OIG approves skilled nursing facility discount deal
OIG approves skilled nursing facility discount deal
Finally, some good news for hospitals that own nursing homes. Last month the news was negative GAO reports on SNFs and how HCFA regulates them, plus an OIG advisory opinion that restricted SNFs from accepting contractor discounts. Now OIG has released an advisory opinion (No. 99-3) that gives a cautious green light to nursing homes that want package deals from suppliers.
The opinion addressed a proposal by a therapeutic mattress distributor that wanted to offer SNFs a special deal. Nursing homes would rent a powered mattress for 30 days for a fixed price, which would include a free nonpowered mattress. The package would be cheaper than if the mattresses were sold separately, plus the SNFs would pay half price if they rented the mattresses beyond the first 30 days. The distributor would market its products by using DME suppliers as sales agents, whose cut would be 20% of collections.
OIG had no problem with the mattress discounts. "So long as the discounted price for the package of mattresses is reflected properly on the SNFs’ cost reports, there is minimal risk of program fraud or abuse from the Proposed Arrangement," the agency concluded. However, the regulators did note they would be concerned about an arrangement where contractors offered low-ball prices for patients who fall under the Part A Prospective Payment System. In return, the SNFs might pay marked-up prices for products for Part B patients, which could be passed on to Medicare through the SNFs’ cost reports. In this case, however, the mattress deal got a clean bill of health because they aren’t reimbursable under Part B.
It’s using DME firms as sales agents that really caught OIG’s attention. Paying them a percentage-based commission is an invitation to overutilization and overcharging, regulators fear. But in this case, OIG was reassured by the fact that nursing homes now get fixed Part A payments, which are a definite disincentive for overutilization.
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