[UPDATED] CMS Final Rule Gives Hospice 3.8% Pay Raise for 2023

The U.S. Centers for Medicare & Medicaid Services (CMS) will give hospices a 3.8% bump in their per diem payments for 2023, according to a final rule published today.

The reimbursement hike is larger than the 2.7% the agency initially proposed for next year, which many providers and industry groups contended was too small in light of rising expenses. However, stakeholders say that the final amount remains insufficient.

“While we believe the 3.8 percent update will be helpful in addressing the financial pressures hospices are experiencing, we have continuing concerns that it will not fully address current cost inflation and will seek support for further increases that would cover the increasing labor and other costs affecting hospice providers,” National Association for Home Care & Hospice President Bill Dombi told Hospice News in an email.

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The rule also increases the hospice aggregate cap for next year by a corresponding 3.8% to $32,486.92.

Hospices’ financial resources continue to be strained by expenses associated with the COVID-19 pandemic, plus price and wage inflation. Operators are also contending with labor pressures and lower patient lengths of stay.

A key point of contention was that CMS used 2019 data to calculate the 2023 rate, including wages and cost reports. These time lags are typical for the agency’s reimbursement decisions, but the conditions that hospices have endured since early 2020 have been anything but normal.

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Compensation costs for the health care and social assistance industry rose nearly 4.4% in 2021, according to the Bureau of Labor Statistics (BLS). Hospice providers nationwide have reported similar increases in their labor expenditures.

Hospices are also taking a hit from rampant inflation, which as of March hit 8.5% with no sign of slowing down. This rate is the highest in 40 years.

In light of these concerns, the National Hospice & Palliative Care Organization (NHPCO) has also called for further updates to 2023 hospice payments.

“We call on the Biden Administration and Congress to step in to provide additional reimbursements in 2023 which accurately reflect the unprecedented demands and costs providers are facing in order to ensure long-term viability for the hospice and palliative care that Americans want and deserve,” NHPCO Interim President and CEO Ben Marcantonio, said in a statement.

In addition to setting reimbursement rates, the rule also contains a model for phasing in changes to the way CMS will use the wage index to inform payment rates in future years.

Through the phase-in plan for the wage index, the agency is changing the data sources it uses to adjust hospice payment amounts to account for differences in wage rates among markets. The implementation strategy is designed to minimize disruption as well as the monetary impact on providers by placing a 5% limit on the dollar amounts hospices could lose due to the adjustments.

Nevertheless, providers say, this action is helpful but does not sufficiently address the substantial cost increases they have seen during the past two years.

“We fully support CMS’ actions to finalize the 5% cap on wage index decreases from one year to the next but are disappointed that CMS did not address the significant reductions that affected many hospices in 2022 that are not remedied by a prospective application of the cap at this point,” Dombi said.

In addition, this starts the ball rolling on a web-based methodology for the Consumer Assessment of Healthcare Providers and Systems (CAHPS) survey, which historically has been done on paper.

The agency also provided updates in the rule on the testing of the Hospice Outcomes & Patient Evaluation (HOPE) tool. The will replace the Hospice Item Set (HIS) quality reporting system when completed.

CMS has begun beta testing the tool and will be collecting data on the estimated burden for providers. The rule also provides updates on the process going forward after beta testing and during the adoption process.

This is a developing story and will be updated.