CMS Pub. 100-02, ch. 15, § 230.6

Providers and Clinics

(Rev. 36, Issued: 06-24-05, Effective: 06-06-05, Implementation: 06-06-05)

References: See also Pub. 100-01, chapter 5, §10.3.

A. General

For rules regarding services provided under arrangement, see Pub. 100-01, chapter 5,

§10.3.

A provider may have others furnish outpatient therapy (physical therapy, occupational

therapy, or speech-language pathology) services through arrangements under which

receipt of payment by the provider for the services discharges the liability of the

beneficiary or any other person to pay for the service.

However, it is not intended that the provider merely serve as a billing mechanism for the

other party. For such services to be covered the provider must assume professional

responsibility for the services.

The provider’s professional supervision over the services requires application of many of

the same controls that are applied to services furnished by salaried employees. The

provider must:

• Accept the patient for treatment in accordance with its admission policies;

• Maintain a complete and timely clinical record on the patient which includes

diagnosis, medical history, orders, and progress notes relating to all services

received;

• Maintain liaison with the attending physician/NPP with regard to the progress of

the patient and to assure that the required plan of treatment is periodically

reviewed by the physician/NPP;

• Secure from the physician/NPP the required certifications and recertifications;

and

• Ensure that the medical necessity of such service is reviewed on a sample basis by

the agency’s staff or an outside review group.

In addition, when a provider provides outpatient services under an arrangement with

others, such services must be furnished in accordance with the terms of a written contract,

which provides for retention by the provider of responsibility for and control and

supervision of such services. The terms of the contract should include at least the

following:

• Provide that the therapy services are to be furnished in accordance with the

plan of care established according to Medicare policies for therapy plans of

care in section 220.1.2 of this chapter;

• Specify the geographical areas in which the services are to be furnished;

• Provide that contracted personnel and services meet the same requirements as

those which would be applicable if the personnel and services were furnished

directly by the provider;

• Provide that the therapist will participate in conferences required to coordinate

the care of an individual patient;

• Provide for the preparation of treatment records, with progress notes and

observations, and for the prompt incorporation of such into the clinical records

of the clinic;

• Specify the financial arrangements. The contracting organization or

individual may not bill the patient or the health insurance program; and

• Specify the period of time the contract is to be in effect and the manner of

termination or renewal.

B. Special Rules for Hospitals

• A hospital may bill Medicare for outpatient therapy (physical therapy,

occupational therapy, or speech-language pathology) services that it furnishes

to its outpatients either directly or under arrangements in the hospital's

outpatient department. If a hospital furnishes medically necessary therapy

services in its outpatient department to individuals who are registered as its

outpatients, those services must be billed directly by the hospital using bill

type 13X or 85X for critical access hospitals. Note that services provided to

residents of a Medicare-certified SNF may not be billed by the hospital as

services to its outpatients.

• When a hospital sends its therapists to the home of an individual who is

registered as an outpatient of the hospital but who is unable, for medical

reasons, to come to the hospital to receive medically necessary therapy

services, the services must meet the requirements applicable to outpatient

hospital therapy services, as set forth in the regulations and applicable

Medicare manuals. The hospital may bill for those services directly using bill

type 13X or 85X for critical access hospitals.

• If a hospital sends its therapists to provide therapy services to individuals who

are registered as its outpatients and who are residing in the non-certified part

of a SNF, or in another residential setting (e.g., a group home, assisted living

facility or domiciliary care home), the hospital may bill for the services as

hospital outpatient services if the services meet the requirements applicable to

outpatient hospital therapy services, as set forth in the regulations and

applicable Medicare manuals.

• A hospital may make an arrangement with another entity such as an

Outpatient Rehab Facility (Rehabilitation Agency) or a private practice, to

provide therapy services to individuals who are registered as outpatients of the

hospital. These services must meet the requirements applicable to services

furnished under arrangements and the requirements applicable to the

outpatient hospital therapy services as set forth in the regulations and

applicable Medicare manuals. The hospital uses bill type 13X or 85X for

critical access hospitals to bill for the services that another entity furnishes

under arrangement to its outpatients.

• Where the provider is a public health agency or a hospital in a rural

community, it may enter into arrangements to have outpatient physical

therapy services furnished in the private office of a qualified physical therapist

if the agency or hospital does not have the capacity to provide on its premises

all of the modalities of treatment, tests, and measurements that are included in

an adequate outpatient physical therapy program and the services and

modalities which the public health agency or hospital cannot provide on its

premises are not available on an outpatient basis in another accessible

certified facility.

• In certain settings and under certain circumstances, hospitals may not bill

Medicare for therapy services as services of the hospital:

○ If a hospital sends its therapists to provide therapy services to patients of

another hospital, including a patient at an inpatient rehabilitation facility

or a long term care facility, the services must be furnished under

arrangements made with the hospital sending the therapists by the hospital

having the patients and billed as hospital services by the facility whose

patients are treated. These services would be subject to existing hospital

bundling rules and would be paid under the payment method applicable to

the hospital at which the individuals are patients.

○ A hospital may not send its therapists to provide therapy services to

individuals who are receiving services from an HHA under a home health

plan of care and bill for the therapy services as hospital outpatient

services. For patients under a home health plan of care, payment for

therapy services (unless provided by physicians/NPPs) is included or

bundled into Medicare’s episodic payment to the HHA, and those services

must be billed by the HHA under the HHA consolidated billing rules. For

patients receiving HHA services under an HHA plan of care, therapy

services must be furnished directly or under arrangements made by the

HHA, and only the HHA may bill for those services.

○ If a hospital sends its therapists to provide services under arrangements

made by a SNF to residents of the Medicare-certified part of a SNF, SNF

consolidated billing rules apply. For arrangements specific to SNF Part A,

see Pub. 100-04, chapter 6, §10.4. This means that therapy services

furnished to SNF residents in the Medicare-certified part of a SNF cannot

be billed by any entity other than the SNF. Therefore, a hospital may not

bill Medicare for PT/OT/SLP services furnished to residents of a

Medicare-certified part of a SNF by its therapists as services of the

hospital.

NOTE: If the SNF resident is in a covered Part A stay, the therapy services would be

included in the SNF’s global PPS per diem payment for the covered Part A stay itself. If

the resident is in a noncovered stay (Part A benefits exhausted, no prior qualifying

hospital stay, etc.), but remains in the Medicare-certified part of a SNF, the SNF would

submit the Part B therapy bill to its A/B MAC (A).

SNF Setting Applicable Rules

Medicare Part A or B Consolidated

Billing Rules

Apply?

Hospital

May Bill

For

Outpatient

Services?

Part A (Medicare Covered / PPS)

Resident in Medicare-certified

part of a SNF

Yes No

Medicare Part B Resident in

Medicare-certified part of a SNF

Yes No

Medicare Part B

Not a Resident in Medicare-certified part of a SNF

No Yes

• A hospital may not send therapy staff to provide therapy services in non-residential health care settings and bill for the services as if they were

provided at the hospital, even if the hospital owns the other facility or entity.

Examples of such non-residential settings include CORFs, rehabilitation

agencies, ORFs and offices of physicians/NPPs or other practitioners, such as

physical therapists. For example, services furnished to patients of a CORF

must be billed as CORF services and not as outpatient hospital services. Even

if a CORF contracts with a hospital to furnish services to CORF patients, the

hospital may not bill Medicare for the services as hospital outpatient services.

However, the CORF could have the hospital furnish services to its patients

under arrangements, in which case the CORF would bill for the services.

Psychiatric hospitals are treated the same as other hospitals for the purpose of therapy

billing.