GREENVILLE, S.C. — On Aug. 27, the Centers for Medicare and Medicaid Services published a final rule on Medicare enrollment standards for DMEPOS providers. The new rule, based on a proposed rule issued in 2008, expands on existing standards that providers must meet to establish and maintain billing privileges in the Medicare program — and those new standards become effective Sept. 27 (today).
The American Association for Homecare has asked CMS for additional time on enforcement of the new standards, but as of press time, there had been no response and no guidance from the agency.
Among other things, the new standards require that HME providers remain open and staffed at least 30 hours a week, meet minimum size requirements in "accessible" locations and post permanent, visible signage. The new standards also specify that providers cannot subcontract for some services in states requiring licensure.
For example, under revised Supplier Standard No. 1, if an HME provider is in a state that requires a licensed respiratory therapist, the company can't contract with an independent therapist or outside agency, explains health care attorney Neil Caesar, president of the Health Law Center in Greenville, S.C. Instead, HME providers must employ the respiratory therapist — full time or part time.
In a special series for HomeCare Monday, Caesar provides clarification and insight on several of the new standards. In last week's issue, he addressed Standard No. 1 regarding licensure (see Supplier Standard No. 1: What the Changes Could Mean for You, Sept. 20).
This week, Caesar's comments are directed toward expansion of Medicare's prohibition on unsolicited contact with beneficiaries in the expanded set of standards. Here's what Caesar has to say:
This category includes general cold calling and solicitation issues that have been a part of Supplier Standard No. 11, as well as new provisions in that supplier standard regarding physician verbal orders. This topic also now includes new Supplier Standard No. 28, which addresses a supplier's obligation to hold onto referral documentation for seven years.
Supplier Standard No. 7 prior to the changes tracks long-standing policy that prohibits sales reps from contacting potential Medicare customers unless: they have been given written permission to be contacted; the supplier furnished a Medicare-covered item to them and is calling to coordinate delivery; or the supplier previously supplied a Medicare-covered item within the past 15 months and is now calling about a different purchase or rental.
CMS has now extended the existing three exceptions to a broader array of contact methods by creating a new term, "direct solicitation," which means "direct contact which includes, but is not limited to — telephone, computer, e-mail, instant messaging, or in-person contacts by a DMEPOS 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."
(The proposed rule from two years ago also prohibited coercive response Internet advertising, but CMS has withdrawn this prohibition, probably because of confusion over its meaning and scope.)
There are certain important nuances to these revisions. First, the solicitation must be with the patient's consent. CMS has required written evidence of the patient's desire to be contacted as one of the exceptions to the prohibition. However, a good argument may be made that other evidence of patient consent will suffice. This is because Standard No. 11 prohibits "direct solicitation," and direct solicitation only occurs when, among other things, contact is made without the beneficiary's consent. Thus, if there is evidence of the beneficiary's consent, there is by definition no prohibited "direct solicitation," and the beneficiary contact therefore should be acceptable even in the absence of written permission. This may give suppliers the avenue they have wanted for several years to allow more customer consent for websites that have a "click to accept" process.
Second, in its commentary to the changes, CMS responded to a question about non-covered items. CMS focused on the problem of one-on-one solicitation as its core concern. Because of that focus, CMS was not persuaded that the rules should be relaxed for non-covered items. In other words, the general prohibition against solicitation also applies "to non-covered items if they are being solicited by a Medicare enrolled DMEPOS supplier." The focus is on the recipient of the solicitation (the beneficiary), not the items being solicited.
Third, CMS emphasized a number of times in its commentary that marketing activities are still allowed. DMEPOS suppliers may advertise their products or services at "health fairs, community events, or the DMEPOS supplier's website." Any website intended to be "of use to the general public" would likely fall within the category of permitted "general advertising." CMS noted that "a dedicated website that can be freely accessed by the general public, at the consumer's choice, is not considered direct solicitation for the purpose of this standard."
Fourth, CMS categorizes the solicitation changes as a "clarification" of Standard No. 11 and not a "modification." That means CMS' position is that this rule is already in effect, though, arguably, not well stated. While this position may be difficult to maintain in a court of law, it is nonetheless important. Whenever CMS indicates an attempt to clarify one of its rules, that usually implies a particular concern with violations of that rule and abuse of the system. Thus, with CMS' emphasis on solicitation problems, it is likely that we may see a crackdown of this rule in the future.
