August 17, 2009
On August 7, 2009, CMS released Change Request 6528 regarding Compliance Standards for Consignment Closets and Stock and Bill Arrangements. The “Summary of Changes” reads: The purpose of this change request is to define and prohibit certain arrangements where an enrolled supplier of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) maintains inventory at a practice location which is not owned by the enrolled DMEPOS supplier, but rather, owned by a physician, non-physician practitioner or other health care professional for the purpose of distribution, commonly referred to as a consignment closet and/or stock and bill arrangement. In addition, this change request will instruct physicians, non-physician practitioners or other health care professional’s practices that use of consignment closets and/or stock and bill arrangements (as defined above) must be in compliance with current standards.
The effective date/implementation date is September 8, 2009. Please let us know if you have questions regarding these changes.
Would physicians be required to have a DME LICENSE to be able to bill Medicare?
Thanks for your question, Dennis. It appears that providers will need to apply for a DMEPOS Billing Number. I believe that is the same as the Durable Medical Equipment Regional Carrier (DMERC) license that you are referencing in your question. Contact your Medicare regional DMERC carrier to obtain guidelines, fee schedules, etc.
In addition, some practices choose to utilize the ABN because they are not enrolled as DME suppliers. Therefore they cannot bill for the DME. The ABN allows disclosure to the patient and gives them the option of paying out of pocket or going to an enrolled supplier.
As well, if you currently have a stock and bill service, many of them will teach you how to bill if you use them as your wholesaler. So they have adopted this into their business model and may be a resource for you.
Would an outpatient surgical group be exempt if they are employed by the local hospital as hospitals abide by different rules?
Thank you for the question, Brent. I would suggest that you consult with the hospital to determine their thoughts on the issue. If the hospital has a DME number and does not use an outside vendor, this may work. My hesitation is that the physicians are still billing Part B for physician fee for service through the hospital physician network that is enrolled in Medicare Part B, and I do not know if CMS would consider these separate, though owned by the same entity (the hospital).
If the hospital is also the DME company and has enrolled the practice location address, it would appear there is a good case for continuing as you are. Again, without knowing how the various entities are enrolled it is hard to comment accurately.
Remember–The spirit of the rule is to not allow outside DME to bill for a product that was presented at the physician/practitioner office and dispensed by that office’s staff. The person who bills needs to be the person who dispensed.
We are owned by our health system. Physicians are employed and not oweners. We have 2500 physicians and 7 hospitals along with 40 clinics. Our DME company has seperate tax id, and provider number, but is owned by the health system. We strictly service patients from our health system. Would we be allowed to stock specialty itemsi in closets? Also, physicians in our system are not prepared to take ownership and meet all the requirments under the DME supplier standards. We have realized that none our clinics have dme provider numbers and they are basically giving the equipment away, this includes our ER’s
Thoughts?
As I read the regulation, I do not see that a hospital employed physician is treated differently than an independent physician. You still have to Bill Part B for your services as a physician, or extender. I would encourage you or other leaders in your network to contact CMS for your area(s) and discuss this with them. If you continue to have the DME company stock the items, then they need to have a separate location possibly in your current buildings, whereby they distribute the DME under their name with their employees, with a separate address. If you continue to distribute the DME as you do through the practice, then it appears to me that you may be in violation of the new rule, unless again for some reason hospital owned physicians are exempt. The rule has been delayed, so this gives you some additional time to investigate and react in an appropriate manner.
Remember, this is a Medicare regulation, and at this time you do not have to meet the same requirements for commercial patients. Perhaps if you are set up properly, you should consider sending Medicare out to a DME location that you set up through your DME company, and you can continue to stock and bill for commercial and self pay patients. Further it appears that this new regulation, has opened your eyes to a systemic billing issue within your organization. Fixing your billing issue certainly will be a positive result of this requirement.
I also invite you to share your findings with us. This is a new regulation for all of us and sharing what we learn along the way would be welcome and appreciated. Thank you for posting your question.
We operate a free standing surgery center that is 60% hospital owned and 40% physician owned. We have two existing consignment/assignment billed
“closets” for DME and supplies. Due the Dr ownership, would this apply? We have been concerned with receiving DME at no cost in exchange for refering our patients as some sort of Stark or Inducement laws.
