Standards of Behavior

The revised Medicare supplier enrollment standards for DMEPOS have been in force for six months or so, since Sept. 27, 2010. Home medical equipment companies are implementing some of the changes with relative ease. But I’m also observing many misunderstandings and miscommunications about the revised rules. Further, a number of the changes seem to be largely unnoticed, resulting in many noncompliant providers. While some of the confusion is due to inconsistent and error-prone “clarifications” from CMS, much is not. In this time of increased audits and tightened compliance requirements, you must understand these changes.

First, an overview. Two themes emerge with the revised standards. One, several of the changes demonstrate an effort by CMS to shape DMEPOS suppliers into a standard mold: a storefront retail operation, open to the public during traditional business hours with multiple staffers and a general product mix. Suppliers who don’t fall into this mold may find it difficult or costly to implement some of the changes.

Two, some of the changes implicate the anti-fraud rules, authorizing the National Supplier Clearinghouse to communicate concerns to the Office of Inspector General or other fraud investigative entities. This means that violations of certain supplier standards could also lead to repayment demands or even fraud allegations.

Here we focus on the revisions to existing Supplier Standards 1, 7, 8, 9 and 11. (Part 2 will examine four new standards, numbers 26-30.)

Standard 1: State Law Compliance and Licensure Issues

Under revised Supplier Standard 1, suppliers may not contract with a third party to provide services if the state requires those services to be “licensed.” For example, a supplier in a state that requires a licensed respiratory therapist must employ (W-2) the therapist. The supplier may not contract with an independent therapist or outside agency, except for short-term substitutes.

Suppliers retain their options in those states that don’t require licensure, as well as in states that specifically allow subcontracts for licensed services. The licensure employment rule also will not apply to subcontracts under competitive bidding. (CMS, however, states that it is allowing these contracts “on a phase-in basis.”)

The more difficult aspects of this rule are somewhat mitigated by the options of part-time employment, per-diem employment, etc. Still, licensed services that would be available by contract are not necessarily easily available with W-2 employees, especially in rural areas and some urban environments.

One of CMS’ stated rationales for the rule is to improve continuity of care, so that someone who does the initial work-up is more likely to be the person who stays with the customer for certain aspects of the relationship. This reasoning is strained, because part-time employment can lead to similar continuity-of-care problems. CMS officials also say they worry about fraud, but I don’t really see where the fraud issue fits in; certainly CMS can monitor fraud without the employment requirement. Primarily though, CMS’ stated reason for this change is simply to ensure that suppliers comply with state licensure law.

CMS recently retreated from its initial aggressive approach to the Standard 1 revisions. When first implemented, the agency contended that DMEPOS personnel had to be employed unless state law explicitly permitted independent contracting. This meant that CMS required that licensed personnel be employed in those states that lacked clear rules about independent contracting. However, CMS now says it requires employment of licensed personnel only when such employment is clearly required under state law. In other words, if state law does not explicitly address the employment issue, suppliers may still maintain independent contractor relationships with licensed personnel.

This is an important change in CMS’ position. It eviscerates the revisions to Standard 1, and returns us to the Standard 1 rule that has always been in place: Suppliers must obey state law. Nonetheless, suppliers should pay close attention to any further CMS pronouncements on this issue.

Standard 7: Practice Location on an ‘Appropriate Site’

Standard 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 “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.”

CMS also wants there to be “space for inventory, storage, including patient records, a desk and chairs, and in most cases a restroom for employees and customers.” CMS did create an exception to this minimum square footage requirement for orthotic and prosthetic suppliers.

Revised Standard 7 does not require DMEPOS suppliers to maintain a storefront, so closed-door operations, pharmacy activities, etc., are still permitted. However, the standard requires that all locations be accessible to the disabled, with permanent signage. If the supplier is in a commercial building, the sign must be “readily visible to the general public.” If the sign is inside the building, it must be somewhere visible from the main lobby entrance, and the lobby must be available to the general public. Those suppliers whose lease or location logistics do not allow for immediately visible signage must negotiate a change to this deficiency with their landlords.

CMS acknowledges that some suppliers may have compliance problems because of existing leases. Accordingly, CMS established a limited three-year phase-in period, but only for existing suppliers who signed long-term leases on or before Sept. 27, 2010.

Several commenters on this rule asked whether they could handle certain operational activities off-site. But 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.”

