Argus Leader Sanford Settled Lawsuit Alleging Kickbacks to Doctors
By Jonathan Ellis
July 28, 2014 – Sanford Health paid the federal government $625,000 earlier this year to settle a whistle-blower lawsuit which claimed two Sioux Falls doctors engaged in a kickback scheme to encourage use of a spinal implant.
The "Anterior Lumbar Interbody Fusion" was developed by Dr. Wilson Asfora. It was hailed by Sanford as a major development in the treatment of spinal conditions when it was approved for use by the FDA in 2009.
The device also is known as the Asfora Bullet Cage. It's difficult to pinpoint just how many patients have been treated with the bullet cage, but Medicare data obtained and analyzed by Argus Leader Media shows that Asfora and Dr. Bryan Wellman — the second doctor in the case — are among the most aggressive in the state in performing spinal fusion surgeries.
When it came time to settle, Sanford asked that the agreement be confidential. Lawyers for the Justice Department refused. The health system did, however, continue to deny DuBay's allegations — as did Asfora and Wellman — and denied any wrongdoing.
Sanford agreed to pay $625,000, and a federal judge signed off on the settlement in January.
Although the agreement wasn't sealed, it wasn't given any fanfare, either. But the agreement prompted Argus Leader Media to review data about the surgeries performed by spine surgeons in South Dakota, including Asfora and Wellman. The data were obtained with a Freedom of Information Request from Medicare, as well as other publicly available data from Medicare as part of a broader Argus Leader Media investigation into physician conflicts of interest.
Number of spinal fusions far above the norm
Asfora and Wellman, according to one analysis, exceed the national average for spinal fusions by a wide margin.
There are different ways to look at that.
Cindy Morrison, Sanford's executive vice president for marketing and public policy, said large numbers don't "mean that something is going on that is dark."
"They may be the ones that are the best at it, and they may be getting a lot of referrals," she said.
But others say high numbers can be a sign a doctor is doing unnecessary surgeries. Dr. Scott Lederhaus, a California neurosurgeon and president of the Association for Medical Ethics, reviewed Medicare data that concluded Asfora and Wellman do fusion surgeries on a higher percentage of their Medicare patients than the national average.
"Wellman and Asfora are the ones that stand out," he said.
The settlement agreement, completed earlier this year with the federal government, sheds light on another layer of potential conflict: Asfora is majority owner of Medical Designs, which makes money when its devices are implanted into patients. The Office of Inspector General for the Department of Health and Human Services classifies Medical Designs as a physician-owned distributorship. PODs are controversial because they enable physicians who invest in them to profit from the devices they implant in patients. That leads to concerns that surgeons will perform unnecessary surgeries. Legal analysts say they could violate anti-kickback laws.
Unlike another POD started last year by nine physicians at the Orthopedic Institute, Asfora's company manufactures its own devices. The POD at the Orthopedic Institute resells devices made by other implant makers.
To Morrison, that's a critical distinction. Asfora, she said, invested money and time into developing devices while other PODs "involve physicians who simply get paid for using a particular device but have not made any such investment."
Steve Johnson, a Sioux Falls lawyer who represented DuBay in the whistle-blower case against Sanford, said patients should be concerned any time a physician has a financial interest in a device or procedure.
"You create incentives for them to use your medical device when maybe a different medical device would be better suited for patients," he said. "In my experience, (patients) don't get that explained to them — that there's a financial interest is using a particular device."
Asfora was a well-regarded independent neurosurgeon known in the community for his love of music and soccer when he joined Sanford in 2007. According to Sanford's most recent public tax filing, the health system pays him more than $2 million a year, making him one of the hospital's highest-paid surgeons and one of Sanford's most valuable revenue producers.
In 2009, Sanford made a big deal about Asfora's latest invention after it received market clearance from the Food and Drug Administration. The Asfora Bullet Cage is a biomechanical device inserted between vertebrae to create space for fusion surgeries in the lumbar region of the spine.
Sanford hailed the FDA approval as a stroke of innovation. But the approval was based on the FDA's finding that the Asfora Bullet Cage is "substantially equivalent" to products already on the market. Experts say dozens of similar devices already were on the market.
"They're all basically the same stuff," Lederhaus said. "Anything about them being special is all garbage."
And they are expensive.
