[Federal Register Volume 70, Number 224 (Tuesday, November 22, 2005)]
[Rules and Regulations]
[Pages 70532-70548]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-23078]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 418

[CMS-1022-F]
RIN 0938-AJ36


Medicare Program; Hospice Care Amendments

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

ACTION: Final rule.

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SUMMARY: This final rule revises existing regulations that govern 
coverage and payment for hospice care under the Medicare program. These 
revisions reflect the statutory changes 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). Additionally, 
these revisions reflect current policy on the documentation needed to 
support a certification of terminal illness, admission to Medicare 
hospice, and a new requirement that allows for discharges from hospice 
for cause under very limited circumstances.
    This final 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.
    The intent of this final rule is to expand the hospice benefit 
periods, improve documentation requirements to support certification 
and recertification of terminal illness, provide guidance on hospice 
admission procedures, clarify hospice discharge procedures, update 
coverage and payment requirements, and address the changing needs of 
beneficiaries, suppliers, and the Medicare program.

DATES: These regulations are effective on January 23, 2006.

FOR FURTHER INFORMATION CONTACT: Linda Smith, (410) 786-5650.

SUPPLEMENTARY INFORMATION: 

I. Background

A. Hospice Care

    Hospice care means a comprehensive set of services described in 
1861(dd)(1) of the Social Security Act (the Act), identified and 
coordinated by an interdisciplinary team to provide the physical, 
psychosocial, spiritual, and emotional needs of a terminally ill 
patient and family members or both as denoted in a specific patient 
plan of care.
    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. Section 1861(dd) of the Act provides for coverage of hospice 
care for terminally ill Medicare beneficiaries

[[Page 70533]]

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. Prior to the BBA of 1997, if a beneficiary voluntarily left 
the program or was discharged from it, he or she forfeited the 
remaining days in the benefit period. When 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 then 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.
    The BBA of 1997 amended the election and benefit period procedures 
to state that once a patient elects the Medicare hospice benefit, 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 
would 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 42 CFR part 418, subpart G, 
``Payment for Hospice Care.''

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

    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 additional changes to the Medicare hospice benefit. Program 
Memorandum (PM A-97-11), released in September 1997, implemented most 
of the hospice-related BBA provisions.
    The limitation of liability rule changes were implemented through 
the Program Memorandum (PM A-97-11), issued in September 1997. A 
hospice cost report for the hospice data collection requirement was 
developed and issued in April 1999.

A. Payments for Hospice Services (Section 4441 of the 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 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, required 
hospices to 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 provides 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.

[[Page 70534]]

    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, were discharged from hospice 
care because they were no longer terminally ill, were able to avail 
themselves of the benefit at some later date if they became terminally 
ill again and otherwise met 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. 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 reiterated 
this policy by amending section 1861(dd)(1) of the Act to add a new 
subparagraph ``I'' 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. 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 
physician's certification of terminal illness for admission to a 
hospice for the initial 90-day benefit period. It requires only that 
certification be done ``at the beginning of the period.'' In accordance 
with our understanding of congressional intent, this change, (for 
example, as indicated by the title of section 4448), was made to extend 
the period for physician certification of the terminal illness by 
allowing hospices the discretion to require that hospice certifications 
are on file before a Medicare claim is submitted.
    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. Under the new certification requirement, certification 
must be done ``at the beginning of the period.'' To protect the 
beneficiaries, we are requiring that the hospice obtain written 
certification before it submits a claim for payment.
    This new certification requirement also applies 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 of the BBA, 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 clarified 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 of BIPA 
clarifies and supports our current policy. In the early 1990's, we 
discovered that in many cases certification and recertification 
occurred without the documentation that would support the terminal 
illness prognosis. Accordingly, in 1995, we issued program memoranda 
requiring clinical information 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. However, 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 information and other 
documentation that provide a basis for the certification of 6 months or 
less if the illness runs its normal course. A signed certification, 
absent a medically sound basis that supports the clinical judgment, is 
not sufficient for application of the hospice

[[Page 70535]]

benefit under Medicare. Section 322 of BIPA became effective for 
certifications made on or after the date of enactment, December 21, 
2000.
Requirements for Issuance of Regulations
    Section 902 of the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (MMA) amended section 1871(a) of the Act and 
requires the Secretary, in consultation with the Director of the Office 
of Management and Budget, to establish and publish timelines for the 
publication of Medicare final regulations based on the previous 
publication of a Medicare proposed or interim final rule. Section 902 
of the MMA also states that the timelines for these regulations may 
vary but shall not exceed 3 years after publication of the preceding 
proposed or interim final rule except under exceptional circumstances.
    This final rule finalizes provisions set forth in the November 22, 
2002 proposed regulation with some changes based on public comments (67 
FR 70363). In addition, this final rule has been published within the 
3-year time limit imposed by section 902 of the MMA. Therefore, this 
final rule is in accordance with the Congress' intent to ensure timely 
publication of final regulations.

III. Provisions of the Proposed Regulations

    In the proposed rule published November 22, 2002 (67 FR 70363), we 
proposed to amend 42 CFR Chapter IV by revising part 418. We proposed 
to make conforming changes to the Medicare hospice regulations to 
reflect the statutory changes, to revise the regulation to reflect 
current policy and to clarify requirements regarding the documentation 
needed to support a certification of terminal illness and the admission 
to and discharge from a Medicare hospice. We proposed to add one new 
requirement that would allow for discharges from hospice for cause 
under very limited circumstances.

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

    In Sec.  418.21, we proposed to revise 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 proposed to revise the cross reference in Sec.  418.22(a)(1) 
from ``Sec.  418.21'' to ``Sec.  418.21(a)'' and remove the phrase 
``for two, three, or four periods'' and replace 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 
proposed to revise 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 
proposed 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. 
Therefore, oral certifications, 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 proposed to maintain 
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 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 proposed 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 would state 
that certification for the hospice benefit would 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 
proposed requiring that clinical information 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 proposed to add to paragraph (c), ``Duration of 
election,'' a new paragraph (c)(3) to state that an election to receive 
hospice care would 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 proposed to 
establish general guidance on hospice admission procedures. Currently, 
there is no guidance in manuals or regulations regarding admission 
procedures. We proposed to add a new Sec.  418.25, ``Admission to 
hospice care,'' which establishes 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

[[Page 70536]]

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 information supporting all diagnoses.

