FY2023 Hospice Payment Rule Proposes 2.7% Update, Mitigation Policy for Significant Wage Index Losses

  • Also Provides Updates to Quality Reporting Program, Hospice Special Focus Program and Requests Input on Achieving Health Equity
  • REGISTER NOW: NAHC Webinar on Wednesday, April 13 at 1:00PM Eastern to go over the FY2023 Hospice Payment Rule. Webinar is sponsored by NetHealth.

On Wednesday, March 30, 2022, the Centers for Medicare & Medicaid Services (CMS) issued Medicare Program; FY 2023 Hospice Wage Index and Payment Rate Update and Hospice Quality Reporting Requirements (https://www.federalregister.gov/public-inspection/2022-07030/medicare-program-fy-2023-hospice-wage-index-and-payment-rate-update-and-hospice-quality-reporting), a proposed rule governing hospice payment and other policies for fiscal year (FY) 2023.

The proposed rule was issued much earlier than is customary, and — likely due to the continuing Public Health Emergency (PHE) and the various other changes implemented over the last two years – is quite limited in scope. However, CMS has taken the opportunity presented by the rule to propose some useful policy changes, including a permanent mitigation policy to smooth the impact of year-to-year changes in hospice payments resulting from changes in the hospice wage index.

Another important advancement in the rule is that CMS indicates that it will initiate a hospice Technical Expert Panel (TEP) during CY 2022 to help provide input on the Hospice Special Focus Program (SFP) enacted as part of the hospice survey reforms included in the Consolidated Appropriations Act of 2021.

CMS further indicates it will include a proposal implementing the Hospice SFP in the FY 2024 Hospice rulemaking proposed rule. The National Association for Home Care & Hospice (NAHC) has regularly encouraged CMS to implement a wage index mitigation policy, and has pressed for a TEP to assist with development of the Hospice SFP.

“CMS’ plan to convene a technical expert panel (TEP) to assist with development of the Hospice Special Focus Program (SFP) and its expressed intent to seek public notice and comment on the program as part of next year’s rule sends a clear message that CMS is committed to developing a SFP that is tailored specifically to the hospice program,” said NAHC President William A. Dombi. “We applaud these actions. Additionally, we have expressed serious concerns over the years regarding the significant financial hardships that some providers have been subjected to by way of routine changes to the wage index values, so we are pleased that CMS sees the wisdom in taking action to mitigate the negative impact of these changes on a permanent basis.”

Proposed FY2023 Hospice Wage Index

CMS will utilize the FY2023 pre-floor, pre-reclassified wage index for hospital cost reporting periods beginning on or after October 1, 2018 and before October 1, 2019 (FY 2019 cost report data).  The wage index value will be 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), and based on the geographic location of the facility for beneficiaries receiving General Inpatient Care (GIP) or Inpatient Respite Care (IRC).  The proposed hospice wage index applicable for FY2023 is available on the CMS website at the following location:  https://www.cms.gov/medicaremedicare-fee-service-paymenthospicehospice-regulations-and-notices/cms-1773-p.

Proposed Permanent Cap on Wage Index Decreases

Across the years when wage index values have undergone changes that could have a significant negative impact on hospice or other provider payments, CMS has utilized various methods to limit the immediate impact of those changes to allow providers to prepare for the financial impact of the wage index changes.  These methods include applying a 50/50 blend of the existing wage index value and the prospective wage index value for the first year or (as used more recently) a 5 percent cap on wage index decreases for the first year in which changes to the wage index values are being applied.   Given the potential that wage index changes have to create instability and significant negative impacts on certain providers even when labor market areas do not change, as part of the proposed FY2023 hospice payment rule, CMS is proposing a permanent approach to smooth year-to-year changes in providers’ wage indexes by placing a 5 percent cap on all wage index decreases in future years, regardless of the reason for the decrease.   Under this change, a geographic area’s wage index would not be less than 95 percent of its wage index calculated in the prior FY.

CMS is further proposing that if a geographic area’s prior FY wage index is calculated based on the 5 percent cap, then the following year’s wage index would not be less than 95 percent of the geographic area’s capped wage index in the prior FY.  The 5 percent cap will be implemented in a budget neutral manner and would be applied after the application of the hospice wage index floor.  If there is a 5 percent decrease from the previous FY’s wage index value after the application of the hospice wage index floor, then the 5 percent cap on wage index decreases would also be applied.  CMS intends to examine the effects of this policy on an ongoing basis in the future in order to assess its appropriateness.

