Keep the Closet Doors Open
Loan closet doors continue to slam shut. These relationships, also known as stock-and-bill arrangements or consignment closets, allow a home care company to place HME on premises with a provider for distribution to certain patients on their departure from the provider's location.
Such loan closets can be useful in many situations, and have withstood scrutiny by the Office of Inspector General twice, in April 2002 and again in November 2008. However, CMS has decided that as of March 1, 2010, such arrangements will no longer be permitted in the offices of a “physician, non-physician practitioner or other health care professional.”
CMS' theory seems to be that loan closets suggest there are multiple providers operating out of the same practice location, creating patient confusion and a violation of the suppler standards. On thinking about the implications of CMS' recent actions, I have four insights:
- Closets must only come into use after the patient has chosen
to obtain the equipment from the particular home care company with
Even though the OIG opinions were vague about the sequence of events, CMS' actions show that a specific sequence of events is important: The referral source identifies the need for home care equipment or services; then, the patient is informed and choice is given (the existence of the closet may be mentioned at this time); then, the patient chooses; then, if the closet supplier is chosen, that supplier is contacted and necessary information is communicated to establish the patient relationship; then (and only then), the closet's equipment may be given to the patient.
- Evidence of patients' freedom of choice is key
I strongly recommend both a script and a written document, which may be incorporated into discharge or referral forms utilized by the closet owner. This is mandatory in the hospital setting, very important if the closet owner has any sort of financial relationship with the supplier and highly recommended in all other cases because it emphasizes that there is to be no patient coercion and that the HME company did not get involved until after the patient made his or her choice.
- Loan closets must not include any financial benefit to the
I recommend that any financial relationship between the HME and the closet owner must fall within the boundaries of the “safe harbor” regulations of the anti-kickback statute. This would apply to lease agreements, medical advisor agreements and professional or support services agreements, etc.