Health Reform WK-EDGE 540M payment rate increase, quality measure updates for hospices in FY 2020
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Thursday, May 2, 2019

540M payment rate increase, quality measure updates for hospices in FY 2020

By Anthony H. Nguyen, J.D.

Hospices stand to gain $540 million in payment rate increases for 2020, along with changes to hospice election requirements and quality measure reporting in new CMS proposal.

Hospices would see an overall $540 million payment rate increase (2.7 percent) for fiscal year (FY) 2020 over FY 2019 rates. In addition to updating the hospice payment rates, wage index, and cap amount for fiscal year (FY) 2020, in its advance release of the proposed rule CMS plans to rebase per diem payment rates for continuous home care, general inpatient care, and inpatient respite care to align these payments rates with a goal of budget-neutrality. Under the proposal, the election statement requirements for hospices would require the entity to include additional information related to coverage transparency for patients electing hospice care. CMS will also undertake additional work on improving the Hospice Quality Reporting Program (HQRP). The proposed rule will officially publish April 25, 2019, with comments to be received by June 18, 2019.

FY 2020 payment rates, cap. For FY 2020, hospice payment rates would be updated by $540 million for FY 2020. The payment update is based on a proposed FY 2020 hospital market basket increase of 3.2 percent reduced by the multifactor productivity adjustment of 0.5 percentage point, mandated by the Patient Protection and Affordable Care Act (ACA), which results in an overall proposed 2.7 percent increase in hospice payment rates for FY 2020. Hospices that fail to meet quality reporting requirements would receive a 2 percentage point reduction to the annual market basket update for the year.

In addition to payment rate increase, CMS would set the hospice cap amount for FY 2020 at $29,993.99, which is the FY 2019 cap amount of $29,205.44 updated by the 2.7 percent payment rate increase. The hospice cap is an annual statutory cap which limits the overall payments per patient made to a hospice.

Rebasing. The base payment rates for each level of hospice care was set in 1983 using information from a relatively small set of 26 hospices that were participating in a CMS hospice demonstration. There are four hospice payment categories, distinguished by the location and intensity of the services provided: (1) routine home care (RHC), (2) continuous home care (CHC), (3) inpatient respite care (IRC), and (4) general inpatient care (GIP). CMS noted that the current per diem payment rates for the hospice benefit may not align accurately with the current costs of providing care because of technological changes to providing hospice care, as well as changes in the patient population that use the hospice benefit.

The payment rates for CHC, IRC, and GIP are significantly less than the average costs of providing care. CMS compared the FY 2019 average costs for RHC for the first 60 days and any RHC days after day 60 to the FY 2019 payment rates for RHC and the percentage difference between payment and average costs and the results significantly exceeded the average costs of providing care for this level of care for the first 60 days (+14.2 percent) and any RHC days after day 60 (+29.6 percent).

Thus, CMS would rebase the payment rates for CHC, IRC, and GIP by setting these payment amounts equal to an FY 2019 estimated average costs per day. Under the proposed rule the payment amounts for (1) CHC would be $56.80 per hour or $1,363.26 per day; (2) IRC would be $435.82 per day; and (3) GIP would be $994.45 per day. In order to rebase CHC, IRC, and GIP levels of care in a budget-neutral manner, RHC payment rates would need to be reduced by 2.71 percent.

Hospice election. Upon request, hospices would be required to provide an election statement addendum with a list and basis for items, drugs, and services that the hospice has deemed to be unrelated to the patient’s terminal illness and related conditions. The request can be made by the beneficiary, other providers treating the patient, and Medicare contractors.

Wage index. CMS is proposing to use the inpatient hospital PPS (IPPS) wage index for the hospice wage index. Currently, CMS calculates the hospice wage index using the previous year’s pre-floor, pre-reclassified hospital wage index data. Under the proposal, CMS would use the IPPS FY 2020 pre-floor, pre-reclassified hospital wage index.

Quality reporting. The Hospice Quality Reporting Program (HQRP) was established in FY 2012; there are currently 10 measures in the HQRP. Under the proposed rule, CMS would continue to collect data on the "Hospice Visits over the Last 7 Days" measure, but not publicly report it. The measure is a companion measure and identifies if hospice patients received at least one hospice visit from a medical social worker, chaplain or spiritual counselor, licensed practical nurse, or aide during their final seven days of life. CMS noted that it decided to not publicly report this measure to review and determine if changes to the measure specifications or how it is displayed on Hospice Compare are needed.

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