Manufacturers of Replacement Parts/Supplies for Prosthetic Implants or Implantable Durable Medical Equipment (DME) Surgically Inserted at an ASC
Since Part A/B Medicare Administrative Contractors (A/B MACs) make payments for implantable prosthetics and DME to hospitals, physicians or ASCs, A/B MACs shall not enroll manufacturers of implantable or non-implantable and prosthetics DME into the Medicare program. A manufacturer of non-implantable prosthetics and DME and replacement parts and supplies for prosthetic implants and surgically implantable DME may enroll in the Medicare program as a supplier with the National Supplier Clearinghouse if it meets the definition of a supplier as well as the requirements in 42 CFR § 424.57.
Owning and Managing Organizations
1. A 5 percent or greater direct or indirect ownership interest in the provider.
The following illustrates the difference between direct and indirect ownership:
EXAMPLE: The supplier listed in section 2 of the Form CMS-855B is an ambulance company that is wholly (100 percent) owned by Company A. Company A is considered to be a direct owner of the supplier (the ambulance company), in that it actually owns the assets of the business. Now assume that Company B owns 100 percent of Company A. Company B is considered an indirect owner - but an owner, nevertheless - of the supplier. In other words, a direct owner has an actual ownership interest in the supplier, whereas an indirect owner has an ownership interest in an organization that owns the supplier.
See the instructions for section 5 of the Form CMS-855 for additional information on indirect ownership.
2. Mortgage or security interest
For purposes of enrollment, ownership also includes "financial control." Financial control exists when:
(a) An organization or individual is the owner of a whole or part interest in any mortgage, deed of trust, note, or other obligation secured (in whole or in part) by the provider or any of the property or assets of the provider, and
(b) The interest is equal to or exceeds 5 percent of the total property and assets of the provider.
All entities with at least a 5 percent mortgage, deed of trust or other security interest in the provider must be reported in section 5. This frequently will include banks, other financial institutions, and investment firms,
3. Any general partnership interest in the provider, regardless of the percentage. This includes: (1) all interests in a non-limited partnership, and (2) all general partnership interests in a limited partnership.
4. For limited partnerships, any limited partnership interest that is 10 percent or greater.
5. Managing control of the provider or supplier
A managing organization is one that exercises operational or managerial control over the provider, or conducts the day-to-day operations of the provider. The organization need not have an ownership interest in the provider in order to qualify as a managing organization. For instance, the entity could be a management services organization under contract with the provider to furnish management services for one of the provider's practice locations.
The organizations referred to above generally fall into one or more of the following categories:
• Corporations
• Partnerships and limited partnerships
• Limited liability companies
• Charitable and religious organizations
• Governmental/tribal organizations
• Banks and financial institutions
• Investment firms
• Holding companies
• Trusts and trustees
• Medical providers/suppliers
• Consulting firms
• Management services companies
• Medical staffing companies
• Non-profit entities
In section 5(A)(2) of the Form CMS-855, the provider must indicate the type(s) of organizational categories the reported entity falls into. The following principles also apply with respect to section 5:
a. Diagrams – In addition to completing section 5(A):
• The provider must submit an organizational structure diagram/flowchart identifying all of the entities listed in section 5 and their relationships with the provider and each other. (This applies to the Form CMS-855A, CMS-855B and CMS-855S.)
• If the provider is a skilled nursing facility (SNF), it must submit a diagram/flowchart identifying the organizational structures of all of its owners, including those that were not required to be listed in section 5 or 6. This must be submitted in addition to the diagram/flowchart in the previous bullet.
These diagrams/flowcharts must be submitted for initial enrollments, revalidations, Form CMS-855 reactivations, and upon any contractor request.
b. Percentage of Interest (section 5(B)) – The provider need not:
• Disclose a percentage of managerial control
• Submit documentation verifying the percentage of ownership, partnership interest or security/mortgage interest, unless the contractor requests it.
c. Section 2 - Any entity listed as the provider in section 2 of the Form CMS-855 need not be reported in section 5A. The only exception involves governmental entities, which must be identified in section 5A even if they are already listed in section 2.
d. Governmental and Tribal Organization Letter - For governmental and tribal organizations, the letter referred to in the Form CMS-855 instructions for section 5 must be signed by an appointed or elected official of the governmental or tribal entity who has the authority to legally and financially bind the governmental or tribal entity to the laws, regulations, and program instructions of Medicare. This governmental or tribal official is not required to be an authorized official, or vice versa.
e. Non-Profit Organizations - Many non-profit organizations are charitable or religious in nature, and are operated and/or managed by a Board of Trustees or other governing body. The actual name of the Board of Trustees or other governing body must be listed in section 5A of the Form CMS-855. The provider must submit a copy of its 501(c)(3) approval notification for non-profit status. If it does not possess such documentation but nevertheless claims it is a non-profit entity, the provider may submit any other documentation that supports its claim (e.g., written documentation from the State).
