Staggering Rise in Catheter Bills Suggests 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, any catheters.

Ms. Hennis, a retired nurse who lives in a suburb of Chicago, noticed that the company selling the plastic tubes was called Pretty in Pink Boutique, and it was based in Texas. “There’s a mistake here,” Ms. Hennis recalled thinking.

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

The massive uptick in billing for catheters included $2 billion charged by seven high-volume suppliers, according to that analysis, potentially accounting for nearly one-fifth of all Medicare spending on medical supplies in 2023. Doctors, state insurance departments and health care groups around the country said the spike in claims for catheters that were never delivered suggested 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 runs Medicare’s Center for Program Integrity, declined to say whether the agency was investigating the catheter billings. When the federal government suspects fraud, she said, it sometimes holds payments in escrow while it reviews the claims. But she would not say whether that had happened for any of the catheter payments.

“We’re doing all 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 ever-present and ever 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 wide-reaching consequences. Even if patients do not pay the bills themselves, more spending by the government insurance program can increase the premiums paid by enrollees in the future.

Catheters and other medical supplies are frequent targets of billing schemes. Last April, the federal government brought criminal charges against 18 defendants who had submitted bills for nonexistent coronavirus tests and other pandemic-related services. And in 2019, the Department of Justice said it had broken up an international fraud ring involving more than $1 billion in phony billing for back and knee braces.

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

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

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

“I just know that 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 health department’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 businesses had a working phone number, and it did not return a request for comment. The other numbers were either disconnected, went to different businesses or, in one case, went to a previous owner.

Pretty in Pink Boutique is registered with Medicare to a street address of a house in El Paso. Its phone number goes to an auto body shop called West Texas Body and Paint, where an employee who answered a call from a reporter said the shop receives “calls all day, every day” from Medicare enrollees concerned about fraudulent bills.

Pamela Ludwig runs an unrelated business in Nashville that is also called Pretty in Pink Boutique. She has received so many catheter complaints that she added a page to her website explaining that her business was not part of any scam.

“I have people calling me, cussing, screaming,” Ms. Ludwig said. “They feel violated.”

She called in a complaint to Medicare in September, she said, but the barrage of phone calls has not stopped. In November, her husband heard from a New York City banker, who said several men had come to his office asking to set up an account for Pretty in Pink Boutique. “He asked if we had recently sold our business,” Ms. Ludwig said.

The issue landed on the radar of the Oklahoma Insurance Department in July, when it was investigating fraudulent Medicare claims for Covid-19 testing kits. The officials noticed a surprisingly high number of claims for catheters as well.

“When we started asking seniors, they told us they had never used urinary catheters and didn’t know why the claims were there,” said Ray Walker, the department’s Medicare assistance director. Since then, he estimates that at least 70 Medicare beneficiaries have filed complaints about catheter claims, one as recently as this week.

In Illinois, Travis Trumitch said he reported four cases of potential catheter fraud to the federal health department’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’s 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 that their names were obtained through data breaches.

Suzanne Gustafson, 76, complained to Medicare last month after she noticed a suspicious payment of about $4,000 made to a company in New York. She saw a similar charge on her husband’s account, too. And when she posted to Facebook, wanting to spread awareness, another friend reached out, saying 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, Ky. This wasn’t Ms. Gustafson’s first encounter with suspicious Medicare bills: Last year, she said, she was falsely billed for coronavirus tests she never ordered or received.

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

“I hate the notion of anybody ripping off Medicare,” she said. “So many of us rely on it. It’s just plain ethically wrong.”