CMS Proposes Changes to Supplier Standards’ Direct Solicitation, Subcontracting Rules

BALTIMORE — Under a proposed rule published in today’s
Federal Register, the circumstances under which HME
providers can contact Medicare beneficiaries directly would be
revised.

An Aug. 27, 2010, final rule on the
DMEPOS supplier standards enlarged the scope of the direct
solicitation ban beyond prohibition of unsolicited telephone
contacts to include in-person contacts, email and instant
messaging.

The proposed rule would modify the definition of “direct
solicitation” because CMS said it is “unfeasible” as written in the
final rule and “has been criticized as it covers some types of
marketing activity outside the bounds of what we intended to
prohibit under our regulations.”

As a result, CMS would “revert to restrictions on suppliers
effective before publication of the Aug. 27, 2010 final rule.”

That’s good new for providers, according to the American
Association for Homecare, which has been working with CMS on the
standards.

“The current standard prohibiting direct solicitation has proved
operationally unworkable for suppliers,” said the association’s
Walt Gorski, vice president for government affairs, in a Friday
afternoon statement. “It is so broad that it seemingly prohibits
communication between the supplier and the beneficiary that is
essential to ensure continuity and coordination of care.”

Attorney Neil Caesar of the Health Law Center, Greenville, S.C.,
agreed. “The changes last year to Supplier Standard 11 were a valid
attempt to curb abusive solicitation practices,” he said, “but CMS
created a definition for ‘direct solicitation’ that had some large
loopholes, and these loopholes both weakened the rule and created
confusion.”

In addition, Caesar said, “the rule was broader than the
anti-solicitation statute, which still is limited to abusive
telephone solicitation.”

While the changes would allow suppliers greater marketing
freedom, he pointed out, “CMS did not change the portion of
Standard 11 dealing with physician verbal orders. The scope and
implications of this rule remain unclear and troubling, and we
still don’t understand what sort of evidence of consent is
required. I hope further clarification will be forthcoming.”

In its comments on the proposal, CMS said it would continue “to
actively monitor the issue of potentially unwanted and unsolicited
communications between DMEPOS suppliers and beneficiaries” and
would engage in further rulemaking on the issue if warranted.

The proposed rule would also modify subcontracting rules under
the supplier standards.

In last year’s final rule, CMS said it sought to ensure
oversight of DMEPOS suppliers by adding an additional layer of
oversight in the form of state law. But the absence of express
state law in certain areas “has led to confusion among suppliers as
to who they may contract with under our programs.”

CMS said it is seeking to clarify that contracting with an
individual or entity for licensed services is permissible if
subcontracting is not expressly prohibited by state law. The new
rule would also eliminate any distinction between contract and
noncontract suppliers in their ability to subcontract for licensed
services.

“By making the proposed clarification (that is, it is
permissible for suppliers to contract for licensed services in the
absence of an express State prohibition), we believe the
requirements for contract suppliers are also clarified and that the
reference to competitive bidding program contract suppliers in the
existing regulation is unnecessary and redundant,” CMS said in the
rule.

Gorski said those proposed changes should provide greater
clarity on the requirements for subcontracting “and will make these
relationships easier for suppliers to administer.”

Caesar also said the changes to Standard 1 “are quite welcome.
CMS now says that licensure and employment questions simply must
follow state law requirements, which makes sense. The prior
expansion was unnecessary and overreaching, and I’m glad CMS
proposes a more limited approach.”

View the proposed rule, which has a 60-day comment
period, in the April 4, 2011, Federal Register.