[Federal Register Volume 79, Number 163 (Friday, August 22, 2014)]
[Rules and Regulations]
[Pages 50452-50510]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-18506]



[[Page 50451]]

Vol. 79

Friday,

No. 163

August 22, 2014

Part III





Department of Health and Human Services





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Center for Medicare & Medicaid Services





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42 CFR Parts 405 and 418





Medicare Program; FY 2015 Hospice Wage Index and Payment Rate Update; 
Hospice Quality Reporting Requirements and Process and Appeals for Part 
D Payment for Drugs for Beneficiaries Enrolled in Hospice; Final Rule

  Federal Register / Vol. 79 , No. 163 / Friday, August 22, 2014 / 
Rules and Regulations  

[[Page 50452]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 405 and 418

[CMS-1609-F]
RIN 0938-AS10


Medicare Program; FY 2015 Hospice Wage Index and Payment Rate 
Update; Hospice Quality Reporting Requirements and Process and Appeals 
for Part D Payment for Drugs for Beneficiaries Enrolled in Hospice

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

ACTION: Final rule.

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SUMMARY: This final rule will update the hospice payment rates and the 
wage index for fiscal year (FY) 2015 and continue the phase-out of the 
wage index budget neutrality adjustment factor (BNAF). This rule 
provides an update on hospice payment reform analyses, potential 
definitions of ``terminal illness'' and ``related conditions,'' and 
information on potential processes and appeals for Part D payment for 
drugs while beneficiaries are under a hospice election. This rule will 
specify timeframes for filing the notice of election and the notice of 
termination/revocation; add the attending physician to the hospice 
election form, and require hospices to document changes to the 
attending physician; require hospices to complete their hospice 
aggregate cap determinations within 5 months after the cap year ends, 
and remit any overpayments; and update the hospice quality reporting 
program. In addition, this rule will provide guidance on determining 
hospice eligibility; information on the delay in the implementation of 
the International Classification of Diseases, 10th Revision, Clinical 
Modification (ICD-10-CM); and will further clarify how hospices are to 
report diagnoses on hospice claims. Finally, the rule will make a 
technical regulations text change.

DATES: Effective Date: These regulations are effective on October 1, 
2014.

FOR FURTHER INFORMATION CONTACT: 
    Debra Dean-Whittaker, (410) 786-0848 for questions regarding the 
CAHPS[supreg] Hospice Survey.
    Roxanne Dupert-Frank, (410) 786-9667 for questions regarding the 
hospice quality reporting program.
    Deborah Larwood, (410) 786-9500 for questions regarding process and 
appeals for Part D payment for drugs while beneficiaries are under a 
hospice election.
    Owen Osaghae, (410) 786-7550 for questions regarding the hospice 
inpatient and aggregate cap determinations.
    For general questions about hospice payment policy, please send 
your inquiry via email to: [email protected].

SUPPLEMENTARY INFORMATION: 
    Wage index addenda will be available only through the internet on 
the CMS Web site at: (http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/Hospice/index.html.) Readers who experience any 
problems accessing any of the wage index addenda related to the hospice 
payment rules that are posted on the CMS Web site identified above 
should contact Hillary Loeffler at 410-786-0456.

Table of Contents

I. Executive Summary
    A. Purpose
    B. Summary of the Major Provisions
    C. Summary of Impacts
II. Background
    A. Hospice Care
    B. History of the Medicare Hospice Benefit
    C. Services Covered by the Medicare Hospice Benefit
    D. Medicare Payment for Hospice Care
    1. Omnibus Budget Reconciliation Act of 1989
    2. Balanced Budget Act of 1997
    3. FY 1998 Hospice Wage Index Final Rule
    4. FY 2010 Hospice Wage Index Final Rule
    5. The Affordable Care Act
    6. FY 2012 Hospice Wage Index Final Rule
    E. Trends in Medicare Hospice Utilization
III. Provisions of the Proposed Rule and Responses to Comments
    A. Hospice Payment Reform: Research and Analyses
    1. Beneficiaries Dying Without Skilled Visits in the Last Days 
of Life
    2. General Inpatient Care, Continuous Home Care, and Inpatient 
Respite Care Utilization
    3. Hospice Live Discharges
    4. Non-hospice Spending for Hospice Beneficiaries During an 
Election
    B. Solicitation of Comments on Definitions of ``Terminal 
Illness'' and ``Related Conditions''
    1. The Development of the Medicare Hospice Benefit
    2. Legislative History of the Medicare Hospice Benefit
    3. Hospice Care Today
    4. Definition of ``Terminal Illness''
    5. Definition of ``Related Conditions''
    C. Guidance on Determining Beneficiaries' Eligibility
    D. Timeframe for Hospice Cap Determinations and Overpayment 
Remittances
    E. Timeframes for Filing the Notice of Election and Notice of 
Termination/Revocation
    1. Timeframe for Filing the Notice of Election
    2. Timeframe for Filing the Notice of Termination/Revocation
    F. Addition of the Attending Physician to the Hospice Election 
Form
    G. FY 2015 Hospice Wage Index and Rates Update
    1. FY 2015 Hospice Wage Index
    2. FY 2015 Wage Index with an Additional 15 Percent Reduced 
Budget Neutrality Adjustment Factor (BNAF)
    3. Hospice Payment Update Percentage
    4. FY 2015 Hospice Payment Rates
    H. Updates to the Hospice Quality Reporting Program
    1. Background and Statutory Authority
    2. Measures for Hospice Quality Reporting Program and Data 
Submission Requirements for Payment Years FY 2014 and FY 2015
    3. Quality Measures for Hospice Quality Reporting Program and 
Data Submission Requirements for Payment Year FY 2016 and Beyond
    4. Future Measure Development
    5. Public Availability of Data Submitted
    6. Adoption of the CAHPS[supreg] Hospice Survey for the FY 2017 
Payment Determination
    a. Background and Description of the Survey
    b. Participation Requirements to Meet Quality Reporting 
Requirements for the FY 2017 APU
    c. Participation Requirements to Meet Quality Reporting 
Requirements for the FY 2018 APU
    d. Vendor Participation Requirements for the 2017 APU
    e. Annual Payment Update
    f. CAHPS[supreg] Hospice Survey Oversight Activities
    7. Procedures for Payment Year 2016 and Subsequent Years
    I. Solicitation of Comments on Coordination of Benefits Process 
and Appeals for Part D Payment for Drugs While Beneficiaries are 
Under a Hospice Election
    1. Part D Sponsor Coordination of Payment with Hospice Providers
    2. Solicitation of Comments on Hospice Coordination of Payment 
with Part D Sponsors and Other Payers
    3. Beneficiary Rights and Appeals
    J. Update on the International Classification of Diseases, 10th 
Revision, Clinical Modification (ICD-10-CM) and Coding Guidelines 
for Hospice Claims Reporting
    1. International Classification of Diseases, 10th Revision, 
Clinical Modification (ICD-10-CM)
    2. Coding Guidelines for Hospice Claims Reporting
    K. Technical Regulatory Text Change
IV. Collection of Information Requirements
    A. Changes Related to Hospice Payment Policy
    1. Changes to the Election Statement (Sec.  418.24)
    2. Changes to Aggregate Cap Determination Reporting (Sec.  
418.308)
    B. CAHPS[supreg] Hospice Survey
V. Regulatory Impact Analysis

[[Page 50453]]

    A. Statement of Need
    B. Introduction
    C. Overall Impact
    1. Detailed Economic Analysis
    a. Effects on Hospices
    b. Hospice Size
    c. Geographic Location
    d. Type of Ownership
    e. Hospice Base
    f. Effects on Other Providers
    g. Effects on the Medicare and Medicaid Programs
    h. Alternatives Considered
    i. Accounting Statement
    j. Conclusion
    2. Regulatory Flexibility Act Analysis
    3. Unfunded Mandates Reform Act Analysis
VI. Federalism Analysis and Regulations Text

Acronyms

    Because of the many terms to which we refer by acronym in this 
final rule, we are listing the acronyms used and their corresponding 
meanings in alphabetical order below:

ACA--Affordable Care Act
APU Annual Payment Update
BBA Balanced Budget Act of 1997
BIPA Benefits Improvement and Protection Act of 2000
BNAF Budget Neutrality Adjustment Factor
BLS Bureau of Labor Statistics
CAHPS[supreg] Consumer Assessment of Healthcare Providers and 
Systems
CBSA Core-Based Statistical Area
CCW Chronic Conditions Data Warehouse
CFR Code of Federal Regulations
CHC Continuous Home Care
CMS Centers for Medicare & Medicaid Services
COPD Chronic Obstructive Pulmonary Disease
CoPs Conditions of Participation
CR Change Request
CVA Cerebral Vascular Accident
CWF Common Working File
CY Calendar Year
DDE Direct Data Entry
DME Durable Medical Equipment
DRG Diagnosis Related Group
DTRR Daily Transaction Reply Report
ED Emergency Department
FEHC Family Evaluation of Hospice Care
FR Federal Register
FY Fiscal Year
GAO Government Accountability Office
GIP General Inpatient Care
HCFA Healthcare Financing Administration
HHS Health and Human Services
HIPAA Health Insurance Portability and Accountability Act
HIS Hospice Item Set
HQRP Hospice Quality Reporting Program
IACS Individuals Authorized Access to CMS Computer Services
ICD-9-CM International Classification of Diseases, Ninth Revision, 
Clinical Modification
ICD-10-CM International Classification of Diseases, Tenth Revision, 
Clinical Modification
ICR Information Collection Requirement
IDG Interdisciplinary Group
IPPS Inpatient Prospective Payment System
IRC Inpatient Respite Care
LCD Local Coverage Determination
MAC Medicare Administrative Contractor
MAP Measure Applications Partnership
MedPAC Medicare Payment Advisory Commission
MFP Multi-factor Productivity
MSA Metropolitan Statistical Area
NCPDP National Council for Prescription Drug Programs
NHPCO National Hospice and Palliative Care Organization
NF Long Term Care Nursing Facility
NOE Notice of Election
NOTR Notice of Termination/Revocation
NP Nurse Practitioner
NPI National Provider Identifier
NQF National Quality Forum
OIG Office of the Inspector General
OACT Office of the Actuary
OIG Office of Inspector General
OMB Office of Management and Budget
ONC Office of the National Coordinator for Health Information 
Technology
PA Prior Authorization
PBM Pharmacy Benefit Manager
PDE Prescription Drug Event
PRA Paperwork Reduction Act
PRRB Provider Reimbursement Review Board
PS&R Provider Statistical and Reimbursement Report
Pub. L Public Law
QAPI Quality Assessment and Performance Improvement
QIO Quality Improvement Organization
QRP Quality Reporting Program
RFA Regulatory Flexibility Act
RHC Routine Home Care
SAF Standard Analytic File
SBA Small Business Administration
SNF Skilled Nursing Facility
TEFRA Tax Equity and Fiscal Responsibility Act of 1982
TEP Technical Expert Panel
TrOOP True Out-of-Pocket
U.S.C. United States Code

I. Executive Summary

A. Purpose

    This final rule will update the payment rates for hospices for 
fiscal year (FY) 2015 as required under section 1814(i) of the Social 
Security Act (the Act), based on the hospital market basket update, 
less reductions mandated for hospices by the Patient Protection and 
Affordable Care Act (Pub. L 111-148) as amended by the Health Care and 
Education Reconciliation Act (Pub. L 111-152) (the Affordable Care 
Act). This final rule also will update the hospice wage index using 
updated hospital wage index data, and will apply the 6th year of the 7-
year Budget Neutrality Adjustment Factor (BNAF) phase-out. In addition, 
section 3004(c) of the Affordable Care Act established a quality 
reporting program for hospices. Starting in FY 2014, hospices that 
failed to meet quality reporting requirements received a two percentage 
point reduction to their market basket update. The Affordable Care Act 
also requires the Secretary to implement revisions to the hospice 
payment methodology no earlier than October 1, 2013; as such, this 
final rule updates the public on our hospice payment reform activities. 
This final rule also discusses potential definitions of ``terminal 
illness'' and ``related conditions,'' and information on potential 
processes and appeals for Part D payment for drugs while beneficiaries 
are under a hospice election. This rule will specify the timeframes for 
filing the hospice notice of election and the notice of termination/
revocation; will require that the attending physician be identified on 
the hospice election form and will require changes in the attending 
physician be documented; will require expedited hospice self-reporting 
of their aggregate cap determinations; and will provide updates to the 
hospice quality reporting program. Additionally, this rule provides 
guidance on determining a patient's eligibility for hospice; discusses 
the delay in the implementation of the International Classification of 
Diseases, 10th Revision, Clinical Modification (ICD-10-CM); clarifies 
how hospices will report diagnoses, in accordance with current ICD-9-CM 
guidelines, on hospice claims; and will make a technical regulations 
text change.

B. Summary of the Major Provisions

    In section III.A of this final rule, we provide information on 
hospice behavior and trends that raises program integrity concerns, 
including reform analyses related to beneficiaries dying without 
skilled visits at the end of life; utilization of General Inpatient 
Care (GIP), Continuous Home Care (CHC), or Inpatient Respite Care 
(IRC); live discharges; and non-hospice spending for hospice 
beneficiaries during a hospice election. The findings discussed raise 
questions about whether some hospices are operating within the intent 
of the Medicare Hospice benefit established by the Congress. In 2010, 
section 3132(a) of the Affordable Care Act amended section 1814(i)(6) 
of the Act to authorize the Secretary of the Department of Health and 
Human Services (the Secretary) to collect additional data and 
information determined appropriate to revise payments for hospice care 
(no earlier than October 1, 2013) and for other purposes. An initial 
step of hospice payment reform is to clarify hospice payment policy, 
and when necessary, to enforce policies to safeguard beneficiaries and 
the Medicare hospice benefit.

[[Page 50454]]

    In response to the concerning trends and comments received in 
response to prior rulemaking, in section III.B, we solicited comments 
on the definitions of ``terminal illness'' and ``related conditions'' 
to strengthen and clarify the current concepts of holistic and 
comprehensive hospice care under the Medicare hospice benefit. In 
addition, we solicited comments on processes that Part D plan sponsors 
could use to coordinate with Medicare hospices in determining coverage 
of drugs for hospice beneficiaries and resolving disagreements between 
the parties.
    We provide guidance on determining the beneficiary's eligibility 
for hospice in section III.C.
    In section III.D, we will require that hospices complete their 
aggregate cap determination using a pro-forma spreadsheet and payment 
data not earlier than 3 months after the cap year end, to determine 
their cap overpayment no later than 5 months after the cap year, and 
remit any overpayments at that time. Given concerns about hospices' 
increasingly exceeding their aggregate cap, along with the increases in 
the average overpayment per beneficiary, we believe that this 
procedural change is necessary to better safeguard the Medicare Trust 
Fund.
    In section III.E, we will require hospices to file both the notice 
of election (NOE) and the notice of termination/revocation (NOTR) on 
behalf of beneficiaries within 5 calendar days after the effective date 
of election or of discharge/revocation, respectively. If an NOE is not 
filed timely, the days from the effective date of election to the date 
of filing the NOE will be the financial responsibility of the hospice. 
We will allow a waiver of this consequence of late-filing an NOE in 
certain exceptional circumstances.
    In section III.F, we will require the hospice to identify the 
attending physician on the election form and to document changes to the 
attending physician.
    This final rule will update the hospice wage index with more 
current wage data, and the BNAF will be reduced by an additional 15 
percent for a total cumulative BNAF reduction of 85 percent as 
described in section III.G.2. The total BNAF phase-out will be complete 
by FY 2016. This final rule will also update the hospice payment rates 
for FY 2015 by 2.1 percent as described in section III.G.3.
    In section III.H of this final rule, we discuss updates to the 
hospice quality reporting program, including participation requirements 
for CY 2015 regarding the CAHPS[supreg] Hospice Survey, and remind the 
hospice industry that last year we set the July 1, 2014 implementation 
date for the Hospice Item Set and the January 1, 2015 implementation 
date for the CAHPS[supreg] Hospice Survey.
    More than seven new quality measures will be derived from these 
tools; therefore, no new measures were proposed this year. Section 
III.H of this rule also will make changes related to the 
reconsideration process, extraordinary circumstance extensions or 
exemptions, and hospice quality reporting program (HQRP) eligibility 
requirements for newly certified hospices.
    In section III.I, we solicit comments on processes that Part D plan 
sponsors could use to coordinate with Medicare hospices in determining 
coverage of drugs for hospice beneficiaries and resolving disagreements 
between the parties.
    In section III.J, we discuss the delay in the implementation of the 
International Classification of Diseases, 10th Revision, Clinical 
Modification (ICD-10-CM) and clarify appropriate diagnosis reporting on 
hospice claims per ICD-9-CM Coding Guidelines. Claims will be returned 
to the provider if the claim listed a non-specific symptom diagnosis as 
the principal hospice diagnosis.
    Finally, we will make a technical regulations text change in 
section III.K pertaining to the definition of ``social worker''.

