Experts say the suspected catheter fraud ring is another reminder that Medicare is an attractive target for fraudsters. The roughly $1 trillion agency has struggled for years to combat a cycle of fraudulent billing for durable medical equipment, and CMS leaders have called on Congress to provide them with additional resources to crack down on thieves.
Healthcare providers also called on the government to crack down on the companies, saying the alleged scheme could distort Medicare payments by making it appear as if doctors were ordering large quantities of catheters they didn’t need, distorting the way government reimburses providers.
“We’ve never seen anything of this scale and scope before,” said Cliff Gauss, CEO of the National Association of Accountable Care Organizations, which uncovered the fraud and drew public attention earlier this year. Several accountable care organizations — groups of hospitals and doctors that receive federal incentives to provide high-quality, low-cost care — said each organization could lose more than $1 million in payments if it doesn’t address the fraudulent claims.
The Washington Post first reported in February that the FBI and other government agencies had begun investigating the ring, sparking outrage among lawmakers about why potentially fraudulent claims had been allowed to go unpunished for months. Sen. Mike Braun (R-Ind.) and others have called on the Government Accountability Office to open an investigation into Medicare fraud and ask whether the agency needs to step up its prevention measures.
Federal authorities declined this week to confirm whether they were investigating the allegations, saying they did not want to jeopardize the investigative process. Officials also repeatedly refused to say whether any criminal charges had been filed or to provide details about how the alleged fraudsters obtained patient and provider data.
But in the proposed rule released Friday, CMS said its “investigation is ongoing and that it has taken initial actions accordingly.”
“We have notified law enforcement, recovered improper Medicare payments, and terminated certain suppliers from the Medicare program,” the agency added in the proposed rule. CMS also said it would change the payment formula for accountable care organizations, citing a surge in “significant, unusual and highly suspicious” claims related to urinary catheters. The changes will effectively protect organizations from a surge in catheter claims.
Medicare officials said this week that they separately confirmed that 11 companies were responsible for a combined $3.16 billion in questionable billing for urinary catheters between January 2023 and March 2024, and that the agency was successful in blocking payments to the companies.
The ACO said it has identified 12 companies allegedly involved in the fraudulent activities, which it said date back to late 2022 or even earlier.
Gauss, a 50-year veteran of the health care industry, said he was unaware of the scheme until Medicare overhauled its payment rules in response to the fraud allegations — a conclusion shared by several current Medicare officials who spoke to The Washington Post. Gauss warned that a similar plan was likely coming soon.
“These fraudsters could obtain patient and provider IDs and use AI to glean information from vast files of patient data collected from all over the place,” Gauss said.
Patients who fell victim to the scam said they remain confused and anxious about what it means for scammers to know their personal information.
“I’m really worried it’s going to get worse,” said Amy Rosenwasser, 70, a retired Chicago public school employee who called Medicare in December to report more than $6,000 in fraudulent charges for catheter supplies. She has yet to hear from authorities after reporting her allegations. “What if I don’t get my prescriptions filled?” Rosenwasser asked.
Victimized patients like Rosenwasser often go unanswered when they report suspected fraud, said Gabriel L. Imperato, a partner at the law firm Nelson Mullins and a former Department of Health and Human Services attorney. Medicare often focuses on cutting off payments to suspect providers rather than thoroughly following up on individual patients who report fraud.
“We don’t know what the outcome will be,” Imperato said. “It’s a tough move, but it’s the only way to avoid capital outflows.”