On July 29, 2011, CMS issued its final Medicare hospice wage index rule for FY 2012, which will increase overall payments by 2.5% as a result of a 3% market basket update, offset by an estimated 0.5% decrease resulting from updated wage index data and the continued phase out of the wage index budget neutrality adjustment factor. CMS has adopted its proposal to change the hospice aggregate cap calculation methodology to a “patient-by-patient proportional methodology” in response to litigation challenging CMS’s existing method for counting Medicare beneficiaries. Hospice providers have the option of electing to continue using the current methodology. Also, as previously reported, “to prevent future litigation, and alleviate the litigation burden on providers, CMS, and the courts,” CMS issued a related ruling dated April 15, 2011 that allows any hospice that has a timely-filed administrative appeal of the existing methodology for a cap year ending on or before October 31, 2011 to have its cap determination recalculated using the patient-by-patient proportional methodology. In addition, the final rule implements a hospice quality reporting program, as mandated by the ACA. The initial measures are limited to a National Quality Forum (NQF)-endorsed measure on pain management and a structural measure related to participation in a Quality Assessment and Performance Improvement (QAPI) Program that includes at least three indicators related to patient care. Hospices must begin collecting quality data in October 2012, to be submitted in 2013; hospices may also voluntarily begin collecting data on the QAPI measure in October 2011 for submission in 2012. Hospices that do not report quality data in 2013 will have their annual increase factor reduced by 2 percentage points in FY 2014. The final rule includes a number of other hospice policy changes, including: elimination of a current requirement that the hospice physician who performs a face-to-face encounter for recertification of a patient’s terminal illness and attests to that encounter be the same physician who certifies the patient’s terminal illness; clarification of the timeframes for face-to-face encounters; and revisions to the definition of hospice employee. The official version of the rule will be published on August 4, 2011.