What Hospice Agencies Need to Know

The changes found in the 2025 Hospice Final Rule go into effect on October 1, 2024, unless otherwise specified. In addition to updating hospice reimbursement rates, it brings about several changes related to the Hospice Quality Reporting Program (HQRP), resolves discrepancies between Conditions of Participation (CoP) and payment requirements, and distinguishes election statements from notices of election (NOEs).

Payment Updates

Rate Changes

CMS publishes two different sets of hospice rates: those for hospitals that report quality metrics, and those that do not meet reporting thresholds. For those not meeting quality reporting requirements, the base rate is 4 percent lower.

In the 2025 Hospice Final Rule, the base rates for hospice levels of care increase by 2.9 percent from the prior year. The final rule also adjusts the hospice cap amount by an equal percentage, resulting in a new annual cap of $34,465.34.

Hospice leaders continue to express concerns that the rate increases do not adequately consider the current inflationary environment and workforce shortages across the industry. CMS notes the inherent lag time in receiving cost reports and other data used in the determination of rates. Even with the rate increase, hospices will still need to manage costs to preserve their margins.

Wage Index Changes

Hospice Medicare reimbursement is calculated by adjusting the labor portion of the base rate by applying a local wage index so that the resulting rate reflects local market pricing. The 2025 Final Rule adopts the Office of Management and Budget’s (OMB) statistical area delineations, which were updated as a result of the 2020 U.S. Census, and ultimately impact the wage index. What this means for hospices is that the wage index numbers impacting their per diem rates may change. CMS applies a 5 percent limit to wage index reductions from year to year, mitigating the risk for hospices whose rates declined, so that they can make operational adjustments. NHPCO offers a more detailed explanation of the OMB changes.

Election Statements vs. NOEs

CMS has further clarified the differences between the patient’s signed Election Statement and the Notice of Election (NOE). The 2025 Hospice Final Rule explains that the purpose of the Election Statement is to inform patients and ensure that they understand their decision to elect hospice. The Notice of Election on the other hand has a five calendar day time frame for submission because its purpose is to prevent payment to other providers which would be precluded by the patient being on hospice service. The changes emphasize that the Election Statement and Notice of Election are separate and distinct items, with separate purposes and requirements.

Certifications of Terminal Illness

The 2025 Hospice Final rule also reconciles conflicting language found in the Conditions of Participation and payment requirements regarding who can certify a patient as terminally ill, noting that hospice providers, surveyors, and accrediting bodies have had differing interpretations. The Conditions of Participation did not previously include a physician member of the IDG team, while the payment requirements did. The new rule allows the Medical Director, an IDG physician, or a physician designee to certify terminal illness, thereby broadening the Conditions of Participation to align with the payment requirements.

Quality Reporting

The 2025 Final Rule addresses upcoming changes to the Hospice Quality Reporting Program (HQRP).

HOPE Tool

Of note, the new Hospice Outcomes and Patient Evaluation (HOPE) assessment tool replaces the Hospice Item Set (HIS). This change does not go into effect until October of 2025.

Unlike HIS, which collects data at admission and discharge, HOPE collects data at multiple times throughout a hospice stay, such as upon admission, at the HOPE Update Visit (HUV), and at discharge. With HOPE, CMS aims to gather patient data during the hospice stay in order to improve the quality of care. HOPE also includes the following updated or expanded domains: sociodemographic, diagnoses, symptom impact assessment, skin conditions, and imminent death. Of note,

• Hospice providers will need to partner with a software vendor to submit HOPE records to CMS.
• To avoid reimbursement penalties, providers need to submit HOPE data. As was the case with HIS, hospice providers do not submit the required HOPE assessment data to CMS for at least 90 percent of their patients will have their base rate reduced by 4 percent.

CAHPS Survey Changes

The final rule also makes changes to CAHPS by adding a web-mail mode or email invitation to a web survey, with follow-up for non-responders.  Additional changes include the simplification and shortening of the survey as well as prenotification. The CAHP changes go into effect in April 2025, and the shorter, electronic version is expected to increase response rates. CMS does not expect the changes to have any significant impact on the Hospice Special Focus Program (SFP) that monitors hospices identified as poor performers based on select indicators.

In Summary

Overall, the 2025 Hospice Final Rule is expected to increase payments to hospices by $790 million in 2025. Major changes include changes to the wage index portion of the payment calculation, due to recent OMB changes from the 2020 census, and changes to the Hospice Quality Reporting Program. Additionally, the new rule reconciles discrepancies between the Conditions of Participation and payment requirements to include the medical director, designated physician, or IDG physician among those who can certify a patient as terminally ill, and also further distinguishes the Election Statement from the Notice of Election, which serve distinct purposes.

Author’s Note: Views, information, and guidance in this blog are intended for information only. We are not rendering legal, financial, accounting, medical, or other professional advice. Alora disclaims any liability to any third party and cannot make any guarantee related to the content.

References:

The 2025 Medicare Hospice Final Rule

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