CMS acknowledged that a centralized business center could make sense for housing records, and presumably also for off-site storage, maintenance and billing activities, etc. However, CMS may have backed away from this commentary. In a Jan. 14 FAQ, the agency stated that suppliers should not use an off-site third party to store records, even if those records could be quickly retrieved.

CMS should be gently prodded back to its position as stated in its Aug. 27, 2010, commentary, which would allow information to be stored off-site as long as it is quickly accessible at the supplier location (such as via computer terminal). Regardless, any providers 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.

Many suppliers still operate businesses out of their homes, or other locations that may not be compliant with Standard 7. Under the new rule, they will find it difficult to escape notice.

Standard 8: Inspections, Access and Signage

Revised Standard 8 specifies that “CMS, the NSC, or agents of CMS or the NSC” must have unlimited access to a supplier location. CMS emphasizes in its comments that surprise site inspections are likely.

It is certainly possible that a staffer responsible for facilitating an inspection may not be present at the practice location when an unannounced site visit occurs. It is also common for personnel to get flustered or nervous when confronted by inspectors.

For these reasons, I strongly recommend that you create for each location a binder in which all of the necessary documents to demonstrate compliance are kept. These should be kept current and placed in a set spot, such as on the top of a particular file cabinet. All appropriate personnel in every location should be trained to give this binder to the inspector when he or she arrives, and then to call a designated person to coordinate the visit. (The telephone number and name of this person could be prominently listed on the first page of the binder.)

One commenter suggested to CMS that it would be unjust to deny or revoke a number based on one site visit, because the business could be closed for a legitimate unforeseen reason when the inspector arrived. CMS replied that suppliers must establish practices and procedures to minimize unexpected or emergency situations. But, “when warranted, the NSC will conduct an unannounced follow-up visit prior to denying or revoking billing privileges.”

CMS clearly does not require multiple site visits before concluding whether a supplier number should be sanctioned. Don’t assume that they will give you a second chance if the first visit goes badly.

Standard 9: Telephones

Supplier Standard 9 also focuses on HME company operations, this time addressing business telephone use. Specifically, the revised standard requires a supplier to maintain a primary telephone operating at the practice location — listed under the name of the business, locally or toll free, for beneficiaries. The supplier is prohibited from using cell phones, beeper numbers or pagers in lieu of the business telephone.

Forwarding calls from the primary business telephone to a cell phone or a beeper/pager is also prohibited. Finally, the exclusive use of answering machines, answering services, or fax machines cannot be the primary business telephone during posted operating hours.

It does not appear that CMS’ prohibition applies to the use of cell phones, beepers and pagers for internal communications; the prohibition seems only to focus on calls with beneficiaries or referral sources. But CMS’ restriction would apply to a branch office forwarding calls to a main business office number. When multiple practice locations exist, CMS believes that each one should handle its own phone calls. Will CMS allow a rollover line for calls that are not answered in time? These details have yet to be addressed.

What about call centers? Some larger companies have begun to utilize call centers to funnel referrals and inquiries to appropriate intake personnel or practice locations. Calls may be forwarded on the basis of geographic proximity or on the basis of specialization; different intake personnel may handle respiratory patients than handle power mobility patients.

Standard 9 probably permits such call forwarding when it is initiated by a local branch that receives an intake call from a local referral. But suppose the caller is prompted electronically toward a particular intake destination? This approach arguably violates Standard 9 because it bypasses the branch office telephone.

Standard 9 revisions will affect many business activities for suppliers large and small. Communication devices other than in-office business telephones should be used minimally, limited to internal communications among company personnel.

Standard 11: Solicitation Activities

CMS’ interpretation of Standard 11 is confusing and contradictory. However, this standard addresses important issues like customer solicitation and physician verbal orders, so we must wade through the CMS mud.

Before it was revised, Standard 11 tracked the federal anti-solicitation statute and prohibited suppliers from contacting potential Medicare customers unless they gave prior written permission to be contacted, or unless the supplier had provided the customer with a Medicare-covered item within the past 15 months.

In its Sept. 27 rule, CMS extended the existing exceptions to a broader array of contact methods by creating a new term, “direct solicitation,” defined as “direct contact which includes, but is not limited to, telephone, computer, e-mail, instant messaging, or in-person contacts by a DMEPOS supplier or its agents to a Medicare beneficiary without his or her consent for the purpose of marketing the DMEPOS supplier’s health care products or services or both.”

