The Centers for Medicare & Medicaid Services (CMS) has officially announced the termination of the Hospice Benefit Component under the Value-Based Insurance Design (VBID) Model, effective December 31, 2024, at 11:59 p.m.
This decision directly impacts Medicare Advantage Organizations (MAOs) and hospice providers participating in the VBID demonstration. After this date, the financial responsibility and billing process for hospice services will transition back to Original Medicare.
Transition Back to Original Medicare for Hospice Coverage
Starting January 1, 2025, CMS will shift hospice payment responsibility for affected Medicare Advantage enrollees back to the Original Medicare (Fee-for-Service) program.
As a result, any hospice services delivered on or after this date will no longer be processed under the VBID Hospice Benefit Component.
CMS has made it clear that MAOs must continue covering hospice care for all valid hospice elections that began before the termination date. This ensures continuity of care for patients already enrolled in hospice services.
Continuity of Care for Existing Hospice Elections
CMS emphasizes that hospice providers should not discharge patients solely because their Medicare Advantage plan was part of the VBID Hospice Benefit Component.
If a patient’s hospice election started before January 1, 2025, and continues afterward, their care must proceed without interruption under Original Medicare rules.
Additionally, CMS has removed the requirement for new Notices of Election (NOEs) for hospice elections that carry over into 2025, simplifying the transition for ongoing cases.
Hospice Billing and NOE Submission Requirements During VBID
During the VBID model years, hospice providers were required to:
- Submit Notices of Election (NOEs) to their Medicare Administrative Contractor (MAC)
- Submit all hospice claims for informational purposes
These requirements helped CMS monitor the model and ensure a smooth transition once Original Medicare resumed financial responsibility.
Because of this structured reporting, claims for services on or after January 1, 2025, can seamlessly shift under Original Medicare—provided prior submission rules were followed correctly.
Late NOE Submission and Financial Impact
CMS also addressed potential penalties related to late NOE submissions.
If a hospice provider fails to submit an NOE on time, claims may face late NOE penalties, especially if submitted after the grace period (for example, January 6, 2025, or later).
However, CMS allows exceptions in cases where late submission occurred due to circumstances beyond the provider’s control.
Example Scenario for Better Understanding
To clarify the billing impact, consider this example:
A patient elects hospice care on September 6, 2024, while enrolled in a VBID participating Medicare Advantage plan. The hospice continues beyond December 31, 2024.
In this case:
- The hospice should have submitted a timely NOE to the MAC in 2024.
- If the NOE is only submitted on January 16, 2025, it is considered late.
- Any claims for services between January 1 and January 15, 2025, may be subject to late NOE penalties.
This example highlights the importance of timely submission during the transition period.
Key Guidance for Providers
CMS refers providers to the CY 2024 VBID Technical and Operational Guidance, which includes detailed instructions for:
- Hospice billing requirements under VBID
- Claims submission procedures during transition
- Operational rules for continuity into Original Medicare
Providers should carefully review these guidelines to avoid compliance issues and ensure accurate reimbursement.
Final Takeaway
The termination of the VBID Hospice Benefit Component marks a significant shift in hospice reimbursement policy. While the model aimed to improve care coordination under Medicare Advantage, all hospice financial responsibility will now revert to Original Medicare beginning in 2025.
Hospice providers must remain vigilant about billing accuracy, NOE timing, and compliance requirements to avoid penalties and payment disruptions during this transition.