April 5th, 2022 
Chapter 24
Durable Medical Equipment, Prosthetics/Orthotics, and Supplies
Learning Objectives (I)
Familiarity with products sold by DMEPOS companies
Benefits to DMEPOS suppliers of a compliance program
Risk areas in DMEPOS supplier organizations
Duties of the Compliance Officer and the Compliance Committee
Learning Objectives (II)
Different types of compliance training
Value of open lines of communication
Techniques for auditing and monitoring
Compliance-related disciplinary action guidelines
Basic types of corrective action
Introduction
A variety of products are manufactured by durable medical equipment, prosthetic, and orthotic companies.
The DMEPOS industry is highly fragmented with over 100,000 competitors.
Some provide home care services and products, while others solely manufacture the products.
Introduction
The Medicare Modernization Act of 2003 set up a new Competitive Bidding Program for DMEPOS suppliers, under which they compete to become Medicare contract suppliers.
OIG Promotion of Compliance Program Adoption
OIG Compliance Program Guidance for the DMEPOS Industry
Variations in company size and resources, and ability to implement a compliance program
OIG seeks a commitment to objectives and principles underlying its program guidances
7 elements of a mandatory compliance program
Benefits of an Effective Compliance Program
Internal controls that ensure obedience of all laws and payor program requirements
Assessment of employee fraud behavior
Identify and prevent criminal conduct
Quickly react to employee compliance concerns
Improved quality of services delivery
Centralized source for compliance information
Thorough investigation of alleged misconduct
Reduced exposure to legal penalties
1. Written Policies and Procedures
Explain exactly how managers want employees to carry out their work tasks
Standards of Conduct – fundamental principles, values, and a framework for all activities
Policies and procedures for specific risk areas
OIG Compliance Program Guidance for DMEPOS entities lists 47 risk areas – many apply to other types of health care organizations
8
DMEPOS Risk Areas (I)
Billing for items or services not provided
Billing for services that the DMEPOS supplier believes may be denied
Billing patients for denied charges without a signed written notice
Duplicate billing
Billing for items or services not ordered
DMEPOS Risk Areas (II)
Using a billing agent whose compensation arrangement violates the reassignment rule
Upcoding
Unbundling items or supplies
Billing for new equipment and providing used equipment
Continuing to bill for rental items after they are no longer medically necessary
DMEPOS Risk Areas (III)
Resubmission of denied claims with different info in an attempt to be improperly reimbursed
Refusing to submit a claim to Medicare for which payment is made on a reasonable charge or fee schedule basis
Inadequate management of contracted services, resulting in improper billing
DMEPOS Risk Areas (IV)
Providing and/or billing for substantially excessive amounts of DMEPOS items or supplies
Providing and/or billing for an item or service that does not meet the quality and standard of the DMEPOS item claimed
Capped rentals
Failure to monitor medical necessity on an on-going basis
DMEPOS Risk Areas (V)
Delivering or billing for certain supplies before receiving a doctor’s order or appropriate CMN
Falsifying information on the claim form, CMN, and/or accompanying documentation
Completing portions of CMNs reserved for completion only by the treating physician or other authorized person
Altering medical records
DMEPOS Risk Areas (VI)
Manipulating the patient’s diagnosis in an attempt to receive improper payment
Failing to maintain medical necessity documentation
Inappropriate use of place of service codes
Cover letters that encourage physicians to order medically unnecessary items or services
Routine waiver of deductibles and coinsurance
DMEPOS Risk Areas (VII)
Providing incentives to actual or potential referral sources that may violate the AntiKickback Statute or other similar Federal laws
Compensation that offers incentives for items or services ordered and revenue generated
Joint ventures between parties, one of whom can refer Medicare/Medicaid business to the other
DMEPOS Risk Areas (VIII)
Billing for items or services furnished pursuant to a prohibited referral under the Stark Physician Self-Referral law
Charge limitations
Improper telemarketing practices
Improper patient solicitation activities and high-pressure marketing of non-covered or unnecessary services
DMEPOS Risk Areas (IX)
Co-location of DMEPOS items and supplies with the referral source
Non-compliance with the Federal, State and private payor supplier standards
Providing false information on the Medicare DMEPOS supplier enrollment form
Failing to meet individual payor requirements
DMEPOS Risk Areas (X)
Not notifying the National Supplier Clearinghouse of changes to the information on the DMEPOS supplier enrollment form
Misrepresenting a person’s status as an agent or representative of Medicare
Knowing misuse of a supplier number, which results in improper billing
DMEPOS Risk Areas (XI)
Performing tests on a beneficiary to establish medical necessity
Failing to refund overpayments to a health care program
Failing to refund overpayments to patients
Improper billing resulting from a lack of communication between the DMEPOS supplier, the physician, and the patient
DMEPOS Risk Areas (XII)
Improper billing resulting from a lack of communication between departments within the DMEPOS supplier
Employing persons excluded from participation in Federal health care programs
2. Designation of a Compliance Officer and Committee
CO is focal point for all compliance activities
Full-time job, access to CEO and BOD, not working in sales/marketing, appropriate authority (review documents, halt claims processing), sufficient funding and staff
Primary responsibilities of the CO
CC is managed by the CO
Primary responsibilities of the CC
3. Conducting Effective Training and Education
So employees follow compliance program rules
General training about laws & payor requirements, and Specialized training for employees in high risk areas
Curriculum for claims development and billing staff
Curriculum for sales and marketing personnel
Annual trainings, 2-4 hours per year, required participation
4. Developing Effective Lines of Communication
Between managers and employees
Facilitate reporting of complaints, questions, misconduct, and suspected violations
Several independent reporting paths
Communication channels widely publicized
5. Auditing and Monitoring
Whether employees follow program rules, and whether organization is obeying laws & regulations
Regular audits by internal & external auditors
Issues that are subjects of the audits
OIG list of auditing techniques
Audit results reported to CO, CC, senior management, and governing board
6. Enforcing Standards Through Disciplinary Guidelines
Disciplinary actions against misbehaving employees
Vary in severity depending on nature of offense
Applied consistently to all levels of employees
Background checks on new employees and new contractors
7. Responding to Offenses and Taking Corrective Actions
Immediately investigate incidents of non-compliance
If material violations found, take steps to correct and prevent
Format of the investigations
Types of corrective actions that might be taken
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