Staggering Rise in Catheter Bills Indicates Medicare Scam

Linda Hennis was checking her Medicare statement in January when she noticed something strange: It said a company she had never heard of had been paid about $12,000 for sending her 2,000 urinary catheters.

But she had never needed or received catheters.

Ms. Hennis, a retired nurse who lives in a Chicago suburb, noted that the company selling the plastic tubes was called Pretty in Pink Boutique and was based in Texas. “There's been a mistake here,” Mrs. Hennis remembered thinking.

She is one of more than 450,000 Medicare beneficiaries billed for urinary catheters in 2023, up from about 50,000 in previous years, according to a new report from the National Association of Accountable Care Organizations, an advocacy group that represents hundreds of health care organizations. systems throughout the country. The report used a federal database of Medicare claims available to researchers.

The massive increase in catheter billing included $2 billion billed by seven major suppliers, according to that analysis, potentially accounting for nearly a fifth of all Medicare spending on medical supplies by 2023. Doctors, insurance departments and health care groups near The country said the spike in claims for never-delivered catheters indicated a far-reaching Medicare scam.

“We think it's outrageous,” said Clif Gaus, executive director of the group that conducted the analysis.

Dara Corrigan, who heads Medicare's Center for Program Integrity, declined to say whether the agency was investigating the catheter bills. When the federal government suspects fraud, it sometimes holds payments in an escrow account while it reviews the claims. But she does not want to say whether this also happened for the catheter payments.

“We do all of this behind the scenes to ensure the integrity of the investigation,” Ms. Corrigan said, speaking generally about the agency's process. She described Medicare billing scams as “one of these problems that is always present and always frustrating.”

Pretty in Pink Boutique, which billed Medicare at least $267 million for catheters between October 2022 and December 2023, could not be reached by phone.

Medicare billing scams can have far-reaching consequences. Even if patients don't pay the bills themselves, increased spending by the government insurance program could increase the premiums paid by enrollees in the future.

Catheters and other medical supplies are often targeted by billing systems. Last April, the federal government released prosecution against 18 defendants who submitted bills for non-existent coronavirus testing and other pandemic-related services. And in 2019, the Justice Department said it did split up an international fraud ring involving more than $1 billion in counterfeit invoices for back and knee braces.

Medical supply companies are easy to set up and the bar for proving medical necessity is relatively low. The companies “don't need much to show why grandma needs a urinary catheter,” said Eva Gunasekera, who previously led a health care fraud investigation at the Justice Department.

Patients and doctors who have been reporting mysterious claims about catheters to Medicare for months say they are frustrated by a lack of communication from the government about whether billions of dollars have been lost in ongoing billing scams.

One of the advocacy group's members, Dr. Bob Rauner, leads a large network of physicians in Nebraska. In an interview, he said his patients had collectively billed nearly $2 million for phantom catheters in 2023. (He tracks such expenses because his organization gets bonus payments from Medicare when patients have good health outcomes with low overall medical expenses.)

“I just know it's all fraud because our doctor didn't order it and our patient never got it,” said Dr. Rauner, who filed a complaint with the Federal Department of Health's Office of Inspector General in mid-December .

The vast majority of the suspicious claims identified by the new analysis came from seven companies, many of which have shared executives, according to public documents and the advocacy group's report. Only one of the companies had a working phone number and a request for comment was not returned. The remaining numbers were closed, went to different companies or in one case went to a previous owner.

Pretty in Pink Boutique is registered with Medicare to a home address in El Paso. The phone number goes to an auto body shop called West Texas Body and Paint, where an employee answering a reporter's call said the store gets calls “all day, every day” from Medicare participants concerned about fraudulent bills.

Pamela Ludwig runs an unrelated business in Nashville called Pretty in Pink Boutique. She has had so many catheter complaints that she… added a page on her website and explained that her company was not part of a scam.

“There are people calling me, swearing and shouting,” Ms Ludwig said. “They feel violated.”

She filed a complaint with Medicare in September, she said, but the barrage of calls hasn't stopped. In November, her husband heard from a New York City banker who said several men had come to his office asking if they wanted to open an account for Pretty in Pink Boutique. “He asked if we had sold our business recently,” Ms. Ludwig said.

The issue came onto the Oklahoma Insurance Department's radar in July as it investigated fraudulent Medicare claims for Covid-19 test kits. Officials also noted a surprisingly high number of claims for catheters.

“When we asked seniors, they told us they had never used urinary catheters and didn't know why these claims were happening,” said Ray Walker, chief of the department's Medicare division. Since then, he estimates that at least 70 Medicare beneficiaries have filed complaints about catheter claims, including one just this week.

In Illinois, Travis Trumitch said he reported four cases of possible catheter fraud to the federal Department of Health's inspector general after his group, the Illinois Senior Medicare Patrol, fielded more than a dozen calls from Medicare beneficiaries. The group is part of a national network that warns older adults about federal health insurance scams.

It is unclear how the catheter companies obtained the Medicare accounts of so many people, but Mr. Trumitch said some people told him they had previously received phone calls asking them for their Medicare identification number. Others said they had not received any calls but suspected their names had been obtained through data breaches.

Suzanne Gustafson, 76, filed a complaint with Medicare last month after noticing a suspicious payment of about $4,000 to a New York company. She also saw a similar charge on her husband's account. And when she posted on Facebook, wanting to raise awareness, another friend reached out and said she had been hit with a similar charge.

Ms. Gustafson speculated that the company could have obtained her Medicare information from a data breach at a hospital she had gone to in Louisville, Kentucky. This wasn't Ms. Gustafson's first encounter with suspicious Medicare billers: Last year, she said, she was incorrectly billed for coronavirus tests she never ordered or received.

Ms. Hennis said she does not know how her information reached the Pretty in Pink Boutique. When she reported the improper billing to Medicare, she said, she was told someone had created a second Medicare account in her name and billed the catheters to the new account.

“I hate the idea of ​​anyone ripping off Medicare,” she said. “Many of us rely on it. It's just ethically wrong.”