Moving the HME Industry Forward

General Healthcare

Co-Marketing Arrangement With a Pharmacy

January 14, 2018

AMARILLO, TX – A DME supplier and a pharmacy can enter into a co-marketing arrangement that achieves several goals. Pharmacy’s Goal – The pharmacy may decide that it does not want to spend the time and money to secure a PTAN in order to provide DME. At the same time, the pharmacy wants to display and “offer” DME so as to compete with the pharmacy chains that do offer DME. DME Supplier’s Goal – A DME supplier may be looking for different ways to display its merchandise.

To achieve these goals, the pharmacy and DME supplier can enter into a co-marketing arrangement. Here is how the arrangement will work:

  • The DME supplier can display products in a display area provided by the pharmacy. A sign can be prominently posted next to the inventory that informs the pharmacy customer that the products are offered by the DME supplier.
  • The pharmacy can provide brochures to its customers that inform them of the products and services offered by the DME supplier.
  • The pharmacy and DME websites can be linked.
  • When a customer walks into the pharmacy and expresses an interest in purchasing a DME item, then the pharmacy employee can tell the customer that there are two options. Option 1 – The employee will tell the customer that the pharmacy does not have a Medicare billing number (“PTAN”), but if the customer is willing to pay cash (and understands that he/she will not be reimbursed by Medicare), then the pharmacy will, on behalf of the DME supplier, be happy to sell the DME item to the customer. This cash sale arrangement presumes that it will not run afoul of the DME supplier’s state DME licensure. Option 2 – If the customer wants Medicare to pay for the item, then the pharmacy employee will tell the customer that the pharmacy is not a “location” or “facility” of the DME supplier, and that while the customer cannot “walk out of the pharmacy” with the item, the DME supplier will be happy to have the item delivered to the customer’s home later that day. Specifically, (i) the pharmacy employee will put the customer on the phone with the DME supplier’s intake employee; this is where the “meeting of the minds” between the customer and the DME supplier occurs; (ii) the pharmacy employee will collect information from the customer and forward the information to the DME supplier; and (iii) the DME supplier will have its delivery driver deliver the product to the customer’s residence later that day.
  • The DME supplier can pay the pharmacy for (i) the space taken up by the display area and (ii) the services provided by the pharmacy. In paying such compensation, the supplier and pharmacy need to be aware that the pharmacy is “referring” or “arranging for the referral of” customers to the DME supplier. Therefore, in order to avoid problems under the federal anti-kickback statute (“AKS”), any payments by the DME supplier to the pharmacy need to comply with one or more “safe harbors” to the AKS. Space Rental Safe Harbor – This allows the supplier to pay rent to the pharmacy if a number of requirements are met, including (i) that the rental arrangement is in writing with a term of at least one year, (ii) that the rent is fixed one year in advance (it can be paid monthly), and (iii) that the rent is fair market value (“FMV”). From a practical standpoint, it is probably not worth the trouble for the DME supplier to pay rent to the pharmacy because the monthly rent will be minuscule. Personal Services and Management Contracts Safe Harbor – This allows the supplier to pay compensation to the pharmacy for the services of the pharmacy employees if a number of requirements are met, including (i) that the arrangement is reduced to a written agreement with a term of at least one year, (ii) that the compensation paid by the supplier is fixed one year in advance (it can be paid monthly), and (iii) that the compensation is the FMV equivalent of the pharmacy’s services.

 

Jeff Baird and Pam Colbert will be presenting the following webinar:

AAHOMECARE’S EDUCATIONAL WEBINAR

How to Contest a Drastic Reimbursement Cut by a Medicaid Managed Care Plan

Presented by: Jeffrey S. Baird, Esq., Brown & Fortunato, P.C. & Pam F. Colbert, Esq., Brown & Fortunato, P.C.

