(May 25, 2022): In recent years, federal regulators have initiated a significant number of audits and investigations examining the improper billing of claims for balloon sinuplasty / balloon dilation procedures by Otolaryngologists (commonly referred to as Ear, Nose and Throat (ENT) physicians. Depending on the specific facts in each case, the improper billing of balloon sinuplasty claims can result in an administrative overpayment, significant financial liability under the civil False Claims Act, and / or criminal liability under a wide variety of statutory provisions. This article examines a number of the recent balloon sinuplasty / balloon dilation cases pursued by program integrity contractors working for the Centers for Medicare and Medicaid Services (CMS) or prosecuted by the Department of Justice (DOJ) and discusses ways that you and your ENT practice can reduce your level of risk.
I. Overview of Balloon Sinuplasty / Balloon Dilation Procedures:
Cedars-Sinai estimates that 37 million Americans suffer from sinusitis each year. Chronic cases of sinusitis can be quite painful. Symptoms can include, but are not limited to headaches, ear pain, and pain / swelling around the nose and eyes. More often than not, sinusitis can be successfully treated with medications. When that is not the case, a patient may choose to undergo another, more invasive treatment option.
One of the most common treatment approaches involves the minimally invasive use of an endoscopic, sinus balloon catheter than is used to dilate the walls of a patient’s sinus passages while not interfering with the patient’s sinus lining. Generally, this technique is referred to as a balloon dilation or balloon sinuplasty procedure. A simplified overview of the steps taken when conducting this procedure are set out below:
- Step 1: An ENT will carefully insert a balloon catheter along a guidewire into a patient’s inflamed sinus cavity. No cutting is typically required. This reduces the likelihood of bleeding and the risk of infection.
- Step 2: The balloon will then be inflated so that it expands the sinus opening.
- Step 3: The patient’s inflamed sinus passages will then be flushed with a saline solution so that any mucus can be flushed out of the passages.
- Step 4: The balloon is then removed, leaving the patient’s sinus passages open and free of obstructing mucus and other debris.
These days, it is quite common for ENTs to perform balloon sinuplasty procedures on an outpatient basis, using only local anesthesia. The procedure is often quite successful in remedying a patient’s symptoms.
There are a number of companies which manufacture and market balloon sinuplasty devices. While there may be different features, these medical device are typically:
- Single use only. Manufacturers specify that these devices are intended to be used only once. When used, balloon sinuplasty / balloon dilation devices may come into contact with blood, pus, mucous and other secretions of the sinus, none of which should be spread from one patient to another.
- Not intended to be cleaned and reused. Manufacturer product manuals and instructions for use accompanying balloon sinuplasty devices consistently note that these devices are not intended to be sterilized and reused.
- Balloon sinuplasty / balloon dilation devices are intended to be properly discarded after use. After completing a procedure, physicians are instructed to dispose of the inflation device, infusion line, guidewire (if used) and any waste flushed from the patient in accordance with OSHA guidelines.
II. Coding and Billing of Balloon Sinuplasty / Balloon Dilation Procedures:
Medicare, Medicaid and private payors cover medically necessary balloon sinuplasty / balloon dilation procedures. The CPT Codes used to report these procedures are set out below:
- CPT Code 31295: Nasal / sinus endoscopy, surgical, with dilation (e.g. balloon dilation); maxillary sinus ostium, transnasal or via canine fossa.
- CPT Code 31296: Nasal / sinus endoscopy, surgical, with dilation (e.g. balloon dilation); frontal sinus ostium.
- CPT Code 31297: Nasal / sinus endoscopy, surgical, with dilation (e.g. balloon dilation); sphenoid sinus ostium.
- CPT Code 31298: Nasal / sinus endoscopy, surgical, with dilation (e.g. balloon dilation); frontal and sphenoid sinus ostia.
III. Balloon Sinuplasty Fraud / Balloon Dilation Fraud Concerns Identified by CMS Contractors and Law Enforcement:
A. MAC Audits of Balloon Sinuplasty / Balloon Dilation Claims
Prior to 2003, Medicare program claims were primarily processed by Fiscal Intermediaries (FIs), that were responsible for processing Part A claims and Carriers, responsible for processing Part B claims. As required by Section 911 of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA), CMS replaced the original claims payment contractors—FIs and Carriers—with contract entities called Medicare Administrative Contractors (MACs). In terms of compliance, despite the enhanced roles of Uniform Program Integrity Contractors (UPICs) around the country, A/B MACs are still an integral part of the government’s efforts to better ensure that Medicare claims are properly coded and billed.
MACs primarily rely on data mining expertise for audit targeting purposes. As set out in CMS’s Medicare Integrity Manual, “Claims data is the primary source of information used to identify and target fraudulent, wasteful or abusive activities.”  In recent years, MACs have issued a number of audit request letters to ENT practices around the country. While these audit requests have not necessarily been limited to only balloon sinuplasty / balloon dilation claims, these claims are typically part of the universe from which a sample is pulled. In most instances, overpayments identified by a MAC are handled through the administrative assessment and appeals process.
