Presented by:
Jeffrey S. Baird, Esq.
© 2015 Brown & Fortunato, P.C.
A DME supplier cannot sell patients.
 A DME supplier cannot sell patient files.

A DME supplier can enter into a bona
fide agreement to sell hard assets, and
in conjunction with the sale of hard
assets, also transfer patient files.
 The stockholder of a DME supplier (that
is a corporation) can sell his stock to a
person or entity.

Purchase the stock of the DME
supplier.
 Purchase the assets of the DME
supplier.

John Smith owns all of the stock in ABC
Medical, Inc., a DME supplier.
 Smith will sell his stock certificate to
XYZ Medical, Inc.

ABC becomes the wholly-owned
subsidiary of XYZ.
 ABC and XYZ remain separate legal
entities. XYZ just so happens to own
ABC.

ABC keeps “humming along” the same
as it always has….same tax ID #, same
PTAN, etc.
 No break in billing.


Notice of the change of ownership
(“CHOW”) must be given to the NSC,
state licensing agencies, state Medicaid
programs, accrediting organizations,
surety bond issuer, and perhaps to third
party payors.
Let’s say that ABC gets hit with claims
after closing for activities occurring
before closing.
 These claims will affect ABC.
 Subject to limited exceptions, the claims
will not flow up the food chain and be
asserted against XYZ.



XYZ can protect itself as follows:
- Through due diligence
- Personal indemnification by Smith
- 75% of purchase price paid at closing
- 25% of purchase price paid after
closing
XYZ can offset in the event that Smith and
ABC breach their “reps and warranties”





Mutual Non-Disclosure Agreement
ABC gives financial documents to XYZ
Letter of Intent
XYZ conducts due diligence
Closing occurs. This is when the Stock
Purchase Agreement is signed and XYZ pays
a portion of the purchase price.
After closing, Smith will continue to own
ABC.
 ABC will have fewer (or no) hard
assets, but will have the purchase price
paid by XYZ.

If post-closing claims are asserted
against ABC, then they are not XYZ’s
problem.
 In an asset acquisition, the purchaser
does not assume any of the seller’s
obligations….unless the purchaser
chooses to do so.






Mutual Non-Disclosure Agreement
Seller gives financials/related documents to
buyer
LOI executed
Buyer conducts due diligence
Closing occurs: Asset Purchase Agreement
signed, seller executes a Bill of Sale, and
buyer pays money to seller


Medicare Program Integrity Manual indicates
that a new physician order is required “when
there is a change in the supplier.”
CMS to B&F: New orders are required where
one supplier purchases the assets of another

PIM: “In cases where two ore more suppliers
merge, the resultant supplier should make all
reasonable attempts to secure copies of all
active CMNs or DIFs from the supplier(s)
purchased. This document should be kept on
file by the resultant supplier for future
presentation to the DME MACs, DME PSCs,
or ZPICs.”


The Claims Processing Manual states that “an
assignment is an agreement between a
physician (or other supplier of services) and an
enrollee where the enrollee transfers to the
physician his/her right to benefits based on
covered services specified on the assigned
claim.”
Because an AOB is an agreement between a
beneficiary and a particular supplier, a nonparticipating supplier that purchases the assets
of another must obtain a new AOB.


If a purchasing supplier is a participating
supplier, it will not be required to obtain a new
AOB.
Medicare payment regulations: “when payment
is for services furnished by a participating
physician or supplier, the beneficiary (or the
person authorized to request payment on the
beneficiary’s behalf) is not required to assign the
claim to the supplier in order for an assignment
to be effective.”

PIM states that suppliers are required to
maintain proof of delivery documentation in
their files. The three methods of delivery are
(1) supplier delivering directly to the
beneficiary or authorized representative; (2)
supplier utilizing a delivery/shipping service
to deliver items; and (3) delivery of items to a
nursing facility on behalf of the beneficiary.


