On March 31, 2023, CMS issued a proposed rule updating Medicare hospice payments and policies and the aggregate cap amount for Fiscal Year (FY) 2024 (Proposed Hospice Rule). Additionally, on April 3, 2023, CMS issued a proposed rule updating Medicare payments and policies under the Inpatient Rehabilitation Facility (IRF) Prospective Payment System and the IRF Quality Reporting Program for FY 2024 (Proposed IRF Rule).

Proposed Hospice Rule

The Proposed Hospice Rule includes CMS’s routine updates to the hospice payment rates and aggregate cap amount for FY 2024. The Proposed Hospice Rule also contains information on hospice utilization trends and CMS’s analysis on non-hospice spending during hospice elections, ownership transparency, and hospice election decision-making. In addition, the Proposed Hospice Rule proposes updates to the Hospice Quality Reporting Program.

The Proposed Hospice Rule proposes to update the Medicare base rate for hospice payments by 2.8% for FY 2024, equating to an increase of $720 million in payments over FY 2023. The Proposed Hospice Rule also proposes to update the aggregate hospice cap for FY 2024 to $33,396.55, which would be an increase of 2.8% over the aggregate cap for FY 2023, which was set at $32,486.92. Additionally, for FY 2024 and each subsequent year thereafter, the proposed rule would require hospices that fail to meet quality reporting requirements receive a 4% reduction to their annual hospice payment update percentage increase for the year. Depending on the amount of the annual hospice payment update for a particular year, a reduction of 4% beginning in 2024 could result in hospice payment rates that are less than payment rates from the previous fiscal year. However, this penalty would only apply for the specified fiscal year.

The Proposed Hospital Rule also contains information on spending and utilization of hospice services. According to the Proposed Hospice Rule’s fact sheet, available here, CMS is looking closely at the hospice industry and has increased concerns about fraud, waste, and abuse. As such, the Proposed Hospice Rule includes information on utilization trends, spending patterns for non-hospice services provided during the election of hospice, ownership transparency, equipping patients and caregivers with information to aid in the hospice election decision-making process, and methods to examine health equity under hospice. The Proposed Hospice Rule notes that the number of Medicare beneficiaries receiving the Medicare hospice benefit has grown from 715,349 in 2003 to over 1.7 million in 2022 and that Medicare hospice expenditures have risen from $5 billion in 2003 to approximately $23 billion in 2022. CMS anticipates that aggregate hospice expenditures will continue to increase by about 9.1% annually.

The Proposed Hospice Rule further notes that Medicare payments for non-hospice Medicare Part A and B items and services during hospice elections increased from $685,155,617 in 2019 to $882,965,833 in 2022. CMS is seeking more information from providers to better address quality and access issues for Medicare beneficiaries. CMS is also soliciting comments from the public on how to address these issues through, for example, establishing methods to ensure that hospice is appropriately covering services, instituting requirements to provide additional information to patients and families about which services are covered under the hospice benefit and how that information should be communicated, and understanding the reasons why non-hospice care spending is growing for beneficiaries who elect hospice.

CMS will accept comments on the Proposed Hospice Rule until May 30, 2023. The Proposed Hospice Rule can be read in full here.

Proposed IRF Rule

On April 3, 2023, CMS issued the Proposed IRF Rule for FY 2024.

Under the Proposed IRF Rule, the IRF Prospective Payment System rates would increase by 3%, which is based on the proposed IRF market basket update of 3.2% minus 0.2% productivity adjustment. The Proposed IRF Rule would also adjust the outlier threshold to maintain outlier payments at 3% of total payments, which would increase IRF payments by 3.7% percent (about $335 million) for FY 2024 as compared with payments in FY 2023. In addition, the Proposed IRF Rule would allow hospitals to open new IRF units and obtain payment under the IRF Prospective Payment System at any time during the cost reporting period with 30-day advance notice to the appropriate CMS regional office and Medicare Administrative Contractor before the date of the change.

Under the IRF Quality Reporting Program, IRFs are required to report standardized patient assessment data about quality measures to CMS. The Proposed IRF Rule proposes certain updates to IRF Quality Reporting Program measures:

• Adopt the Discharge Function Score measure – The Discharge Function Score measure would assess functional status by assessing the percentage of IRF patients who meet or exceed an expected discharge function score, using mobility and self-care items collected on the IRF Patient Assessment Instrument. The measure would take effect beginning with the 2025 Quality Reporting Program and would replace the Application of Percent of Long-Term Care Hospital Patients with an Admission and Discharge Functional Assessment and a Care Plan measure.
• Adopt the COVID-19 Vaccine: Percent of Patients/Residents Who Are Up to Date measure – This measure reports the percentage of IRF patients that are up to date with recommended COVID-19 vaccines in accordance with the CDC’s most recent guidance. This measure would take effect beginning with the 2026 IRF Quality Reporting Program.
• Modify the COVID-19 Vaccination Coverage among Healthcare Personnel (HCP COVID-19 Vaccine) – This measure tracks the percentage of healthcare personnel in IRFs who are up to date with the recommended COVID-19 vaccines in accordance with the CDC’s most recent guidance. This measure would begin with the 2025 IRF Quality Reporting Program.
• Remove the IRF Functional Outcome Measure: Change in Self-Care Score for Medical Rehabilitation Patients measure and the IRF Functional Outcome Measure: Change in Mobility Score for Medical Rehabilitation Patients measure – The Proposed IRF Rule proposes to remove these measures because the costs associated with these measures outweigh the benefits of their use in the IRF Quality Reporting Program and are similar to other measures within the IRF Quality Reporting Program.
• Begin the public reporting of the Transfer of Health Information to the Provider—PAC Measure and the Transfer of Health Information to the Patient—PAC Measure beginning with the September 2024 Care Compare refresh or as soon as possible – These measures report the percentage of IRF patients with a discharge assessment indicating that a current reconciled medication list was provided to the subsequent provider, to patients, or to their families or caregivers at discharge or transfer.

The Proposed IRF Rule can be read in full here, and the Fact Sheet for the Proposed IRF Rule can be found here. CMS will accept comments on the Proposed IRF Rule until June 2, 2023.