September 12, 2016

Hospice Final Rule

By Joshua Banach, Senior Manager, Advisory Services

Hospice Final Rule

On August 5, 2016, The Centers for Medicare & Medicaid Services (CMS) released the fiscal year 2017 final payment rule regarding Medicare hospice payment and quality reporting requirements. This final rule contains all updates to hospice reimbursement for fiscal year 2017, as well as changes to the Hospice Quality Reporting Program (HQRP) and updates to the hospice cap for the 2017 cap year.

CMS announced all updates to hospice reimbursement effective with services beginning October 1, 2016 through September 30, 2017.

Wage Index
Previously, for fiscal year 2016, CMS transitioned all hospices to the 2010 Core Based Statistical Areas (CBSAs). This changed the classification of many counties between urban and rural status, thus effecting reimbursement. Because the effect could be significant, CMS implemented a 50/50 blend of old wage index and new wage index for fiscal year 2016 to transition the reimbursement shift.  Effective October 1, 2016, the wage index will be fully transitioned, and hospices will be reimbursed at 100% based on the new county delineations.

Payment Rates
Hospices will see an overall 2.1% increase in reimbursement rates effective October 1, 2016, which is a slight increase from the proposed rule released in April 2016. The 2.1% is broken down as:

  • 2.7% increase in market basket
  • 0.3% reduction for productivity
  • 0.3% reduction for required Affordable Care Act mandate

Note that the above assume hospices are meeting their requirements for submitting quality data. If a hospice is deficient, an additional 2% will be deducted from the market basket, thus resulting in a total increase of 0.1%.

Refer to the grid below for the 2017 Federal base payment rates. Please refer to the rate calculator at Located Here to obtain rates for specific counties.

Level of Care FY 2016 Rates FY 2017 Rates Increase

Routine Home Care (Days 1-60)




Routine Home Care (Days 60+)




Continuous Home Care (Full 24 units)




Inpatient Respite Care




General Inpatient Care




Hospice Caps
CMS began the transition of the hospice cap reporting year to align with the Medicare fiscal year-end of 9/30. Previously, the hospice cap reporting year ran from November 1 through October 31 of each year. The current cap year, which runs from 11/1/2015-10/31/2016, will remain the same. The 2017 cap year will run from 11/1/2016-9/30/2017, which will be an eleven-month period. Then, going forward, all cap years will be October 1 through September 30, the same as the CMS fiscal year as well as reimbursement rates. The following grid depicts the applicable dates for both methods of cap calculation for both patient and payment counting:

Cap Year Streamlined Method Proportional Method





















CMS announced the 2017 cap amount will be $28,404.99. This is an increase from the 2016 cap amount of $27,820.75 of 2.1%. This is the first year that the cap amount was increased in the same percentage as the payment rates.

Quality Reporting
CMS made numerous changes and updates to the HQRP program for fiscal year 2017.

There will be two new reporting measures. First, “hospice visits when death is imminent” will assess hospice staff visits to patients and caregivers during the last three and seven days of a patient’s life. It will assess the percentage of patients receiving at least one visit from a registered nurse, nurse practitioner, physician, or physician assistant in the last three days of life to address case management and clinical care. Due to patient refusal of visits and potentially rapid decline, a score of 100% will not be expected.  In addition, it will assess the percentage of patients receiving at least two visits from medical social workers, chaplains, spiritual counselors, licensed practical nurses, or hospice aides in the last seven days of life. These two measures will be scored separately and CMS will be making training available in the near future.  Second, “hospice and palliative care composite process measure” will assess the percentage of patients that receive care consistent with existing guidelines. CMS will utilize a total of seven individual care processes which are currently part of the hospice item set. The seven scores will be assessed separately and then aggregated.  The data collection of these two measures will impact payments in fiscal year 2019.  Data collection for these measures will begin for all patients admitted on or after 4/1/2017.

Hospices that receive their Medicare Certification Number after 1/1/2017 will be exempt from the fiscal year 2019 hospice CAHPS requirement because they are too new. CMS will determine this and the exemption will be good for only one year. This will be the same case for hospices receiving their certification after 1/1/2018 for the 2020 requirement.

CMS is currently considering a new data collection tool. Although this is still in the early stages, CMS solicited comments and concerns regarding how this tool should be designed. As it develops this tool, CMS hopes to minimize the burden on providers while ensuring it is scientifically rigorous and clinically appropriate. CMS also hopes to keep the hospice philosophy in mind as well as involve providers throughout the process of developing the tool.

CMS also announced that public reporting of hospice quality data will begin in calendar year 2017, likely in the spring or summer. CMS is currently evaluating the best method to include both the hospice item set, as well as CAHPS survey data in this public reporting. It is planned to present this data as an eight-quarter rolling average. (There will be fewer initially, but will build up to eight). This will counterbalance any variability in data. CMS plans to include the “hospice rating” question as well as the “would you recommend this hospice” question from the CAHPS data. In addition, the hospice compare website will have a star rating system. A timeline for this rating system will be announced in the future by CMS.

Beginning in calendar year 2016, hospices need to meet timeliness threshold for quality reporting to avoid a 2% penalty in reimbursement rates. The threshold will be set at 70% and will jump to 80% and 90% for fiscal years 2018-2020 respectively. These thresholds refer to the overall amount of records received from each provider within the 30 day submission timeframes for the Hospice Item Sets. Hospices with less than 50 survey eligible patients are exempt from this data collection, but must submit an exemption request. The following grid depicts the submission due dates for fiscal years 2018-2019:

Sample Months (month of death) Quarterly Data Submission Deadline

January-March 2016

August 10, 2016

April-June 2016

November 9, 2016

July-September 2016

February 8, 2017

October- December 2016

May 10, 2017

January-March 2017

August 9, 2017

April-June  2017

November 8, 2017

July-September 2017

February 14, 2018

October-December 2017

May 9, 2018

January-March 2018

August 8, 2018

April-June 2018

November 14, 2018

July-September 2018

February 13, 2019

October-December 2018

May 8, 2019

If you have questions on how the hospice changes will affect your program, please feel free to contact a member of our Marcum Healthcare team.

Information contained herein is accurate at the time of publication.

Related Industry