ACOs’ Focus on Rooting Out Fraud Aligns With CMS Vision Under Oz

First catheters, now skin substitutes—and more areas of anomalous medical billing will continue to pop up, requiring data vigilance and collaboration on the part of accountable care organizations (ACOs), according to speakers at the National Association of ACOs (NAACOS) Spring 2025 Conference. The identification of these areas potentially signaling fraud aligns with the Trump administration’s focus on promoting efficiency and cutting out waste, as described by new CMS Administrator Mehmet Oz, MD.

A Catheter Conundrum Threatened ACO Savings in 2024

Anomalous billing for durable medical equipment (DME) such as catheters was a hot topic at last spring’s NAACOS meeting,¹ and according to the chair of today’s session, “Unmasking Fraud in Value-Based Care: Lessons from 2023 DME Settlements and Strategies for the Next Wave,” the issue has only grown in importance. Gabe Orthous, MBA, director of value-based services and analytics, Health Choice Care, described how fraud can take multiple forms: DME that is billed but not delivered, DME that is unnecessarily provided, kickbacks for DME suppliers, or billing for custom-fitted DME that is actually standard issue.

The pattern of anomalous billing for catheters, which CMS addressed last year by excluding certain billing codes from shared savings calculations,² “changed the dynamic of how we get paid,” Orthous said. “It changed the dynamic of our funds flow. It changed our dynamic of how we look at utilization in general, how our quarterly expenditure reports looked.”

But there are ways for ACOs to quickly identify potential fraud by harnessing the information in their claims plus electronic health records data, Orthous said. While plenty of vendors offer data analytics tools and machine learning products that provide real-time alerts, software as basic as Excel could let ACOs identify concerning trends and take action.

Orthous also detailed the external resources that are available to prevent and investigate suspected fraud, but he emphasized that collaboration with payers, regulators, and other ACOs will be key to sharing intelligence in a timely manner. “A lot of people audit their systems every 6 months to a year—well, that’s too late when it comes to fraud detection,” he cautioned.

The ACO community anticipates that the new Trump administration, including CMS under the helm of Oz, will be receptive to their reports of suspected fraud. | Image Credit: © Nadzeya - stock.adobe.com

Now, Skin Substitute Spending Raises Eyebrows

The next speaker, Jake Woods, executive director of the PSW and NW Momentum Health Partners ACO, described the importance of ACOs advocating to legislators and CMS that fraud affects everyone from the beneficiary level to the Medicare program.

“ACOs really are that frontline defense,” Woods said. “We’re looking at the data; we can move a lot quicker than CMS to be able to address these kinds of challenges. We have that regular connection with our providers. We're working with the network or connecting with the beneficiaries. We can actually get in and intervene a lot faster.”

The latest example of an area where ACOs are looking to intervene before suspected fraud eats into their shared savings is in the use of costly skin substitutes. A recent New York Times investigation described soaring spending on these tissue-based products by Medicare, which experts say has arisen due to complex coverage rules and has resulted in reports of billing even for patients with no wounds at all.³

Woods confirmed that he has seen this trend in the MultiCare Connected Care ACO, with skin substitutes accounting for 0.4% of spending in 2022 but 4.5% in 2025. He encouraged the audience to keep a close eye on their own spending and, like Orthous, reiterated the importance of banding together to advocate for a fair solution from CMS, which could involve the creation of a new pathway for timely appeals that ensures a resolution is aligned with the ACO settlement timeline.

“I think the ability for us to come together and have a single voice and be advocating for this is really how we’re going to get some movement,” Woods said.

Audience members concurred that their own ACOs are keeping a watchful eye on skin substitute expenditures but also looking to the data for the next trend that will arise as fraudsters shift their targets. Gary Jacobs, MPA, executive director of VillageMD’s Center for Public Policy, said that “whether it’s catheters today and skin substitutes tomorrow…we need people like me to live on Capitol Hill and work every day with our congressional delegations to try to get things done.”

ACOs and Federal Government Share a Focus on Fraud

The ACO community anticipates that the new Trump administration, including CMS under the helm of Oz, will be receptive to their reports of suspected fraud. Oz mentioned fraud, waste, and abuse as important targets in his confirmation hearing,⁴ and amid potential cuts to Medicaid funding in the House’s budget plan, President Donald Trump and House Speaker Mike Johnson have framed their public comments around rooting out fraud in the program while avoiding making politically unpopular calls to slash Medicaid coverage more broadly.⁵

In a letter to Oz released yesterday,⁶ NAACOS President and CEO Emily D. Brower, MBA, emphasized the common ground between the cohort of ACOs and the aims of CMS under its new leader. “In-depth use of data has made ACOs a great steward of the Medicare program, regularly identifying instances of suspected fraud, waste, and abuse,” the letter states. “We look forward to working with you in your role to advance payment models that enable providers to innovate care and help patients achieve their health goals.”

References

1. Mattina C. CMS leaders describe their partnership to align programs, address ACOs’ concerns. AJMC^®. April 11, 2024. Accessed April 23, 2025. https://www.ajmc.com/view/cms-leaders-describe-their-partnership-to-align-programs-address-acos-concerns

2. Proposed rule on mitigating the impact of significant, anomalous, and highly suspect billing activity on Medicare Shared Savings Program financial calculations in calendar year 2023 (CMS-1799-P). CMS. June 28, 2024. Accessed April 23, 2025. https://www.cms.gov/newsroom/fact-sheets/proposed-rule-mitigating-impact-significant-anomalous-and-highly-suspect-billing-activity-medicare

3. Kliff S, Thomas K. Medicare bleeds billions on pricey bandages, and doctors get a cut. New York Times. April 10, 2025. Updated April 14, 2025. Accessed April 23, 2025. https://www.nytimes.com/2025/04/10/health/skin-substitutes-medicare-costs.html

4. Mattina C. Oz confirmation hearing probes vision for Medicaid but coalesces around well-being. AJMC. March 14, 2025. Accessed April 23, 2025. https://www.ajmc.com/view/oz-confirmation-hearing-probes-vision-for-medicaid-but-coalesces-around-well-being

5. Hinton E, Mathers J, Rudowitz R. 5 key facts about Medicaid program integrity—fraud, waste, abuse and improper payments. KFF. March 18, 2025. Accessed April 23, 2025. https://www.kff.org/medicaid/issue-brief/5-key-facts-about-medicaid-program-integrity-fraud-waste-abuse-and-improper-payments/

6. Letter to CMS: NAACOS priorities for advancing accountable care. NAACOS. April 22, 2024. Accessed April 23, 2025. https://www.naacos.com/wp-content/uploads/2025/04/NAACOSLetterCMSAdministrator-AdvancingAccountableCare.pdf