New Supplier Standards! What They Mean for Your Business

MEDTRADE SPRING 2011 CONFERENCE AND EXPO New Supplier Standards! What They Mean for Your Business Las Vegas, Nevada Tuesday, April 12, 2011 at 4:15 PM 1200 Woodruff Road, A-3 Greenville, SC 29607 www.healthlawcenter.com Telephone 864-676-9075 Facsimile 864-297-8725 info@healthlawcenter.com 2011 Neil B. Caesar 1 New Supplier Standards! What They Mean for Your Business Neil B. Caesar, Esq. Health Law Center Health Law Center Neil B. Caesar Law Associates, PA 1200 Woodruff Road -- Building A-3 Greenville, South Carolina 29607 Telephone: 864-676-9075 Fax: 864-297-8725 E-Mail: ncaesar@healthlawcenter.com www.healthlawcenter.com 2011 Neil B. Caesar 2 About the Health Law Center Established in 1994, the Health Law Center serves the legal and management advisory needs of healthcare companies nationally. The Health Law Center is recognized as an innovative leader in health law services, and is proud to have achieved the highest rating ("AV") from Martindale-Hubbell. 2011 Neil B. Caesar 3 1

About the Health Law Center Neil Caesar, President of the Health Law Center, brings 30 years of extensive healthcare and business law background to the firm. Mr. Caesar possesses an extensive healthcare and business law background, having served as Corporate Counsel to Foster Medical Corporation (now Apria Homecare), as Vice President of the Health Care Group, Inc., and as a member of premier law firms in Pennsylvania and North Carolina. 2011 Neil B. Caesar 4 About the Health Law Center Mr. Caesar is the Author and Editor-in-Chief of the five-volume Compliance Answer Book Series, and is an active speaker and author on ventures and acquisitions; compliance, reimbursement and fraud; physician and HME issues; and health law issues generally. Mr. Caesar was the creator of the Legal Forum, Diagnosis Health Law and Legal Insight from the Health Law Center columns for Managed Care, Today s Physician and New Perspectives magazines. His column, Compliance University appears monthly in HomeCare magazine. 2011 Neil B. Caesar 5 Clarifications, Revisions and New Standards New Tools to fight Fraud and Abuse? Attempt to Mold Suppliers Homogeneity? Storefront retail operation Showroom General product mix Typical business hours Significant public traffic Multiple staffers 2011 Neil B. Caesar 6 2

Important to Understand Implications of Revisions Reflect issues CMS believes are of immediate importance Likely focus for investigation and enforcement 2011 Neil B. Caesar 7 Several Revisions Implicate Anti-Fraud Rules Investigations by OIG and MAC as well as by NSC ZPIC and RAC reporting Risk of repayment and penalties, not just revocation 2011 Neil B. Caesar 8 Clarifications of Existing Standards Emphasis of existing meaning, not new elements Already in effect; suppliers already bound by it Immediate compliance 2011 Neil B. Caesar 9 3

Clarifications versus Revisions Example: Standard 1 Current: Supplier must operate according to all state/federal regulatory and licensing i requirements Clarification: NSC has no responsibility to help figure out requirements 2011 Neil B. Caesar 10 Immediate Results: No more if I missed something, they ll tell me and I ll fix it Deficiencies result in revocation notices Supplier has burden to demonstrate when rules are inapplicable 2011 Neil B. Caesar 11 Modification/revision: Bring it all in house State licenses belong to supplier or employees, not subcontractors Significant impact for suppliers who are licensed independent contractors Respiratory therapists Nurses Etc. 2011 Neil B. Caesar 12 4