C. Summary of Impacts

                      Table 1--Impact Summary Table
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         Provision description                      Transfers
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FY 2015 Hospice Wage Index and Payment   The overall economic impact of
 Rate Update.                             this final rule is estimated
                                          to be $230 million in
                                          increased payments to hospices
                                          during FY 2015.
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                                         Total costs
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New Quality Reporting Requirements for   $8.85 million.
 Hospices (FY 2015) and Aggregate cap
 Filing Requirements.
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II. Background

A. Hospice Care

    Hospice care is an approach to treatment that recognizes that the 
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, nursing, social, 
psychological, emotional, and spiritual services through use of a broad 
spectrum of professionals and other caregivers, with the goal of making 
the individual as physically and emotionally comfortable as possible. 
Hospice is compassionate patient and family-centered care for those who 
are terminally ill. It is a comprehensive, holistic approach to 
treatment that recognizes that the impending death of an individual 
necessitates a change from curative to palliative care.
    Medicare regulations define palliative care as ``patient and 
family-centered care that optimizes quality of life by anticipating, 
preventing, and treating suffering.'' Palliative care throughout the 
continuum of illness involves addressing physical, intellectual, 
emotional, social, and spiritual needs and to facilitate patient 
autonomy, access to information, and choice (42 CFR 418.3). Palliative 
care is at the core of hospice philosophy and care practices, and is a 
critical component of the Medicare hospice benefit. As stated in the 
June 5, 2008 Hospice Conditions of Participation final rule (73 FR 
32088), palliative care is an approach that ``optimizes quality of life 
by anticipating, preventing, and treating suffering.'' The goal of 
palliative care in hospice is to improve the quality of life of 
individuals, and their families, facing the issues associated with a 
life-threatening illness through the prevention and relief of suffering 
by means of early identification, assessment and treatment of pain and

[[Page 50455]]

other issues. This is achieved by the hospice interdisciplinary team 
working with the patient and family to develop a comprehensive care 
plan focused on coordinating care services, reducing unnecessary 
diagnostics or ineffective therapies, and offering ongoing 
conversations with individuals and their families about changes in the 
disease. It is expected that this comprehensive care plan will shift 
over time to meet the changing needs of the patient and family as the 
individual approaches the end-of-life.
    Medicare hospice care is palliative care for individuals with a 
prognosis of living 6 months or less if the terminal illness runs its 
normal course. As generally accepted by the medical community, the term 
``terminal illness'' refers to an advanced and progressively 
deteriorating illness, and that the illness is diagnosed as incurable 
(see section III.B for a discussion). When an individual is terminally 
ill, many health problems are brought on by underlying condition(s), as 
bodily systems are interdependent. In the June 5, 2008 Hospice 
Conditions of Participation final rule (73 FR 32088), we stated that 
``the medical director must consider the primary terminal condition, 
related diagnoses, current subjective and objective medical findings, 
current medication and treatment orders, and information about 
unrelated conditions when considering the initial certification of the 
terminal illness.'' As referenced in our regulations at Sec.  
418.22(b)(1), to be eligible for Medicare hospice services, the 
patient's attending physician (if any) and the hospice medical director 
must certify that the individual is terminally ill, that is, the 
individual's prognosis is for a life expectancy of 6 months or less if 
the terminal illness runs its normal course as defined in section 
1861(dd)(3)(A) of the Act and our regulations at Sec.  418.3. The 
certification of terminal illness must include a brief narrative 
explanation of the clinical findings that supports a life expectancy of 
6 months or less as part of the certification and recertification 
forms, as stated in Sec.  418.22(b)(3).
    The goal of hospice care is to make the hospice patient as 
physically and emotionally comfortable as possible, with minimal 
disruption to normal activities, while remaining primarily in the home 
environment. Hospice care uses an interdisciplinary approach to deliver 
medical, nursing, social, psychological, emotional, and spiritual 
services through the use of a broad spectrum of professional and other 
caregivers and volunteers. While the goal of hospice care is to allow 
for the individual to remain in his or her home environment, 
circumstances during the end-of-life may necessitate short-term 
inpatient admission to a hospital, skilled nursing facility (SNF), or 
hospice facility for procedures necessary for pain control or acute or 
chronic symptom management that cannot be managed in any other setting. 
These acute hospice care services are to ensure that any new or 
worsening symptoms are intensively addressed so that the individual can 
return to his or her home environment under a home level of care. 
Short-term, intermittent, inpatient respite services are also available 
to the family of the hospice patient when needed to relieve the family 
or other caregivers. Additionally, an individual can receive continuous 
home care during a period of crisis in which an individual requires 
primarily continuous nursing care to achieve palliation or management 
of acute medical symptoms so that the individual can remain at home. 
Continuous home care may be covered on a continuous basis for as much 
as 24 hours a day, and these periods must be predominantly nursing care 
per our regulations at Sec.  418.204. A minimum of 8 hours of nursing, 
or nursing and aide, care must be furnished on a particular day to 
qualify for the continuous home care rate (Sec.  418.302(e)(4)).
    Hospices are expected to comply with all civil rights laws, 
including the provision of auxiliary aids and services to ensure 
effective communication with patients or patient care representatives 
with disabilities consistent with Section 504 of the Rehabilitation Act 
of 1973 and the Americans with Disabilities Act, and to provide 
language access for such persons who are limited in English 
proficiency, consistent with Title VI of the Civil Rights Act of 1964. 
Further information about these requirements may be found at http://www.hhs.gov/ocr/civilrights.

B. History of the Medicare Hospice Benefit

    Before the creation of the Medicare hospice benefit, hospice was 
originally run by volunteers who cared for the dying. During the early 
development stages of the Medicare hospice benefit, hospice advocates 
were clear that they wanted a Medicare benefit available that provided 
all-inclusive care for terminally-ill individuals, provided pain relief 
and symptom management, and offered the opportunity to die with dignity 
in the comfort of one's home rather than in an institutional 
setting.\1\ As stated in the August 22, 1983 proposed rule entitled 
``Medicare Program; Hospice Care'' (48 FR 38146), ``the hospice 
experience in the United States has placed emphasis on home care. It 
offers physician services, specialized nursing services, and other 
forms of care in the home to enable the terminally ill individual to 
remain at home in the company of family and friends as long as 
possible.'' The concept of a patient ``electing'' the hospice benefit 
and being certified as terminally ill were two key components in the 
legislation responsible for the creation of the Medicare Hospice 
Benefit (section 122 of the Tax Equity and Fiscal Responsibility Act of 
1982 (TEFRA), (Pub. L. 97-248)). Section 122 of TEFRA created the 
Medicare Hospice Benefit, which was implemented on November 1, 1983. 
Under sections 1812(d) and 1861(dd) of the Social Security Act (the 
Act), codified at 42 U.S.C. 1395d(d) and 1395x(dd), we provide coverage 
of hospice care for terminally ill Medicare beneficiaries who elect to 
receive care from a Medicare-certified hospice. Our regulations at 
Sec.  418.54(c) stipulate that the comprehensive hospice assessment 
must identify the patient's physical, psychosocial, emotional, and 
spiritual needs related to the terminal illness and related conditions, 
and address those needs in order to promote the hospice patient's well-
being, comfort, and dignity throughout the dying process. The 
comprehensive assessment must take into consideration the following 
factors: the nature and condition causing admission (including the 
presence or lack of objective data and subjective complaints); 
complications and risk factors that affect care planning; functional 
status; imminence of death; and severity of symptoms (Sec.  418.54(c)). 
The Medicare hospice benefit requires the hospice to cover all 
reasonable and necessary palliative care related to the terminal 
prognosis and related conditions, as described in the patient's plan of 
care. The December 16, 1983 Hospice final rule (48 FR 56008) requires 
hospices to cover care for interventions to manage pain and symptoms. 
Clinically, related conditions are any physical or mental conditions 
that are related to or caused by either the terminal illness or the 
medications used to manage the terminal illness.\2\

[[Page 50456]]

See section III.B of this final rule for a discussion on a possible 
Medicare hospice definition of ``related conditions.'' Additionally, 
the hospice Conditions of Participation at Sec.  418.56(c) require that 
the hospice must provide all reasonable and necessary services for the 
palliation and management of the terminal illness, related conditions 
and interventions to manage pain and symptoms. Therapy and 
interventions must be assessed and managed in terms of providing 
palliation and comfort without undue symptom burden for the hospice 
patient or family.\3\ For example, a hospice patient with lung cancer 
(the principal terminal diagnosis) may receive inhalants for shortness 
of breath (related to the terminal condition). The patient may also 
suffer from metastatic bone pain (a related condition) and will be 
treated with opioid analgesics. As a result of the opioid therapy, the 
patient may suffer from constipation (a related condition) and require 
a laxative for symptom relief. It is often not a single diagnosis that 
represents the terminal prognosis of the patient, but the combined 
effect of several conditions, which could include not only the 
physical, but the emotional, psychosocial and spiritual, that makes the 
patient's condition terminal. In the December 16, 1983 Hospice final 
rule (48 FR 56010 through 56011), regarding what is related versus 
unrelated to the terminal illness, we stated: ``. . . we believe that 
the unique physical condition of each terminally ill individual makes 
it necessary for these decisions to be made on a case-by-case basis. It 
is our general view that hospices are required to provide virtually all 
the care that is needed by terminally ill patients.'' Therefore, unless 
there is clear evidence that a condition is unrelated to the terminal 
prognosis, all services will be considered related. It is also the 
responsibility of the hospice physician to document why a patient's 
medical needs will be unrelated to the terminal prognosis.
---------------------------------------------------------------------------

