Changes to Telemarketing and Beneficiary Contact Rules
In February 2010, CMS issued FAQs permitting DMEPOS suppliers to contact beneficiaries upon receipt of a written or verbal order. In that guidance, FAQ No. 3 stated:
Question 3: Is a supplier contacting the beneficiary based on the receipt of a physician order considered an “unsolicited” contact?
If a physician contacts a supplier on behalf of a beneficiary with the beneficiary’s knowledge, and then a supplier contacts the beneficiary to confirm or gather information needed to provide that particular covered item (including delivery and billing information), then that contact would not be considered “unsolicited.” Please note that the beneficiary need only be aware that a supplier will be contacting him/her regarding the prescribed covered item, recognizing that the appropriate supplier may not have been identified at the time of consultation.
That guidance allowed DMEPOS suppliers to contact beneficiaries to fulfill a physician order, provided that the beneficiary was made aware (presumably by the physician) that a DMEPOS supplier would subsequently contact him or her.
However, the current revised “DME Supplier Telemarketing Frequently Asked Questions” referenced in the Final Rule and available here deleted the prior FAQ No. 3 and do not reflect that prior guidance.
In addition, the preamble to the prior Final Rule (75 FR 52629, Aug. 27, 2010) contains comments from CMS allowing the practice so long as the patient knows that a DMEPOS supplier would be contacting him or her. (Our prior analysis of these changes can be found in an August 31, 2010 article available here.) Among those comments, CMS stated:
[A] supplier may contact a beneficiary if a physician contacts a DMEPOS supplier on behalf of a beneficiary with the beneficiary’s knowledge, and then a supplier contacts the beneficiary to confirm or gather information needed to provide that particular covered item (including delivery and billing information). In that instance, the contact would not be considered a direct solicitation and therefore, would not implicate the standard set forth at § 424.57(c)(11). See 75 FR 52639.
CMS also stated:
[I]f a physician contacts the supplier on behalf of the beneficiary with the beneficiary’s knowledge, and then a supplier contacts the beneficiary to confirm or gather information needed to provide that particular covered item (including the delivery and billing information), then that contact would not be considered a direct solicitation for the purpose of this standard. This is the case even if the physician has not specified the precise DMEPOS supplier that will be contacting the beneficiary regarding the item referred by that physician. See 75 FR 52639.
In contrast, the preamble to the new Final Rule repeatedly references the specific issue of DMEPOS suppliers contacting beneficiaries upon receipt of a physician order, but CMS does not explicitly approve the practice. Instead, CMS states it “did not specifically solicit comments on our proposed change to 424.57(c)(11)” and “as such, we are not in a position to incorporate the commenter’s requested revision of 424.57(c)(11) into this final rule.” See 77 Fed. Reg. 14990. CMS stated, “The language in this final rule reflects our policy on this particular issue,” but also stated that, “The quoted verbiage [from the prior Final Rule] still reflects our policy with regard to this provision.” Ultimately, CMS said it may consider addressing the issue through future rulemaking.
Other Changes in the Final Rule
The Final Rule implements a few other changes introduced by the Proposed Rule. (Our prior analysis of these changes can be found in an April 5, 2011 article available here. They are as follows:
Contractual Arrangement Issues
- Under current supplier standard No. 1, a DMEPOS supplier cannot contract with a third party to provide the licensed service(s). 42 C.F.R. § 424.57(c)(1)(ii). This requirement is designed to prevent entities from enrolling in Medicare, only to subcontract out the operations to DMEPOS suppliers that do not (or may not) participate in the Medicare program.
- Under the Proposed Rule, CMS stated a DMEPOS supplier may contract with an individual or entity to provide the licensed service(s) unless such a contractual arrangement is expressly prohibited by state law.
- The Final Rule finalizes the revisions introduced by the Proposed Rule without further modification.
Local Zoning Requirements
- Current supplier standard No. 1 requires a DMEPOS supplier to comply with all local zoning requirements under state and municipal laws. 42 C.F.R. § 424.57(c)(1)(iii). This requirement is intended to provide an additional level of protection to the Medicare program by helping to prevent waste, fraud, and abuse.
- The Proposed Rule eliminates this requirement. Although CMS expects DMEPOS suppliers to comply with all local zoning requirements, CMS determined that enforcement of those requirements is best left to local authorities and should not be included among the supplier standards.
- The Final Rule finalizes the revisions introduced by the Proposed Rule without further modification.
Minimum Square Footage Requirement
- Current supplier standard No. 7 requires DMEPOS suppliers to maintain a physical location measuring at least 200 square feet in size, except for state-licensed orthotic and prosthetic personnel providing custom fabricated orthotics or prosthetics in private practice. 42 C.F.R. § 424.57(c)(7)(i)(A).
- The Proposed Rule expands the exception such that the minimum square footage rule does not apply if a state does not offer licensure for orthotic and prosthetic personnel providing custom fabricated orthotics or prosthetics in private practice.
- The Final Rule finalizes the revisions introduced by the Proposed Rule without further modification.
Open and Accessible Requirement
- Current supplier standard No. 30 requires that a DMEPOS supplier’s location be staffed during posted business hours and remain open and accessible to the public at least 30 hours per week (e.g., not in a gated community or area where access is restricted). 42 C.F.R. § 424.57(c)(30)(i). There are limited exceptions, including for licensed non-physician practitioners furnishing services to their own patients as part of their professional services.
- The Proposed Rule deletes the “non-physician practitioners” language and replaces it with “physical or occupational therapists.” For clarity and simplicity, the Proposed Rule directly references the statute (Section 1861 (p) and (g) of the Social Security Act) for a list of the services qualifying for the exception.
- The Final Rule finalizes the revisions introduced by the Proposed Rule without further modification.
Recommendations and Implications
In light of the significant restrictions and increased oversight DMEPOS suppliers have recently experienced, DMEPOS suppliers will welcome the relaxed standards contained in the Final Rule, but the issue of contacting a patient upon receipt of a physician’s order remains an important sticking point with significant operational burdens and implications. DMEPOS suppliers should carefully review the existing regulations and the Final Rule to confirm they are in compliance with the supplier standards.
Access a copy of the Final Rule here.
Legal News Alert is part of our ongoing commitment to providing up-to-the-minute information about pressing concerns or industry issues affecting our health care clients and colleagues. If you have any questions about this alert or would like to discuss this topic further, please contact your Foley attorney or any of the following individuals:
Nathaniel M. Lacktman
Tampa, Florida
813.225.4127
[email protected]
Heidi A. Sorensen
Washington, D.C.
202.672.5596
[email protected]
Lawrence W. Vernaglia
Boston, Massachusetts
617.342.4079
[email protected]
Judith A. Waltz
San Francisco, California
415.438.6412
[email protected]
The authors wish to acknowledge the contribution of Law Graduate Danna Carmi to this article.