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

    As with admission to hospice, the statute does not explicitly 
address when it is appropriate to discharge an individual from hospice 
care. The Internet Online Manual (IOM) Medicare Benefit Policy Manual, 
Section 20.2.1 Hospice Discharge, 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 proposed 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. Before 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.
    Paragraph (b), ``Effect of discharge,'' specifies 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 realize that there are certain 
instances in which it is no longer appropriate for a hospice to provide 
care to a patient. 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 proposed to add a paragraph (c), ``Discharge 
planning,'' in the new requirement at Sec.  418.26. We 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 that the patient cannot continue to 
be certified as terminally ill. Additionally, we proposed 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, we proposed to revise Sec.  418.28(b)(1) to permit 
discharges for cause (under proposed Sec.  418.26(a)) 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 position of receiving daily payments from 
Medicare for a person who cannot receive services. Paragraph (b)(1) 
would permit waiver of a signed revocation if one were not obtainable 
in cases of discharge for cause. 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 proposed to 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.  418.301, Sec.  418.302, Sec.  
418.304, and Sec.  418.306)

    In addition to reflecting the payment changes required by the BBA, 
we proposed to add a new paragraph (c) to Sec.  418.301, ``Basic 
rules.'' This paragraph

[[Page 70537]]

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 proposed to add 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 based on the geographic 
location where the service is provided (requirement of section 4442 of 
the BBA).
    We proposed to 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 proposed to 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 also proposed to 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 provisions in 42 CFR Part 414 Subpart B.
    Finally, in Sec.  418.306, ``Determination of payment rates,'' we 
proposed to revise paragraph (b)(3) and to 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 were increased by 0.75 percent.

IV. Analysis of and Responses to Public Comments

    We received a total of 27 timely public comments in response to the 
November 22, 2002 proposed rule (67 FR 70363). Some of the 
organizations we received letters from were hospice providers, national 
stakeholder and advocacy groups, national and State hospice 
associations, and other health care providers and suppliers. All public 
comments were reviewed and grouped by the same or related topics. The 
comments and our responses are summarized below.

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

    Comment: A commenter stated that the regulations should make clear 
that if a beneficiary revokes the benefit and there are unused days 
remaining in the benefit period, the beneficiary is free to re-elect 
hospice before those unused days pass.
    Response: Section 418.26(b)(3) specifically states that the 
individual ``may at any time elect to receive hospice care if he or she 
is again eligible to receive the benefit.'' Section 418.28(c)(3) also 
contains similar language.
    Comment: One commenter requested that the new benefit period rules 
apply to State Medicaid programs that offer hospice.
    Response: This would be up to individual States, who generally 
follow Medicare hospice rules.
    Comment: A commenter asked us to state in the final rule that there 
is no 6-month limit on hospice eligibility as long as there is 
documentation to support medical reviews of cases when this happens.
    Response: We do not believe this language needs to be included in 
the final rule. The 6-month rule applies to eligibility for the hospice 
benefit, including a patient's prognosis and life expectancy. Medical 
reviews are not automatic in the event that a patient lives longer than 
6 months, and could occur at any point during an individual's time in 
hospice including less than 6 months if this review were indicated.

B. Certification of Terminal Illness (Sec.  418.22)

    Comment: A few commenters believe that the proposed rule would 
require oral certifications for each benefit period, and that oral 
certification is required from the medical director and the attending 
physician for all benefit periods, a new and unnecessary burden.
    Response: This is not correct. An oral certification is only needed 
if no written certification is obtained within 2 days. This change in 
regulations implements a BBA provision that the Congress intended to 
ease the burden of obtaining a written certification within 2, or at 
the latest, 8 days after the start of the initial benefit period. Now, 
the written certification is required before a hospice submits a claim 
for payment. Therefore, oral certification will be required if the 
written certification cannot be obtained within 2 days following the 
start of the benefit period. In fact, the rules for certification for 
periods following the initial period are unchanged. Section Sec.  
418.22(c), the regulation concerning the initial certification and 
those that followed, was not part of the proposed changes published on 
November 22, 2002 (67 FR 70363). This regulation requires the attending 
physician's (if there is one) certification for the initial period. 
Subsequent periods only require certification by the hospice's medical 
director or the physician member of the hospice IDG.
    Comment: Several commenters are concerned that language calling for 
``specific clinical findings and other documentation'' at Sec.  
418.22(3)(b)(2) could end up with requirements that would become 
excessively specific and cause access problems due to a perception that 
exacting documentation requirements must be met; or that additional 
tests must be performed, beyond what already will have sufficiently 
established that eligibility is met. Commenters suggested that 
physician experience and not simply lab or pathology reports be 
recognized.
    Response: It appears that the word ``specific'' may be skewing the 
intention of the regulation. This rule is being added to formalize 
policy that came in response to OIG/ORT findings in the mid-1990s, when 
a number of admissions to hospices were happening with little or no 
documentation that supported a certification for hospice. We expect 
that a hospice patient's medical record would contain sufficient 
information to support the certification of the individual as having a 
terminal illness with a life expectancy of 6 or fewer months, if the 
illness runs its normal course. We believe it is reasonable to expect 
documentation to support the certification. We are removing the word 
``specific'' and changing ``findings'' to ``information'' so that the 
phrase would read ``clinical information and other documentation.'' 
Section 322 of BIPA called for the physician's ``clinical judgment,'' 
and this regulation simply asks that it be supported.
    Comment: A commenter stated that the best approach to certification 
might be for the attending physician to refer patients he or she 
believes eligible, and for the medical director to exercise his or her 
best judgment regarding concurrence.

[[Page 70538]]

