Fact sheet



The Centers for Medicare & Medicaid Services (CMS) today issued a proposed rule to update the Medicare Hospice Wage Index for fiscal year (FY) 2010.

Payments to Medicare participating hospices are estimated to decrease by approximately 1.1 percent in FY 2010.  The decrease in the hospice payments is the net result of a 3.2 percent reduction in payments due to the phase-out of a temporary adjustment used in calculating the wage index, partially offset by an estimated 2.1 percent increase in the hospital market basket indicator of costs.

The elimination of this adjustment with a 2-year phase-out would result in more accurate payments and saves Medicare $2.9 billion over five years.  The  phase-out would include a 75 percent reduction for FY 2010 and ultimately eliminate it in FY 2011. As such, hospice expenditures are estimated to be about $13 billion in 2010 for more than 3,000 for-profit and not-for-profit hospices across the country.

The Medicare Payment Advisory Commission (MedPAC) reports that through 2015, hospice expenditures are projected to grow at a rate that outpaces those projected for hospitals, skilled nursing facilities, physician services or home health care. 

In the Medicare Hospice Wage Index FY 2009 final rule, CMS laid out a plan to phase-out the budget neutrality adjustment factor (BNAF) over a three year period, with the first BNAF reduction of 25 percent in the fiscal year 2009 wage index.   With the passage of the American Recovery and Reinvestment Act, Congress suspended the BNAF reduction set for 2009. However, the legislation did not affect FYs 2010 and 2011. CMS plans to reduce the BNAF by 75 percent in FY 2010 and ultimately eliminate it in FY 2011. 

The BNAF was implemented in 1997 as part of an effort to change from an outdated wage index to a more current and accurate method for determining hospice payments.   In order to minimize disruption to services this special adjustment was applied. 

This proposed regulation would bring the Medicare hospice wage index more in line with that used for home health agencies, while maintaining the fiscal integrity of Medicare and allowing continued access to services for its beneficiaries. Both hospices and home health agencies are home-based benefits, which compete in the same labor markets.

The rule also proposes to adopt a MedPAC recommendation that would increase accountability in the physician hospice certification and recertification process.   MedPAC found an increasing proportion of hospice patients with stays exceeding 180 days and significant variation in hospice length of stay.  Therefore, CMS is proposing that hospice physicians who certify or recertify a beneficiary as terminally ill write a short narrative on the certification form.  The narrative would briefly describe the clinical evidence supporting a life expectancy of six months or less. 




The Medicare hospice benefit is intended to assist terminally ill patients, with a prognosis of six months or less if the disease runs its normal course, to remain in their homes. The focus of care shifts from curative to palliative care for relief of pain and symptom management. The law requires that hospice physicians certify that the patient is terminally ill, with a life expectancy of six months or less, and periodically recertify that the patient continues to be terminally ill.    


Payment is made to a hospice for each day that an individual elects the benefit.   Payment rates are adjusted to reflect local differences in area wage levels using a hospice-specific wage index, which is based on hospital wage data. Overall aggregate payments to a hospice are subject to a statutorily prescribed aggregate cap amount. 

The number of Medicare-certified hospices has increased significantly since 1997, up by over 70 percent.  The number of Medicare beneficiaries in hospice care has also grown rapidly from just over 400,000 in 1998 to close to one million in 2007.


Proposed Rule Details


This proposed rule also solicits comments on a number of potential policy changes for the future.  In order to increase accountability in the recertification process, the rule seeks comment on requiring a physician or nurse practitioner to visit every hospice patient after 180 days on the benefit, and every benefit period thereafter.


This proposed rule also solicits comments on broader payment reform, such as alternate methods to calculate the hospice aggregate cap. 


This proposed rule will be published at the Federal Register on April 24, 2009.  Comments are due 60 days after publication by June 22, 2009. A link to the proposed rule and accompanying documents will be available at: