Home Health & Hospice Week

Medicare holds fast to its volatile wage index methodology.

If you made budget plans based on Medicare’s proposed rule for 2019 hospice payment, they should be right on target.

In the 2019 final rule released Aug. 1, the Centers for Medicare & Medicaid Services sticks with its proposal to increase hospice payment rates by 1.8 percent starting Oct. 1. That should translate to a $340 million bump for hospice spending in the coming fiscal year, according to the rule published in the Aug. 6 Federal Register. (See rates by service level in chart, p. 231.)

Cap: The statutory aggregate cap amount for fiscal year 2019 will be $29,205.44, CMS notes in a fact sheet about the rule. That’s 1.8 percent higher than the 2018 cap amount of $28,689.04. And remember, the cap is not adjusted based on the location of the hospice or the patients served, reminds consulting firm The Health Group in Morgantown, West Virginia.

Some years, there are significant differences between the proposed and final payment rate increases or decreases, noted the National Hospice & Palliative Care Organization in analysis of the proposed rule. Factors such as the hospital market basket and the productivity adjustment can vary with updated data (see Eli’s HCW, Vol. XXVII, No. 17).

But this year, the figures held steady and CMS has finalized the 1.8 percent increase. The FY 2019 update factor is based on the inpatient hospital market basket update of 2.9 percent reduced by a multifactor productivity adjustment mandated by the PPACA of 0.8 percent and further reduced by 0.3 percent, also mandated by law, the rule specifies.

Don’t forget: The Service Intensity Add-on adjustment rate is the same as the Continuous Home Care hourly rate, the National Association for Home Care & Hospice points out — $41.56 per hour.

Of course, payments will be different for providers based on variables including patient mix, location, and provider type. CMS estimates that hospices in the Rural New England Region (Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont) will see the biggest increase, with a 3.4 percent boost. The next biggest increase is tied between the Urban West South Central (Arkansas, Louisiana, Oklahoma, and Texas) and Urban Outlying (Guam, Puerto Rico, and Virgin Islands) regions at 2.2 percent.

No hospices will see estimated reductions this coming year, but the area with the smallest rate of increase is projected to be the Rural Mountain region (Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah, and Wyoming) at 1.4 percent. The Urban Mountain and Rural Outlying regions are next with a forecast of 1.5 percent.

Stat fact: The region with the highest number of hospice providers is Urban Pacific (Alaska, California, Hawaii, Oregon, and Washington) with 845. The smallest is Rural Outlying with only six providers, CMS says in its impact table in the rule.

Wage Index Arguments Fall On Deaf Ears

As in other years, commenters on the proposed rule protested some facets of the wage index adjustment process that they deem unfair. Some of the problems commenters cited were “using older wage index data, not allowing reclassification, and not accounting for outward migration,” according to the rule. Those problems show “the need for wage index reform for the hospice payment system.”

Another problem cited was volatility due to using the pre-floor, pre-reclassified hospital wage index.

Examples: Commenters highlighted specific problem areas, including that: the wage index for Spokane, Washington increased in 2018 but will decrease in 2019, making it harder for providers to pay and retain employees; in rural Kentucky and Indiana, the costs of providing hospice care exceed Medicare payments; the New York City CBSA is problematic because it contains counties from New Jersey where labor costs are lower; and Washington, D.C. suburbs in Maryland should have the same index as the city but do not due to separate CBSA delineations.

CMS responds that it reviews hospital data for accuracy and it implements wage index changes in a budget neutral manner overall.

As for reclassification, “the current statute and regulations that govern the hospice payment system do not currently provide a mechanism for allowing hospices to seek geographic reclassification,” CMS says in the rule. “We do not believe that using hospital reclassification data would be appropriate, as these data are specific to the requesting hospitals and they may or may not apply to a given hospice.”

And for boundary problems, CMS says CBSA areas are up to the Office of Management and Budget. “While we recognize that OMB’s geographic area delineations are not designed specifically for use in nonstatistical programs or for program purposes … we continue to believe that the OMB’s geographic area delineations represent a useful proxy for differentiating between labor markets and that the geographic area delineations are appropriate for use in determining Medicare hospice payments,” the rule says.

Note: The final rule is at www.gpo.gov/fdsys/pkg/FR-2018-08-06/pdf/2018-16539.pdf.