Thank you for your question, David. We are looking into this and will have an answer for you in the coming days.
To answer your question, David, I am going to assume that your ASC has also applied for a DME number and is billing DME using that number. If that is the case, you should be OK. If you have a true stock and bill situation as described in the requirement, then you would likely be in violation as you are furnishing the DME but not billing for it. They do not call out ASCs or facilities in the requirement because they are specifically addressing the issue seen in many physician offices. But the rule applies to DME suppliers, which your facility would be if enrolled.
Since Medicare Certified ASCs are allowed to apply for DME certification with Medicare, you would still be required to meet the requirements set on DME suppliers. Therefore: I dispense, I educate, I bill. If you are doing that, you should be OK. Since I do not know the nuances of your particular situation, I would recommend that you engage your consultant or health care attorney to address.
As far as the referral question you pose. Typically profits are distributions are paid to owners based upon one’s pro-rata share of ownership in the surgery center. If you are distributing profits via some other method, then you could be in violation of Stark laws. I would recommend you consult with your health care attorney.
Remember the base issue here: CMS Does not want anyone distributing DME to a Medicare patients, only to have a second party (who the patient may not even know exists) bill Medicare for the DME.
There are many hospitals who provide these DME “closets” so that the DME can supply and bill the Medicare beneficiary directly. This not only relieves the hospital from ordering, restocking and carrying this inventory on their books, but also from running the risk of not being reimbursed for the equipment had they been the party to issue it. Does this change prohibit hospitals from continuing this practice?
The requirement focuses on practice locations that are “not owned by the enrolled DMEPOS supplier, but rather, owned by a physician, non-physician practitioner or other health care professional for the purpose of distribution, commonly referred to as a consignment closet and/or stock and bill arrangement.”
Arrangements with hospitals and other facilities are not affected by the change. One would need to review the requirement and the specific ownership and billing arrangements to be certain they do not fall under the new requirements.
Coming up on the deadline, as a DME provider, I’ve been told that hospitals who own specialty clinic, such as an orthopedic office, that have been designated “Critical Access Hospitals” will be exempt. Any info on this?
If there are different rules for CAH or rural facilities related to this new rule, I am not aware of it. I would recommend you contact your MAC to verify. We would welcome a posting from you on your findings.
we were currenty approached on becoming a stock and bill company. However, we fall under rehab agency with medicare and are not required to carry a separate dme number because of our specialty we bill to our fiss Would there be any benefits to be a stock and bill company . If I am understanding correctly you have a vendor supply dme do the physicians fit the orthotics or does the vendor. Also in turn then the physician bills for this service not quite sure I understand this whole process
Jackie,
The rules we are referencing relate specifically to physicians billing for DME and a physician dispensing DME in their office setting. The rule simply put states that he who fits the orthotic bills the orthotic and they need to be credentialed with Medicare to do so. If the DME company bills the orthotic, they need to have a separate storefront and address adjacent to the physician office to do so.
I am not familiar with the Rehab Agency rules related to DME. But it seems if you are being asked to be a stock and bill company, that is a separate venture from your Rehab Agency services. If you are being asked to stock and bill in the physician practice setting, then you need to follow the rule as stated above for Medicare patients. I think to be certain you are in compliance or selecting the correct billing route, you should have a one-on-one conversation with a good healthcare attorney or consultant.
How is it not a conflict of intrest if physcians are distributing DME / Bracing?
I’m still fuzzy on the implementation of the CR 6528. One of our manufacturer reps said it was recended indefinately. Is this correct?
Thanks for your comment, Dan. You are correct–it was rescinded on February 4, 2010: http://bit.ly/cxmN7s
CMS continues to review this subject, so we should all stay tuned.
Lee, thank you for your comment regarding conflict of interest. CMS does not see it as such. Orthopaedic and other specialties have been distributing DME/Bracing years as a part of their OT and PT programs and overall standard practice of care. Practices have to file for a DME number and meet the credentialing requirements and medical necessity. So oversight is in place related to CMS, as well as with other commercial payers.
any new updates post Sept 1 2010
To my knowledge there are no further updates. However, be sure to watch Local Carrier Determinations for information or changes pertinent to your carrier.
