[Federal Register: January 25, 2008 (Volume 73, Number 17)]
[Proposed Rules]
[Page 4503-4513]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr25ja08-21]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 424
[CMS-6036-P]
RIN 0938-AO90
Medicare Program; Establishing Additional Medicare Durable
Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS)
Supplier Enrollment Safeguards
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Proposed rule.
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SUMMARY: This proposed rule clarifies, expands, and adds to the
existing enrollment requirements that Durable Medical Equipment and
Prosthetics, Orthotics, and Supplies (DMEPOS) suppliers must meet to
establish and maintain billing privileges in the Medicare program.
DATES: To be assured consideration, comments must be received at one of
the addresses provided below, no later than 5 p.m. on March 25, 2008.
ADDRESSES: In commenting, please refer to file code CMS-6036-P. Because
of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
You may submit comments in one of four ways (please choose only one
of the ways listed):
1. Electronically. You may submit electronic comments on specific
issues in this regulation to http://www.regulations.gov. Follow the
instructions under the ``Comment or Submission'' tab and enter the file
code to find the document accepting comments.
2. By regular mail. You may mail written comments (one original and
two copies) to the following address ONLY: Centers for Medicare &
Medicaid Services, Department of Health and Human Services, Attention:
CMS-6036-P, P.O. Box 8012 Baltimore, MD 21244-8012.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments (one
original and two copies) to the following address only: Centers for
Medicare & Medicaid Services, Department of Health and Human Services,
Attention: CMS-6036-P, Mail Stop C4-26-05, 7500 Security Boulevard,
Baltimore, MD 21244-1850.
4. By hand or courier. If you prefer, you may deliver (by hand or
courier) your written comments (one original and two copies) before the
close of the comment period to one of the following addresses. If you
intend to deliver your comments to the Baltimore address, please call
telephone number (410) 786-4696 or (410) 786-1161 in advance to
schedule your arrival with one of our staff members. Room 445-G, Hubert
H. Humphrey Building, 200 Independence Avenue, SW., Washington, DC
20201; or 7500 Security Boulevard, Baltimore, MD 21244-1850.
(Because access to the interior of the HHH Building is not readily
available to persons without Federal Government identification,
commenters are encouraged to leave their comments in the CMS drop slots
located in the main lobby of the building. A stamp-in clock is
available for persons wishing to retain a proof of filing by stamping
in and retaining an extra copy of the comments being filed.)
Comments mailed to the addresses indicated as appropriate for hand
or courier delivery may be delayed and received after the comment
period.
Submission of comments on paperwork requirements. You may submit
comments on this document's paperwork requirements by mailing your
comments to the addresses provided at the end of the ``Collection of
Information Requirements'' section in this document.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT: August Nemec, (410) 786-0612.
SUPPLEMENTARY INFORMATION: Submitting Comments: We welcome comments
from the public on all issues set forth in this rule to assist us in
fully considering issues and developing policies. You can assist us by
referencing the file code CMS-6036-P and the specific ``issue
identifier'' that precedes the section on which you choose to comment.
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in
[[Page 4504]]
a comment. We post all comments received before the close of the
comment period on the following Web site as soon as possible after they
have been received: https://www.cms.hhs.gov/eRulemaking. Click on the
link ``Electronic Comments on CMS Regulations'' on that Web site to
view public comments.
Comments received timely will be available for public inspection as
they are received, generally beginning approximately 3 weeks after
publication of a document, at the headquarters of the Centers for
Medicare & Medicaid Services, 7500 Security Boulevard, Baltimore,
Maryland 21244, Monday through Friday of each week from 8:30 a.m. to 4
p.m. To schedule an appointment to view public comments, phone 1-800-
743-3951.
I. Background
Medicare services are furnished by two types of entities, providers
and suppliers. At Sec. 400.202, ``provider'' is defined as a hospital,
a critical access hospital (CAH), a skilled nursing facility, a
comprehensive outpatient rehabilitation facility, a home health agency
(HHA), or a hospice that has in effect an agreement to participate in
Medicare, or a clinic, a rehabilitation agency, or a public health
agency that has in effect a similar agreement but only to furnish
outpatient physical therapy or speech pathology services, or a
community mental health center that has in effect a similar agreement
but only to furnish partial hospitalization services. The term
``provider'' is also defined in sections 1861(u) and 1866(e) of the
Social Security Act (the Act).
For purposes of the DMEPOS supplier standards, the term
``supplier'' is defined in Sec. 424.57(a) as an entity or individual,
including a physician or Part A provider, that sells or rents Part B
covered DMEPOS items to Medicare beneficiaries that meet the DMEPOS
supplier standards. This proposed rule applies to all DMEPOS suppliers
and amends the DMEPOS supplier standards set forth at Sec. 424.57(c).
Those individuals or entities that do not furnish DMEPOS items but
furnish other types of health care services only (for example,
physician services or nurse practitioner services) would not be subject
to this requirement. A supplier that furnishes durable medical
equipment, prosthetics, orthotics, and suppliers (DMEPOS) is one
category of supplier. Other supplier categories may include, for
example, physicians, nurse practitioners, and physical therapists. If a
supplier, such as a physician or physical therapist, also provides
DMEPOS to a patient, then the supplier is also considered to be a
DMEPOS supplier. The term ``DMEPOS'' encompasses the types of items
included in the definition of medical equipment and supplies found at
section 1834(j)(5) of the Act.
In FY 2007, the Medicare program spent more than $10 billion for
DMEPOS supplies, and in April 2007, there were 116,471 individual
DMEPOS suppliers. However, due to the affiliation of some DMEPOS
suppliers with chains, there were 65,984 unique billing numbers. The
largest concentration of DMEPOS suppliers were located in five States:
California (approximately 9 percent), Texas (approximately 7 percent),
Florida (approximately 7 percent), New York (approximately 6 percent)
and Pennsylvania (approximately 5 percent). We believe that
approximately 30 percent of the DMEPOS suppliers are located in rural
areas throughout the United States and that the vast majority of DMEPOS
suppliers are small entities (based on Medicare reimbursement alone).
The term DMEPOS is defined at section 1861(n) of the Act. This
definition, in part, excludes from coverage as DMEPOS, items furnished
in skilled nursing facilities and hospitals. Also, the term DMEPOS is
included in the definition of ``medical and other health services''
found at section 1861(s)(6) of the Act. Furthermore, the term is
defined in Sec. 414.202 as equipment furnished by a supplier or a HHA
that--
Can withstand repeated use;
Is primarily and customarily used to serve a medical
purpose;
Generally is not useful to an individual in the absence of
an illness or injury; and
Is for use in the home.
Examples of DMEPOS supplies include items such as blood glucose
monitors, hospital beds, nebulizers, oxygen delivery systems, and
wheelchairs.
Prosthetic devices are included in the definition of ``medical and
other health services'' under section 1861(s)(8) of the Act. Prosthetic
devices are defined in this section of the Act as ``devices (other than
dental) which replace all or part of an internal body organ (including
colostomy bags and supplies directly related to colostomy care),
including replacement of such devices, and including one pair of
conventional eyeglasses or contact lenses furnished subsequent to each
cataract surgery with insertion of an intraocular lens.'' Other
examples of prosthetic devices include cardiac pacemakers, cochlear
implants, electrical continence aids, electrical nerve stimulators, and
tracheostomy speaking valves.
Section 1861(s)(9) of the Act provides for the coverage of ``leg,
arm, back, and neck braces, and artificial legs, arms, and eyes,
including replacement of required because of a change in the patient's
physical condition.'' As indicated by section 1834(h)(4)(C) of the Act,
these items are often referred to as ``orthotics and prosthetics.''
