[Federal Register Volume 67, Number 226 (Friday, November 22, 2002)]
[Proposed Rules]
[Pages 70363-70373]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-29798]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 418

[CMS-1022-P]
RIN 0938-AJ36


Medicare Program; Hospice Care Amendments

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would revise existing regulations that 
govern coverage and payment for hospice care under the Medicare 
program. These revisions are required by the Balanced Budget Act of 
1997 (BBA), the Medicare, Medicaid, and SCHIP Balanced Budget 
Refinement Act of 1999 (BBRA), and the Medicare, Medicaid, and SCHIP 
Benefits Improvement and Protection Act of 2000 (BIPA).
    The BBA made changes to the time frame for completion of a 
physician's certification for admission of a patient; the duration of 
benefit periods; the requirement that hospices make certain services 
available on a 24-hour basis; the required core services; the coverage 
of services specified in a patient's plan of care; and the payment of 
claims according to area. The BBA also established hospice payment 
rates for Federal fiscal years 1998 through 2002. BBRA amended those 
rates. BIPA further amended those rates and clarified the physician 
certification rule.
    This rule would also add to existing regulations certain 
established Medicare hospice policies that currently are available only 
in policy memoranda. These policies clarify the regulations regarding 
the content of the certification of terminal illness and the admission 
to, and discharge from, a hospice.
    This rule does not address the requirement for hospice data 
collection, the changes to the limitation of liability rules, or the 
changes to the hospice conditions of participation that were included 
in the BBA.

DATES: Comments will be considered if we receive them at the 
appropriate address, as provided below, no later than 5 p.m. on January 
21, 2003.

ADDRESSES: In commenting, please refer to file code CMS-1022-P. Because 
of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission. Mail written comments (one original and 
three copies) to the following address ONLY: Centers for Medicare & 
Medicaid Services, Department of Health and Human Services, Attention: 
CMS-1022-P, Box 8010, Baltimore, MD 21244-8010.
    Please allow sufficient time for mailed comments to be timely 
received in the event of delivery delays.
    If you prefer, you may deliver (by hand or courier) your written 
comments (one original and three copies) to one of the following 
addresses:

Hubert H. Humphrey Building, Room 443-G, 200 Independence Avenue, SW., 
Washington, DC 20201, or
Room C5-14-03, 7500 Security Boulevard, Baltimore, Maryland 21244-1850.

    (Because access to the interior of the HHH Building is not readily 
available to persons without Federal Government identification, 
commenters are encouraged to leave their comments in the CMS drop slots 
located in the main lobby of the building. A stamp-in clock is 
available for commenters wishing to retain a proof of filing by 
stamping in and retaining an extra copy of the comments being filed.)
    Comments mailed to the addresses indicated as appropriate for hand 
or

[[Page 70364]]

courier delivery may be delayed and could be considered late.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Thomas Saltz, (410) 786-4480 or Carol 
Blackford, (410) 786-5909.

SUPPLEMENTARY INFORMATION: Inspection of Public Comments: Comments 
received timely will be available for public inspection as they are 
received, generally beginning approximately 3 weeks after publication 
of a document, at the headquarters of the Centers for Medicare & 
Medicaid Services, 7500 Security Boulevard, Baltimore, Maryland 21244, 
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I. Background

A. Hospice Care

    Hospice care is an approach to health care that recognizes that the 
impending death of an individual warrants a change in focus from 
curative care to palliative care, that is, relief of pain and other 
symptoms. The emphasis of hospice care is on the control of pain and 
the furnishing of services that enable the beneficiary to remain at 
home as long as possible with minimal disruption to normal activities. 
A hospice uses an interdisciplinary approach to deliver medical, 
social, psychological, emotional, and spiritual services through the 
use of a broad spectrum of professional and other caregivers, with the 
goal of making the individual as physically and emotionally comfortable 
as possible. Counseling and respite services are available to the 
family of the hospice patient. Hospice programs consider both the 
patient and the family as the unit of care.

B. Medicare Hospice Before the Balanced Budget Act of 1997

    The Balanced Budget Act of 1997 changed and clarified numerous 
aspects of the Medicare hospice benefit including, the length of 
available benefit periods, the amount of annual updates, how local 
payment rates are determined, the time frame for physician 
certification, and what is considered a covered Medicare hospice 
service. Before explaining each change in detail, it is important to 
understand how the Medicare hospice benefit was structured prior to the 
BBA of 1997.
    Section 1861(dd) of the Social Security Act (the Act) provides for 
coverage of hospice care for terminally ill Medicare beneficiaries who 
elect to receive care from a participating hospice. Beneficiaries are 
eligible to elect the Medicare hospice benefit if they are eligible for 
Medicare Part A; are certified as terminally ill by their personal 
physician, if they have one, and by the hospice medical director; and 
elect to receive hospice care from a Medicare-certified hospice. 
Section 1861(dd)(3)(A) of the Act defines terminally ill as a medical 
prognosis with a life expectancy of 6 months or less. This definition 
was clarified to provide for a life expectancy of ``6 months or less if 
the illness runs its normal course'' when we amended 42 CFR 418.3 in 
our December 11, 1990 final rule with comment period titled ``Hospice 
Care Amendments: Medicare'' (55 FR 50834).
    A Medicare beneficiary who has elected the hospice benefit can 
receive care for specific lengths of time referred to as benefit 
periods. Under the Tax Equity and Fiscal Responsibility Act of 1982, 
hospice care was made available in three distinct benefit periods, the 
first two lasting 90 days, and the third lasting 30 days. The total 
amount of Medicare hospice coverage was 210 days. Because of the 
scientific difficulty in making a prognosis of 6 months or less, the 
210-day limit was repealed by the Medicare Catastrophic Coverage Repeal 
Act of 1989 for services furnished on or after January 1, 1990. The 
benefit periods were restructured into two periods of 90 days duration, 
one period of 30 days duration, and a fourth period of unlimited 
duration. If a beneficiary voluntarily left the program or was 
discharged from it, he or she forfeited the remaining days in the 
benefit period. If this occurred during the fourth benefit period, the 
beneficiary could never again receive the Medicare hospice benefit. A 
beneficiary in the fourth benefit period who became ineligible for 
hospice care services because he or she no longer met the eligibility 
requirements would return to normal Medicare coverage and would never 
be eligible for the Medicare hospice program, even if his or her 
condition once again became terminal. This provision was amended by the 
BBA, as discussed below.
    Once a patient elects Medicare hospice care, the patient gives up 
the right to have Medicare pay for hospice care furnished by any 
hospice provider other than the one that he or she has selected, unless 
the selected hospice provider arranges for services to be furnished by 
another provider or if the patient elects to change providers. Also 
during the benefit period, the beneficiary gives up the right to 
receive any other Medicare payment for services that are determined to 
be related to his or her terminal illness or other related conditions 
or that are duplicative of hospice care. Medicare will continue to pay 
for a beneficiary's covered medical needs unrelated to the terminal 
condition.
    The Medicare hospice benefit includes nursing services, medical 
social services, physician services, counseling services including 
dietary and bereavement counseling, short-term inpatient care including 
respite care, medical appliances and drugs, home health aide and 
homemaker services, physical therapy, occupational therapy, and speech-
language pathology services. Medicare-certified hospices furnish care 
using an interdisciplinary team of people who assess the needs of the 
beneficiary and his or her family and develop and maintain a plan of 
care that meets those needs.
    Under section 1814(i) of the Act, Medicare payment for hospice care 
is based on one of four prospectively determined rates that correspond 
to four different levels of care for each day a 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. The prospective payment rates are updated annually and 
are adjusted by a wage index to reflect geographic variation. The 
payment rules are in our regulations at part 418, subpart G, ``Payment 
for Hospice Care.''

