On Aug. 27, the Centers for Medicare and Medicaid Services
published a final rule on Medicare enrollment
standards for DMEPOS providers. The rule expands on existing
standards that providers must meet to establish and maintain
billing privileges in the Medicare program; the new supplier
standards took effect Sept. 27. In a special series for HomeCare
Monday, health care attorney Neil Caesar of the Health Law Center
provides clarification and insight on a number of the new
standards. Here's what Caesar has to say about Supplier Standards
Nos. 29 and 8:
This week we focus on the remaining supplier standards that
regulate the operations of your facility locations, new Standard
No. 29 (sharing locations) and revised Standard No. 8 (on-site
inspections).
New Supplier Standard No. 29, first proposed in 2008, addresses
CMS' concern that problems may arise when more than one provider
shares a practice location. However, CMS is less than clear with
its explanation of this standard.
First, what space sharing does CMS specifically prohibit? The
first sentence of CMS' commentary to the new standard states that
Standard No. 29 prohibits a supplier "from sharing a practice
location with another Medicare supplier." Yet when you look at
the wording of the standard itself, it explicitly prohibits a
supplier sharing a practice location with any other supplier or
provider.
One of the key issues, therefore, is the appropriate breadth of
this prohibition. Elsewhere in the commentary, CMS discusses
space-sharing issues involving suppliers in hospital locations, as
well as space-sharing examples with non-competing providers. There
would be no need for these discussions if CMS only intends this new
standard to prohibit space sharing between suppliers. Thus, it is
clear from the overall commentary that CMS intends to interpret
this standard broadly to apply to space sharing with any
provider.
Second, in defending its position CMS states "we do not
believe that legitimate DMEPOS suppliers routinely share practice
locations with another Medicare supplier." CMS' rationale
seems to be that "we have found that unrelated business
entities that share the same practice location often provide poor
quality care or, in some case(s), are associated with fraudulent
businesses or do not exist." Even here, though, the scope of
CMS' rationale is unclear. CMS states at one point that it does not
"believe that legitimate businesses share practice locations
with competitors."
Yet the focus on competitors disappears elsewhere in CMS'
commentary. One commenter asked whether two entities that did not
compete, and were owned by the same owner, could share space? CMS
replied that such an action was prohibited, stating that it did
"not believe that it is a common practice to establish multiple
DBAs at the same practice location." Thus CMS' rationale
extends beyond collusion suspicion or quality concerns regarding
competitors.
On this point, note that CMS' focus is on two entities with two
NPI numbers sharing space. If one supplier had two different DBAs
(but one NPI number) operating, it may be able to operate both cost
centers from the same location.
CMS emphasized that Standard No. 29 similarly prohibits
complementary businesses from sharing space, as well as prohibiting
two entities from sharing a location only for retail sales. CMS did
confirm that a supplier may be in an office building that, in
separate suite locations, also houses other providers. In other
words, the "same space" applies to a specific location with a
distinct street address, not to the entire building itself.
The third inconsistency in CMS' explanation of this new standard
affects whether the prohibition applies to sharing other things
beside space. On the one hand, in response to a question as to
whether the prohibition also encompassed an "equipment or
staff" sharing, CMS clarified that the restriction was limited
to the sharing of the physical location. On the other hand, CMS
states elsewhere, "We do not believe that legitimate DMEPOS
suppliers share inventory, staffing or a practice location with a
competing DMEPOS supplier."
CMS' comments suggest that it may take a hard line against any
kind of activity that shares resources, whether it is equipment,
personnel or whatever. While one could argue persuasively that that
this approach would overreach the plain wording of the standard,
suppliers should exercise caution when considering any sort of
co-mingling. This is especially true when the co-mingling of
equipment, personnel, etc., occurs among competing suppliers. CMS'
attitude may be softer when the entities are in complementary or
unrelated businesses.
On a related point, CMS acknowledges in its comments that
Standard No. 29 focuses only on the location where the supplier
"operates his or her business and meets with customers and
potential customers." So, if warehouse, storage facility or repair
facility space is located elsewhere, then the space-sharing
prohibition would presumably not apply to those activities. (Be
careful, though, to comply with supplier standard requirements
regarding inventory, storage, etc.) The wise course of action for
any kind of warehouse space sharing is to have distinct locations
for the different entities' equipment.
