The Centers for Medicare & Medicaid Services late today released a final rule for Medicare hospice providers that provides a net payment update of 1.1%, or $160 million, in fiscal year 2016. The increase includes a 2.4% market-basket update, which is reduced by Affordable Care Act-mandated adjustments of 0.5 percentage point and 0.3 percentage point; a 0.7 percentage point decrease to account for updated wage data and the final installment of the budget-neutrality adjustment factor phase-out; and a 0.2 percentage point increase for new area wage index boundaries. In addition, CMS implements a new two-tiered system for per diem rates for “routine hospice care,” the most common among the four levels of care, intended to more accurately align hospice payments with intensity of services. Specifically, CMS creates a higher rate of $187.54 for the first 60 days of care, since costs are greater in the earlier portion of a hospice episode, and a lower rate of $145.14 for days 61 and later. The rule also creates an add-on payment for certain “routine hospice care” provided during the last seven days of life to address the more resource-intensive services associated with that week. For hospice patients who are discharged and readmitted to hospice within 60 days, the initial hospice days will be counted when determining which per diem rate should apply for routine hospice care. CMS will implement both the dual-rate structure and the new payment add-on in a budget-neutral manner, but is delaying their effective date until Jan. 1, 2016. Other provisions in the final rule will take effect Oct. 1.