CMS published a proposed rule on May 5, 2015 that would update Medicare hospice payment rates and the wage index for fiscal year (FY) 2016. CMS estimates that the proposed rule would increase overall payments to hospices by about 1.3%, or $200 million, in FY 2016. This increase reflects a 1.8% proposed FY 2016 hospice payment update, which is reduced by the use of updated wage index data and the last year of the phase-out of the wage index budget neutrality adjustment factor (-0.7% decrease), and further increased as a result of a transition to new Office of Management and Budget Core Based Statistical Area (CBSA) delineations for the FY 2016 hospice wage index (0.2% increase).

In addition, CMS proposes to create two different payment rates for routine home care (RHC) that would provide a higher base payment rate for the first 60 days of hospice care and a reduced base payment rate for subsequent days. CMS also would establish a service intensity add-on (SIA) payment for services provided in the last 7 days of a beneficiary's life, if the following criteria are met: (1) the day must be billed as a RHC level of care day; (2) the day must occur during the last 7 days of life (and the beneficiary is discharged dead); (3) direct patient care must be provided by a RN or a social worker; and (4) the service may not be provided in a skilled nursing facility or nursing facility. The proposed SIA payment would equal the continuous home care (CHC) hourly payment rate multiplied by the amount of direct patient care provided by a RN or social worker for up to 4 hours total, per day, as long as the four criteria are met.

The proposed rule also would, among other things: implement Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act) changes to the aggregate cap calculation; align the cap accounting year for both the inpatient cap and the hospice aggregate cap with the federal fiscal year starting in FY 2017; make changes to the hospice quality reporting program; and clarify requirements for diagnosis reporting on the hospice claim.  CMS will accept comments on the proposed rule until June 29, 2015.