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The Department of Justice (DOJ) has turned its attention to birth tissue products, charging a Texas-based physician assistant with healthcare fraud for allegedly injecting patients with amniotic fluid in a "dubious attempt at pain management," .

Ray Anthony Shoulders, PA, allegedly submitted $788,000 in fraudulent claims to Medicare and took in more than $614,000, mostly for "Cell Genuity" injectable products.

Even though Medicare would not reimburse for these products, Shoulders reportedly came up with a scheme to get them covered because patients initially weren't sold on paying more than $800 per injection out of pocket, according to the DOJ.

In August 2020, Shoulders allegedly spoke with a sales rep for a competing product called Fluid Flow, which Medicare would reimburse for wound care because it had a unique reimbursement code: Q4206. While Shoulders didn't purchase any Fluid Flow products at the time -- they were far more expensive than Cell Genuity, the DOJ said -- he started to bill Medicare for the cheaper injections using code Q4206.

"Because they were told insurance would cover the cost of the injections, more patients consented to the procedure," the agency noted in a press release.

From August to October 2020, Shoulders' clinic submitted more than 100 bills for Fluid Flow to Medicare, taking in about $400,000 in reimbursements. Shoulders allegedly profited about $1,200 per cc of Cell Genuity injected; Fluid Flow profit would have only been about $400 per cc.

After those few months, Shoulders allegedly got nervous and laid low, according to the DOJ. But after almost a year without any repercussions, he allegedly started the scheme up again in October 2021, purchasing just 10 ccs of Fluid Flow for $20,000 -- the only recorded purchase of this product by the clinic.

However, he also continued to purchase "significant quantities of Cell Genuity," the DOJ said. "Despite purchasing only 10 ccs of Fluid Flow, Mr. Shoulders billed Medicare for approximately 394 ccs of Fluid Flow in the subsequent months," the press release stated. He continued the scheme through December 2021, the agency said.

The DOJ noted that some amniotic products have been FDA approved for wound care but not for pain management, so Medicare "considers amniotic injections administered to treat pain medically unnecessary and does not reimburse for them."

The agency also linked to an stating that biologics such as amniotic fluid "have not been approved for the treatment of any orthopedic condition, such as osteoarthritis, tendonitis, disc disease, tennis elbow, back pain, hip pain, knee pain, neck pain, or shoulder pain," nor for "chronic pain or fatigue."

The FDA has long been trying to put a lid on unapproved stem cell therapies. In 2017, the agency issued guidance on regenerative medicine products, with a November 2020 deadline for full compliance. That deadline was extended due to the COVID-19 pandemic and . Now, manufacturers must meet the FDA investigational new drug (IND) and premarket approval requirements for certain products before promoting them to patients.

Related to the Shoulders case, in February 2022, several U.S. regional Medicare Administrative Contractors announced that they would seek to recover losses from "birth tissue" claims going back more than 2 years. This applied to amniotic, placental, and umbilical cord injectables, MedPage Today previously reported.

That story noted that some companies were able to secure "Q codes" from CMS, which were in turn marketed to doctors as being reimbursable. It specifically mentioned Fluid Flow by BioLab Sciences using code Q4206, and a source at that time told MedPage Today that the DOJ would likely be getting involved, opening the door to criminal prosecutions.

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