Legal Speak

CMS Proposes to Clarify Supplier Standards

• By Asela Cuervo
• Jun 01, 2008

Earlier this year, the Centers for Medicare & Medicaid Services (CMS) published a proposed rule that would establish new supplier standards for DMEPOS suppliers. CMS is revising the standards in order to raise the bar for suppliers entering the Medicare program. If the standards become final, however, the rules would apply to all suppliers, not just new ones. The standards codify a number of initiatives that the National Supplier Clearinghouse (NSC) has attempted to implement through the enrollment process and which industry members have challenged in a variety of forums. Importantly, the proposed rule would clarify the existing standards consistent with CMS’ narrow interpretation of the standards and add several new requirements. Some highlights of the proposed changes follow.

The proposed rule would prohibit suppliers from meeting state licensing requirements via subcontracting with a licensed professional or entity. Instead, suppliers would be required to meet licensing requirements directly through employed staff. This means that in states where respiratory therapists are required to perform certain services such as oxygen setups, suppliers would be unable to use contracted therapists to furnish the services. Aside form creating significant financial burdens for suppliers, the proposed rule appears to conflict with the CMS policy of permitting suppliers to subcontract under the competitive bidding program.

The Social Security Act prohibits certain telemarketing activities by DMEPOS suppliers. The prohibition is directed generally at beneficiary “cold calls” for the purpose of selling medical equipment and was established in response to “boiler room” operations that were prevalent in the early 1990’s. Congress believed that these sales tactics resulted in increased costs for medically unnecessary equipment sold to vulnerable Medicare beneficiaries. The current supplier standards incorporate the statutory prohibition. The proposed rule seeks to clarify and expand on the prohibition by prohibiting almost all types of contact between suppliers and beneficiaries, including e-mail and in-person contact such as contact that occurs as part of education programs or health fairs.

The proposed rule also would require suppliers to be open for business a minimum of 30 hours per week. According to CMS, a standard setting minimum hours is necessary because some suppliers post very restrictive hours of operation, which make it difficult for the NSC to perform on-site inspections. CMS also is concerned that suppliers with limited business hours are inaccessible to beneficiaries, or may not be legitimate businesses. This standard will adversely affect suppliers in low volume areas who maintain part-time hours as an alternative to closing a facility, and could impact access to DMEPOS in rural areas. Under the proposed rule, the NSC could revoke a supplier’s billing number if personnel are not available during posted hours of operation.

The rule proposes to clarify the requirement that suppliers maintain a business telephone. The current standards preclude the use of faxes, cell phones and call forwarding to pagers and cell phones as the primary mode of communication for suppliers.

The proposed standards would prohibit the use of these technologies during posted hours of operation, requiring suppliers to have staff available to respond to calls. The proposed standards also would codify criteria that the NSC has already been applying to suppliers via on-site inspections. For example, the proposed standards would require that locations comply with rules for wheelchair accessibility. The new standards appear to also require locations to maintain business records, including beneficiary records. Presumably, suppliers with multiple locations can continue to maintain centralized records, but this is not explicit under the proposed regulation and requires further clarification.

This article originally appeared in the Respiratory Management June 2008 issue of HME Business.