Under section 1834(h)(4)(B), prosthetic devices do not include
parenteral and enteral nutrition nutrients and implantable items
payable under section 1833(t) of the Act.''
Section 1861(s)(5) of the Act includes ``surgical dressings,
splints, casts, and other devices used for reduction of fractures and
dislocation'' as one of the ``medical and other health services'' that
is covered by Medicare. Other items that may be furnished by suppliers
would include (among others):
Prescription drugs used in immunosuppressive therapy
furnished to an individual who receives an organ transplant for which
payment is made under this title, and that are furnished within a
certain time period after the date of the transplant procedure as noted
at section 1861(s)(2)(j) of the Act.
Extra-depth shoes with inserts or custom molded shoes with
inserts for an individual with diabetes as listed at section
1861(s)(12) of the Act.
Home dialysis supplies and equipment, self-care home
dialysis support services, and institutional dialysis services and
supplies included at section 1861(s)(2)(F) of the Act.
Oral drugs prescribed for use as an anticancer therapeutic
agent as specified in section 1861(s)(2)(Q) of the Act.
Self-administered erythropoietin as described in section
1861(s)(2)(O) of the Act.
The National Supplier Clearinghouse (NSC) is the Center for
Medicare & Medicaid Services' (CMS) designated national enrollment
contractor for DMEPOS suppliers. The primary functions of the NSC are
to: (1) Ensure that only qualified suppliers of DMEPOS are enrolled or
remain enrolled in the Medicare program, and (2) take the necessary
actions to revoke enrolled suppliers who no longer meet supplier
standards.
A. Statutory Authority
Various sections of the Act and the regulations require providers
and suppliers to furnish information concerning the amounts due and the
identification of individuals or entities that furnish medical services
to beneficiaries before payment can be
[[Page 4505]]
made. The following is an overview of the sections that grant this
authority.
Sections 1102 and 1871 of the Act provide general
authority for the Secretary of Health and Human Services (the
Secretary) to prescribe regulations for the efficient administration of
the Medicare program. Under this authority, this proposed rule will
require the collection of information from providers and suppliers for
the purpose of enrolling in the Medicare program and granting
privileges to bill the program for health care services furnished to
Medicare beneficiaries.
Sections 1814(a), 1815(a), and 1833(e) of the Act require
the submission of information necessary to determine the amounts due a
provider or other person.
Section 1834(j)(1)(A) of the Act states that no payment
may be made for items furnished by a supplier of medical equipment and
supplies unless such supplier obtains (and renews at such intervals as
the Secretary may require) a supplier number. In order to obtain a
supplier billing number, a supplier must comply with certain supplier
standards as identified by the Secretary.
Section 1842(r) of the Act requires CMS to establish a
system for furnishing a unique identifier for each physician who
furnishes services for which payment may be made. To complete this, we
need to collect information unique to that physician.
Section 1862(e)(1) of the Act states that no payment may
be made when an item or service was at the medical direction of an
individual or entity that is excluded in accordance with sections 1128,
1128A, 1156, or 1842(j)(2) of the Act.
Section 4313 of the Balanced Budget Act of 1997 (BBA)
(Pub. L. 105-33) amended sections 1124(a)(1) and 1124A of the Act to
require disclosure of both the Employer Identification Number (EIN) and
Social Security Number (SSN) of each provider or supplier, each person
with ownership or control interest in the provider or supplier, any
subcontractor in which the provider or supplier directly or indirectly
has a 5 percent or more ownership interest, and any managing employees
including Directors and Board Members of corporations and non-profit
organizations and charities. The ``Report to Congress on Steps Taken to
Assure Confidentiality of Social Security Account Numbers as Required
by the Balanced Budget Act'' was signed by the Secretary and sent to
the Congress on January 26, 1999. This report outlines the provisions
of a mandatory collection of SSNs and EINs effective on or after April
26, 1999.
Section 31001(i)(1) of the Debt Collection Improvement Act
of 1996 (DCIA) (Pub. L. 104-134) amended section 7701 of 31 U.S.C. by
adding paragraph (c) to require that any person or entity doing
business with the Federal Government must provide their Tax
Identification Number (TIN).
Section 936(j)(1)(A) of the Medicare Prescription Drug,
Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173)
amended the Act to require the Secretary to establish a process for the
enrollment of providers of services and suppliers.
We are authorized to collect information on the Medicare enrollment
application (that is, the CMS-855, (Office of Management and Budget
(OMB) approval number 0938-0685)) to ensure that correct payments are
made to providers and suppliers under the Medicare program as
established by Title XVIII of the Act.
B. Historical Enrollment Initiatives
For many years, concern about easy entry into the Medicare program
by unqualified or even fraudulent providers or suppliers has led us to
increase our efforts to establish more stringent controls on provider
and supplier entry into the Medicare program. The following is a
summary of the regulations that we have published to ensure that only
qualified providers and suppliers are participating in the Medicare
program.
In the October 11, 2000 Federal Register, we published the
Additional Supplier Standards final rule with comment period where we
listed the durable medical equipment, prosthetics, orthotics, and
supplies (DMEPOS) suppliers. In this rule, we established additional
standards that a DMEPOS supplier must comply with in order to receive
and maintain a Medicare billing number. This final rule with comment
period outlined the supplier requirements to ensure that suppliers of
DMEPOS are qualified to furnish DMEPOS items and to help safeguard the
Medicare program and its beneficiaries from fraudulent or abusive
billing practices.
In the April 21, 2006 Federal Register, we published the
Requirements for Providers and Suppliers to Establish and Maintain
Medicare Enrollment final rule. This final rule implemented section
1866(j)(1)(A) of the Act. In this final rule, we required that all
providers and suppliers (other than physicians or practitioners who
have elected to ``opt-out'' of the Medicare program) must complete an
enrollment form and submit specific information to CMS in order to
obtain Medicare billing privileges. This final rule also required that
all providers and suppliers must periodically update and certify the
accuracy of their enrollment information to receive and maintain
billing privileges in the Medicare program. These statutory provisions
include requirements meant to protect beneficiaries and the Medicare
Trust Funds by trying to prevent unqualified, fraudulent or excluded
providers and suppliers from providing items or services to Medicare
beneficiaries or billing the Medicare program or its beneficiaries.
In the April 10, 2007 Federal Register (72 FR 17992), we published
Competitive Acquisition for Certain Durable Medical Equipment,
Prosthetics, Orthotics, and Supplies (DMEPOS) final rule implemented
section 302 of the MMA and established DME competitive bidding. In
addition, it created incentives for suppliers to provide quality items
and services while at the same time providing Medicare with reasonable
prices for payment. This final rule also incorporated provisions from
section 5101 of the Deficit Reduction Act of 2005, which concerns
beneficiary ownership of certain DMEs.
II. Provisions of the Proposed Rule
To ensure that DMEPOS suppliers understand how CMS interprets the
DMEPOS supplier standards, we are revising certain supplier standards
specified in Sec. 424.57(c). We are also proposing several new DMEPOS
supplier standards. We believe that these revisions and additions would
help to ensure that legitimate DMEPOS suppliers are furnishing items of
DMEPOS to Medicare beneficiaries.
A. Proposed Clarifications and Revisions of Existing DMEPOS Supplier
Standards
The supplier standard at Sec. 424.57(c)(1) states, ``Operates its
business and furnishes Medicare-covered items in compliance with all
applicable Federal and State licensure and regulatory requirements.''
