Alleged medical supply scam could cost Medicare $2 billion

A massive spike in billing for at-home catheters led to the discovery of an alleged scam that cost Medicare as much as $2 billion. The increased billing would account for nearly one-fifth of all Medicare spending on medical supplies in 2023.

Seven high-volume suppliers went from billing 14 to more than 400,000 patients over a two-year period, according to the National Association of Accountable Care Associations. The accounts of more than 450,000 Medicare beneficiaries were billed for urinary catheters in 2023, up from about 50,000 in previous years.

Doctors, state insurance departments and health-care groups around the country said the large increase in claims for catheters that were never delivered suggested a far-reaching Medicare scam. “We think it’s outrageous,” said Clif Gaus, the association’s president.

Dara Corrigan, who runs Medicare’s Center for Program Integrity, declined to say whether the agency was investigating the catheter billings. When the federal government suspects fraud, she said, it sometimes holds payments in escrow while it reviews the claims. However, she would not say whether that had happened for any of the catheter payments.

Catheters and other medical supplies are frequent targets of billing schemes. Last April, the federal government brought criminal charges against 18 defendants who had submitted bills for nonexistent coronavirus tests and other pandemic-related services. In 2019, the Department of Justice said it had broken up an international fraud ring involving more than $1 billion in phony billing for back and knee braces.

Medical supply companies are easy to set up and have a relatively low bar for proving medical necessity. The companies “don’t need much to show why grandma needs a urinary catheter,” said Eva Gunasekera, who previously led health-care fraud investigations at the Department of Justice.

Patients who have been reporting mysterious claims of billing for catheters that they never ordered or received to Medicare for months said they are frustrated by a lack of communication from the government about whether billions of dollars have been lost to an ongoing billing scam.

The vast majority of the suspicious claims identified by the new analysis came from seven companies, many of which have shared executives, according to public documents and the advocacy group’s report. It’s unclear how the catheter companies obtained the Medicare accounts of so many people. Some patients said they previously had received phone calls asking for their Medicare identification number, and others said they had not received any calls but suspected that their names were obtained through data breaches.

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“Where do you get half a million Medicare beneficiary names and ID numbers?” Glaus told the Washington Post.. “There has to be a breach somewhere in the health-care system.”