Experts said the alleged catheter fraud ring is just the latest reminder that Medicare is a tempting target for scammers. The roughly $1 trillion agency has long struggled to combat a stream of fraudulent claims for durable medical equipment, and CMS leaders have urged Congress to provide them with additional resources to crack down on would-be thieves.
Health-care providers also urged the government to clamp down on the companies, saying the alleged scheme threatened to distort Medicare payments by making it appear that doctors were ordering massive amounts of unnecessary catheters and skewing the government’s formula for reimbursing providers.
“We’ve never seen anything like this” in size and scope, said Clif Gaus, CEO of the National Association of Accountable Care Organizations, which helped uncover and spotlight the alleged fraud earlier this year. Several accountable care organizations — groups of hospitals and physicians that receive federal incentives to deliver high-quality, low-cost health care — said they could each lose more than $1 million in payments if the fraudulent bills were not addressed.
The Washington Post in February first reported that the FBI and other agencies had opened a probe of the alleged fraud ring, sparking anger from lawmakers who asked why potentially fraudulent claims had been allowed to continue for months. Sen. Mike Braun (R-Ind.) and colleagues asked the Government Accountability Office to open an investigation into Medicare’s anti-fraud efforts and whether the agency needed to ramp up prevention.
Federal officials this week refused to confirm whether they were investigating the allegations, saying they did not want to compromise the process. Officials also have repeatedly declined to specify whether criminal charges have been filed or share details about how the alleged fraudsters obtained patient and provider data.
But in a proposed rule issued Friday, CMS said an investigation was “ongoing, and we have taken initial actions in response.”
“We have made referrals to law enforcement, recouped improper Medicare payments, and terminated certain suppliers from the Medicare program,” the agency added in its proposed rule. CMS also said it would change its payment formula for accountable care organizations, citing the surge of “significant, anomalous and highly suspect” bills linked to urinary catheters. The change effectively protects the organizations from the spike in catheter bills.
Medicare officials this week separately confirmed that 11 companies were collectively responsible for $3.16 billion in questionable bills for urinary catheters between January 2023 and March 2024, saying the agency had successfully blocked payments to the companies.
The ACOs said they identified 12 companies engaged in the alleged fraud, which they say stretches back into late 2022 or even earlier.
Gaus, a 50-year veteran of the health-care industry, said he was not aware of Medicare ever before overhauling its payment rules in response to alleged fraud — a conclusion shared by several current Medicare officials who spoke with The Post. He warned that similar schemes are likely on the horizon.
“These fraudsters can get patient IDs, provider IDs, and maybe use AI to glean through these massive files of patient data that they collect from everywhere,” Gaus said.
Patients drawn into the alleged fraud said they remain confused and nervous about the implications of fraudsters knowing their personal information.
“I’m really worried that it’ll screw things up,” said Amy Rosenwasser, a 70-year-old retired public school teacher in Chicago, who called Medicare in December to report a fraudulent charge of over $6,000 for catheter supplies. She has yet to hear back from the agency after reporting the allegations. “What if I can’t get a prescription?” Rosenwasser asked.
Aggrieved patients — like Rosenwasser — often don’t get answers when they report fraud allegations, said Gabriel L. Imperato, a partner with the Nelson Mullins law firm and a former lawyer for the Department of Health and Human Services. Instead, Medicare often focuses on…
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