Value-Based Insurance Design Model Hospice Benefit Component Overview

Published 10/31/2022

On January 1, 2021, the Centers for Medicare & Medicaid Services (CMS) began testing the inclusion of the Part A Hospice Benefit within the Medicare Advantage (MA) benefits package through the Hospice Benefit Component of the Value-Based Insurance Design (VBID) Model. This test allows CMS to assess the impact on care delivery and quality of care, especially for palliative and hospice care, when participating MA plans are financially responsible for all Parts A and B benefits.

Currently, when an enrollee in an MA plan elects hospice, fee-for-service (FFS) Medicare becomes financially responsible for most services, while the MAO (MA Organization) retains responsibility for certain services (e.g., supplemental benefits). Under the Hospice Benefit Component of the VBID Model, participating MAOs retain responsibility for all Original Medicare services, including hospice care. 

Key Policies and Requirements

  • Participating MAOs must continue to cover hospice care for enrollees who choose to elect hospice through an in-network or out-of-network hospice provider
  • Participating MAOs continue to be prohibited from applying any prior authorization to hospice care related to the enrollee’s terminal condition
  • Participating MAOs must continue to pay for out-of-network hospice care at 100% of Original Medicare rates, including physician services and the service intensity add-on (SIA) payments
  • Participating MAOs must continue to pay for any unrelated services and/or post-hospice live discharge costs, as long as they are deemed to be appropriate and medically necessary

Billing and Claims Under the Hospice Benefit

  • For questions about enrollment, billing, claims, and contracting related to enrollees of participating plans, hospice providers should contact the participating MAO
  • If you contract to provide hospice services with the plan, be sure to confirm billing and processing steps before the calendar year begins, as they may be different
  • Hospice providers must continue (as they have in CY 2021) to send all notices and claims to both the participating MAO and the relevant MAC on a timely basis
  • The MAO will process payment, and the Medicare Administrative Contractor (MAC) will process the Notice of Elections (NOEs) and claims for informational and operational purposes and for CMS to monitor the Model
  • How the MAC will process informational NOEs and claims:
    • NOE processes and approves like normal (PB9997 location)
      • A hospice would not know a patient is in a VBID MAO with the processing of the NOE
      • The NOE will open the election in Medicare’s eligibility systems, same as a patient in Original Medicare
    • Claims will reject with Reason Code (RC) U523A
      • RC Narrative: The dates of service are during both a hospice election period and a MA plan's period that is in a VBID Model
    • The rejected claims will open benefit periods in Medicare’s eligibility systems
    • Therefore, if a patient leaves the MAO plan, returns to Original Medicare and continues the hospice election, they will continue from the current period on Medicare’s eligibility systems. The hospice would continue to bill the MAC and the MAC would issue payment, assuming the patient’s MAO plan has a termination date on Medicare’s eligibility systems for the dates of service billed. The MAC would not pay if Medicare’s eligibility systems were not updated to show the termination. The patient or hospice would have to contact the MAO to submit the termination. 

Hospice providers should keep in mind that a patient may travel for their hospice care so they may see a patient enrolled in one of the participating plans offering coverage not in their service area.

  • Example: A patient with coverage from a participating plan whose service area is in Ohio may travel to receive hospice care from a hospice provider in Florida. The provider should submit all notices and claims to the plan in Ohio.
  • The hospice continues to bill claims for informational and operational purposes to their current MAC

Reimbursement for “Unrelated Care”

  • Any unrelated care associated with an enrollee’s hospice stay which is covered by a plan participating in the Hospice Benefit Component is now the financial responsibility of the participating plan
  • FFS Medicare should not process any claims for unrelated care for an enrollee which is covered by a plan participating in the Hospice Benefit Component

Calculation of the Aggregate Cap and the Inpatient Cap

  • All billing related to care provided to an enrollee who have coverage through a plan participating in the Hospice Benefit Component shall not be included in calculating a hospice’s progress towards the aggregate and inpatient cap

Contacting the VBID Model Team

  • All stakeholders can reach out to the VBID Model Team with any questions, comments, or concerns about the Hospice Benefit Component at VBID@cms.hhs.gov

Resource (this page provides links to VBID)CMS VBID Model Hospice Benefit Component Overview Homepage.

  • Coverage
  • Participating Plans
  • Billing and Payment
    • Eligibility Check
    • Directions for Submitting Claims
  • Outreach and Education
    • Publications: Hospice Benefit Component Technical and Operational Guidance
    • Events
    • Mailings
  • FAQ

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