There is no written guidance that specifically
addresses the question of whether new
delivery tickets must be obtained by a
supplier after an asset purchase.
It stands to reason that obtaining new
delivery tickets would not be possible as
delivery of an item is a discrete event that
can only be documented at the time of
occurrence by the one who carried it out.

Telephone Solicitation Statute and
Supplier Standard #11: a supplier may
not call a Medicare beneficiary (a
prospective customer) unless the
beneficiary has given his prior written
permission to be called.
As a condition to completing the asset
purchase, the buyer should required the
seller to send the patient written notice
regarding the asset purchase.
 The letter should inform the patient that
unless he objects, the patient’s files will
be transferred to the buyer.


With the notice letter, the seller should
send a separate consent card to be
completed and returned by the patient,
giving the buyer written consent to call
the patient directly.
►A
new 36-month rental period can begin only in
the following additional situations:
• After the 5-year reasonable useful lifetime of the
oxygen equipment has expired if the beneficiary elects
to obtain new oxygen equipment,
• Specific incident of damage beyond repair (e.g.,
dropped and broken, fire, flood, etc.) or the item is
stolen or lost,
• During the 36-month rental payment period if break-inneed for at least 60 days plus the days remaining in
the month of discontinuation and new medical
necessity is established.
► RUL
for oxygen equipment is 5 years.
► At any time after the end of the 5-year RUL for
oxygen equipment, the beneficiary may elect to
receive new equipment; thus, beginning a new
36-month rental period.
► Five-year
period begins on the initial date of
service and runs for five years from that date. It
is not based on the actual age of the equipment.
► It does not re-start if there has been a change in
oxygen modality, change out of equipment, or
change in supplier.
► When
the RUL of a beneficiary’s portable
oxygen equipment differs from the RUL of the
beneficiary’s stationary oxygen equipment, the
RUL of the stationary oxygen equipment shall
govern for both types of oxygen equipment, i.e.,
stationary and portable.
► If
the RUL end date of the portable oxygen
equipment is before the RUL end date of the
stationary oxygen equipment, the RUL end date
of the portable oxygen equipment is extended to
coincide with the RUL end date of the stationary
oxygen equipment.
► If
the RUL end date of the portable oxygen
equipment is after the RUL end date of the
stationary oxygen equipment, the end date of
the RUL of the portable oxygen equipment is
shortened to coincide with the RUL end date of
the stationary oxygen equipment.
► When
the end date of the RUL of the stationary
oxygen equipment occurs, the beneficiary may
elect to obtain replacement of both the
stationary and the portable oxygen equipment.
► If
the beneficiary elects to obtain replacement of
the stationary and the portable oxygen
equipment, both types of oxygen equipment
must be replaced at the same time; and a new
36-month rental period and new RUL is started
for both the replacement stationary oxygen
equipment and the replacement portable oxygen
equipment.
►A
beneficiary who resides in a DMEPOS
competitive bidding area (CBA) may obtain
replacement of both the stationary and portable
oxygen systems only from a contract supplier
having a competitive bidding contract for the
CBA in which the beneficiary permanently
resides.
► If
the beneficiary elects not to receive new
equipment after the end of the 5-year RUL and if
the supplier retains title to the equipment, all
elements of the payment policy for months 3760 remain in effect.
► There is no separate payment for accessories or
repairs.
► If
the beneficiary was using gaseous or liquid
oxygen equipment during the 36th rental month,
payment can continue to be made for oxygen
contents.
► If
the beneficiary elects not to receive new
equipment after the end of the 5-year RUL and if
the supplier transfers title of the equipment to
the beneficiary, accessories, maintenance, and
repairs are statutorily non-covered by Medicare.
► Contents are separately payable for beneficiaryowned gaseous or liquid systems.
►A
specific incident of damage to equipment is
required, such as equipment falling down a flight
of stairs as opposed to equipment that is worn
out over time.
► New 36-month cap rental period cannot be
started if equipment is replaced due to
malfunction, wear and tear, routine
maintenance, or repair needed.
►A
new 36-month rental period and new RUL is
started on the date that the replacement
equipment is furnished to the beneficiary.
► Claims for the replacement of oxygen equipment
for the first month of use only are billed using
