Why in-house preferred provider agreements are profitable & risky

Establish "in-house preferred provider" arrangements with independent and assisted living communities and garner a steady flow of referrals - an arrangement that accounts for a quarter of Jim Barraza's private duty revenue. But tread carefully because you could unknowingly be establishing relationships that are illegal, warn several long-term care attorneys.

In-house preferred provider arrangements allow the private duty agency to maintain a constant, physical presence in the community and serve as way for the community to visibly endorse your agency, says Barraza, affiliate owner of Arcadia Health Care, MidSouth, based in Memphis. Barraza maintains several of these relationships, and the services he provides in these communities account for more than 25% of his revenue. He's had up to five live-in cases in one facility at one time, he says.

But be warned: The arrangements you make with any referral source, including independent and assisted living communities, will be scrutinized under federal and state anti-kickback laws if your agency receives money from Medicare, Medicaid or any other federal payer, says home care attorney John Gilliland, a partner at Gilliland, Markette & Milligan in Indianapolis.