Page 20 - HME Business, September 2017

The Distributed Provider
Jessica Fairbanks of NuCara Home Medical uses Health Mobius, along with other vendors, to streamline their ship-to-home services. One of their goals is to get products to their patients as soon as possible. Approximately 10 percent of her company’s business uses a fulfillment model.
Benefits of the turnkey system, she says, is
it decreases inventory needed in the actual store and allows for quick turnaround time to the patient. It also gives her staff more time to handle other tasks, she says.
Regarding challenges using turnkey services, she says that educating their patients that they can order products online is an ongoing task.
For providers considering turnkey services, Haddad advises, “Do your homework. Assess your options. Take the most profitable path with the least resistance. Selling retail home health products is a no brainer. Finding the right
partner and program that enables you to keep up with new products, manage online pricing and scale up with technology in a quick, efficient way is critical.”
VGM Fulfillment (www.vgmfulfillment.com)
VGM Fulfillment offers a CPAP patient re-supply service on behalf of HME providers. This includes providing custom integration with any billing system and custom reporting based on providers’ individual needs. Re-supply orders are fulfilled using relationships with UPS, USPS, and FedEx.
“Providers are able to outsource their entire CPAP resupply, freeing up time they would have spent on warehousing products and owning all the logistics of patient re-supply,” says Shalini Douglas, implementation and automation manager for VGM Fulfillment. “With our fulfill-
ment services, providers have no cash tied up in product on their shelves; they pay for the product only when it is sold. We carry resupply products offered by more than a dozen manu- facturers. With our consignment operation, product is on our shelves, and contracted pricing remains between the manufacturer and the provider. VGM Fulfillment only bills for shipping and handling.”
Douglas says there are no upfront costs to use the service and providers pay for orders as they are shipped and maintain their pricing arrange- ments privately with the manufacturers.
To help boost HME providers’ success using their turnkey service, VGM Fulfillment can insert flyers and other custom print pieces into patient orders on behalf of the provider. VGM has an in-house design team and printing business that handles the design and printing of these pieces. There is a fee for marketing services. Prices vary
Legal Perspective: Selling Funded Products Using Turnkey Services
To learn about any legal issues HME providers should understand when using a fulfillment turnkey service, HME Business magazine turned to Jeffrey Baird, Esq., chairman of the Health Care Group at law firm Brown & Fortunato, P.C.
HME Business: Are HME providers allowed to sell funded products using a turnkey service?
Baird: Yes. This arrangement is commonly referred to as a “fulfill- ment” arrangement. It operates as follows: First, the DME supplier will generate customers through its marketing program. Second, the DME supplier will handle the “intake, assessment and coordination of care.” This means that the supplier will secure the physician’s order and will determine if the medical necessity criteria is met. Third, if the supplier determines that the medical necessity criteria is met, then it will direct the “fulfillment house” (e.g., McKesson) to ship the product to the customer. Fourth, in shipping the product to the customer, the fulfill- ment house will affix the DME supplier’s label to the shipping package. Fifth, the supplier will bill and collect from the third-party payer. Sixth, the supplier will pay the fulfillment house for the inventory and for labeling, packing and shipping. And seventh, if the customer has follow- up questions, he or she will contact the supplier.
Are there any legal concerns a provider should consider when using such a system?
Let’s focus on Medicare. Medicare requires the DME supplier to handle the “intake, assessment and coordination of care.” The fulfillment house cannot handle this function for the supplier. The supplier and the fulfill- ment house should enter into a written agreement that sets out each party’s rights and obligations and contains a HIPAA-compliant Business Associate Addendum.
Anything else providers should know about using turnkey services?
Yes. Let’s focus on Medicare again. While the fulfillment house can
provide turnkey “pack, label, and ship”
services, the fulfillment house cannot run
the DME operation’s overall business on a
turnkey basis. Doing so would violate the
OIG’s April 2003 Special Advisory Bulle-
tin, entitled ‘Contractual Joint Ventures.’
From the OIG’s standpoint, if the DME
supplier is going to bill Medicare for prod-
ucts, then the DME supplier must have
operational responsibilities and financial
risk. Says another way, the supplier must
have “skin in the game.” When the sup-
plier submits a claim to Medicare, the
supplier is representing that it (the sup-
plier) is truly the supplier of the product.
If the fulfillment house is running all of
the supplier’s operations on a turnkey
basis, then such representation is false,
hence, a violation of the federal False Claims Act. The fulfillment house can provide services that are in addition to ‘pack, label and ship,’ but such additional services cannot amount to the fulfillment house running the supplier’s entire operation on a turnkey basis.
One more thing: The safe course of action is for the fulfillment house not to provide any marketing services for the supplier. If the supplier
is generating customers for the supplier, and if the supplier is paying
for the products (and for the “packing, labeling and shipping”) on a per-product basis, then the compensation paid by the supplier to the fulfillment house will vary based on the customers generated by the fulfillment house to the supplier. This will implicate the Medicare anti-kickback statute (AKS). I am not saying that the fulfillment house cannot provide marketing services to the supplier; however, if it does so, then the arrangement needs to be carefully structured in order to avoid violating the AKS.
There are several key legal consid- erations in a distributed provider scenario, according to Jeffrey Baird, Esq., chairman of the Health Care Group at law firm Brown & Fortunato, P.C.
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