the HCPCS code for the new equipment and the
RA modifier.
► You
must include on the claim for the first month
of use a narrative explanation of the reason why
the equipment was replaced and supporting
documentation must be maintained in your files.
► For
example, if equipment was stolen, you
should keep a copy of the police report in your
files.
► For lost or irreparably damaged equipment, you
should maintain any documentation that
supports the narrative account of the incident.
► AFTER
expiration of the 36-month cap rental
period, supplier of oxygen equipment must
continue providing oxygen contents to the
beneficiary during ANY period of medical need
for the remainder of the 5-year RUL of the
equipment.
► Initial
CMN and claim for replacement
equipment
• Initial Date should be the date of delivery of the
replacement oxygen equipment.
• Claims for the initial rental month (and only the initial
rental month) must have the RA modifier (replacement
of DME item) added to the HCPCS code for the
equipment when there is replacement due to RUL or
replacement due to damage, theft, or loss.
• Claims for the initial rental month must include a
narrative explanation of the reason why the equipment
was replaced and supporting documentation must be
maintained in the supplier's files.
► Recert
CMN for replacement equipment
• Repeat testing is not required.
 Enter the most recent qualifying value and test date.
 This test does not have to be within 30 days prior to the Initial
Date.
 It could be the test result reported on the most recent prior
CMN.
• There is no requirement for a physician visit that is
specifically related to the completion of the CMN for
replacement equipment.
► If
beneficiary enters hospital or skilled nursing
facility or joins Medicare HMO and continues to
need/use oxygen, when the beneficiary returns
home or rejoins Medicare FFS, payment
resumes where it left off.
► If
need/use of oxygen ends for less than 60 days
plus the remainder of the rental month of
discontinuation and then resumes, payment
resumes where it left off.
• During the 36-month rental period, if need/use of
oxygen ends for more than 60 days plus the remainder
of the rental month of discontinuation and new medical
necessity is established, a new 36-month rental period
would begin.
► New
Initial CMN
• The blood gas study must be the most recent study
obtained within 30 days prior to the Initial Date.
► The
beneficiary must be seen and evaluated by
the treating physician within 30 days prior to the
date of Initial Certification.
►If there is an interruption in medical necessity of
greater than 60 days plus the days remaining in the
last paid rental month, once the need resumes, the
supplier would collect supporting documentation
(made available upon request) of the new medical
need including, but not limited to:
• New prescription (detailed written order, written order prior to
delivery if required)
• New Initial CMN (with new qualifying oxygen test results
performed within 30 days of new initial date)
• Documentation supporting new medical need
• Documentation explaining interruption of need
• Documentation supporting length of interruption (e.g., pick up
date, new delivery date)
• The claim for the first month of the new rentals
meeting the above documentation should include:
 New Initial CMN
 Narrative statement, "Break in medical need greater than 60
days."
► During
months 37-60, if need/use of oxygen ends
for more than 60 days plus the remainder of the
rental month of discontinuation and new medical
necessity is established, a new rental period does
not begin.
► The supplier who provided the oxygen equipment
during the 36th rental month must provide all
necessary items and services for the duration of the
RUL.
► Applicable
to the following items:
• E0424, E0431, E0433, E0434, E0439, E0441, E0442,
E0443, E0444
► These
items require an in-person or face-to-face
interaction between the beneficiary and their
treating physician prior to prescribing the item,
specifically to document that the beneficiary was
evaluated and/or treated for a condition that
supports the need for the item(s) of DME ordered.
►A
dispensing order is not sufficient to provide
these items.
► A WOPD is required.
►A
new face-to-face examination is required each
time a new prescription for one of the specified
items is ordered.
► A new prescription is required by Medicare:
• For all claims for purchases or initial rentals
• When there is a change in the prescription for the
accessory, supply, drug, etc., all claims for purchases or
initial rentals
• For all claims for purchases or initial rentals
• If a local coverage determination requires periodic
prescription renewal (i.e., policy requires a new
prescription on a scheduled or periodic basis) all
claims for purchases or initial rentals
• When an item is replaced
