Facts You Need to Know About the Hospice Final Rule

January 6, 2023

The votes have been cast, decisions made, and regarding the hospice final rule of the fiscal year (FY) 2023. After e Nov. 1st health industry ruling, the Centers for Medicare & Medicaid Services (CMS) will implement several changes across hospice care, a service focused on the care, comfort, and quality of life for patients with a terminal illness nearing death. This essential industry affects millions of people and patients annually.

What these CMS final rule 2023 updates will mean for you as a primary care provider, hospice patient, or end-of-life care provider at a hospital will vary greatly. To help make this transition period less complicated, we’ve outlined some key facts regarding the hospice final rule.

Updated Hospice Payment rates

CMS must perform annual payment updates (APUs) for hospice using current inpatient hospital market baskets, reflecting reduced productivity adjustments made by the Affordable Care Act. Market baskets are fixed-weight indexes used by CMS to track the changing prices of goods and services hospitals need to buy for medical care. Following the final rule restriction of budget neutrality, CMS posted the updated FY 2023 hospice payment rate of 3.8%.

CMS asserted it’s right to reasonably adjust these payments in the future with recent quality data. CMS used 2021 data reports to update 2023 payment rates after seeing no difference between the updated reports, placing the FY 2023 hospice annual payment cap at $32,486.92. Hospice providers who submit the quality data required to make these rulings will see a 2% reduction in their annual market basket updates for 2023.

Adjustments to Hospice Wage Index

CMS uses the hospice wage index to determine Medicare payment rates for hospice services within a geographical area based on average wage levels. CMS then determines if payment adjustments are appropriate every year using hospital cost reports collected by the Office of Management and Budget (OMB). Following the budget-neutral requirements of the hospice final rule, CMS has implemented an aggregate expenditure cap of 5% on negative wage index changes.

CMS finalized this because the labor metrics OMD uses are subject to fluctuating decreases due to uncontrollable geographical factors affecting income levels where a hospice operates. To help protect and stabilize rates in heavily impacted areas experiencing those issues, CMS declared that regardless of any future OMD changes, the geographical wage index could not be less than 95% of the rate calculated in the previous FY. This is a significant win for hospice patients as it will soften the impact of year-to-year payment changes because CMS doesn’t foresee areas experiencing decreases greater than 5%.

Impacts on the Quality of Hospice Reporting

The Affordable Care Act has hospices collect and report data under quality measures chosen by the Secretary of the Department of Health and Human Services (HHS) Since 2014, the preferred quality measures have been issued through the Hospice Quality Reporting Program (HQRP). Hospice locations failing to comply with HQRP guidelines will now see an APU payment reduction of 4% instead of the former 2% starting in 2024.

One significant benefit of the final rule is the development of a new hospice patient assessment instrument (HOPE) system. HOPE will be a multidisciplinary instrument employed by nurses, social workers, mental health professionals, and primary care physicians (PCPs) to raise a patient’s quality of life while in . CMS plans for HOPE to standardize the collection of quality clinical data and real-time patient assessments through beta testing and derivatives designed to shape future payment updates.

New Methodology Data Collection

CMS has begun experimenting with updates to their Consumer Assessment of Healthcare Providers and Systems (CAHPS®), which allows them to survey caregiver feedback when making decisions. Specifically, they’ve added a web-based tool with three modes of engagement: e-mail, telephone, and a hybrid of the two. CMS hopes to improve response rates by revising and shortening their surveys with more personalized content. Caregivers responded well to having to submit feedback.

After the 2023 hospice final rule is implemented, CMS will start publicly reporting on this data and issue star ratings for hospice locations. This ensures patients can compare hospice locations and choose a provider based on performance and standards of care necessary for a high star rating.


When change comes to Medicare, it’s usually more focused on slightly adjusting the scales. But this final rule has leaned harder towards Hospice car. While the initial proposed 2.7% was very generous, the finalized payment will now see an $825 million (3.8%) increase in yearly hospice payments. Plus, CMS has kept all wage index changes budget-neutral—a big win for end-of-life care. These ruling grants patients an easy-to-understand tool for comparing different hospice locations based on high and low performance, and select the services best for them. CMS rewards hospices with higher star ratings (4-5 stars) with an annual bonus, allowing them to invest in more patient benefits without negatively impacting their budget.

Above all else, this final rule has convinced CMS to take a more active role in listening and adapting to the needs of hospice patients. CMS didn’t try to oppose any additional HQRP quality measures and welcomed different ways to report clinical data. This data will now be publicly reported so hospice patients can clearly see which center will give them the best care possible The policy changes implemented during 2023 will redefine and shape the standards of hospice patient care.

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