Will Medicare and Medicaid End Up Paying For J&J's Hip Replacement Recall?

Drug giant Johnson & Johnson's subsidiary DePuy Orthopaedics recently issued a massive hip replacement recall of 93,000 hip implants.  DePuy now admits that the recalled hip implants have a failure rate of at least 13%, which means that more than 12,000 people will have to undergo a surgery to remove an replace the defective devices.

Who will pay for these surgeries, each which can cost $50,000 or more?  Government programs (Medicaid and Medicare) already have paid substantial costs to surgically remove the recalled hip replacement parts, and assuming $50,000 for each surgery, the total medical costs of DePuy's hip implant recall could exceed $600 million.  DePuy tells patients that these costs should be submitted to the patient's insurance company for payment.  In many cases, this will be the federal government through Medicare or the State governments through Medicaid system.

DePuy says that it will reimburse insurers for “out of pocket reasonable and customary expenses,” but it does not define what it considers “reasonable and customary.”  DePuy also has not disclosed the procedure for reimbursements or the criteria that will be used to deny reimbursements.  But DePuy’s recent arguments show that it might vigorously fight responsibility for reimbursements.  For example, DePuy recently accused patients who had to undergo a surgery to remove their recalled hip implant of being “negligent, careless, and at fault” and it argued that these patients’ “negligence, carelessness and fault” may bar them from recovering their damages from DePuy.

Last month, DePuy's lawyer wrote a letter to me and demanded that I stop telling the public that "both the insurance carriers and the government could end up paying for product liability expenses that would otherwise accrue to the manufacturer." [Letter from DePuy re: Hip Replacement Recall - PDF]

In response, I called on Johnson & Johnson and DePuy to “unconditionally guarantee that they will pay directly to hospitals and doctors all costs associated with every surgery to remove and replace the recalled ASR and ASR XL hip implants.”  [Letter to DePuy re: Hip Implant Recall Costs - PDF] DePuy has not accepted this pledge, leaving open the possibility that Medicare and Medicaid programs could end up being stuck paying costs associated with DePuy’s recall.

Tags: Medicare, Medicaid, hip replacement recall (all tags)

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