Loan closet doors continue to slam shut. These relationships,
also known as stock-and-bill arrangements or consignment closets,
allow a home care company to place HME on premises with a provider
for distribution to certain patients on their departure from the
provider's location.
Such loan closets can be useful in many situations, and have
withstood scrutiny by the Office of Inspector General twice, in
April 2002 and again in November 2008. However, CMS has decided
that as of March 1, 2010, such arrangements will no longer be
permitted in the offices of a “physician, non-physician
practitioner or other health care professional.”
CMS' theory seems to be that loan closets suggest there are
multiple providers operating out of the same practice location,
creating patient confusion and a violation of the suppler
standards. On thinking about the implications of CMS' recent
actions, I have four insights:
- Closets must only come into use after the patient has chosen
to obtain the equipment from the particular home care company with
the closet
Even though the OIG opinions were vague about the sequence of
events, CMS' actions show that a specific sequence of events is
important: The referral source identifies the need for home care
equipment or services; then, the patient is informed and choice is
given (the existence of the closet may be mentioned at this time);
then, the patient chooses; then, if the closet supplier is chosen,
that supplier is contacted and necessary information is
communicated to establish the patient relationship; then (and only
then), the closet's equipment may be given to the patient.
I strongly recommend both a script and a written document, which
may be incorporated into discharge or referral forms utilized by
the closet owner. This is mandatory in the hospital setting, very
important if the closet owner has any sort of financial
relationship with the supplier and highly recommended in all other
cases because it emphasizes that there is to be no patient coercion
and that the HME company did not get involved until after the
patient made his or her choice.
closet owner
I recommend that any financial relationship between the HME and
the closet owner must fall within the boundaries of the “safe
harbor” regulations of the anti-kickback statute. This would
apply to lease agreements, medical advisor agreements and
professional or support services agreements, etc.
The agreement should be in writing, signed by the parties, with
a definite term of at least a year and a specific fee structure not
tied to the volume or value of referrals. Payment must be at fair
market value for necessary services actually rendered. I recommend
this even if the financial arrangement only applies to private
patients (not government-reimbursed).
In this regard, no remuneration should be paid to the closet
owner for “convenience benefits,” such as use of a
private line connecting the closet owner to the HME. Similarly,
don't pay for use of the closet owner's personnel to facilitate
paperwork or do patient set-ups, etc. In fact, to avoid scrutiny
and reduce any appearance of impropriety, I recommend that you not
even allow the closet owner to provide these services at no
charge.
As far as I can tell, CMS' objection is that the closets may
confuse the patient as to whether the physician or other
professional is in fact the HME supplier. Under this reasoning,
such confusion, as well as the presence of the HME company's
equipment in the professional's office, would violate the supplier
standard that requires a home care company not to share its space
with another provider.
I do not think this reasoning holds up well under analysis.
Other relationships between HME companies and professionals —
support service arrangements, etc. — also include the
intertwining of the “health care professional” with the
HME company. Nonetheless, CMS has taken this position. It may be
prudent to reevaluate or restructure those relationships to
withstand any CMS challenge that suppler standards may be violated
in those circumstances as well.
Read more Compliance
University columns.
Neil Caesar is president of the Health Law
Center (Neil B. Caesar Law Associates, PA), a national health
law practice in Greenville, S.C. He also is a principal with Caesar
Cohen Ltd., which offers compliance training, outsourcing and
consulting and the author of the Home Care Compliance Answer Book.
You can reach him at 864/676-9075 or ncaesar@healthlawcenter.com.
