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[Federal Register Volume 76, Number 64 (Monday, April 4, 2011)]
[Proposed Rules]
[Pages 18472-18476]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-7885]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 424

[CMS-6036-P2]
RIN 0938-AQ57

Medicare Program; Revisions to the Durable Medical Equipment, 
Prosthetics, Orthotics, and Supplies (DMEPOS) Suppliers Safeguards

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would remove the definition of and modify 
requirements regarding ``direct solicitation;'' allow DMEPOS suppliers, 
including DMEPOS competitive bidding program contract suppliers, to 
contract with licensed agents to provide DMEPOS supplies unless 
prohibited by State law; remove the requirement for compliance with 
local zoning laws; and modify certain State licensing requirement 
exceptions.

DATES: To be assured consideration, comments must be received at one of 
the addresses provided below, no later than 5 p.m. on June 3, 2011.

ADDRESSES: In commenting, please refer to file code CMS-6036-P2. 
Because of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission.
    You may submit comments in one of four ways (please choose only one 
of the ways listed):
    1. Electronically. You may submit electronic comments on this 
regulation to http://www.regulations.gov. Follow the ``Submit a 
comment'' instructions.
    2. By regular mail. You may mail written comments to the following 
address ONLY: Centers for Medicare & Medicaid Services, Department of 
Health and Human Services, Attention: CMS-6036-P2, P.O. Box 8013, 
Baltimore, MD 21244-8013.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments to 
the following address ONLY: Centers for Medicare & Medicaid Services, 
Department of Health and Human Services, Attention: CMS-6036-P2, Mail 
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
    4. By hand or courier. If you prefer, you may deliver (by hand or 
courier) your written comments before the close of the comment period 
to either of the following addresses:
    a. For delivery in Washington, DC--Centers for Medicare & Medicaid 
Services, Department of Health and Human Services, Room 445-G, Hubert 
H. Humphrey Building, 200 Independence Avenue, SW., Washington, DC 
20201.
    (Because access to the interior of the Hubert H. Humphrey Building 
is not readily available to persons without Federal government 
identification, commenters are encouraged to leave their comments in 
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing 
by stamping in and retaining an extra copy of the comments being 
filed.)
    b. For delivery in Baltimore, MD--Centers for Medicare & Medicaid 
Services, Department of Health and Human Services, 7500 Security 
Boulevard, Baltimore, MD 21244-1850.
    If you intend to deliver your comments to the Baltimore address, 
please call telephone number (410) 786-9994 in advance to schedule your 
arrival with one of our staff members.
    Comments mailed to the addresses indicated as appropriate for hand 
or courier delivery may be delayed and received after the comment 
period.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Katie Mucklow Lehman, (410) 786-0537.

SUPPLEMENTARY INFORMATION:
    Inspection of Public Comments: All comments received before the 
close of the comment period are available for viewing by the public, 
including any personally identifiable or confidential business 
information that is included in a comment. We post all comments 
received before the close of the comment period on the following Web 
site as soon as possible after they have been received: http://www.regulations.gov. Follow the search instructions on that Web site to 
view public comments.
    Comments received timely will also be available for public 
inspection as they are received, generally beginning approximately 3 
weeks after publication of a document, at the headquarters of the 
Centers for Medicare & Medicaid Services, 7500 Security Boulevard, 
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 
a.m. to 4 p.m. To schedule an appointment to view public comments, 
phone 1-800-743-3951.

I. Background

A. General Overview

    Medicare services are furnished by two types of entities, 
providers, and suppliers. At Sec.  400.202, the term ``provider'' is 
defined 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. The term ``provider'' is also defined in 
sections 1861(u) and 1866(e) of the Social Security Act (the Act).
    For purposes of the durable medical equipment, prosthetics, 
orthotics, and supplies (DMEPOS) supplier standards, the term 
``supplier'' is defined in Sec.  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 that meet the DMEPOS 
supplier standards. A supplier that furnishes DMEPOS is one category of 
supplier. Other supplier categories may 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, then the supplier is also considered to be a 
DMEPOS supplier. The term ``DMEPOS'' encompasses the types of items 
included in the definition of medical

