“Under Arrangements” Relationships

10.4.1 - “Under Arrangements” Relationships (Rev. 10880, Issued: 08-06-21, Effective: 11-08-21, Implementation: 11-08-21) Under an arrangement as defined in §1861(w) of the Act, Medicare’s payment to the SNF represents payment in full for the arranged-for service, and the supplier must look to the SNF (rather than to A/B MAC (B)) for its payment. Further, in entering into such an arrangement, the SNF cannot function as a mere billing conduit, but must actually exercise professional responsibility over the arranged-for service (see the Medicare General Information, Eligibility, and Entitlement Manual, Chapter 5, §10.3, and the Medicare Benefit Policy Manual, Chapter 8, §70.4, for additional information on services furnished under arrangements). Medicare does not prescribe the actual terms of the SNF’s relationship with its suppliers (such as the specific amount or timing of payment by the SNF), which are to be arrived at through direct negotiation between the parties to the agreement. However, in order for a valid “arrangement” to exist, the SNF must reach a mutual understanding with its supplier as to how the supplier is to be paid for its services. Documenting the terms of the arrangement confers the added benefit of providing both parties with a ready means of resolution in the event that a dispute arises over a particular service. This type of arrangement has proven to be effective in situations where suppliers regularly provide services to facility residents on an ongoing basis; e.g., laboratory and x-ray suppliers, DME supplies, etc. Sample model agreements involving arrangements between SNFs and their suppliers are available for review on CMS’s “Best Practices Guidelines” website, at https://www.cms.gov/Medicare/Medicare-Fee-for-Service- Payment/SNFPPS/BestPractices.html. If a SNF elects to utilize an outside supplier to furnish medically appropriate services that are subject to consolidated billing, but then refuses to reimburse that supplier for the services, then there is no valid arrangement as contemplated under §1862(a)(18) of the Act. Not only would this potentially result in Medicare’s noncoverage of the particular services at issue, but a SNF demonstrating a pattern of nonpayment would also risk being found in violation of the terms of its provider agreement. Under §1866(a)(1)(H)(ii) of the Act (and 42 CFR 489.20(s)), the SNF’s provider agreement includes a specific commitment to comply with the requirements of the consolidated billing provision. Further, §1866(g) of the Act imposes a civil money penalty on any person who knowingly and willfully presents (or causes to be presented) a bill or request for payment inconsistent with an arrangement or in violation of the requirement for such an arrangement.