Medicare Advantage And State Medicaid Patients: Do Federal Anti-Fraud Statutes And Supplier Standards Apply?

(August 2012)

There are a number of federal statutes and regulations that govern HME suppliers. In particular, suppliers need to be aware of the “big four”: Medicare anti-kickback statute; telephone solicitation statute; beneficiary inducement statute; and the supplier standards. While these statutes and standards clearly apply to Medicare fee-for-service patients, the following question often arises: “Do these three statutes and the supplier standards also apply to state Medicaid and Medicare Advantage patients?” This article addresses this question.

Medicare Anti-Kickback Statute

Medicaid

The Medicare anti-kickback statute (“AKS”), 42 U.S.C. § 1320a-7b(b), applies to state Medicaid programs. The AKS states that it applies to “Federal health care programs,” and the definition of a Federal health care program includes “any State health care program . . . .” Id. at § 1320a-7b(f)(2). A “State health care program” is then defined as “a State plan approved under subchapter XIX” of Title 42, Chapter 7 of the United States Code. Id. at § 1320a-7(h)(1). State Medicaid plans are approved under subchapter XIX and, therefore, are covered by the AKS.

Medicare Advantage

The AKS applies to the Medicare Advantage program. The AKS states that it applies to “Federal health care programs,” and the definition of a Federal health care program includes “any plan or program that provides health benefits, whether directly, thorough insurance, or otherwise, which is funded directly, in whole or in part, by the United States Government . . . .” Id. at § 1320a-7b(f)(1). As a federally funded plan or program to provide health benefits, Medicare Advantage is covered by the AKS.

Telephone Solicitation Statute

Medicaid

The telephone solicitation statute (“TSS”), 42 U.S.C. § 1395m(a)(17), does not apply to a contact with an individual enrolled in a state Medicaid program unless the individual is also a Medicare Part B beneficiary. The TSS states that it applies to contacts with individuals “enrolled under this part,” meaning individuals enrolled in Medicare Part B. Id. at § 1395m(a)(17)(A). There is no reference to or language indicating that contacts with Medicaid beneficiaries are covered by the statute.

Medicare Advantage

The TSS applies to a contact with an individual enrolled in Medicare Advantage. The TSS states that it applies to contacts with individuals “enrolled under this part,” meaning individuals enrolled in Medicare Part B. Id. at § 1395m(a)(17)(A). As a condition of enrolling in Medicare Advantage under Part C of the Medicare statute, an individual must also be enrolled under Part B. Id. at § 1395w-21(a)(3)(A). Because all Medicare Advantage enrollees must also be Medicare Part B enrollees, the statute will apply to all contacts with Medicare Advantage patients.

Beneficiary Inducement Statute

Medicaid

The beneficiary inducement statute (“BIS”), 42 U.S.C. § 1320a-7a(a)(5), applies to remuneration transferred to an individual enrolled in a state Medicaid program. The BIS states that it applies to “any individual eligible for benefits . . . under a State health care program (as defined in section 1320a-7(h) of this title) . . . .” Id   Therefore, an interaction with an individual enrolled in a state Medicaid plan is subject to the statute. See Medicaid analysis in Medicare Anti-Kickback Statute section above.

Medicare Advantage

The BIS applies to remuneration transferred to an individual enrolled in Medicare Advantage. The BIS states that it applies to “any individual eligible for benefits under subchapter XVIII” of Title 42, Chapter 7 of the United States Code. Id. The Medicare Advantage program falls under Part C of subchapter XVIII. See Id. at §§ 1395w-21-29. Therefore, as a patient eligible for benefits under Part C of subchapter XVIII, the statute applies to remuneration transferred to a Medicare Advantage patient.

DMEPOS Supplier Standards

Medicaid

The DMEPOS Supplier Standards (“DSS”), 42 C.F.R. § 424.57(c), do not apply to a business by virtue of the business’ serving an individual enrolled in a state Medicaid program. The DSS apply to “DMEPOS suppliers,” and the regulations define that term as “an entity or individual . . . which sells or rents Part B covered items to Medicare beneficiaries . . . .” Id. at § 424.57(a). There is no language indicating that the DSS apply to suppliers selling items to individuals enrolled in state health care programs.

Medicare Advantage

The DSS apply to a business that serves Medicare Advantage patients. Part C of the Medicare statutes states that Medicare Advantage benefits must be administered by “providers and other persons that meet the applicable requirements” of Title 42 of the United States Code. 42 U.S.C. § 1395w-22(a)(1). Further, the Medicare Program Integrity Manual states that “No provider or supplier shall receive payment for services furnished to a Medicare beneficiary unless the provider or supplier is enrolled in the Medicare program.” Therefore, as a condition of becoming a contracted supplier with a Medicare Advantage organization, a DMEPOS supplier must be enrolled under Part B which requires compliance with the DSS. When providing services to a Medicare Advantage patient, however, a supplier is not required to comply with the rules that are specific to individual patient interactions unless required by the Medicare Advantage organization contract. For example, a supplier is not required to give a Medicare Advantage beneficiary a copy of the supplier standards, or advise the beneficiary that inexpensive or routinely purchased equipment may be either rented or purchased.

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)
www.bf-law.com

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