They're baaaak. CMS has decided to take yet another stab at
revising its supplier standards for home medical equipment
providers. The agency has proposed a number of clarifications and
revisions to the existing 21 supplier standards as well as a
handful of new standards for Medicare DMEPOS enrollment.
CMS is couching its revisions as supposed enhanced tools for the
fight against fraud and abuse. However, many of the changes seem to
pigeonhole suppliers into a specific storefront retail operation
with a showroom, general business hours and significant public
traffic. This push toward homogenocity may be a particular hardship
for small suppliers and those who cater to specialized markets.
The Implications
HME providers should strive to understand the implications of
these revisions before they become official. (The comment period on
the new standards proposal was slated to end March 25, 2008.)
First, these proposed changes reflect issues that CMS believes
are important. Whether the change reflects a clarification, a
revision or a new standard, CMS has addressed these issues because
the agency deems them to be of immediate importance. This also
means that these changes may likely reflect a focus from the
National Supplier Clearinghouse on its investigation and
enforcement activities over the next few years.
Second, some of the modifications implicate the anti-fraud
rules. Standard No. 11, for example, concerns cold-calling and
certain inappropriate marketing activities by home care companies.
Violations of these rules will subject a supplier to potential
revocation of its supplier number. But, it will also likely subject
the supplier to challenge because of abusive marketing practices
and to potential repayment of revenues and penalties.
Third, a number of the changes are characterized as
“clarifications.” This means that CMS intends that the
standard that is being “clarified” already means what
the clarification states. It is not a new rule; it is the same
rule, just worded more clearly. Therefore, CMS' position is that
the rule as restated in the “clarification” already is
in effect, and suppliers are already subject to its provisions.
A supposed clarification can be challenged, of course. But that
is a difficult procedure, and it is important to appreciate which
modifications to the standards CMS considers already to be in
force.
Clarifications Vs. Revisions
For example, let's take a look at the differences between
“clarifications” and “revisions” by
examining the proposed revisions to Standard No. 1.
This standard presently states that a supplier must operate its
business according to all state and federal licensure and
regulatory requirements. Basically, that's been interpreted to date
to require that a supplier have all the necessary DME licenses,
specialty certifications, occupancy permits and everything else
required under federal, state or local law.
The proposed changes include a clarification and a modification.
In the clarification, CMS is making it clear the government has no
responsibility whatsoever for helping a supplier determine what
licenses or other kinds of requirements are necessary to operate in
that state.
“While the NSC maintains information regarding state
licensure laws, we do not believe that the NSC is responsible for
notifying any supplier of what licenses are required or that any
changes have occurred in the state licensing requirements,”
CMS' comments say.
This will mean any supplier who historically has taken the
attitude “If I missed something, the NSC will tell me and I
will fix it then,” cannot embrace that lackadaisical approach
should this clarification take effect.
Further, CMS makes clear that if a supplier contends there is an
exception to a state rule, the company will have to show clear
evidence that the state has that exception in place. That means a
supplier would not be able to rely on a telephone comment from some
state official or an inference about what other companies are doing
to conclude that the state rules do not apply. Clear, written
evidence will be necessary.
Because CMS has characterized these changes as a
“clarification,” this reemphasis probably means the NSC
already intends to take a hard line about compliance with state,
local or federal rules. Suppliers should proactively verify their
ongoing compliance as soon as practical. Noncompliance could well
lead to a revocation challenge.
Subcontracting — Yes or No?
The modification to Standard No. 1 is that CMS intends to bring
everything “in house” for the supplier.
Specifically, CMS contends that any state license required in
order for a supplier to supply certain services must belong to the
supplier itself or to its employees. In other words, suppliers will
not be allowed to have a contract relationship with an individual
or entity for licensed services but must hire the licensed
individual as a W-2 employee.
In explaining the rationale for this change, CMS said, “We
believe that we are enrolling DMEPOS suppliers, not third-party
agents that subcontract their operations … therefore to
ensure that only qualified suppliers are enrolled …we
maintain that a DMEPOS supplier … cannot contract with an
individual or entity to provide the license service(s).”
This modification would require significant staffing changes for
many suppliers who currently contract on an independent basis with
respiratory therapists, nurses and other individuals subject to
state licensure and other related requirements.
The proposed change also raises serious questions about
subcontracting under competitive bidding. Suppose a supplier in a
competitive bidding area operates in a state that requires licenses
for respiratory therapists or technicians. Would such a supplier be
allowed to subcontract with another supplier (as is permitted under
the competitive bidding rules) for the provision of respiratory
equipment or services in a geographically remote area? The answer
is murky, at best.