• When there is a change in the supplier
• When required by state law
► The
face-to-face examination must be within 6
months prior to the date of the WOPD.
► Competitive
bidding is forcing a number of DME
suppliers to close their doors.
► Many of these suppliers are having to go into
bankruptcy.
► The
guidance issued by CMS related to
payment for replacement oxygen equipment in
bankruptcy situations is contained in Section
50.4 of Chapter 20 in the Medicare Claims
Processing Manual.
► It
states, “when a supplier files for Chapter 7 or 11
bankruptcy … and cannot continue to furnish
oxygen to its Medicare beneficiaries, the oxygen
equipment is considered lost in these situations and
payment may be made for replacement equipment.
For replacement oxygen equipment, a new
reasonable useful lifetime period and a new 36month payment period begins on the date of
delivery of the replacement oxygen equipment.”
► The
supporting documentation that will be required
to verify that the supplier declared bankruptcy
depends on whether the bankruptcy is a Chapter 7
(liquidation) or a Chapter 11 (reorganization). For a
Chapter 7, the “supporting documentation must
include court records documenting that the previous
supplier filed a petition for a Chapter 7 bankruptcy in
a United States Bankruptcy Court … .”
► For
a Chapter 11, the “supporting documentation
must include Court records documenting that the
previous supplier filed a petition for a Chapter 11
bankruptcy in a United States Bankruptcy Court;
and documents filed in the bankruptcy case
confirming that the equipment was sold or is
scheduled to be sold as evidenced by one of the
following:
• [1] The Court order authorizing and/or approving the
sale; or
• [2] Supporting documentation that the sale is
scheduled to occur or has occurred, e.g., a bill of sale,
or an asset purchase agreement signed by the seller
and the buyer; or
• [3] A Court order authorizing abandonment of the
equipment.”
► Because
this policy contemplates the
establishment of a new reasonable useful
lifetime, it should allow for a new 36-month
payment period regardless of whether a patient
of the bankrupt supplier was still in the 36-month
rental payment period or the non-rental payment
period consisting of rental months 37-60.
► As
with any other situation in which oxygen
equipment is lost and replacement equipment is
furnished, the RA modifier must be submitted on
the claim and a narrative explanation should be
included on the claim.
► In
addition, the replacement supplier must
obtain the necessary qualifying documentation,
including the blood gas testing results, a new
order and/or CMN, and proof of delivery.
► In late August 2013, CMS published the
following announcement regarding
“abandonment” of patients:
• MLN Connects Provider eNews 08/22/13
• Replacement of Home Oxygen Services in the Event
That a Supplier Exits the Medicare Oxygen Business
• Effective immediately, CMS will allow for the
replacement of oxygen equipment in cases where a
supplier exits the Medicare oxygen business and is
no longer able to continue furnishing oxygen and
oxygen equipment. In these instances, the oxygen
equipment will be considered lost and a new 36month rental period and reasonable useful lifetime
will begin for the new supplier furnishing
replacement oxygen equipment on the date that the
replacement equipment is furnished to the
beneficiary.
• Suppliers exiting the Medicare oxygen
business with patients that they were unable
to transfer to new suppliers should be aware
that they are in violation of the statutory and
regulatory requirements for furnishing
oxygen equipment both before and after the
payment cap.
• As such, oxygen suppliers that do not fulfill their
oxygen obligations and voluntarily exit the Medicare
oxygen business are not in compliance with the
Durable Medical Equipment, Prosthetics, Orthotics,
and Supplies (DMEPOS) supplier standards set
forth at 42 CFR 424.57(c).
► This announcement is likely intended to deter
(and punish) DME suppliers that abandon their
patients at or near the end of the 36-month
rental period by closing their doors or exiting
the Medicare oxygen business.
► This announcement likely does not apply to a
supplier that assumes responsibility for patients
who transfer to the supplier pursuant to a bona fide
asset sale.
► In a bona fide asset sale, the seller does not exit
the Medicare oxygen business without insuring its
patients are taken care of.
►The asset sale allows for the continuation of
patient support and service; therefore, there is
no abandonment.
►This announcement appears to be meant to
deter DME suppliers that provide DME products
in addition to oxygen equipment from voluntarily
leaving the Medicare oxygen business without
fulfilling their oxygen obligations to patients.
► The
“deterrence” is CMS’s statement that such
