Navigating the FY 2025 Hospice Proposed Rule

Written by Dee Geray, Senior Manager, Clinical Consulting, McBee

Now that the Centers for Medicare & Medicaid Services has released its Fiscal Year 2025 Hospice Payment Rate Update, agencies may be wondering what changes could be on the horizon. During a recent webinar with Michael Puskarich, we discussed the proposed rule and its potential impacts on financial and operational quality. 

Key Changes Entailed in the FY 2025 Hospice Proposed Rule

Wage Index Adjustments 

• 2020 Census Impact: Shifts in population demographics and changing geographic classifications are affecting rural-urban dynamics. 
• Rural Classification Changes: Use of hospital cost reports in rural classifications marks a significant change in reimbursement calculation methods. 
• Potential Decreases: Providers must address potential decreases in wage index rates. 

Micropolitan Statistical Areas 

• Policy Challenges: Providers in areas with populations ranging from 10,000 to 50,000 must navigate evolving policies and intricate reimbursement mechanisms. 
• Reclassification Impacts: Urban counties reclassified as rural impact reimbursement dynamics, necessitating vigilance from providers. 

Payment Updates and Cap Revisions 

• Inflation Adjustments: Payment updates reflect adjustments based on inflation indices and rural hospital wage revisions. 
• Strategic Planning: Incremental rate increases and reductions require focused financial planning. 
• Cap Revisions: New methodologies for expenditure thresholds over multiple years impact operational budgeting and resource allocation. 

Documentation and Complex Therapies 

• Streamlined Processes: Clarifications on election statements and certification of terminal illness aim to enhance documentation clarity. 
• Complex Therapies: Information requests explore incorporating complex therapies into hospice benefits, aiming to reduce financial risks. 

Quality Reporting Enhancements 

• CAHPS Hospice Survey Changes: 
• Pre-notification Letters: Starting January 2025, letters sent to potential respondents to improve response rates. 
• Extended Response Period: Survey response period extended from 42 to 49 days. 
• Simplified Language: Survey language simplified to reduce confusion and improve feedback accuracy. 
• New Measures in 2027: New CAHPS measures to be reported starting November 2027, based on data from 2025-2026. 

HOPE Integration 

• Data Collection and Evaluation: Integration of HOPE (Hospice Outcome and Patient Evaluation) represents a shift in data collection methodologies. 
• Collaboration: Requires collaboration with private vendors. 
• Logistical Challenges: Despite challenges, HOPE’s potential to enhance patient care outcomes is significant. 

Proactive Strategies for Providers 

• Understanding Changes: Providers must grasp wage index intricacies, adapt to payment updates, and manage cap revisions. 
• Enhancing Quality Reporting: Emphasizing timely reassessment of symptoms and integrating HOPE will foster patient-centric care. 
• Sustainable Growth: Leveraging insights from the FY 25 proposed rule can help providers achieve excellence in end-of-life care delivery. 

From understanding wage index intricacies to adapting to payment updates and cap revisions, providers must remain agile in their response to evolving regulatory frameworks. Quality reporting enhancements, coupled with the integration of HOPE, offer avenues for fostering patient-centric care paradigms. By leveraging insights gleaned from the FY 25 proposed rule, providers can chart a course towards sustainable growth and excellence in end-of-life care delivery. 

Click here to listen to our full webinar on the FY 2025 Hospice Payment Rate Update Proposed Rule. 

Frequently Asked Questions About the 2025 Hospice Payment Rate

What is the hospice payment rate for the 2025 fiscal year?

$34,465 is the hospice cap amount for the fiscal year 2025. This is a 2.9% increase from the cap amount of $33,494 in 2024.

What is the FY 2025 Hospice Proposed Rule?

The Centers for Medicare & Medicaid Services have finalized a 2.9% increase in hospice payment rates for fiscal year 2025. The change is likely to result in a rise of $790 million in payments to hospices compared to FY 2024.

This update has been derived from a 3.4% increase in inpatient hospital market basket costs, adjusted downward by 0.5% to account for productivity gains.

The final rule also adopts the most recent Office of Management and Budget statistical area delineations, which will affect the wage index used by some hospices. Some hospices (especially ones in rural locations) will see a slightly larger payment increase than urban hospices.

The rule also plans to inaugurate a patient-level data collection tool in FY 2028 to replace the existing Hospice Item Set.

Who sets the hospice payment rate?

The Centers for Medicare & Medicaid Services sets the hospice payment rate. CMS is a federal agency within the U.S. Department of Health and Human Services that oversees several critical programs that impact millions of lives:

• Medicare
  This program primarily covers people aged 65 and older, as well as certain younger individuals with disabilities.
• Medicaid
  Offering benefits not always included in Medicare, such as nursing home care, Medicaid helps subsidize the medical expenses of those with limited income.
• Children’s Health Insurance Program
  CHIP provides health coverage to children in families that earn too much for Medicaid but cannot afford private insurance.
• Health Insurance Marketplace
  This platform helps individuals and small businesses compare and enroll in health insurance plans.

In addition to administering these programs, CMS makes it its mission to uphold the highest quality standards in healthcare. The agency rigorously enforces regulations and guidelines to ensure the safety and effectiveness of care delivered across the United States.

Who is Michael Puskarich?

Michael Puskarich is the director of advisory consulting at McBee, a top-tier health care support services organization. Mr. Puskarich shares his industry expertise and opines on the future of health care in blogs and webinars produced by McBee. Recently he participated in a webinar about the FY 2025 hospice payment rate update proposed rule.