The Centers for Medicare & Medicaid Services (CMS) Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Quality Standards require that a DMEPOS supplier be responsible for furnishing the item, billing Medicare, and coordinating the care for a beneficiary in compliance with the physician’s order and Medicare rules and guidelines. However, a DMEPOS supplier may subcontract certain services.
What Can Be Subcontracted?
A DMEPOS Competitive Bidding Program (CBP) supplier (contract supplier) can contract with another company to perform the following services:
1. Purchasing Inventory: 42 CFR § 424.57(c)(4)
A supplier can contract with another company to purchase the items needed to fill an order. If they do:
- The supplier must provide copies of contracts or other documentation showing compliance, if asked.
- The subcontractor cannot be excluded from Medicare, any state health care programs, or any federal government executive branch program.
- Accreditation is not required for a subcontractor that only purchases inventory.
2. Delivery and Instruction for Use: 42 CFR § 424.57(c)(12)
A supplier can use a subcontractor to deliver Medicare-covered items to beneficiaries. The supplier must keep proof of delivery and ensure beneficiaries receive proper instructions on how to use Medicare-covered items safely and effectively.
- Accreditation is not required if the subcontractor only delivers the item.
- Accreditation is required if the subcontractor also sets up the equipment or gives instructions on its use, unless a professional exemption (Section 1834(a)(20)(F)(ii) of the Social Security Act (the Act)) or a pharmacy exemption (Section 1834(a)(20)(G) of the Act) applies.
3. Maintenance and Repair of Rented Equipment: 42 CFR § 424.57(c)(14)
A supplier can contract with another company to maintain or repair equipment it rents to patients. Repaired or replaced items must work properly after service.
- Accreditation is not required if the subcontractor only repairs the equipment.
- Accreditation is required if the subcontractor also sets up the repaired item or gives instruction on its use, unless a professional or pharmacy exemption applies.
What Cannot Be Subcontracted?
Some services are core responsibilities of the supplier and cannot be subcontracted. These include:
- Patient intake and assessment
- Coordinating care with the physician
- Submitting claims to Medicare on behalf of the patient
- Ownership and responsibility for the equipment
- Ensuring product safety
Overall Responsibility
A contract supplier can subcontract limited, specific tasks (like purchasing, delivery, or repairs), but remains fully accountable for any services provided to the beneficiary. The DMEPOS Quality Standards, which have been issued consistent with the mandate in Section 1834(a)(20) of the Act, serve as a helpful guide for understanding what the supplier must do directly versus what can be delegated.
The DMEPOS Quality Standards delineate the services that a contract supplier is required to perform in the course of furnishing quality items and services. While the DMEPOS Quality Standards are not meant to be an exhaustive list of services a supplier performs when furnishing DMEPOS, they do highlight many of the services that a contract supplier performs in the course of furnishing the item and coordinating the care for the beneficiary. Services such as intake and assessment, coordination of care with the physician, submitting claims on behalf of the beneficiary, ownership and responsibility for equipment furnished to the beneficiary, ensuring product safety, etc., are all services that cannot be subcontracted. Therefore, only contract suppliers can communicate with referral agents and Medicare beneficiaries to arrange for furnishing of competitively bid items and services.
The DMEPOS Quality Standards document many supplier services and are, therefore, a good reference tool for distinguishing the role of a contract supplier versus the role of a subcontractor. Contract suppliers are accountable for ensuring that all of the services associated with furnishing the item, including subcontracted services, are performed in compliance with the physician’s order and Medicare rules and guidelines.
All suppliers, including those that perform subcontracted services, must be accredited, unless they qualify for one of the professional exemptions or they are pharmacies that are exempt from accreditation because they satisfy the criteria described in Section 1834(a)(20)(G) of the Act. (Please note that while the pharmacy accreditation exemption applies to pharmacies that perform as subcontractors, the exemption does not apply to pharmacies that bid in the DMEPOS CBP. All contract supplier locations must be appropriately accredited.) Contract suppliers and their subcontractors must also possess the applicable State/Territory licenses to furnish the items in the competitive bidding area.