Federal Register / Vol. 77, No. 50 / Wednesday, March 14, 2012 / Rules and Regulations 14989 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Part 424 

[CMS–6036–F2] 

RIN 0938–AQ57 

Medicare Program; Revisions to the 

Durable Medical Equipment, 

Prosthetics, Orthotics, and Supplies 

(DMEPOS) Supplier Safeguards 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Final rule. 

SUMMARY: This final rule removes the 

definition of ‘‘direct solicitation’’ and 

allows DMEPOS suppliers, including 

DMEPOS competitive bidding program 

contract suppliers, to contract with 

licensed agents to provide DMEPOS 

supplies, unless prohibited by State law. 

It also removes the requirement for 

compliance with local zoning laws and 

modifies certain State licensure 

requirement exceptions. 

DATES: Effective Date: These regulations 

are effective on April 13, 2012. 

FOR FURTHER INFORMATION CONTACT: 

Katie Mucklow Lehman, (410) 786– 

0537; Frank Whelan, (410) 786–1302. 

SUPPLEMENTARY INFORMATION: 

I. Background 

A. General Overview 

1. Providers and Suppliers 

Medicare services are furnished by 

providers and suppliers. The term 

‘‘provider’’ is defined at 42 CFR 400.202 

as a hospital, a critical access hospital 

(CAH), a skilled nursing facility (SNF), 

a comprehensive outpatient 

rehabilitation facility (CORF), a home 

health agency (HHA), or a hospice that 

has in effect an agreement to participate 

in Medicare, or a clinic, a rehabilitation 

agency, or a public health agency that 

has in effect a similar agreement but 

only to furnish outpatient physical 

therapy or speech pathology services, or 

a community mental health center that 

has in effect a similar agreement but 

only to furnish partial hospitalization 

services. 

Provider is also defined in sections 

1861(u) and 1866(e) of the Social 

Security Act (the Act). 

For purposes of the DMEPOS supplier 

standards, the term ‘‘DMEPOS supplier’’ 

is defined in 42 CFR 424.57(a) as an 

entity or individual, including a 

physician or Part A provider that sells 

or rents Part B covered DMEPOS items 

to Medicare beneficiaries and which 

meets the DMEPOS supplier standards. 

A supplier that furnishes DMEPOS is 

one category of supplier. Other supplier 

categories include, for example, 

physicians, nurse practitioners, and 

physical therapists. If a supplier, such 

as a physician or physical therapist, also 

furnishes DMEPOS to a patient, the 

supplier is also considered to be a 

DMEPOS supplier. 

2. DMEPOS 

The term ‘‘durable medical 

equipment’’ is defined in section 

1861(n) of the Act. It is also included in 

the definition of ‘‘medical and other 

health services’’ in section 1861(s)(6) of 

the Act. Furthermore, the term is 

defined in 42 CFR 414.202 as equipment 

furnished by a supplier or an HHA 

that— 

• Can withstand repeated use; 

• Effective with respect to items 

classified as DME after January 1, 2012, 

has an expected life of at least 3 years; 

• Is primarily and customarily used 

to serve a medical purpose; 

• Generally is not useful to an 

individual in the absence of an illness 

or injury; and 

• Is appropriate for use in the home. 

Examples of durable medical 

equipment include blood glucose 

monitors, hospital beds, oxygen tents, 

and wheelchairs. Prosthetic devices are 

included in the definition of ‘‘medical 

and other health services’’ in section 

1861(s)(8) of the Act. Prosthetic devices 

are defined as devices (other than 

dental) which replace all or part of an 

internal body organ (including 

colostomy bags and supplies directly 

related to colostomy care), including 

replacement of such devices, and 

including one pair of conventional 

eyeglasses or contact lenses furnished 

subsequent to each cataract surgery with 

insertion of an intraocular lens. Other 

examples of prosthetic devices include 

cardiac pacemakers, cochlear implants, 

electrical continence aids, electrical 

nerve stimulators, and tracheostomy 

speaking valves. 

Section 1861(s)(9) of the Act provides 

for the coverage of leg, arm, back, and 

neck braces, and artificial legs, arms, 

and eyes, including replacement if 

required because of a change in the 

patient’s physical condition. As 

indicated by section 1834(h)(4)(C) of the 

Act, these items are often referred to as 

‘‘orthotics and prosthetics.’’ Under 

section 1834(h)(4)(B) of the Act, the 

term ‘‘prosthetic devices’’ does not 

include parenteral and enteral nutrition 

nutrients, supplies and equipment, and 

implantable items payable under section 

1833(t) of the Act. 

Section 1861(s)(5) of the Act includes 

‘‘surgical dressings, and splints, casts, 

and other devices used for reduction of 

fractures and dislocations’’ as one of the 

‘‘medical and other health services’’ that 

are covered by Medicare. Other items 

that may be furnished by suppliers 

include, but are not limited to: 

• Prescription drugs used in 

immunosuppressive therapy furnished 

to an individual who receives an organ 

transplant for which payment is made 

under this title, as noted in section 

1861(s)(2)(J) of the Act. 

• Extra-depth shoes with inserts or 

custom-molded shoes with inserts for an 

individual with diabetes, as described 

in section1861(s)(12) of the Act. 

