AMARILLO, TX – Over the years, durable medical equipment prosthetics orthotics and supplies (DMEPOS) suppliers worked with the National Supplier Clearinghouse (NSC) as the only enrollment entity for the DMEPOS industry. The NSC had a number of responsibilities:

• It would process applications for Medicare Part B supplier numbers (PTANs). In doing so, the NSC would determine if the applicant was accredited, had the required state DMEPOS licensure, had a surety bond, and otherwise complied with the Medicare Supplier Standards.
• After a PTAN was issued to a DMEPOS supplier, the NSC would monitor whether the supplier continued to comply with the Supplier Standards and met requirements to have a PTAN.
• After the DMEPOS supplier was awarded its initial PTAN, the supplier would go through periodic re-validations where the supplier would complete a full CMS-855S and update the information it had on file with the NSC.
• If the NSC determined that a DMEPOS supplier was not complying with the Supplier Standards, the NSC could revoke the supplier’s PTAN.

DMEPOS suppliers discovered that the NSC was relatively reasonable to work with. In the past, when the NSC determined that a DMEPOS supplier had failed to comply with a requirement to maintain a PTAN, it would send a letter to the supplier informing it that the NSC believed it was not in compliance with the Supplier Standards; and, if appropriate, the supplier would be given 30 days to prove that it was in compliance with the Supplier Standards before its PTAN was revoked.

Importantly, the DMEPOS supplier would be given the opportunity to correct the issue without being revoked/suspended. This step prevented a revocation that creates significant issues in serving patients. In the past, if a PTAN was revoked, the supplier would have the option of submitting either a Corrective Action Plan (CAP) or an appeal.

Unfortunately, all of this has changed. The NSC is gone. Effective November 8, 2022, it was replaced by the National Provider Enrollment East (Novitas) and the National Provider Enrollment West (Palmetto). Now, when one of the enrollment contractors determines that a DMEPOS supplier is not meeting all of the Supplier Standards, the enrollment contractor typically sends a letter to the supplier informing it that its PTAN will be revoked.

Depending on the reasons for the revocation, the effective date of the revocation can be retroactive to a date in the past where the enrollment contractor determined the supplier was no longer in compliance with the Supplier Standards. As you can imagine, this places a DMEPOS supplier in a particularly difficult position. Failure to maintain a PTAN can be detrimental to a supplier’s ability to stay in business. Not only can the supplier not submit current claims, it must also deal with the recoupment of claims that have already been paid.

Effective January 1 of this year, changes to the Program Integrity Manual (PIM) have resulted in a reclassification of the revocation reasons. An additional subsection was added to the PIM which specifically addressed revocations for independent diagnostics testing facilities, opioid treatment programs, home infusion therapy providers, Medicare diabetes prevention programs, and DMEPOS suppliers.

The section is more specific and allows for revocation for noncompliance with enrollment criteria. In the case of DMEPOS suppliers, revocation is allowed if the DMEPOS supplier is non-compliant with any provision in 42 C.F.R. § 424.57(c) or the Medicare Supplier Standards. Previously, most revocations were proper under a more general subsection which allowed for revocation for noncompliance with any enrollment requirement. The biggest difference in the two revocation reasons is that if the supplier is denied under the more general subsection, the supplier is allowed to submit both a CAP and an appeal. However, if the revocation is based on a more specific reason, the supplier does not have the right to submit a CAP. CAPs have been key to fixing technical denials and other minor noncompliance issues in the past but now a CAP is no longer an option.

