In March, I wrote about the MedPAC recommendations to change the Medicare Hospice program and payment system.  Yesterday, CMS announced the final (2010) payment for Hospice as well as the implementation structure of some key MedPAC recommendations.  The final rule will be published August 6th in the Federal Register.

  • For FY 2010 (commencing October 1), the Medicare payment for Hospice will inflate 1.4%.  This increase is a net of a 2.1% increase in the “hospital market basket”, offset by a 0.7% reduction via the CMS plan to phase out the Budget Neutrality Factor (BNAF).
  • CMS has revised, from its 2009 final rule, the BNAF phase out to seven years.  In 2010, the BNAF is reduced by 10% and then from 2011 to 2016, the reduction is 15% in each year.
  • CMS also adopted the MedPAC recommendation requiring physicians to write a more expanded narrative supporting the diagnosis and six months or less of life expectancy.

The trend evident in this CMS rule is a continued adoption policy of the MedPAC recommendations released this year and corresponding to previous year’s releases.

In an unrelated publication, the OIG has indicated its review and audit targets for Hospices for its upcoming year.

  • In continuing work for 2009, the OIG will review Medicare Hospice care provided to nursing home residents for services and appropriateness. As a result of an increase of spending from $3.5 billion to $7 billion on hospice care provided to nursing home residents between 2001 and 2004, the OIG has concluded that these patients (nursing home) when covered as Hospice beneficiaries, receive 46% fewer nursing and aid services than Hospice patients residing at home.  The OIG will conduct record reviews of the hospice services provided to nursing home patients to determine if the plan of care, the services provided, and the payment are appropriate.
  • Beginning in 2009, the OIG will review physician billing practices for Medicare Hospice beneficiaries.  Under the Medicare Hospice benefit, Physician services are covered under the Hospice payment.  Physicians that are affiliated with, contracted or employed by the Hospice are to receive their payment for services provided via the Hospice as a part of the payment the Hospice received from Medicare.  The OIG review is targeted at determining whether “double billing” for services provided to Hospice patients is occurring and to what extent.
  • Beginning in 2009, the OIG will review the utilization trends associated with the Medicare Hospice benefit. When first created under TEFRA in 1982, the benefit provided for 210 days of care.  When the program was amended via the Balanced Budget Act of 1997, CMS expanded the amount of coverage to an “unlimited’ number of days, as qualified by prognosis and diagnosis for the patient.  Since the 1997 amendment, the number of diagnoses covered has expanded dramatically as has the length of stay in the Hospice program.  The OIG intends to examine the characteristics of stays, diagnoses and utilization, particularly between for-profit and non-profit Hospice providers.


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