[Federal Register Volume 60, Number 21 (Wednesday, February 1, 1995)]
[Rules and Regulations]
[Pages 6013-6021]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-2194]



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DEPARTMENT OF DEFENSE

Office of the Secretary

32 CFR Part 199

RIN-0720-AA18
[DoD 6010.8-R]


Civilian Health and Medical Program of the Uniformed Services 
(CHAMPUS); Hospice Care

AGENCY: Office of the Secretary, DoD.

ACTION: Final rule.

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SUMMARY: This final rule revises DoD 6010.8-R which implements the 
Civilian Health and Medical Program of the Uniformed Services. The rule 
establishes a hospice benefit for the terminally ill that offers an 
alternative to traditional therapeutic treatment which may no longer be 
appropriate or desirable. Hospice care is palliative rather than 
curative, generally emphasizing home care rather than institutional 
care, and treating the social, psychological, spiritual, and physical 
needs of the entire family.

EFFECTIVE DATE: This final rule is effective June 1, 1995.

ADDRESSES: Office of the Civilian Health and Medical Program of the 
Uniformed Service (OCHAMPUS), Program Development Branch, Aurora, CO 
80045-6900.

FOR FURTHER INFORMATION CONTACT:
David Bennett, Program Development Branch, OCHAMPUS, Aurora, Colorado 
80045-6900, telephone (303) 361-1094.

SUPPLEMENTARY INFORMATION: In FR Doc. 93-21950, appearing in the 
Federal Register on September 10, 1993 (58 FR 47692), The Office of the 
Secretary of Defense published for public comment a proposed rule 
establishing a hospice benefit under CHAMPUS.

Background

    The Defense Authorization Act for FY 1992-93, Public Law 102-190, 
directed CHAMPUS to provide hospice care in the manner and under the 
conditions provided in section 1861(dd) of the Social Security Act (42 
U.S.C. 1395x(dd)). This section of the Social Security Act sets forth 
coverage/benefit guidelines, along with certification criteria for 
participation in a hospice program. Since it is Congress' specific 
intent to establish a benefit identical to that of Medicare, CHAMPUS 
has adopted the provisions currently set out in Medicare's hospice 
coverage/benefit guidelines, reimbursement methodologies (including 
national hospice rates and wage indices), and certification criteria 
for participation in [[Page 6014]] the hospice program (42 CFR Part 
418, Hospice Care).
    Under these provisions CHAMPUS will provide palliative care to 
individuals with prognoses of less than 6 months to live if the illness 
runs its normal course. The benefit is based upon a patient and family-
centered model where the views of the patient and family or friends 
figure predominantly in the care decisions. This type of care 
emphasizes supportive services, such as pain control and home care, 
rather than cure-oriented services provided in institutions that are 
otherwise the primary focus under CHAMPUS.
    CHAMPUS will use the following national Medicare hospice rates for 
services provided on or after October 1, 1994, through September 30, 
1995, along with the wage and nonwage components of each:

----------------------------------------------------------------------------------------------------------------
                                                                             National       Wage       Nonwage  
                                                                               rate      component    component 
----------------------------------------------------------------------------------------------------------------
Routine Home Care........................................................       $90.51       $62.19       $28.32
Continuous Home Care.....................................................       528.30       362.99       165.31
Inpatient Respite........................................................        93.63        50.68        42.95
General Inpatient........................................................       402.67       257.75       144.92
----------------------------------------------------------------------------------------------------------------

    The rates are based on a cost-related prospective payment method 
subject to a ``cap'' amount and will be adjusted annually by the 
Medicare hospital market basket inflation factor for services rendered 
on or after October 1 of each fiscal year. These national payment rates 
will be adjusted for regional wage differences by using appropriate 
Medicare area wage indices. The hospice will be reimbursed for an 
amount applicable to the type and intensity of the services furnished 
to the beneficiary on a particular day. The Medicare statutory cap 
amount for the cap year ending October 31, 1994, is $12,846. Annual 
adjustments to the cap amount will be the same as Medicare.
    Hospice care is viewed as the most cost-effective form of treatment 
for the terminally ill. The benefit lowers costs by reducing or 
eliminating inpatient days, unnecessary tests, and expensive curative 
therapies. The national rate system is designed to reimburse the 
hospice for the costs of all covered services related to the treatment 
of the beneficiary's terminal illness, including the administrative and 
general supervisory activities performed by physicians who are 
employees of, or working under arrangements made with, the hospice.

