Are You on the NSC's Naughty or Nice List?

DME suppliers face an era of increasing scrutiny from the government. As Medicare and Medicaid reimbursements drop and the government commences various reform initiatives (including competitive bidding), the National Supplier Clearinghouse (NSC) has begun increased oversight of providers, both new applicants and those already up and running.

Even though the catalyst for such scrutiny may have been the recent Medicare billing scheme involving power mobility equipment, the NSC has always been required to perform periodic supplier audits to verify continued compliance with the CMS 21 Supplier Standards. So, long after the power wheelchair scandal is considered old news, NSC scrutiny will continue.

These days, you do not have to engage in fraudulent activities in order to be in the hot seat. The NSC seems to have created a number of “secret” rules that have not been written down or communicated well, so it is difficult for suppliers to avoid revocation proactively. This is important because it is much easier to comply than it is to get your number back if it is revoked.

The lack of effective communication is probably unintentional, the result of having too much to do too quickly. Regardless, the NSC has made its list and is checking it twice. They will find out if you've been naughty or nice.

What Do You Need to Know?

The rules are not difficult to embrace. They require you to implement checks and balances into your day-to-day operations to ensure that important policies or licenses do not lapse, and to formalize relationships that already exist. But the NSC is still learning how to operate during this new era. The rules its agents apply are not necessarily consistent among all site inspectors, and they may actually change from one visit to the next.

Even so, some patterns have emerged, and paying attention to the following “secret” compliance tips can help.

• Supplier Standard No. 1 requires suppliers to comply with all federal and state licensure requirements. The “federal” part of this rule is fairly easy, since the rules are applied to all suppliers. The state requirements can be more tricky. You must verify any certificates, business licenses or special qualifications that are required in the state where you will be conducting business. For example, does your state require a “bedding license?”

• The NSC frequently revokes billing privileges based on alleged violations of Supplier Standard No. 4. If you base part of your inventory levels on lines of credit with other suppliers, the NSC currently takes the position that you are required to have signed, written documents containing the terms of the credit line.

  The NSC acknowledges that the amount of inventory required varies, depending on the scope of products carried and supplied by the company. In one case, for example, a $6,000 line of credit coupled with $3,000 in on-site inventory was not adequate for a DME supplier who provided wheelchairs, walkers, canes, crutches and shoes on a regular basis. However, this amount was adequate for another supplier who primarily handled diabetic shoes.

  The bottom line is that you must be able to explain why your inventory levels are adequate and persuasively defend your position. If you supply only limited product lines, this is an important piece of information to communicate to the inspector.

• Supplier Standard No. 5 requires suppliers to disclose to beneficiaries that they have the option to rent or purchase inexpensive routinely purchased items. The Supplier Standards do not expressly require suppliers to obtain written verification of the beneficiary's choice. We recommend it, nonetheless, so that you have written proof of the beneficiary's choice. We have also been told by the NSC that it is requiring such written verification. Regardless, your disclosure form should include a space for patients to indicate their choices, with signature.

• Supplier Standard No. 8 requires your shop to be accessible during reasonable business hours. This means if your employees leave to take a lunch break or to run a quick errand, you must leave a sign on your door stating when you will return. If your posted business hours state that you are open from 10 to 5 Monday through Friday, then you must be there from 10 to 5, Monday through Friday. NSC site inspectors frequently arrive during times when you are the most likely to be out — near opening or closing hours or during lunch. Be ready!

• Supplier Standard No. 10 requires you to maintain comprehensive liability insurance. You should retain your complete policy at your business location for immediate review by a site inspector. It is also important to have contact information for your underwriter available so that the NSC can confirm the continued existence of the policy.

• Supplier Standard No. 12 states that a supplier is responsible for delivery of equipment. The NSC has stated that you should not contract with another entity to deliver your equipment. The NSC's position here needs clarification, as management subcontracts are certainly legally permitted, and such relationships often include delivery services. However, the NSC's current position is that a supplier must deliver its own equipment and instruct the patient on its use at the time of delivery.

