Physician Billing for DME and Orthotics

As a manufacturer and supplier of durable medical equipment (DME), VQ OrthoCare is often asked if a physician or a physician’s practice is permitted to bill Medicare and Medicaid (or any other Federally-funded health care benefits program) for DME that it purchases from a manufacturer or other supplier.

Consideration of billing DME to Medicare or Medicaid should always be discussed with your legal counsel, who can advise you with respect to how the applicable rules and regulations apply to your particular situation. The federal government, however, has stated its position on physician billing for DME to federally funded beneficiaries in the Federal Register as follows:

Q: Can I bill Medicare and Medicaid for [DME] Products that I purchased and prescribed to my patients?

A: No. Both the Federal Ethics in Self-Referrals Law (42 U.S.C. § 1395nn), which is commonly known as the “Stark Law” or “physician self-referral ban,” as well as the Medicare Supplier Standards effectively prohibit a physician from seeking reimbursement for DME dispensed to Medicare or Medicaid patients. Physicians risk significant fines and penalties by billing Medicare or Medicaid for DME items.”

In order to avoid violating the Stark Law, a referring physician would have to personally furnish the DME products and supplies and, in order to do so, must also be enrolled in Medicare as a DME supplier. The Centers for Medicare and Medicaid Services (CMS), which is the federal agency charged with administration, oversight, and enforcement of the Stark Law, has issued the following statement in connection with the Stark Law regulations:

“There are few, if any, situations in which a referring physician would personally furnish DME and supplies to a patient, because doing so would require that the physician himself or herself be enrolled in Medicare as a DME supplier and personally perform all of the duties of a supplier as set forth in the supplier standards in §424.57(c)….

These entities [i.e., physicians who bill Medicare or Medicaid for DME] must be enrolled with the appropriate Medicare contractor as a DME supplier and must meet all of the professional supplier standards and quality standards that we require through regulations and administrative or program instructions. The enrollment requirements and professional supplier standards are not waived in those situations in which a physician furnishes DME directly to the patient. The services to be personally performed by the physician would include, but not be limited to, the following, as appropriate:

  • Personally fit the item for the beneficiary
  • Provide necessary information and instructions concerning use of the DME
  • Advise the beneficiary that he or she may either rent or purchase inexpensive or routinely purchased DME
  • Explain the purchase option for capped rental DME
  • Explain all warranties
  • (Usually) deliver the DME to the beneficiary at home
  • Explain to the beneficiary at the time of delivery how to contact the physician in his or her capacity as a DME supplier by telephone

A referring physician claiming to provide DME personally would need to maintain adequate documentation to establish that the physician personally performed these and other required DME supplier activities. All of these supplier requirements would need to be satisfied in order for a physician to be considered to be providing personally DME items and supplies. This is true for all DME furnished by a physician …. We believe that it is highly unlikely that a referring physician would meet the criteria for personally performed services when dispensing … DME equipment.”

72 Fed. Reg. 51012, 51019-51020 (Sep. 5, 2007)

Physicians who violate the Stark Law are subject to very serious fines and penalties, including exclusion from federal health care programs and collateral liability under the Civil False Claims Act.

Although a physician may be able to fulfill all the requirements listed above and the additional requirements detailed in the DMEPOS Supplier and Quality Standards, VQ OrthoCare strongly recommends that physicians not bill Medicare or Medicaid for DME and recommends the physician consult with legal counsel if considering billing Medicare or Medicaid (or any other Federally-funded health care benefits program) for DME. Numerous State laws also may prohibit or restrict a physician’s ability to bill commercial insurance companies and other payors. These laws vary by State. We also recommend that physicians consult with legal counsel before considering billing any commercial insurance companies or other payors for DME.

We are also often asked more generally:

“What payor types may I, or my practice, bill for durable medical equipment or orthotics?”
The grid below should assist in understanding the scope of payor acceptance or requirements by product type and payor type. As stated above, we recommend that you review your billing arrangements with legal counsel to ensure compliance with Federal and State regulations and payor requirements. The information below is intended as general guidance and should not be construed as legal advice.

DME

Physicians generally can provide certain ambulatory items only to a patient in office such as crutches, canes, walkers and folding manual wheelchairs if the arrangement meets the requirements of an applicable exception to the Stark self-referral prohibition. Providing any other items of DME is prohibited unless the physician personally provides the item to the patient, is licensed as a DMEPOS Supplier by NSC and documents personal compliance with all professional supplier and quality standards.
Same as Medicare, however there also may be additional requirements in State Medicaid programs regarding treatment authorization, licensing or credentialing.
Physicians generally can provide DME within the scope of his or her practice, provided that the physician complies with applicable State laws, including any applicable State physician self-referral prohibitions or restrictions. Physicians should consult with counsel regarding state licensing requirements and self referral prohibitions or restrictions. Some states have established fee schedules for medical equipment and medical supplies. Other states may have a limiting cost plus formula established for reimbursement.
Physicians generally can provide DME within the scope of his or her practice, provided that the physician complies with applicable State laws, including any applicable physician self-referral prohibitions or restrictions. Physicians should consult with counsel regarding state licensing requirements and self referral prohibitions or restrictions. Some payors may have restrictions so pre-authorization is recommended.

Orthotics

Physicians generally can provide orthotics but must meet the requirements of an applicable exception to the Stark self-referral prohibition and be enrolled as a DMEPOS supplier by NSC and documents compliance with all professional supplier and quality standards.
Same as Medicare, however, there may be additional requirements in State Medicaid programs regarding treatment authorization, licensing or credentialing.
Physicians generally can provide DME within the scope of his or her practice, provided that the physician complies with applicable State laws, including any applicable State physician self-referral prohibitions or restrictions. Physicians should consult with counsel regarding state licensing requirements and self referral prohibitions or restrictions. Some states have established fee schedules for medical equipment and medical supplies. Other states may have a limiting cost plus formula established for reimbursement.
Physicians generally can provide DME within the scope of his or her practice, provided that the physician complies with applicable State laws, including any applicable physician self-referral prohibitions or restrictions. Physicians should consult with counsel regarding state licensing requirements and self referral prohibitions or restrictions. Some payors may have restrictions so pre-authorization is recommended.