CMS published a final rule on August 7, 2013 that updates Medicare hospice reimbursement and related policies for FY 2014, which begins on October 1, 2013. The final rule increases Medicare hospice payments by 1.0% compared to FY 2013 rates, but down slightly from the 1.1% increase anticipated in the proposed rule. Specifically, CMS is increasing hospice per diem rates by 1.7% (reflecting a 2.5% market basket increase that is reduced by 0.8 percentage points due to ACA adjustments), but this update is partially offset by a 0.7 percentage point cut resulting from the use of updated wage data and continued phase-out of the wage index budget neutrality adjustment factor (as set forth in prior rulemaking). CMS is also finalizing its clarification of ICD–9–CM coding guidelines and CMS’s expectations for diagnosis reporting on hospice claims, especially regarding the use of nonspecific symptom diagnoses. CMS instructs hospice providers to use the most definitive, contributory terminal illness as the principal diagnosis, with additional diagnoses included on the claim. CMS provides that “debility” and “adult failure to thrive” may not be used as principal hospice diagnoses on the claim; such claims will be returned to the provider for more definitive coding. However, in response to comments regarding the need for additional time to implement these coding clarification changes within provider software systems, CMS will delay returning claims to providers until October 1, 2014 (which coincides with the transition to ICD-10-CM).

CMS also adopted revisions to its hospice quality reporting requirements. By way of background, under the ACA, hospices that fail to meet quality reporting requirements will receive a 2 percentage point reduction to their market basket update beginning in FY 2014. In 2013, hospices began reporting data on two quality measures (a pain management measure and a structural measure on participation in a Quality Assessment and Performance Improvement Program) for the FY 2014 payment determination. Beginning with the 2016 payment determination, CMS is eliminating these two measures and replacing them with a standardized patient-level data collection instrument called the Hospice Item Set (HIS). Hospices must complete the HIS at admission and discharge on all patients admitted to hospice effective July 1, 2014. The final rule also discusses, among other things, CMS’s plans to require the use of a Hospice Experience of Care Survey beginning in 2015 for the FY 2017 payment determination, and CMS’s efforts to reform the hospice payment framework. Further, the rule provides that CMS will update future hospice per diem rates through an annual rule or notice, rather than solely through a subregulatory Change Request, as CMS has previously done.