AMARILLO, TX – Most states require a DME supplier to have some type of license. This requirement is imposed on the supplier located within the state, as well as the out-of-state supplier shipping into the state. A few states (e.g., Tennessee, Colorado) require the DME supplier to have a “brick and mortar” presence in the state before a license will be issued to the supplier. The latest state to impose such a “brick and mortar” requirement is Georgia.
To the extent that a DME supplier provides items that meet the Georgia statutory definition of “durable medical equipment,” and submits claims to third party payors for such items, it will need to obtain a state durable medical equipment supplier license and maintain an office or place of business in Georgia.
Under SB 41, any person or entity that “supplies durable medical equipment to a consumer and submits a claim for reimbursement by a third party… shall possess a durable medical equipment supplier license …” The term “durable medical equipment” is defined as “equipment for which a prescription is required, including repair and replacement parts for such equipment, and which:
(A) can withstand repeated use;
(B) has an expected life of at least three years;
(C) is primarily and customarily used to serve a medical purpose;
(D) generally is not useful to a person in the absence of illness or injury; and
(E) is appropriate for use in the home.”
Under this definition, incontinence supplies, such as diapers or underpads, would not be considered “durable medical equipment” as they are not meant for repeated use. In addition, it is unlikely that catheters or other urological supplies would meet the definition of “durable medical equipment” due to the requirement that the item have an expected life of at least three years, but this would depend on the nature of the specific product being supplied to patients.
Notably, SB 41 does allow the licensing agency to issue a license to a Medicare enrolled out-of-state manufacturer or wholesale distributor, that provides durable medical equipment directly to consumers, and exempts such entities from the in-state office or place of business requirement. SB 41 contains other exceptions as well.
It is likely that other states will adopt “brick and mortar” requirements as a precondition to receive a DME license. If the supplier intends to sell products to residents of one of these states, it is important that the supplier carefully read the statutory language. Each state “brick and mortar” statute will have nuances that will likely not be found in other state “brick and mortar” statutes. Examples of such nuances are:
1) Does the statute define how large the facility must be? Must the facility be 1000 square feet? 500 square feet? 200 square feet? 50 square feet?
2) Can the facility be as simple as subleasing e.g., 200 square feet from a pharmacy or grocery store?
3) Can the facility be a self-storage unit?
4) Is the facility required to be accredited as a DME supplier? Must the facility have a PTAN?
5) Can an out-of-state supplier lease e.g., 200 square feet in the state … but then ship products from out-of-state directly to the residents (i.e., products do not physically come into … or go out of … the facility)?
6) Is the facility required to be open to the public for “X” hours per week?
7) Must there be a person in the facility for “X” hours per week? If so, must the person be a W2 employee of the supplier or can the person be a 1099 independent contractor?
8) Must the facility have an address that is recognized by the post office?
9) Must the facility have a telephone with a working telephone number?
The answers to these types of questions will determine how easy, or how hard, it will be for a DME supplier to meet a state’s “brick and mortar” requirement.
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. Baird is Board Certified in Health Law by the Texas Board of Legal Specialization, and can be reached at (806) 345-6320 or firstname.lastname@example.org.