Who Gets Paid When a Supplier Bills Medicare Part B for an SNF Resident?

When your Part B supplier bills Medicare for your resident's ostomy supplies, Medicare cuts a check. That check goes somewhere. Most SNF administrators and CFOs assume it comes to the facility. It does not. This is a foundational fact of Part B supply billing in skilled nursing, and understanding it is the first step toward changing it.

The Mechanics of Part B Supply Billing

Medicare Part B can cover certain supplies for SNF residents, including surgical dressings, ostomy supplies, urological supplies, tracheostomy supplies, and splints and orthotics. Whether a facility or supplier can bill for a given item depends on the resident's status, the item, the date of service, and the applicable Medicare billing rules, including SNF consolidated billing and the rules for separately billable items.

Medicare generally pays the entity that submits the claim under its own National Provider Identifier. That is the whole mechanism. The billing entity and the paid entity are the same. If a supplier bills under its NPI, the supplier gets paid. If the facility bills under its NPI, the facility gets paid. The supplies are the same. The resident is the same. The Medicare coverage is the same. The only variable is who submitted the claim.

The Supplier Model: Step by Step

Consider a resident at your facility who requires ostomy supplies. Here is what happens under a standard supplier arrangement.

1. The clinical team identifies the supply need and contacts the vendor.
2. The vendor ships supplies to the facility.
3. The vendor obtains or uses on-file documentation to establish medical necessity under the applicable coverage rules.
4. The vendor submits a claim to Medicare Part B under the vendor's NPI, where the item is separately billable.
5. Medicare processes the claim and deposits payment to the vendor's bank account.
6. The facility receives the supplies. Revenue received: zero.

The supplies were delivered. Medicare paid. The payment went to the vendor. Your facility's role was as a care setting and a documentation source. The vendor received the revenue.

The Facility Billing Model: Step by Step

Same resident. Same ostomy supplies. Same month. Different billing arrangement.

1. The facility, or a billing partner operating under the facility's NPI, manages the documentation and claim preparation.
2. A claim is submitted to Medicare Part B under the facility's NPI, where the item is separately billable.
3. Medicare processes the claim and deposits payment to the facility's bank account.
4. If the facility works with a billing partner, the partner receives a contingency fee from that revenue.
5. The facility nets the remainder. Revenue that previously flowed to the supplier stays in the building.

The care is identical. The compliance requirements are the same. The only difference is who filed the claim and who received the payment. For the underlying mechanics, see the Medicare Part B supply billing guide.

What the Law Says

The facility billing model is supported under federal law and CMS guidance, subject to the resident-status and item-specific rules described above. This is not a workaround. It is the framework.

What the Resident Pays

Standard Medicare Part B cost-sharing applies: 20% coinsurance after the annual Part B deductible. For dual-eligible residents covered by Medicare and Medicaid, Medicaid may cover the coinsurance as a crossover claim, depending on current CMS crossover billing guidance. The resident's cost-sharing obligation is generally the same regardless of whether the supplier or the facility bills.

Why This Arrangement Exists and Why It Persists

Under the supplier model, the supplier bills under its own NPI and receives the Medicare payment. The facility receives supplies but no portion of the reimbursement. This arrangement persists because it is operationally simple for the facility, because the revenue is invisible on the facility's P&L, and because many facilities have not examined who is actually receiving the Medicare payment.

SNFs whose vendors are billing under the supplier model carry compliance exposure tied to documentation practices they do not control. Documentation and audit readiness is where that exposure shows up first.

What Changes When the Facility Bills

When the facility takes over billing, the Medicare payment flows to the facility instead of the supplier. The facility gains visibility into claims, payments, denials, and documentation. It also assumes the compliance responsibility for claim accuracy and documentation. The resident's care and cost-sharing are generally unchanged.

Facilities running PointClickCare already hold most of the source data a facility-side billing program depends on: census, physician orders, and the MAR.

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 CRUSH announcement
• CMS Fraud Hot Spot: DMEPOS Suppliers fact sheet