New rates effective October 1, 2006, reflect a 3.4% increase for the hospice industry. The new rates, as always, are subject to adjustments for local wage indexes, which CMS has yet to publish.

CMS made a slight change in how the Continuous care payments will be calculated. Beginning January 1, 2007, the payment for Medicare’s hospice payments for continuous care will be based on 15-minute increments of care. Continuous care payments make up a very small percentage of all hospice payments.

THE FOLLOWING IS A TABLE ILLUSTRATING THE CHANGES

Caution: CMS is recommending to hospice providers to split claims if the dates of service span separate fiscal years, e.g., September/October billing. If this is not done, the claim could well be reimbursed under the old rates with no subsequent adjustments to these claims. Medicare systems will apply the 2007 rates to all claims with dates on or after October 1, 2006 through September 30, 2007.

Calculating Your New Rates

As you are aware, the hospice rates have both a labor and nonlabor component. The table above breaks out the national labor and nonlabor portions of the new rates. The labor portion of the rates are “localized” by applying the hospice wage index to the labor portion of the rate. The hospice wage index is updated annually and published in the Federal Register. The wage amount component is adjusted (multiplied) by the wage index for the location of the place of service for routine home care and continuous home care and by location of the hospice agency for inpatient respite and general inpatient care to provide for the regional differences in wages.

A Few Examples:

Routine Home Care.  If the wage index for the beneficiary’s area is 1.0310, the national wage amount of $89.87 is multiplied by 1.0310 to yield $92.66. This is added to the nonlabor portion of $40.92 to provide a localized rate of $133.58.

General Inpatient Care.  If the wage index for the hospice location is 0.998, the national wage amount of $372.42 is multiplied by 0.998 to yield $371.68. This is added to the nonlabor portion of $209.40 to provide a local rate of $581.08.