Governmental and tribal entities need not submit a copy of a 501(c)(3) if it is otherwise obvious to the contractor that the entity is a governmental or tribal entity. The contractor can assume that the governmental or tribal entity is non-profit.
f. IRS CP-575 - Owning/managing organizations need not furnish an IRS CP-575 document unless requested by the contractor (e.g., the contractor discovers a potential discrepancy between the organization’s reported legal business name and tax identification number.
g. Documentation – Proof of ownership, managerial control, security interest, etc., need not be submitted unless the contractor requests it. This also means that articles of incorporation, partnership agreements, etc., need not be submitted absent a contractor’s request.
h. Partnerships – Only partnership interests in the enrolling provider need be disclosed in section 5. Partnership interests in the provider’s indirect owners need not be reported. However, if the partnership interest in the indirect owner results in a greater than 5 percent indirect ownership interest in the enrolling provider, this indirect ownership interest would have to be disclosed in section 5.
i. Disregarded Entities – In general, a “disregarded entity” is a term the IRS uses for an LLC that – for federal tax purposes only – is effectively indistinguishable from its single owner/member. The LLC’s income and expenses are shown on the owner’s personal tax return. The LLC itself does not pay taxes.
If an enrolling provider claims that it is a disregarded entity, the contractor need not obtain written confirmation of this from the provider notwithstanding the instruction in section 17 of the Form CMS-855 that such confirmation is required. As a disregarded entity does not receive a CP-575 form from the IRS confirming its legal business name (LBN) and tax identification number (TIN), the contractor may accept from the enrolling provider any government form (such as a W-9) that lists its LBN and TIN. The disregarded entity’s LBN and TIN shall be listed in section 2B1 of the Form CMS-855.
Since Part A/B Medicare Administrative Contractors (A/B MACs) make payments for implantable prosthetics and DME to hospitals, physicians or ASCs, A/B MACs shall not enroll manufacturers of implantable or non-implantable and prosthetics DME into the Medicare program. A manufacturer of non-implantable prosthetics and DME and replacement parts and supplies for prosthetic implants and surgically implantable DME may enroll in the Medicare program as a supplier with the National Supplier Clearinghouse if it meets the definition of a supplier as well as the requirements in 42 CFR § 424.57.
Owning and Managing Organizations
1. A 5 percent or greater direct or indirect ownership interest in the provider.
The following illustrates the difference between direct and indirect ownership:
EXAMPLE: The supplier listed in section 2 of the Form CMS-855B is an ambulance company that is wholly (100 percent) owned by Company A. Company A is considered to be a direct owner of the supplier (the ambulance company), in that it actually owns the assets of the business. Now assume that Company B owns 100 percent of Company A. Company B is considered an indirect owner - but an owner, nevertheless - of the supplier. In other words, a direct owner has an actual ownership interest in the supplier, whereas an indirect owner has an ownership interest in an organization that owns the supplier.
See the instructions for section 5 of the Form CMS-855 for additional information on indirect ownership.
2. Mortgage or security interest
For purposes of enrollment, ownership also includes "financial control." Financial control exists when:
(a) An organization or individual is the owner of a whole or part interest in any mortgage, deed of trust, note, or other obligation secured (in whole or in part) by the provider or any of the property or assets of the provider, and
(b) The interest is equal to or exceeds 5 percent of the total property and assets of the provider.
All entities with at least a 5 percent mortgage, deed of trust or other security interest in the provider must be reported in section 5. This frequently will include banks, other financial institutions, and investment firms,
3. Any general partnership interest in the provider, regardless of the percentage. This includes: (1) all interests in a non-limited partnership, and (2) all general partnership interests in a limited partnership.