[[Page 70365]]

II. Hospice Provisions of the Balanced Budget Act of 1997, the Balanced 
Budget Refinement Act of 1999, and the Medicare, Medicaid, and SCHIP 
Benefits Improvement and Protection Act of 2000

    As mentioned above, the Balanced Budget Act of 1997 (BBA) included 
a number of provisions affecting the Medicare hospice benefit. 
Additionally, the Balanced Budget Refinement Act (BBRA) of 1999 and the 
Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act 
(BIPA) of 2000 made some additional changes to the Medicare hospice 
benefit. This section will explain each change in detail and describe 
how these changes have been implemented. All of the BBA hospice 
provisions were implemented through a Program Memorandum (PM A-97-11) 
released in September 1997, which addresses all of the hospice-related 
BBA provisions, except the requirement for hospice data collection, the 
changes to the limitation of liability rules, the provision allowing 
contracting with physicians, and the new waivers for certain staffing 
requirements.
    The provision allowing contracting with physicians and the new 
waivers for certain staffing requirements will be included in a 
proposed regulation to revise the hospice conditions of participation, 
which may be published in the near future. The limitation of liability 
rule changes were implemented through the Program Memorandum issued in 
September 1997. A hospice cost report for the hospice data collection 
was developed and issued in April 1999.

A. Payments for Hospice Services (Section 4441 of BBA)

    Section 4441(b) of the BBA amended section 1814(i) of the Act to 
require hospice management to submit cost data for each fiscal year 
beginning with fiscal year 1999. A hospice cost report to collect this 
information was developed and issued in April 1999. To allow hospices 
enough time to prepare for the new requirement, the implementation of 
the hospice cost report was delayed until cost reporting periods 
beginning on or after April 1, 1999.

B. Payment for Home Hospice Care Based on Location Where Care Is 
Furnished (Section 4442 of the BBA)

    Section 4442 of the BBA amended section 1814(i)(2) of the Act, 
effective for services furnished on or after October 1, 1997, to 
require that hospices submit claims for payment for hospice care 
furnished in an individual's home only on the basis of the geographic 
location at which the service is furnished. Previously, local wage 
index values were applied based on the geographic location of the 
hospice provider, regardless of where the hospice care was furnished. 
Hospices were able to inappropriately maximize reimbursement by 
locating their offices in high-wage areas and actually delivering 
services in a lower-wage area. Applying the wage index values for rate 
adjustments on the geographic area where the hospice care is furnished 
would provide a reimbursement rate that is a more accurate reflection 
of the wages paid by the hospice for the staff used to furnish care.

C. Hospice Care Benefit Periods (Section 4443 of the BBA)

    Section 4443 of the BBA amended sections 1812(a)(4) and 1812(d)(1) 
of the Act to provide for hospice benefit periods of two 90-day 
periods, followed by an unlimited number of 60-day periods. This 
amendment changed the previous hospice care benefit periods. Each 
period requires a physician to certify at the beginning of the period 
that the individual has a terminal illness with a prognosis that the 
individual's life expectancy is 6 months or less, should the illness 
run its normal course. Though it continues to be true that the 
remaining days in a benefit period are lost once a beneficiary revokes 
election of the hospice benefit or is discharged from the hospice, the 
restructured benefit periods will allow the beneficiary, or the 
hospice, to make this type of decision without placing the beneficiary 
at risk of losing hospice benefit periods in the future.
    Section 4449 of the BBA indicated that the benefit period change 
applied to the hospice benefit regardless of whether or not an 
individual had made an election of the benefit period before the date 
of enactment. Therefore, beneficiaries who elected hospice before the 
BBA, and who, after the passage of the BBA, are discharged from hospice 
care because they are no longer terminally ill, could avail themselves 
of the benefit at some later date if they should become terminally ill 
again and otherwise meet the requirements of the Medicare hospice 
benefit. If the beneficiary had been discharged during the initial 90-
day period, he or she would enter the benefit in the second 90-day 
period. If the discharge took place during the final 90-day period or 
any subsequent 60-day period, the beneficiary would enter the benefit 
in a new 60-day period. A beneficiary who had been discharged from 
hospice during the fourth benefit period before the enactment of the 
BBA would be eligible to access the benefit again, if certified as 
being terminally ill, and would begin in a new 60-day period. The 90-
day periods would not be available again, as amended section 1812(d)(1) 
of the Act still provides only for two 90-day periods during an 
individual's lifetime. There is no limit on the number of 60-day 
periods available as long as the beneficiary meets the requirements for 
the hospice benefit.

D. Other Items and Services Included in Hospice Care (Section 4444 of 
the BBA)

    Section 1861(dd)(1) of the Act lists the specific services covered 
under the Medicare hospice benefit. Because the hospice provider is 
responsible for the palliation and management of the patient's terminal 
illness, it has always been Medicare's policy that Medicare hospice 
includes not only those specific services listed in Section 1861(dd)(1) 
of the Act but also any service otherwise covered by Medicare that is 
needed for the palliation and management of the terminal illness. 
Section 4444 of the BBA reiterates this policy by amending Section 
1861(dd)(1) of the Act.
    A new subparagraph ``I'' has been added to the list of covered 
hospice services in section 1861(dd)(1) of the Act, effective April 1, 
1998. This new provision states that any other service that is 
specified in the plan of care, and for which payment may otherwise be 
made under Medicare, is a covered hospice service. As explained, this 
change underscores our previous construction of the law as requiring 
that the hospice is responsible for furnishing any and all services 
indicated as necessary for the palliation and management of the 
terminal illness, and related conditions, in the plan of care. A 
Medicare beneficiary who elects hospice care gives up the right to have 
Medicare pay for services related to the terminal illness, or related 
conditions, outside of the hospice benefit. Section 1861(dd)(1) of the 
Act contains a list of services and therapies covered under the 
Medicare hospice benefit. This list does not include services like 
radiation therapy, which are often furnished by hospices for palliative 
purposes. This change clarifies that these additional necessary 
services are covered under the hospice benefit and cannot be billed 
separately to Medicare.

