NCB: Providers suspicious about subcontracting, grandfathering

Sunday, June 1, 2008

WASHINGTON - With less than one month until CMS kicks off national competitive bidding, questions abound about subcontracting and grandfathering.

During a conference call last week (May 27), one listener pointed out that the Palmetto GBA Web site states that providers may not subcontract with other providers for "essential services" like oxygen. The Medicare contractor states that the provider receiving payment for services must be the provider furnishing services.

The listener asked, "Are we allowed to subcontract under competitive bidding?"

Joel Kaiser, CMS's deputy director of DMEPOS policy, said, "Yes." When pressed further, however, he said, "We will have to consult with our office of financial management to get clarification on that. I think one key might be the essential services part of that guidance."

The listener asked: "Can you explain essential services?"

Kaiser said: "I think we need to wait and get that from our supplier standards experts, who aren't here today."

Other tidbits on subcontracting (or lack thereof):
* Is subcontracting allowed for contractors without appropriate licenses (In Florida, for example, providers have complained that some of the contract providers for oxygen don't hold the required state licenses to supply the equipment)? Kaiser said: "The contract suppliers were accredited to furnish the items that they have contracts for. If you have information about a specific contract supplier (who) you think may have been accredited for something inappropriately, then you should send an e-mail with that information to us and we can research that."
* Should the work order, delivery invoice, assignment of benefits form, etc., come from the contractor or the subcontractor? Kaiser told the listener he would get back to him.
* How will CMS monitor subcontractors? While the contractor not the subcontractor must get accredited, "the subcontracted supplier has to meet the same rigors of our quality standards," said Sandra Bastinelli, CMS's acting division director of special programs.
* In a contractor-subcontractor relationship, who should own inventory? Supplier enrollment standards, which include provisions for furnishing services using inventory, continue to apply, CMS officials said.

During the conference call, non-contract providers complained about having only days to notify beneficiaries of their decision to become (or not become) grandfathered providers. CMS released the form they must use to notify beneficiaries on May 28 and asked providers to notify beneficiaries by June 1, 2008.

To view the form, go to and click on provider educational products and resources.

Near the end of the call, a provider asked CMS officials whether he could become grandfathered to provide concentrators but not portables. Providers have thought they must become (or not become) grandfathered for entire product categories.

Kaiser said: "You can elect to become a grandfathered supplier for the stationary concentrator and not be a grandfathered supplier for portable oxygen. It's the supplier's choice."