Medicare Program; Revisions to the Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Supplier Safeguards, 14989-14994 [2012-5913]
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Federal Register / Vol. 77, No. 50 / Wednesday, March 14, 2012 / Rules and Regulations
to Medicare beneficiaries and which
meets the DMEPOS supplier standards.
A supplier that furnishes DMEPOS is
one category of supplier. Other supplier
categories include, for example,
physicians, nurse practitioners, and
physical therapists. If a supplier, such
as a physician or physical therapist, also
furnishes DMEPOS to a patient, the
supplier is also considered to be a
DMEPOS supplier.
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Centers for Medicare & Medicaid
Services
42 CFR Part 424
[CMS–6036–F2]
RIN 0938–AQ57
Medicare Program; Revisions to the
Durable Medical Equipment,
Prosthetics, Orthotics, and Supplies
(DMEPOS) Supplier Safeguards
Centers for Medicare &
Medicaid Services (CMS), HHS.
ACTION: Final rule.
AGENCY:
This final rule removes the
definition of ‘‘direct solicitation’’ and
allows DMEPOS suppliers, including
DMEPOS competitive bidding program
contract suppliers, to contract with
licensed agents to provide DMEPOS
supplies, unless prohibited by State law.
It also removes the requirement for
compliance with local zoning laws and
modifies certain State licensure
requirement exceptions.
DATES: Effective Date: These regulations
are effective on April 13, 2012.
FOR FURTHER INFORMATION CONTACT:
Katie Mucklow Lehman, (410) 786–
0537; Frank Whelan, (410) 786–1302.
SUPPLEMENTARY INFORMATION:
SUMMARY:
I. Background
A. General Overview
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1. Providers and Suppliers
Medicare services are furnished by
providers and suppliers. The term
‘‘provider’’ is defined at 42 CFR 400.202
as a hospital, a critical access hospital
(CAH), a skilled nursing facility (SNF),
a comprehensive outpatient
rehabilitation facility (CORF), a home
health agency (HHA), or a hospice that
has in effect an agreement to participate
in Medicare, or a clinic, a rehabilitation
agency, or a public health agency that
has in effect a similar agreement but
only to furnish outpatient physical
therapy or speech pathology services, or
a community mental health center that
has in effect a similar agreement but
only to furnish partial hospitalization
services.
Provider is also defined in sections
1861(u) and 1866(e) of the Social
Security Act (the Act).
For purposes of the DMEPOS supplier
standards, the term ‘‘DMEPOS supplier’’
is defined in 42 CFR 424.57(a) as an
entity or individual, including a
physician or Part A provider that sells
or rents Part B covered DMEPOS items
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2. DMEPOS
The term ‘‘durable medical
equipment’’ is defined in section
1861(n) of the Act. It is also included in
the definition of ‘‘medical and other
health services’’ in section 1861(s)(6) of
the Act. Furthermore, the term is
defined in 42 CFR 414.202 as equipment
furnished by a supplier or an HHA
that—
• Can withstand repeated use;
• Effective with respect to items
classified as DME after January 1, 2012,
has an expected life of at least 3 years;
• Is primarily and customarily used
to serve a medical purpose;
• Generally is not useful to an
individual in the absence of an illness
or injury; and
• Is appropriate for use in the home.
Examples of durable medical
equipment include blood glucose
monitors, hospital beds, oxygen tents,
and wheelchairs. Prosthetic devices are
included in the definition of ‘‘medical
and other health services’’ in section
1861(s)(8) of the Act. Prosthetic devices
are defined as devices (other than
dental) which replace all or part of an
internal body organ (including
colostomy bags and supplies directly
related to colostomy care), including
replacement of such devices, and
including one pair of conventional
eyeglasses or contact lenses furnished
subsequent to each cataract surgery with
insertion of an intraocular lens. Other
examples of prosthetic devices include
cardiac pacemakers, cochlear implants,
electrical continence aids, electrical
nerve stimulators, and tracheostomy
speaking valves.
Section 1861(s)(9) of the Act provides
for the coverage of leg, arm, back, and
neck braces, and artificial legs, arms,
and eyes, including replacement if
required because of a change in the
patient’s physical condition. As
indicated by section 1834(h)(4)(C) of the
Act, these items are often referred to as
‘‘orthotics and prosthetics.’’ Under
section 1834(h)(4)(B) of the Act, the
term ‘‘prosthetic devices’’ does not
include parenteral and enteral nutrition
nutrients, supplies and equipment, and
implantable items payable under section
1833(t) of the Act.
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14989
Section 1861(s)(5) of the Act includes
‘‘surgical dressings, and splints, casts,
and other devices used for reduction of
fractures and dislocations’’ as one of the
‘‘medical and other health services’’ that
are covered by Medicare. Other items
that may be furnished by suppliers
include, but are not limited to:
• Prescription drugs used in
immunosuppressive therapy furnished
to an individual who receives an organ
transplant for which payment is made
under this title, as noted in section
1861(s)(2)(J) of the Act.
• Extra-depth shoes with inserts or
custom-molded shoes with inserts for an
individual with diabetes, as described
in section1861(s)(12) of the Act.
• Home dialysis supplies and
equipment, self-care home dialysis
support services, and institutional
dialysis services and supplies included
in section 1861(s)(2)(F) of the Act.
• Oral drugs prescribed for use as an
anticancer chemotherapeutic agent, as
specified in section 1861(s)(2)(Q) of the
Act.
• Self-administered erythropoietin, as
described in section 1861(s)(2)(O) of the
Act.
B. Statutory Authority
Various sections of the Act and the
regulations require providers and
suppliers to furnish information
concerning the amounts due and the
identification of individuals or entities
that furnish medical services to
beneficiaries before payment can be
made. The following is an overview of
the sections that grant this authority:
• Sections 1102 and 1871 of the Act
provide general authority for the
Secretary of the Department of Health
and Human Services (the Secretary) to
prescribe regulations for the efficient
administration of the Medicare program.
• Section 1834(j)(1)(A) of the Act
states that no payment may be made for
items furnished by a supplier of medical
equipment and supplies unless such
supplier obtains (and renews at such
intervals as the Secretary may require)
a supplier number. In order to obtain a
supplier billing number, a supplier must
comply with certain supplier standards
as identified by the Secretary.
We are authorized to collect
information on the Medicare enrollment
application (that is, the CMS–855
(Office of Management and Budget
(OMB) approval number 0938–0685)) to
ensure that correct payments are made
to providers and suppliers under the
Medicare program, as established by
Title XVIII of the Act.
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II. Provisions of the Proposed Rule and
Responses to Public Comments
In the April 4, 2011 Federal Register
(76 FR 18472), we issued a proposed
rule that removed the definition of and
modified the requirements regarding
‘‘direct solicitation;’’ allowed DMEPOS
suppliers, including DMEPOS
competitive bidding program contract
suppliers, to contract with licensed
agents to provide DMEPOS supplies
unless prohibited by State law; removed
the requirement for compliance with
local zoning laws; and modified certain
State licensing requirement exceptions.
We received 14 timely pieces of
correspondence on the April 4, 2011
proposed rule. In this section of the
final rule, we will present our proposals
and summarize and respond to the
public comments that we received.
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A. Direct Solicitation
In the August 27, 2010 Federal
Register (75 FR 52629), we published a
final rule that addressed several matters
related to the DMEPOS supplier
standards in 42 CFR 424.57(c). One
involved the prohibition in
§ 424.57(c)(11) against the direct
solicitation of Medicare beneficiaries by
DMEPOS suppliers. Previously, the
definition of direct solicitation was
generally limited to telephonic contact.
The August 27, 2010 final rule
expanded the scope of this provision to
include in-person contacts, email, and
instant messaging. Since publication of
the August 27, 2010 final rule, we
discovered that implementation of the
expanded portions of this provision as
written was unfeasible. The definition
of ‘‘direct solicitation’’ was criticized as
being overly broad as it covered some
types of marketing activity outside the
bounds of what we intended to prohibit
under our regulations.
Therefore, in the April 4, 2011
proposed rule, we proposed to remove
the definition of ‘‘direct solicitation’’
from § 424.57(a), revise § 424.57(c)(11)
to remove all references to ‘‘direct
solicitation,’’ and clarify that the
prohibition was limited to telephonic
contact.
The proposed revision to
§ 424.57(c)(11) thus read as follows:
• Must agree not to contact a
beneficiary by telephone when
supplying a Medicare-covered item
unless one of the following applies:
++ The individual has given written
permission to the supplier to contact
them by telephone concerning the
furnishing of a Medicare-covered item
that is to be rented or purchased.
++ The supplier has furnished a
Medicare-covered item to the individual
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and the supplier is contacting the
individual to coordinate the delivery of
the item.
++ If the contact concerns the
furnishing of a Medicare-covered item
other than a covered item already
furnished to the individual, the supplier
has furnished at least one covered item
to the individual during the 15-month
period preceding the date on which the
supplier makes such contact.