E. Extending the Period for Physician Certification of an Individual's 
Terminal Illness (Section 4448 of the BBA)

    Section 4448 of the BBA amended section 1814(a)(7)(A)(i) of the Act 
to eliminate the specific statutory time frame for the completion of a

[[Page 70366]]

physician's certification of terminal illness for admission to a 
hospice for the initial 90-day benefit period and to require only that 
certification be done ``at the beginning of the period.'' A literal 
interpretation of ``at the beginning of the period,'' that is, on the 
first day of the benefit period, would produce time frames that are 
more stringent than previous requirements. However, it appears that the 
congressional intent of this change was to give us the discretion, as 
we currently have with home health certifications, to require instead 
that hospice certifications be on file before a Medicare claim is 
submitted. Thus, section 4448 is titled ``Extending the Period for 
Physician Certification of an Individual's Terminal Illness.''
    Before the BBA, hospices were required to obtain, no later than 2 
calendar days after hospice care was initiated, written certification 
that a person had a prognosis of a terminal illness with a life 
expectancy of 6 months or less. For the first benefit period, if the 
written certification could not be obtained within the 2 calendar days 
following the initiation of hospice care, a verbal certification could 
be made within 2 days following the initiation of hospice care, with a 
written certification not later than 8 calendar days after care was 
initiated. For subsequent benefit periods, written certification was 
required no later than 2 calendar days after the first day of each 
benefit period.
    The new certification requirements also apply to individuals who 
had been previously discharged during a fourth benefit period and are 
being certified for hospice care again to begin in a new 60-day benefit 
period. Also, due to the restructuring of the benefit periods, any 
individual who revoked, or was previously discharged from, the hospice 
benefit, and then reelects to receive the hospice benefit in the next 
available benefit period, will need to be recertified as if entering 
the program in an initial benefit period. This means that the hospice 
must obtain verbal certification of terminal illness no later than 2 
days after care begins, and written certification before the submission 
of a claim to the fiscal intermediary.

F. Effective Date (Section 4449 of the BBA)

    The provisions of the BBA discussed above, unless noted otherwise, 
became effective for services furnished on or after the date of 
enactment of the BBA, or August 5, 1997. Section 4444, the other 
services provision, was effective on April 1, 1998.

G. Clarification of the Physician Certification Requirement (Section 
322 of BIPA)

    Section 322 of BIPA amended section 1814(a) of the Act by 
clarifying that the certification of an individual who elects hospice 
``* * * shall be based on the physician's or medical director's 
clinical judgment regarding the normal course of the individual's 
illness.'' The amendment clarifies that the certification is based on a 
clinical judgment regarding the usual course of a terminal illness, and 
recognizes the fact that making medical prognostications of life 
expectancy is not always exact. This amendment at section 322(b) of 
BIPA clarifies and supports our current policy, which we are proposing 
to add to our regulations. The policy came about in response to 
Operation Restore Trust (ORT) and is discussed later in section III. B 
of this preamble. Briefly, ORT found that certification and 
recertification occurred without the documentation that would support 
the terminal illness prognosis. Accordingly, in 1995, we issued program 
memoranda requiring clinical findings and other documentation that 
support the medical prognosis. This documentation must accompany a 
certification and be filed in the patient's medical record.
    We recognize that medical prognostications of life expectancy are 
not always exact, but the amendment regarding the physician's clinical 
judgment does not negate the fact that there must be a basis for a 
certification. A hospice needs to be certain that the physician's 
clinical judgment can be supported by clinical findings and other 
documentation that provide a basis for the certification of 6 months or 
less if the illness runs its normal course. A mere signed 
certification, absent a medically sound basis that supports the 
clinical judgment, is not sufficient for application of the hospice 
benefit under Medicare.
    Section 322 of BIPA became effective for certifications made on or 
after the date of enactment, December 21, 2000.

III. Provisions of This Proposed Rule

    We are proposing to make conforming changes to the Medicare hospice 
regulations to reflect the statutory changes discussed above. In 
addition, we are proposing to revise the regulation to reflect current 
policy on the documentation needed to support a certification of 
terminal illness, admission to Medicare hospice, and discharge from 
hospice. We are proposing to add one new requirement that would allow 
for discharges from hospice for cause under very limited circumstances.
    We propose to amend 42 CFR chapter IV by revising part 418.

A. Duration of Hospice care Coverage--Election Periods (Sec.  418.21)

    In Sec.  418.21, we are revising paragraph (a) to make hospice 
benefit periods available in two 90-day periods followed by an 
unlimited number of 60-day periods (requirement of section 4443 of the 
BBA).

B. Certification of Terminal Illness (Sec.  418.22)

    We are revising the cross reference in Sec.  418.22(a)(1) from 
``Sec.  418.21'' to ``Sec.  418.21(a)'' and removing the phrase ``for 
two, three, or four periods'' and replacing it with ``for an unlimited 
number of periods'' to reflect the changes in the hospice care election 
periods (requirement of section 4443 of the BBA). We are revising the 
basic requirement at paragraph (a)(2) to state that the hospice must 
obtain written certification before it submits a claim for payment 
(requirement of section 4448 of the BBA), and we are proposing to 
revise the exception at paragraph (a)(3) to state that, if the hospice 
cannot obtain the written certification within 2 calendar days, it must 
obtain an oral certification within 2 calendar days, and the written 
certification before it submits a claim for payment. Oral 
certifications, therefore, which are necessary only if the hospice is 
unable to obtain written certification within 2 calendar days of the 
start of the benefit period, would be required for each benefit period 
rather than for just the initial 90-day period. We are maintaining our 
requirement for verbal physician's certification no later than 2 days 
after hospice care begins because we continue to believe that proper 
and timely assessment of a patient's condition is of critical 
importance both to the hospice, which becomes responsible for the 
patient, and to the patient, who must have a sound basis for choosing 
palliative rather than curative care.
    As a condition of eligibility for a Medicare hospice program, an 
individual must be entitled to Medicare Part A and be certified as 
terminally ill. The Act also requires that this certification be made 
in writing by either the hospice medical director or the physician 
member of the interdisciplinary group, and by the attending physician, 
if the patient has one. However, the law does not explicitly discuss 
what information a hospice physician needs to consider

[[Page 70367]]

before making a certification of terminal illness.
    Operation Restore Trust (ORT), a joint effort among the Centers for 
Medicare & Medicaid Services, the Office of the Inspector General, and 
the Administration on Aging to identify vulnerabilities in the Medicare 
program and to pursue ways to reduce Medicare's exposure to fraud and 
abuse, identified several areas of weakness in the hospice benefit, 
primarily in the area of hospice eligibility. In 1995, as a result of 
early ORT findings, we issued a letter to all Regional Offices and 
Regional Home Health Intermediaries (RHHIs) clarifying what should be 
included in a patient's medical record to support the certification of 
terminal illness. Subsequent ORT reports, and medical reviews conducted 
by RHHIs, have raised concerns about inappropriate certifications and 
recertifications and problems with a lack of documentation to support a 
prognosis of terminal illness. These reports and reviews found that 
certifications are being made for patients who are chronically ill but 
who are without complications or other circumstances that indicate a 
life expectancy of 6 months or less.
    In response to these concerns, we are proposing to revise Sec.  
418.22(b) by adding introductory text, redesignating paragraph (b) as 
paragraph (b)(1), and adding an additional requirement for the content 
of certification as paragraph (b)(2). The introductory text will state 
that certification for the hospice benefit will be based upon the 
physician's or medical director's clinical judgment regarding the 
normal course of the individual's illness. In paragraph (b)(2), we 
propose requiring that specific clinical findings and other 
documentation supporting the medical prognosis accompany the written 
certification and be filed in the medical record as required under 
Sec.  418.22(d).

