The Do’s and Don’ts in a Rehab Contract (you WILL amend your contract this year)

With PDPM looming, the industry is abuzz with pricing models as the current RUV IV pricing will no longer apply.  Your current rehab provider will come to you soon and propose an amendment to your current contract to account for patient treatment falling under PDPM.  This is a PERFECT time for you to not only get the “right” PDPM pricing model for you, but also look at other items in your contract that you might want to change.

PDPM Pricing in a nutshell and who is at “risk” for being accused of not providing enough Rehab:

  1. Per Minute Pricing Model ($0.95/minute) – I call this the “business as usual” model.  It lacks creativity and encourages the facility to decrease therapy provided to increase profit margins.  If this occurs, your outcomes and patient satisfactions will plummet, and your long-term success could be at risk.  

    *The Facility is at risk of being accused of decreasing therapy to increase profit.

  2. Per Level Pricing Model – Similar to what we have today.  The IDT decides which level is appropriate and you are charged a flat per diem for that level (the below Example shows a 6 Level model at $0.95 per minute).

    a.       Level 1 – 150 to 300 minutes per week                   Per Diem $20.36/day

    b.       Level 2 – 301 to 400 minute per week                     Per Diem $40.85/day

    c.       Level 3 – 401 to 500 minutes per week                   Per Diem $54.42/day

    d.       Level 4 – 501 to 600 minutes per week                   Per Diem $67.99/day

    e.       Level 5 – 601 to 700 minutes per week                   Per Diem $81.56/day

    f.        Level 6 – 701 and up minutes per week                  Per Diem $95.14/day

    *The Facility and the Rehab Company share in the risk

  3. Per Patient Day Model – This is a one size fits all model.  Over time your facility averages 72 minutes of therapy/day for a Medicare Part A patient.  At a $0.95 per minute contract rate, you pay $68.40/day for Rehab if they do 400 minutes a week or 700 minutes per week.  The advantage to the SNF here is you have a known cost (known margins) and its up to therapy to provide the “appropriate” amount of care.

    *The Rehab Company is at risk of being accused of decreasing therapy to increase profit.

  4. A Percentage of Rehab Model – Since there is a dollar amount associated to PT, OT, and SLP in PDPM, you could pay a percentage of that to your Rehab provider.  This model is gaining favor among rehab companies.  DO NOT agree to 50% of the PT, OT, and SLP money, its too much.

    *The Rehab Company is at risk of being accused of decreasing therapy to increase profit

  5. A Percentage of the Per Diem Model – This is a model to consider ONLY IF your Rehab provider can do more than PT, OT, and SLP. IF they can help you with the Nursing component and the NTA component, this model could be a good fit.

    *The Facility and the Rehab Company share in the risk

Things to FIX in your current contract with this new amendment!

  1. If you do not currently see the acronym MPPR in your rehab contract under Medicare Part B, ask about it.  We fiercely  negotiate our current Medicare Part A rate to get a penny or two reduction, but don’t seem to be concerned about paying 18 to 46 cents per minute more for Medicare Part B services (MPPR vs Non MPPR)

  2. No contract should “lock you in” under PDPM.  If you can’t cancel you contract for 12 months and your current provider does a poor job under PDPM, you will suffer. Do not get locked into a pricing model for a year.  As a rule SNFs DO NOT want to change rehab providers, but should have the option if its not a good fit.

  3. Have your non-compete non-solicit portion amended to decline over time.  There is a true cost to a rehab company to staff a facility.  But that cost does diminish over time.

Ready to talk? Contact us today!