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Abandonment Of Patients Can Lead To Supplier Number Revocation

Wednesday, November 4th, 2015

(September 2013)

In late August, CMS published the following announcement regarding “abandonment” of patients:

MLN Connects Provider eNews 08/22/13

Replacement of Home Oxygen Services in the Event that a Supplier Exits the Medicare Oxygen Business

Effective immediately, CMS will allow for the replacement of oxygen equipment in cases where a supplier exits the Medicare oxygen business and is no longer able to continue furnishing oxygen and oxygen equipment. In these instances, the oxygen equipment will be considered lost and a new 36-month rental period and reasonable useful lifetime will begin for the new supplier furnishing replacement oxygen equipment on the date that the replacement equipment is furnished to the beneficiary.

Suppliers exiting the Medicare oxygen business with patients that they were unable to transfer to new suppliers should be aware that they are in violation of the statutory and regulatory requirements for furnishing oxygen equipment both before and after the payment cap. As such, oxygen suppliers that do not fulfill their oxygen obligations and voluntarily exit the Medicare oxygen business are not in compliance with the Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) supplier standards set forth at 42 CFR 424.535(c).

Which DME Suppliers Does This Affect?

I believe that this announcement is intended to deter (and punish) DME suppliers that abandon their patients at or near the end of the 36-month rental period by closing their doors or exiting the Medicare oxygen business. I do not believe that this announcement applies to a supplier that have assumes responsibility for patients who transfer to the supplier pursuant to a bona fide asset sale. In a bona fide asset sale, the seller does not exit the Medicare oxygen business without insuring its patients are taken care of. The asset sale allows for the continuation of patient support and service; therefore there is no abandonment.

This announcement appears to be meant to deter DME suppliers, that provide DME products in addition to oxygen equipment, from voluntarily leaving the Medicare oxygen business without fulfilling their oxygen obligations to patients. The “deterrence” is CMS’ statement that such abandonment is a violation of the DMEPOS supplier standards, and could lead to the revocation of the DME company’s Part B supplier number. It appears that CMS does not want a DME supplier, that provides a variety of products, to drop its oxygen business because it is no longer profitable.

This is particularly relevant in the competitive bidding arena. A DME supplier may be motivated to walk away from its oxygen business after losing out on a competitive bid contract. Without the influx of new patients, the Medicare oxygen business can quickly become unprofitable.

I anticipate CMS will use this announcement to protect oxygen patients in the event their supplier walks away from the business, leaving the patients “abandoned” with nowhere to go for equipment repairs. Allowing the 36-month rental period to restart by classifying the equipment as “lost” is an incentive for new suppliers to assume responsibility for the abandoned patients.

This monograph is not intended to be legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general information purposes only. The law pertaining to this monograph may have changed following the date of the monograph. The reader should consult his or her own attorney for legal advice concerning the contents of this monograph. Except where noted, attorneys are not certified by the Texas Board of Legal Specialization.

Prepared by:

Health Care Group
Brown & Fortunato
P.O. Box 9418
Amarillo, Texas 79105-9418
(806) 345-6300
(806) 345-6363 (fax)

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