2/21/2017
Avoiding Medicare Fee‐For‐Service: Billing Non‐Assigned, Using ABNs, and Other Solutions
Presented by:
Jeffrey S. Baird, Esq. Brown & Fortunato, P.C.
Mary Ellen Conway, President
Capital Healthcare Group
Sarah Hanna, President
ECS Billing & Consulting North
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Introduction
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Introduction
• The DME industry, as we know it today, has been around for about 40 years. It is a young industry.
• For the first 30 years of its existence, there was little government oversight on the DME industry.
• This has changed. Over the last 10 years, it feels like the government is making up for lost time.
Introduction
• The DME industry is caught in a “perfect storm.”
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Competitive bidding
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Reimbursement cuts
Stringent documentation requirements
Aggressive auditors
Proliferation of “whistleblowers”
Introduction
• Let’s look at competitive bidding.
• On 7/1/16, the CMS July Fee Schedule went into effect.
• The rates encompass the expansion of competitive bid rates to non‐CBAs.
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Introduction
• The cuts range between 45% to 59% on common respiratory products, but reach 82% on TENS units and Enteral IV Poles.
• Said another way, the rates are ugly.
Introduction
• Competitive bidding (“CB”) has created a two‐tier system. • Those on the lower end of the socio‐economic scale likely have no choice but to accept whatever it is that Medicare pays for. • Those on the higher end of the socio‐economic scale will be inclined to pay cash for “higher end” products (Cadillac vs. Cavalier.)
Introduction
• Some DME suppliers will implement “economies of scale” that will allow the suppliers to succeed in the Medicare fee‐for‐service (“FFS”) arena. • However, these suppliers will be the exception. Most DME suppliers can no longer build their business model on Medicare FFS. • The successful supplier needs to go outside its comfort zone and look for new sources of business. • Said another way, the supplier needs to lessen its dependence on Medicare FFS.
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Introduction
• There are 78 million “Baby Boomers.” • They are retiring at the rate of 10,000 per day. While the 23 million of the “Greatest Generation” expected Medicare to pay for everything, Boomers understand that they will be required to pay out‐of‐pocket for a portion of their health care expenses…including DME. • From a Boomer’s standpoint, the most important asset he has is time.
Introduction
• Many 70 year old Boomers will not want to wait around for Medicare approval. • Rather, the Boomers will simply pay cash and move on with their lives. In 1965 When the Medicare Benefit Was Created
• Average life expectancy was 70.2 years
– In 1996 it was 79.1 years
– In 2025 it is expected to be 82.6 years
• The benefit package was patterned after the products most commonly provided by private insurance companies
• The system was not designed to handle today’s patients with more complex illness and greater needs‐ new medications/treatments/technologies
• 8,000 ‐ 10,000 “baby boomers” retiring every day—not being replaced by that number in the workforce = reduced Medicare contributions
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Reality
25% of Medicare beneficiaries account for
43%‐85% of costs
– These are beneficiaries with specific multiple chronic conditions and are the fastest growing segment of the population
Bottom 50% of beneficiaries account for only 4% of costs
What We’re Facing
The number one fiscal problem facing the U.S. is the high and rising cost of Medicare— “nothing else even comes close”
Looking to have less providers and reduce payments
Today
We have a health care delivery system that is designed to treat acute conditions, and we have done nothing to convert it to a system that treats the #1 cost driver—chronic illness
The future of services/items provided in the home is bright because the health care delivery system will have to conform to the demographics of the population
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Avoiding Discrimination
Anti‐Discrimination Rule
• The Age Discrimination Act of 1975 generally prohibits age discrimination under any program receiving federal financial assistance.
• CMS has a specific anti‐discrimination rule that states that CMS can terminate a DME supplier’s PTAN for a number of reasons, including if the supplier “places restrictions on the persons it will accept for treatment and it fails either to exempt Medicare beneficiaries from those restrictions or to apply them to Medicare beneficiaries the same as to all other persons seeking care.” 42 C.F.R. 489.53. Participating vs. Non‐Participating
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Participating Supplier
• A DME supplier elects to become a “participating supplier” by completing the Medicare Participating Physician or Supplier Agreement (Form CMS‐460).
• When a DME supplier elects to become a participating supplier, the supplier agrees to accept assignment on all claims for Medicare products and services and agrees to be paid the Medicare‐allowed amount as full payment, less any unmet deductible and coinsurance.
Participating Supplier
• As such, the supplier is “precluded from charging the enrollee more than the deductible or coinsurance based upon the approved payment amount determination.”
AOB
• One advantage to being a participating supplier is not having to obtain an AOB‐‐of course there is still the issue of signature on file to bill.
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Competitive Bidding
• If you won a contract and are participating in Competitive Bidding, you signed a contract for the competitive bid price and you have no option but to participate at the CB price.
(c) Capital Healthcare Group 2016
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Non‐Participating Supplier
• When a DME supplier is a “non‐participating supplier,” the supplier “may accept assignment on a claim‐by‐
claim basis.”
• If a non‐participating supplier accepts assignment on a claim, it agrees to be paid the Medicare‐allowed amount as full payment for that particular Part B claim, except for any unmet deductible and coinsurance.
Non‐Participating Supplier
• If a non‐participating supplier does not accept assignment, the supplier can collect directly from the patient for Medicare covered products and services and charge more than the Medicare allowable in such cases.
• In this instance, the supplier is required to file the claim with Medicare on a non‐assigned basis on behalf of the patient, and any Medicare reimbursement is sent directly to the patient.
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Switching From Participating Supplier to Non‐
Participating Supplier
• If a participating supplier elects to become a non‐
participating supplier, the supplier must terminate its existing Medicare participating supplier agreement. • To terminate an existing Medicare participating supplier agreement and become non‐participating, the supplier “must notify the National Supplier Clearinghouse (NSC) in writing during the [Medicare participating supplier agreement] enrollment period.”
Switching From Participating Supplier to Non‐
Participating Supplier
• The annual participation enrollment period begins on November 15 and concludes on December 31 of each year.
Drop Medicare?
• Must bill 3‐4 items per year
– Could bill non‐CB items in a CB area
– Cash for CB items in CB areas for non‐winners
– Many third party payers require a Medicare PTAN but not necessarily that the supplier be participating. 9
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Medicaid Is Another Story
• Many Medicaid programs require that you be an active Medicare provider. • Most state Medicaid programs require the participating supplier to bill the Medicaid program your usual and customary price and accept the Medicaid rate. You MAY NOT bill the patient the difference.
