BALTIMORE — Some 11,000 DMEPOS providers have had their
Medicare numbers revoked as a result of new accreditation and
surety bond requirements,
according to CMS. Thousands more withdrew from the program

"Starting with a universe of about 105,000 suppliers and
pharmacies in October, as of Dec. 15, about 3,400 voluntarily
terminated their numbers, another 1,200 deactivated their numbers,
but we don't know why, and about 11,000 were revoked," a spokesman
for the agency told HomeCare. "But that number may change
because there are some in the accreditation queue and others in
appeal, so the numbers are still pretty fluid."

What is concrete, however, is that approximately 15,600
providers — about 15 percent of the universe, going by CMS'
figures — are currently no longer eligible to do Medicare

CMS required DMEPOS providers to be accredited by Oct. 1, 2009
(some pharmacies
received an extension
until Dec. 31), and to have
$50,000-per-location surety bonds in place by Oct. 2 or forfeit
their right to bill Medicare.

In the weeks before those deadlines, the National Supplier
Clearinghouse was deluged with calls as providers tried to find out
whether their accreditation and bonding information had been
received — or asked to withdraw their Medicare billing
numbers voluntarily. Under CMS rules, unaccredited providers who
did not voluntarily end their Medicare enrollment before the
deadline risked not only revocation but also a one-year
reenrollment bar. Those who voluntarily withdrew their numbers can
apply for reenrollment once they meet the requirements.

In the weeks following the deadlines, non-compliant providers
received letters notifying them of pending revocation. Some who got
the notices said they were still waiting for onsite surveys months
after completing accreditation preparation, while others who
obtained accreditation after the deadline said they were having
problems getting billing privileges reinstated retroactive
to their accreditation
date. Still others had their surety
bonds returned because of a missing signature from the company

Whatever the reasons, the anticipated provider fallout led home
care advocates to question beneficiary access.

"If you look just at the small pharmacy-based suppliers, I am
aware of close to a dozen in a rural area of Virginia that have
pulled their numbers," said Wayne Stanfield, president and CEO of
the National Association of Independent Medical Equipment
Suppliers, after the accreditation deadline.

In an Oct. 30 email, a CMS employee seemed to confirm the worry,
warning that in "areas within Montana, a Medicare beneficiary may
experience supplier access issues" in obtaining oxygen, enteral and
parenteral nutrition and power wheelchairs. The reason: a shortage
of providers meeting the agency's new requirements. (For more, see
Beneficiaries Could Lose Access
, Nov. 4, 2009.)

"I think we could start seeing spotty access issues in places
like Montana because there is a low population and a lot of
territory to cover, and if you have a small population, as a
provider you're likely to have smaller revenue," said industry
consultant Wallace Weeks of Weeks Group, Melbourne, Fla., about the
recent revocations. "In spite of the fact they may never have to
participate in competitive bidding, the burden of accreditation and
a surety bond becomes a very significant part of a very small
company's revenues."

Weeks said he sees more widespread access issues "farther down
the road. I think three years from now we are really going to see
some access issues as a result of competitive bidding."

Under the current bidding program, thousands more HME
businesses, many of them small, are expected to go under. CMS has
estimated that when competitive bidding is fully
implemented, only half of the providers existing at its outset will
remain. The American Association for Homecare has said bidding
could put as many as 90 percent of providers out of business.

Round 1 of the bid program is set to go live in January 2011 in
nine cities; Round 2 could expand the bid to an additional 91
cities should a provision in the Senate's health care reform
become law.

While industry consolidation is inevitable, Weeks believes, he
noted many of the current revocations could be for businesses that
"only have a few thousand dollars a year coming in from DME, like a
grocery-based pharmacy that had a provider number under Part B."
For such companies, he said, "it would be ludicrous for them to get
accredited and get a surety bond for their DME operations.

"How many of those there are I don't know," Weeks continued,
"but I think we can expect that a majority of the revocations could
be attributed to non-traditional DME operations that are ancillary
and/or insignificant to the company."