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What the Percentages Mean for You--CMS Proposes 2.7% Increase in Hospice Payments for 2020


Details: April 19th, CMS released the proposed fiscal year (FY) 2020 payment update for hospice agencies. This proposed rule updates the payment rates, wage index and cap amounts. It also updates hospice quality reporting requirements. Please don’t just read the headline. The major change is in the details and will not provide a 2.7% increase to the majority of our customers and hospice partners.

For FY 2020, CMS proposed a 2.7% increase, or $540M. The payment is the product of a 3.2% hospital market basket minus a 0.5% productivity adjustment.

The rule also proposes to rebase the payment rates for continuous home care (CHC), general inpatient care (GIP) and inpatient respite care (IRC) in a budget neutral manner.

Budget neutral refers to an approach to fiscal policy in which a program or project has no impact on the budget. The term is usually used in formulating government programs and involves incorporating a method of funding other than borrowing. The goal of budget neutrality is to avoid creating a spending deficit or adding to an existing deficit.

In reviewing detailed cost data, CMS determined that these three codes (CHC, GIP, and IRC) do not track with increased costs, and the rule proposes to increase each significantly. Although the rule does not rebase routine home care (RHC), applying budget neutrality would reduce RHC by 2.71%, before applying the payment increase.

The real challenge is in the level of care reimbursement changes. On a volume basis, continuous home care represents approximately 0.2% of all hospice care days. General inpatient care has a 1.7% utilization rate, the highest among those three levels of care, RHC represents 97.6% of all hospice care days. The majority of the increase is focused on the level of care that are not used frequently.

After reviewing the details of the proposed rule, the allotted rebasing produces an array of changes for different types of hospices. Hospices in the aggregate would see a 2.7% increase in payments, for-profit hospices would see only a 1.8% increase. Rural for-profit hospices would see only an approximate a 1.2% increase.

Starting FY 2017, both the inpatient cap amount and the hospice aggregate cap align with the start and ending of the fiscal year. The proposed hospice cap amount for FY 2020 is $29,993.99, which is the 2019 cap of $29,205.44 increased by 2.7%.

The proposed rule also proposes to update the wage index with current year wage data, eliminating the year-old data lag previously used. Additionally, the rule would modify the hospice election statement to increase education to patients on the benefit and notify beneficiaries if there are services not covered by the hospice. Lastly, the rule requests comments on hospice services within Medicare Advantage or capitated payment arrangements.

Our recommendation is that all hospices complete a detailed analysis of the proposed rule based on the details of their patient population. Find that here.

Hospices should ensure they are commenting on the proposed rule. Electronically, you may submit comments on this regulation here. Follow the "Submit a comment" instructions and ensure you are referencing CMS-1714-P.


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