CMS Sets Hospice Payment Update at 3.8 Percent FY2023

  • Finalizes Mitigation Policy for Significant Wage Index Losses
  • Responds to Comments on the Hospice Quality Reporting Program, Special Focus Program, and Requests for Information
  • Look for a NAHC webinar on the FY2023 Hospice Payment Update in the coming days!

On Wednesday, July 27, 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, a final rule governing hospice payment and other policies for fiscal year (FY) 2023. The final rule acknowledges higher inflationary trends and their anticipated impact on prices over the coming months and finalizes a 3.8 percent update for hospice payments for FY2023, a significant increase over the proposed update.

In response to the proposed rule earlier this year, NAHC and other hospice stakeholders expressed serious concern that the proposed payment update of 2.7 percent was grossly inadequate when considering the dramatic increases in costs experienced by hospices (and other providers) given the ongoing COVID-19 Public Health Emergency (PHE) and record-breaking growth in inflation over recent months.

The rule also finalizes CMS’ proposal to impose a 5 percent cap on wage index losses from one year to the next to mitigate the negative impact that can result from wage index changes.

“While we believe the 3.8 percent update will be helpful in addressing the financial pressures hospices are experiencing, we have continuing concerns that it will not fully address current cost inflation and will seek support for further increases that would cover the increasing labor and other costs affecting hospice providers,” said NAHC President William A. Dombi, in response to the release of the rule. “We also fully support CMS’ actions to finalize the 5 percent cap on wage index decreases from one year to the next but are disappointed that CMS did not address the significant reductions that affected many hospices in 2022 that are not remedied by a prospective application of the cap at this point.”

 In addition to payment related provisions, CMS responded to comments on the hospice quality reporting program, the special focus program that is part of hospice survey reforms and requests for information on health equity and advancing health information exchange.  Below is a summary of the final rule.

FY2023 Hospice Wage Index

As has historically been the case, 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), for hospice providers. 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 hospice wage index applicable for FY2023 is available on the CMS website HERE.

Permanent Cap on Wage Index Decreases

As part of the proposed FY2023 hospice payment rule, CMS proposed a permanent approach to smooth year-to-year changes in providers’ wage indexes by placing a 5 percent cap on all wage index decreases for FY2023 and 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 further proposed 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 five 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 five percent decrease from the previous FY’s wage index value after the application of the hospice wage index floor, then the five percent cap on wage index decreases would also be applied.

While NAHC and others suggested that CMS should examine other options for their potential impact – such as a lower cap value – and that CMS should also consider applying the five percent cap retroactive to FY2022 for those providers who had wage index reductions in FY2022 that exceeded five percent, CMS indicated it will finalize its proposed five percent cap on wage index reductions from year to year beginning October 1, 2022, for hospice providers, and will not implement other recommendations made as part of the rulemaking process.  CMS indicated it intends to examine the effects of this policy on an ongoing basis in the future in order to assess its appropriateness.

FY2023 Hospice Payment Update Jumps to 3.8 Percent

As part of the proposed FY2023 hospice payment rule, CMS projected a net payment update of 2.7 percent for hospices based on an estimated inpatient hospital market basket update of 3.1 percent less a productivity adjustment estimated at 0.4 percentage point.  In developing the final hospice payment rule, CMS utilized more recent data — IHS Global Inc.’s second quarter 2022 forecast with historical data through the first quarter of 2022 – that resulted in a final hospital market basket update of 4.1 percent.

As required by law, CMS must reduce the payment update by a productivity adjustment, which is now calculated to be 0.3 percentage point.  As a result, the final hospice payment update for FY2023 will be 3.8 percent, a significant increase over the proposed 2.7 percent update.

NAHC and other stakeholders provided comments on the proposed 2.7 percent update that conveyed great concerns regarding the financial strains being experienced by hospice providers in the current environment given the ongoing increased costs related to the PHE and the impact of inflation. As part of the final rule CMS acknowledges that the “recent higher inflationary trends have impacted the outlook for price growth over the next several quarters” and that CMS “now ha[s] an updated forecast of the price proxies underlying the market basket that incorporates more recent historical data and reflects a revised outlook”.

CMS notes that the 4.1 percent market basket update for hospitals that is used as the basis for the hospice update is the highest market basket update implemented in an inpatient hospital final rule going back to FY1998.

FY2023 Hospice Payment Rates

Following are the proposed and final hospice payment rates based on the proposed and final payment update percentages referenced above.  The rates must be further adjusted by the wage index values to determine the rates a hospice will receive.


FY2022 Payment Rates FY2023 Proposed Hospice Update Proposed FY2023 Payment Rates FY 2023 FINAL Hospice Update FINAL FY2023 Payment Rates
Routine Home Care (days 1-60) $203.40 1.027 $209.14 1.038 $211.34
Routine Home Care (days 61+) $160.74 1.027 $165.25 1.038 $167.00


FY2022 Payment Rates Proposed FY2023 Hospice Update Proposed FY2023 Payment Rates FY2023 FINAL Hospice Update FINAL FY2023 Payment Rates
Continuous Home Care full rate = 24 hours of care $1,462.52 ($60.94 per hour) 1.027 $1,505.61*  1.038 $1,522.04*($63.42 per hour)
Inpatient Respite Care $473.75 1.027 $486.88  1.038 $492.10
General Inpatient Care $1,068.28 1.027 $1,098.88  1.038 $1,110.76

*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 will be subject to a 2 percent reduction in their payment rates for FY2023

Hospice Cap Amount for FY2023

The hospice cap amount for the FY2023 cap year is $32,486.92.

