Hospices Would See a $180 Million Increase in Payments for FY 2014 Under Proposed Rule: CMS

In advance of its publication in the Federal Register on May 13, 2013, CMS has issued the text of a Proposed rule providing the payment rates and wage index for hospices for fiscal year (FY) 2014. Under the Proposed rule, hospices serving Medicare beneficiaries would see a $180 million increase in payments, or 1.1 percent, for FY 2014. The Proposed rule also includes proposed changes to the hospice quality reporting program, including the development of a Hospice Experience of Care Survey for caregivers of hospice patients, and clarifies diagnosis coding policies.

The increased payment amount of 1.1 percent would result from a 1.8 percent increase in hospice per diem rates, minus a 0.7 percent decrease from updated wage data and the phase-out of the budget neutrality adjustment factor (BNAF). (The per diem increase is the result of a 2.5 percent market basket (changes in the costs of goods and services used in treating patients) reduced by a 0.4 percentage point productivity adjustment and a 0.3 percentage point market basket reduction mandated by the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148).)


Along with payment updates, the rule proposes several changes to hospice policies, including:

  • Reporting diagnoses. Diagnosis reporting on hospice claims, especially regarding the use of non-specific symptom diagnoses, would be clarified. This clarification, along with that to the ICD-9-CM coding guidelines, are meant to clarify “CMS’ expectations for diagnosis reporting on the hospice claims in order to ensure the Medicare hospice beneficiaries are receiving the holistic comprehensive hospice services based on the initial and ongoing comprehensive assessment and the individualized hospice plan of care.” Comments are requested with regard to coding to gain a better understanding of those serviced by the Medicare hospice program.
  • BNAF phase-out. The wage index BNAF, an adjustment that increases the hospice wage index value, is being phased out over a period of seven years, of which FY 2014 is the fifth year. In the first year, FY 2010, the BNAF was reduced by 10 percent, and has been reduced annually every year since by 15 percent, including for FY 2014 under the Proposed rule. Therefore, the total BNAF reduction for FY 2014 would be 70 percent. The 15 percent reduction would continue for the final two years of the phase-out, FYs 2015 and 2016.

Quality Reporting Requirements

Under sec. 3004 of PPACA, hospices that fail to report on certain specified quality measures and requirements would see a two percentage point reduction to their market basket update, beginning in FY 2014. To that end, the following proposals were made with regard to quality reporting:

  • Quality measures. Reporting requirements began in FY 2013, and the reduction in market basket could result in payment rate reductions beginning in FY 2014. Under the Proposed rule, the two measures that hospices were required to report on for the FY 2014 payment determination would be eliminated, and two other measures would be introduced. Comments are requested on the elimination and addition of quality measures.
  • Hospice Item Set (HIS). A standardized patient-level data collection instrument, HIS, is proposed, and would affect the FY 2016 payment determination. This instrument would need to be completed at admission and discharge for all hospice patients starting July 1, 2014.
  • Hospice Experience of Care Survey. In addition to other quality of care measures, a Hospice Experience of Care Survey is proposed to obtain detailed survey administration protocols so that comparisons could be made across hospices. These surveys would be taken from caregivers after a patient’s death, asking about the experiences of both the caregivers and the patients in the hospice setting. Participation in this survey would be required for the FY 2017 payment determination.

Once the Proposed rule is published in the Federal Register, comments will be due within 60 days of the date of publication to be considered in the Final rule.