2016 Hospice Final Rule Introduces Two-Tier Payments

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Amy Shellhart By Amy Shellhart 
Director, Product Management, McKesson
A young caregiver holds hands with a bed bound elderly woman

The Centers for Medicare & Medicaid Services is implementing a two-tier per diem rate for routine hospice care, with a higher base payment rate for the patient’s first 60 days of hospice care and a reduced rate for all days following day 60. The change, part of the 2016 Hospice Final Rule, is intended to address the fact that service intensity is highest during the first seven days of hospice enrollment and then declines slowly until day 60.

A new McKesson white paper, “CMS’s data gathering informs 2016 Hospice Final Rule,” outlines all of the changes to hospice payments. In addition to the two-tier rate, those changes include:

  1. Implementing a service intensity add-on (SIA) payment for services provided in the last seven days of a beneficiary’s life, if certain criteria are met.
  2. Implementing the last phase-out year of the wage index budget neutrality adjustment factor (BNAF).
  3. Aligning the hospice cap accounting year for both the inpatient cap and the hospice aggregate cap with the fiscal year for FY 2017 and later.
  4. Making changes to the hospice quality reporting program.
  5. Clarifying that hospices are required to report all diagnoses identified in the initial and comprehensive assessments on hospice claims, regardless of their relation to the patient’s terminal prognosis.

The paper points out two key differences between the Proposed Rule and the Final Rule. First, the tiered payments were originally going to begin on October 1, 2015, but they now will kick in on January 1, 2016. Second, the SIA payments will be made even for hospice patients residing in a nursing or skilled nursing facility during their last week of life. The payments will be for direct patient care given during that period by registered nurses or social workers.

Note that the amount of the SIA payment is equal to the continuous home care (CHC) hourly payment rate established by CMS, multiplied by the number of hours of direct patient care provided by an RN or social worker, up to four hours per day. The supplemental payment applies regardless of length of stay, and CMS has been clear that it will initiate payment for the SIA—no billing is required on the part of the hospice provider.

For all the details on the contents of the Hospice Final Rule, please download our white paper, “CMS’s Data Gathering Informs 2016 Hospice Final Rule.”

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