Q&A: What the Patient Protection and Affordable Care Act Means to HME Suppliers

AMARILLO, Texas — The Senate health reform bill, H.R.
3590, entitled the “Patient Protection and Affordable Care Act”
(PPACA), was passed by the U.S. Senate on Dec. 24, 2009. The House
of Representatives passed the Senate bill on March 22, 2010, and
President Obama signed it into law on March 23. The PPACA, as
written, will make things harder on HME suppliers by expanding the
competitive bidding program, imposing a fee on device manufacturers
and tightening reimbursement provisions, according to health care
attorney Jeff Baird. Here’s Baird’s rundown on the new law.

Question: Does the PPACA affect Medicare reimbursement
for power wheelchairs?

Answer: Yes. Sec. 3136 of the PPACA is entitled
“Revision of payment for power driven wheelchairs.” This section
provides that the purchase option will be available only to complex
rehabilitation power wheelchairs. The purchase option will no
longer be available to other power wheelchairs. Also, the rental
payment amounts will change from 10 percent of the purchase price
for the first three months and 7.5 percent for the remaining rental
months, to 15 percent for the first three months and 6 percent for
the remaining rental months.

Q: I understand that the health reform act affects CPI-U
increases. Is this correct?

A: Yes. Sec. 3401 of the PPACA (“Productivity
Improvements”) provides that, beginning with 2011, the CPI-U update
will be reduced by a “productivity adjustment,” which may result in
no CPI-U update for the year or payment rates for a year that are
lower than the payment rates for the preceding year.

The definition of “productivity adjustment” is a mouthful. It is
defined as “the 10-year moving average of changes in annual
economy-wide private nonfarm business multi-factor productivity (as
projected by the Secretary for the 10-year period ending with the
applicable fiscal year, year, cost reporting period, or other
annual period).” Note that the Bureau of Labor Statistics currently
maintains data on private nonfarm business multifactor
productivity.

Q: I have heard that the health reform act talks about
provider/supplier screening and other enrollment requirements for
Medicare, Medicaid and CHIP. Is this correct?

A: Yes. Sec. 6401 contains a number of
requirements that affect HME suppliers. Specifically:

• Provider/Supplier Screening. Providers
  and suppliers enrolling or re-enrolling in Medicare, Medicaid or
  CHIP will be subject to screening measures. The Department of
  Health and Human Services is required, within six months and in
  consultation with the Office of Inspector General, to establish
  procedures for screening providers and suppliers.

  HHS is required to determine the level of screening according to
  the risk of fraud, waste and abuse with respect to each category of
  provider or supplier. All providers and suppliers will be subject
  to licensure checks and, if HHS so determines, additional screening
  measures such as criminal background checks, fingerprinting,
  database checks and unscheduled and unannounced site visits. In
  short, it will be more difficult for a new player to come into the
  industry and to successfully re-enroll. The owner of the HME
  company needs to be squeaky clean.

• Disclosure Requirements. Providers and
  suppliers enrolling or re- enrolling in Medicare, Medicaid or CHIP
  will be subject to new disclosure requirements. Applicants will be
  required to disclose current or previous affiliations, directly or
  indirectly, with any provider or supplier that has uncollected
  debt, been subject to payment suspension under a federal health
  care program, been excluded from participating in a federal health
  care program or had its billing privileges denied or revoked. HHS
  may deny enrollment or re-enrollment if such affiliations pose an
  undue risk of fraud, waste or abuse. Not only must the owner of the
  HME company be squeaky clean, but the owner must be careful about
  who he/she has affiliated with, or done business with, in the
  past.

• Offset payments from suppliers with same tax ID
  number. HHS may adjust payments to a provider or
  supplier that has the same tax ID number as a provider or supplier
  that owes past-due obligations under Medicare, Medicaid or CHIP,
  regardless of such providers’ or suppliers’ Medicare billing number
  or NPI.

• Temporary Moratorium. HHS may impose a
  temporary moratorium on the enrollment of new providers and
  suppliers if HHS determines that such action is necessary to
  prevent or combat fraud, waste or abuse. Those people who have had
  to deal with the MediCal moratorium know that this is a train wreck
  waiting to happen.

• Compliance Programs. Sometime in the
  future, certain providers and suppliers will be required to
  establish a compliance program that must contain core elements,
  which will be established by HHS in consultation with the OIG. Note
  that the OIG currently has compliance guidelines for various types
  of health care providers and suppliers, including DMEPOS suppliers.
  For a number of reasons, each HME supplier should have a compliance
  program now.

Q: Does the new legislation contain anti-fraud
measures?

A: Yes. Sec. 6402 discusses overpayments,
kickbacks, false claims and surety bonds. Specifically:

• Reporting and Returning Overpayments.
  Any provider or supplier that receives an overpayment must report
  the overpayment to HHS, carrier or other appropriate person and
  provide written notice of the reason for the overpayment. An
  overpayment must be reported and returned no later than 60 days
  after it is identified or the date of any corresponding cost report
  (if applicable). Failure to do so may result in civil money
  penalties. Think of the ramifications. It is common to pay back
  money to the DME MAC. These reporting requirements will be
  onerous.