There are three important nuances to these revisions. First, Standard 11’s prohibited “direct solicitation” only occurs when, among other things, contact is made without the beneficiary’s consent. Thus, if there is evidence of a beneficiary’s consent, by definition there is no prohibited “direct solicitation” and the beneficiary contact is permitted even in the absence of written permission. This may give suppliers the avenue they have wanted for several years to allow more customer consent for websites that have a “click to accept” process.

Second, in its commentary to the changes, CMS stated that the prohibition also applies “to non-covered items if they are being solicited by a Medicare enrolled DMEPOS supplier.” The focus is on the recipient of the solicitation (the beneficiary), not the items being solicited.

Third, marketing activities are still allowed. CMS states that DMEPOS suppliers may advertise their products or services at “health fairs, community events, or the DMEPOS supplier’s website.” Any website intended to be “of use to the general public” would likely fall within the category of permitted “general advertising.” CMS noted that “a dedicated website that can be freely accessed by the general public, at the consumer’s choice, is not considered direct solicitation for the purpose of this standard.”

Fourth, even though the text of Standard 11 in no way prohibits direct mail marketing, CMS stated in its Jan. 14 FAQ, “We believe that general mass advertising through the post office is not prohibited. Targeted mailings to specific beneficiaries are prohibited.” This CMS interpretation clearly goes beyond the scope of Standard 11. Postal mail is not prohibited, regardless of whether it is from “general mass advertising” or “a targeted mailing.” General mail is not coercive. A beneficiary can elect to open the mail or not, and act on it or toss it in the trash.

CMS has also expanded Standard 11 to deal explicitly with the issue of verbal orders from physician offices, stating, “it is inappropriate for a DMEPOS to contact a beneficiary based solely on a physician order.” The agency’s core concern is that the contact be with the beneficiary’s knowledge and consent. Further, this consent may only be for the physician to contact some DMEPOS supplier, not a specific provider.

CMS believes that this permission can easily be a standard part of the paperwork presented to the patient during a physician visit, or may be part of “a consent form giving [for example, a] hospital staff member permission to share the beneficiary’s information with the DMEPOS supplier for the purpose of initiating service.” Standing permission with the physician, hospital, etc., may also satisfy this requirement.

A recent CMS FAQ suggested that the patient’s consent must be written. After an outcry from the industry, CMS stated on Jan. 20 that, due to “enforcement issues,” it would not tell contractors to implement the expanded provision until the issues are addressed.

CMS’ retraction does not resolve the confusion. Can a supplier presume that the physician has a patient’s consent for contact? The most cautious approach would be not to contact the patient unless consent has been verified with the physician.

Most HME companies will probably choose a more practical but slightly riskier protocol, to contact the patient if they believe that the patient knew the physician was going to place an order for DME. Regardless of the approach, I strongly recommend that all patient intake calls begin by verifying that the patient knew his or her physician was going to contact a DMEPOS supplier. If the patient answers no, the phone call should end and the physician should be contacted for clarification.

CMS’ Jan. 20 retraction probably applies both to the rule about physician verbal orders and also to the expanded prohibition on in-person contacts, email, instant messaging, targeted mailings, etc. It thus appears that, at least for the moment, only telephone cold calling is prohibited.

Two final observations: First, CMS makes clear in its commentary that it views solicitation excesses as evidence of potential fraud or abuse because of the coercive message used. Consequently, CMS contends that violations of Standard 11 will allow it to revoke a supplier’s billing privileges, and potentially to refer such activities to the Office of Inspector General for further action.

Second, Standard 11 has significant ramifications for companies that lose key personnel to competitors. Often an employee who jumps ship will try to appropriate “his” customers. If the former employer tries to fight this misappropriation, the new employer will often threaten to tie the fight up in expensive litigation, and the previous employer backs away.

Under Standard 11, it is clear that the customer relationship belongs to the original supplier, the former employer. If a departing employee communicates with previous customers, he or she will be engaging in solicitation activities that violate Standard 11. (For the moment, this only applies to telephone solicitation.)

This violation subjects both the employee and the new employer to potential revocation and investigation for abusive activities. Standard 11 thus gives employers who lose key personnel an important weapon to utilize when protecting proprietary customer information. (HIPAA penalties may be an additional weapon for the former employer.)

The NSC has already embraced these revisions. You must do the same.

Neil B. Caesar is president of the Health Law Center (Neil B. Caesar Law Assoc., PA), a national health law practice in Greenville, S.C. He also is the author of the Home Care Compliance Answer Book. You can reach him at 864/676-9075 or [email protected].

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