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CMS proposes FY 2025 Medicare payment rates for hospice, IPFs

Medicare payment rates would increase by 2.6% for hospices and IPFs, respectively, in FY 2025 as CMS calculates the impact of several policy changes.

Jacqueline LaPointe
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Published: 01 Apr 2024

CMS proposes a 2.6% hospice payment update for the fiscal year (FY) 2025, which would add about $705 million to payments versus this year. The newly proposed rule (CM-1810-P) states the update comes from a 3.0% market basket percentage increase less a 0.4 percentage point productivity adjustment. However, hospices that do not submit the required quality data would face a penalty, resulting in a -1.4% update.

Additionally, CMS proposes a hospice cap amount of $34,364.85 for FY 2025. The cap amount limits overall Medicare payments per patient annually and would be 2.6% greater than the FY 2024 rate of $33,494.01 if finalized as is.

The proposed rule would also adopt the most recent statistical area delineations per the Office of Management and Budget (OMB). The policy would modify existing cored-based statistical areas, which impact the geographic wage index for Medicare payments.

However, hospices affected by the change to their geographic wage index by the policy would be able to apply for a 5%-cap on any decrease to the wage index from the previous year. The cap was finalized in FY 2023 to prevent a geographic area’s wage index from dipping below 95% of its previous wage index, CMS explains in the proposed rule.

Hospice Conditions of Participation (CoPs) are also covered in the latest proposed payment rule, with CMS looking to update language discrepancies around medical director and physician designee CoPs and a physician member of the interdisciplinary group (IDG) in the payment requirements for the certification of the terminal illness and the admission to hospice care. Regulation text changes would also clarify requirements around the election statement and NOE in the CoPs to more clearly differentiate the separate requirements for the two.

In terms of the Hospice Quality Reporting Program (HQRP), the proposed rule would add two new process measures — Timely Reassessment of Pain Impact and Timely Reassessment of Non-Pain Symptom Impact — starting in FY 2028. CMS says these measures would use data from the new HOPE instrument.

The rule would also adopt and implement the HOPE-level data collection tool starting in FY 2025, replacing the existing Hospice Item Set (HIS) structure.

CMS is also asking for stakeholder feedback through the rule on potential data collection items related to social determinants of health, specifically housing instability, food insecurity, utility and transportation challenges, and how they are relevant to the hospice setting.

Finally, the proposed rule would update the Hospice CAHPS Survey following 2021’s mode experiment. If finalized as is, the changes would include the addition of a web-mail mode, shortened survey, modifications to survey administration protocols to include a prenotification letter and extended field period, a two-item Care Preferences measure, revisions to the existing Hospice Team Communication measure and Getting Hospice Care Training measure and removal of three nursing home items and additional survey items.

Inpatient Psychiatric Facilities payment update

CMS also proposes updates to the Inpatient Psychiatric Facilities Prospective Payment System (IPF PPS) for FY 2025, including a key Medicare payment update.

The proposed rule would update the IPF PPS payment rates by 2.7% based on the proposed IPF market basket increase of 3.1% for 2021 reduced by a 0.4 percentage point productivity adjustment. Although, CMS says it will update the payment rates if more recent data, such as a market basket update, becomes available.

The proposed rule would also update the outlier threshold so the estimated payments would remain at 2.0 percent of total payments in FY 2025.

Together, CMS anticipates a 2.6%, or $70 million, increase in IPF Medicare payments in FY 2025 compared to this year's total payments.

If finalized as is though, the proposed rule would update the way CMS determines IPF PPS payment rates for psychiatric hospitals and psychiatric units. Specifically, the rule would use IPF patient-level adjustment factors, including the Medicare Severity Diagnosis Related Groups (MS–DRGs) assignment of the patient’s principal diagnosis, selected comorbidities, patient age and the variable per diem adjustments, to determine rates for these facilities in the future.

The IPF PPS already taps into these, as well as facility-level, adjustments to determine rates under the Medicare payment system. However, the proposed rule would update the regression model to determine the adjustments, which would reflect costs and claims data from 2019 through 2021. The changes would be budget neutral.

CMS also recently found through its quest to update IPF PPS rates that the use of electroconvulsive therapy (ECT) has increased since 2005, especially compared to the current ECT per treatment payment. Therefore, the proposed rule would increase the per-treatment rate to $660.30 from $385.58 to ensure patient access.

Additionally, the proposed rule would update the core-based statistical area labor market areas for the IPF PPS wage index as defined by OMB and training providers from rural to urban areas based on these new delineations. The providers transitioning to urban areas would receive two-thirds of the rural adjustment in FY 2025, followed by one-third in FY 2026 and no adjustment in FY 2027.

Other proposed payment policy changes in the rule include clarification of requirements around reporting ancillary charges and all-inclusive status eligibility. CMS also wants to hear from stakeholders on the IPF PPS patient assessment instrument made mandatory by the Consolidated Appropriations Act of 2023 and the facility-level adjustment factors used to determine IPF PPS rates.

CMS also includes updates to the IPF Quality Reporting Program in the proposed rule. Among the updates is the addition of one claims-based measure, the 30-Day Risk-Standardized All-Cause Emergency Department Visit Following an Inpatient Psychiatric Facility Discharge, or IPF ED Visit measure. IPFs would also need to submit patient-level quality data on a quarterly versus annual basis if the rule is finalized as is.

IPFs that fail to submit the required data to the IPF Quality Reporting Program face a 2.0 percentage point reduction in their annual payment update.

The proposed changes would be effective starting Oct. 1, 2024, through Sept. 30, 2025, otherwise known as FY 2025.

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