An aging population and the desire for patients to receive in-home care are fueling a surge in the durable medical equipment (DME) market.
Starting a durable medical equipment business: 3 things to consider
DME can include a variety of equipment, including wheelchairs, portable oxygen, diabetic testing kits, walkers, and even hospital-grade beds. Provided the equipment is intended for long-term use, the cost of DME is often covered by insurance plans and Medicare, and sellers receive a payment directly or through one of these plans.
If you’re interested in starting a durable medical equipment business and selling these items to those in need, here are three things to consider.
1. DME wholesaler vs. retailer licensing requirements
DME wholesalers and retailers are subject to separate and unique licensing requirements.
A DME wholesaler sells medical devices and supplies to retailers and other organizations that then sell or provide the equipment to the end consumer. These organizations can include pharmacies, hospitals, healthcare practitioners, and authorized businesses (grocery and convenience stores).
If you plan to operate a DME wholesale business and intend to ship equipment into or out of a state, you may be required to obtain a license from the regulatory board governing medical equipment in your state, as well as the state into which you plan to ship your product. Laws can vary so be sure to check with each individual state.
To apply for a license in a nonresident state, you typically must hold a resident state license and provide the following:
- Description of the supplies you sell
- Current facility inspection report
- Information about your company’s corporate ownership and officers
A DME retailer sells directly to the end consumer. If you are a retailer, you may need a license in each state in which you do business. Even licensed pharmacies may require additional licensure specific to the sale of DME products.
The DME retailer application process often involves:
- Verification of your corporate certificates
- List of corporate officers
- Current facility inspection report
- State license or registration
- Sales tax permit
Before you get started, verify the DME licensing requirements of your home state and any state in which you plan to operate.
2. DME compliance
The federal government conducts strict oversight of DME companies via the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) and the Centers for Medicare and Medicaid Services (CMS).
Compliance with federal laws and regulations requires the implementation of a system of review for all advertising and billing procedures. Common violations involve billing practices, referral fees and kickbacks, and marketing transgressions.
To help ensure compliance, the HHS-OIG has developed a series of compliance program guidance documents for hospitals, nursing homes, DME suppliers, and more. These can help inform the development and use of internal controls to monitor adherence to statutes and regulations.
3. DME Medicare and Medicaid billing registration
If you plan to bill a customer’s Medicare/Medicaid insurance, you should be aware of important distinctions in the billing requirements and process.
If you sell DME to Medicaid beneficiaries, you must register in each state in which sales and services will be dispensed. Furthermore, if your business bills Medicaid directly for DME, you are required to enroll as a Medicaid Provider in the state where service is provided — typically with either the Department of Community Health or the Inspector General’s office.
In addition to completing a state enrollment form, you must provide
- FEIN tax ID number
- Business license certifications of any staff member qualified to sell DME
- DME Provider Information Request Form
- Copy of the Medicare award/participation letter from your home state
- Application fee
- Electronic Funds Transfer (EFT) authorization form
If you intend to bill patients and their medical insurance, you must enroll in the U.S. Department of Health and Human Services Centers for Medicare and Medicaid Services (CMS) Medicare/Medicaid Provider-Supplier system. A failure to register can expose your business to financial risk.
To establish and maintain billing privileges, you must also meet requirements set out in the Affordable Care Act and published in the Federal Register. Designed to prevent fraud, waste, and abuse and to ensure quality care, these requirements include compliance with the following:
- Applicable federal and state licensure, regulatory, and accreditation requirements.
- Disclosure and pricing notification requisites, delivery, maintenance, and repair standards.
- Suppliers are also required to submit to on-site inspections of facilities to ensure that premises are appropriately maintained.
Note: If you do not plan to bill Medicare/Medicaid patients, you don’t need to apply for a Medicare/Medicaid Billing Number.
For more information and to apply, visit the Center for Medicare & Medicaid Services.