Changes to Telemarketing and Beneficiary Contact Rules
In February 2010, CMS issued FAQs permitting DMEPOS suppliers to contact beneficiaries upon receipt of a written or verbal order. In that guidance, FAQ No. 3 stated:
Question 3: Is a supplier contacting the beneficiary based on the receipt of a physician order considered an “unsolicited” contact?
If a physician contacts a supplier on behalf of a beneficiary with the beneficiary’s knowledge, and then a supplier contacts the beneficiary to confirm or gather information needed to provide that particular covered item (including delivery and billing information), then that contact would not be considered “unsolicited.” Please note that the beneficiary need only be aware that a supplier will be contacting him/her regarding the prescribed covered item, recognizing that the appropriate supplier may not have been identified at the time of consultation.
That guidance allowed DMEPOS suppliers to contact beneficiaries to fulfill a physician order, provided that the beneficiary was made aware (presumably by the physician) that a DMEPOS supplier would subsequently contact him or her.
However, the current revised “DME Supplier Telemarketing Frequently Asked Questions” referenced in the Final Rule and available here deleted the prior FAQ No. 3 and do not reflect that prior guidance.
In addition, the preamble to the prior Final Rule (75 FR 52629, Aug. 27, 2010) contains comments from CMS allowing the practice so long as the patient knows that a DMEPOS supplier would be contacting him or her. (Our prior analysis of these changes can be found in an August 31, 2010 article available here.) Among those comments, CMS stated:
[A] supplier may contact a beneficiary if a physician contacts a DMEPOS supplier on behalf of a beneficiary with the beneficiary’s knowledge, and then a supplier contacts the beneficiary to confirm or gather information needed to provide that particular covered item (including delivery and billing information). In that instance, the contact would not be considered a direct solicitation and therefore, would not implicate the standard set forth at § 424.57(c)(11). See 75 FR 52639.
CMS also stated:
[I]f a physician contacts the supplier on behalf of the beneficiary with the beneficiary’s knowledge, and then a supplier contacts the beneficiary to confirm or gather information needed to provide that particular covered item (including the delivery and billing information), then that contact would not be considered a direct solicitation for the purpose of this standard. This is the case even if the physician has not specified the precise DMEPOS supplier that will be contacting the beneficiary regarding the item referred by that physician. See 75 FR 52639.
In contrast, the preamble to the new Final Rule repeatedly references the specific issue of DMEPOS suppliers contacting beneficiaries upon receipt of a physician order, but CMS does not explicitly approve the practice. Instead, CMS states it “did not specifically solicit comments on our proposed change to 424.57(c)(11)” and “as such, we are not in a position to incorporate the commenter's requested revision of 424.57(c)(11) into this final rule.” See 77 Fed. Reg. 14990. CMS stated, “The language in this final rule reflects our policy on this particular issue,” but also stated that, “The quoted verbiage [from the prior Final Rule] still reflects our policy with regard to this provision.” Ultimately, CMS said it may consider addressing the issue through future rulemaking.
Other Changes in the Final Rule
The Final Rule implements a few other changes introduced by the Proposed Rule. (Our prior analysis of these changes can be found in an April 5, 2011 article available here. They are as follows:
Contractual Arrangement Issues
Local Zoning Requirements
Minimum Square Footage Requirement
Open and Accessible Requirement
Recommendations and Implications
In light of the significant restrictions and increased oversight DMEPOS suppliers have recently experienced, DMEPOS suppliers will welcome the relaxed standards contained in the Final Rule, but the issue of contacting a patient upon receipt of a physician’s order remains an important sticking point with significant operational burdens and implications. DMEPOS suppliers should carefully review the existing regulations and the Final Rule to confirm they are in compliance with the supplier standards.
Access a copy of the Final Rule here.
Legal News Alert is part of our ongoing commitment to providing up-to-the-minute information about pressing concerns or industry issues affecting our health care clients and colleagues. If you have any questions about this alert or would like to discuss this topic further, please contact your Foley attorney or any of the following individuals:
Lawrence W. Vernaglia
Judith A. Waltz
San Francisco, California
The authors wish to acknowledge the contribution of Law Graduate Danna Carmi to this article.