Payment for hospice services is made to a designated hospice provider based on the Medicaid hospice rates published annually in a memorandum issued by the Centers for Medicare & Medicaid Services (CMS), Center for Medicaid and CHIP Services. These Medicaid hospice rates are effective from October 1 of each year through September 30 of the following year. Payment for hospice care will be made at predetermined rates for each day in which a beneficiary is under the care of the hospice. The daily rate is applicable to the type and intensity of services furnished to the beneficiary for that day. Consistent with sections 1902(a)(13)(b) and 1902(a)(30)(A) of the Social Security Act, states retain their flexibility to pay providers more than the established minimum payment published in the Medicaid Hospice Payment Rate letter. With the exception of payment for physician services under hospice, the following are the categories or levels of care into which Medicaid hospice are classified:
- Routine Home Care (Provider paid at one of two levels: days 1-60 and days 60+)
- Continuous Home Care
- Inpatient Respite Care
- General Inpatient Care
- Service Intensity Add-On (SIA)
Sections 1814(i)(1)(C)(ii) and 1902(a)(13)(b) of the Social Security Act authorize Medicaid hospice payment rates based on the annual hospice rates established under Medicare along with annual increases in payment rates for Medicare hospice care services. Hospice payment rates can be adjusted for regional differences in wages using the hospice wage indices published annually in the Federal Register. Rates for hospice physician services are not increased under this provision.
For each day that an individual is under the care of a hospice, the state pays the hospice an amount applicable to the type and intensity of the services furnished to the individual for that day. For continuous home care, the amount of payment is determined based on the number of hours of continuous care furnished to the beneficiary on that day. A description of each level of care is as follows:
- Routine Home Care: The state pays the hospice one of two-tiered per diems, as set by CMS based on a beneficiary’s length of stay, with a higher rate for the first 60 days of hospice care and a lower rate starting on day 61. The routine home care rate is paid for each day the patient is under the care of the hospice and another hospice rate is not paid. This rate is paid without regard to the volume or intensity of services provided on any given day.
- Continuous Home Care: The state pays the hospice at the continuous home care rate when continuous home care is provided. The continuous home care rate is divided by 24 hours in order to arrive at an hourly rate. A minimum of eight hours per day must be provided. The state pays the hospice for every hour or part of an hour of continuous care furnished up to a maximum of 24 hours a day.
- Inpatient Respite Care: The state pays the hospice at the inpatient respite care rate for each day the beneficiary is in an approved inpatient facility and is receiving respite care. The state pays for respite care for a maximum of five days each admission for respite, including the date of admission but not counting the date of discharge. The state pays for the sixth and any subsequent days at the routine home care rate.
- General Inpatient Care: The state pays at the general inpatient rate when general inpatient care is provided.
Outside of the payments made for the various levels of care described above, the following payment provisions are also made for hospice services.
- SIA Payment: The state pays the SIA for visits made by a social worker or a registered nurse, when provided during routine home care in the last seven days of life. The SIA payment is in addition to the routine home care rate. The SIA payment will be equal to the continuous home care hourly rate, multiplied by the hours of nursing or social work provided (up to four hours total) that occurred on the day of service. The SIA payment will also be adjusted by the appropriate hospice wage index.
- Hospice Nursing Facility Room and Board: Hospice nursing facility room and board per diem rates are reimbursed to the hospice provider at a rate equal to 95% of the skilled nursing facility rate, less any Post Eligibility Treatment of Income amount (amount an individual in an institution is able to contribute to cost of his/her own care) for Medicaid clients who are receiving hospice services. The hospice provider is responsible for passing the room and board payment through to the nursing facility.
- Optional Provisions: States can elect to implement the hospice payment cap and/or a 2% reduction in hospice payment for lack of quality reporting.
Hospice State Plan Language
Changes to hospice coverage or reimbursement requires submission of a state plan amendment. Modifications to the hospice reimbursement rates or methodology requires 4.19-B payment pages to be submitted, while changes to hospice coverage provisions require the appropriate 3.1-A and/or 3.1-B pages to be submitted. To describe hospice payment, a state should ensure they have comprehensive descriptions of the following on their state plan pages:
- The four levels of care and SIA, with an indication that hospice will be paid based on them
- The limitation on payments for inpatient care
- Hospice nursing facility room and board payment methodology
- Optional cap on overall hospice payment
- Optional 2% point reduction in hospice payment for lack of quality adjustment
Payments to a hospice for inpatient care must be limited according to the number of days of inpatient care furnished to Medicaid patients. During the 12-month period beginning November 1 of each year and ending October 31, the aggregate number of inpatient days (both for general inpatient care and inpatient respite care) may not exceed 20% of the aggregate total number of days of hospice care provided to all Medicaid recipients during that same period. This limitation is applied once each year, at the end of the hospices’ cap period.
Further guidance on the coverage benefit for hospice may be found at the Hospice Benefits page.