Fact Sheets

CMS ANNOUNCES FINAL WAGE INDEX CHANGES FOR THE MEDICARE HOSPICE BENEFIT

Hospices serving Medicare beneficiaries will see a 1.4 percent increase in their payments for fiscal year 2010 according to a final regulation released today by the Centers for Medicare & Medicaid Services (CMS). 

The hospice payment increase is the net result of a 2.1 percent increase in the “hospital market basket,” an indicator of input price increases, offset by a 0.7 percent decrease in payments to hospices due to CMS’ revised policy to phase out its wage index budget neutrality factor. 

Specifically, the final rule revises the phase-out of the wage index budget neutrality adjustment factor (BNAF) which was made final  in the fiscal year (FY) 2009 final rule, to now occur over seven years.  Under CMS’s final policy, the budget neutrality adjustment will be reduced by 10 percent in FY 2010, and 15 percent each year from FY 2011 through FY 2016.  

The rule also adopts a Medicare Payment Advisory Commission (MedPAC) recommendation which requires physicians to complete a narrative on the certification and recertification describing the clinical justification for the patient’s terminal prognosis.   The proposed rule also sought comments on future hospice payment reform, the cap calculation methodology, and on requiring physician visits to evaluate eligibility in patients with longer lengths of stay.  CMS will consider the comments in future analyses.

This final rule reflects the ongoing efforts of CMS to support beneficiary access to hospice services while maintaining responsible financial stewardship of the Medicare Trust Fund.   

Final Rule Details

The BNAF is to be phased-out over seven years, beginning with a 10 percent reduction in FY 2010, and followed by an additional 15 percent reduction in each of the next six fiscal years.  Phase out will be complete in FY 2016.   This more gradual phase-out provides opportunity for CMS to consider the effects of a reduction in payments in the context of hospice payment reform, which is under consideration. The 10 percent reduction to the BNAF is partially offset by the annual market basket increase, which is 2.1 percent for fiscal 2010.

This rule also makes final a change to the physician certification process, where doctors will be required to submit a brief narrative supporting a patient’s life expectancy of six months or less. 

A link to the final rule, which will be published in the Federal Register on August 6, 2009, along with accompanying documents will be available at:

http://www.federalregister.gov/OFRUpload/OFRData/2009-18553_PI.pdf.