Stymied Medicaid reimbursement for nursing home room and board could threaten access to care for hospice patients in California and possibly other states.

The issue centers around patients in nursing homes who are dually eligible for Medicare and Medicaid. When caring for patients in nursing homes, hospices typically pay for their room and board with the expectation that they will be reimbursed by Medicaid for those expenses.

Medi-Cal, California’s Medicaid program, is among the states that shifted management of its safety net health coverage to health plans. Under this system, Medi-Cal pays the health plans who then pass payments on to the providers. However, due to confusion among managed care plans that oversee Medicaid in most states, those hospices are not getting those dollars back, according to Craig Dresang, CEO of YoloCares. This has caused hospices to lose thousands to millions of dollars in some cases.

“Managed health care plans are saying they’re denying the claims, and they’re tying them up so that they age out. So the due date has passed and we can no longer bill,” Dresang told Hospice News. “Because the managed care plans have actually already been paid for all of the care for these patients, they should just simply reimburse us the way Medi-Cal always has, and they’re not. They’re keeping the money and it’s a double whammy for us, because we’re now paying out thousands of dollars per patient in room-and-board charges, and we’re not getting reimbursed for that.”

Currently, YoloCares is on the hook for more than a million dollars in room-and-board payments. One plan alone owes the nonprofit provider more than $500,000.

In addition to the financial concerns, the issue spurs regulatory compliance questions as well. If hospices are not reimbursed for the money they have given to nursing homes, it could be seen as inducement by the federal government, according to Sheila Clark, president and CEO of the California Hospice and Palliative Care Association (CHAPCA). One form of inducement is the payment of kickbacks to other health care organizations or physicians in exchange for referrals.

The reimbursement problem also creates additional burden for staff who have to deal with the billing, claims denials and other related issues, Robert Love, executive director of Butte Home Health and Hospice, indicated.

Lack of education about hospice among health plans is a key factor, Love said.

“Payers don’t know how to handle the room and board, and it’s new to them. They aren’t well educated on it,” Love told Hospice News. “The net effect is that we and many other hospices are owed hundreds of thousands if not millions of dollars in room-and-board payments. What’s extra painful about this is we’re expected to make our skilled nursing facility partners whole, and they don’t want to wait for their money.”

Ultimately, it could be patients that lose as hospices face more obstacles to providing care in nursing homes. For some providers, the lack of room-and-board reimbursement could make care in that setting unsustainable, Love said.

California hospices have banded together to help address the issue and ensure health plans are better informed. A group of providers went to CHAPCA to voice their concerns, and the state association quickly began engaging with Medi-Cal, the health plans, fellow hospices and other stakeholders, Clark said.

The result was a series of calls and meetings with those stakeholders to discuss how the process should work and where it is breaking down. For example, according to law, plans are not allowed to require prior authorizations for these room-and-board payments, nor do those providers have to contract with the plans in order to receive that reimbursement, according to Clark.

In response, California’s Department of Managed Care will soon send what is called an All-Plan Letter designed to elucidate how this room-and-board payment system should work when it comes to hospice. 

Among the individual plans, some have been responsive and some, to date, have not, according to Love.

The two plans that participated in CHAPCA’s meetings with Medi-Cal and the Department of Managed Care seemed to get the message, Clark told Hospice News. Future meetings with additional plans are in the works.

“We had VPs on the phone from both plans, and they’re like, ‘okay, we understand,’” Clark said. “We’re going to roll this through and set up meetings with other plans to make sure that they understand it. We need to get this fixed.”