CMS Final Rule on Medicare Hospice Payment Rates and Wage Index 2016

Hospices are more dependent on Medicare and Medicaid reimbursements than other types of providers. As a result, hospice providers have an uphill task ahead of them to reduce and shift costs in response to financial, administrative and even regulatory challenges. The Centers for Medicare and Medicaid Services (CMS) has issued a final rule regarding Medicare hospice payment rates and wage index for 2016. Hospices serving Medicare beneficiaries will see an estimated increase in payments of 1.1% or $160 million to be effective January 1, 2016.

Changes to Routine Home Care Payments

CMS is addressing payment reforms to Routine Home Care (RHC) level of care by providing a differential payment of two separate rates. One is for care provided from day one through day 60 of an episode of hospice care and the other is for days 61 and after. The rate for RHC delivered from day 61 will be a reduced rate. CMS’ reasoning for this is that according to research beneficiaries whose care is between 8 and 60 days of hospice have higher wage-weighted minute usage than those with longer stays. Using 60 days for the higher RHC rate as opposed to an earlier time allows hospices to have the resources available to provide high quality care to patients whose average daily visit intensity is higher than for longer stay patients.

To control potentially high rates of admission and discharge due to the payment rate changes, CMS is proposing that any patient discharged and readmitted to hospice within 60 days of the earlier discharge will have those previous hospice days counted within the patient days for receiving hospice. What this means is that hospice election period or series of election periods that are not separated by more than a 60-day gap would be a single episode of care. CMS cautions that it will continue to expect that hospices adhere to long-standing policy to provide complete care during a hospice election.

Service Intensity Add-On Payment                  

CMS has also provided for a Service Intensity Add-on (SIA) that would be added to RHC payment for RN and social work visits provided during the last seven days of life. The SIA can be implemented with minimal changes to existing systems. CMS has opted to establish the two PHC payment rates covered above and SIA to be applied if the following criteria is met:

  1. The day is billed as a RHC level of care day;
  2. The day occurs during the last 7 days of life (and the beneficiary is discharged dead);
  3. Direct patient care is provided by a RN or a social worker that day (in person); and
  4. The service is not provided in a SNF/NF.

As long as the four criteria are met, this proposed SIA would be equal to the Continuous Home Care (CHC) hourly payment rate multiplied by the amount of direct patient care provided by a RN or social worker for up to 4 hours total per day.  The SIA payment would be paid in addition to the current per diem rate for the RHC level of care. SNF and NF sites would not be eligible for the SIA add-on payment.  In order to guarantee budget neutrality in the first year of payment changes, the increased costs of SIA will be offset with reductions in proposed RHC rates.

Wage Index and Payment changes to Hospice regulations mean that Healthcare Providers in Hospices must be aware of what is expected from them in coming months.

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