Review of Comments

    As a result of the publication of the proposed rule, the following 
comments were received from interested associations and agencies.
    Comment 1. One commentor felt that it would be unfair for OCHAMPUS 
to apply Medicare aggregate reimbursement limitations to individual 
hospices since the CHAMPUS beneficiary population is only a fraction of 
the Medicare population. It was their contention that the volume of 
Medicare patients is sufficiently large to allow for the development of 
average inpatient stay, and average cost per patient, whereas the 
volume of CHAMPUS patients in any one hospice would be so small as to 
potentially result in a skewed average; e.g., a hospice may have a 
small percentage of CHAMPUS patients who either have longer lengths of 
stay or require substantial amounts of inpatient care.
    As was previously stated, it was Congress' intent for CHAMPUS to 
provide hospice care in the manner and under the conditions provided in 
section 1861(dd) of the Social Security Act (42 U.S.C. 1395x(dd)). 
Paragraph (2)(A)(iii) of this section requires assurance that the 
aggregate number of inpatient days does not exceed 20 percent of the 
aggregate number of days during the cap period. The only practical way 
of assuring this requirement is to incorporate it as part of the 
overall reimbursement methodology.
    The aggregate limitations also lend themselves to the basic hospice 
philosophy of emphasizing home care over institutional care. The cap 
and inpatient limitations provide a financial incentive for home care 
delivery under the hospice all-inclusive prospective payment system. 
Elimination of such incentives might inadvertently result in 
overutilization of inpatient care (both respite and general inpatient 
care).
    There could also be the assumption that since CHAMPUS beneficiaries 
constitute a younger population, their hospice care would be more 
conducive to a non-institutional setting (home health care setting) 
than the traditional Medicare population. Factors such as patient 
mobility and availability of family/care-givers would facilitate 
treatment in the home setting, thus reducing total expenditures and 
inpatient days for CHAMPUS beneficiaries.
    Although the commenter's assumption that the vast majority of 
individual hospices will service only a very small number of CHAMPUS 
beneficiaries may be valid, there may be those with significant volumes 
due to the concentration of military personnel in select geographic 
locations. These programs may provide care for the vast majority of 
CHAMPUS beneficiaries electing hospice care.
    Comment 2. As part of the previous comment, it was recommended that 
the proposed CHAMPUS regulation, section 199.14, paragraph 
(g)(5)(D)(ii), be modified to make it clear that inpatient days in 
excess of the 80-20 rule be paid as routine home care days when 
calculating the amount refunded to CHAMPUS.
    Procedural guidelines have been incorporated under section 199.14, 
paragraph (g)(4) describing the calculation of amounts in excess of the 
inpatient limitation which must be refunded to CHAMPUS. Paragraph 
(g)(4)(i)(C) of this section specifies that the actual inpatient days 
in excess of the limitation (20 percent of the aggregate inpatient 
days) will be paid at the routine home rate when calculating the amount 
refunded to CHAMPUS.
    Comment 3. One commentor felt that CHAMPUS should not require 
hospice programs to collect copayments for outpatient drugs/biologicals 
and respite care since their collection was optional under Medicare and 
would impose an undue administration burden on those hospice programs 
which do not currently have a billing system in place for copayments.
    Section 199.14, paragraph (g)(8) has been revised to make the 
collection of cost-shares of outpatient drugs/biologicals and respite 
care option under CHAMPUS.
    Comment 4. Several commentors questioned the accuracy of the 
calculations in Table IV of the Supplementary Information section of 
the rule.
    There was a transposition error in the example. The adjusted wage 
component of $58.91 calculated in the first line of the table should 
have been added to the [[Page 6015]] nonwage component of $39.50 to 
arrive at the adjusted rate of $98.41. The adjusted rate should then 
have been divided by .95 to figure the rate for inpatient respite care 
including the coinsurance ($103.59) and multiplied by .05 to arrive at 
a cost-share of $5.18.
    Comment 5. Several commenters felt that the combining of core 
service and 24-hour availability requirements caused confusion and led 
to the interpretation that drugs and biologicals, as non-core service, 
did not have to be routinely available on a 24-hour basis.
    The core service and 24-hour availability requirements have been 
separated in order to alleviate the apparent confusion over drugs and 
biologicals. Refer to section 199.4 paragraphs (e)(19)(ii) through (iv) 
for revisions.
    Comment 6. One commentor pointed out the draft CHAMPUS regulatory 
language does not say exactly what the Medicare regulations do 
concerning core services, substantially all of which must be routinely 
provided by employees of the hospice, and those services the hospice 
must make routinely available on a 24-hour basis. The commentor felt 
that these subtle distinctions/differences might cause confusion and 
differing interpretations.
    Section 199.4, paragraphs (e)(19)(ii) and (iv) have been revised to 
reflect current Medicare language regarding core service and 24-hour 
availability requirements.
    Comment 7. Several commentors indicated that section 199.4, 
paragraphs (e)(19)(iv) and (v)(B)(1) of the proposed rule did not say 
that the benefit periods may be elected separately at different times 
as specified in the Medicare hospice regulations. It was recommended 
that language be added to the referenced sections to clarify that 
breaks between benefit periods will also be allowed under CHAMPUS.
    Section 199.4, paragraph (e)(19)(vi)(B)(1) has been revised to 
indicate that periods of care may be elected separately at different 
times.
    Comment 8. One commentor expressed concern that the preamble 
language, as well as the proposed regulatory language, left uncertainty 
regarding whether OCHAMPUS will adopt future changes to the Medicare 
hospice benefit for its own CHAMPUS benefit so that the two benefits 
remain nearly identical. It was felt that a divergence in standards 
between the two programs could cause confusion and adversely affect a 
hospice's ability to serve CHAMPUS patients.
    It is OCHAMPUS' intent to maintain a hospice benefit similar to, if 
not identical to, that of Medicare. This includes the adoption of all 
future changes in the Medicare hospice conditions of participation.
    Comment 9. One commentor felt that it was important that OCHAMPUS 
confirm that it intends to use the most current Medicare rates to 
reimburse hospices for services provided to CHAMPUS beneficiaries and 
to adopt changes in the Medicare reimbursement methodology as they 
occur; e.g., Medicare's adoption of an updated, more accurate wage 
index. The commentor recommended that regulatory language be added to 
section 199.14, paragraph (g) confirming CHAMPUS' intent to adopt 
future changes in the Medicare reimbursement methodology.
    It is CHAMPUS' intent to use the most current Medicare rates to 
reimburse hospices for services to CHAMPUS beneficiaries and to adopt 
all changes to the Medicare reimbursement methodology as they occur. 
Regulatory language has been added to section 199.14 confirming 
CHAMPUS' intention of adopting future changes in the Medicare 
reimbursement methodology (refer to section 199.14, paragraph (g)(2)).
    Comment 10. Several commentors felt there was an inconsistency 
between the preamble and proposed regulatory language regarding the 
patient's initial certification. It was pointed out that while section 
199.4, paragraph (e)(19)(v)(A) requires the patient's initial 
certification to be provided in writing by the patient's attending 
physician (if there is one) and the hospice medical director or a 
physician member of the hospice interdisciplinary group, the preamble 
indicated that written certification must be provided in writing by the 
attending physician and/or the hospice medical director or a physician 
member of the hospice interdisciplinary group. The commentor felt that 
the use of ``and/or'' incorrectly suggested that either the attending 
physician or the medical director's certification is sufficient for the 
initial certification.
    The patient's initial 90-day certification must be provided in 
writing by both the patient's attending physician (if there is one) and 
the hospice medical director or physician member of the hospice 
interdisciplinary group. For subsequent periods the only requirement is 
certification by the medical director of the hospice or the physician 
member of the hospice interdisciplinary group.
    Comment 11. One commentor recommended that the definition of 
hospice care at Sec. 199.2, paragraph (b) and at Sec. 199.4, paragraph 
(e)(19) be amended to add ``palliative care'' to the sentence: ``This 
type of care emphasizes [palliative care] and supportive service * * 
*.''
    The recommendation has been adopted and incorporated into the final 
rule.
    Comment 12. Several commentors recommended that the term ``nursing 
home'' be changed to Medicaid-certified nursing facility in Sec. 199.4, 
paragraph (e)(19)(i)(H).
    The commentors' recommendation was adopted and incorporated into 
the final rule.
    Comment 13. One commentor felt that a cross-reference to the 
Medicare home health agency conditions of participation, 42 CFR 484.36, 
would be helpful in defining the term ``qualified'' aides in 
Sec. 199.4, paragraph (e)(19)(i)(E).
    A cross-reference has been provided in a note following Sec. 199.4, 
paragraph (e)(19)(i)(E) which will help in defining the term 
``qualified'' home health aide.
    Comment 14. One commentor felt that the last sentence in proposed 
Sec. 199.4, paragraph (e)(19)(i)(F) was not necessary and would only 
cause confusion since each of the covered services enumerated in 
Sec. 199.4, paragraphs (e)(19)(i) (A)-(H) are covered only if the 
service or item is included in the patient's plan of care.
    The last sentence has been deleted from the final rule.
    Comment 15. One commentor pointed out that Medicare policy defines 
``terminal'' as six months or less if the disease runs its normal 
course.
    The definition of ``terminal'' has been expanded wherever cited in 
the final regulation.
    Comment 16. One commentor recommended that the requirement that the 
hospice must maintain professional management of the patient at all 
times be expanded to include ``and in all settings.''
    The recommendation was adopted and incorporated into the final 
rule.
    Comment 17. One commentor wanted clarification regarding the word 
``participating'' in Sec. 199.4, paragraph (e)(19)(i)(H).
    A hospice program must be Medicare approved (i.e., a state agency 
must certify to the Department of Health and Human Services that a 
hospice meets the conditions of participation established in 42 CFR 
Part 418--Hospice Care) in order to participate in the CHAMPUS program. 
The hospice will only be allowed to participate (enter into a 
participation agreement with CHAMPUS) if there is proof that it is a 
Medicare approved facility. Respite care is the only type of inpatient 
care that may be provided in a nursing [[Page 6016]] facility (formally 
known as an intermediate care facility--ICF). A nursing facility must 
be certified by a state Medicaid agency as well as meet the conditions 
for participation under 42 CFR 418.100 in order to participate in 
CHAMPUS.
    Comment 18. One commentor pointed out that CHAMPUS' requirement 
that short-term inpatient care be provided in Medicare participating 
facilities precludes/prohibits the coverage of inpatient care in VA 
hospitals.
    Hospice care will not be allowed in VA hospitals under the 
provisions of this rule.
    Comment 19. One commenter wanted to know if CHAMPUS intended to use 
the Health Care Financing Administration's (HCFA) wage index 
adjustments for hospice reimbursement.
    Yes, CHAMPUS intends to use HCFA's wage index adjustments for 
hospice reimbursement. These wage indices have been in use since the 
inception of the Medicare hospice benefit in 1983, and are different 
than those used in calculation of CHAMPUS DRGs and mental health per 
diems.
    Comment 20. Several editorial comments were received from one of 
CHAMPUS' administrative agencies.
    All of these comments were adopted and incorporated into the final 
rule.