  You must also retain a “delivery ticket” for every delivery. This ticket should include the details of the contact: instructions to the patient, setup, a patient signature, etc.

• Supplier Standard No. 14 requires a supplier to maintain and repair rented equipment. If not done in-house, this standard merely requires a “contract” with a company to perform this service. Even though by law a “contract” may be oral, NSC requires that suppliers have a written contract signed by both parties. The NSC must agree with Yogi Berra, who said, “An oral contract isn't worth the paper it's written on.”

What Do You Need to Do?

The consequences of not knowing the rules have landed some suppliers in hot water. An NSC site inspector will identify any missing pieces of information during an inspection. He or she will tell you that you have an opportunity to submit this information — typically within 15 days of the site inspection — and everything will be okay. Unfortunately, the NSC is so busy dealing with its new mandate and its severe backlog that paperwork could be misplaced or overlooked. Do not rely on this 15-day window.

What can you do to demonstrate compliance before a visit from the site inspector or during the re-application process? First, make sure that you have a copy of the 21 Supplier Standards posted where all of your employees can review them from time to time, and let them know the details as well.

Next, create a “corrective action plan” that all employees must follow. This will be a policy that contains all requirements to prevent your company from fighting with the NSC to be reinstated. Include the following:

• Require that all certificates and licensures be posted on the wall for easy access and view. Highlight all expiration dates for certificates, licensures and insurance policies.

• Designate one person for renewing any certificates, licenses, or policies thirty days prior to their expiration.

• Create a list of items that must be included in a patient's file, and maintain that file on site. Be sure it is easily accessible when the NSC inspector comes knocking.

• Conduct internal audits quarterly to verify compliance with the 21 Supplier Standards.

• Review CMS and carrier Web sites on a monthly basis to verify any updates or coverage changes.

• Require employees to attend approved Medicare and product-related training once a year.

• Maintain a log of all incoming and outgoing communications, including mail, telephone calls and faxes.

Write your corrective action plan carefully, then implement these policies into your day-to-day operations. It is important to demonstrate to your personnel that you mean business — they can follow the rules or work elsewhere.

What Can You Expect During A Site Inspection?

Demonstrate professionalism and knowledge during the site inspection.

The site inspector will visit your location at a time when you least expect it — 15 minutes before the end of your day or around a holiday, for example. You must be prepared at all times. All documents must be maintained on site, and they must be accessible when the inspector arrives. Remember, anything that is not available and must be sent later is at risk of being overlooked.

You may show all documents that are requested by the inspector. If you have specific concerns, such as the privacy of your patients, communicate those concerns during the inspection; do not wait until later to supply excuses for not turning over requested materials.

It is also important that your staff know where documents are stored so that they will be able to help if you are not available. One supplier went through two months without a working supplier number because company personnel panicked when an inspector visited. The manager was out, and the other employees did not appear to know where key documents were kept. The manager tried to send the requested materials the next day, but the NSC ignored his several faxes and telephone calls.

What Should You Expect After A Site Inspection?

If a site inspector notices problems, he or she will typically give you the opportunity to “fix” the problem swiftly by sending any additional documentation. However, you are taking a chance that your documentation could be overlooked, so you will want to document thoroughly any correspondence and communication that you exchange with the NSC, including all faxes.

If the NSC still determines that you have not met the Supplier Standards, you will receive a Notice of Revocation of your supplier number. In that event, be sure to retain all documentation and correspondence from the NSC, including envelopes with postmark dates. This is important to demonstrate that you made requests within the required timeframe.

Previously, NSC notice letters have stated that you have 60 days from the postmark date of the revocation letter in which to request either a reconsideration or to request a hearing. The federal regulations (42 CFR 405.874) differed; they offer a supplier an extra 30 days to request a hearing (90 days total). In March of this year, CMS agreed that the NSC would apply the 90-day rule from that time forward.