We received the following comments on
this proposal:
Comment: A commenter expressed
support for CMS’s proposal to remove
email, instant messaging, and in-person
contacts from the definition of ‘‘direct
solicitation.’’ However, the commenter
requested a further revision to
§ 424.57(c)(11) that would allow
suppliers to contact Medicare
beneficiaries upon receipt of a written
or verbal prescription or prescriber
order as long as the beneficiary has been
made aware (for example, through the
prescribing physician) that he or she
will be contacted by a supplier. The
commenter believed that requiring
written consent from the beneficiary
would severely limit his or her access to
care by delaying the provision of needed
services and items. It would also impose
a large administrative burden on
physicians and physician offices, as
they would have to obtain the
beneficiary’s written permission to be
contacted by the DMEPOS supplier.
The commenter added that the policy
stated in CMS’s February 2010
frequently asked question (FAQ) #3
regarding what constitutes ‘‘unsolicited
contact’’ with a beneficiary is
appropriate. CMS’s response to that
question was:
‘‘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.’’
Response: We appreciate the
commenter’s support. We note that we
did not specifically solicit comments on
our proposed change to § 424.57(c)(11).
As such, we are not in a position to
incorporate the commenter’s requested
revision of § 424.57(c)(11) into this final
rule. However, we have addressed these
concerns in our Frequently Asked
Questions (FAQ) section (available at
https://www.cms.gov/
MedicareProviderSupEnroll/ by clicking
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on ‘‘DME Supplier Telemarketing
Frequently Asked Questions’’ under the
‘‘Downloads’’ section) and may update
that information in the future.
Comment: A commenter supported
CMS’s proposed revisions regarding
§ 424.57(c)(11), believing that the
current standard prohibiting ‘‘direct
solicitation’’ of beneficiaries is too
broad, thus making it difficult for
compliant suppliers to operate their
businesses and respond to the care
expectations of beneficiaries. The
commenter posed several scenarios,
asking whether any of them violated the
DMEPOS supplier standards.
Response: We appreciate the
commenter’s support. For the scenarios
that the commenter posed, we will be
conducting significant outreach to the
DMEPOS supplier and beneficiary
communities before and after the
implementation of this final rule. This
will include the issuance of updated
frequently asked questions (FAQs). We
will address the general tenets of the
commenter’s scenarios in our FAQ
updates.
Comment: One commenter stated that
the proposal to remove the definition of
‘‘direct solicitation’’ from § 424.57(c)(11)
will continue to unnecessarily restrain
DMEPOS suppliers. In order to reduce
annoying or abusive marketing practices
while also granting suppliers more
freedom to legitimately contact
beneficiaries, the commenter
recommended that § 424.57(c)(11) be
revised to allow beneficiaries to give
verbal permission for a supplier to
contact them, and/or allow DMEPOS
suppliers to contact beneficiaries when
they have received a written order or
prescription for a Medicare-covered
item to be furnished from the patient’s
physician prior to contact with the
beneficiary.
Response: We disagree with the
commenter’s first recommendation as it
pertains to § 424.57(c)(11)(i) regarding
verbal consent. Due to the potential for
abuse, we believe it is important that
there be a documented record of the
beneficiary’s approval of the contact.
Concerning this recommendation and as
previously explained, we are not in a
position to adopt this suggestion for this
final rule. However, we may consider
addressing the issue through future
rulemaking.
Comment: A commenter noted that
the April 4, 2011 proposed rule stated:
‘‘In the interim, we intend to instruct
Medicare contractors to continue
applying the restrictions on telephone
solicitation that were in effect before
publication of the August 27, 2010 final
rule, instead of implementing the final
rule’s requirements regarding direct
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solicitation.’’ The commenter requested
that CMS explain its legal authority to
instruct Medicare contractors not to
enforce the regulatory modification to
the ‘‘direct solicitation’’ requirement
made in the August 27, 2010 final rule.
The commenter stated that Federal
regulations have the effect of law and
that CMS instructions cannot trump
them.
Response: We understand the
commenter’s concerns. However, due to
the concerns that we ourselves had
regarding the implementation of the
August 27, 2010 final rule, we decided
not to enforce it while working on the
April 4, 2011 proposed rule. Indeed, we
believed that the direct solicitation
restrictions in the August 27, 2010 rule
created an exigent situation, such that
enforcement of the rule as written
would have been problematic. Nor
would it have benefitted the DMEPOS
supplier community, Medicare
beneficiaries, or CMS for the August 27,
2010 rule to have been enforced while
waiting for the restrictions in question
to be removed via a subsequent
regulation.
Comment: A commenter
recommended that CMS retain the
‘‘direct solicitation’’ provisions
established in the August 27, 2010 final
rule, and modify the definition of
‘‘direct solicitation’’ found in § 424.57(a)
by deleting the phrase, ‘‘which includes,
but is not limited to.’’ The commenter
believes by deleting this phrase it would
make the ‘‘direct solicitation’’ definition
less ambiguous.
Response: For reasons previously
stated, we believe that the definition of
‘‘direct solicitation’’ should be deleted
from the regulations.
Comment: A commenter requested
that CMS explain, using actual
examples: (1) Why it believed a problem
existed in unwanted and unsolicited
communications between DMEPOS
suppliers and beneficiaries; (2) whether
those problems have abated or
increased; and (3) why it is not taking
the necessary steps to reduce or
eliminate unwanted and unsolicited
communications between DMEPOS
suppliers and beneficiaries.
Response: We disagree with the
commenter’s assertion that we have not
taken steps to resolve these problems.
We have not conducted formal studies
in a way that would enable us to
quantify whether those issues have
abated or increased. Although we are
modifying the supplier standard on
direct solicitation at § 424.57(c)(11), we
will continue to actively monitor the
issue of unwanted and unsolicited
communications between DMEPOS
suppliers and beneficiaries. We will also
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be working with law enforcement
agencies to determine if further agency
intervention is required. In the event we
believe that we need to take action to
limit these types of communications, we
will engage in further rulemaking to
address this concern.
Comment: A commenter
recommended that CMS add a
subparagraph (iv) to § 424.57(c)(11) that
will allow suppliers, after receipt of a
prescription or prescriber order, to
contact individuals to coordinate the
delivery of a covered item. The
commenter stated that it can be
extremely difficult, and sometimes
impossible, for suppliers to coordinate
timely delivery of an item without first
contacting the beneficiary. The
commenter also noted that the proposed
language in § 424.57(c)(11)(ii) is
ambiguous because it states that the
supplier may contact the beneficiary to
arrange delivery only after the item has
already been furnished. In short, the
commenter contends that the supplier
must contact the beneficiary in order to
furnish the item; waiting for written
permission from the beneficiary before
contacting him or her is neither
practical nor efficient. Another
commenter agreed that contact with the
beneficiary is necessary so that the item
can be furnished. Another commenter
contended that contacting beneficiaries
about the delivery of a prescribed item
is, in actuality, ‘‘care coordination,’’ not
telemarketing, and is not an
‘‘unsolicited communication.’’
Response: As previously explained,
we are not able to adopt the
commenter’s recommendation.
However, we may consider addressing
the issue through future rulemaking.
Comment: A commenter stated that
the August 27, 2010 final rule contained
a CMS response to a public comment in
that rule that stated:
However, if a physician contacts the
supplier on behalf of the beneficiary’s [sic]
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.
The commenter stated that the April 4,
2011 proposed rule removing the
prohibition against ‘‘direct solicitation’’
did not address this specific issue. The
commenter sought confirmation that the
quoted verbiage remains CMS policy
notwithstanding the removal of the
‘‘direct solicitation’’ reference.
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Response: For reasons previously
stated, we are finalizing the version of
§ 424.57(c)(11) that was in the April 4,
2011 proposed rule by removing the
definition of ‘‘direct solicitation.’’ The
language in this final rule reflects our
policy on this particular issue. The
quoted verbiage still reflects our policy
with regard to this provision.
Comment: One commenter stated that
direct solicitation creates an
opportunity for businesses to solicit the
purchase of products that recipients
may not need, and that this opens the
door for fraud and waste.
Response: We appreciate the
commenter’s concern. As previously
stated, we will continue to actively
monitor the issue of unwanted and
unsolicited communications between
DMEPOS suppliers and beneficiaries.
We will also be working with law
enforcement agencies to determine if
further agency intervention is required.
In the event we believe that we need to
take action to limit these types of
communications, we will engage in
further rulemaking to address this
concern.
After review of the public comments
received, we are finalizing our proposals
to remove the definition of ‘‘direct
solicitation’’ from § 424.57(a), to revise
§ 424.57(c)(11) to remove all references
to ‘‘direct solicitation,’’ and to clarify
that the prohibition is limited to
telephonic contact.
B. Contractual Arrangement Issues
In the August 27, 2010 final rule, we
finalized an additional layer of oversight
of DMEPOS suppliers via State law.