Special pricing dealscan conceal real costs
Implants are considered one of the major cost drivers in surgery. But pinning down their cost can be difficult, in part because hospitals and vendors make special pricing deals with one another in which they sign nondisclosure agreements, said Dr. Samuel Bederman, a neurosurgeon at the University of California-Irvine. He calls the market for implants "opaque."
Bederman is finishing a study of implant costs based on records from a group of about four-dozen academic medical centers. Hospitals in the study were paying $1,000 to $7,000 each for spinal cages that perform the same function as the Asfora Bullet Cage. The mean was about $3,000.
The study did not include devices sold by smaller manufacturers, such as Medical Designs.
"This was just variation within six major manufacturers," Bederman said. "There are dozens and dozens of smaller players that don't weigh into this."
Bederman said higher-cost devices should have to show that they are more effective. But without more transparency in the market, that's not possible.
It's unclear what the effectiveness rate is for the Asfora Bullet Cage. When it received FDA clearance in 2009, a Sanford news release claimed it was successful in 98 percent of lumbar fusions. But when asked whether there had been a retrospective analysis or randomized study on patients who had received the device, Morrison said that the device cleared its "first hurdle" of FDA approval — a process she called "robust." She also said Sanford evaluates devices under its peer-review system, and that the "complication rates were within the expected range for the bullet cage."
She also declined to disclose how much Sanford pays Medical Designs for the devices, saying the information is "proprietary."
"All devices, including Dr. Asfora's bullet cage, must get approval through our independent value-analysis committee which is subject to oversight by Sanford Health's compliance process," she said in an email. "Further, we use an independent third party to determine fair market pricing. Dr. Asfora has no decision-making ability within those processes, and his device would be evaluated on the same criteria as any other device (i.e. cost, efficacy, etc.). Dr. Asfora receives no premiums or concessions."
Less-expensive options available, experts say
Surgeons in spinal fusions can use other techniques to create space between a patient's vertebrae, including harvesting bone from the patient or using cadaver bone. But those techniques, experts say, are less expensive than billing for manufactured devices such as the Asfora Bullet Cage.
The Asfora Bullet Cage, and all the devices like it, are billed to Medicare using a specific code. Argus Leader Media used the Freedom of Information Act to request four years of data from doctors who billed Medicare using that code.
From 2010 through last year, more than 40 surgeons in South Dakota billed Medicare at least once for that code. But two doctors — Asfora and Wellman — stick out.
Of the 1,972 times that doctors in South Dakota billed Medicare under the device code, Asfora and Wellman accounted for 687 of those billings — or more than a third. Wellman billed Medicare 387 times under the code and Asfora 380 times, according to the data.
The next highest was another Sanford doctor, Dr. Troy Gust. He billed Medicare 181 times under the device code.
Those numbers do not include surgeries that were covered by private insurance plans, meaning there probably are more implants unaccounted for in the Medicare data.
Because the code is used to bill for the general category of device, it's not known whether they were used for the Asfora Bullet Cage or for one of the dozens of other similar devices.
"The majority of Sanford's spine surgeons in Sioux Falls have used the bullet cage; some use it rarely and some more frequently depending on a number of factors, including intricacies of the case, intricacies of the device, ease of use, efficacy of the particular device, and the technique the surgeon is using, to name a few," Morrison said.
Asfora: Special expertise accounts for caseload
Wellman and Gust, through Sanford's marketing department, declined to be interviewed. In an email, Asfora said he gets many complicated spinal cases referred to him from other doctors because of his expertise and training. He added that the cases often are complex, requiring multiple-level fusions.
"The statistically reported higher percentage of procedures can therefore be related to this pool of patient pathology specifically referred to me because of my expertise and experience," he said.
Asfora also said most of his patients require re-do surgeries to fix failed operations performed by other doctors. A review of Medicare data from 2012 show that he did more first-time surgeries on Medicare patients than re-dos. The data show he did 19 lumbar back surgeries on patients that required a subsequent surgery following a first surgery. In contrast, the same data show that he performed 35 lumbar fusions that were billed to Medicare as first-time surgeries. The data don't include surgeries on patients covered by private insurance.
He also responded "absolutely not" when asked whether he or Medical Designs ever had paid doctors to use or promote the company's devices. However, he did say that Medical Designs had employed other physicians to help research products.
"As anyone having any type of company knows, outside consultants are often utilized to provide unbiased feedback regarding strength or weaknesses of any particular product," Asfora said in the email. "During research and development (R&D) Medical Designs does get the opinion of physician consultants. Once the R&D is completed and device feedback is received, consultant contracts are concluded."
