[Federal Register Volume 72, Number 169 (Friday, August 31, 2007)]
[Rules and Regulations]
[Pages 50214-50249]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 07-4292]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 418

[CMS-1539-F]
RIN 0938-AO72


Medicare Program; Hospice Wage Index for Fiscal Year 2008

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

ACTION: Final rule.

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SUMMARY: This final rule sets forth the hospice wage index for fiscal 
year 2008. This final rule also revises the methodology for updating 
the wage index for rural areas without hospital wage data and provides 
clarification of selected existing Medicare hospice regulations and 
policies.

EFFECTIVE DATES: These regulations are effective on October 1, 2007.

FOR FURTHER INFORMATION CONTACT: Terri Deutsch, (410) 786-9462.

SUPPLEMENTARY INFORMATION:

I. Background

A. General

1. Hospice Care
    Hospice care is an approach to treatment that recognizes that the

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impending death of an individual warrants a change in the focus from 
curative care to palliative care for relief of pain and for symptom 
management. The goal of hospice care is to help terminally ill 
individuals continue life with minimal disruption to normal activities 
while remaining primarily in the home environment. A hospice uses an 
interdisciplinary approach to deliver medical, social, psychological, 
emotional, and spiritual services through 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 services and inpatient respite services are available to the 
family of the hospice patient. Hospice programs consider both the 
patient and the family as a unit of care.
    Section 1861(dd) of the Social Security Act (the Act) provides for 
coverage of hospice care for terminally ill Medicare beneficiaries who 
elect to receive care from a participating hospice. Section 1814(i) of 
the Act provides payment for Medicare participating hospices.
2. Medicare Payment for Hospice Care
    Our regulations at 42 CFR part 418 establish eligibility 
requirements, payment standards and procedures, define covered 
services, and delineate the conditions a hospice must meet to be 
approved for participation in the Medicare program. Part 418 subpart G 
provides for payment in one of four prospectively-determined rate 
categories (routine home care, continuous home care, inpatient respite 
care, and general inpatient care) to hospices, based on each day a 
qualified Medicare beneficiary is under a hospice election.

B. Hospice Wage Index

    Our regulations at Sec.  418.306(c) require each hospice's labor 
market to be established using the most current hospital wage data 
available, including any changes to the Metropolitan Statistical Areas 
(MSAs) definitions, which have been superseded by Core-Based 
Statistical Areas (CBSAs).
    The hospice wage index is used to adjust payment rates for hospice 
agencies under the Medicare program to reflect local differences in 
area wage levels. The original hospice wage index was based on the 1981 
Bureau of Labor Statistics hospital data and had not been updated since 
1983. In 1994, because of disparity in wages from one geographical 
location to another, a committee was formulated to negotiate a wage 
index methodology that could be accepted by the industry and the 
government. This committee, functioning under a process established by 
the Negotiated Rulemaking Act of 1990, was comprised of: National 
hospice associations; rural, urban, large and small hospices; multi-
site hospices; consumer groups; and a government representative. On 
April 13, 1995, the Hospice Wage Index Negotiated Rulemaking Committee 
signed an agreement for the methodology to be used for updating the 
hospice wage index.
    In the August 8, 1997 Federal Register (62 FR 42860), we published 
a final rule implementing a new methodology for calculating the hospice 
wage index based on the recommendations of the negotiated rulemaking 
committee. The committee statement was included in the appendix of that 
final rule (62 FR 42883).
    The hospice wage index is updated annually. Our most recent annual 
update notice, published in the September 1, 2006 Federal Register (71 
FR 52080), set forth updates to the hospice wage index for FY 2007. On 
October 3, 2006, we published a correction notice in the Federal 
Register (71 FR 58415) and we published a subsequent correction notice 
on January 26, 2007 (72 FR 3856), to correct technical errors that 
appeared in the September 1, 2006 notice.
1. Changes to Core-Based Statistical Areas
    The annual update to the hospice wage index is published in the 
Federal Register and is based on the most current available hospital 
wage data, as well as any changes by the Office of Management and 
Budget (OMB) to the definitions of MSAs. The August 4, 2005 final rule 
(70 FR 45130) adopted the changes discussed in the OMB Bulletin No. 03-
04 (June 6, 2003), which announced revised definitions for Micropolitan 
Statistical Areas and the creation of MSAs and Combined Statistical 
Areas. In adopting the OMB Core-Based Statistical Area (CBSA) 
geographic designations, we provided for a 1-year transition with a 
blended wage index for all providers for FY 2006. For FY 2006, the 
hospice wage index for each provider consisted of a blend of 50 percent 
of the FY 2006 MSA-based wage index and 50 percent of the FY 2006 CBSA-
based wage index. As discussed in the August 4, 2005 final rule and in 
the September 1, 2006 notice, for FY 2007 and subsequent years we will 
use the full CBSA-based wage index values, as presented in Tables A and 
B of this final rule for FY 2008.
2. Raw Wage Index Values
    Raw wage index values (that is, inpatient hospital pre-floor and 
pre-reclassified wage index values) as described in the August 8, 1997 
hospice wage index final rule (62 FR 42860), are subject to either a 
budget neutrality adjustment or application of the wage index floor. 
Raw wage index values of 0.8 or greater are adjusted by the budget 
neutrality adjustment factor. Budget neutrality means that, in a given 
year, estimated aggregate payments for Medicare hospice services using 
the updated wage index values will equal estimated payments that would 
have been made for these services if the 1983 wage index values had 
remained in effect. To achieve this budget neutrality, the raw wage 
index is multiplied by a budget neutrality adjustment factor. The 
budget neutrality adjustment factor is calculated by comparing what we 
would have paid using current rates and the 1983 wage index to what 
would be paid using current rates and the new wage index. The budget 
neutrality adjustment factor is computed and applied annually. For the 
FY 2008 hospice wage index in the final rule, FY 2007 hospice payment 
rates were used in the budget neutrality adjustment factor calculation.
    Raw wage index values below 0.8 are adjusted by the greater of: (1) 
The hospice budget neutrality adjustment factor; or (2) the hospice 
wage index floor (a 15 percent increase) subject to a maximum wage 
index value of 0.8. For example, if County A has a pre-floor, pre-
reclassified hospital wage index (raw wage index value) of 0.4000, we 
would perform the following calculations using the budget neutrality 
factor (which for this example is 1.060988) and the hospice wage index 
floor to determine County A's hospice wage index:
    Raw wage index value below 0.8 multiplied by the budget neutrality 
adjustment factor:
    (0.4000 x 1.060988 = 0.4244).
    Raw wage index value below 0.8 multiplied by the hospice wage index 
floor:
    (0.4000 x 1.15 = 0.4600).
    Based on these calculations, County A's hospice wage index would be 
0.4600.
3. Hospice Payment Rates
    Section 4441(a) of the Balanced Budget Act of 1997 (BBA) amended 
section 1814(i)(1)(C)(ii) of the Act to establish updates to hospice 
rates for FYs 1998 through 2002. Hospice rates were to be updated by a 
factor equal to the market basket index, minus 1 percentage point. 
Payment rates for FY

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2008 will be updated according to section 1814(i)(1)(C)(ii)(VII) of the 
Act, which states that the update to the payment rates for subsequent 
FYs will be the market basket percentage for the fiscal year. 
Accordingly, the FY 2008 update to the payment rates for each of the 
four levels of care (routine home care, continuous home care, general 
inpatient care and inpatient respite care) will be the full market 
basket percentage increase for FY 2008. The rate update for FY 2008 is 
implemented through a separate administrative instruction and is not 
part of this rule. Historically, the rate update has been published 
through a separate administrative instruction issued annually in July 
to provide adequate time to implement necessary system changes and 
allow for provider notification. Providers determine their payment 
rates by applying the wage index in this rule to the labor portion of 
the published hospice rates.
4. Proxy for the Hospital Market Basket
    As discussed above, the hospice payment rates for fiscal years 
after 2002 are adjusted each year based upon the full hospital market 
basket percentage increase. In the FY 2007 update notice (72 FR 52082) 
published on September 1, 2006, we indicated that beginning in April 
2006, with the publication of March 2006 data, the Bureau of Labor 
Statistic's (BLS's) Employment Cost Index (ECI) began using a different 
classification system, the North American Industrial Classification 
System (NAICS), instead of the Standard Industrial Classification 
System (SIC), which no longer exists. The ECIs had been used as the 
data source for wages and salaries and other price proxies in the 
hospital market basket. In the FY 2007 update notice we noted that no 
changes would be made to the usage of the NAICS-based ECI; however, 
input was solicited on this issue. We received no comments. As a 
result, in the proposed rule we did not propose any changes.

II. Provisions of the Proposed Regulation and Analysis of and Responses 
to Public Comments

    On May 1, 2007, we published a proposed rule in the Federal 
Register (72 FR 24116) that set forth the proposed hospice wage index 
for FY 2008. The following is a summary of each of the proposed 
provisions followed by our response to public comments. We received 19 
timely items of correspondence, one from a physician, 6 from hospice 
providers, and 12 from associations.

A. Annual Update to the Hospice Wage Index

    We did not propose any modifications to the hospice wage index 
methodology as described in the 1997 final rule (62 FR 42860). In 
accordance with our regulations and the agreement signed with other 
members of the Hospice Wage Index Negotiated Rulemaking Committee, we 
use the most current hospital data available to adjust for area wage 
differences. As noted above, payment rates for each of the four levels 
of care (routine home care, continuous home care, general inpatient 
care and inpatient respite care) are adjusted annually based upon the 
hospital market basket for that year and are promulgated through 
administrative instructions issued annually in July in order to allow 
for sufficient time for system changes and provider notification.
    We use the previous fiscal year's hospital wage index data to 
calculate the hospice wage index values. For the FY 2008 proposed and 
final hospice wage index values, we used the FY 2007 hospital pre-floor 
and pre-reclassified hospital wage data. This means that the hospital 
wage data used for the hospice wage index is not adjusted to take into 
account any geographic reclassification of hospitals including those in 
accordance with sections 1886(d)(B) or 1886(d)(10) of the Act. We also 
do not take into account reclassifications in accordance with section 
508 of the MMA or the out-migration adjustment for hospitals (section 
505 of the MMA).
    All hospice wage index values for FY 2008 are adjusted by either 
the FY 2008 budget neutrality adjustment factor or the wage index floor 
adjustment. For wage index values 0.8 or greater, the value is 
multiplied by the budget neutrality adjustment factor. Wage index 
values that are below 0.8, receive the greater of a 15 percent increase 
or the budget neutrality adjustment factor subject to a maximum wage 
index value of 0.8. In other words, the floor adjustment is the greater 
of the raw wage index value multiplied by the proposed budget 
neutrality adjustment factor or the raw wage index value for that area 
is multiplied by 15 percent subject to a maximum value of 0.8. Budget 
neutrality means that, in a given year, estimated aggregate payments 
for Medicare hospice services using the updated wage index will equal 
estimated payments that would have been made for the same services if 
the wage index adopted for hospices in 1983 had remained in effect. For 
a detailed discussion of the methodology used to compute the hospice 
wage index see the September 4, 1996 proposed rule (61 FR 46579) and 
the August 8, 1997 final rule (62 FR 42860).
    As indicated in the proposed rule, we did not propose any changes 
in the methodology used in calculating the hospice wage index values 
and we did not solicit comments. However, we received eight items of 
correspondence pertaining to future changes, the methodology for 
computing the wage index for Puerto Rico, the publication of the market 
basket update through administrative issuance, and the inadequacy of 
rural payment rates.
    Comment: We received two comments stating that any future changes 
proposed for hospice payments should follow the negotiated rulemaking 
process rather than notice and comment. The same commenters also 
expressed support for a more reasonable and consistent approach to 
constructing wage index adjustments for hospitals and post acute 
providers. The commenters also indicated that any changes in the wage 
index approach should require an extended transition period to prevent 
disruptive swings.
    Response: We thank the commenters for their suggestions and we will 
keep them under advisement as we analyze the need for future 
refinements.
    Comment: One commenter suggested that the hospice payment rates be 
published with the hospice wage index regulations as is done in other 
prospective payment systems.
    Response: As we discussed in the proposed rule, historically the 
payment rate updates have been promulgated through a separate 
administrative instruction or administrative issuance in July of each 
year to provide adequate time to implement necessary system changes. As 
the hospice wage index regulation is scheduled for publication at the 
end of August, inclusion of the hospice payment updates in this 
regulation would not allow sufficient time for system changes to be 
made to accommodate the October 1 implementation date of the payment 
updates.
    Comment: Several commenters noted that there are challenges in 
furnishing hospice care in rural areas, citing underdevelopment, long 
distances for staff to travel, staff recruitment challenges and the 
need for rural hospices to be competitive in the wages and benefits 
that they provide. One commenter stated that rural areas adjacent to 
urban areas are at a greater disadvantage as they are competing for 
staff in urban areas with higher wages. Another commenter stated that 
rural home based salary adjustment based on the hospital wage index is 
inadequate

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and should be reimbursed at a higher rate. The commenter also stated 
that there are extra costs for mileage expenses for rural staff and 
suggested that an ``expansive geography index'' be applied to the 
hospice wage index formula for rural counties. Another commenter 
indicated willingness to discuss this issue further to investigate ways 
to encourage hospice care in rural areas.
    Response: We thank the commenters for their comments and 
suggestions. We recognize that there are challenges in providing health 
care in urban as well as in rural areas. Recruitment challenges, 
competitiveness in wages and benefits and commuting difficulties are 
factors that are facing all health care providers. We believe that the 
hospital wage data reflects these factors and as a result, the hospice 
wage index values are also reflective of these challenges. In addition, 
the application of the hospice floor for raw values below 0.8 provides 
a higher wage index value to many rural areas. However, we will 
consider these comments and suggestions as we analyze the need for 
future refinements to the hospice payment methodology.
    Comment: One hospice provider from Puerto Rico provided us with a 
study that it had undertaken. It requested that this report be used by 
CMS to make the ``right'' decision about the correct wage index for 
Puerto Rico. This study concluded that 34 hospices in Puerto Rico will 
see a decrease in their hospice payments by 2.6 percent in FY 2008. 
Several of the conclusions presented in this study compare a hospice in 
Arecebo, Puerto Rico to hospitals in New England and Albuquerque, New 
Mexico, list the economic challenges in Puerto Rico, and suggested the 
payment rate that it believes should be used for Puerto Rico.
    Response: We thank the commenter for sending its study to us. 
However, as the study concludes that payment rates and wage index 
values should be determined utilizing the same methodology used for the 
hospital wage index values, we believe the study is based on an 
erroneous and incorrect understanding of the content of the hospice 
wage index proposed rule as well as the methodology that had been 
developed and agreed upon through the negotiated rulemaking committee.
    As noted above, the methodology for the hospice wage index was 
developed, and an agreement on the methodology was signed, by members 
of the Hospice Wage Index Negotiated Rulemaking Committee. We note that 
Puerto Rico was represented by the hospice associations' participants 
on the committee. Hospices in Puerto Rico had notice of the committee 
deliberations and they had an opportunity to apply to be on the 
committee, and were encouraged to attend and make a statement to the 
committee. A detailed description of the methodology is contained in 
both the September 4, 1996 proposed rule (61 FR 46579) and the August 
8, 1997 final rule (62 FR 42860).
    The commenter is incorrect in stating that the payment rates for 
Puerto Rico will decrease 2.6 percent in FY 2008. We indicated in the 
proposed rule that the impact analysis demonstrates the impact of the 
FY 2008 wage index values and is not a projection of the anticipated 
expenditures of hospice payments for FY 2008. The impact analysis 
compares hospice payments using the FY 2007 hospice wage index to the 
estimated payments using the FY 2008 wage index. For urban Puerto Rico, 
the proposed rule indicated that, using the FY 2007 payment rates and 
the FY 2008 wage index values, payments are anticipated to decrease 2.6 
percent, which represents only the affects of the wage index and does 
not reflect the payment increase for FY 2008. As noted above, the FY 
2008 hospice payment rates will reflect the market basket update.
    We do not understand the study's comparison between Puerto Rico and 
Albuquerque, New Mexico or New England regions and as a result cannot 
respond. However, it is important to note that wage index values 
fluctuate from year to year for counties as well as regions and we do 
not believe that comparisons to other regions provide any substantive 
information. It is also important to note that the FY 2007 hospital 
pre-floor, pre-reclassified hospital wage data reflects data from the 
FY 2003 hospital cost reports and the data provided in the Puerto Rico 
study reflect data from later years. We will share the information 
provided in this study with the organizational component within CMS 
that develops the inpatient hospital wage data, as it appears that the 
study relates to the development of the hospital wage index.

B. Rural Areas Without Hospital Wage Data

    When adopting OMB's new labor market designations, we identified 
some geographic areas where there were no hospitals, and thus, no 
hospital wage index data on which to base the calculation of the 
hospice wage index (70 FR 45135, August 4, 2005). For FY 2006 and FY 
2007, we adopted a policy to use the FY 2005 pre-floor, pre-
reclassified hospital wage index value for rural areas where no rural 
hospital wage data were available. We also adopted the policy that for 
urban labor markets without an urban hospital from which a hospital 
wage index data could be derived, all of the CBSAs within the State 
would be used to calculate a statewide urban average wage index data to 
use as a reasonable proxy for these areas. In the August 2005 final 
rule and in the September 2006 update notice, we applied the average 
wage index data from all urban areas lacking hospital wage data in that 
state. Currently, the only CBSA that is affected by this policy is CBSA 
25980, Hinesville-Fort Stewart, Georgia. We proposed to continue this 
approach for urban areas where there are no hospitals and, thus, no 
hospital wage index data on which to base the calculations for the FY 
2008 and subsequent hospice wage indexes.
    In the proposed rule we noted that under the CBSA labor market 
areas, there are no rural hospitals in rural locations in Massachusetts 
and Puerto Rico. In the August 2005 final rule (70 FR 45135) and in the 
September 2006 update notice (71 FR 52081), we applied the FY 2005 pre-
floor, pre-reclassified hospital wage data in both FY 2006 and FY 2007 
for rural Massachusetts and rural Puerto Rico. In the proposed rule, we 
considered alternatives in our methodology to update the wage index for 
rural areas without hospital wage index data consistent with other 
prospective payment systems. We noted that we believe that the best 
imputed proxy for rural areas, would: (1) Use pre-floor, pre-
reclassified hospital data; (2) use the most local data available to 
impute a rural wage index; (3) be easy to evaluate and; (4) be easy to 
update from year to year. Although our current methodology meets the 
first three criteria, it could not be easily updated from year to year 
because the FY 2005 pre-floor, pre-reclassified hospital wage data 
would continue to be used. Therefore, in cases where there is a rural 
area without rural hospital wage data, we proposed using the average 
pre-floor, pre-reclassified wage index data from all contiguous CBSAs 
to represent a reasonable proxy for the rural area. This approach meets 
all of the stated criteria (72 FR 24118).
    We noted in the proposed rule that we interpret the term 
``contiguous'' to mean ``sharing a border''. We cited the example of 
Massachusetts, where the entire rural area consists of Dukes and 
Nantucket counties. We determined that the borders of Dukes and 
Nantucket counties are contiguous with Barnstable and Bristol counties. 
Therefore, the pre-floor, pre-reclassified wage index values for the 
counties of Barnstable (CBSA 12700, Barnstable Town, MA) and

