Company Contracts and Ethics: An Introduction

Jeannine LeCompte, Publishing and Research Coordinator

All Medicare- and Medicaid-approved long-term care facilities (LTCs) should adhere to a firmly established program of ethics to comply with the rules set down by the Centers for Medicare & Medicaid Services (CMS). However, it is sometimes overlooked that these rules and regulations apply equally to all outside contractors with whom the LTC interacts.

CMS expects the same standards and compliance from an LTC’s outside contractors as it does from the LTC itself—and, even more importantly, it will hold the LTC responsible for any lapses in conduct by these outside parties. It is therefore vital for all LTCs to have a coherent policy regarding all contractual relationships with outside parties in order to remain compliant with the law.

In practical terms this means that the behavior of all outside contractors must comply with the LTC’s own compliance and ethics program. This applies to all contracts, including, but not limited to, those covering vendors, PPS/Medicare Part A, billing services, staffing agencies, therapy contracts, physician and other referral sources, building and equipment leases, and, equally importantly, all federal government contracting.

For the sake of consistency and ease of understanding, it is a good idea to have the compliance sections in each contract uniform, similar in language, and, of course, approved by the LTC’s compliance and ethics attorney. Just like the compliance and ethics program itself, these contracts should be reviewed annually for any improvements or changes, and not left to self-renew from year to year.

The golden rule is that any contract which the LTC enters into with any outside party, which is even in part reimbursable by federal or state healthcare programs, must be subjected to the same rigorous compliance and ethics requirements.

There are three main groups of contractual obligations which have to be monitored: