Investigators Looking into $2B Catheter Fraud Involving Medicare Patients

Seven companies allegedly operating out of Connecticut, Florida, Kentucky, New York and Texas are the target of a $2 billion Medicare fraud investigation – one of the largest in the program’s history.

According to published reports, in this catheter fraud scheme, the companies were billing for urinary catheters. The National Association of ACOs (NAACOS), a resource for Accountable Care Organizations, uncovered the scheme. The organization says its members began notifying them in December about suspicious amounts being billed for catheters.

Raising Red Flags in Healthcare Fraud

Using information gleaned from the Centers for Medicare & Medicaid Services (CMS) Virtual Research Data Center, NAACOS discovered more than 450,000 Medicare beneficiaries were billed for urinary catheters in 2023, up from about 50,000 in previous years. In 2021, urinary catheter payments to beneficiaries accounted for $153 million but skyrocketed $2.1 billion in 2023. Because catheters are inexpensive their charges generally fly under the radar. However, when one person is billed for thousands of dollars, that can raise red flags.

One of the companies that began to receive complaints from Medicare beneficiaries about the fraudulent claims is Pretty in Pink, which provides wigs, mastectomy bras and other accessories to cancer patients. The company received so many calls that it had to put a notice on its website telling people there are five other companies doing business under the same name and they were not the one doing the billing.

“We are a nearly 20-year-old, family-owned business that prides itself on integrity and doing things the right way. Our staff has received many unfounded accusations and even threats from people jumping to conclusions after a cursory web search, on the assumption that there is only one Pretty In Pink Boutique, which is false,” the website reads.

Other Reports of Catheter Fraud Around the U.S.

CBS News in New York recently reported that one of the companies suspected of catheter fraud, is a Brooklyn business called G&I Ortho. The Better Business Bureau received numerous complaints about the company from people stating it had billed for hundreds of intermittent urinary catheters that cost in the thousands of dollars

None of the agencies said to be involved including the FBI and CMS have commented. However, other complaints have come in to various news outlets including WISN in Wisconsin, which reported that they received calls from viewers who believe they were victims of the scam. And, as early as August 2023, both Oklahoma and Hawaii’s Departments of Health put out a warning for the public to be aware of fraudulent claims for urinary catheters, among other supplies.

Investigators Aware of Potential for Catheter Fraud as Early as 2001

In 2001, the U.S. Department of Health and Human Services Office of Inspector General added to its monthly Work Plan audits for payments for intermittent urinary catheters to determine whether claims submitted by DMEPOS suppliers complied with Medicare requirements and guidance.

At the time the IG stated “For calendar year 2021, Medicare paid more than $308 million for intermittent urinary catheters. Prior reviews performed by OIG and CMS contractors have identified high improper payment rates for urological supplies (including intermittent urinary catheters) that did not meet Medicare requirements.

In 2022, OIG released a report recommending that CMS lower Medicare’s payment rates for intermittent urinary catheters. The reason: “Medicare payments were 3.4 times suppliers’ acquisition costs for intermittent urinary catheters in FY 2020. In total, Medicare allowed $407 million in payments for these items, while suppliers paid approximately $121 million to acquire them,” the agency reported. Meaning Medicare payments exceeded suppliers’ acquisition costs by $286 million.

Durable Medical Equipment suppliers should be aware that any spike in the sale of items could result in an audit. These audits also can be sparked by complaints from Medicare beneficiaries, as has been the case here, or by someone within the company who acts as a whistleblower.

How We Can Help

The Health Law Offices of Anthony C. Vitale has been representing clients under investigation for more than 30 years. Our long-standing experience allows us to help clients to prepare for an investigation and to limit liability and minimize potential damage. For more information call us at 305-358-4500 or email info@vitalehealthlaw.com