    Response: The Medicare statute is clear about the responsibility of 
the hospice's medical director to certify, along with the attending 
physician for the initial benefit period, the individual as eligible 
for hospice.
    Comment: Two commenters believe we were compromising the intent of 
BIPA by requiring oral certifications for each benefit period, 
requiring a hospice to expend additional resources without any obvious 
benefit. One commenter believes this is a new requirement. Another 
commenter indicated that it ignores Congressional intent.
    Response: In a sense, this is a new requirement, but it protects 
and ensures timely medical care for the beneficiary as well as 
significantly eases the written certification burden on the hospice. 
The hospice regulations have always required written certification at 
the start of each benefit period. The Congress made no indication that 
this rule should end. Now, all that is required, if a written physician 
certification cannot be completed within 2 calendar days after a period 
begins, is that an oral certification be obtained. Previously a written 
certification was required within 2 days for every period after the 
initial benefit period, or the hospice would be faced with the 
possibility of a claim being denied. We are following Congressional 
intent, in that the Congress indicated that the written hospice 
certification rule should follow the home health rule, and be on file 
before a claim is submitted.
    Comment: A commenter believes that clinical information and 
documentation do not need to accompany the certification, and urged 
that we delete ``accompany'' in the requirement at Sec.  418.22(b)(2), 
replacing it with simply a requirement that the information be in the 
medical record. The commenter believes that if documentation had to 
accompany the certification, care could be delayed or even denied, and 
an unnecessary burden would be placed upon the hospice and other 
providers. Several commenters pointed out that frequently hospices 
obtain certifying information over the phone from the referring 
physician, which is then recorded and placed in the patient's medical 
record.
    Response: We believe that clinical information and documentation 
are critical to the certification decision. We recognize that some 
documentation may physically arrive at the hospice and be placed in the 
medical record after the start of care; however, that should not mean 
that the information does not come to the attention of the hospice and 
be included in the certification and admission process. The attending 
physician may well report clinical information by telephone or 
interview, with written documents to arrive later. It is the 
information needed for the hospice's IDG to develop the initial plan of 
care for the new patient, and therefore we would expect the information 
to accompany, in some fashion, the certification, although some of it 
may not arrive physically at the hospice until later. We are revising 
this final rule to indicate that clinical information may initially 
arrive verbally and is documented in the patient's medical record as 
part of the hospice's assessment of eligibility for hospice.
    Comment: A commenter objected to oral certification within 2 days 
after the start of each benefit period, believing it is unnecessary 
record keeping.
    Response: Certification no later than 2 days after the start of 
each benefit period is not a new requirement. Past regulations required 
that certification be in writing no later than 2 days after the start 
of care for all periods after the initial period. The oral 
certification is a way to protect and ensure timely medical care for 
the beneficiary as well as easing the written certification burden on 
the hospice. This final rule requires oral certification (if needed) 
for all benefit periods, and in writing before a claim for the period 
is submitted.
    Comment: A few commenters stated that it was burdensome and 
unnecessary to require clinical information and documentation as part 
of the certification that supports the physician's clinical judgment 
that the individual is terminally ill with a prognosis of 6 months or 
less to live if the illness runs its normal course. There were 
suggestions that BIPA's amendment of the statute, which provides for 
``certification based on the physician's or medical director's clinical 
judgment * * *'' was sufficient, without any supporting documentation 
at the time of certification. It was noted that prognosis is inexact at 
best, and that we seemed to be requiring accurate predictions (with 
possible penalties for failure to be precise).
    Response: As discussed in the preamble of the November 22, 2002 
proposed rule (67 FR 70363), the Medicare statute does not explicitly 
describe what a physician needs to consider before certifying a patient 
for hospice. In that preamble, we cited early ORT findings (which were 
partly based upon other OIG and intermediary medical reviews of patient 
records) as clearly indicating a need for requirements that 
certifications be supported by clinical findings and documentation. 
(Elsewhere in this preamble, we discuss the replacing of the word 
``findings'' with ``information'' in the final rule.) Our 1995 letters 
to RHHIs clarified expectations for supporting documentation, and this 
information was widely disseminated to the hospices and the hospice 
industry. Response to our effort was positive. At that time, claims 
were coming under closer scrutiny, and failure to find documentation in 
medical records that supported certification and the need for hospice 
caused denial of claims. CMS has sent out widely disseminated letters 
that made it clear that Medicare supports accessibility to the hospice 
benefit. The letters recognized that prognosis is not an exact science, 
and that the impact of a hospice's services may sometimes lead to brief 
periods of improvement. Nevertheless, it is reasonable to expect that 
information supporting physician certifications be provided to ensure 
that patients beginning hospice are appropriate for this type of care.
    Comment: One commenter stated that written certifications did not 
need to be obtained by the hospice before submission of claims for 
periods following the initial period and could be obtained later.
    Response: A written certification has been required by statute 
since the inception of the Medicare hospice program.
    Comment: There was a comment that certification of the terminal 
illness should be based on either the attending physician's 
certification or the hospice's medical director's certification.
    Response: This is a statutory requirement. Section 1814(a)(7)(A) of 
the Social Security Act requires that both the hospice's physician 
(either the medical director or physician member of the 
interdisciplinary group) and the attending physician (if the patient 
has one) must certify patients for the Medicare hospice benefit for the 
initial period. For subsequent benefit periods, the hospice physician 
alone may certify patients for the hospice benefit. The attending 
physician does not have sole or surrogate power to certify for 
admission for any benefit period.

C. Election of Hospice Care (Sec.  418.24)

    No comments were received.

D. Admission to Hospice Care (Sec.  418.25)

    Comment: A commenter suggested that the medical director alone 
certify patients for hospice.
    Response: Though the medical director or physician member of the 
hospice interdisciplinary group must certify for each election period, 
the attending physician (if any) is also

[[Page 70539]]