(c) Capital Healthcare Group 2016
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Anti‐Discrimination Rule As Applied to Business Models
Business Model No. 1
• XYZ Medical Equipment, Inc. (“XYZ”), a non‐
participating supplier, may desire to continue to offer the same products that it currently offers. • For example, assume that XYZ currently offers products A, B, C, D, E, and F and accepts assignment from all payors, including Medicare, on items A through F. 10
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Business Model No. 1
• XYZ may desire to no longer accept Medicare assignment on products A, B, and C, but will continue to accept assignment from all non‐Medicare payors for these items. • XYZ may desire to continue to accept assignment from all payors, including Medicare, on items D, E, and F. Business Model No. 1
• Under this approach, the only criteria for determining when assignment for items A, B, and C will be accepted is based on the beneficiary’s payor. • If the payor is Medicare, then XYZ will require that the beneficiary pay cash for items A, B, or C and will submit a non‐assigned claim on the beneficiary’s behalf. • If the payor is not Medicare, then XYZ will accept assignment for items A, B, or C from the payor. Business Model No. 1
• Structured in this manner, this approach poses significant risk of being found to discriminate against Medicare beneficiaries since the decision is based solely on the fact that Medicare is the payor. • Therefore, it is unwise for XYZ to pursue this approach.
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Business Model No. 1
• As an alternative, XYZ can create a policy that bases the acceptance of assignment decision on the expected amount of reimbursement for the particular item, not who the payor is. • For example, XYZ’s policy for accepting assignment on item A may require a minimum reimbursement rate of $100, otherwise, the item will be treated as a “cash pay” item, regardless of the payor. • Because the policy is being applied to Medicare beneficiaries the same as to all other persons seeking care, this model does not discriminate against Medicare patients. Business Model No. 2
• XYZ can reduce the range of items it offers, regardless of payor. • In other words, XYZ will no longer offer items A, B, and C to any patient, but will continue to offer items D, E, and F and accept assignment as usual. • Because this model treats Medicare beneficiaries the same as non‐Medicare beneficiaries, this model does not pose any risk of discrimination against Medicare patients. Business Model No. 3
• XYZ can continue to offer the same products that are currently offered, but would only accept assignment on specific items regardless of payor. • For instance, items A, B, and C would be assignment items, regardless of payor, and the remaining items, items D, E, and F, would be “cash pay” items, regardless of payor. 12
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Business Model No. 3
• This model treats Medicare and non‐Medicare beneficiaries the same and, therefore, does not pose a risk of discrimination against Medicare patients. Business Model No. 3
• It is important to note again that if XYZ does not accept assignment for certain items it supplies to Medicare beneficiaries, it must still submit non‐
assigned claims for reimbursement on behalf of those patients as a non‐participating supplier. • Commercial payor provider agreements may also require that a claim be submitted even if assignment is not accepted. Other Issues
• If a patient’s order specifies a particular brand or feature of an item, a new order may need to be obtained before XYZ will be able to supply the patient with a different item. • In such instance, the patient may be required to see his physician again to obtain a new prescription. 13
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Billing Non‐Assigned
Introduction
• We have discussed the difference between a participating supplier and a non‐participating supplier. We have also discussed the non‐discrimination rule.
• Now let’s step back and look at the big picture.
Introduction
• For the last four decades, suppliers have primarily provided DME on an assigned basis. Medicare paid the suppliers directly and the patients only had to pay their copayments and deductibles. • Until the last several years, this worked out for DME suppliers. Until the last several years, reimbursement was high enough and audits were not onerous … meaning that this “assignment model” worked well for suppliers.
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Introduction
• Under this “assignment model,” on the relatively rare occasion when a supplier did bill non‐assigned and Medicare was asked to reimburse the patient, such reimbursement was usually made. • All of this has changed.
Introduction
• It is becoming cost‐prohibitive for many suppliers to continue with the “assignment model.” The reasons are obvious:
– Medicare reimbursement is not sustainable.
– It is time consuming to go through the Medicare claims submission process.
– If the DME supplier is hit with a prepayment review, then it will not get paid until it submits documentation satisfactory to the CMS contractor.
– Even if the supplier is paid, then it is subject to a “claw back” pursuant to a post‐payment audit.
Introduction
• Up to now, DME suppliers have shouldered the burden of increasingly harsh Medicare policies. The suppliers have shielded their patients from the pain being inflicted by Medicare policies.
• Financially, DME suppliers can no longer do this. For the first time in its history, the DME industry is having to shift the burden (of complying with the increasingly harsh Medicare policies) to the suppliers’ patients.
• This is unpleasant … but it is the “new normal.”
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Introduction
• What we are now witnessing are (i) DME suppliers are electing to be non‐participating and (ii) DME suppliers are “billing non‐assigned.” • If a non‐participating supplier provides a product on a non‐assigned basis, this means that the supplier is not agreeing to accept the Medicare allowable as payment in full and can collect directly from the patient and charge more than the Medicare allowable in such cases. The supplier must file the claim with Medicare on behalf of the patient and any Medicare reimbursement will go directly to the patient.
You Can Decide Whether or Not You Will Accept Assignment Based On…
• A number of factors, including, but not limited to:
– The reimbursement rate of a particular product requested – The patient’s secondary or supplemental insurance – The referral source – The success, or lack thereof, that the supplier has had in obtaining reimbursement for that product
– The risk that the product will be subjected to a post‐
payment audit.
The supplier has considerable flexibility to ensure that it receives sufficient reimbursement
Introduction
• As the industry shifts from the “assignment model” to the “non‐assignment model,” an interesting question arises. Will CMS continue to reimburse patients (pretty much without question) … or will CMS treat patients the same harsh way that CMS is treating suppliers?
• Said another way, will CMS say to 78 year old Mrs. Smith: “We will not reimburse you until you submit medical necessity documentation?” Essentially, this is a prepayment review. Will CMS initially pay Mrs. Smith and then hit her with a post‐
payment audit?
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Introduction
• The bottom line is that the non‐participating supplier (that is not a competitive bid contract supplier taking care of CB patients) can collect up‐front from the patient (i.e., bill non‐assigned.).
• But as is often the case, the “devil is in the details.” And so let’s talk about the “details.”
Statutorily Non‐Covered
• If a non‐participating supplier without a CB contract sells or rents an item (that falls within a product category covered by CB) on a non‐assigned basis to a patient residing in a CBA, the item is statutorily non‐covered and the patient will not be reimbursed by Medicare.
• The item is statutorily excluded from coverage under §
1862 of the Social Security Act (the “Act”). Statutorily Non‐Covered
• The Act excludes from coverage instances “where the expenses are for an item or service furnished in a competitive acquisition area by an entity other than an entity with which the Secretary has entered into a contract …” 17
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Statutorily Non‐Covered
• Additionally, the noncontract supplier is responsible for notifying the beneficiary that it is not a contract supplier for the competitive bidding item in the CBA, and the supplier must obtain a signed ABN indicating that the beneficiary was informed in writing prior to receiving the competitively bid item or service that there would be no payment by Medicare due to the supplier’s noncontract status.