The purpose of this standard is to ensure that DMEPOS suppliers
obtain and maintain the necessary State licenses required to furnish
the services provided to Medicare beneficiaries. In addition, we
believe that each DMEPOS supplier is responsible for determining what
licenses are required to operate a DMEPOS supplier's business. While
the NSC maintains information regarding State licensure laws, we do not
believe that the NSC is responsible for notifying any supplier of what
licenses are
[[Page 4506]]
required or that any changes have occurred in the State licensing
requirements. Further, we do not believe that there are any exceptions
to State licensing requirements, unless the State in which the DMEPOS
supplier furnishes services provides for such an exception. If a State
requires a specific license to furnish certain services, we believe
that a DMEPOS supplier cannot contract with an individual or other
entity to provide these licensed services, but rather, the DMEPOS
supplier could hire the individual as a W-2 employee. The owner of the
supplier, or full-time W-2 employee, must obtain and maintain this
licensing requirement. We are proposing to revise this supplier
standard by adding language to clarify that a DMEPOS supplier must be
licensed to provide licensed service(s) and cannot contract with an
individual or entity to provide the licensed service(s). We believe
that we are enrolling DMEPOS suppliers, not third party agents that
subcontract their operations to suppliers that are not enrolled or
cannot enroll in the Medicare program. Therefore, to ensure that only
qualified suppliers are enrolled or maintain enrollment in the Medicare
program, we maintain that a DMEPOS supplier must be licensed to provide
licensed service(s) and cannot contract with an individual or entity to
provide the licensed service(s).
In general, to ensure compliance, the NSC verifies that DMEPOS
suppliers meet the supplier standards in Sec. 424.57, comply with
State business and product licensing requirements, and meet applicable
local zoning requirements.
The supplier standard at Sec. 424.57(c)(7) specifies that the
DMEPOS supplier maintains a physical facility on an appropriate site
and that the physical facility must contain space for storing business
records including the supplier's delivery, maintenance, and beneficiary
communication records. We are proposing to revise this standard to
require that DMEPOS suppliers maintain business records for 7 years
after the claim has been paid and to clarify the term, ``appropriate
site.'' An appropriate site includes, but is not limited to, the
following features:
The supplier location must be accessible during posted
business hours to beneficiaries and to CMS, and must maintain a visible
sign and posted hours of operation. We believe that all DMEPOS
suppliers must have a permanent, durable sign that is visible at the
main entrance of the facility and positioned so that it is visible to
the public, including customers using wheelchairs.
The supplier location must be accessible during posted
hours of operation to beneficiaries and to CMS, and must maintain a
permanent visible sign in plain view and posted hours of operation. We
believe that DMEPOS suppliers must have its hours of operation posted
and in plain view and that suppliers submit changes to their posted
hours of operation in advance of any change by notifying the NSC via
the Medicare enrollment application. If the supplier's place of
business is located within a building complex, the sign must be visible
at the main entrance of the building where the place of business is
located.
The supplier's place of business must be staffed during
the supplier's posted hours of operation. The supplier's place of
business must be accessible to the public, CMS, the NSC and any of its
agents during the supplier's posted hours of operation regardless of
whether beneficiaries routinely visit the facility.
The supplier's place of business may be a ``closed door''
business, such as pharmacies or suppliers providing services only to
beneficiaries residing in a nursing home, that complies with all
applicable Federal, State, and local laws and regulations.
A supplier is not in compliance with this standard if no one is
available during the posted hours of operation.
In addition, we believe that an ``appropriate site'' applies to
``closed door'' businesses, (such as pharmacies/suppliers providing
services only to beneficiaries residing in a nursing home) and are
responsible for being in compliance with all applicable Federal, State,
and local laws and regulations. We believe that ``closed door''
businesses must comply with all the requirements of Sec. 424.57(c)(7),
and all DMEPOS supplier standards. Additionally, the facility has to be
accessible to beneficiaries, CMS or its agents regardless of whether
beneficiaries routinely visit the facility.
We are soliciting comments on whether we should establish a minimum
square footage requirement to the definition of an appropriate site and
what, if any, appropriate exceptions would apply to a minimum square
footage requirement.
The supplier standard at Sec. 424.57(c)(8) states, ``Permits CMS,
or its agents to conduct on-site inspections to ascertain supplier
compliance with the requirements of this section. The supplier location
must be accessible during posted business hours to beneficiaries and to
CMS, and must maintain a visible sign and posted hours of operation.''
We are proposing to revise (c)(8) to limit the provision to on-site
inspection. The proposed revision would read as follows: ``Permits CMS,
the NSC, or agents of CMS or the NSC to conduct on-site inspections to
ascertain supplier compliance with the requirements of this section.''
If the NSC or its agents are unable to perform a site visit during a
supplier's posted business hours, the NSC would deny billing privileges
for prospective applicants or would revoke the billing privileges of
DMEPOS suppliers enrolled in the Medicare program.
The supplier standard at Sec. 424.57(c)(9) states, ``Maintains a
primary business telephone listed under the name of the business
locally or toll-free for beneficiaries. The exclusive use of a beeper
number, answering service, pager, facsimile machine, car phone, or an
answering machine can not be used as the primary business telephone for
purposes of this regulation.'' We are proposing to revise this supplier
standard to exclude the use of cell phones and beepers/pagers as a
method of receiving calls or using ``call forwarding'' to forward a
call to a cell phone or beeper/pager from the public or beneficiaries
during the supplier's posted hours of operation. Therefore, we are
proposing to revise this standard to read, ``Maintains a primary
business telephone that is operating at the appropriate site listed
under the name of the business locally or toll-free for beneficiaries.
The use of cellular phones, beeper numbers, and pagers is prohibited.
Additionally, DMEPOS suppliers are prohibited from forwarding calls
from the primary business telephone listed under the name of the
business to a cellular phone, or a beeper/pager. The exclusive use of
answering machines, answering services or facsimile machine (or
combination of these options) cannot be used as the primary business
telephone during posted operating hours.'' We maintain that DMEPOS
suppliers who are utilizing cell phones, call forwarding, beeper
numbers, pagers, answering services or other methods to receive
telephone calls in a location other than the place of business for
business calls during their posted hours of operations are not in
compliance with this standard and that DMEPOS suppliers who exclusively
use answering machines or answering services during their posted hours
of operations are not in compliance with this standard.
The supplier standard at Sec. 424.57(c)(10) states, ``has a
comprehensive liability insurance policy in the amount of at least
$300,000 that covers both the supplier's
[[Page 4507]]
place of business and all customers and employees of the supplier. In
the case of a supplier that manufactures its own items, this insurance
must also cover product liability and completed operations. Failure to
maintain required insurance at all times will result in revocation of
the supplier's billing privileges retroactive to the date the insurance
lapsed.'' We are proposing to revise this provision to specify that the
DMEPOS supplier has a comprehensive liability insurance policy in the
amount of at least $300,000 per incident that covers both the
supplier's place of business and all customers and employees of the
supplier and ensures that insurance policy must remain in force at all
times. The DMEPOS supplier must list the NSC as a certificate holder on
the policy and notify the NSC in writing within 30 days of any policy
changes or cancellations. In the case of a supplier that manufactures
its own items, this insurance must also cover product liability and
completed operations. Failure to maintain required insurance at all
times will result in revocation of the supplier's billing privileges
retroactive to the date the insurance lapsed. DMEPOS suppliers are
responsible for providing the contact information of an individual
employed with the underwriter.'' While the NSC routinely verifies
comprehensive insurance coverage with an insurance agent, it may be
necessary to contact the underwriter to verify the policy's coverage.
Specifically, the NSC may need to verify insurance coverage with an
underwriter when: (1) Self-insurance is used; or (2) when the NSC
believes that the insurance agent is misrepresenting the terms and
conditions of coverage. This would not preclude the use of self-
insurance to demonstrate compliance with the comprehensive liability
insurance policy as long as CMS or the NSC can verify the policy and
its coverage provisions with an independent underwriter. Therefore we
are also proposing that to add a provision stating that self-insurance
may be used to demonstrate compliance with the comprehensive liability
insurance policy as long as CMS or the NSC can verify the policy and
its coverage provisions with an independent underwriter.
