[Federal Register Volume 60, Number 229 (Wednesday, November 29, 1995)]
[Notices]
[Pages 61264-61265]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-29140]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
[BPD-820-N]
RIN 0938-AG93
Medicare Program; Notice Containing the Statement Drafted by the
Committee Established to Negotiate the Wage Index to be Used to Adjust
Hospice Payment Rates Under Medicare
AGENCY: Health Care Financing Administration (HCFA), HHS.
ACTION: Notice.
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SUMMARY: This notice provides the statement signed on April 13, 1995,
by the Negotiating Committee on the Hospice Wage Index, concerning the
index to be used to adjust Medicare payment rates for hospice services
to reflect geographic differences in wages. The statement represents a
consensus by the committee members, who represent different interests
affected by the hospice rules.
The notice also announces that a proposed rule establishing the
revised hospice wage index, with a description of the methodology used
to calculate the index, will be published in the spring of 1996. A new
wage index is needed because the index currently applied is based on
1981 wage and employment data and has not been updated since 1983.
FOR FURTHER INFORMATION CONTACT: Jennifer Carter (410) 786-4615.
SUPPLEMENTARY INFORMATION:
I. Background
Section 1814(i) of the Social Security Act (the Act) provides for
payment to Medicare hospices. Regulations for Medicare hospice care
services (42 CFR part 418) were published in the Federal Register on
December 16, 1983 (48 FR 56008), effective for hospice services
furnished on or after November 1, 1983. These regulations provide for
payment to hospices based on one of four prospectively determined rates
for each day in which a qualified Medicare beneficiary is under the
care of the hospice. The four rate categories are routine home care,
continuous home care, inpatient respite care, and general inpatient
care. Under Sec. 418.306(c), we adjust the payment rates to reflect
local differences in area wage levels.
The wage index currently used to adjust the hospice payment rates
is the wage index published in the Federal Register on September 1,
1983 (48 FR 39871) for purposes of determining Medicare inpatient
hospital prospective payment rates. This hospital wage index was based
on calendar year 1981 hospital wage and employment data obtained from
the Bureau of Labor Statistics' (BLS) ES 202 Employment, Wages and
Contributions file for hospital workers.
Although Medicare hospice payment rates have been periodically
updated since the inception of the Medicare hospice program in late
1982, we have never updated the wage index for hospices. Thus, the wage
index developed based on 1981 BLS data is still used for hospices, even
though HCFA now uses its own wage data surveys to construct an updated,
more accurate hospital wage index. Previous attempts to begin to
develop an updated wage index for hospices through rulemaking brought
to our attention the divergent views within the hospice industry itself
and between the industry and HCFA on how best to update the index.
During discussions preliminary to developing a new wage index, the
industry voiced concerns over the adverse financial impact of a new
wage index on individual hospices and a possible reduction in overall
Medicare hospice care payments, the effect of overarching Federal
budgetary constraints. The result was that, in the absence of
agreement, we continued to use a wage index that is clearly obsolete
for geographically adjusting Medicare hospice payments.
II. Negotiated Rulemaking Process
In accordance with the Negotiated Rulemaking Act of 1990, we
embarked on the use of the negotiated rulemaking process to promulgate
a proposed rule specifying the wage index to be used to adjust payment
rates for hospice services under Medicare. Our goal was to achieve the
objectives associated with the use of the negotiated rulemaking
process--reducing the time, cost, and other problems associated with
the traditional rulemaking process.
To determine who should participate on the negotiating committee, a
neutral facilitator selected by the Department of Health and Human
Services conducted a convening process to ensure the presence on the
committee of all interests affected by changes in the wage index. The
intent was to establish a negotiating committee that represented all
interests, although not necessarily all interested parties. The two
national hospice organizations, the National Hospice Organization and
Hospice Association of America, were also contacted by the facilitator
for their recommendations. The facilitator then interviewed a number of
representatives in the hospice community to determine who would best
represent different interests on the committee. The facilitator
proposed, and we accepted, the following individuals as negotiation
participants. We believe these individuals represent an appropriate mix
of interests and backgrounds:
Donna Bales, Kansas Hospice Association
Mary Ellen Bliss, American Association of Retired Persons
Janice Casey, Hospice Care, Inc.
