Compliance University

Once More--with Feeling

The loan closet doors are open, but enter with caution.
by Neil Caesar

In recent columns, I have tried to give advice about loan closets in the face of changing CMS rules. Now CMS has withdrawn its new rules for the foreseeable future. With all the confusion over the past six months, I thought it would be helpful to consolidate the rules as they currently exist and offer my six recommendations for safe and effective loan closets.

  1. Purpose

    An HME company may place an inventory of its equipment onsite at provider locations, including physician offices, hospitals and long-term care facilities, etc. The purpose of the closet is limited to distribution to patients who are bound for home, where a physician orders the equipment for home use. You should not use the closet to "borrow" inventory for in-house purposes.

  2. Sequence

    Closets may be used only after the patient has chosen to obtain the equipment from the closet supplier (your HME company). Even though previous OIG opinions were vague on this point, 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.

    CMS' problem with loan closets clearly arose in part because many HME providers/closet owners do not follow (and document) this sequence of events as carefully as they should.

  3. 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. It emphasizes that there is no patient coercion and that the supplier was uninvolved until after the patient made his choice.

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