Arthrocare Billing Unit Draws Scrutiny

OKLAHOMA CITY -- When it comes to sports medicine, critics sayArthrocare (ARTC Quote) likes to play by its own set of rules.

Arthrocare runs an obscure division, DRS, that offers assistance to surgery centers that use the company's sports medicine devices. Specifically, Arthrocare says, DRS bills insurers for its devices under "established carve-outs" so that surgeons won't have to seek reimbursement for the devices themselves. Surgeons simply bill for the actual operations instead.

"Carve-out billing is pretty straightforward," Arthrocare CEO Michael Baker told TheStreet.com earlier this month. "There's nothing the least bit unusual about what DRS does." ...