Uncovering Questionable Billing Practices at Zynex: A Close Look at the Capitol Forum's Investigation
Introduction:
An investigation by The Capitol Forum (published December 2022) uncovered alarming concerns surrounding the billing practices of medical device company Zynex (ZYXI). These concerns range from the use of improper billing codes to the excessive shipment of unnecessary supplies to patients. Strikingly, these practices resemble those of its competitor, Electrostim Medical Services (EMSI). Both companies manufacture electrotherapy devices for pain management and physical rehabilitation, such as TENS and NMES units, using 9-volt batteries and skin-adhesive electrodes.
Similarities Between Zynex and Its Competitor EMSI:
According to Capitol’s investigation, both Zynex and EMSI have faced allegations of improper billing practices. EMSI has recently been sued by 28 Liberty Mutual insurers for using billing codes associated with more complex and costly devices and for unbundling resupply products for separate billing, a practice known as unbundling. Interestingly, EMSI has faced similar allegations from other insurers, such as Allstate and Nationwide- “in that case, EMSI has moved to dismiss certain claims, arguing, in part, that unless state law incorporates CMS guidelines in some way, those guidelines do not apply to sovereign state laws.”
Former Zynex Employees Allege a Shift in Billing Focus from Commercial to Workers’ Comp:
Former employees of Zynex revealed to Capitol Forum that the company shifted its focus from billing commercial insurance to workers' compensation funds after negative determinations from commercial insurers. This shift has raised concerns, as Zynex's billing practices for workers' compensation funds appear strikingly similar to those of EMSI.
E1399 Billing Code Controversy:
One of the key issues uncovered in the Captiol Forum investigation is the use of inappropriate billing codes. According to the complaints filed against EMSI, companies selling TENS units should use billing code E0730. However, EMSI rarely used this code and instead opted for a miscellaneous billing code, E1399, which resulted in higher reimbursements. Zynex is also found to use E1399 for billing its TENS/NMES devices, though it is argued that none of their products qualify for this code. Using claims data it obtained from the California, New York, and Ohio state workers compensation boards through public records requests, Captiol Forum learned that Zynex uses very similar billing practices as EMSI which could violate worker's compensation fraud laws.
Both Zynex and EMSI have been accused of unbundling billing codes for shipments of replacement electrodes and batteries. Despite CMS guidance recommending the use of billing code A4595 for resupply items associated with TENS or NMES units, the companies allegedly used different codes for separate billing, potentially seeking higher reimbursements.
Zynex Excessively Shipping Supplies:
The investigation uncovered complaints to the FTC and the Better Business Bureau by both Zynex employees and customers. According to Captiol Forum, the complaints show that Zynex has been shipping far more supplies than necessary to patients. Patients report receiving excessive quantities of electrodes and other supplies, far beyond what is typically required for their treatment.
Former employees of Zynex told Capitol Forum that they were pressured to increase reimbursement by any means possible and encouraged to find loopholes to meet billing goals. The former employees allegedly were also aware of the excessive supply shipments to customers as one former customer service employee of Zynex told Capitol Forum
A FTC complaint filed by a customer and obtained by Capitol Forum stated “Zynex collected $35 million on resales of generic 9-volt batteries and electrodes last year. Their profit margin on these items was 85%. Zynex is projected to sell $60 million this year. These products are available at retailers for approximately 10% of what Zynex is being reimbursed.”
Zynex's Response:
In response to the investigation’s allegations, a spokesperson for Zynex told Captiol Forum that the company is not aware of or involved in the allegations against EMSI. They also defended the company's billing practices, arguing that E1399 is an accurate procedure code for their NexWave device.
Conclusion:
The Capitol Forum's investigation has brought to light concerning billing practices within the medical device industry, particularly with companies like Zynex and EMSI. The similarities in these practices raise questions about compliance with billing codes and the ethical implications of these actions.
it remains to be seen how regulators and insurers will respond to these allegations and whether patients will see any changes in the way companies bill for their services.
Read the Investigation report by Capitol Forum here: https://thecapitolforum.com/zynex-company-improperly-billing-workers-compensation-funds-for-tens-devices-practices-strikingly-similar-to-competitor-being-sued-by-28-liberty-mutual-insurers/