New Nerve Test, a Moneymaker, Divides Doctors

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New Nerve Test, a Moneymaker, Divides Doctors

Dr. D. England says NC-stat is being " utilized by physicians

who are not qualified to do these tests. "

http://www.nytimes.com/2006/10/20/business/20device.html?

ex=1318996800 & en=9abab5e97d39012d & ei=5088 & partner=rssnyt & emc=rss

By REED ABELSON

Published: October 20, 2006

For many doctors, it's an irresistible pitch: a $250 profit from a

15-minute test.

With that lure, some 12,000 of the nation's physicians have

purchased an automated device that checks patients for nerve

disease. Such a diagnosis might otherwise require extensive testing

by specialists.

Indeed, many neurologists, who stand to lose money and patients from

the growing popularity of the device, say that the general

practitioners who use it are not always capable of discovering the

true cause of a patient's symptoms. Some insurers and other doctors

also have qualms about use of the automated test to diagnose

possible nerve damage.

One neurologist cites an extreme case, in which a general

practitioner diagnosed arm numbness as carpal tunnel syndrome but

missed the main cause: a brain tumor.

The system, made by a company called Neurometrix, " is being marketed

to and utilized by physicians who are not qualified to do these

tests, " said Dr. D. England, a neurologist at the Billings

Clinic in Montana who is also an officer for a national professional

society of specialists and was the doctor who discovered the brain

tumor.

The popularity of Neurometrix's nerve-testing system, called the NC-

stat, speaks to the zealous sales practices that some makers of

medical devices employ to build the largest possible market for

their products. The company's marketing is the subject of an

investigation by federal regulators, with which the company says it

is cooperating. But the product's success among general

practitioners — the company's primary customers — also touches on a

more fundamental fact of the American health care system. Medicare

and other insurers tend to pay doctors much more for performing

diagnostic tests and other billable procedures than for spending

time talking with patients about their symptoms and figuring out how

best to treat them.

" NC-stat is a Billable Procedure, " says one slide in a Neurometrix

marketing DVD obtained by The New York Times.

A worksheet prepared by one former Neurometrix salesman,

labeled " CONFIDENTIAL OPPORTUNITY, " showed how a doctor could

realize an annual profit of $46,588.80 by testing 10 patients a

week.

" The doctor's making margin, the company's making money, " said the

former salesman, who shared the document and spoke only on condition

of anonymity.

For physicians, who might be able to bill only $80 or so for a

routine 30-minute office visit, Neurometrix's promise of a profit as

high as $250 for 15 minutes, is compelling. So was a customer-

referral program in which physicians could receive hundreds of

dollars in free products for steering other doctors to Neurometrix.

Dr. Shai N. Gozani, Neurometrix's founder and chief executive, said

he could not comment on the specific marketing materials but said

the company was " very ethical. "

And he said the company's marketing efforts stressed the medical

over the monetary. " I think our messaging to physicians is clinical

first, " Dr. Gozani said.

Neurometrix says there is no evidence that doctors are using the

tests inappropriately and that, on average, they are testing only a

handful of patients a month.

" By no means do we believe this is a replacement for neurologists, "

said Dr. Gozani, who said the doctors referred patients to

specialists whenever necessary.

The company says it plans within the next six months to publish

research on how doctors are using the test, based on their

experience with thousands of patients.

While Medicare and many insurers are paying for the Neurometrix

test, other insurers have rejected it as unproven or are now having

second thoughts about covering it.

And a Chicago surgeon, to whom doctors have referred cases based on

Neurometrix exams, also says he is wary of the diagnoses.

Whenever carpal tunnel syndrome has been found with a Neurometrix

test, " it always makes me more uncomfortable, " said the surgeon, who

noted that he sometimes referred such patients to a neurologist to

rule out more complex problems. The surgeon insisted on anonymity

for fear of offending doctors who refer patients to him.

General practitioners who have purchased the device, which sells for

around $5,000, say they are qualified to use it. The test is

generally used to check for signs of nerve damage associated with

carpal tunnel syndrome, diabetes or low-back pain. The company says

the system enables patients to be screened more quickly, and to

start treatment sooner, than if they must wait to be seen by

specialists.

Since the Food and Drug Administration approved the NC-stat in 1998,

the company estimates that more than 500,000 patients have been

tested with the system, in which biosensors are attached to the skin

to stimulate nerves, and a hand-held device records the results. The

doctor can transmit the readings to the company and within minutes

receive the findings by a fax or e-mail message.

