Supplier Standard No. 7: What the Changes Could Mean for You

On Aug. 27, the Centers for Medicare and Medicaid Services
published a final rule on Medicare enrollment
standards for DMEPOS providers. The new rule expands on
existing standards that providers must meet to establish and
maintain billing privileges in the Medicare program — and
those standards took effect Sept. 27.

“CMS’ significant revisions to the supplier standards will push
some suppliers out of compliance immediately. Nonetheless, CMS
expected suppliers to be in immediate compliance with all the new
rules, effective Sept. 27,” said health care attorney Neil Caesar,
president of the Health Law Center, Greenville, S.C. “It is
imperative for all suppliers to assess their compliance with all
changes as soon as possible. I recommend that suppliers consult
immediately with their accreditation agencies, attorneys,
consultants or other advisors with any questions they may have. CMS
intends for the National Supplier Clearinghouse (NSC) to
investigate violations promptly and to immediately enforce the new
rules.”

In a special series for HomeCare Monday, Caesar
provides clarification and insight on several of the new standards.
This week, his comments are directed toward Supplier Standard No.
7, one of several revised standards that focus on a supplier’s
facility and physical operations:

Standard No. 7 focuses on a supplier’s obligation to maintain a
physical facility at an “appropriate site.” CMS now requires that
this site must be at least 200 square feet in size. In 2008, CMS’
proposed changes to this standard would have required 500 square
feet, so CMS has reduced this obligation. However, CMS is adamant
that the minimum square footage requirement is necessary, and is
part of CMS’ stated intent “to ensure that DMEPOS suppliers
conform to generally accepted business practices employed by
quality suppliers.”

Many suppliers commented on these changes, and more than one
asked why CMS felt it important to “micromanage” supplier
operations, especially when a supplier satisfies all Medicare and
accreditation requirements. CMS’ consistent response is that these
changes are “necessary to ensure that the facility can meet its
obligations to a beneficiary ….” including “an area
for the beneficiary to sit, or room for a wheelchair and room for
it to turn/move around, as well as room for stock and for the
equipment necessary for running a business.”

The 200-square-foot requirement reflects CMS’ belief that this
is the minimum space necessary for those activities. CMS also
believes 200 square feet to be a minimum size necessary to
accommodate “space for inventory, storage, including patient
records, a desk and chairs, and in most cases a restroom for
employees and customers.”

CMS has carved out an exception to this minimum square footage
requirement for orthotic and prosthetic suppliers. The lab area for
such suppliers is “separate from the patient area and is often
located off site.” And while patient interaction is important,
the area required for such interaction “can be as small as 80
square feet ….”

Several commenters asked whether they could handle certain
operational activities off site. CMS emphasized that the primary
obligation is to have “prompt access to delivery, maintenance,
and beneficiary records at the supplier’s facility where the
beneficiary receives services.” However, CMS acknowledged that
a centralized business center could make sense for housing records.
This acknowledgement should also apply to off-site storage,
maintenance, billing activities, etc.

CMS’ requirement, though, is that such off-site information be
quickly accessible at the supplier location via computer terminal.
Thus, any suppliers who wish to create efficiencies among multiple
locations must ensure that such centralization or consolidation
does not impair each location’s ability to obtain information and
to serve customers promptly.

CMS is not requiring DMEPOS suppliers to maintain a storefront,
so closed-door operations, pharmacy activities, etc., are still
permitted. However, CMS requires that all suppliers be easily found
by beneficiaries and inspectors, and that they be easily accessible
to those people. Thus, part of CMS’ requirement for “an appropriate
site” is that the site be accessible to the disabled and that there
be permanent signage identifying the supplier’s location.

If the supplier is in a commercial building, CMS notes that the
sign can be posted at the entrance of the building. Regardless, the
sign must be “readily visible to the general public.” CMS
acknowledges that the sign may be inside the building. However, the
sign would need to be posted somewhere visible from the main lobby
entrance, and even then only if access to the lobby is available to
the general public. Those suppliers whose lease or location
logistics do not allow for signage immediately visible from the
building entrance must seek to negotiate a change to this
deficiency with their landlords. If the landlord refuses to
accommodate, suppliers must evaluate whether they can fall into the
“phase-in” exception for leasing difficulties, discussed below.

One commenter wrote that certain signage requirements might
conflict with local zoning ordinances. CMS acknowledged the
problem, but was unpersuaded that it required a change to policy.
“For example,” CMS notes, “if the owner of a prospective
supplier of DMEPOS knows or should have known local zoning
ordinances preclude the establishment of home business in a
residential neighborhood, then the prospective supplier of DMEPOS
should make the business decision to: 1) obtain a waiver to the
local zoning ordinance in advance of submitting their enrollment
application to the NSC; or 2) select a different practice location
that will ensure the supplier’s compliance ….”

There are many suppliers who operate businesses out of their
homes, or out of other locations that may not be compliant under
state and local rules in light of CMS’ new requirements. A supplier
may have been able to fly under the radar operating out of these
locations in the past, but will now find it difficult because of
the new requirements.

As mentioned, CMS acknowledges that some suppliers may have
problems in complying with these changes because of their existing
leases. Accordingly, CMS is establishing a limited three-year
phase-in period for existing suppliers who signed long-term leases
on or before Sept. 27. CMS is not allowing a phase-in for
prospective suppliers, even if they have already pursued a lease.
Further, there is no exception for suppliers who have a pending
enrollment with the NSC, nor for existing suppliers who seek to
move to a new location. For all such entities, CMS expects
immediate compliance.

For existing suppliers who are locked into a lease that
prohibits some of these changes, CMS will allow DME suppliers whose
leases end within a year to come into compliance with Standard No.
7 at the end of their current lease. Similarly, suppliers who have
a lease with more than one but less than three years remaining must
come into compliance with the standard at the end of their leases.
Any supplier with a lease that extends more than three years must
negotiate a change to the lease to come into compliance with this
standard by Sept. 27, 2013.

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 [email protected].