Catheter Fraud and ACO Shared Savings: What the SAHS Adjustment Actually Removed

The ACO shared savings adjustment for catheter fraud removed payment amounts for catheter codes A4352 and A4353 from Medicare’s shared savings calculations for calendar year 2023. The Centers for Medicare & Medicaid Services found suppliers billing Medicare for catheters that physicians had not ordered and patients never received. An accountable care organization could see its spending rise because a supplier billed for its patients, even when its clinicians had never ordered the supplies. CMS changed the arithmetic used to assess performance. For the ACO employee staring at an unexplained catheter bill, the question behind that bill remained: who ordered it, who supplied it and why was Medicare charged?

Why Catheter Spending Reached the ACO’s Books

An accountable care organization’s financial result depends on spending for its assigned beneficiaries compared with a benchmark. That spending reaches beyond care delivered by the ACO’s own practices. An outside supplier’s catheter claim can enter the total even though the ACO had no part in the order or delivery.

That is how a durable medical equipment billing scheme can become a problem for the health care organization trying to manage the patient’s care. The supplier submits the claim. The ACO sees an expenditure attached to its patient. The clinical record and the spending report can tell different stories. False bills target taxpayer money and leave care teams accounting for supplies their patients never received.

The increase was large enough to reach the program’s national numbers. In its proposed rule, CMS described spending on selected intermittent catheter codes as below 0.1% of total Medicare fee-for-service spending from 2016 through 2022, then nearly 1% in 2023.

The concentration mattered as much as the national increase. An ACO coalition’s April 2024 letter reported the Institute for Accountable Care’s finding that almost 10% of ACOs in 2023 averaged nearly $50 per patient per year in catheter spending above their regional average. A regional comparison could therefore leave an accountable care organization carrying unusually heavy spending in its own population. Everyone’s benchmark moving upward did not make every ACO whole.

What the Catheter Adjustment Removed

The ACO catheter expenditure adjustment removed the selected codes’ payment amounts from financial calculations. A4352 identified an intermittent catheter with a curved tip. A4353 identified an intermittent catheter with sterile insertion supplies. CMS classified billing for those codes as significant, anomalous and highly suspect, commonly called SAHS.

The catheter final rule took effect on October 15, 2024, addressing the earlier year’s spending. The remedy changed the figures used to calculate an ACO’s result.

The Centers for Medicare & Medicaid Services also left a consequential boundary in place: it did not remove the catheter amounts from the 2019 through 2021 benchmark years used in the earlier reconciliation. Removing spending from the performance calculation while leaving those historical amounts in place left a residual mismatch. The straight-tip catheter code A4351 also stayed outside the selected pair.

Why an Unaffected ACO Could Lose a Windfall

The catheter SAHS adjustment could have an adverse impact on an unaffected ACO because removing suspect spending could also remove an inflated benchmark advantage. The effect depended on where the spending appeared, both in the ACO’s assigned population and in the wider spending used to update its benchmark.

An ACO with unusually heavy catheter spending among its own patients could look more expensive without having changed its care. Removing that spending could improve its measured performance. An ACO whose patients largely escaped the billing could benefit from a benchmark update inflated by spending elsewhere. Removing that inflation could reduce its apparent savings.

The same billing surge could therefore make one organization’s work look worse and another’s look better. Correcting the distortion could take away the second organization’s advantage. That is why the adjustment’s effect cannot be read from a national spending total, or from the amount removed from an ACO’s own expenditure report alone.

CMS’s approach addressed a comparison: the spending attributed to the organization and the spending against which it was judged.

What the Standing SAHS Policy Changes

The standing Shared Savings Program rule applies to calendar year 2024 and subsequent years. The Centers for Medicare & Medicaid Services decides which billing codes meet the SAHS threshold for a particular calendar year. A later year’s treatment depends on that determination.

Under the standing rule, the ACO catheter expenditure adjustment removes payment amounts from all suppliers’ claims for designated codes on specified claim types. It covers all Medicare Part A and Part B fee-for-service payment amounts for those codes and claim types.

The changes reach the accountable care organization’s assigned-beneficiary spending, county and national expenditure calculations, and growth rates used to build and update benchmarks. A code-level adjustment can affect both the performance result and other financial terms of participation.

The standing policy reaches the identified calendar year when it serves as either a performance year or a benchmark year. It also reaches the three historical benchmark years used to reconcile a performance year receiving the adjustment. That is broader historical treatment than the earlier catheter response, which left its older benchmark years alone.

For agreements beginning in 2024 and later, the rule also adjusts projected Medicare spending growth using the designated codes in the third benchmark year.

Skin-substitute spending has prompted a similar debate about the effect of rising costs on ACO finances. The standing policy still requires CMS to designate the billing activity for adjustment.

ACO REACH Has Its Own Adjustment

ACO REACH uses a separate financial methodology. In its performance year 2026 model update, CMS specified an adjustment to 2024 expenditures for A4353 and the ostomy-bag code A5057.

That update calls for recalculating the retrospective trend adjustment and stop loss. It also removes the selected amounts from the historical benchmark years for the affected performance year and from future performance years where 2024 serves as a benchmark year.

The Records Behind the Catheter Code

The product and the records supporting its use matter beneath the expenditure total. A curved-tip catheter and a sterile insertion kit carry different requirements. The kit is a higher-paying product than the plain straight-tip catheter, so the distinction has a financial consequence as well as a clinical one.

The urological supplies coverage policy requires medical-record support for the need for a curved-tip catheter. Its sterile-kit criteria address particular clinical circumstances, including recurrent urinary tract infections under the conditions the policy specifies. Separately supplied kit components do not satisfy the packaged-kit requirement.

Recurring supplies add another set of records. The supplier must document an affirmative response before dispensing a refill. It must receive the standard written order before submitting the claim and retain proof of delivery. The original order, refill contact and delivery record answer different questions about the same billing.

The inspector general’s catheter audit examined July 2021 through June 2022, before the surge. It estimated $35.1 million in improper payments out of $303.3 million paid for catheters and kits.

Detecting the Billing and Correcting the Calculation

Accountable care organizations helped bring the spending problem to CMS’s attention by examining expenditures attributed to their patients. CMS credited those alerts in its catheter rule and later said it could classify the annual increase as SAHS only after the year ended.

Supplier enforcement followed a different inquiry. In its 2026 review of Medicare fraud analytics, the Government Accountability Office described payment suspensions and enrollment revocations involving 15 providers that allegedly billed for catheters never supplied.

For an insider, the useful connection is between the spending pattern and what happened inside the ordering or supply business. We examine the claims, clinical support, refill contacts and delivery records with you to understand how the billed supplies reached the patient’s account.

A Prescription Form Can Reveal a Different Catheter Scheme

C.R. Bard’s January 2025 settlement resolved a separate catheter kickback case for $17 million. The government alleged that free samples and discounts encouraged urology practices to use Bard’s prescription form for intermittent catheters. A former employee of another company brought the whistleblower case.

That case puts the relationship behind the order in view. A claims analyst sees the billed product. Someone inside the business may know why a practice used a particular form and what the supplier offered in return. We connect that knowledge to the healthcare billing it produced.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

When You Can Explain the Catheter Bills

If you work in ACO analytics, a urology practice or a catheter supplier and can connect the spending to the orders and business decisions behind it, speak with our whistleblower experts about what you know. We work beside you from start to finish to build your strongest catheter fraud whistleblower case and bring in Medicare fraud whistleblower lawyers who understand durable medical equipment claims and the financial incentives behind them.