Biden Administration Issues Final Rule to Address Durable Medical

Summary: On September 24, 2024, the Biden administration issued a final rule designed to address suspicious billing for durable medical equipment that may have cost the Medicare program more than $2 billion.

The problem involving urinary catheters has disproportionately affected accountable care organizations (ACOs), the groups of doctors, clinicians, and hospitals that provide coordinated care for beneficiaries in traditional Medicare.

After detecting the spike in billing in early 2023, the Centers for Medicare & Medicaid Services (CMS) stopped payment on almost all of the claims and began an investigation.

They found the activity “was attributed to a small group of durable medical equipment supply companies,” and “determined that the beneficiaries did not receive catheters and were not billed directly, physicians did not order these supplies, and supplies were not needed,” said a CMS fact sheet. Since then, the top 15 billers of suspicious catheter claims have had their Medicare enrollment revoked.

The CMS rule (RIN 0938-AV20) excludes payments involving certain billing codes for durable medical equipment from calculations used to assess an ACO’s financial performance in 2023.

The rule finalizes changes in policies for:

Other modifications to the methodology for calculating Shared Savings Program payments are also included in the rule for future years. The shared savings program is the leading value-based care initiative of the CMS.

When ACOs in the shared savings program provide quality care and lower costs for Medicare, member providers share in the savings through bonus payments. But if left unaddressed, the suspicious billing activity would have adversely affected the accuracy of financial calculations used to determine ACO bonus payments, the CMS said previously.

Bonus payments to ACOs have already declined by millions of dollars in recent years due to the suspected billing scheme. The Biden administration has dubbed the activity “anomalous billing,” rather than calling it “fraud” without proper investigation.

Agency: Centers for Medicare & Medicaid Services (CMS), Department of Health and Human Services (HHS).

Action: Final rule

Dates: These regulations are effective on October 15, 2024

Final Rule: LINK

CMS Fact Sheet: LINK

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