abandonment is a violation of the DMEPOS supplier
standards and could lead to the revocation of the
DME company’s Part B supplier number.
► It appears that CMS does not want a DME supplier
that provides a variety of products to drop its oxygen
business because it is no longer profitable.
► This
is particularly relevant in the competitive
bidding arena.
► A DME supplier may be motivated to walk away
from its oxygen business after losing out on a
competitive bid contract.
► Without the influx of new patients, the Medicare
oxygen business can quickly become
unprofitable.
► CMS
will likely use this announcement to protect
oxygen patients in the event their supplier walks
away from the business leaving the patients
“abandoned” with nowhere to go for equipment
repairs.
► Allowing the 36-month rental period to restart by
classifying the equipment as “lost” is an incentive for
new suppliers to assume responsibility for the
abandoned patients.
► DME
MAC Jurisdiction A posted an article on
12/19/13 entitled “Supplier ‘Abandonment’ of
Beneficiaries and Oxygen Equipment.” The article
provides the following:
• In the event the DME supplier voluntarily exits the
Medicare oxygen business and is no longer able to
continue furnishing oxygen and oxygen equipment, the
replacement oxygen and oxygen equipment will be
deemed to be “lost” under Medicare regulations.
• The regulations provide that a patient may elect to
obtain a new piece of equipment if the equipment
has been in continuous use by the patient for the
equipment’s reasonable and useful lifetime or has
been lost, stolen, or irreparably damaged.
• When considering “lost” equipment, the DME MACs
will establish a new 36-month rental period and
reasonable useful lifetime for the new supplier
beginning on the date that the replacement
equipment is furnished to the beneficiary.
►The article reminds suppliers (voluntarily exiting the
Medicare program) that they are in violation of their
regulatory obligations.
►The regulations state that
• the supplier that received the 36-month rental payment must
continue furnishing the oxygen equipment during any period of
medical need for the remainder of the equipment’s reasonable
useful life and
• subject to a few exceptions, the supplier that
furnishes oxygen equipment in the first month during
which payment is made must continue to furnish the
equipment for the entire 36-month period of
continuous use unless medical necessity ends.
►The article then states that oxygen suppliers that do
not fulfill their oxygen obligations and voluntarily exit
the Medicare oxygen business are not in compliance
with the supplier standards.
►The article gives the following instructions to suppliers
that are voluntarily exiting the Medicare oxygen
market.
• These suppliers must provide a 90-day notice to the beneficiary
of the supplier’s intention to no longer provide oxygen therapy
services.
• The notice must be provided in writing and must take one of two
forms:
• a letter to the beneficiary notifying him/her of the supplier’s intention
to discontinue oxygen therapy services
 the letter must specify a date upon which this will occur or
• working with the beneficiary, a letter to the new supplier that
transfers the provision of oxygen therapy services to the new
supplier as of a specific date.
►The article then gives the following instructions to the
new supplier that assumes responsibility for
beneficiaries of suppliers that have elected to
voluntarily exit the Medicare oxygen business.
• The claims for replacement equipment must
• include the RA modifier (replacement of a DME item)
on the claim line for the replacement equipment and
• document in the narrative field of the claim that
“Beneficiary acquired through supplier voluntarily
exiting Medicare program” (or a similar statement).
►In the event of an audit, the new supplier
should be prepared to provide documentation
demonstrating that the beneficiary was
transferred from a supplier exiting the
Medicare oxygen program.
►Examples of documentation to meet this
requirement are either
• copy of notice sent to the beneficiary from the old supplier
indicating that the supplier’s services were being terminated or
• letter from the old supplier to the new supplier indicating
transfer of the beneficiary due to the voluntary exit from the
Medicare program.
►The article further states that if the new supplier is
unable to obtain the required documentation, the new
supplier may not append the RA modifier to the claim
and may not initiate a new 36-month capped rental
period.
►Lastly, the article reminds all suppliers (accepting
transfers of beneficiaries) that all Medicare rules apply
(e.g., new order, new initial CMN, and medical
necessity documentation).
►The other three jurisdictions have issued the
same or similar instructions.

