In Medicare Transmittal 271, dated August 4, 2004, CMS notified the Hospice industry of a 3.3% rate increase for fiscal year 2004-2005. The new rates will be effective October 1, 2004. These rates, as always, are adjusted each year by the projected increase in the medical expenditures category of the Consumer Price Index (CPI).
The following is a table which illustrates the changes:
The Hospice Cap has also been raised from $18,661.29 to $19,635.67.
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 2005 rates to all claims with dates on or after October 1, 2004 through September 30, 2005.
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 indexes 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 0.965, a national wage amount of $83.81 is multiplied by 0.965 to yield $80.88. This is added to the nonlabor portion of $38.17 to provide a local rate of $119.05.
General Inpatient Care. If the wage index for the hospice location is 1.005, the national wage amount of $347.32 is multiplied by 1.005 to yield $349.06. This is added to the nonlabor portion of $195.29 to provide a local rate of $544.35.