The VBID Hospice Benefit changed how Medicare Advantage plans managed hospice care. CMS introduced this model to improve care coordination and patient outcomes. The model also tested whether managed hospice services could deliver better value.
However, CMS ended the model on Benefit Component of the VBID Model on December 31, 2024. Even so, healthcare providers should understand how the program worked. This knowledge helps explain previous billing requirements and claim processing.
In this guide, we explain the VBID Hospice Benefit, its policies, billing process, reimbursement rules, and important resources.
What Is the VBID Hospice Benefit?
The VBID Hospice Benefit was part of the Value-Based Insurance Design (VBID) Model created by the Centers for Medicare & Medicaid Services (CMS).
CMS launched this model on January 1, 2021. Its purpose was to test hospice coverage within Medicare Advantage plans.
Before this model, Original Medicare handled most hospice payments. Meanwhile, Medicare Advantage Organizations remained responsible for selected services.
Under the VBID Hospice Benefit, participating Medicare Advantage Organizations became responsible for all Medicare Part A and Part B services. This responsibility included hospice care.
As a result, CMS evaluated whether this approach improved quality, coordination, and patient experience.
Why CMS Introduced the VBID Hospice Benefit
CMS designed the VBID Hospice Benefit to strengthen care management for seriously ill patients.
The program focused on several important goals.
- Improve hospice care coordination.
- Increase care quality.
- Reduce fragmented healthcare services.
- Give Medicare Advantage plans greater responsibility.
- Improve patient outcomes through integrated care.
Because of these goals, CMS collected data throughout the testing period.
End of the VBID Hospice Benefit
CMS later reviewed the results of the demonstration.
After evaluation, CMS decided to end the hospice portion of the model.
The Benefit Component of the VBID Model on December 31, 2024 officially concluded at 11:59 p.m.
Additional information appears under Termination of the Hospice documentation issued by CMS.
Key Policies Under the VBID Hospice Benefit
Several important rules applied throughout the model.
Medicare Advantage Plans Covered Hospice Care
Participating Medicare Advantage Organizations remained responsible for hospice services. This responsibility included both in-network and out-of-network hospice providers.
Prior Authorization Was Not Allowed
Plans could not require prior authorization for hospice care related to the patient’s terminal illness.
Therefore, eligible patients received timely hospice services.
Out-of-Network Payment Rules
Participating plans paid out-of-network hospice providers at 100% of Original Medicare payment rates.
These payments also included physician services and Service Intensity Add-On payments.
Coverage for Unrelated Medical Services
Plans also covered medically necessary services unrelated to the terminal diagnosis.
Furthermore, plans covered eligible costs after a patient left hospice care.
Billing Process Under the VBID Hospice Benefit
Hospice providers followed specific billing procedures during the model.
First, providers contacted the participating Medicare Advantage Organization for enrollment, billing, contracting, and payment questions.
Next, contracted providers confirmed billing requirements before each calendar year.
Requirements sometimes changed between participating plans.
Providers also submitted all required notices and claims to both the Medicare Advantage Organization and the Medicare Administrative Contractor.
Although the Medicare Advantage Organization handled payment, the Medicare Administrative Contractor processed claims for monitoring and operational purposes.
How Medicare Administrative Contractors Processed Claims
The Medicare Administrative Contractor handled informational claims differently during the VBID Hospice Benefit.
The Notice of Election processed normally.
However, providers could not identify VBID enrollment from the Notice of Election alone.
The Notice of Election still opened the patient’s hospice election within Medicare eligibility systems.
Claims later rejected with Reason Code U523A.
This rejection indicated that service dates occurred during both hospice election and participation in the VBID Model.
Even though payment did not occur through Medicare, rejected claims still updated Medicare eligibility records.
This process protected future hospice benefit periods.
What Happened If a Patient Left the Medicare Advantage Plan?
Sometimes patients returned to Original Medicare while continuing hospice care.
When this happened, hospices resumed billing the Medicare Administrative Contractor.
However, Medicare eligibility systems first needed updated termination information.
Without those updates, Medicare could not issue payment.
Therefore, either the patient or the hospice contacted the Medicare Advantage Organization to report plan termination.
Hospice Care Outside the Plan’s Service Area
Patients sometimes traveled while receiving hospice care.
For example, a patient enrolled in an Ohio plan could receive hospice services in Florida.
In that situation, the Florida hospice billed the participating Medicare Advantage Organization in Ohio.
Meanwhile, the hospice continued sending informational claims to its regular Medicare Administrative Contractor.
Reimbursement for Unrelated Care
The VBID Hospice Benefit also changed responsibility for unrelated medical care.
Participating Medicare Advantage plans paid for unrelated covered services during hospice care.
Therefore, Fee-for-Service Medicare did not process unrelated care claims for participating enrollees.
Aggregate Cap and Inpatient Cap Calculations
Hospice providers also followed different cap calculations.
CMS excluded billing connected to participating VBID enrollees from aggregate cap calculations.
CMS also excluded these services from inpatient cap calculations.
Consequently, participating claims did not affect hospice cap reporting.
Guidance for Hospice Providers
Hospice providers should review all applicable CMS guidance before submitting claims.
They should also verify payer responsibility before billing.
Most importantly, providers should review the CY 2024 VBID-Hospice Supplement to Technical and Operational Guidance for detailed payment scenarios and operational instructions.
Contact Information
Stakeholders with questions regarding the model could contact the CMS team directly.
Email: VBID@cms.hhs.gov.
Resources
- 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
Conclusion
The VBID Hospice Benefit represented an important Medicare demonstration project. It shifted hospice payment responsibility to participating Medicare Advantage plans. The model also tested better care coordination and improved patient outcomes.
Although CMS ended the model on Benefit Component of the VBID Model on December 31, 2024, its billing guidance remains valuable. Hospice providers can still learn from its payment structure and operational requirements. Understanding these policies also helps explain historical claims and Medicare processing.
