Know the Ropes for Direct Purchase of Service Relationships


For more than thirty, (30) years Medicaid waiver agents, focused on the elderly and disabled and community mental health agencies focused on the mentally ill and developmentally disabled have contracted with service providers in their own internal pools to provide services for those whose care they manage.   These service providers include:


  1. Assisted Living/Adult Foster Care
  2. Adult Day Care
  3. Durable Medical Equipment
  4. Medical Needs Transportation
  5. Contractors for Environmental Modifications
  6. In-Home Services (In a variety of categories)

Direct Purchase of Service Agreements can be efficient and purposeful.  It allows a care manager within the care coordinating agency – generally a nurse or social worker – to write the Plan of Care after the assessment process which is then passed along to the contract manager who contacts the selected provider and purchases the services.  Many have grown their businesses through agreements such as these and the community gets  a broad range of needed services from very diverse provider agencies.

In many cases, when preparing these agreements a provider is asked to bid, as the agents will not give you a ceiling but only a minimum or average reimbursement rate.  For this reason, it is important for providers and prospective providers of services under these DPOS agreements to be aware of how these processes work.  Why?  Generally, barring an issue of quality and reliability, those offering services at the lowest rate will get the most purchases.

This includes learning the ranges of rates, the dynamic between care manager and the agency purchaser and what actions are needed on your part to be considered for purchases with frequency.  You also need to know the definition of each service you bid to provide, such as in-home respite care and out-of-home respite care.


Equally important is knowing your cost of doing business, including costs spread over numerous hours of service such as insurances and labor costs.

Making the Introduction:  When you make an introduction to these agencies you need to clearly articulate what makes your agency the best qualified.  Are you using a special scheduling software, does your size allow a larger purchase of equipment which brings your prices down compared to others in PIC - WHEELCHAIR LIFT VANmedical equipment, does your adult day care have more wheelchair lift equipped vehicles?  Whatever allows you to stand out needs to be a part of the Clinical and Operational Narrative you provide that can be circulated within a Direct Purchase of Service Agency.

Just remember to go in knowing the ropes, which can prevent you from being hung by them!

, share your comments and thoughts.


PIC - ADULT DAY CARE MANUAL COVERThis publication offers expert advice on managing direct purchase of service agreements.  Order today.










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