Office of Inspector General
Public Affairs

330 Independence Ave., SW
Room 5541, Cohen Bldg.
Washington, DC 20201
(202) 619-1343

NEWS RELEASE


FOR IMMEDIATE RELEASE
Tuesday, June 22, 1999

Contact:   Judy Holtz    (202) 619-0893
Ben St. John (202) 619-1028
Alwyn Cassil (202) 205-0333

OIG ISSUES COMPLIANCE PROGRAM GUIDANCE FOR
PROVIDERS OF MEDICAL EQUIPMENT AND SUPPLIES

The Department of Health and Human Services' Office of Inspector General (OIG) today issued compliance guidance that details actions suppliers of wheelchairs, artificial limbs and other medical equipment, devices and supplies can take to prevent violations of the Medicare fraud and abuse laws.

Titled the "Office of Inspector General's Compliance Program Guidance for the Durable Medical Equipment, Prosthetics, Orthotics, and Supply Industry," the 80-page document provides both general and specific guidance as to various internal anti-fraud and abuse controls suppliers can voluntarily implement.  Moreover, it identifies and discusses numerous compliance risk areas particularly susceptible to fraud and abuse by durable medical equipment, prosthetics, orthotics, and medical supply (DMEPOS) suppliers.

"The purpose of the guidance is to help suppliers self-regulate, self-report and prevent health care fraud," Inspector General June Gibbs Brown said.  "The voluntary adoption and implementation of the guidance will serve to promote ethical and lawful conduct and further the fundamental mission of all suppliers, which is to provide quality items, service, and care to patients."

Nancy-Ann DeParle, Administrator of the Health Care Financing Administration, which administers the Medicare program, said, "The Inspector General's compliance guidance is preventive medicine for both suppliers and Medicare and reflects our commitment to working with industry to pay claims right.  Following this guidance will help ensure that beneficiaries get the equipment and services they need while protecting the Medicare Trust Fund from waste, fraud and abuse."

The guidance, which is now available on the Internet at www.dhhs.gov/progorg/oig, is scheduled to be published next week in the Federal Register.

Similar to other guidance already issued by the Office of Inspector General (OIG) for clinical laboratories, hospitals, home health agencies, and third-party medical billing companies, the DMEPOS guidance is based on the following seven elements: 1) implementation of written policies, procedures and standards of conduct; 2) designation of a compliance officer and committee; 3) development of training and education programs; 4) creation of a hotline or other measures for receiving complaints and protecting callers from retaliation; 5) performance of internal audits to monitor compliance; 6) enforcement of standards through well-publicized disciplinary directives; and 7) prompt response to detected offenses through corrective action.

Beyond the seven basic elements, the guidance addresses 47 compliance risk areas specific to DMEPOS suppliers that are of particular concern to the OIG.  They range from improper telemarketing practices and paying kickbacks for referrals to double billing and falsifying documentation.  Among other things, the guidance cautions suppliers against:

• Making unsolicited telephone contacts to Medicare beneficiaries.  Such contacts are prohibited unless the supplier has written permission from the beneficiary to make telephone contact or the supplier is contacting a beneficiary to whom the supplier had provided an item or service during the preceding 15-month period.
  
• Continuing to bill for rental items after they are no longer medically necessary.  The OIG advises suppliers to contact the treating physician or other authorized person to ensure the rental item continues to be medically necessary.  Billing for rental items after they are no longer medically necessary will result in the supplier being held financially liable for any overpayments.
  
• Providing and/or billing for substantially excessive amounts of DMEPOS items or supplies.  This practice, which constitutes overutilization, involves providing and/or billing for substantially more items or supplies than are reasonable and necessary for the needs of each individual patient.
  
• Improper conduct relevant to completing certificates of medical necessary (CMN).  This includes billing for items or supplies prior to receiving a CMN, falsifying information on the CMN, or completing portions of a CMN that are to be completed only by the treating physician or other authorized person.
  
• Engaging in business arrangements that violate the anti-kickback statute or other similar Federal and State statutes or regulations by providing something of value in exchange for the referral of Federal health care program business.  This could, depending on the terms of the arrangement, include a supplier's co-location of DMEPOS items and supplies with a referral source such as a physician.

"To avoid these and other pitfalls, suppliers may want to use our guidance to design and implement a compliance program," Inspector General Brown stated.   "Regardless of their size, number of locations, or corporate structure, all suppliers should strive to accomplish the objectives and principles underlying all of the compliance policies and procedures that we have recommended."

Unlike the earlier guidance issuances, the DMEPOS guidance includes recommendations throughout as to how small suppliers with limited resources can implement controls to reduce the risk of unlawful or improper conduct.  For example, small suppliers that may not have the resources for a permanent compliance committee are counseled to create a "task force" to address potential problems as they are identified.  The members of the task force may vary, the guidance explains, depending upon the issue.   Additionally, small suppliers lacking the resources to develop a comprehensive set of written policies and procedures are encouraged to create a manual focusing on the risk areas most potentially problematic to their specific business operations.

While compliance with the guidance is strictly voluntary, the OIG has made it known that the existence of an effective compliance program could mitigate any action to be taken against a supplier who self-reports or is caught in subsequent wrongdoing.  The existence of an effective compliance program will be a factor in determining the administrative sanctions, penalties and any potential exclusion action to be imposed against an offending provider.

This is the fifth set in a series of guidelines to be developed by the OIG for a health care provider as part of a national prevention program to better ensure provider compliance with the rules and regulations of doing business with Medicare, Medicaid and other Federal health care programs.   Besides the DMEPOS guidance and the guidances issued earlier for clinical laboratories, hospitals, home health agencies, and third-party billers, draft compliance guidance for managed care organizations was recently released for public comment, and work is in progress on guidance for nursing facilities and hospices.  The managed care guidance is expected to be finalized this summer while drafts of the guidances for nursing facilities and hospices are expected to be issued for public review and comment later in the year.

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