Ketamine Audits and Investigations are on the Rise! Are Your Ketamine Infusion / Injection Practices Compliant with the Law?

/ Medicare, Medicaid & Private Payor Updates / By

(October 10, 2024): Ketamine has been in the news again lately. . . for all the wrong reasons. In August 2024, Federal prosecutors out of the Central District of California announced the indictment of five individuals, including two physicians, who allegedly played a role in the fatal ketamine overdose of Matthew Perry in October 2023. The Matthew Perry case is merely the latest example highlighting the risks of ketamine misuse and abuse. In recent years, health care providers around the country have increasingly ordered and / or administered ketamine to their patients in connection with approved and a wide variety of off-label uses. As the use of ketamine has grown, both Federal and State regulatory and law enforcement agencies have ramped up audits and investigations of its utilization, coding, and billing to payors for reimbursement. In this article, we examine the current ketamine enforcement landscape and discuss steps you should take to reduce your level of risk.

I. Background of Ketamine Use:

Ketamine has been approved by the FDA for use as a general anesthetic - Liles Parker

Ketamine is the generic name for ketamine hydrochloride and falls within a class of drugs known as dissociate anesthetic hallucinogens.[1] Almost 60 years ago, the first clinical study of Ketamine being used as an anesthetic agent was published.[2] It was first used in veterinary settings as an anesthetic in 1963. It was subsequently patented for human use in 1966 and became available by prescription in 1969 under the trade name “Ketalar”. The U.S. Food and Drug Administration (FDA) initially approved ketamine for use in humans in 1970, and it was administered to soldiers as a field anesthetic during the Vietnam War.[3] Since that time, ketamine has been used in an off-label fashion to treat a number of health conditions. Unfortunately, it has also garnered a considerable illicit following and has a history of misuse due to its dissociative and hallucinogenic effects. Although illegal, ketamine has a long history of being used as a recreational drug and is sometimes referred to as “Special K.” The unauthorized possession or use of ketamine can result in fines and imprisonment.

II. Frequently Asked Questions Regarding Ketamine:

  • Is Ketamine an FDA Approved Medication?

    Ketamine has been approved by the FDA for use as a general anesthetic. It is administered intravenously or as an intramuscular injection. Ketamine has NOT been approved by the FDA for other medical indications. Nevertheless, the FDA has recognized that there has been significant interest in the use of ketamine for off-label conditions such as depression and chronic pain. Earlier this year, the FDA conducted a public meeting to explore the scope of approved ketamine use and other areas of emerging therapeutic interest.[4]

  • Is Ketamine Covered under the Controlled Substance Act (CSA)?

    Yes. In 1999,[5] an increase in the illegal diversion and abuse of ketamine led the Drug Enforcement Administration (DEA) to have ketamine classified as a Schedule III drug[6] under the CSA. Ketamine is specifically listed as a Schedule III drug under 21 C.F.R. §1308.13(c)(7).

  • Are Any Compounded Ketamine Products FDA Approved?

    The FDA does not confer approval for any compound drugs, including compounded ketamine products. Essentially, this means that the FDA has not verified “the safety, effectiveness or quality of compounded drugs before they are marketed.”[7] Since the FDA has not approved any compounded ketamine products, both prescribing providers and their patients must carefully assess the risks of using these products. Despite the risks presented, the FDA is aware that compound ketamine products are widely marketed for the treatment of psychiatric disorders (including, but not limited to, depression, anxiety, post-traumatic stress disorder (PTSD), and obsessive-compulsive disorder).[8]

  • Can Ketamine be Prescribed for Off-Label Uses?

    While ketamine is an FDA-approved medication, the ONLY approved indication for ketamine is as a general anesthetic. Nevertheless, ketamine has been prescribed by providers around the country for the treatment of a number of unapproved, off-label uses ranging from psychiatric disorders to pain management.

  • What is Spravato?

    Esketamine (also known by its brand name “Spravato”) is a nasal spray medication that has been approved by the FDA to treat depression. Spravato is a derivative of ketamine that was first approved by the FDA in 2019. In contrast to ketamine, the FDA considers Spravato to be safe for use when caring for patients suffering from major depressive disorder.[9]

III. Federal and State Audit and Enforcement Actions Involving Ketamine:

In recent years, both Federal and State audits and investigations of ketamine infusions / injections and the related medical claims submitted to payors have greatly expanded. Depending on the facts, prescribing providers may be subject to State Medical Board investigations, DEA investigations, and payor audits. Depending on the facts, violations can lead to civil and / or criminal liability. Examples of these matters are outlined below:

  • CMS Contractor Audits of Ketamine Claims.

    Neither National Coverage Determination (NCD) nor Local Coverage Determination (LCD) guidance covering the coverage and payment of ketamine claims has been issued. Nevertheless, that does not mean that ketamine infusion and treatment services have avoided payor scrutiny. Medicare Administrative Contractors (MACs) and Unified Program Integrity Contractors (UPICs) are actively conducting administrative audits of ketamine-related services and claims.

  • State Medical Board Disciplinary Actions Involving Ketamine.

    Prescribers of ketamine must ensure that all applicable state licensure obligations are fully met. Positions taken by State Medical Boards in response to ketamine-related complaints have varied from state to state. The North Carolina case discussed below illustrates several of the concerns raised in State Medical Board matters.