4. For limited partnerships, any limited partnership interest that is 10 percent or greater.
5. Managing control of the provider or supplier
A managing organization is one that exercises operational or managerial control over the provider, or conducts the day-to-day operations of the provider. The organization need not have an ownership interest in the provider in order to qualify as a managing organization. For instance, the entity could be a management services organization under contract with the provider to furnish management services for one of the provider's practice locations.
The organizations referred to above generally fall into one or more of the following categories:
• Corporations
• Partnerships and limited partnerships
• Limited liability companies
• Charitable and religious organizations
• Governmental/tribal organizations
• Banks and financial institutions
• Investment firms
• Holding companies
• Trusts and trustees
• Medical providers/suppliers
• Consulting firms
• Management services companies
• Medical staffing companies
• Non-profit entities
In section 5(A)(2) of the Form CMS-855, the provider must indicate the type(s) of organizational categories the reported entity falls into. The following principles also apply with respect to section 5:
a. Diagrams – In addition to completing section 5(A):
• The provider must submit an organizational structure diagram/flowchart identifying all of the entities listed in section 5 and their relationships with the provider and each other. (This applies to the Form CMS-855A, CMS-855B and CMS-855S.)
• If the provider is a skilled nursing facility (SNF), it must submit a diagram/flowchart identifying the organizational structures of all of its owners, including those that were not required to be listed in section 5 or 6. This must be submitted in addition to the diagram/flowchart in the previous bullet.
These diagrams/flowcharts must be submitted for initial enrollments, revalidations, Form CMS-855 reactivations, and upon any contractor request.
b. Percentage of Interest (section 5(B)) – The provider need not:
• Disclose a percentage of managerial control
• Submit documentation verifying the percentage of ownership, partnership interest or security/mortgage interest, unless the contractor requests it.
c. Section 2 - Any entity listed as the provider in section 2 of the Form CMS-855 need not be reported in section 5A. The only exception involves governmental entities, which must be identified in section 5A even if they are already listed in section 2.
d. Governmental and Tribal Organization Letter - For governmental and tribal organizations, the letter referred to in the Form CMS-855 instructions for section 5 must be signed by an appointed or elected official of the governmental or tribal entity who has the authority to legally and financially bind the governmental or tribal entity to the laws, regulations, and program instructions of Medicare. This governmental or tribal official is not required to be an authorized official, or vice versa.
e. Non-Profit Organizations - Many non-profit organizations are charitable or religious in nature, and are operated and/or managed by a Board of Trustees or other governing body. The actual name of the Board of Trustees or other governing body must be listed in section 5A of the Form CMS-855. The provider must submit a copy of its 501(c)(3) approval notification for non-profit status. If it does not possess such documentation but nevertheless claims it is a non-profit entity, the provider may submit any other documentation that supports its claim (e.g., written documentation from the State).
Governmental and tribal entities need not submit a copy of a 501(c)(3) if it is otherwise obvious to the contractor that the entity is a governmental or tribal entity. The contractor can assume that the governmental or tribal entity is non-profit.
f. IRS CP-575 - Owning/managing organizations need not furnish an IRS CP-575 document unless requested by the contractor (e.g., the contractor discovers a potential discrepancy between the organization’s reported legal business name and tax identification number.
g. Documentation – Proof of ownership, managerial control, security interest, etc., need not be submitted unless the contractor requests it. This also means that articles of incorporation, partnership agreements, etc., need not be submitted absent a contractor’s request.
h. Partnerships – Only partnership interests in the enrolling provider need be disclosed in section 5. Partnership interests in the provider’s indirect owners need not be reported. However, if the partnership interest in the indirect owner results in a greater than 5 percent indirect ownership interest in the enrolling provider, this indirect ownership interest would have to be disclosed in section 5.
i. Disregarded Entities – In general, a “disregarded entity” is a term the IRS uses for an LLC that – for federal tax purposes only – is effectively indistinguishable from its single owner/member. The LLC’s income and expenses are shown on the owner’s personal tax return. The LLC itself does not pay taxes.
If an enrolling provider claims that it is a disregarded entity, the contractor need not obtain written confirmation of this from the provider notwithstanding the instruction in section 17 of the Form CMS-855 that such confirmation is required. As a disregarded entity does not receive a CP-575 form from the IRS confirming its legal business name (LBN) and tax identification number (TIN), the contractor may accept from the enrolling provider any government form (such as a W-9) that lists its LBN and TIN. The disregarded entity’s LBN and TIN shall be listed in section 2B1 of the Form CMS-855.
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