• Home dialysis supplies and 

equipment, self-care home dialysis 

support services, and institutional 

dialysis services and supplies included 

in section 1861(s)(2)(F) of the Act. 

• Oral drugs prescribed for use as an 

anticancer chemotherapeutic agent, as 

specified in section 1861(s)(2)(Q) of the 

Act. 

• Self-administered erythropoietin, as 

described in section 1861(s)(2)(O) of the 

Act. 

B. Statutory Authority 

Various sections of the Act and the 

regulations require providers and 

suppliers to furnish information 

concerning the amounts due and the 

identification of individuals or entities 

that furnish medical services to 

beneficiaries before payment can be 

made. The following is an overview of 

the sections that grant this authority: 

• Sections 1102 and 1871 of the Act 

provide general authority for the 

Secretary of the Department of Health 

and Human Services (the Secretary) to 

prescribe regulations for the efficient 

administration of the Medicare program. 

• Section 1834(j)(1)(A) of the Act 

states that no payment may be made for 

items furnished by a supplier of medical 

equipment and supplies unless such 

supplier obtains (and renews at such 

intervals as the Secretary may require) 

a supplier number. In order to obtain a 

supplier billing number, a supplier must 

comply with certain supplier standards 

as identified by the Secretary. 

We are authorized to collect 

information on the Medicare enrollment 

application (that is, the CMS–855 

(Office of Management and Budget 

(OMB) approval number 0938–0685)) to 

ensure that correct payments are made 

to providers and suppliers under the 

Medicare program, as established by 

Title XVIII of the Act. 


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14990 Federal Register / Vol. 77, No. 50 / Wednesday, March 14, 2012 / Rules and Regulations 

II. Provisions of the Proposed Rule and 

Responses to Public Comments 

In the April 4, 2011 Federal Register 

(76 FR 18472), we issued a proposed 

rule that removed the definition of and 

modified the requirements regarding 

‘‘direct solicitation;’’ allowed DMEPOS 

suppliers, including DMEPOS 

competitive bidding program contract 

suppliers, to contract with licensed 

agents to provide DMEPOS supplies 

unless prohibited by State law; removed 

the requirement for compliance with 

local zoning laws; and modified certain 

State licensing requirement exceptions. 

We received 14 timely pieces of 

correspondence on the April 4, 2011 

proposed rule. In this section of the 

final rule, we will present our proposals 

and summarize and respond to the 

public comments that we received. 

A. Direct Solicitation 

In the August 27, 2010 Federal 

Register (75 FR 52629), we published a 

final rule that addressed several matters 

related to the DMEPOS supplier 

standards in 42 CFR 424.57(c). One 

involved the prohibition in 

§ 424.57(c)(11) against the direct 

solicitation of Medicare beneficiaries by 

DMEPOS suppliers. Previously, the 

definition of direct solicitation was 

generally limited to telephonic contact. 

The August 27, 2010 final rule 

expanded the scope of this provision to 

include in-person contacts, email, and 

instant messaging. Since publication of 

the August 27, 2010 final rule, we 

discovered that implementation of the 

expanded portions of this provision as 

written was unfeasible. The definition 

of ‘‘direct solicitation’’ was criticized as 

being overly broad as it covered some 

types of marketing activity outside the 

bounds of what we intended to prohibit 

under our regulations. 

Therefore, in the April 4, 2011 

proposed rule, we proposed to remove 

the definition of ‘‘direct solicitation’’ 

from § 424.57(a), revise § 424.57(c)(11) 

to remove all references to ‘‘direct 

solicitation,’’ and clarify that the 

prohibition was limited to telephonic 

contact. 

The proposed revision to 

§ 424.57(c)(11) thus read as follows: 

• Must agree not to contact a 

beneficiary by telephone when 

supplying a Medicare-covered item 

unless one of the following applies: 

++ The individual has given written 

permission to the supplier to contact 

them by telephone concerning the 

furnishing of a Medicare-covered item 

that is to be rented or purchased. 

++ The supplier has furnished a 

Medicare-covered item to the individual 

and the supplier is contacting the 

individual to coordinate the delivery of 

the item. 

++ If the contact concerns the 

furnishing of a Medicare-covered item 

other than a covered item already 

furnished to the individual, the supplier 

has furnished at least one covered item 

to the individual during the 15-month 

period preceding the date on which the 

supplier makes such contact. 

We received the following comments on 

this proposal: 

Comment: A commenter expressed 

support for CMS’s proposal to remove 

email, instant messaging, and in-person 

contacts from the definition of ‘‘direct 

solicitation.’’ However, the commenter 

requested a further revision to 

§ 424.57(c)(11) that would allow 

suppliers to contact Medicare 

beneficiaries upon receipt of a written 

or verbal prescription or prescriber 

order as long as the beneficiary has been 

made aware (for example, through the 

prescribing physician) that he or she 

will be contacted by a supplier. The 

commenter believed that requiring 

written consent from the beneficiary 

would severely limit his or her access to 

care by delaying the provision of needed 

services and items. It would also impose 

a large administrative burden on 

physicians and physician offices, as 

they would have to obtain the 

beneficiary’s written permission to be 

contacted by the DMEPOS supplier. 

