What to consider with DME agreements

Contract Language. By Steven M. Harris, AMNews contributor. Aug. 7, 2006.

CONTRACT LANGUAGE

A column examining the ins and outs of contract issues

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A physician group client of mine recently received a proposed services agreement from a durable medical equipment firm -- something many doctors are considering, and something doctors must enter into cautiously because of recent declarations that such deals could violate fraud and abuse laws if constructed in certain ways.

The group is seeking to contract with the DME company for provision of DME and setup services through a licensed professional employed by the company. The physicians seek to provide DME to their patients through this agreement to enable their patients to have convenient access to what they judge to be high-quality DME, as well as related training and instruction.

This column highlights the content of the proposed agreement and also addresses regulatory considerations, including the recent DME Competitive Bidding Program and OIG advisory opinion.

The Office of Inspector General issued an advisory opinion on March 21 that addressed two programs proposed by a DME and orthotics manufacturer and supplier that designs, develops, and manufacturers and markets products.

The DME supplier sought an opinion on the two programs it wanted to offer to physicians. One would offer physician practices "the opportunity" to be DME suppliers for items and services furnished to patients "who are not beneficiaries of any federal health care program." Physicians would buy products at a predetermined price from the supplier, then sell them to non-federal patients, billing them and their plans directly.