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Bristol (CBSA 39300, Providence-New Bedford-Fall River, RI-MA) would be 
averaged resulting in an imputed pre-floor, pre-reclassified rural wage 
index for rural Massachusetts.
    While we believe that this policy could be readily applied to other 
rural areas that lack hospital wage data (possibly due to hospitals 
converting to a different provider type, such as a critical access 
hospital (CAH), that do not submit the appropriate wage data), should a 
similar situation arise in the future, we may re-examine this policy.
    In the proposed rule we noted that we do not believe that this 
policy would be appropriate for Puerto Rico. There are sufficient 
economic differences between hospitals in the United States and those 
in Puerto Rico, including the payment of hospitals in Puerto Rico using 
blended Federal/Commonwealth-specific rates that we believe necessitate 
a separate and distinct policy for Puerto Rico. Consequently, any 
alternative methodology for imputing a wage index for rural Puerto Rico 
would need to take into account those differences. Our policy of 
imputing a rural wage index based on the wage index(es) of CBSAs 
contiguous to the rural area in question does not recognize the unique 
circumstances of Puerto Rico. We also noted that while we have not yet 
identified an alternative methodology for imputing a wage index for 
rural Puerto Rico, we will continue to evaluate the feasibility of 
using existing hospital wage data and, possibly, wage data from other 
sources. Accordingly, we propose to continue using the most recent pre-
floor, pre-reclassified wage index previously available for Puerto 
Rico, which is 0.4047 (72 FR 24118-19).
    Comment: We received four items of correspondence in response to 
our proposal for rural areas without hospital wage data. Two commenters 
supported the proposal. Two commenters stated that the proposed 
methodology, while not ideal, comes closest to what the commenters 
believe is an equitable solution in resolving a perceived flaw in using 
hospital data to adjust payment to non-hospital providers. The 
commenters also assumed that a better alternative would emerge over the 
next few years in the course of revising the hospital wage index. One 
commenter agreed with the methodology but asked that we do not use this 
formula for other situations without review and reexamination of the 
policy. The same commenter commended us for demonstrating flexibility 
and good judgment in creating a different system for Massachusetts and 
Puerto Rico.
    We note that we received no comments on the methodology employed 
for urban areas without a hospital from which to derive hospital wage 
data.
    Response: We thank the commenters for their support. We continue to 
believe that our proposed methodology results in the most appropriate 
imputed proxy for rural areas in meeting the criteria we identified as 
follows: (1) Use pre-floor, pre-re-classified hospital data, (2) use 
the most local data available to impute a rural wage index, (3) be easy 
to evaluate; and (4) be easy to update from year to year. We will 
consider the suggestion for evaluating the policy if needed in other 
situations.

C. Nomenclature Changes

    We proposed to clarify that all hospice rules and notices are 
considered to incorporate the CBSA changes published in the most recent 
OMB bulletin that applies to the hospital wage index data used to 
determine the current hospice wage index (72 FR 24119). We received no 
comments on this proposal.

D. Payment for Hospice Care Based on the Location Where Care Is 
Furnished

    Under the Medicare hospice program, hospice providers receive 
payment for four levels of care based upon the individual's needs. The 
payment rates are adjusted to reflect the variation in geographic 
locations. Section 4442 of the BBA amended section 1814(i)(2) of the 
Act, effective for services furnished on or after October 1, 1997, 
required the application of the local wage index value of the 
geographic location at which the service is furnished for hospice care 
provided in the home. Prior to this provision, local wage index values 
were applied based on the geographic location of the hospice provider, 
regardless of where the hospice care was furnished. In the proposed 
rule, we noted that we believe that for the majority of hospice 
providers the office and the site for the provision of home and 
inpatient care occur in the same geographic area. However, with the 
substantial growth of hospice providers in multiple states and with 
multiple sites within a State, hospice providers have been able to 
inappropriately maximize reimbursement by locating their offices in 
high-wage areas and delivering services in a lower-wage area. We also 
believe that hospice providers are able to inappropriately maximize 
reimbursement by locating their inpatient services either directly or 
under contractual arrangements in lower wage areas than their offices.
    Section 4442 of the BBA applies the wage index value of a home's 
geographic location for services provided there, but is silent as to 
what wage index value should be used for hospice services provided in 
an inpatient setting. We believe that the application of the wage index 
values should reflect the location of the services provided rather than 
the location of an office. We believe such application results in a 
reimbursement rate that is a more accurate reflection of the wages paid 
by the hospice for the staff used to furnish care. We proposed that 
effective January 1, 2008, all payment rates (routine home care, 
continuous home care, inpatient respite and general inpatient care) be 
adjusted by the geographic wage index value of the area where hospice 
services are provided. This would require hospice providers to include 
the geographic location of the inpatient facility for general inpatient 
and inpatient respite levels of care on claims submitted for payment. 
We proposed to modify Sec.  418.302 accordingly.
    In the proposed rule we also indicated that as hospice claims do 
not contain information identifying the location of the facility where 
general inpatient and respite care are provided, we are unable to 
predict the savings or costs associated with the changes associated 
with this proposed provision. However, we believe most hospice 
providers provide hospice care in the same geographic location as their 
offices. Therefore, we believe the impact of implementing this proposal 
will be negligible.
    Comment: We received eight items of correspondence, of which six 
supported the provision to base payment rates on the geographic wage 
index value of the area where inpatient hospice services are provided.
    Response: We thank the commenters for their support of this 
provision.
    Comment: One commenter suggested that we suspend the implementation 
of this provision until we have additional data from providers on the 
impact.
    Response: In the proposed rule we indicated that, as hospice claims 
do not contain information identifying the location of the facility 
where inpatient care is provided, we are unable to predict the savings 
or costs associated with changes in this provision. Effective January 
1, 2007, hospice providers were required to indicate the type of 
location where care was provided (for example, nursing home, assisted 
living facility, hospital unit), but not the geographic location (which 
would be used to adjust payments). As we have indicated, we believe 
that for most providers, the location of the inpatient facility and the 
hospice provider are the same. We do not believe that postponing the

[[Page 50219]]

implementation of this provision would enable us to collect any 
additional information.
    Comment: One commenter indicated that this change will 
significantly increase the complexity of filing hospice claims and will 
increase hospice costs due to the need to include the CBSA for the 
geographic location, as well as the code of where the patient is 
receiving hospice services.
    Response: We appreciate the concern regarding the complexity of 
filing claims and the perceived increased costs to hospices. We are in 
the process of developing operational instructions that we believe will 
help simplify the billing process. Hospice providers currently are 
required to identify the geographic location of their patients for the 
routine home care and continuous home care levels of care, and the 
location of the hospice office for general inpatient care and inpatient 
respite care. We are now also requiring hospice providers to identify 
the geographic location where inpatient care is provided. We believe 
that for the majority of hospice providers, the location of the 
facility for the provision of both the general inpatient and inpatient 
respite levels of care will be the same as the location of the hospice 
office. For those majority of cases, this change will require the 
hospice provider to indicate the same CBSA location of the office on 
the claims as the location of the facility where inpatient levels of 
care are provided. As a result, we believe that the impact on hospices 
for implementing this provision should be negligible as most hospices 
currently provide this information on the claims.
    Comment: Several commenters concurred with the provision but 
objected to the statement that hospice providers are able to 
inappropriately maximize reimbursement by having their offices located 
in a higher wage area. One commenter indicated that the statement was 
misleading and unnecessarily harsh. Another commenter suggested 
removing the statement. One commenter interpreted this statement as 
being demeaning and inflammatory. The same commenter stated that most 
hospices would not benefit from manipulating the location of an 
inpatient facility. Several commenters indicated that there is nothing 
prohibiting a hospice from having their inpatient facilities in a 
higher wage area, though the commenters stated it was doubtful that a 
hospice would do this or arrange contracts in order to manipulate 
reimbursement. Some commenters stated that urban areas have higher 
rates and that hospices generally have contracts with all hospitals in 
an area. Some commenters indicated patients have choices about where to 
receive care and would complain if they were forced to receive 
inpatient care out of their area.
    Response: While we appreciate the commenters objection to the 
statement that we made about hospice providers being able to 
inappropriately maximize reimbursement by locating their offices in a 
higher age area, we concur with the commenter that nothing prohibits a 
hospice from locating its inpatient services, either directly or under 
contractual arrangements, in a higher wage area, as well. In fact, we 
have received anecdotal information that leads us to believe that there 
are hospice offices that have been intentionally located in higher wage 
areas than those of their patients in order to maximize their 
reimbursement. We supported our proposal by noting the potential for 
maximizing reimbursement based on the location of the main office, 
which was the same rationale used by the congressional committee when 
the BBA 1997 provision requiring the application of the local wage 
index of the geographic location where the service is furnished for 
hospice care provided in the home was enacted. We believe that the same 
rationale applies to the inpatient facility locations as well. Our 
intent for this provision is to have all levels of payment adjusted by 
the wage index that applies to the site where the service is being 
provided.
    Comment: One commenter interpreted the proposed provision as 
reducing reimbursement to a lesser amount based on distance from the 
main office. The same commenter stated that staff were paid at the home 
office area rate and suggested that payment be based on the costs at 
the main office.
    Response: We believe that the suggestion that using distance from 
the main office determines payment rates is a misinterpretation of the 
intent of this provision as well as the statement concerning maximizing 
reimbursement based upon the location of the hospice main office. As we 
have discussed in the proposed rule, we were not proposing to modify 
the methodology used for computing the hospice wage index values. The 
intent of the proposal is to employ the same methodology for applying 
the wage index value for geographic variations regardless of where 
hospice care is provided.

