Transcript
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Greg Corombos: Hi, I'm Greg Corombos. Our guest in this edition of Expert Insights is Hans Howk. He is Manager of Content Management at CT Corporation. Today, Hans is going to share some of his advice for businesses providing durable medical equipment or home medical equipment. What do these business owners need to know about compliance requirements? And what are the best ways to meet those requirements? And Hans, thanks very much for being with us.
Hans Howk: Thanks, Greg, happy to be here.
GC: These sorts of businesses can be very challenging from a regulatory or compliance standpoint. So explain why that is, first of all, and also how important it is to stay on top of what those requirements are?
HH: Well, first of all, it's a highly regulated industry. DME — durable medical equipment — is a subset of medical equipment generally. And it warrants some understanding because different states will regulate it differently and we want to understand the regulations involved in every state. We want to understand what DME is called, or defined as, in every state so that we can be sure that we are compliant as a business.
GC: Well, let's start answering those questions. First of all, what exactly is durable medical equipment?
HH: Yeah, durable medical equipment is, as the name suggests, medical equipment that is durable. It's designed to be used more than once, often in an at-home setting. That usually doesn't contain any sort of prescription drug, although there are some exceptions. And it can include things like crutches, back braces, oxygen equipment, infusion pumps and supplies, pretty much a wide array of devices that can vary somewhat from state to state. But in general, all medical equipment shares, the quality of being multiple use and safe for an at home setting.
GC: So, what are some of the steps required to sell durable medical equipment at a retail level? What do you have to have in place before you can open those doors?
HH: Well, you need to register your establishment at the federal level. So, whether you're a manufacturer or distributor, you're going to need to register with the Food and Drug Administration as an establishment. Then you're going to need to register with whatever states you want to do business in whether that's your home state, you want to form your business, obviously. And then when you get down to the specifics, you're going to want to look and see whether or not your state has a specific license requirement for durable medical equipment, whether that be a retail supplier or a wholesale distributor.
GC: What are some of the more common DME license application requirements?
HH: You are going to find that many times the owner or operator of the DME establishment is going to need to get fingerprinted. You're going to need to show evidence that you have registered with the secretary of state in which you are planning to do business. You're going to need to show that you have an FBI and a federal employee identification number. That you have some sort of experience or training in the industry. And it varies by state, so it's going to differ on exactly who is regulating you. But you're going to usually need to show a copy of your own state license if you're doing business in a foreign state.
You will probably need to obtain a sales tax permit. Although many DME products are specifically exempt from sales tax, many states will still make you register for sales tax. And often states will ask that you are accredited with a national accreditation service. There is about 10 national accreditation services that are approved by the Center for Medicare and Medicaid Services (CMS). And many states require that a DME supplier or distributor be accredited by one of those.
GC: Now licensing can get pretty complex in this arena. So, how do you determine what your specific licensing requirements are?
HH: Yeah, it's not always clear whether your business needs to be licensed in a particular state. It's really determined on a case-by-case basis. A lot of times it's determined by the product that you're selling, and to whom you are selling it to. So, things such as whether or not your device is considered a legend device –that is whether it's required to be dispensed upon a prescription—that’s going to matter to some states not all states to some states. Whether you are a resident of that state or a nonresident of that state. Some states hold licenses for residents but do not license nonresident entities. And whether or not you are selling direct to the consumer or wholesale to facilities and practitioners. All those are factors that are going to go into whether or not you need a license.
GC: We're talking with Hans Howk of CT Corporation, Manager of Content Management, and we're talking about the licensing requirements and other compliance measures for businesses dealing with durable and home medical equipment. Hans, are licensed home health agencies are physicians required to obtain licensing?
HH: Often yes, if they are distributing or supplying durable medical equipment to patients, they will also need to hold a DME license in their state in addition to their health professional license. Now, there are some exemptions for some states. If you hold a pharmacy license, you may be exempt from also needing a DME license. Or if you hold a wholesale drug distributor license, you may be exempt from also needing a DME license. But again, that's a case-by-case basis and it's important to look up the regulations of that particular state to determine
GC: Well, if you think compliance is difficult, wait until you get tagged with non-compliance. So, what are the ramifications of noncompliance in this world?
HH: Aside from the obvious, you know, you're going to need to cease your business. Civil and criminal penalties exist, and they are large. So, if you are involved in setting up or installing any sort of DME equipment, you or your employees—whether you're distributing, delivering installing setting up—you really need to make sure that you are fulfilling the regulations of whichever state you are operating in because penalties can be harsh
GC: Hans, what other advice do you have for business owners when it comes to properly being licensed properly, complying with other state and federal requirements? And at the same time, how can CT Corporation help folks navigate some of those hurdles?
HH: Yep. So oftentimes, state agencies will be forthcoming and helpful when it comes to licensing. Oftentimes, they won't. So, it is important to reach out to professionals who deal with this every day like CT Corporation, just to make sure that you are complying with all the regulations at the federal state and local level.
You know, we mentioned federal and state, but oftentimes a business might need a local county health permit or a local business license for the city in which they're operating or in which their warehouses. So, there are a lot of compliance points that you need to make sure that you are checking off of your list when starting a DME business or any business but specifically a DME business. And it's always helpful to reach out to an entity such as CT that has large databases full of these licensing requirements and can tell you exactly what you need so that you are, if anything, over compliant and certainly not deficient.
GC: Having some navigation along that regulatory path is always a huge help. Hans, thank you very much for your time today. We greatly appreciate it.
HH: Thanks, Greg. Appreciate it.
GC: Hans Howk is Manager of Content Management at CT Corporation. I'm Greg Corombos reporting for Expert Insights. For more information on this subject, please contact CT Corporation today.