Monday, January 22, 2018

2:30-3:30 p.m. EASTERN TIME

It is the proverbial “Irresistible Force Meeting the Immovable Object:” State Medicaid rolls are continuing to expand…but Medicaid programs are constrained by limited money. In an attempt to contain costs, State Medicaid programs are contracting with Medicaid Managed Care Plans (“Plans”). The State contracts with the Plan to provide health care services and products to beneficiaries under a capitation payment (fee per member per month).  The Plan then contracts with providers and suppliers to provide the products and services to Medicaid beneficiaries. Plans focus on profits. In order to generate profits, Plans are (i) cutting reimbursement and (ii) contracting with a small number of providers and suppliers…and in some cases, Plans contract with only one provider/supplier. If a DME supplier is facing drastically reduced reimbursement and/or being bumped off of Plan’s panel, the supplier needs to know what responsive steps to take.  This program will (i) discuss what a Plan is and how a state Medicaid program will contract with it; (ii) examples of Plans drastically reducing reimbursement and limiting the number of DME suppliers on their panels; and (iii) steps that the supplier can take to respond to the Plan’s actions. These steps include (i) utilizing the Plan’s appeal/grievance process; (ii) determining if the state has an applicable “any willing provider” statute; (iii) filing a complaint with the State Insurance Commission; (iv) lobbying the State Medicaid program; (v) lobbying the state legislature; and (vi) contacting Medicaid beneficiaries directly.

Register for How to Contest a Drastic Reimbursement Cut by a Medicaid Managed Care Plan on Monday, January 22, 2018, 2:30-3:30 pm ET, with Jeffrey S. Baird, Esq., and Pam F. Colbert, Esq., Brown & Fortunato, P.C.

Contact Cherie Newell at CherieN@aahomecare.org if you experience any difficulties registering.

FEES:

Member: $99.00

Non-Member: $129.00

 

Jeff Baird and Denise Leard will be presenting the following webinar:

Webinar Sponsored by PAMS

Targeted Probe and Education Review: What it is and How to Respond

Presented by: Jeffrey S. Baird, Esq., Brown & Fortunato, P.C. & Denise M. Leard, Esq., Brown & Fortunato, P.C.

Wednesday, January 24, 2018

2:00 pm – 3:30 pm EASTERN TIME

Over the past 10 years, DME suppliers have been subjected to aggressive post-payment audits and prepayment reviews. In responding to a post-payment audit, the supplier is required to justify claims that were submitted years earlier. With a prepayment review, even though the supplier has furnished the equipment to the patient, Medicare will not pay the supplier until the supplier submits documentation that, in the eyes of Medicare, supports the claim. A frustrating byproduct of all of this is the three to four year ALJ backlog. Fortunately, Medicare has taken a step in the right direction by implementing the Targeted Probe and Educate (“TPE”) program. Under the TPE program, the supplier will not be subjected to unlimited requests for documentation…followed by vague denials. Rather, under the program the DME MAC will (i) request a limited number of patient files, (ii) review the files, (iii) explain any denials, and (iv) provide education to the supplier that addresses the denials. This webinar will discuss what the TPE program is and how the DME supplier should respond to a TPE request. Equally as important, this webinar will talk about the steps the supplier should take to ensure that its documentation will pass TPE review.

Register now for “Targeted Probe and Education Review: What it is and How to Respond” on Wednesday, January 24, 2018, 2:00-3:30 pm ET, with Jeffrey S. Baird, Esq., and Denise M. Leard, Esq., of Brown & Fortunato, PC.

FEES:            

Member: $59.00       

Non-Member: $89.00

Jeffrey S. Baird, JD, is chairman of the Health Care Group at Brown & Fortunato, PC, a law firm based in Amarillo, Tex. He represents pharmacies, infusion companies, HME companies and other health care providers throughout the United States. Baird is Board Certified in Health Law by the Texas Board of Legal Specialization, and can be reached at (806) 345-6320 or jbaird@bf-law.com.