CMS Final Rule Implements New Payment Structure for Hospice

The Centers for Medicare and Medicaid Services released the FY2016 Hospice Wage Index Final Rule on Friday, July 31, 2015.  Payment reform, which includes a two-tiered routine home care (RHC) rate and a service intensity add-on 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.

NHPCO 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.

Payment Reform: 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.  

Service Intensity Add-On Payment:  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. 

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.

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