DMEPOS suppliers are responsible for providing the contact
information of an individual employed with the underwriter, who can
verify coverage. To ensure that coverage is actually issued and the
policy is in effect, we believe that the NSC should be able to verify
policy coverage with an insurance agent, or when necessary, the
underwriter, since this is the company affording coverage. This
proposed revision would not preclude the use of self-insurance to
demonstrate compliance with the comprehensive liability insurance
policy as long as CMS or its designated contractor can verify the
policy and its coverage provisions with an independent underwriter.
Moreover, we propose that a DMEPOS supplier obtain the appropriate
liability coverage prior to submitting its Medicare enrollment
application and supporting documentation to the NSC. (When a policy is
issued, up to 90 days may pass before the underwriter receives
notification that the policy has been issued by the insurance agent or
broker.) In addition, we believe if the NSC is unable to verify the
issuance and validity of liability insurance with an insurance agent,
or when necessary, an underwriter at the time of filing, then the NSC
should deny Medicare billing privileges without further action,
including an onsite review. Accordingly, the NSC must be able to verify
the issuance and validity of a DMEPOS liability insurance policy on the
day a prospective DMEPOS supplier submits a Medicare enrollment
application to the NSC for review. If the NSC is unable to verify the
issuance and validity of a liability insurance policy with an insurance
agent, or when necessary, the underwriter for a DMEPOS supplier
enrolled in the Medicare program, then the NSC may revoke the billing
privileges of that supplier.
In addition, we believe that it is the responsibility of the DMEPOS
supplier to list the NSC as a certificate holder on the policy. By
listing the NSC as a certificate holder on the policy, the NSC would be
able to verify coverage with the underwriter. A DMEPOS supplier who
fails to list the NSC as a certificate holder on the policy may have
their enrollment application denied or billing privileges revoked
because the NSC may not be able to verify the issuance and validity of
the policy. Finally, we believe that it is the DMEPOS supplier's
responsibility to: (1) Ensure that insurance policy must remain in
force at all times and provide coverage of at least $300,000 per
incident; and (2) notify the NSC in writing within 30 days of any
policy changes or cancellations.
The supplier standard at Sec. 424.57(c)(11) states, ``Must agree
not to contact a beneficiary by telephone when supplying a Medicare-
covered item unless one of the following applies: (i) The individual
has given written permission to the supplier to contact them by
telephone concerning the furnishing of a Medicare-covered item that is
to be rented or purchased; (ii) the supplier has furnished a Medicare-
covered item to the individual and the supplier is contacting the
individual to coordinate the delivery of the item; and (iii) if the
contact concerns the furnishing of a Medicare-covered item other than a
covered item already furnished to the individual, the supplier has
furnished at least one covered item to the individual during the 15-
month period preceding the date on which the supplier makes such
contact.'' We are proposing to revise this supplier standard to clarify
that suppliers can not directly solicit patients, which includes, but
is not limited to, a prohibition on telephone, computer e-mail or
instant messaging, coercive response internet advertising on sites
unrelated to DMEPOS products, or in-person contacts. The DMEPOS
supplier may only contact the Medicare beneficiary under the current
provisions at Sec. 424.57(c)(11)(i) through (iii). We believe that if
CMS or the NSC through on-site inspection obtains or develops evidence
that a DMEPOS supplier has made prohibited contacts with Medicare
beneficiaries in violation of the provisions found in this section that
CMS or the NSC may revoke that supplier's billing privileges, and may
determine if such billing may be for fraudulent or unnecessary
supplies.
The supplier standard at Sec. 424.57(c)(12) currently states that
the supplier must be responsible for the delivery of Medicare-covered
items to beneficiaries and maintain proof of delivery. The supplier
must document that it or another qualified party has, at an appropriate
time, provided beneficiaries with necessary information and
instructions on how to use Medicare-covered items safely and
effectively. We are proposing to revise paragraph (c)(12) provision to
clarify its intent. A DMEPOS supplier--
Is responsible for maintaining proof of the delivery in
the beneficiary's file;
The supplier must furnish information to beneficiaries at
the time of delivery of items as to how the beneficiary can contact the
supplier by telephone;
Must provide the beneficiary with instructions on how to
safely and effectively use the equipment or contract this service to a
qualified individual;
Is responsible for providing instruction on the safe and
effective use of the equipment that should be completed at the time of
delivery; and
[[Page 4508]]
Must document that this instruction has taken place.
We believe that a DMEPOS supplier is solely responsible for
delivery of Medicare-covered items and for instruction on the use of
those items. While we believe that a DMEPOS supplier may choose to
contract out the delivery of Medicare-covered items to another
individual or entity, the DMEPOS supplier has ultimate responsibility
for ensuring delivery in accordance with this standard and for
maintaining all necessary documentation to demonstrate that the
beneficiary received the Medicare-covered item and appropriate
instructions for its use. We believe that our revised interpretation of
this section will help to ensure that instructions for the safe and
appropriate use of products will be given to beneficiaries.
B. Proposed New DMEPOS Supplier Standards
At Sec. 424.57(c)(27), we are proposing a new standard that
specifies that the DMEPOS supplier must obtain oxygen from a State-
licensed oxygen supplier. To ensure that DMEPOS suppliers meet and
maintain this standard, we believe that DMEPOS suppliers who are
supplying oxygen must contract with a supplier licensed by the State to
provide them with oxygen. Obviously, this standard does not apply when
the State does not license oxygen suppliers. We understand that in
certain areas, DMEPOS suppliers may obtain oxygen from oxygen suppliers
in other States. However, when a DMEPOS supplier is located in a State
where licensure is required, then they must obtain their oxygen from a
state-licensed oxygen supplier, regardless of which State the oxygen
supplier obtained their licensure. For example in State A, a license is
required when supplying oxygen. If a DMEPOS supplier located in State A
is supplying oxygen, they must get their oxygen from a state-licensed
oxygen supplier. To extend this example, in State B, where no license
is required for an oxygen supplier, a DMEPOS supplier may obtain their
oxygen from a non-licensed supplier within State B, or a licensed
supplier (in a State where you must have a State license to supply
oxygen), or from a non-State-licensed supplier outside of State B
(where there is no State license required for supplying oxygen). We
believe that this standard would help to protect Medicare beneficiaries
and promote quality in the furnishing of oxygen.
At Sec. 424.57(c)(28), we are proposing a new supplier standard
that states that the supplier is required to maintain ordering and
referring documentation, including the National Provider Identifier,
received from a physician, nurse practitioner, physician assistant,
clinical social worker, or certified nurse midwife, for 7 years after
the claim has been paid. Since all DMEPOS supplies are ordered and
referred by physicians, nurse practitioners, physician assistants,
clinical social workers, or certified nurse midwives, we believe that
it is essential that DMEPOS suppliers maintain documentation regarding
the specific individual who ordered or referred a Medicare beneficiary
for DMEPOS. In addition, we are codifying the requirement to maintain
ordering and referring documentation for 7 years as required in
Publication 100-08, Chapter 5, Section 8.
We maintain that a DMEPOS supplier should retain the necessary
ordering and referring documentation received from physicians, nurse
practitioners, physician assistants, clinical social workers, or
certified nurse midwives to assure themselves that coverage criterion
for an item has been met. If the information in the patient's medical
record does not adequately support the medical necessity for the item,
the supplier is liable for the dollar amount involved unless a properly
executed Advance Beneficiary Notice of possible denial has been
obtained.