required, by statute, to do so for the first election period.
    Comment: Some commenters believe the regulation would require the 
attending physician to participate in all certifications that may be 
required, and that it imposes a barrier to obtaining hospice care. 
Further, it would subvert the role of the IDG. It would also increase 
costs unnecessarily, since some patients are near death by time of 
admission.
    Response: This is not correct. An attending physician (if the 
patient has one) does certify for the initial period, but is not 
required or expected to do any subsequently needed certifications. We 
would expect the attending physician to be consulted by the medical 
director or IDG if he or she has maintained significant involvement in 
the case.
    Comment: A commenter believes this rule negates the role of the IDG 
in the admission process.
    Response: The role of the IDG is not changed by this rule. 
Regulations at Sec.  418.22(c)(1)(i), which includes the physician 
member of the interdisciplinary group as a party who may certify 
terminal illness, remain the same.
    Comment: A commenter believes that the November 22, 2002 proposed 
rule requires excessive involvement by the Medical Director in the 
patients' admission to hospice, such as physically seeing the patient 
before admission, making telephone calls to the attending physician, 
and obtaining original history and physical reports.
    Response: Currently, to be admitted to hospice, the patient must 
meet the eligibility requirements at Sec.  418.20(b) ``certified as 
being terminally ill in accordance with Sec.  418.22.'' It is the 
physician's responsibility to assess the patient's medical condition 
and determine if the patient can be certified as terminally ill. This 
is reflected in Section 418.22(c)(i) and (ii), Sources of 
Certification, which states that for the initial 90-day period, 
certification statements must be obtained from ``the medical director 
of the hospice or the physician member of the hospice interdisciplinary 
group; and the individual's attending physician if the individual has 
an attending physician.'' The new requirements at Sec.  418.25 provides 
clarification of the physician's responsibilities as it relates to the 
admission process.
    Comment: Some commenters suggested that this final rule would 
require the medical director to consult directly with the attending 
physician, and that it would be a poor and expensive use of the 
director's time. Some commenters stated that it would be a needless 
impediment that would add delays to the start of hospice care. One 
commenter stated that the final rule required every piece of medical 
documentation be in the hands of the medical director before an 
admission decision is made. One commenter stated that the hospice 
nurse, while obtaining pre-admission information, would be the more 
appropriate individual to obtain an attending physician's input in the 
admission process.
    Response: It is not our intent to require a face-to-face or any 
type of direct consultation between the Director and the attending 
physician. We are revising the language to indicate that the medical 
director has considered patient information from the attending 
physician that may be obtained through consultation, or through 
information obtained indirectly. Information could be obtained through 
the hospice nurse or others who would bring the attending physician's 
knowledge of the patient to the medical director when the admission 
decision is being made. We also note that the medical documentation 
does not necessarily need to be physically in the hands of the medical 
director, but that the information presented is considered in the 
decision. The medical reports may arrive later for retention in the 
patient's medical record.
    Comment: A commenter suggested that the proposed rule required an 
attending physician to be consulted, which would be impossible if the 
patient did not have one.
    Response: The proposed rule included the phrase ``if any'' 
following ``attending physician'' but preceded by a comma. We have made 
``if any'' a parenthetical phrase after attending physician to make it 
clearer that we recognize that there may not be an attending physician 
in all cases.
    Comment: One commenter is concerned that small hospices that use 
volunteer medical directors would be forced to hire a Medical Director 
at a big expense. The commenter believes that volunteers would be 
reluctant to offer their time because consultation with attending 
physicians at the time of admission would require more time than they 
would be willing to provide. Other commenters believe that hospices, 
especially small ones with part-time medical directors with separate 
private practices, will face considerable increased costs if medical 
directors were forced to consult with attending physicians.
    Response: We cannot know whether this final rule would cause 
volunteer physicians to cease participating in any particular hospice 
program, or what additional costs a hospice would face with respect to 
its part-time medical directors. However, no matter what the status of 
the hospice medical director--employee or volunteer--that individual 
(or the physician member of the IDG) has always had a responsibility to 
review the appropriateness of admission of new patients to hospice. The 
ORT/OIG reports from the mid-1990s investigations made it clear that we 
need to make sure that certifications were not simply a physician 
signature upon a document alone, but that there was documentation 
supporting the admission decision that had been considered. The medical 
director's certification is an essential part of the admission 
procedure, and the director considering the attending physician's 
knowledge of the patient is part of the certification decision. As we 
discussed elsewhere in the preamble, the consultation need not be 
direct, but the attending physician's input should be considered in the 
admission process.
    Comment: A commenter stated that the medical director must submit 
documentation regarding his or her consideration of the documentation.
    Response: The medical director would only need to document that the 
pertinent clinical information had been considered in the certification 
process. The documentation includes a diagnosis of the patient's 
terminal condition; any related diagnoses or comorbidities; and current 
clinically relevant findings supporting all diagnoses.
    Comment: A commenter objected to Sec.  418.25(b) describing the 
information that should be considered by the medical director when 
certifying a patient.
    Response: We believe that this final rule clarifies the expectation 
that underlies the basis for making a significant decision about an 
individual accepting his or her terminal condition and the treatment 
plans that are to come. It is information that should be considered, 
and we do not think that the final rule should be modified.
    Comment: One commenter opposes this admission section of the 
proposed regulations entirely, citing election and certification as the 
only requirements for beginning hospice. The commenter believes that 
the admission rules would make it impossible for a hospice to admit 
certain individuals for care for a terminal illness that does not meet 
the Medicare eligibility requirements for the benefit, but for whom the 
hospice would not submit claims to Medicare.
    Response: As we explained in the preamble to the proposed rule (67 
FR 70367), this regulation would establish guidance on hospice 
admission

[[Page 70540]]

procedures. It clarifies and supports the election and certification 
rules by describing the process by which a medical director must 
certify that a patient is terminally ill and, thus, admit that patient 
to the hospice. In addition, the admission rules, along with election 
and certification rules would not necessarily pertain to an individual 
that does not meet Medicare eligibility rules but whom the hospice 
otherwise decides to offer services to without cost to Medicare.

E. Discharge From Hospice Care (Sec.  418.26)

    We received some comments that indicated that a discharge for cause 
rule offered helpful guidance in cases where patients consistently 
refused to permit the hospice to visit or deliver care, or it was 
dangerous for staff to visit the home, or when the patient repeatedly 
left the service area. Other commenters asked for specificity in the 
regulations regarding circumstances when the discharge for cause rule 
might apply. We do not believe it is possible to do this without 
creating either an excessively lengthy regulation or one that due to 
over-specificity would unintentionally take the flexibility that the 
hospice may need to act. We do plan to offer some guidance and examples 
in the hospice manual.
    Comment: Some commenters want family added along with the patient 
as a source of problems that could be a reason to consider a discharge 
for cause. Commenters cited examples such as threats from the patient's 
family, or drug stealing and drug dealing by members of the patient's 
household.
    Response: We agree, and have amended the proposed rule to take 
other persons (which would include family) in the patient's home into 
account. To the extent that the situation interferes with the ability 
of the hospice staff to provide care efficaciously, it may be 
appropriate to discharge the patients. However, we would expect the 
hospice to make every effort to rectify the situation before ending its 
services, with documentation of what transpired in the case. 
Alternative suggestions and referrals for care should be presented to 
the patient and his or her caregiver before ending services.
    Comment: A commenter suggested that failure on the part of the 
patient to follow the plan of care be identified as a reason for 
discharge. Instances of the patient going to the emergency room without 
first contacting the hospice were cited, particularly with respect to 
financial issues where the patient would be responsible for care not 
arranged for through the hospice.
    Response: We do not think that single instances of the patient/
family going to the emergency room without prior authorization from the 
hospice would necessarily be a valid reason for discharge. Failure to 
follow important clinical features of the POC may be a reason to 
consider discharge, but a panicked reaction to an emergency should not 
be, by itself, a reason to terminate services. It is important for the 
patient and family to be educated before the start of care that hospice 
entails certain limits in the way care will be provided once hospice 
services begin, among them being restrictions on obtaining care outside 
those provided or arranged for by the hospice, and the patient's 
potential liability for care received without the hospice's 
involvement. It is particularly important that the patient and 
caregiver be instructed on what to do in a crisis or emergency.
    Comment: Some commenters believe that it would be very difficult to 
obtain a patient's attending physician's signature when discharging a 
patient for cause, and that in any event many attending physicians 
cease following their patients after hospice begins. Some patients 
never had an attending physician. Other commenters worry that an 
attending physician could override an IDG decision, when the attending 
physician's opinion was not needed or that in the case of an attending 
physician who disagreed with discharge, it would place him or her in a 
compromised position with his or her patient. Further, the commenter 
stated that it is ultimately the hospice's responsibility to decide 
upon discharge of patients.
    Response: If there is no attending physician involved in a 
patient's care, then such a requirement would seem to create a problem. 
At the same time, a discharge for cause is a serious matter where we 
believe the patient needs some protection from a hospice that may 
behave unethically and try to discharge a patient because he or she may 
require more attention or care than the hospice wished to offer. If 
there is an attending physician, his or her opinion matters. However, 
to reduce a burden that the proposed rule might have created if it were 
finalized, we are revising the requirement at Sec.  418.26(b) to read, 
``Prior to discharging a patient for any reason listed in subsection 
(a), the hospice must obtain a written physician's discharge order from 
the hospice medical director. If the patient has an attending physician 
involved in his or her care, the physician should be consulted before 
discharge and his or her view included in the discharge note.'' This 
would help ensure that the attending physician's position on discharge 
for cause is taken into account, as well as giving the attending 
physician an opportunity to participate in post-discharge planning for 
the patient.
    Comment: Some commenters suggested that either the attending 
physician or medical director could sign a discharge order.
    Response: We cannot accept this suggestion. It is the 
responsibility of the hospice to make this decision, just as it is the 
hospice's decision to admit the new patient. Elsewhere in this 
preamble, we have indicated that the final rule has been revised to 
indicate that the attending physician is to be consulted and his or her 
views included in the discharge note.
    Comment: Commenters want the discharge-planning rule made 
conditional upon the possibility that there will be time to plan, or 
that planning only be done when possible, since some patients may need 
immediate discharge because they are no longer terminally ill. Requests 
were made for a time frame for determining stability requiring 
discharge.
    Response: The rule requires that the hospice have in place a 
process ``that takes into account the prospect that a patient's 
condition might stabilize or otherwise change''. We do not expect that 
a discharge would be the result of a single moment that does not allow 
time for some post-discharge planning. Rather, we would expect that the 
hospice's IDG is following their patient, and if there are indications 
of improvement in the individual's condition such that hospice may soon 
no longer be appropriate, then planning should begin. If the patient 
seems to be stabilizing and the disease progression has halted, then it 
could be the time to begin preparing the patient for alternative care. 
Discharge planning should be a process, and planning should begin 
before the date of discharge. We have tried to avoid prescriptive time 
frames for discharge planning, since we have long been aware that 
merely the attention that hospice services give to a patient can have a 
beneficial effect, creating the impression that the individual may no 
longer be ``actively dying'' and therefore ineligible for the Medicare 
hospice benefit. Therefore, we cannot offer a specific number of days 
or weeks that a patient may be stable and thus not eligible. We see 
this issue as one requiring physician/IDG judgment and would only ask 
that the judgment be supported by documentation in the medical record 
indicating the reason