E. Educational Requirements for Nurse Practitioners

    On December 8, 2003, the Congress enacted the Medicare Prescription 
Drug, Improvement, and Modernization Act (MMA) of 2003 (Pub. L. 108-
173). Section 408 of the MMA, Recognition of Attending Nurse 
Practitioners as Attending Physicians to Serve Hospice Patients, 
amended sections 1861(dd)(3)(B) and 1814(a)(7) of the Act to add nurse 
practitioners (NPs) to the definition of an attending physician for 
beneficiaries who have elected the hospice benefit. Section 408 of the 
MMA was implemented through an administrative issuance (Change Request 
(CR) 3226, Transmittals 22 and 304, September 24, 2004). In the August 
4, 2005 FY 2006 final rule (70 FR 45139), we revised Sec.  418.3 to 
reflect that an attending physician can be a nurse practitioner who 
meets the training, education and experience requirements as the 
Secretary may prescribe.
    We indicated in the proposed rule that we believe that the 
definition of attending physician, which includes nurse practitioners 
under the Medicare hospice benefit, should be consistent with the 
provisions of section 410.75 that provide for Medicare Part B coverage 
of nurse practitioner services. Therefore, to ensure consistency, we 
proposed to revise the definition of ``attending physician'' at Sec.  
418.3(1)(ii) to cross reference the training, education, and experience 
requirements as described in Sec.  410.75(b).
    Comment: We received six items of correspondence regarding our 
proposal to conform the educational requirements for nurse 
practitioners serving as the attending physician to the requirements 
described in Sec.  410.75. All commenters supported this provision. One 
commenter requested that the hospice physician definition be revised to 
include nurse practitioners, although the commenter recognized that any 
such revision could not allow nurse practitioners to certify the 
terminal illness of a patient. Another commenter suggested that the 
definition of attending physician be clarified by using the term 
``attending nurse practitioner'' instead of referring to nurse 
practitioners as ``attending physicians.'' One commenter requested that 
the nurse practitioner qualifications provisions at Sec.  410.75 be 
amended to reflect current and evolving educational requirements for 
advanced practice registered nurses. The commenter requested that the 
term ``master's degree'' in Sec.  410.75(b)(ii)(4) be replaced with 
``graduate degree'' to reflect nurse practitioners with doctoral 
degrees.
    Response: We thank the commenters for their support of this 
provision. As noted in the proposed rule and earlier in this rule, the 
implementation of section 408 of the MMA, which amended sections 
1861(dd)(3)(B) and

[[Page 50220]]

1814(a)(7) of the Act to add nurse practitioners to the definition of 
an attending physician, was discussed in the August 4, 2005 final rule 
(70 FR 45130). Section 418.304(e)(2)(iv) specifies that nurse 
practitioners may bill and receive payment for services provided as the 
attending physician, only if the services are not related to the 
certification of the terminal illness in Sec.  418.22(c)(1)(ii). 
Section 418.22(c) specifies that certification of the terminal illness 
is obtained from ``the medical director of the hospice or the physician 
member of the hospice interdisciplinary group''. Therefore, we believe 
it would be inconsistent with statute and regulations to allow nurse 
practitioners to bill and receive payment for certifying an 
individual's terminal illness. As the role of the nurse practitioner is 
explicit in statute, nurse practitioners are not included as a hospice 
physician and may not serve in that role.
    We concur with the commenter that the definition of attending 
physician should use the term ``attending nurse practitioner''. 
However, as the statute at sections 1861(dd)(3)(B) and Sec.  1814(a)(7) 
explicitly uses the term ``attending physician'' for a nurse 
practitioner serving as the attending physician, we do not accept this 
recommendation.
    We did not propose to replace the term master's degree in 
410.75(b)(ii)(4) with ``graduate degree''. Therefore, we will not make 
the change in this final rule. However, we will provide your suggestion 
to the area within CMS responsible for advanced practitioner 
educational requirements.

F. Caregiver Breakdown and General Inpatient Care

    In the proposed rule, we discussed a concern that some hospice 
providers are requesting payment for the general inpatient level of 
care for circumstances that do not qualify under the statute at section 
1861(dd)(1)(G) of the Act, our regulations at Sec.  418.202(e), or 
Medicare hospice policy in Chapter 9 of the Medicare Benefit Policy 
Manual. We provided clarification of existing statute, regulation and 
policy in the proposed rule and did not propose any changes (72 FR 
24120).
    As discussed in the proposed rule, the Medicare hospice benefit 
places emphasis on the provision of items and services to enable an 
individual to remain at home in the company of family and friends. 
Section 1861(dd)(1)(G) of the Act provides for short-term inpatient 
hospice care to be available when an individual's pain and symptoms 
must be closely monitored or the intensity of interventions that are 
required cannot be provided in any other settings. Inpatient respite 
care is available for family members, who serve as the primary 
caregivers, to obtain rest for a period of no more than 5 days at a 
time. Hospice providers should submit claims for inpatient respite care 
in situations where there is an unexpected loss of the individual's 
support structure that results in an inability to maintain the 
individual in his or her home, but the individual does not require an 
inpatient level of care.
    Medicare policy states that skilled nursing care may be required by 
a patient whose home support has broken down, if this breakdown makes 
it no longer feasible to furnish needed care in the home setting. If 
the hospice and the caregiver, working together, are no longer able to 
provide the necessary skilled nursing care in the individual's home, 
and if the individual's pain and symptom management can no longer be 
provided at home, then the individual may be eligible for a short term 
general inpatient level of care. To receive payment for general 
inpatient care under the Medicare hospice benefit, beneficiaries must 
require an intensity of care directed towards pain control and symptom 
management that cannot be managed in any other setting. It is the level 
of care provided to meet the individual's needs and not the location of 
where the individual resides, or caregiver breakdown, that determine 
payment rates for Medicare services.
    Caregiver breakdown is the loss of the individual's support 
structure and should not be confused with the coverage requirements for 
medically reasonable and necessary care for pain and symptom management 
that cannot be managed in any other setting. Therefore, caregiver 
breakdown should not be billed as general inpatient care unless the 
coverage requirements for this level of care are met. As discussed 
above, for the general inpatient level of care, the intensity of 
interventions required for pain and symptom management is such that it 
cannot be provided in any setting other than an inpatient setting.
    As explained in the proposed rule, this is a clarification of 
current Medicare policy and as such does not create new limitations on 
access to hospice care. As noted in the proposed rule, we intend to 
monitor the usage of general inpatient care. Additionally, the 
circumstances addressed by this policy, and the clarification discussed 
above, should not be construed as similar to situations where an 
individual does not have family, friends or other individuals who are 
able to take on the role of a caregiver when a hospice election is 
made. In the proposed rule, we indicated that inpatient respite care 
could be used in situations where there is caregiver breakdown. 
However, in situations where there is a lack of a caregiver at the time 
of the election, the inpatient respite level of care does not apply. 
Inpatient respite care is unavailable when there is no caregiver to 
whom relief must be provided. The established policy that the level of 
care required to provide pain and symptom management determines payment 
and not the location of where the individual resides or receives 
hospice services, also applies in situations where there is not an 
appropriate caregiver. We recognize the difficulties surrounding the 
provision of hospice care to an individual who is terminally ill and 
who does not have caregivers at home. This may be particularly 
challenging in rural areas. Section 409 of the MMA (Pub. L. 108-173) 
established the Rural Hospice Demonstration which hopes to test 
alternative mechanisms for providing hospice services for beneficiaries 
who lack an appropriate caregiver and who reside in rural areas. In 
this demonstration, a hospice organization may provide all services in 
an inpatient facility which serves as a beneficiary's home; however, 
payment for inpatient care must meet the usual level of care 
requirements. In this demonstration, inpatient respite care is not 
possible since there is no caregiver. For specific information on this 
demonstration, refer to: http://www.cms.hhs.gov/DemoProjectsEvalRpts/MD/itemdetail.aspitemID=CMS1183983.
     Comment: We received nine items of correspondence regarding the 
clarification of the general inpatient level of care and its use when 
there is a breakdown in caregiver support. Several commenters supported 
the clarification, however the majority did not, as we describe below. 
Several commenters stated that they shared our concern that the general 
inpatient level of care not become a source of abuse and the need to 
focus on hospice providers who use the general inpatient level of care 
inappropriately. Two commenters stated that they supported steps to 
eliminate any potential collusion or inducements in this area.
     Response: We appreciate the comments and thank those who were in 
support of this provision. The intent of this clarification was to 
ensure that the general inpatient level of care be utilized 
appropriately and in accordance with statute, regulations and policy. 
Our focus was not on fraudulent or abusive use of the general inpatient 
level of care, but rather on ensuring that