The “take away” for the DME supplier exiting the
market is:
• if it can sell its business to another supplier, thereby
insuring the orderly transition of oxygen patients, that
is the preferable course of action to take.

If the exiting supplier cannot find a buyer for its
business, it needs to give the required advance
notice to the beneficiary.

The “take away” for the new supplier that
intends to bill for the entire 36 months is
• that the supplier needs to properly submit the claim
and obtain the necessary documentation to withstand
an audit.
► A growing challenge to a DME supplier is what to do with
noncompliant oxygen patients. A supplier probably could
reasonably conclude that the absence of a fully compliant
recertification CMN is a technical fault to be remedied by the
pickup of equipment. Likewise, there must be information in the
beneficiary’s medical record to support that the item continues to
be used by the beneficiary and remains reasonable and
necessary. If there is no medical evidence that the item is
reasonable and necessary, the supplier is no longer required to
provide service to the beneficiary.
► That being said, a concern is that the supplier may have exposure
if it picks its equipment up against the beneficiary’s wishes and the
beneficiary later alleges that he was injured as a result. This risk
can be reduced by having the beneficiary return the item
voluntarily.
► Several
FAQs address oxygen patients whose
physicians refuse to provide information needed to
establish medical necessity. The FAQ responses
state that the supplier has a right to refuse to
service a patient but also urge suppliers to
communicate with both beneficiaries and their
physicians to mitigate the noncompliance issue.
► The
bottom line is that, although the DME supplier
has the right to refuse service to noncompliant
beneficiaries, there is risk in exercising this right.
In order to reduce the number of beneficiaries who
do not recertify in the first place, the supplier may
wish to take the following steps:
► Reminder
letters: The supplier can send letters
to both the physician and the beneficiary (a)
before or contemporaneously with the
beneficiary’s receipt of the item; and (b) 120, 90,
60 and 30 days before the date recertification is
due. The supplier can also use this opportunity to
educate the beneficiary about fire safety to satisfy
accreditation requirements.
► Lapse
notification: If the beneficiary does not recertify,
the supplier can send a letter to both the beneficiary and
the ordering physician notifying the beneficiary that:
• his certification has ended; and
• the supplier will pick up the item in 30 days unless recertification
documentation is received within 15 days [providing a specific
date and time the equipment will be picked up]. Alternatively, the
supplier can offer to provide a return shipping package to return
the item by mail.
► This
letter should also list other suppliers from which the
beneficiary can obtain a similar item. In most cases, this
notification to the physician and the beneficiary should
result in recertification.
► Gift
card incentive: The DME supplier may wish to offer
a $25.00 gift card to beneficiaries upon return of the item
to the supplier. This is low risk under federal and state
anti-kickback laws because the purpose of the card is
not to induce referrals nor induce a person to become a
patient of the supplier, but rather to give the patient an
incentive to return the item.
► Despite
best efforts, some beneficiaries will refuse to
either recertify or return the item to the supplier. In this
case, the risks of demanding the item’s return may
outweigh the benefits and, therefore, the supplier may
decide that these beneficiaries be permitted to keep the
item. The supplier can then periodically contact the
beneficiary and offer a gift card in exchange for the
item’s return.
Relevant FAQ’s:
► Q11: What should suppliers do if a physician refuses to
provide information needed to establish medical
necessity?
► A11: One option is to use the “Dear Physician” letters we
have on our web site. These are letters written by our medical
director, basically, from one doctor to another advising them
