Best Practices Guidelines

Arrangement Required

On May 31, 2004, we issued an instruction (Change Request (CR) 3248, Transmittal 183) regarding the longstanding requirement for a skilled nursing facility (SNF) to enter into an arrangement with any outside supplier from which the SNF's residents receive "bundled" services (i.e., services that are subject to SNF consolidated billing).

Concerns were expressed that an SNF needs to execute a formalized contract, drafted pursuant to State law, with every outside entity that furnishes such services to its residents. In fact, while executing such a formalized contract with a supplier would indeed be one way to satisfy the requirement for an "arrangement," this in not the only acceptable way. On December 23, 2004, we issued another instruction (CR 3592, Transmittal 412), which provides further clarification concerning the nature of the arrangement between an SNF and its supplier. As explained in greater detail below, the SNF can effect an "arrangement" through any means that specifies—

the arranged-for services for which the SNF assumes responsibility, and

the manner in which the SNF will pay the supplier for those services.

While entering into a formalized legal contract may well be a routine business practice with regard to those suppliers with which an SNF has a routine, ongoing relationship, this may be less feasible in connection with other entities that serve the SNF's residents on only an occasional or irregular basis. For example, an SNF may occasionally refer one of its Part A residents to an offsite clinic to receive certain bundled procedures, such as diagnostic tests. Rather than executing a formalized contract with the clinic in advance, the SNF may instead prepare a document that accompanies the resident. For example, the document could notify the clinic of the following:

That Medicare Part A is covering the resident's SNF stay, so that the clinic must bill the SNF (rather than Part B) for any bundled services that it furnishes to the resident;

The particular bundled services that the beneficiary is being sent to receive, and the terms of the SNF's payment to the clinic for those services;

That before furnishing any bundled services beyond those specified (or referring the beneficiary to any other entity to receive such services) the clinic must first contact the SNF; and

That by furnishing services to the beneficiary, the clinic agrees to the terms set forth in the agreement by the SNF.

We also wish to clarify that the absence of an agreement--written or verbal--does not relieve the SNF of its overall responsibility to furnish directly or make arrangements for all services that are subject to the consolidated billing requirement. When an SNF refuses to reimburse a supplier for furnishing such a service to the SNF's resident, it is the SNF's failure to enter into a valid arrangement for the service (rather than the absence of written documentation per se) that is inconsistent with the terms of the SNF's Medicare provider agreement under Section 1866(a)(1)(H)(ii) of the Social Security Act.

Notice

This website provides sample agreements and communication tools for use by SNFs and their suppliers and practitioners. We are providing these samples in response to numerous requests for guidance. The use of the sample documents is not required. Providers, suppliers, and practitioners may chose to modify any of these documents to reflect more closely and accurately the realities of the parties' relationship. These documents only provide sample language, and CMS does not prescribe or endorse the use of any particular format or language.

Consolidated Billing Claims Processing Instructions

This type of flowchart walks a SNF through basic steps of processing a claim and includes consolidated billing concerns. For example, the chart includes a section on "Determin[ing] SNF Responsibility." First the SNF should check the HCPCS code in CMS's SNF quarterly and annual updates to determine if the service is included or excluded from the bundle of consolidated services. If the service is included in the bundle, the SNF next moves to determining payment owed to the supplier. The SNF should also check to see if the service is site specific, that is, a service that is excluded from the bundle (and separately billable to Part B) only when furnished in the outpatient hospital setting, but not when furnished in a freestanding setting. This chart is illustrative only and does not include every possible exclusion (e.g., practitioner exclusions).

The Sample Forms

"Under Arrangement" Agreement Between SNF and Supplier (Sample Agreement 1)

This type of agreement provides terms for a basic ongoing arrangement between an SNF and a supplier. The document provides timeframes for payment and billing as well as payment terms. Applying specifically to physician suppliers, one section requires SNF approval for referrals outside of the outpatient hospital setting which require certain emergency care or high level diagnostic services. (Consolidated billing rules make the SNF responsible for such services when rendered outside of the outpatient hospital setting.)

