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Law Educator, Esq.
Law Educator, Esq., Attorney
Category: Business Law
Satisfied Customers: 111609
Experience:  All corporate law, including non-profits and charitable fraternal organizations.
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My question is about a self-referral problem. In the situation

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My question is about a self-referral problem. In the situation where I operate Business A as a Durable Medical Equipment (DME) company, for example, and then had another company under that that operated as a non-medical home care company, would it be legal to sell the products from the DME company to the patients that we take on-board for the home care company? I read somewhere that the self referral regulation only pertains to healthcare companies receiving funding from Medicare. Can you advise?

Also, what if the home care company ALSO had a DME license (within the same business entity)...then the products could be sold by the same company that is servicing the patients?
You are referring to the Stark Act which prohibits any healthcare company that receives any federal funding for payment from making referrals to other companies owned by them or from paying kickbacks to companies in exchange for referrals. If your home care company receives no federal money and your medical equipment company receives no federal money, then you would likely be running afoul of Stark provisions. If the home care company provides DME, then this is not a referral, it is one business providing both DME and home care and that is allowed.

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Customer: replied 5 years ago.
What would be the case if i provided home care and DME as one business but started billing Medicare for the DME equipment?
If your business was all in one, like when a doctor's office provides limited DME in their office, this may or may not be acceptable and it all depends on exactly what DME is being provided. According to Stark, not all DME's are covered under the DMEPOS fee schedule and those DME's can be provided by your company, but those items under the DMEPOS you cannot provide and you cannot be involved in self referrals to your own company for DME provision.
Law Educator, Esq. and 2 other Business Law Specialists are ready to help you
Customer: replied 5 years ago.
Hello again

Thank you for all the useful info. I have another related question:
Suppose I chose the combined DME and non-medical Home Care business route where the funding was all private pay. If I sold an item ON the DMEPOS schedule but got paid for it privately by the patient, would this be illegal? (if he could get it under Medicare with another medicare-contracted DME?)

Second question:
Suppose I chose the combined DME and non-medical Home Care business route where the funding was all private pay. Then at a later stage I wanted to sell DME products like braces and TENS units to doctors that worked in Workers Compensation. These work comp doctors are funded mainly by private third party insurance companies. Would this be a problem or illegal? Would it be better then to operate a separate DME company?

Thankyou kindly
If you take medicare at all, even if you sell privately then this would be a Stark issue, even if it is a non-medical business, if the person buying was a medical client of yours. If you are not self referring to these patients and your non-medical business or medical home care business has nothing to do with the patient or referral to your DME then you are fine. Stark gets very tricky.

2) Everything is better separated and you have to be careful that your DME business is not involved in referrals from your home care company that is the key.
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