It is noteworthy that the results of one MAC audit of ENT provider claims was not resolved as a mere overpayment. As discussed in Section D below, the improper conduct of this audited ENT practice resulted in a referral of the case to the DOJ. This is a prime example of why it is essential that you take ALL claims audit requests (even those from a MAC) seriously and engage qualified health care legal counsel for assistance.
B. UPIC Audits of Balloon Sinuplasty / Balloon Dilation Claims
In an effort to streamline the program integrity process, CMS has contracted with a number of private sector organizations known as Unified Program Integrity Contractors (UPICs) to perform the Medicare and Medicaid program integrity work that was previously handled by multiple contractor entities. CMS has described the goal of a UPIC as follows:
"The primary goal of the UPIC is to identify cases of suspected fraud, waste and abuse, develop them thoroughly and in a timely manner, and take immediate action to ensure that Medicare Trust Fund monies are not inappropriately paid. Payment suspension and denial of payments and the recoupment of overpayments are examples of the actions that may be taken in cases of suspected fraud. Once such actions are taken, cases where there is potential fraud are referred to LE for consideration and initiation of criminal or civil prosecution, civil monetary penalties (CMP), or administrative sanction actions."  (Emphasis added).
UPICs are the primary program integrity contractors tasked with ferreting out instances of fraud and suspected fraud. Once a suspected case of fraud is identified, the UPIC will refer it to law enforcement (typically the DOJ or the OIG) for further review and possible prosecution. When auditing balloon sinuplasty / balloon dilation claims, UPICs aren’t required to limit their requests for information to only medical records and claims-related documents. UPICs may also ask for copies of medical device purchase orders so that they can verify that ENT provider has properly limiting balloon sinuplasty devices to the use by a single patient. For example, if a UPIC finds that an ENT provider has billed Medicare and Medicaid for 100 balloon sinuplasty / balloon dilation procedures but can only show that it purchased 30 medical devices from manufacturers, there is a significant likelihood that the UPIC will refer the case to the DOJ for prosecution of instances balloon sinuplasty fraud / balloon dilation fraud.
C. Example of Balloon Dilation Civil Case Brought Under the False Claims Act
Georgia. In this case, the federal government alleged that a multi-office ENT practice submitted false claims to Medicare, TRICARE and Federal Employee Health Benefit Plans (FEHBP) when it billed the payors for sinus dilation procedures (CPT Codes 31295, 31296 and 31297) in which single use balloon catheters were reused on multiple patients. The medical devices at issue were only cleared by the FDA to be single use only. Ultimately, the defendant ENT company agreed to pay more than $1.1 million to settle alleged violations of the civil False Claims Act, 31 U.S.C. §§ 3729, 3733. The defendant also agreed to enter into a three-year Integrity Agreement with the Department of Human Services (HHS), Office of Inspector General (OIG).
D. Example of Balloon Sinuplasty Criminal Prosecution
North Carolina. In this recent 2022 case, a superseding indictment was issued against an ENT on the basis that she allegedly “reused” balloon sinuplasty devices on her patients, even though the devices were only intended to be used a single time and had not been approved by the Food and Drug Administration (FDA) for use on multiple patients. Among the charges brought in this case, federal prosecutors have alleged that the defendant ENT routinely reused balloon sinuplasty devices "sometimes inserting the same device into more than one patient on the same business day.” The physician defendant has been charged with violating multiple criminal statutes, several of which include the following:
- Adulteration of Medical Devices. 21 U.S.C. §331(k). Under the Federal Drug and Cosmetic Act (FD&C Act), it is against the law to engage in conduct with respect to a medical device that has been held for sale after shipment in interstate commerce, if such conduct results in the device being “adulterated".  Under 21 U.S.C. §351(a)(2)(A), a medical device is considered to be adulterated if, among other things, it was prepared, packaged, or held under unsanitary conditions where it may have been contaminated with filth or been rendered injurious to the health of a patient. Violations of this statute are a strict liability misdemeanor under 21 U.S.C. §333(a)(1). If such conduct is committed with intent to defraud or mislead, it is a felony under 21 U.S.C. §333(a)(2). In this case, the government is arguing that the defendant’s alleged reuse of a previously used balloon sinuplasty device constitutes a felony violation of the medical device adulteration statute.
- Illegal Remuneration. 42 U.S.C. §1320a-7b(b)(2)(B). Simply put, the government has alleged that the defendant’s routine waiver of all or part of copayments that would normally be owed constitutes a violation of the federal Anti-Kickback Statute. It is worth noting that improper waiver of copayment charges are rarely, if ever, brought in a case where it is the only criminal violation being alleged. Federal prosecutors tend to add this charge to the litany of other violations being alleged in a criminal health care fraud case.