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.

NAHC was one of the stakeholders strongly urging CMS to initiate a Technical Expert Panel (TEP) and appreciates that CMS indicated in the FY 2023 proposed rule that it would convene a TEP in CY 2022.

Outside of its response to comments in this final rule, CMS recently announced that nominations are open until August 12, 2022, for this TEP.

More information about the TEP and the nomination process can be found here.  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

Comments submitted to the proposed rule included recommendations to incorporate social determinants of health (SDOH) into the HOPE and consider the burden of the HOPE on hospices.  CMS will take the comments into consideration and reiterated in the final rule that it will continue to share information about the HOPE via sub-regulatory means, such as Open Door Forums (ODFs), Hospice Quality Reporting Program (HQRP) Forums, the CMS HQRP webpage, and other appropriate communications and will propose HOPE in future rulemaking.

The HOPE is currently undergoing beta testing to establish reliability, validity, and feasibility of the assessment instrument.  Outside of this final rule, CMS and its contractor, Abt Associates, are recruiting more hospices to participate in the beta testing.  Please see the recent NAHC Report article on this topic for additional information on the recruitment, and please consider participating if your organization is able.  Beta testing is national and will continue through 2022. CMS anticipates proposing HOPE in future rulemaking after testing and analyses are complete.

Future Quality Measure (QM) Development

CMS provided contemplated updates for hospice quality measure concepts based on future use of HOPE and administrative data in this proposed rule.  In its comments, NAHC reiterated its recommendations submitted previously urging CMS to develop codes or modifiers for telehealth visits in hospice and that it supports the recommendation by MedPAC that technology-based visits be reported on claims. Such visits should be incorporated into the HQRP.  CMS received additional support for the same from other commenters and indicates in this final rule that it will take these comments into consideration in future quality measure development.  CMS will also consider additional comments submitted about the need to include the other hospice services/disciplines such as spiritual care/chaplains in the HQRP.  CMS reiterated its commitment to the Meaningful Measures Initiative and Measures Management System Blueprint.  NAHC recommends that hospices not already familiar with the Initiative and Blueprint take the time to become acquainted with them as they are guiding documents for CMS’ quality reporting programs.

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 beginning with the August 2022 refresh. It seems there were a good number of comments submitted on various aspects of the CAHPS hospice survey star rating. Commenters are concerned about the impact of the overall response rates for the CAHPS hospice survey on the star rating as well as the impact of a seemingly low number of hospices having a star rating displayed on Care Compare. CMS responded that it continues to analyze data from the recent testing of a web-based mode for the CAHPS hospice survey and a shortened version of the survey for future changes to the survey.  Such changes would be part of future rulemaking.

CMS also shared that for the August 2022 reporting period, most hospices with publicly reported CAHPS Hospice Survey measure scores (68 percent) met the threshold of 75 completed surveys and were assigned a Star Rating. The vast majority of 2020 Medicare decedents (approximately nine out of ten) received care from hospices that received a Star Rating in August 2022. CMS also responded that it presents footnotes and other documentation on the Care Compare website to clearly indicate why hospices with smaller numbers of completed surveys do not have Star Ratings.

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

In both the FY 2022 and FY 2023 Hospice Wage Index and Rate Update proposed rules, CMS sought and received comments regarding health equity.  The comments in both years were generally supportive of gathering standardized patient assessment data elements and additional SDOH data to improve health equity.  Despite this general support NAHC and others submitted comments about the great variation in organizational readiness to develop and implement health equity initiatives and challenges in implementing a health equity framework and respective quality improvement activities.  These challenges include, but are not limited to, financial limitations, data collection burden, and workforce shortages.  Barriers to standardized collection of data related to health equity were also shared.

In response to CMS’ request for feedback on a structural composite measure, NAHC and others indicated general support but recommended a number of steps for CMS to take prior to implementation and publishing of such a measure. NAHC strongly urged CMS to convene a TEP to guide the development of the health equity structural composite measure. Commenters also requested that providers have an opportunity to review, analyze, and learn from results of the structural measure prior to CMS implementation.  NAHC is pleased that CMS recently announced that it will convene the recommended TEP. See the NAHC Report coverage of the announcement here

Advancing Health Information Exchange

CMS also sought feedback on initiatives to advance health information exchange.  Comments submitted were generally aligned with NAHC’s comments which:

  • urged CMS to use its existing authority to support hospices’ ability to purchase, implement, and maintain HIT that facilitates interoperable data exchange across all care settings
  • recommended CMS begin to set more specific expectations for hospices (and other PAC providers), as well as HIT and EHR vendor organizations, regarding SDOH data collection and sharing, and
  • work with ONC to develop more detailed guidance and education that explains the specific legal and operational protocols that can facilitate health information exchange between hospices and community based SDOH organizations.

CMS responded that it appreciates the comments provided on interoperability initiatives and will take these comments into consideration as it coordinates with Federal partners, including ONC, on these initiatives, and to inform future rulemaking.

CMS Sets Hospice Payment Update at 3.8 Percent FY2023

Finalizes Mitigation Policy for Significant Wage Index Losses Responds to Comments on the Hospice Quality Reporting Program, Special Focus Program, and Requests for Information Look for a NAHC webinar on the FY2023 Hospice Payment Update in the coming days! On Wednesday, July 27, 2022, the Centers for Medicare & Medicaid Services (CMS) issued Medicare Program; FY…