[[Page 50221]]

the general inpatient level of care is properly utilized in accordance 
with established criteria.
     Comment: Some commenters believed that the clarification was 
overly prescriptive while others believed that this was not a 
clarification of existing policy, but was a new interpretation. Some 
commenters expressed that the intent of the general inpatient level of 
care, at the inception of the benefit, was to address the need for pain 
control and symptom management as well as care for patients whose 
caregiver or home support has broken down, making it no longer feasible 
to furnish care in the home. One commenter indicated that use of the 
general inpatient level of care in the event of caregiver breakdown met 
the requirements in 418.302 as a condition of participation. The same 
commenter added that the proposed interpretation shifts the focus from 
caring for patients in the appropriate setting to a billing and 
reimbursement issue. Some commenters stated that this provision was 
designed to reduce expenditures without regard to patient safety and 
hospice expenses.
    Other commenters also strongly disagreed with the clarification. 
They indicated that Medicare policy has been interpreted for more than 
twenty years to mean that general inpatient level of care can be used 
for caregiver breakdown and the practice of billing at the higher level 
of care in those circumstances is consistent with written CMS and 
fiscal intermediary guidance.
    Some commenters stated that the definition of general inpatient 
care in the hospice regulations supported the use of general inpatient 
level of care for caregiver breakdown. One commenter stated that it was 
inappropriate to punish patients by removing a long established benefit 
for the hospice program because of the perception that some hospices 
are using the general inpatient level of care inappropriately.
     Response: We disagree with the commenter who believes that this 
clarification is a new interpretation. Rather, we seek to clarify here 
our established policy by providing what we believe is a helpful 
explanation of how our policies should be interpreted and applied. We 
are not making any policy changes with this clarification. We believe 
that this clarification is needed because, as some commenters 
recognize, the general inpatient level of care has been used for 
situations where caregiver breakdown has occurred.
    The level of care needed to manage pain and symptoms is the basis 
for the general inpatient level of care in the statute, regulations and 
policy, none of which recognizes caregiver breakdown as an indication 
for the general inpatient level of care. The Medicare Benefit Policy 
Manual, Chapter 9--Coverage of Hospice Services, section 40.1.5--Short-
Term Inpatient Care, indicates that skilled nursing care may be needed 
by a patient whose home support has broken down. In the proposed rule 
we acknowledged this and indicated that if the hospice and the 
caregiver, working together, are no longer able to provide the 
necessary skilled nursing care in the individual's home, and if the 
individual's pain and symptom management can no longer be provided at 
home, then the individual may be eligible for a short term general 
inpatient level of care. Section 1861(dd)(1) of the Act defines hospice 
care as the items and services to be provided to a terminally ill 
individual by a hospice directly or under arrangement. The statute goes 
on to specify the items and services, but does not include caregiver 
services. This means that Medicare does not pay for caregiver services 
under the hospice benefit. In further support, Sec.  418.98 sets forth 
the hospice conditions of participation requiring hospices to make 
available ``inpatient care* * * for pain control, symptom management 
and respite purposes * * *.'' Section 418.202 lists the covered hospice 
services and includes short-term inpatient care at Sec.  418.202(e), 
stating ``inpatient care may be required for procedures necessary for 
pain control or acute or chronic symptom management. Inpatient care may 
also be furnished as a means of providing respite for the individual's 
family or other persons caring for the individual at home.'' Further, 
Sec.  418.302(b)(4) provides that ``a general inpatient care day is a 
day on which an individual who has elected hospice care receives 
general inpatient care in an inpatient facility for pain control or 
acute or chronic symptom management which cannot be managed in other 
settings.''
    We believe that there is no support for the comments that suggest 
that the intent of the general inpatient level of care was to include 
care for patients whose home support has broken down. We also disagree 
with the comment that this clarification shifts the focus from caring 
for patients to a purely billing and reimbursement issue and that there 
needs to be a humane and practical alternative. Our discussions in the 
proposed rule and in this final rule have focused on the provision of 
care and the level of care needed by the patient. However, certain 
billing requirements and payment amounts are associated with each level 
of care. In cases where a particular level of care is provided because 
of circumstances that are inappropriate to warrant that particular 
level of care (here, general inpatient provided because of caregiver 
breakdown), it is inappropriate for the hospice to bill and receive 
payment for the general inpatient level of care.
     Comment: Several commenters indicated that the general inpatient 
level of care was appropriate in rare circumstances where the patient's 
care network breakdown is not recoverable after a short period of 
inpatient respite care. Other commenters expressed the need to provide 
inpatient care immediately for caregiver breakdown. The same commenters 
believe that the immediate need would prohibit the use of inpatient 
respite care, which they indicated was a planned admission. One 
commenter strongly objected to the statement in the proposed rule that 
specified the requirement for the provision of an intensity of care to 
support the general inpatient level of care. However, some commenters 
stated that more frequent use of general inpatient level of care is 
appropriate as hospices are experiencing difficulty finding adequate 
caregivers.
    Some commenters stated that general inpatient level of care 
provided the only option other than discharging patients from the 
hospice benefit to long term care facilities. Others stated that the 
proposed clarification implied that hospice care must be terminated 
when there is a situation of caregiver breakdown, as there was no 
Medicare hospice benefit category to care for patients without 
caregiver support. Some commenters stated that we did not address how 
caregiver breakdown situations should be addressed while others implied 
that unless hospices could bill for general inpatient level of care for 
caregiver breakdown, patients' symptoms could be uncontrolled 
necessitating the general inpatient level of care.
    Response: We disagree with the comment that we did not indicate how 
caregiver breakdown situations should be addressed. We indicated in the 
proposed rule that there is nothing prohibiting a Medicare approved 
facility from serving as the individual's home. However, Medicare daily 
per-diem payments are based on medically reasonable and necessary 
levels of care as described in the Medicare regulations at Sec.  
418.302: A routine home care day is a day on which an individual is at 
home and is not receiving continuous care; a continuous home care day 
is a day on which an individual is not in an inpatient facility and 
receives hospice

[[Page 50222]]

care consisting predominantly of nursing care on a continuous basis at 
home during brief periods of crisis as described in Sec.  418.204(a), 
to maintain the terminally ill patient at home; an inpatient respite 
care day is a day on which the individual receives care in an approved 
facility on a short-term basis for respite; and a general inpatient 
care day is a day on which an individual receives general inpatient 
care in an inpatient facility for pain control or acute or chronic 
symptom management which cannot be managed in other setting. Medicare 
payment is made based on the medically reasonable and necessary level 
of care provided, and not simply where that care is provided. As 
discussed above, it is not appropriate to bill Medicare for the general 
inpatient care day for situations where the individual's caregiver 
support has broken down unless the coverage requirements for the 
general inpatient level of care are otherwise met.
    We disagree with the comments that patients will need to be 
discharged from the hospice benefit to long term care facilities 
because discharge for caregiver breakdown does not meet the discharge 
requirements in the regulations at Sec.  418.26. The requirements for 
discharge at Sec.  418.26 state that a hospice may discharge a patient 
if the patient moves out of the hospice service area or transfers to 
another hospice; the hospice determines that the patient is no longer 
terminally ill; or the hospice discharges the patient for cause. We 
also disagree with the comment that patients will be forced to revoke 
the hospice benefit if there is caregiver breakdown. Revocation of the 
hospice benefit as described in Sec.  418.28 is an action initiated by 
the individual (patient) and not by the hospice provider. Finally, we 
disagree with the comment that denying the use of the general inpatient 
level of care for caregiver breakdown will result in limitation of 
access. We have discussed various ways of providing care in this 
situation, such as the use of inpatient respite or use of alternative 
sources of payment for room and board, that we believe are appropriate 
alternatives to meeting the needs of the individual.
    Comment: One commenter stated that hospices have seen an erosion of 
the use of the inpatient benefit and many offer very little inpatient 
care. This commenter concluded that the clarification represents a 
reduction in the benefit and will create a new limitation on access to 
hospice care and patients will seek inpatient hospital admissions 
instead of receiving hospice services at the general inpatient level of 
care. Several commenters stated that fiscal intermediaries have allowed 
the use of general inpatient care for caregiver breakdown.
    Response: We disagree that our clarification on the use of the 
general inpatient level of care represents a reduction in the Medicare 
hospice benefit and that it will result in a limitation on access to 
hospice care. As we noted above, we are not making any policy changes 
concerning general inpatient care, rather, we are clarifying our 
established policy. We also disagree that there has been an erosion of 
the use of general inpatient level of care. Our data, which is 
available on the hospice Web site at http://www.cms.hhs.gov/center/hospice.asp demonstrates that use and payment for the general inpatient 
level of care has been increasing each year. We also do not agree that 
better compliance with statute, regulations and policy will limit 
access to hospice care nor do we see our clarification as an inducement 
to increase hospital admissions.
    Comment: One commenter questioned why this clarification was being 
made when we were unable to quantify the extent of the use of general 
inpatient in the event of caregiver breakdown and suggested that 
further analysis be done. The same commenter indicated that the cost 
savings were inaccurate as our assumption of potential savings is based 
on current reimbursement rates for inpatient respite services. The same 
commenter believes that the inpatient respite care payment rate is 
inadequate. Several other commenters indicated that the reimbursement 
rate for inpatient respite care was inadequate.
    Several commenters suggested the following: Extending the current 
5-day limitation on inpatient respite care; revising policy to allow 
for the use of the general inpatient level of care when documentation 
indicates that a sufficient caregiver network cannot be restored in a 
few days; or establishing an alternative payment mechanism in the 
hospice benefit for situations where there is caregiver breakdown.
    One commenter suggested that Medicare work with hospice providers 
to increase the average length of stay to that which was originally 
intended in legislation and in regulation. The same commenter stated 
that studies show that hospice care saves Medicare dollars. Several 
offered to work with CMS to find an alternative policy to meet patient 
needs while protecting the Medicare trust fund.
    Response: We appreciate these suggestions and will keep them in 
mind as we continue to evaluate Medicare hospice payment policy. We 
noted in the proposed rule that we are unable to quantify the use of 
the general inpatient level of care for caregiver breakdown. In the 
proposed rule we provided an example of the potential impact, as we did 
not have empirical data to suggest the actual usage. This example 
demonstrated the cost savings to Medicare by using as an example, what 
we believe could be a cost saving if we assumed that 5 percent of the 
days and expenditures for general inpatient level of care were 
attributable to caregiver breakdown. However, the unavailability of 
exact utilization rates does not preclude us from ensuring that the 
general inpatient level of care is being billed as we intended. Based 
upon the comments we received, we believe that the use of the general 
inpatient level of care for caregiver breakdown may be more pervasive 
than we had envisioned at the time of the proposed rule.
    We disagree with the commenter who suggested that the original 
legislation and regulation intended for the average length of stay to 
be at a specified level. While the statute defines the terminal 
diagnosis as having a prognosis of six months or less if the disease 
runs its normal course, this does not imply that there is, or ever was, 
a targeted length of stay that is required. The regulations require 
that an individualized plan of care be developed and updated to 
identify patient and family needs and the medically reasonable and 
necessary items and services that are required to meet these needs. In 
addition, as individuals vary in their responses to illness and care, 
we expect to see some variability in lengths of stay. We do not believe 
that it is feasible or prudent to specify or predetermine what lengths 
of stay should or must be achieved to measure or evaluate the 
effectiveness of care provided.
    Regarding the comment that the reimbursement rate for inpatient 
respite care is inadequate, in the proposed rule, we did not propose to 
make any adjustments on the payment rates and merely indicated that the 
hospice payment rates are adjusted annually based upon the full market 
basket percentage increase. We are aware of studies which suggest that 
the inpatient respite care payment rate may not reflect the costs for 
providing this level of care. We will consider the comments made 
concerning the inpatient respite care rate as we continue to examine 
Medicare hospice payment policy.