    \1\ Connor, Stephen. (2007) Development of Hospice and 
Palliative Care in the United States. OMEGA. 56(1), p89-99.
    \2\ Harder, PharmD, CGP, Julia. (2012). To Cover or Not To 
Cover: Guidelines for Covered Medications in Hospice Patients. The 
Clinician. 7(2), p1-3.
    \3\ Paolini, DO, Charlotte. (2001). Symptoms Management at End 
of Life. JAOA. 101(10). p609-615.
---------------------------------------------------------------------------

    As stated in the December 16,1983 Hospice final rule, the 
fundamental premise upon which the hospice benefit was designed was the 
``revocation'' of traditional curative care and the ``election'' of 
hospice care for end-of-life symptom management and maximization of 
quality of life (48 FR 56008). After electing hospice care, the patient 
typically returns to the home from an institutionalized setting or 
remains in the home, to be surrounded by family and friends, and to 
prepare emotionally and spiritually for death while receiving expert 
symptom management and other supportive services. Election of hospice 
care also includes waiving the right to Medicare payment for curative 
treatment for the terminal prognosis, and instead receiving palliative 
care to manage pain or symptoms.
    The benefit was originally designed to cover hospice care for a 
finite period of time that roughly corresponded to a life expectancy of 
6 months or less. Initially, beneficiaries could receive three election 
periods: two 90-day periods and one 30-day period. Currently, Medicare 
beneficiaries can elect hospice care for two 90-day periods and an 
unlimited number of subsequent 60-day periods; however, the expectation 
remains that beneficiaries have a life expectancy of 6 months or less 
if the terminal illness runs its normal course.

C. Services Covered by the Medicare Hospice Benefit

    One requirement for coverage under the Medicare Hospice Benefit is 
that hospice services must be reasonable and necessary for the 
palliation and management of the terminal illness and related 
conditions. Section 1861(dd)(1) of the Act establishes the services 
that are to be rendered by a Medicare certified hospice program. These 
covered services include: nursing care; physical therapy; occupational 
therapy; speech-language pathology therapy; medical social services; 
home health aide services (now called hospice aide services); physician 
services; homemaker services; medical supplies (including drugs and 
biologics); medical appliances; counseling services (including dietary 
counseling); short-term inpatient care (including both respite care and 
procedures necessary for pain control and acute or chronic symptom 
management) in a hospital, nursing facility, or hospice inpatient 
facility; continuous home care during periods of crisis and only as 
necessary to maintain the terminally ill individual at home; and any 
other item or service which is specified in the plan of care and for 
which payment may otherwise be made under Medicare, in accordance with 
Title XVIII of the Act.
    Section 1814(a)(7)(B) of the Act requires that a written plan for 
providing hospice care to a beneficiary who is a hospice patient be 
established before care is provided by, or under arrangements made by, 
that hospice program and that the written plan be periodically reviewed 
by the beneficiary's attending physician (if any), the hospice medical 
director, and an interdisciplinary group (described in section 
1861(dd)(2)(B) of the Act). The services offered under the Medicare 
hospice benefit must be available, as needed, to beneficiaries 24 hours 
a day, 7 days a week (section 1861(dd)(2)(A)(i) of the Act). Upon the 
implementation of the hospice benefit, the Congress expected hospices 
to continue to use volunteer services, though these services are not 
reimbursed by Medicare (see Section 1861(dd)(2)(E) of the Act and (48 
FR 38149)). As stated in the August 22, 1983 Hospice proposed rule, the 
hospice interdisciplinary group should be comprised of paid hospice 
employees as well as hospice volunteers (48 FR 38149). This expectation 
is in line with the history of hospice and philosophy of holistic, 
comprehensive, compassionate, end-of-life care.
    Before the Medicare hospice benefit was established, the Congress 
requested a demonstration project to test the feasibility of covering 
hospice care under Medicare. The National Hospice Study was initiated 
in 1980 through a grant sponsored by the Robert Wood Johnson and John 
A. Hartford Foundations and CMS (then, the Health Care Financing 
Administration (HCFA)). The demonstration project was conducted between 
October 1980 and March 1983. The project summarized the hospice care 
philosophy as the following:
     Patient and family know of the terminal condition.
     Further medical treatment and intervention are indicated 
only on a supportive basis.
     Pain control should be available to patients as needed to 
prevent rather than to just ameliorate pain.
     Interdisciplinary teamwork is essential in caring for 
patient and family.
     Family members and friends should be active in providing 
support during the death and bereavement process.
     Trained volunteers should provide additional support as 
needed.
The cost data and the findings on what services hospices provided in 
the demonstration project were used to design the Medicare hospice 
benefit. The identified hospice services were incorporated into the 
service requirements under the Medicare hospice benefit. Importantly, 
in the August 22, 1983 hospice proposed rule, we stated ``the hospice 
benefit and the resulting Medicare reimbursement is not intended to 
diminish the voluntary spirit of hospices'' (48 FR 38149).

[[Page 50457]]

D. Medicare Payment for Hospice Care

    Sections 1812(d), 1813(a)(4), 1814(a)(7), 1814(i), and 1861(dd) of 
the Act, and our regulations in 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 a per diem payment in one of four prospectively-
determined rate categories of hospice care (routine home care, 
continuous home care, inpatient respite care, and general inpatient 
care), based on each day a qualified Medicare beneficiary is under 
hospice care (once the individual has elected). This per diem payment 
is to include all of the hospice services needed to manage the 
beneficiaries' care, as required by section 1861(dd)(1) of the Act. 
There has been little change in the hospice payment structure since the 
benefit's inception. The per diem rate based on level of care was 
established in 1983, and this payment structure remains today with some 
adjustments, as noted below:
1. Omnibus Budget Reconciliation Act of 1989
    Section 6005(a) of the Omnibus Budget Reconciliation Act of 1989 
(Pub. L. 101-239) amended section 1814(i)(1)(C) of the Act and provided 
for the following two changes in the methodology concerning updating 
the daily payment rates: (1) effective January 1, 1990, the daily 
payment rates for routine home care and other services included in 
hospice care were increased to equal 120 percent of the rates in effect 
on September 30, 1989; and (2) the daily payment rate for routine home 
care and other services included in hospice care for fiscal years 
beginning on or after October 1, 1990, were the payment rates in effect 
during the previous Federal fiscal year increased by the hospital 
market basket percentage increase.
2. Balanced Budget Act of 1997
    Section 4441(a) of the Balanced Budget Act of 1997 (BBA) (Pub. L. 
105-33) amended section 1814(i)(1)(C)(ii)(VI) of the Act to establish 
updates to hospice rates for FYs 1998 through 2002. Hospice rates were 
updated by a factor equal to the hospital market basket percentage 
increase, minus 1 percentage point. Payment rates for FYs from 2002 
have been 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 hospital market basket percentage increase for the FY. 
The Act requires us to use the inpatient hospital market basket to 
determine hospice payment rates.
3. FY 1998 Hospice Wage Index Final Rule
    In the August 8, 1997 FY 1998 Hospice Wage Index final rule (62 FR 
42860), we implemented a new methodology for calculating the hospice 
wage index based on the recommendations of a negotiated rulemaking 
committee. The original hospice wage index was based on 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, the Hospice Wage Index Negotiated Rulemaking Committee was 
formed to negotiate a new wage index methodology that could be accepted 
by the industry and the government. This Committee was comprised of 
representatives from national hospice associations; rural, urban, large 
and small hospices, and multi-site hospices; consumer groups; and a 
government representative. The Committee decided that in updating the 
hospice wage index, aggregate Medicare payments to hospices would 
remain budget neutral to payments calculated using the 1983 wage index, 
to cushion the impact of using a new wage index methodology. To 
implement this policy, a Budget Neutrality Adjustment Factor (BNAF) 
will be computed and applied annually to the pre-floor, pre-
reclassified hospital wage index when deriving the hospice wage index, 
subject to a wage index floor.
4. FY 2010 Hospice Wage Index Final Rule
    Inpatient hospital pre-floor and pre-reclassified wage index 
values, as described in the August 8, 1997 Hospice Wage Index final 
rule, are subject to either a budget neutrality adjustment or 
application of the wage index floor. Wage index values of 0.8 or 
greater are adjusted by the (BNAF). Starting in FY 2010, a 7-year 
phase-out of the BNAF began (August 6, 2009 FY 2010 Hospice Wage Index 
final rule, (74 FR 39384)), with a 10 percent reduction in FY 2010, an 
additional 15 percent reduction for a total of 25 percent in FY 2011, 
an additional 15 percent reduction for a total 40 percent reduction in 
FY 2012, an additional 15 percent reduction for a total of 55 percent 
in FY 2013, and an additional 15 percent reduction for a total 70 
percent reduction in FY 2014. The phase-out will continue with an 
additional 15 percent reduction for a total reduction of 85 percent in 
FY 2015, and an additional 15 percent reduction for complete 
elimination in FY 2016. We note that the BNAF is an adjustment which 
increases the hospice wage index value. Therefore, the BNAF reduction 
is a reduction in the amount of the BNAF increase applied to the 
hospice wage index value. It is not a reduction in the hospice wage 
index value or in the hospice payment rates.
5. The Affordable Care Act
    Starting with FY 2013 (and in subsequent fiscal years), the market 
basket percentage update under the hospice payment system referenced in 
sections 1814(i)(1)(C)(ii)(VII) and 1814(i)(1)(C)(iii) of the Act will 
be annually reduced by changes in economy-wide productivity, as 
specified in section 1886(b)(3)(B)(xi)(II) of the Act, as amended by 
section 3132(a) of the Patient Protection and Affordable Care Act (Pub. 
L. 111-148) as amended by the Health Care and Education Reconciliation 
Act (Pub. L. 111-152) (the Affordable Care Act)). In FY 2013 through FY 
2019, the market basket percentage update under the hospice payment 
system will be reduced by an additional 0.3 percentage point (although 
for FY 2014 to FY 2019, the potential 0.3 percentage point reduction is 
subject to suspension under conditions as specified in section 
1814(i)(1)(C)(v) of the Act).
    In addition, sections 1814(i)(5)(A) through (C) of the Act, as 
amended by section 3132(a) of the Affordable Care Act, require hospices 
to begin submitting quality data, based on measures to be specified by 
the Secretary, for FY 2014 and subsequent fiscal years. Beginning in FY 
2014, hospices which fail to report quality data will have their market 
basket update reduced by 2 percentage points.
    Section 1814(a)(7)(D)(i) of the Act was amended by section 3132 
(b)(2)(D)(i) of the Affordable Care Act, and requires, effective 
January 1, 2011, that a hospice physician or nurse practitioner have a 
face-to-face encounter with the beneficiary to determine continued 
eligibility of the beneficiary's hospice care prior to the 180th-day 
recertification and each subsequent recertification, and to attest that 
such visit took place. When implementing this provision, we decided 
that the 180th-day recertification and subsequent recertifications 
corresponded to the recertification for a beneficiary's third or 
subsequent benefit periods (CY 2011 Home Health Prospective Payment 
System final rule (75 FR 70435)). Further, section 1814(i)(6) of the 
Act, as amended by section 3132(a)(1)(B) of the Affordable Care Act, 
authorizes the Secretary to

