CMS Limits Consignment Closet and Stock Bill Arrangements

On September 1, 2009 the Centers for Medicare & Medicaid Services (“CMS”) issued Change Request 6528 which amends the Medicare Program Integrity Manual, chapter 10, section 21.8. The purpose of the change request is to “define and prohibit certain arrangements” where an enrolled supplier of durable medical equipment, prosthetics, orthotics, and supplies (“DMEPOS supplier”) maintains inventory at a practice location owned by a physician or non-physician practitioner and the billing and furnishing of DMEPOS items is done by the physician or non-physician practitioner. Such an arrangement is commonly referred to as a consignment closet or a stock and bill arrangement.

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