CMS Officials Pressed on Catheter Fraud Issue at Accountable Care Meeting

The Centers for Medicare & Medicaid Services (CMS) officials speaking on a panel at an annual gathering of accountable care organizations (ACOs) in Baltimore were prepared to discuss their efforts to increase participation in Medicare ACOs. But that wasn’t the only thing the audience wanted to talk about.

“I want to pivot to the elephant in the room for everybody here, which is the DME [durable medical equipment] catheter issue,” Clif Gaus, ScD, president and CEO of the National Association of ACOs (NAACOS), said to the officials toward the end of the discussion. “I know you’re limited in what you can say to me, but I think our fundamental question is, ‘Is CMS going to come up with a solution to mitigate the potential losses to our members, and when are we likely to see that?'”

Gaus, one of the organization’s co-founders — who also announced his retirement at the meeting — was referring to an alleged fraud ring that may have scammed Medicare out of as much as $2 billion in payments for catheters that were never ordered or delivered, according to a story in the Washington Post. At least 10 companies were linked to an unexplained surge in bills for the catheters. The devices normally cost Medicare about $150 million annually, but that figure jumped starting in late 2022, according to the story, which credited NAACOS with helping to identify the fraud.

“I know that the DME fraud issue is front and center in all of your minds,” replied Meena Seshamani, MD, PhD, director of the agency’s Center for Medicare. “We are absolutely exploring and looking into the latest DME fraud, with that mindset of how can we make sure that together we are enabling good stewardship of the Medicare program.”

Liz Fowler, PhD, director of the Center for Medicare & Medicaid Innovation (CMMI), said she heard about the catheter fraud “from my father, who called me and said, ‘There’s $18,000 in catheter charges that I didn’t receive, because I was out of the country during this time.’ … There’s a lot of abuse in Medicare. And I think we’re taking all of that into account as we think about what the future should look like. But you [ACOs] are the canaries in the coal mine” for alerting the agency to the problem.

The issue came up again during the question-and-answer session. “We really appreciate all that you work on, but the DME erroneous billing is a lot bigger than what you described,” said a man who identified himself as “David” from Palm Beach ACO. “We went from $62 million in the [Medicare] Shared Savings [Program] — the most in the program — all the way down to $45 million, due to $50 million of erroneous [DME] fraud starting in 2020.”

“We submitted 39 submissions to CPI [Medicare’s Center for Program Integrity] and the OIG [HHS Office of Inspector General]; we sent 800 signed patient attestations, but our providers paid for the fraud — it wasn’t the trust fund, it wasn’t the taxpayers, it was our providers working hard in your programs,” he said.

As a result of the fraud, the Palm Beach ACO had very embarrassing financial results, David added. “Everybody questioned our organization: ‘Why are you guys failing?’ We laid off 15% of our staff,” he said.

“So we just kindly ask that you address the issue with the higher urgency, because it really hurts all of us in the room,” he concluded, to loud applause.

Seshamani seemed to hint that some action might be forthcoming, saying that although “we cannot talk about what might be coming out in rulemaking, we have really appreciated all of the input that we have gotten from everyone. We very much understand what a serious issue this is … This is key for all of us to drive towards good stewardship of the Medicare program, and we are absolutely exploring this further.”

The issue appears not to be limited to catheter spending either, according to Gaus. He read aloud messages from members of an ACO listserv complaining about extraordinarily high equipment and supply charges. One listserv member in the Phoenix area wrote that “We tried to reach the company but their listed address is only a rent-by-the-hour space and they’re not returning our phone calls. We have over $7 million in spend on four patients in the last 4 months.” A listserv member in Colorado responded that they had seen something similar, adding, “The per-patient billing is astronomical. It can literally be a million dollars for a single patient.” The same person mentioned a supplier charging for a large square of artificial skin for a small wound requiring much less.

“We are hundreds and thousands of people scrutinizing those claims every month,” Gaus said, “but I think just reporting individually to OIG or to CPI — it’s not enough. There needs to be some more vibrant mechanism so that not only we’re sure we’re being listened to, but that we know what the status is of things. So I’ll make that plea.”

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