After years of nonpayment, the California Department of Health Care Services (DHCS) has instructed Medicaid managed care plans to pay hospices for nursing home room and board.

The issue pertains to patients 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. However, due to confusion among managed care plans that oversee Medicaid in most states, those hospices have not been receiving those payments.

But DHCS has now issued an All Plan Letter designed to clarify both the hospice’s and the managed care plan’s roles and responsibilities, including payment for room and board and actions to identify fraud, waste and abuse.

“The hospice provider must reimburse the facility for the room and board at the rate negotiated between the hospice provider and facility …,” the letter stated. “For dually eligible SNF residents … payment for room and board must be made directly to the hospice provider. The room and board charge billed to the [managed care plan] as the hospice benefit under Medicare does not cover room and board. Following payment from Medicare, the hospice provider then bills the [manged care plan] for the Medicare co-payment amount.”

Managed care plans are required to make these “pass-through” payments regardless of whether the hospice is in or out of network, according to the letter. Moreover, the letter indicated that plans may not require prior authorization for room-and-board payments. The only circumstance in which plans may require a prior authorization for hospice is for General Inpatient Care, the All Plan Letter said.

DHCS has also asked managed care plans to write an attestation that they’re going to implement the provisions of the letter, according to Sheila Clark, CEO of the California Hospice and Palliative Care Association (CHAPCA).

“This All Plan Letter holds the plans responsible for implementing the hospice benefit. No authorization is needed. No contract is needed if they’re dual eligible for room-and-board pass through,” Clark told Hospice News. “That was the big problem with getting paid. This is a perfect example of how states can work to get hospice right.”

CHAPCA was instrumental in ensuring that DHCS issued these clarifications. After a group of providers went to CHAPCA to voice their concerns, the state association quickly began engaging with Medi-Cal, the health plans, fellow hospices and other stakeholders, according to Clark. The result was a series of calls and meetings with those stakeholders to discuss how the process should work.

Within a month of these efforts, hospices began receiving room-and-board payments, Robert Love, executive director of Butte Home Health and Hospice, told Hospice News in an email.

The letter provides necessary clarifications for managed care plans, Love said.

“I read the letter and it’s excellent. It provides much-needed clarity,” Love told Hospice News. “These payors needed guidance and this document provides it. I can’t really blame the payers. The rules are complex and hospice accounts for less than 1% of their volume. There were bound to be huge mistakes and this letter clarifies.”