"Under Arrangement" Agreement Between SNF and Supplier (Sample Agreement 2)

This type of agreement provides terms for an ongoing arrangement between an SNF and a supplier. Providing timeframes for payment and billing as well as payment terms, the document requires that the supplier provide information concerning services rendered and maintain good standing as specified. The SNF is required to provide written policies and procedures for resident care and to identify whether the service ordered is subject to consolidated billing.  

Weekly Part A Beneficiary Service Log (Sample Notification 1)

This type of service log can be used by either the SNF, as a record of ordered services, or by the supplier to confirm both the provision of the service and the beneficiary status information needed for correct billing. By showing whether the resident is in a Part A stay, the form indicates at the outset whether consolidated billing rules would apply or not to most services. (Note: specified therapy services remain bundled for residents in noncovered stays.)

SNF's Request for Ambulance Transportation For a Beneficiary in a Medicare Part A Stay (Sample Notification 2)

An SNF can provide this type of notification to an ambulance service transporting a beneficiary. Reflecting consolidated billing rules, this notice lays out the types of ambulance trips for which the ambulance service should bill Medicare directly and the types of ambulance trips which would require payment by the SNF to the ambulance service.

SNF's Notice to a Physician Treating a Beneficiary in a Medicare Part A Stay (Sample Notification 3)

An SNF can provide this type of notification to a physician or other practitioner treating a beneficiary. The notification outlines that SNF approval is required for referrals requiring certain emergency care or high level diagnostic services when taking place anywhere other than the outpatient hospital setting. (Consolidated billing rules make the SNF responsible for such services when rendered in a nonhospital setting.) Additionally, this notice provides for a payment arrangement.

SNF's Notice to a Physician Treating a Beneficiary in a Medicare Part A Stay (Sample Notification 4)

An SNF can provide this type of notification to a physician or other practitioner treating a beneficiary. Reflecting consolidated billing rules, the form requires that the physician distinguish between professional services (billed to Medicare by the physician) versus the technical component and "incident to" codes (billed to the SNF by the physician) and list the latter on the form. The notification also mandates that the physician coordinate with the SNF in referrals requiring certain emergency care or high level diagnostic services.

SNF's Notice to a Physician Treating a Beneficiary in a Medicare Part A Stay (Sample Notification 5)

An SNF can provide this type of notification to a physician or other practitioner treating a beneficiary. Reflecting consolidated billing distinctions, the form describes the difference between "incident to services" (billed to the SNF) versus professional services (billed to Medicare); and technical component (billed to the SNF) versus professional component (billed to Medicare) of a service. The form requires notification of the SNF prior to referrals for certain emergency care or high level diagnostic services. (Consolidated billing rules make the SNF responsible for such services when rendered outside of the outpatient hospital setting.) Spaces in the form allow the SNF to specify by HCPCS what must be billed to it and terms of payment.

SNF's Notice to a Hospital Treating a Beneficiary in a Medicare Part A Stay on an Outpatient Basis (Sample Notification 6)

An SNF can provide this type of notification to a hospital treating a beneficiary on an outpatient basis. Requiring the hospital to list the services provided, this notice also lays out under consolidated billing which services the hospital should bill to Medicare Part B, and which services the hospital should bill to the SNF.

SNF's Notice to a Hospital Treating a Beneficiary in a Medicare Part A Stay on an Outpatient Basis (Sample Notification 7)

An SNF can provide this type of notification to a hospital treating a beneficiary on an outpatient basis. Reflecting consolidated billing rules, the notice lays out services that the hospital should bill to Medicare Part B. Providing a payment amount, the form states that the SNF will be responsible for routine and other non-emergency procedures as long as prior authorization from the SNF and necessary documentation from the hospital are obtained. The form includes a written request for medical documents.