Price That the Supplier Can Charge
• Assume that a noncontract supplier sells an item, on a non‐assigned basis, to a patient (not residing in a CBA) for cash. • Assume that Medicare reimburses the item as a “sale item,” not as a “capped rental item.” • The supplier can sell the item to the patient for an amount in excess of the Medicare fee schedule, and Medicare will pay the patient 80% of the fee schedule amount (less the patient’s deductible). Renting a Capped Rental Item
• Assume that an item is reimbursable by Medicare as a “capped rental item.” • Assume that the non‐participating, noncontract supplier rents the item, on a non‐assigned basis, to a patient not residing in a CBA. • In this situation, the supplier can collect a rental amount from the patient that is higher than the Medicare fee schedule, and Medicare will pay 80% of the Medicare fee schedule rental payment to the patient on a monthly basis.
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Term of ABN
• Assume that an item is reimbursable by Medicare as a “capped rental item.” • Assume that the supplier rents the item, on a non‐assigned basis, to a patient not residing in the CBA. Assume that the supplier concludes that an ABN is appropriate. • The question is this: “Is it sufficient for the supplier to issue one ABN at the beginning of the rental term, or must the supplier issue an ABN every month of the rental term?”
• A single ABN is good for one year.
Term of ABN
• A new ABN would be required if the rental extends beyond one year, or if the reason for expected Medicare denial changes.
• For example, assume an initial ABN is issued because the patient has not met the “face to face” visit requirement. Subsequently, the patient has a physician visit and meets that requirement, but still fails to medical coverage criteria. A new ABN would need to be obtained with the new reason for expected Medicare denial of coverage.
• Note: Although a single ABN is good for one year, the supplier must still have beneficiary complete a signature authorization for the claim form every month for items rented on a non‐assigned basis.
Supplies and Accessories
• For supplies and accessories used with beneficiary‐
owned equipment (equipment that is owned by the beneficiary, but was not paid for by the DME MAC/fee‐
for‐service Medicare), Medicare will pay for them, however all of the following information must be submitted with the initial claim in Item 19 on the CMS‐
1500 claim form or in the NTE segment for electronic claims:
– HCPCS code of base equipment
– A notation that this equipment is beneficiary‐owned
– Date the patient obtained the equipment
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Supplies and Accessories
• Claims for supplies and accessories must include all three pieces of information listed above. • Claims lacking any one of the above elements will be denied for missing information. • Medicare requires that supplies and accessories only be provided for equipment that meets the existing coverage criteria for the base item. In addition, if the supply or accessory has additional, separate criteria, these must also be met. Supplies and Accessories
• In the event of a documentation request from the DME MAC or a redetermination request, the supplier must provide information justifying the medical necessity for the base item and the supplies and/or accessories. • Refer to the applicable Local Coverage Determination(s) and related Policy Article(s) for information on the relevant coverage, documentation, and coding requirements.
• Note: drugs and biologicals are mandatory assignment items so the supplier is required to accept assignment for those items, and cannot bill nebulizer drugs on a non‐assigned basis. Repairs
• Repairs to equipment which a beneficiary owns are covered when necessary to make the equipment serviceable. • If the expense for repairs exceeds the estimated expense of purchasing (or renting another item of equipment for the remaining period of medical need), no payment can be made for the amount of the excess.
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Repairs
• When billing for repairs, include the HCPCS code and date of purchase of the item being repaired (if the HCPCS code is not available, include the manufacturer’s name, product name, and model number of the equipment), the manufacturer’s name, product name, model number, and MSRP of the repair item provided, and the justification of the repair. Commercial Insurance Mandates Assignment
• Under the anti‐discrimination provision, the supplier can adopt a policy in which (A) it bills non‐assigned for Products A, B, and C and/or (B) it bills non‐assigned for all products in which third party reimbursement is $100 or less. This policy does not discriminate against Medicare patients because this policy applies across the board ... that is, it applies equally to Medicare patients and commercial insurance patients. Commercial Insurance Mandates Assignment
• The key question is this: If the insurance company requires the supplier to bill on an assigned basis for all products, including "Product A," then does the supplier have the right (under the anti‐discrimination provision) to sell/rent "Product A" to the Medicare patient on a non‐assigned basis?
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Commercial Insurance Mandates Assignment
• The answer is “yes.” The supplier has the right to choose whether to accept Medicare assignment on a claim by claim basis. Rather than saying it will only take assignment on claims based on a certain dollar figure, the supplier should adopt a policy that a particular item will be available to a patient if the reimbursement received meets a certain dollar threshold. Commercial Insurance Mandates Assignment
• The supplier can always make that item available to a Medicare patient on a non‐assigned basis. • If the commercial insurance does not allow non‐assigned claims, the item is only available to the patient if the insurance reimbursement meets the threshold dollar amount. Switching to Medicare Advantage
• Many Medicare beneficiaries are switching from Medicare fee‐for‐service ("FFS") to Medicare Advantage plans. • The key question is: “Do Medicare Advantage plans allow the DME supplier to bill non‐assigned or do Medicare Advantage plans require the supplier to take assignment?” 22
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Switching to Medicare Advantage
• Suppliers will need to look to the specific Medicare Advantage plan to see if the specific plan requires the supplier to take assignment or allows the supplier to bill non‐assigned. If the answer it that the specific Medicare Advantage plan requires assignment, then the supplier can follow the advice set out above and only make the item available to the patient if the insurance reimbursement meets the threshold dollar amount.
ABN
• A supplier is required to get an ABN signed whenever it expects that Medicare will not pay for the item or service provided, regardless of whether it is an assigned or unassigned claim.
Claim Authorization
• A request for payment signed by the beneficiary must be filed on or with each claim for charge basis reimbursement.
• Suppliers may obtain and retain in their files a one‐time payment authorization from a beneficiary (or the beneficiary’s representative) applicable to any current and future services. 23
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Claim Authorization
• Once the supplier has obtained the beneficiary’s one‐
time authorization, later claims can be filed without obtaining an additional signature from the beneficiary. • These claims may be on an assigned or non‐assigned basis with the exception of DME rentals. The one‐time authorization for DME rental claims is limited to assigned claims.
• The supplier will have to get a beneficiary signature authorization each month for items rented on a non‐
assigned basis.
What the Supplier Can Charge
• While the supplier can charge the patient an amount higher or lower than the Medicare fee schedule, the supplier needs to be aware of the federal statute that says that a supplier is prohibited from charging Medicare substantially in excess of the supplier’s usual and customary charges, unless there is good cause shown. See the section, below, entitled “Discounts to Cash Customers.”
• The supplier needs to also be aware of (i) Medicaid statutes that say that the supplier must bill Medicaid its “usual and customary,” and (ii) provisions in commercial insurance contracts that state that the supplier must give its “best price” to the insurer.
Limiting Charge
• According to CMS: “The provider may bill the beneficiary no more than the “limiting charge” for covered services.
• Should the provider bill more than the limiting charge for a covered service, the provider will have violated the non‐
participating agreement and may be subject to fines or penalties. When a provider does not accept assignment on a Medicare claim, he/she is not required to file a claim to the beneficiary's secondary insurance.
• NOTE: The “limiting charge” applies only to certain Medicare‐
covered services and doesn't apply to some supplies and durable medical equipment.”
