Supplier Standard No. 1: What the Changes Could Mean for You

By all accounts, the effects of CMS’ proposed
revision and expansion of supplier standards for DMEPOS will be
far-reaching. In a special series for HomeCare Monday leading up to
the March 25 deadline for comments, health care attorney Neil B.
Caesar, president of the Health Law Center, Greenville, S.C., will
help provide clarification and insight on several provisions of the
draft rule.

This week, Caesar’s comments are directed to a change in
existing standard No. 1, which deals with state and federal
licensure and regulatory requirements:

This standard right now 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 a supplier to 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.
The clarification is that CMS is making it clear the government has
no responsibility whatsoever for helping the supplier determine
what licenses or other kinds of requirements are necessary to
operate in that state.

“While the [National Supplier Clearinghouse] 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 after this
clarification takes effect.

Further, CMS makes clear that if a supplier contends that there
is an exception to some state rule, the supplier 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 to that
supplier. Clear, written evidence will be necessary.

Most important is an effort by CMS to bring everything “in
house” for the supplier. Specifically, CMS contends that any state
licenses 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 licensed service(s).”

This change 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.

In my opinion, CMS is imposing an unnecessary hardship on
suppliers with this rule because they must already 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, that supplier’s
relationships with agencies or independent professional groups will
change dramatically.

View all
proposed standards and revisions.