Health Reform WK-EDGE Slight change; hospices to see $540M payment increase in 2021
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Wednesday, August 12, 2020

Slight change; hospices to see $540M payment increase in 2021

By Anthony H. Nguyen, J.D.

CMS sets hospice payment rates and wage index values for 2021.

CMS has set updated fiscal year (FY) 2021 Medicare payment rates and wage index for hospices serving Medicare beneficiaries. Effective October 1, 2020, for FY 2021, based on the market basket percentage increase of 2.4 percent, hospice payment rates will increase $540 million. Hospices that fail to meet quality reporting requirements receive a 2 percentage point reduction to the annual market basket percentage increase for the year. The hospice payment system also includes a statutory aggregate cap, which limits the overall payments made to a hospice annually. The final hospice cap amount for the FY 2021 cap year is $30,683.93, which is equal to the FY 2020 cap amount of $29,964.78 updated by the final FY 2021 hospice payment update percentage of 2.4 percent (Final rule, 85 FR 47070, August 4, 2020).

The final rule also adopts the revised Office of Management and Budget (OMB) statistical area delineations and applies a 5 percent cap on wage index decreases from FY 2020 to FY 2021. Finally, in conjunction with the final rule, CMS updated its model examples on the CMS website of the hospice election statement and the hospice election statement addendum.

COVID-19 impact. CMS stressed that in recognition of the significant impact of the COVID-19 public health emergency, and limited capacity of health care providers to review and provide comment on extensive proposals, it has limited annual hospice rulemaking required by statute to essential policies. This includes including Medicare payment to hospices, as well as policies that reduce provider burden and may help providers in the COVID-19 response.

Payment updates. For FY 2021, the hospice payment update percentage is 2.4 percent, resulting in a $540 million increase from FY 2020. In a changed from the earlier proposed rule, CMS had proposed an increase of $580 million with a 2.6 percent market percentage increase (see Hospices would receive $580M more in FY 2021 payments, April 13, 2020). For 2021, the market basket increase was reduced by a 0.0 percentage point multifactor productivity adjustment. Any hospices that fail to meet quality reporting requirements receive a 2 percentage point reduction to the annual market basket percentage increase for the year. Additionally, the final hospice cap amount for the FY 2021 cap year is $30,683.93, which is equal to the FY 2020 cap amount updated by the final FY 2021 hospice payment update percentage of 2.4 percent.

Wage levels. Under Soc. Sec. Act §1888(e)(4)(G)(ii), federal rates are adjusted to account for differences in area wage levels. CMS proposed to adopt revised geographic delineations provided by the OMB, which are used to identify a beneficiary’s location to calculate the wage index. Specifically, for FY 2021 as a transition, CMS will implement a 5 percent cap on any decrease in a geographic area’s wage index value from the wage index value from the prior FY. CMS noted that a 5 percent cap on the overall decrease in a geographic area’s wage index value would be appropriate for FY 2021, as it provides predictability in payment levels from FY 2020 to the upcoming FY 2021 and additional transparency because it is administratively simpler than the previous year’s 50/50 blended wage index approach.

Hospice election statement examples. Finally, CMS is providing links to updated examples of the hospice election statement and the hospice election statement addendum that reflect the changes finalized in the FY 2020 hospice final rule (84 FR 38520) in order to assist hospices in understanding the content requirements for the hospice election statement and addendum, effective October 1, 2020. These requirements were finalized in order to increase coverage transparency for beneficiaries electing the Medicare hospice benefit.

FederalRegisterIssuances: FinalRules AgencyNews HospiceNews MedicarePartANews MedicarePartBNews ProviderPaymentNews NewsFeed

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