The commenter added that the policy 

stated in CMS’s February 2010 

frequently asked question (FAQ) #3 

regarding what constitutes ‘‘unsolicited 

contact’’ with a beneficiary is 

appropriate. CMS’s response to that 

question was: 

‘‘If a physician contacts a supplier on 

behalf of a beneficiary with the beneficiary’s 

knowledge, and then a supplier contacts the 

beneficiary to confirm or gather information 

needed to provide that particular covered 

item (including delivery and billing 

information), then that contact would not be 

considered ‘‘unsolicited.’’ Please note that 

the beneficiary need only be aware that a 

supplier will be contacting him/her regarding 

the prescribed covered item, recognizing that 

the appropriate supplier may not have been 

identified at the time of consultation.’’ 

Response: We appreciate the 

commenter’s support. We note that we 

did not specifically solicit comments on 

our proposed change to § 424.57(c)(11). 

As such, we are not in a position to 

incorporate the commenter’s requested 

revision of § 424.57(c)(11) into this final 

rule. However, we have addressed these 

concerns in our Frequently Asked 

Questions (FAQ) section (available at 

http://www.cms.gov/ 

MedicareProviderSupEnroll/ by clicking 

on ‘‘DME Supplier Telemarketing 

Frequently Asked Questions’’ under the 

‘‘Downloads’’ section) and may update 

that information in the future. 

Comment: A commenter supported 

CMS’s proposed revisions regarding 

§ 424.57(c)(11), believing that the 

current standard prohibiting ‘‘direct 

solicitation’’ of beneficiaries is too 

broad, thus making it difficult for 

compliant suppliers to operate their 

businesses and respond to the care 

expectations of beneficiaries. The 

commenter posed several scenarios, 

asking whether any of them violated the 

DMEPOS supplier standards. 

Response: We appreciate the 

commenter’s support. For the scenarios 

that the commenter posed, we will be 

conducting significant outreach to the 

DMEPOS supplier and beneficiary 

communities before and after the 

implementation of this final rule. This 

will include the issuance of updated 

frequently asked questions (FAQs). We 

will address the general tenets of the 

commenter’s scenarios in our FAQ 

updates. 

Comment: One commenter stated that 

the proposal to remove the definition of 

‘‘direct solicitation’’ from § 424.57(c)(11) 

will continue to unnecessarily restrain 

DMEPOS suppliers. In order to reduce 

annoying or abusive marketing practices 

while also granting suppliers more 

freedom to legitimately contact 

beneficiaries, the commenter 

recommended that § 424.57(c)(11) be 

revised to allow beneficiaries to give 

verbal permission for a supplier to 

contact them, and/or allow DMEPOS 

suppliers to contact beneficiaries when 

they have received a written order or 

prescription for a Medicare-covered 

item to be furnished from the patient’s 

physician prior to contact with the 

beneficiary. 

Response: We disagree with the 

commenter’s first recommendation as it 

pertains to § 424.57(c)(11)(i) regarding 

verbal consent. Due to the potential for 

abuse, we believe it is important that 

there be a documented record of the 

beneficiary’s approval of the contact. 

Concerning this recommendation and as 

previously explained, we are not in a 

position to adopt this suggestion for this 

final rule. However, we may consider 

addressing the issue through future 

rulemaking. 

Comment: A commenter noted that 

the April 4, 2011 proposed rule stated: 

‘‘In the interim, we intend to instruct 

Medicare contractors to continue 

applying the restrictions on telephone 

solicitation that were in effect before 

publication of the August 27, 2010 final 

rule, instead of implementing the final 

rule’s requirements regarding direct 


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solicitation.’’ The commenter requested 

that CMS explain its legal authority to 

instruct Medicare contractors not to 

enforce the regulatory modification to 

the ‘‘direct solicitation’’ requirement 

made in the August 27, 2010 final rule. 

The commenter stated that Federal 

regulations have the effect of law and 

that CMS instructions cannot trump 

them. 

Response: We understand the 

commenter’s concerns. However, due to 

the concerns that we ourselves had 

regarding the implementation of the 

August 27, 2010 final rule, we decided 

not to enforce it while working on the 

April 4, 2011 proposed rule. Indeed, we 

believed that the direct solicitation 

restrictions in the August 27, 2010 rule 

created an exigent situation, such that 

enforcement of the rule as written 

would have been problematic. Nor 

would it have benefitted the DMEPOS 

supplier community, Medicare 

beneficiaries, or CMS for the August 27, 

2010 rule to have been enforced while 

waiting for the restrictions in question 

to be removed via a subsequent 

regulation. 

Comment: A commenter 

recommended that CMS retain the 

‘‘direct solicitation’’ provisions 

established in the August 27, 2010 final 

rule, and modify the definition of 

‘‘direct solicitation’’ found in § 424.57(a) 

by deleting the phrase, ‘‘which includes, 

but is not limited to.’’ The commenter 

believes by deleting this phrase it would 

make the ‘‘direct solicitation’’ definition 

less ambiguous. 

Response: For reasons previously 

stated, we believe that the definition of 

‘‘direct solicitation’’ should be deleted 

from the regulations. 

