By all accounts, the effects of CMS' proposed revision and expansion of supplier standards for DMEPOS would be far-reaching. In a special series for HomeCare Monday leading up to the March 25 deadline for comments, health care attorney Neil B. Caesar, president of the Health Law Center, Greenville, S.C., will help provide clarification and insight on several provisions of the draft rule. This week, Caesar's comments center on proposed changes to Supplier Standards No. 10 and No. 12, which cover a supplier's insurance and equipment delivery and beneficiary instruction.
Prior Standard No.10 deals with liability insurance. Currently, the standard requires that the supplier have comprehensive insurance for at least $300,000 and that this insurance covers “both the supplier's place of business and all customers and employees of the supplier. In the case of a supplier that manufactures its own items, insurance must also cover product liability and complete operations.”
CMS proposes an expansion of this requirement to require insurance of at least $300,000 per incident, not just in the aggregate. CMS also continues that the NSC must be listed on the policy as a certificate holder. This is to enable the National Supplier Clearinghouse to contact the underwriter to verify coverage, and also to keep the NSC on the disposition list for any communications from the insurer.
However, CMS also proposes a change to this notification requirement. Specifically, suppliers would now be responsible for providing the NSC with contract information or an individual employed with the underwriter who can verify coverage. The NSC wants to be able to verify coverage with an agent or, when necessary, with the underwriter.
Moreover, CMS proposes that a supplier should be required to obtain this insurance coverage prior to submitting its Medicare enrollment application and supporting documentation to the NSC. CMS' justification is that there can be up to a 90- day lag between the issuance of a policy and notification to the underwriter that the policy has been issued.
The agency proposes that insurance be obtained early to ensure that, when the NSC contacts the underwriter, enough time will have passed so that the underwriter will know about the insurance coverage. CMS' position is that, if the underwriter cannot verify coverage, the application will be denied and/or the supplier's billing privileges will be revoked.
This proposal, of course, raises the possibility that a new supplier coming to the Medicare program for the first time may have to purchase insurance whose value is premised on obtaining a Medicare supplier number that may or may not be issued. This would have to be viewed as a business risk for any new supplier.
It is possible that an insurer would be willing to postpone activation of the policy until the issuance of a supplier number, thereby intentionally saving the applicant some premium costs. Research would be necessary in this instance to verify that this type of activation postponement would still allow the underwriters to be told about the policy, so that they might confirm coverage should the NSC come knocking.
Prior Standard No. 12 deals with the delivery of product. It currently states that the supplier must be responsible for Medicare-covered items and must maintain proof of delivery.
CMS is proposing to clarify this standard. Specifically, CMS specifies that the supplier is responsible for maintaining proof of delivery in the beneficiary's file; must furnish information at the time of delivery as to how the beneficiary can contact the supplier by telephone; must provide the beneficiary at the time of delivery with instruction on how to use the equipment safely and effectively; and must document that this instruction has taken place.
Most advisers have specifically counseled that this [proof of delivery and instruction on how to use the equipment] is addressed by the supplier and the beneficiary at the time of delivery, and that this documentation be maintained in the beneficiary's file. CMS has now verified that this course of action is mandatory.
CMS also confirms that it will allow a supplier to contract out the delivery of Medicare-covered items to another individual or entity. The NSC has gone back and forth on this question over the years, so it is good to see it has finally confirmed that the delivery process may be subcontracted.
However, CMS cautions that the DMEPOS supplier has ultimate responsibility for ensuring the delivery in accordance with this standard and for maintaining all necessary documentation to demonstrate that the beneficiary received the Medicare-covered item and appropriate instructions for its use.
This means any subcontract for delivery services must include strict protocols on paperwork, prompt return of documentation, etc. Specifically, while the delivery will be by common carrier, I advise suppliers to deal with the paperwork requirements by direct communication with the beneficiary. Your mileage may vary.
Finally, note that CMS characterizes its requirements for this standard as a “clarification.” This means that the rule is in effect right now. Any noncompliant supplier should promptly address sufficiencies in their delivery documentation and beneficiary instruction.
Comments are due by March 25. Electronic comments can be
submitted at http://www.regulations.gov. Follow the
instructions under the “Comment or Submission” tab and
enter the file code CMS-6036-P.