DME suppliers face new anti-fraud regulations

Operation Restore Trust, the Medicare anti-fraud and abuse initiative launched in 1995, will be riding herd on durable medical equipment (DME) suppliers, the government recently announced.

Under a new regulation issued in January by the U.S. Department of Health and Human Services (HHS), DME suppliers to Medicare recipients face criminal and civil penalties for fraud and higher standards for demonstrating that they are not fly-by-night operators.

Specifically, the regulation includes the following requirements:

• DME suppliers must obtain surety bonds of at least $50,000.

• DME telemarketing is prohibited.

• DME suppliers must have a physical office and a listed phone number.

• DME suppliers must re-enroll in Medicare every three years.

• DME suppliers are prohibited from reassigning a supplier number.

• Suppliers face criminal and civil sanctions for misrepresenting information on billing umber applications.

Earlier in January, the HHS announced that surety bonds are required for home health agencies, another segment of the health care industry that has faced intense scrutiny under Operation Restore Trust.

A report by the HHS Office of the Inspector General published in December said enrolling as a Medicare DME supplier was "too easy, making possible participation by those who were unqualified to reliably supply beneficiary needs, and opening vulnerability to fraud and abuse."

Medicare spent about $6 billion on DME in fiscal 1997, according to the HHS.