12.19.11
Trans1 Inc. certainly has had its share of challenges in 2011—a weak market for orthopedic procedures, disappointing quarterly earnings, and limited physician reimbursement for its AxiaLIF procedure. Now it looks as if the Wilmington, N.C.-based company is going to end the year on a (fittingly) difficult note, contending with an investigation from the federal government.
Trans1 received a subpoena earlier this fall from the Office of Inspector General (OIG) within the U.S. Department of Health and Human Services (HHS). The subpoena—issued under the authority of the federal healthcare fraud and false claims statutes—requested company documents from Jan. 1, 2008 through Oct. 6, 2011, according to a U.S. Securities and Exchange Commission (SEC) filing. The government’s False Claims Act pertains to those who knowingly submit or cause another person or entity to submit, false claims for payment of government funds. Inquiries often are related to a sealed whistleblower lawsuit. Sometimes (as was the case with bone stimulation manufacturers in 2009), the government uses subpoenas to gather information to settle reimbursement issues.
No claims have been filed against Trans1. The company is cooperating with the OIG’s request but executives have declined to comment further on the investigation or provide more details on the kind of information the government demanded. Such silence has fueled speculation about the nature of the subpoena and whether other spine firms received similar requests (none have heard from the OIG).
Though reimbursement issues have long been a thorn in the company’s side, Trans1 recently has been successful in convincing some large insurance carriers to cover its AxiaLIF procedure, a minimally invasive surgical approach that saves soft tissues such as muscles and ligaments from being cut during lower back repairs. The procedure is less risky and minimizes pain, according to the company.
Despite the breakthrough in reimbursement, Trans1’s third-quarter revenue fell 26 percent to $4.7 million and gross margin slipped 3.2 percent during the three-month period ended Sept. 30. Domestic revenue dropped 27.1 percent, though the company’s net loss slowed a bit to $3.3 million (compared with $3.8 million during the same quarter in 2010). “Our business continues to be impacted by challenging conditions in the spine market as well as the limited physician reimbursement for our procedure,” President and CEO Ken Reali said.
Trans1 received a subpoena earlier this fall from the Office of Inspector General (OIG) within the U.S. Department of Health and Human Services (HHS). The subpoena—issued under the authority of the federal healthcare fraud and false claims statutes—requested company documents from Jan. 1, 2008 through Oct. 6, 2011, according to a U.S. Securities and Exchange Commission (SEC) filing. The government’s False Claims Act pertains to those who knowingly submit or cause another person or entity to submit, false claims for payment of government funds. Inquiries often are related to a sealed whistleblower lawsuit. Sometimes (as was the case with bone stimulation manufacturers in 2009), the government uses subpoenas to gather information to settle reimbursement issues.
No claims have been filed against Trans1. The company is cooperating with the OIG’s request but executives have declined to comment further on the investigation or provide more details on the kind of information the government demanded. Such silence has fueled speculation about the nature of the subpoena and whether other spine firms received similar requests (none have heard from the OIG).
Though reimbursement issues have long been a thorn in the company’s side, Trans1 recently has been successful in convincing some large insurance carriers to cover its AxiaLIF procedure, a minimally invasive surgical approach that saves soft tissues such as muscles and ligaments from being cut during lower back repairs. The procedure is less risky and minimizes pain, according to the company.
Despite the breakthrough in reimbursement, Trans1’s third-quarter revenue fell 26 percent to $4.7 million and gross margin slipped 3.2 percent during the three-month period ended Sept. 30. Domestic revenue dropped 27.1 percent, though the company’s net loss slowed a bit to $3.3 million (compared with $3.8 million during the same quarter in 2010). “Our business continues to be impacted by challenging conditions in the spine market as well as the limited physician reimbursement for our procedure,” President and CEO Ken Reali said.