How can a hospital just decide to get into the dme business for hosp beds, cpaps, etc. and not be in a conflict of interest when they are trying to get referrals from their own doctors who usually recommend other dme companies in the area??
I heard that CR 6528 is in effect as of 9/27/2010. Is there a period of time that allows DMEPOS suppliers to get compliant. If the supplier fits the patient for the products and then bills for the products, are they in compliance with the new law? Any help would be appreciated.
I am not aware that 6528 has been put back into play. You may refer to the link below to view all the DME updates.
http://bit.ly/bSMMcO
Long time viewer / 1st time poster. Really enjoy reading the blog, keep up the good work. Will definitely start posting more in the future.
Referring back to the “Lee” post of 10/31/10: Can you clarify that if a Orthopedic Physician dispenses a brace (off the shelf) to a patient during their visit, then bills it to the insurance using the appropriate “L” HCPC, then the Physician should have a DME supplier # and be accreditated?
If you want to bill government payers, then you should register and receive a DMEPOS number. Commercial payers will vary on their requirements on DMEPOS enrollment.
At this point in time, physicians do not have to be accredited with an accreditation agency to qualify for a DMEPOS number and bill for Medicare recipients. If quality standards are developed by CMS related to physician practices supplying DME, then this may be revised; see additional information below. Again commercial payers may have differing requirements.
The MIPPA, section 154(b), added a new subparagraph (F). This subparagraph states that eligible professionals and other persons (defined below) are exempt from meeting the September 30, 2009 accreditation deadline unless CMS determines that the quality standards are specifically designed to apply to such professionals and persons.
The eligible professionals (as defined in section 1848(k)(3)(B)) include the following practitioners:
Physicians (as defined in section 1861(r) of the Act),
Physical Therapists,
Occupational Therapists,
Qualified Speech-Language Pathologists,
Physician Assistants,
Nurse Practitioners,
Clinical Nurse Specialists,
Certified Registered Nurse Anesthetists,
Certified Nurse-Midwives,
Clinical Social Workers,
Clinical Psychologists,
Registered Dietitians, and
Nutritional professionals.
Additionally, section 154(b) of MIPPA allows the Secretary to specify “other persons” that are exempt from meeting the accreditation deadline unless CMS determines that the quality standards are specifically designed to apply to such other persons. At this time, “such other persons” are only defined as the following practitioners:
Orthotists,
Prosthetists,
Opticians, and
Audiologists.
Can a sleep management company that performs home sleep studies and also owns it’s own equipment division also set up the cpap/bipap/apap unit if ordered by the MD? There are companies out there doing this and I always thought that was a conflict or a violation of a law. Can you elaborate?
Beth, there are different requirements for providers that are not physician offices, and they would have some more hoops to jump through than say a typical orthopaedic practice in terms of approval of a DME provider number. My guess is that the sleep center management companies you reference have a separate entity associated with the center management component that provides the DME. It may look like one company, but if you look deeper you will see separate entities closely affiliated.
So Where are we now on the common DME orthopedic stock and bill situation, I am confused? Can national companies like DonJoy still do stock and bill in physicians offices? And what does it look like in the near future?
Josh, who knows what the future holds, but as of now companies can conduct the stock and bill. Many of our clients transitioned away from this during that period of time when it looked as though this would not be an option. What we see now is that practices are purchasing from DME suppliers and distributing and billing themselves under their practice’s DME number.
Cathy I am a bit confused I have been told by many that hospitals cannot collect on charges billed for DME out of their ED’s (splints,crutches, etc) and we have been giving away supplies for years. I took that as word but as I read your site we possibly could bill out of the ED. Is that right ?
Dave–My area of expertise lies with the physician side of the equation. The crux of this blog posting is to discuss the Physician Office based DME Billing. I would rely on the Hospital Billing and ED billing professionals for the right answer to how DME can be billed in such a setting.
Pain Management Clinic, Can we buy and sell back brace. Only to te pt’s we write the oders for??
Teresa-You should be able to as long as you have a DME number, order and bill it correctly (this assuming you currently bill as a group practice). If your pain center currently bills under a hospital billing number or some other categorization, you will need to do a bit more research.