Rhode Island Enacts Annual Raise for Medicaid-Contracted Hospices, Home Health Agencies

The State of Rhode Island has implemented a 1% annual inflation increase for all Medicaid hospice and home care direct fee-for-service rates, the first state Medicaid program in the nation to do so. The state’s General Assembly last year approved a statute instituting the annual increase and recently funded the raise for the first time in its Fiscal Year 2020 budget.  

Prior to the establishment of this yearly payment hike, the rates for hospice care (and skilled nursing and therapeutic services) had been frozen between 2001 and 2018, when the program received a 20% increase after Rhode Island withdrew from a U.S. Centers for Medicare & Medicaid Services managed care demonstration program for Medicaid-only beneficiaries and transitioned back to the fee-for-service system.

“Last year we pushed for a change in the way the Rhode Island Medicaid program goes about funding Medicaid-contracted home care and hospice services,” said Nicolas Oliver, executive director of the Rhode Island Partnership for Home Care. “We went to our General Assembly leadership and said we should look at [rate increases] differently. Maintaining small, predictable annual rate increases in statute helps stabilize and grow providers and their direct care staff to meet current levels of need.”

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The Rhode Island Partnership for Home Care is a trade group representing 30 members, all hospice, home health care, palliative care and other home- and community-based health care providers. Collectively, the partnership’s members care for 20,000 patients annually with a workforce of 8,000, contributing nearly half of a billion dollars to the state’s economy each year, according to Oliver.

The first annual rate increase, the amount of which is based on the New England Consumer Price Index Card, became effective July 1, the start of the state’s fiscal year. The annual raise is designed to stabilize the Medicaid payment system in Rhode Island following more than a decade of rate freezes followed by a substantial increase.

“We have gone through periods of having rate freezes, followed by dramatic increases with the goal of trying to catch up from prior years, but providers never [catch up],” Oliver said. “If you are under a rate freeze and then get an increase it’s not as though you are catching up from the past; it’s that you are trying to stabilize your current operations and project how that would impact you after years of uncertainty regarding rate increases or rate freezes.”

Oliver suggested that this action by Rhode Island could serve as a model for other states.

“I believe that other states could replicate this model; we would like to see our 49 counterparts take this direction,” Oliver said. “This is an excellent tool for state lawmakers to provide better funding for Medicaid-contracted providers and provide better opportunities for Medicaid beneficiaries to receive home care and hospices services in a timely manner.”

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