C. Election of Hospice Care (Sec.  418.24)

    In Sec.  418.24, we are proposing to add to paragraph (c), 
``Duration of election,'' a new paragraph (c)(3) to state that an 
election to receive hospice care will be considered to continue through 
the initial election period and through the subsequent election periods 
without a break in care as long as the individual is not discharged 
from the hospice under the provisions of Sec.  418.26. This addition 
would clarify that only revocation by the beneficiary or discharge by 
the hospice terminates an election.

D. Admission to Hospice Care (Sec.  418.25)

    Also in response to concerns raised by ORT, we are proposing to 
establish general guidance on hospice admission procedures. Currently, 
there is no guidance in manuals or regulations regarding admission 
procedures. We are proposing to add a new Sec.  418.25, ``Admission to 
hospice care,'' which would establish specific requirements to be met 
before a hospice provider admits a patient to its care.
    Paragraph (a) would permit a hospice to admit a patient only on the 
recommendation of the medical director in consultation with the 
patient's attending physician, if any. We realize that many hospice 
patients are referred to hospice from various ``nonmedical'' sources. 
This is entirely appropriate; however, it is the responsibility of the 
medical director, in concert with the attending physician, to assess 
the patient's medical condition and determine if the patient can be 
certified as terminally ill.
    Paragraph (b) would require that the hospice medical director 
consider at least the following information when making a decision to 
certify that a patient is terminally ill: diagnosis of the patient's 
terminal condition; any related diagnoses or comorbidities; and current 
clinically relevant findings supporting all diagnoses.

E. Discharge From Hospice Care (Sec. Sec.  418.26 and 418.28)

    As with admission to hospice, the statute does not explicitly 
address when it is appropriate to discharge an individual from hospice 
care. Section 210 of the Medicare Hospice Manual (HCFA Pub. 21) 
explains that discharge is allowable only if the patient is no longer 
terminally ill or if the patient moves out of the service area.
    We propose to add a new Sec.  418.26, ``Discharge from hospice 
care,'' to specify when a hospice may discharge a patient from its 
care. Paragraph (a), ``Reasons for discharge,'' would specify that a 
hospice may discharge a patient if--
    1. The patient moves out of the hospice's service area or transfers 
to another hospice;
    2. The hospice determines that the patient is no longer terminally 
ill; or
    3. The hospice determines, under a policy set by the hospice for 
the purpose of addressing ``discharge for cause'' that also meets the 
requirements discussed in the remainder of the new paragraph (a), that 
the patient's behavior is disruptive, abusive, or uncooperative to the 
extent that delivery of care to the patient or the ability of the 
hospice to operate effectively is seriously impaired. When the hospice 
seeks to discharge a patient, we would require it to make a serious 
effort to resolve the problem(s) presented by the patient's behavior or 
situation; ascertain that the patient's proposed discharge is not due 
to the patient's use of necessary hospice services; document the 
problem(s) and efforts made to resolve the problem(s) and enter this 
documentation into the patient's medical records; and obtain a written 
physician's order from the patient's attending physician and hospice 
medical director concurring with the discharge from the hospice.
    Since the inception of the Medicare hospice program, we have 
received inquiries from hospices regarding patients and their family 
members or primary caregivers who elected hospice but subsequently 
became uncooperative or hostile (including threats of physical harm and 
to the extent that hospice staff could not provide care to the patient) 
when the facilities attempted to provide care. In the absence of 
regulations or guidance from Medicare regarding these situations, 
hospices were uncertain as to their authority to act to resolve this 
type of problem. We offered informal guidance that if the hospice had 
made a conscientious effort to resolve the problem and had documented 
that effort, and the patient refused to revoke the benefit voluntarily, 
a discharge would be indicated. Failure to revoke the benefit could 
place the patient in a compromised position in which the patient would 
not be able to receive services from the hospice but would at the same 
time be unable to obtain services under the standard Medicare program 
because of his or her hospice status. An additional concern is the 
issue of daily payments being made to a hospice when no services are 
being provided. We are interested in commenter responses to this 
proposed regulation, particularly as to whether it is needed, and, if 
it is, whether there are sufficient protections for patients in the 
proposed rule.
    Paragraph (b), ``Effect of discharge,'' would specify that an 
individual, upon discharge from the hospice during a particular 
election period for reasons other than immediate transfer to another 
hospice is no longer covered under Medicare for hospice care and 
resumes Medicare coverage of the benefits waived under Sec.  418.24(d). 
If the beneficiary becomes eligible for the hospice benefit at a future 
time, he or she would be able to elect to receive this benefit again.
    Although the statute does not explicitly address when a hospice may 
discharge a patient from its care, we

[[Page 70368]]

realize that there are certain instances in which it is no longer 
appropriate for a hospice to provide care to a patient. We have 
attempted to capture those instances with our proposal; nevertheless, 
we are requesting that commenters share their experiences regarding 
situations that have arisen that would fall into one of our proposed 
categories.
    A decision that a hospice patient is no longer terminally ill is 
generally not made during one assessment. However, once it is 
determined that the patient is no longer terminally ill, the patient is 
no longer eligible to receive the Medicare hospice benefit. Currently, 
the regulations do not provide any time for discharge planning between 
the determination that the patient is no longer terminally ill and 
discharge from the benefit. Since the BBA has ended the limitation on 
available benefit periods during a beneficiary's lifetime, we expect to 
see an increase in the number of beneficiaries being discharged from, 
or revoking, the hospice benefit because they can no longer be 
certified as terminally ill. However, it is common for these 
beneficiaries to remain in medically fragile conditions and in need of 
some type of medical services in order to remain at home. It is 
important that hospice providers consider these needs so that support 
structures can quickly be put into place should the patient's prognosis 
improve.
    Therefore, we are proposing to add a paragraph (c), ``Discharge 
planning,'' in new Sec.  418.26. We would require at paragraph (c)(1) 
that the hospice have in place a discharge planning process that takes 
into account the prospect that a patient's condition might stabilize or 
otherwise change such that the patient cannot continue to be certified 
as terminally ill. Additionally, we are proposing at paragraph (c)(2) 
that the discharge planning process must ensure that planning for the 
potential of discharge includes consideration of plans for any 
necessary family counseling, patient education, or other services 
before the patient is discharged because he or she is no longer 
terminally ill.
    Finally, Sec.  418.28(b)(1) is revised to permit discharges for 
cause (under proposed Sec.  418.26(a)(3)) if a patient refuses to sign 
a revocation statement. A signed revocation statement serves to protect 
hospice patients whose hospice may seek to discharge them because of 
possible higher costs associated with use of necessary services. Under 
current regulations, if a patient who otherwise would be discharged for 
cause were to refuse to sign a revocation statement, the hospice would 
be in the anomalous position of receiving daily payments from Medicare 
for a person who cannot receive services. Earlier in this section, the 
implications for the hospice and the beneficiary were discussed. 
Paragraph (b)(1) would permit waiver of a signed revocation if one is 
not obtainable in cases of discharge for cause. It is our intention to 
take all comments into account prior to finalizing the ``discharge for 
cause'' policy. If implemented, our utmost concern is that there are 
sufficient patient protections in place to ensure appropriate delivery 
of care and, if needed discharge planning.