[[Page 50458]]

collect additional data and information determined appropriate to 
revise payments for hospice care and other purposes. The types of data 
and information suggested in the Affordable Care Act would capture 
accurate resource utilization, which could be collected on claims, cost 
reports, and possibly other mechanisms, as the Secretary determines to 
be appropriate. The data collected may be used to revise the 
methodology for determining the payment rates for routine home care and 
other services included in hospice care, no earlier than October 1, 
2013, as described in section 1814(i)(6)(D) of the Act. In addition, we 
are required to consult with hospice programs and the Medicare Payment 
Advisory Commission (MedPAC) regarding additional data collection and 
payment revision options.
6. FY 2012 Hospice Wage Index Final Rule
    When the Medicare Hospice Benefit was implemented, the Congress 
included an aggregate cap on hospice payments, which limits the total 
aggregate payments any individual hospice can receive in a year. The 
Congress stipulated that a ``cap amount'' be computed each year. The 
cap amount was set at $6,500 per beneficiary when first enacted in 1983 
and is adjusted annually by the change in the medical care expenditure 
category of the consumer price index for urban consumers from March 
1984 to March of the cap year (section 1814(i)(2)(B) of the Act). The 
cap year is defined as the period from November 1st to October 31st. As 
we stated in the August 4, 2011 FY 2012 Hospice Wage Index final rule 
(76 FR 47308 through 47314), for the 2012 cap year and subsequent cap 
years, the hospice aggregate cap will be calculated using the patient-
by-patient proportional methodology, within certain limits. We will 
allow existing hospices the option of having their cap calculated via 
the original streamlined methodology, also within certain limits. New 
hospices will have their cap determinations calculated using the 
patient-by-patient proportional methodology. The patient-by-patient 
proportional methodology and the streamlined methodology are two 
different methodologies for counting beneficiaries when calculating the 
hospice aggregate cap. A detailed explanation of these methods is found 
in the August 4, 2011 FY 2012 Hospice Wage Index final rule (76 FR 
47308 through 47314). If a hospice's total Medicare reimbursement for 
the cap year exceeded the hospice aggregate cap, then the hospice must 
repay the excess back to Medicare.

E. Trends in Medicare Hospice Utilization

    Since the implementation of the hospice benefit in 1983, and 
especially within the last decade, there has been substantial growth in 
hospice utilization. The number of Medicare beneficiaries receiving 
hospice services has grown from 513,000 in FY 2000 to over 1.3 million 
in FY 2013. Similarly, Medicare hospice expenditures have risen from 
$2.9 billion in FY 2000 to an estimated $15.1 billion in FY 2013. Our 
Office of the Actuary (OACT) projects that hospice expenditures are 
expected to continue to increase, by approximately 8 percent annually, 
reflecting an increase in the number of Medicare beneficiaries, more 
beneficiary awareness of the Medicare Hospice Benefit for end-of-life 
care, and a growing preference for care provided in home and community-
based settings. However, this increased spending is partly due to an 
increased average lifetime length of stay for beneficiaries, from 54 
days in 2000 to 86 days in 2011, an increase of 59 percent.
    There have also been noted changes in the diagnosis patterns among 
Medicare hospice enrollees. Specifically, there were notable increases 
between 2002 and 2007 in neurologically-based diagnoses, including 
various dementia diagnoses. Additionally, there have been significant 
increases in the use of non-specific, symptom-classified diagnoses, 
such as ``debility'' and ``adult failure to thrive.'' In FY 2012, 
``debility'' and ``adult failure to thrive'' were the first and third 
most common hospice diagnoses, respectively. ``Debility'' and ``adult 
failure to thrive'' continue to be among the most common hospice 
principal diagnoses (14 percent), and those, combined with ``dementia'' 
and Alzheimer's disease constituted approximately 30 percent of all 
claims-reported principal diagnosis codes reported in FY 2013 (see 
Table 2 below).

             Table 2--The Top Twenty Principal Hospice Diagnoses, FY 2002, FY 2007, FY 2012, FY 2013
----------------------------------------------------------------------------------------------------------------
                  Rank                    ICD-9/Reported principal diagnosis        Count          Percentage
----------------------------------------------------------------------------------------------------------------
                                                  Year: FY 2002
----------------------------------------------------------------------------------------------------------------
1.......................................  162.9 Lung Cancer.................            73,769                11
2.......................................  428.0 Congestive Heart Failure....            45,951                 7
3.......................................  799.3 Debility Unspecified........            36,999                 6
4.......................................  496 COPD..........................            35,197                 5
5.......................................  331.0 Alzheimer's Disease.........            28,787                 4
6.......................................  436 CVA/Stroke....................            26,897                 4
7.......................................  185 Prostate Cancer...............            20,262                 3
8.......................................  783.7 Adult Failure To Thrive.....            18,304                 3
9.......................................  174.9 Breast Cancer...............            17,812                 3
10......................................  290.0 Senile Dementia, Uncomp.....            16,999                 3
11......................................  153.0 Colon Cancer................            16,379                 2
12......................................  157.9 Pancreatic Cancer...........            15,427                 2
13......................................  294.8 Organic Brain Synd Nec......            10,394                 2
14......................................  429.9 Heart Disease Unspecified...            10,332                 2
15......................................  154.0 Rectosigmoid Colon Cancer...             8,956                 1
16......................................  332.0 Parkinson's Disease.........             8,865                 1
17......................................  586 Renal Failure Unspecified.....             8,764                 1
18......................................  585 Chronic Renal Failure (End                 8,599                 1
                                           2005).
19......................................  183.0 Ovarian Cancer..............             7,432                 1
20......................................  188.9 Bladder Cancer..............             6,916                 1
----------------------------------------------------------------------------------------------------------------
                                                  Year: FY 2007
----------------------------------------------------------------------------------------------------------------
1.......................................  799.3 Debility Unspecified........            90,150                 9

[[Page 50459]]

