SNF therapy contracts: Your risks and what you need to know Q&A
Editor’s note: The following Q&A was written by Reginald Hislop III.
Q: When we receive proposals from various therapy companies, they all represented that they would increase our Part A and Part B billings. Should this somehow be incorporated into the contract?
A: Yes. Absolutely. If they’re willing to say that to you and they tell you, "That’s the reason why you’re going to go with us is because we’re going to do this," I am going to hold them accountable for that, and I first want to know how you determine that and how are you going to do that because I’m going to tell them right there before we even get to a contract, I’m going to say that they need to fundamentally prove it. How do you know it, how’s it going to happen, and be prepared because yeah, you’re going to put in the contract, you’re going to represent it, it’s going to be legal and you’re going to do it over what period of time? I’m then going to hold them accountable for it.
Otherwise, it becomes a common game of therapy contractors: "We’re going to make your world so much better than the last group that was in here." I’ve never seen a contractor come in and say, "We looked at your last experience with your last therapy contractor and the amount of stuff that they were doing, and by the way, we got to tell you, it really makes us nervous, and fundamentally if you go with us, we’re going to shrink your revenue by 15% because we think there’s a whole bunch of erroneous and falsely billed claims." I’ve never seen that happen. Everybody comes in and says, "Yes, we can improve your performance over this group, and we’re going to do it by a pretty impressive margin, and your revenue is going to go up, your claims are going to go up." I want to know how they’re going to do that, I want it in the contract, and I want full transparency. I want to know over what time period, because without that, they haven’t actually validated they will be able to do that. That’s a standard pitch, and they have never yet been expected in many cases to be accountable for those kind of numbers. It’s just a sales pitch, but, if they’re going to say it, I want it in the contract.
Q: Would the indemnification clause you mentioned, indemnification not just for the therapy component but the whole amount?how can the therapy company indemnify money they did not receive?
A: How can they indemnify money they did not receive? We’re not talking about necessarily indemnification for money they received. We’re talking about indemnification for services that they provided as part of the representation that all of our services that we provide are going to be compliant and in concert with the law. Since the SNF is responsible for that, my responsibility then is to negotiate with that company and say, "By the way, if in fact we’re involved in this work and you’re going to be part of this process and you’re going to have input in terms of what we RUG, what we bill, part of our triple check and all the rest of that other kind of stuff, there is dollars on the table, and anything that you did that was illegal, unethical, or improper that caused us to lose revenue as a result of your actions and your documentation, all those other kinds of things because you’re going to represent to me that you’re going to do this, you’re going to properly manage and supervise your employees and all those other kinds of things, that if in fact you didn’t do that, you’re going to be responsible not just for what we paid you but also for what your bad acts caused this facility." Yes, I can indemnify them for that because they are part and parcel to that. They’re going to represent to me that they’re going to do this the right way, and if they don’t, then they’re going to have shared risk for anything that occurs that they were responsible for or could be tied to them that cost my facility money or my organization money.
Q: How do we hold the therapy provider accountable for an 80% productivity level?
A: You actually monitor their productivity levels. Their treatment records should be open. Their minutes should be open. I should be able to see when they were on-site, what their time was spent on this site, what I was billed for because I’m being billed for their time. And I should be able to go to treatment logs and treatment records and look at what their billing time was and their documentation time was, and I can quickly do a simple calculation that says if I had a physical therapist here for eight hours and she was here for four days a week or five days a week, I ought to be able to convert that based on treatment records and treatment logs to what her productivity percentage was, what her care percentage time was, and it better not be more than 80%.
Q: Our present contract doesn’t include much of anything you mentioned. How do we change it or get the therapy provider to go along with your recommendation?