F. Covered Services (Sec.  418.202)

    We would add a new paragraph (i) to Sec.  418.202 to state that any 
other service that is specified in the patient's plan of care as 
reasonable and necessary for the palliation and management of the 
patient's terminal illness and related conditions, and for which 
payment may otherwise be made under Medicare, is a covered hospice 
service. This change was made by section 4444 of the BBA and was a 
clarification of long-standing Medicare policy.

G. Payment for Hospice Care (Sec. Sec.  418.301, 418.302, 418.304, and 
418.306)

    In addition to reflecting the payment changes required by the BBA, 
we are proposing to add a new paragraph (c) to Sec.  418.301, ``Basic 
rules.'' This paragraph would restate the basic requirement, included 
in the provider agreement, that the hospice may not charge a patient 
for services for which the patient is entitled to have payment made 
under Medicare or for services for which the patient would be entitled 
to payment if the provider had completed all of the actions described 
in Sec.  489.21. Since this requirement is currently included in the 
provider agreement, we would restate it in this part for clarification 
only.
    We are adding a new paragraph (g) to Sec.  418.302, ``Payment 
procedures for hospice care,'' to provide that payment for routine home 
care and continuous home care would be made on the basis of the 
geographic location where the service is provided (requirement of 
section 4442 of the BBA).
    We would also update the rules found at Sec.  418.304, ``Payment 
for physician services,'' to reflect current payment methodology for 
physician services under Medicare Part B. References to reimbursement 
based on reasonable charges would be replaced with references to the 
physician fee schedule. We would revise the first sentence of paragraph 
(b) to clarify that a specified Medicare contractor pays the hospice an 
amount equivalent to 100 percent of the physician fee schedule, rather 
than 100 percent of the physician's reasonable charge, for those 
physician services furnished by hospice employees or those under 
arrangement with the hospice. We would also revise the second sentence 
of paragraph (c) to specify that services of the patient's attending 
physician, if he or she is not an employee of the hospice or providing 
services under arrangements with the hospice, are paid by the carrier 
under the procedures in subpart A, part 414 of chapter IV.
    Finally, in Sec.  418.306, ``Determination of payment rates,'' we 
would revise paragraph (b)(3) and add new paragraphs (b)(4) and (b)(5) 
to set the payment rate in Federal fiscal years 1998 through 2002 as 
the payment rate in effect during the previous fiscal year increased by 
a factor equal to the market basket percentage increase minus 1 
percentage point, with the exception that the payments for the first 
half of FY 2001 shall be increased 0.5 percent, and then increased an 
additional 5 percent over the above calculation. Payments for all of FY 
2002 will be increased 0.75 percent.

IV. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995 (PRA), we are required to 
provide 60-day notice in the Federal Register and solicit public 
comment before a collection of information requirement is submitted to 
the Office of Management and Budget (OMB) for review and approval. In 
order to fairly evaluate whether an information collection report 
should be approved by OMB, section 3506(c)(2)(A) of the PRA requires 
that we solicit comments on the following issues:
    [sbull] The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
    [sbull] The accuracy of our estimate of the information collection 
burden.
    [sbull] The quality, utility, and clarity of the information to be 
collected.
    [sbull] Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    We are soliciting public comment on each of these issues for the 
following sections of this document that contain information collection 
requirements:
    Sections 418.22 and 418.26 of this proposed regulation contain 
information collection requirements that are subject to review by OMB 
under the PRA.

[[Page 70369]]

Section 418.22 Certification of Terminal Illness

    The current collection requirements referenced in Sec.  418.22 have 
been approved by OMB under approval number 0938-0302, with a current 
expiration date of January 31, 2003. However, this rule proposes a new 
collection requirement, which requires CMS to solicit comment on the 
new information collection requirement and resubmit 0938-0302 to OMB 
for review and approval, as a revision to a currently approved 
collection.
    The newly proposed requirement as referenced under paragraph (b)(2) 
of this section stipulates that specific clinical findings and other 
documentation that support the medical prognosis must accompany the 
certification of terminal illness and must be filed in the medical 
record with the written certification as set forth in paragraph (d)(2) 
of this section.
    While this requirement is subject to the PRA, we believe the burden 
associated with this requirement is exempt from the PRA as stipulated 
under 5 CFR 1320.3 (b)(2) and (b)(3) because the requirement is 
considered a reasonable and customary business practice and/or is 
required under State or local laws and/or regulations.

Section 418.26 Discharge From Hospice Care

    The requirement referenced in paragraph (a)(3)(iii) of this section 
requires the documentation of the problem(s) related to the patient and 
efforts made to resolve the problem(s) and enter this documentation 
into the patient's medical records.
    The requirement referenced in paragraph (a)(3)(iv) of this section 
requires that a written physician's order from the patient's attending 
physician and hospice medical director concurring with discharge from 
hospice care be obtained and included in the patient's medical record.
    While these requirements are subject to the PRA, we believe the 
burden associated with these requirements is exempt from the PRA as 
stipulated under 5 CFR 1320.3(b)(2) and (b)(3) because the requirements 
are considered reasonable and customary business practices and/or are 
required under State or local laws and/or regulations.
    If you have any comments on any of these information collection and 
record keeping requirements, please mail the original and three copies 
directly to the following:

Centers for Medicare & Medicaid Services, Office of Information 
Services, Standards and Security Group, Division of CMS Enterprise 
Standards, Room N2-14-26, 7500 Security Boulevard, Baltimore, MD 21244-
1850, ATTN: John Burke, CMS-1022-P; and
Office of Information and Regulatory Affairs, Office of Management and 
Budget, Room 10235, New Executive Office Building, Washington, DC 
20503, ATTN: Allison Eydt, CMS Desk Officer CMS-1022-P.

V. Regulatory Impact Analysis

    The provisions of this proposed rule are based upon provisions in 
the BBA, BBRA, and BIPA, with statutorily-set timeframes, and have 
already been implemented through program memoranda. These include 
changes in election periods; timing requirements for written 
certification; covered services; payment based upon site of service; 
and annual payment update amounts. Other proposed provisions address 
documentation supporting certification; admission requirements; 
discharge from hospice; and clarification of current policy that has 
not previously been captured in regulations.