The device is " a good revenue maker, " said Poole, a manager at

the family practice Colstrip Medical Center in Montana, but, he

added, " we don't want to abuse it. "

Neurometrix, a small medical device maker with billion-dollar

ambitions, says that its system has removed much of the complexity

inherent in traditional neurology exams.

" We've put that technology in the hands of all physicians, allowing

them to replicate the diagnostic accuracy of the specialist, " Dr.

Gozani told financial analysts and others at a recent meeting.

Dr. Gozani, a medical doctor with advanced degrees in biomedical

engineering and neurobiology, said the company's device

represented " a new standard of care. "

Still, some former employees and Neurometrix's own sales materials

portray a company willing to go to great lengths to sell its device.

In May, Neurometrix said the Department of Health and Human Services

had issued a subpoena for documents from the company in connection

with potential kickbacks and possible fraud against the federal

government. The company offered no further details, and federal

regulators declined to comment.

Several former employees and Neurometrix documents also describe a

program to reward physicians who are already customers, if they find

other doctors who will purchase the system. The company gave away

boxes of the disposable biosensors that are used with the system —

which Neurometrix typically sells to the doctor for around $200 a

box.

" Allow us to thank you for your loyalty, " reads a document from this

year. If a prospective customer agreed to meet with a sales

representative, the referring doctor got one box of sensors — and a

second if the prospect became a customer.

Giving doctors something of value for referrals is an industry

practice that can potentially violate federal antikickback laws,

said Bruce A. Levy, a lawyer in Newark who used to work for the

United States attorney there.

Dr. Gozani said the giveaway program had been " extremely small, "

involving a tiny fraction of the sensors the company sells. He said

Neurometrix had recently stopped it, but declined to comment

further.

Neurometrix, based in Waltham, Mass., is eager to please Wall Street

and investors with fast growth. The company went public in 2004.

Sales last year doubled, to $34 million, and are expected to be $55

million or so this year.

Neurometrix cites numerous studies, written up in medical journals,

that compared its nerve tests with traditional methods and found

them just as accurate.

Medicare and many other insurers, including some Blue Cross/Blue

Shield plans, have paid for many of the tests. But some large

insurers, including Aetna and Cigna, say they do not generally cover

the Neurometrix test because there is inadequate clinical evidence

to support it. Cigna says it is reluctant to cover a new test when

there are existing methods that have proven reliable in making a

diagnosis.

The federal Medicare program leaves the coverage decision to the

nearly 20 regional insurers that oversee payments to physicians.

Some of these regional Medicare offices are currently reviewing

their coverage policies on the Neurometrix test.

Physicians using the device have not told the company they are

having trouble getting reimbursed for the tests, Dr. Gozani said.

But doubts about insurance coverage have contributed to the

volatility of Neurometrix's stock price in recent months. Short-

sellers — investors who bet that a stock's price will fall — have a

large position in the stock.

The debate within the medical community has been muted in part by

letters from Neurometrix threatening legal action against some

doctors who criticized its technology.

One target was the Arizona Neurological Society, after its Web site

posted a sharp critique, according to the society's president, Dr.

Terry D. Fife. The critique claimed that the Neurometrix system

produced " results that may be misleading or even wrong " and

suggested doctors " are likely to use it excessively for the sole

purpose of generating income. "

Dr. Fife said he received a threatening letter in August from the

company's lawyers, saying questions about the test's accuracy

were " unsubstantiated innuendo. " If the Web site continued to post

the commentary, the letter said, the society would risk " legal

claims both for violations of the antitrust laws and for defamation

and for miscellaneous other intentional torts. "

Dr. Fife said that he removed the critique and that the society did

not plan to publicly comment on the technology again, because it did

not want to risk a lawsuit.

The company says it has sent letters only in isolated cases. " We are

by no means trying to limit the discussion, " Dr. Gozani said.

For some health policy analysts, the popularity of such procedures

illustrates why primary care doctors should be paid more for basic

office visits and less for money-making procedures. Earning $250

from a diagnostic test " is obviously out of line with what

physicians can earn from office visits, " said Ginsburg, the

president of the Center for Studying Health System Change, a

Washington research group.

But many primary care doctors, including family physicians, defend

their adoption of the Neurometrix test and say they are not

overusing it.

" Family physicians can safely and reliably administer the tests, "

said Dr. Lehman, an official with the Ohio Academy of Family

Physicians, which has been fighting efforts by the Medicare

administrator in that state to curtail use of the tests. " It's more

convenient for the patients, " he said, " and it's quicker. "