CMS’s freeze on enrollment chills deals, bid prep

WASHINGTON – CMS’s moratorium on new DMEPOS supplier enrollments has brought deal closings to a halt, injected uncertainty into bidding preparation and raised dozens of questions as industry stakeholders seek further clarification.

CMS announced in a Feb. 27 notice in the Federal Register that it was immediately implementing a six-month nationwide moratorium on the Medicare enrollment of DMEPOS supplier medical supply companies.

Uncertainty looms over competitive bidding timelines

CMS has previously used its authority to implement moratoriums on home health agencies and ambulance services as far back as 2013, but it implemented them in targeted geographical areas, rather than imposing a national ban. The agency also has a track record of extending these moratoriums – which could complicate the process for a new round of Medicare’s competitive bidding program (CBP).

“The biggest fear is whether this moratorium is going to be longer than six months,” said Kim Brummett, senior vice president of regulatory affairs for AAHomecare. “If it’s going to be longer, what’s the impact going to be on people who are going to submit bids? You have to have all your licenses by the close of the bid window. If you won’t have a license, you can’t bid.”

CMS in January stated that bidding suppliers need to be licensed in all 50 states to provide items under the new Remote Item Delivery (RID) CBP. With the bid window set to open in late summer or early fall this year, stakeholders worry the moratorium could dampen efforts by suppliers to expand their businesses to meet the agency’s requirements.

“Even if you’re a provider in good standing, if you’re opening a new location or under an acquisition (process), you need to get a new billing number,” said Cara Bachenheimer, head of the Government Affairs Practice at Brown & Fortunato. “It’s really alarming and I hope this was an unintended consequence (of the moratorium).”

M&A deals, payer contracts thrown in limbo

In the wake of the moratorium, M&A transactions came to a halt while analysts and attorneys tried to sort through questions surrounding changes in ownership. The notice says a supplier will not be able to undergo a change in majority ownership within 36 months of its initial enrollment or a previous change in ownership, because such changes require submitting a new enrollment.

“I know that our law firm was handling a number of transactions that are scheduled to close,” said Jeff Baird, chairman of the Health Care Group at Brown & Fortunato. “What does that mean? This is creating a problem because it means that our client that's halfway through the transaction, doing due diligence and so on and so forth, all of a sudden, pursuant to an asset purchase, our client cannot get a PTAN.”

The inability to get a PTAN will also affect a supplier’s business outside of Medicare. In the notice, CMS encourages states to implement a similar moratorium for Medicaid and CHIP programs. Brummet also points out that a Medicare supplier number is also a requirement for contracts with Medicare Advantage plans and other commercial payers.

 “The ripple effects are huge,” she said.

Opportunity to amplify value

CMS has said that the moratorium is necessary for it to tackle what it sees as fraud, waste and abuse – something stakeholders say they have long supported.

“We want to work with them; we want to be an ally and a resource,” said Mina Uehara, senior director of regulatory affairs for AAHomecare. “But in an ideal world, they would focus on the fraudsters, with little impact on law-abiding suppliers.”

The moratorium provides an opportunity for the industry to “lean into being part of the solution,” says Ike Isaacson, senior vice president, government & regulatory relations, for VGM Group. CMS has invited providers, beneficiaries and others to shape the agency’s fraud-fighting strategy in a request for information published in the Federal Register on the same day as the moratorium.

“We need to highlight the fact that our industry is essential, not only to quality of life and the sustainability of the health care system overall,” he said. “This gives us a unique chance to really highlight our value to legislators and regulators.”

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