August 2, 2021 | blake I

6 min read

Part B in the ALF/Home: How to Set Up a Rehabilitation Agency

With all of the changes going on in healthcare since the start of COVID-19, many physical, occupational and speech therapists are looking for opportunities to provide care in their patients’ homes.

One avenue to deliver services at home is by setting up a rehab agency to bill the services. There are a lot of advantages to doing so, but as with most business ventures, there are some disadvantages as well as pitfalls to avoid when taking this route.

Keep reading on for suggestions to consider.

Do Your Rehab Agency Homework

A provider of rehabilitation services often chooses to become a rehab agency because the goal is to deliver rehabilitation services through a multidisciplinary team that includes physical, occupational, and speech therapy services.  

To be considered a rehabilitation agency under the Medicare program1, providing rehabilitation services, the agency must at a minimum:

  1. Provide an integrated interdisciplinary rehabilitation program designed to upgrade the physical functioning of handicapped, disabled individuals by bringing specialized rehabilitation staff together to perform as a team; and
  2. Provide at least physical therapy or speech-language pathology.

A state agency can also create their own definitions and/or requirements for a rehabilitation agency.  Some states require a multidisciplinary practice to get licensed as a rehab agency and therefore if you set up as a group practice instead, it would be illegal according to the state but not according to the CMS.

Some state agencies may have a certificate of need (CON) program that regulates any new institutional facility.  A CON program provides a set of regulations set up by state agencies to control establishing and/or expanding health care facilities and services in a given area.2

The rehabilitation agency is also unique in that it is considered an institutional setting by Medicare.  This means it is subject to Conditions for Coverage (CfCs) and Conditions of Participation ( CoPs).3  

A provider must demonstrate that it meets the CfCs and CoPs before it can bill for services as a rehabilitation agency.  This is accomplished by a survey conducted by the state department of health or a deeming authority.

It is also prudent to check the availability of payer networks in your area.  Do they understand what “outpatient therapy in the home” is?  More importantly, do they understand what a rehabilitation agency is?

Don’t assume all payers are familiar with the term or familiar with the constellation of services provided. You may have to do some education with them before attempting to bill for services.

Steps to Becoming a Rehab Agency

Become Medicare-Certified

After setting up your business entity, the next step to becoming a rehab agency is to enroll in Medicare.  Start by obtaining a Type 2 National Provider Identifier (NPI).  The next step is completing a CMS-855a form.  

Many providers make the mistake of completing the CMS-855B form for outpatient providers because they will be delivering ‘outpatient’ rehabilitation services. However, since an agency is considered an institutional entity by Medicare, the CMS-855a is required. 

Prepare for Your Survey

You must be surveyed prior to being able to bill for services.4 Unlike private practices or group practices, this site visit will be more than just a check to ensure you are operational.  As mentioned previously, rehabilitation agencies must comply with a set of CfCs and CoPs.  This requires planning, preparation, and investment of resources.  

Providers must have an actual ”space” to be surveyed with a minimum amount of equipment.  If you plan to be primarily mobile, delivering services in the home, consider this in your preparations. Providers must develop policies and procedures, patient care policies and an emergency preparedness plan.5

Practice Administration Considerations

 Credentialing: One benefit of being a rehabilitation agency, rather than a group practice, is that you only have to enroll once, making the path to growth potentially quicker.  In other words, every therapist working for you does not have to be separately enrolled.  However, Medicare-managed care payers, state Medicaid programs, and other commercial payers may still require each therapist to be credentialed.

Staffing: Services delivered by therapist assistants require general supervision.6  This is often seen as one of the primary benefits to setting up a rehab agency since in a group practice, therapist assistants require direct, onsite supervision. However, when delivering services in a rehab agency clinic, there must always be two people in the clinic.6

Billing: Rehab agencies bill on the CMS-1450 form, also referred to as the UB-04 or CMS 837I.  A rehabilitation agency, as an institutional provider, bills only once a month, and therefore the UB-04 reflects up to 30 days of services.  The CPT®7 codes are used to define the skilled services.7  Claims are paid using the Medicare physician fee schedule for skilled services delivered.

Rehab Agency in the Home Conclusions

When it comes to providing rehabilitation services in the home or ALF, there are important decisions to make to decide what kind of entity is best for you and your clients.

In conclusion, establishing a thriving agency in assisted living facilities and homes is a significant endeavor, but one that holds the promise of immense satisfaction and success.

We’ve walked together through the key steps and considerations, but remember that this journey doesn’t stop here. Each day and every patient in or outside of the clinic will bring its own set of challenges and triumphs as you navigate the complex yet rewarding world of healthcare.

By integrating a robust and efficient Part B program, you’re not only building a valuable service but also contributing significantly to the wellbeing and quality of life of countless individuals. You’ll help them regain their independence, strength, and confidence, thereby fostering a sense of hope and dignity.

Just like any journey, this process requires careful planning, a dedicated team, a passion for service, and an unwavering commitment to patient care.

As you continue to grow, never lose sight of your ultimate mission: to provide exceptional care that empowers individuals, promotes healing, and helps them lead fulfilling lives. Remember, you are not only creating a rehabilitation agency, but also a beacon of hope for those seeking to regain their mobility and autonomy.

We hope this comprehensive guide has illuminated the path forward and sparked your enthusiasm for the journey ahead. So, here’s to your new venture – and the incredible impact you’re about to make. Stay the course, celebrate every milestone, and keep in mind that the work you’re doing is changing lives, one step at a time.

How-to Guide for Part B in the ALF/Home

Advice for Rehab Consultants Seeking to Expand Their Service Options

1Electronic Code of Federal Regulations.  Title 42:  Public Health. Chapter IV; Subchapter G; Part 485-Conditions of Participation:  Specialized Providers; Subpart H.  Retrieved from:

2Investopedia.  Certificate of Need (CON).  Retrieved from:  

3Centers for Medicare and Medicaid Services.  Conditions for Coverage (CfC) & Conditions of Participation (CoPs).  Retrieved from:

4Centers for Medicare and Medicaid Services.  Quality, Safety & Oversight – Certification & Compliance.  Outpatient Rehabilitation Providers.  Retrieved from:  

542 CFR 484.4.  Centers for Medicare and Medicaid Services, Internet Only Manual, Benefits Policy Manual.  Chapter 15 – Covered Medical and Other Health Services.  Section 230.1.C

6Electronic Code of Federal Regulations.  Title 42:  Public Health. Chapter IV; Subchapter G; Part 485-Conditions of Participation:  Specialized Providers; Subpart H. §485.723(a)(6) Physical Environment.   Retrieved from:

7CPT® is a registered trademark of the American Medical Association.  All rights reserved.


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