Late last year, officials with Nebraska groups that manage care for seniors began noticing a sharp increase in billings to Medicare for urinary catheters, a relatively inexpensive medical device made for home use.

Quarterly Medicare data for Lincoln-based OneHealth Nebraska indicated that spending on the devices on behalf of their patients was up an average of $60 a patient, totaling more than $1 million, according to Dr. Bob Rauner, the organization’s former chief medical officer.

Similarly, number-crunching by the Omaha-based Nebraska Health Network showed its catheter claims jumped from $269,000 in 2022 to more than $4 million in 2023, said CEO Lee Handke.

Concerned, the Nebraskans and leaders of other accountable care organizations across the United States alerted their national group to the suspicious billings. An analysis of Medicare data by the National Association of Accountable Care Organizations and the Institute for Accountable Care found that Medicare payments for two catheter billing codes had increased from $153 million in 2021 to $3.1 billion in 2023. Some states’ officials also noticed suspicious billings.

In early March, the U.S. Department of Health and Human Services’ Office of Inspector General issued a consumer alert to warn the public “about a fraud scheme involving durable medical equipment, specifically urinary catheters.”

A group of U.S. House Republicans, meanwhile, has demanded answers from leaders of the federal agency and the Centers for Medicare & Medicaid Services. They want to know when officials were alerted to the increase in catheter billing, who perpetrated the alleged fraud and how they plan to recoup the losses.

Seniors unlikely to face harm; not clear if care organizations will

The fallout from the scheme isn’t yet clear. Seniors in whose names the catheters were billed, including some in Nebraska, reportedly never ordered them and never received them. So far, there is no evidence they face any financial harm. But local officials say Medicare beneficiaries still should be alert to suspicious billings and report them if they see them.

The issue could impact the ACOs, groups of doctors, hospitals and other health care providers who agree to provide coordinated, high-quality care to Medicare patients. If they meet goals, they can share in any cost savings with CMS. Some ACOs, however, also agree to repay the agency if they miss their goals.

Rauner, who left OneHealth in February to focus on other initiatives, said it will be up to CMS to decide whether to apply the suspicious charges to the ACOs’ bottom lines. “To me, the simple thing is to say, ‘This is fraud and it shouldn’t go on your budget,’” he said.

“We’re focused on quality and cost,” said Handke, whose network includes doctors and hospitals from Nebraska Medicine, Methodist Health System and Fremont Health. “When you see something like this impacting your total costs, it starts to negate some of the good work you’ve done.”

Clif Gaus, NAACOS’ president and CEO, said the organization has asked CMS not to hold ACOs accountable for fraud. The organization has met with federal officials to share its concerns and is monitoring the situation. Medicare ACOs cover more than 13 million Medicare beneficiaries and represent more than 600,000 physicians and other providers.

“We remain concerned that ACOs will be hurt financially by this apparent fraud and hope CMS will act to mitigate the impact,” he said in a statement.

Robert Mechanic, executive director of the Institute for Accountable Care, said ACOs are evaluated according to their spending trends. An increase in billings could spike the organizations’ costs and cause them to miss out on shared savings or, in some cases, owe money to CMS.

ACOs typically receive a financial reconciliation for the previous years’ claims in August, he said. Based on that schedule, ACOs would expect a reckoning for 2023 to arrive late this summer.

It was because they closely monitor Medicare cost and quality data that officials with some of the groups began noticing the increases in catheter billing last year. Last winter, some began posting on an internal listserv. Rauner, who serves on NAACOS’ board, was among those leading the charge, according to Handke and Mechanic.

Said Rauner: “Having these ACOs across the country looking at this is kind of handy.”

Members brought their concerns to the national group, which took them to news media to raise their profile. The Washington Post and the New York Times reported on the uptick in billing for catheters in early February.

Newly created ‘suppliers’ boosted billings

Mechanic said the institute identified a number of suppliers of medical equipment that hadn’t previously billed CMS but had begun charging at suspiciously high levels. The institute is a nonprofit, independent research and policy group that has an agreement with CMS that allows it to look at agency data for research purposes.

Nearly all of the increase was due to billings by 10 suppliers that hadn’t existed two years prior. More than 40,000 patients were billed for catheters in 2021. Last year, that number climbed to nearly 550,000.

How the suspicious suppliers got beneficiaries’ Medicare numbers, however, is not known, Mechanic said.

In analyzing the data, the researchers found considerable geographic variation, with little increase in billings in some states and ACOs and a lot in others, he said. Nebraska was among nearly two dozen states where the increase in billing for the devices across all beneficiaries between 2022 and 2023 topped 1000%.

Handke said he has never seen anything on the scale of the suspicious catheter billing.

“There are always cases of fraud and abuse,” he said. “But this seems to be a very coordinated effort to defraud Medicare, and seeing this level of increase was really startling.”

Some Nebraska Medicare patients also noticed — and a few, like the ACOs, have reported their concerns. But the catheter scheme isn’t the only one officials been noticing, which emphasizes the need for beneficiaries to know what to watch for and what to do if they encounter something suspicious, according to Jonathan Burlison, administrator of the Nebraska State Health Insurance Assistance Program and the Senior Medicare Patrol.

Nebraska SHIP began receiving calls from Medicare patients about catheter billing as early as last June, Burlison said. The federally funded programs, housed within the Nebraska Department of Insurance, provide assistance to Medicare beneficiaries.

Since the beginning of the year, he wrote, the program has helped 10 Nebraskans who had reported concerns about catheter billing submit evidence to investigating agencies.

Many people affected by the scheme, however, may not be aware. Beneficiaries should review those documents and look for billings for services or items they haven’t received as well as for billings from doctors they don’t recognize. They should report any suspected Medicare fraud, error or abuse to Nebraska SHIP and SMP at 1-800-234-7119. If their Medicare number has been compromised, they can request a new number be issued through those programs or by calling 1-800-MEDICARE.

Other recent scams, Burlison said, involve phone calls in which a caller claims to be with Medicare and offers a piece of medical equipment, such as a knee or back brace; a new plastic Medicare card, sometimes claiming the card has a chip for security; and testing, usually either at-home COVID-19 test kits or at-home genetic test kits for cancer or cardiovascular risks.

“Currently, the catheter scam seems to be the ‘flavor of the month,’” Burlison wrote. “But we do see other scams occurring in our state that unfortunately don’t seem to stop.”