In a shocking case of Medicare fraud, a Texas physician assistant, Ray Anthony Shoulders, has been convicted for defrauding the system by administering unapproved injections of amniotic fluid to patients and illegally billing Medicare for these shots. After a 5-day trial, Shoulders was found guilty by a jury and could potentially face up to 240 years in federal prison. This case highlights the severe consequences of healthcare fraud and the potential risks posed to patients.
Shoulders, who worked at a Fort Worth pain management clinic, gave patients injections of an amniotic fluid product called Cell Genuity, despite its lack of FDA approval for any indication. Some patients initially paid out of pocket for these shots, which cost over $800 each. However, due to the high cost, many patients declined the treatment. In an attempt to increase the number of patients receiving injections, Shoulders connected with a sales representative for a different amniotic product called Fluid Flow, which had a reimbursement code known as a “Q code.” This unique code allowed for easier billing to insurance providers.
Though Shoulders never purchased Fluid Flow, which was significantly more expensive than Cell Genuity, he used its reimbursement code (Q4206) to fraudulently bill Medicare for Cell Genuity shots. By doing so, he received over $614,000 from Medicare for the unapproved injections, earning $1,200 per cc of Cell Genuity compared to the $400 per cc for Fluid Flow. From August to October 2020, Shoulders’ clinic submitted over 100 claims for Fluid Flow to Medicare, resulting in a reimbursement of approximately $400,000. To avoid suspicion, Shoulders stopped the scheme temporarily but resumed it in October 2021 and continued until December of that year.
A Broader Context: Birth Tissue Claims and Medicare Fraud
The case of Ray Anthony Shoulders is part of a broader issue surrounding fraudulent billing for “birth tissue” claims. In February 2022, regional Medicare Administrative Contractors announced their intention to recover losses from such claims dating back more than 2 years. This includes claims for amniotic, placental, and umbilical cord injectables, raising concerns about the extent of fraudulent billing practices concerning these products. Some companies, like BioLab Sciences with its Fluid Flow product, obtained Q codes from CMS, which were then marketed to doctors as eligible for reimbursement. The involvement of the Department of Justice in these cases suggests that criminal prosecutions may be pursued.
According to Chris Centeno, MD, a physician who owns stem cell clinics across the U.S., Shoulders’ case is just the “tip of a billion-dollar claims iceberg.” He alleges that numerous clinics in the United States have fraudulently billed Medicare for birth tissue products for pain treatment. While many of these clinics have faced clawbacks of their payments, some may also be subject to criminal prosecutions. It is clear that healthcare fraud in the Medicare system is a significant issue that demands further attention and stricter measures to deter individuals from exploiting the system.
The FDA has been actively seeking to address the issue of unapproved cell therapies, including those using birth tissue products like amniotic fluid. In 2017, the FDA issued guidance aimed at regulating regenerative medicine products, with a deadline for compliance set for November 2020. Due to the impact of the COVID-19 pandemic, this deadline was extended, and the regulations went into effect in June 2021. Manufacturers are now required to meet FDA’s premarket approval or Investigational New Drug requirements for certain products before promoting them to patients. Additionally, marketing these products for uses outside of the approved indications is strictly prohibited, as highlighted in a recent warning letter sent to Kimera Labs, a manufacturer of exosomes.
The conviction of Ray Anthony Shoulders serves as a stark reminder of the consequences of healthcare fraud and the risks it poses to patient safety. By administering unapproved injections and billing Medicare illegally, Shoulders put his patients at potential risk and defrauded the system of hundreds of thousands of dollars. This case sheds light on the broader issue of fraudulent billing practices for birth tissue products, prompting a closer examination of reimbursement codes and the need for increased vigilance to combat Medicare fraud. The FDA’s efforts to regulate unapproved cell therapies are crucial in ensuring patient safety and preventing unscrupulous individuals from taking advantage of vulnerable healthcare systems. As this case demonstrates, combating healthcare fraud requires a coordinated effort from healthcare providers, regulatory authorities, and law enforcement agencies to protect both patients and the integrity of the healthcare system.
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