On July 27, 2012, CMS published a notice announcing that Medicare hospice rates will increase by 0.9% in FY 2013. This update is based on a 2.6% market basket increase, which is reduced under the ACA by a 0.7 percentage point productivity adjustment/reduction and an additional 0.3 percentage point reduction, and further reduced by 0.7 percentage point reduction due to updated wage data and an additional wage index budget neutrality adjustment factor (BNAF) reduction. Under the BNAF provision, CMS is continuing its seven-year phase-out of the wage index BNAF with an additional 15% BNAF reduction for 2013, for a total BNAF reduction through FY 2013 of 55%. The BNAF phase-out is scheduled to continue with successive 15% reductions from FY 2014 through FY 2016. The notice also discusses its contractor’s finding that most hospice claims contain only a principal diagnosis, when hospice patients are likely to have multiple comorbidities. CMS therefore is clarifying that all of a patient’s coexisting or additional diagnoses should be reported on the hospice claim (unless they are unrelated to the terminal illness). CMS notes that comorbidity information is needed to help the agency determine if it should include a case-mix adjustment in its ongoing hospice payment reform efforts. CMS also directs interested parties to its July 13, 2012 Medicare proposed home health prospective payment system (PPS) rate update for calendar year 2013, which includes a detailed discussion of CMS’s proposed hospice quality data reporting requirements affecting payments in FY 2015 and subsequent years.  CMS will accept comments on the home health PPS proposed rule (including hospice quality provisions) until September 4, 2012.