But it was the blurry line between consultant and kickback that ultimately forced Sanford to pay the $625,000 fine.
"From May 2010 to April 2011," the settlement agreement reads, "Medical Designs made payments identified as consulting fees to Dr. Bryan Wellman and two other Sanford Health employees intended to induce them to promote and/or use the Asfora Bullet Cage, in violation of the Federal Anti-Kickback Statute."
Billing for spinal SURGERY IMPLANTS
In the four-year period of 2010 through 2013, more than 40 doctors in South Dakota billed Medicare 1,972 times for devices that are implanted during spinal surgeries. The devices have a unique billing code, making it possible to compare doctors and their use. The devices, used in spinal fusion surgeries, are more costly than other techniques. Here is a list of the top 10 doctors who billed Medicare for the implants and their hospitals as reported by the Centers for Medicare and Medicaid Services:
- Bryan Wellman, Sanford … 387
- Wilson Asfora, Sanford … 380
- Troy Gust, Sanford … 181
- Tim Watt, Black Hills Surgical Hospital and Rapid City Regional … 141
- Robert Ingraham, Black Hills Surgical Hospital and Rapid City Regional … 102
- Quentin Durward, Siouxland Surgical Center and Avera Sacred Heart … 91
- Allen Sossan, Lewis and Clark Specialty Hospital and Avera Sacred Heart … 68
- Wade Jensen, Siouxland Surgery Center … 54
- Robert Woodruff, Black Hills Surgical Hospital and Rapid City Regional … 54
- Geoffrey Haft, Sanford … 51
Q&A with Dr. Asfora
Dr. Wilson Asfora answered questions from Argus Leader Media regarding his use of a spinal device he invented, known as the Asfora Bullet Cage, via email. Here is the text of that conversation:
Argus Leader: Between 2010 and 2013, you and Dr. (Bryan) Wellman billed Medicare 767 times for implant devices (CPT code 22851). This amount represents 39 percent of all the doctors in South Dakota who billed for that code. There were a total of 44 doctors who billed under that code at least once in those three years. How do you explain the high usage of these devices relative to other doctors?
Asfora: Regarding the coding (usage and fusions), I cannot speak for other physicians, only for myself. I do not keep track of what other physicians bill and therefore will not address this part of your question. In addition, I do not directly bill or code for any of the surgeries I perform, but rather, that is left to the analysis and appropriate coding by coding specialists at Sanford based on the narrative from my operative report as I am a Sanford employee.
I am a neurosurgical spine specialist whose practice is based on referrals from other physicians, as I am trained, experienced and capable of doing complicated, complex spine conditions. The majority of my patients are referred to me after having failed prior surgery(ies) performed by other physicians elsewhere. As a result of the complex nature of the presenting pathologies, there is often a need to perform multilevel fusions and use an implantable device in an attempt to appropriately address the various spine conditions (e.g. scoliosis, spondylolisthesis, spinal instability, facet arthropathy, multiple level disease, failed previous implants, spinal tumors, spinal trauma, etc). The minimally invasive approach that I use for complex spine cases is well tolerated by patients. The statistically reported higher percentage of procedures can therefore be related to this pool of patient pathology specifically referred to me because of my expertise and experience.
Argus Leader: Of the Medicare patients you saw in 2011 and 2012, you performed fusion surgery on 13 percent of them, nearly double the national average of 7 percent. Dr. Wellman performed fusions on 32 percent. In addition, you performed fusions on four or more vertebrae on 5 percent of your Medicare patients, more than any doctor in South Dakota. What explains this high number of fusions relative to other doctors?
Asfora: See answer above.
Argus Leader: I understand that you invested a significant amount of money into developing the Asfora Bullet Cage. Can you tell me how much?
Argus Leader: Are there any other doctors besides you who have ownership in Medical Designs? If so, who are they?
Argus Leader: Does Medical Designs or you compensate doctors for using devices or tools manufactured by Medical Designs?
Asfora: Absolutely not.
Argus Leader: Has Medical Designs or you ever compensated other physicians as consultants?
Asfora: As anyone having any type of company knows, outside consultants are often utilized to provide unbiased feedback regarding strength or weaknesses of any particular product. During research and development (R&D) Medical Designs does get the opinion of physician consultants. Once the R&D is completed and device feedback is received, consultant contracts are concluded.
Argus Leader: Besides you, are there any other physicians who have a financial interest in Medical Designs?