At Sec. 424.57(c)(29), we are proposing a new standard that
specifies that the supplier is prohibited from sharing a practice
location with another Medicare supplier. DMEPOS suppliers may not share
a practice location with any other Medicare supplier, including a
physician/physician group or another DMEPOS supplier. We believe that
allowing DMEPOS suppliers to commingle practice locations, operations,
staff, inventory and other aspects of supplier's operations constitutes
a significant risk to the Medicare program. Moreover, to allow a DMEPOS
supplier to commingle its practice location with another DMEPOS
supplier effectively limits the ability of CMS and the NSC to ensure
that each DMEPOS supplier meets all of the supplier standards specified
at Sec. 424.57. Finally, we do not believe that legitimate DMEPOS
suppliers routinely share practice locations with another Medicare
supplier.
Since we are aware that physicians and other licensed nonphysician
practitioners may obtain their own DMEPOS supplier number and furnish
DMEPOS from their office, we are soliciting comments on whether we
should establish an exception to this space sharing proposal for
physicians and nonphysician practitioners and the circumstances which
warrant an exception.
At Sec. 424.57(c)(30), we are proposing a new supplier standard
that specifies, ``Is open to the public a minimum of 30 hours per week,
except for those DMEPOS suppliers who are working with custom-made or
fitted orthotics and prosthetics.'' We are proposing this new standard
because the NSC has found that a number of existing DMEPOS suppliers
have posted restrictive or limited business hours, and in some cases,
have posted business hours that are so restrictive that it makes it
nearly impossible for a NSC to conduct on onsite visit or for a
beneficiary or the public to obtain DMEPOS services. Since we question
the legitimacy of any DMEPOS supplier with posted operating hours of
less than 4 hours a day, we are proposing to establish a minimum number
of operational hours for DMEPOS suppliers. Moreover, we believe that
most legitimate DMEPOS suppliers are open to the public at least 30
hours per week. We believe that most legitimate DMEPOS suppliers are
open to the public for more than 40 hours per week and that all
legitimate DMEPOS would need to be open a minimum of at least 30 hours
per week (either 6 hours a day, 5 days a week or 5 hours a day, 6 days
a week) in order to attract, retain and serve Medicare beneficiaries.
We believe that a minimum number of operating hours will help to ensure
that DMEPOS suppliers are open to the public and are able to serve the
needs of Medicare beneficiaries. Given that Medicare beneficiaries may
not be able to find transportation during limited operating hours, the
DMEPOS supplier must be open and available for periods long enough for
beneficiaries to readily access their facility. To ensure that DMEPOS
suppliers are able to report any change in their posted business hours,
we are proposing to revise the CMS-855S Medicare enrollment application
to accommodate this proposed change.
At Sec. 424.57(c)(31), we propose adding a new supplier standard
that specifies, ``Does not have an Internal Revenue Service (IRS) or a
State taxing authority tax delinquency.'' Currently, we do not consider
whether a DMEPOS supplier that is seeking enrollment or one that is
currently enrolled in the Medicare program has an IRS or a State taxing
authority tax delinquency. To ensure that Medicare payments are only
being made to organizations and individuals who have satisfied existing
tax debts, we will have a basis to revoke the billing privileges of a
DMEPOS supplier, including physicians and nonphysician
[[Page 4509]]
practitioners who are also enrolled as a DMEPOS supplier, that has
failed to comply with this standard.
The Government Accountability Office (GAO) found that over 21,000
of the physicians, health professionals, and suppliers paid under
Medicare Part B during the first 9 months of calendar year 2005 had tax
debts totaling over $1 billion. The GAO report titled, ``Medicare,
Thousands of Medicare Part B Providers Abuse the Federal Tax System
(GAO-07-587T)'' found abusive and potentially criminal activity,
including failure to remit to IRS individual income taxes or payroll
taxes or both withheld from their employees.
Moreover, we are proposing to revise the Medicare enrollment
application (that is, CMS-855S) to require that DMEPOS suppliers: (1)
Certify that the supplier does not have an IRS or a State taxing
authority tax delinquency; and (2) consent to having CMS or its
designated contractor verify that the information submitted by a DMEPOS
supplier regarding a tax delinquency is correct and accurate as
determined by the IRS or State taxing authority. We believe that this
change will allow CMS and its designated contractors to verify that the
information submitted by a DMEPOS supplier is accurate.
We would propose to define a ``tax delinquency'' as meaning an
amount of money owed to the United States or a State: A conviction or
civil judgment for tax evasion, a criminal or civil charge of tax
evasion, or the filing of a tax lien.
In Sec. 424.57(d), we would redesignate the current text as
paragraph (d)(1). We would add a new paragraph (d)(2) specifying that
``CMS, the NSC, or CMS designated contractor establishes a Medicare
overpayment from the date of an adverse legal action or felony
conviction (including felony convictions within the 10 years preceding
enrollment or revalidation of enrollment) that precludes payment.'' In
addition, we are proposing that any overpayment assessed by CMS or its
designated contractor due to a lack of reporting would follow the
existing rules governing Medicare overpayments set forth at Sec.
405.350 et seq.
We believe that proposed Sec. 424.57(d)(2) is necessary because
some DMEPOS suppliers fail to report adverse legal actions and felony
convictions to the NSC within the 30 days of the reportable event.
Since it is essential that DMEPOS suppliers notify the NSC of all
adverse legal actions and felony convictions within 30 days of the
reportable event, we believe that it is essential to establish this new
provision. This new provision would allow the CMS, the NSC, or a
designated Medicare contractor the authority to assess and collect an
overpayment from the time of the reportable event. In addition, the
CMS, the NSC, or a designated CMS contractor would revoke the DMEPOS
supplier's Medicare billing privileges, in accordance with Sec.
424.57(d)(1), if the adverse legal action or felony conviction
precludes participation in or payment from the Medicare program.
III. Collection of Information Requirements
Under the Paperwork Reduction Act of 1995 (PRA), agencies are
required to provide a 60-day notice in the Federal Register and solicit
public comment before a collection of information requirement is
submitted to the Office of Management and Budget (OMB) for review and
approval. In order to fairly evaluate whether an information collection
should be approved by OMB, section 3506(c)(2)(A) of the PRA requires
that we solicit comments on the following issues:
Whether the information collection is necessary and useful
to carry out the proper functions of the agency;
The accuracy of the agency's estimate of the information
collection burden;
The quality, utility, and clarity of the information to be
collected; and
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
We are soliciting public comment on each of the following issues
pertaining to the information collection requirements contained in this
proposed rule.
Section II.A. of this proposed rule provides proposed
clarifications and revisions of the existing DMEPOS supplier standards.
The following is a discussion of the information collection
requirements contained in the Sec. 424.57(c) that are clarified and
revised by this proposed rule.
Section II.A. of this proposed rule provides proposed
clarifications of the information collection requirements contained in
Sec. 424.57(c)(1). The standard at Sec. 424.57(c)(1) states that a
supplier must operate its own business and furnish Medicare-covered
items in compliance with all applicable Federal and State licensure and
regulatory requirements. As stated in section II.A. of this proposed
rule, the purpose of this standard is to ensure that DMEPOS suppliers
obtain and maintain the necessary State licenses required to furnish
services provided to Medicare beneficiaries. While there is burden
associated with complying with this standard, we believe it is exempt
from the PRA as stated in 5 CFR 1320.3(b)(3). A collection of
information conducted or sponsored by a Federal agency that is also
conducted or sponsored by a unit of State, local, or tribal government
is presumed to impose a Federal burden except to the extent that the
agency shows that such State, local, or tribal requirement would be
imposed even in the absence of a Federal requirement.
In addition, we believe the burden associated with the maintenance
of the required documentation is exempt from the PRA as stated in 5 CFR
1320.3(b)(2), to the extent that the time, effort, and financial
resources necessary to comply with collection of information that would
be incurred by persons in the normal course of their activities.