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Limiting Charge
• The limiting charge applies to all of the following services/supplies, regardless of who provides or bills for them, if the services/supplies are covered by the Medicare program and are provided: Limiting Charge
– Physicians’ services;
– Services and supplies furnished incident to a physician’s services that are commonly furnished in a physician’s office;
– Outpatient physical therapy services furnished by an independently practicing physical therapist; – Outpatient occupational therapy services furnished by an independently practicing occupational therapist;
– Diagnostic tests; and
– Radiation therapy services (including x‐ray, radium, and radioactive isotope therapy, and materials and services of technicians)
Limiting Charge
• Therefore, items provided by a DME supplier are not subject to the “limiting charge” provisions.
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Selling Capped Rental Items
• Since Medicare will not pay anything for the sale of a capped rental item, the better approach is to allow the beneficiary to rent on a non‐assigned basis so that the supplier gets higher reimbursement, but the beneficiary still gets paid 80% of the Medicare allowable.
Billing for Items on Same Day
• A supplier cannot submit some items assigned and others non‐assigned on the same claim.
• It is unclear if a supplier can have two separate claims, one assigned and one non‐assigned, with the same date of service, or if different dates of service are required.
Billing for Items on Same Day
• Examples: – Billing nutrition assigned, billing supply kits non‐assigned.
– Over the quantity of items and there is no support of medical necessity for the increase in quantity. 26
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Oxygen Contents
• A non‐participating supplier can bill oxygen contents non‐assigned after the 36 month rental period.
Stationary and Portable
• If an oxygen patient has both a concentrator and a portable that are being billed on two different anniversary dates, one claim can be assigned and the other claim can be non‐assigned • It is unclear as to whether the claims can have the same date of service, or if different dates of service will be required. Dropping Accreditation
• If a supplier drops its accreditation on a product category (resulting in the supplier no longer being able to bill Medicare for that product category), this does not allow the supplier to collect cash up front.
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Dropping Accreditation
• The supplier must be accredited for the products it provides because accreditation certifies that the supplier meets the specific standards for the products provided. • Otherwise, the supplier may be in violation of the supplier standards and the requirements of the supplier’s accreditation agency. • This is true for both Medicare and commercial patients. Self‐Fill Cylinders
• A supplier can use conserving devices, portable oxygen concentrators, etc. • A supplier can technically use a self‐fill unit for the individual patients as long as each patient has his/her own equipment and self‐fill cylinders. • The supplier can have the patient, nurse, or other caregiver fill the cylinder for the patient. • The supplier cannot have one self‐fill unit with a number of cylinders to fill for unnamed individuals. That is not permitted. Number of Cylinders
• Unless it is a safety issue to have multiple cylinders in a residence, there is not a limit to what should be provided to meet that patient's needs.
• The supplier is required to provide all contents that the patient needs during the month and cannot limit the number of cylinders. 28
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Post‐Payment Audits
• As previously discussed, up to now most DME claims have been billed on an assigned basis.
• Because relatively few DME claims have historically been billed non‐assigned, there is no significant track record of CMS pursuing recoupments of non‐assigned claims.
• Having said this, non‐assigned claims are equally as vulnerable to audits as assigned claims.
Post‐Payment Audits
• If a non‐assigned claim is audited, the supplier may not be insulated from being assessed an overpayment.
Streamlining Operations – “Hub and Spoke” Model
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“Hub and Spoke” Model
• The Hub and Spoke Model requires a central processing, billing, and shipping center for all DME products and services offered by the spokes. The DME supplier’s headquarters would act as its central hub and its multiple locations would act as the spokes. The benefit to this model is that it streamlines certain services under one roof, effectively reducing the supplier’s costs related to decentralized services. “Hub and Spoke” Model
• There are several roles that the spokes can play, but the level of involvement the spokes take on will ultimately determine the potential savings found by this model. For example, any DME supplier location where a Medicare beneficiary reasonably believes he/she can purchase and service DME must be enrolled as a Medicare supplier location. Supplier location enrollment and compliance with DME supplier standards can increase the spoke’s compliance costs. “Hub and Spoke” Model
• Some DME suppliers will operate a “showroom” at the spoke’s location. A showroom is an open floor store that physically presents the equipment that is sold by the hub. • When a Medicare patient expresses an interest in a piece of equipment, the showroom employee educates the patient about the product and connects the patient with the hub to purchase, deliver, and service the equipment. In this scenario, (i) the “point of sale” has occurred with the hub and (ii) the spoke is not required to be accredited and have a PTAN.
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“Hub and Spoke” Model
• As long as the spoke ensures that the patient is aware that the spoke does not furnish the products, then the spoke is not required to be accredited or maintain a Medicare supplier number. Therefore, this model may substantially decrease the spoke’s compliance overhead, and if crafted properly, may only slightly increase the hub’s overhead resulting in increased profit. Centralized Intake Call Center
Centralized Intake Call Center
• Another way for a DME supplier to streamline its operations is to centralize its intake operations.
• Let’s look at a supplier that is organized as a legal entity with a single tax identification number (“Tax ID”) and with multiple locations. Assume that each location has its own PTAN. 31
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Centralized Intake Call Center
• The various locations route received telephone calls to a designated main location. • Personnel at the main location perform eligibility checks and verify a beneficiary’s qualifications for the equipment. Physicians fax orders for equipment to a centralized fax number associated with the main location. Centralized Intake Call Center
• The issue of a centralized intake center, or call center, implicates the DMEPOS Quality Standards.
• With regard to the Quality Standards, a supplier is responsible for performing “intake and assessment.” The NSC has stated, in other context, that a supplier may not subcontract out or otherwise delegate to a third party its intake and assessment responsibilities. Unfortunately, neither CMS nor the NSC has issued additional significant guidance regarding what constitutes “intake and assessment.” Centralized Intake Call Center
• Based on a review of the limited Medicare guidelines available and informal guidance from the NSC, locations sharing the same Tax ID are likely to be considered the same supplier and, therefore, may centralize their intake operations at a single location if the following policies and/or procedures are implemented:
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Centralized Intake Call Center
– Each separate location must maintain its own local telephone number.
– Calls to a location’s local telephone number must allow a beneficiary to speak with a live representative at that location, if so desired by the beneficiary. – At the time of intake, the beneficiary will be assigned to the nearest supplier location, as determined by the beneficiary’s zip code.
– Intake personnel at the centralized call center or the main location must advise the beneficiary that the aforementioned nearest supplier location will be his or her supplier with regards to the equipment. Centralized Intake Call Center
– The location that dispenses the equipment must be the one that bills Medicare for the item using its PTAN.
– Paperwork provided to the beneficiary from the entity must clearly indicate the particular location from which the equipment will be dispensed. – The equipment being dispensed must come from the inventory of the location that sets up the beneficiary.