Summary of Regulatory Modifications

    The following modifications were made as a result of suggestions 
received during the public comment period:
    (1) The core services and 24-hour availability requirements were 
separated out as distinct provisions;
    (2) the collection of cost-shares by individual hospices for 
outpatient drugs/biologicals and respite care was made optional under 
CHAMPUS; (3) regulatory language was added confirming CHAMPUS's 
intention of adopting future changes in Medicare reimbursement 
methodology; (4) procedures were added for changes in designation of 
hospice programs; (5) exceptions were provided for waiver of payment of 
other basic program services related to treatment of terminal illness; 
(6) a note was added regarding the information required on the 
treatment plan; and (7) payment provisions were modified to allow 100 
percent payment of CHAMPUS allowed charges for hospice physicians 
providing direct patient care.

Provider Notification

    The CHAMPUS contractors will be sending out letters along with 
CHAMPUS participation agreements, on a one time basis, to all hospice 
programs certified to participate in Medicare within their 
jurisdictional areas. The letters will provide information regarding 
the new hospice benefit and encourage participation under CHAMPUS. A 
hospice program will be certified based solely on its appearance on a 
current Medicare listing. No additional information will be required 
except for the signed CHAMPUS participation agreement which accompanied 
the notification letter. Thereafter, hospice programs will have to 
contact the CHAMPUS contractor responsible for claims processing within 
their geographical area for certification under CHAMPUS. The hospice 
will have to provide documentation that it is certified to participate 
in Medicare (i.e., it meets all Medicare conditions of participation 
(42 CFR Part 418) relative to CHAMPUS beneficiaries) and that it and 
its employees are licensed in accordance with applicable Federal, State 
and local laws and regulations. The hospice will be provided with a 
participation agreement for signature if the above requirements are 
met. An agreement with a hospice is not time-limited and has no fixed 
expiration date. The agreement remains in effect until such time as 
there is a voluntary or involuntary termination.