CMS has also expanded this supplier standard to deal explicitly with the issue of verbal orders from physician offices. This formalizes (and slightly changes) a position taken by CMS several months ago on the topic of physician orders. Specifically, CMS takes the position "that it is inappropriate for a DMEPOS to contact a beneficiary based solely on a physician order." The agency's core concern is that the contact be with the beneficiary's knowledge and consent, because otherwise the supplier's follow-up contact after the physician's referral would be prohibited unless one of the exceptions applied.
The key under the new language in Standard No. 11 is that the beneficiary must know that the physician intends to contact a DMEPOS supplier. It is not necessary that the beneficiary (or even the physician) know which supplier is to be contacted. Regardless, if the patient has knowledge, then a physician verbal order to a supplier will permit the supplier to contact the patient to establish the necessary qualifications for the relationship.
CMS believes that this permission can easily be a standard part of the paperwork presented to the patient in connection with the office visit. Indeed, CMS may be rather flexible about how to obtain this permission. It indicates that, for example, "a consent form giving [a] hospital staff member permission to share the beneficiary's information with the DMEPOS supplier for the purpose of initiating service" will be enough to allow for further contact. Standing permission with the physician, hospital, etc., may also satisfy this requirement.
On this general topic, CMS has also created new Supplier Standard No. 28, which deals with ordering and referring documentation. Specifically, suppliers are required to maintain such documentation for seven years after the date of service. CMS' original 2008 proposal tracked the seven-year period from the date the claim was paid, but CMS is now recognizing that it is more practical and useful to focus on the date of service.
Documentation issues have become vitally important because of the many audits befalling Medicare suppliers. It is clear that a DME supplier's ability to produce documentation justifying the beneficiary's entitlement to equipment and services is essential to payment entitlement.
For Supplier Standard No. 28, such documentation needs to demonstrate clearly what was ordered, by whom it was ordered and when it was ordered. Further, even though the supplier standard requires that referral documents be kept for seven years, the reimbursement audit rule still only allows CMS to go back three years for all non-fraudulent claims. (The timeframe for claims allegedly based on fraud is for a longer period.) Thus, the supplier standard requires record retention for a longer period of time than is required merely for reimbursement purposes.
I have two final observations about these supplier standards. First, CMS makes clear in its commentary that its solicitation concerns also raise questions regarding fraudulent and abusive activities. There remains an anti-solicitation statute that applies to these same activities, with essentially the same three exceptions as contained in the supplier standards. Because of this statute, cold calling abuses are viewed by CMS as evidence of potential fraud because of the coercive message used.
Consequently, CMS contends that violations will allow it to revoke a supplier's billing privileges, and potentially to refer such activities to the Office of Inspector General for further action.
Finally, note that these revisions have significant ramifications for companies that lose key personnel to competitors. Often when an employee jumps ship, that person will try to swipe customers with whom he or she has had a relationship. This is also often done in a manner that violates the employee's fiduciary obligation to the former employer by appropriating proprietary customer contact information. In many instances, however, if the former employer tries to fight this misappropriation, the new employer will threaten to tie the fight up in expensive litigation, and the previous employer backs away.
Under CMS' changes, it is clear that the customer relationship belongs to the original supplier, the former employer. If a departing employee communicates with previous customers, then he or she will be engaging in solicitation activities and violating Standard No. 11. This violation would subject both the employee and the new employer to significant problems, including potential revocation and investigation for fraudulent billing. This revision thus gives employers who lose key personnel an important weapon to utilize when protecting proprietary customer information.
Read the final rule on supplier standards, titled "Medicare Program; Establishing Additional Medicare Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Supplier Enrollment Safeguards" (CMS-6036-F) in the Federal Register.
Neil B. Caesar is president of the Health Law Center (Neil B. Caesar Law Associates, PA), a national health law practice in Greenville, S.C. He also is a principal with Caesar Cohen Ltd., which offers compliance training, outsourcing and consulting and the author of the Home Care Compliance Answer Book. You can reach him at 864/676-9075 or ncaesar@healthlawcenter.com.