Comment: A commenter requested 

that CMS explain, using actual 

examples: (1) Why it believed a problem 

existed in unwanted and unsolicited 

communications between DMEPOS 

suppliers and beneficiaries; (2) whether 

those problems have abated or 

increased; and (3) why it is not taking 

the necessary steps to reduce or 

eliminate unwanted and unsolicited 

communications between DMEPOS 

suppliers and beneficiaries. 

Response: We disagree with the 

commenter’s assertion that we have not 

taken steps to resolve these problems. 

We have not conducted formal studies 

in a way that would enable us to 

quantify whether those issues have 

abated or increased. Although we are 

modifying the supplier standard on 

direct solicitation at § 424.57(c)(11), we 

will continue to actively monitor the 

issue of unwanted and unsolicited 

communications between DMEPOS 

suppliers and beneficiaries. We will also 

be working with law enforcement 

agencies to determine if further agency 

intervention is required. In the event we 

believe that we need to take action to 

limit these types of communications, we 

will engage in further rulemaking to 

address this concern. 

Comment: A commenter 

recommended that CMS add a 

subparagraph (iv) to § 424.57(c)(11) that 

will allow suppliers, after receipt of a 

prescription or prescriber order, to 

contact individuals to coordinate the 

delivery of a covered item. The 

commenter stated that it can be 

extremely difficult, and sometimes 

impossible, for suppliers to coordinate 

timely delivery of an item without first 

contacting the beneficiary. The 

commenter also noted that the proposed 

language in § 424.57(c)(11)(ii) is 

ambiguous because it states that the 

supplier may contact the beneficiary to 

arrange delivery only after the item has 

already been furnished. In short, the 

commenter contends that the supplier 

must contact the beneficiary in order to 

furnish the item; waiting for written 

permission from the beneficiary before 

contacting him or her is neither 

practical nor efficient. Another 

commenter agreed that contact with the 

beneficiary is necessary so that the item 

can be furnished. Another commenter 

contended that contacting beneficiaries 

about the delivery of a prescribed item 

is, in actuality, ‘‘care coordination,’’ not 

telemarketing, and is not an 

‘‘unsolicited communication.’’ 

Response: As previously explained, 

we are not able to adopt the 

commenter’s recommendation. 

However, we may consider addressing 

the issue through future rulemaking. 

Comment: A commenter stated that 

the August 27, 2010 final rule contained 

a CMS response to a public comment in 

that rule that stated: 

However, if a physician contacts the 

supplier on behalf of the beneficiary’s [sic] 

with the beneficiary’s knowledge, and then a 

supplier contacts the beneficiary to confirm 

or gather information needed to provide that 

particular covered item (including the 

delivery and billing information), then that 

contact would not be considered a direct 

solicitation for the purpose of this standard. 

This is the case even if the physician has not 

specified the precise DMEPOS supplier that 

will be contacting the beneficiary regarding 

the item referred by that physician. 

The commenter stated that the April 4, 

2011 proposed rule removing the 

prohibition against ‘‘direct solicitation’’ 

did not address this specific issue. The 

commenter sought confirmation that the 

quoted verbiage remains CMS policy 

notwithstanding the removal of the 

‘‘direct solicitation’’ reference. 

Response: For reasons previously 

stated, we are finalizing the version of 

§ 424.57(c)(11) that was in the April 4, 

2011 proposed rule by removing the 

definition of ‘‘direct solicitation.’’ The 

language in this final rule reflects our 

policy on this particular issue. The 

quoted verbiage still reflects our policy 

with regard to this provision. 

Comment: One commenter stated that 

direct solicitation creates an 

opportunity for businesses to solicit the 

purchase of products that recipients 

may not need, and that this opens the 

door for fraud and waste. 

Response: We appreciate the 

commenter’s concern. As previously 

stated, we will continue to actively 

monitor the issue of unwanted and 

unsolicited communications between 

DMEPOS suppliers and beneficiaries. 

We will also be working with law 

enforcement agencies to determine if 

further agency intervention is required. 

In the event we believe that we need to 

take action to limit these types of 

communications, we will engage in 

further rulemaking to address this 

concern. 

After review of the public comments 

received, we are finalizing our proposals 

to remove the definition of ‘‘direct 

solicitation’’ from § 424.57(a), to revise 

§ 424.57(c)(11) to remove all references 

to ‘‘direct solicitation,’’ and to clarify 

that the prohibition is limited to 

telephonic contact. 

B. Contractual Arrangement Issues 

In the August 27, 2010 final rule, we 

finalized an additional layer of oversight 

of DMEPOS suppliers via State law. 

Specifically, we added a new paragraph 

(c)(1)(ii) to § 424.57. It read— 

• State licensure and regulatory 

requirements. If a State requires 

licensure to furnish certain items or 

services, a DMEPOS supplier— 

++ Must be licensed to provide the 

item or service; 

++ Must employ the licensed 

professional on a full-time or part-time 

basis, except for DMEPOS suppliers 

who are— 

—Awarded competitive bid contracts 

using subcontractors to meet this 

standard; or 

—Allowed by the State to contract 

licensed services as described in 

paragraph (c)(1)(ii)(C) of this section; 

—Must not contract with an individual 

or other entity to provide the licensed 

services, unless allowed by the State 

where the licensed services are being 

performed. 