Regulatory Procedures

    Executive Order 12866 requires that a regulatory impact analysis be 
performed on any significant action. A ``significant action'' is 
defined as one which would result in an annual effect on the national 
economy of $100 million or more, or which would have other substantial 
impacts.
    The Regulatory Flexibility Act (RFA) requires that each federal 
agency prepare, and make available for public comment, a regulatory 
flexibility analysis when the agency issues a regulation which would 
have a significant impact on a substantial number of small entities.
    This final rule is not a major rule under Executive Order 12866. 
The changes set forth in this final rule are minor revisions to 
existing regulation. The changes made in this final rule involve an 
expansion of CHAMPUS benefits. In addition, this final rule will have 
minor impact and will not significantly affect a substantial number of 
small entities. In light of the above, no regulatory impact analysis is 
required.
    We certify that this final rule has been reviewed under the 
provisions of the October 23, 1991, Executive Order on Civil Justice 
Reform. This final rule meets all applicable standards provided in that 
executive order.
    This rule does impose minimal information collection requirements 
to include the following: (1) Total number of CHAMPUS inpatient hospice 
days; (2) total number of CHAMPUS hospice days (both inpatient and home 
care); (3) total number of CHAMPUS beneficiaries electing hospice care; 
(4) total reimbursement for CHAMPUS inpatient care; and (5) total 
reimbursement for all CHAMPUS hospice care (both inpatient and home 
care).
    The fact that all CHAMPUS-approved hospice programs are subject to 
Medicare reporting requirements (i.e., they must be Medicare certified 
in order to receive CHAMPUS reimbursement), will tend to minimize the 
administrative burden imposed by this rule. The hospice will already 
have an established data collection system in place for developing 
these annual reports. Overall, resource allocation (administrative 
time) will be minimal since the number of CHAMPUS hospice beneficiaries 
would be disproportionately low compared to the number of Medicare 
patients. In other words, since the facility already has to collect, 
arrange, and submit the data on a majority of its patients, the 
administrative costs and/or burden of reporting CHAMPUS hospice 
patients would be minimal. The hospice would have to expand only the 
data collection parameters (data on CHAMPUS beneficiaries) in order to 
meet the requirements under this rule.
    The rule represents an expansion of benefits under the CHAMPUS 
program, resulting in certification of a new provider category 
(hospice). Although hospice programs are accustomed to the proposed 
reporting requirements and would not view this as an administrative 
intrusion, the final rule has been prepared for review by the Executive 
Office of Management and Budget under authority of the Paperwork 
Reduction Act of 1980 (44 U.S.C. 3501-3520.

List of Subjects in 32 CFR Part 199

    Claims, handicapped, health insurance, and military personnel.

    Accordingly, 32 CFR part 199, is amended as follows:

PART 199--CIVILIAN HEALTH AND MEDICAL PROGRAM OF THE UNIFORMED 
SERVICES (CHAMPUS)

    1. The authority citation for Part 199 continues to read as 
follows:

    Authority: 5 U.S.C. 301; 10 U.S.C. 1079, 1086.

    2. Section 199.2(b) is amended by adding a definition for ``hospice 
care'' [[Page 6017]] and ``respite care'' in alphabetical order to read 
as follows:


Sec. 199.2  Definitions.

* * * * *
    (b) * * *
    Hospice care. Hospice care is a program which provides an 
integrated set of services and supplies designed to care for the 
terminally ill. This type of care emphasizes palliative care and 
supportive services, such as pain control and home care, rather than 
cure-oriented services provided in institutions that are otherwise the 
primary focus under CHAMPUS. The benefit provides coverage for a humane 
and sensible approach to care during the last days of life for some 
terminally ill patients.
* * * * *
    Respite care. Respite care is short-term care for a patient in 
order to provide rest and change for those who have been caring for the 
patient at home, usually the patient's family.
* * * * *
    3. Section 199.4 is amended by adding new paragraph (e)(19) to read 
as follows:


Sec. 199.4  Basic program benefits.

