Consider Carefully

This is a question that has been debated by the Brown & Fortunato attorneys. While we recognize what the Competitive Bidding Implementation Contractor and the National Supplier Clearinghouse have said about this issue, there is not an across-the-board consensus regarding how HME companies should respond to the CBIC/NSC guidance. Let me explain.

Among other things, the CBIC/NSC guidance requires a subcontractor of a Medicare-enrolled DMEPOS supplier to be accredited when performing certain tasks. (For this article, I use the term “subcontractor” to mean a person or entity that is not a Medicare-enrolled DMEPOS supplier.) According to the CBIC/NSC guidance, the subcontracting requirements stem from the DMEPOS supplier standards. However, neither the CBIC nor the NSC has identified a specific standard that requires subcontractor accreditation.

The most relevant standard reads: “All suppliers of DMEPOS … must be accredited by a CMS-approved accreditation organization in order to receive and retain a supplier billing number.” To me, this standard clearly does not apply to an entity that is not seeking to “receive and retain a supplier billing number.”

Another potential basis for requiring subcontractors to be accredited is the Medicare Improvements for Patients and Providers Act, the law that, among other things, delayed competitive bidding. MIPPA requires “suppliers furnishing … [DMEPOS] directly or as a subcontractor for another entity” to be accredited. To be a “supplier” as the term is used in the Medicare context, an entity must be enrolled in the Medicare program. It is clear to me, therefore, that the MIPPA accreditation requirement does not apply to non-suppliers acting as subcontractors.

The CBIC/NSC guidance states that a DMEPOS supplier may subcontract for the following services: purchase of inventory; delivery and instruction (including patient set-up); and repair of rental equipment. The guidance requires that a subcontractor performing patient instruction (including patient set-up) be accredited for the item for which the instruction or set-up is provided, unless an exemption to the DMEPOS accreditation requirement applies.

Under the CBIC/NSC guidance, a subcontractor will need to obtain accreditation from one of the 10 deemed DMEPOS accreditation organizations (AO). The NSC’s guidance implies that full DMEPOS accreditation is required, though there is no direct guidance on this issue. I believe that a DME supplier (and its subcontractor) may rely on an AO to use the appropriate criteria in accrediting the subcontractor.

There are a number of subcontract arrangements that are affected by the CBIC/NSC guidance. For example, a DME supplier may enter into an equipment consignment/patient set-up arrangement with a sleep lab, under which the sleep lab fits patients with CPAPs and educates them regarding adjustments, cleaning and changing out replacement parts.

Must the sleep lab be accredited by an AO? As mentioned, neither the supplier standards nor MIPPA requires a subcontractor to be accredited, and certainly it can be argued that a sleep lab or other entity that has already satisfied its own Medicare enrollment requirements should not have to be accredited as a DMEPOS supplier as well.

An argument can be made that the CBIC/NSC subcontracting guidelines are not a permissible interpretation of the supplier standards but are, in effect, new regulations that must be issued through the rulemaking process with an opportunity for public comment. In addition, it can be argued that when CMS rescinded Transmittals 297 and 300 (regarding consignment closets, or “stock-and-bill” arrangements), it implicitly rescinded the subcontracting guidelines as well.

For these reasons, and because there has been no guidance on how or when CMS will enforce the requirements, some HME owners have decided to move forward with subcontracting arrangements with non-DMEPOS-accredited subcontractors and have assumed whatever risk is associated. However, we cannot entirely ignore the guidance from the CBIC and the NSC. At the end of the day, you must make a risk assessment as to the decision your company will make.

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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].