 
2.......................................  162.9 Lung Cancer.................            86,954                 8
3.......................................  428.0 Congestive Heart Failure....            77,836                 7
4.......................................  496 COPD..........................            60,815                 6
5.......................................  783.7 Adult Failure To Thrive.....            58,303                 6
6.......................................  331.0 Alzheimer's Disease.........            58,200                 6
7.......................................  290.0 Senile Dementia Uncomp......            37,667                 4
8.......................................  436 CVA/Stroke....................            31,800                 3
9.......................................  429.9 Heart Disease Unspecified...            22,170                 2
10......................................  185 Prostate Cancer...............            22,086                 2
11......................................  174.9 Breast Cancer...............            20,378                 2
12......................................  157.9 Pancreas Unspecified........            19,082                 2
13......................................  153.9 Colon Cancer................            19,080                 2
14......................................  294.8 Organic Brain Syndrome NEC..            17,697                 2
15......................................  332.0 Parkinson's Disease.........            16,524                 2
16......................................  294.10 Dementia In Other Diseases             15,777                 2
                                           w/o Behav. Dist.
17......................................  586 Renal Failure Unspecified.....            12,188                 1
18......................................  585.6 End Stage Renal Disease.....            11,196                 1
19......................................  188.9 Bladder Cancer..............             8,806                 1
20......................................  183.0 Ovarian Cancer..............             8,434                 1
----------------------------------------------------------------------------------------------------------------
                                                  Year: FY 2012
----------------------------------------------------------------------------------------------------------------
1.......................................  799.3 Debility Unspecified........           161,163                12
2.......................................  162.9 Lung Cancer.................            89,636                 7
3.......................................  783.7 Adult Failure To Thrive.....            86,467                 7
4.......................................  428.0 Congestive Heart Failure....            84,333                 6
5.......................................  496 COPD..........................            74,786                 6
6.......................................  331.0 Alzheimer's Disease.........            64,199                 5
7.......................................  290.0 Senile Dementia, Uncomp.....            56,234                 4
8.......................................  429.9 Heart Disease Unspecified...            32,081                 2
9.......................................  436 CVA/Stroke....................            31,987                 2
10......................................  294.10 Dementia In Other Diseases             27,417                 2
                                           w/o Behavioral Dist.
11......................................  174.9 Breast Cancer...............            22,421                 2
12......................................  153.9 Colon Cancer................            22,197                 2
13......................................  157.9 Pancreatic Cancer...........            22,007                 2
14......................................  332.0 Parkinson's Disease.........            21,183                 2
15......................................  185 Prostate Cancer...............            21,042                 2
16......................................  294.8 Other Persistent Mental Dis.-           17,762                 1
                                           classified elsewhere.
17......................................  585.6 End Stage Renal Disease.....            17,545                 1
18......................................  518.81 Respiratory Failure........            12,962                 1
19......................................  294.11 Dementia In Other Diseases             11,751                 1
                                           w/Behavioral Dist.
20......................................  188.9 Bladder Cancer..............            10,511                 1
----------------------------------------------------------------------------------------------------------------
                                                  Year: FY 2013
----------------------------------------------------------------------------------------------------------------
1.......................................  799.3 Debility Unspecified........           127,415                 9
2.......................................  428.0 Congestive Heart Failure....            96,171                 7
3.......................................  162.9 Lung Cancer.................            91,598                6%
4.......................................  496 COPD..........................            82,184                 6
5.......................................  331.0 Alzheimer's Disease.........            79,626                 6
6.......................................  783.7 Adult Failure to Thrive.....            71,122                 5
7.......................................  290.0 Senile Dementia, Uncomp.....            60,579                 4
8.......................................  429.9 Heart Disease Unspecified...            36,914                 3
9.......................................  436 CVA/Stroke....................            34,459                 2
10......................................  294.10 Dementia In Other Diseases             30,963                 2
                                           w/o Behavioral Dist.
11......................................  332.0 Parkinson's Disease.........            25,396                 2
12......................................  153.9 Colon Cancer................            23,228                 2
13......................................  294.20 Dementia Unspecified w/o               23,224                 2
                                           Behavioral Dist.
14......................................  174.9 Breast Cancer...............            23,059                 2
15......................................  157.9 Pancreatic Cancer...........            22,341                 2
16......................................  185 Prostate Cancer...............            21,769                 2
17......................................  585.6 End-Stage Renal Disease.....            19,309                 1
18......................................  518.81 Acute Respiratory Failure..            15,965                 1
19......................................  294.8 Other Persistent Mental Dis.-           14,372                 1
                                           classified elsewhere.
20......................................  294.11 Dementia In Other Diseases             13,687                 1
                                           w/Behavioral Dist.
----------------------------------------------------------------------------------------------------------------
Note(s): The frequencies shown represent beneficiaries that had a least one claim with the specific ICD-9-CM
  code reported as the principal diagnosis. Beneficiaries could be represented multiple times in the results if
  they have multiple claims during that time period with different principal diagnoses.
Source: FY 2002, 2007, and 2012 hospice claims data from the Chronic Conditions Data Warehouse (CCW), accessed
  on February 14 and February 20, 2013. FY 2013 hospice claims data from the CCW, accessed on June 26, 2014.


[[Page 50460]]

III. Provisions of the Proposed Regulations and Responses to Comments

    On May 8, 2014, we published a proposed rule in the Federal 
Register (79 FR 26538-26587) entitled, FY 2015 Hospice Wage Index and 
Payment Rate Update; Hospice Quality Reporting Requirements and Process 
and Appeals for Part D Payment for Drugs for Beneficiaries Enrolled in 
Hospice (herein referred to as the FY 2015 Hospice Wage Index proposed 
rule). The FY 2015 Hospice Wage Index proposed rule updated the public 
on several issues and set forth the following proposals:
     We discussed recent payment reform analyses related to 
beneficiaries dying without skilled visits at the end of life; 
utilization of General Inpatient Care (GIP), Continuous Home Care 
(CHC), or Inpatient Respite Care (IRC); live discharges; and non-
hospice spending for hospice beneficiaries during a hospice election.
     We solicited comments on the definition of ``terminal 
illness'' and ``related conditions.''
     We provided guidance on determining eligibility for 
hospice care.
     We proposed to require that hospices determine their 
inpatient and/or aggregate cap overpayment within 5 months after the 
cap year, and proposed to further amend Sec.  418.308 and Sec.  405.371 
to state that payments to a hospice would be suspended in whole or in 
part, for failure to file a self-determined inpatient and aggregate cap 
determination no later than 5 months after the end of the cap year 
(that is, by March 31st of each year).
     We proposed to amend Sec.  418.24(a) to require that a 
hospice must file the Notice of Election (NOE) with its Medicare 
Administrative Contractor (MAC) within 3 calendar days after the 
hospice effective date of election. We also proposed that for those 
hospices that do not file the NOE timely (that is, within 3 calendar 
days after the effective date of election), Medicare would not cover 
and pay for days of hospice care from the effective date of election to 
the date of filing of the NOE. In addition, we proposed that these days 
be considered the financial responsibility of the hospice; the hospice 
could not bill the beneficiary for them.
     We proposed to revise the regulations at Sec.  418.26 and 
Sec.  418.28 to require hospices to file a Notice of Termination or 
Revocation (NOTR) within 3 calendar days after the effective date of a 
beneficiary's discharge or revocation, if they have not already filed a 
final claim.
     We proposed to amend the regulations at Sec.  418.24(b)(1) 
to require the election statement to identify the attending physician, 
and to include an acknowledgement that the attending physician was 
chosen by the patient. We also proposed that if a patient (or 
representative) wants to change his or her designated attending 
physician, he or she must file a statement with the hospice which 
identifies the new attending physician and includes the date the change 
is to be effective, the date that the statement is signed, and the 
patient's (or representative's) signature, along with an 
acknowledgement that this change in the attending physician is the 
patient's (or representative's) choice.
     We provided a preliminary update to the FY 2015 hospice 
wage index, continuing to use the hospital pre-floor, pre-reclassified 
wage index as the source data, and provided a preliminary update to the 
FY 2015 hospice payment rates.
     We proposed in Sec.  418.312 that newly certified hospices 
that receive notice of their CMS certification number on or after 
November 1, 2014, for payments to be made in FY 2016, be excluded from 
the quality reporting requirements for the FY 2016 payment 
determination, as data submission and analysis would not be possible 
for a hospice receiving notification of their certification this late 
in the reporting time period. We also proposed that in future years, 
hospices that receive notification of certification on or after 
November 1 of the preceding year involved would continue to be excluded 
from any payment penalty for quality reporting purposes for the 
following FY.
     We proposed that approved survey vendors meet all of the 
minimum business requirements and follow the detailed technical 
specifications for survey administration as published in the 
CAHPS[supreg] Hospice Survey specifications manual. We proposed to 
codify the CAHPS[supreg] Hospice Survey vendor requirements to be 
effective with the FY 2017 Annual Payment Update (APU) (as proposed in 
Sec.  418.312). We also proposed that no organization, firm, or 
business that owns, operates, or provides staffing for a hospice be 
permitted to administer its own Hospice CAHPS[supreg] survey or 
administer the survey on behalf of any other hospice in the capacity as 
a Hospice CAHPS[supreg] survey vendor.
     We described a potential coordination of benefits and 
appeals process for Part D payment for drugs while beneficiaries are 
under a hospice election, and solicited comments to guide us in making 
a possible proposal in future rulemaking. We solicited comments on 
whether hospices need to determine, in a specific amount of time, a 
beneficiary's drug and biological needs and communicate with the Part D 
plan sponsor or to the other payer and/or provider, verbally or in 
writing, to ensure that there is no lapse of reasonable and necessary 
drugs and biologicals or other items or services for the palliation and 
management of the terminal illness and related conditions. We also 
solicited comments on steps a hospice could take to reconcile payment 
responsibility with Part D plans or with other payers or providers.
     We provided an update on the International Classification 
of Diseases, 10th Revision, Clinical Modification (ICD-10-CM) and 
coding guidelines for hospice claims reporting.
     We proposed to make at technical correction in Sec.  418.3 
to delete an obsolete definition for a ``social worker.''
    We provided for a 60 day comment period on the FY 2015 Hospice Wage 
Index proposed rule. We received 114 public comments from the Medicare 
Payment Advisory Commission, Medicare beneficiary advocacy groups, 
hospice providers, state and national hospice associations, hospice and 
end-of-life care organizations and experts, hospice financial experts 
and consultants, attorneys, Part D sponsors, pharmacy associations, 
private insurance plans, and private individuals. In general, 
commenters provided thoughtful and diverse comments on the proposed 
policies. We also received comments that are outside the scope of this 
rule. We will take these comments under consideration when evaluating 
current hospice policies.
    Summaries of the public comments received on the proposals and our 
responses to those comments are provided in the appropriate sections in 
the preamble of this final rule.

