CMS Issues Proposed Hospice Payment Update for FY 2014

by King & Spalding

On April 29, 2013, CMS issued a proposed rule providing the payment rates and wage index for hospices effective FY 2014.  While the proposed rule describes current findings and offers options for consideration, it does not include any suggested changes for payment reforms required by the Affordable Care Act (ACA).  Under the proposed rule, hospices serving Medicare patients would see a 1.1 percent ($180 million) increase in payments for FY 2014.  The increase is based on a 2.5 percent increase in the inpatient hospital “market basket,” which includes changes in the costs of goods and services used to treat patients, minus: 0.7 percent for legally required reductions, 0.6 percent as part of the planned seven-year phasing out of the wage index’s budget neutrality adjustment factor (BNAF), and 0.1 percent owing to the use of updated wage data.

The proposed rule clarifies how hospices should report diagnoses on hospice claims, including recommendations that:

  • Hospices should be diligent in reporting multiple diagnoses on claims;
  • “Debility” and “adult failure to thrive” are not appropriate principal hospice diagnoses;
  • Hospices should pay particular attention to special conventions for dementia codes to ensure that dementia is the appropriate principal diagnosis; and
  • Patients who elect hospice within 3 days of hospital discharge should have the inpatient care diagnosis reported on the hospice claim.

Additionally, as § 3004 of the ACA provides that, beginning in FY 2014, hospices will be subject to a 2 percent reduction to their market basket update if they fail to report certain quality measures, the proposed rule recommends changes to hospice quality reporting requirements.  These changes include:

  • Eliminating two quality measures on which hospices were required to report (a structural measure related to Quality Assurance Performance Improvement indicators and the National Quality Forum #0209 pain measure), but adding two other measures related to pain (pain screening and pain assessment);
  • Proposing a hospice item set, which contemplates a standard, patient-level data collection instrument to be completed at admission and discharge for all hospice patients starting July 1, 2014 that would affect FY 2016 payment determinations; and
  • Proposing a “Hospice Experience of Care Survey” to acquire detailed survey administration protocols, with the survey taken after a patient’s death, so that comparisons of services and experiences could be made among hospices.  Survey participation would be required for FY 2017 payment determinations.

The rule will be published in the Federal Register on May 10 with a 60-day comment period.  The proposed rule is available here.

Reporter, Katy Lucas, Atlanta, +1 404 572 2822,

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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