OIG releases DME compliance plan with list of dos-and-don’ts

By MATTHEW HAY
HHBR Washington Correspondent

The Department of Health and Human Services Office of Inspector General (OIG) released an 80-page compliance plan for durable medical equipment (DME) suppliers last week that carries warnings about myriad potential billing violations and sets up several potential roadblocks for arrangements between suppliers, physicians, and hospitals.

While OIG compliance programs are strictly voluntary, the OIG uses these programs to put DME suppliers and others on notice about potential trouble spots.

Like previous compliance programs the OIG has already issued for clinical laboratories, hospitals, home health agencies, and third-party medical billing companies, this plan is based on seven key elements, such as the designation of a compliance officer and the creation of a hotline for receiving complaints. But the guidance for DME, issued June 24, is far more detailed than those earlier plans. It includes no fewer than 47 specific risk areas that range from traditional OIG targets like telemarketing practices and certificates of medical necessity (CMN) to more recent issues, such as the use of supply closets.

When the draft compliance plan for DME was released in January, suppliers complained that the OIG had offered its own interpretations of federal regulations or statutes not yet issued by the Health Care Financing Administration (HCFA; Baltimore) on a host of areas, such as supply closets, advanced beneficiary notices, CMNs, and supplier billing agents. The Health Industry Distributors Association (HIDA; Alexandria, VA) argued it was premature and presumptuous for the OIG to offer assumptions and interpretations about Medicare rulings, guidance, or regulations not yet issued by HCFA. 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 so-called supply closets. Suppliers maintain these closets 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," said OIG spokesperson Alwyn Cassil. "But we are saying that they may lead to potential violations of the anti-kickback statute if they are not structured properly."

A similar potential trouble spot, according to Kathy Ladipo, manager of regulatory affairs at the National Association for Medical Equipment Services (NAMES; Alexandria, VA), is the OIG’s reference to the use of cover letters that suppliers send to physicians attached to CMNs.

"It appears to be contrary to the recent program memorandum issued by HCFA, which basically said that it cannot regulate cover letters," said Ladipo. "Yet the compliance plan seems to imply cover letters are something that suppliers can get in trouble for."

But Cassil said 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 said.

Among other things the OIG warns suppliers about are the following: making unsolicited telephone contacts to Medicare beneficiaries, continuing to bill for rental items after they are no longer medically necessary, providing and/or billing for "substantially excessive" items or supplies, and improper conduct relating to CMNs.

The plan also includes these warnings about supplier efforts to help physicians complete their paperwork:

    • Do not forward blank CMNs to the treating physician for signature.
    • Do not complete section B (Medical Necessity) of the CMN.
    • Do not alter or add any information on the CMN after receiving the completed and signed CMN from the physician.
    • Do not sign the CMN for the treating physician.

The plan also urges suppliers to implement the recommendations "regardless of their size, number of locations, or corporate structure." That was a major sticking point in the OIG’s draft plan.

But also unlike the earlier plans, the guidance includes recommendations about how small suppliers with limited resources can implement controls to reduce the risk of unlawful or improper conduct. For example, small suppliers that may not have the resources for a permanent compliance committee are counseled to create a task force to address potential problems. Likewise, small suppliers unable to develop a comprehensive set of written policies and procedures are encouraged to create a manual focusing on the risk areas most potentially problematic to their business.

The final guidance is now available on the Internet at www.dhhs.gov/progorg/oig.