A number of questions remain, however, about suppliers' hearing rights in the event of revocation. For example, regulations require that a hearing be held “within one week” of the supplier's request. While the NSC is making an effort to process hearing requests more quickly, it has not accepted this obligation.

Note also that the NSC Notice of Revocation letter declares that a supplier has two options. One is to seek a reconsideration by the NSC of their decision to revoke a supplier number. The second is to pursue a hearing appeal with the Medicare Hearing Officer for Palmetto GBA. The NSC's position has been that a supplier must choose between those two options. A supplier who sought reconsideration would be denied a right to a hearing. If the subsequent reconsideration was unfavorable, the supplier would be required to start over, seeking a new supplier number without an appeal right.

We have seen a number of suppliers send all the necessary information during the reconsideration but still receive a letter stating that they remained non-compliant. These suppliers were then instructed to re-apply for billing privileges. After months of challenging the NSC's position, the hearing officer agreed that the NSC may not eliminate a supplier's opportunity for a hearing just because the supplier first chooses a reconsideration. The hearing officer stated, “A request for [an] NSC reconsideration does not remove the supplier's right to request a hearing. One or both options may be elected within 60 days after receipt of the NSC letter revoking the supplier number.” (Remember that the timeframe is now 90 days.)

Also pay close attention to the postmark date on the outside of the envelope in which you receive the notice. This will be the date that starts the clock for determining whether you made a timely request for a hearing. The date of the letter will frequently be several weeks prior to its mailing, so it is important that you retain the envelope for proof of when the letter was postmarked.

Remember Your Manners

The NSC will remain a significant and increased presence in HME providers' lives. It will continue to apply tough scrutiny during site visits as well as with new applications. If you have not yet been visited by a site inspector representing the NSC, you will.

The keys to any supplier's success during this new age of intense oversight are knowledge and respect. Learn the 21 Supplier Standards and their requirements, and treat all NSC site inspectors and agents with respect. Our parents always taught us that “you catch more flies with honey than with vinegar.” The same is true here. NSC inspectors and agents are more likely to help if you are courteous. Even when pursuing a reconsideration or a hearing, you and your advocates should be gracious.

Reinstating a supplier number is time-consuming, costly and aggravating. Now that you know some of the “secrets,” make sure you stay away from the NSC's “naughty” list!

Neil B. Caesar and Kelly R. Pickens are attorneys with the Health Law Center (Neil B. Caesar Law Associates, PA), a national health law practice in Greenville, S.C. Caesar is also a principal with Caesar Cohen, Ltd., offering compliance training, outsourcing and consulting, and the author of the Home Care Compliance Answer Book. They can be reached via e-mail at info@healthlawcenter.com or by telephone at 864/676-9075.

What Are the Basic Rules?

Following are the basics of the CMS 21 Supplier Standards. To view the list in its entirety as posted by CMS, visit www.palmettogba.com, then click on “National Supplier Clearinghouse” under the “Providers” heading, then on “Standards and Compliance” in the left-side contents box.

1. Compliance with state and federal licensure and regulatory requirements.

2. Complete, accurate, and updated application. Changes must be reported within 30 days.

3. The application must be signed by an authorized individual.

4. You must fill orders from your inventory, or contract with another entity to do so. That entity may not be excluded from Medicare, or other state or federal health care programs.

5. You must notify Medicare patients of the rent/purchase option.

6. You must notify beneficiaries of warranty coverage and honor all warranties.

7. You must maintain a physical facility on an appropriate site.

8. You must permit CMS, or its agents to conduct on-site inspections. You must be accessible to beneficiaries' reasonable business hours and maintain a visible sign and posted hours.

9. You must maintain a number that is listed in the directory. You may not use a cell phone number as your primary business telephone.

10. You must maintain comprehensive liability insurance in the amount of at least $300,000.

11. You may not contact beneficiaries by telephone in order to solicit business.

12. You are responsible for delivery and instructing beneficiaries on the use of your equipment. You must maintain proof of delivery.

13. You are required to respond to any beneficiary complaints and maintain documents of complaints and their resolutions.

