AMARILLO, TX – If a DME supplier has a properly structured financial relationship (ownership or compensation) with a sleep lab, and if the sleep lab conducts an attended facility-based polysomnogram on a Medicare patient (i.e., the Medicare patient spends the night at the “brick and mortar” sleep lab), and if the Medicare patient tests positive for obstructive sleep apnea (“OSA”), and if the treating physician orders a CPAP for the Medicare patient, then the DME supplier can furnish the CPAP to the Medicare patient.
Now let’s switch gears and talk about a home sleep test (“HST”) as opposed to the Medicare patient spending the night at the sleep lab. If a DME supplier has a properly structured financial relationship with a sleep lab, and if the sleep lab sends the Medicare patient an HST device to conduct an HST, and if the Medicare patient tests positive for OSA, and if the treating physician orders a CPAP for the Medicare patient, then the DME supplier cannot furnish the CPAP to the Medicare patient. 42 CFR §424.57(f) states:
(f) Payment prohibition. No Medicare payment will be made to the supplier of a CPAP device if that supplier, or its affiliate, is directly or indirectly the provider of the sleep test used to diagnose the beneficiary with obstructive sleep apnea. This prohibition does not apply if the sleep test is an attended facility-based polysomnogram.
42 CFR §424.57(a) defines “affiliate” as “a person or organization that is related to another person or organization through a compensation arrangement or ownership.”
But now let us look at a third scenario. Assume that a DME supplier has a properly structured financial relationship with a sleep lab. Assume that the sleep lab sends a commercial insurance patient an HST device, the commercial insurance patient tests positive for OSA, the treating physician orders a CPAP for the commercial insurance patient, and the DME supplier furnishes the CPAP to the commercial insurance patient. But then assume that the commercial patient subsequently transitions to Medicare fee-for-service coverage. The question becomes: Is it acceptable for the DME supplier to continue to provide CPAP equipment and accessories (e.g., masks, filters and tubing) to the patient after he switches to Medicare fee-for-service?
The PAP LCD states, in relevant part:
BENEFICIARIES ENTERING MEDICARE
For beneficiaries who received a PAP device prior to enrollment in fee for service (FFS) Medicare and are seeking Medicare coverage of either rental of the device, a replacement PAP device and/or accessories, both of the following coverage requirements must be met:
- Sleep test – There must be documentation that the beneficiary had a sleep test, prior to FFS Medicare enrollment, that meets the Medicare AHI/RDI coverage criteria in effect at the time that the beneficiary seeks Medicare coverage of a replacement PAP device and/or accessories; and,
- Clinical Evaluation – Following enrollment in FFS Medicare, the beneficiary must have a face-to-face evaluation by their treating practitioner who documents in the beneficiary’s medical record that:
a) The beneficiary has a diagnosis of obstructive sleep apnea; and,
b) The beneficiary continues to use the PAP device.
If either criteria 1 or 2 above are not met, the claim will be denied as not reasonable and necessary.
In these situations, there is no requirement for a clinical re-evaluation or for objective documentation of adherence to use of the device.
The PAP LCD Policy Article states, in relevant part:
No aspect of a home sleep test, including but not limited to delivery and/or pickup of the device, may be performed by a DME supplier. This prohibition does not extend to the results of studies conducted by hospitals certified to do such tests or to tests conducted in facility-based sleep laboratories.
BENEFICIARIES ENTERING MEDICARE
For beneficiaries who received a PAP device prior to enrollment in fee for service (FFS) Medicare and are seeking Medicare coverage of either rental of the device, a replacement device or accessories, the supplier may add the KX modifier only if both of the criteria listed in the Coverage Indications, Limitations and/or Medical Necessity for Beneficiaries Entering Medicare section of the related LCD have been met.
The supplier may hold claims, pending confirmation that the above requirements are met, and then submit claims with the KX modifier beginning with the date of FFS Medicare enrollment.
Our analysis:
While a supplier may be able to bill Medicare for accessories for a PAP device originally provided to a patient under commercial insurance based on a HST performed by an affiliate of the supplier, it cannot bill for continued rental or provide a replacement PAP unless there is a qualifying attended polysomnogram or HST performed by a qualified Medicare provider that is not an affiliate of the supplier.
Even though the PAP LCD only states that “[t]here must be documentation that the beneficiary had a sleep test, prior to Medicare fee-for-service enrollment, that meets the Medicare AHI/RDI coverage criteria in effect at the time that the beneficiary seeks Medicare coverage of a replacement PAP device and/or accessories” which could be read to allow relying on a HST performed by an affiliate of the supplier, 42 CFR 424.57(f) explicitly states that “No Medicare payment will be made to the supplier of a CPAP device if that supplier, or its affiliate, is directly or indirectly the provider of the sleep test used to diagnose the beneficiary with obstructive sleep apnea. This prohibition does not apply if the sleep test is an attended facility-based polysomnogram.” Therefore, notwithstanding the looser language in the LCD, federal regulation prohibits payment for the device if the supplier, or its affiliate, performed the qualifying HST.
AAHomecare’s Retail Work Group
The Retail Work Group is a vibrant network of DME industry stakeholders (suppliers, manufacturers, consultants) that meets once a month via video conference during which (i) an expert guest will present a topic on an aspect of selling products at retail, and (ii) a question and answer period will follow. The next Retail Work Group video conference is scheduled for March 28, 2019, at 11:00 a.m. Central. Jeff Baird, Brown & Fortunato, P.C., will present “Diving Deeper into the Legal Aspects of Retail.” Participation in the Retail Work Group is free to AAHomecare members. For more information, contact Ashley Plauché Manager of Government Affairs, AAHomecare ([email protected]).
Jeffrey S. Baird, JD, is chairman of the Health Care Group at Brown & Fortunato, PC, a law firm based in Amarillo, Tex. He represents pharmacies, infusion companies, HME companies and other health care providers throughout the United States. Mr. Baird is Board Certified in Health Law by the Texas Board of Legal Specialization, and can be reached at (806) 345-6320 or [email protected].
Lisa K. Smith, JD, is an attorney with the Health Care Group at Brown & Fortunato, PC, a law firm based in Amarillo, Tex. She represents pharmacies, infusion companies, HME companies and other health care providers throughout the United States. Ms. Smith is Board Certified in Health Law by the Texas Board of Legal Specialization, and can be reached at (806) 345-6370 or [email protected].