G. Certification of the Terminal Illness

    Section 1814(a)(7)(A)(i) of the Act stipulates that the 
individual's attending physician and the hospice medical director 
initially certify the individual's terminal diagnosis with a prognosis 
of

[[Page 50223]]

six months or less if the disease runs its normal course. Our 
regulations at Sec.  418.22 discuss the requirements of the 
certification, including documentation requirements. As discussed in 
the proposed rule, we are aware that some providers permit the hospice 
admission nurse to determine eligibility for hospice services and to 
certify the individual's terminal diagnosis. In the proposed rule, we 
explained that the statute is explicit in the requirement that the 
attending physician and the hospice medical director determine the 
terminal diagnosis, and his or her signature on the certification 
attests to that fact.
    Comment: We received three items of correspondence regarding this 
clarification. One commenter supported the clarification of the 
responsibility of the hospice medical director and the attending 
physician to certify the terminal illness. One commenter asked if a 
hospice medical director visit is required at the time of admission to 
a hospice and what is the time frame for the visit. Another commenter 
stated that concurrence of the hospice medical director and the 
attending physician may be tacit and no communication is required 
between them.
    Response: As discussed above, section 1814(a)(7)(A)(i) of the Act 
stipulates that the individual's attending physician and the hospice 
medical director each initially certify that the individual is 
terminally ill with a medical life expectancy of six months or less if 
the disease runs its normal course. Our regulations at Sec.  418.25(a) 
of hospice regulations indicate, that 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). As noted 
in the proposed rule, the requirements of the physician certification, 
including supportive documentation, were discussed in the Medicare 
Program; Hospice Care Amendments proposed rule (67 CFR 70363) and final 
rule (70 CFR 70548). Current regulations do not address a time frame 
for a physician or hospice medical director visit.

III. Provisions of the Final Regulations

    In this final rule, we are adopting the following provisions, as 
set forth in the proposed rule, without change. We are also publishing 
the FY 2008 urban and rural wage index values for hospices in the 
addendum as well as the table that reflects the impact of the FY 2008 
wage index values.

A. Annual Update to the Hospice Wage Index

    The FY 2008 hospice wage index values have been computed utilizing 
OMB's geographic location definitions (CBSA). The budget neutrality 
adjustment factor was computed utilizing data from the FY 2006 claims 
processed through June 2007. The FY 2008 budget neutrality adjustment 
factor of 1.066671 was applied to hospital wage data above 0.8. The 
budget neutrality adjustment factor or the hospice floor was applied to 
the hospital wage data below 0.8, not to exceed 0.8. The wage index 
values are reflected in Table A and Table B of the Addendum. 
Specifically, Table A reflects the FY 2008 wage index values for urban 
areas under the CBSA designations. Table B reflects the FY 2008 wage 
index values for rural areas under the CBSA designations.

B. Rural Areas Without Hospital Wage Data

    For FY 2008 and subsequent hospice wage index values, for urban 
labor markets without an urban hospital from which hospital wage index 
data could be derived, all of the CBSAs within the State will be used 
to calculate a statewide urban average wage index to use as a 
reasonable proxy for these areas. Currently, the only CBSA that is 
affected by this is CBSA 25980, Hinesville-Fort Stewart, Georgia.
    For FY 2008 and subsequent hospice wage index values, in cases 
where there is a rural area without rural hospital wage data, we will 
use the average pre-floor, pre-reclassified wage index data from all 
contiguous CBSAs to represent a reasonable proxy for the rural area. 
This approach meets the criteria that we believe would be the best 
imputed proxy for rural areas, which (1) uses pre-floor, pre-
reclassified hospital data; (2) uses the most local data available to 
impute a rural wage index; (3) is easy to evaluate; and (4) is easy to 
update from year-to-year. Currently there are no hospitals in rural 
locations in Massachusetts and Puerto Rico.
    We interpret the term ``contiguous'' to mean sharing a border. For 
example, we have determined that the borders of Dukes and Nantucket 
counties are contiguous with Barnstable and Bristol Counties. 
Therefore, the pre-floor, pre-reclassified wage index values for the 
counties of Barnstable (CBSA 12700, Barnstable Town, MA) and Bristol 
(CBSA 39300, Providence-New Bedford-Fall River, RI-MA) would be 
averaged resulting in an imputed pre-floor, pre-reclassified rural wage 
index for rural Massachusetts. Should a similar situation arise in the 
future, we may re-examine this policy.
    As discussed in the proposed rule, as there are sufficient economic 
differences between hospitals in the United States and those in Puerto 
Rico, we do not believe that this policy would be appropriate for 
Puerto Rico. We also noted that as we have not yet identified an 
alternative methodology for imputing a wage index for rural Puerto 
Rico, we will continue to evaluate the use of other sources. 
Accordingly, we will continue to use the most recent pre-floor, pre-
reclassified wage index previously available for Puerto Rico.

C. Nomenclature Changes

    This final rule and all subsequent hospice rules and notices are 
considered to incorporate the CBSA changes published in the most recent 
OMB bulletin that applies to the hospital wage data used to determine 
the current hospice wage index. The tables in this final rule reflect 
changes made by these bulletins. The OMB bulletins may be accessed at 
http://www.whitehouse.gov/omb/bulletins/index.html.

D. Payment for Hospice Care Based on the Location Where Care Is 
Furnished

    Effective January 1, 2008, all payment rates (routine home care, 
continuous home care, inpatient respite and general inpatient care) 
will be adjusted by the geographic wage index value of the area where 
hospice services are provided. In other words, the wage component of 
each payment rate is multiplied by the wage index value applicable to 
the location in which the hospice services are provided. Section 
418.302 is amended to reflect this change. Hospice providers will be 
required to indicate on hospice claims, the CBSA for the location where 
hospice care is provided.

E. Educational Requirements for Nurse Practitioners

    In order to align the hospice qualifications for nurse 
practitioners under Sec.  418.3 and Part B nurse practitioners under 
Sec.  410.75, the definition of ``attending physician'' at Sec.  418.3 
is revised to cross reference the training, education and experience 
requirements described in Sec.  410.75(b).

F. Caregiver Breakdown and General Inpatient Care

    We are not implementing any changes regarding the general inpatient 
level of care and caregiver breakdown, but are providing clarification 
of existing policy, statute, and hospice regulations. The Medicare 
hospice benefit provides for care that is medically reasonable and 
necessary for the palliation and

[[Page 50224]]

management of terminal and related conditions, and is structured in 
such a way to enable the individual with a terminal condition to remain 
at home, in the company of family and friends. The statute, our 
regulations at Sec.  418.202(e), and Medicare hospice policy require 
that in order to receive payment for general inpatient care under the 
Medicare hospice benefit, beneficiaries must require an intensity of 
care directed towards pain control and symptom management that cannot 
be managed in any other setting. It is the level of care provided to 
meet the individual's needs that determines payment rates for Medicare 
services. In other words, caregiver breakdown should not be billed as 
general inpatient care regardless where the services are provided, 
unless the intensity-of-care requirement is met. If an individual no 
longer is able to remain at home or if the individual's caregiver is no 
longer able to provide care, and the required care does not meet the 
requirements for general inpatient care, the hospice may not bill this 
care at the general inpatient level of care. This situation is 
considered to be caregiver breakdown. This does not imply or suggest 
that the individual must be discharged from the hospice if caregiver 
breakdown occurs. It does mean that the hospice must find alternative 
means for the provision of caregiver services, which may include 
payment for room and board, as Medicare does not pay for caregiver 
services, nor does it pay for room and board.

G. Certification of Terminal Illness

    We are not making any changes to the certification of terminal 
illness requirements. We are clarifying that the statute requires that 
the attending physician and the hospice medical director, not the 
admission nurse, initially certify the terminal diagnosis with a 
prognosis of six months or less if the disease runs its normal course. 
The regulations require that there be documentation in the medical 
record to support the initial as well as any subsequent certifications. 
The admission nurse may obtain information supporting the terminal 
illness in order to allow the attending physician and the medical 
director to have the necessary information to make the terminal illness 
determination. But, the determination of the terminal illness cannot be 
delegated to an admission nurse or any other employee.

IV. Collection of Information Requirements

    This document does not impose any information collection and 
recordkeeping requirements. Consequently, it need not be reviewed by 
the Office of Management and Budget under the authority of the 
Paperwork Reduction Act of 1995 (44 U.S.C. 35).

