DME Optimization in 2024: CMS Hospice Payment Update

Hospice providers often face challenges related to reimbursement rates, regulatory changes, and compliance issues. In 2024, it is crucial to stay informed about any updates from CMS that may impact hospice payments. Industry concerns may include changes in reimbursement methods, adjustments in payment rates, and compliance with changing regulations. Staying proactive and engaging with industry standards can help hospice providers navigate these challenges and ensure financial stability while delivering high-quality patient care. Let’s have a deep dive into the updates, concerns, and the way to address them:

CMS Hospice Payment Updates in 2024

In 2024, the U.S. Centers for Medicare & Medicaid Services (CMS) is providing a 3.1% increase in per diem payments for hospices. This marks a modest climb from the initially proposed 2.8% payment boost for 2024, announced in March. The finalized rule, published recently, includes several key details:

  • Payment Increase

Hospices will see a 3.1% increase in per diem payments for 2024. This results in a $780 million increase in hospice payments compared to Fiscal Year 2023.

  • Aggregate Payment Cap

The aggregate payment cap is raised to $33,494.01 for 2024, up from $32,486.92 set in 2023.

  • Quality and Compliance Updates

CMS has raised the annual payment reduction from 2 to 4 percentage points for hospices that fail to meet quality reporting requirements. Hospices not meeting these requirements will receive a four percentage point reduction to the annual hospice payment update percentage increase for the year.

  • Telehealth Regulations

The final rule addresses the changes in telehealth in a post-pandemic scenario. Temporary waivers during the COVID-19 public health emergency allowed hospices to virtually perform routine home care visits. Face-to-face recertification visits were also allowed through telehealth. Congress extended the recertification waiver through December 31, 2024.

The CMS 2024 Hospice Payment Update and Industry Concerns

Despite the 3.1% payment increase, many argue that the adjustment may not offset challenges such as inflation, wage pressures, etc. Stakeholders emphasized the need for higher reimbursement rates to support nonprofit and mission-driven hospice providers, particularly amid increased workforce costs and shortages.

Addressing Cost Optimization through DME Management

In response to concerns about insufficient payment increases, hospices are exploring cost optimization strategies, specifically focusing on DME management. The efficient management of durable medical equipment (DME) is critical to address rising operational costs. Here are key areas to consider:

  • Streamlined DME Ordering

Efficient ordering and tracking of equipment deliveries and pick-ups are vital to save clinicians time. Integration of DME management software with Electronic Medical Records (EMR) can streamline the process. For instance, there is a need to adopt an online ordering portal that integrates with EMRs, saving up to 10 hours per week and eliminating the need for manual communication methods.

  • Reduced Administrative Burden

Advanced technology and software solutions can automate billing adjudication and streamline administrative processes. The optimal approach involves a team of experts handling administrative tasks associated with DME orders, including billing, claims management, and compliance. This not only saves time but also minimizes the risk of human errors, allowing hospice staff to focus more on patient care.

  • Optimized Non-Formulary Management

Efficient management of non-formulary DME items is crucial for maximizing cost savings. Regular reviews of formulary and non-formulary items aligning with patient needs and industry best practices are emphasized. DME Evaluation service focuses on utilizing best practices, staff education, and utilization safeguards to maximize the value of each non-formulary item.

  • Competitive Pricing & Contract Negotiation

Strategic pricing and effective contract negotiation are crucial in achieving cost optimization in DME management. With the established relationships with DME providers, one can negotiate volume-based discounts, resulting in an average savings of 10-20%. This approach ensures favorable pricing and contract terms, allowing hospices to allocate financial resources efficiently.

  • Optimizing Equipment Selection

Careful consideration of each patient’s specific needs is needed to help select the most appropriate and cost-effective DME. Avoiding unnecessary or redundant equipment can lead to significant cost savings.

  • Staff Training and Education

Proper training for hospice staff on DME utilization, documentation, and billing/coding is crucial. This can reduce errors, improve compliance, and save costs by minimizing unnecessary expenses.

  • Regular Audits and Compliance Checks

Conducting regular audits of DME usage, DME billing and coding practices can help identify any compliance issues. Ensuring adherence to CMS guidelines and regulations will prevent potential financial penalties and support cost optimization.


While the CMS 2024 hospice payment update provides some financial relief, industry concerns persist about addressing mounting operating costs. Effective cost optimization through DME management becomes imperative to mitigate financial burdens and uphold the delivery of high-quality care to patients in need. To learn more about potential time and cost savings, hospices are encouraged to get free consultations from the outsourcing company such as 24/7 Medical Billing Services.

See also: Turning Challenges Into Cash Flow: DME AR Collection Efficiency Tips


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