CMS Finalizes FY 2022 Hospice Rule

Situation Report | August 2, 2021

The U.S. Centers for Medicare and Medicaid Services (CMS) on July 29 came out with its final payment rule for hospice in fiscal year (FY) 2022. It is expected to be published later this week in the Federal Register. It goes into effect October 1, 2021.

The rule includes a payment update of 2 percent (down from CMS’s proposed update of 2.3 percent). This accounts for a market-basket increase of 2.7 percent, deducted by a 0.7 percentage-point productivity adjustment that is higher than estimated in the proposed rule.

The hospice aggregate cap is $31,297.61, also a slight reduction from the proposed rule but up from the FY 2021 amount of $30,683.93.

In the rule, CMS is finalizing its proposed rebasing of and revisions to the labor shares for the various levels of care using 2018 cost report data for freestanding hospices. Each level of care saw a slight increase compared to CMS’s proposed rule, due to revisions in the final rule’s methodology. The final labor shares of payment are: 74.6 percent for continuous home care; 64.7 percent for routine home care; 60.1 percent for inpatient respite care; and 62.8 percent for general inpatient care.

CMS is also making permanent some regulatory waivers, as proposed. These would permit skills competencies to be assessed by observing an aide performing the skill with either a patient or a pseudo-patient as part of a simulation, essentially allowing hospices to utilize pseudo-patients.

CMS is also amending the requirements for competency evaluation of aides, allowing the hospice to focus on the specific deficiency and related skill(s) instead of completing another full competency evaluation if an area of concern is verified by the hospice during the RN on-site supervisory visit.

Hospices will also see two changes in the Hospice Quality Reporting Program (HQRP). CMS is removing the seven “Hospice Item Set process measures” and adding the Hospice Visits in Last Days of Life (HVLDL) and the Hospice Care Index (HCI).

As a reminder, hospices are subject to a 2 percent payment penalty for non-compliance with HQRP reporting in the FY 2022 Annual Payment Update (APU). This penalty increases to 4 percent in the FY 2024 APU. While this increased penalty is for a later APU period, it should be stressed that the penalty would be applicable to calendar year (CY) 2022 HQRP submissions.

The final rule also makes clarifications to the election statement addendum and addresses hospice utilization trends following the proposed rule’s call for comments on a CMS data analysis. That analysis examined the number of beneficiaries using the hospice benefit, live discharges, reported diagnoses on hospice claims, Medicare hospice spending, and non-hospice spending during a hospice election. In response to comments, CMS said it will continue to monitor these trends for ongoing analyses and potential future rulemaking. HCA will provide a further summary of this analysis, along with the response from public comments, in our upcoming detailed analysis of the final rule.

HCA is in the process of preparing a comprehensive memo on the hospice final rule, covering each of the above items in much further detail. We will share this analysis with members later this week.