V. Regulatory Impact Analysis

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 Act, the Unfunded Mandates Reform Act of 
1995 (Pub. L. 104-4), and Executive Order 13132. We estimated the 
impact on hospices, as a result of the changes to the FY 2008 hospice 
wage index. As discussed previously, the methodology for computing the 
wage index was determined through a negotiated rulemaking committee and 
implemented in the August 8, 1997 final rule (62 FR 42860). This final 
rule updates the hospice wage index in accordance with our regulation 
and that methodology, incorporating the CBSA designations used in the 
FY 2007 hospital wage index data.
     Table 1 categorizes the impact of the FY 2008 wage index 
values on hospices by various geographic and provider characteristics. 
We estimate that the total hospice payments will increase $2,860,000 as 
a result of the application of the FY 2008 wage index values. As 
discussed in the proposed rule as well as in this final rule, the 
impact analysis only reflects the FY 2008 wage index values. The FY 
2008 hospice payment rates are promulgated through administrative 
issuance and are not included in the impact analysis.
     Table A reflects the FY 2008 wage index values for urban 
areas designations.
     Table B reflects the FY 2008 wage index values for rural 
areas designations.
    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 one 
year). We have determined that this final rule is not an economically 
significant rule under this Executive Order.
    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 small governmental 
jurisdictions. Most hospices and most other providers and suppliers are 
small entities, either by nonprofit status or by having revenues of 
$6.5 million to $31.5 million in any one year (for details, see the 
Small Business Administration's regulation at 65 FR 69432, that sets 
forth size standards for health care industries). For purposes of the 
RFA, most hospices are small entities. As indicated in Table 1 below, 
there are 2,956 hospices. Approximately 53 percent of Medicare 
certified hospices are identified as voluntary, government, or other 
agencies and, therefore, are considered small entities. Because the 
National Hospice and Palliative Care Organization estimates that 
approximately 79 percent of hospice patients are Medicare 
beneficiaries, we have not considered other sources of revenue in this 
analysis. Furthermore, the wage index methodology was previously 
determined by consensus, through a negotiated rulemaking committee that 
included representatives of national hospice associations, rural, 
urban, large and small hospices, multi-site hospices, and consumer 
groups. Based on all of the options considered, the committee agreed on 
the methodology described in the committee statement, and it was 
adopted into regulation in the August 8, 1997 final rule. In developing 
the process for updating the wage index in the 1997 final rule, we 
considered the impact of this methodology on small entities and 
attempted to mitigate any potential negative effects.
    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 a CBSA and has fewer 
than 100 beds. We have determined that this final rule will not have a 
significant impact on the operations of a substantial number of small 
rural hospitals. We are not preparing an analysis for the RFA because 
we have determined that this rule will not have a significant economic 
impact on a substantial number of small entities.

[[Page 50225]]

    Section 202 of the Unfunded Mandates Reform Act of 1995 also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule that may result in expenditures in any one year by 
State, local, and tribal governments, in the aggregate, or by the 
private sector, of $120 million or more. This final rule is not 
anticipated to have an effect on State, local, or tribal governments or 
on the private sector of $120 million or more.
    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. We have reviewed this final rule under the threshold 
criteria of Executive Order 13132, Federalism, and have determined that 
it will not have an impact on the rights, roles, and responsibilities 
of State, local, or tribal governments.
    In accordance with the provisions of Executive Order 12866, this 
regulation was reviewed by the Office of Management and Budget.

B. Anticipated Effects

    As discussed in the proposed rule, we are unable to quantify the 
extent of the usage of the general inpatient level of care in the event 
of caregiver breakdown. Therefore, we are unable to definitively 
anticipate the impact of our clarification of the general inpatient 
level of care policy in the event of caregiver breakdown. For this 
reason, we solicited comment on what the impact of our clarification 
might be. We did not receive any substantive comments on the impact. 
Based on anecdotal evidence as well as substantial increases in the 
number of claims submitted for general inpatient care, however, we 
believe a small proportion of patient days attributed to general 
inpatient care would be appropriately allocated to inpatient respite 
care with this clarification. Significant savings could be realized 
even if only a small proportion of patient days attributed to general 
inpatient care were allocated to inpatient respite care.
    In the proposed rule we cited an example to determine the impact. 
In that example, we allocated 5.0 percent of general inpatient care 
days to inpatient respite care, using the FY 2005 patient days, 
expenditures and number of beneficiaries electing the hospice benefit 
to estimate the impact of the clarification of existing policy in this 
final rule. The number of inpatient days was adjusted from 1,250,678 to 
1,188,144. The number of inpatient respite days was adjusted from 
96,646 to 159,180. While inpatient respite expenditures increased from 
$14,000,000 to $23,058,570, general inpatient care expenditures 
decreased from $737,300,000 to $700,435,000. In total, if 5.0 percent 
of patient days that were attributed to general inpatient care in FY 
2005 were allocated to the inpatient respite level of care, it would 
have resulted in net savings of $27,806,430.
    The impact analysis of this final rule represents the projected 
effects of the changes in the hospice wage index from FY 2007 to FY 
2008. We estimate the effects by estimating payments for FY 2008 using 
the FY 2007 wage index values while holding all other payment variables 
constant.
    We note that certain events may combine to limit the scope or 
accuracy of our impact analysis because such an analysis is future 
oriented and, thus, susceptible to forecasting errors due to other 
changes in the forecasted impact time period. The nature of the 
Medicare program is such that the changes may interact, and the 
complexity of the interaction of these changes could make it difficult 
to predict accurately the full scope of the impact upon hospices.
    For the purposes of this final rule, we compared estimated payments 
using the FY 1983 hospice wage index to estimated payments using the FY 
2008 wage index and determined the hospice wage index to be budget 
neutral. Budget neutrality means that, in a given year, estimated 
aggregate payments for Medicare hospice services using the FY 2008 wage 
index would equal estimated aggregate payments that would have been 
made for the same services if the 1983 wage index had remained in 
effect. Budget neutrality to 1983 does not imply that estimated 
payments would not increase since the budget neutrality applies only to 
the wage index portion and not the total payment rate, which 
accommodates inflation.
    As discussed above, we use the latest claims file available to us 
to develop the impact table when we issue the annual yearly wage index 
update. For the purposes of this final rule, data were obtained from 
the National Claims History file using FY 2006 claims processed through 
June 2007, which was the most recent available data. We deleted bills 
from hospice providers that have since closed. For the purposes of this 
final rule, this file is adequate to demonstrate the impact of the FY 
2008 wage index values and is not intended to project the anticipated 
expenditures for FY 2008. This impact analysis compares hospice 
payments using the FY 2007 hospice wage index to the estimated payments 
using the FY 2008 wage index. We note that estimated payments for FY 
2008 are determined by using the wage index for FY 2008 and payment 
rates for FY 2007. We also note that the results in the impact analysis 
table (Table 1) in this final rule differ from the proposed rule, 
because we have incorporated the most recent data to determine the 
budget neutrality adjustment factor. As noted in previous sections, 
payment rates for FY 2008 are published through administrative 
issuance.
    Table 1 demonstrates the results of our analysis. In column 1 we 
indicate the number of hospices included in our analysis. In column 2, 
we indicate the number of routine home care days that were included in 
our analysis, although the analysis was performed on all types of 
hospice care. Column 3 estimates payments using the FY 2007 wage index 
values and the FY 2007 payment rates. Column 4 estimates payments using 
FY 2008 wage index values as well as the FY 2007 payment rates. Column 
5 compares columns 3 and 4 and shows the percentage change in estimated 
hospice payments based on the hospice category.
    Table 1 also categorizes hospices by various geographic and 
provider characteristics. The first row displays the aggregate result 
of the impact for all Medicare-certified hospices. The second and third 
rows of the table categorize hospices according to their geographic 
location (urban and rural). Our analysis indicated that there are 1,974 
hospices located in urban areas and 982 hospices located in rural 
areas. The next two groupings in the table indicate the number of 
hospices by census region, also broken down by urban and rural 
hospices. The sixth grouping shows the impact on hospices based on the 
size of the hospice's program. We determined that the majority of 
hospice payments are made at the routine home care rate. Therefore, we 
based the size of each individual hospice's program on the number of 
routine home care days provided in FY 2006. The next grouping shows the 
impact on hospices by type of ownership. The final grouping shows the 
impact on hospices defined by whether they are provider-based or 
freestanding. As indicated in Table 1 below, there are 2,956 hospices. 
Approximately 53 percent of Medicare-certified hospices are identified 
as voluntary, government, or other agencies and, therefore, are 
considered small entities. Because the National Hospice and Palliative 
Care Organization estimates that