[[Page 70541]]

why hospice should continue if there seems to be improvement such that 
discharge is under consideration.
    Comment: A commenter wanted the discharge of a patient who moves 
out of the service area or who transfers to another hospice to include 
patients who temporarily leave the hospice's service area without 
notifying or making arrangements with the hospice.
    Response: If the patient transfers to another hospice, then the 
assumption is that arrangements have been made, and end and start dates 
of care have been worked out. This is not a temporary move, and 
discharge issues should not arise. Concerning patients who leave the 
hospice service area temporarily, this issue should have been addressed 
by the hospice at the time of admission when the hospice explains to 
the patient the waiver of benefits that occur upon election of the 
hospice benefit. If the hospice patient leaves the service area and 
attempts to obtain care for his or her terminal condition for which 
hospice was elected, then the patient assumes financial responsibility 
for this care. It is not necessarily a reason to discharge a patient 
unless there is a repeated pattern of such activity and it interferes 
with the care that the hospice plan of care calls for. The hospice 
should counsel the patient regarding the consequences of obtaining care 
from sources other than the hospice. The patient may even decide to 
revoke the benefit under the circumstances.
    Comment: A commenter does not believe a discharge plan should be 
required for all patients, since live discharges are rare. Imposing 
this requirement for every patient would be an unnecessary and costly 
burden.
    Response: We believe that the commenter may have misunderstood the 
purpose of the proposed rule. A hospice would need to have a process in 
place should the condition of a patient show indications that hospice 
possibly may no longer be the appropriate treatment for that 
individual. We do not expect that every patient will have a discharge 
plan prepared. However, should a hospice patient's condition seem to be 
improving (beyond just brief periods of improvement that sometimes 
occur simply because the individual is receiving attention and some 
symptom relief), the hospice IDG should have a discharge planning 
process available in order to help make plans for the individual's 
discharge and follow-up care as may be needed. We would expect most 
patients would not have a discharge plan ever; however, when indicated, 
the hospice would have the ability to begin the process timely.
    Comment: A commenter believes that requiring a written physician's 
order for discharge of a patient, ignored the role of the IDG, 
including the attending physician if he or she is participating.
    Response: We agree about the essential role of the IDG, and we 
would expect their participation in any discharge decisions. However, 
it is the commonly accepted practice for a physician to sign an 
admission or discharge order in hospitals. Similarly, it is the hospice 
physician who signs a certification for hospice care in order to begin 
care, and that individual also would consequently be the one to sign 
the discharge order. Elsewhere in this preamble, we have advised that 
an attending physician would not be required to sign discharge papers.
    Comment: A commenter urged that in cases of discharge for cause the 
patient should be notified of this possible action.
    Response: We agree, and have revised the regulation to reflect this 
suggestion.
    Comment: A commenter wants the beneficiary advised of appeal rights 
when a discharge for cause is being considered. One commenter noted the 
potential for misuse of the discharge for cause rule to discharge high-
cost patients.
    Response: There are no specific appeal rights for the beneficiary 
regarding such considerations. However, for the protection of the 
beneficiary, we added to the regulation, a provision that the 
beneficiary must be notified, by the hospice, that discharge for cause 
is being considered.
    Comment: A commenter suggested that we monitor, analyze, and 
identify ways to reduce discharge for cause, and perhaps then establish 
a forum for sharing best practices on maintaining hospice care for 
difficult patients.
    Response: We appreciate the suggestion and will consider it for 
future program evaluations.
    Comment: A commenter complained that having a physician sign a 
discharge order was creating an additional paperwork burden.
    Response: We see the signing of a discharge order in the patient's 
medical record as part of the physician's administrative activities. 
Signing the order would simply be the final action at the end of 
discharge process.
    Comment: Some commenters believe that it was inappropriate to ask 
the hospice, in considering a discharge for cause, to ``ascertain that 
* * * is not due to * * * use of necessary hospice services,'' and that 
it would be difficult to prove a negative that the use of services was 
not a factor in discharge. Commenters did agree that use of necessary 
services would not be an appropriate reason to discharge.
    Response: We believe that this requirement is appropriately in this 
section of the rule. It is one of our concerns that discharge for cause 
could be a rule that offers opportunity for abuse, and we want to make 
it clear that the hospice needs to make sure that it is planning to 
discharge a patient because of behavior issues, not time or effort or 
cost factors in providing services to a particular individual. We 
believe that ascertaining that discharge is not due to the use of 
necessary services is simply a reminder that some of a hospice's 
patients require more services. This fact should not influence a 
discharge decision.
    Comment: One commenter suggested that the regulations should not 
list any reasons for a cause discharge and instead the hospice should 
set its own policy for discharge for cause. This was based upon the 
assertion that it is impossible to set forth rules that could address 
every possible circumstance that would be a reason to seek a cause 
discharge.
    Response: We agree that it is impossible to list every possible 
reason that an individual might be discharged under this rule. That 
being said, we believe that the circumstances under which this type of 
discharge could be considered are adequately addressed by the rule we 
published. The types of behavior discussed in the rule that seriously 
impair the hospice's ability to operate effectively and provide care to 
the patient and the requirements imposed on the hospice are necessary 
to place some parameters on discharges for cause.
    Comment: One commenter is concerned that the hospice would be 
responsible for post-discharge care of patients discharged for cause, 
when generally these would be patients that it had already found to be 
a problem to the extent that it could not provide needed services.
    Response: We recognize that it may be very difficult to implement 
post-discharge care plans for a patient that has proven to be 
disruptive, abusive, or uncooperative to the extent that services 
cannot be provided, but post-discharge care would not be the 
responsibility of the hospice. The hospice would engage in and prepare 
for after hospice care, but it is up to the patient (and the patient's 
supporters) to take advantage of other sources of care after discharge. 
Though not entirely analogous, it is similar to a physician prescribing 
medication, but it is the responsibility of the patient to take the 
medication, even after the