Kate Colburn, Hospice of Central Iowa
Randall DuFour, Hospice of Louisville, Kentucky
Thomas Hoyer, Bureau of Policy Development, HCFA
Mary Labiak, Hospice of the Florida Suncoast, Florida
John J. Mahoney, National Hospice Organization
Janet Neigh, Hospice Association of America
Dale C. Smith, Academy of Hospice Physicians
Mark Sterling, VITAS Healthcare
Claire Tehan, Hospital Home Health Care Agency of California
With the assistance of the facilitator, we reached consensus with
hospice industry groups and other affected interests on how best to
propose an update to the present outdated hospice wage index. We
believed a new wage index based on consensus would be less
controversial and easier to administer than one developed by the
traditional rulemaking process.
The committee held five public meetings beginning in November 1994
and ending in April 1995. In accordance with the Federal Advisory
Committee Act, each meeting of the negotiating committee was announced
in the Federal Register, at least 15 days before the meeting. The
meeting notices indicated that the meetings were open to the public and
that time was set aside at the end of each meeting day to hear any
public statements.
On April 13, 1995, the committee reached consensus on an option for
the proposed wage index. Reaching consensus was a long and deliberative
process. The committee stressed that consensus meant that even if
elements of the agreement were not the choice of individual committee
members, all committee members could live with the agreement,
considered as a whole. The committee concurred that a wage index based
on the committee's
[[Page 61265]]
recommendations would be preferable to a wage index that could be
developed by the traditional rulemaking process, both for the hospice
community as a whole, and for the Medicare beneficiaries it serves. The
proposed rule announcing the revised hospice wage index, including a
description of the methodology used to calculate the index, will be
published in the spring of 1996. The Committee Statement signed by all
committee members is reprinted below.
United States Department of Health and Human Services Negotiating
Committee on the Medicare Hospice Wage Index
Committee Statement
April 13, 1995.
The Negotiating Committee on Medicare Hospice Wage Index has
concurred in the following recommendations, considered as a whole,
concerning the wage index used to adjust Medicare payment rates for
hospice services to reflect geographic differences in wages:
A. Data to be Used
The wage index for hospices will be based on the wage index used
by the Health Care Financing Administration (HCFA) for hospitals
under the Medicare Prospective Payment System, prior to
reclassification. This means that the hospital wage index will not
be adjusted to take into account the geographic reclassification of
hospitals in accordance with sections 1886(d)(8)(b) and 1886(d)(10)
of the Social Security Act.
The hospital wage index prior to reclassification will be
referred to in this statement as the Raw Index and will be adjusted
as provided below to calculate what will be referred to as the
Revised Wage Index.
Special provisions governing a transition period are described
in paragraph D below.
B. Budget Neutrality
HCFA will determine a Budget Neutrality Factor that will be
applied to achieve neutrality during and after the transition
period. Budget neutrality means that, in a given year, estimated
aggregate payments for Medicare hospice services using the Revised
Wage Index will equal estimated payments that would have been made
for the same services if the wage index adopted for hospices in 1983
(1983 Index) had remained in effect. HCFA will estimate aggregate
payments for Medicare hospice services using the best available
utilization data.
C. Adjustments
Each Raw Index value will be adjusted in one of two ways to
determine the Revised Wage Index value applicable to each area.
(1) If the Raw Index value for any area is 0.8 or greater, the
Revised Wage Index will be calculated by multiplying the Raw Index
value for that area by the Budget Neutrality Factor.