On a related point, some states require respiratory therapists
to remain independent. How will Standard No. 1 provide for a
supplier's use of licensed respiratory therapists in those
states?
In my opinion, CMS is imposing an unnecessary hardship on
suppliers with this rule. Suppliers already must be responsible for
their personnel's performance, regardless of employment status.
There are many less disruptive ways for CMS to gain compliance
assurances: Subcontractors can be identified and listed;
performance and supervision requirements could be monitored.
Further, W-2 employment status does not, in itself, create a
mechanism or an obligation for the supplier to ensure that the
employee is performing consistent with licensure requirements.
Regardless, if this change takes effect, the supplier's
relationships with agencies or independent professional groups will
change dramatically.
Wait, There's More
Here are a few other observations.
First, these standards were drafted with no input from the NSC
Advisory Committee, which is composed of large and small suppliers
and advisors from across the country.
It is not surprising that the revisions reflect the philosophy
apparently embraced by CMS in its recent activities: One way to
combat waste, fraud and abuse in the industry is to try to fit
everybody into one specific mold, both large and small suppliers
alike.
In this case, the mold appears to be a stand-alone retail
operation in which personnel maintain the storefront at all times,
answering the on-site, land-line phone, taking orders from the
storefront and greeting customers, while additional personnel make
deliveries, conduct set-ups and maintenance, etc.
The fact that this one-size-fits-all philosophy does a
disservice to specialty operations, closed shops and very small
suppliers does not presently appear to be of substantial concern to
CMS. Whether this is insensitivity or indifference to the very
small or specialty supplier remains to be seen.
Second, at the beginning of its commentary to the proposed
supplier standards changes, CMS lists some interesting statistics
for fiscal year 2007. According to the commentary, in April 2007
there were 116,471 individual DMEPOS suppliers. However, due to the
affiliation of some suppliers with chains, there were 65,584 unique
billing numbers.
CMS also opines “that approximately 30 percent of the
DMEPOS suppliers are located in rural areas and that the vast
majority of DMEPOS suppliers are small entities (based on Medicare
reimbursement alone).”
Applying some basic arithmetic, this suggests that somewhere
between 20,000 and 35,000 suppliers are based in rural areas.
Further, the CMS information implies that at least 40,000 to 70,000
suppliers are small entities.
It is ironic that, with so many suppliers being acknowledged by
CMS as “small entities,” in its proposed supplier
standards changes, the agency appears to shape everyone into the
traditional retail mold more commonly associated with larger
suppliers.
Third, CMS also notes that, in FY 2007, the largest
concentrations of suppliers were in five states: California
(approximately 9 percent, or 6,000 to 11,000 suppliers), Texas
(approximately 7 percent, or 3,500 to 8,000 suppliers), Florida
(approximately 7 percent, or 3,500 to 8,000 suppliers), New York
(approximately 6 percent, or 4,000 to 7,000 suppliers), and
Pennsylvania (approximately 5 percent, or 3,000 to 5,000
suppliers).
It is realistic to expect that much of the investigative and
enforcement activities by CMS, NSC and the various DME MACs will be
focused on these five states.
Finally, it is valuable to realize that we are in the early
stages of a struggle that will probably last for years, where the
government simultaneously wants home medical equipment suppliers to
function as fungible commodities, with initiatives such as
competitive bidding suggesting that cheaper is almost always
better.
Yet, at the same time, the government wants to emphasize
operational requirements that tell home care companies when, how
and with what tools they must provide enhanced services to their
patients.
We must seek to ensure that the government finds (and
reimburses) the right balance between these distinct philosophies.
Our mission is to communicate clearly to CMS about what works, what
is fair, and what is unfair. Remember, it is common for law
enforcement to push too far and too hard in its efforts to main-
tain order.
It is the responsibility of all of us to combat that government
excess with well-articulated comments and effective resistance,
even while we continue to emphasize legal and ethical behavior.
To view CMS' proposed supplier standards revisions and
changes, see the Federal Register, Jan. 25, 2008.
Neil B. Caesar is president of the Health Law Center (Neil B.
Caesar Law Associates, PA), a national health law practice in
Greenville, S.C., focusing on business opportunities and regulatory
issues for health care providers. He is also a principal with
Caesar Cohen Ltd., which offers compliance training, outsourcing
and consulting, and author of the Home Care Compliance Answer
Book series. Caesar may be reached by phone at 864/676-9075 or
email at ncaesar@healthlawcenter.com.