* * * * *
    (e) * * *
    (19) Hospice care. Hospice care is a program which provides an 
integrated set of services and supplies designed to care for the 
terminally ill. This type of care emphasizes palliative care and 
supportive services, such as pain control and home care, rather than 
cure-oriented services provided in institutions that are otherwise the 
primary focus under CHAMPUS. The benefit provides coverage for a humane 
and sensible approach to care during the last days of life for some 
terminally ill patients.
    (i) Benefit coverage. CHAMPUS beneficiaries who are terminally ill 
(that is, a life expectancy of six months or less if the disease runs 
its normal course) will be eligible for the following services and 
supplies in lieu of most other CHAMPUS benefits:
    (A) Physician services.
    (B) Nursing care provided by or under the supervision of a 
registered professional nurse.
    (C) Medical social services provided by a social worker who has at 
least a bachelor's degree from a school accredited or approved by the 
Council on Social Work Education, and who is working under the 
direction of a physician. Medical social services include, but are not 
limited to the following:
    (1) Assessment of social and emotional factors related to the 
beneficiary's illness, need for care, response to treatment, and 
adjustment to care.
    (2) Assessment of the relationship of the beneficiary's medical and 
nursing requirements to the individual's home situation, financial 
resources, and availability of community resources.
    (3) Appropriate action to obtain available community resources to 
assist in resolving the beneficiary's problem.
    (4) Counseling services that are required by the beneficiary.
    (D) Counseling services provided to the terminally ill individual 
and the family member or other persons caring for the individual at 
home. Counseling, including dietary counseling, may be provided both 
for the purpose of training the individual's family or other care-giver 
to provide care, and for the purpose of helping the individual and 
those caring for him or her to adjust to the individual's approaching 
death. Bereavement counseling, which consists of counseling services 
provided to the individual's family after the individual's death, is a 
required hospice service but it is not reimbursable.
    (E) Home health aide services furnished by qualified aides and 
homemaker services. Home health aides may provide personal care 
services. Aides also may perform household services to maintain a safe 
and sanitary environment in areas of the home used by the patient. 
Examples of such services are changing the bed or light cleaning and 
laundering essential to the comfort and cleanliness of the patient. 
Aide services must be provided under the general supervision of a 
registered nurse. Homemaker services may include assistance in personal 
care, maintenance of a safe and healthy environment, and services to 
enable the individual to carry out the plan of care. Qualifications for 
home health aides can be found in 42 CFR 484.36.
    (F) Medical appliances and supplies, including drugs and 
biologicals. Only drugs that are used primarily for the relief of pain 
and symptom control related to the individual's terminal illness are 
covered. Appliances may include covered durable medical equipment, as 
well as other self-help and personal comfort items related to the 
palliation or management of the patient's condition while he or she is 
under hospice care. Equipment is provided by the hospice for use in the 
beneficiary's home while he or she is under hospice care. Medical 
supplies include those that are part of the written plan of care. 
Medical appliances and supplies are included within the hospice all-
inclusive rates.
    (G) Physical therapy, occupational therapy and speech-language 
pathology services provided for purposes of symptom control or to 
enable the individual to maintain activities of daily living and basic 
functional skills.
    (H) Short-term inpatient care provided in a Medicare participating 
hospice inpatient unit, or a Medicare participating hospital, skilled 
nursing facility (SNF) or, in the case of respite care, a Medicaid-
certified nursing facility that additionally meets the special hospice 
standards regarding staffing and patient areas. Services provided in an 
inpatient setting must conform to the written plan of care. Inpatient 
care may be required for procedures necessary for pain control or acute 
or chronic symptom management. Inpatient care may also be furnished to 
provide respite for the individual's family or other persons caring for 
the individual at home. Respite care is the only type of inpatient care 
that may be provided in a Medicaid-certified nursing facility. The 
limitations on custodial care and personal comfort items applicable to 
other CHAMPUS services are not applicable to hospice care.
    (ii) Core services. The hospice must ensure that substantially all 
core services are routinely provided directly by hospice employees; 
i.e., physician services, nursing care, medical social services, and 
counseling for individuals and care givers. Refer to paragraphs 
(e)(19)(i)(A), (e)(19)(i)(B), (e)(19)(i)(C), and (e)(19)(i)(D) of this 
section.
    (iii) Non-core services. While non-core services (i.e., home health 
aide services, medical appliances and supplies, drugs and biologicals, 
physical therapy, occupational therapy, speech-language pathology and 
short-term inpatient care) may be provided under arrangements with 
other agencies or organizations, the hospice must maintain professional 
management of the patient at all times and in all settings. Refer to 
paragraphs (e)(19)(i)(E), (e)(19)(i)(F), (e)(19)(i)(G), and 
(e)(19)(i)(H) of this section.
    (iv) Availability of services. The hospice must make nursing 
services, physician services, and drugs and biologicals routinely 
available on a 24-hour basis. All other covered services must be made 
available on a 24-hour basis to the extent necessary to meet the needs 
of individuals for care that is reasonable and necessary for the 
palliation and management of the terminal illness and related 
condition. These services must be provided in a [[Page 6018]] manner 
consistent with accepted standards of practice.
    (v) Periods of care. Hospice care is divided into distinct periods/
episodes of care. The terminally ill beneficiary may elect to receive 
hospice benefits for an initial period of 90 days, a subsequent period 
of 90 days, a second subsequent period of 30 days, and a final period 
of unlimited duration.
    (vi) Conditions for coverage. The CHAMPUS beneficiary must meet the 
following conditions/criteria in order to be eligible for the hospice 
benefits and services referenced in paragraph (e)(19)(i) of this 
section.
    (A) There must be written certification in the medical record that 
the CHAMPUS beneficiary is terminally ill with a life expectancy of six 
months or less if the terminal illness runs its normal course.
    (1) Timing of certification. The hospice must obtain written 
certification of terminal illness for each of the election periods 
described in paragraph (e)(19(vi)(B) of this section, even if a single 
election continues in effect for two, three or four periods.
    (i) Basic requirement. Except as provided in paragraph 
(e)(19(vi)(A)(1)(ii) of this section the hospice must obtain the 
written certification no later than two calendar days after the period 
begins.
    (ii) Exception. For the initial 90-day period, if the hospice 
cannot obtain the written certifications within two calendar days, it 