Specifically, we added a new paragraph
(c)(1)(ii) to § 424.57. It read—
• State licensure and regulatory
requirements. If a State requires
licensure to furnish certain items or
services, a DMEPOS supplier—
++ Must be licensed to provide the
item or service;
++ Must employ the licensed
professional on a full-time or part-time
basis, except for DMEPOS suppliers
who are—
—Awarded competitive bid contracts
using subcontractors to meet this
standard; or
—Allowed by the State to contract
licensed services as described in
paragraph (c)(1)(ii)(C) of this section;
—Must not contract with an individual
or other entity to provide the licensed
services, unless allowed by the State
where the licensed services are being
performed.
After the implementation of
§ 424.57(c)(1)(ii), the absence of specific
State laws regarding certain areas of
DMEPOS supplier oversight caused
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confusion among suppliers regarding
who they could contract with. This was
especially true regarding paragraphs
(ii)(B)(2) and (ii)(C), which use the term
‘‘allowed by the State.’’ Therefore in the
April 4, 2011 proposed rule, we stated
that we would revise § 424.57(c)(1)(ii) to
read—
• State licensure and regulatory
requirements. If a State requires
licensure to furnish certain items or
services, a DMEPOS supplier—
++ Must be licensed to provide the
item or service; and
++ May contract with a licensed
individual or other entity to provide the
licensed services unless expressly
prohibited by State law.
We believed that this change would
clarify our expectations with regard to
State licensure and contracts. We
received the following comment on this
proposal:
Comment: A commenter expressed
support for our proposed revision to
§ 424.57(c)(1)(ii), stating that it is
straightforward compared to the current
standard. The commenter also posed
several factual scenarios and asked
whether said situations would
constitute violations of the DMEPOS
supplier standards.
Response: We appreciate the
commenter’s support concerning this
provision. As previously mentioned, we
will be conducting outreach to the
DMEPOS supplier community before
and after the implementation of this
final rule. This will include the issuance
of updated FAQs. We will address the
general tenets of the commenter’s
scenarios during this process. We also
remind suppliers that they must always
comply with any applicable Federal and
State laws, including, without
limitation, those related to fraud and
abuse.
After review of the public comments
received, we are finalizing our proposed
revision to § 424.57(c)(1)(ii) without
modification.
C. Local Zoning Requirements
In the August 27, 2010 final rule, we
stated in the new § 424.57(c)(1)(iii) that
the DMEPOS supplier must operate its
business and furnish Medicare covered
supplies in compliance with local
zoning requirements. We believe that
this would help ensure that DMEPOS
suppliers were providing goods and
services to Medicare beneficiaries in a
physical location, rather than out of a
residence; indeed, the latter practice is
often prohibited by municipal code
zoning requirements. However, the wide
variances in State and municipal laws
and the potential difficulty our
contractors could have in verifying
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compliance with municipal codes, led
us to propose the elimination of
§ 424.57(c)(1)(iii) in the April 4, 2011
proposed rule. In hindsight, we believe
that the task of ensuring that DMEPOS
suppliers comply with local zoning
requirements is best left to the States.
The State’s verification of the supplier’s
compliance will generally be reflected
in the supplier’s business license status,
which the National Supplier
Clearinghouse (NSC) validates. Thus,
ensuring the supplier’s adherence to all
State and local laws is, in part,
accomplished through the verification
of the supplier’s licensure status. We
received the following comments on
this proposal:
Comment: A commenter requested
that CMS explain the following:
• Whether the NSC verified that
suppliers met local zoning requirements
before the publication of the January 25,
2008 proposed rule entitled ‘‘Medicare
Program; Establishing Additional
Medicare Durable Medical Equipment,
Prosthetics, Orthotics and Supplies
(DMEPOS) Supplier Enrollment
Standards.’’
• Whether the NSC verified that
DMEPOS suppliers met local zoning
requirements between January 2008 and
the publication of the August 27, 2010
final rule.
• How this proposed change (that is,
no longer verifying local zoning
requirements) will impact CMS’s efforts
to reduce fraud, waste and abuse in the
Medicare program.
• Whether it believes that more
unscrupulous DMEPOS suppliers will
try and obtain Medicare billing
privileges in residential neighborhoods
as a result of limiting the NSC from
denying or revoking Medicare billing
privileges based on local zoning
requirements.
Response: The NSC did not routinely
verify, either before or after the
publication of the January 25, 2008
proposed rule, whether DMEPOS
suppliers met local zoning
requirements. Therefore, we believe that
our proposed change will not impact
our ability to combat fraud, waste, and
abuse, as it simply codifies existing
practices. As explained previously, the
State’s verification of the supplier’s
compliance with local laws will often be
reflected in the supplier’s State business
license status, which the NSC verifies.
We note that DMEPOS suppliers would
still be required to comply with all
applicable Federal and State laws to
comply with the supplier standards.
Furthermore, suppliers are still required
to comply with all applicable local
zoning requirements. However, we
believe that allowing local
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municipalities to enforce their zoning
requirements is most appropriate, as
they are most familiar with their
respective requirements and have
jurisdiction over these matters.
Comment: One commenter stated that
in the April 4, 2011 proposed rule, CMS
stated: ‘‘In the August 27, 2010 final
rule, we finalized regulations at
§ 424.57(c)(1)(iii) that required DMEPOS
suppliers to comply with all local
zoning requirements.’’ This statement,
the commenter contended, made it
appear that CMS established the
requirement that DMEPOS suppliers
adhere to local zoning requirements in
August 2010. The commenter disagreed
with this statement, noting that the
March 2009 version of the CMS–855S
showed that CMS required DMEPOS
suppliers to submit ‘‘local (city/county)
business licenses’’ in March 2009, if not
before. The commenter recommended
that CMS withdraw its proposal to
remove the provision found at
§ 424.57(c)(1)(iii) until it provides more
facts and data to the public about why
this change should be made. Another
commenter opposed the proposal to
remove § 424.57(c)(1)(iii), believing that
it would increase Medicare’s exposure
to fraud, waste, and abuse.
Response: The previously quoted
statement in the August 27, 2010 final
rule was not meant to imply that
§ 424.57(c)(1)(iii) was a new
requirement. It was merely a
restatement of the fact that we had
finalized § 424.57(c)(1)(iii) in the August
27, 2010 rule. However, we decline to
accept the suggestion to withdraw our
proposal to remove § 424.57(c)(1)(iii) for
the reasons outlined in the April 4, 2011
proposed rule and in the summary of
this provision outlined earlier in this
final rule.
After review of the public comments
received, we are finalizing the proposed
changes to § 424.57(c)(1) without
modification.
D. State Licensure Requirement
Exception
Per § 424.57(c)(7), a DMEPOS supplier
must maintain a physical facility on an
appropriate site. The August 27, 2010
final rule added several paragraphs to
§ 424.57(c)(7), of which paragraph
(c)(7)(i)(A) stated that an appropriate
site must, among other things, meet the
following size requirement:
Except for State-licensed orthotic and
prosthetic personnel providing custom
fabricated orthotics or prosthetics in private
practice, (the DMEPOS supplier) maintains a
practice location that is at least 200 square
feet. (Parentheses added.)
In the April 4, 2011 rule, we proposed
to modify § 424.57(c)(7)(i)(A) to allow
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orthotic and prosthetic professionals to
qualify for the minimum square footage
exception if the State does not offer
licensure. We believed that due to
variations in State licensing procedures,
comparable practitioners should not be
excluded from this exception. Of course,
if a State does offer licensure for
orthotic and prosthetic professionals,
the supplier must obtain licensure in
order to qualify for the minimum square
footage exception. We received the
following comments on this proposal:
Comment: For the square footage
requirements, a commenter stated that
DMEPOS suppliers furnishing orthotic
and prosthetic items and services
should have a facility large enough to
perform all activities associated with
orthotic and prosthetic activities,
including a laboratory. The commenter
expressed concern about orthotic and
prosthetic offices that are very small,
have little overhead, and spend time
serving patients at nursing homes and
other provider facilities. The commenter
stated that this makes it difficult for
larger facilities to compete.
Response: As we stated in the August
27, 2010 final rule (75 FR 52636), we
received the following comment to the
January 25, 2008 proposed rule, which
proposed a minimum square footage
requirement in § 424.57(c)(7):
One commenter believes the minimum
square footage requirement causes potential
issues for orthotic and prosthetic suppliers,
since the lab area is separate from the patient
area and is often located off-site. The patient
interaction area is most important, but since
this area can be as small as 80 square feet,
the size requirement should not be imposed
as to orthotic and prosthetic suppliers.
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We agreed with this comment and, as
a result, established an exception to the
proposed requirement for certain
orthotic and prosthetic suppliers. While
we understand the April 4, 2011,
proposed rule commenter’s concerns,
we continue to believe that this
exception is necessary.
After review of the public comments
received, we are finalizing the proposed
changes to § 424.57(c)(7)(i)(A) without
modification.