Maintaining State license documentation is part of usual and customary
business practices.
In Sec. 424.57(c)(12)(ii) we propose to specify that a supplier
must furnish information to beneficiaries at the time of delivery of
items on how the beneficiary can contact the supplier by telephone. The
burden associated with complying with the standard is the time and
effort required for the supplier to provide its contact information to
beneficiary at the time of delivery of the Medicare-covered item(s).
While the burden is subject to the PRA, we believe it is exempt under 5
CFR 1320.3(b)(2) to the extent that the time, effort, and financial
resources necessary to comply with collection of information that would
be incurred by persons in the normal course of their activities.
In Sec. 424.57(c)(32), we are proposing that each supplier must
report changes in hours of operation to the NSC 15 calendar days prior
to the proposed change. The burden associated with this requirement is
the time and effort associated with notifying the NSC of the change in
hours of operation. We estimate that 1,000 suppliers will be subject to
this requirement. The estimated time required to report the information
to the NSC is 10 minutes. The estimated total annual burden associated
with this requirement is 167 hours.
Section 424.57(c)(10)(iii) states that with respect to liability
insurance, it is the responsibility of the DMEPOS supplier to,
``promptly notify the NSC in writing of any policy changes or
cancellations.'' The burden associated with this requirement is the
time and effort associated with drafting and submitting notification to
the NSC of any policy changes or cancellations. While this burden is
subject to the PRA, we believe it is exempt under 5 CFR 1320.3(h)(6).
Facts or opinions collected from a single person or entity are not
[[Page 4510]]
subject to the PRA. The aforementioned information collection request
will be reviewed on a case by case basis, as they submitted individual
DMEPOS suppliers.
Section 424.57(c)(12) states that a supplier, ``Must be responsible
for the delivery of Medicare-covered items to beneficiaries and
maintain proof of delivery.'' In addition, the supplier must,
``Document that it or another qualified party has at an appropriate
time, provided beneficiaries with information and instructions on how
to use the Medicare-covered items safely and effectively.'' This
standard imposes reporting and recordkeeping requirements.
The burden associated with this section is the time and effort
required to: Document the delivery of the Medicare-covered item;
document the provision of information or instructions to the
beneficiary by the supplier itself or another qualified party; maintain
the documentation of delivery of the Medicare-covered items and the
necessary information and instructions. The burden associated with
these requirements is subject to the PRA. However, we believe it is
exempt under 5 CFR 1320.3(b)(2) to the extent that the time, effort,
and financial resources necessary to comply with collection of
information that would be incurred by persons in the normal course of
their activities.
If you comment on any of these information collection and
recordkeeping requirements, please mail copies directly to the
following:
Centers for Medicare & Medicaid Services, Office of Strategic
Operations and Regulatory Affairs, Regulations Development Group Attn.:
William Parham, CMS-6036-P Room C4-26-05, 7500 Security Boulevard,
Baltimore, MD 21244-1850; and
Office of Information and Regulatory Affairs, Office of Management and
Budget, Room 10235, New Executive Office Building, Washington, DC
20503. Attn.: Carolyn Lovett, CMS Desk Officer, CMS-6036-P,
carolyn_lovett@omb.eop.gov. Fax (202) 395-6974.
IV. Response to Comments
Because of the large number of public comments we normally receive
on Federal Register documents, we are not able to acknowledge or
respond to them individually. We will consider all comments we receive
by the date and time specified in the DATES section of this preamble,
and, when we proceed with a subsequent document, we will respond to the
comments in the preamble to that document.
V. Regulatory Impact Statement
We have examined the impact of this rule as required by Executive
Order 12866 (September 1993, Regulatory Planning and Review), the
Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354),
section 1102(b) of the Social Security Act, the Unfunded Mandates
Reform Act of 1995 (Pub. L. 104-4), Executive Order 13132 on
Federalism, and the Congressional Review Act (5 U.S.C. 804(2)).
Executive Order 12866 directs agencies to assess all costs and
benefits of available regulatory alternatives and, if regulation is
necessary, to select regulatory approaches that maximize net benefits
(including potential economic, environmental, public health and safety
effects, distributive impacts; and equity). A regulatory impact
analysis (RIA) must be prepared for major rules with economically
significant effects ($100 million or more in any 1 year). This rule
does not reach the economic threshold and thus is not considered a
major rule.
To ensure that Medicare is making correct payments to only
legitimate DMEPOS suppliers, we implemented a comprehensive payment and
enrollment strategy. This strategy includes developing and implementing
the statutorily mandated competitive bidding program, making revisions
to the National Supplier Clearinghouse contract, implementing a DMEPOS
demonstration project, and publishing a proposed rule that would
require DMEPOS suppliers to obtain a surety bond.
We began implementation of the statutorily mandated competitive
bidding program (72 FR 17992) for DMEPOS suppliers on April 10, 2007.
Competitive bidding changes the way that Medicare pays for certain
DMEPOS categories under Part B of the Medicare program by using bids
submitted by DMEPOS suppliers to establish payment amounts. Beginning
in 2007, we initiated and began implementation of the program which
initially involves ten product categories in the first Metropolitan
Statistical Areas. We have received bids and anticipate contract awards
in 2008. In addition, DMEPOS suppliers will be required to submit bids
for all items within a product category for which they are bidding. The
product categories and bid items may vary by competitive bidding area
(CBAs). For 2007, using 2005 data and the item selection criteria in
the competitive bidding regulation, we selected the following items for
competitive bidding: (1) Oxygen supplies and equipment; (2) standard
power wheelchairs, scooters, and related accessories; (3) complex
rehabilitative power wheelchairs and related accessories; (4) mail-
order diabetic supplies; (5) enteral nutrients, equipment, and
supplies; (6) continuous positive airway pressure (CPAP) devices,
respiratory assist devices (RADs), and related accessories; (7)
hospital beds and related accessories; (8) negative pressure wound
therapy (NPWT) pumps and related accessories; (9) walkers and related
accessories; and (10) support surfaces (group 2 and 3 mattresses and
overlays).
The statute requires that competition under the program begin in 10
of the largest Metropolitan Statistical Areas (MSAs) and then expand to
70 additional MSAs during the second phase of implementation.
Additional competitive bidding areas will then be phased in over time.
The final rule requires a formula-driven methodology for selecting the
80 MSAs for the first two phases of implementation and it will be
sometime after 2008 before DMEPOS suppliers will participate in the
competitive bidding initiative in these 80 MSAs and only for the
product categories that are included in the first two phases of
implementation.
It is important to note while competitive bidding will reduce the
number of DMEPOS suppliers eligible for payment of selected product
categories, competitive bidding will not totally prevent unscrupulous
DMEPOS suppliers from gaining entry into the program and fraudulently
billing for any of those products. Accordingly, it is essential that we
further develop and implement administrative and regulatory changes
which prevent unscrupulous DMEPOS suppliers from enrolling or
maintaining their enrollment in the Medicare program. To this end, we
have implemented the following administrative changes and are seeking
comments on mandated DMEPOS surety bonding requirements.
As part of our administrative change, we revised the contract with
the National Supplier Clearinghouse (NSC) in FY 2008 and are currently
recompeting this contract through full and open competition. The
revised contract requires that the NSC conduct and increase the number
of site visits to ensure that DMEPOS suppliers are in compliance with
the provisions found at Sec. 424.57. We are also expanding the funding
for NSC operations to support the increased number of sites visits.
