The Centers for Medicare & Medicaid Services (CMS) has issued Change Request (CR) 13707, effective October 1, 2024, which introduces critical updates to hospice payment rates, the hospice wage index, and the hospice cap amount for the fiscal year (FY) 2025. These changes are essential for hospice providers to understand and implement as they impact reimbursement rates, compliance requirements, and overall financial planning.

Key Updates for FY 2025:

1. Hospice Payment Rates

For FY 2025, the hospice payment update percentage is based on the inpatient hospital market basket, which is set at 3.4%. However, this percentage must be reduced by a multifactor productivity (MFP) adjustment of 0.5 percentage points, resulting in a final hospice payment update of 2.9%. This update applies to the payment rates for all levels of hospice care, including Routine Home Care, Continuous Home Care, Inpatient Respite Care, and General Inpatient Care.

Hospice providers who do not submit the required quality data will face a reduction in their payment rates. Specifically, the payment update percentage for these providers will be reduced by 4 percentage points, resulting in a net decrease, with an update rate of -1.1%. This emphasizes the importance of timely and accurate quality data submission to avoid significant financial penalties.

2. Hospice Cap Amount

The hospice cap amount for FY 2025 has been updated to $34,465.34, reflecting a 2.9% increase from the FY 2024 cap amount of $33,494.01. This cap applies to the aggregate amount that a hospice provider can be reimbursed for services rendered within the cap year, which spans from October 1, 2024, to September 30, 2025.

3. Hospice Wage Index

The hospice wage index is adjusted annually to account for local variations in wages. For FY 2025, CMS continues to implement a 5% cap on any decreases to a geographic area’s wage index. This cap helps mitigate significant negative impacts on hospice providers in areas where wage index adjustments could otherwise result in substantial payment reductions. CMS has also incorporated revised delineations from the Office of Management and Budget (OMB) into the hospice wage index, ensuring that wage index values are reflective of current geographic and economic realities.

4. Labor and Non-Labor Shares

The labor and non-labor shares used to wage-adjust hospice payments for each level of care have been revised. For instance, the labor share for Routine Home Care (days 1-60) is now 66.00%, with the corresponding non-labor share at 34.00%. These adjustments ensure that hospice payments more accurately reflect the cost of providing care.

Importance for Hospice Providers

These updates underscore the necessity for hospice providers to remain vigilant in their billing practices, particularly in the areas of wage index coding and quality data submission. Failure to comply with CMS requirements can result in significant payment reductions, which could impact the financial viability of hospice services.

Conclusion

CMS’s CR 13707 brings several critical changes for FY 2025, with a focus on ensuring fair and accurate payment adjustments for hospice services. By staying informed and compliant with these updates, hospice providers can optimize their reimbursement processes and continue delivering high-quality care to their patients.

For more detailed information and guidance on these changes, hospice providers should refer to the official CMS documentation or consult their Medicare Administrative Contractor (MAC).