Updated Special Fraud Alert: Telemarketing by Durable Medical Equipment Suppliers

On January 14, 2010, the Department of Health and Human Services Office of Inspector General ("OIG") published in the Federal Register a notice setting forth its recently issued "Updated Special Fraud Alert" addressing telemarketing by durable medical equipment ("DME") suppliers ("Updated Special Fraud Alert").  This Updated Special Fraud Alert restates and updates an earlier-issued Special Fraud Alert on the same topic published in March 2003 ("2003 Special Fraud Alert") (collectively "Fraud Alerts").  The Fraud Alerts highlight the prohibition under section 1834(a)(17) of the Social Security Act (the "Act") against DME suppliers soliciting Medicare beneficiaries. 

Specifically, the Act prohibits DME suppliers or telemarketers working on the suppliers' behalf, from making unsolicited telephone calls to Medicare beneficiaries regarding the furnishing of a "covered item," except where: (i) the beneficiary has given written permission to the supplier to make contact by telephone; (ii) the contact is regarding a covered item that the supplier has already furnished the beneficiary; or (iii) the supplier has furnished at least one covered item to the beneficiary during the preceding 15 months.  Section 1834(a)(17)(B) of the Social Security Act prohibits payment to a supplier that knowingly submits a claim generated pursuant to a prohibited telephone solicitation.  Any such claims for payment are considered by the government to be false, and both DME suppliers and telemarketers, soliciting on their behalf, are potentially subject to criminal, civil, and administrative penalties, including exclusion from Federal health care programs.

The Updated Special Fraud Alert deviates from the 2003 Special Fraud Alert in that it contains additional language strongly suggesting that DME suppliers may not call a Medicare beneficiary based solely on the treating physician's "preliminary written or verbal orders" prescribing DME for such beneficiary, without the beneficiary's "written consent."  Thus, a DME supplier, contacted by a physician or hospital to provide an item of DME to a Medicare patient, would be at risk of violating the Act if it were to contact the patient for supplementary information prior to issuance of the DME, without first obtaining the beneficiary's written consent. 

The Updated Special Fraud Alert also points out that claims for payment for items or services generated pursuant to a prohibited solicitation would subject a DME supplier and independent marketing firm to criminal and civil penalties for using interstate telephone calls in furtherance of schemes to defraud.

DME suppliers may wish to consider strategies for ensuring compliance under the Fraud Alerts.  One possible approach is to develop a DME supplier telephone contact consent form to be signed by the Medicare patient with the assistance of the ordering practitioner.

The text of the Special Fraud Alert may be found at either 75 Fed. Reg. 2105 (Jan. 14, 2010) at http://edocket.access.gpo.gov/2010/pdf/2010-562.pdf;
or at the OIG's website at:
http://oig.hhs.gov/fraud/docs/alertsandbulletins/fraudalert_telemarketing.pdf.

Should you have any questions, please do not hesitate to contact Adele Merenstein (317-752-4427) or your regular Hall Render attorney (317-633-4884).

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice.  The reader must consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.