A: There are two ways to do that. One is basically to tell them you attended this seminar and their contract stinks and you want to renegotiate it. I don’t know what your out clauses look like in your contracts. Typically there will be some kind of out clause that will allow you some leverage. If not, when your contract comes up for renewal, make them well aware that these are all going to be key components of your RFP process. You’re going to put it out there, you’re going to bid them unless they’re going to come to the table and do it, they’re not going to have this contract anymore, and generally I have suggested providers to tell them this in advance, good advance. Tell them, "[We] might be six months away from when our contract renews, but here’s a list of the things that we’re going to require of you going forward. So, if you want to keep this contract, we can talk about this now or you can basically be assured that if you’re not going to do this now or have some conversation with us now, chances are relatively poor that you will retain this contract." I haven’t seen a contractor yet that won’t under certain circumstances if you raise most of these issues, at least be willing to start conversations with them about them.
Q: What tools do you suggest in guiding SNF therapists into making appropriate decisions regarding choosing a RUG?
A: Again, the best process for this is your triple check. There are some very good software programs out there, and I’m not going to try to pitch too many companies, but most software programs, AOD does a good job. Rehab Optima also does a good job. Develop a good triple-check process, have good education, make sure your MDS coordinator is certified, RAC certified as part of this process. The RAC certification and staying current on the certification is amajor help in terms of appropriate RUGs based on the documentation. Use your triple check, have everybody together in terms of being able to access and identify your MDSs, what your sections mean, what your documentation is to support your RUG categories. It’s not that difficult, but it does require some work, and it’s really critical that you have good software and a good MDS coordinator who’s RAC certified.
If you don’t have a good MDS coordinator or a coordinator that is RAC certified, rent one. There are services out there that you can go to that will in fact help you through that process on a monthly basis. It will cost you a little money up front, and in the interim get somebody on your staff RAC certified.
Q: Can you explain the in-house hybrid model in greater detail?
A: Sure. The in-house hybrid model works exactly like this: For all intents and purposes we bifurcate the issues. We say, "All right, what we need is we need staff therapists or we need access to staff therapists, and we can do that, but we don’t know how to do that as a facility." We’re not sure where to go, we’re not sure how to recruit, we don’t know how much they should be paid, job descriptions, all the rest of that other kind of stuff, and the one thing that we definitely don’t have expertise in maybe is managing a therapy department, is managing a therapy company. And we’ve heard horror stories about how hard it is to find good rehab directors, how much you pay, you know, all that kind of stuff.
What we do is essentially bifurcate the issues. We say, "All right, here’s the deal. Let’s go get a company who isn’t going to provide the therapy and has no interest in doing that or billing us for that, but is going to help us set up our program." So we’re going to go to one of the qualified companies that are out there that do this, and what they’re going to do is they’re going to come in, they’re going to do an assessment for us, which should be very low cost, to look at our operations, look at what we’re billing, look at our Medicare utilization, and give us a proposal that basically says, "Hey, here is what our department from our perspective would look like. Here’s how many PT hours you need, OT hours, speech therapy, staffing requirements, you know, rates of pay and all that other kind of stuff. We’re going to help you do that. We’re going to put this together and give you a pro forma, show you how this pays for itself and all this other kind of stuff.
"In the meantime, what we’re going to do as well is if you want to proceed down this path, we’re going to do that for you in concert with you. We will recruit, we will hire, we’ll give you job descriptions which we have. We have policies, we have procedures, we can give you a turn-key therapy company, and what we will do is we will be your therapy director fundamentally. We’ll be the folks who manage your therapists. We’ll watch those productivities. We’ll do the education. We’ll do all those kinds of things for you and in partnership with you, and the therapists that will be on site will be 100% your skilled nursing facility employees. They are your employees. You pay them. They’re your benefits. They’re subject to all your rules and regulations and all that kind of stuff, and we’ll just help you manage them. We’ll provide better oversight, and we’ll provide the infrastructure that’s necessary for a therapy department and a therapy program including ongoing education and RUG support and QA and all that kind of stuff. And we do that for a flat fee each month or a percentage of your ultimate therapy department revenue, etc."
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