A. Hospice Payment Reform: Research and Analyses

    Section 3132(a) of the Affordable Care Act amended section 
1814(i)(6) of the Act to authorize the Secretary to collect additional 
data and information determined appropriate to revise payments for 
hospice care and for other purposes. The data collected may be used to 
revise the methodology for determining the payment rates for routine 
home care and other services included in hospice care, no earlier than 
October 1, 2013, as described in section 1814(i)(6)(D) of the Act. We 
are also required to consult with hospice

[[Page 50461]]

programs and the Medicare Payment Advisory Commission (MedPAC) 
regarding additional data collection and payment revision options. 
Since 2010, we have been working with our hospice reform contractor, 
Abt Associates, to review the most current peer-reviewed literature; 
conduct research and analyses; identify potential vulnerabilities in 
the current payment system; and research and develop hospice payment 
model options. We recently required additional information on hospice 
claims regarding drugs and certain durable medical equipment, effective 
April 1, 2014; and are in the process of finalizing changes to the 
hospice cost report to better collect data on the costs of providing 
hospice care. The additional information on hospice claims and the 
hospice cost report will be used in our hospice payment reform efforts, 
once the data are available for analysis.
    The research and analyses conducted thus far on available Medicare 
claims and cost report data have highlighted hospice utilization trends 
that raise concerns regarding the viability of the Medicare hospice 
program and the impact of beneficiary access to quality end of life 
care. In March 2009, the Medicare Payment Advisory Commission (MedPAC) 
recommended that Medicare improve its payment system for hospice 
services to address a misalignment between Medicare's payments and 
hospice's costs that created incentives for providers to enroll 
patients who are more likely to have long stays because those stays are 
more profitable than short ones (http://www.medpac.gov/chapters/Mar09_Ch06.pdf). MedPAC's June 2013 Report to Congress on Medicare and the 
Health Care Delivery System reiterated concerns about utilization 
trends and suggested that such trends were driven by a misalignment in 
the payment system (http://www.medpac.gov/chapters/Jun13_Ch05.pdf). 
MedPAC's June 2013 report added that, while payment reform would better 
align payments with costs, additional administrative controls were 
necessary to balance incentives and strengthen provider compliance. As 
such, we believe that a critical goal of the Medicare hospice payment 
system is to strengthen and safeguard the current scope of the Medicare 
hospice benefit. This will provide a solid foundation on which to 
reform the methodology used to pay for Medicare hospice services. 
Program integrity is being addressed immediately while we develop 
further data and research to address payment reform in the near future.
    Abt Associates, with its subcontractor Brown University, has 
developed a technical report entitled, ``Medicare Hospice Payment 
Reform: Analyses to Support Payment Reform,'' dated May 1, 2014 
(hereafter, referred to as the May 2014 Technical Report) that 
thoroughly describes the analytic file and extensive work performed on 
analyzing current hospice utilization data, of which many of the 
results of the analyses are presented in this final rule. Both the May 
2014 Technical Report and an updated literature review are available on 
our hospice center Web page at: http://www.cms.gov/Center/Provider-Type/Hospice-Center.html in the ``Research and Analyses'' section. We 
further examined hospice utilization data and developed a provider-
level file to identify aberrant hospice behavior. The provider-level 
file contains information on beneficiaries who were discharged (alive 
or deceased) in calendar year (CY) 2012 and includes claims data from 
January 1, 2010 through December 31, 2012. Some of the findings 
described in this section, are based on this provider-level file.
1. Beneficiaries Dying Without Skilled Visits in the Last Days of Life
    Hospice clinicians are experts in recognizing changes as a patient 
is approaching the last few days of life and helping to prepare and 
support the patient and family. Most individuals approaching end-of-
life have noted declines over the several days prior to death. As such, 
the expectation is that there would be an increased need for hospice 
services in the days leading up to the hospice beneficiary's death. 
Although we recognize that prognostication is not an exact science, 
there are hallmark physical, functional, nutritional, and cognitive 
changes that are typically present leading up the hospice patient's 
death (see section III.C of this final rule).
    When looking at skilled visits provided in the last days of life, 
as reported on the hospice claim, our analysis found that a relatively 
high percentage (28.9 percent) of hospice decedents who were receiving 
RHC on their last day of life did not receive a skilled visit on that 
day (see Table 3 below). This could be explained, in part, by sudden or 
unexpected death. Expanding this analysis to skilled visits provided in 
the last two to four days of life, we found that 14.4 percent of 
hospice decedents did not receive skilled visits in the last 2 days of 
life and 6.2 percent of hospice decedents did not receive skilled 
visits in the last 4 days of life. While this could also be explained, 
in part, by sudden or unexpected death, we are concerned with the 
possibility that those beneficiaries and their families are not 
receiving hospice care and support at the very end of life. If hospices 
are actively engaging with the beneficiary and the family throughout 
the election period, we would expect to see skilled visits during those 
last days of life.

  Table 3--Frequency and Percentage of Decedents Not Receiving Skilled Visits at the End of Life, Calendar Year
                                                      2012
----------------------------------------------------------------------------------------------------------------
                                                                                         Percentage of decedents
                                                                  Number of decedents     with no skilled visits
----------------------------------------------------------------------------------------------------------------
No skilled visits on last day (and last day was RHC)..........                  656,355                     28.9
No skilled visits on last two days (and last two days were                      622,334                     14.4
 RHC).........................................................
No skilled visits on last three days (and last three days were                  585,648                      9.1
 RHC).........................................................
No skilled visits on last four days (and last four days were                    551,359                      6.2
 RHC).........................................................
----------------------------------------------------------------------------------------------------------------
Note(s): Skilled visit was considered to be a visit from a social worker, therapist, or nurse.
Source: Beneficiaries whose last days of hospice enrollment were billed to the RHC level of care using 100% of
  hospice days from the Hospice Standard Analytic File (SAF), Calendar Year (CY) 2012.

