Something to Think About

How did you celebrate your birthday? Cake and ice cream with family? A night on the town with your pals? Me? I analyzed a brand new advisory opinion from the OIG about physician joint ventures involving DME. It's all about the love, friends.

Let's explore this opinion, officially known as AO 06-02, because it analyzes a private patient joint venture (no Medicare/Medicaid) offering insight on a topic not usually discussed by the feds. In AO 06-02, the OIG said that a proposed program that would allow physicians to become DME suppliers might violate Medicare's anti-kickback statute even though it would apply only to private-pay patients.

The proposed venture included four financial components. First, a manufacturer/supplier would sell DME and orthotic products to the physician practice under a commercially reasonable pre-arranged fee schedule. Nothing wrong with that, right? Second, the manufacturer/supplier would rent continuous passive motion devices to the physician practice on an as-needed basis for a commercially reasonable daily rental amount. Still OK, right?

Third, the manufacturer/supplier would provide a trained technician to fit the joint venture patients, “complete in-home set-up of equipment, instruct patients on the use and maintenance of the products, monitor patient progress, obtain payer pre-certification, manage product inventory and procure additional products as necessary.” The physician practice would pay a commercially reasonable fixed monthly fee for the services of this technician. Copacetic, right?

Fourth, the manufacturer/supplier would provide comprehensive coding, billing and collection services to the physician practice for a commercially reasonable fixed monthly fee. We're golden, right?

Finally, as a safeguard against inappropriate referral patterns, the physician practices would instruct their government-reimbursed patients to obtain DME “from any local … DMEPOS supplier.” What could be more reasonable?

Why, then, did the OIG conclude that this proposed program posed “a significant risk of fraud and abuse?”

What bothered the government is that the manufacturer/supplier essentially offered the physician practices a “turnkey” DME operation. OIG notes the manufacturer/supplier, “a would-be competitor of the new physician practice supplier, would provide virtually all of the key items and services” including the DME and orthotics products, personnel, day-to-day management, patient support services, inventory management and billing and collection services.