Revisions and Changes to Existing Standards
Here is a brief overview of the clarifications and revisions
CMS has proposed to its current Medicare DMEPOS supplier standards
for enrollment.
Standard No. 1: Requires a supplier to operate
its business and furnish Medicare-covered items in compliance with
all applicable federal and state licensure and regulatory
requirements.
Clarification: The supplier is responsible for figuring out
applicable federal and state requirements. The NSC has no
responsibility to assist in this hunt and will not tolerate
suppliers who do not put forth the effort.
Proposed Revision: If a state requires a specific license to
furnish certain services, CMS seeks to require the supplier to hire
the licensed individual as a W-2 employee. Contract relationships
would no longer be permitted.
Standard No. 7: Currently requires a supplier
to maintain a physical facility on an appropriate site, the
facility containing space for storing enumerated business
records.
Clarification: “Appropriate site” requires
accessibility during posted business hours, visible signage and
posted hours of operation. In a building complex, the sign must be
visible at the main entrance of the building. The place of business
must be staffed during the posted hours of operation. These same
rules apply to “closed door” suppliers.
Proposed Revision: CMS would require suppliers to maintain
business records for seven years after the claim has been paid.
Also, CMS is soliciting comments on whether to establish a minimum
square footage requirement.
Standard No. 8: Allows CMS to conduct on-site
inspections to ascertain compliance with the supplier
standards.
Proposed Revision: Emphasizes that billing privileges are
subject to the NSC's ability to conduct on-site inspections.
Standard No. 9: Currently requires the primary
business telephone to be a land line, and prohibits exclusive use
of certain alternate communication devices as the primary business
telephone.
Proposed Revision: Would exclude the use of cell phones and
beepers/pagers as a method of receiving calls from the public, or
using “call forwarding” during posted hours of
operation.
Standard No. 10: Currently requires
comprehensive liability insurance of at least $300,000.
Clarification: Self-insurance is permitted.
Proposed Revision: Comprehensive liability insurance must be in
the amount of at least $300,000 per incident. Also, liability
coverage would have to be obtained prior to submitting a Medicare
enrollment application.
Standard No. 11: Imposes limiting conditions on
a supplier's ability to “cold call” beneficiaries by
telephone.
Clarification: Except in limited circumstances, cold-calling is
similarly impermissible by all other means, including computer
email or instant messaging, coercive response internet advertising,
or in-person contacts. Violations of this section may result in
revocation of billing privileges and further investigation under
fraud-and-abuse rules.
Standard No. 12: Currently requires a supplier
to be responsible for delivery of Medicare-covered items and
maintain proof of delivery with appropriate documentation.
Clarification: Identifies five specific obligations connected to
the delivery process.
Materials in this article have been prepared by the Health
Law Center for general informational purposes only. This
information does not constitute legal advice. You should not act,
or refrain from acting, based upon any information in this
presentation. Neither our presentation of such information nor your
receipt of it creates nor will create an attorney-client
relationship.
In addition to revision and clarification of existing
standards, CMS has also proposed the addition of a handful new
supplier standards for Medicare DMEPOS enrollment.
Standard No. 27: Would obligate suppliers in a
state that licenses oxygen suppliers to subcontract only with a
state-licensed suppliers. In a state that does not require
licensure for oxygen supplies, the supplier would be free to obtain
oxygen from any source, in any state.
Standard No. 28: Would require a supplier to
maintain documentation identifying who ordered and referred
equipment, supplies or services, and to maintain this information
for seven years after claim payment; would also require the
supplier to maintain information sufficient to support the medical
necessity for the item.
Standard No. 29: Would prohibit a supplier from
sharing a practice location with another provider, including
physician groups or other providers.
Standard No. 30: Would require a supplier to be
open to the public at least 30 hours per week, excepting suppliers
who work with custom-made or fitted orthotics and prosthetics.
Standard No. 31: Would prohibit a supplier from
having a past delinquency with federal or state taxing authorities.
This prohibition would include a criminal or civil charge of tax
evasion, even if there was no conviction.
Standard No. 57: Would expand the rules about
program exclusion because of ineligible persons working for a
supplier by allowing CMS to assess and correct an overpayment from
the time the supplier should have reported the existence of an
adverse legal action or felony conviction to the NSC. This revision
seems to suggest that CMS may intend to seek repayment from all
suppliers that provide services while ineligible persons are under
their employ or in an ownership position.