[[Page 50226]]

approximately 79 percent of hospice patients are Medicare 
beneficiaries, we have not considered other sources of revenue in this 
analysis. Furthermore, the wage index methodology was previously 
determined by consensus, through a negotiated rulemaking committee that 
included representatives of national hospice associations; rural, 
urban, large, and small hospices; multi-site hospices; and consumer 
groups. Based on all of the options considered, the committee agreed on 
the methodology described in the committee statement, and it was 
adopted into regulation in the August 8, 1997 final rule. In developing 
the process for updating the wage index in the 1997 final rule, we 
considered the impact of this methodology on small entities and 
attempted to mitigate any potential negative effects.
    As stated previously, the following discussions are limited to 
demonstrating trends rather than projected dollars. We used the CBSA 
designations and wage indices as well as the data from FY 2006 claims 
processed through June 2007 in developing the impact analysis. For FY 
2008, the wage index is the variable that differs between the FY 2007 
payments and the FY 2008 estimated payments. FY 2007, payment rates are 
used for both FY 2007 actual payments and the FY 2008 estimated 
payments. The FY 2008 payment rates will be adjusted to reflect the 
full FY 2008 hospital market basket, as required by section 
1814(i)(1)(C)(ii)(VII) of the Act. As previously noted, we publish 
these rates through administrative issuances.
    As discussed in the FY 2006 final rule (70 FR 45129), hospice 
agencies may use multiple wage indices to compute their payments based 
on potentially different geographic locations. For the purposes of this 
final rule, the location of the beneficiary is used for routine and 
continuous home care or the CBSA for the location of the hospice agency 
for respite and general inpatient care. As noted above, beginning 
January 1, 2008, the wage index utilized will be based on the location 
of the site of service. As the location of the beneficiary's home and 
the location of the facility may vary, there will still be variability 
in geographic location. We anticipate that the location of the various 
sites will correspond with the geographic location of the hospice and 
thus we will continue to use the location of the hospice for our 
analyses. For this analysis, we use payments to the hospice in the 
aggregate based on the location of the hospice. The impact of hospice 
wage index changes has been analyzed according to the type of hospice, 
geographic location, type of ownership, hospice base, and size.
    Our analysis shows that most hospices are in urban areas and 
provide the vast majority of routine home care days. Most hospices are 
medium-sized followed by large hospices. Hospices are almost equal in 
numbers by ownership with 1,578 designated as non-profit and 1,378 as 
proprietary. The vast majority of hospices are freestanding.
1. Hospice Size
    Under the Medicare hospice benefit, hospices can provide four 
different levels of care days. The majority of the days provided by a 
hospice are routine home care (RHC) days representing over 70 percent 
of the services provided by a hospice. Therefore, the number of RHC 
days can be used as a proxy for the size of the hospice, that is, the 
more days of care provided, the larger the hospice. As discussed in the 
August 4, 2005 final rule, we currently use three size designations to 
present the impact analyses. The three categories are: small agencies 
having 0 to 3,499 RHC days; medium agencies having 3,500 to 19,999 RHC 
days; and large agencies having 20,000 or more RHC days. Using RHC days 
as a proxy for size, our analysis indicates that the proposed FY 2008 
wage index values are anticipated to have virtually no impact on 
hospice providers, with a slight increase of 0.1 percent anticipated 
for medium hospices while no change is anticipated for small or large 
hospices.
2. Geographic Location
    Our analysis demonstrates that the proposed FY 2008 wage index 
values will result in little change in estimated payments with urban 
hospices anticipated to experience no change while rural hospices are 
anticipated to experience a slight increase of 0.3 percent. For urban 
hospices, the greatest increase of 0.9 percent is anticipated to be 
experienced by the Mountain regions, followed by an increase for East 
North Central of 0.7 percent and Pacific regions of 0.6 percent. The 
remaining urban regions are anticipated to experience a decrease 
ranging from 0.1 percent in the West North Central and Middle Atlantic 
regions to 0.6 percent in the East South Central region. The greatest 
decrease of 2.4 percent is anticipated for Puerto Rico.
    For rural hospices, Puerto Rico is anticipated to experience no 
change. Two regions are anticipated to experience a decrease of 1.1 
percent for New England and 0.3 percent for the mountain regions. The 
remaining regions are anticipated to experience an increase ranging 
from 0.1 percent for the South Atlantic region to 0.6 percent for the 
Middle Atlantic, East South Central and West North Central regions.
3. Type of Ownership
    By type of ownership, non-profit hospices are anticipated to 
experience a slight increase of 0.1 percent in payment while government 
hospices are anticipated to experience a slight increase of 0.2 
percent. No change is anticipated for proprietary hospices. Not 
specified hospices in the ``other'' category are anticipated to 
experience a slight decrease of 0.2 percent.
4. Hospice Base
    No change in payment is anticipated for freestanding facilities. 
Home health, hospital, and skilled nursing facilities are anticipated 
to experience an increase of 0.1, 0.3, and 0.7 percent, respectively.

                                  Table 1.--Impact of Hospice Wage Index Change
----------------------------------------------------------------------------------------------------------------
                                                                                     Estimated
                                                     Number of    Payments using  Payments using  Percent Change
                                     Number of     Routine Home    FY 2007 Wage    FY 2008 CBSA     in Hospice
                                     Hospices      Care Days in      Index in      Wage Index in     Payments
                                                     Thousands       Thousands       Thousands
                                             (1)             (2)             (3)             (4)             (5)
----------------------------------------------------------------------------------------------------------------
ALL HOSPICES:...................            2956          61,125       9,148,694       9,151,554             0.0
    URBAN HOSPICES..............            1974          52,426       8,048,410       8,048,224             0.0
    RURAL HOSPICES..............             982           8,699       1,100,284       1,103,330             0.3
BY REGION--URBAN:
    NEW ENGLAND.................             112           1,772         313,059         311,816            -0.4

[[Page 50227]]

 
    MIDDLE ATLANTIC.............             198           5,211         843,068         842,000            -0.1
    SOUTH ATLANTIC..............             285          11,385       1,839,567       1,831,476            -0.4
    EAST NORTH CENTRAL..........             294           7,568       1,158,628       1,166,376             0.7
    EAST SOUTH CENTRAL..........             157           4,333         586,642         583,333            -0.6
    WEST NORTH CENTRAL..........             151           3,413         471,129         470,666            -0.1
    WEST SOUTH CENTRAL..........             336           7,113       1,007,361       1,002,636            -0.5
    MOUNTAIN....................             182           4,531         702,881         709,230             0.9
    PACIFIC.....................             225           6,302       1,054,910       1,061,223             0.6
    PUERTO RICO.................              34             797          71,165          69,468            -2.4
BY REGION--RURAL:
    NEW ENGLAND.................              26             144          21,134          20,910            -1.1
    MIDDLE ATLANTIC.............              43             408          52,441          52,765             0.6
    SOUTH ATLANTIC..............             124           1,840         238,972         239,136             0.1
    EAST NORTH CENTRAL..........             140           1,125         146,434         146,747             0.2
    EAST SOUTH CENTRAL..........             142           1,982         240,058         241,528             0.6
    WEST NORTH CENTRAL..........             188             944         120,343         121,061             0.6
    WEST SOUTH CENTRAL..........             163           1,307         153,527         153,934             0.3
    MOUNTAIN....................             103             576          74,972          74,718            -0.3
    PACIFIC.....................              52             365          51,809          51,936             0.2
    PUERTO RICO.................               1               7             595             595             0.0
ROUTINE HOME CARE DAYS:
    0-3499 DAYS (small).........             617           1,060         142,491         142,458             0.0
    3500-19,999 DAYS (medium)...            1429          14,208       1,994,694       1,996,162             0.1
    20,000+ DAYS (large)........             910          45,856       7,011,509       7,012,935             0.0
TYPE OF OWNERSHIP:
    VOLUNTARY...................            1220          27,555       4,270,787       4,274,723             0.1
    PROPRIETARY.................            1378          30,166       4,380,444       4,379,751             0.0
    GOVERNMENT..................             193             986         133,503         133,745             0.2
    OTHER.......................             165           2,417         363,960         363,335            -0.2
HOSPICE BASE:
    FREESTANDING................            1767          45,209       6,752,227       6,750,239             0.0
    HOME HEALTH AGENCY..........             620           9,105       1,369,110       1,370,605             0.1
    HOSPITAL....................             555           6,606         994,451         997,560             0.3
    SKILLED NURSING FACILITY....              14             205          32,906          33,149            0.7
----------------------------------------------------------------------------------------------------------------
Note: FY 2007 payment rates were used for estimated payments for FY 2008. FY 2008 payment rates will be adjusted
  to reflect the full hospital market basket and will be promulgated through administrative issuance.

C. Conclusion

    Our impact analysis compared the FY 2007 wage index to the 
estimated payments using the FY 2008 wage index. Through the analysis, 
we estimate that total hospice payments, based on the FY 2008 wage 
index values, will effectively be budget neutral with an estimated 
increase from FY 2007 of $2,860,000. As discussed, the budget 
neutrality adjustment factor is determined by using the pre-floor, pre-
reclassified hospital wage data. The impact analysis compares the wage 
index values, which have had either the budget neutrality adjustment 
factor or the hospice floor applied. Additionally, we compared 
estimated payments using the FY 1983 hospice wage index to estimated 
payments using the FY 2008 wage index and determined the current 
hospice wage index to be budget neutral, as required by the negotiated 
rulemaking committee. As noted above, the payment rates used reflect 
the FY 2007 rates. The FY 2008 payment rates will be adjusted to 
reflect the full FY 2008 hospital market basket, as required by section 
1814(i)(1)(C)(ii)(VII) of the Act. We publish these rates through 
administrative issuances.
    In accordance with the provisions of Executive Order 12866, this 
regulation was reviewed by the Office of Management and Budget.

List of Subjects for 42 CFR Part 418

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

0
For the reasons set forth in the preamble, the Centers for Medicare & 
Medicaid Services amends 42 CFR Chapter IV as set forth below:

PART 418--HOSPICE CARE

0
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 A--General Provision and Definitions

0
2. Section 418.3 is amended by revising paragraph (1)(ii) in the 
definition of ``attending physician'' to read as follows:


Sec.  418.3  Definitions.

* * * * *
    (1) * * *
    (ii) Nurse practitioner who meets the training, education, and 
experience requirements as described in Sec.  410.75 (b) of this 
chapter.
* * * * *

[[Page 50228]]

Subpart G--Payment for Hospice Care

0
3. Section 418.302 is amended by revising paragraph (g) to read as 
follows:


Sec.  418.302  Payment procedures for hospice care.

* * * * *
    (g) Payment for routine home care, continuous home care, general 
inpatient care and inpatient respite care is made on the basis of the 
geographic location where the services are provided.

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

(Catalog of Federal Domestic Assistance Program No. 93.778, Medical 
Assistance Program)

    Dated: July 19, 2007.
Leslie V. Norwalk,
Acting Administrator, Centers for Medicare & Medicaid Services.
    Approved: August 17, 2007.
Michael O. Leavitt,
Secretary.
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