must obtain oral certifications within two calendar days, and written 
certifications no later than eight calendar days after the period 
begins.
    (2) Sources of certification. Physician certification is required 
for both initial and subsequent election periods.
    (i) For the initial 90-day period, the hospice must obtain written 
certification statements (and oral certification statements if required 
under paragraph (e)(19(vi)(A)(i)(ii) of this section) from:
    (A) The individual's attending physician if the individual has an 
attending physician; and
    (B) The medical director of the hospice or the physician member of 
the hospice interdisciplinary group.
    (ii) For subsequent periods, the only requirement is certification 
by one of the physicians listed in paragraph (e)(19)(vi)(A)(2)(i)(B) of 
this section.
    (B) The terminally ill beneficiary must elect to receive hospice 
care for each specified period of time; i.e., the two 90-day periods, a 
subsequent 30-day period, and a final period of unlimited duration. If 
the individual is found to be mentally incompetent, his or her 
representative may file the election statement. Representative means an 
individual who has been authorized under State law to terminate medical 
care or to elect or revoke the election of hospice care on behalf of a 
terminally ill individual who is found to be mentally incompetent.
    (1) The episodes of care must be used consecutively; i.e., the two 
90-day periods first, then the 30-day period, followed by the final 
period. The periods of care may be elected separately at different 
times.
    (2) The initial election will continue through subsequent election 
periods without a break in care as long as the individual remains in 
the care of the hospice and does not revoke the election.
    (3) The effective date of the election may begin on the first day 
of hospice care or any subsequent day of care, but the effective date 
cannot be made prior to the date that the election was made.
    (4) The beneficiary or representative may revoke a hospice election 
at any time, but in doing so, the remaining days of that particular 
election period are forfeited and standard CHAMPUS coverage resumes. To 
revoke the hospice benefit, the beneficiary or representative must file 
a signed statement of revocation with the hospice. The statement must 
provide the date that the revocation is to be effective. An individual 
or representative may not designate an effective date earlier than the 
date that the revocation is made.
    (5) If an election of hospice benefits has been revoked, the 
individual, or his or her representative may at any time file a hospice 
election for any period of time still available to the individual, in 
accordance with Sec. 199.4(e)(19)(vi)(B).
    (6) A CHAMPUS beneficiary may change, once in each election period, 
the designation of the particular hospice from which he or she elects 
to receive hospice care. To change the designation of hospice programs 
the individual or representative must file, with the hospice from which 
care has been received and with the newly designated hospice, a 
statement that includes the following information:
    (i) The name of the hospice from which the individual has received 
care and the name of the hospice from which he or she plans to receive 
care.
    (ii) The date the change is to be effective.
    (7) Each hospice will design and print its own election statement 
to include the following information:
    (i) Identification of the particular hospice that will provide care 
to the individual.
    (ii) The individual's or representative's acknowledgment that he or 
she has been given a full understanding of the palliative rather than 
curative nature of hospice care, as it relates to the individual's 
terminal illness.
    (iii) The individual's or representative's acknowledgment that he 
or she understands that certain other CHAMPUS services are waived by 
the election.
    (iv) The effective date of the election.
    (v) The signature of the individual or representative, and the date 
signed.
    (8) The hospice must notify the CHAMPUS contractor of the 
initiation, change or revocation of any election.
    (c) The beneficiary must waive all rights to other CHAMPUS payments 
for the duration of the election period for:
    (1) Care provided by any hospice program other than the elected 
hospice unless provided under arrangements made by the elected hospice; 
and
    (2) Other CHAMPUS basic program services/benefits related to the 
treatment of the terminal illness for which hospice care was elected, 
or to a related condition, or that are equivalent to hospice care, 
except for services provided by:
    (i) the designated hospice;
    (ii) another hospice under arrangement made by the designated 
hospice; or
    (iii) an attending physician who is not employed by or under 
contract with the hospice program.
    (3) Basic CHAMPUS coverage will be reinstated upon revocation of 
the hospice election.
    (D) A written plan of care must be established by a member of the 
basic interdisciplinary group assessing the patient's needs. This group 
must have at least one physician, one registered professional nurse, 
one social worker, and one pastoral or other counselor.
    (1) In establishing the initial plan of care the member of the 
basic interdisciplinary group who assesses the patient's needs must 
meet or call at least one other group member before writing the initial 
plan of care.
    (2) At least one of the persons involved in developing the initial 
plan must be a nurse or physician.
    (3) The plan must be established on the same day as the assessment 
if the day of assessment is to be a covered day of hospice care.
    (4) The other two members of the basic interdisciplinary group--the 
attending physician and the medical director or physician designee--
must review the initial plan of care and provide their input to the 
process of establishing the plan of care within two 
[[Page 6019]] calendar days following the day of assessment. A meeting 
of group members is not required within this 2-day period. Input may be 
provided by telephone.
    (5) Hospice services must be consistent with the plan of care for 
coverage to be extended.
    (6) The plan must be reviewed and updated, at intervals specified 
in the plan, by the attending physician, medical director or physician 
designee and interdisciplinary group. These reviews must be documented 
in the medical records.
    (7) The hospice must designate a registered nurse to coordinate the 
implementation of the plan of care for each patient.
    (8) The plan must include an assessment of the individual's needs 
and identification of the services, including the management of 
discomfort and symptom relief. It must state in detail the scope and 
frequency of services needed to meet the patient's and family's needs.
    (E) Complete medical records and all supporting documentation must 
be submitted to the CHAMPUS contractor within 30 days of the date of 
its request. If records are not received within the designated time 
frame, authorization of the hospice benefit will be denied and any 
prior payments made will be recouped. A denial issued for this reason 
is not an initial determination under section 199.10, and is not 
appealable.
    (vii) Appeal rights under hospice benefit. A beneficiary or 
provider is entitled to appeal rights for cases involving a denial of 
benefits in accordance with the provisions of this part and part 
199.10.
* * * * *
    4. Section 199.6 is amended by adding new paragraph (b)(4)(xiii) to 
read as follows:


