CMS Final Rule: Addressing Significant Anomalous & Highly Suspect ACO Billing Activities

In response to 2023 bogus charges for intermittent urinary catheter billing within the Medicare Shared Savings Program (Shared Savings Program) program, the federal government released a final rule that holds ACOs harmless for the suspicious billing activity. The program showed a 20-fold increase in catheter billing from 10 durable medical equipment suppliers over two years, equivalent to a nearly $3 billion increase in spending.

The Centers for Medicare and Medicaid Services (CMS) is changing its policies for assessing performance year (PY) 2023 financial performance of Shared Savings Program ACOs and policies establishing benchmarks for ACOs with starting agreement periods from 2024-2026. CMS is also changing the calculating factors used in the application cycle for ACOs applying for a new agreement period beginning on January 1, 2025, and continuing their participation in the program for PY 2025, as a result of SAHS billing activity for the two intermittent urinary catheter codes.

CMS uses payment amounts on Medicare Parts A and B claims to calculate various factors used in Shared Savings Program financial calculations, including expenditures for people assigned to an ACO, expenditures for the national assignable fee-for-service (FFS) population, and the assignable population in an ACO’s regional service area, as well as in calculations used to determine ACO revenue status (high revenue or low revenue).

The final rule ensures that clinicians, hospitals, other healthcare providers, and ACOs are not unfairly held responsible for the fraudulent catheter spending.

The National Association for Accountable Care Organizations (NAACOS) reported the suspicious billing activity to CMS and after the publication of the final rule noted the anomalous nature of the national billing scandal by positing most billing fraud occurs at the local level.

NAACOS President and CEO Clif Gaus,

As part of this work, ACOs readily identify and report anomalous and highly suspect billing. While this rule holds ACOs harmless for a broad national instance of suspected fraud, anomalous billing is typically identified at the local level. We look forward to working with CMS to establish permanent policies that address future instances of fraud, waste, and abuse at the local level.

The observed suspicious billing was for A4352 (Intermittent urinary catheter; Coude (curved) tip, with or without coating (Teflon, silicone, silicone elastomeric, or hydrophilic, etc.), and A4353 (Intermittent urinary catheter, with insertion supplies).

A proposal in the calendar year (CY) 2025 Physician Fee Schedule (PFS) proposed rule addresses the suspect billing activity for CY 2024 and future performance years.