Changes to hospice payment structure announced by CMS

Categories: Policy.

Hospice providers across the U.S. have been waiting for CMS to release the FY2016 Hospice Wage Index Final Rule. As was expected, the final rule features historic payment reform.  There will be a two-tiered routine home care (RHC) rate and a service intensity add-on (SIA) payment are two major components cited in the rule which represent the first significant changes to hospice payment methodology since the Medicare hospice benefit went into effect in 1983.

National Hospice and Palliative Care Organization is supportive of the proposal for a new payment structure and believes that payment of a higher rate during the first 60 days of care reflects the service intensity identified by CMS and its contractors in claims data.

The two-tiered payment model for RHC days will be implemented on January 1, 2016. Hospices will be paid a higher rate for the first 60 days of hospice care and a lower rate for subsequent days in hospice care.  

“The National Hospice and Palliative Care Organization supports the implementation of the two-tiered payment model,” says Senior Vice President of Health Policy, Jonathan Keyserling. “We look forward to working with CMS, state Medicaid agencies, and hospice providers to ensure that implementation goes smoothly and hospices have clear instructions about the changes.”

A service intensity add-on (SIA) payment, also effective January 1, 2016, will be made for patients receiving visits conducted by an RN or social worker during the last week of life when patients and families typically have more intensive needs. 

CMS will calculate and make the appropriate SIA payment based on a retrospective review, after a patient’s death, of hospice claims for the last seven days of the patient’s life. The SIA payment will be equal to the continuous home care hourly rate, multiplied by the amount of direct patient care provided by an RN or social worker for up to a total of four hours per day. 

“We applaud CMS for including SIA payment for all patients in the last seven days of life, regardless of their place of residence,” says Keyserling. Following the release of the proposed rule in April, there were questions about whether the SIA would apply to nursing home residents.

The SIA payment applies to any hospice patient in the last seven days of life, regardless of length of stay.  For patients with a short length of stay in hospice, the SIA payment will help to “mitigate the marginally higher costs associated with short lengths of stay,” added Keyserling.

In addition, the new rule will provide for a 1.6 percent rate increase for hospice providers in FY2016.

CMS issued a fact sheet on the FY2016 Final Rule.

NHPCO released a regulatory alert for the organization’s membership that includes more detailed analysis of the rule.

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