Q&A: Subcontracting in the Competitive Bidding Program

AMARILLO, Texas — In the current Round 1 rebid of
Medicare's DMEPOS
competitive bidding program, CMS' Competitive Bidding
Implementation Contractor has issued several announcements
regarding subcontracting and accreditation. The following Q&A
on the topic from health care attorneys Jeff Baird and Phuong D.
Nguyen of Brown
& Fortunato is based on current guidance from the CBIC (as
of Oct. 1), but Baird cautions it may be subject to change.

Q: What services may a subcontractor
perform?

A: Under current guidance, a subcontractor may
perform the following services: (i) purchase of inventory; (ii)
delivery and instruction; and (iii) maintenance and repair of
rented equipment. The CBIC has stated that a supplier may not
subcontract for the following services: (i) intake and assessment;
(ii) coordination of care with physicians; (iii) submission of
claims on behalf of beneficiaries; (iv) ownership and
responsibility for equipment furnished to beneficiaries; and (v)
ensuring product safety. A supplier may not subcontract with an
entity or person that is excluded from Medicare, a state health
care program, or any federal government executive branch
procurement program or activity.

Q: May a supplier use a billing contractor to submit
claims?

A: Yes. A supplier may use a billing contractor
to submit claims on behalf of the supplier. Also, when a
beneficiary requests that the supplier submit a claim on behalf of
the beneficiary, the supplier may use its billing contractor to
submit the claim. The CBIC has stated that a billing contractor is
not considered a subcontractor under its subcontracting
guidelines.

Q: Do subcontractors need to be accredited?

A: A subcontractor that only performs the
"purchase of inventory" service need not be accredited. A
subcontractor that only delivers the item (such as UPS or FedEx)
need not be accredited. Similarly, a subcontractor that only
repairs equipment that a supplier is renting to a beneficiary need
not be accredited.

However, a subcontractor that performs equipment setup or
patient instruction must be accredited unless the subcontractor is
exempt from accreditation under Medicare rules or guidelines. Also,
a supplier that is enrolled in Medicare as a DMEPOS supplier and
performs subcontracted services must be accredited, unless the
supplier is exempt from accreditation. All suppliers enrolled in
Medicare as a DMEPOS supplier are required to be accredited (the
deadline was Sept. 30).

Q: Do subcontractors need to have surety
bonds?

A: A subcontractor need not have a DMEPOS surety bond, unless it is
enrolled in Medicare as a DMEPOS supplier. All DMEPOS suppliers are
required to submit a valid surety bond to the NSC (the deadline was
Oct. 2). Medicare requires a DMEPOS supplier to have a surety bond
in an amount of at least $50,000 for each supplier location.

Q: Is a supplier responsible for services performed by a
subcontractor?

A: Yes. The CBIC has stated, "The primary
suppliers are accountable for ensuring that all of the services
associated with furnishing the item, including subcontracted
services, are performed in compliance with the physician's order
and Medicare rules and guidelines." The "primary supplier" is the
supplier that is enrolled in Medicare as a DMEPOS supplier and
bills Medicare for reimbursement of the item or service furnished
to the beneficiary.

Jeffrey S. Baird, Esq., is chairman of the Health Care
Group, and Phuong D. Nguyen, Esq., is an attorney at Brown & Fortunato,
P.C., a law firm based in Amarillo, Texas. The firm represents
pharmacies, infusion companies, home medical equipment companies
and other health care providers throughout the United States. Baird
can be reached at 806/345-6320 or jbaird@bf-law.com. Nguyen can be
reached at 806/345-6308 or pnguyen@bf-law.com.

Baird will present several sessions at Medtrade next week,
including: "Marketing and Joint Ventures: Within Legal Guidelines
You Are Limited Only by Your Imagination," Oct. 13; "Dealing with
the Crazy Aunt in the Attic: Understanding and Successfully
Navigating the Revised Competitive Bidding Rules" with co-presenter
Mark Higley of VGM, Oct. 14; and "Post-Cap Oxygen Payment Rules:
Understanding These Ill-Conceived Rules and Proactive Steps to
Survive under Them," Oct. 15. For more information, visit
www.medtrade.com.