Moving the HME Industry Forward

General Healthcare

State Law Requirement of Physical Location

January 5, 2015

AMARILLO, TX – Increasingly, we are witnessing state legislatures passing laws that require a DME supplier to have a “physical location” in the state before the supplier will be issued a DME license. A recent state to impose this requirement is Colorado. A new Colorado law, which took effect on January 1, 2015, states:

DME Supplier License—Definition, Rules
1) As used in this section, “durable medical equipment supplier” means a person or entity that delivers disposable medical supplies or durable medical equipment products directly to a recipient and that currently bills or plans to bill the Medicare program for services or products in the current calendar year. “Durable medical equipment supplier” does not include a supplier of insulin infusion pumps and related supplies or services.
2) In order to do business in Colorado, a durable medical equipment supplier must be licensed by the Secretary of State.
3) An applicant for a durable medical equipment supplier license must:
a) Complete the license application as directed by the Secretary of State;
b) Submit to the Secretary of State a notarized affidavit attesting that:

I) The applicant has one or more physical locations within the state or within fifty miles of the border of the state;
II) The applicant has sufficient inventory and staff to service or repair products; and
III) The applicant is accredited by an accrediting organization recognized and accepted by the federal Centers for Medicare and Medicaid services;

c) Provide to the Secretary of State a street address and a local business telephone number; and
d) Pay an annual fee established by the Secretary of State, not to exceed five hundred dollars.

4) The durable medical equipment supplier licensee shall prominently display the license at each of its physical business locations. The license may be duplicated for this purpose.
5) The Secretary of State shall refer all complaints concerning durable medical equipment suppliers, durable medical equipment, or services to the federal Centers for Medicare and Medicaid.
6) The Secretary of State shall implement this section on or before Dec 31, 2014. The secretary of state may promulgate rules to implement this section.

In determining the scope of a law requiring a physical location, the “devil is in the details.” Requirements vary from state-to-state. In some states, before a license is issued, an inspection is required. Such an inspection is not required for Colorado. When looking at a state “physical location” statute, a number of issues should be addressed, including the following:
• Must the location be in the state or can it be in a bordering state?
• Are there any requirements regarding number of square feet, hours that the facility must be open, and signage
• Must a customer be able to walk into the facility and purchase a product, or can the facility be simply a “warehouse” from which products are delivered to customers’ homes?
• Must the facility have a PTAN or can the DME supplier simply sell items for cash out of the facility?
• Can the out-of-state DME supplier meet the “physical location” requirement by the simple act of leasing minimal space from a local DME supplier . . . or from a local pharmacy . . . or from any other type of landlord?

In short, depending on the wording of the state statute, it may be easy . . . or it may be hard . . . for a DME supplier to comply with a state “physical location” requirement.

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, 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. He can be reached at (806) 345-6320 or jbaird@bf-law.com.