September 17, 2018

Medicare Hospice Final Rule for Fiscal Year 2019

By Scott Manson, Partner, Advisory Services

Medicare Hospice Final Rule for Fiscal Year 2019

On August 6, 2018, the Centers for Medicare and Medicaid Services (CMS) released the fiscal year 2019 final payment rule. The final rule includes the payment updates for Medicare hospice reimbursement for service dates between October 1, 2018, and September 30, 2019; the hospice cap update amount; and other regulatory changes.


The net increase to the national hospice rates is 1.8% for FY 2019. The 1.8% is a result of a 2.9% increase in the market basket, less 8% decrease for productivity adjustment, less 0.3% decrease as mandated by the Affordable Care Act. Changes in geographical wage indices will result in different increases or decreases by region. Please refer to the rate calculator to obtain rates for specific counties. As in prior years, the reimbursement for hospices that do not submit the required quality data will be reduced by 2%. The rate increase is expected to result in a net increase in reimbursement to hospices of $340 million during FY 2019.

Hospice Cap

The FY 2019 cap year will be from October 1, 2018, through September 30, 2019. The hospice cap amount will receive the same 1.8% increase as the reimbursement rates. The FY 2019 cap amount is $29,205.44.

Physician Assistants

According to the final payment rule, effective January 1, 2019, physician assistants (PA) will be recognized as designated hospice attending physicians, in addition to physicians and nurse practitioners. CMS also indicates that since PAs are not physicians, they may not act as medical directors or physicians of the hospice, certify the beneficiary’s terminal illness, or perform the face-to-face encounter. Also, hospices may not contract with PAs to serve on their interdisciplinary groups. State-by-state specific PA rules may also further restrict the duties that a PA may perform.

Hospice Claims Processing

Hospices will have the option to continue reporting infusion pumps and drug charges as separate individual line items on hospice claims, even though it will no longer be mandatory, or hospice providers can submit total aggregate durable medical equipment and drug charges on the claim. At this time, there will not be an edit prohibiting providers from using both methods; however, CMS encourages providers to select one method.

Cost Reporting

In the Final Rule, CMS references the April 13, 2018, CMS transmittal revising the Medicare Provider Reimbursement Manual. The revisions include additional hospice cost report Level 1 edits. Level 1 edits must be cleared in order to file a cost report. The edits require costs to be reported in specific fields, including:

  • Line 1 – Capital Related Costs – Building & Fixtures
  • Line 2 – Capital Related Costs – Movable Equipment
  • Line 3 – Employee Benefits Department
  • Line 4 – Administrative and General
  • Line 13 – Volunteer Services Coordination
  • Line 28 – Registered Nurses
  • Line 33 – Medical Social Services
  • Line 37 – Hospice Aide and Homemaker Services
  • Line 38 – Durable Medical Equipment
  • Line 14 and 42.50 (combined) – Pharmacy and Drugs Charged to Patients

Hospice providers should be collecting this information in their general ledgers or elsewhere for proper cost reporting.

Quality Reporting

In the final rule, CMS includes updates to the Healthcare Quality Reporting Program (HQRP), including specific data review and correction timeframes for data submitted using the Hospice Item Set (HIS), extension of the Consumer Assessment of Healthcare Providers and Systems (CAHPS) hospice survey participation requirements, and other changes to public quality reporting.

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Scott  Manson

Scott Manson

Managing Director

  • Advisory
  • Deerfield, IL