THE SUPPLIER STANDARDS The 30 Rules 1. Compliance with state and federal licensure and regulatory requirements 2. Complete, accurate and updated application. Changes must be reported within 30 days 3. The application must be signed by an authorized individual 4. You must fill orders from your inventory, or contract with another entity to do so. That entity may not be excluded from Medicare, or other state or federal health care programs 5. You must notify Medicare patients of the rent/purchase option 2011 Neil B. Caesar 13 THE SUPPLIER STANDARDS The 30 Rules 6. You must notify beneficiaries of warranty coverage and honor all warranties 7. You must maintain a physical facility on an appropriate site 8. You must permit CMS, or its agents to conduct on-site inspections. You must be accessible to beneficiaries during reasonable business hours and maintain a visible sign and posted hours 9. You must maintain a number that is listed in the directory. You may not use a cell phone number as your primary business telephone 2011 Neil B. Caesar 14 THE SUPPLIER STANDARDS The 30 Rules 10. You must maintain comprehensive liability insurance in the amount of at least $300,000 11. You may not contact beneficiaries by telephone in order to solicit business [incomplete!] 12. You are responsible for delivery and for instructing ti beneficiaries on the use of your equipment. You must maintain proof of delivery 13. You are required to respond to any beneficiary complaints and maintain documents of complaints and their resolutions 2011 Neil B. Caesar 15 5

THE SUPPLIER STANDARDS The 30 Rules 14. You are required to maintain at no charge or repair directly, or through a service contract, equipment rented to beneficiaries 15. You must accept returns of substandard or unsuitable items from beneficiaries 16. You must disclose the 30 Supplier Standards to each Medicare patient to whom you supply equipment 17. You must disclose to the government any person having ownership, financial, or control interest in your company 2011 Neil B. Caesar 16 THE SUPPLIER STANDARDS The 30 Rules 18. You may not sell or allow another entity to use your Medicare billing number 19. You must have a complaint resolution protocol established s ed to address beneficiary e complaints that relate to the 21 Supplier Standards 20. Complaint records must include: the name, address, telephone number and health insurance claim number of the beneficiary, a summary of the complaint, and any actions taken to resolve it 21. A supplier must agree to furnish CMS any information required by the Medicare statute 2011 Neil B. Caesar 17 The 30 Rules 22. You must be accredited by a CMS-approved accreditation organization. 23. You must notify the accreditation organization when a new DMEPOS location is opened. 24. All locations, owned or subcontracted, must meet the DMEPOS quality standards and be separately accredited. 2011 Neil B. Caesar 18 6

The 30 Rules 25. You must disclose all products and services, including the addition of new product lines, when seeking accreditation. 26. You must meet the surety bond requirements. 27. You must obtain oxygen from a state-licensed oxygen supplier. 28. You must maintain ordering and referring documentation. 2011 Neil B. Caesar 19 The 30 Rules 29. DMEPOS suppliers are prohibited from sharing a practice location with certain other Medicare providers and suppliers. 30. DMEPOS suppliers must remain open to the public for a minimum of 30 hours per week with certain exceptions. 2011 Neil B. Caesar 20 Changes to Supplier Standards Standard #1. State laws Standard #7. Physical facility Standard #8. On-site inspections Standard #9. Business telephone Standard #11. Solicitation 2011 Neil B. Caesar 21 7

27. Must obtain oxygen from a Statelicensed oxygen supplier. 28.Maintain ordering and referring documentation. 29. May not share practice locations. 30.Open at least 30 hours per week. 2011 Neil B. Caesar 22 Supplier Standard #1: A supplier must be in compliance with all applicable Federal and State licensure and regulatory requirements and cannot contract with an individual or entity to provide licensed services. 2011 Neil B. Caesar 23 THE REVISED STANDARDS First - Compliance with state and federal licensure and regulatory requirements Supplier Standard #1: State rules, big and small Is imperfection fatal? 2011 Neil B. Caesar 24 8

THE REVISED STANDARDS Changes to #1: NSC not responsible for helping identify the rules Implications for enforcement Burden on supplier to show inapplicability of rules Bring it all in house 2011 Neil B. Caesar 25 THE REVISED STANDARDS Second: You must employ licensed personnel unless your state doesn t care; no independent contacting allowed. Supposedly subordinate to state law Q: Seek clarification from each state? 2011 Neil B. Caesar 26 Supplier Standard #7: A supplier must maintain a physical facility on an appropriate site. 2011 Neil B. Caesar 27 9

THE SUPPLIER STANDARDS Supplier Standard #7: You must maintain a physical facility on an appropriate site Physical facilities Disabled accessible Signage Off-site activities Square footage 2011 Neil B. Caesar 28 THE SUPPLIER STANDARDS Changes to #7: Minimum space requirement Explicit requirements for physical presence, signage Implications for enforcement 2011 Neil B. Caesar 29 Supplier Standard #8: A supplier must permit CMS, or its agents to conduct onsite inspections to ascertain the supplier s compliance with these standards. The supplier location must be accessible to beneficiaries during reasonable business hours, and must maintain a visible sign and posted hours of operation. 2011 Neil B. Caesar 30 10

THE SUPPLIER STANDARDS Supplier Standard #8: You must permit CMS, or its agents to conduct on-site inspections. You must be accessible to beneficiaries during reasonable posted business hours Hours of operation - office staffed Truth in advertising Inspection activity 2011 Neil B. Caesar 31 Supplier Standard #9: A supplier must maintain a primary business telephone listed under the name of the business in a local directory or a toll free number available through directory assistance. The exclusive use of a beeper, answering machine, answering service or cell phone during posted business hours is prohibited. 2011 Neil B. Caesar 32 THE SUPPLIER STANDARDS Supplier Standard #9: You must maintain a listed phone number that is listed in the directory. You may not use a cell phone, etc. as your primary business telephone. Exclusive use of call forwarding is not allowed Neither are: Answering service Pager Fax Cellular 2011 Neil B. Caesar 33 11

THE SUPPLIER STANDARDS Changes to #9: Ban cell phones and beepers altogether as means to receive outside calls Prohibit call forwarding during posted hours Implications for call forwarding 2011 Neil B. Caesar 34 Supplier Standard #11: A supplier must agree not to initiate telephone contact with beneficiaries, with a few exceptions allowed. This standard prohibits suppliers from contacting a Medicare beneficiary based on a physician s oral order unless an exception applies. 2011 Neil B. Caesar 35 THE SUPPLIER STANDARDS Supplier Standard #11: You may not contact beneficiaries by telephone in order to solicit business Inaccurate on Website! Not just telephone! Extend exceptions to clarify direct solicitations prohibited Telephone Computer email Instant messaging In person contacts Excludes 2008 coercive response internet advertising on non-dmepos sites 2011 Neil B. Caesar 36 12

THE SUPPLIER STANDARDS Changes to #11: Unless the company: Has their written permission Is trying to coordinate delivery Has a prior relationship with the beneficiary (within past 15 months) Includes door to door sales 2011 Neil B. Caesar 37 THE SUPPLIER STANDARDS Changes to #11 (Cont d): Direct solicitation definition Consent loophole Scope Medicare eligible Advertising and marketing distinguished 2011 Neil B. Caesar 38 Supplier Standard #27: A supplier must obtain oxygen from a state-licensed oxygen supplier. 2011 Neil B. Caesar 39 13

NEW STANDARDS Supplier Standard #27: Suppliers in a state that licenses oxygen suppliers subcontract only with a statelicensed supplier In a state that does not require licensure for oxygen supplies, suppliers free to obtain oxygen from any source, in any state 2011 Neil B. Caesar 40 Supplier Standard #28: A supplier must maintain ordering and referring documentation consistent with provisions found in 42 C.F.R. 424.516(f). 2011 Neil B. Caesar 41 NEW STANDARDS Supplier Standard #28: Supplier must maintain documentation identifying who ordered and referred equipment, supplies or services Maintain i information i for seven years after claim payment Require supplier to maintain information sufficient to support the medical necessity for the item 2011 Neil B. Caesar 42 14

