As most HME providers are now aware, on December 8, 2003, President Bush signed into law the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, which contains sweeping provisions that will affect virtually every area of the home health care industry. The provisions of the act that have received the most press are those related to competitive bidding and reimbursement rates.

However, the new law also will eventually require mandatory accreditation for all HME suppliers who wish to bill Medicare, and—just as with competitive bidding and the reimbursement rate reductions—this will necessitate major adjustments on behalf of most HME providers.

The mandatory accreditation provision is found in section 302(a) of the act and requires the Secretary of the US Department of Health and Human Services (HHS) to establish and implement quality standards for HME suppliers, to be applied by designated independent accreditation organizations. Suppliers must comply with these quality standards in order to receive Medicare payment for HME and to obtain or keep their Medicare supplier number.

Antifraud Motivation
Essentially, the government wants HME suppliers, as a whole, to meet higher standards because it believes this may reduce Medicare fraud. The officials behind the accreditation provision may hope that by requiring accreditation and higher standards of all HME companies who bill Medicare, suppliers who do not want to run a legitimate business will not go through the increased efforts that will be required to obtain and retain a Medicare supplier number and will instead exit the home health care business.

Currently, few states have licensure requirements and the only applicable federal standards are the supplier standards, which are only minimal requirements and address few areas. The new quality standards will certainly be more comprehensive because the act states that the new standards cannot be less stringent than the quality standards that would otherwise apply, and they must include consumer service standards. However, beyond this, the act gives few details on what the new standards should contain. Instead, it gives direction to the HHS Secretary on how to develop the standards.

According to the act, the HHS Secretary is to develop the standards after consulting with representatives of relevant parties, which presumably would include physicians, practitioners, HME suppliers, manufacturers, and accreditation organizations. The act also says HHS should form a new committee called the Program Advisory and Oversight Committee, which also will provide advice to the HHS Secretary concerning the quality standards. The act does not specify who the members of this committee will be and instead leaves that decision to the discretion of the HHS Secretary.

In addition, the act does not specify which accreditation organization or organizations will apply the standards. Rather, the HHS Secretary is to designate and approve one or more independent accreditation organizations within 1 year after the date the HHS Secretary has established the new quality standards. The act also does not set a deadline by which the new quality standards must be implemented.

Too Heavy a Burden?
Suppliers are obviously concerned that the requirement for accreditation in the act accompanied by reimbursement cuts and competitive bidding will place a heavy burden on them. This is because accreditation will involve an investment in time and money in order to bring organizations up to the higher standards. While costs vary according to the accreditation organization and the size of the HME company, it could typically cost a small HME company approximately $5,000 to obtain accreditation. Considering the HME reimbursement cuts and price freezes also being implemented by the act, it could be difficult for small HME companies to afford this expense.

In addition, suppliers who have never been through an accreditation survey are alarmed at the amount of manpower and support needed to meet current accreditation standards. Not only do suppliers have to collect information requested by the accrediting agency, but often they must draft new organizational policies and procedures, create new forms, train their staffs on these new controls, and organize and restructure their record-keeping systems. Even after a supplier receives accreditation, it must monitor the standards and implement changes to remain up-to-date with the accrediting agency’s standards.

Is There Time?
Although increasing quality standards is a goal that is important to HME suppliers, it is understandable that mandatory accreditation causes many providers to become apprehensive. Besides the money involved, a bigger concern may be ensuring that the government allows adequate time for existing suppliers to obtain accreditation before the deadline for compliance passes. The government—especially in light of its current emphasis on fighting fraud through the 10-point “Operation Wheeler Dealer” plan—wants to implement increased quality standards and accreditation requirements sooner, rather than later, to rid the industry of questionable suppliers. Senate Bill 1, from which the act adopted most of the provisions at issue here, specified a 3-year limit for implementation. The act does not include that language, but rather simply states that the HHS Secretary may establish the quality standards by program instruction or otherwise, to be applied prospectively, and that the accreditation organizations shall be designated by the HHS Secretary within 1 year after determination of the quality standards.

However, while the government may want quick implementation, there are practical problems with rushing the accreditation process. Few HME providers in the United States are accredited, and there are only three major organizations offering accreditation for HME suppliers: the Joint Commission on Accreditation of Healthcare Organizations (JCAHO), the Accreditation Commission for Health Care (ACHC), and the Community Health Accreditation Program (CHAP). Even if one assumes that all three organizations are designated by the HHS Secretary to survey the suppliers to ensure compliance, there remains a huge number of suppliers that will have to be surveyed. Surveying is a time-consuming process, and unless the HHS Secretary allows adequate time for compliance or implements some type of grandfathering provision during the time between the request and the actual survey, some suppliers could find themselves at risk of losing their Medicare supplier numbers simply because the designated accreditation organizations do not have enough time to survey the number of requesting suppliers.

Prepare Now
Industry advocates, including the American Association for Homecare, have promised to assert their right to be involved in the development of the accreditation standards and hope to ensure they are implemented in a reasonable manner. However, there is little chance of having the accreditation requirement removed because aside from the concerns raised by the cost and logistics of accreditation, it is hard to make an argument that accreditation will hurt the industry. Due to the fact that a majority of states do not have licensure requirements for HME suppliers, many companies lack even basic policy and procedures. Consequently, situations are handled on an ad hoc basis with varying results. The mandatory accreditation provisions will raise the industry standard. Plus, implementing the policies and procedures required to meet the higher quality standards could eliminate inefficiencies and waste from a supplier’s operations.

To prepare for the coming quality standards, suppliers should look to existing accreditation standards and begin moving in that direction. Although the quality standards have not been adopted and the accreditation organizations have not been chosen, efforts taken by suppliers now will decrease the stress and frustration that are likely to result if suppliers wait until the last minute to become accredited.

Denise M. Fletcher, JD, is an attorney with the Health Care Group of Brown & Fortunato PC, Amarillo, Tex. She is board certified in Health Law by the Texas Board of Legal Specialization and represents HME companies, pharmacies, and other ancillary providers throughout the United States and Puerto Rico. She can be reached at (806) 345-6318 or dfletcher@bf-law.com.