Annually, the Centers for Medicare & Medicaid Services (CMS) releases proposed payment and policy rules that reflect the expected payment update for Medicare reimbursement. If Congress does not supersede existing stature payment updates are based on a formula in current law. That was the case for SNFs with a proposed 2.5% payment update and hospice with a 2.7% payment update for FY 2020. These numbers could change in the final rule, but typically little if at all, based on updated market data.

Last year, the Bipartisan Budget Act of 2018 made significant changes to the Medicare home health payment system, including a budget neutral transition to a 30-day unit of service beginning on January 1, 2020. As part of this law, Medicare rates to home health providers under the Patient-Driven Groupings Model (PDGM) will be reduced by 6.42% ($1,873.91 for a 30-day unit if service to $1,753.68) due to the behavioral assumptions allowed to reach budget neutrality.

Payment Update

Current law sets forth a formula that guides CMS’ proposed payment update that can be changed if Congress passes legislation to change the existing formula. In the proposed rule the payment update for fiscal year (FY) 2020 is 2.7% based on the estimated inpatient hospital market basket update of 3.2% minus the multifactor productivity adjustment estimated at 0.5%. CMS indicates this to be a $540 million increase in payments. However, that is a simplistic overview of the payment adjustment for this rule as it affects hospice rates.

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