How to Audit Your SNF's Part B Supply Vendor Arrangement

Most skilled nursing facilities inherited their Part B supply arrangement rather than chose it. A supply vendor delivers dressings, ostomy, urological, tracheostomy, and splint or orthotic products, handles the paperwork, and the facility rarely sees a claim, a remittance, or a denial. That arrangement can be entirely appropriate. The problem is that many facilities cannot tell, because they have never looked.

This is a five-step internal review you can run with your existing team. It does not assume your vendor is doing anything wrong. It establishes what is actually being billed, under whose number, against what documentation, and whether the arrangement matches the Medicare rules that apply to your residents.

Step 1: Establish What Is Being Billed and By Whom

Start with facts, not assumptions. Before you can evaluate the arrangement, you need to see the claim record behind it. Request the following from your supply vendor in writing, identifying the contract, compliance, or reconciliation purpose of the request:

• HCPCS codes billed for your residents, by date of service
• The billing NPI submitted on those claims
• Claim status, allowed amounts, and paid amounts
• Denials, adjustments, and any recoupments
• The Medicare contractor the claims were submitted to

Data sharing is subject to privacy and authorization requirements, so expect the vendor to scope what it releases. If the vendor declines entirely, document the request and the response. A refusal to disclose billing activity conducted in connection with your residents is itself an audit finding worth escalating to your compliance officer.

In parallel, pull your own side of the record. Understanding how Medicare Part B supply billing works will tell you which of your residents fall outside a covered Part A stay and therefore generate Part B supply activity at all.

Step 2: Read the Contract, Line by Line

Vendor supply agreements are often signed by operations and never reviewed by billing or compliance. Pull the executed agreement, every amendment, and any business associate agreement attached to it. Have your compliance officer and counsel look specifically at these provisions.

Flag any language that appears to assign claim rights, payment rights, or resident benefits to the supplier, and confirm with counsel that the agreement does not conflict with applicable Medicare rules.

Step 3: Test the Documentation Trail

Pick a sample of recent supply months and trace individual items from the chart to the claim. For each sampled item, confirm that the record contains a signed physician order, medical necessity documentation tied to the resident's condition, and proof that the item was delivered and used. These are the same documentation requirements a Medicare contractor would apply on review.

Two questions matter more than the rest. First, does the documentation live in your system, or only in the vendor's? If a contractor requests records and the facility cannot produce them independently, the facility is exposed regardless of who submitted the claim. Second, do the dates of service in the claim data line up with the MAR and the resident's stay status in your census?

Step 4: Check the Arrangement Against the Medicare Rules

This is where most arrangements either hold up or do not. CMS guidance on SNF consolidated billing states that items and services subject to consolidated billing during a covered Part A stay generally must be billed by the SNF, either directly or under an arrangement with an outside supplier. Separate rules apply to certain items and to SNF outpatients and Part B residents.

Work through your sample resident by resident:

1. Determine the resident's status on the date of service: covered Part A stay, non-covered day, Part B only, or Medicare Advantage.
2. Identify the HCPCS code and confirm whether it falls within consolidated billing for that status.
3. Confirm which entity submitted the claim and to which contractor.
4. Compare that to the rule applicable to the item, the payer, and the date of service.
5. Escalate any mismatch to compliance before drawing conclusions or contacting the vendor.

If your review shows supplies billed separately by a supplier during covered Part A stays, treat that as a compliance question rather than a billing preference. Facilities that want to remove the ambiguity often move to billing under your own NPI, which keeps the claim, the documentation, and the audit response in one place.

Step 5: Evaluate the Transition Economics Before Deciding

An audit finding is not automatically a reason to change vendors. Once you know what is being billed and whether the arrangement is defensible, weigh the practical variables: contract notice periods, enrollment and payer requirements, documentation readiness, EHR workflow, the item and HCPCS mix in your building, and the staff time implementation would take.

There is no universal timeline for moving from supplier billing to facility billing. Burst has seen selected PointClickCare integration implementations reach a first claim in under two weeks. That is an observation from specific facilities, not a guarantee or an industry benchmark.

What to Do With the Findings

Document the review, the requests you made, what you received, and what you could not obtain. Share the findings with your compliance committee. If the arrangement is sound, you now have a record showing you checked. If it is not, you have the evidence needed to renegotiate, escalate, or transition on an informed basis.

Burst Billing works exclusively with skilled nursing facilities on Medicare Part B supply billing, billing under the facility's own NPI on a contingency basis. If you want a second set of eyes on what your claim record shows, the assessment is free, takes 30 minutes, and ends with written findings.

Compliance Note

This is not legal advice. Medicare billing should be validated against current contractor instructions and reviewed by qualified compliance or legal professionals before implementation.

References

• CMS, SNF Consolidated Billing
• Medicare Claims Processing Manual, Chapter 6
• Medicare Claims Processing Manual, Chapter 7
• 42 CFR 411.15
• CMS press release on the CRUSH initiative