E. Open Hours Exception
Section 424.57(c)(30)(i), in the August
27, 2010 final rule, states that suppliers
must be open to the public a minimum
of 30 hours per week. Section
(c)(30)(ii)(B) of this section prescribes an
exception to this requirement for
‘‘licensed non-physician practitioners
whose services are defined in sections
1861(p) and 1861(g) of the Act (and)
furnishes items to his or her own
patients as part of his or her
professional service.’’ (Parentheses
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13:21 Mar 13, 2012
Jkt 226001
added.) Sections 1861(p) and (g) of the
Act define certain outpatient physical
therapy services and certain outpatient
occupational therapy services,
respectively. In the April 4, 2011
proposed rule to clarify which nonphysician practitioners fall under
§ 424.57(c)(30)(ii)(B), we proposed to
remove the phrase ‘‘licensed nonphysician practitioners’’ from
§ 424.57(c)(30)(ii)(B) and simply refer to
physical and occupational therapists.
We did not receive any comments on
this provision. Therefore, we are
finalizing proposed changes to
§ 424.57(c)(30)(ii)(B) without
modification.
F. Out of Scope Comments
We received several other comments
that were outside of the scope of the
proposed rule. Therefore, we are not
addressing these comments in this final
rule.
III. Provisions of Final Rule
This final rule finalizes the provisions
of the proposed rule without
modification.
IV. Collection of Information
Requirements
This document does not impose
information collection and
recordkeeping requirements.
Consequently, it need not be reviewed
by the Office of Management and
Budget under the authority of the
Paperwork Reduction Act of 1995 (44
U.S.C. chapter 35).
V. Regulatory Impact Statement
We have examined the impacts of this
rule as required by Executive Order
12866 on Regulatory Planning and
Review (September 30, 1993), Executive
Order 13563 on Improving Regulation
and Regulatory Review (February 2,
2011), the Regulatory Flexibility Act
(RFA) (September 19, 1980, Pub. L. 96–
354), section 1102(b) of the Social
Security Act, section 202 of the
Unfunded Mandates Reform Act of 1995
(March 22, 1995; Pub. L. 104–4),
Executive Order 13132 on Federalism
(August 4, 1999), and the Congressional
Review Act (5 U.S.C. 804(2)).
Executive Orders 12866 and 13563
direct agencies to assess all costs and
benefits of available regulatory
alternatives and, if regulation is
necessary, to select regulatory
approaches that maximize net benefits
(including potential economic,
environmental, public health and safety
effects, distributive impacts, and
equity). A regulatory impact analysis
(RIA) must be prepared for major rules
with economically significant effects
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14993
($100 million or more in any 1 year).
This final rule does not reach the
economic threshold and thus is not
considered a major rule.
The RFA requires agencies to analyze
options for regulatory relief of small
businesses. For purposes of the RFA,
small entities include small businesses,
nonprofit organizations, and small
governmental jurisdictions. Most
hospitals and most other providers and
suppliers are small entities, either by
nonprofit status or by having revenues
of $7.0 million to $34.5 million in any
1 year. Individuals and States are not
included in the definition of a small
entity. We are not preparing an analysis
for the RFA because the Secretary has
determined that this rule will not have
a significant economic impact on a
substantial number of small entities.
The provisions contained in this final
rule are primarily procedural and do not
require DMEPOS suppliers to incur
additional operating costs. They merely
clarify several provisions in the
DMEPOS supplier standards covered in
§ 424.57. We anticipate a minimal
economic impact, if any, on small
entities.
As of March 2008, there were 113,154
individual DMEPOS suppliers.
However, due to the affiliation of some
DMEPOS suppliers with chains, there
were only approximately 65,984 unique
billing numbers. We believe that
approximately 20 percent of the
DMEPOS suppliers are located in rural
areas.
Comment: A commenter suggested
that we use current data (for example,
June 2011) rather than data from 2008
to update the number of DMEPOS
suppliers found in the Regulatory
Impact Analysis (RIA) and the
percentage of DMEPOS suppliers that
are located in rural areas.
Response: The percentage of DMEPOS
suppliers located in rural areas remains
largely unchanged from 2008. As of June
2011, there were approximately 102,000
individual DMEPOS suppliers enrolled
in Medicare. We believe that
approximately 20 percent of Medicareenrolled DMEPOS suppliers are located
in rural areas.
Comment: A commenter
recommended that CMS more fully
explain how this proposed change will
impact Medicare beneficiaries.
Response: We believe that Medicare
beneficiaries will be well-served by the
provisions of this final rule, as the
protections afforded by § 424.57(c)(11)
will remain largely intact.
In addition, section 1102(b) of the Act
requires us to prepare a regulatory
impact analysis if a rule may have a
significant impact on the operations of
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a substantial number of small rural
hospitals. This analysis must conform to
the provisions of section 604 of the
RFA. For purposes of section 1102(b) of
the Act, we define a small rural hospital
as a hospital that is located outside of
a metropolitan statistical area and has
fewer than 100 beds. We are not
preparing an analysis for section 1102(b)
of the Act because the Secretary has
determined that this final rule will not
have a significant impact on the
operations of a substantial number of
small rural hospitals.
Section 202 of the Unfunded
Mandates Reform Act of 1995 (UMRA)
also requires that agencies assess
anticipated costs and benefits before
issuing any rule whose mandates
require spending in any 1 year of $100
million, updated annually for inflation.
In 2011, that threshold is approximately
$136 million. This rule does not
mandate expenditures by State, local, or
tribal governments, in the aggregate, or
by the private sector, of $136 million;
therefore, no analysis is required.
Executive Order 13132 establishes
certain requirements that an agency
must meet when it promulgates a
proposed rule (and subsequent final
rule) that imposes substantial direct
requirement costs on State and local
governments, preempts State law, or
otherwise has Federalism implications.
Since this regulation does not impose
any costs on State or local governments,
the requirements of E.O. 13132 are not
applicable.
In accordance with the provisions of
Executive Order 12866, this regulation
was reviewed by the Office of
Management and Budget.
List of Subjects in 42 CFR Part 424
Emergency medical services, Health
facilities, Health professionals,
Medicare, Reporting and recordkeeping
requirements.
For the reasons set forth in the
preamble, the Centers for Medicare &
Medicaid Services amends 42 CFR
chapter IV as set forth below:
PART 424—CONDITIONS FOR
MEDICARE PAYMENT
1. The authority citation for part 424
continues to read as follows:
pstrozier on DSK7SPTVN1PROD with RULES
■
Authority: Secs. 1102 and 1871 of the
Social Security Act (42 U.S.C. 1302 and
1395hh).
Subpart D—To Whom Payment Is
Ordinarily Made
§ 424.57
■
[Amended]
2. Section 424.57 is amended by—
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Jkt 226001
A. Removing the definition of ‘‘Direct
solicitation’’ in paragraph (a).
■ B. Revising paragraph (c)(1)(ii).
■ C. Removing paragraph (c)(1)(iii).
■ D. Revising paragraphs (c)(7)(i)(A) and
(c)(11).
■ E. In paragraph (c)(30)(ii)(B),
removing the phrase ‘‘Licensed nonphysician practitioners’’ and adding the
phrase ‘‘A physical or occupational
therapist’’ in its place.
The additions and revisions read as
follows:
■
§ 424.57 Special payment rules for items
furnished by DMEPOS suppliers and
issuance of DMEPOS supplier billing
privileges.
(c) * * *
(1) * * *
(ii) State licensure and regulatory
requirements. If a State requires
licensure to furnish certain items or
services, a DMEPOS supplier—
(A) Must be licensed to provide the
item or service; and
(B) May contract with a licensed
individual or other entity to provide the
licensed services unless expressly
prohibited by State law.
*
*
*
*
*
(7) * * *
(i) * * *
(A)(1) Except for orthotic and
prosthetic personnel described in
paragraph (c)(7)(i)(A)(2) of this section,
maintains a practice location that is at
least 200 square feet beginning—
(i) September 27, 2010 for a
prospective DMEPOS supplier;
(ii) The first day after termination of
an expiring lease for an existing
DMEPOS supplier with a lease that
expires on or after September 27, 2010
and before September 27, 2013; or
(iii) September 27, 2013, for an
existing DMEPOS supplier with a lease
that expires on or after September 27,
2013.
(2) Orthotic and prosthetic personnel
providing custom fabricated orthotics or
prosthetics in private practice do not
have to meet the practice location
requirements in paragraph (c)(7)(i)(A)(1)
of this section if the orthotic and
prosthetic personnel are—
(i) State-licensed; or
(ii) Practicing in a State that does not
offer State licensure for orthotic and
prosthetic personnel.
*
*
*
*
*
(11) Must agree not to contact a
beneficiary by telephone when
supplying a Medicare-covered item
unless one of the following applies:
(i) The individual has given written
permission to the supplier to contact
them by telephone concerning the
furnishing of a Medicare-covered item
that is to be rented or purchased.
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Fmt 4700
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(ii) The supplier has furnished a
Medicare-covered item to the individual
and the supplier is contacting the
individual to coordinate the delivery of
the item.
