AMARILLO, Texas — "Over the past several weeks, it feels like we have gone down the proverbial rabbit hole into Alice in Wonderland," said health care attorney Jeff Baird. "CMS' written guidance and verbal comments regarding supplier standards have defied logic in some instances and have been contradictory in other instances."
With the following questions and answers, Baird said, "I'll try to explain what is going on and try to give some clarity to HME providers."
Question: Mrs. Smith is 78 years old. She has never been a customer of ABC Medical Equipment. Dr. Jones sends an order for DME to ABC. Can ABC call Mrs. Jones and in order to coordinate delivery and set-up?
Answer: Supplier Standard No. 11 was revised effective Sept. 27, 2010, to provide that an HME supplier agrees "not to make a direct solicitation (as defined in [Sec.] 424.57 (a)) of a Medicare beneficiary unless one or more of the following applies:
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The individual has given written permission to the supplier or the ordering physician or non-physician practitioner to contact [him/her] concerning the furnishing of a Medicare-covered item that is to be rented or purchased; or
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The supplier has furnished a Medicare-covered item to the individual and the supplier is contacting the individual to coordinate the delivery of the item."
Sec. 424.57 (a) states: "Direct solicitation means direct contact, which includes, but is not limited to, telephone, computer, e-mail, instant messaging or in-person contact, by a DMEPO supplier or its agents to a Medicare beneficiary without his or her consent for the purpose of marketing the DMEPOS supplier's health care products or services or both."
In an Aug. 27, 2010, Federal Register comment, CMS stated: "[I]f a physician contacts the supplier on behalf of the beneficiary with the beneficiary's knowledge, and then a supplier contacts the beneficiary to confirm or gather information needed to provide the particular covered item (including the delivery and billing information), then that contact would not be considered a direct solicitation for the purpose of this standard. This is the case even if the physician has not specified the precise DMEPOS supplier that will be contacting the beneficiary regarding the item referred by that physician."
A prior FAQ entitled "Telemarketing" stated: "Question — Does a supplier have to collect and maintain documentation from the physician reflecting that the physician has contacted the supplier with the beneficiary's knowledge? Answer — No. However, it would be a business decision on the part of the supplier whether to collect and obtain such documentation for [its] records."
In short, CMS' Aug. 27 comment and its "Telemarketing" FAQ provide that Dr. Jones is not required to obtain Mrs. Smith's signature in order for ABC to call Mrs. Smith (in response to Dr. Jones' order) to arrange delivery and set-up; and that ABC does not have to maintain documentation confirming that Mrs. Smith was aware that Dr. Jones contacted ABC on her behalf. (Of course, it would be wise for ABC to maintain such documentation in the event the company is ever questioned about Mrs. Smith's knowledge concerning the order from Dr. Jones.)
Then, in an FAQ on Jan. 14 this year, CMS contradicts itself by stating: "Question — Is a supplier contacting the beneficiary based on the receipt of a physician order considered an "unsolicited" contact? What if a supplier contacts the beneficiary based solely on the physician order (and, therefore, the contact is without the beneficiary's knowledge that the physician would be contacting a supplier on the beneficiary's behalf)? Answer — Yes, it is unsolicited unless the physician has written permission from the beneficiary allowing the supplier to contact the beneficiary."
CMS did not answer the question. The question is whether ABC can contact Mrs. Smith based on an order from Dr. Jones without Mrs. Smith's knowledge. The answer is clearly "no." Unfortunately, CMS gives an answer that contradicts its Aug. 27 comment and contradicts the "Telemarketing" FAQ.
CMS' answer that Dr. Jones must have the written permission from Mrs. Smith contradicts its earlier guidance that Mrs. Smith must only be aware that Dr. Jones is ordering DME on her behalf.
From a practical standpoint, CMS' Jan. 14 FAQ does not fit into the real world. Dr. Jones has a fiduciary relationship with Mrs. Smith; he is her agent. As her physician, he has the absolute right to order tests and products for Mrs. Smith. It is unworkable for Dr. Jones to be required to obtain Mrs. Smith's signature when he orders DME (or, for that matter, any test, service or product) for her. All that should be necessary is that Mrs. Smith be aware of what Dr. Jones is doing. CMS recognized this in its 8/27/10 comment and in the "Telemarketing" FAQ.
It defies reason for CMS, then, to contradict itself in its Jan 14 FAQ. Perhaps recognizing the contradiction, on an Open Door Forum call Jan. 20, CMS stated that due to enforcement issues, CMS "will not tell contractors to implement the expanded provision" until the issues are addressed. This statement is consistent with other recent verbal statements made by CMS and/or its contractors.
OK, so what does all of this mean to ABC from a practical standpoint? I would hope — and it would be reasonable to expect — that CMS will issue a correction to its Jan. 14 FAQ. If such a correction is not made, then I would hope — and it would be reasonable to expect — that when CMS starts enforcing the revised Supplier Standard No. 11, it will not bring enforcement actions against ABC just because Dr. Jones does not obtain Mrs. Smith's signature.