Proposed FY2023 Hospice Payment Update Percentage

The proposed hospice payment update percentage for FY2023 is based on the proposed inpatient hospital market basket update of 3.1 percent less a productivity adjustment currently estimated at 0.4 percentage point, for a net update of 2.7 percent.  It should be noted that the hospital market basket update and the productivity adjustment values are subject to change and will likely be adjusted in the final hospice payment rule which will be issued this summer.

Proposed FY2023 Hospice Payment Rates

Following are the proposed hospice payment rates based on the estimated payment update percentage referenced above.  The rates must be further adjusted by the wage index values to determine the rates a hospice will receive.  (Please see the proposed rule for further explanation of the SIA Budget Neutrality Factor and the Wage Index Standardization Factor.)


FY2022 Payment Rates SIA Budget Neutrality Factor Wage Index Standardization Factor Proposed FY2023 Hospice Payment Update Proposed FY2023 Payment Rates
Routine Home Care (days 1-60) $203.40 1.0004 1.0008 1.027 $209.14
Routine Home Care (days 61+) $160.74 1.0003 1.0007 1.027 $165.25


FY2022 Payment Rates Wage Index Standardization Factor Proposed FY2023 Hospice Payment Update Proposed FY2023 Payment Rates
Continuous Home Care full rate = 24 hours of care $1,462.52 ($60.94 per hour) 1.0024 1.027 $1,505.61*
Inpatient Respite Care $473.75 1.0007 1.027 $486.88
General Inpatient Care $1,068.28 1.0016 1.027 $1,098.88

*The service-intensity add-on payment hourly rate will be equal to the CHC daily rate divided by 24

**Payment rates for hospices that fail to meet the Hospice Quality Reporting Program obligations sill be subject to a 2 percent reduction in their payment rates for FY2023

Proposed Hospice Cap Amount for FY2023

The proposed hospice cap amount for the FY2023 cap year is $32,142.65.  As with the payment rates, the cap amount is subject to change.

Update on Hospice Survey Reforms

The Consolidated Appropriations Act of 2021 required CMS to implement various hospice survey reforms. In the CY 2022 Home Health Prospective Payment System (HH PPS) final rule, CMS addressed these reforms, and as outlined in that final rule, CMS stated it would take into account comments received and work on a revised proposal, seeking additional collaboration with stakeholders to further develop the methodology for the SFP that was part of the reforms. CMS will initiate a hospice TEP in CY 2022. Accordingly, CMS plans to use the TEP findings to further develop a proposal on the methodology for establishing the hospice SFP, and plans to include a proposal implementing a SFP in the FY 2024 Hospice rulemaking proposed rule.

Hospice Outcomes & Patient Evaluation Tool – HOPE

This rule proposes no new quality measures but proposes updates on already-adopted measures and provides an update on the Hospice Outcomes & Patient Evaluation (HOPE) instrument. CMS also utilizes this proposed rule to remind hospices of the current Hospice Quality Reporting Program (HQRP) requirements.  This instrument is designed to support the hospice conditions of participation (CoPs), including hospices’ quality assessment and performance improvement (QAPI) and provide quality data to calculate outcome and other types of quality measures. In this proposed rule, CMS states its primary objectives for HOPE are to:

  • provide quality data for the HQRP requirements through standardized data collection;
  • support survey and certification processes; and
  • provide additional clinical data that could inform future payment refinements

Supporting survey and certification processes is a new objective of the HOPE likely related to the hospice survey reforms initiated from the Consolidated Appropriations Act of 2021 which stem from considerable concerns about the quality of hospice cared raised by reports published by the Health and Human Services (HHS) Office of the Inspector General (OIG) in 2019.

CMS states that HOPE supports care planning, quality improvement efforts, and health and safety of patients enrolled in Medicare-certified hospices. It will include key items from the Hospice Item Set (HIS) and demographics like gender and race and be completed by nursing, social work and spiritual care staff. Some HIS items will be modified for inclusion in HOPE to increase specificity.

After going through cognitive, pilot and alpha testing, the HOPE is currently undergoing beta testing to establish reliability, validity, and feasibility of the assessment instrument.  Beta testing is national with three distinct disciplinary assessments.  It began in late fall 2021 and will continue through 2022. CMS anticipates proposing HOPE in future rulemaking after testing and analyses are complete.

CMS has engaged NAHC and other national associations and stakeholders throughout the development of HOPE and states its plans to continue this engagement through sub-regulatory and communications channels (I.e., Medicare Learning Network (MLN) and list serve communications, Open Door Forums, etc.). In particular, CMS plans to continue to host HQRP Forums to allow hospices and other interested parties to engage in the latest updates and ask questions on the development of HOPE and related quality measures.