After the implementation of 

§ 424.57(c)(1)(ii), the absence of specific 

State laws regarding certain areas of 

DMEPOS supplier oversight caused 


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confusion among suppliers regarding 

who they could contract with. This was 

especially true regarding paragraphs 

(ii)(B)(2) and (ii)(C), which use the term 

‘‘allowed by the State.’’ Therefore in the 

April 4, 2011 proposed rule, we stated 

that we would revise § 424.57(c)(1)(ii) to 

read— 

• State licensure and regulatory 

requirements. If a State requires 

licensure to furnish certain items or 

services, a DMEPOS supplier— 

++ Must be licensed to provide the 

item or service; and 

++ May contract with a licensed 

individual or other entity to provide the 

licensed services unless expressly 

prohibited by State law. 

We believed that this change would 

clarify our expectations with regard to 

State licensure and contracts. We 

received the following comment on this 

proposal: 

Comment: A commenter expressed 

support for our proposed revision to 

§ 424.57(c)(1)(ii), stating that it is 

straightforward compared to the current 

standard. The commenter also posed 

several factual scenarios and asked 

whether said situations would 

constitute violations of the DMEPOS 

supplier standards. 

Response: We appreciate the 

commenter’s support concerning this 

provision. As previously mentioned, we 

will be conducting outreach to the 

DMEPOS supplier community before 

and after the implementation of this 

final rule. This will include the issuance 

of updated FAQs. We will address the 

general tenets of the commenter’s 

scenarios during this process. We also 

remind suppliers that they must always 

comply with any applicable Federal and 

State laws, including, without 

limitation, those related to fraud and 

abuse. 

After review of the public comments 

received, we are finalizing our proposed 

revision to § 424.57(c)(1)(ii) without 

modification. 

C. Local Zoning Requirements 

In the August 27, 2010 final rule, we 

stated in the new § 424.57(c)(1)(iii) that 

the DMEPOS supplier must operate its 

business and furnish Medicare covered 

supplies in compliance with local 

zoning requirements. We believe that 

this would help ensure that DMEPOS 

suppliers were providing goods and 

services to Medicare beneficiaries in a 

physical location, rather than out of a 

residence; indeed, the latter practice is 

often prohibited by municipal code 

zoning requirements. However, the wide 

variances in State and municipal laws 

and the potential difficulty our 

contractors could have in verifying 

compliance with municipal codes, led 

us to propose the elimination of 

§ 424.57(c)(1)(iii) in the April 4, 2011 

proposed rule. In hindsight, we believe 

that the task of ensuring that DMEPOS 

suppliers comply with local zoning 

requirements is best left to the States. 

The State’s verification of the supplier’s 

compliance will generally be reflected 

in the supplier’s business license status, 

which the National Supplier 

Clearinghouse (NSC) validates. Thus, 

ensuring the supplier’s adherence to all 

State and local laws is, in part, 

accomplished through the verification 

of the supplier’s licensure status. We 

received the following comments on 

this proposal: 

Comment: A commenter requested 

that CMS explain the following: 

• Whether the NSC verified that 

suppliers met local zoning requirements 

before the publication of the January 25, 

2008 proposed rule entitled ‘‘Medicare 

Program; Establishing Additional 

Medicare Durable Medical Equipment, 

Prosthetics, Orthotics and Supplies 

(DMEPOS) Supplier Enrollment 

Standards.’’ 

• Whether the NSC verified that 

DMEPOS suppliers met local zoning 

requirements between January 2008 and 

the publication of the August 27, 2010 

final rule. 

• How this proposed change (that is, 

no longer verifying local zoning 

requirements) will impact CMS’s efforts 

to reduce fraud, waste and abuse in the 

Medicare program. 

• Whether it believes that more 

unscrupulous DMEPOS suppliers will 

try and obtain Medicare billing 

privileges in residential neighborhoods 

as a result of limiting the NSC from 

denying or revoking Medicare billing 

privileges based on local zoning 

requirements. 

Response: The NSC did not routinely 

verify, either before or after the 

publication of the January 25, 2008 

proposed rule, whether DMEPOS 

suppliers met local zoning 

requirements. Therefore, we believe that 

our proposed change will not impact 

our ability to combat fraud, waste, and 

abuse, as it simply codifies existing 

practices. As explained previously, the 

State’s verification of the supplier’s 

compliance with local laws will often be 

reflected in the supplier’s State business 

license status, which the NSC verifies. 

We note that DMEPOS suppliers would 

still be required to comply with all 

applicable Federal and State laws to 

comply with the supplier standards. 

Furthermore, suppliers are still required 

to comply with all applicable local 

zoning requirements. However, we 

believe that allowing local 

municipalities to enforce their zoning 

requirements is most appropriate, as 

they are most familiar with their 

respective requirements and have 

jurisdiction over these matters. 