[[Page 70542]]

physician has fully informed the patient of the importance of doing so.

F. Revoking Election of Hospice Care (Sec.  418.28)

    Comment: A commenter believes that the waiver of a signed 
revocation when a patient revocation cannot be obtained in cases of 
discharge for cause should be placed in the section of regulations 
addressing discharge. The commenter stated that it is confusing to have 
it in its present location as it mixes discharge and revocation. The 
commenter also pointed out that a discharge for cause is not 
revocation. Revocation is voluntary, and mixing it with discharge for 
cause is confusing and unnecessary.
    Response: We agree that this proposal is unneeded, and it has been 
deleted from the final rule.

G. Covered Services (Sec.  418.202)

    Comment: Commenters objected to ``other covered services'' applying 
to ``related conditions'' (to the terminal illness), and asked that it 
be removed from the proposed rule. The commenters feared it would be 
misinterpreted to mean that the hospice would be responsible for 
services not related to the terminal illness.
    Response: A hospice has always been responsible for the care of the 
patient's terminal illness and related conditions, and this rule should 
not be interpreted to mean what the commenter fears, that is, that the 
hospice provides care unrelated to the terminal illness. At the same 
time, if the hospice staff notices, for example, that the patient has 
an eye infection that is unrelated to the terminal illness, then sound 
health care practices suggest that the hospice staff refer that person 
to his or her doctor for treatment. Commenters should review the 
hospice regulation at 42 CFR 418.402, which addresses this concern when 
it states that ``* * * services not considered hospice care include * * 
* treatment of an illness or injury not related to the individual's 
terminal condition.''
    Comment: One commenter asked how ``covered services'' might be 
interpreted by contractors reviewing claims, and whether the lack of 
specificity defining these services could cause denial of payment if 
``covered services'' were determined to be non-covered.
    Response: As we discussed in the preamble to the proposed rule, the 
BBA clarified and codified what had been a Medicare rule, but had not 
always been well understood: that a ``service that is specified in the 
patient's plan of care as reasonable and necessary for the palliation 
and management of the terminal illness and related conditions, and for 
which payment may otherwise be made under Medicare, is a covered 
hospice service.'' The decision as to whether a patient requires and 
receives any particular service from the hospice is, as before, the 
responsibility of the hospice. A medical review by a contractor would 
not necessarily consider whether an item was not required and therefore 
subject to a denial or payment, but rather whether the patient had 
received the appropriate necessary care for his or her particular 
terminal condition. Hospice payment is a prospectively-set daily 
payment to the hospice, and is made without regard to the cost of care 
on any particular day, nor with regard to the total cost of care during 
the entire time period that the hospice cares for the patient.
    Comment: One commenter believes that the phrase ``otherwise covered 
by Medicare'' would result in limitations on what patients could 
receive by way of care, since items not covered by the regular Medicare 
program would not be available due to this phrase.
    Response: The BBA expressly used the cited phrase in amending the 
law and in a congressional document, indicating that Medicare services 
that had not previously been specified in section 1861(dd)(1) of the 
Act were indeed to be made available under the hospice benefit if 
determined to be medically necessary and ordered in the plan of care.
    Comment: A commenter believes that hospices would use this phrase 
to use unqualified and untrained persons to provide services.
    Response: Hospices must meet conditions of participation, which 
require that their staff be qualified to provide the particular service 
the patient needs.
    Comment: The American Association for Respiratory Care asked 
whether respiratory therapy, when part of a hospice patient's plan of 
care, is a Medicare covered hospice service.
    Response: Respiratory therapy would be a covered hospice service if 
the hospice decides its patient requires the service. Provision of the 
service would be paid for out of the hospice daily rate made to the 
hospice.
    Comment: One commenter suggested that psychologists be recognized 
as equivalent practitioners to physicians for purposes of payment for 
mental health services required by a hospice patient. The commenter 
argued that as an otherwise covered Medicare service, certain patients 
could benefit from a psychologist's specialized training, but because 
of the high cost of these services, a hospice would avoid arranging for 
them. This would be due to the fact that payment would come out of the 
hospice's daily rate, a limited source of payment for all needed 
hospice services for individual patients.
    Response: The Medicare law, with respect to hospice, only 
recognizes physicians as defined by statute, that is, medical doctors 
and osteopaths, and we therefore limit separate additional payments to 
those practitioners. If a hospice recognizes that its terminally ill 
patient requires the services of a psychologist, it is free to arrange 
for it.

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

    Comment: A commenter requested that Sec.  418.301(c) indicate that 
hospices pay for medical services not related to the hospice-covered 
terminal illness. Another commenter asked that we clarify that hospices 
are only responsible for the care and services related to the terminal 
illness.
    Response: Conditions not related to the terminal illness may be 
covered under the regular Medicare program, a right that the 
beneficiary does not lose when hospice is elected. Even though other 
non-hospice care may be written into the hospice's plan of care to 
address care and services not related to the terminal illness, which 
help assure proper care to the patient, the hospice's responsibility is 
for care and services related to the terminal illness. Of course, the 
hospice would be expected to make the proper referrals when needed.
    Comment: One commenter asked about the change proposed in Sec.  
418.304(b), where the phrase ``physician's reasonable charge'' is 
replaced by ``physician fee schedule''. The commenter wanted to know if 
this change was the change discussed in the preamble of the proposed 
rule.
    Response: The change in the regulation is the same one discussed in 
the preamble of the proposed rule.