Future Quality Measure (QM) Development

CMS provides contemplated updates for hospice quality measure concepts based on future use of HOPE and administrative data in this proposed rule and seeks public comment from hospices on health equity initiatives and a structural composite measure concept to inform future measure development.

CMS convened a Technical Expert Panel (TEP) to inform the development of quality measures. This TEP met twice in 2021 and considered HOPE-based process measures intended to (1) evaluate the rate at which hospices’ use specific processes of care; (2) assist in reducing variation in care delivery; and (3) determine hospices’ compliance with practices that are expected to improve outcomes. The TEP also considered potential areas for future quality measure development. CMS continues to consider developing hybrid quality measures that could be calculated from multiple data sources: for example, claims, assessments (HOPE), or other data sources. Hybrid quality measures allow for a more comprehensive set of information about care processes and outcomes that can be calculated using claims data alone. See the 2021 HQRP TEP Summary Report for more information.

Updates to the CAHPS Hospice Survey Participation Requirements for the FY 2023 APU and Subsequent Years

CMS recently conducted a mode experiment with the goal of testing the effects of adding a web-based mode to the CAHPS Hospice Survey, specifically the impact on survey response rates and scores. The survey currently has three approved modes without any web component (mail, telephone, and mail with telephone follow-up). Additionally, the test will allow for examination of the effects of a shortened survey (removing existing survey items) on response rate and scores; assessment of the measure properties of a limited number of supplemental survey items suggested by stakeholders; and calculation of item-level mode adjustments for the shortened survey in the currently-approved modes of CAHPS Hospice Survey administration. Overall, CMS sampled 15,000 eligible caregivers from around 50 hospices over a six- to seven-month period. CMS continues to analyze the results of the mode experiment and will share results with stakeholders. Any changes to the CAHPS Hospice Survey will be proposed in future rulemaking.

CAHPS Hospice Survey Star Rating

As finalized in the FY 2022 Hospice Wage Index and Payment Rule Update rule, star ratings will be publicly reported on Care Compare on Medicare.gov beginning with the August 2022 refresh. CMS began a “dry run” of the star rating by allowing hospices to see a star rating in preview reports during the November 2021 and March 2022 preview periods for the February 2022 and May 2022 updates of Care Compare on Medicare.gov.  Again, the hospice star rating will not be published on Care Compare until August 2022 so the star rating seen by hospices in the November 2021 and March 2022 preview periods will not be published. These previews are for the purpose of allowing hospices to experience a “dry run” of the CAHPS Hospice Survey Star Rating process. The star rating that will be published on Care Compare in August 2022 has a preview period of May 2022.

Request For Information Related to The HQRP Health Equity Initiative and Structural Composite Measure

CMS is working to advance health equity by designing, implementing, and operationalizing policies and programs that support health for all the people served by CMS programs, eliminating avoidable differences in health outcomes experienced by people who are disadvantaged or underserved, and providing the care and support that enrollees need to thrive.  In the FY 2022 Hospice Wage Index and Rate Update final rule, CMS sought and received comments regarding health equity.  The comments were supportive of gathering standardized patient assessment data elements and additional Social Determinants of Health (SDOH) data to improve health equity. Comments also advocated for education efforts for beneficiaries, providers, and stakeholders on the benefits of collecting and reporting demographic and social risk factor data. Many comments were received about the use of standardized patient assessment data elements in the hospice setting to assess health equity and SDOH, some of which raised concerns there may be unintended consequences. Many commenters noted that hospice patients have different goals of care than non-hospice patients, which does not align with standardized data elements for patient assessment. Commenters encouraged CMS to only utilize certain aspects of standardized data elements for patient assessment (specifically, Z-codes 55-65) in collecting health equity data. For more details, see the summary of public comments received in the FY 2022 Hospice Wage Index and Rate Update final rule. Given the value of the comments thus far and the ongoing development of activities to improve health equity, CMS is soliciting public comment on the following questions:

  • What efforts does your hospice employ to recruit staff, volunteers, and board members from diverse populations to represent and serve underserved populations? How does your hospice attempt to bridge any cultural gaps between your personnel and beneficiaries/clients? How does your hospice measure whether this has an impact on health equity?
  • How does your hospice currently identify barriers to access in your community or service area? What are barriers to collecting data related to disparities, social determinants of health, and equity? What steps does your hospice take to address these barriers?
  • How does your hospice collect self-reported data such as race/ethnicity, veteran status, socioeconomic status, housing, food security, access to interpreter services, caregiving status, and marital status used to inform its health equity initiatives?
  • How is your hospice using qualitative data collection and analysis methods to measure the impact of its health equity initiatives?

