Assume the following:

• ABC Medical Equipment, Inc. (“ABC”) is a durable medical equipment (“DME”) supplier.
• ABC has one corporate office and two warehouses.
• The corporate office handles (i) intake, assessment, and coordination of care, (ii) billing, and (iii) other decision-making functions. The corporate office is enrolled in Medicare and has a Medicare Part B supplier number (“PTAN”).
• The two warehouses store DME and handle deliveries and pick-ups.
• The warehouses are located in industrial areas. There are no signs on the warehouses. The warehouses are not accessible to the public. There is no outside telephone line to the warehouses. The phones only connect with the corporate office.

Based on the above facts, are the two warehouses required to have PTANs? The answer is “no.” The applicable law is as follows:

• United States Code – The Social Security Act states, “The Secretary may not issue more than one supplier number to any supplier of medical equipment and supplies unless the issuance of more than one number is appropriate to identify subsidiary or regional entities under the supplier’s ownership or control.”[1]
• Code of Federal Regulations – A DME supplier must enroll each “separate physical location[] it uses to furnish Medicare-covered DMEPOS, with the exception of locations that it uses solely as warehouses[.]”^[2] The DME supplier standards do not address if a specific location must enroll in Medicare (or have a PTAN).^[3] The standards address the conditions that must be met to enroll and maintain enrollment in the program for those locations that must enroll. The standards for enrolled supplier locations include that the location “is in a location that is accessible to the public” and that the location maintains “a permanent visible sign in plain view and posts hours of operation[,]” among other standards not relevant to locations where the public is not served.

• Federal Register – In the final rule addressing the DMEPOS Supplier Standards, the Department of Health and Human Services (“DHHS”) indicates that “warehouses” are not used for retail customers and thus are not subject to the standards:

Likewise, many suppliers maintain warehouse locations that are not used for retail customers. These types of locations should not be subject to the telephone standard because appropriately trained customer service representatives would not be available to respond to the public’s questions.[4]

Likewise, DHHS indicates that a DME supplier’s central site is required to be enrolled in Medicare (and have a PTAN), but that other locations such as warehouses are not:

We recognize that some suppliers may have multiple sites from which they do business and may maintain records at one central site. Such suppliers may supply evidence of such recordkeeping, as long as the central site is an enrolled Medicare supplier site or represents a central function of a larger corporation of which the supplier is a part. We note that locations serving simply as warehouses are not subject to these standards.[5]

• Medicare Administrative Contractor Guidance – In response to the frequently asked question “Must all physical locations be enrolled individually?”, Novitas Solutions states that warehouses are not required to enroll in Medicare if beneficiaries are not served at the location:

If the warehouse includes an office where beneficiaries are serviced, the warehouse or repair facility is required to be enrolled. If the facility is used to store inventory only and does not service beneficiaries at the location, the facility … does not need to be enrolled.[6]

Conclusion
On condition that a DME supplier’s warehouse is exactly that – a warehouse – then it is not required to have a PTAN. Of particular importance, (i) there should be no signage, (ii) the general public cannot access the facility, and (iii) the facility is primarily used for drivers to pick up DME and deliver it to patients’ homes.

Jeffrey S. Baird, JD, is chairman of the Health Care Group at Brown & Fortunato, a law firm with a national health care practice based in Texas. He represents pharmacies, infusion companies, HME companies, manufacturers, and other health care providers throughout the United States. 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].

[1] 42 U.S. Code § 1395m(j)(1)(D).
[2] 42 CFR 424.57(b) (emphasis added).
[3] 42 CFR 424.57(c).
[4] HHS, Final Rule, Additional Supplier Standards, 65 Fr 60366 (October 11, 2000), at https://www.govinfo.gov/content/pkg/FR-2000-10-11/pdf/00-25495.pdf.
[5] Id.
[6] Novitas Solutions, Must all physical locations be enrolled individually (last modified 02/10/2023), https://www.novitas-solutions.com/webcenter/portal/DMEPOS/pagebyid?contentId=00268905.

AAHOMECARE’S EDUCATIONAL WEBINAR

Hospices, SNFs and Part A: Opportunities for DME Suppliers

Presented by: Jeffrey S. Baird, Esq., Brown & Fortunato and Blinn E. Combs, Esq., Brown & Fortunato
Thursday, November 30, 2023
1:30-2:30 p.m. CENTRAL TIME
Because it primarily serves patients covered by Medicare, DME suppliers are accustomed to billing Medicare Part B directly (traditional Medicare) and indirectly (Medicare Advantage). There is an opportunity for DME suppliers to supplement their Part B income: this is through billing hospices and skilled nursing facilities (“SNFs”). Hospice providers and SNFs are paid under Medicare Part A for their services to Medicare patients. Hospices and SNFs are paid on a per patient per day basis. Out of the Part A reimbursement they receive, hospice providers and SNFs are required to pay health care providers (including DME suppliers) for products/services furnished by the providers to the hospice and SNF patients. This provides an opportunity for DME suppliers to enter into contracts with hospice providers and SNFs in which (i) the suppliers will furnish DME (including soft goods) to the hospice/SNF patients and (ii) the hospices/SNFs pay the suppliers for their products and services. This program will discuss the type of contact a DME supplier should enter into with a hospice provider and SNF. The program will focus on the most important provisions of the contract. The program will also focus on actions that can cause the DME supplier problems under the federal anti-kickback statute. In particular, the supplier cannot offer “anything of value” to hospices/SNFs in exchange for referrals of Part A patients. Lastly, the program will discuss the types of “value-added” services the DME supplier can provide to the hospice/SNF without expecting compensation in return…and the types of value-added services for which the hospice/SNF must compensate the DME supplier.

Register for Hospices, SNFs and Part A: Opportunities for DME Suppliers on Thursday, November 30, 2023, 1:30-2:30 p.m. CT, with Jeffrey S. Baird, Esq., and Blinn E. Combs, Esq., of  Brown & Fortunato.

Members:  $99
Non-Members:  $129