The Patient Protection and Affordable Care Act was signed into
law on March 23, 2010. The health reform law has a number of
provisions that directly affect DME suppliers, including screening
and disclosure requirements.
Screening: Section 6401 of the act states that suppliers
enrolling or re-enrolling in Medicare, Medicaid or CHIP will be
subject to screening measures. The Secretary of the Department of
Health and Human Services is required to establish procedures for
screening suppliers, and to determine the level of screening
according to the risk of fraud, waste and abuse with respect to
each category of supplier.
All suppliers will be subject to licensure checks and, if the
Secretary so determines, additional screening measures such as
criminal background checks, fingerprinting, database checks, and
unscheduled and unannounced site visits. An application fee of $500
will be imposed to cover the costs of screening; this fee will be
adjusted for inflation. (A recent CMS notice sets the fee at $505
beginning March 25.)
To paraphrase the words of an OIG attorney, the government is
moving away from “pay and chase” to “guarding the
henhouse.” In the early days of the industry — in the
“pay and chase” days — it was easy for a company
to obtain a Medicare Part B supplier number. The screening process
was rudimentary. A dishonest company could easily obtain a supplier
number, improperly bill Medicare, and then shut down and escape
just ahead of the posse.
Over the past five years, it has become more difficult for a
company to obtain a supplier number. Accreditation and surety bond
requirements by themselves have weeded out many of the dishonest
Section 6401 of PPACA assists the government in achieving its
goal of moving away from “pay and chase” to
“guarding the henhouse.” Now, a company must jump
through multiple hoops before it is awarded a supplier number: It
has to purchase a surety bond; it has to become accredited; and its
principals are subject to a background check (including a criminal
background check and fingerprinting).
DME companies are experiencing unannounced site visits from a
variety of sources, including the NSC, the OIG, the state Medicaid
program, an accrediting organization or a Medicare contractor. If a
DME supplier is conducting a non-compliant, or perhaps a
fraudulent, operation, there is a reasonable chance that the
non-compliance/fraud will be discovered when a person walks
unannounced onto the premises, eyeballs the operation and asks for
evidence that the supplier standards are being followed.
The bottom line is this: In addition to expecting an NSC site
visit when you come up for re-enrollment, you can expect
unannounced site visits on a periodic basis.
Disclosure: Section 6401 of the act further provides that
suppliers enrolling or re-enrolling in Medicare, Medicaid or CHIP
will be subject to new disclosure requirements.
Applicants will be required to disclose current or previous
affiliations, directly or indirectly, with any provider or supplier
that has uncollected debt, been subject to payment suspension under
a federal health care program, has been excluded from participating
in a federal health care program or has had its billing privileges
denied or revoked.
The Secretary may deny enrollment or re-enrollment if such
affiliations pose an undue risk of fraud, waste or abuse.
Permit me to use an analogy. There is a class of physicians who
are dysfunctional, incompetent and/or dishonest. These physicians
bounce around from one small town to the next. A small town that is
in desperate need of a doctor will be so excited about getting one
that the town officials don't conduct the proper background check.
This allows the physician to move to the town, cash in on whatever
financial incentives the town gives him and then skip out to the
next town once his dysfunctions start surfacing.
I use this analogy because we see the same phenomenon in the DME
industry. John Smith will start ABC Medical. ABC will suffer
serious compliance and/or financial problems and will close its
doors. Mr. Smith will then start XYZ Medical, which will end up
suffering the same fate as ABC.
By requiring Mr. Smith to disclose past affiliations, the
chances increase that he will be “outed” and will no
longer be eligible for a supplier number.
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Jeffrey S. Baird, Esq. is chairman of the Health Care Group
at Brown &
Fortunato, P.C., a law firm based in Amarillo, Texas. He
represents pharmacies, infusion companies, home medical equipment
companies and other health care providers throughout the United
States. Baird is board-certified in health law by the Texas Board
of Legal Specialization. He can be reached at 806/345-6320 or