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CMS Updates to the Wage Index and Payment Rates for the Medicare Hospice Benefit

May 01, 2015




April 30, 2015


Contact: CMS Media Relations

(202) 690-6145 | CMS Media Inquiries


2016 Hospice NPRM CMS-1629-P

(CMS updates to the wage index and payment rates for the Medicare Hospice Benefit)



On April 30, 2015, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule (CMS-1629-P) that would update fiscal year (FY) 2016 Medicare payment rates and the wage index for hospices serving Medicare beneficiaries. The proposed hospice payment rule reflects the ongoing efforts of CMS to support beneficiary access to hospice care. The FY 2016 proposals and other issues discussed in the proposed rule are summarized below.


Changes to Payments under the Medicare Hospice Benefit

As proposed, hospices would see an estimated 1.3 percent ($200 million) increase in their payments for FY 2016. The $200 million increase in estimated payments for FY 2016 reflects the distributional effects of the 1.8 percent proposed FY 2016 hospice payment update percentage ($290 million increase), the use of updated wage index data and the phase-out of the wage index budget neutrality adjustment factor (-0.7 percent/$120 million decrease) and the proposed implementation of the new Office of Management and Budget (OMB) Core Based Statistical Areas (CBSA) delineations for the FY 2016 hospice wage index with a one-year transition (0.2 percent/$30 million increase). The elimination of the wage index budget neutrality adjustment factor (BNAF) was part of a 7-year phase-out that was finalized in the “Medicare Program; Hospice Wage Index for Fiscal Year 2010” final rule (74 FR 39384, Aug. 6, 2009), and is not a policy change.


Proposed Rule Details


Budget Neutrality Adjustment Factor phase-out

This proposed rule describes the final year of a provision of the FY 2010 Hospice Wage Index rule that phased out the BNAF. The BNAF was implemented in 1997, when the former Health Care Financing Administration (HCFA), now CMS, moved from an outdated wage index to a more current and accurate method for determining hospice payments. The FY 2010 Hospice Wage Index final rule finalized a schedule to phase-out the BNAF over seven years, reducing it by 10 percent in FY 2010 and by 15 percent reductions each year from FY 2011 through FY 2016.



Alignment of Cap Year

This proposed rule would seek to align the cap accounting year for both the inpatient cap and the hospice aggregate cap with the fiscal year for FY 2017 and later. This allows for the timely implementation of the IMPACT Act of 2014 changes (implementation in FY 2016) while better aligning the cap accounting year with the timeframes described in the Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act of 2014). The IMPACT Act of 2014 mandates that the hospice aggregate cap be updated by the hospice payment update rather than using the CPI-U for a specified time. In addition, we will align the timeframe for counting the number of beneficiaries with the fiscal year, rather than the accounting year.


CBSA-OMB Delineations

This rule proposes to adopt changes to the delineation of Metropolitan Statistical Areas, Micropolitan Statistical Areas, and Combined Statistical Areas, and guidance on uses of the delineation of these areas reflected in the OMB Bulletin No. 13-01. These changes would be implemented using a blended wage index with a one-year transition, which aligns with the policy finalized for the Skilled Nursing Facility PPS and Home Health PPS in FY 2015 and calendar year (CY) 2015, respectively. For each county, a blended wage index would be calculated as fifty percent of the FY 2015 wage index using the current OMB delineations and fifty percent of the FY 2015 wage index using the revised OMB delineations.


Proposed Routine Home Care Rates

This rule proposes two different payment rates for routine home care (RHC) that would result in a higher base payment rate for the first 60 days of hospice care and a reduced base payment rate for 61 or more days of hospice care. These differing payment rates would further the goal of more accurately aligning the per diem payments with visit intensity and the cost of providing care.


Service Intensity Add-On

This proposed rule proposes a Service Intensity Add-On (SIA) Payment for FY2016 and beyond in conjunction with the proposed RHC rates. The proposed SIA payment is a payment that would be made for the last seven days of life in addition to the per diem rate for the Routine Home Care (RHC) level of care if certain criteria were met. The payment would not be made to providers with patients residing in SNF/NFs due to the concerns with the provision of hospice care in these settings as highlighted by the Office of Inspector General and the Medicare Payment Advisory Commission. The SIA payment policy encourages visits to patients at the end of life and improves provider accountability. Additionally, the policy begins to address industry and other organizations’ concerns regarding the need for increased payment for more resource intensive days.


Clarification Regarding Diagnoses on Claim Form

Based on the numerous comments received in previous rulemaking, and anecdotal reports from hospices, hospice beneficiaries, and non-hospice providers, we are concerned that some hospices are neither conducting a comprehensive assessment nor updating the plan of care as articulated by the Conditions of Participation to recognize the conditions that affect an individual’s terminal prognosis.


Therefore, we are clarifying that hospices are required to report all diagnoses identified in the initial and comprehensive assessments on hospice claims, whether related or unrelated to the terminal prognosis of the individual. This is in keeping with the requirements of determining whether an individual is terminally ill. This would also include the reporting of any mental health disorders and conditions that would affect the plan of care as hospices are to assess and


provide care for identified psychosocial and emotional needs, as well as, for the physical and spiritual needs.


The proposed rule went on display on April 30, 2015 at the Federal Register’s Public Inspection Desk and will be available under “Special Filings,” at or  

After 05/05/2015 this rule will be available online at



For further information, see Public comments on the proposal will be accepted until June 29, 2015.



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