The 2027 hospice payment rates likely will change based on a technical error by the U.S. Centers for Medicare & Medicaid Services (CMS).
The agency made a mistake that affected the Fiscal Year 2027 hospice wage index and has recalculated those numbers. CMS is in the process of developing a correction notice to update the wage index and hospice payment rates for all four levels of care. This will not require another proposed rule.
“We have discovered a technical error that affected the FY 2027 hospice wage index,” CMS indicated on its website. “As a result of this technical error, we have recalculated the FY 2027 hospice wage index values for all [core-based statistical areas (CBSAs)] and rural areas which required updates to the wage index standardization factors and subsequently the national payment rates for each level of hospice care.”
Through the wage index, CMS continues to use geographic wage data to adjust the labor and non-labor portions of hospice care payments on a budget-neutral basis.
In its 2027 final hospice rule CMS issued a 2.3% base rate increase, which was slightly lower than the 2.4%the agency initially proposed. The rate hike is expected to become effective on Oct. 1. However, the agency may now adjust that percentage. CMS has given no timeline for completing that work.
This development could create problems for hospice providers, according to Arlene Maxim, senior vice president of clinical services at the post-acute tech company Axxess.
“Many organizations have already used the originally published Final Rule information to prepare budgets, reimbursement projections, rate sheets and operational plans for the new fiscal year,” Maxim wrote in an internal company memo shared with Hospice News. “Billing departments, consultants and software vendors may also have begun preparing systems for the Oct. 1 change.”
Maxim recommends that hospices do the following:
- Verify the corrected wage index applicable to every location from which your hospice operates
- Recheck FY 2027 revenue projections
- Ask their billing company, EMR vendor or reimbursement software provider whether the corrected FY 2027 hospice wage index and payment rates have been incorporated into their systems for Oct. 1.
- Review payment amounts for Routine Home Care, Continuous Home Care, Inpatient Respite Care and General Inpatient Care.
- Keep copies of the corrected CMS materials used by your organization. Make sure finance, billing, operations and leadership are working from the same updated source.
“Hospices should now cover themselves because CMS has put all these numbers together, and of course we’re going into September already, and those rates are going to be effective Oct. 1,” Maxim told Hospice News. “‘[Hospices] have got a short window of time to pull all of this together and make sure their projections are correct.”
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