Supplier Standard #29: DMEPOS suppliers are prohibited from sharing a practice location with certain other Medicare providers and suppliers. 2011 Neil B. Caesar 43 NEW STANDARDS Supplier Standard #29: Prohibit supplier from sharing a practice location with another provider, including physician groups or other providers Tied to tax identification number Shared off-site services allowed? What is the location? 2011 Neil B. Caesar 44 Supplier Standard #30: DMEPOS suppliers must remain open to the public for a minimum of 30 hours per week with certain exceptions. 2011 Neil B. Caesar 45 15

NEW STANDARDS Supplier Standard #30: Require a supplier to be open to the public at least 30 hours per week Excepting suppliers who work with custom- made or fitted orthotics and prosthetics 2011 Neil B. Caesar 46 NEW OVERPAYMENT REGULATION Applies to all Standards CMS, NSC, MACs may treat as overpayments all payments for services rendered after final adverse action Defined Includes exclusions of suppliers Notice: Includes key exclusions of individuals 2011 Neil B. Caesar 47 NEW OVERPAYMENT REGULATION Implications: Pre-certification versus post-event Retroactivity danger Exclusion issues Suppose no reinstatement? 2011 Neil B. Caesar 48 16

UNIMPLEMENTED 2008 CHANGES Supplier Standard #10: You must maintain comprehensive liability insurance in the amount of at least $300,000 Insurance coverage Verification required Access by NSC 2011 Neil B. Caesar 49 UNIMPLEMENTED 2008 CHANGES 2008 Proposed Changes to #10: $300K per incident NSC as certificate holder NSC to have access to underwriters and agents Obtain coverage prior to submitting application 2011 Neil B. Caesar 50 THE SUPPLIER STANDARDS Supplier Standard #12: You are responsible for delivery and for instructing beneficiaries on the use of your equipment. You must maintain proof of delivery - Delivery Subcontracting delivery Delivery tickets 2011 Neil B. Caesar 51 17

THE SUPPLIER STANDARDS Changes to #12: Supplier responsible to: maintain proof of delivery in file Furnish information to patient about how to contact t supplier by telephone Provide patient with instruction about safe and effective use of equipment Document that instruction has occurred Okay to subcontract delivery to another entity 2011 Neil B. Caesar 52 PROPOSED 2008 STANDARDS Supplier Standard #31: Prohibit a supplier from having a past delinquency with federal or state taxing authorities Includes a criminal or civil charge of tax evasion, even if there was no conviction 2011 Neil B. Caesar 53 CONCLUDING THOUGHTS AND OBSERVATIONS CMS mantra: Combat waste, fraud and abuse by pounding everyone into same mold 2011 Neil B. Caesar 54 18

CONCLUDING THOUGHTS AND OBSERVATIONS 2007 Statistics: 116,471 individual DMEPOS suppliers 65,584 unique billing numbers Approximately 30% rural 20,000 35,000 rural suppliers Vast majority small suppliers 40,000 70,000 2011 Neil B. Caesar 55 CONCLUDING THOUGHTS AND OBSERVATIONS 2008 Statistics: March: 113,114 suppliers Down 2,000+ 65,984 unique billing numbers Approximately 20% rural 23,000 or so 2011 Neil B. Caesar 56 CONCLUDING THOUGHTS AND OBSERVATIONS 2010 Statistics: January: 97,164 suppliers Down 13,000 since 2008 September: 100,523 suppliers Up 3,000+ 2011 Neil B. Caesar 57 19

CONCLUDING THOUGHTS AND OBSERVATIONS Early stages of long struggle: Government wants both fungibility and broad service Economically incompatible Find correct balance between distinct philosophies Communicate what works Communicate what is fair Communicate what is unfair 2011 Neil B. Caesar 58 CONCLUDING THOUGHTS AND OBSERVATIONS Natural tendency for law enforcement to push too far/too hard Combat government excess Well-articulated l t comments Effective resistance While continuing to emphasize legal/ethical behavior 2011 Neil B. Caesar 59 CONCLUDING THOUGHTS AND OBSERVATIONS Near perfection required I dream of mutuality 2011 Neil B. Caesar 60 20

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