A. Overall Impact

    We have examined the impacts of this rule as required by Executive 
Order 12866 (September 1993, Regulatory Planning and Review) and the 
Regulatory Flexibility Act (RFA) (September 19, 1980 Public Law 96-
354). Executive Order 12866 directs agencies to assess all costs and 
benefits of available regulatory alternatives and, if regulation is 
necessary, to select regulatory approaches that maximize net benefits 
(including potential economic, environmental, public health and safety 
effects, distributive impacts, and equity). A regulatory impact 
analysis (RIA) must be prepared for major rules with economically 
significant effects ($100 million or more in any one year). We have 
determined that this rule is not a major rule for the reasons discussed 
below.
    The RFA requires agencies to analyze options for regulatory relief 
of small businesses, nonprofit organizations, and government agencies. 
For purposes of the RFA, small entities include small businesses, 
nonprofit organizations, and government agencies. Most hospitals and 
most other providers and suppliers are small entities, either by 
nonprofit status or having revenues of $25 million or less annually. 
For purposes of the RFA, all hospices are considered to be small 
entities. In 2001, there were approximately 2,277 Medicare-certified 
hospices. Of those 2,277, approximately 73 percent can be considered 
small entities because they were identified as being voluntary, 
government, or other agency.
    Given the general lack of hospice data and the unpredictable nature 
of hospice care, it is extremely difficult to predict the savings or 
costs associated with the changes contained in this proposed rule. 
Originally, we estimated the Medicare hospice rate reductions required 
by section 4441(a) of the BBA would result in a $103 million savings to 
the Medicare program in FY 2002. Increases required by section 321 of 
BIPA, however, will add $37 million to Medicare program costs. While it 
is likely that all of the Medicare-certified hospices considered to be 
small entities have been required to make changes in their operations 
in some way due to the implementation of these statutory provisions and 
proposed changes, this NPRM does not propose any additional changes 
that are likely to significantly impact the operations of hospice 
providers. For these reasons, we certify that this proposed rule will 
not have a significant effect on a substantial number of small 
entities. However, we have prepared the following analysis to describe 
the impacts of this rule. This analysis, in combination with the rest 
of the preamble, is consistent with the standards for analysis set 
forth by the RFA and EO 12866.
    In addition, section 1102(b) of the Act requires us to prepare a 
regulatory impact analysis if a rule may have a significant impact on 
the operations of a substantial number of small rural hospitals. This 
analysis must conform to the provisions of section 603 of the RFA. For 
purposes of section 1102(b) of the Act, we define a small rural 
hospital as a hospital that is located outside of a Metropolitan 
Statistical Area and has fewer than 100 beds. This proposed rule 
largely codifies existing hospice requirements and will not result in a 
significant impact on a substantial number of small rural hospitals. 
Therefore, no analysis is required.
    Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule that may result in expenditure in any 1 year by State, 
local, or tribal governments, in the aggregate, or by the private 
sector, of $110 million. This proposed rule does not impose unfunded 
mandates, as defined by Section 202 of UMRA, as it will not result in 
the expenditure in any 1 year by either State, local or tribal 
governments, or by the private sector of $110 million.
    Executive Order 13132 establishes certain requirements that an 
agency

[[Page 70370]]

must meet when it promulgates a proposed rule (and subsequent final 
rule) that imposes substantial direct requirement costs on State and 
local governments, preempts State law, or otherwise has Federalism 
implications. This proposed rule has no impact on State law. We have 
reviewed this proposed rule under the threshold criteria of Executive 
Order 13132 and we believe that it would not have substantial 
Federalism implications.
    Section 1902(a)(13)(B) of the Act requires the Medicaid payment 
methodology for hospice care to be determined using the same 
methodology that is used for Medicare. State Medicaid programs with the 
optional Medicaid hospice benefit would be required to implement 
sections 4441(a) and 4442 of the BBA. We remain unaware of any impact 
of these provisions on State Medicaid programs since these provisions 
became effective. Nevertheless, it is possible that these payment-
related provisions could impact particular State Medicaid programs. 
However, because each State Medicaid program is unique, it is 
impossible to quantify meaningfully, an estimate of the effect of the 
costs on State and local governments.
B. Anticipated Effects
1. Effects on Hospice Providers
    Given the general lack of hospice data and the unpredictable nature 
of hospice care, it is extremely difficult to quantify the impact this 
proposed rule would have on hospice providers. Nevertheless, we have 
tried to estimate the impact of the following changes on hospice 
providers. In general, we believe that the effect of the proposed rule 
will have minimal economic impact on hospice providers or on the 
regulatory burden of small business. In the following sections we have 
indicated implementation actions already taken, and anticipated effects 
the proposed rules may have.
2. Effects on Payments
    The BBA required hospice providers to bill for routine and 
continuous home care based on the geographic location where the service 
was provided. We expect that Medicare would experience some savings 
with this provision; however, it is impossible to predict the size of 
the savings attributable to this provision. These Medicare savings may 
reflect a cost to hospice providers. This BBA change has been 
implemented through program memoranda. This proposed rule merely 
codifies this statutorily required change.
3. Effects on Benefit Period Change
    Medicare hospice is now available in two 90-day periods and an 
unlimited number of 60-day benefit periods. Because there is no longer 
a limit on the number of benefit periods available to a beneficiary, it 
is possible that this change would result in an increase in the number 
of revocations and reelections. However, we anticipate that this change 
would have a negligible effect on hospice providers. The change in 
benefit periods was implemented by a program memorandum issued shortly 
after passage of the BBA and has already been incorporated into hospice 
program operations.
4. Effects on Covered Services
    The BBA clarified that the Medicare hospice benefit covers any 
service otherwise covered by Medicare and listed in the hospice plan of 
care as reasonable and necessary for the palliation and management of a 
terminal illness. This change should not generate any additional costs 
for Medicare hospices because it is merely a statutory clarification of 
existing Medicare policy. This clarification of covered hospice 
services was implemented through a program memorandum issued prior to 
the effective date set by the BBA, April 1, 1998 and is merely being 
codified by this regulation. It helped providers determine better the 
services they must provide.
5. Effects of Physician Certification
    The requirement that a written certification of terminal illness 
for admission to a hospice for the initial 90-day benefit period be on 
file before a claim for payment is submitted would not impose any 
additional costs on hospice providers and removes the problem of 
obtaining the written certification according to a rigid timeframe. 
This requirement would provide hospices with more flexibility to 
establish cost-efficient procedures for obtaining the required 
certifications. However, the proposed expansion of the requirement for 
verbal certifications to every benefit period may impose costs on 
hospice providers. Before enactment of the BBA, verbal certifications 
were required within 2 days of the start of care during the first 
benefit period if a written certification could not be obtained within 
those 2 days. We are proposing to require that, absent written 
certification, verbal certifications of terminal illness be obtained 
within those 2 days for each benefit period. Although we believe the 
impact of this proposal would be negligible, it is difficult to 
estimate the exact size of the impact of this proposal because some 
costs may be negated by the increased flexibility, and time, a hospice 
provider has in obtaining the required written certifications.
    Additionally, we believe that the proposal to require that written 
certifications of terminal illness be accompanied by specific clinical 
findings and documentation supporting the prognosis would not impose 
any new costs on hospice providers. We released a policy memorandum in 
1995 to all hospice providers, through the fiscal intermediaries, 
requesting that all hospices maintain documentation demonstrating a 
beneficiary's terminal status. Because it has been 6 years since we 
issued the policy calling for specific clinical findings and other 
documentation supporting the terminal prognosis, we do not anticipate 
that the requirement will alter hospices' current practices.
6. Effects on Admission to Hospice Care
    We believe that the proposed regulation describing admission 
responsibilities would impose no additional burden upon hospices. The 
responsibilities were referred to in various regulations, manuals, 
program memoranda, and other correspondence; this regulation brings 
them together in an organized rule. ORT and OIG investigations and 
reviews found that admission activities were not always executed fully, 
or when done, they were not always documented. This proposed regulation 
would specify the consultation between the attending physician and the 
hospice and its medical director that normally does or should take 
place when a physician seeks hospice care for his or her patient. The 
regulation would also describe the consideration that the medical 
director gives, when deciding upon certification, to the patient's 
diagnosis, related diagnoses, medical findings that support those 
diagnoses, the over all medical management needs of the patient, and 
the attending physician's future plans for the patient. We do not 
believe any new costs are associated with these proposed requirements, 
and the 1995 policy memorandum had made clear hospice admission 
responsibilities and the need to document their execution. We found 
that the hospice provider community was generally pleased that CMS had 
issued the guidance, which alleviated previous problems associated with 
admission of beneficiaries to hospice care.

