We ran across a LinkedIn article by Craig Dresang, Chief Executive Officer at YoloCares based in the Sacramento region.

The article was too informative to not share with our HospicePass subscribers. We reached out to Craig and he gave us permission to share his article. Here’s the link to the article:

Payers that don’t pay . . . are weakening California’s safety net

By: Craig Dresang

Chief Executive Officer at YoloCares

January 3, 2025

California hospices face a real problem!  Managed healthcare plans are not paying their bills.

Since Medi-Cal shifted the patient care and the associated reimbursements to private insurers, the insures have adopted a strategy of denying and disputing legitimate claims for skilled nursing patients who are on their death bed.

As a result, the community-grounded hospice providers that make up an important part of California’s safety net are being cheated out of money owed to them.  And it may likely put some hospices out of business and diminish a patient’s options for high-quality care.

Here’s what is happening:

Medi-Cal pays a lump sum to health insurance companies to manage all care for Medi-Cal patients.  If a patient needs to be placed in a skilled nursing facility, Medi-Cal does not pay the nursing facility for room-and-board.  Instead, Medi-Cal pays the insurance company (managed care plan) to cover the cost of a patient’s room and board.

However, under a new policy change, if the patient needs hospice while they are in a skilled nursing facility, then the hospice is expected to pay the room-and-board fee to the facility, and then bill the insurance company for reimbursement.

In theory, this makes sense because the insurance company has already collected the payment for room and board, and they are supposed to reimburse the hospice for covering that same cost.  But that is not what is happening.

Insurance companies (managed care plans) like NealthNet, Molina, Cigna, Aetna, Blue Shield, and others are collecting payments from Medi-Cal, but not necessarily reimbursing the hospices that have already paid for a patient’s room and board.  In brief, they are collecting and KEEPING payments for something that they are not providing.

This highly unethical dynamic boosts the profit margin for insurance companies, but costs hospice providers millions of dollars. As a result, some hospices are refusing to admit patients who need care if they are in a skilled nursing facility.   Many hospice agencies -- already financially stretched -- simply cannot afford to pay a patient’s room-and-board without getting reimbursed from the managed care plan.

When hospices try to collect payments that are owed to them, the insurance companies have well-oiled machines that spit out delays and denials.  Another part of their machinery now requires a hospice to secure prior authorization for room-and-board fees, but they provide no direction on how to secure an authorization.  This is an extra step that was not previously required with Medi-Cal.  Meanwhile, hospice billing departments spend significant time manually reviewing claims and resubmitting them with additional required documentation . . .  only to have the claim denied again and again.

This appears to be an effective strategy for insurers to deny payments to hospices who care for patients who are dying in skilled nursing facilities.

To date, YoloCares in Davis has paid out more than $1million in room-and-board fees to nursing homes without any prospect of being reimbursed from the insurance companies that are supposed to pay these bills.

A recent informal poll of 50 California providers, clearly demonstrates that this issue is normal and widespread . . .   from southern California to the Oregon border.  Robert Love, executive director of Butte Home Health & Hospice says, “We recently wrote off over $200,000 in expected revenue due to Anthem taking over Medi-Cal patients in our area in 2023. We were unaware of the situation at first, as many patients had been on Medi-Cal prior to the switch, and so Anthem instructed us on how to obtain the ‘prior authorization’ by mailing records to a specific address.”  He continues, “As the months rolled on, our intake team was calling Anthem for prior authorization when we admitted new patients, but as it turns out, they were getting authorization for hospice care and not room-and-board. When we discovered the error, we mailed more records to obtain the prior authorizations.”

Love later called Anthem several times only to be told the company does not give prior authorizations, despite what Anthem previously told Butte Home Health for months. The agency appealed, and then appealed again. Frustrated and demoralized, Love says, “As I understand, we can’t appeal further, as much as I’d love to talk to an administrative law judge about why a dual-eligible patient who was in a nursing home paid by Medicare, then switched to Medi-Cal (Anthem) needs prior authorization.  The most painful part about it is that we have paid our skilled nursing facility partners to make them whole.”

Another Sacramento area provider, located in the Sierra Foothills, is currently owed $330,000 (90+ days past due) from 9 different payers and another $380,000 (under 90 days due).

Why do hospices admit patients without the now-required authorizations?

Hospice admissions are urgent.  Patients who come to hospice are in crisis and cannot wait days, weeks, or months for the insurance company to grant the hospice provider an authorization.  If hospices waited for an authorization from the payors whose practice is to deny and delay, then patients would suffer and die in pain without ever accessing appropriate end-of-life care.

Hospices pay the skilled nursing facilities for room and board in good faith that the insurer will authorize timely reimbursements.  In some skilled nursing facilities, a patient’s stay can cost more than $10,000 per month (at Medi-Cal rates).

What’s the solution?

• Managed healthcare needs to have a more balanced approach between profits and patients.  Their hyper-focus on profitability comes at the expense of person-centered care and the protection of community safety nets.

• Remove the barriers. Treat providers and patients like they are shareholders, because in a very real way, we are.  Payers need to seek out and implement more streamlined processes for providers who need timely authorizations.  This includes surgically cutting out all of the intended bureaucracy that enables a practice and culture of deny, delay, deflect . . .  just so they do not have to pay legitimate claims.  After all, if managed health plans are collecting premiums, they are obligated to pay claims.

• Work to understand and accommodate niche programs like hospice room-and-board which is a Medicare/Medicaid regulation.

• Have a local presence.  Consider assigning an ombudsman for different regions so providers can access real help and have someone from the managed healthcare plan who is on their side, and who understands the issues.

• Consider having the skilled nursing facilities bill the insurance directly for room and board.

• Medi-Cal could pay room-and-board services directly to the hospice instead of carving out to managed care.

• Medi-Cal should require that health plans follow Medi-Cal guidelines. Medi-Cal does NOT require an authorization.  It should be written in the manual and in letters to the managed care payers not to require authorizations except for GIP.

• California hospices propose a bill for legislation defining regulations and enforce consequences for those health plans that do not comply.

• Hospices as a group (possibly through the California Hospice and Palliative Care Association) should approach the plans that are denying reimbursement based on lack of prior authorizations to demand that they:

1. Articulate and circulate clear coverage standards for hospices to use in requesting authorizations.

2. Adopt expedited procedures for considering prior authorization requests and reviewing appeals from adverse decisions.

3. Be required to provide reimbursement for past room and board expenses that have been improperly withheld, based on records maintained by hospices that have been involved.

• Simultaneously, hospices should organize as a group and provide notification of the problem to the DHCS Medi-Cal Managed Care Division as the regulatory body responsible for overseeing Medi-Cal managed care plans.   The aim would be to make the plans answerable to an authority that they could not ignore.  Of course, litigation would be the final alternative.

Thank you Craig for allowing HospicePass to share with our audience. If you’d like to reach out to Craig for additional information:

[email protected] and their website is www.yolocares.org

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