On April 28, 2011, CMS released a proposed rule updating the Medicare hospice wage index for FY 2012.  When a projected 2.8% market basket update is factored in, CMS expects Medicare hospice payments to increase by $310 million overall in FY 2012 (while the market basket update and updated wage data would increase payments by a total of $400 million, this increase would be offset partially by a $90 million reduction resulting from the continued phase out of the wage index budget neutrality adjustment factor). The proposed rule would 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 also would have the option of electing to continue using the current methodology. Moreover, “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 their cap determination recalculated using the patient-by-patient proportional methodology.  The proposed rule also would begin implementation of a hospice quality reporting program, as mandated by the ACA. Under the proposed quality reporting system, hospices would be required to submit data on quality measures to CMS or have their annual increase factor reduced by 2 percentage points, starting in FY 2014.  The initial measures would be limited to a National Quality Forum (NQF)-endorsed measure on pain management and one structural measure related to participation in a Quality Assessment and Performance Improvement (QAPI) Program that includes at least three quality indicators related to patient care. CMS proposes that hospices report the structural measure by January 2013 and the NQF measure by April 2013 in order to be used in the FY 2014 payment determination. The proposed rule includes a number of other hospice policy changes, include a proposal to revise the current requirement for a face-to-face encounter for recertification of a patient’s terminal illness to remove the requirement that the hospice physician who performs the face-to-face encounter and attests to that encounter be the same physician who certifies the patient’s terminal illness. CMS also proposes to more clearly define the timeframes for face-to-face encounters and clarify the definition of hospice employee. The official version of the proposed rule will be published May 9, 2011, and CMS will accept comments on the proposed rule until June 27, 2011.