On August 27, 2010, the Centers for Medicare & Medicaid Services (CMS) published a final rule revising certain requirements that suppliers of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) must meet to obtain and maintain Medicare billing privileges. The rule adds several new standards and modifies existing standards to make them more stringent for suppliers. A press release from the CMS indicated that the purpose of the tougher standards is to “help to reduce fraud in Medicare and provide beneficiaries with additional assurance that they are being served by legitimate suppliers who meet Medicare’s standards.” The new and revised standards are effective September 27, 2010, giving suppliers less than a month to achieve compliance.

The following is a summary of certain points of the new rule.

  • In states where oxygen suppliers must be licensed, DMEPOS suppliers must now obtain their inventory of oxygen from a state-licensed oxygen supplier. Further, in states where suppliers are licensed, Medicare suppliers may not subcontract with non-licensed entities to perform services for the supplier.  
  • DMEPOS suppliers will now be required to maintain ordering and referring documentation from physicians and non-physician practitioners.  
  • DMEPOS suppliers will generally be prohibited from sharing a practice location with certain other Medicare providers and suppliers, subject to exceptions which allow a supplier to share space with:  
  1. Physicians or nonphysician practitioners who are furnishing items to their own patients as part of their professional service;  
  2. Physical or occupational therapists furnishing items to their own patients as part of their professional service; or  
  3. A hospital, home health agency, skilled nursing facility or other Part A provider that is enrolled in Medicare, when the DMEPOS supplier is owned by that Part A provider and is a separate unit.
  • The new rule bolstered the physical space requirements for DMEPOS suppliers. Suppliers must now maintain a physical facility on an appropriate site that must:  
  1. Measure at least 200 square feet, except for state-licensed orthotic and prosthetic personnel providing custom-fabricated orthotics or prosthetics in private practice (the CMS staggered the deadline for compliance with the square footage requirement to accommodate suppliers that have lease obligations that extend beyond the general September 27, 2010, compliance date);  
  2. Be in a location that is accessible to the public, Medicare beneficiaries, the CMS, the National Supplier Clearinghouse (NSC) and its agents;  
  3. Not be in a gated community or other area where access is restricted;  
  4. Be accessible and staffed during posted hours of operation, which many be no less than 30 hours per week (with exceptions for physicians or similar practitioners providing DMEPOS to their own patients and suppliers providing custom-made orthotics and prosthetics);  
  5. Maintain a permanent visible sign in plain view and post hours of operation; and  
  6. Be in a location that contains space for storing business records, including proof of delivery, maintenance and beneficiary communication records.  
  • DMEPOS suppliers are prohibited from using cell phones, beeper numbers and pagers as the primary business telephone number. In addition, answering machines, answering services and callforwarding systems may not be used exclusively as a supplier’s primary telephone number during posted business hours.  
  • The prohibition on soliciting Medicare beneficiaries was expanded beyond telephone solicitation to also include in-person contacts, emails, instant messaging and coercive advertising via the internet.  
  • From a procedural standpoint, the rule defined the term “final averse action” to mean the following:  
  1. A Medicare-imposed revocation of any Medicare billing privileges;  
  2. Suspension or revocation of a license to provide healthcare by any state licensing authority;  
  3. Revocation of a supplier’s billing privileges for failure to meet DMEPOS quality standards;  
  4. A conviction of a federal or state felony offense within the past 10 years preceding enrollment, revalidation, or re-enrollment; or  
  5. An exclusion or debarment from participation in a federal or state healthcare program. It also states that the CMS or a CMS contractor may reopen all Medicare claims paid on or after the date of a final adverse action in order to establish an overpayment determination.