Doctors selling HME

Tuesday, May 31, 2005

Q. A doctor in my town wants to start selling DME. Can he do that?

A. With a few exceptions, probably not. The Stark law prohibits a physician from making Medicare/Medicaid referrals to a DME business with which the physician has a financial relationship unless there is an applicable exception. When the physician offers DME to Medicare or Medicaid patients, it is a "referral" under Stark even if the physician offers it as part of his/her medical practice.
Three exceptions to the Stark law could apply. First, canes, crutches, walkers, folding wheelchairs, infusion pumps, and blood glucose testing equipment are excepted from the Stark prohibition under the "in-office ancillary service" exception if certain criteria are met. The physician who provides the DME must satisfy the 21 Supplier Standards and obtain a separate DME supplier number.
Second, some physicians argue that they may supply DME to Medicare/Medicaid patients under the "physician services" exception which applies to reimbursable services that would normally be provided by a physician. Providing DME equipment for home use is not a normal physician service.
Third, a physician may have a financial relationship with a DME company to which he makes referrals if the company (among other requirements) furnishes at least 75% of its services in an area that is designated as non-urban.
If the physician wants to limit the DME activity to non-Medicare/Medicaid patients, he/she must be aware of any state anti-self-referral laws. These "mini-Stark" laws apply to all payors.
Also, the physician cannot be certain that none of the patients will be eligible for Medicare. (The Stark law applies to goods and services that are eligible for Medicare/Medicaid payment.)
Finally, the Stark law limits the referral, not the financial relationship. If the physician is not in a position to make or influence referrals, Stark may not be implicated.


Richard Tuten is an attorney with the Health Law Center,