Medicaid Room & Board for Hospice: Complete State-by-State Billing Guide

When hospice patients reside in nursing facilities, Medicaid covers the room and board (R&B) costs while Medicare covers the hospice benefit. For hospices serving patients in nursing facilities, Medicaid R&B billing can represent $75-150 per patient per day — but the rules are complex and vary by state.

Understanding the Financial Flow

When a Medicaid-eligible hospice patient resides in a nursing facility:

Medicare pays the hospice the per diem for hospice care
Hospice is responsible for arranging nursing facility care
Medicaid pays the hospice 95% of the state’s nursing facility per diem
Hospice pays the nursing facility (typically 100% of state rate — the 5% differential covers administrative burden)

Eligibility Requirements

For Medicaid R&B to apply, all of the following must be true:

Patient is Medicaid-eligible for long-term care (meets income/asset requirements)
Patient resides in a Medicaid-certified nursing facility
Patient has elected the Medicare Hospice Benefit
Hospice has a written agreement with the nursing facility

Step-by-Step Billing Process

Step 1: Verify Medicaid Eligibility

Check the patient’s Medicaid status through your state’s eligibility verification system. Coverage can be lost if the patient moves or has income changes.

Step 2: Confirm Level of Care Authorization

Some states require prior authorization for nursing facility level of care. This typically requires a minimum level of care documentation.

Step 3: Coordinate with the Nursing Facility

Establish who is responsible for billing — typically:

Hospice bills Medicaid for R&B
Hospice pays the nursing facility
Nursing facility does NOT bill Medicaid directly while patient is on hospice

Step 4: Submit Medicaid Claims

Each state has different billing requirements. Common elements:

State-specific revenue codes
Medicaid-specific claim forms
Accurate patient days (admit date through discharge or end of month)

Step 5: Follow Up on Denials

Medicaid R&B denials are common. Track and appeal systematically.

State-Specific Variations

California

Uses Medi-Cal specific claim forms
Requires level of care authorization from treatment authorization request (TAR)
Pays on a complex acuity-based rate structure

Texas

Uses STAR+PLUS managed care for most dual-eligible patients
Requires coordination with the managed care organization
Often requires specific hospice LTC contracts

Florida

Medicaid managed care is standard
Each MCO has its own billing requirements
Prior authorization is typically required

New York

Has specific Hospice Room and Board Medicaid billing rules
Uses MMIS system with specific rate codes
Careful coordination with MLTC plans needed

Common Pitfalls and How to Avoid Them

1. Not Billing Medicaid at All

Many smaller hospices simply absorb nursing facility R&B costs. This is the biggest missed revenue opportunity in hospice billing. Even covering 95% of costs through Medicaid makes nursing facility placements financially viable.

2. Using Wrong State Rate Codes

Rate codes change, and different nursing facilities may have different rates. Maintain a current rate file.

3. Missing Retroactive Eligibility

If a patient applies for Medicaid while on hospice, retroactive coverage may apply. Bill for covered periods as soon as eligibility is determined.

4. Inadequate Nursing Facility Contracts

Contracts should clearly specify rates, billing responsibilities, and quality expectations.

5. Poor Coordination with Managed Care

Most state Medicaid is now managed care. Each MCO has specific requirements that differ from traditional Medicaid.

Revenue Impact for a Typical Hospice

Consider a hospice with 30% of its census residing in nursing facilities:

100 ADC x 30% = 30 patients in nursing facilities
Average Medicaid R&B rate: $200/day at 95% = $190/day
Hospice cost to pay facility: $200/day
Net to hospice: Typically -$10/day (loss)
But: Without Medicaid billing, hospice loses $200/day per patient = $6,000/day or $2.19M annually

The economics only work with proper Medicaid R&B billing.

How CPS Handles Medicaid R&B

We manage Medicaid R&B billing across all 50 states for our hospice clients. Our team maintains current rate files, handles state-specific claim formats, and manages follow-up on denials. For hospices that currently don’t bill Medicaid R&B, partnering with CPS typically adds $500K-$2M+ in annual revenue.