Final DME plan conflicts with HCFA regs, critics say

On June 24, the Office of Inspector General (OIG) released a hefty 80-page compliance plan for durable medical equipment (DME) suppliers that warns suppliers about myriad potential billing violations and sets up potential roadblocks between suppliers, physicians, and hospitals. The new guidance also could make life difficult for any hospital that sells even limited amounts of DME.

More detailed than earlier model plans, the DME guidance details no fewer than 47 specific "risk areas" that could trip up suppliers and other providers. They range from traditional OIG targets like telemarketing practices and certificates of medical necessity (CMN) to more recent OIG favorites such as the use of so-called "supply closets."

When the draft compliance plan for DME was released in January, suppliers complained the OIG had offered its own interpretations about Medicare regulations not yet issued by the Health Care Financing Administration (HCFA). And DME representatives say the final plan is still ripe with interpretations that conflict with prior rulings issued by HCFA and its intermediaries.

One of those areas is a warning about the use of supply closets. Suppliers maintain they amount to nothing more than a limited number of items stored with a physician or hospital to expedite the training and discharge of a patient. But the OIG says this practice could spell trouble if a supplier offers a physician or other referral source "more than fair market value" for space rented to store supplies. "We are not saying they can't be used," says OIG spokesperson Alwyn Cassil. "We’re saying that they may lead to potential violations of the anti-kickback statute if they are not structured properly."

A similar trouble spot is the use of cover letters that suppliers send to physicians attached to CMNs, says Kathy Ladipo, manager of regulatory affairs at the Alexandria-VA-based National Association for Medical Equipment Services.

That provision seems to contradict a recent HCFA memorandum stating that it can’t regulate cover letters, says Ladipo. "Yet the compliance plan seems to imply cover letters are something that suppliers can get in trouble for."

But Cassil maintains that even without a federal regulation, it is within the OIG's bounds to include areas such as this as a potential risk area. "We continue to put suppliers on notice that these are potential risk areas if not done properly," she says.

The final guidance is now available on the Internet at