AMARILLO, TX – In the past, DME suppliers worked with the National Supplier Clearinghouse (“NSC”). This was the Medicare contractor that issued PTANs and enforced compliance with the Supplier Standards. Although DME suppliers complained about the NSC, in hindsight it is evident that the NSC was reasonable to work with. As a general rule, if a DME supplier would fall outside of compliance with a Supplier Standard, the NSC would give the supplier the opportunity to correct the problem before the supplier’s PTAN is revoked.

Well…that was then. The NSC has been replaced by National Provider Enrollment (“NPE”) East and NPE West. In line with the harsh stance that the Trump II Administration and by extension, CMS, has taken towards the DME industry, NPE is taking aggressive (“no holds barred”) measures against DME suppliers. It is a game of “gotcha.” If NPE determines that a DME supplier is out of compliance with one or more Supplier Standards, the NPE will revoke the supplier’s PTAN…as opposed to giving the supplier the opportunity to correct the problem before revocation.

NPE can say: “The DME supplier can always appeal and, if it wins, the supplier will get its PTAN back.” This is often “too little, too late.” The supplier must pay its light bill and meet payroll. If cash flow is cut off, the DME supplier may have to close its doors before the administrative appeal is completed. Even if the DME supplier is ultimately successful, it may have “won the battle but lost the war.”

In today’s climate, it is critical that DME suppliers give NPE no reason to revoke their PTANs. If I could wave my magic wand, each supplier would have an employee whose sole responsibility is to ensure that the supplier is in compliance with the Supplier Standards.

An example of what can happen to a DME supplier is the redacted NPE letter set out below. NPE asserts that the supplier does not have the required state DME licensure in the states into which the supplier ships products. Instead of giving the supplier the opportunity to correct the problem and avoid a revocation, NPE revoked the supplier’s PTAN. The letter says, in part:

The purpose of this letter is to inform you that… your Medicare supplier number, Medicare enrollment, and Medicare billing privileges for Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) issued by National Provider Enrollment… is revoked. The effective date of this revocation has been made retroactive to ____, which is the date when your company submitted claims in the states of _____ without the required state licenses in place.

We have determined that you are not in compliance with the supplier standard(s) noted below:

42 CFR § 424.57(c)(l): Operates its business and furnishes Medicare-covered items in compliance with the following applicable laws:

• Federal regulatory requirements that specify requirements for the provision of DMEPOS and ensure accessibility for the disabled.
• State licensure and regulatory requirements. If a State requires licensure to furnish certain items or services, a DMEPOS supplier—
• Must be licensed to provide the item or service; and
• May contract with a licensed individual or other entity to provide the licensed services unless expressly prohibited by State law.

A review of your billing report for dates of service from _____, through ______, shows that your company submitted claims in the following states without the required state pharmacy licenses: ________. The state licenses were never submitted; therefore, you failed to comply with this standard, and the revocation is effective the date when you first submitted claims without the required licenses.

42 CFR § 424.57(c)(2): Has not made, or caused to be made, any false statement or misrepresentation of a material fact on its application for billing privileges. (The supplier must provide complete and accurate information in response to questions on its application for billing privileges. The supplier must report to CMS any changes in information supplied on the application within 30 days of the change.)

You submitted the claims nationwide but disclosed only the state of ______ as the state where you intend to provide services for Medicare beneficiaries; therefore, you failed to add all states where you intend to service beneficiaries to your enrollment records. 

… Section l834(j) of the Social Security Act states that, with the exception of medical equipment and supplies furnished incident to a physician’s service, no payment may be made by Medicare for items furnished by a supplier unless the supplier has a valid Medicare billing number. Therefore, any expenses for items you supply to a Medicare beneficiary on or after the effective date of the revocation of your billing numbers are your responsibility and not the beneficiary’s, unless you have proof that you have notified the beneficiary in accordance with section 1834(a) (18) (A) (ii) of the Social Security Act and the beneficiary has agreed to take financial responsibility if the items you supply are not covered by Medicare. You will be required to refund on a timely basis to the beneficiary (and will be liable to the beneficiary for) any amounts collected from the beneficiary for such items. If you fail to refund the beneficiary as required under 1834(i)(4) and l879(h) of the Social Security Act, you may be liable for civil money penalties.

Pursuant to 42 CFR § 424.535(c), you are barred from reenrolling in the Medicare program for a period of one (1) year from the effective date of the revocation. To re-enroll after the re-enrollment bar has expired, you must meet all requirements for your supplier type. In addition, if submitting a Form CMS-855S application after the re-enrollment bar’s expiration, 42 C.F.R. § 424.57(d)(3)(ii) states that suppliers are required to maintain an elevated surety bond amount of $50,000 for each final adverse action (which includes a Medicare revocation) imposed. Therefore, if you do not request a reconsideration of this revocation decision or receive an unfavorable decision through the administrative review process, you must submit an elevated surety bond with any application to reenroll in Medicare. Please note that this amount is in addition to, and not in lieu of, the base $50,000 amount that must be maintained…

There is a term I like to use called “healthy paranoia.” DME suppliers need to be obsessed with not getting into trouble with NPE. For example:

• The supplier needs to update PECOS whenever the supplier undergoes a change (e.g., new authorized official, new product line, change in ownership structure).
• The supplier’s location must be open and accessible to an NPE inspector during those hours set out in PECOS and posted at the location.
• State DME licensure can be complicated. Here is what I mean:
  • Many, but not all, states have DME licensure requirements.
  • In some states, the DME license is issued by the Board of Pharmacy. In other states, there is a separate board that issues DME licenses.
  • State DME licensure is product specific. Product “A” may require licensure in Iowa…but not in Nebraska.
  • The NPE website, setting out state DME licensure requirements, is helpful. It is a starting point. But it is not entirely accurate. DME suppliers need to approach the NPE website like they approach AI. The website will give the supplier a head start on state licensure…but then the supplier must look at each state into which the supplier is shipping products. Sometimes a state statute will be clear. Other times, the statute will be unclear and confusing. The DME supplier can call the state agency/board that issues licenses and ask for clarification. If such clarification is verbally given, the supplier should request a written confirmation. But even then, the person the DME supplier talks to will likely be low level…and he/she will likely not have the authority to bind the state to the guidance the person gives to the supplier.
  • What I am about to say next is self-serving…but there will be occasions when it is important for the DME supplier to ask a health care attorney for guidance on state licensure requirements. 

Jeffrey S. Baird, Esq., is chairman of the Health Care Group at Brown & Fortunato, PC, a law firm based in Texas with a national healthcare practice. He represents pharmacies, infusion companies, HME companies, manufacturers, and other healthcare 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].