UNH UnitedHealth Group Inc

By Gretchen Morgenson 

United Healthcare, one of the nation's largest insurance companies, has determined that amniotic tissue products made by MiMedx Group Inc. and other manufacturers are "unproven and/or not medically necessary for any indication," and won't reimburse patients for their use, according to the insurer's most recent medical policy update bulletin.

The updated policy at United Healthcare, which goes into effect Oct. 1, came about because of "insufficient clinical evidence of safety and/or efficacy in published peer-reviewed medical literature" about the products, the bulletin said.

"Due to limited studies, small sample sizes, and weak study designs, there is insufficient clinical evidence to conclude that these skin substitutes have an improved health outcome over standard therapies; well-designed, randomized comparative clinical trials are needed to demonstrate the efficacy and safety of these products," United Healthcare said.

"Unlike many other insurers, UnitedHealthcare has not covered MiMedx products, so this does not represent a change in coverage," said a MiMedx spokesman. "We look forward to continuing to build on our compendium of clinical studies to help gain coverage in the future."

The products, which include wound patches and injectable products made of amniotic tissue, have been aggressively promoted to treat a variety of ailments, including erectile dysfunction, osteoarthritis and hair loss.

The decision by the giant insurer, whose parent company is UnitedHealth Group Inc., hasn't been publicly reported and coincides with a similar policy change by Health Care Services Corp., the parent of Blue Cross/Blue Shield operations in five states.

On Aug. 1, Health Care Services said it wouldn't reimburse patients for injectable amniotic-tissue products, saying they are experimental and investigational. It also said it would limit reimbursement for wound patches made from the material.

After The Wall Street Journal reported on that change, MiMedx issued a news release Wednesday saying the company "continues to build its compendium of clinical studies, including numerous randomized controlled studies, to support the use of EpiFix," an amniotic skin graft.

Once a highflying health-care company, MiMedx is facing an array of woes. It is in the process of restating its financial results back to 2012, and its founder, Parker H. "Pete" Petit, has been removed as chief executive, although he remains on the board. Its shares, which peaked at nearly $18 earlier this year, have fallen to below $4.

The company prospered after it acquired a seller of treatments in 2011 meant to heal wounds more quickly. The products, made from placentas from women who have given birth by caesarean section, were lightly regulated and relatively inexpensive to make.

MiMedx takes the amniotic membrane -- thin, moist tissue that protects the fetus -- and processes it into wound patches or grinds it into a powder that can be applied topically or by injection.

A recent Wall Street Journal investigation detailed allegations by former employees that MiMedx improperly booked revenue when it shipped goods, rather than when the products were used. Its practices are under investigation by the Justice Department, the Department of Veterans Affairs and the Securities and Exchange Commission.

The Marietta, Ga.-based company has said its board's audit committee is conducting an independent investigation into "certain sales and distribution practices and other matters" and that it is cooperating fully with regulatory agencies, but didn't elaborate.

Write to Gretchen Morgenson at gretchen.morgenson@wsj.com

(END) Dow Jones Newswires

August 15, 2018 20:43 ET (00:43 GMT)

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