[[Page 18473]]

equipment and supplies in section 1834(j)(5) of the Act.
    The term DMEPOS is defined at section 1861(n) of the Act. This 
definition, in part, excludes from coverage as DMEPOS, items furnished 
in skilled nursing facilities and hospitals. Also, the term DMEPOS is 
included in the definition of ``medical and other health services'' 
found at section 1861(s)(6) of the Act. Furthermore, the term is 
defined in Sec.  414.202 as equipment furnished by a supplier or a HHA 
that--
     Can withstand repeated use;
     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 for use in the home.
    Examples of DMEPOS supplies include items such as blood glucose 
monitors, hospital beds, nebulizers, oxygen delivery systems, and 
wheelchairs.Prosthetic devices are included in the definition of 
``medical and other health services'' under section 1861(s)(8) of the 
Act. Prosthetic devices are defined in this section of the Act 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, prosthetic devices do not 
include parenteral and enteral nutrition nutrients 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 
is covered by Medicare. Other items that may be furnished by suppliers 
would include the following (among others):
     Prescription drugs used in immunosuppressive therapy 
furnished to an individual who receives an organ transplant for which 
payment is made under this title, and that are furnished within a 
certain time period after the date of the transplant procedure as noted 
at 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 listed at section 
1861(s)(12) of the Act.
     Home dialysis supplies and equipment, self-care home 
dialysis support services, and institutional dialysis services and 
supplies included at section 1861(s)(2)(F) of the Act.
     Oral drugs prescribed for use as an anticancer therapeutic 
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 Health and Human Services (the 
Secretary) to prescribe regulations for the efficient administration of 
the Medicare program. Under this authority, this proposed rule will 
require the collection of information from providers and suppliers for 
the purpose of enrolling in the Medicare program and granting 
privileges to bill the program for health care services furnished to 
Medicare beneficiaries.
     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.
    In the August 27, 2010 we published a final rule (75 FR 52629) 
regarding DMEPOS supplier standards which became effective on September 
27, 2010.

II. Provisions of the Proposed Regulations

    This proposed rule would apply to all DMEPOS suppliers and would 
revise several of the DMEPOS supplier standards set forth at Sec.  
424.57(c).
    With the passage of the Affordable Care Act and efforts to focus on 
waste, fraud, and abuse of our Medicare system, one of our goals has 
been to reduce expenditures and provide better quality and access to 
care. This rule is in furtherance of this goal but also addresses the 
realities that certain suppliers confront as they attempt to provide 
quality care and maintain access for beneficiaries.
    To ensure that DMEPOS suppliers understand how CMS interprets the 
DMEPOS supplier standards, we are revising certain supplier standards 
specified in Sec.  424.57(c). Further, we are clarifying our 
interpretation of these provisions so as to ensure that our approach 
protects against fraud, waste, and abuse but also preserves access to 
services for our beneficiaries.

A. Direct Solicitation

    The August 27, 2010 final rule implemented an expansion of a 
provision regarding the ``direct solicitation'' of Medicare 
beneficiaries by DMEPOS suppliers in Sec.  424.57(c)(11). The final 
rule enlarged the scope of the provision beyond prohibiting unsolicited 
telephone contacts to include in-person contacts, e-mail, and instant 
messaging. We continue to be concerned about the potential for abuse 
caused by ``direct solicitation'' by DMEPOS suppliers and will continue 
to evaluate DMEPOS supplier marketing practice to ensure our 
beneficiaries are protected from abusive practices. Based upon our 
continuing need to evaluate these practices, we believe further 
investigation is necessary to determine how the agency plans to address 
this concern. 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 solicitation.''
    The original intent of the August 27, 2010 final rule was to limit 
the circumstances in which DMEPOS suppliers could directly contact 
beneficiaries. The purpose was to inhibit the direct, coercive, and 
targeted solicitation of our nation's senior citizens. We are concerned 
that these solicitations and subsequent purchases can be fraudulent or 
abusive in nature,

[[Page 18474]]

which may result in monetary increases in health care costs and further 
drains on the Medicare Trust Fund.
    Since publication of the August 27, 2010 final rule, we discovered 
that implementation of the expanded portions of this provision as 
written is unfeasible. The definition of ``direct solicitation'' has 
been criticized as overly broad as it covers some types of marketing 
activity outside the bounds of what we intended to prohibit under our 
regulations. Thus, we are proposing to revise Sec.  424.57(a) to remove 
the definition of ``direct solicitation'' and revise our regulations at 
Sec.  424.57(c)(11).
    The supplier standard at Sec.  424.57(c)(11) currently states that 
suppliers must do the following:

    Agree not to make a direct solicitation (as defined in Sec.  
424.57(a)) of a Medicare beneficiary unless one or more of the 
following applies:
    (i) The individual has given written permission to the supplier 
or the ordering physician or nonphysician practitioner to contact 
them 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.

    We propose to revise this supplier standard to remove the 
prohibition against suppliers' ``direct solicitation'' of patients, 
which included, but was not limited to, a prohibition on telephone, 
computer e-mail or instant messaging, or in-person contacts and to 
revert to restrictions on suppliers effective before publication of the 
August 27, 2010 final rule. Thus, we are proposing to remove the 
definition of ``direct solicitation'' and to revise the supplier 
standard at Sec.  424.57(c)(11) to read as follows:
    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.