– If necessary, the beneficiary must go to the particular location that dispensed the equipment for any service or repair. Centralized Intake Call Center
• The analysis is limited to the centralization of intake operations among locations that share the same Tax ID under a single entity. In circumstances involving entities or locations with two or more distinct Tax IDs, such entities or locations are considered to be separate suppliers. • Accordingly, in order to reduce the risk of violating the Quality Standards, additional procedures should be implemented if establishing a centralized intake or call center for multiple legal entities. 33
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Centralized Intake Call Center
• In those situations, in addition to the above provisions, to the extent that the centralized intake or call center obtains or collects eligibility information or other documentation regarding the beneficiary or the order (e.g., medical records), the centralized call center must provide such documentation to the primary supplier prior to furnishing the equipment to the beneficiary. Centralized Intake Call Center
• Upon receipt, the primary supplier must review the documentation and independently determine whether there is medical necessity for the item prior to authorizing the centralized call center to furnish the equipment to the beneficiary. Discounts to Cash Customers
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Provision of Discounts to Cash Customers • Selling products at retail – for cash – is the future of DME. There are several reasons for this.
– As previously discussed, CB has resulted in a two‐tier system. Those on the lower end of the socio‐economic scale will normally have no choice but to accept whatever Medicare pays for. Those on the higher end of the socio‐economic scale will have the ability to bypass Medicare and pay cash….and they will want the “Cadillac” product.
Provision of Discounts to Cash Customers – Baby Boomers – there are 78 million of them – are the future customers of DME suppliers. Boomers are the “Woodstock Generation.” Psychologically, Boomers refuse to get old. Boomers do not want to spend their “Golden Years” playing shuffleboard at a retirement community in Scottsdale, AZ. Rather, Boomers expect to be participating in Triathlons and going to Rolling Stones concerts.
Provision of Discounts to Cash Customers – Unlike their parents, Boomers understand that they will have to pay cash for at least a portion of their health care products and services.
– The 70 year old Boomer understands that the most precious asset he has is time. He does not want to waste his time waiting for Medicare. The Boomer is willing to pay cash for the “Cadillac” item and hit the golf course, running trail, or rock concert.
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Provision of Discounts to Cash Customers – All of this is a long way of saying that there is a huge opportunity to sell items for cash at retail.
Provision of Discounts to Cash Customers • A common question asked by DME suppliers is this: “Can I sell a Medicare‐covered item for cash at a discount off the Medicare allowable?
• The short answer is “yes,” but as is often the case, the “devil is in the details.”
Provision of Discounts to Cash Customers • There is a federal statute that says that a DME supplier is prohibited from charging Medicare substantially in excess of the supplier’s usual charges, unless there is good cause. • The current regulations do not give any clear guidance on what constitutes “substantially in excess” or “usual charges.” Although governmental agencies have attempted to give clarification over the years, they have been unsuccessful.
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Provision of Discounts to Cash Customers • In 2003, a proposed rule contemplated the “usual charge” to be either the average or median of the supplier’s charges to payers other than Medicare (and some others). • Under the proposed rule, a DME supplier’s usual charge should not be less than 83% of the Medicare fee schedule amount (i.e., up to a 17% discount from the Medicare fee schedule). Provision of Discounts to Cash Customers • Under the proposed rule, there would be an exception for good cause, which would allow a supplier’s usual charges to be less than 83% of the Medicare fee schedule, if the supplier can prove unusual circumstances requiring additional time, effort or expense, or increased costs of serving Medicare beneficiaries.
Provision of Discounts to Cash Customers • The proposed rule would include charges of affiliate companies into the calculation of a supplier’s usual charges. • An affiliated company is any entity that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with the DME supplier.
• There is no legal basis for including charges of affiliate companies, but including this in the proposed rule gives the DME industry a glimpse into the government’s thinking. 37
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Provision of Discounts to Cash Customers • In 2007, CMS declined to promulgate the proposed rule into a final rule. • Nevertheless, this proposed rule provides insight into CMS’ thinking.
Provision of Discounts to Cash Customers • A DME supplier, under one legal entity (i.e., one TIN) can simultaneously (i) take assignment from Medicare and (ii) sell Medicare‐covered items for cash.
• Having said this, my preference is for the DME supplier to have two legal entities: (i) Company A is the Part B supplier and (ii) Company B does not have a PTAN – it sells covered and non‐covered items for cash. Here is why this is my preference:
Provision of Discounts to Cash Customers – If the Part B and retail businesses are under one TIN, and if the supplier gets hit with a large recoupment demand, and if the recoupment takes the supplier “down in flames,” then the retail side will go down with it. On the other hand, if the retail business is in a separate legal entity, then it is likely that the retail business will be left intact if the Part B business goes down. To make this two company scenario work, the two legal entities will truly need to be separate.
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Provision of Discounts to Cash Customers – If the Part B and retail businesses are under one legal entity, and the owner wishes to sell only one of the two businesses, then the owner will likely be relegated to engaging in an asset sale. Conversely, if the Part B and retail businesses are under separate legal entities, then the owner has the option of engaging in either an asset or stock sale.
Provision of Discounts to Cash Customers • If separate legal entities are set up then, subject to patient choice, customers can be referred between the companies….so long as there is no remuneration in exchange for the referrals.
DME Supplier Has No PTAN
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DME Supplier Has No PTAN
• Certain disclaimers must be made when a supplier sells, without a PTAN, DME to a Medicare beneficiary. 42 U.S.C. §1395m(j)(4)(A) states that if a supplier furnishes DME to a Medicare beneficiary, for which no payment may be made because the supplier does not have a Medicare supplier number, then any expenses incurred for the DME will be the responsibility of the supplier. DME Supplier Has No PTAN
• The beneficiary will have no financial responsibility for the expenses, and the supplier will refund any amounts collected from the beneficiary, unless before the DME was furnished, the beneficiary was informed that Medicare would not pay for the DME and the beneficiary agreed to pay for the item. • Assume that a DME supplier, without a PTAN, desires to sell items for cash over the internet. DME Supplier Has No PTAN
• The supplier’s web page should have the following in large bold type appear as soon as the customer clicks on a link to view DME….as well as immediately prior to check‐out:
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DME Supplier Has No PTAN
• Notice to Medicare Beneficiaries. Medicare will pay for medical equipment and supplies only if a supplier has a Medicare supplier number. We do not have a Medicare supplier number. Medicare will not pay for any medical equipment and supplies we sell or rent to you. You will be personally and fully responsible for payment.
Loan/Consignment Closets
Loan/Consignment Closets
• A DME supplier may place inventory in a hospital or physician’s office. The inventory must be for the convenience only of the hospital’s/physician’s patients and the hospital/physician cannot financially benefit, directly or indirectly, from the inventory.
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Loan/Consignment Closets
• If a DME supplier pays rent for a space in which the consigned inventory is placed, then the arrangement should comply with the Space Rental safe harbor to the Medicare anti‐kickback statute. Among other requirements, (i) the lease must be for a term of at lease one year, (ii) the rent must be fixed one year in advance (e.g., $12,000 per year or $1,000 per month), and (iii) the rent must be fair market value.
