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Home Health & Hospice Week

Hospice:

Medicare Hospice Rate Increase Gets Thumbs Down Across The Industry

Published on Fri Apr 05, 2024

Plus: Watch out for stealth payment provision.

The Centers for Medicare & Medicaid Services is not showing hospices the money, they say in response to the newly released rule on hospice payment for 2025.

CMS proposes upping the hospice base payment rate by 2.6 percent in fiscal year 2025, which begins on Oct. 1. That’s an estimated increase of $705 million in payments over 2024. The update includes a 3.0 percent market basket increase reduced by a 0.4 percent productivity adjustment, the agency explains in the proposed rule published in the April 4 Federal Register.

The proposed per patient hospice cap amount for FY 2025 is increased by the same 2.6 percent and would be $34,364.85, according to the rule released on March 28.

The increase does draw some tepid praise. “Any increase in payment is appreciated,” allows trade group LeadingAge in a statement about the rule.

The rate bump “presents a positive outlook for hospice providers, potentially offsetting operational costs and facilitating enhanced service delivery,” suggests Lexington, Ky.-based BC Healthcare Consulting in online analysis of the rule.

But criticism is a more common reaction to the regulation. The National Association for Home Care & Hospice “is disappointed in the inadequate 2.6 percent payment rate update,” NAHC’s Davis Baird says. “This small increase does not reflect the high costs hospices continue to face as a result of ongoing workforce shortages and inflationary cost challenges. More and more people are being served by hospice every year, and CMS needs to recognize the dynamic value the benefit provides — not only from the improved quality of life hospices provide, but also from the huge financial savings to Medicare that utilization of the hospice benefit drives,” Baird blasts.

Data shows that “hospice saves the overall Medicare program billions of dollars a year,” Baird continues. “It is high time CMS acknowledges this outsized impact and provides the resources hospices need to meet the growing demand for their unique services,” he concludes.

“The 2.6 percent proposed rate increase for hospices is not enough to support the continued delivery of hospice care amidst rising cost pressures and ongoing workforce constraints affecting hospices nationwide,” National Hospice & Palliative Care Organization Interim CEO Ben Marcantonio says in a release. “To continue providing the high level of care our patients and their families deserve, hospices require a payment rate that accurately reflects the current economic challenges,” Marcantonio maintains.

“Hospice care has demonstrated $3.5 billion in annual savings for Medicare, which underscores the critical importance of investing in hospice to ensure continued beneficiary access to quality end-of-life care,” Marcantonio emphasizes.

“We are disappointed with the proposed 2.6 percent payment increase,” LeadingAge CEO Katie Smith Sloan says in a release. “This is not enough for our nonprofit, mission-driven hospice members who are struggling to keep up with both continued workforce shortages and inflation-driven operating expense increases,” Smith Sloan stresses.

“Without a better rate adjustment, providers will have to continue to reject referrals and may even close, leaving older adults and families searching for care,” Smith Sloan warns.

“Most hospices rely on Medicare for over 90 percent of their revenue,” highlights attorney Howard Young with law firm Morgan Lewis in Washington, D.C. Thanks to the proposed rule and other developments, “March goes out like a lion” for the hospice sector, Young notes in online rule analysis.

The rate and cup update aren’t the only reimbursement-impacting provisions in the 61-page proposed rule. CMS proposes “to adopt the most recent [Office of Management and Budget] statistical area delineations, which revises the existing core-based statistical areas [CBSAs] based on data collected during the 2020 Decennial Census,” the agency points out in a fact sheet about the rule.

“This proposed change to the geographic delineations will have impacts on the payment rates hospices receive, based on their locations,” NAHC explains in its rule analysis.

At least: “Hospices affected by the change to their geographic wage index will be eligible for applying a 5 percent cap on any decrease to the wage index from the prior year,” CMS explains. “This permanent cap, finalized in the FY 2023 Hospice Final Rule, would prevent a geographic area’s wage index from falling below 95 percent of its wage index calculated in the prior FY” (see HHHW by AAPC, Vol. XXXI, No. 27).

Watch For Consequences Down The Road

A more long-range — and potentially paradigm-changing — influence on payment rates lies in another brief provision.

Hospice providers and their representatives have told CMS that “providing complex palliative treatments and higher intensity levels of hospice care may pose financial risks to hospices,” the proposed rule says. “The current bundled per diem payment is not reflective of the increased expenses associated with higher-cost and certain patient subgroups.”

Thus, CMS is soliciting comments on an array of questions related to the potential implementation of a separate payment mechanism to account for high-intensity palliative care services, the rule says. Those services might include palliative dialysis, chemotherapy, radiation, and transfusions.

For example: “Should there be separate payments for different types of higher-cost palliative treatments or one standard payment for any higher-cost treatment that would exceed the per-diem rate?” CMS asks. And “should an additional payment only be applicable when the patient is in RHC [Routine Home Care]?” the agency queries.

This provision could be good news for hospice providers, reps contend.

“We are excited to see the request for information around payment for high-intensity palliative services,” LeadingAge’s Smith Sloan says. “This thinking aligns with our benefit reform proposal around concurrent care,” she notes.

And “NHPCO commends CMS for taking steps to explore the possibility of a separate payment mechanism for high-intensity palliative care services in acknowledgment of both the substantial benefits these services offer to patients and the resource-intensive nature of their delivery,” Marcantonio says.

This solicitation “signals interest in … caring for medically complex, high-cost beneficiaries through palliative care rather than through the costlier acute care sector,” Morgan Lewis’ Young cheers.

However: Hospices may not want to greet this concept with completely open arms quite yet.

“While the proposed rule may appear to be fairly innocuous, the hospice community should pay attention to the information request on high-cost services as it may signal an emerging interest in payment model reform,” warns NAHC President William Dombi in a statement.

Meanwhile: Not all of the rule’s provisions are as directly payment-related. Other sections deal with the HOPE tool, regulatory clarifications, and more (see related stories, this issue).

“The proposed FY 2025 Hospice Rule has significant implications for hospice providers,” emphasizes consulting firm SimiTree in a blog post on the new rule.

Hospices should be sure to comment on the rule by its deadline, May 28, experts counsel.

“Numerous factors within the proposed rule can significantly influence your hospice,” stresses Melinda Gaboury with Healthcare Provider Solutions in Nashville, Tenn. “It’s crucial for hospices to actively engage and submit comments on this proposal before its finalization in August,” exhorts Gaboury in her Monday Minute with Melinda vlog.

“Ensure your comments are comprehensive and detailed, as your input matters greatly,” Gaboury advises.

Note: The proposed rule, including instructions on commenting, is at www.govinfo.gov/content/pkg/FR-2024-04-04/pdf/2024-06921.pdf.

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