    Although we are proposing to modify the supplier standard on direct 
solicitation at Sec.  424.57(c)(11), we will continue to actively 
monitor the issue of potentially unwanted and unsolicited 
communications between DMEPOS suppliers and beneficiaries. 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.

B. Contractual Arrangement Issues

    In the August 27, 2010 final rule, we sought to ensure oversight of 
DMEPOS suppliers by adding an additional layer of oversight in the form 
of State law. The absence of express State law in certain areas of 
DMEPOS suppliers oversight has led to confusion among suppliers as to 
who they may contract with under our programs. We are seeking to 
clarify that contracting with an individual or entity for licensed 
services is permissible in the absence of an express prohibition. In 
addition, the existing supplier standards permits competitive bidding 
program contract suppliers to contract for licensed services if such 
contracting is permitted by the State where the licensed services are 
performed. As with other suppliers, we believe contract suppliers may 
contract for licensed services in the absence of an express State 
prohibition. By making the proposed clarification (that is, it is 
permissible for suppliers to contract for licensed services in the 
absence of an express State prohibition), we believe the requirements 
for contract suppliers are also clarified and that the reference to 
competitive bidding program contract suppliers in the existing 
regulation is unnecessary and redundant. Therefore, we are proposing to 
revise Sec.  424.57(c)(1)(ii) by -(1) removing the reference to 
contract suppliers; and (2) specifying that a DMEPOS supplier may 
contract with an individual or other entity to provide the licensed 
services unless expressly prohibited by State law.
    Suppliers are reminded that they must always comply with any 
applicable Federal and State laws, including, without limitation, those 
related to fraud and abuse.

C. Local Zoning Requirements

    In the August 27, 2010 final rule, we finalized regulations at 
Sec.  424.57(c)(1)(iii), that required DMEPOS suppliers to comply with 
all local zoning requirements. The requirement that suppliers comply 
with local zoning requirements was originally intended to add an 
additional level of protection to the Medicare program by helping to 
prevent waste, fraud, and abuse. Under this new zoning compliance 
requirement, we could ensure DMEPOS suppliers were actually providing 
goods and services to Medicare beneficiaries in a physical location 
rather than out of a residence, a practice often prohibited by 
municipal code zoning requirements.
    However, because State and municipal laws vary considerably and are 
often subject to frequent changes, we believe that the task of ensuring 
suppliers comply with local zoning laws is best left to the States. Our 
contractors do not have access to the information needed to verify each 
and every compliance requirement, nor are they aware of municipal code 
provisions, including zoning exceptions, needed to complete compliance 
verification.
    Therefore, we are proposing to remove the language in Sec.  
424.57(c)(1)(iii) which requires DMEPOS suppliers to comply with local 
zoning requirements as part of the supplier standards. 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 
since the local municipalities are most familiar with their respective 
requirements and have jurisdiction over these matters.

D. State Licensing Requirement Exceptions

    DMEPOS supplier standards require that DMEPOS suppliers maintain a 
physical facility on an appropriate site as specified in Sec.  
424.57(c)(7)(i). Currently, Sec.  424.57(c)(7)(i)(A) states that DMEPOS 
suppliers must meet certain square footage requirements. This provision 
has an exception for State-licensed orthotic and prosthetic 
professionals providing custom fabricated orthotics or prosthetics in 
private practice. We are proposing that if a State does not offer 
licensure for orthotic and prosthetic personnel providing custom 
fabricated orthotics or prosthetics in private practice, then those 
non-State licensed suppliers in private practice would also meet the 
exception. However, if the suppliers' State does offer licensure for 
this practice area, the exception would apply only to those holding the 
applicable State license.
    Therefore, we propose to modify Sec.  424.57(c)(7)(i)(A) to add a 
provision

[[Page 18475]]

that allows prosthetic and orthotic professionals to qualify for the 
minimum square footage exception if the State does not offer licensure. 
We are proposing this modification because we believe that due to the 
variations in State licensing procedures, comparable practitioners 
should not be excluded under this rule. However, if a State does offer 
licensure for such professionals, the orthotics and prosthetics 
professionals would be required to obtain licensure in order to qualify 
for the exception to the minimum square footage requirement set forth 
in Sec.  424.57(c)(7)(i)(A).
    In addition, our current regulations at Sec.  424.57(c)(30)(i) 
state that suppliers must be open to the public a minimum of 30 hour 
per week. Paragraph (c)(30)(ii)(B) of this section specifies an 
exception to the minimum hours of operations requirement for licensed 
non-physician practitioners whose services are defined in section 1861 
(p) and (g) of the Act. We note that section 1861(p) and (g) of the Act 
define certain outpatient physical therapy services and certain 
outpatient occupational therapy services, respectively. Therefore, to 
clarify which non-physician practitioners qualify for the minimum hours 
of operations exception, we are proposing to revise Sec.  
424.57(c)(30)(ii)(B) by removing the phrase ``licensed non-physician 
practitioners'' and more specifically referring to the applicable 
sections of the Act. This also should remove any associated confusion 
that the public has regarding the impact of licensure in meeting this 
exception.

