NAACOS praises CMS proposed rule on accounting for alleged catheter billing fraud

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Allegations of fraudulent billing for catheters in 2023 will not affect calculations when Medicare analyzes financial performance of accountable care organizations (ACOs).

The U.S. Centers for Medicare & Medicaid Services (CMS) has opened a 30-day public comment period on its “Proposed Rule on Mitigating the Impact of Significant, Anomalous, and Highly Suspect Billing Activity on Medicare Shared Savings Program Financial Calculations in Calendar Year 2023.” The proposed rule “is part of a larger strategy to address significant, anomalous, and highly suspect (SAHS)” billing within ACO reconciliation, according to CMS.

ACOs respond

The rule is potentially good news for the ACOs, some of which were the first to alert CMS about the catheter billing that has prompted a federal investigation. National Association of Accountable Care Organizations (NAACOS) President and CEO Clif Gaus, ScD, issued a statement supporting the CMS announcement of June 28.

“NAACOS applauds CMS for implementing stakeholder recommendations to hold ACOs harmless for significant anomalous and highly suspect catheter expenditures in 2023,” Gaus said. “This ensures that clinicians, hospitals, other healthcare providers, and ACOs can remain in the models and are not unfairly penalized.

“As part of their efforts to promote high quality and efficient care, ACOs quickly discovered higher spending and reported suspected fraud,” Gaus said. “It is through these efforts that ACOs serve as a steward of the Medicare program. We look forward to working with CMS to establish permanent policies that will address future instances of fraud, waste, and abuse, as well as streamline the process for identification and reporting.”

More information will come out in the Medicare Physician Fee Schedule. Comments can be submitted at regulations.gov and should include the file code CMS-1799-P.

Codes involved

The CMS announcement was the latest public pronouncement about a situation that came to light earlier this year.

As CMS describes it, the federal regulators recently observed an increase in durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) billing for intermittent urinary catheter supplies in calendar year 2023. If unaddressed, the billing could affect the accuracy, fairness and integrity of the financial calculations of the Medicare Shared Savings Program.

The billing volume of Healthcare Common Procedure Coding System codes A4352 (Intermittent urinary catheter; Coude (curved) tip, with or without coating (Teflon, silicone, silicone elastomeric, or hydrophilic, etc.), each) and A4353 (Intermittent urinary catheter, with insertion supplies) represents SAHS activity. CMS will exclude the codes when assessing the 2023 financial performances of ACOs using the Medicare Shared Savings Program, when establishing benchmarks for 2024, 2025 and 2026, and in calculating revenues and repayments for new or continuing ACOs in 2025.

By the numbers

The CMS announcement said codes exhibit “SAHS billing activity when there is a significant increase in claims, either in volume or dollars, with national or regional impact, which represents a deviation from historical utilization trends that is unexpected and is not clearly attributable to reasonably explained changes in policy or the supply or demand for covered items or services.”

In the case of the catheters, billing for the relevant codes was less than 0.1% of total fee-for-services spending from 2016 to 2022. In 2023, that billing increased to almost 1%, according to the 2024 Medicare Trustees Report.

While 1% may not sound like much, that translates into a lot of money – $2 billion, and possibly closer to $3 billion, according to lawmakers who in March asked for an investigation of the billing patterns. Republican leaders of committees that oversee Medicare and the U.S. Department of Health and Human Services said “the scale of the alleged catheter billing fraud, affecting over 450,000 Medicare beneficiaries, may represent a significant failure” by those agencies.

Senators speak

Sen. Mike Braun (R-Indiana) cited investigative reports by The New York Times and the Washington Post, which credited NAACOS for uncovering the scheme.

“Using federal data, NAACOS found that over two years, 10 companies went from billing just 15 patients for catheters to an astonishing 515,000 patients, marking an increase of 50,000 from the previous year and accounting for an estimated $2.7 billion increase in taxpayer spending,” Braun said in a letter signed with Sen. Rick Scott (R-Florida) and Sen. J.D. Vance (R-Ohio). “This represents approximately 23.7 percent of Medicare’s total medical supply expenditures for the year, leading to the group’s conclusion that a significant portion seems to be related to fraudulent activities.”

“The victims of Medicare fraud are often the most vulnerable Americans. I’m calling for a full audit of Medicare so we can get to the bottom of the rampant fraud, waste, and abuse,” Braun said in a statement earlier this year. “It’s beyond alarming that this recent case of alleged Medicare fraud involving overbilling for urinary catheters went undetected for over a year and accounted for an additional $2.7 billion in taxpayer spending. American seniors deserve better.”