• Anti-kickback Statute and False Claims
  Act. A claim that includes items or services
  resulting from a violation of the Medicare/Medicaid anti-kickback
  statute constitutes a false or fraudulent claim under the Civil
  False Claims Act (31 USC § 3729). This is nothing new. This has
  been the Department of Justice’s position for many years.

• Surety Bonds. HHS must take into
  account the volume of billing for an HME supplier or home health
  agency when determining the size of the surety bond. In other
  words, the surety bonds will not be limited to $50,000.

Q: What about physicians?

A: Under Sec. 6405, physicians who order items
or services will be required to be Medicare enrolled physicians or
eligible professionals. On or after July 1, 2010, DME or home
health services must be ordered by a Medicare-enrolled physician or
eligible professional. HHS may extend these requirements to other
Medicare items and services to reduce fraud, waste and abuse.

(Note that, as of this writing, the deadline for physicians
and non-physician practitioners who order DMEPOS items or services,
or refer Medicare beneficiaries to Medicare-enrolled DMEPOS
suppliers, to enroll in the Medicare Provider Enrollment, Chain and
Ownership System, or PECOS, is Jan. 3, 2011. It is uncertain what
effect, if any, the July 1, 2010, deadline will have on the PECOS
deadline. We await guidance from CMS on this issue.)

Q: In the past, the worst thing that would happen to a
supplier that did not have all of the required documentation was
the assessment of an overpayment. Has this changed?

A: Unfortunately, yes. Under Sec. 6406, DHHS
may revoke enrollment of a physician or supplier for failure to
maintain and, upon request, provide access to documentation
relating to written orders or requests for payment for DME,
certifications for home health services or referrals for other
items or services written or ordered by such physician or supplier.
Such revocation may be for no longer than one year per act.

This is scary. I hope that HHS/OIG does not take the position
that an HME supplier’s number can be revoked if it does not have
physicians’ progress notes in its files.

Q: For the past several years, we have had to comply
with a “face-to-face” rule in the power mobility arena. Has this
rule been expanded?

A: Yes. Sec. 6407 states that a face-to-face
encounter with a patient is required before a physician may certify
eligibility for home health services or DME under Medicare. As a
condition of Medicare payment for DME, the physician must document
that a physician, physician assistant, nurse practitioner or
clinical nurse specialist has had a face-to-face encounter with the
patient during the six months prior to the written order for the
DME.

HHS may determine another reasonable time frame and may impose
the requirement to other Medicare-covered items and services. There
will be similar face-to-face requirements prior to physician
certification for home health services.

Q: I have heard that the health reform legislation
“speeds up” competitive bidding. Please tell me this is not
true.

A: I wish I could tell you that, but I cannot.
Under Sec. 6410, the competitive bidding program will be expanded
in round two from 79 of the largest metropolitan statistical areas
to 100 of the largest MSAs (i.e., Round 2 will consist of the nine
MSAs from the Round 1 rebid plus 91 additional MSAs). HHS will be
required either to competitively bid areas or use competitive bid
prices by 2016.

Q: … and RACs are not going away, are
they?

A: No. States must establish contracts with one
or more RACs for the purpose of identifying underpayments and
overpayments and recouping overpayments under the state Medicaid
plan or any waiver of the state plan. The RAC program will be
expanded to Medicare Parts C and D no later than Dec. 31, 2010.

Q: I understand that the health reform act hits
manufacturers in the pocketbook. Correct?

A: Yes. Sec. 9009 imposed an annual fee on
medical device manufacturers and importers. (Note: this
provision was replaced with an excise tax under the Health Care and
Education Reconciliation Act of 2010.)

Q: OK. So what is the Health Care and Education
Reconciliation Act of 2010 (“Reconciliation Act”)?

A: The Reconciliation Act was signed into law
on March 30, 2010. It amends the PPACA. The following is a summary
of provisions that are relevant to HME suppliers:

• Sec. 1302. Repeal of Prepayment Review
  Limits. Previously, a Medicare Administrative
  Contractor could conduct a prepayment review only under certain
  circumstances. Those limits have been removed.

• Sec. 1304. 90-Day Enhanced Oversight for Initial DME
  Claims. After Jan. 1, 2011, if HHS determines that
  there is a significant risk of fraudulent activity among HME
  suppliers, then HHS will withhold Medicare payment of any claims
  submitted by a supplier that is initially enrolling in Medicare.
  HHS will withhold such payment during the 90-day period beginning
  on the date of the first submission of a claim for DME by the “new”
  supplier. In other words, the new supplier is placed on 90-day
  “probation.”

• Sec. 1405. Excise Tax on Medical Device
  Manufacturers. This section replaced the annual fee
  on device manufacturers under the PPACA with an excise tax. A tax
  of 2.3 percent of the sales price will be imposed on the sale of
  any taxable medical device by the manufacturer, producer or
  importer. The tax will apply to sales after Dec. 31, 2012. Any
  device defined by the Federal Food, Drug and Cosmetic Act that is
  intended for humans is subject to the tax, except the following
  items: eyeglasses, contact lenses, hearing aids and any other
  medical device determined by HHS to be of a type that is purchased
  by the general public at retail for individual use.

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
[email protected].

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