The Hospice FY 2025 Final Rule is released: What are next steps to be taken by hospices?

Next steps:

The Hospice FY 2025 final payment and wage index updates go into effect with hospice services beginning October 1, 2024, and ending September 30, 2025. Hospices should understand the financial impact of the FY 2025 final payment rate and wage index updates for the geographic areas served by your agency.

• Hospices should identify the FY 2025 final rates (inclusive of labor and non-labor share amounts) for each level of care that will apply to their agency based on whether Hospice Quality Reporting Program (HQRP) requirements were met in CY 2023. It is important to note that hospices that have not met HQRP requirements in CY 2023 are subject to a 4% reduction in payments in FY 2025, which results in a -0.1% payment update (vs. 2.9% for hospices that have met HQRP requirements). CMS began sending out non-compliance letters to hospices that did not meet CY 2023 HQRP requirements in July 2024.

The FY 2025 final rates for hospices that have met and not met HQRP requirements in CY 2023 are displayed in Tables 1 and 2 of CR 13707 released by CMS on August 2, 2024.

• Hospices should access the final FY 2025 wage index files via the link on the CMS Hospice Center webpage and identify the CBSA codes and/or 5-digit wage index transition codes along with the wage-index values for the geographical areas served by your agency to understand if there are changes. Note that the wage index value for the location in which the patient is served applies to the payment update calculation.

5-digit wage index transition codes: It should be noted that due to the way that CMS finalized to calculate the 5% cap for counties that experience an OMB designation change, some CBSAs and statewide rural areas could have more than one wage index value because of the potential for their constituent counties to have different wage index values as a result of application of the 5% cap.

Specifically, some counties that change OMB designations would have a wage index value that is different than the wage index value assigned to the other constituent counties that make up the CBSA or statewide rural area that they are moving into because of the application of the 5% cap. However, for hospice claims processing, each CBSA or statewide rural area can have only one wage index value assigned to that CBSA or statewide rural area.

Therefore, hospices that serve beneficiaries in a county that would receive the cap would need to use a number other than the CBSA or statewide rural area number to identify the county’s appropriate wage index value for hospice claims in FY 2025. CMS finalized as proposed that beginning in FY 2025, counties that have a different wage index value than the CBSA or rural area into which they are designated due to the application of the 5% cap would use a wage index transition code for reporting to hospice claims.

These special codes are five digits in length and begin with “50.” The wage index transition codes would be used only in specific counties — counties located in CBSAs and rural areas that do not correspond to a different transition wage index value will still use the CBSA number.

• Hospices should calculate the FY 2025 final Medicare payment rates for each level of care using the labor/non-labor share and wage index value for each geographical area served by your agency to understand the financial impacts in FY 2025 Medicare payments compared to FY 2024. It should also be noted that the Medicare 2% sequestration is still in effect and that the calculated rates will be further reduced by an additional 2%.

Example Medicare final rate calculation using RHC (days 1-60) final rate: $224.62 and CBSA 40060 (Richmond, VA): 0.8752

Wage index value (0.8752) x labor portion of final rate ($148.25) + non-labor portion of final rate ($76.37) =

$129.75 + $76.37 = $206.12 (final rate prior to applying 2% sequestration)

$206.12 x .02 = $4.12

$206.12 – $4.12 = $202.00 (final rate after applying 2% sequestration)

• Hospices that have received non-compliance letters for not meeting both HQRP requirements in CY 2023, should evaluate the reasons causing non-compliance to correct them going forward.

To avoid a 4% payment reduction in the annual payment update (APU) year, hospices need to:

• • Meet the 90% timeliness compliance threshold for Hospice Item Set (HIS) admission and discharge record submission (and acceptance) within the 30-day submission deadline AND
  • Submit CAHPS Hospice Survey data timely according to quarterly submission deadlines for all four quarters in CY 2023

CMS has informed that common reasons for HQRP non-compliance and being subject to a 4% payment reduction include:

• • Changing a CAHPS Hospice Survey vendor that causes the CAHPS Hospice Survey data to not be submitted timely for all four quarters in the calendar year. CMS recommends that hospices contact their CAHPS Hospice Survey help desk for assistance if planning to change vendors.
  • Submitting HIS admission and discharge records timely within 30 days, but the records were not accepted to the CMS QIES system due to errors. HIS data must be accepted to the CMS QIES system to be considered timely. One of the best methods to monitor successful HIS submissions is through CMS Final Validation Reports. Instructions on reports for validating HIS are available on the CMS iQIES portal.

The CMS HQRP Requirements and Best Practices webpage provides additional information on HQRP compliance requirements.

• Hospices that serve Medicaid patients should also monitor for the release of the state Medicaid hospice payment rates for the CBSA areas served by your agency. The national hospice Medicaid reimbursement rates for the four hospice levels of care change annually and are based on the annual Medicare hospice updates.

  Now that the final FY 2025 Medicare hospice payment rates are released, CMS will post the FY 2025 minimum Medicaid payment rates that states can use to the gov Hospice Benefits webpage. Remember that state Medicaid agencies can choose to pay more than the minimum Medicaid payment rates, but cannot pay less.

• Reach out to your software vendor to understand their plans for implementing the final FY 2025 payment rates and wage index updates along with the reporting of the FY 2025 CBSA and new 5-digit wage index codes for specific counties (if applicable) to your hospice claims, effective with dates of service billed October 1, 2024 through September 30, 2025.