It is relatively easy for a supplier to end up with a revocation. Some of the reasons we have seen an enrollment contractor revoke a PTAN include the following:

• The supplier switches from one surety bond company to another company. There is no gap in surety bond coverage; but, because the supplier either failed or did not properly update the NSC that the old bond had been replaced, the enrollment contractor revokes the supplier’s PTAN for failure to have a valid surety bond. In the past, with the ability to submit a CAP prior to revocation, a supplier could have easily avoided a revocation by working with the enrollment contractor to update its information. But under the new procedures, there is a technical violation of the Supplier Standards—so the PTAN is revoked creating all sorts of headaches for the supplier.
• Another example of a technical breach is if the DMEPOS supplier has a change of ownership (CHOW) but does not notify the enrollment contractor within 30 days following the CHOW. This sometimes happens because a supplier is waiting on licensure to be issued from the state or other regulatory agency; and, without having the licensure, the CHOW would be denied. So, instead, the supplier notifies the enrollment contractor 32 days after the CHOW, which is as soon as it has all of the documentation to support the CHOW. This is an extremely minor breach, but this could lead to revocation.
• A final example is when the DMEPOS supplier’s CMS-855S reflects that it sells a particular item, but the supplier does not provide that item because, e.g., the supplier does not have the state license for the item. If the DMEPOS supplier was allowed to submit a CAP, the CAP would simply say that the supplier is removing the product from the supplier’s CMS-855S. However, because a CAP is not permitted, this hyper technical breach results in a PTAN revocation.

Without the opportunity to submit a CAP, in the event of revocation for a technical breach, the DMEPOS supplier’s sole recourse is to ask for a Reconsideration. The problem with this is that a Reconsideration must be based on the premise that the enrollment contractor was wrong in concluding that the supplier did not meet the Supplier Standards.

The standard of review is was the revocation appropriate at the time of the revocation. In the example, above, regarding a two-day lapse in surety bond coverage, there absolutely was a technical breach; and, so on its face, the appeal will be unsuccessful. If the DMEPOS supplier loses at this first level of appeal, it can pursue an appeal to an Administrative Law Judge (ALJ). The hope is that the ALJ will reverse the revocation.

But while the DMEPOS supplier is going through the Reconsideration and ALJ stages, the supplier is suffering from a “domino effect.” The supplier ceases to receive Medicare payments and can no longer submit claims. Almost all states require a DME supplier to have a PTAN as a precondition of the state Medicaid program issuing a Medicaid provider number to the supplier. Because the supplier’s PTAN has been revoked, the supplier is not in compliance with state Medicaid requirements, resulting in the revocation of the supplier’s Medicaid provider number.

Approximately 50 percent of Medicare beneficiaries are covered by Medicare Advantage Plans (MAP) and approximately 70 percent of Medicaid patients are covered by Medicaid Managed Care Plans (MMCP). Virtually all MAP and MMCP require suppliers to have an active PTAN. And, so, with the revocation of its PTAN, the supplier is in breach of its MAP/MMCP contracts. This will result in termination of the contracts and possible clawbacks.

There may be relief on the horizon. Industry advocates have raised this issue with CMS and have been told that they are working on these concerns. In fact, most recently, on March 1, MedLearn Matters^® (MLM) 13449 Stay of Enrollment was issued. This MLM addresses many technical violations by allowing the enrollment contractor to impose a stay on enrollment for up to 60 days if an area of noncompliance can be corrected by submission of a CMS-855S. What this means and how it will be implemented is still to be determined. However, we are hopeful that this will mean that suppliers will be given the opportunity to correct errors before the harsh penalty of revocation is imposed.

At any rate, the key takeaway for all suppliers is that steps should be taken to avoid revocations by ensuring it is always in compliance with all Medicare Supplier Standards. Further, it is recommended that suppliers regularly review their enrollment information and, as appropriate, update the information.

Denise Leard (Brown & Fortunato) and Kelly Grahovac (The van Halem Group) will present “Provider Enrollment:  Current State of Affairs” on March 26, 2024, at Medtrade Expo & Conference in Dallas, Texas.

Denise M. Leard, Esq., is an attorney with the Health Care Group of Brown & Fortunato, a law firm with a national health care practice based in Texas. Mrs. Leard represents HME companies, pharmacies, and other health care providers throughout the United States. Leard has authored numerous articles and is a frequent lecturer throughout the country. She is licensed in Idaho, Oklahoma, Oregon, Texas, and Washington and is Board Certified in Health Law by the Texas Board of Legal Specialization. Leard can be reached at (806) 345-6318 or [email protected].