I. Miscellaneous Comments

    Comment: Some commenters believe that we were tightening up the 6-
month prognosis, and that it would make physicians more reluctant to 
refer patients to hospice. Commenters stated that physicians are 
``terrible'' at determining prognoses. They feared they would be 
exposed to scrutiny and penalty if they failed to make accurate 
prognoses.
    Response: As we have noted elsewhere in this section, we know that 
``prognosis'' indicates expectancy. It does not connote exact 
predictions regarding the expected date of death of an individual with 
a terminal illness. We merely want the certification of the

[[Page 70543]]

patient for hospice care to be accompanied by documentation that 
supports the appropriateness of the hospice benefit.
    Comment: One commenter seems concerned by references to ORT, and 
what was perceived as a disregard for the intent of Congress to make 
hospice more accessible.
    Response: We believe that ORT and other investigations by the OIG 
are what helped guide the Congress in changes affecting the Medicare 
hospice benefit, and that we adhered to this effort to make the benefit 
more accessible. Payments for hospice care increased in response to 
industry complaints that payments were inadequate, but payment based 
upon the location at which the services were provided (the individual's 
home) made it more appropriate in that it reflected the wages paid in 
the home's location rather than the high cost area where the hospice's 
home office might be located. The unlimited number of benefit periods 
permitted the hospice industry and all potential patients to no longer 
worry that an individual might live into a fourth but final benefit 
period and then be forced out of hospice care because of improvement in 
health, only to face permanent loss of access to hospice care in the 
future because of pre-BBA rules. Physician certification rules were 
eased, but as discussed elsewhere, the Congress gave no indication that 
it was dissatisfied with our clarification of requirements that a 
physician certification of terminal illness be supported by 
documentation. In addition, the growth of hospice since the ORT/OIG 
investigations indicates that our clarification has not adversely 
affected the industry, considering the increases in patient enrollment 
and Medicare payments for the care.
    Comment: A commenter asked about relief from the 24-hour registered 
nurse requirement for respite care.
    Response: This issue is being taken into consideration as CMS 
drafts the new Hospice Conditions of Participation.

V. Provisions of the Final Regulations

    For the most part, this final rule incorporates the provisions of 
the proposed rule. The provisions of this final rule that differ from 
the proposed rule are as follows and changes are based on public 
comments to provide clarifying language:

Certification of Terminal Illness (Sec.  418.22)

    (a) Timing of certification: (3) Exception. Added, ``after a period 
begins'' to clarify timeframe for written certification within 2 days.
    (b) Content of certification: Deleted the term ``specific'' and 
changed ``findings'' to ``information.'' Also added, ``Initially, the 
clinical information may be provided verbally, and must be documented 
in the medical record and included as part of the hospice's eligibility 
assessment.''

Admission To Hospice Care (Sec.  418.25)

    (a) Added clarifying language ``or with input from'' the patient's 
attending physician and added parentheses around the phrase ``if any.''

Discharge From Hospice Care (Sec.  418.26)

    (a) Reasons for discharge.
    (3) Added clarifying language ``(or other persons in the patient's 
home)'' to address public comment that the patient's family may be the 
problem necessitating a discharge for cause. Also added the following 
language ``(i) Advise the patient that a discharge for cause is being 
considered'' to address the public comment that there should be 
requirements for notification to beneficiaries.
    (b) Renumbered and revised proposed paragraph (a)(3)(iv) for 
clarity as follows ``Prior to discharging a patient for any reason 
listed in subsection (a), the hospice must obtain a written physician's 
discharge order from the hospice medical director. If a patient has an 
attending physician involved in his or her care, this physician should 
be consulted before discharge and his or her review and decision 
included in the discharge note.''

Revoking the Election of Hospice Care (Sec.  418.28)

    Deleted proposed change to Sec.  418.28(b)(1).

Payment for Physician Services (Sec.  418.304)

    As a technical correction we are replacing the language 
``reasonable charges'' with physician fee schedule: to reflect the 
current payment methodology. Additionally, the cross-reference to 
``subparts D or E, Part 405 of this chapter'' will be changed to 
``subpart B, Part 414 of this chapter.''

VI. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995 (PRA), we are required to 
provide 30-day notice in the Federal Register and solicit public 
comment when 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:
     The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
     The accuracy of our estimate of the information collection 
burden.
     The quality, utility, and clarity of the information to be 
collected.
     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 final regulation contain 
information collection requirements that are subject to review by OMB 
under the PRA.

Certification of Terminal Illness (Sec.  418.22)

    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 September 30, 2006. However, this rule imposes 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 imposed requirement as referenced under paragraph (b)(2) 
of this section stipulates that clinical information 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 (b)(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.

Discharge From Hospice Care (Sec.  418.26)

    Paragraph (a)(3)(iv) of this section requires documentation of the 
problem(s) related to the patient and efforts made to resolve the 
problem(s) into the patient's medical records.
    Paragraph (b) of this section requires that a written physician's 
discharge order from the hospice medical director and the decision of 
the patient's attending physician (if any) concurring with discharge 
from hospice care be

[[Page 70544]]

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.
    We have submitted a copy of this final rule to OMB for its review 
of the information collection requirements described above. These 
requirements are not effective until they have been approved by OMB.
    If you comment on any of these information collection and record 
keeping requirements, please mail copies directly to the following: 
Centers for Medicare & Medicaid Services, Office of Strategic 
Operations and Regulatory Affairs, Regulations Development Group, Attn: 
Melissa Musotto, CMS-1022-F, Room C5-11-04, 7500 Security Boulevard, 
Baltimore, MD 21244-1850; and Office of Information and Regulatory 
Affairs, Office of Management and Budget, Room 10235, New Executive 
Office Building, Washington, DC 20503, Attn: Carolyn Lovett, CMS Desk 
Officer. Comments submitted to OMB may also be e-mailed to the 
following address: e-mail: [email protected] or faxed to OMB 
at (202) 395-6974.

VII. Regulatory Impact

    The provisions of this final 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 final rule as required by 
Executive Order 12866 (September 1993, Regulatory Planning and Review), 
the Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-
354), section 1102(b) of the Social Security Act, the Unfunded Mandates 
Reform Act of 1995 (Pub. L. 104-4), and Executive Order 13132.
    Executive Order 12866 (as amended by Executive Order 13258, which 
merely reassigns responsibility of duties) 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 1 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. 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 by having revenues of $6 
million to $29 million in any 1 year. Individuals and States are not 
included in the definition of a small entity. For purposes of the RFA, 
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 final rule. 
Originally, we estimated the Medicare hospice rate reductions required 
by section 4441 of the BBA would result in a $120 million savings to 
the Medicare program in FY 2002. Increases required by section 321 of 
BIPA, however, added $150 million to Medicare program costs, and 
increases required by section 131 of BBRA added another $20 million in 
costs, for a net of $50 million in costs for that fiscal year. 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 final rule does not set forth any additional 
changes that are likely to significantly impact the operations of 
hospice providers. For these reasons, we certify that this final 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 Executive Order 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 604 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 final 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 final 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 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 final rule has no impact on State or local 
governments. We have reviewed this final rule under the threshold 
criteria of Executive Order 13132 and we believe that it will 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.

