AtriCure: Closed-Chest Surgery, Open-Heart Billing

In the AtriCure 2010 Medicare settlement, the device manufacturer agreed to pay $3.76 million to resolve allegations of off-label surgical-ablation promotion, upcoding and kickbacks. The alleged sales pitch reached well beyond which device a hospital bought. It reached the procedure a surgeon performed, the patients sent for surgery and the code the hospital used to get paid. For someone working in sales, clinical education or reimbursement, those connections are the story.

The Justice Department announced the civil settlement on February 2, 2010. It alleged that the West Chester, Ohio company marketed its devices for atrial fibrillation, an abnormal heart rhythm, when that use lacked FDA approval. The government also alleged that AtriCure promoted expensive heart surgery when less invasive alternatives were appropriate, advised hospitals to inflate Medicare reimbursement and paid health care providers to use its products.

The Procedure Was Part of the Sale

AtriCure’s surgical ablation devices use focused energy to create controlled lesions or scar tissue. The whistleblower’s amended complaint alleged that the company promoted its bipolar ablation products for inpatient treatment of atrial fibrillation when many patients could instead receive less invasive outpatient catheter ablation.

That allegation put the choice of procedure at the center of the business model. The complaint described a campaign aimed at cardiothoracic surgeons losing business to catheter-based treatment. AtriCure allegedly offered them a way to win patients back through surgery, with training and marketing support attached. Hospitals, meanwhile, allegedly heard about the margin between what Medicare would pay and what the procedure would cost.

The complaint alleged that AtriCure used those incentives together to sell more devices and cause false Medicare claims. Under that alleged scheme, patients faced more invasive treatment and taxpayers paid inflated Medicare bills.

How Does Reimbursement Work for Medical Devices?

In inpatient care, Medicare generally includes device costs in the hospital’s payment for the stay. The payment category matters to the hospital’s margin, while the manufacturer earns its sale from the product. AtriCure’s alleged campaign connected those interests by promoting the gap between reimbursement and procedure cost.

The complaint called this “marketing the spread.” Its central coding allegation was concrete:

The complaint alleged that managers trained sales representatives to promote that procedure code with DRG 108, the inpatient payment group, for closed-chest, stand-alone ablation. In the complaint’s account, the hospital incurred the lower costs of a closed-chest procedure while seeking payment under an open-heart category. The more profitable billing description was part of the alleged sales instruction.

The complaint attacked the connections among the treatment promoted, the procedure performed and the bill presented to Medicare.

The Reimbursement Hotline Behind the Sales Pitch

The complaint alleged that AtriCure supported the billing process through a reimbursement hotline that helped coding specialists “fight denials.” An independent reimbursement expert was available to answer coding and coverage questions.

It also alleged that company medical staff accompanied new surgeons into the operating room and gave detailed instructions on using the device to treat Medicare patients with atrial fibrillation. Reimbursement assistance and clinical instruction appeared in the same alleged effort to build use of the product.

That puts a sales operation close to decisions usually visible inside the provider: what procedure to perform, how to describe it and how to defend the bill. The hotline’s advice matters because the complaint alleged that higher Medicare payment was itself a reason representatives gave hospitals to use the device.

What Are Some Examples of Kickbacks in Healthcare?

The AtriCure complaint alleged benefits tailored to what each customer wanted: patients and publicity for surgeons, equipment and lower costs for hospitals. It described free advertising, referral services and grants to train new surgeons as inducements to use the company’s products.

According to the complaint, AtriCure paid for brochures promoting surgeons who used its system. It sponsored community events to screen potential patients, referred them to surgeons who had agreed to use its product and tracked whether they received the procedure. The alleged benefit was a supply of business for the surgeon, with device sales following the patients into surgery.

Hospitals allegedly received generators, disposable equipment and discounts in exchange for purchase volumes and preferred product status. With the hospital payment fixed, reducing equipment costs increased the margin. The complaint alleged that some market-share agreements required hospitals to turn over competitors’ equipment. In some instances, it alleged, sales representatives disabled competing generators by taking their power cords and adapters.

A promise to use one manufacturer’s product becomes considerably more concrete when the competitor’s generator cannot be switched on.

What Evidence Is Needed to Prove Fraud?

Connecting the manufacturer’s instructions to the procedure performed and the claim submitted is work we do with the insider who knows the sales, clinical or reimbursement operation.

The AtriCure complaint identified provider examples in Illinois and Iowa. It alleged that company sales representatives attended stand-alone ablation procedures and that the providers then billed Medicare using the disputed open-heart codes. The complaint alleged that the providers in those examples were paid approximately $30,000 for each stand-alone use.

A 2020 analysis in the Journal of Forensic and Investigative Accounting, A Forensic Accountant’s Guide to the Most Potent Federal Laws Used Against Healthcare Fraud, identifies false descriptions of services or goods on reimbursement requests as a form of fraud. A sales presentation promising a margin, the coding advice behind that promise and the resulting provider claim tell a more complete story together.

The Same Sales Pattern at Estech

The AtriCure action belonged to a group of related surgical-device cases described in a July 2009 court order. Endoscopic Technologies, also called Estech, agreed to a smaller payment than AtriCure: a $1.4 million civil settlement announced in July 2009. Its allegations likewise concerned atrial-fibrillation promotion, unnecessary invasive procedures, upcoding advice and kickbacks. The parallel is the combination of treatment promotion and billing advice.

The Whistleblower’s Share of the Recovery

The AtriCure case began with a qui tam complaint under the False Claims Act. The Justice Department announced a share of the settlement for the whistleblower who brought it.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. For a device insider, the starting point is the connection between what the company encouraged and what Medicare paid for. That is where we bring our expertise to the account you can give.

You Know How the Procedure Was Sold

If you saw device sales tied to a procedure, a payment code or a promised hospital margin, talk with our whistleblower experts. We work with you to build your strongest medical device whistleblower case from those decisions, bring in medical device fraud whistleblower lawyers who understand manufacturer-driven billing, and stay beside you through the pursuit of a recovery.