Hospice Wage Index Changes for FY 2010 and Changes to Terminal Illness Certification Requirements

05 August 2009 Publication

American Health Lawyers Association

By R. Michael Scarano, Jr.

On July 30, 2009, CMS issued a final rule (Final Rule) that will result in a 1.4% increase in Hospice payments for Fiscal Year (FY) 2010. The Final Rule also revises the requirements for physician certifications of terminal illness, which are required for hospice coverage.

Payment Provisions in the Final Rule
Hospices serving Medicare beneficiaries will receive 1.4% increases in their payments for FY 2010. This increase is the net result of a 2.1% increase in the "hospital market basket," an indicator of input price increases, offset by a 0.7% decrease in payments to hospices due to CMS' revised policy to phase out its wage index budget neutrality adjustment factor (BNAF).

The Final Rule revises the phase out of the BNAF to occur over seven years. Under the revised policy, the BNAF will be reduced by 10% in FY 2010, and by 15% for the following six years, with the phase-out completed in FY 2016. CMS states that the more gradual phase-out provides it with an opportunity to consider the effects of a reduction in payments in the context of hospice payment reform, which is currently under consideration.

Changes in Physician Certification Requirements
The Final Rule also changes the requirements for physician certification and recertification, based on a recommendation by the Medicare Payment Advisory Commission (MedPAC). To be eligible for hospice coverage, a patient must be certified by a physician as having a life expectancy of no more than 180 days. MedPAC had noted an increasing proportion of hospice patients with stays exceeding 180 days and significant variation in the hospice length of stay. To address concerns regarding the accuracy of physician certification, MedPAC recommended and the Final Rule adopts a requirement that physician certifications and recertifications include a short narrative explanation of the clinical findings that support a life expectancy of six months or less. In the Proposed Rule, CMS had required that the narrative be included directly on the certification form.

However, in the Final Rule CMS will permit the narrative to either be included on the form or on an attachment to the form. The narrative must:

  • Be composed by the physician performing the certification or recertification and not by other hospice personnel;
  • Include, under the physician's signature, a statement indicating that by signing, the physician confirms that he/she composed the narrative based on his/her review of the patient's medical record or, if applicable, examination of the patient;
  • Reflect the patient's individual clinical circumstances, and should not contain checked boxes or standard language used for all patients; and
  • In the case of the initial certification, be composed and signed by the attending physician or the hospice medical director.

The Final Rule went on display on July 30, 2009, at the Office of the Federal Register's Public Inspection Desk and will be available under "Special Filings." It will appear in the August 6, 2009, Federal Register. On July 30, 2009, CMS issued a fact sheet, entitled "CMS Announces Final Wage Index Changes for the Medicare Hospice Benefit."

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