In addition, CMS is considering a structural composite measure based on information already collected by hospices. Specifically, the structural composite measure could include organizational activities to address access to and quality of hospice care for underserved populations. The composite structural measure concept could include hospice reported data on hospice activities to address underserved populations’ access to hospice care. For example, a hospice could receive a point for each domain where data are submitted to a CMS portal, regardless of the hospice’s action in that domain (such as, reporting whether or not the hospice provided training for board members, leaders, staff and volunteers in culturally and linguistically appropriate services (CLAS), health equity, and implicit bias). The data could reflect the hospice’s completed actions for each corresponding domain (for a total of three points) in a reporting year. A hospice could submit information such as documentation, examples, or narratives to qualify for the measure numerator.

CMS is seeking comment on how to score a domain for a hospice that submitted data reflecting no actions or partial actions in the given domain. Examples of the domains CMS is considering are described below. CMS seeks comment on each of these domains, including specific suggestions on items that should be added, removed, or revised. Furthermore, CMS is soliciting public comments on publicly reporting a composite structural health equity quality measure; displaying descriptive information on Care Compare from the data hospices provide to support health equity measures; and the impact of the domains and quality measure concepts on organizational culture change.

  • Domain 1: Hospice commitment to reducing disparities is strengthened when equity is a key organizational priority. Candidate domain 1 could be satisfied when a hospice submits data on their actions regarding the role of health equity and community engagement in their strategic plan. Hospices could self-report data in the reporting year about their actions in each of the following areas, and submission of data for all elements could be required to qualify for the measure numerator
    • Hospice attests whether its strategic plan includes approaches to address health equity in the reporting year.
    • Hospice reports community engagement and key stakeholder activities in the reporting year.
    • Hospice reports on any attempts to measure input from patients and caregivers about care disparities they may experience and recommendations or suggestions
  • Domain 2: Training board members, leaders, staff and volunteers in culturally and linguistically appropriate services (CLAS)27, health equity, and implicit bias is an important step hospices take to provide quality care to diverse populations. Candidate domain 2 could focus on hospices’ diversity, equity, inclusion and CLAS training for board members, employed staff, and volunteers by capturing the following self-reported actions in the reporting year. Submission of relevant data for all elements could be required to qualify for the measure numerator.
    • Hospice attests whether employed staff were trained in CLAS and culturally sensitive care mindful of social determinants of health (SDOH) in the reporting year. Example data include specific training programs or training requirements for staff.
    • Hospice attests whether it provided resources to staff and volunteers about health equity, SDOH, and equity initiatives in the reporting year. Examples include the materials provided, webinars, or learning opportunities.
  • Domain 3: Leaders and staff could improve their capacity to address disparities by demonstrating routine and thorough attention to equity and setting an organizational culture of equity. This candidate domain could capture activities related to organizational inclusion initiatives and capacity to promote health equity. Examples of equity-focused factors include proficiency in languages other than English, experience working with populations in the service area, experience working on health equity issues, and experience working with individuals with disabilities. Submission of relevant data for all elements could be required to qualify for the measure numerator.
    • Hospice attests whether equity-focused factors were included in the hiring of hospice senior leadership, including chief executives and board of trustees, in the previous reporting year.
    • Hospice attests whether equity-focused factors were included in the hiring of hospice senior leadership, including chief executives and board of trustees, is more reflective of the services area patient than in the previous reporting year.
    • Hospice attests whether equity-focused factors were included in the hiring of direct patient care staff (for example, RNs, medical social workers, aides, volunteers, chaplains, or therapists) in the previous reporting year.
    • Hospice attests whether equity focused factors were included in the hiring of indirect care or support staff (for example. administrative, clerical, or human resources) in the previous reporting year.

Advancing Health Information Exchange

CMS also provided updates on initiatives to advance health information exchange. The Department of Health and Human Services (HHS) has a number of initiatives designed to encourage and support the adoption of interoperable health information technology and to promote nationwide health information exchange to improve health care and patient access to their digital health information.

Upcoming Webinar on the Hospice Rule

Remember, there will be a NAHC Webinar on Wednesday, April 13 at 1:00PM Eastern to go over the FY2023 Hospice Payment Rule. REGISTER NOW!