California Provider Settles for $1.9 Million in Stivax Neurostimulator Case

Sarasota, FL (WorkersCompensation.com) – Manufactures are usually considered the leading experts of the products they make, as they are the ones that have applied for category licensing, and intimately know the requirements for the product to be on the market. Any time new drugs or medical devices are introduced on the market, providers are heavily reliant on the manufacturer and their representatives for education on how to appropriately code for those new items. It’s interesting to note that many of the representatives providing the education material aren’t necessarily medical practitioners themselves. 

When it comes to new products, CMS Medicare coverage and coding guidelines, as well conventional coding sources, can often be left open to interpretation, especially in the process of development of the newer guidelines that may change at some point. 

Acupuncture and neurostimulator devices are just two examples of coverage policies that have changed over the years. For instance, up until the opioid epidemic Medicare would not even consider covering what they considered a non-traditional and un-medically necessary treatment, even though it has been accepted for years in other countries. When the National Institutes of Health released a study showing the benefit of acupuncture for pain relief - especially for back pain which opioids are commonly prescribed for - CMS changed their tune as they desperately need an alternative in the drug epidemic. In 2020, CMS announced that they would cover acupuncture for chronic low back pain lasting 12 weeks or longer.

Electrical stimulation devices are another area that CMS initially did not cover, then later developed policy. However, due to marketing education and a lack of clarity, CMS had to later release a bulletin to help clarify the rules between surgically implanted devices and those used with needles or on the skin. In one audit performed by the Office of Inspector General, between 2016 and 2017 Medicare improperly paid out $1.4 billion in overpayments for claims involving electrical nerve stimulation devices. 

One item that has received a lot press in the aftermath of that audit has been code L8679. Even in its bulletin, CMS described an L8679 as, “implantable neurostimulator, pulse generator, any type”.  

Prior to the audit and bulletin release, Mark Kaiser owned Doc Solutions that marketed Stivax, a nuerostimulator device. The power device attached to the skin behind the ear, with an electrode attaching to an acupuncture point in the ear. According to lawsuit records, it’s asserted that Kaiser instructed his healthcare provider clients to use code L8679 when billing for Stivax,  when in fact the intention of L8679 is actually surgical. 

In 2021, the Pennsylvania Department of Justice announced a settlement in which Kaiser agreed to pay out $1.15 million and a 20 year CMS exclusion to resolve allegations for his role in the marketing scheme. Two other marketing company settlements, as well as false claim cases in multiple states were highlighted in the release as well. 

In yet another case announced earlier this month, a California provider has agreed to pay out settlement to resolve allegations related to the Stivax stimulator device and code L8679. Aziz Kamali, M.D, an internal medicine provider specializing in geriatrics, and his medical corporation have agreed to settle for $1,963,953 to resolve allegations of violating the False Claims Act. Kamali admitted that from July 2018 to May 2020, his office submitted claims for code L8679, which is intended to be a surgically implanted device, when in fact he was using the skin-adhered Stivax device that only required taping the device to the patient’s skin. 

Additionally, with the L8679 he billed code 64553, which is a surgical implantation of an electrode into the skin. Instead of a surgical implantation of the electrodes, the electrodes were actually attached by two tiny acupuncture needles that were inserted into the skin of the ear.

In addition to the inflated codes that were billed, Kamali admitted that he paid a sales and marketing company to promote Stivax. In exchange for marketing the device, the company received 10 to 15 percent of claims payments from Kamali. In return, the marketing company granted Kamali exclusive rights in Stockton to use the Stivax device.

Kamali is required was required to pay out $300,000 within 14 days of the settlement, and has forfeited $213,953.59 in suspended CMS payments. He has a period of 5 years to pay out the remaining $1,450,000, with $700,000 coming from sale of residential properties. According to the settlement, if undisclosed properties of $100,000 or more are discovered, the agreement is null and void and the original suit is reinstated with the new assets seized. 

In addition to payout, Kamali has agreed to the Integrity Agreement with the Department of Health and Human Services Office of Inspector General. The agreement requires that he execute a compliance plan that includes training on healthcare fraud laws, and incorporating an Independent Review Organization to audit his claims for medical necessity.  

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