Centers for Medicare and Medicaid Services (CMS) noted that consignment closets (also known as stock and bill arrangements) have not complied with durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) supplier standards. As a result, CMS issued a Change Request (CR) affecting physicians and DMEPOS suppliers, which allows for consignment closets only when all of the following are met:

1. When the DMEPOS is furnished to the patient, the title is transferred to the physician;
2. The physician bills for the DMEPOS using his or her own DMEPOS billing number;
3. Services related to the DMEPOS are performed by those associated with the physician (as opposed to a DMEPOS supplier); and 4. When patients are having complications with the DMEPOS, they are instructed to contact the physician and not the DMEPOS supplier.

CMS cautions, however, even if a physician satisfies the aforementioned requirements, he or she must also be aware of the limitations of Stark. In general, Stark prohibits physicians from “self-referring” for “designated health services,” which include DME. There is an exception from this general Stark prohibition for the in-office furnishing of certain limited items of DME by physicians (i.e., canes, crutches, walkers and folding manual wheelchairs, and blood glucose monitors), all of which are subject to certain specified requirements, as well as infusion pumps that constitute DME. Physicians may not furnish or bill Medicare for any other items of DME except in certain special circumstances (e.g., rural providers).

The CR impacts consignment closet arrangements with physicians only. Arrangements with hospitals and other facilities are, at least as of now, not affected by these recent changes.

For more information, please contact Adrienne Dresevic, Esq. or Carey F. Kalmowitz, Esq. at (248) 996-8510.

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