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A report by National Criminal Justice Association; claimed that Medicare recipients from around the U.S. have said that a company called Pretty in Pink charged their health insurance companies thousands of dollars for urinary catheters that they never ordered or received. Flooded by complaints, the Pretty in Pink Boutique in Franklin, Tenn., a provider of accessories for cancer patients, <a href=”” target=”_blank” >launched a webpage in September to explain</a> that its leaders were dumbfounded. The boutique said another company with the same name was submitting the claims.

The complaints are a piece of an alleged fraud scheme whose scale has little precedent in the history of Medicare, an estimated $2 billion, reports the Washington Post. The case involves fraudulent insurance claims submitted by seven companies to the taxpayer-funded health insurance program. Federal officials are investigating the allegedly fraudulent billing for catheters. the companies collectively went from billing just 14 patients for catheters to nearly 406,000.

The National Association of ACOs (NAACOS) initially reported these findings to the federal government. The association’s allegations came from a review of two billing codes for Medicare claims data from the Centers for Medicare & Medicaid Services (CMS) Virtual Research Data Center. They say urinary catheter payments to beneficiaries accounted for $153 million in 2021 before surging to $2.1 billion in 2023. Catheter spending by DMEs increased by 15.5% as false claims were filed around the country.

In nearly all 50 states, catheter payment growth has skyrocketed. Over half of U.S. states saw an increase in Medicare fee-for-service DME catheter payments of 500% or more from 2022 to 2023. Yet the majority of payments can be attributed back to just seven companies – three companies in New York and one each in Texas, Florida, Connecticut and Kentucky – NAACOS reported.

While the companies used real patients’ information to submit bills, NAACOS found no evidence that the patients wanted the catheters or even received them. “We’ve just never seen anything like this nationally,” said Clif Gaus of NAACOS, whose members spotted and reported the billings to federal officials last fall. Gaus’s team estimates that Medicare was wrongly billed $2 billion for the catheters in 2022 and 2023.

Urinary catheters were an appealing target for scammers because orders for the low-cost products – small tubes often made with latex or silicone – could escape scrutiny on billing for expensive equipment, surgeries and other high-cost claims.

After alerting federal authorities, NAACOS felt they needed to push the envelope when the problem persisted. Last week, major news publications broke the story, though states had begun warning beneficiaries of potential fraud months earlier, and local news outlets had started to uncover elements of the scandal.

Now, providers are worried about a broken insurance fraud reporting process and the impacts data breaches have on a national scale. And experts are concerned this could be just the tip of the iceberg.The Office of Inspector General (OIG) for the Department of Health and Human Services has not revealed whether there is an ongoing investigation, citing internal agency policy.

NAACOS wants the OIG to pay closer attention to fraud reports it receives from ACOs, and it wants to work with CMS to improve the reporting process, a spokesperson said. Despite the troubles ACOs faced in this ordeal, the association says this is why ACOs are so valuable, as fraud detection is more identifiable. NAACOS is also pushing for improved communication between Medicare administrative contractors. Beyond that, it seeks more provider participation and advocates for extending the alternative payment model incentive.

After public reports of a large-scale, year-long Medicare fraud scheme involving catheter billing, leaders from the Energy and Commerce, Ways and Means, and Oversight and Accountability committees, along with GOP Doctors Caucus Co-Chairs, announced on March 6 that they are seeking a briefing from Department of Health and Human Services (HHS) Inspector General (IG) Christi Grimm and Centers for Medicare and Medicaid Services (CMS) Administrator Chiquita Brooks-LaSure.

At the time of their announcement, the estimated amount of the fraud in their headline was reported to be “$3 Billion.” This estimate was explained by saying “Public reporting estimates the cost of fraud from this scheme to be at least $2 billion.However, discussions between committee staff and stakeholders suggest the dollar figure may be closer to $3 billion.”

In a new letter, the lawmakers request briefings from the HHS IG and CMS by March 20, 2024, regarding what steps are being taken to address this reported fraud and prevent its reoccurrence.