Loan closets: OIG posts second favorable opinion

Wednesday, December 31, 2008

YARMOUTH, Maine - Two HME providers recently received the green light from the Office of Inspector General (OIG) to place consignment closets and licensed personnel in hospitals. In a Nov. 26 advisory opinion, the OIG concluded neither action would violate the anti-kickback statute as long as the hospitals allow patients to choose their providers. Also, even though hospitals will supply closets, desks and phones at no cost, providers must not give them referrals. "This is great news for everybody, including the government," said Elizabeth Hogue, a healthcare attorney. "When you have consignment closets in hospitals, patients are sent home sooner, which saves money." Other stipulations, according to the advisory: Providers must avoid contacting patients until they've been selected as providers, and licensed personnel must not educate patients on anything other than equipment. While the OIG's advisories don't constitute policy, providers can use this advisory and a similar one in 2002 as blueprints for how to set up consignment closets within the letter of the law, healthcare attorneys say. "If you stick to what it says, then you're pretty well protected," said Neil Caesar, president of the Health Law Center in Greenville, S.C. "That's why they issue these things, and that's why people rely on them." This most recent advisory reiterates the OIG's position on providers paying rent for consignment closets. "No money will be paid by the providers, meaning that the Space Rental Safe Harbor will not come into play," said Jeff Baird, a healthcare attorney at Brown & Fortunato in Amarillo, Texas. "If the providers were to pay rent to the hospitals, then I believe that the OIG would say rent is OK so long as the Safe Harbor is met." There's a steady stream of interest in consignment closets, healthcare attorneys say, because they help providers save time and money. "In most arrangements, the hospital gives the patient the equipment, transmits information to the provider and the next day, the provider bills for the equipment," Hogue said. "The provider doesn't have to go to a patient's home to make a delivery." To read the OIG's advisory opinion: