CMS has adopted a Final rule changing the hospice wage index for fiscal year (FY) 2009 and providing for a payment update. The market basket increase is set at 3.6 percent, up from the 3.0 percent estimate in the Proposed rule. The hospice wage index will be based on the inpatient hospital wage index, before the application of any floors, adjustments or geographic reclassifications. Hospices in core-based statistical areas (CBSAs) with an index of 0.8 or below will be protected by the floor on payment rates.
The budget neutrality adjustment factor (BNAF) is to be phased out over three years; the adjustment will be reduced by 25 percent for FY 2009, by 75 percent in FY 2010, and by 100 percent for FY 2011. In response to concerns about the effect of the decreases on hospice reimbursement, CMS noted that the hospice reimbursement will not actually decrease; rather, the BNAF will no longer increase hospice payments beyond the amount of the market basket increase.
CMS' reasoning
When the wage index was updated in 1997, the BNAF was added in order to compensate for an anticipated reduction in payments resulting from corrections to artificially high wage data used in the 1983 index. The 1998 wage index would have reduced payments in some areas by up to 20 percent. There were concerns that access to hospice care would decrease.
However, CMS notes, the number of hospice providers has grown to 3,111 compared with 1,602 in 1994; the number of Medicare-certified hospices grew 26 percent between 2001 and 2005. In addition, Medicare payments for hospice services rose from about $2.2 billion in 1998 to $9.2 billion in 2006. Therefore, CMS reasons, the BNAF increases are no longer needed to preserve access to hospice care.
Effect on payments
CMS estimates that the combined effects of the market basket increase and the 25 percent reduction in the BNAF will result in a net payment increase for FY 2009 of 2.5 percent for hospices in CBSAs with wage index factors greater than 0.8 percent; hospices in CBSAs below that factor will see a greater increase in payments.
Source: Final rule, 73 FR 46464, Aug. 8, 2008.
For more information on this and related topics, consult the CCH® Medicare and Medicaid Guide.
Visit our News Library to read more news stories.
