One of the last-minute laws passed by Kentucky’s General Assembly and signed by Governor Beshear was a statute that authorizes Medicaid reimbursement for “Hospital-to-Home Transition Care,” which becomes effective on June 24, 2015.

The passage of this law follows a federally funded demonstration project, “Kentucky Transitions,” aimed at creating a care transition model that helps elderly and disabled patients move out of costly long term care institutional settings, including nursing homes, intermediate care facilities, and into less expensive home and community based care.

Kentucky’s new statute, KRS 205.528, requires that the Department of Medicaid Services (“DMS”) set up a “Hospital-to-Home” transition program for the Section 1915(c) Home & Community-Based Waiver program. Section 1915(c) allows States to craft programs to provide long term care services in home and community-based settings.

This new law fills in a gap in Medicaid coverage for patients leaving hospitals, nursing homes, and other institutions to begin home or community care under the waiver program. Applicants for the transition program must be functionally eligible for the services in a home or community setting and have a pending Medicaid waiver application.

On June 23, 2015, community and home based waiver providers can receive Medicaid reimbursement for services, which are not covered by “Medicaid essential benefits,” that are rendered to elderly and disabled adult patients during a 60 days transition period. KRS 205.528(1). This new statute also covers nonmedical services, including adult day care services, attendant services, meal delivery services and transportation services. KRS 205.528(2). Since both medical and nonmedical services are covered under the new statute, waiver providers can provide services that permit a more comprehensive transition from hospital or institution to home and/or community care.

Unfortunately, Kentucky’s new support for transitioning Medicaid patients out of the hospital or nursing home to home and community based care comes at a time of increased governmental scrutiny of home and community-based care. In January, the OIG released a study of hospice claims from 2007 to 2012 that identified hospice care in assisted living facilities as a problem area and recommended reduction of incentives for hospice care. Moreover, the 2014 OIG Workplan identified both home and hospice care, especially hospice care in assisted living facilities and nursing home, as special target areas for OIG audits.

Although the new statute covers the gap in Medicaid coverage during the time period that a patient transitions to home and community care, the transition to home or community care will come at the cost of increased governmental scrutiny of Medicaid and Medicare claims.