CMS has created a few exceptions to this prohibition. One
exception applies where a physician or a non-physician practitioner
furnishes DMEPOS to his or her own patients as part of his or her
professional service. Because of the Stark law, this overlap is
limited to those types of DME allowed under Stark — walkers,
crutches, glucose starter kits, etc. Another exception focuses on
physical or occupational therapists who furnish items to their
patients as part of their professional service. Both of these
exceptions are limited to equipment provided to patients actively
under the physician's or therapist's care. However, CMS did not
extend these exceptions to orthotic or prosthetic fitters
"because they are not individual practitioners who are
furnishing items to their own patients as part of their
professional service." Instead, they were DMEPOS suppliers
seeking to share "space with another supplier."
CMS' rationale for these exceptions is that physicians and other
licensed practitioners are allowed to obtain a DME supplier number
and furnish DMEPOS from their offices. Therefore, it would be
impossible for CMS to apply its space-sharing prohibition to those
circumstances.
The final exception applies to a supplier who is "co-located
with and owed by an enrolled Medicare [Part A] provider." The
idea here is that a supplier owned by a hospital (or other Part A
provider) may have space in that hospital facility (or other Part A
facility) without violating this standard. To qualify for this
exception, the supplier must operate as a separate unit and meet
all of the other supplier standards. One commenter suggested that
this same exception should apply to a pharmacy "because of the
burden that separate locations would put on the patients." CMS
disagreed, and emphasized the narrow scope of the exception.
Another commenter suggested that space sharing should be allowed
when both entities had common ownership. CMS again disagreed. The
exception only applies when the DME supplier is a separate unit
located within or owned by a larger facility.
There are many legitimate reasons, both fiscal and operational,
why one supplier and another might want to share resources. When
they are not competitors, it is hard to see why CMS believes
problems and substandard care are likely simply because of the
economies of scale from certain shared resources. Nonetheless, CMS'
position is, for the most part, clear. A number of suppliers will
be required to change their space utilization to avoid all
prohibited co-mingling.
Supplier Standard No. 8 has been modified to specify those
government officials who must be given unlimited access to a
supplier location. Specifically, the supplier must permit "CMS,
the NSC, or agents of CMS or the NSC to conduct onsite inspections
to ascertain to supplier compliance with the requirements of this
section." CMS emphasizes in its comments that surprise
inspections are to be expected. This is one of the reasons why,
according to CMS, all DMEPOS suppliers need to be open during all
posted hours of operation.
It is certainly possible that staffers responsible for
facilitating any inspections may not be present at the practice
location when an unannounced site visit occurs. It is also common
for supplier personnel to get flustered or nervous when confronted
by inspectors. For these reasons, I strongly recommend that
compliance with Standard No. 8 also include the creation of a
loose-leaf binder or similar container in which all of the
necessary documents to demonstrate compliance are kept. These
should be kept active at each location, in a set spot such as on
the top of a particular file cabinet. All appropriate personnel in
each location should be trained to give this binder to the
inspector when he or she arrives. At the same time, the staffer
should call a designated person to coordinate the visit. (The
telephone number and name of this person could be prominently
listed on the first page of the binder.)
One commenter suggested to CMS that it would be unjust to deny
or revoke a number based on one site visit, because the business
could be closed for a legitimate unforeseen reason when the
inspector arrived. CMS replied that it is essential for suppliers
to establish practices and procedures to address and minimize
unexpected or emergency situations. CMS does acknowledge, however,
that unforeseen emergencies may still arise and "when
warranted, the NSC will conduct an unannounced follow-up visit
prior to denying or revoking billing privileges."
CMS is clearly taking a hard line against routinely allowing
multiple site visits before concluding whether a supplier number
should be issued or reaffirmed even though the change to Standard
No. 8 is characterized as a "clarification." Suppliers should not
assume that they will get a second chance when the first visit goes
badly.
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. 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.
