Moving the HME Industry Forward

General Healthcare

Offshore Subcontracting – Medicare Guidance

November 28, 2016

AMARILLO, TX – In a previous Medtrade Monday article, I discussed utilization by DME suppliers of offshore subcontractors. This article provides further Medicare guidance.

On July 23, 2007, CMS issues a letter to Medicare Part C and D plan sponsors addressing the performance of the plan sponsors’ activities outside of the United States. In the letter, CMS asked each plan sponsor to submit information about offshore subcontractors plus an attestation that the plan sponsor has taken steps to address the risks associated with sending “protected health information,” as defined by HIPAA (“PHI”), to foreign subcontractors. The letter directed plan sponsors to mail hard copies of the information and attestations to CMS.

On September 20, 2007, CMS issued another letter that addressed questions arising from the July 23 letter. In the September 20 letter, CMS stated that the subcontractor relationships the plan sponsors are required to disclose must include all downstream subcontractors. 42 C.F.R. 1001.952(t)(2)(i), (iii), and Medicare Managed Care Manual, Chapter 11, Section 10 define a “downstream contractor” as a party that enters into an agreement below the level of the agreement between the plan sponsor and a first tier subcontractor down to the level of the ultimate provider of health and/or administrative services. The September 20 letter further stated that “Medicare-related work” that triggers the reporting and attestation requirements includes claims processing and data entry.

On August 26, 2008, CMS issued a letter announcing the launch of the Offshore Subcontractor Data module in the Health Plan Management System website. This module allows plan sponsors to submit the required information and attestations electronically rather than by hard copy.

Based on CMS’s requirement that Medicare Part C and D plan sponsors gather and submit information about offshore subcontractors, we can conclude that CMS does not prohibit a DME supplier from using an offshore subcontractor in connection with PHI from Medicare beneficiaries. Because CMS issued its directive to plan sponsors to submit information and attestations to the Offshore Subcontractor Data Module, a downstream subcontractor is not directly required to submit information to the module.

DME suppliers (that contract with offshore subcontractors) may be required by their network agreements to provide information and attestations to the Part C and D plans that those suppliers are in network with. In this case, the suppliers may seek information and attestations from the offshore subcontractors. As of yet, CMS has not issued a directive to downstream subcontractors to enter information into the Offshore Subcontractor Data module.

The bottom line is that CMS guidance does not prohibit a DME supplier that bills Medicare under the fee-for-service program, or a supplier that is in network with a Medicare managed care plan, from using an offshore subcontractor to perform claims processing services.

Jeff Baird and Lisa Smith will be presenting the following webinar:
Webinar sponsored by Mediware Information Systems, Inc.

Responding to Medicare Cuts: Details About Billing Non-Assigned, ABNs, and Retail

Presented by: Jeffrey S. Baird, Esq., Brown & Fortunato, P.C. & Lisa K. Smith, Esq., Brown & Fortunato, P.C.
Thursday, December 1, 2016
1:00-2:30 p.m. CENTRAL TIME
On June 23, 2016, CMS published the July fee schedule for DME suppliers, and it is ugly. The rates encompass the expansion of competitive bid rates to non-CBAs. The cuts range between 45%-59% on common respiratory products but reach 82% on TENS units and enteral IV poles. In response, suppliers may need to distance themselves from Medicare fee-for-service. This webinar will discuss ways that DME suppliers can accomplish this.

This presentation will help attendees understand:
• The difference between “participating” and “non-participating” suppliers
• How a “participating” supplier can switch to being a “non-participating” supplier
• Medicare’s antidiscrimination rule and how suppliers can avoid violating this rule
• What it means to bill non-assigned and when it is appropriate to use an ABN
• Selling Medicare-covered items for cash at retail and the rules regarding charging patients less than the Medicare allowable

Register for “Responding to Medicare Cuts:  Details About Billing Non-Assigned, ABNs, and Retail” on Thursday, December 1, 2016, 1:00-2:30 pm CT, with Jeffrey S. Baird, Esq., and Lisa K. Smith, Esq., of  Brown & Fortunato, PC.

Contact Kolby Wegener at if you experience any difficulties registering.

This webinar is free for attendees.

Denise Leard will be presenting the following webinar:
Compliance Program: Your Most Important “Profit Center”
Presented by: Denise M. Leard, Esq., Brown & Fortunato, P.C.
Monday, December 5, 2016

2:30-4:00 p.m. EASTERN TIME
The OIG has stressed the importance of compliance programs for DME suppliers by issuing guidance on how the programs should be structured and implemented.  Congress has also weighed in through the Affordable Care Act, which makes compliance programs mandatory for DME suppliers at a date to be set in the future.  This program will discuss how an effective compliance program helps create financial success, customer loyalty, community support and employee satisfaction.  Topics covered will include primary compliance program objectives, the role of management in overcoming implementation obstacles, and identifying and addressing risk areas.  Topics will further include changing behaviors, balancing multiple roles, integration with other parts of the organization, education and training, and finding qualified staff.  The program will review the elements of an effective compliance program, and the need to regularly review and update the program.  Specific risk areas arising from marketing of DME will be discussed, as well as how to identify and address risk areas particular to DME suppliers.

Register for Compliance Program: Your Most Important “Profit Center” on Monday, December 5, 2016, 2:30-4:00 pm ET, with Denise M. Leard, Esq., of  Brown & Fortunato, PC.

Contact Ika Sukh at if you experience any difficulties registering.

FEES: Member:  $99.00    
Non-Member:  $129.00

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