By all accounts, the effects of CMS' proposed revision and expansion of supplier standards for DMEPOS will be far-reaching. In a special series for HomeCare Monday, 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 are directed to proposed new Standards 27, 31 and 57.
Proposed Standard 21 would require suppliers that provide oxygen to obtain their supplies from a state-licensed oxygen supplier. CMS believes that, in those states where a license is required to supply oxygen, suppliers who obtain the oxygen from another supplier must utilize someone licensed by that state. This is designed to prevent suppliers from purchasing oxygen from an outside vendor in a state where a license is required. If the state does not require a license, then this standard would not apply.
This standard is similar to the new attitude in revised Standard 1. Again, CMS is requiring a tight nexus between the supplier and licensed personnel or entities. Nonetheless, this new standard raises some questions as to its interaction with Standard 1.
That standard requires suppliers to employ directly licensed individuals instead of contracting with them on an independent basis. Yet new Standard 27 clearly implies that the oxygen would be allowed to come from another supplier. The only reconciliation of these two standards would appear to be that Standard 27 applies to the purchasing of the oxygen itself and not the subcontracting for therapy, delivery, equipment or other ancillary services.
In other words, if you are purchasing the gas or liquid, Standard 27 would apply. If you seek to utilize any other services, Standard 1 would apply. Clarification of this uncertainty would be welcome.
Proposed Standard 31 would require a supplier to resolve any tax delinquency it might have with the Internal Revenue Service or state taxing authority. CMS believes it important to “ensure that Medicare payments are only being made to organizations and individuals who have satisfied existing tax debts.” Consequently, CMS wants the basis to revoke the billing privileges of any DMEPOS supplier (“including physicians and non-physician practitioners who are also enrolled as a DMEPOS supplier [sic]”) that has failed to resolve its tax problems.
CMS' justification for tying together tax delinquencies and the ongoing right to remain a supplier is nowhere articulated in its commentary to Standard 31. I expect that CMS would argue it only wants suppliers to participate in the Medicare program if their hearts are pure, and tax delinquencies suggest a fiscal irresponsibility that could present problems with the supplier's compliance with supplier standards.
Indeed, CMS cites a Government Accountability Office report that found over 21,000 individuals and companies paid under Medicare Part B during the first nine months of 2005 had tax debts totaling over $1 billion. But CMS' decision to act as Big Brother and eradicate tax debt is a dangerous precedent. First, this attitude could lead next to CMS issuing edicts about other aspects of a supplier's fiscal behavior, such as how quickly the company pays its bills or how well it collects receivables.
Second, individuals and entities are allowed under the tax laws to challenge the imposition of taxes they believe are improper. Often, they are allowed to refuse to pay the tax until the fight is concluded, knowing that, if they lose, they will also have to pay interest and perhaps penalties. But the choice of whether to accept that risk or to pay the tax and then fight for a refund should be a business decision for the individual or company. Proposed Standard 31 would remove that choice.
Finally, proposed Standard 57 is technically not a new supplier standard, but rather an expansion of the existing language, which discusses the consequences of failing to meet the supplier standards. Currently that portion of the law only discusses CMS' ability to revoke billing privileges if the standards are not satisfied. A new section would establish that all monies received by a supplier that failed to report an adverse legal action or felony conviction that precludes payment would constitute an overpayment to the supplier, which then must be repaid.
CMS is doing two things with this new language. First, the agency is clarifying its existing position that, because a supplier is not allowed to participate in the program when certain adverse legal actions have occurred and further is not allowed to utilize the services of individuals who have been convicted of a felony or certain other violations of the law for a specific period of time, any monies received by the supplier during a period when either of these circumstances apply should be deemed overpayments that must be refunded to the government.
It also clarifies and emphasizes the requirement that the supplier report adverse legal actions and felony convictions to the National Supplier Clearinghouse within 30 days of the event.
Second, the new rule would assess the period within which overpayments are calculated as going back to the date of the conviction or adverse legal action.
This new rule emphasizes that CMS wants suppliers to crack down on internal monitoring of hiring practices to ensure that the supplier is not hiring ineligible persons. It also emphasizes that CMS is taking very seriously the supplier's obligation to report adverse legal events promptly.
Practically speaking, the consequence of 100 percent refund of all Medicare reimbursement for services rendered after the date of a felony conviction or adverse legal event (including, presumably, the date the supplier hired an ineligible person) are quite severe. This penalty would likely bankrupt many suppliers.
Until the fairness of this position is sorted out over time, the lesson for suppliers is clear: Be very careful to screen new hires thoroughly to ensure that they are allowed to participate in providing Medicare-reimbursed services, and also report adverse court actions to the NSC promptly. Better yet, avoid adverse court actions that trigger the reporting requirement.
Finally, in my opinion, CMS would love nothing more than to be able to license DMEPOS suppliers at the federal level and micromanage most aspects of their operations. Because the agency does not have that ability, CMS has to be content with its ever-increasing quantity of rules, including rules that focus on day-to-day operational details. The trend towards increased and increasingly burdensome supplier standards may continue, at least until Congress can be persuaded that this volume of rules is unfair.
Wouldn't it be interesting if CMS, the DME MACs or the NSC were held to the same standard of near perfection to which DMEPOS suppliers are being held?
Comments are due by Tuesday, March 25 (tomorrow). 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.