Cooperative Arrangement With Hospital
Cooperative Arrangement With Hospital
• Because of how they are paid by Medicare and commercial insurers, hospitals are motivated to discharge patients as quickly as possible.
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Cooperative Arrangement With Hospital
• However, under the Hospital Readmissions Reduction Program, if a patient is readmitted after discharge within a certain period of time for a particular disease, then the hospital can be subjected to future payment reductions from Medicare.
• For these reasons, the hospital desires to have some control over the patient post‐discharge so as to reduce the risk of a premature readmission.
Cooperative Arrangement With Hospital
• One way to accomplish this is for the hospital to enter into a Preferred Provider Agreement with the DME supplier under which the supplier will monitor/work with discharged patients so that they are not readmitted soon after being discharged. • Under such a preferred provider arrangement, the hospital will insure patient choice. If the physician orders DME for the patient, and if the patient does not express a preference for a DME supplier, then the hospital will refer the patient to its preferred DME supplier.
Cooperative Arrangement With Hospital
• In turn, the supplier commits to provide a high level of services to the discharged patient with the goal of preventing a premature readmission.
• Another way for the hospital and a preferred DME supplier to work together is for them to create a joint venture.
• For example, St. Mary’s Hospital and ABC Medical Equipment, Inc. can form a new corporation called “St. Mary’s Medical Equipment, Inc.” (“SMME”).
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Cooperative Arrangement With Hospital
• SMME will be partially owned by St. Mary’s Hospital and will be partially owned by ABC. • So as to avoid kickback concerns, SMME should be set up and operated in accordance with the Small Investment Interest safe harbor to the Medicare anti‐
kickback statute (“AKS”). Cooperative Arrangement With Hospital
• If this safe harbor cannot be met, then SMME should adhere to (i) the OIG’s 1989 Special Fraud Alert (“Joint Ventures”) and (ii) the OIG’s April 2003 Special Advisory Bulletin (“Contractual Joint Ventures”).Subject to patient choice, the hospital will refer discharged patients to SMME. • The hospital and ABC will share SMME’s profits in accordance with each party’s percentage ownership interest in SMME.
Hospital Consignment Arrangement and “Chargeback” Obligation
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Introduction
• When a consignment arrangement with a hospital works properly, the DME supplier places products in a “closet” at the hospital, a physician will order a product for a patient to take and use at home, hospital staff will pull the item out of the closet and give it to the patient, the patient is discharged, and the DME supplier will collect the appropriate documents and bill for the item. Introduction
• An important question is whether there should be a chargeback provision (i) for items that cannot be accounted for; (ii) for items dispensed with improper or insufficient paperwork or lack of medical necessity; or (iii) for instances where consigned items are used by the hospital for inpatient encounters. Applicable Laws – Medicare Anti‐Kickback Statute
• The AKS makes it a criminal offense to knowingly and willfully offer, pay, solicit, or receive remuneration (monetary or anything of value) to induce, or in return for, referrals of health care services or items paid for by a federal health care program.
• A claim for items or services that results from a violation of the AKS also constitutes a false or fraudulent claim under the Federal False Claims Act (“FCA”).
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Applicable Laws – False Claims Act
• The FCA is a civil statute that prohibits the knowing submission of false or fraudulent claims.
• The FCA creates a civil penalty of between $5,500 and $11,000 per claim filed, plus treble damages sustained by the Government due to the false claim.
• Claims that include items or services resulting from a violation of the AKS constitute a false claim under the FCA.
Applicable Laws – False Claims Act
• The FCA also prohibits conspiring to submit false or fraudulent claims.
• This means that persons who conspire to commit any type of FCA violation, have themselves committed an FCA violation, even though they may not present any false claims or make any false statements. Applicable Laws – Medicare “48‐Hour” Rule
• The Medicare Claims Processing Manual allows a DME supplier to deliver durable medical equipment, prosthetics, and orthotics (but not supplies) to an inpatient up to two days before discharge, if certain conditions are met.
• This is commonly referred to as the “48‐Hour” Rule. 46
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Applicable Laws – Medicare “48‐Hour” Rule
• By definition, DME is covered by Part B only when intended for use in the home.
• One of the conditions that must be met under the 48‐
Hour Rule states that the reason the supplier furnishes the item cannot be for the purpose of eliminating the facility's responsibility to provide an item that is medically necessary for the beneficiary's use or treatment while the beneficiary is in the facility.
Applicable Laws – Medicare “48‐Hour” Rule
• Such items are included in the Diagnostic Related Group (DRG) or Prospective Payment System (PPS) rates.
• Items or services provided by an entity, other than the hospital, to an inpatient of a hospital or to a hospital outpatient during an encounter, are excluded from Medicare coverage, subject to certain exceptions.
Applicable Laws – Medicare “48‐Hour” Rule
• A hospital is responsible for furnishing medically necessary items to a beneficiary for the full duration of a beneficiary’s stay.
• A hospital is not allowed to delay furnishing or shift its costs for furnishing medically necessary items to a beneficiary, who is a resident in the facility, to Medicare Part B.
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Applicable Laws – Medicare “48‐Hour” Rule
• The Medicare Claims Processing Manual further states, “[a] facility may not prematurely remove a medically necessary item from the beneficiary’s use or treatment on the basis that a supplier delivered a similar or identical item to the beneficiary for the purpose of fitting or training.”
Applicable Laws – Medicare “48‐Hour” Rule
• However, “beginning two days before the beneficiary’s discharge, a facility may take reasonable actions to . . . fit or train the beneficiary . . . include[ing] the substitution of the supplier‐furnished item, in whole or in part, for the facility‐furnished item during the beneficiary’s last two inpatient days provided the substitution is both reasonable and necessary for fitting or training . . . for subsequent use at the beneficiary’s home.”
Hospital “Chargeback” Obligation –
Unaccounted For Items
• While there appears to be no OIG guidance directly addressing this issue, an argument can be made that consignment arrangements between DME suppliers and hospitals that lack a chargeback provision, holding the hospital financially responsible for items that are unaccounted for, implicates the AKS. • One purpose of the lack of a chargeback provision may be interpreted as an offer of remuneration to induce or reward referrals. 48
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Hospital “Chargeback” Obligation –
Unaccounted For Items
• The remuneration offered to the hospital would be in the form of access to items without having to pay for them. • Because the underlying service being provided by the DME supplier in consignment arrangements is to patients, and not the hospital, and because these items have independent value to the hospital, it may not be difficult for the government to prove that access to these free items was furnished for no purpose other than to induce recommendation of the DME supplier.
Hospital “Chargeback” Obligation –
Unaccounted For Items
• Further, providing access to free items is a violation of an OIG Advisory Opinion prohibiting a consignment arrangement from benefiting the hospital in any way. Accordingly, the lack of a chargeback provisions in a consignment arrangement will be suspect under the AKS because it creates an incentive for influencing patient referrals. Hospital “Chargeback” Obligation –
Unaccounted For Items
• For this reason, DME suppliers and hospitals should include a chargeback provision in their consignment arrangement.
