AMARILLO, TX – As a result of the ill-conceived competitive bid program, a sea-change is occurring in the DME industry. Some suppliers are getting totally out of the business and so they are selling 100% of their assets to other suppliers. Some suppliers have had to file bankruptcy resulting in other suppliers purchasing the bankrupt’s assets out of the bankruptcy estate. Some suppliers are keeping their doors open to serve non-Medicare patients…..while selling the Medicare component of their business.

The common theme in these three scenarios is that the Medicare beneficiaries are switching suppliers. This results in a “domino effect.” Specifically, when a beneficiary switches from Supplier A to Supplier B, then Supplier B must obtain a new physician’s order for the patient. Before the physician can issue the order, the face-to-face requirement must be met. Supplier B must then also comply with the WOPD requirement.

Because a new order triggers application of the new face-to-face and WOPD rules, the safest (yet a very burdensome) course of action is to have the seller notify its patients of the impending sale and to instruct them to immediately set up an appointment to have a face-to-face meeting with a doctor to certify the need for the equipment and to get a new order.

If the seller is unwilling or unable to do this, it could also be done by the purchaser after closing. However, this would lead to longer gaps between closing and the time that each patient has the qualifying documentation. Also note that enforcement of the face-to-face portion of the new rule has been delayed, and it is not known when CMS will begin enforcement.

Also, there has been no clear guidance from CMS as to whether the face-to-face portion of the rule will be enforced retroactively to claims with a date of service beginning on the effective date of the rule – 7/1/13 – or whether the rule will only be enforced as to claims with a date service beginning on whatever date CMS begins enforcement. We think and hope it will be the latter, but we are not certain. Therefore, until the new enforcement date is announced, a purchasing supplier must evaluate the risk and make a calculated business decision about whether it is willing to assume patients without obtaining documentation of a face-to-face encounter.

With regard to the WOPD requirement, enforcement has not been delayed, so it is currently in full effect. This creates some difficulty when a patient switches suppliers due to an asset sale because a new order must be generated, but no delivery typically occurs, and hence no new proof of delivery is typically generated. This leaves the new supplier with proof of delivery that is dated prior to the date on the new order. There is no written guidance in the final rule about how to handle this, and so far, no other guidance that has been issued directly on point.

However, I have seen a Q&A transcript from at least one previous ACT with Jurisdiction A in which it was indicated that a new face-to-face and WOPD would be required anytime a contract supplier takes on a beneficiary who is switching suppliers due to competitive bidding. Because we have not seen anything to the contrary, it is our understanding that the WOPD requirement applies anytime a patient switches to a new supplier. Accordingly, a purchasing supplier should consider sending someone out to each rental patient to inspect the patient’s equipment and obtain the patient’s signature on a new delivery ticket.

While this is all terribly burdensome on the purchasing supplier, it is our understanding that all aspects of the rule will apply anytime a new order is required. If a supplier does not take the appropriate measures to comply with the face-to-face and WOPD requirements for patients acquired as part of an asset acquisition, the supplier risks an overpayment determination in the event of an audit. And, while a supplier can appeal an overpayment determination, and it may be possible to convince an ALJ that the overpayment determination should be overturned, this is no guarantee.

Jeffrey S. Baird, JD, is chairman of the Health Care Group at Brown & Fortunato PC, a law firm based in Amarillo, Tex. He represents DME suppliers, pharmacies, infusion 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 [email protected].