(2) If the Raw Index value for any area is less than 0.8, the
Revised Wage Index will be the greater of either:
(a) The Raw Index value for that area multiplied by the Budget
Neutrality Factor; or
(b) The Raw Index value for that area multiplied by 1.15 (in
effect, a 15-percent increase), but subject to a maximum index value
of 0.8.
D. Transition Period
The Revised Wage Index will be implemented over a 3-year
transition period beginning on or about October 1, 1996. For the
first year of the transition period, a blended index will be
calculated by adding two-thirds of each 1983 index value for an area
to one-third of the Revised Wage Index value for that area. During
the second year of the transition period, the calculation will be
similar, except that the blend will be one-third of the 1983 Index
values and two-thirds of the Revised Wage Index values. During the
third year the Revised Wage Index will be fully implemented.
Throughout the transition period, new hospices will be treated
the same as existing hospices based in the same county.
E. Annual Updates
The Revised Wage Index will be updated annually, so that it is
based on the most current available data used by HCFA to construct
the hospital wage index, as well as on changes by the Office of
Management and Budget to Metropolitan Statistical Areas as adopted
by HCFA in calculating the hospital wage index.
HCFA will use the most current hospital cost report data
available that allows HCFA to publish a proposed rule containing
wage index values at least 4 months in advance of the effective date
of each annual update to the Revised Wage Index.
F. Effective Date
The effective date of a final rule revising the wage index as
stated above should be October 1, 1996.
G. Statement to Accompany Proposed and Final Hospice Wage Index
Notice
The proposed rule is based upon a Committee Statement developed
by a Negotiating Committee on the Medicare hospice wage index which
was convened under the Negotiated Rulemaking Act. A new hospice wage
index is needed because the existing hospice wage index is based on
a 1983 wage index using 1981 Bureau of Labor Statistics (BLS) data
which is inaccurate and outdated.
The Committee reached consensus; however, this means only that
all Committee members could ``live with'' the agreement, considered
as a whole, even if elements of that agreement were not the
preferred choice of individual Committee members. The Committee
Statement reflects those issues upon which the Committee ultimately
concurred, but does not address many issues that were considered by
the Committee.
The Committee considered the appropriate data to be used to
construct a wage index, the appropriateness of retaining a 0.8
floor, budget neutrality, and how to structure a transition to
timely update the index yet ensure access to hospice care. In
particular, the Committee considered the problems faced by hospices
that would receive significant decreases under the new wage indices,
rural hospices, hospices with low wage indices, and hospices that
may have disproportionately high non-wage costs.
The Committee received extensive information from experts who
appeared before the Committee and from the hospice community, and
sought public input. While considerable data was reviewed, the
Committee acknowledges that hospice data collection is maturing and
encourages its continued development. In addition, while other
issues were identified, the scope of the Committee's negotiations
was limited by the Notice of Intent to Negotiate.
Given these constraints, and taking into account the differing
and conflicting interests that would be significantly affected, the
Committee sought to develop a wage index that would be as accurate,
reliable, and equitable as possible, but would not threaten access
to hospice care.
The Committee recognizes that hospice care is still not
universally available. The Committee further recognizes that there
may be geographic or other circumstances that inhibit the provision
of hospice care. The Committee strongly requests that HCFA consider
options to address these access problems.
Reaching consensus was a long and deliberative process. The
Committee concurred that the wage index it recommends will be better
both for the hospice community as a whole, and for the Medicare
beneficiaries it serves, than a wage index developed by the
traditional rulemaking process.
Authority: Section 1814(i) of the Social Security Act (42 U.S.C.
1395(f)).
(Catalog of Federal Domestic Assistance Program No. 93.773
Medicare--Hospital Insurance Program; and No. 93.774, Medicare--
Supplementary Medical Insurance Program)
Dated: October 25, 1995.
Bruce C. Vladeck,
Administrator, Health Care Financing Administration.
[FR Doc. 95-29140 Filed 11-28-95; 8:45 am]
BILLING CODE 4120-01-P