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CMS Releases Hospice Proposed Payment Rule

Tiffany Karlin

April 13, 2020

On Friday, April 10, 2020, the Centers for Medicare & Medicaid Services (CMS) issued its proposed fiscal year (FY) 2021 (October 1, 2020 through September 30, 2021)  payment rule to update the wage index, payment rates, and cap amount.  

The rule includes:

  1. Changes to the hospice wage index by adopting the most recent Office of Management and Budget (OMB) statistical area delineations:
    1. 5% cap on wage index decreased;
    2. Sunset the “Service Intensity Add-on (SIA)” budget neutrality factor;
    3. Changes to the hospice election statement proposed during the FY2020 rule cycle to become effective October 1, 2020, as well as a model election statement and sample addendum for use in delineating diagnoses and treatments that are unrelated to the hospice terminal diagnosis and related conditions. 
  2. Overall impact of the rule is an estimated $580 million in increased hospice payments.    

Hospice Wage Index:

While CMS believes that hospices should be subject to the most current OMB delineations–as written in September 2018 by the Office of Management and Budget (OMB) that establishes revisions to the delineations of Metropolitan Statistical Areas (MSAs), Micropolitan Statistical Areas, and Combined Statistical Areas, and guidance on uses of the delineations in these areas– the agency acknowledges that the modifications represent a number of significant changes. 


  • Changes in status from urban to micropolitan, urban to rural, rural to urban;
  • Shifts of counties from one urban CBSA to another, and other changes. 

For FY2021, as a transition, CMS will apply a 5% cap on any decrease in a geographic area’s wage index value from the wage index value from FY2020.  No cap will be applied in FY2022. 


Hospice providers would need to examine the anticipated shifts as outlined in the rule and in the wage index tables as CMS is proposing to implement the new delineations. 

Wage index files:  HERE (see link at the middle of the page).

FY2021 Hospice Wage Index:  

The FY2021 rule proposed to use the FY2021 pre-floor, pre-reclassified wage index, with the 5% cap on wage index decreases.

The wage index value is applied to the labor portion of the hospice payment rate based on the geographic area in which the beneficiary resides when receiving routine home care (RHC) or continuous home care (CHC).  The wage index value is applied to the labor portion of the payment rate based on the geographic location of the facility for beneficiaries receiving general inpatient care (GIP) or inpatient respite care (IRC).

Payment Update Percentage: 

Based on the inpatient hospital market basket percentage increase, currently estimated at 3%, less an Affordable Care Act-mandated “productivity” adjustment, which is currently estimated at .4 percentage point, netting to an estimated 2.6% update to the FY2020 payment rates for FY2021

Proposed FY2021 base payment rates for various levels of care:

 *Should providers not be in compliance with hospice quality reporting requirements, 2% will be reduced from the values referenced above.

Hospice Aggregate Cap:

Aggregate Cap value for FY2021 of $30,743.86 (the FY2020 value of $29,964.78 multiplied by 2.6 percent).

Service-Intensity Adjustment:

CMS has analyzed the service-intensity adjustment (SIA) budget neutrality factors calculated for FYs 2016 through 2020 and determined that the utilization of the SIA from one year to the next has remained relatively constant.  Based on this general stability, CMS is proposing to eliminate the SIA budget neutrality factor to simplify the payment update calculation. 

Election Statement Modifications and Election Statement Addendum

CMS is not proposing any changes to the policies finalized in the FY 2020 Hospice final rule regarding the election statement content modifications or the requirements for the election statement.

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