The DME supplier that bills Medicare for items it furnishes is responsible for the overall service of furnishing the item and coordinating the care for the beneficiary. DME suppliers, including contract suppliers, are required to meet all Medicare requirements, including compliance with the Medicare DMEPOS Quality Standards. That “primary supplier” is responsible overall, but Medicare regulations allow a DME supplier to subcontract only certain services. (42 C.F.R. 424.57(c)).
The primary DME supplier is required to directly perform the following services:
- 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, and
- ensuring product safety.
Services which can be subcontracted include the following:
- purchase of inventory,
- delivery and instruction on use of the item, and
- repair of rented equipment.
For more information, see Subcontracting Fact Sheet
If a contract supplier chooses to subcontract services, it must ensure that its subcontractors are in compliance with all Medicare requirements, including accreditation, state licensure, and other Medicare requirements.
The contract supplier must also provide information to CMS/CBIC on each subcontracting arrangement and the terms under contract. The supplier must disclose to CMS/CBIC on whether each subcontractor meets applicable accreditation requirements, within 10 days after the supplier enters into the contract with CMS. If the contract supplier enters into a subcontracting arrangement after being awarded a contract, the supplier has 10 days from entering into the subcontracting relationship to provide this information to CMS.
For more information on subcontracting, see Contract Supplier Obligations Fact Sheet.
Non-contract suppliers that are renting competitively bid items, including oxygen and oxygen equipment, at the time contracts in a new round of competition begins may become grandfathered suppliers to those beneficiaries. A grandfathered supplier means that the supplier agrees to continue to provide items and services to the beneficiaries, until medical necessity ends, or the rental period ends (whichever occurs first). All suppliers that are not awarded contracts to furnish rented DME or oxygen and oxygen equipment must (1) decide if they will choose to become a grandfathered supplier; (2) notify beneficiaries of their decision, and (3) fulfill other requirements.
If a non-contract supplier chooses to be a grandfathered supplier for a product category, it must grandfather all items within that product category to all Medicare beneficiaries who are renting the DME, including oxygen, at the time the contracts become effective. The beneficiary may choose to stay with the grandfathered supplier or may choose to receive competitive bid items from a contract supplier. Grandfathered suppliers may also furnish competitively bid accessories and supplies used in conjunction with, or that are necessary for, the use of the grandfathered item.
Grandfathered suppliers will be paid the SPA in that CBA for the items, and these suppliers are required to accept assignment.
Non-contract suppliers are required to provide written notice of their decision whether they will be a grandfathered supplier to all of their Medicare beneficiaries who reside in a CBA and who are currently renting competitive bid items. That notice must occur at least 30 business days prior the contract implementation. The written notice must tell the beneficiaries if the supplier will be a grandfathered supplier and must also explain the grandfathering process and the options available to the beneficiary. If the beneficiary chooses to switch to a contract supplier, the current supplier must provide the beneficiary with two additional notices before picking up the equipment. The supplier must contact the beneficiary 10 business days prior to picking up the equipment, and again 2 business days before the pick-up. The non-contract supplier and contract supplier must coordinate the pick-up and delivery of the equipment to ensure there is no disruption.
Grandfathering applies to the following rented items:
- oxygen and oxygen equipment,
- standard manual wheelchairs, standard power wheelchairs,
- hospital beds,
- group 1 support surfaces,
- group 2 support surfaces,
- commode chairs,
- patient lifts, seat lift mechanisms,
- negative pressure wound therapy (NPWT) pumps,
- respiratory assist devices, and
For more information, check out the MLN Fact Sheet.