III. 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).

IV. Response to Comments

    Because of the large number of public comments we normally receive 
on Federal Register documents, we are not able to acknowledge or 
respond to them individually. We will consider all comments we receive 
by the date and time specified in the DATES section of this preamble, 
and, when we proceed with a subsequent document, we will respond to the 
comments in the preamble to that document.

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), 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 (Pub. L. 104-4), Executive Order 13132 on 
Federalism (August 4, 1999), and the Congressional Review Act (5 U.S.C. 
804(2)).
    Executive Order 12866 directs 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 proposed 
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 
for small entities, if a rule has a significant impact on a substantial 
number of small entities. For purposes of the RFA, small entities 
include small businesses, nonprofit organizations, and government 
agencies. Most hospitals and most other providers and suppliers are 
small entities, either by nonprofit status or by having revenues of 
$7.0 to $34.5 million in any 1 year. (For details, see the Small 
Business Administration's Web site at http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&sid=2465b064ba6965cc1fbd2eae60854b11&rgn=div8&view=text&node=13:1.0.1.1.16.1.266.9&idno=13 (refer to the 620000 series. There are 
four categories of provider revenues listed, $7.0, $10.0, $13.5, and 
$34.5 million or less). 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. We have determined 
that the RFA is reasonable given that the provisions contained in this 
proposed rule are primarily procedural and do not require DMEPOS 
suppliers to incur additional operating costs. We also believe that the 
regulatory impact of this proposed rule is negligible and not 
calculable. This proposed rule would revise and clarify our current 
policy in the DMEPOS supplier standards covered in Sec.  424.57. 
Therefore, 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.
    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 a substantial number of small rural hospitals. This 
analysis must conform to the provisions of section 603 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 proposed rule will not have a significant impact 
on the operations of a substantial number of small rural hospitals. Any 
language herein impacting rural institutions will only serve to place 
fewer restrictions on these entities, creating a small burden, if any. 
We understand that a large number of DMEPOS suppliers fall into this 
category, however these provisions are very narrow in scope and we 
expect that legitimate DMEPOS suppliers are already meeting these 
provisions.
    Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule that may result in expenditure in any 1 year by State, 
local, or tribal governments, in the aggregate, or by the private 
sector, of $100 million. In 2011, that threshold was approximately $136 
million. This rule does not mandate expenditures by State, local, or 
tribal governments, in the aggregate, or by the private sector of $135 
million and 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.
    We have considered alternatives to all of the provisions.
    For instance, to reduce the burden associated with the provision 
limiting ``direct solicitation,'' but also to establish some standards 
of conduct and

[[Page 18476]]

beneficiary protection, we are relaxing the current rule barring 
``direct solicitation'' and are reverting to the requirements in place 
prior to the August 27, 2010 final rule. We did consider the 
alternative of not proceeding with the proposed provisions; however, we 
believe that the proposed rule is necessary to ensure consistency and 
clarity with regard to supplier standards. In addition, we are relaxing 
our standards to enable certain nonphysician practitioners to more 
easily provide access to care for our beneficiaries by reducing the 
burden associated with the provisions limiting licensed professionals, 
zoning requirements, and addressing certain contractual arrangement 
issues.
    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 proposed to amend 42 CFR part 424 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

Sec.  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 non-
physician practitioners'' and adding the phrase ``A physical or 
occupational therapist'' in its place.
    The additions and revisions read as follows:

Sec.  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 an 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.
* * * * *

    Authority: (Catalog of Federal Domestic Assistance Program No. 
93.773, Medicare--Hospital Insurance; and Program No. 93.774, 
Medicare--Supplementary Medical Insurance Program)

    Dated: February 9, 2011.
Donald M. Berwick,
Administrator, Centers for Medicare & Medicaid Services.
    Approved: February 25, 2011.
Kathleen Sebelius,
Secretary.
[FR Doc. 2011-7885 Filed 4-1-11; 8:45 am]
BILLING CODE 4120-01-P
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