By: Christopher Parrella, Esq., CPC, CHC, CPCO
Parrella Health Law, Boston, MA
A Health Care Provider Defense and Compliance Firm

A recent $1 million settlement out of the Eastern District of Pennsylvania should get the attention of every DME supplier medical equipment company and health care provider that bills TRICARE. The U.S. Attorney’s Office resolved allegations against The Breastfeeding Shop and its owner Patricia Gatter for submitting false claims tied to breast pumps and related equipment for service members and their families. The government’s message was blunt. TRICARE billing is subject to the same scrutiny as Medicare and Medicaid and suppliers who get it wrong face serious consequences.

The allegations focus on conduct that many suppliers wrongly assume lives in a gray area. According to the government TRICARE rolled out its breast pump benefit in 2015 and during the program’s early years The Breastfeeding Shop allegedly billed TRICARE hundreds of dollars more per pump than it billed Pennsylvania Medicaid for the same equipment. That pricing structure created what the government characterized as a prohibited dual fee schedule. On top of that the company allegedly took prepackaged breast pump accessory kits and billed TRICARE separately for each individual component as if they were replacement parts. That combination drove reimbursement far beyond what the program contemplated.

From the government’s perspective this was not confusion or a learning curve problem. Prosecutors framed it as prioritizing financial interests at the expense of taxpayers and service members. The Defense Health Agency echoed that sentiment saying the settlement sends a clear message that exploitative billing practices will not be tolerated especially where essential medical equipment is involved. The company disputes the allegations and maintains it complied with TRICARE rules. Its owner has said the program failed to provide adequate guidance to contractors during the benefit rollout and that settlement was the only practical option given the cost and uncertainty of prolonged litigation. That reality matters. You can believe you are right and still lose years of time money and focus fighting the federal government.

This case did not arise in a vacuum. The investigation traces back to a 2018 Department of Defense OIG report that found the Defense Health Agency overpaid $16.2 million in a single year for standard electric breast pumps and replacement parts. The OIG blamed the overpayment on DHA’s failure to require fixed reimbursement rates. That report put suppliers on notice. Once an OIG report identifies systemic overpayment patterns enforcement actions are almost inevitable.

There are several hard lessons here for providers and suppliers. First TRICARE is not a “lighter touch” program. It uses the same fraud theories as Medicare and Medicaid including False Claims Act exposure. Second billing more to TRICARE than to Medicaid or other government programs can trigger dual fee schedule allegations even when suppliers believe pricing differences are justified. Third unbundling prepackaged items is one of the fastest ways to draw enforcement attention particularly in DME and supply billing. And finally lack of clear guidance from the government is not a defense once money has been paid.

This is your call to action. If you bill TRICARE you should be reviewing your fee schedules right now and comparing them across all government programs. Identify any pricing disparities that cannot be clearly justified. Audit your use of bundled versus unbundled codes and confirm that replacement parts are truly replacements and not components of a standard kit. Revisit your policies for new or evolving benefits because early program years are exactly when regulators look back and second guess supplier behavior. And if you rely on informal guidance verbal instructions or assumptions about what TRICARE allows you should stop and get those rules nailed down in writing.

The Breastfeeding Shop settlement is not about breast pumps alone. It is about how aggressively the government is policing supplier billing under TRICARE and how quickly program design flaws can turn into provider liability. Taking the time now to clean up billing practices is far cheaper than defending a False Claims Act investigation later. If you have any questions or comments about the subject of this blog or want help reviewing your TRICARE or DME billing practices please contact Parrella Health Law at 857.328.0382 or Chris directly at cparrella@parrellahealthlaw.com.