Comment: One commenter stated that 

in the April 4, 2011 proposed rule, CMS 

stated: ‘‘In the August 27, 2010 final 

rule, we finalized regulations at 

§ 424.57(c)(1)(iii) that required DMEPOS 

suppliers to comply with all local 

zoning requirements.’’ This statement, 

the commenter contended, made it 

appear that CMS established the 

requirement that DMEPOS suppliers 

adhere to local zoning requirements in 

August 2010. The commenter disagreed 

with this statement, noting that the 

March 2009 version of the CMS–855S 

showed that CMS required DMEPOS 

suppliers to submit ‘‘local (city/county) 

business licenses’’ in March 2009, if not 

before. The commenter recommended 

that CMS withdraw its proposal to 

remove the provision found at 

§ 424.57(c)(1)(iii) until it provides more 

facts and data to the public about why 

this change should be made. Another 

commenter opposed the proposal to 

remove § 424.57(c)(1)(iii), believing that 

it would increase Medicare’s exposure 

to fraud, waste, and abuse. 

Response: The previously quoted 

statement in the August 27, 2010 final 

rule was not meant to imply that 

§ 424.57(c)(1)(iii) was a new 

requirement. It was merely a 

restatement of the fact that we had 

finalized § 424.57(c)(1)(iii) in the August 

27, 2010 rule. However, we decline to 

accept the suggestion to withdraw our 

proposal to remove § 424.57(c)(1)(iii) for 

the reasons outlined in the April 4, 2011 

proposed rule and in the summary of 

this provision outlined earlier in this 

final rule. 

After review of the public comments 

received, we are finalizing the proposed 

changes to § 424.57(c)(1) without 

modification. 

D. State Licensure Requirement 

Exception 

Per § 424.57(c)(7), a DMEPOS supplier 

must maintain a physical facility on an 

appropriate site. The August 27, 2010 

final rule added several paragraphs to 

§ 424.57(c)(7), of which paragraph 

(c)(7)(i)(A) stated that an appropriate 

site must, among other things, meet the 

following size requirement: 

Except for State-licensed orthotic and 

prosthetic personnel providing custom 

fabricated orthotics or prosthetics in private 

practice, (the DMEPOS supplier) maintains a 

practice location that is at least 200 square 

feet. (Parentheses added.) 

In the April 4, 2011 rule, we proposed 

to modify § 424.57(c)(7)(i)(A) to allow 


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Federal Register / Vol. 77, No. 50 / Wednesday, March 14, 2012 / Rules and Regulations 14993 

orthotic and prosthetic professionals to 

qualify for the minimum square footage 

exception if the State does not offer 

licensure. We believed that due to 

variations in State licensing procedures, 

comparable practitioners should not be 

excluded from this exception. Of course, 

if a State does offer licensure for 

orthotic and prosthetic professionals, 

the supplier must obtain licensure in 

order to qualify for the minimum square 

footage exception. We received the 

following comments on this proposal: 

Comment: For the square footage 

requirements, a commenter stated that 

DMEPOS suppliers furnishing orthotic 

and prosthetic items and services 

should have a facility large enough to 

perform all activities associated with 

orthotic and prosthetic activities, 

including a laboratory. The commenter 

expressed concern about orthotic and 

prosthetic offices that are very small, 

have little overhead, and spend time 

serving patients at nursing homes and 

other provider facilities. The commenter 

stated that this makes it difficult for 

larger facilities to compete. 

Response: As we stated in the August 

27, 2010 final rule (75 FR 52636), we 

received the following comment to the 

January 25, 2008 proposed rule, which 

proposed a minimum square footage 

requirement in § 424.57(c)(7): 

One commenter believes the minimum 

square footage requirement causes potential 

issues for orthotic and prosthetic suppliers, 

since the lab area is separate from the patient 

area and is often located off-site. The patient 

interaction area is most important, but since 

this area can be as small as 80 square feet, 

the size requirement should not be imposed 

as to orthotic and prosthetic suppliers. 

We agreed with this comment and, as 

a result, established an exception to the 

proposed requirement for certain 

orthotic and prosthetic suppliers. While 

we understand the April 4, 2011, 

proposed rule commenter’s concerns, 

we continue to believe that this 

exception is necessary. 

After review of the public comments 

received, we are finalizing the proposed 

changes to § 424.57(c)(7)(i)(A) without 

modification. 

E. Open Hours Exception 

Section 424.57(c)(30)(i), in the August 

27, 2010 final rule, states that suppliers 

must be open to the public a minimum 

of 30 hours per week. Section 

(c)(30)(ii)(B) of this section prescribes an 

exception to this requirement for 

‘‘licensed non-physician practitioners 

whose services are defined in sections 

1861(p) and 1861(g) of the Act (and) 

furnishes items to his or her own 

patients as part of his or her 

professional service.’’ (Parentheses 

added.) Sections 1861(p) and (g) of the 

Act define certain outpatient physical 

therapy services and certain outpatient 

occupational therapy services, 

respectively. In the April 4, 2011 

proposed rule to clarify which nonphysician practitioners fall under 

§ 424.57(c)(30)(ii)(B), we proposed to 

remove the phrase ‘‘licensed nonphysician practitioners’’ from 

§ 424.57(c)(30)(ii)(B) and simply refer to 

physical and occupational therapists. 

We did not receive any comments on 

this provision. Therefore, we are 

finalizing proposed changes to 

§ 424.57(c)(30)(ii)(B) without 

modification. 