that it is their obligation to provide this information in order for
the patient to be reimbursed for the item they prescribed.
Also, you can get the beneficiary involved and have them
contact the physician for the information. If they still refuse
to provide the documentation, it is your right to refuse to
service this patient.
►
► Q23:
What can we do if a physician refuses to
provide documentation that is needed to establish
medical necessity?
► A23: “Dear Physician” letters on our web site will help
assist in obtaining this information. You can also get the
beneficiary involved and have them assist in obtaining
the documentation from the physician.
► Q37:
We have an initial CMN for oxygen that the
doctor completed. When the recertification is due,
the doctor will not complete the CMN stating he has
not seen the patient within the past year. As a
provider, do we have any recourse? What do we
need to do since the physician will not sign for a
recertification?
► A37:
Suppliers need to educate the beneficiary as well
that they need to have a visit with their physician prior to
their recertification in order for Medicare to reimburse
their oxygen claims. This visit will also help to justify
continued need and continued use.
► Q2:
Can we refuse to service a beneficiary if the
doctor is noncompliant in getting us the required
documentation?
► A2: Yes, this is your option as a Medicare provider. You
can inform the patient that the referring physician does
not provide adequate documentation to determine if the
item is reasonable and necessary according to Medicare
guidelines.
► On
November 8, 2006, the OIG posted Advisory Opinion
No. 06-20 that sets out a restrictive OIG view towards
two business practices pertaining to home oximetry
testing.
► Pursuant to the first practice, the HME company would
provide Medicare beneficiaries with free home oxygen
until the beneficiaries qualify for Medicare coverage for
oxygen.
► Under
the second practice, the HME company would
pre-screen beneficiaries by running overnight pulse
oximetry tests on them and then reporting the test
results to the physician.
► The OIG stated that the practices would implicate both
the Civil Monetary Penalties (“CMP”) statute and the
Medicare/Medicaid anti-kickback statute.
► In
making this statement, the OIG offered its
opinion that
• (i) both programs would constitute remuneration to the
beneficiaries who receive them;
• (ii) the remuneration provided under the practices would
be likely to influence beneficiaries to select the HME
company (providing the free services) as their supplier of
oxygen or other Medicare - payable goods and services;
and
• (iii) the HME company (providing the free services) would
know, or should know, that the provision of items and
services under the two practices would be likely to
influence beneficiaries’ selection of the company for
oxygen or other Medicare-payable supplies.
► In
reviewing the Advisory Opinion, the following
observations can be made:
• The Advisory Opinion is not intended to prevent the HME
company from providing care (ordered by the treating
physician) for existing patients of the HME company that are
enrolled in disease management programs, COPD pathways
or similar types of programs.
• If an HME company has a patient enrolled in such a program,
and if an assessment (including oximetry) is ordered by the
treating physician, then the HME company can perform the
assessment.
• Note that the patient must have a diagnosis that fits the need
for the assessment. Examples would include COPD or CHF.
• Documentation would need to support that the assessment
was ordered.
• Assessment documentation would include not only SpO2, but
presumably also auscultation, respiratory rate and pulse rate.
• If the assessment findings indicate that the patient is
experiencing a decline in his/her condition or additional health
issues, the patient’s physician should be notified.
• The physician will need to make the decisions regarding
further assessment and/or intervention.
• Other than as discussed above, an HME company may not
provide a free oximetry screening. In other words, the HME
company cannot provide free services that would potentially
