OIG Opens the Door on DME-Hospital Closet Deals
WASHINGTON — The Department of Health and Human Services’
Office of Inspector
General, in an
advisory opinion issued Nov. 19, gave the go to two HME
providers to place equipment in hospital supply closets and have
licensed personnel either on site or on call to train patients in
the use of respiratory equipment.
While the OIG has said previously that consigning equipment can
create the risk of fraud and abuse, it said in this case — in
which the consignment closets will be provided at no cost, as will
the use of phones and a desk — because “no remuneration will
flow” between the suppliers and the hospitals, the two providers
would not risk violating anti-kickback statutes present in the
Social Security Act.
As with all advisory opinions, this one was issued only to the
two providers seeking the opinion (their names were redacted) and
has no application to other individuals or entities, the OIG
said.
However, providers can draw some guidance from the opinion.
“To a large extent, this opinion confirms what most health
lawyers believe to be required by existing law,” said Neil Caesar
of the Health Law Center in
Greenville, S.C. “But we have some clear guidance as to the type of
relationship that works, and anyone who varies from that is taking
a big chance.”
Caesar noted that there are some nuances that differ from
previous OIG opinions. This opinion focuses on hospital supply
closets, while previous opinions centered on supply closets in
physician offices. The new opinion also deals with the issue of
having on-site or on-call personnel to train or educate patients
requiring respiratory equipment.
Both are permissible under the new advisory opinion, Caesar
said, but with a caveat: “You cannot have any role to play before
the choice [of a provider] is made,” he said.
That means that the provider’s on-site licensed personnel, such
as a respiratory therapist, cannot have any contact with a patient
prior to the patient selecting his or her provider.
As well, the provider’s employees may not provide any services
to patients who have selected another supplier.
The chosen suppliers would directly bill payers, including
Medicare and Medicaid, for the equipment.
Providers may not pay any remuneration to hospitals or anyone
affiliated with the hospitals for the use of consignment closets
nor may hospitals charge the providers for use of a hospital desk
and phone connected to the hospital’s internal telephone system,
the opinion said.
While all this is positive, there is a caution, according to
Caesar.
“Generally, the OIG doesn’t go out of its way [to issue
opinions] on things it doesn’t care about. This suggests that there
has been, and will continue to be, scrutiny of these types of
relationships,” he said. “It’s a flag that says you can do things,
but it’s also a flag that says, ‘We’re watching.’”
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