This is one of the oddest stories I've seen in a year. Since it likely involves a lot of litigation, I'll focus on what MedPageToday has reported.
In a March 16, 2022, open access article (registration might be required) MedPageToday writes,
- Medicare Claws Back Money for Dubious Birth-Tissue Stem Cell Shots
- Government seeks to recoup more than 2 years of payments for unproven treatments
Possibly, the coverage could be related to the 21st Century Cures Act, which made it harder for MACs to create and revise LCDs. Possibly, CMS told MACs to pay claims with legal codes unless (1) they had bandwidth to stop the claim for manual review by clinical staff, or (2) they had an LCD on it. Lacking either, the codes may have autopaid at the time of submission. Autopay is common, for example, codes for office visits, or appendectomies, generally autopay. It sounds like these were "buy and bill" products, so the first line of recoupment is the doctor or clinic that billed Medicare, not the manufacturer.
I'm not sure how codes for stem cells etc would have been priced.