CMS Publishes Final Rule for Hospice Payments in Fiscal Year 2023

The Centers for Medicare and Medicaid Services (CMS) published the final rule for hospice payments in fiscal year (FY) 2023 in the Federal Register on July 29, 2022.

This rule will be effective October 1, 2022. An overview of the rule follows.

Final Medicare Hospice Payment Policies

Wage Index Cap

The finalized rule sets a permanent, budget neutral approach to smooth year-to-year changes in the hospice wage index.

Specifically, CMS finalized the permanent cap on negative wage index changes greater than a 5% decrease from the prior year—regardless of the underlying reason for the decrease—for hospices in the FY 2023 final rule.

Routine Annual Rate Setting Changes

Hospices will see a 3.8% increase in their payments, adding up to $825 million, for FY 2023. The final 3.8% hospice payment update for FY 2023 is based on the estimated 4.1% inpatient hospital market basket update reduced by the productivity adjustment—0.3%.

Hospices that don’t meet quality reporting requirements receive a 2% reduction to the annual market basket update for FY 2023.

Hospice Quality Reporting Program

The proposed rule provided an update on the development of a patient assessment instrument, titled Hospice Outcomes and Patient Evaluation (HOPE), which would contribute to a patient’s plan of care when adopted.

This included an update on the beta testing and derivatives to be achieved during this phase of testing, such as burden estimates and timepoints for collection, as well as additional outreach efforts to be conducted during and after beta testing and during future plans for adoption.

CMS also discussed potential future quality measures within the Hospice Quality Reporting Program (HQRP) based on HOPE and administrative data, including HOPE-based process measures and hybrid quality measures, which could be based upon multiple sources that include HOPE, claims, and other data sources.

The proposed rule also announced a potential future update to the Consumer Assessment of Healthcare Providers and Systems (CAHPS) Hospice Survey, which collects data on experiences of hospice care from primary caregivers of hospice patients.

CMS will provide an update on a mode experiment, which aimed to test the effect of adding a web-based mode to the CAHPS Hospice Survey.

In the proposed rule, CMS also requested comments regarding information on the Health Equity Initiative within the HQRP by describing its current assessment of health equity within hospice.

CMS also asked for input on a potential future structural measure, as well as responses to specific questions that would further inform future efforts.

After receiving comments related to the above requests, CMS didn’t implement changes and stated in the final rule they’ll use these comments in future rule making.

Final Changes to Hospice Payments

CMS finalized the following updates to the hospice payments for FY 2023.

Hospice Payments That Meet Quality Standards

Chart of code and descriptions with comparison of FY 2022 to FY 2023 for Hospice payments that meet quality standards

Hospice Payments That Didn’t Meet Quality Standards

Chart of code and descriptions with comparison of FY 2022 to FY 2023 for Hospice payments that did not meet quality standards

Other Notable Updates

Hospice Cap Amount

The hospice payment update includes a statutory aggregate cap that limits the overall payments per patient made to a hospice annually.

The finalized cap amount for FY 2023 is $32,486.92, which is the FY 2022 cap amount of $31,297.61 increased by 3.8%.

Economic Impact

The overall economic impact of the finalized FY 2023 changes constitutes an $825 million increase in payments from FY 2022.

Next Steps

Hospice providers need to review whether the appropriate rates have been loaded into the patient accounting system used to bill Medicare on or after October 1, 2022.

Once these revised rates are incorporated, providers can validate whether the rates calculate appropriately. For example, providers can review the Medicare remittance advice to ensure a hospice receives the payment expected.

We’re Here to Help

For more information about the final rule and its implications, contact your Moss Adams professional.

You can also find more insights on our Provider Reimbursement Enterprise Services page.

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