These expanded measures will help to ensure that only legitimate DMEPOS
suppliers are enrolled or maintain
[[Page 4511]]
enrollment in the Medicare program. In addition, we announced plans on
June 28, 2007, to implement a 2-year demonstration involving DMEPOS
suppliers. The goal of this initiative is to strengthen our ability to
detect and prevent fraudulent activity and will focus specifically on
DMEPOS suppliers in South Florida and the Los Angeles metropolitan
area. Based on the findings of this initiative, we will determine if
the administrative processes and procedures used in this demonstration
should be expanded to other parts of the country.
On August 1, 2007, we published a proposed rule (72 FR 42001) which
would implement Section 4312(a) of the Balanced Budget Act of 1997
(BBA) by requiring all Medicare DMEPOS suppliers to furnish CMS with a
surety bond. The public comment period for this proposed rule closed on
October 1, 2007, and CMS is currently reviewing these comments.
Accordingly, while the activities described above will promote
compliance with the existing supplier standards and reduce payments for
suppliers selected under competitive bidding, these activities do not
supply CMS and the NSC with the needed authority to deny or revoke
billing privileges to those DMEPOS suppliers that pose a significant
risk to the program. Therefore, we believe that the provisions of this
proposed rule are essential in expanding upon and strengthening the
supplier standards in order to ensure that only legitimate suppliers
are enrolled or maintain enrollment in the Medicare program.
The RFA requires agencies to analyze options for regulatory relief
for small businesses. For purposes of the RFA, small entities include
small businesses, nonprofit organizations, and government agencies.
Most hospitals and most other providers and suppliers are small
entities, either by nonprofit status or by having revenues of $6.5 to
$31.5 million in any one year. Individuals and States are not included
in the definition of a small entity.
We are not preparing an analysis for the RFA because we because we
are certifying that this rule will not have a significant economic
impact on a substantial number of small entities. We have determined
that the RFA is reasonable given that the provisions contained in this
proposed rule are primarily procedural and do not require DMEPOS
suppliers to incur additional operating costs. We also believe that the
regulatory impact of this proposed rule is negligible and not
calculable. We maintain that this proposed rule would not have an
adverse impact on a significant number of small entities because we
believe that these suppliers are operating on standard business
practices and therefore are already in compliance with these proposed
standards. Since we believe that a significant number of small entities
currently meet each of the revised or new proposed standard, we do not
have information available to calculate the economic impact of any
individual or combination of proposals would have on small entities.
This proposed rule would merely clarify, expand, and update our current
policy found in the DMEPOS supplier standards currently covered under
Sec. 424.57. Therefore, we anticipate a minimal economic impact, if
any, on small entities. We are soliciting public comment regarding any
specific impacts that these proposed provisions will have on suppliers.
To encourage such comments we are providing the public with the
relevant data that we possess on DMEPOS suppliers.
The following table examines the allowed charges to the unique
billing numbers (a DMEPOS supplier may have multiple locations, for
example, a chain organization, but use only one unique billing number),
the vast majority of DMEPOS suppliers are small entities (based on
Medicare reimbursement alone).
Table 1.--Total Number of Suppliers Arranged by Allowed Charges for
Dates of Service
[January through December 2005 based on Unique Billing Numbers]
------------------------------------------------------------------------
Number of
Number of DMEPOS
suppliers suppliers
Allowed charge reimbursed reimbursed
for DME for non-DME
only
------------------------------------------------------------------------
$0...................................... 2,016 4,655
$0.01-$999.............................. 2,544 6,624
$1,000-$2,499........................... 2,099 4,993
$2,500-$4,999........................... 2,285 4,459
$5,000-$9,999........................... 2,964 4,153
$10,000-$24,999......................... 4,568 4,328
$25,000-$49,999......................... 3,378 2,100
$50,000-$99,999......................... 2,780 1,245
$100,000-$499,999....................... 5,955 1,191
$500,000-$999,999....................... 1,762 220
$1,000,000-$4,999,999................... 1,345 105
$5,000,000 or more...................... 208 7
-------------------------------
Total............................... 31,904 34,080
------------------------------------------------------------------------
In reviewing the table above, the term, durable medical equipment
(DME) is defined at section 1861(n) of the Act. This definition, in
part, excludes from coverage as DME, items furnished in skilled nursing
facilities and hospitals (equipment furnished in those facilities is
paid for as part of their routine or ancillary costs). Also, the term
DME is included in the definition of ``medical and other health
services'' at section 1861(s)(6) of the Act. Furthermore, the term is
defined in Sec. 414.202 as equipment furnished by a supplier or a HHA
that--
Can withstand repeated use;
Is primarily and customarily used to serve a medical
purpose;
Generally is not useful to an individual in the absence of
an illness or injury; and
Is appropriate for use in the home.
Examples of DMEPOS supplies include items such as blood glucose
monitors, hospital beds, nebulizers, oxygen delivery systems, and
wheelchairs.
[[Page 4512]]
Conversely, suppliers of non-DME only refers to items or services
furnished by prosthetics, orthotist, and supplies found in section
1861(s)(5) of the Act.
As of April 2007, there were 116,471 individual DMEPOS suppliers.
However, due to the affiliation of some DMEPOS suppliers with chains,
there were only approximately 65,984 unique billing numbers (31,904 +
34,080). We believe that approximately 30 percent of the 116,000 DMEPOS
suppliers are located in rural areas.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. This
analysis must conform to the provisions of section 603 of the RFA. For
purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is located outside of a Metropolitan
Statistical Area and has fewer than 100 beds. We are not preparing an
analysis for section 1102(b) of the Act because we have determined that
this proposed rule will not have a significant impact on the operations
of a substantial number of small rural hospitals. We understand that a
large number of DMEPOS suppliers fall into this category, however these
proposed provisions are procedural in nature and we expect that
legitimate DMEPOS suppliers are already meeting these provisions.
Section 202 of the Unfunded Mandates Reform Act of 1995 also
requires that agencies assess anticipated costs and benefits before
issuing any rule that may result in expenditure in any 1 year by State,
local, or tribal governments, in the aggregate, or by the private
sector, of $120 million. That threshold is currently approximately $127
million. This rule does not mandate expenditures by State, local, or
tribal governments, in the aggregate, or by the private sector of $127
million and therefore no analysis is required.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct requirement costs on State
and local governments, preempts State law, or otherwise has Federalism
implications. Since this regulation does not impose any costs on State
or local governments, the requirements of E.O. 13132 are not
applicable.
We anticipate that this rule would codify certain procedural
policies contained in the Program Integrity Manual (PIM) that DMEPOS
suppliers already are supposed to adhere to, and that legitimate DMEPOS
suppliers should already be meeting. By establishing the standards in
this rule, we are establishing our authority to deny or revoke the
Medicare billing privileges of DMEPOS suppliers that have failed to
comply with one or more of these supplier standards.
We have considered alternatives to all of the proposed provisions,
however only one of the provisions considered lends itself to other
options. Initially, we considered establishing a 40-hour requirement
for a DMEPOS supplier's hours of operation since most businesses are
open to the public for a minimum of 40 hours each week.
To reduce the burden associated with this provision, but also
establish a minimum requirement for the hours of operation, we relaxed
the initial 40-hour requirement to 30 hours per week because we believe
that this is the minimum amount of time that a DMEPOS supplier is
required to be open and legitimately operate as a business. We did not
consider the alternative of not proceeding with the proposed provisions
because we believe that they are necessary to ensure that only
legitimate DMEPOS suppliers are enrolling and maintaining enrollment in
the Medicare program.
As a result of not having quantifiable data, we cannot effectively
derive an estimate for the monetary impacts of these provisions.
Accordingly, we are seeking public comment so that the public may
provide any data available that provides a calculable impact or any
alternative to the proposed provisions.
In accordance with the provisions of Executive Order 12866, this
regulation was reviewed by the Office of Management and Budget.