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Hospital “Chargeback” Obligation –
Lack of Medical Necessity
• Although there appears to be no OIG guidance directly addressing this issue, an argument can be made that a consignment arrangement that lacks a chargeback provision for claims denied due to lack of medical necessity or deficient paperwork implicates the AKS. Hospital “Chargeback” Obligation –
Lack of Medical Necessity
• The fact that a hospital is lax in regards to properly documenting medical necessity for consigned items it dispenses, or knowingly dispensing items the patient lacks a medical need for, suggests that the items were dispensed for the purpose of inducing the beneficiary to obtain additional services from the hospital or physician. Hospital “Chargeback” Obligation –
Lack of Medical Necessity
• Further, if the hospital is consistently dispensing items to patients that lack medical necessity or giving the DME supplier deficient paperwork, and the DME supplier does not require the hospital to reimburse the DME supplier for such claims, it suggests that the DME supplier is giving the hospital free items in order to induce or reward referrals from the hospital. 50
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Hospital “Chargeback” Obligation –
Lack of Medical Necessity
• To avoid potential AKS violations, the consignment arrangement should contain a chargeback provision for denied claims of consigned items which the hospital dispenses, if the claims are denied due to lack of medical necessity or deficient paperwork on the part of the hospital. Hospital “Chargeback” Obligation –
Restricting Use of Consigned Items
• Although there appears to be no OIG guidance directly addressing this particular issue, an argument can be made that not prohibiting, or not requiring reimbursement for, the use of consigned items for hospital inpatient encounters may result in a violation of the FCA. Hospital “Chargeback” Obligation –
Restricting Use of Consigned Items
• By using, and not paying for, a consigned item for the inpatient encounter, the hospital is able to shift its actual costs to the DME supplier. • Submitting a Part A claim for services, some of which were actually provided by another entity, likely constitutes a violation of the FCA on the part of the hospital.
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Hospital “Chargeback” Obligation –
Restricting Use of Consigned Items
• In order to avoid violating the FCA by potentially conspiring to commit an FCA violation, the DME supplier and the hospital should state in the agreement that consignment items will not be used by the hospital for inpatient encounters, unless the DME supplier is reimbursed for the items or the items are provided in accordance to the 48‐Hour Rule. Employee Liaison
Employee Liaison
• A DME supplier may designate an employee to be on a facility’s premises for a certain number of hours each week.
• The employee may educate the facility staff regarding medical equipment (to be used in the home) and related services. 52
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Employee Liaison
• The employee liaison may not assume responsibilities that the facility is required to fulfill.
• Doing so will save the facility money, which will likely constitute a violation of the Medicare anti‐kickback statute.
Medical Director Agreement
Medical Director Agreement
• A DME supplier can enter into an independent contractor Medical Director Agreement with a physician.
• The MDA must comply with the (i) Personal Services and Management Contracts safe harbor and (ii) the Personal Services exception to the Stark physician self‐referral statute.
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Medical Director Agreement
• Requirements of the safe harbor and Stark exception include the following:
– Written agreement with a term of at least one year
– They physician must give valuable services…not “made up services”
– The compensation paid by the DME supplier must be fixed one year in advance (e.g., $6000 over the next 12 months, or $500 per month)
– The compensation must be the fair market value equivalent of the physician’s services
Medical Director Agreement
• “Sham” medical director arrangements are under the OIG’s spotlight
• On June 9, 2015, the OIG addressed this issue by issuing a Fraud Alert entitled “Physician Compensation Arrangements May Result in Significant Liability.” The Fraud Alert states:
Medical Director Agreement
– “Physicians who enter into compensation arrangements such as medical directorships must ensure that those arrangements reflect fair market value for bona fide services the physicians actually provide. Although many compensation arrangements are legitimate, a compensation arrangement may violate the anti‐kickback statute if even one purpose of the arrangement is to compensate a physician for his or her past or future referrals of Federal health care program business. OIG encourages physicians to carefully consider the terms and conditions of medical directorships and other compensation arrangements before entering into them. 54
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Medical Director Agreement
• Cont’d:
– OIG recently reached settlements with 12 individual physicians who entered into questionable medical directorship and office staff arrangements. OIG alleged that the compensation paid to these physicians under the medical directorship arrangements constituted improper remuneration under the anti‐kickback statute for a number of reasons, including that the payments took into account the physicians’ volume or value of referrals and did not reflect fair market value for the services to be performed, and because the physicians did not actually provide the services called for under the agreements. Medical Director Agreement
• Cont’d:
– OIG also alleged that some of the 12 physicians had entered into arrangements under which an affiliated health care entity paid the salaries of the physicians’ front office staff. Because these arrangements relieved the physicians of a financial burden they otherwise would have incurred, OIG alleged that the salaries paid under these arrangements constituted improper remuneration to the physicians. OIG determined that the physicians were an integral part of the scheme and subject to liability under the Civil Monetary Penalties Law. Billing Medicaid
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Billing Medicaid
• Billing and collecting from state Medicaid programs is more expensive and time consuming for a DME supplier than collecting from a cash‐paying customer. • It is logical for suppliers to desire to charge a cash‐paying customer less than what the supplier bills Medicaid. Billing Medicaid
• The question thus arises: Is it permissible for the supplier to do so? • Most state Medicaid programs require the supplier to bill the Medicaid program its usual and customary price. State Sales Tax
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State Sales Tax
• When a DME supplier ships products into another state, the question is whether the supplier must collect sales tax in that state. • The general rule is that a state cannot require a DME supplier to collect sales tax if the supplier (1) does not have a physical presence in the state and (2) does not have sufficient connections with the state to create a “substantial nexus.” Quill vs. N. Dakota, 504 U.S. 298, 311 (1992). State Sales Tax
• Because of the general rule, many states have strengthened their efforts to establish that DME suppliers (shipping into these states) have a “substantial nexus” in their states. • For example, a state may assert that a “substantial nexus” occurs when an out‐of‐state supplier has an employee…or a warehouse…in the state. Registering as a Foreign Corporation
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Registering as a Foreign Corporation
• The requirement to register or “qualify” as a foreign corporation generally hinges on whether an entity is “doing business” in a state according to that state’s foreign corporation statute. • Most states do not statutorily define what constitutes “doing business” in the state; instead, the statute sets forth a non‐exhaustive list of activities that do not
constitute “doing business” in the state and “interstate commerce” is frequently listed as one of the exceptions. Registering as a Foreign Corporation
• In most states, solely (1) obtaining a DME license, and (2) shipping products into the state will not result in the supplier being required to qualify as a foreign corporation in the state. Note that qualification as a foreign corporation will subject the DME supplier to potential state business income taxation in some states.
