The $3 Billion Catheter Case Doesn't Add Up. Or Maybe It Does..?

Recently, Congress held hearings about a $3 Billion fraud involving fake orders for, of all things, catheters.  There are a couple of things about this case, related legislation, and something the Inspector General is supposed to report on that have more than a bit of unpleasant odor to them.

There is a bill in Congress S.3630 - Medicare Transaction Fraud Prevention Act amid this.  First, there is no preventive measure in the bill.  The two provisions of the bill propose CMS, or the Inspector General implement analytic tools to identify volume spikes in orders, products, visits, or anything that can be billed.  The second is to determine whether AI can identity and offer a risk score to claims.  Neither of these are preventive, but merely bolster the old method of pay-and-chase.  Based on additional findings, which may be what the intent is. 

Frequency and acceleration analysis (50 claims one week, 1000 the next week and 25,000 the week after) is Fraud Identification 101.  I believe that after years and billions of dollars poured into this, CMS and their contractors already have that in place.  They should not have to ask to have that included in a bill unless they are diverting attention to another issue.  If they do not have that already functioning, Congress should ask why such a basic measure that is easily implemented has not existed.  It does not require legislation. 

According to high-level people who are in positions to know, CMS has such a tool already in place.  These people tell me that CMS saw the catheter fraud coming from spikes in claims but took no action.  The real objective was to give the Department of Justice a juicy $3 Billion case so the DOJ could publicly claim victory and superb investigative work.  Unfortunately for the DOJ, patients of Accountable Care Organizations started asking their physicians, and the physicians started asking each other why bills for catheters were showing up on Medicare Summary Notices and, in the case of the ACOs hitting their bonuses under the Medicare Shared Savings Program (MSSP).  The ACOs brought this to the attention of Washington.  The ACOs have since squared away their accounts with CMS for the bonuses under the MSSP.  But nothing has been implemented or proposed to prevent future situations like this.  And the Change Healthcare breach, spilling the identities of 1/3 of Americans, and offering no protection against similar cases, only portends more of the same. 

Why ask Congress for a systems capability that is, in all probability, already in place, and really does not require Congressional authorization?  Is it to mask the fact that CMS knew about the catheter scam?  And did CMS really want to expose a major fraud and bolster pay-and-chase or just add it to next years’ budget request? 

None of these potential scenarios smells particularly good.  The Investigations and Oversight Committee of the House, and the Energy & Commerce Committee need to find the underlying cause of this.  Investments in pay-and-chase, which everybody decries publicly come at the expense to the taxpayer.  The recent report of $200 Billion in annual Medicare and Medicaid fraud costs trillions when compounded over time.  Congress needs to end it.  Today.