List of Subjects in 42 CFR Part 424
Emergency medical services, Health facilities, Health
professionals, Medicare, Reporting and recordkeeping requirements.
For the reasons set forth in the preamble, the Centers for Medicare
& Medicaid Services would amend 42 CFR chapter IV as set forth below:
PART 424--CONDITIONS FOR MEDICARE PAYMENT
1. The authority citation for part 424 continues to read as
follows:
Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh).
Subpart D--To Whom Payment is Ordinarily Made
2. Section 424.57 is amended by--
A. Adding in paragraph (a) the definition of ``tax delinquency'' in
alphabetical order.
B. Revising paragraph (c) introductory text and (c)(1).
C. Revising paragraphs (c)(7) through (c)(12) and (c)(15).
D. Adding new paragraphs (c)(26) through (c)(31).
E. Revising paragraph (d).
The additions and revisions read as follows:
Sec. 424.57 Special payment rules for items furnished by DMEPOS
suppliers and issuance of DMEPOS supplier billing privileges.
* * * * *
Tax delinquency means an amount of money owed to the United States
taxing authority from any individual, entity organization, association,
partnership or corporation and it can be evidenced through the
following measures brought by either the United States or a State: a
conviction or civil judgment for tax evasion, a criminal or civil
charge of tax evasion, or the filing of a tax lien.
* * * * *
(c) Application certification standards. The supplier must meet and
must certify in its application for billing privileges that it meets
and will continue to meet the following standards:
(1) Operates its business and furnishes Medicare-covered items in
compliance with the following applicable laws:
(i) Federal regulatory requirements that specify requirements for
the provision of DMEPOS and ensure accessibility for the disabled.
(ii) State licensure and regulatory requirements. If a State
requires licensure to furnish certain items or services, a DMEPOS
supplier must be licensed to provide the item or service and cannot
contract with an individual or other entity to provide the licensed
services.
(iii) Local zoning requirements.
* * * * *
(7) Maintains a physical facility on an appropriate site that
contains space for storing business records (including the supplier's
delivery, maintenance, and beneficiary communication records) and
retain the necessary ordering and referring documentation received from
physicians, nurse practitioners, physician assistants, clinical social
workers, or certified nurse midwives to assure themselves that coverage
criterion for an item has been met, to facilitate an on site inspection
by CMS or the NSC of the supplier's business records or ordering and
referring documentation. An appropriate site
[[Page 4513]]
includes, but is not limited to, the following:
(i) Is in a location that is accessible to the public, Medicare
beneficiaries, CMS, NSC, and its agents. (The location must not be in a
gated community or other area where access is restricted.)
(ii) Is accessible and staffed during posted hours of operation.
(iii) Maintains a permanent visible sign in plain view and posts
hours of operation. If the supplier's place of business is located
within a building complex, the sign must be visible at the main
entrance of the building.
(iv) May be a ``closed door'' business, such as pharmacies or
suppliers providing services only to beneficiaries residing in a
nursing home, that complies with all applicable Federal, State, and
local laws and regulations. ``Closed door'' businesses must comply with
all the requirements in Sec. 424.57(c)(7).
(8) Permits CMS, the NSC, or agents of CMS or the NSC to conduct
on-site inspections to ascertain supplier compliance with the
requirements of this section.
(9) Maintains a primary business telephone that is operating at the
appropriate site listed under the name of the business locally or toll-
free for beneficiaries. The use of cellular phones, beeper numbers, and
pagers is prohibited. Additionally, DMEPOS suppliers are prohibited
from forwarding calls from the primary business telephone listed under
the name of the business to a cellular phone, or a beeper/pager. The
exclusive use of answering machines, answering services or facsimile
machine (or combination of these options) cannot be used as the primary
business telephone during posted operating hours.
(10) Has a comprehensive liability insurance policy and meets the
following insurance-related requirements:
(i) The comprehensive liability insurance is at least $300,000 per
incident that covers both the supplier's place of business and all
customers and employees of the supplier. If the supplier manufactures
its own items, the insurance must also cover product liability and
completed operations. Self insurance may be used to demonstrate
compliance with the comprehensive liability insurance as long as CMS or
the NSC can verify the policy and its coverage provisions with an
independent underwriter. Failure to maintain required insurance at all
times beginning with the date of filing will result in denial or
revocation of the supplier's billing privileges retroactive to the date
the insurance lapsed. DMEPOS suppliers are responsible for providing
the contact information of an individual employed with the underwriter.
(ii) List the NSC as a certificate holder on the policy.
(iii) Notify the NSC in writing within 30 days of any policy
changes or cancellations.
(11) Agree not to directly solicit patients, which includes, but is
not limited to, a prohibition on telephone, computer e-mail or instant
messaging, coercive response internet advertising on sites unrelated to
DMEPOS products, or in-person contacts. The DMEPOS supplier may only
contact the Medicare beneficiary when supplying a Medicare-covered item
and only when one or more of the following applies:
(i) The individual has given written permission to the supplier to
contact them concerning the furnishing of a Medicare-covered item that
is to be rented or purchased.
(ii) The supplier has furnished a Medicare-covered item to the
individual and the supplier is contacting the individual to coordinate
the delivery of the item.
(iii) If the contact concerns the furnishing of a Medicare-covered
item other than a covered item already furnished to the individual, the
supplier has furnished at least one covered item to the individual
during the 15-month period preceding the date on which the supplier
makes such contact.
(12) Has met the following delivering and beneficiary instruction
requirements:
(i) Maintains proof of the delivery in the beneficiary's file.
(ii) Furnishes information to the beneficiary at the time of
delivery of items on how the beneficiary can contact the supplier by
telephone.
(iii) Provides the beneficiary with instructions on how to safely
and effectively use the equipment or contract this service to a
qualified individual.
(iv) Completes and documents beneficiary instruction on the safe
and effective use of the equipment at the time of delivery or other
appropriate time.
* * * * *
(26) [Reserved]
(27) Must obtain oxygen from a State-licensed oxygen supplier
(applicable only to those suppliers in States that require oxygen
licensure.)
(28) Is required to maintain ordering and referring documentation,
including the National Provider Identifier, received from a physician,
nurse practitioner, physician assistant, clinical social worker, or
certified nurse midwife, for 7 years after the claim has been paid.
(29) Is prohibited from sharing a practice location with any other
Medicare supplier.
(30) Is open to the public a minimum of 30 hours per week, except
for those DMEPOS suppliers who are working with custom made or fitted
orthotics and prosthetics.
(31) Does not have an Internal Revenue Service (IRS) or a State
taxing authority tax delinquency.
(d) Failure to meet standards. (1) Revocation. CMS revokes a
supplier's billing privileges if it is found not to meet the standards
in paragraphs (b) and (c) of this section. The revocation is effective
15 days after the entity is sent notice of the revocation, as specified
in Sec. 405.874 of this subchapter.
(2) Overpayments associated with adverse legal action and felony
convictions. CMS, the NSC or a CMS-designated contractor establishes a
Medicare overpayment from the date an adverse legal action or felony
conviction (including felony convictions within the 10 years preceding
enrollment or revalidation of enrollment) that precludes payment.
Authority: (Catalog of Federal Domestic Assistance Program No.
93.773, Medicare--Hospital Insurance; and Program No. 93.774,
Medicare--Supplementary Medical Insurance Program).
Dated: May 31, 2007.
Leslie V. Norwalk,
Acting Administrator, Centers for Medicare & Medicaid Services.
Approved: August 21, 2007.
Michael O. Leavitt,
Secretary.
Editor's note: This document was received by the Office of the
Federal Register on January 22, 2008.
[FR Doc. E8-1346 Filed 1-24-08; 8:45 am]
BILLING CODE 4120-01-P