[[Page 70371]]

7. Effects on Discharge and Discharge Planning
    This proposed regulation may add a small additional burden to 
hospices providing services to Medicare beneficiaries, but at the same 
time it also should reduce certain other burdens they may currently 
experience, particularly with respect to making appropriate discharges. 
In the absence of specific regulations, hospices have often been 
uncertain what to do when a patient appeared appropriate for discharge 
from the program. There was limited manual guidance, although following 
the ORT and OIG investigations, some additional information on the 
appropriate time to discharge patients was communicated to the hospice 
industry. Our proposal would incorporate discharge planning, a normal 
part of health care provision, into the hospice's care planning 
procedures. Regular, ongoing care planning, including the potential for 
discharge, has always been part of a hospice's responsibilities, and 
the regulation would simply recognize this responsibility. It is not a 
new additional burden.
    Discharge for certain disruptive, abusive, or uncooperative 
patients would entail a small additional burden upon very few hospices, 
based on past discussions with some providers before preparation of 
this proposed rule. We believe the burden is small, because we have 
rarely received requests from hospices over the years for relief in 
cases involving this type of behavior. Elsewhere in this preamble, we 
have elicited input on this particular proposed rule, particularly with 
respect to protection of patients. We are aware of the burden that 
individual providers have had when faced with difficult patients, and 
this proposal would provide a way for them to resolve it, and, we 
believe, also lessen burdens currently experienced when trying to 
provide care to this type of patient.
    The section of this proposed regulation that discusses the effect 
of discharge, that is, that a beneficiary discharged from hospice care 
immediately resumes full coverage under the regular Medicare program, 
has always been the law. However, it has not been stated in regulation 
in a straightforward manner, and doing so offers reassurance to both 
the beneficiary and the hospice that discharge from the hospice does 
not mean the loss of Medicare benefits. This section also assures a 
beneficiary that he or she may again elect hospice at any future time 
if he or she meets eligibility requirements.

C. Effects on Other Providers

    We do not anticipate that this rule would have any effects on other 
provider types.

D. Effects on the Medicare and Medicaid Programs

    As discussed above, it is very difficult to estimate the size of 
any savings to the Medicare program attributable to this proposed rule. 
We have estimated that the hospice rate reduction for FY 1998 through 
FY 2002, as required by section 4441(b) of the BBA, section 131(a) of 
BBRA, and section 321 of BIPA, would result in a total savings of $108 
million. Also, as discussed above, it is very difficult to estimate the 
size of any implementation costs to State Medicaid programs with 
optional Medicaid hospice benefits. However, it should be noted that 
the BBA provisions that State Medicaid programs are required to 
implement (rates of payment, payment based on location where care is 
furnished, other items and services, physician contracting) have been 
effective since August 5, 1997. Since that time, we have not received 
any correspondence from State Medicaid programs indicating that these 
provisions have had significant costs associated with implementation.

E. Alternatives Considered

    Most of the proposed regulations are mandated requirements of the 
BBA, BBRA, and BIPA, and have already been implemented by CMS Program 
Memoranda, published in the month after passage of the BBA, and the 
month after the passage of BIPA. BBRA changes only concerned hospice 
payment amounts but did not affect the basic law. Discharge for cause 
will enable us to implement policies that permit hospices to act in 
those rare events that indicate the need, but with protection for the 
beneficiary included in the rules. Alternatively, hospices may continue 
to address this particular problem without certainty as to their 
authority in these special situations. Other proposed regulations 
represent current policies that have been implemented and recognized by 
the industry, clarification of current regulations, or suggested 
policies that the industry and CMS believe may help improve the 
Medicare hospice program.

F. Conclusion

    The general lack of hospice data and the unpredictable nature of 
hospice care have made it extremely difficult to predict the savings or 
costs associated with the changes contained in this proposed rule. 
However, we believe that the proposed changes would create very little, 
if any, new economic or regulatory burdens on hospice providers. These 
proposed changes are either statements of current policy or 
clarifications of policy that would benefit hospice providers. We 
believe that we have made every effort to mitigate the effects of these 
proposed changes on hospice providers.
    In accordance with the provisions of Executive Order 12866, this 
regulation was reviewed by the Office of Management and Budget.

VI. Response to Comments

    Because of the large number of items of correspondence we normally 
receive in response to Federal Register documents published for 
comment, we are not able to acknowledge or respond to them 
individually. We will consider all comments we receive by the date and 
time specified in the DATES section of this preamble, and, when we 
proceed with a subsequent document, we will respond to the comments in 
the preamble to that document.

List of Subjects in 42 CFR Part 418

    Health facilities, Hospice care, Medicare, Reporting and Record 
keeping requirements.
    For the reasons set forth in the preamble, 42 CFR, Chapter IV, part 
418 is proposed to be amended as set forth below:

PART 418--HOSPICE CARE

    1. The authority citation for part 418 continues to read as 
follows:

    Authority: Secs. 1102 and 1871 of the Social Security Act (42 
U.S.C. 1302 and 1395hh).

Subpart B--Eligibility, Election and Duration of Benefits

    2. In Sec.  418.21, paragraph (a) is revised to read as follows:


Sec.  418.21  Duration of hospice care coverage--Election periods.

    (a) Subject to the conditions set forth in this part, an individual 
may elect to receive hospice care during one or more of the following 
election periods:
    (1) An initial 90-day period;
    (2) A subsequent 90-day period; or
    (3) An unlimited number of subsequent 60-day periods.
* * * * *
    3. In Sec.  418.22, paragraphs (a) and (b) are revised to read as 
follows:


Sec.  418.22  Certification of terminal illness.

    (a) Timing of certification--(1) General rule. The hospice must 
obtain written certification of terminal illness for each of the 
periods listed in

[[Page 70372]]

Sec.  418.21(a), even if a single election continues in effect for an 
unlimited number of periods, as provided in Sec.  418.24(c).
    (2) Basic requirement. Except as provided in paragraph (a)(3) of 
this section, the hospice must obtain the written certification before 
it submits a claim for payment.
    (3) Exception. If the hospice cannot obtain the written 
certification within 2 calendar days, it must obtain an oral 
certification within 2 calendar days and the written certification 
before it submits a claim for payment.
    (b) Content of certification. Certification will be based on the 
physician's or medical director's clinical judgment regarding the 
normal course of the individual's illness. The certification must 
conform to the following requirements:
    (1) The certification must specify that the individual's prognosis 
is for a life expectancy of 6 months or less if the terminal illness 
runs its normal course.
    (2) Specific clinical findings and other documentation that support 
the medical prognosis must accompany the certification and must be 
filed in the medical record with the written certification as set forth 
in paragraph (d)(2) of this section.
* * * * *
    4. In Sec.  418.24, paragraph (c) is revised to read as follows:


Sec.  418.24  Election of hospice care.

