In late February, the Centers for Medicare and Medicaid Services (CMS) proposed a new set of anti-fraud measures the agency dubbed CRUSH: Comprehensive Regulations to Uncover Suspicious Healthcare.

Part of a broader focus on what the Trump administration describes as wasteful spending, CMS issued a Request for Information on February 27 asking for public comment on a new set of potential regulations that incorporates analytics and AI to detect fraud in real time.

CMS highlighted both molecular diagnostics and durable medical equipment as two areas of concern.

Although many CRUSH policies have yet to go into effect, David Lipschutz, codirector for law and policy at the Center for Medicare Advocacy, said they have potential for significant impacts on physicians’ day-to-day work.

“There’s a real danger that medically necessary care can be denied or targeted here,” he said. “The agency and its contractors have an obligation to ensure that they don’t overreach and they don’t end up denying or deterring medically necessary and appropriate care.”

Molecular Diagnostics: Rising Costs, Documented Fraud

According to CMS, advances in molecular diagnostics have led to rapid spending growth, documented fraud schemes involving genetic testing, and structural vulnerabilities in how these tests are billed and marketed.

CMS cited 2024 data that showed genetic tests comprised 5% of tests ordered but 43% of spending, making it ripe for potential schemes.

Molecular diagnostics isn’t the only category singled out by CMS. To combat future Durable Medical Equipment, Prosthetics, Orthotics, and Supplies fraud, CMS also announced a 6-month nationwide moratorium on Medicare enrollment for certain suppliers.

Improvements in genetic sequencing and analysis have launched innumerable screening and diagnostic tests for patients of all ages. Though typically more expensive than traditional lab-based blood tests, payoffs in terms of improved health and targeted therapeutics have made investments in molecular diagnostics worthwhile.

Expensive Tests, Tempting Targets

But the high value of these tests has also made them targets for fraudsters. Federal investigators began documenting wide-spread scams involving molecular tests billed to Medicare. The schemes were broadly similar, in which a telemarketing company would contact Medicare beneficiaries to sell a genetic screening panel, often for pharmacogenomics or cancer risk. Physicians in telemedicine networks would sign off on the tests, usually without even examining the patient. Laboratories then performed large genetic test panels and billed Medicare.

In 2019, federal officials arrested 35 individuals from dozens of labs and physician’s offices as part of Operation Double Helix, charging them with fraudulently billing Medicare over $2.1 billion.

The arrests helped put molecular diagnostics fraud on the radar at CMS, according to Bruce Quinn, a physician turned medical consultant who writes frequently on CMS policy. The scams themselves, he said, aren’t actually that complicated.

“This is stuff a 10-year-old can see with an Excel spreadsheet. It does not require some IBM supercomputer,” Quinn said. “We don’t lose tens of millions of dollars because some chiropractor gave five manipulations and the patient only needed four. That’s not where the money goes.”

If he could make these discoveries on his laptop, Quinn argued, it shouldn’t be hard for CMS contractors to detect the most egregious and obvious scams without a major technological overhaul. He points to the fact that many of these operations are concentrated in specific states such as Texas and Florida.

Medicare’s day-to-day operations, including claims review and coverage decisions, are largely handled by regional contractors known as Medicare Administrative Contractors (MACs), which act as the operational gatekeepers between physicians and the federal program.

In many states, MACs can quickly detect deceptive testing, such as a cystic fibrosis or Tay-Sachs test for an octogenarian.

But health policy expert Jonathan Blum, former principal deputy administrator at CMS and current co-founder and co-managing partner of Health Transformation Strategies, said that the changing nature of healthcare fraud has forced CMS to improve its fraud detection technology.

“The nature of fraud has changed. It’s far more sophisticated. It’s often conducted in places beyond the United States. It means there has to be much more vigilance and checking,” Blum said.

Even as CMS and its MACs tightened oversight of molecular diagnostics in the wake of Operation Double Helix, the number of potential tests ballooned as precision medicine expanded its reach into oncology and rare diseases. Although some scams are simple enough to identify, Blum said, others can be far more sophisticated.

The challenge for regulators, Blum said, will be to balance the need to prevent payments on deceitful bills with the documentation burden placed on physicians.

“For the physician practice, they’re going to have to consider more audits, more paperwork, more edits, more awareness to what the Medicare coverage rules are,” he said.

‘More Audits, More Awareness’

It’s a growing problem across the field, and the area of durable medical equipment is no different, said David Schomaker, CEO at Minnesota-based Handi Medical. The company sells a range of durable medical equipment to consumers, and Schomaker said that much of Handi Medical’s time and attention is tied up with insurance coverage and billing issues. The company needs more paperwork with more information from physicians to be able to submit bills to Medicare and other payors.

“The number of types of those types of interactions that we have today has grown tremendously from 38 years ago. Usually, all you needed was a script from the physician, and you would send the product out,” Schomaker said. “But just because the doctor says today that they want to order a manual wheelchair for someone, that isn’t enough to get the item.”

Lipschutz doesn’t begrudge CMS its intention to focus on fraud, waste, and abuse. But he likens CRUSH to CMS’s WISeR initiative that expands formerly-rare use of prior authorization in fee-for-service Medicare, along with AI tools to prevent what the agency deems low-value or unnecessary care.

CRUSH, he said, feels like another justification for CMS to avoid paying for potentially necessary care.

CMS is also likely to more aggressively pursue physician audits, Blum said. Rather than accumulating data over time to document alleged fraud, CMS appears to be signaling that it will lower the bar to begin audits or investigations, he said.

“CMS has said they’re willing to become more aggressive and not have as high degree of confidence there’s actual fraud happening,” Blum said. “It says to me is there is going to be more scrutiny, and there is going to be quicker action.”

Here, too, Lipschultz worries that concerns about audits could cause physicians to shy away from prescribing needed care so that they don’t raise red flags from CMS.

“It’s part of CMS’s mission to address both overutilization and underutilization, but the focus has all been on overutilization and not enough on ensuring that people actually have access to care that they need,” Lipschutz said.