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Document your 'under arrangement' agreements with SNFs

Rehab Regs, February 1, 2005

Outside rehab agencies should get it in writing

Rehab company X provides therapy services to a handful of local skilled nursing facilities (SNF). Understandably, company X wants to receive adequate and prompt reimbursement, limit its liability, and be clear about what the SNF expects of it and its therapists.

Sound like a tall order? Not if the facility has a written agreement with the nursing homes it serves. If you provide rehab in a SNF, here are some reasons why you shouldn't leave home without a written agreement.

CMS doesn't require you to have a written agreement with the SNFs you partner with, but it's a good idea to do so. With a contract in place, you can avoid problems before they start.

"Under arrangement" agreements, as they're called, are essential components to a successful partnership between a SNF and a contract rehab company, says Tracy Gregg, PT, president of SunDance Rehabilitation Corporation in Alexandria, VA.

"If your intent is to have a long-term arrangement, it's best to have [an agreement]," says Gregg.

She refers therapists to CMS Transmittal 183, dated May 21, 2004, which states that SNFs and suppliers must operate under a written agreement to "reimburse the outside entity for Medicare-covered services subject to consolidated billing (i.e., services that are reimbursable only to the SNF as part of its global PPS [prospective payment system] per diem or those Part B services that must be billed by the SNF)."

In addition, CMS Transmittal 412, released December 23, 2004, specifies that the SNF and its outside provider must have an agreement that forms the basis for reimbursement. It also stipulates that nothing in consolidated billing will relieve the SNF of financial responsibility for those products and services that are subject to consolidation.

Gregg suggests including the following components in your written agreement:

Date of initiation of the partnership

Definition of the agreed-upon services to be provided

How many hours, if any, of inservice training the contract rehab provider will be expected to provide

Activities, other than direct patient care, in which the therapists will be expected to participate

Payment terms, including the window of time between when the rehab company provides services and when it is paid

The contract length

By initiating the agreement yourself-rather than allowing the SNF to draw it up-you control what it contains.

"You're the vendor, so you write up the contract," says Frances J. Fowler, president of Fowler Health Affiliates, Inc., in Atlanta. "You have to think of yourself as a business person with a goal of limiting your legal exposure and following CMS' rules."

If you are an individual therapist who works for a contract rehab company, Fowler also stresses the importance of the contractual obligations of that relationship.

"If you work for a company instead of directly with a nursing home, that doesn't mean you don't need [an agreement]," says Fowler. "Protect yourself no matter what."

Remember to factor in the time and cost of commuting to your rate, because that is time you can use to treat additional patients. Also renew contracts yearly and always adjust your rates according to inflation. Consider issues such as liability, benefits, business costs, and compensation if you work more hours than those stipulated in the contract.

"It doesn't have to be a fancy contract, but there does need to be some type of agreement," says Fowler. "Build in a few additional benefits and then negotiate them later."

Editor's note: Visit www.cms.hhs.gov/manuals/pm_trans/R183CP.pdf to view CMS' Transmittal 183. Visit www.cms.hhs.gov/manuals/pm_trans/R412CP.pdf to view CMS' Transmittal 412.

Sample 'under arrangement' agreement between SNF and supplier

Effective date: March 1, 2005

Skilled nursing facility (SNF): __________________________

Supplier of services: ____________________________

The SNF as identified above wishes to obtain services under arrangement from the supplier of services in accordance with 42 CFR §483.75 as follows:

The SNF will

1. provide the service supplier with a written authorization for each resident when it wishes to obtain services under arrangement. The authorization will specify whether the Medicare beneficiary is in a Medicare Part A stay, and whether the ordered service is subject to the Medicare consolidated billing provisions.

2. maintain professional responsibility in accordance with 42 CFR §483.75(h) for all services provided to Medicare Part A residents of the SNF.

3. bill the services to CMS on form UB-92 as part of the SNF consolidated billing bundled rate.

4. pay the supplier of services within ___ days for all services it properly billed and received prior approval for from the SNF.

5. notify the supplier of services in writing within ___ days regarding problems with any claim. The SNF will include an explanation of the problem (e.g., services were not billed in a timely manner, services did not receive prior approval, resident was not an inpatient, services were not bundled back to the SNF).

6. permit supplier access to residents' medical records as needed.

7. retain original treatment records and other resident care information on-site and in resident records.

The supplier of services will

1. treat beneficiaries only in accord with prevailing standards of care by licensed professionals.

2. provide to the SNF information for each resident, including the diagnosis code, medical history, physician's order, and progress notes.

3. bill the SNF on either a UB-92 or CMS 1500 form using correct revenue codes and dates of services, and include a CPT or Healthcare Common Procedural Coding System code for each item billed.

4. bill the SNF within ___ months of the date of service. However, the ___ month requirement is waived in any instance where the SNF fails to correctly identify beneficiaries as being in a Part A stay, and the supplier of services receives a claim denial from CMS or a CMS recoupment letter requesting repayment for a service payable by the SNF under consolidated billing.

5. bill the SNF only for the technical component of the service.

6. bill the SNF the negotiated payment arrangement. When no published fee schedule exists, bill the SNF at _______________________.

7. accept as payment in full, payment under _____________________. The supplier of services will not bill the resident or his or her representative.

SNF: ________________________ Date: __________________

Supplier of services: ________________________ Date: __________________

Source: BRRR adapted this agreement from a CMS sample agreement. Visit www.cms.hhs.gov/providers/snfpps/bestpractices.asp and look under the heading "Sample Forms."