Here are the steps (from the safest to those that contain risk) that the supplier can take:
- ABC can elect not to call Mrs. Smith unless ABC is confident that Dr. Jones has obtained her signature;
- ABC can elect not to call Mrs. Smith unless ABC is confident that Dr. Jones made Mrs. Smith aware that Dr. Jones was placing an order for DME; or
- ABC can elect not to call Mrs. Smith unless ABC has received an assurance from Dr. Jones that it is his policy to inform his patients when he orders DME for them.
Regardless of which step ABC takes, when ABC calls Mrs. Smith, the first words out of ABC's mouth should be: "Mrs. Smith, this is ABC Medical Equipment. Your physician (Dr. Jones) sent us an order for DME. Were you aware that he was going to do this?" If the answer is "yes," then ABC should ask: "Would you like for us to come to your home and deliver the equipment ordered by Dr. Jones?" If the answer to the first question is "no," then ABC should politely end the telephone conversation and not deliver the equipment.
Question: Can ABC mail literature, through the United States Post Office, to Mrs. Smith?
Answer: As with the preceding question and answer, this question pertains to Supplier Standard No. 11. In a comment contained in the Aug. 27 Federal Register, CMS stated: "We believe that "direct solicitation" occurs when a DMEPOS supplier or its agents directly contacts an individual Medicare beneficiary by telephone, e-mail, instant messaging, or in-person contact without his or her consent for the purpose of marketing the DMEPOS supplier's health care products or services or both." This is essentially the same language as quoted in Sec. 424.57(a) in the previous answer.
This comment appears to allow ABC to mail literature to Mrs. Smith through the United States Post Office. Receiving something in the mailbox is not intrusive. Mrs. Smith does not have to contend with a pushy salesperson. She can simply throw the envelope in the trash.
However, in its Jan. 14 FAQ, CMS stated the following: "Question — Does "direct solicitation" include mailings through the U.S. Post Office? Neither the rule, nor the preamble, appears to address this. Answer — We believe that general mass advertising through the post office is not prohibited. Targeted mailings to specific beneficiaries are prohibited."
This defies logic. Regardless of whether the envelope that appears in Mrs. Smith's mailbox is a result of "general mass mailing" or a "targeted mailing," the fact remains that it is simply an envelope that Mrs. Smith can throw in the trash. Plus, what is the definition of "general mass advertising" and "targeted mailing?"
The Jan. 14 FAQ is simply wrong. During the Jan. 20 Open Door Forum, CMS described how the revised Supplier Standard No. 11 was expanded to prohibit direct solicitation. CMS stated that direct solicitation included activities such as e-mails, instant messaging and in-person contacts. No mention was made of mailing literature through the U.S. Post Office.
On the Open Door call, CMS stated that for now, its contractors will not enforce the expanded provision. So what does this mean to ABC from a practical standpoint? Once again I would hope — and it would be reasonable to expect — that CMS will issue a correction to its FAQ. If such a correction is not made, then I would hope — and it would be reasonable to expect — that when CMS starts enforcing the revised Supplier Standard No. 11, it will not bring an enforcement action against ABC because ABC mails literature to Mrs. Smith.
Here are the steps (from the safest to one that contains some risk) that ABC can take:
- ABC can mail literature to Mrs. Smith so long as ABC's action cannot be construed to be a "targeted mailing;" or
- ABC can mail literature to Mrs. Smith without worrying about whether it can be construed to be a "targeted mailing," and go with the assumption that CMS will not be so illogical as to bring an enforcement action against ABC.
Question: ABC directs John Brown to set up equipment on Mrs. Smith. Must Brown be licensed?
Answer: Revised Supplier Standard No. 1 states, in part: "If a state requires licensure to furnish certain items or services, a DMEPOS supplier (a) must be licensed to provide the item or service; (b) must employ the licensed professional on a full-time or part-time basis, except for DMEPOS suppliers who are … allowed by the state to contract licensed services …."
In other words, according to this standard, if a state says that Brown must be licensed, then Brown must be an employee (not an independent contractor) of ABC unless state law specifically allows Brown to be an independent contractor.
And yet, in the Jan. 14 FAQ, CMS contradicts itself, stating: "We are interpreting our regulation … to mean that a supplier may contract with an individual or other entity to provide licensed services unless state law expressly prohibits such an arrangement. Similarly, the restrictions … shall only require an employment arrangement where state law expressly prohibits other contractual arrangements (e.g., independent contractor arrangements). In the absence of an express prohibition against independent contractor and other contractual arrangements (e.g., through relevant state law, through relevant case law, etc.), we interpret our regulation to allow such arrangements."
Frankly, I like the FAQ much better than I like the language of the standard itself. It is my hope that CMS will revise the language of the standard to comport with what CMS says in the FAQ.
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 jbaird@bf-law.com.