Going, Going, Not Sold?
Since the passage of the Medicare Modernization Act of 2003, industry experts have been advising DMEPOS providers to become accredited. But with a recent statement by CMS that only 30 percent of providers are accredited, we wonder why people have been waiting.
In 2005 and 2006, providers said they were waiting to find out who the recognized accreditors would be. The accreditors were announced in November of 2006, but still they waited. At that time, many stated the reason for their delay was that they wanted to see where the first 10 MSAs selected for competitive bidding would be. Even though they were announced in April 2007, providers outside of those 10 areas continued to wait.
Their next “postpone-the-process” reason was to see if they were included in the 70 MSAs chosen for round two of bidding. Those cities were announced in December of 2007 along with the “drop-dead” accreditation date for all providers of Sept. 30, 2009.
And now we hear that many of the providers who delayed becoming accredited for any or all of these reasons want to sell their business rather than become accredited. But a surprise announcement from CMS in January of this year has many in this group kicking themselves.
The agency announced that any provider seeking to obtain a new NSC number after March 1, 2008, would have to be accredited first. This applies to the opening of a new business location as well as the purchase of an existing business.
With this ironic twist, these providers are stuck. Without the business being accredited, a buyer (with less than 25 stores) cannot obtain a new NSC number for the purchase of an existing business. How can this be? CMS is looking to curb the activities of fraudulent providers who can close up shop in one location and quickly set up in another before their abuse of the system is discovered.
By requiring that providers be accredited before they can obtain a new NSC number, the expectation is that the bad apples will be rooted out. Yet again, however, this hurts the good guys as well.
Some of CMS' recognized accreditation organizations can award “conditional” or “provisional” accreditation to a new site when they have already accredited the parent location, but this award is subject to the unannounced on-site survey. (Some accreditors don't offer this kind of recognition at all.)
An unannounced survey can take from two to four months once the accreditor is notified of the new location or that the purchase is final. We also know that if a provider is starting the accreditation process from scratch and the parent location is not accredited, the process can take from four to six months to complete.
Additionally, most state Medicaid programs require that providers have a Medicare number first before they can receive a Medicaid provider number. The same thing holds true for many managed care and third-party payers.
Can we all guess what the value of a non-accredited business that services Medicare beneficiaries for identified Part B items and supplies became on March 1? And does this business have any value between now and Sept. 30, 2009, if it is not accredited? We know the answer after that date since all providers must be accredited by that time, but now the tide has changed well before that “drop-dead” date.
It looks like CMS just gave us the last and most important reason to become accredited as soon as possible. Your deadline is 2009, sooner if you intend to bid in round two — and now critical if you intend to sell your business at any time.
It continues to appear that CMS is throwing the baby out with the bath water in efforts to curb fraud and abuse. While these efforts will limit the ability of fraudulent providers, they have just decimated the market for small, non-accredited HME businesses that wish to sell.
Accreditation is just one way to ensure that only quality providers are in business, but now CMS has made it a crucial element for the sale of a business as well. The message? Get accredited.
“Going, going, gone” is the statement we need to hear at the conclusion of a successful HME business sale.