CMS has issued Compliance Standards for Consignment Closets and Stock and Bill Arrangements. The purpose of Change Request 6528 was to define and prohibit certain arrangements where an enrolled supplier of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) maintains inventory at a practice location which is not owned by the enrolled DMEPOS supplier, but rather owned by a physician, non-physician practitioner or other healthcare professional, which arrangements are sometimes referred to as "consignment closets" or "stock and bill arrangements."

The CMS announcement does not prohibit these arrangements, but indicates that they must comply with the following requirements:

1.         The title to the DMEPOS shall be transferred to the enrolled physician, non-physician practitioner or practice at the time the DMEPOS is furnished to the beneficiaries;

2.         The physician or non-physician practitioner shall bill for the DMEPOS supplies and services using their own enrolled DMEPOS billing number;

3.         All services provided to a Medicare beneficiary concerning fitting or use of the DMEPOS shall be performed by individuals being paid by the physician or non-physician practitioner’s practice, and not by any other DMEPOS supplier;

4.         The beneficiary shall be advised that if he or she has a problem or question regarding the DMEPOS, then the beneficiary should contact the physician or non-physician practitioner and not the DMEPOS supplier who placed the DMEPOS at the physician or non-physician practitioner’s practice; and

5.         The National Supplier Clearinghouse Medicare Administrative Contractor (NSC-MAC) shall verify that two or more enrolled DMEPOS suppliers shall not be enrolled and/or located at the same practice location and that each practice location shall have a separate entrance and separate post office address.

In addition to these requirements, the Anti-Kickback and Stark rules would still apply to the financial arrangement between the DMEPOS supplier and the physician.