Sec. 199.6  Authorized providers.

* * * * *
    (b) * * *
    (4) * * *
    (xiii) Hospice programs. Hospice programs must be Medicare approved 
and meet all Medicare conditions of participation (42 CFR Part 418) in 
relation to CHAMPUS patients in order to receive payment under the 
CHAMPUS program. A hospice program may be found to be out of compliance 
with a particular Medicare condition of participation and still 
participate in the CHAMPUS as long as the hospice is allowed continued 
participation in Medicare while the condition of noncompliance is being 
corrected. The hospice program can be either a public agency or private 
organization (or a subdivision thereof) which:
    (A) Is primarily engaged in providing the care and services 
described under Sec. 199.4(e)(19) and makes such services available on 
a 24-hour basis.
    (B) Provides bereavement counseling for the immediate family or 
terminally ill individuals.
    (C) Provides for such care and services in individuals' homes, on 
an outpatient basis, and on a short-term inpatient basis, directly or 
under arrangements made by the hospice program, except that the agency 
or organization must:
    (1) Ensure that substantially all the core services are routinely 
provided directly by hospice employees.
    (2) Maintain professional management responsibility for all 
services which are not directly furnished to the patient, regardless of 
the location or facility in which the services are rendered.
    (3) Provide assurances that the aggregate number of days of 
inpatient care provided in any 12-month period does not exceed 20 
percent of the aggregate number of days of hospice care during the same 
period.
    (4) Have an interdisciplinary group composed of the following 
personnel who provide the care and services described under 
Sec. 199.4(e)(19) and who establish the policies governing the 
provision of such care/services:
    (i) A physician;
    (ii) A registered professional nurse;
    (iii) A social worker; and
    (iv) A pastoral or other counselor.
    (5) Maintain central clinical records on all patients.
    (6) Utilize volunteers.
    (7) The hospice and all hospice employees must be licensed in 
accordance with applicable Federal, State and local laws and 
regulations.
    (8) The hospice must enter into an agreement with CHAMPUS in order 
to be qualified to participate and to be eligible for payment under the 
program. In this agreement the hospice and CHAMPUS agree that the 
hospice will:
    (i) Not charge the beneficiary or any other person for items or 
services for which the beneficiary is entitled to have payment made 
under the CHAMPUS hospice benefit.
    (ii) Be allowed to charge the beneficiary for items or services 
requested by the beneficiary in addition to those that are covered 
under the CHAMPUS hospice benefit.
    (9) Meet such other requirements as the Secretary of Defense may 
find necessary in the interest of the health and safety of the 
individuals who are provided care and services by such agency or 
organization.
* * * * *
    5. Section 199.14 is amended by redesignating paragraphs (g), (h), 
(i), (j), and (k) as (h), (i), (j), (k), and (l), adding new paragraph 
(g).