(iii) If the contact concerns the
furnishing of a Medicare-covered item
other than a covered item already
furnished to the individual, the supplier
has furnished at least one covered item
to the individual during the 15-month
period preceding the date on which the
supplier makes such contact.
*
*
*
*
*
(Catalog of Federal Domestic Assistance
Program No. 93.773, Medicare—Hospital
Insurance; and Program No. 93.774,
Medicare—Supplementary Medical
Insurance Program)
Dated: January 11, 2012.
Marilyn Tavenner,
Acting Administrator, Centers for Medicare
& Medicaid Services.
Approved: February 21, 2012.
Kathleen Sebelius,
Secretary, Department of Health and Human
Services.
[FR Doc. 2012–5913 Filed 3–9–12; 4:15 pm]
BILLING CODE 4120–01–P
DEPARTMENT OF COMMERCE
National Oceanic and Atmospheric
Administration
50 CFR Part 679
[Docket No. 111213751–2012–02]
RIN 0648–XB038
Fisheries of the Exclusive Economic
Zone Off Alaska; Reallocation of
Pollock in the Bering Sea and Aleutian
Islands; Correction
National Marine Fisheries
Service (NMFS), National Oceanic and
Atmospheric Administration (NOAA),
Commerce.
ACTION: Temporary rule; correction.
AGENCY:
NMFS is correcting a
temporary rule that published on
February 29, 2012, reallocating the
projected unused amounts of pollock
directed fishing allowances from the
Aleut Corporation and the Community
Development Quota from the Aleutian
Islands subarea to the Bering Sea
subarea directed fisheries. There are
errors in the table for the pollock
allocation in the Aleutian Island subarea
and the Bogoslof District.
DATES: Effective March 14, 2012 through
2400 hrs, A.l.t., December 31, 2012, and
is applicable beginning February 29,
2012.
SUMMARY:
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Agencies
[Federal Register Volume 77, Number 50 (Wednesday, March 14, 2012)]
[Rules and Regulations]
[Pages 14989-14994]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-5913]
[[Page 14989]]
=======================================================================
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 424
[CMS-6036-F2]
RIN 0938-AQ57
Medicare Program; Revisions to the Durable Medical Equipment,
Prosthetics, Orthotics, and Supplies (DMEPOS) Supplier Safeguards
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This final rule removes the definition of ``direct
solicitation'' and allows DMEPOS suppliers, including DMEPOS
competitive bidding program contract suppliers, to contract with
licensed agents to provide DMEPOS supplies, unless prohibited by State
law. It also removes the requirement for compliance with local zoning
laws and modifies certain State licensure requirement exceptions.
DATES: Effective Date: These regulations are effective on April 13,
2012.
FOR FURTHER INFORMATION CONTACT: Katie Mucklow Lehman, (410) 786-0537;
Frank Whelan, (410) 786-1302.
SUPPLEMENTARY INFORMATION:
I. Background
A. General Overview
1. Providers and Suppliers
Medicare services are furnished by providers and suppliers. The
term ``provider'' is defined at 42 CFR 400.202 as a hospital, a
critical access hospital (CAH), a skilled nursing facility (SNF), a
comprehensive outpatient rehabilitation facility (CORF), a home health
agency (HHA), or a hospice that has in effect an agreement to
participate in Medicare, or a clinic, a rehabilitation agency, or a
public health agency that has in effect a similar agreement but only to
furnish outpatient physical therapy or speech pathology services, or a
community mental health center that has in effect a similar agreement
but only to furnish partial hospitalization services.
Provider is also defined in sections 1861(u) and 1866(e) of the
Social Security Act (the Act).
For purposes of the DMEPOS supplier standards, the term ``DMEPOS
supplier'' is defined in 42 CFR 424.57(a) as an entity or individual,
including a physician or Part A provider that sells or rents Part B
covered DMEPOS items to Medicare beneficiaries and which meets the
DMEPOS supplier standards. A supplier that furnishes DMEPOS is one
category of supplier. Other supplier categories include, for example,
physicians, nurse practitioners, and physical therapists. If a
supplier, such as a physician or physical therapist, also furnishes
DMEPOS to a patient, the supplier is also considered to be a DMEPOS
supplier.
2. DMEPOS
The term ``durable medical equipment'' is defined in section
1861(n) of the Act. It is also included in the definition of ``medical
and other health services'' in section 1861(s)(6) of the Act.
Furthermore, the term is defined in 42 CFR 414.202 as equipment
furnished by a supplier or an HHA that--
Can withstand repeated use;
Effective with respect to items classified as DME after
January 1, 2012, has an expected life of at least 3 years;
Is primarily and customarily used to serve a medical
purpose;
Generally is not useful to an individual in the absence of
an illness or injury; and
Is appropriate for use in the home.
Examples of durable medical equipment include blood glucose
monitors, hospital beds, oxygen tents, and wheelchairs. Prosthetic
devices are included in the definition of ``medical and other health
services'' in section 1861(s)(8) of the Act. Prosthetic devices are
defined as devices (other than dental) which replace all or part of an
internal body organ (including colostomy bags and supplies directly
related to colostomy care), including replacement of such devices, and
including one pair of conventional eyeglasses or contact lenses
furnished subsequent to each cataract surgery with insertion of an
intraocular lens. Other examples of prosthetic devices include cardiac
pacemakers, cochlear implants, electrical continence aids, electrical
nerve stimulators, and tracheostomy speaking valves.
Section 1861(s)(9) of the Act provides for the coverage of leg,
arm, back, and neck braces, and artificial legs, arms, and eyes,
including replacement if required because of a change in the patient's
physical condition. As indicated by section 1834(h)(4)(C) of the Act,
these items are often referred to as ``orthotics and prosthetics.''
Under section 1834(h)(4)(B) of the Act, the term ``prosthetic devices''
does not include parenteral and enteral nutrition nutrients, supplies
and equipment, and implantable items payable under section 1833(t) of
the Act.
Section 1861(s)(5) of the Act includes ``surgical dressings, and
splints, casts, and other devices used for reduction of fractures and
dislocations'' as one of the ``medical and other health services'' that
are covered by Medicare. Other items that may be furnished by suppliers
include, but are not limited to:
Prescription drugs used in immunosuppressive therapy
furnished to an individual who receives an organ transplant for which
payment is made under this title, as noted in section 1861(s)(2)(J) of
the Act.
Extra-depth shoes with inserts or custom-molded shoes with
inserts for an individual with diabetes, as described in
section1861(s)(12) of the Act.
Home dialysis supplies and equipment, self-care home
dialysis support services, and institutional dialysis services and
supplies included in section 1861(s)(2)(F) of the Act.
Oral drugs prescribed for use as an anticancer
chemotherapeutic agent, as specified in section 1861(s)(2)(Q) of the
Act.
Self-administered erythropoietin, as described in section
1861(s)(2)(O) of the Act.
B. Statutory Authority
Various sections of the Act and the regulations require providers
and suppliers to furnish information concerning the amounts due and the
identification of individuals or entities that furnish medical services
to beneficiaries before payment can be made. The following is an
overview of the sections that grant this authority:
Sections 1102 and 1871 of the Act provide general
authority for the Secretary of the Department of Health and Human
Services (the Secretary) to prescribe regulations for the efficient
administration of the Medicare program.
Section 1834(j)(1)(A) of the Act states that no payment
may be made for items furnished by a supplier of medical equipment and
supplies unless such supplier obtains (and renews at such intervals as
the Secretary may require) a supplier number. In order to obtain a
supplier billing number, a supplier must comply with certain supplier
standards as identified by the Secretary.
We are authorized to collect information on the Medicare enrollment
application (that is, the CMS-855 (Office of Management and Budget
(OMB) approval number 0938-0685)) to ensure that correct payments are
made to providers and suppliers under the Medicare program, as
established by Title XVIII of the Act.
[[Page 14990]]
II. Provisions of the Proposed Rule and Responses to Public Comments
In the April 4, 2011 Federal Register (76 FR 18472), we issued a
proposed rule that removed the definition of and modified the
requirements regarding ``direct solicitation;'' allowed DMEPOS
suppliers, including DMEPOS competitive bidding program contract
suppliers, to contract with licensed agents to provide DMEPOS supplies
unless prohibited by State law; removed the requirement for compliance
with local zoning laws; and modified certain State licensing
requirement exceptions. We received 14 timely pieces of correspondence
on the April 4, 2011 proposed rule. In this section of the final rule,
we will present our proposals and summarize and respond to the public
comments that we received.
A. Direct Solicitation
In the August 27, 2010 Federal Register (75 FR 52629), we published
a final rule that addressed several matters related to the DMEPOS
supplier standards in 42 CFR 424.57(c). One involved the prohibition in
Sec. 424.57(c)(11) against the direct solicitation of Medicare
beneficiaries by DMEPOS suppliers. Previously, the definition of direct
solicitation was generally limited to telephonic contact. The August
27, 2010 final rule expanded the scope of this provision to include in-
person contacts, email, and instant messaging. Since publication of the
August 27, 2010 final rule, we discovered that implementation of the
expanded portions of this provision as written was unfeasible. The
definition of ``direct solicitation'' was criticized as being overly
broad as it covered some types of marketing activity outside the bounds
of what we intended to prohibit under our regulations.
