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DME Industry 2021 Year End Review & Looking Into 2022

Many DME providers have had tremendous hurdles to overcome this year, from the implementation of a new round of Medicare’s Competitive Bidding Program through continued impacts of COVID-19. Mergers and acquisitions are through the roof as a result, as are continued compliance concerns that plague the industry.

Let’s dive into some of the major DME related matters & issues that have come across my desk this year, and what to be on the lookout for in the next.

Competitive Bidding Impacts

After much uncertainty about what DME products would actually be included upon its implementation, Round 2021 of Medicare’s Competitive Bidding Program (“CBP”) kicked off at the beginning of this year.

With off-the-shelf knee and lumbar braces (HCPCS Code OR03) included in Round 2021 of the CBP – and thus ability to supply such devices to beneficiaries in competitive bid areas restricted to bid-winners – non bid-winning DME providers have been scrambling to find new revenue streams to fill the void. Unfortunately, many are doing so in a non-compliant manner.

Many such providers have looked to continue providing braces – such as prefabricated orthosis (HCPCS Code OR02) – which are not included in the most recent round of the CBP; the non-compliance concerns come into place when the DME provider dispense the prefabricated braces in the same manner as it would off-the-shelf equipment.

Unfortunately, a misunderstanding that could jeopardize Medicare billing privileges seems to be spreading. This compliance concern pertains personnel/fitter requirements required to bill for such prefabricated orthotics. While providing Medicare patients with off-the-shelf orthotics does not require the involvement of any specialized personnel, prefabricated and custom fabricated orthotics do.

An off-the-shelf brace can be merely handed or mailed to a Medicare beneficiary; a prefabricated brace requires an appropriately credentialled professional to physically fit the brace on the patient in order for the claim to Medicare to be properly payable.

In the last few months of 2021 there has been an uptick in Medicare’s auditing of DME providers regarding the personnel involved in their billing and dispensing prefabricated devices, and whether those devices were personally fit, resulting in monetary recoupments and PTAN revocations. The upcoming year will certainly see an increase in such activities.

Marketing Concerns

2019’s regulatory enforcement crackdown dubbed “Operation Brace Yourself” – which targeted criminally illegal kickbacks to marketing companies and ‘telemedicine’ prescribers – was only the ‘tip of the iceberg’. Ancillary and newly related investigations have still been in full force in 2021, with no signs of slowing down in 2022.

While many providers have accordingly learned to not engage with markers involved in illegal sham telemedicine arrangements, unfortunately many are still involved in non-compliant telemarketing relationships, such as those that do not abide by the mandated of Medicare’s Supplier Standard 11 (consent to contact).

Continuous Glucose Monitor State License Requirements

The amount of DME providers supplying continuous glucose monitor (“CGM”) to their customers has increased exponentially over the past few years since the technology was introduced and approved as a Medicare benefit.

Unfortunately, beyond certain heighted documentation requirements, many providers are not aware that state licensure requirements for CGM products, in many jurisdictions, differ from state licensure requirements for standard diabetic testing supplies – such as a glucometer, test strips, lancets and a lancing device.

If a provider dispenses CGM products in the same fashion it would traditional diabetic testing supplies, it may unknowingly dispense CGM supplies in a state that requires licensure – resulting in financial recoupment and/or PTAN revocation for such unlicensed activity.

As Medicare has just recently been auditing and investigating suppliers for CGM licensure requirements, 2022 will surely see an uptick in such enforcement activity.

What to Expect in 2022

Increased merger and acquisition activities, resulting from both the CBP and strains caused by the COVID-19 pandemic.

Continued enforcement of illegal marketing and ‘telemedicine’ arrangements.

Auditing of (and accompanying penalties for) DME providers for failure to properly fit patients for prefabricated (OR02) braces, and for CGM state licensure requirements.

Don’t just survive in 2022, plan ahead and thrive.