Sharing of Space With Another Provider: What You Can And Cannot Do

(July 2012)

In the real world, one business can share physical space with another. For example, Schlotzsky’s can share space with Cinnabon, truck stops can share spaces with fast food outlets, and so on. Unfortunately, HME suppliers are not in the real world. They live in Alice in Wonderland where up is down, down is up, and every day they crawl through the proverbial rabbit hole. Two examples of the Alice in Wonderland phenomenon are the CMS prohibitions against an (i) HME supplier sharing physical space with a physician, and (ii) IDTF sharing space with another provider.

Prohibition Against HME Supplier Sharing Space With A Physician

Under the Supplier Standards, an HME supplier is “prohibited from sharing a practice location with any other Medicare supplier or provider.” A “Medicare supplier or provider” includes a physician. This prohibition does not apply “[w]here a physician…or a nonphysician practitioner…furnishes items to his or her own patients as part of his or her professional service.”

The scope of this prohibition and the exception for physician offices are somewhat vague as a result of unclear guidance by the NSC. After the release of the Supplier Standards in 2010, the NSC published “Frequently Asked Questions Concerning the Revised Standards for DMEPOS Suppliers.” Under the heading “Supplier Standard 7,” the NSC addressed the follow question:

Question. I own an optical shop that is located within an optometrist’s or ophthalmologist’s office. The optical part is less than 200 square feet and does not have a separate entrance. The physician’s total office space is at least 200 square feet. Is this allowable?

Answer. Yes.

While this question and answer appear to allow an HME supplier to co-locate with a physician, the NSC probably intended to address only the space issue. Further, the language in the preamble to the Federal Register (that introduces the revised standards) appears to limit the physician exception to situations in which the physician is enrolled as an HME supplier:

Comment: One Commenter believes that an orthotic and prosthetic facility should be allowed to share space with complementary but not competing businesses that may already have a Medicare supplier number, specifically, physicians and physical therapy offices.

Response: We disagree with this Commenter. While we have established an exception to Section 424.57(c)(29) for physicians, NPPs and physician and occupational therapists who are furnishing items to their own patients as part of their professional service, we do not believe that a similar exception should be established for orthotic and prosthetic facilities or personnel because they are not individual practitioners who are furnishing items to their own patients as part of their professional service. The facilities in question would be sharing space with another supplier whereas the exceptions noted are supplying their own patients as part of their service [emphasis added]…Moreover, we believe that physicians can furnish DMEPOS to their own patients as part of professional services. In addition, in many cases, a physician furnishing DMEPOS to their own patients can benefit those patients in terms of convenience and continuity of care.

The Federal Register has more authority than a FAQ published by the NSC. If a physician establishes a “practice location” (i.e., sees patients on a scheduled basis) in an office at an HME supplier location, there is a risk that, as a result of a site inspection, the NSC will assert that the HME supplier is violating the shared practice location prohibition. There is a risk that, as a result of a survey, the HME supplier’s accrediting organization will make the same assertion. In order to reduce this risk, the HME supplier should take the following steps: (i) the physician office is physically segregated from the HME supplier’s operations; (ii) there is a separate ingress and egress to (and from) the physician’s office for the public; and (iii) the U.S. Post Office recognizes that the physician’s office has a separate address form the HME supplier’s address (e.g., the HME supplier is in Suite A and physician’s office is in Suite B).

Prohibition Against IDTF Sharing Space With Another Provider

IDTFs are prohibited from “sharing a practice location with another Medicare-enrolled individual or organization.” The scope of this prohibition is even more unclear than the prohibition in the Supplier Standards. The following are a few statements from the preamble to the Federal Register introducing the IDTF space sharing prohibition:

Specifically, while we are not prohibiting sharing of hallways, parking, or common area, we believe that a multi-specialty clinic cannot occupy or be co-located within the same practice location. For example, a multi- specialty clinic and an IDTF could not enroll or remain enrolled using the same suite number within the same office building…
While we agree that it is common for IDTFs to share common areas (that is, waiting rooms) with the adjoining physician’s practice or radiology group that is an owner of the IDTF, we do not believe that it is appropriate for IDTFs to share common practice locations or diagnostic equipment…

Comment: One Commenter agreed that it would be inappropriate to co-mingle the clinical staff listed on the CMS-855 enrollment application during the times that the IDTF is open; however, the Commenter maintains that non-clinical space and staff (such as waiting rooms, receptionists, and schedulers) should be shared with other entities.

Response: We agree with this comment and have amended the provision to reflect these concerns.

Neither the statute nor the preamble clearly defines “practice location.” The first paragraph quoted from the preamble suggests that a practice location is the suite that is enrolled in Medicare. The other paragraphs, however, suggest that a practice location is only the “clinical space” in which the IDTF provides clinical services.

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

© Brown & Fortunato

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