The Centers for Medicare and Medicaid Services (CMS) has released Change Request (CR) 6528, impacting guidelines for sleep labs that administer durable medical equipment.

The CR outlines guidelines for DMEPOS that are maintained at a location owned by a physician or non-physician practitioner with a purpose to distribute products to Medicare beneficiaries. After the March 1, 2010, effective date for CR 6528, “Physicians or non-physicians must be enrolled as a DMEPOS provider to distribute nebulizers, orthotics etc, [because] once the inventory previously owned by a DME company is dispensed, the physician or non-physician has become the supplier and is responsible for meeting all regulatory issues associated with billing Medicare Part B for the DMEPOS item,” says Peggy Miller, senior consultant for DME Defender, Houston.

These new guidelines result in significant changes for sleep labs that sell durable medical equipment, according to Miller. “Sleep labs that allowed DME companies to ‘stock’ equipment and supplies (masks) for use during the titration study and mask fitting will now need to enroll as a DMEPOS provider if they wish to continue this practice,” she says. “Two problems stem from that: (1) the sleep lab would be required to bill for the CPAP and/or mask once dispensed but is prohibited by law in providing the equipment; and (2) the lab would not be exempt from becoming accredited under the DMEPOS Accreditation Standards by an accrediting body such as CHAPS or JCAHO and complying with the requirement to purchase a Surety Bond.” According to Clay Stribling, JD, attorney with the Health Care Group of Brown & Fortunato, Amarillo, Tex, "Because this transmittal applies only to practice locations owned by physicians and non physician practitioners, it would not apply to many sleep labs which are owned or operated independent of a physician’s practice."*

Suppliers involved in these arrangements are commonly referred to as consignment closets or stock/bill arrangements. According to Miller, prior to CR 6528, there was no hard and fast rule for how these consignment closets could operate; however, there were guidelines  put out by the Office of Inspector General (OIG) on what was and was not acceptable. 
An announcement from the National Supplier Clearinghouse about CR 6528 reads, “Effective March 1, 2010, Medicare will allow enrolled suppliers to maintain inventory at a practice location or a physician or a non-physician practitioner when the following conditions are met:

• The title to the DMEPOS shall be transferred to the enrolled physician or non-physician practitioner’s practice at the time the DMEPOS is distributed to the beneficiary.
• The physician or non-physician practitioner’s practice shall bill for the DMEPOS supplies and services using their own enrolled DMEPOS billing number.
• All services provided to a Medicare beneficiary concerning fitting or use of the DMEPOS shall be performed by individuals being paid by the physician or non-physician practitioner’s practice, not by any other DMEPOS supplier.
• The beneficiary shall be advised that, if they have a problem or questions with the DMEPOS, they should contact the physician or non-physician practitioner’s practice, not the DMEPOS supplier who placed the DMEPOS at the physician or non-physician practitioner’s practice.”

For more information, suppliers can read the MLN Matters article.

*Article updated to inlclude comments from Clay Stribling, September 2:30pm

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