Home Health & Hospice Week

Under the arrangement, the hospitals would provide the loan closet space to the suppliers for free, according to the opinion. The hospitals would also provide desks and phones free of charge to the on-site personnel so they could communicate with patients and their physicians as required by regulation.

"No remuneration will flow from the Suppliers to their potential referral sources, the hospitals and their staff and physicians, in connection with the hospitals' provision of consignment closets to the Suppliers," the OIG approves.

The suppliers sidestep another pitfall identified by the OIG. "We have long been concerned about aggressive marketing by DMEPOS suppliers, including those marketing activities that involve personal contact with beneficiaries," the OIG says in the opinion. "In-person sales pitches or 'informational' sessions can be extremely coercive, particularly when such activities are targeted at senior citizens, Medicaid beneficiaries, and other particularly vulnerable patients."

"These activities are highly susceptible to fraud and abuse, as they can lead to overutilization,increased costs to the Federal health care programs and beneficiaries, and inappropriate medical choices,as well as adverse effects on the quality of care patients receive," the OIG warns. "Arrangements ...that offer DMEPOS suppliers opportunities for access to hospital staff and patients are particularly susceptible to problematic marketing schemes."

Rent isn't verboten: Although the hospitals in this proposal would charge the suppliers no rent for the loan closet, the OIG would be likely to approve rent too, Baird points out. "The OIG has stated in the past that rent can be paid by the DME supplier so long as the two parties comply with the Space Rental safe harbor to the Medicare/Medicaid antikickback statute," Baird says. "If ... the DME suppliers were to pay rent to the hospital, then I believe that the OIG would say that such rental payments are OK so long as the safe harbor is met."