Registering as a Foreign Corporation
• If a DME supplier does decide to qualify as a “foreign corporation” in another state, the qualification process typically involves filing fees and an application for foreign corporation qualification with the secretary of state’s office, maintaining a registered office and/or registered agent in the state and filing an annual report. • Most states will not allow an entity to qualify and conduct business in the state under a name that is not distinguishable from a name already on file in that state. 58
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Registering as a Foreign Corporation
• The requirements for withdrawing registration as a foreign corporation are generally more onerous than the initial application to qualify as a foreign corporation. • Certain states require detailed financial information and most require clearance from other state agencies in order to withdraw. All states require the withdrawing entity to certify, under penalty of perjury, that it is no longer conducting business in the state, and surrender its authority to conduct business in the state. Registering as a Foreign Corporation
• Doing business in another state may result in the DME supplier owing certain types of taxes to that state. • Because the state tax laws frequently use criteria that differ from the state foreign corporation statute, these taxes may be owed even if the business is not otherwise required to register as a foreign corporation. Social Media
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Social Media
• “Social media” is a way for people to communicate and interact online. Social media has been around since the dawn of the Internet, but in the last 10 years or so we have seen a surge in both the number and popularity of social media sites. • The future of the DME industry is the servicing of the Boomers. Social Media
• Unlike their parents, Boomers are comfortable using social media. • The forward‐thinking DME supplier will utilize social media to (i) advertise to prospective customers, (ii) stay in touch with existing customers, and (iii) monitor patient outcomes.
Sham Telehealth Arrangements
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Sham Telehealth Arrangements
• A growing segment of the DME industry involves the sale of back, knee and ankle braces. • DME suppliers are aggressively marketing braces and it is not uncommon for a supplier to mail braces to Medicare patients residing in multiple states. Sham Telehealth Arrangements
• When a DME supplier is marketing to patients in multiple states, the supplier often runs into a “bottleneck.” • This involves the patient’s local physician. A patient may desire to purchase a brace from the out‐of‐state DME supplier but it is too inconvenient for the patient to drive to his physician’s office. Sham Telehealth Arrangements
• Or if the patient is seen by his local physician, the physician may decide that the patient does not need a brace and so the physician refuses to sign an order. • Or even if the physician does sign an order, he may be hesitant to send the order to an out‐of‐state DME supplier. 61
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Sham Telehealth Arrangements
• This kind of “bottleneck” is not uncommon: we see this when DME suppliers mail CPAP supplies, incontinence supplies, and other “soft goods” to patients residing throughout the United States. Sham Telehealth Arrangements
• In order to address this challenge, we are witnessing some DME suppliers enter into arrangements that will get them into trouble. • This has to do with “telehealth” companies. Sham Telehealth Arrangements
• A typical telehealth company has contracts with many physicians who practice in multiple states. • The telehealth company contracts with, and is paid by (i) self‐funded employers that pay a membership fee for their employees, (ii) health plans, and (iii) patients who pay a per visit fee. 62
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Sham Telehealth Arrangements
• Where a DME supplier will find itself in trouble is when it aligns itself with a telehealth company that is not paid by employers, health plans and patients – but rather – is directly or indirectly paid by the DME supplier. Sham Telehealth Arrangements
• Here is an example: DME supplier purchases leads from a marketing company…the marketing company sends the leads to the telehealth company…the telehealth company contacts the leads and schedules audio or audio/visual encounters with physicians contracted with the telehealth company…the physicians sign orders for braces…the telehealth company sends the orders to the DME supplier…the marketing company pays compensation to the telehealth company for its services in contacting the leads and setting up the physician appointments…the telehealth company pays the physicians for their patient encounters…the DME supplier mails the brace to the patient…the DME supplier bills (and gets paid by) Medicare. Sham Telehealth Arrangements
• There can be a number of permutations to this example, but you get the picture. • Stripping everything away, the DME supplier is paying the ordering physician. 63
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Sham Telehealth Arrangements
• To the extent that a DME supplier directly or indirectly pays money to a telehealth company, which in turn writes an order for braces that will be dispensed by the DME supplier and reimbursed by a federal health care program, the arrangement will likely be viewed as remuneration for a referral (or remuneration for “arranging for” a referral).
Sham Telehealth Arrangements
• Said another way, the arrangement will likely be viewed as a kickback.
Failure to Collect Full Copayment
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Failure to Collect Full Copayment
• Instead of collecting the full copayment, some suppliers only collect a flat rate.
• By discounting the copayment owed by the patient, the supplier is essentially waiving the remainder of the copayment. • A waiver of copayment (whole or partial) should only be made when financial hardship is documented.
Failure to Collect Full Copayment
• Furthermore, up‐front discounting of the copayment will likely be viewed as a reduction of the supplier’s actual charge for the item and will likely affect the supplier’s usual and customary charge for the medication.
Failure to Collect Full Copayment
• The supplier needs to avoid entering into a “sham” copayment subsidy arrangement.
• Such an arrangement can take many forms. However, the end result is that the patient ends up paying none of the copayment, or only a small portion of the copayment.
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Safeguards Against Routine Waivers
Safeguards Against Routine Waivers
• To avoid risks that the supplier may be engaging in a routine business practice of waiving copayments, the supplier may want to implement the following safeguards:
– The supplier will implement a policy entitled “Collection of Deductibles and Copayments and Economic Hardship Waivers” (“Policy”).
– The supplier should ensure the Policy reflects the supplier’s actual practices.
Safeguards Against Routine Waivers
–
–
The supplier should require patients who may qualify for a full or partial waiver to complete and sign the application required under the Policy. The supplier should keep the signed applications on file.
The supplier should request some form of documentation verifying the application (e.g., a pay stub or W‐2) when possible. The supplier should require such documentation in the event the supplier has any doubts regarding the validity of information provided on the application.
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Safeguards Against Routine Waivers
– The amounts of the copayment reductions should be granted on a sliding scale that is based upon the patients’ resources. For example, patients with incomes at 100% of the Federal Poverty Guidelines (“FPG”) may be eligible for full waivers, whereas patients with incomes between 200 and 400% of the FPG may only qualify for partial waivers. The amount of the actual waiver should depend on the particular patient’s resources, and the supplier should attempt to collect some copayment for patients with income levels above 100% of the applicable FPG.
Safeguards Against Routine Waivers
– The patient’s income level should not be the sole factor considered by the supplier. The supplier should evaluate the totality of the patient’s circumstances to determine whether the copayment is truly a financial hardship for the patient. Among other items, the supplier should consider the amount of the copayment resources available to the individual and the individual’s expenses.
THE END
Jeffrey S. Baird, Esq.
jbaird@bf‐law.com
806‐345‐6320
Mary Ellen Conway
[email protected]
301-896-0193
Sarah Hanna, President
[email protected]
419‐448‐5332 ext. 102
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Avoiding Medicare Fee‐For‐Service: Billing Non‐Assigned, Using ABNs, and Other Solutions
Medtrade Spring 2017 – February 28, 2017
29Y0916.ppt
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