Medicaid Hospice Reimbursement to Become RUGs-Based July 1, 2015

When Virginia Medicaid switched to RUGs-based billing for nursing facility care last November, the Department of Medical Assistance Services (DMAS) did not make the switch for Hospice providers based on both DMAS’ and the providers’ readiness for the change.  As you know, when a nursing facility resident enters hospice, the hospice provider is paid by Medicaid at 95 percent of the nursing facility rate; the hospice provider then pays the nursing facility based on the contract between the facility and the hospice provider.

The switch to RUGs-based billing essentially created 34 rates per facility as opposed to one facility-wide rate; neither DMAS nor the hospice providers had made the system/procedure changes necessary to implement the change.  As a result, DMAS defaulted to the July 1, 2014 facility case mix adjusted rate as its basis for hospice reimbursement, as opposed to the November 1 rates, and the hospices followed suit in their payment to nursing facilities.  In the interim, DMAS has been working with the hospice providers, with input from the nursing facilities, on the change to RUGs-based hospice reimbursement, to be effective July 1, 2015.  To that end, DMAS released a memo dated May 18, 2015 outlining the change.

From a nursing facility perspective, you may need to revisit your contract(s) with hospice providers to ensure the language accommodates the reimbursement change.  Additionally, under the methodology change, the hospice providers will need to know the appropriate RUGs assignment (to determine the rate) for both their billing to DMAS and their payment back to the nursing facility.  As such, you will likely need to include the RUGs information (in whatever form the parties agree) on communication to the hospice to ensure accurate and timely billing and payment.