On August 8, 2008, CMS published a final rule updating the Medicare hospice wage index for FY 2009. CMS is adopting a 3.6% inflation update for hospices in FY 2009, but this increase is partially offset by a 1.1% decrease in payments in FY 2009 resulting from a phase-out of the hospice wage index budget neutrality adjustment factor (BNAF). Specifically, CMS is phasing out the BNAF over three years, beginning with a 25% reduction in FY 2009, an additional 50% reduction (for a total of a 75% reduction) in FY 2010, and a complete elimination in FY 2011. CMS estimates that phasing-out this adjustment will reduce Medicare hospice spending by $2.18 billion over five years. In addition, the final rule clarifies two wage index issues pertaining to the definition of rural and urban areas and multi-campus hospital facilities. The rule is effective October 1, 2008.