This is the second of a 4-part series on the provisions of the Patient Protection and Affordable Care Act (PPACA) and how the health reform law affects DME providers. Series: Part 1 | Part 2 | Part 3
The Patient Protection and Affordable Care Act was signed into law on March 23, 2010. The health reform law has a number of provisions that directly affect DME suppliers, including screening and disclosure requirements.
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Screening: Section 6401 of the act states that suppliers enrolling or re-enrolling in Medicare, Medicaid or CHIP will be subject to screening measures. The Secretary of the Department of Health and Human Services is required to establish procedures for screening suppliers, and to determine the level of screening according to the risk of fraud, waste and abuse with respect to each category of supplier.
All suppliers will be subject to licensure checks and, if the Secretary so determines, additional screening measures such as criminal background checks, fingerprinting, database checks, and unscheduled and unannounced site visits. An application fee of $500 will be imposed to cover the costs of screening; this fee will be adjusted for inflation. (A recent CMS notice sets the fee at $505 beginning March 25.)
To paraphrase the words of an OIG attorney, the government is moving away from “pay and chase” to “guarding the henhouse.” In the early days of the industry — in the “pay and chase” days — it was easy for a company to obtain a Medicare Part B supplier number. The screening process was rudimentary. A dishonest company could easily obtain a supplier number, improperly bill Medicare, and then shut down and escape just ahead of the posse.
Over the past five years, it has become more difficult for a company to obtain a supplier number. Accreditation and surety bond requirements by themselves have weeded out many of the dishonest players.
Section 6401 of PPACA assists the government in achieving its goal of moving away from “pay and chase” to “guarding the henhouse.” Now, a company must jump through multiple hoops before it is awarded a supplier number: It has to purchase a surety bond; it has to become accredited; and its principals are subject to a background check (including a criminal background check and fingerprinting).
DME companies are experiencing unannounced site visits from a variety of sources, including the NSC, the OIG, the state Medicaid program, an accrediting organization or a Medicare contractor. If a DME supplier is conducting a non-compliant, or perhaps a fraudulent, operation, there is a reasonable chance that the non-compliance/fraud will be discovered when a person walks unannounced onto the premises, eyeballs the operation and asks for evidence that the supplier standards are being followed.
The bottom line is this: In addition to expecting an NSC site visit when you come up for re-enrollment, you can expect unannounced site visits on a periodic basis.
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Disclosure: Section 6401 of the act further provides that suppliers enrolling or re-enrolling in Medicare, Medicaid or CHIP will be subject to new disclosure requirements.
Applicants will be required to disclose current or previous affiliations, directly or indirectly, with any provider or supplier that has uncollected debt, been subject to payment suspension under a federal health care program, has been excluded from participating in a federal health care program or has had its billing privileges denied or revoked.
The Secretary may deny enrollment or re-enrollment if such affiliations pose an undue risk of fraud, waste or abuse.
Permit me to use an analogy. There is a class of physicians who are dysfunctional, incompetent and/or dishonest. These physicians bounce around from one small town to the next. A small town that is in desperate need of a doctor will be so excited about getting one that the town officials don't conduct the proper background check. This allows the physician to move to the town, cash in on whatever financial incentives the town gives him and then skip out to the next town once his dysfunctions start surfacing.
I use this analogy because we see the same phenomenon in the DME industry. John Smith will start ABC Medical. ABC will suffer serious compliance and/or financial problems and will close its doors. Mr. Smith will then start XYZ Medical, which will end up suffering the same fate as ABC.
By requiring Mr. Smith to disclose past affiliations, the chances increase that he will be “outed” and will no longer be eligible for a supplier number.
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Jeffrey S. Baird, Esq. is chairman of the Health Care Group at Brown & Fortunato, P.C., a law firm based in Amarillo, Texas. He represents pharmacies, infusion companies, home medical equipment companies and other health care providers throughout the United States. Baird is board-certified in health law by the Texas Board of Legal Specialization. He can be reached at 806/345-6320 or jbaird@bf-law.com.
