More from PPACA

This is the third of a 4-part series on the provisions of the Patient Protection and Affordable Care Act (PPACA) and how the health reform law affects DME providers. Series: Part 1 | Part 2 | Part 3

There are a number of provisions that directly affect DME suppliers in the Patient Protection and Affordable Care Act, including offsetting payments to suppliers with the same tax ID numbers and the requirement that a supplier implement a compliance program.

Under the health reform law, the Department of Health and Human Services can adjust payments to a provider or supplier that has the same tax ID number as one that owes past-due obligations under Medicare, Medicaid or CHIP, regardless of such providers’ or suppliers’ Medicare billing number or NPI.

For example, assume that an HME company has three HME locations (each with a Part B supplier number), a sleep lab and a home health agency. Assume these are divisions of the HME company (they are not separate subsidiary corporations). Assume that one of the HME locations ends up owing a substantial recoupment to CMS.

In order to recover the recoupment, CMS may now offset not only against the supplier number for the one HME location but also against payments to be made under the other two HME supplier numbers, the sleep lab local carrier Part B number and the home health agency provider number.

The right given to HHS to look at multiple supplier and provider numbers under the same corporate entity for offset is consistent with CMS’ goal of not allowing a company or individual to escape its/his obligations by “hiding” behind a separate supplier number or corporate entity.

PPACA states, for example, that providers or suppliers enrolling or re-enrolling in Medicare, Medicaid or CHIP will be subject to new disclosure requirements. Applicants will be required to disclose current or previous affiliations, directly or indirectly, with any provider or supplier that owes money to a government program, has been excluded from participating in federal health care programs or has had billing privileges denied or revoked.

In another of the law’s directives, by a date to be determined by HHS, certain providers and suppliers will be required to establish a compliance program. The compliance program must contain core elements that will be established by HHS in consultation with the Office of Inspector General.

There is no specific implementation timeline for HHS to establish the core elements. CMS has, however, solicited comments from the public as recently as Feb. 2, 2011, on issues pertaining to implementation of the core elements. Based on compliance program guidance for the HME industry published by the OIG in 1999 and on subsequent comments and guidance from the OIG, we can fairly accurately predict the core elements that the OIG will expect to be included.

Existing OIG compliance guidelines for HME suppliers list seven required elements of an effective compliance program: written policies and procedures; designation of a compliance officer and compliance committee; conduct of effective training and education; development of effective lines of communication; enforcement of disciplinary standards; auditing and monitoring; and response to offenses and corrective action.

In order to be deemed “effective,” the compliance program must be something more than a set of documents that simply restate these seven elements. These basic elements must be specifically implemented by the HME company and be designed to address its past, existing and future activities.

Once HHS issues regulations — and a deadline — for compliance programs, HME companies will need to buy into the importance of compliance.

The OIG has warned that merely purchasing compliance policies is not enough:

“Implementing an effective compliance program requires a substantial commitment of time, energy and resources by senior management and by the DMEPOS supplier’s governing body. Superficial programs that simply have the appearance of compliance without being wholeheartedly adopted and implemented by the DMEPOS supplier or programs that are hastily constructed and implemented without appropriate ongoing monitoring will likely be ineffective and could expose the DMEPOS supplier to greater liability than no program at all.”

As the OIG said in its first guidance: “Compliance efforts are designed to establish a culture within a DMEPOS supplier that promotes prevention, detection, and instances of resolution of conduct that do not conform to federal and state law…..[T]he compliance program should effectively articulate and demonstrate the DMEPOS supplier’s commitment to ethical conduct. Benchmarks that demonstrate implementation and achievements are essential to any effective compliance program. Eventually, a compliance program should be part of the fabric of routine DMEPOS supplier operations.”

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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].