AMARILLO, TX – Over the last 10 years, the DME industry has demonstrated that it is a critical component of the health care delivery system. In particular, the DME industry has been lauded with deserved praise for its role in keeping patients out of the hospital during the pandemic. Now that the pandemic is waning, an important question is: “What can DME suppliers expect to face over the next 12 months?”

Sales Tax

All states impose sales taxes on certain products. A DME supplier must adhere to the sales tax requirements of the states into which the supplier sells products.

State DME Licensure

Most states require a DME supplier to have a license to sell products to residents of the state. Such licenses are product specific. If a DME supplier fails to secure a required DME license, the supplier will be in violation of the DME Supplier Standards.

Discounts and Rebates from Manufacturer

Discounts and rebates provided by the manufacturer to the DME supplier must comply with the Discount safe harbor to the AKS. If the discounts and rebates provided by the manufacturer are not based solely on the volume of purchases by the supplier but, rather, are also based on other actions by the supplier (e.g., converting patients from one manufacturer to another), the AKS is implicated.

Cooperative Marketing with Affiliated Entity

As a “covered entity” under HIPAA, a DME supplier cannot disclose or use PHI unless HIPAA requirements are met. If the DME supplier communicates with its patients about services offered by an affiliated entity, such communications will violate HIPAA unless the supplier complies with HIPAA guidelines.

Cooperative Marketing with Manufacturer

A DME supplier and a manufacturer can cooperatively market together on condition that the arrangement does not violate the AKS. In implementing a cooperative marketing program with a manufacturer, the DME supplier must ensure that both parties are contributing their pro rata share of the program’s expenses.

Arrangements with Referring Physicians

If a DME supplier enters into an arrangement with a referring physician that results in the supplier providing anything of value to the physician, the arrangement must comply with the federal anti-kickback statute (“AKS”) and the federal physician self-referral statute (“Stark”).

If a DME supplier provides anything of value to a referring physician, the arrangement will violate the AKS unless the arrangement complies with (or substantially complies with) a safe harbor.

Likewise, if a DME supplier provides anything of value to a referring physician, the arrangement will violate Stark unless the arrangement complies with an exception. For example, under the Stark Non-Monetary Compensation exception, the DME supplier can spend up to $452 in 2022 on non-monetary/non-monetary equivalent gifts for a physician (e.g., meals, entertainment).

The physician’s staff does not fall under Stark, meaning that the Stark Non-Monetary Compensation exception does not apply to the staff. Meals, etc. to the staff must be examined under the AKS. There is no safe harbor that applies to meals, etc. for the staff. From a practical standpoint, if meals, etc. provided to the staff are modest in price and infrequent in nature, the risk is low that a government enforcement action will be brought against the arrangement under the AKS.

Arrangements with Non-Physician Referral Sources

If a DME supplier enters into an arrangement with a non-physician referral source that results in the supplier providing anything of value to the non-physician referral source, the arrangement must comply with the AKS. See the preceding discussion.

Marketing to Prospective Customers

In marketing to prospective customers, it is important that the DME supplier not offer anything of value to the prospective customers unless what is offered falls into an exception to the federal beneficiary inducement statute. This statute states that a DME supplier cannot offer anything of value to a prospective customer to persuade the prospective customer to purchase a federal health care program-covered product from the supplier … unless an exception is met.

The nominal value exception allows the DME supplier to offer a gift to a prospective customer if the gift (i) has a retail value of $15 or less and (ii) is not cash or cash equivalent. The DME supplier can offer multiple gifts to a prospective customer on condition that the retail value of the gifts, in the aggregate, do not exceed $75 over a 12-month period.

Offshore Subcontractors

In utilizing offshore subcontractors, a DME supplier must (i) ensure the protection of HIPAA protected health information (“PHI”) and (ii) determine if there are restrictions or prohibitions (on the use of such subcontractors) by third-party payors. For example, (i) some state Medicaid programs prohibit the use of offshore subcontractors and (ii) some commercial insurers require the DME supplier to obtain the prior approval by the insurers before the supplier can use the offshore subcontractors.

Waiver of Copayments

A DME supplier is required to exert a reasonable effort to collect copayments from patients. If a DME supplier routinely waives copayments, or advertises that it has a financial hardship waiver program, or advertises that if the patient meets certain requirements his/her copayment will be waived or reduced, then the supplier is potentially liable under the AKS, federal beneficiary inducement statute, and Federal False Claims Act.

AAHOMECARE’S EDUCATIONAL WEBINAR

Managed Care Contracts:  Key Provisions

Presented by: Jeffrey S. Baird, Esq., Brown & Fortunato

Monday, June 13, 2022

1:30-2:30 p.m. CENTRAL TIME

DME suppliers serve multiple categories of patients, including the elderly (Medicare) and those on the lower end of the socio-economic scale (Medicaid). Both the Medicare and Medicaid programs are gravitating towards “managed care.” Approximately 40% of Medicare beneficiaries are signed up with Medicare Advantage Plans (MAPs), while approximately 70% of Medicaid beneficiaries are signed up with Medicaid Managed Care Plans (MMCPs). These percentages are increasing. MAPs and MMCPs work essentially the same way: (i) the government health care program contracts with a “Plan” that is owned by an insurance company; (ii) the Plan signs up patients; (iii) the Plan signs contracts with hospitals, physicians, DME suppliers and other providers … these providers/suppliers will take care of the Plan’s patients; and (iv) the government program pays the Plan that, in turn, pays the provider/supplier. In order to serve MAP and MMCP patients, DME suppliers must sign managed care contracts. In so doing, the supplier needs to be careful. Not only must the contract provide sufficient reimbursement to the supplier, but the contract will have some “trap” provisions that may be harmful to the supplier. This program will discuss the most important provisions that are contained in managed care contracts. The program will discuss how the supplier can negotiate with Plans; and the discussion will point out the provisions that are often non-negotiable and the provisions that are open to negotiation.

Register for Managed Care Contracts:  Key Provisions on Tuesday, June 13, 2022, 1:30-2:30 p.m. CT, with Jeffrey S. Baird, Esq. of  Brown & Fortunato.

Members:  $99
Non-Members:  $129

Jeffrey S. Baird, Esq., 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. 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].