Abelson, Reed. "New Nerve Test, A Moneymaker, Divides Doctors," New York Times, 20
October 2006, pp. 1, C8.
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
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. John 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
The device is "a good revenue maker," said John 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
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
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 Paul 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. Keith 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."