14. You are required to maintain at no charge or repair directly, or through a service contract, equipment rented to beneficiaries.

15. You must accept returns of substandard or unsuitable items from beneficiaries.

16. You must disclose the 21 Supplier Standards to each Medicare patient to whom you supply equipment.

17. You must disclose to the government any person having ownership, financial, or control interest in your company.

18. You may not sell or allow another entity to use your Medicare billing number.

19. You must have a complaint resolution protocol established to address beneficiary complaints that relate to the 21 Supplier Standards.

20. Complaint records must include: the name, address, telephone number and health insurance claim number of the beneficiary, a summary of the complaint, and any actions taken to resolve it.

21. A supplier must agree to furnish CMS any information required by the Medicare statute.

A Baker's Dozen Tips Gained from Suppliers Who Learned the Hard Way

1. If your supplier number is revoked, fight for retroactivity. When communicating with the NSC's Supplier Audit and Compliance Unit or the site inspector, be sure to keep good records of who said what, and when. Document the dates and times of the communication to help demonstrate that you sent everything that was asked for prior to the revocation date. If your number is revoked even though you send this information, the hearing officer can determine, based on the evidence, that your reinstatement should be retroactive to the revocation date.

2. If it seems unclear what the NSC is looking for, ask in writing, and retain evidence of your request.

3. Get help if you need it. Retain the help of knowledgeable counsel or advisors as soon as you receive the Notice of Revocation. They will help you work with the NSC to resolve the issues as quickly as possible. Your counsel or advisors must first send the NSC a letter, signed by you, authorizing the NSC to speak to the counsel or advisors about your case.

4. Always be prepared for another site inspection. If the NSC revokes your number, you can bet they will want to do another site inspection to verify that you are now compliant with the 21 Supplier Standards. If you are not available, the NSC will determine that you have not met the standards, and will require you to re-apply for a new supplier number to receive billing privileges.

5. If you choose to submit your information to a fair and neutral hearing officer, by law, the hearing is required to be scheduled within one week of your request. With recent increased activity, the NSC has not been able to schedule hearings within a week, but when it begins, the process is still fairly timely. The hearing officer will render a decision within 10 days from the close of the testimony.

6. If you request a hearing, you may opt to hold the hearing in person or by telephone. It is usually quicker to schedule a telephone hearing since a hearing officer will not have to travel to your location.

7. You are permitted to obtain a copy of the NSC file that is given to the hearing officer. This request must be made to the NSC, so you must submit it early enough for the NSC to respond. It is important to get your file so that you will be able to identify any missing or inaccurate information.

8. It is helpful to submit your arguments to the hearing officer prior to the hearing. He or she will then have the opportunity to review the information in your file to determine if there are any missing pieces.

9. The hearing officer will determine if you have complied with all 21 Supplier Standards, not merely the standards that the NSC originally cited in its Notice of Revocation.

10. It is imperative that you communicate clearly and precisely during the hearing. To avoid confusion, non-essential persons should not be involved in the hearing. It may be helpful to allow your advisor or attorney to conduct the hearing without any of your company employees being present. For example, one supplier requested an appeal for consideration in writing. During the hearing, the owner mistakenly stated that her request was actually a reconsideration request. The hearing officer then ruled that the 90-day timeframe for requesting a hearing had lapsed. The supplier had to re-apply for a billing number.

11. The hearing officer will allow the file to remain open for about a week, during which time you should be able to supplement information and proof of compliance.

12. If you decide to request a reconsideration or a hearing and do not get a favorable decision, you will have to resubmit an application for billing privileges. Alternatively, you can appeal the hearing officer's decision, but you must do so within 60 days.

13. If you believe that the revocation of your supplier number was improper, you may continue to provide Medicare services. If your number is reinstated retroactive to the revocation date, you will be entitled to receive reimbursement for those services. However, you must be cautious. Your reimbursement for these services depends on a successful hearing result and a determination that you are entitled to retroactivity.