    North Carolina. In this case, an Arizona-based physician practiced telemedicine from a location in Tucson, Arizona. The physician was properly licensed in a number of states, one of which was North Carolina. Last year, the North Carolina Medical Board received a complaint from a North Carolina patient who was prescribed ketamine during a telehealth appointment held with the physician. The Board subsequently obtained the medical records of three additional patients prescribed ketamine by the remote physician. Upon review, the Board found that:

    • The physician failed to conduct urine drug screens prior to prescribing ketamine to patients.
    • The physician failed to conduct and document a thorough physical exam and comprehensive medical history from the patients before prescribing ketamine.
    • The physician failed to ensure that once ketamine was prescribed, a clear protocol was in place for patient monitoring, follow-up visits, and the assessment of side effects and adverse reactions.
    • The physician failed to establish guidelines for prescribing, dispensing, and monitoring the use of ketamine to prevent its misuse.

    Based on this improper conduct, the physician was reprimanded, was required to complete continuing medical education, and was restricted / prohibited from prescribing ketamine and any other drug that may contain ketamine.

  • DEA Registration Revocation Case Involving Ketamine.

    As previously discussed, ketamine is a Schedule III drug and is covered under the CSA. As such, it can only be prescribed by a qualified, licensed medical professional who is a DEA Registrant. Additionally, it can only be administered in a DEA-registered location. Providers regularly run afoul of these regulations. An example of a recent DEA Certificate of Registration revocation case is outlined below:

    Washington. This case arose after complaints were received by the Washington Department of Health (Washington State) alleging that a number of dental patients receiving conscious sedation at a periodontics clinic had been administered expired Fentanyl and Ketamine. An Investigator of the DEA subsequently conducted an on-site inspection of the registered location. Various violations were documented during the inspection, one of which included the fact that the Registrant of the DEA number had been permitting a dentist operating within his office to use his DEA license number. Based on statements made by the Registrant to both Washington State and DEA Investigators, the government alleged that the Registrant had ‘‘turned a willful blind eye to the diversion of controlled substances you obtained using your own DEA Certificate of Registration.’’ As a result of this conduct, the DEA revoked the Registrant’s DEA Certificate of Registration.

  • Criminal Prosecutions Involving Ketamine.

    Texas. In this criminal case, the defendant (the owner of two pharmacies) was convicted of conspiracy to distribute Ketamine, money laundering, and conspiracy to commit wire fraud. The defendant was sentenced to 14 years in prison for her lead role in a scheme involving the improper billing of creams containing Ketamine without valid prescriptions. According to the government, one of the defendant’s pharmacies paid a physician and nurse practitioner thousands of dollars per month to pre-sign prescription pads without examining patients. At the defendant’s sentencing hearing, the Court heard additional evidence that one of the individuals who received the creams died from Ketamine and Cyclobenzaprine toxicity. Both substances were active ingredients in the creams marketed and sold by the defendant. Under the direction of the defendant, the two pharmacies falsely billed insurance companies for more than $17 million in just two years.

    Missouri. Earlier this year, two St. Louis physicians were charged with conspiracy to illegally distribute controlled substances, maintaining a drug-involved premises, conspiracy to commit health care fraud, illegal distribution of a controlled substance, and making false statements related to health care matters. According to the government:

    • Physician #1 was, in fact, a DEA Registrant and was authorized to administer controlled substances, including ketamine, as long as the ketamine was being administered in a DEA-registered location. Physician #1 was also enrolled in the Spravato Risk Evaluation and Mitigation Strategy Program (REMS), which authorized him to administer the prescription esketamine nasal spray Spravato.
    • Physician #2 did not have a DEA registration. Therefore, Physician #2 was not authorized to administer ketamine and / or Spravato unless he was being directly supervised by a practitioner with a DEA registration, and the administration took place at a DEA-registered location.

    According to the indictment, Physician #1 and Physician #2 agreed that Physician #2 could use Physician #1’s DEA registration number to administer ketamine infusions and bill Medicare for services provided by Physician #2. In doing so, the government alleges that Physician #2 defrauded Medicare when he falsely used Physician #1’s name and Medicare billing number to bill for health care services. The government further alleged that Physician #2 illegally administered intravenous ketamine and a nasal spray version of the drug without authorization. This case remains ongoing.

IV. Responding to an Audit or Investigation of Your Utilization of Ketamine.

Should you receive notice of an audit or investigation of ketamine services or claims, we recommend that you call a health law attorney who is experienced in handling these specific types of cases. Liles Parker attorneys have extensive experience representing health care providers and their practices in administrative, civil, and criminal health care cases, including those alleging the improper administration of ketamine. Are your ketamine infusion or treatment services being audited or investigated by the government? For a complimentary consultation regarding your case, please give us a call at 1 (800) 475-1906

Meaghan McCormick - Senior Associate - Liles Parker

Meaghan DeBenedetto is Senior Associate at Liles Parker. She is an experienced health care attorney. Meaghan also holds certifications as a Certified Reimbursement Specialist (CMRS) and a Certified Professional Coder (CPC). Meaghan’s practice is concentrated exclusively on health care law and particularly on the appeal of claim denials, regulatory guidance, and compliance planning. Meaghan has represented providers in connection with audits of ketamine-related claims and infusion services. Are your ketamine infusion services being audited or investigated? Call an attorney who regularly handles these types of appeals. Give Meaghan a call at: (202) 298-8750 or 1 (800) 475-1906. She can also be e-mailed at mdebe@lilesparker.com.