5 Legal Issues for Home Medical Equipment Providers in 2022

Well, the last two years have been strange. COVID-19 has been a game changer. In a silver lining, the home medical equipment (HME) industry came through with shining colors during the pandemic. The industry was asked to take care of patients in their homes and keep the patients out of hospitals—and HME providers and manufacturers responded admirably.

From a public health standpoint, the country will continue to face uncertainty. HME suppliers will be on the front line in facing these uncertainties. Let’s discuss some hot button legal issues facing HME suppliers in the next 12 months.

1. Vaccines

In early November 2021, the Centers for Medicare & Medicaid Services (CMS) issued an interim final rule (IFR) that mandates that employees of specified health care providers be vaccinated. HME providers were not specifically included in the rule. As of press time, two federal courts have enjoined CMS from enforcing the rule, and the agency announced a pause in enforcement actions.

Also in early November, the Occupational Safety and Health Administration (OSHA) issued an emergency temporary standard (ETS) stating that employers with 100 employees or more must either mandate vaccinations or require COVID-19 testing. This mandate did apply to large HME providers. The Fifth Circuit Court of Appeals enjoined the enforcement of the ETS. In response, OSHA announced that it will not enforce the ETS pending future court decisions.

Notwithstanding the CMS IFR and the OSHA ETS, private sector employers have the legal right to require employees to be vaccinated, subject to two exceptions: the employee has a medical condition that might cause the vaccine to result in medical problems for the employee and/or the employee has a bona fide religious objection to taking the vaccine.

2. Managed Care

Today, about 39% of Medicare beneficiaries are covered by Medicare Advantage Plans (MAPs) and about 70% of Medicaid patients are covered by Medicaid Managed Care Plans (MMCPs). MAPs and MMCPs are causing many challenges for HME suppliers, including the prevalence of closed panels in managed care.

HME suppliers are trying to determine what their rights are when dealing with MAPs and MMCPs that implement policies that are unfair to suppliers. The challenge is that federal law governing MAPs does not focus on the rights of providers and suppliers; rather, the focus is on enrollees. There is an interesting dynamic when it comes to MMCPs. They are governed by both federal law and state law. It appears that state regulators say, “That’s not our responsibility, that is Medicare’s responsibility,” while federal regulators say, “that’s not our responsibility, that is the state Medicaid program’s responsibility.”

Federal statutes and regulations governing MAPs and MMCPs are quite extensive. However, only a small portion of the regulations address the relationship between the plans and providers/suppliers. Generally, the regulations that pertain to providers and suppliers are aimed at protecting enrollees’ access to care and ensuring that the plans have a baseline coverage of medical care and an adequate provider network.

Recognizing the challenge facing HME suppliers, the American Association for Homecare has formed the Payer Relations Council, which focuses exclusively on the challenges MAPs and MMCPs are causing HME suppliers.

3. Telehealth

Before COVID-19 hit, HME suppliers were limited as to how much they could rely on physician orders resulting from telehealth encounters for HME. Pre-pandemic, in order for CMS to pay for HME resulting from a telehealth physician order, three things had to happen. The Medicare beneficiary had to reside in a rural area, the beneficiary had to drive to an “originating site” (e.g., a critical access hospital) to have the telehealth encounter with the physician, and the telehealth encounter had to be both audio and visual.

These requirements have been relaxed during the public health emergency (PHE). Now, the Medicare beneficiary can reside in any area in the United States and the beneficiary can have the telehealth encounter from home. In most instances, the telehealth encounter must continue to be both visual and audio.

The question is whether this relaxation of telehealth restrictions will last when the PHE is over. While there is no clear answer to this question, many industry stakeholders believe that the relaxation of restrictions will remain permanent.

4. Value-Added Services vs. Prohibited Inducement

A way for an HME supplier to set itself apart from its competitors is to offer value-added services to patients that the supplier’s competitors do not offer. This is legally acceptable.

However, it is important that in offering value-added services, the HME supplier not cross the line into offering prohibited inducements.

Recently, the industry has witnessed a loosening up of restrictions by CMS and the Office of Inspector General (OIG). CMS and the OIG recognize the importance of offering value-added services that are designed to make health care more accessible to individuals who normally face obstacles to care. In 2017 and 2019, the OIG published Advisory Opinions that discussed the difference between a legally acceptable value-added service and a prohibited inducement. For example, the OIG stated that it is acceptable for a hospital to provide free child care services for a parent who wishes to drop off a child for a couple of hours while the parent takes another child to an appointment with a physician. On the other hand, the OIG stated that it would not be acceptable for the hospital to reward a parent with movie tickets after the parent took a child to an appointment with a physician.

In November 2020, CMS published amendments to exceptions to the federal physician self-referral statute (the Stark Law), and the OIG published amendments to the safe harbors to the federal anti-kickback statute. In line with the 2017 and 2019 Advisory Opinions, the amendments are designed to allow health care providers more flexibility in offering value-added services.

5. The “60 Day” Rule

The Affordable Care Act sets out the “60 Day” rule. This rule states that when a provider or supplier determines (or should have determined) that it was paid for claims by a federal health care plan when it shouldn’t have, then they are obligated to take six months or less to investigate the issue and they must voluntary report the matter to CMS and repay the claims within 60 days after the six months. If the provider or supplier fails to take these steps, the claims can become false claims under the federal False Claims Act, resulting in potentially large penalties.