Q&A with Jeff Baird: Contractual Obligations under Competitive Bidding

AMARILLO, Texas — In a HomeCare
Monday Q&A (July 19), health care attorney Jeff Baird
discussed requirements pertaining to the purchase and sale of a
contract supplier (an HME company that was awarded, and signed, a
competitive bid contract). In this set of questions and answers,
Baird discusses the contract supplier’s rights and obligations
under a competitive
bidding contract.

Question: What is the term of a competitive bidding
contract?

Answer: Contracts for mail-order diabetic
supplies have two-year terms starting on Jan. 1, 2011. The term was
limited to two years to allow for a “possible” (i.e., likely)
national mail order competition. Contracts for all other items have
terms of three years starting on Jan. 1, 2011.

Question: Must a contract supplier maintain billing
privileges?

Answer: Yes. A contract supplier must maintain
Medicare billing privileges, state licenses and accreditation
during the entire term of the contract. In addition, a contract
supplier must comply with all requirements of the competitive
bidding program.

Question: What about acceptance of
assignment?

Answer: A contract supplier must accept
assignment on all items under its competitive bidding contract.

Question: How much is paid under the competitive bidding
contract?

Answer: A contract supplier is paid based on
the single payment amounts. Single payment amounts are published on
the CBIC’s website at www.dmecompetitivebid.com. On the left side of
the page, there is a link to “Single Payment Amounts.”

Question: I keep hearing about “non-discrimination.”
What is this?

Answer: A contract supplier may not
discriminate against a Medicare beneficiary. If a contract supplier
offers a particular brand and model for an item (covered by the
contract) to a non-Medicare beneficiary, then the same brand and
model must be available to a Medicare beneficiary. Conversely, if a
contract supplier offers a particular brand and model for an item
to a Medicare beneficiary, then the same brand and model must also
be available to a non-Medicare beneficiary.

Question: When is the contract supplier
required to furnish items to a Medicare beneficiary?

Answer: A contract supplier must furnish items
covered by its competitive bidding contract to any Medicare
beneficiary who maintains a permanent residence in or visits a
competitive bidding area, and requests such items from the contract
supplier. There is an exception for skilled nursing facilities and
nursing facilities that were awarded contracts as specialty
suppliers.

Question: What must the contract supplier do if the
physician orders a specific brand or mode of delivery?

Answer: If a physician or treating practitioner
prescribes a particular brand of an item or mode of delivery, the
contract supplier must:

• furnish the particular brand or mode of delivery as prescribed
  by the physician or treating practitioner;
• consult with the physician or treating practitioner to find an
  appropriate alternative brand of item or mode of delivery for the
  beneficiary and obtain a revised written prescription from the
  physician or treating practitioner; or
• assist the beneficiary in locating a contract supplier that can
  furnish the particular brand of item or mode of delivery prescribed
  by the physician or treating practitioner.

Medicare does not make an additional payment to a contract
supplier that furnishes a particular brand or mode of delivery for
an item. A contract supplier is prohibited from submitting a claim
to Medicare if it furnishes an item different from that specified
in the written prescription received from the beneficiary’s
physician or treating practitioner.

A physician or treating practitioner may prescribe a particular
brand of an item or a particular mode of delivery for an item if he
or she determines that the particular brand or mode of delivery
would avoid an adverse medical outcome for the beneficiary. The
physician or treating practitioner must document the reason in the
beneficiary’s medical record why the particular brand or mode of
delivery is medically necessary to avoid an adverse medical
outcome.

Question: When must the contract supplier disclose a
subcontract arrangement?

Answer: Not later than 10 days after the date a
supplier enters into a competitive bidding contract (i.e., Jan. 11,
2011), the supplier must disclose information on both of the
following: each subcontracting arrangement that the supplier has in
furnishing items and services under the competitive bidding
contract; and whether the subcontractor meets the DMEPOS
accreditation requirements. All suppliers, including those that
perform subcontracted services, must be accredited unless an
exemption to accreditation is applicable. All subcontractors must
be accredited to perform equipment set-up and patient instruction,
unless an exemption is applicable.

Not later than 10 days after the date a contract supplier enters
into a subcontracting arrangement, the contract supplier must
disclose information on both of the following: the subcontracting
arrangement that the supplier has in furnishing items and services
under the competitive bidding contract; and whether the
subcontractor meets the DMEPOS accreditation requirements. All
suppliers, including those that perform subcontracted services,
must be accredited unless an exemption to accreditation is
applicable. All subcontractors must be accredited to perform
equipment set-up and patient instruction, unless an exemption is
applicable.

Question: What reports must the contract supplier
submit?

Answer: A contract supplier is required to
submit to CMS a quarterly report (called “Form C”). Form C requests
information regarding the competitively bid items that a contract
supplier furnished to Medicare beneficiaries during the most recent
quarter. Such information will include the manufacturer, model,
model number, HCPCS code and approximate number of items furnished.
Form C will be due no later than 10 days after: March 31, June 30,
September 30 and December 31 throughout the entire contract
period.

A contract supplier is also expected to review the information
in the Supplier Directory posted on the Medicare website (www.medicare.gov) to
determine if the information is current. Current information must
be submitted to the CBIC within 10 business days of the close of
each quarter.

Question: What must the contract supplier do when a
Medicare beneficiary decides to switch to the contract
supplier?

Answer: When a beneficiary chooses to switch
from a noncontract supplier to a contract supplier (for a rental
item), the contract supplier will work with the noncontract
supplier to make arrangements for pickup and delivery that are
suitable to the beneficiary. A beneficiary may elect to transition
to a contract supplier at any time, and the contract supplier is
required to accept the beneficiary as a customer.

The noncontract supplier is responsible for furnishing the item
until the first rental anniversary date of the equipment that
occurs after the start of the competitive bidding program (Jan. 1,
2011), and the contract supplier may not bill for the new equipment
until the first rental anniversary date. The anniversary date is
the day of the month on which the item was first delivered to the
beneficiary. Thus, the date of pickup and delivery should be the
first anniversary date of the equipment. CMS needs to issue
guidance addressing when a beneficiary insists on a pickup/delivery
date that is substantially prior to the anniversary date.

View more competitive bidding
stories.

Jeffrey S. Baird, Esq., is chairman of the Health Care Group
at Brown &
Fortunato, P.C., a law firm based in Amarillo, Texas. He
represents pharmacies, infusion companies, home medical equipment
companies and other health care providers throughout the United
States. Baird is Board Certified in Health Law by the Texas Board
of Legal Specialization. He can be reached at 806/345-6320 or
[email protected].

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