F. Out of Scope Comments 

We received several other comments 

that were outside of the scope of the 

proposed rule. Therefore, we are not 

addressing these comments in this final 

rule. 

III. Provisions of Final Rule 

This final rule finalizes the provisions 

of the proposed rule without 

modification. 

IV. Collection of Information 

Requirements 

This document does not impose 

information collection and 

recordkeeping requirements. 

Consequently, it need not be reviewed 

by the Office of Management and 

Budget under the authority of the 

Paperwork Reduction Act of 1995 (44 

U.S.C. chapter 35). 

V. Regulatory Impact Statement 

We have examined the impacts of this 

rule as required by Executive Order 

12866 on Regulatory Planning and 

Review (September 30, 1993), Executive 

Order 13563 on Improving Regulation 

and Regulatory Review (February 2, 

2011), the Regulatory Flexibility Act 

(RFA) (September 19, 1980, Pub. L. 96– 

354), section 1102(b) of the Social 

Security Act, section 202 of the 

Unfunded Mandates Reform Act of 1995 

(March 22, 1995; Pub. L. 104–4), 

Executive Order 13132 on Federalism 

(August 4, 1999), and the Congressional 

Review Act (5 U.S.C. 804(2)). 

Executive Orders 12866 and 13563 

direct agencies to assess all costs and 

benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). A regulatory impact analysis 

(RIA) must be prepared for major rules 

with economically significant effects 

($100 million or more in any 1 year). 

This final rule does not reach the 

economic threshold and thus is not 

considered a major rule. 

The RFA requires agencies to analyze 

options for regulatory relief of small 

businesses. For purposes of the RFA, 

small entities include small businesses, 

nonprofit organizations, and small 

governmental jurisdictions. Most 

hospitals and most other providers and 

suppliers are small entities, either by 

nonprofit status or by having revenues 

of $7.0 million to $34.5 million in any 

1 year. Individuals and States are not 

included in the definition of a small 

entity. We are not preparing an analysis 

for the RFA because the Secretary has 

determined that this rule will not have 

a significant economic impact on a 

substantial number of small entities. 

The provisions contained in this final 

rule are primarily procedural and do not 

require DMEPOS suppliers to incur 

additional operating costs. They merely 

clarify several provisions in the 

DMEPOS supplier standards covered in 

§ 424.57. We anticipate a minimal 

economic impact, if any, on small 

entities. 

As of March 2008, there were 113,154 

individual DMEPOS suppliers. 

However, due to the affiliation of some 

DMEPOS suppliers with chains, there 

were only approximately 65,984 unique 

billing numbers. We believe that 

approximately 20 percent of the 

DMEPOS suppliers are located in rural 

areas. 

Comment: A commenter suggested 

that we use current data (for example, 

June 2011) rather than data from 2008 

to update the number of DMEPOS 

suppliers found in the Regulatory 

Impact Analysis (RIA) and the 

percentage of DMEPOS suppliers that 

are located in rural areas. 

Response: The percentage of DMEPOS 

suppliers located in rural areas remains 

largely unchanged from 2008. As of June 

2011, there were approximately 102,000 

individual DMEPOS suppliers enrolled 

in Medicare. We believe that 

approximately 20 percent of Medicareenrolled DMEPOS suppliers are located 

in rural areas. 

Comment: A commenter 

recommended that CMS more fully 

explain how this proposed change will 

impact Medicare beneficiaries. 

Response: We believe that Medicare 

beneficiaries will be well-served by the 

provisions of this final rule, as the 

protections afforded by § 424.57(c)(11) 

will remain largely intact. 

In addition, section 1102(b) of the Act 

requires us to prepare a regulatory 

impact analysis if a rule may have a 

significant impact on the operations of 


pstrozier on DSK7SPTVN1PROD with RULES
14994 Federal Register / Vol. 77, No. 50 / Wednesday, March 14, 2012 / Rules and Regulations 

a substantial number of small rural 

hospitals. This analysis must conform to 

the provisions of section 604 of the 

RFA. For purposes of section 1102(b) of 

the Act, we define a small rural hospital 

as a hospital that is located outside of 

a metropolitan statistical area and has 

fewer than 100 beds. We are not 

preparing an analysis for section 1102(b) 

of the Act because the Secretary has 

determined that this final rule will not 

have a significant impact on the 

operations of a substantial number of 

small rural hospitals. 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 (UMRA) 

also requires that agencies assess 

anticipated costs and benefits before 

issuing any rule whose mandates 

require spending in any 1 year of $100 

million, updated annually for inflation. 

In 2011, that threshold is approximately 

$136 million. This rule does not 

mandate expenditures by State, local, or 

tribal governments, in the aggregate, or 

by the private sector, of $136 million; 

therefore, no analysis is required. 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it promulgates a 

proposed rule (and subsequent final 

rule) that imposes substantial direct 

requirement costs on State and local 

governments, preempts State law, or 

otherwise has Federalism implications. 

Since this regulation does not impose 

any costs on State or local governments, 

the requirements of E.O. 13132 are not 

applicable. 

In accordance with the provisions of 

Executive Order 12866, this regulation 

was reviewed by the Office of 

Management and Budget. 