Therefore, in the April 4, 2011 proposed rule, we proposed to
remove the definition of ``direct solicitation'' from Sec. 424.57(a),
revise Sec. 424.57(c)(11) to remove all references to ``direct
solicitation,'' and clarify that the prohibition was limited to
telephonic contact.
The proposed revision to Sec. 424.57(c)(11) thus read as follows:
Must agree not to contact a beneficiary by telephone when
supplying a Medicare-covered item unless one of the following applies:
++ The individual has given written permission to the supplier to
contact them by telephone concerning the furnishing of a Medicare-
covered item that is to be rented or purchased.
++ The supplier has furnished a Medicare-covered item to the
individual and the supplier is contacting the individual to coordinate
the delivery of the item.
++ If the contact concerns the furnishing of a Medicare-covered
item other than a covered item already furnished to the individual, the
supplier has furnished at least one covered item to the individual
during the 15-month period preceding the date on which the supplier
makes such contact.
We received the following comments on this proposal:
Comment: A commenter expressed support for CMS's proposal to remove
email, instant messaging, and in-person contacts from the definition of
``direct solicitation.'' However, the commenter requested a further
revision to Sec. 424.57(c)(11) that would allow suppliers to contact
Medicare beneficiaries upon receipt of a written or verbal prescription
or prescriber order as long as the beneficiary has been made aware (for
example, through the prescribing physician) that he or she will be
contacted by a supplier. The commenter believed that requiring written
consent from the beneficiary would severely limit his or her access to
care by delaying the provision of needed services and items. It would
also impose a large administrative burden on physicians and physician
offices, as they would have to obtain the beneficiary's written
permission to be contacted by the DMEPOS supplier.
The commenter added that the policy stated in CMS's February 2010
frequently asked question (FAQ) 3 regarding what constitutes
``unsolicited contact'' with a beneficiary is appropriate. CMS's
response to that question was:
``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.''
Response: We appreciate the commenter's support. We note that we
did not specifically solicit comments on our proposed change to Sec.
424.57(c)(11). As such, we are not in a position to incorporate the
commenter's requested revision of Sec. 424.57(c)(11) into this final
rule. However, we have addressed these concerns in our Frequently Asked
Questions (FAQ) section (available at https://www.cms.gov/MedicareProviderSupEnroll/ by clicking on ``DME Supplier Telemarketing
Frequently Asked Questions'' under the ``Downloads'' section) and may
update that information in the future.
Comment: A commenter supported CMS's proposed revisions regarding
Sec. 424.57(c)(11), believing that the current standard prohibiting
``direct solicitation'' of beneficiaries is too broad, thus making it
difficult for compliant suppliers to operate their businesses and
respond to the care expectations of beneficiaries. The commenter posed
several scenarios, asking whether any of them violated the DMEPOS
supplier standards.
Response: We appreciate the commenter's support. For the scenarios
that the commenter posed, we will be conducting significant outreach to
the DMEPOS supplier and beneficiary communities before and after the
implementation of this final rule. This will include the issuance of
updated frequently asked questions (FAQs). We will address the general
tenets of the commenter's scenarios in our FAQ updates.
Comment: One commenter stated that the proposal to remove the
definition of ``direct solicitation'' from Sec. 424.57(c)(11) will
continue to unnecessarily restrain DMEPOS suppliers. In order to reduce
annoying or abusive marketing practices while also granting suppliers
more freedom to legitimately contact beneficiaries, the commenter
recommended that Sec. 424.57(c)(11) be revised to allow beneficiaries
to give verbal permission for a supplier to contact them, and/or allow
DMEPOS suppliers to contact beneficiaries when they have received a
written order or prescription for a Medicare-covered item to be
furnished from the patient's physician prior to contact with the
beneficiary.
Response: We disagree with the commenter's first recommendation as
it pertains to Sec. 424.57(c)(11)(i) regarding verbal consent. Due to
the potential for abuse, we believe it is important that there be a
documented record of the beneficiary's approval of the contact.
Concerning this recommendation and as previously explained, we are not
in a position to adopt this suggestion for this final rule. However, we
may consider addressing the issue through future rulemaking.
Comment: A commenter noted that the April 4, 2011 proposed rule
stated: ``In the interim, we intend to instruct Medicare contractors to
continue applying the restrictions on telephone solicitation that were
in effect before publication of the August 27, 2010 final rule, instead
of implementing the final rule's requirements regarding direct
[[Page 14991]]
solicitation.'' The commenter requested that CMS explain its legal
authority to instruct Medicare contractors not to enforce the
regulatory modification to the ``direct solicitation'' requirement made
in the August 27, 2010 final rule. The commenter stated that Federal
regulations have the effect of law and that CMS instructions cannot
trump them.
Response: We understand the commenter's concerns. However, due to
the concerns that we ourselves had regarding the implementation of the
August 27, 2010 final rule, we decided not to enforce it while working
on the April 4, 2011 proposed rule. Indeed, we believed that the direct
solicitation restrictions in the August 27, 2010 rule created an
exigent situation, such that enforcement of the rule as written would
have been problematic. Nor would it have benefitted the DMEPOS supplier
community, Medicare beneficiaries, or CMS for the August 27, 2010 rule
to have been enforced while waiting for the restrictions in question to
be removed via a subsequent regulation.
Comment: A commenter recommended that CMS retain the ``direct
solicitation'' provisions established in the August 27, 2010 final
rule, and modify the definition of ``direct solicitation'' found in
Sec. 424.57(a) by deleting the phrase, ``which includes, but is not
limited to.'' The commenter believes by deleting this phrase it would
make the ``direct solicitation'' definition less ambiguous.
Response: For reasons previously stated, we believe that the
definition of ``direct solicitation'' should be deleted from the
regulations.
Comment: A commenter requested that CMS explain, using actual
examples: (1) Why it believed a problem existed in unwanted and
unsolicited communications between DMEPOS suppliers and beneficiaries;
(2) whether those problems have abated or increased; and (3) why it is
not taking the necessary steps to reduce or eliminate unwanted and
unsolicited communications between DMEPOS suppliers and beneficiaries.
Response: We disagree with the commenter's assertion that we have
not taken steps to resolve these problems. We have not conducted formal
studies in a way that would enable us to quantify whether those issues
have abated or increased. Although we are modifying the supplier
standard on direct solicitation at Sec. 424.57(c)(11), we will
continue to actively monitor the issue of unwanted and unsolicited
communications between DMEPOS suppliers and beneficiaries. We will also
be working with law enforcement agencies to determine if further agency
intervention is required. In the event we believe that we need to take
action to limit these types of communications, we will engage in
further rulemaking to address this concern.
Comment: A commenter recommended that CMS add a subparagraph (iv)
to Sec. 424.57(c)(11) that will allow suppliers, after receipt of a
prescription or prescriber order, to contact individuals to coordinate
the delivery of a covered item. The commenter stated that it can be
extremely difficult, and sometimes impossible, for suppliers to
coordinate timely delivery of an item without first contacting the
beneficiary. The commenter also noted that the proposed language in
Sec. 424.57(c)(11)(ii) is ambiguous because it states that the
supplier may contact the beneficiary to arrange delivery only after the
item has already been furnished. In short, the commenter contends that
the supplier must contact the beneficiary in order to furnish the item;
waiting for written permission from the beneficiary before contacting
him or her is neither practical nor efficient. Another commenter agreed
that contact with the beneficiary is necessary so that the item can be
furnished. Another commenter contended that contacting beneficiaries
about the delivery of a prescribed item is, in actuality, ``care
coordination,'' not telemarketing, and is not an ``unsolicited
communication.''
Response: As previously explained, we are not able to adopt the
commenter's recommendation. However, we may consider addressing the
issue through future rulemaking.
Comment: A commenter stated that the August 27, 2010 final rule
contained a CMS response to a public comment in that rule that stated:
However, if a physician contacts the supplier on behalf of the
beneficiary's [sic] 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.
The commenter stated that the April 4, 2011 proposed rule removing the
prohibition against ``direct solicitation'' did not address this
specific issue. The commenter sought confirmation that the quoted
verbiage remains CMS policy notwithstanding the removal of the ``direct
solicitation'' reference.
Response: For reasons previously stated, we are finalizing the
version of Sec. 424.57(c)(11) that was in the April 4, 2011 proposed
rule by removing the definition of ``direct solicitation.'' The
language in this final rule reflects our policy on this particular
issue. The quoted verbiage still reflects our policy with regard to
this provision.
Comment: One commenter stated that direct solicitation creates an
opportunity for businesses to solicit the purchase of products that
recipients may not need, and that this opens the door for fraud and
waste.