Sec. 199.14  Provider reimbursement methods.

* * * * *
    (g) Reimbursement of hospice programs. Hospice care will be 
reimbursed at one of four predetermined national CHAMPUS rates based on 
the type and intensity of services furnished to the beneficiary. A 
single rate is applicable for each day of care except for continuous 
home care where payment is based on the number of hours of care 
furnished during a 24-hour period. These rates will be adjusted for 
regional differences in wages using wage indices for hospice care.
    (1) National hospice rates. CHAMPUS will use the national hospice 
rates for reimbursement of each of the following levels of care 
provided by or under arrangement with a CHAMPUS approved hospice 
program:
    (i) Routine home care. The hospice will be paid the routine home 
care rate for each day the patient is at home, under the care of the 
hospice, and not receiving continuous home care. This rate is paid 
without regard to the volume or intensity of routine home care services 
provided on any given day.
    (ii) Continuous home care. The hospice will be paid the continuous 
home care rate when continuous home care is provided. The continuous 
home care rate is divided by 24 hours in order to arrive at an hourly 
rate.
    (A) A minimum of 8 hours of care must be provided within a 24-hour 
day starting and ending at midnight.
    (B) More than half of the total actual hours being billed for each 
24-hour period must be provided by either a registered or licensed 
practical nurse.
    (C) Homemaker and home health aide services may be provided to 
supplement the nursing care to enable the beneficiary to remain at 
home.
    (D) For every hour or part of an hour of continuous care furnished, 
the hourly rate will be reimbursed to the hospice up to 24 hours a day.
    (iii) Inpatient respite care. The hospice will be paid at the 
inpatient respite care rate for each day on which the beneficiary is in 
an approved inpatient facility and is receiving respite care.
    (A) Payment for respite care may be made for a maximum of 5 days at 
a time, including the date of admission but not counting the date of 
discharge. The [[Page 6020]] necessity and frequency of respite care 
will be determined by the hospice interdisciplinary group with input 
from the patient's attending physician and the hospice's medical 
director.
    (B) Payment for the sixth and any subsequent days is to be made at 
the routine home care rate.
    (iv) General inpatient care. Payment at the inpatient rate will be 
made when general inpatient care is provided for pain control or acute 
or chronic symptom management which cannot be managed in other 
settings. None of the other fixed payment rates (i.e., routine home 
care) will be applicable for a day on which the patient receives 
general inpatient care except on the date of discharge.
    (v) Date of discharge. For the day of discharge from an inpatient 
unit, the appropriate home care rate is to be paid unless the patient 
dies as an inpatient. When the patient is discharged deceased, the 
inpatient rate (general or respite) is to be paid for the discharge 
date.
    (2) Use of Medicare rates. CHAMPUS will use the most current 
Medicare rates to reimburse hospice programs for services provided to 
CHAMPUS beneficiaries. It is CHAMPUS' intent to adopt changes in the 
Medicare reimbursement methodology as they occur; e.g., Medicare's 
adoption of an updated, more accurate wage index.
    (3) Physician reimbursement. Payment is dependent on the 
physician's relationship with both the beneficiary and the hospice 
program.
    (i) Physicians employed by, or contracted with, the hospice.
    (A) Administrative and supervisory activities (i.e., establishment, 
review and updating of plans of care, supervising care and services, 
and establishing governing policies) are included in the adjusted 
national payment rate.
    (B) Direct patient care services are paid in addition to the 
adjusted national payment rate.
    (1) Physician services will be reimbursed an amount equivalent to 
100 percent of the CHAMPUS' allowable charge; i.e., there will be no 
cost-sharing and/or deductibles for hospice physician services.
    (2) Physician payments will be counted toward the hospice cap 
limitation.
    (ii) Independent attending physician. Patient care services 
rendered by an independent attending physician (a physician who is not 
considered employed by or under contract with the hospice) are not part 
of the hospice benefit.
    (A) Attending physician may bill in his/her own right.
    (B) Services will be subject to the appropriate allowable charge 
methodology.
    (C) Reimbursement is not counted toward the hospice cap limitation.
    (D) Services provided by an independent attending physician must be 
coordinated with any direct care services provided by hospice 
physicians.
    (E) The hospice must notify the CHAMPUS contractor of the name of 
the physician whenever the attending physician is not a hospice 
employee.
    (iii) Voluntary physician services. No payment will be allowed for 
physician services furnished voluntarily (both physicians employed by, 
and under contract with, the hospice and independent attending 
physicians). Physicians may not discriminate against CHAMPUS 
beneficiaries; e.g., designate all services rendered to non-CHAMPUS 
patients as volunteer and at the same time bill for CHAMPUS patients.
    (4) Unrelated medical treatment. Any covered CHAMPUS services not 
related to the treatment of the terminal condition for which hospice 
care was elected will be paid in accordance with standard reimbursement 
methodologies; i.e., payment for these services will be subject to 
standard deductible and cost-sharing provisions under the CHAMPUS. A 
determination must be made whether or not services provided are related 
to the individual's terminal illness. Many illnesses may occur when an 
individual is terminally ill which are brought on by the underlying 
condition of the ill patient. For example, it is not unusual for a 
terminally ill patient to develop pneumonia or some other illness as a 
result of his or her weakened condition. Similarly, the setting of 
bones after fractures occur in a bone cancer patient would be treatment 
of a related condition. Thus, if the treatment or control of an upper 
respiratory tract infection is due to the weakened state of the 
terminal patient, it will be considered a related condition, and as 
such, will be included in the hospice daily rates.
    (5) Cap amount. Each CHAMPUS-approved hospice program will be 
subject to a cap on aggregate CHAMPUS payments from November 1 through 
October 31 of each year, hereafter known as ``the cap period.''
    (i) The cap amount will be adjusted annually by the percent of 
increase or decrease in the medical expenditure category of the 
Consumer Price Index for all urban consumers (CPI-U).
    (ii) The aggregate cap amount (i.e., the statutory cap amount times 
the number of CHAMPUS beneficiaries electing hospice care during the 
cap period) will be compared with total actual CHAMPUS payments made 
during the same cap period.
    (iii) Payments in excess of the cap amount must be refunded by the 
hospice program. The adjusted cap amount will be obtained from the 
Health Care Financing Administration (HCFA) prior to the end of each 
cap period.
    (iv) Calculation of the cap amount for a hospice which has not 
participated in the program for an entire cap year (November 1 through 
October 31) will be based on a period of at least 12 months but no more 
than 23 months. For example, the first cap period for a hospice 
entering the program on October 1, 1994, would run from October 1, 1994 
through October 31, 1995. Similarly, the first cap period for hospice 
providers entering the program after November 1, 1993 but before 
November 1, 1994 would end October 31, 1995.
    (6) Inpatient limitation. During the 12-month period beginning 
November 1 of each year and ending October 31, the aggregate number of 
inpatient days, both for general inpatient care and respite care, may 
not exceed 20 percent of the aggregate total number of days of hospice 
care provided to all CHAMPUS beneficiaries during the same period.
    (i) If the number of days of inpatient care furnished to CHAMPUS 
beneficiaries exceeds 20 percent of the total days of hospice care to 
CHAMPUS beneficiaries, the total payment for inpatient care is 
determined follows:
    (A) Calculate the ratio of the maximum number of allowable 
inpatient days of the actual number of inpatient care days furnished by 
the hospice to Medicare patients.
    (B) Multiply this ratio by the total reimbursement for inpatient 
care made by the CHAMPUS contractor.
    (C) Multiply the number of actual inpatient days in excess of the 
limitation by the routine home care rate.
    (D) Add the amounts calculated in paragraphs (g)(6)(i) (B) and (C) 
of this section.
    (ii) Compare the total payment for inpatient care calculated in 
paragraph (g)(6)(i)(D) of this section to actual payments made to the 
hospice for inpatient care during the cap period.
    (iii) Payments in excess of the inpatient limitation must be 
refunded by the hospice program.
    (7) Hospice reporting responsibilities. The hospice is responsible 
for reporting the following data within 30 days after the end of the 
cap period: [[Page 6021]] 
    (i) Total reimbursement received and receivable for services 
furnished CHAMPUS beneficiaries during the cap period, including 
physician's services not of an administrative or general supervisory 
nature.
    (ii) Total reimbursement received and receivable for general 
inpatient care and inpatient respite care furnished to CHAMPUS 
beneficiaries during the cap period.
    (iii) Total number of inpatient days furnished to CHAMPUS hospice 
patients (both general inpatient and inpatient respite days) during the 
cap period.
    (iv) Total number of CHAMPUS hospice days (both inpatient and home 
care) during the cap period.
    (v) Total number of beneficiaries electing hospice care. The 
following rules must be adhered to by the hospice in determining the 
number of CHAMPUS beneficiaries who have elected hospice care during 
the period:
    (A) The beneficiary must not have been counted previously in either 
another hospice's cap or another reporting year.
    (B) The beneficiary must file an initial election statement during 
the period beginning September 28 of the previous cap year through 
September 27 of the current cap year in order to be counted as an 
electing CHAMPUS beneficiary during the current cap year.
    (C) Once a beneficiary has been included in the calculation of a 
hospice cap amount, he or she may not be included in the cap for that 
hospice again, even if the number of covered days in a subsequent 
reporting period exceeds that of the period where the beneficiary was 
included.
    (D) There will be proportional application of the cap amount when a 
beneficiary elects to receive hospice benefits from two or more 
different CHAMPUS-certified hospices. A calculation must be made to 
determine the percentage of the patient's length of stay in each 
hospice relative to the total length of hospice stay.
    (8) Reconsideration of cap amount and inpatient limit. A hospice 
dissatisfied with the contractor's calculation and application of its 
cap amount and/or inpatient limitation may request and obtain a 
contractor review if the amount of program reimbursement in 
controversy--with respect to matters which the hospice has a right to 
review--is at least $1000. The administrative review by the contractor 
of the calculation and application of the cap amount and inpatient 
limitation is the only administrative review available. These 
calculations are not subject to the appeal procedures set forth in 
Sec. 199.10. The methods and standards for calculation of the hospice 
payment rates established by CHAMPUS, as well as questions as to the 
validity of the applicable law, regulations or CHAMPUS decisions, are 
not subject to administrative review, including the appeal procedures 
of Sec. 199.10.
    (9) Beneficiary cost-sharing. There are no deductibles under the 
CHAMPUS hospice benefit. CHAMPUS pays the full cost of all covered 
services for the terminal illness, except for small cost-share amounts 
which may be collected by the individual hospice for outpatient drugs 
and biologicals and inpatient respite care.
    (i) The patient is responsible for 5 percent of the cost of 
outpatient drugs or $5 toward each prescription, whichever is less. 
Additionally, the cost of prescription drugs (drugs or biologicals) may 
not exceed that which a prudent buyer would pay in similar 
circumstances; that is, a buyer who refuses to pay more than the going 
price for an item or service and also seeks to economize by minimizing 
costs.
    (ii) For inpatient respite care, the cost-share for each respite 
care day is equal to 5 percent of the amount CHAMPUS has estimated to 
be the cost of respite care, after adjusting the national rate for 
local wage differences.
    (iii) The amount of the individual cost-share liability for respite 
care during a hospice cost-share period may not exceed the Medicare 
inpatient hospital deductible applicable for the year in which the 
hospice cost-share period began. The individual hospice cost-share 
period begins on the first day an election is in effect for the 
beneficiary and ends with the close of the first period of 14 
consecutive days on each of which an election is not in effect for the 
beneficiary.
* * * * *
    Dated: January 25, 1995.
Patricia L. Toppings,
Alternate OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 95-2194 Filed 1-31-95; 8:45 am]
BILLING CODE 5000-04-M