Employers Adding Stem Cell Options to Insurance Plans

By Liz Szabo, Kaiser Health News

A Midwestern grocery chain, Hy-Vee, is taking an unusual approach to reducing health care costs. Before employees in certain cities can undergo knee replacement, they first must visit a stem cell provider.

Hy-Vee has contracted with one of the United States’ leading stem cell companies — Regenexx, based in Des Moines, Iowa — that claims injections of concentrated bone marrow or platelets can help patients avoid expensive joint surgery.

Regenexx has persuaded over 100 employers to include its services in their health insurance plans. In a marketing booklet, Regenexx, whose injections range in price from $1,500 to $9,000, notes that its treatments cost a fraction of major surgery.

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A single knee replacement ranges from $19,000 to $30,000 in the U.S.

Health insurance typically doesn’t cover stem cell injections, with the exception of certain accepted treatments, such as bone-marrow transplants for cancer and aplastic anemia.

Aetna, the United States’ third-largest health insurer, dismisses stem cells and platelet injections as experimental; Anthem, the country’s second-biggest health insurance provider, classifies the injections as “not medically necessary.” Without insurance coverage, patients are forced to pay out-of-pocket or forgo treatment.

So instead of dealing with disapproving insurance executives, Regenexx appeals directly to employers large enough to fund their own health plans. These businesses have the freedom to customize their plans, covering services that aren’t part of a standard insurance package.

In a statement, Regenexx said its goal is to “replace more invasive surgical orthopedics” with nonsurgical options, noting that recent research has found many joint operations are ineffective. On its website, Regenexx claims its procedures “repair and regenerate damaged or degenerated bone, cartilage, muscle, tendons, and ligaments.”

In a bone marrow stem cell procedure, for example, a doctor withdraws bone marrow cells from a patient’s hip, concentrates them, then reinjects them into a problem area, such as an arthritic knee. Doctors target the exact location in the joint using ultrasound. For a “platelet-rich plasma” treatment, doctors draw blood, concentrate the platelets, then inject them into the target area.

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Regenexx, previously known as Regenerative Sciences, is one of the oldest stem cell companies in the U.S. When it opened its doors in 2005, it had only a handful of competitors.

Today, there are more than 1,000 stem clinics in the U.S., said Leigh Turner, an associate professor at the University of Minnesota’s Center for Bioethics, who has published a series of articles describing the stem cell market.

At times, Regenexx has clashed with the Food and Drug Administration. In 2010, for example, Regenexx sued the FDA, claiming the agency lacked the authority to regulate its procedures, which involved culturing stem cells before reinjecting them into patients. Regenexx lost its case and was countersued by the FDA, which charged that Regenexx was marketing an unapproved drug. In 2014, the U.S. Court of Appeals in Washington sided with the FDA, forcing Regenexx to stop performing the controversial procedures.

Today, Regenexx performs this procedure only in the Cayman Islands, where the government allows it. The Cayman Islands, where there is less government regulation of health care, has become known as a medical tourism destination, Turner said.

Regenexx says that the treatments offered at its U.S. clinics comply with FDA regulations, which require that cells injected into patients undergo no more than “minimal manipulation.”

On its website, Regenexx lists more than two dozen studies led by its doctors. For example, its chief medical officer, Dr. Chris Centeno, published a small study last year that found patients with knee arthritis who received bone marrow and platelets fared better than those randomly assigned to exercise therapy.

Other research suggests stem cells and platelets may work no better than placebos. In a recent analysis, over 80% of patients with knee arthritis experienced a noticeable improvement in pain after receiving simple saltwater injections.

There’s also no definitive evidence stem cells and platelets can regrow lost cartilage. A 2018 review concluded platelets have “marginal effectiveness,” and experts note that most published studies are so small or poorly designed that their results aren’t reliable.

Corporate Boosters

Corporate executives have become some of Regenexx’s biggest boosters. Hy-Vee’s former chairman and CEO, Ric Jurgens, appears in a Regenexx marketing brochure and says that he turned to Regenexx because of heel pain. The brochure, which was removed from a Regenexx website after Kaiser Health News began reporting this story, quotes Jurgens as saying, “I knew that giving our employees the chance to explore options besides surgery was in their best interest.”

Hy-Vee did not make Jurgens or other employees available to interview.

Perhaps Regenexx’s best-known corporate client is Des Moines-based Meredith Corp., which owns multiple TV and radio stations, as well as magazines such as Better Homes & Gardens.

Steve Lacy, Meredith’s former CEO and current board chairman, said he underwent a Regenexx procedure two years after his company began covering stem cell treatments. He had been facing knee surgery and thought stem cells were worth a try.

The procedure got him back to doing everything he wants to do, Lacy said, even running several days a week. He also has done daily physical therapy for over two years. “The rehab and recovery is far less onerous” with the Regenexx procedure than with surgery, Lacy said. “If the procedure doesn’t work for an individual, there’s no harm.”

Meredith has spent about $400,000 in four years on 85 employees who have had Regenexx treatments, or about $4,700 a patient, said Meredith spokesman Art Slusark. That’s a small share of the roughly $75 million a year that Meredith spends on its medical plan, he said.

At its headquarters, Meredith has promoted Regenexx procedures through email, posters and “lunch-and-learn” sessions in the office, said Jenny McCoy, Meredith’s corporate communications director.

McCoy herself has become a poster child for Regenexx’s benefits. She and two other Meredith employees appear with Lacy in a marketing video on the Regenexx site:

Although McCoy had begun to experience knee and hip pain during exercise, she said in an interview that her pain was not severe enough to need surgery. McCoy underwent platelet injections two years ago and is pain-free today, she said.

“I thought, ‘If Meredith is covering it, I might as well have it done early before [the pain] causes me too many problems,’” said McCoy, 52. Given the price tag, she said, “I would not have done it otherwise. I wouldn’t have even known about it.”

‘Very Pushy’ Marketing

Some employers are, in fact, skeptical. The Des Moines Public Schools has opted not to add Regenexx to its employee health plan, said Catherine McKay, director of employee services for the school system. She said a salesman for a local stem cell clinic, which has since merged with Regenexx, told her the treatments could save the school system lots of money. McKay wasn’t sold.

“My experience with them has not been great, in terms of marketing and sales. They’re very, very pushy,” McKay said. “They claim they can get people back to work earlier” than surgery. “But if I still need knee surgery a year down the road, that doesn’t cut my costs.”

The Des Moines school system has agreed to consider covering Regenexx procedures as part of its workers’ compensation program on a case-by-case basis, McKay said. The school system has not signed a contract with Regenexx, however, and hasn’t included Regenexx in its health plan.

McKay said she knows of two school employees who have tried Regenexx. While one employee was satisfied with the results, McKay said, another “went through a couple procedures and ended up needing surgery anyway.” 

In response, Regenexx noted that many patients who undergo knee surgery are also unhappy with the results. Research suggests that up to one-third of those who have knees replaced continue to experience chronic pain, while one-fifth report that they are dissatisfied with the results of their surgery.

Kaiser Health News, a nonprofit health newsroom whose stories appear in news outlets nationwide, is an editorially independent part of the Kaiser Family Foundation.