Response: We appreciate the commenter's concern. As previously
stated, we will continue to actively monitor the issue of unwanted and
unsolicited communications between DMEPOS suppliers and beneficiaries.
We will also be working with law enforcement agencies to determine if
further agency intervention is required. In the event we believe that
we need to take action to limit these types of communications, we will
engage in further rulemaking to address this concern.
After review of the public comments received, we are finalizing our
proposals to remove the definition of ``direct solicitation'' from
Sec. 424.57(a), to revise Sec. 424.57(c)(11) to remove all references
to ``direct solicitation,'' and to clarify that the prohibition is
limited to telephonic contact.
B. Contractual Arrangement Issues
In the August 27, 2010 final rule, we finalized an additional layer
of oversight of DMEPOS suppliers via State law. Specifically, we added
a new paragraph (c)(1)(ii) to Sec. 424.57. It read--
State licensure and regulatory requirements. If a State
requires licensure to furnish certain items or services, a DMEPOS
supplier--
++ Must be licensed to provide the item or service;
++ Must employ the licensed professional on a full-time or part-
time basis, except for DMEPOS suppliers who are--
--Awarded competitive bid contracts using subcontractors to meet this
standard; or
--Allowed by the State to contract licensed services as described in
paragraph (c)(1)(ii)(C) of this section;
--Must not contract with an individual or other entity to provide the
licensed services, unless allowed by the State where the licensed
services are being performed.
After the implementation of Sec. 424.57(c)(1)(ii), the absence of
specific State laws regarding certain areas of DMEPOS supplier
oversight caused
[[Page 14992]]
confusion among suppliers regarding who they could contract with. This
was especially true regarding paragraphs (ii)(B)(2) and (ii)(C), which
use the term ``allowed by the State.'' Therefore in the April 4, 2011
proposed rule, we stated that we would revise Sec. 424.57(c)(1)(ii) to
read--
State licensure and regulatory requirements. If a State
requires licensure to furnish certain items or services, a DMEPOS
supplier--
++ Must be licensed to provide the item or service; and
++ May contract with a licensed individual or other entity to
provide the licensed services unless expressly prohibited by State law.
We believed that this change would clarify our expectations with
regard to State licensure and contracts. We received the following
comment on this proposal:
Comment: A commenter expressed support for our proposed revision to
Sec. 424.57(c)(1)(ii), stating that it is straightforward compared to
the current standard. The commenter also posed several factual
scenarios and asked whether said situations would constitute violations
of the DMEPOS supplier standards.
Response: We appreciate the commenter's support concerning this
provision. As previously mentioned, we will be conducting outreach to
the DMEPOS supplier community before and after the implementation of
this final rule. This will include the issuance of updated FAQs. We
will address the general tenets of the commenter's scenarios during
this process. We also remind suppliers that they must always comply
with any applicable Federal and State laws, including, without
limitation, those related to fraud and abuse.
After review of the public comments received, we are finalizing our
proposed revision to Sec. 424.57(c)(1)(ii) without modification.
C. Local Zoning Requirements
In the August 27, 2010 final rule, we stated in the new Sec.
424.57(c)(1)(iii) that the DMEPOS supplier must operate its business
and furnish Medicare covered supplies in compliance with local zoning
requirements. We believe that this would help ensure that DMEPOS
suppliers were providing goods and services to Medicare beneficiaries
in a physical location, rather than out of a residence; indeed, the
latter practice is often prohibited by municipal code zoning
requirements. However, the wide variances in State and municipal laws
and the potential difficulty our contractors could have in verifying
compliance with municipal codes, led us to propose the elimination of
Sec. 424.57(c)(1)(iii) in the April 4, 2011 proposed rule. In
hindsight, we believe that the task of ensuring that DMEPOS suppliers
comply with local zoning requirements is best left to the States. The
State's verification of the supplier's compliance will generally be
reflected in the supplier's business license status, which the National
Supplier Clearinghouse (NSC) validates. Thus, ensuring the supplier's
adherence to all State and local laws is, in part, accomplished through
the verification of the supplier's licensure status. We received the
following comments on this proposal:
Comment: A commenter requested that CMS explain the following:
Whether the NSC verified that suppliers met local zoning
requirements before the publication of the January 25, 2008 proposed
rule entitled ``Medicare Program; Establishing Additional Medicare
Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS)
Supplier Enrollment Standards.''
Whether the NSC verified that DMEPOS suppliers met local
zoning requirements between January 2008 and the publication of the
August 27, 2010 final rule.
How this proposed change (that is, no longer verifying
local zoning requirements) will impact CMS's efforts to reduce fraud,
waste and abuse in the Medicare program.
Whether it believes that more unscrupulous DMEPOS
suppliers will try and obtain Medicare billing privileges in
residential neighborhoods as a result of limiting the NSC from denying
or revoking Medicare billing privileges based on local zoning
requirements.
Response: The NSC did not routinely verify, either before or after
the publication of the January 25, 2008 proposed rule, whether DMEPOS
suppliers met local zoning requirements. Therefore, we believe that our
proposed change will not impact our ability to combat fraud, waste, and
abuse, as it simply codifies existing practices. As explained
previously, the State's verification of the supplier's compliance with
local laws will often be reflected in the supplier's State business
license status, which the NSC verifies. We note that DMEPOS suppliers
would still be required to comply with all applicable Federal and State
laws to comply with the supplier standards. Furthermore, suppliers are
still required to comply with all applicable local zoning requirements.
However, we believe that allowing local municipalities to enforce their
zoning requirements is most appropriate, as they are most familiar with
their respective requirements and have jurisdiction over these matters.
Comment: One commenter stated that in the April 4, 2011 proposed
rule, CMS stated: ``In the August 27, 2010 final rule, we finalized
regulations at Sec. 424.57(c)(1)(iii) that required DMEPOS suppliers
to comply with all local zoning requirements.'' This statement, the
commenter contended, made it appear that CMS established the
requirement that DMEPOS suppliers adhere to local zoning requirements
in August 2010. The commenter disagreed with this statement, noting
that the March 2009 version of the CMS-855S showed that CMS required
DMEPOS suppliers to submit ``local (city/county) business licenses'' in
March 2009, if not before. The commenter recommended that CMS withdraw
its proposal to remove the provision found at Sec. 424.57(c)(1)(iii)
until it provides more facts and data to the public about why this
change should be made. Another commenter opposed the proposal to remove
Sec. 424.57(c)(1)(iii), believing that it would increase Medicare's
exposure to fraud, waste, and abuse.
Response: The previously quoted statement in the August 27, 2010
final rule was not meant to imply that Sec. 424.57(c)(1)(iii) was a
new requirement. It was merely a restatement of the fact that we had
finalized Sec. 424.57(c)(1)(iii) in the August 27, 2010 rule. However,
we decline to accept the suggestion to withdraw our proposal to remove
Sec. 424.57(c)(1)(iii) for the reasons outlined in the April 4, 2011
proposed rule and in the summary of this provision outlined earlier in
this final rule.
After review of the public comments received, we are finalizing the
proposed changes to Sec. 424.57(c)(1) without modification.
D. State Licensure Requirement Exception
Per Sec. 424.57(c)(7), a DMEPOS supplier must maintain a physical
facility on an appropriate site. The August 27, 2010 final rule added
several paragraphs to Sec. 424.57(c)(7), of which paragraph
(c)(7)(i)(A) stated that an appropriate site must, among other things,
meet the following size requirement:
Except for State-licensed orthotic and prosthetic personnel
providing custom fabricated orthotics or prosthetics in private
practice, (the DMEPOS supplier) maintains a practice location that
is at least 200 square feet. (Parentheses added.)
In the April 4, 2011 rule, we proposed to modify Sec.
424.57(c)(7)(i)(A) to allow
[[Page 14993]]
orthotic and prosthetic professionals to qualify for the minimum square
footage exception if the State does not offer licensure. We believed
that due to variations in State licensing procedures, comparable
practitioners should not be excluded from this exception. Of course, if
a State does offer licensure for orthotic and prosthetic professionals,
the supplier must obtain licensure in order to qualify for the minimum
square footage exception. We received the following comments on this
proposal:
Comment: For the square footage requirements, a commenter stated
that DMEPOS suppliers furnishing orthotic and prosthetic items and
services should have a facility large enough to perform all activities
associated with orthotic and prosthetic activities, including a
laboratory. The commenter expressed concern about orthotic and
prosthetic offices that are very small, have little overhead, and spend
time serving patients at nursing homes and other provider facilities.
The commenter stated that this makes it difficult for larger facilities
to compete.
Response: As we stated in the August 27, 2010 final rule (75 FR
52636), we received the following comment to the January 25, 2008
proposed rule, which proposed a minimum square footage requirement in
Sec. 424.57(c)(7):
One commenter believes the minimum square footage requirement
causes potential issues for orthotic and prosthetic suppliers, since
the lab area is separate from the patient area and is often located
off-site. The patient interaction area is most important, but since
this area can be as small as 80 square feet, the size requirement
should not be imposed as to orthotic and prosthetic suppliers.