result in the beneficiary choosing the HME company as
his/her supplier.
• An HME company may not set up free oxygen while waiting
for a qualifying test. If a physician tells the HME company
that an emergency exists and that the patient must
immediately be set up on oxygen, then the best case scenario
would be for the patient to go to an IDTF for testing.
• Keep in mind that an emergency room is not a good choice
for testing, as Medicare would view that as emergent care;
thus, the patient would not be in a “chronic stable state.”
• An alternative is for the HME company to complete an ABN
and have the patient sign it in advance of setting the patient
up on oxygen. The ABN would advise the patient that
Medicare will not pay for oxygen until the patient has a
qualifying oxygen test, and inform the patient that he/she will
be financially responsible for the oxygen until the patient
qualifies.
• Should the patient later qualify under the appropriate testing
standards, the HME company may, at that point, accept
assignment.
• The HME company is not prohibited from advising the
physician of the need for re-certification testing, or testing
needed due to a change in insurance carrier.
► DME
supplier can receive an order for a pulse
oximetry test from a physician and forward the
order to the IDTF.
► DME
supplier can deliver a pulse oximetry test
unit and related technology, used to collect and
transmit overnight oximetry test results to the
IDTF, to a beneficiary’s home.
► DME
supplier can use related technology to
download overnight pulse oximetry test results
from a sealed testing unit and transmit those
results to the IDTF.
► DME supplier can request an order from a
physician for oximetry testing for a patient
in the following situations:
• A supplier furnishing oxygen to a beneficiary
may contact the beneficiary or the physician
as a reminder if a recertification oximetry test
is needed or if testing is required for other
reasons such as a change in insurance.
• A supplier with an initial order for oxygen
where no oximetry test has been
performed, or where the tests results are
expired or invalid (e.g. the test was
performed three days before discharge
instead of two), may contact the
physician or the beneficiary to inform him
or her that a new test is required.
• As part of a clinical evaluation for
patients receiving respiratory services
from a supplier, the supplier may
communicate the beneficiary’s symptoms
to the physician. The physician may use
this information to determine what further
assessment should be performed in
order to further evaluate the beneficiary’s
condition.
► Under
certain circumstances a DME supplier may
do the following:
• Educate physicians or their staff regarding the
screening of patients for disease states that may
require DME.
• Educate physicians on Medicare documentation
guidelines.
• Provide a pre-filled prescription to a physician for
his/her review and signature based on at least a
verbal order from the physician.
► DME supplier cannot perform qualifying oximetry
tests.
► DME supplier cannot create written instructions on
the proper operation of overnight pulse oximetry
test equipment, provide verbal instructions, answer
questions from the beneficiary, apply or
demonstrate the application of the testing
equipment to the beneficiary, or otherwise
participate in the conduct of the test being
performed by an IDTF.
► DME
supplier cannot access or manipulate IDTF
pulse oximetry test results.
► DME supplier cannot loan pulse oximeters to
physicians.
► DME supplier should not provide a physician with
a pre-filled prescription or order without at least a
verbal order from a physician.
►DME
supplier cannot be involved in delivery,
pickup, or any other aspect of home sleep
test.
►DME
supplier cannot perform free
“screening” oximetry or home sleep test on
patients.
A production of:
Brown & Fortunato, P.C.
905 S. Fillmore, Suite 400
Amarillo, TX 79101
806-345-6300
www.bf-law.com
Jeffrey S. Baird, Esq.
jbaird@bf-law.com
806-345-6320
Buying and Selling, Transferring Patient Files After a Sale, Calling Patients After a
Purchase, and Restarting the 36 Months
GAMES Annual Meeting – 8/16/2015
27B7885.ppt