* * * * *
    (c) Duration of election. An election to receive hospice care will 
be considered to continue through the initial election period and 
through the subsequent election periods without a break in care as long 
as the individual--
    (1) Remains in the care of a hospice;
    (2) Does not revoke the election under the provisions of Sec.  
418.28; and
    (3) Is not discharged from the hospice under the provisions of 
Sec.  418.26.
* * * * *
    5. New Sec. Sec.  418.25 and 418.26 are added to read as follows:


Sec.  418.25  Admission to hospice care.

    (a) The hospice admits a patient only on the recommendation of the 
medical director in consultation with the patient's attending 
physician, if any.
    (b) In reaching a decision to certify that the patient is 
terminally ill, the hospice medical director must consider at least the 
following information:
    (1) Diagnosis of the terminal condition of the patient.
    (2) Other health conditions, whether related or unrelated to the 
terminal condition.
    (3) Current clinically relevant findings supporting all diagnoses.


Sec.  418.26  Discharge from hospice care.

    (a) Reasons for discharge. A hospice may discharge a patient if--
    (1) The patient moves out of the hospice's service area or 
transfers to another hospice;
    (2) The hospice determines that the patient is no longer terminally 
ill; or
    (3) The hospice determines, under a policy set by the hospice for 
the purpose of addressing discharge for cause that meets the 
requirements of paragraphs (a)(3)(i) through (a)(3)(iv) of this 
section, that the patient's behavior is disruptive, abusive, or 
uncooperative to the extent that delivery of care to the patient or the 
ability of the hospice to operate effectively is seriously impaired. 
The hospice must do the following before it seeks to discharge a 
patient:
    (i) Make a serious effort to resolve the problem(s) presented by 
the patient's behavior or situation.
    (ii) Ascertain that the patient's proposed discharge is not due to 
the patient's use of necessary hospice services.
    (iii) Document the problem(s) and efforts made to resolve the 
problem(s) and enter this documentation into its medical records.
    (iv) Obtain a written physician's order from the patient's 
attending physician and hospice medical director concurring with 
discharge from hospice care.
    (b) Effect of discharge. An individual, upon discharge from the 
hospice during a particular election period for reasons other than 
immediate transfer to another hospice--
    (1) Is no longer covered under Medicare for hospice care;
    (2) Resumes Medicare coverage of the benefits waived under Sec.  
418.24(d); and
    (3) May at any time elect to receive hospice care if he or she is 
again eligible to receive the benefit.
    (c) Discharge planning. (1) The hospice must have in place a 
discharge planning process that takes into account the prospect that a 
patient's condition might stabilize or otherwise change such that the 
patient cannot continue to be certified as terminally ill.
    (2) The discharge planning process must include planning for any 
necessary family counseling, patient education, or other services 
before the patient is discharged because he or she is no longer 
terminally ill.
    6. In Sec.  418.28, paragraph (b)(1) is amended by adding the 
following sentence at the end of the paragraph.


Sec.  418.28  Revoking the election of hospice care.

* * * * *
    (b) * * *
    (1) * * * If a signed revocation is not obtainable by the hospice 
for a discharge under Sec.  418.26(a)(3), the requirement of the 
section may be waived.

Subpart F--Covered Services

    7. In Sec.  418.202, the introductory text is republished, and a 
new paragraph (i) is added to read as follows:


Sec.  418.202  Covered services.

    All services must be performed by appropriately qualified 
personnel, but it is the nature of the service, rather than the 
qualification of the person who provides it, that determines the 
coverage category of the service. The following services are covered 
hospice services:
* * * * *
    (i) Effective April 1, 1998, any other service that is specified in 
the patient's plan of care as reasonable and necessary for the 
palliation and management of the patient's terminal illness and related 
conditions and for which payment may otherwise be made under Medicare.

Subpart G--Payment for Hospice Care

    8. Section 418.301 is amended by adding a new paragraph (c) to read 
as follows:


Sec.  418.301  Basic rules.

* * * * *
    (c) The hospice may not charge a patient for services for which the 
patient is entitled to have payment made under Medicare or for services 
for which the patient would be entitled to payment, as described in 
Sec.  489.21 of this chapter.
    9. Section 418.302 is amended by adding a new paragraph (g) to read 
as follows:


Sec.  418.302  Payment procedures for hospice care.

* * * * *
    (g) Payment for routine home care and continuous home care is made 
on the basis of the geographic location where the service is provided.


Sec.  418.304  [Amended]

    10. In Sec.  418.304, the following amendments are made:
    a. In paragraph (b), the phrase ``physician's reasonable charge'' 
is removed and add in its place ``physician fee schedule.''
    b. In paragraph (c), the phrase ``subparts D or E, part 405 of this 
chapter'' is removed and add in its place ``subpart A, part 414 of this 
chapter.''
    11. In Sec.  418.306, the introductory text of paragraph (b) is 
republished, paragraph (b)(3) is revised, and new paragraphs (b)(4) and 
(b)(5) are added to read as follows:

[[Page 70373]]

Sec.  418.306  Determination of payment rates.

* * * * *
    (b) Payment rates. The payment rates for routine home care and 
other services included in hospice care are as follows:
* * * * *
    (3) For Federal fiscal years 1994 through 2002, the payment rate is 
the payment rate in effect during the previous fiscal year increased by 
a factor equal to the market basket percentage increase minus--
    (i) 2 percentage points in FY 1994;
    (ii) 1.5 percentage points in FYs 1995 and 1996;
    (iii) 0.5 percentage points in FY 1997; and
    (iv) 1 percentage point in FY 1998 through FY 2002.
    (4) For Federal fiscal year 2001, the payment rate is the payment 
rate in effect during the previous fiscal year increased by a factor 
equal to the market basket percentage increase plus 5 percentage 
points. However, this payment rate is effective only for the period 
April 1, 2001 through September 30, 2001. For the period October 1, 
2000 through March 31, 2001, the payment rate is based upon the rule 
under paragraph (b)(3)(iv) of this section. The payment rate in effect 
during the period April 1, 2001 through September 30, 2001 is 
considered the payment rate in effect during fiscal year 2001.
    (5) The payment rate for hospice services furnished during fiscal 
years 2001 and 2002 will be increased by an additional 0.5 percent and 
0.75 percent, respectively. This additional amount will not be included 
in updating the payment rate as described in paragraph (b)(3) of this 
section.
* * * * *

(Catalog of Federal Domestic Assistance Program No. 93.773, 
Medicare--Hospital Insurance; and Program No. 93.774, Medicare-- 
Supplementary Medical Insurance)

    Dated: June 3, 2002.
Thomas A. Scully,
Administrator, , Centers for Medicare & Medicaid Services.

    Dated: August 21, 2002.
Tommy G. Thompson,
Secretary.
[FR Doc. 02-29798 Filed 11-21-02; 8:45 am]
BILLING CODE 4120-01-P