We agreed with this comment and, as a result, established an
exception to the proposed requirement for certain orthotic and
prosthetic suppliers. While we understand the April 4, 2011, proposed
rule commenter's concerns, we continue to believe that this exception
is necessary.
After review of the public comments received, we are finalizing the
proposed changes to Sec. 424.57(c)(7)(i)(A) without modification.
E. Open Hours Exception
Section 424.57(c)(30)(i), in the August 27, 2010 final rule, states
that suppliers must be open to the public a minimum of 30 hours per
week. Section (c)(30)(ii)(B) of this section prescribes an exception to
this requirement for ``licensed non-physician practitioners whose
services are defined in sections 1861(p) and 1861(g) of the Act (and)
furnishes items to his or her own patients as part of his or her
professional service.'' (Parentheses added.) Sections 1861(p) and (g)
of the Act define certain outpatient physical therapy services and
certain outpatient occupational therapy services, respectively. In the
April 4, 2011 proposed rule to clarify which non-physician
practitioners fall under Sec. 424.57(c)(30)(ii)(B), we proposed to
remove the phrase ``licensed non-physician practitioners'' from Sec.
424.57(c)(30)(ii)(B) and simply refer to physical and occupational
therapists.
We did not receive any comments on this provision. Therefore, we
are finalizing proposed changes to Sec. 424.57(c)(30)(ii)(B) without
modification.
F. Out of Scope Comments
We received several other comments that were outside of the scope
of the proposed rule. Therefore, we are not addressing these comments
in this final rule.
III. Provisions of Final Rule
This final rule finalizes the provisions of the proposed rule
without modification.
IV. Collection of Information Requirements
This document does not impose information collection and
recordkeeping requirements. Consequently, it need not be reviewed by
the Office of Management and Budget under the authority of the
Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35).
V. Regulatory Impact Statement
We have examined the impacts of this rule as required by Executive
Order 12866 on Regulatory Planning and Review (September 30, 1993),
Executive Order 13563 on Improving Regulation and Regulatory Review
(February 2, 2011), the Regulatory Flexibility Act (RFA) (September 19,
1980, Pub. L. 96-354), section 1102(b) of the Social Security Act,
section 202 of the Unfunded Mandates Reform Act of 1995 (March 22,
1995; Pub. L. 104-4), Executive Order 13132 on Federalism (August 4,
1999), and the Congressional Review Act (5 U.S.C. 804(2)).
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). A
regulatory impact analysis (RIA) must be prepared for major rules with
economically significant effects ($100 million or more in any 1 year).
This final rule does not reach the economic threshold and thus is not
considered a major rule.
The RFA requires agencies to analyze options for regulatory relief
of small businesses. For purposes of the RFA, small entities include
small businesses, nonprofit organizations, and small governmental
jurisdictions. Most hospitals and most other providers and suppliers
are small entities, either by nonprofit status or by having revenues of
$7.0 million to $34.5 million in any 1 year. Individuals and States are
not included in the definition of a small entity. We are not preparing
an analysis for the RFA because the Secretary has determined that this
rule will not have a significant economic impact on a substantial
number of small entities. The provisions contained in this final rule
are primarily procedural and do not require DMEPOS suppliers to incur
additional operating costs. They merely clarify several provisions in
the DMEPOS supplier standards covered in Sec. 424.57. We anticipate a
minimal economic impact, if any, on small entities.
As of March 2008, there were 113,154 individual DMEPOS suppliers.
However, due to the affiliation of some DMEPOS suppliers with chains,
there were only approximately 65,984 unique billing numbers. We believe
that approximately 20 percent of the DMEPOS suppliers are located in
rural areas.
Comment: A commenter suggested that we use current data (for
example, June 2011) rather than data from 2008 to update the number of
DMEPOS suppliers found in the Regulatory Impact Analysis (RIA) and the
percentage of DMEPOS suppliers that are located in rural areas.
Response: The percentage of DMEPOS suppliers located in rural areas
remains largely unchanged from 2008. As of June 2011, there were
approximately 102,000 individual DMEPOS suppliers enrolled in Medicare.
We believe that approximately 20 percent of Medicare-enrolled DMEPOS
suppliers are located in rural areas.
Comment: A commenter recommended that CMS more fully explain how
this proposed change will impact Medicare beneficiaries.
Response: We believe that Medicare beneficiaries will be well-
served by the provisions of this final rule, as the protections
afforded by Sec. 424.57(c)(11) will remain largely intact.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact on
the operations of
[[Page 14994]]
a substantial number of small rural hospitals. This analysis must
conform to the provisions of section 604 of the RFA. For purposes of
section 1102(b) of the Act, we define a small rural hospital as a
hospital that is located outside of a metropolitan statistical area and
has fewer than 100 beds. We are not preparing an analysis for section
1102(b) of the Act because the Secretary has determined that this final
rule will not have a significant impact on the operations of a
substantial number of small rural hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any 1 year of $100
million, updated annually for inflation. In 2011, that threshold is
approximately $136 million. This rule does not mandate expenditures by
State, local, or tribal governments, in the aggregate, or by the
private sector, of $136 million; therefore, no analysis is required.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct requirement costs on State
and local governments, preempts State law, or otherwise has Federalism
implications. Since this regulation does not impose any costs on State
or local governments, the requirements of E.O. 13132 are not
applicable.
In accordance with the provisions of Executive Order 12866, this
regulation was reviewed by the Office of Management and Budget.
List of Subjects in 42 CFR Part 424
Emergency medical services, Health facilities, Health
professionals, Medicare, Reporting and recordkeeping requirements.
For the reasons set forth in the preamble, the Centers for Medicare
& Medicaid Services amends 42 CFR chapter IV as set forth below:
PART 424--CONDITIONS FOR MEDICARE PAYMENT
0
1. The authority citation for part 424 continues to read as follows:
Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh).
Subpart D--To Whom Payment Is Ordinarily Made
Sec. 424.57 [Amended]
0
2. Section 424.57 is amended by--
0
A. Removing the definition of ``Direct solicitation'' in paragraph (a).
0
B. Revising paragraph (c)(1)(ii).
0
C. Removing paragraph (c)(1)(iii).
0
D. Revising paragraphs (c)(7)(i)(A) and (c)(11).
0
E. In paragraph (c)(30)(ii)(B), removing the phrase ``Licensed non-
physician practitioners'' and adding the phrase ``A physical or
occupational therapist'' in its place.
The additions and revisions read as follows:
Sec. 424.57 Special payment rules for items furnished by DMEPOS
suppliers and issuance of DMEPOS supplier billing privileges.
(c) * * *
(1) * * *
(ii) State licensure and regulatory requirements. If a State
requires licensure to furnish certain items or services, a DMEPOS
supplier--
(A) Must be licensed to provide the item or service; and
(B) May contract with a licensed individual or other entity to
provide the licensed services unless expressly prohibited by State law.
* * * * *
(7) * * *
(i) * * *
(A)(1) Except for orthotic and prosthetic personnel described in
paragraph (c)(7)(i)(A)(2) of this section, maintains a practice
location that is at least 200 square feet beginning--
(i) September 27, 2010 for a prospective DMEPOS supplier;
(ii) The first day after termination of an expiring lease for an
existing DMEPOS supplier with a lease that expires on or after
September 27, 2010 and before September 27, 2013; or
(iii) September 27, 2013, for an existing DMEPOS supplier with a
lease that expires on or after September 27, 2013.
(2) Orthotic and prosthetic personnel providing custom fabricated
orthotics or prosthetics in private practice do not have to meet the
practice location requirements in paragraph (c)(7)(i)(A)(1) of this
section if the orthotic and prosthetic personnel are--
(i) State-licensed; or
(ii) Practicing in a State that does not offer State licensure for
orthotic and prosthetic personnel.
* * * * *
(11) Must agree not to contact a beneficiary by telephone when
supplying a Medicare-covered item unless one of the following applies:
(i) The individual has given written permission to the supplier to
contact them by telephone concerning the furnishing of a Medicare-
covered item that is to be rented or purchased.
(ii) The supplier has furnished a Medicare-covered item to the
individual and the supplier is contacting the individual to coordinate
the delivery of the item.
(iii) If the contact concerns the furnishing of a Medicare-covered
item other than a covered item already furnished to the individual, the
supplier has furnished at least one covered item to the individual
during the 15-month period preceding the date on which the supplier
makes such contact.
* * * * *
(Catalog of Federal Domestic Assistance Program No. 93.773,
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)
Dated: January 11, 2012.
Marilyn Tavenner,
Acting Administrator, Centers for Medicare & Medicaid Services.
Approved: February 21, 2012.
Kathleen Sebelius,
Secretary, Department of Health and Human Services.
[FR Doc. 2012-5913 Filed 3-9-12; 4:15 pm]
BILLING CODE 4120-01-P