To:       NHPCO Members
From:  NHPCO Health Policy Team
Date:   July 24, 2012

FY2013 Hospice Payment Rates

Summary at a Glance:

The Centers for Medicare and Medicaid Services has released the FY2013 Medicare Hospice payment rates. These rates show an increase of 1.6% over FY2012.  The cap amount is set at $25,377.01 for the cap year ending October 31, 2012.

The FY2013 wage index is needed to project rates for individual CBSAs and rural areas.  It is not yet published, but will publish in the Federal Register sometime between now and October 1, 2012. (NHPCO will produce its annual State by State Wage Index Spreadsheets and Wage Index Calculator for members once the wage index for FY2013 is published.)

FY2013 Hospice Payment Rates

The Centers for Medicare and Medicaid Services (CMS) has published the FY2013 rates for hospice, effective October 1, 2012. The rates show an increase of 1.6% over FY2012. The calculation includes the following:

 This rate increase is for care and services furnished on or after October 1, 2012 through September 30, 2013.

Cap Amount

The latest hospice cap amount for the cap year ending October 31, 2012 is $25,377.01.

Budget Neutrality Adjustment Factor (BNAF)

These payment rates do not include the rate reduction due to the Budget Neutrality Adjustment Factor (BNAF). The FY2013 BNAF rate adjustment is a multiplier to the wage index and will already be included in the wage index when it is published for FY2013 later this summer. This is the fifth year of a seven-year phase out of the BNAF, and is projected to reduce these payment rates by 0.6% this year.

The multiplier will be the same for all CBSAs and rural areas, but the wage index values for a given area change from year to year and could impact, either positively or negatively, the wage index and the applicable rates.

FY2013 Wage Index

As noted above, CMS has not yet released the FY2013 wage index, but expects to sometime in the next several weeks. Once it is released, NHPCO will produce State by State Wage Index Spreadsheets and a Wage Index Calculator so that a hospice can project its rates for FY2013.

Other Issues That Could Impact FY2013 Rates

Sequestration

When the Super Committee failed to produce $1.2 trillion in savings for the budget, the enforcement mechanism to reach savings, called sequestration, was triggered. The sequestration includes automatic reductions split 50/50 between domestic and defense spending. The sequestration process protects Social Security, Medicare beneficiaries, and low-income programs from any cuts, but Medicare providers – including hospices – are at risk for a 2% reduction in our market basket updates starting in January 2013. The current thinking is that Congress will try to undo these broad, across-the-board cuts after the November elections (during the ‘lame duck’ session), but it is by no means a certainty that hospice and other Medicare providers will be spared. NHPCO continues to monitor the situation and will provide updates for the hospice community as available.

Quality Reporting

October 1, 2012 is the beginning of data collection for the FY2014 annual payment year. While mandatory quality reporting does NOT impact the FY2013 payment rates, hospices that do not meet the quality reporting deadlines during the spring of 2013 (January 31, 2013 and April 1, 2013) will be penalized with a 2% hospital marketbasket reduction for the FY2014 payment year, beginning on October 1, 2013. (For more information on the deadlines, see the timeline posted on the NHPCO website.)

If you have questions about the FY2013 rates or other issues in this Regulatory Alert, the NHPCO Regulatory Team can answer your questions. Please contact us at regulatory@nhpco.org for more information or answers to your questions.

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