List of Subjects in 42 CFR Part 424 

Emergency medical services, Health 

facilities, Health professionals, 

Medicare, Reporting and recordkeeping 

requirements. 

For the reasons set forth in the 

preamble, the Centers for Medicare & 

Medicaid Services amends 42 CFR 

chapter IV as set forth below: 

PART 424—CONDITIONS FOR 

MEDICARE PAYMENT 

■ 1. The authority citation for part 424 

continues to read as follows: 

Authority: Secs. 1102 and 1871 of the 

Social Security Act (42 U.S.C. 1302 and 

1395hh). 

Subpart D—To Whom Payment Is 

Ordinarily Made 

§ 424.57 [Amended] 

■ 2. Section 424.57 is amended by— 

■ A. Removing the definition of ‘‘Direct 

solicitation’’ in paragraph (a). 

■ B. Revising paragraph (c)(1)(ii). 

■ C. Removing paragraph (c)(1)(iii). 

■ D. Revising paragraphs (c)(7)(i)(A) and 

(c)(11). 

■ E. In paragraph (c)(30)(ii)(B), 

removing the phrase ‘‘Licensed nonphysician practitioners’’ and adding the 

phrase ‘‘A physical or occupational 

therapist’’ in its place. 

The additions and revisions read as 

follows: 

§ 424.57 Special payment rules for items 

furnished by DMEPOS suppliers and 

issuance of DMEPOS supplier billing 

privileges. 

(c) * * * 

(1) * * * 

(ii) State licensure and regulatory 

requirements. If a State requires 

licensure to furnish certain items or 

services, a DMEPOS supplier— 

(A) Must be licensed to provide the 

item or service; and 

(B) May contract with a licensed 

individual or other entity to provide the 

licensed services unless expressly 

prohibited by State law. 

* * * * * 

(7) * * * 

(i) * * * 

(A)(1) Except for orthotic and 

prosthetic personnel described in 

paragraph (c)(7)(i)(A)(2) of this section, 

maintains a practice location that is at 

least 200 square feet beginning— 

(i) September 27, 2010 for a 

prospective DMEPOS supplier; 

(ii) The first day after termination of 

an expiring lease for an existing 

DMEPOS supplier with a lease that 

expires on or after September 27, 2010 

and before September 27, 2013; or 

(iii) September 27, 2013, for an 

existing DMEPOS supplier with a lease 

that expires on or after September 27, 

2013. 

(2) Orthotic and prosthetic personnel 

providing custom fabricated orthotics or 

prosthetics in private practice do not 

have to meet the practice location 

requirements in paragraph (c)(7)(i)(A)(1) 

of this section if the orthotic and 

prosthetic personnel are— 

(i) State-licensed; or 

(ii) Practicing in a State that does not 

offer State licensure for orthotic and 

prosthetic personnel. 

* * * * * 

(11) Must agree not to contact a 

beneficiary by telephone when 

supplying a Medicare-covered item 

unless one of the following applies: 

(i) The individual has given written 

permission to the supplier to contact 

them by telephone concerning the 

furnishing of a Medicare-covered item 

that is to be rented or purchased. 

(ii) The supplier has furnished a 

Medicare-covered item to the individual 

and the supplier is contacting the 

individual to coordinate the delivery of 

the item. 

(iii) If the contact concerns the 

furnishing of a Medicare-covered item 

other than a covered item already 

furnished to the individual, the supplier 

has furnished at least one covered item 

to the individual during the 15-month 

period preceding the date on which the 

supplier makes such contact. 

* * * * * 

(Catalog of Federal Domestic Assistance 

Program No. 93.773, Medicare—Hospital 

Insurance; and Program No. 93.774, 

Medicare—Supplementary Medical 

Insurance Program) 

Dated: January 11, 2012. 

Marilyn Tavenner, 

Acting Administrator, Centers for Medicare 

& Medicaid Services. 

Approved: February 21, 2012. 

Kathleen Sebelius, 

Secretary, Department of Health and Human 

Services. 

[FR Doc. 2012–5913 Filed 3–9–12; 4:15 pm] 

BILLING CODE 4120–01–P 

DEPARTMENT OF COMMERCE 

National Oceanic and Atmospheric 

Administration 

50 CFR Part 679 

[Docket No. 111213751–2012–02] 

RIN 0648–XB038 

Fisheries of the Exclusive Economic 

Zone Off Alaska; Reallocation of 

Pollock in the Bering Sea and Aleutian 

Islands; Correction 

AGENCY: National Marine Fisheries 

Service (NMFS), National Oceanic and 

Atmospheric Administration (NOAA), 

Commerce. 

ACTION: Temporary rule; correction. 

SUMMARY: NMFS is correcting a 

temporary rule that published on 

February 29, 2012, reallocating the 

projected unused amounts of pollock 

directed fishing allowances from the 

Aleut Corporation and the Community 

Development Quota from the Aleutian 

Islands subarea to the Bering Sea 

subarea directed fisheries. There are 

errors in the table for the pollock 

allocation in the Aleutian Island subarea 

and the Bogoslof District. 

DATES: Effective March 14, 2012 through 

2400 hrs, A.l.t., December 31, 2012, and 

is applicable beginning February 29, 

2012. 


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