The Hospice Medicare Final Rule for FY 2020 Is Here

Long-term-care provider speaking with senior

On October 1, 2019, CMS implemented the hospice Medicare final rule for fiscal year 2020 and addressed changes to hospice payment rates, hospice cap amounts, election statements and election statement addendums. These changes are outlined below.

Hospice Payment Rates

Overall, hospice payments were updated by 2.6 percent, based on the 2020 hospital market basket adjustment of 3 percent, less a productivity adjustment of 0.4 percent. CMS modified the year lag in the wage index and will now use the pre-floor, pre-reclassified acute-care hospital wage index for 2020. While there isn’t expected to be a net change to all providers, the wage index updates each year affect individual providers differently.

One of the most significant provisions of the final rule is that CMS rebased the 2019 rates for 2020. This rebasing resulted in higher payment rates for the continuous, inpatient respite and general inpatient levels of care. However, due to the legislative requirements regarding budget neutrality, a reduction of 2.72 percent in the routine level of care payment rates was imposed. CMS felt this rebasing would better match the higher costs of care required with more intense levels of care. The chart below summarizes the updated rates for 2020, before application of any wage index adjustments:

2020 Update Rates

As in prior years, hospices that don’t meet quality reporting requirements are subject to a 2 percent reduction in payments, and all payments continue to be subject to the 2 percent sequestration reduction.

While the rate increase in the final rule is encouraging for the industry, due to changes in the wage index adjustment not all hospices will experience an increase in rates. To view the updated payment rates for all Core-Based Statistical Areas, visit BKD’s Hospice Payment Rates page.

Hospice Cap

The hospice aggregate cap amount was updated for the 2019 and 2020 cap years. The cap limit is $29,205.44 for 2019 and $29,964.78 for 2020.

Election Statement & Election Statement Addendum

As part of the final rule, CMS issued modifications to the hospice election statement and added a new requirement for an election statement addendum. The changes won’t be effective until 2021, and CMS plans to issue a model election statement as guidance. At that time, CMS will require the following to be included in the election statement:

  • Information about the holistic, comprehensive nature of the Medicare hospice benefit
  • A statement outlining items that won’t be covered by the hospice because the uncovered items are related to a condition other than the terminal illness
  • Cost-sharing information regarding the beneficiary’s responsibility for hospice services
  • Notification of the beneficiary’s right to request an election statement addendum that contains the hospice’s basis for care and includes immediate advocacy available through the Beneficiary Family Centered Care-Quality Improvement Organization (BFCC-QIO) should the beneficiary disagree with the hospice’s basis of care

If requested by a beneficiary or its representative, the hospice will be required to provide an election statement addendum titled “Patient Notification of Hospice Non-Covered Items, Services, and Drugs” that includes:

  • Hospice agency name
  • Beneficiary’s name and hospice medical record identifier
  • Beneficiary’s terminal illness and related conditions
  • Beneficiary’s current diagnoses/conditions present upon hospice admission (or plan of care update) and the associated items, services and drugs determined as not covered by the hospice for being unrelated to the terminal illness
  • A written clinical explanation as to why such conditions, items, services and drugs are considered unrelated to the terminal illness with a statement that this information should be shared by the beneficiary with other health care providers in which he or she seeks services
  • References to any relevant clinical practice, policy or coverage guidelines
  • Information on the addendum’s purpose and the beneficiary’s right to immediate advocacy through the BFCC-QIO:
    • The name and signature of the Medicare hospice beneficiary or representative and date signed with a statement that signing the addendum is only acknowledgment of receipt of the addendum and not necessarily the beneficiary’s agreement with the hospice’s determinations

Hospices will have five calendar days to provide the addendum if the beneficiary requests it at the time of the election but will have 72 hours to provide the requested addendum if requested after the election during care.

Hospice agencies should review the final rule and evaluate the potential effect it may have on their individual organizations. View the final rule on the Federal Register’s website.

For more information, reach out to your BKD trusted advisor or use the Contact Us form below.


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