[[Page 70545]]

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 
final rule will 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 final 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 final 
rule 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 final 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 will result in an increase in the number 
of revocations and re-elections. However, we anticipate that this 
change will 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 before the 
April 1, 1998 effective date set by the BBA and is merely being 
codified by this regulation. It helped providers to better determine 
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 will not impose any 
additional costs on hospice providers and removes the problem of 
obtaining the written certification according to a rigid timeframe. 
This requirement will provide hospices with more flexibility to 
establish cost-efficient procedures for obtaining the required 
certifications. However, the 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 requiring 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 requirement 
would be negligible, it is difficult to estimate the exact size of the 
impact of this requirement 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 requiring that written certifications 
of terminal illness be accompanied by clinical information and 
documentation supporting the prognosis will 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 10 years since we issued the 
policy calling for clinical information 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 final rule describing admission 
responsibilities will 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 final rule 
specifies 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 
final rule also describes the consideration that the medical director 
gives when deciding upon certification, to the patient's diagnosis, 
related diagnoses, medical information that support those diagnoses, 
the overall 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 requirements, and the 1995 policy 
memorandum had made clear the hospice admission responsibilities and 
the need to document their execution. We found that the hospice 
provider community was generally pleased that we had issued the 
guidance, which alleviated previous problems associated with admission 
of beneficiaries to hospice care.
7. Effects on Discharge and Discharge Planning
    This final rule 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 final rule 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 will entail a small additional burden upon very few hospices, 
based on past discussions with some providers before preparation of 
this final 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. In the

[[Page 70546]]

preamble to the proposed rule, we elicited input on this particular 
final 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 regulation 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 final rule 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.
8. Effects on Other Providers
    We do not anticipate that this rule will have any effects on other 
provider types.
9. 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 final rule. We 
have estimated that the hospice rate reduction as required by section 
4441 of the BBA, temporary increases in hospice care payments for FY 
2001 and FY 2002 due to section 131 of BBRA, and a 5 percent increase 
in hospice payments due to section 321 of BIPA, would result in a net 
savings of $80 million for FY 1998-2002 and an overall net cost of $120 
million for FY 1998-2007. Given that after FY 2001 the annual costs 
attributable to section 321 of BIPA exceed the annual savings 
attributable to section 4441 of BBA, there are net costs in the out-
years attributable to these two provisions. Below is a table indicating 
the year-by-year costs and savings attributable to the various 
provisions.

                                                  Costs Associated With the Various Hospice Provisions
--------------------------------------------------------------------------------------------------------------------------------------------------------
                              FY                                  1998     1999     2000     2001     2002     2003     2004     2005     2006     2007
--------------------------------------------------------------------------------------------------------------------------------------------------------
BBA Sec. 4441.................................................      -20      -40      -70      -90     -120     -130     -140     -140     -150     -160
BBRA Sec. 131.................................................  .......  .......  .......       10       20  .......  .......  .......  .......
BIPA Sec. 321.................................................  .......  .......  .......       80      150      160      170      180      200      210
    Total Costs...............................................      -20      -40      -70        0       50       30       30       40       50      50
--------------------------------------------------------------------------------------------------------------------------------------------------------
 All dollar figures are in millions and rounded to the nearest $10 million. Costs are shown as positive, savings as negative.
 BBA Sec. 4441: Payments for Hospice Services.
 BBRA Sec. 131: Temporary increase in payment for hospice care.
 BIPA Sec. 321: 5% Increase in Payment.

    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.

C. Alternatives Considered

    Most sections of this final rule 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 sections of this final 
rule 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.

D. Conclusion

    For these reasons, we are not preparing analyses for either the RFA 
or section 1102(b) of the Act because we have determined that this 
final rule will not have a significant economic impact on a substantial 
number of small entities or a significant impact on the operations of a 
substantial number of small rural hospitals.
    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 final rule. 
However, we believe that these changes will create very little, if any, 
new economic or regulatory burdens on hospice providers. These 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 changes on hospice 
providers.
    In accordance with the provisions of Executive Order 12866, this 
regulation was reviewed by the Office of Management and Budget.

List of Subjects in 42 CFR Part 418

    Health facilities, Hospice care, Medicare, Reporting and 
recordkeeping requirements.

0
For reasons set forth in this preamble, the Centers for Medicare & 
Medicaid Services amend 42 CFR chapter IV as follows:

PART 418--HOSPICE CARE

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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

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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.
* * * * *

[[Page 70547]]


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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 Sec.  418.21, 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, after a period begins, 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) Clinical information 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. Initially, the clinical information 
may be provided verbally, and must be documented in the medical record 
and included as part of the hospice's eligibility assessment.
* * * * *

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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; and
    (3) Is not discharged from the hospice under the provisions of 
Sec.  418.26.
* * * * *

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5. New Sec.  418.25 and Sec.  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, or with input from, 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 information 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 (or other persons in the patient's home) 
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 for cause:
    (i) Advise the patient that a discharge for cause is being 
considered;
    (ii) Make a serious effort to resolve the problem(s) presented by 
the patient's behavior or situation;
    (iii) Ascertain that the patient's proposed discharge is not due to 
the patient's use of necessary hospice services; and
    (iv) Document the problem(s) and efforts made to resolve the 
problem(s) and enter this documentation into its medical records.
    (b) Discharge order. Prior to discharging a patient for any reason 
listed in paragraph (a) of this section, the hospice must obtain a 
written physician's discharge order from the hospice medical director. 
If a patient has an attending physician involved in his or her care, 
this physician should be consulted before discharge and his or her 
review and decision included in the discharge note.
    (c) 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.
    (d) 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.

Subpart F--Covered Services

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6. 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

0
7. 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.

0
8. 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]

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9. In Sec.  418.304, the following changes are made:
0
a. In paragraph (b), the phrase ``physician's reasonable charge'' is

[[Page 70548]]

removed and is replaced with ``physician fee schedule.''
0
b. In paragraph (c), the phrase ``subparts D or E, part 405 of this 
chapter'' is removed and the phrase ``subpart B, part 414 of this 
chapter'' is added in its place.

0
10. 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:


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 is increased by an additional 0.5 percent and 0.75 
percent, respectively. This additional amount is not 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 Program)

    Dated: May 24, 2005.
Mark B. McClellan,
Administrator, Centers for Medicare & Medicaid Services.
    Approved: October 11, 2005.
Michael O. Leavitt,
Secretary.
[FR Doc. 05-23078 Filed 11-21-05; 8:45 am]
BILLING CODE 4120-01-P