CMS Issues Final Rule on Hospice Wage Index and Payment Rate Update for FY 2015

by Foley & Lardner LLP

On August 4, 2014, the Centers for Medicare & Medicaid Services (CMS) issued a final rule updating the hospice wage index and payment rate for Fiscal Year (FY) 2015 and adopting a number of payment reforms addressing concerns about program integrity, beneficiary protection, and quality (Final Rule). CMS also issued an accompanying Fact Sheet which summarizes the significant provisions. The Final Rule will be published in the Federal Register on August 22, 2014 with an effective date of October 1, 2014.

Hospices are paid on a per diem basis in one of four prospectively determined rate categories, i.e., routine home care, continuous home care, inpatient respite care, and general inpatient care. Hospice payments are subject to a patient-specific cap on inpatient days and an annual aggregate payment cap.

  • Payment Rate Update – Hospice per diem rates for FY 2015 will increase by 2.1%. Hospices that do not submit required quality data will be subject to a 2% rate reduction. CMS expects payment to all hospices to increase by 1.4%, or $230 million, in FY 2015.
  • Self-Determined Aggregate Cap Reporting and Repayment Deadline – The Final Rule sets the aggregate cap for FY 2015 at $26,725.79 per beneficiary. Currently, the Medicare Administrative Contractor (MAC) determines a hospice’s cap liability 16 to 24 months after the end of the cap year. The Final Rule requires hospices to self-determine cap liability and refund overpayments no later than five months after the end of the cap year, i.e., March 31, 2015, with a true-up by the MAC.
  • Calculating Aggregate Cap Liability – The Final Rule specifies that hospices must wait to self-determine cap liability until three months after the end of the cap year, i.e., January 31, 2015. A hospice’s calculation may be based on data from the Provider Statistical and Reimbursement System or the hospice’s own data. If the calculation is based on its own data, a hospice must maintain documentation supporting its calculation.
  • Penalty for Failure to Timely Report and Repay Self-Determined Cap Liability – A hospice that does not report and repay its selfdetermined cap liability by March 31, 2015, will be subject to payment suspension that will remain in place until the obligation is satisfied. Extended Repayment Schedules will continue to be available in appropriate circumstances for hospices that exceed the cap.
  • Deadline for Filing NOE and NOTR – The Final Rule noted multiple compliance, program integrity, and beneficiary protection concerns related to the lag time in filing Notices of Election (NOEs) and Notices of Termination or Revocation (NOTRs). To address these concerns, the Final Rule requires hospices to submit NOEs to the MAC no later than five calendar days after the effective date of the election and NOTRs no later than five calendar days after the date of discharge or revocation (unless the hospice already submitted its final claim). CMS noted that most NOE and NOTR filing is electronic, but it cautioned hospices that submit paper forms to ensure that the MAC receives the forms by the deadline.
  • Penalty for Failure to Timely File the NOE – If a hospice does not file the NOE within five calendar days after the effective date of the election, it may not receive payment for the hospice days from the effective date through (but not including) the date the NOE is submitted. The Final Rule outlines four narrow exceptions that are available only in circumstances beyond the hospice’s control. The Final Rule does not specify a penalty for late filing of the NOTR.
  • Election Statement Must Include Patient Choice of Attending Physician – The Final Rule requires hospices to identify on the election form the name of the attending physician selected by the patient (or representative) and to include on the form an acknowledgement by the patient/representative that the designated physician was the patient’s/representative’s choice. If a hospice patient/representative wishes to change attending physicians, the Final Rule requires the hospice to obtain from the patient/representative a signed statement that: (1) identifies the new attending physician; (2) includes the patient’s/representative’s dated signature; (3) specifies the effective date of the change (not earlier than date of signature); and (4) includes an acknowledgement that the new attending physician was the patient’s/representative’s choice.
  • Hospice Quality Reporting and CAHP Survey – For FY 2016 and beyond, the Final Rule will require hospices to submit for all patients (regardless of payer) an admission Hospice Item Set (HIS) and a discharge HIS addressing seven National Quality Forum measures. The Final Rule also requires hospices to collect and report data using the Consumer Assessment of Healthcare Provider and Systems Hospice Survey for one month during the first quarter of 2015, with required monthly collection beginning April 1, 2015. Hospices that do not meet this requirement (or other quality reporting requirements) will be subject to a 2% payment reduction.

Originally, this article was an alert sent to the American Health Lawyers Association’s (AHLA) Regulation, Accreditation and Payment Practice Group. For more information, visit AHLA’s website.

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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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