- Making False Statements Relating to Health Care Benefits. 18 U.S.C. §1035(a)(2). In this case, the government has alleged that the defendant submitted a variety of false and fabricated records to Palmetto, its Medicare Administrative Contractor (MAC), in response to a claims audit. Palmetto’s audit included (but were not necessarily limited to) 27 claims for balloon sinuplasty services. One example cited by federal prosecutors is that the physician defendant and employees of her practice "altered existing documentation and created new documentation in support of the claims" before producing the records to Palmetto. The government contends that the defendant "created, and caused others to create, false and fictitious medical records and reports including, but not limited to, patient encounter notes and operative reports."
- Aggravated Identity Theft. 18 U.S.C. § 102A(a)(1). In order to bring a charge of "Aggravated Identity Theft" federal prosecutors must show that identity theft has taken place during, and in relation to one of approximately 60 federal felony white collar offenses. In this case, the predicate offense that has been alleged is violations of 18 U.S.C. §1035 (as discussed above, this relates to false statements related to health care matters). Federal prosecutors have further alleged that the physician defendant and her staff obtained patient signatures after the fact and backdated them to appear as though they had been in the patient’s medical records prior to the audit. The government alleges that the physician defendant further compounded the situation by directing one of her employees to notarize the signatures as though the patient signature had been obtained on the date of the patient encounter. These falsified records were then submitted to Palmetto in response to their audit request. Aggravated Identity Theft carries a 2-year mandatory prison sentence, consecutive to any other punishment that may be levied by the court in connection with other charges.
IV. Lessons Learned:
There are a number of important balloon sinuplasty / balloon dilation compliance lessons that can be learned from the administrative, civil and criminal cases brought so far in this ongoing law enforcement initiative:
- Always independently verify the medical necessity, documentation, coding and billing requirements of a medical device. Don’t assume that sales representatives know when a payor will find that the use of medical device is medically necessary. Similarly, a sales representative’s understanding of how a balloon sinuplasty procedure should be documented, coded and billed may or may not be correct. Have you checked to see if your MAC has issued Local Coverage Determination (LCD) guidance outlining Medicare’s requirements? Have private payors issued relevant guidance that needs to be reviewed?
- Don’t use an FDA approved single use medical device with multiple patients. Misuse of a balloon sinuplasty / balloon dilation device can result in civil and / or criminal liability. Is the medical devise you are using at your practice only approved for single use or is multi-use permitted? Conduct your own review of the restrictions placed on a medical device by the FDA.
- Keep accurate records of your purchases. To the extent that a False Claims Act or criminal investigation of your sinus dilation claims is initiated by the government, one of the first things that the government will do is compare the number of claims your practice has billed to federal payors against the number of balloon sinuplasty devices your practice has actually purchased.
- Take audits and investigations seriously. Please remember – there is no such thing as a “random audit". If your ENT practice receives an audit request from a MAC or a UPIC or an investigative inquiry from the OIG or the DOJ, it is essential that you contact qualified health law counsel to assist you in responding to the audit or investigation.
Is your ENT practice currently being audited or investigated? If not, now is the time to get ahead of any problems that may be present and initiate corrective action to address any deficiencies that have been noted.
To the extent that a balloon sinuplasty / balloon dilation audit has already been initiated, we recommend that you engage experienced legal counsel to represent you. Liles Parker attorneys have extensive experience and expertise representing physician specialty practices around the country in audits and investigations. Many of our health law attorneys are also Certified Professional Coders (CDCs) and / or Certified Medical Reimbursement Specialists (CMRSs). Questions? Give us a call for a free consultation. We can be reached at: 1 (800) 475-1906.
Robert W. Liles, Esq. is Managing Partner at the health law firm, Liles Parker PLLC. With offices in Washington, DC, Houston, TX, and Baton Rouge, LA, our attorneys represent ENT physicians, their practices and other health care providers around the country in connection with payor claims audits and law enforcement investigations. Should you have any questions, please call us for a free consultation. Robert can be reached at: 1 (800) 475-1906.
-  Cedars Sinai Sinus Center. https://www.cedars-sinai.org/health-library/diseases-and-conditions/b/balloon-sinuplasty.html
-  Medicare Program Integrity Manual, Chapter 2, Section 2.4.C. – Primary Sources of Data.
-  Medicare Program Integrity Manual, Chapter 4, Section 4.2. – The Medicare Program Integrity.
-  Section 501 of the FD&C Act provides, in part, that a drug or device shall be deemed to be adulterated:
“(a)(1) If it consists in whole or in part of any filthy, putrid, or decomposed substance; or
(2)(A) if it has been prepared, packed, or held under insanitary conditions whereby it may have been contaminated with filth, or whereby it may have been rendered injurious to health; if it includes any filthy, putrid, or decomposed substance, or if it is prepared, packed, or held under unsanitary conditions. . . “
-  Under 18 U.S.C. § 1035(a)(2), in any matter involving a health care benefit program, if a person:
"makes any materially false, fictitious, or fraudulent statements or representations, or makes or uses any materially false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry in connection with the delivery of or payment for health care benefits, items, or services, shall be fined under this title or imprisoned not more than 5 years, or both."
-  For a detailed discussion of the differences between "Identity Theft" and "Aggravated Identity Theft", please see our article titled "What is Aggravated Identity Theft?"