    Further analysis of skilled visits during the last two days of life 
found that 10.3 percent of very short stay decedents (5 days or less) 
did not receive skilled visits during the last two days of life. In 
contrast, 15.9 percent of decedents with lengths of stay 181 days or 
longer did not receive visits in the last two days of life. Newer 
hospices (5

[[Page 50462]]

years or less since Medicare certification) were more likely to have 
decedents with no skilled visits during the last two days of life (17.8 
percent) compared to older hospices (6 years or more since Medicare 
certification; 14.0 percent). We also found geographic differences in 
this analysis. The five states with the lowest percentage of decedents 
with no skilled visits on the last two days of life included: Wisconsin 
(5.7 percent), North Dakota (7.3 percent), Vermont (7.5 percent), 
Tennessee (7.5 percent), and Kansas (8.7 percent). The five states with 
the highest percentage of decedents with no skilled visits on the last 
two days of life included: New Jersey (23 percent), Massachusetts (22.9 
percent), Oregon (21.2 percent), Washington (21 percent), and Minnesota 
(19.4 percent).
    Using the provider-level file referenced above, we also found that, 
on average, hospices did not report any skilled visits in the last two 
days of life for 9.7 percent of their decedents who died receiving 
routine home care.\4\ Nearly 5 percent of hospices did not provide any 
skilled visits in the last two days of life to more than 50 percent of 
their decedents receiving routine home care on those last two days; the 
average lifetime length of stay among those decedents was 143 days. We 
note that the average lifetime length of stay in our provider-level 
file was 95.4 days (among beneficiaries who were discharged alive or 
deceased in CY 2012). Furthermore, we found that 34 hospices did not 
make any skilled visits in the last 48 hours of life to any of their 
decedents who died while receiving routine home care.
---------------------------------------------------------------------------

    \4\ The provider-level analysis conducted on whether skilled 
visits were provided in the last two days of life only examined 
instances where the decedent was receiving routine home care in the 
last two days of life. We note that 21 providers did not have any 
decedents that died while on routine home care.
---------------------------------------------------------------------------

2. General Inpatient Care, Continuous Home Care, and Inpatient Respite 
Care Utilization
    Medicare Conditions of Participation require hospices to 
demonstrate that they are able to provide all four levels of care--
Routine Home Care (RHC), General Inpatient Care (GIP), Continuous Home 
Care (CHC) and Inpatient Respite Care (IRC) to be a certified Medicare 
hospice provider. As stated in our regulations at Sec.  418.302(b)(4), 
a GIP day is a day in 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. For FY 2014, the payment rate for GIP was $694.19 
per day compared to $156.06 for a day of RHC.
    While the goal of hospice care is to allow for the individual to 
remain in his or her home environment, circumstances during the end-of-
life may necessitate short-term inpatient admission to a hospital, 
skilled nursing facility (SNF), or hospice inpatient facility for 
procedures necessary for pain control or acute or chronic symptom 
management that cannot be managed in any other setting. These acute 
hospice care services are to ensure that any new or worsening symptoms 
are intensively addressed so that the individual can return to his or 
her home environment under a home level of care.
    As part of our reform work, we analyzed CY 2012 data to better 
understand GIP utilization. We found that 77.3 percent of beneficiaries 
did not have any GIP care in 2012. Using provider-level data for 
beneficiaries discharged in 2012, we also found that 21.1 percent of 
hospices did not provide GIP care to any of their beneficiaries. While 
there are appropriate circumstances where a hospice provides no GIP 
(for example, when a provider only has a few patients, none of whom 
needs GIP), we are concerned that more than a fifth of hospices not 
providing any GIP may be an indication that hospice beneficiaries do 
not have adequate access to a necessary level of care for acute or 
chronic symptom management. We also found that there were site of 
service differences such that the longest GIP length of stay was in the 
inpatient hospice setting (6.1 days) and shortest at in the inpatient 
hospital setting (4.5 days). Over two-thirds of GIP days were provided 
in an inpatient hospice setting (68 percent), and about a quarter of 
GIP days were provided in an inpatient hospital (24.9 percent). Only 
5.5 percent of GIP days were provided in a SNF.
    As stated in our regulations at Sec.  418.302(b)(2), a continuous 
home care day is a day on which an individual who has elected to 
receive hospice care, is not in an inpatient facility, and receives 
hospice care consisting predominantly of nursing care on a continuous 
basis at home. Home health aide (also known as a hospice aide) or 
homemaker services, or both, may also be provided on a continuous 
basis. Continuous home care is only furnished during brief periods of 
crisis as described in Sec.  418.204(a), and only as necessary to 
maintain the terminally ill patient at home. Continuous home care may 
be covered on a continuous basis for as much as 24 hours a day, and 
these periods must be predominantly nursing care per our regulations at 
Sec.  418.204. A minimum of 8 hours of care must be furnished on a 
particular day to qualify for the continuous home care rate (Sec.  
418.302(e)(4)).
    As part of our reform work, we analyzed CY 2012 data to better 
understand CHC utilization. Overall, approximately 0.4 percent of all 
hospice days in 2012 were billed as CHC, but that percentage decreases 
to 0.2 when a large chain provider with a large percentage of its 
hospice days billed as CHC days was excluded. Although 42.7 percent of 
hospices billed at least 1 day of CHC, we found considerable variation 
in the share of CHC days among hospices that provided any CHC. Almost 
90 percent of hospices that provided any CHC had less than 1 percent of 
their days billed as CHC, but four hospices billed more than 10 percent 
of their days as CHC. Forty hospices accounted for 46 percent of all 
CHC days and a single hospice accounted for over a quarter of all CHC 
days. Among hospices who billed for providing CHC, 9.4 percent provided 
over half of their CHC days to beneficiaries residing in a nursing 
home. For CHC, a hospice must provide a minimum of 8 hours of care 
during a 24-hour day, which begins and ends at midnight.
    Finally, we analyzed inpatient respite care (IRC) utilization in 
CYs 2005 through 2012. IRC is provided in an approved facility, as 
needed, on an occasional basis to relieve the family caregivers for up 
to 5 consecutive days. Payment for IRC is subject to the requirement 
that it may not be provided consecutively for more than 5 days at a 
time. As stated in our regulations at Sec.  418.302(e)(5), payment for 
the sixth and any subsequent day of respite care is made at the routine 
home care rate. Overall, while the percentage of beneficiaries 
receiving at least 1 day of IRC care increased from 1.44 percent in CY 
2005 to 3.4 percent in CY 2012, only a small percentage of 
beneficiaries utilize IRC. We also found that 26 percent of hospices 
did not bill for any IRC days in CY 2012. IRC is a critical part of the 
Medicare hospice benefit, providing vital support and relief to the 
patient's caregiver and family. We will continue to monitor utilization 
of IRC level of care, over time, to ensure beneficiaries receiving 
hospice care have access to respite services for their caregivers.
    The variation in the provision of GIP, CHC, and IRC could suggest 
that the level of hospice care that a beneficiary receives may not 
always be driven by patient factors. Medicare Conditions of 
Participation require hospices to

[[Page 50463]]

demonstrate that they are able to provide all four levels of care--RHC, 
GIP, CHC, and IRC--in order to be a certified Medicare hospice 
provider. We will continue to monitor GIP, CHC, and IRC use to identify 
hospices with aberrant utilization patterns, to identify hospices that 
may be in violation of the CoPs or of payment regulations, and to refer 
hospices identified through our analysis to Survey and Certification, 
to the Office of Financial Management, and to the Center for Program 
Integrity for further investigation.
3. Hospice Live Discharges
    Currently, federal regulations allow a patient who has elected to 
receive Medicare hospice services to revoke that election at any time. 
That patient may re-elect hospice benefits at any time for any other 
election period that is still available. However, federal regulations 
provide limited opportunity for a Medicare hospice provider to 
discharge a patient from its care. In accordance with 418.26, discharge 
from hospice care is permissible when the patient moves out of the 
provider's service area, is determined to be no longer terminally ill, 
or for cause. Hospices may not automatically or routinely discharge the 
patient at its discretion, even if the care may be costly or 
inconvenient. Neither should the hospice request or demand that the 
patient revoke his/her election.
    Our regulations also state that if the hospice patient (or his/her 
representative) revokes the hospice election, Medicare coverage of 
hospice care for the remainder of that period is forfeited. The patient 
may, at any time, re-elect to receive hospice coverage for any other 
hospice election period that he or she is eligible to receive (Sec.  
418.28(c)(3) and Sec.  418.24(e)). During the time period between 
revocation/discharge and the re-election of the hospice benefit, 
Medicare coverage would resume for those Medicare benefits previously 
waived.
    Prior to 2012, claims data provided limited information about the 
reason a hospice patient was discharged from a hospice's care. Starting 
July 1, 2012, the discharge information collected on the Medicare claim 
was expanded to capture the reason for all types of discharge, that is, 
if the discharge was due to a death, revocation, transfer to another 
hospice, moving out of the hospice's service area, discharge for cause, 
or due to the patient no longer being considered terminally ill (that 
is, no longer qualifying for hospice services). Between 2000 and 2012, 
the overall rate of live discharges increased from 13.2 percent of 
hospice discharges to 18.1 percent in 2012. In 2010, the rate of live 
discharges varied by state (from 12.8 percent in Connecticut to 40.5 
percent in Mississippi) and by hospice provider (from a 25th percentile 
of 9.5 percent to 75th percentile of 26.4 percent). Furthermore, 
analysis of our provider-level file shows that of the 3,702 hospices in 
our file, 71 hospices had a live discharge on 100 percent of their 
beneficiaries. The average lifetime length of stay for these hospices 
was 193 days compared to the national average lifetime length of stay 
of 95.4 days (among beneficiaries who were discharged alive or deceased 
in CY 2012). We have shared this information with the Office of 
Financial Management and with the Center for Program Integrity for 
their review and follow-up.
    One study of hospice live discharges in cancer patients noted that 
smaller hospices and for-profit hospices had a higher rate of hospice 
live discharges.\5\ Our subcontractors at Brown University studied 2010 
hospice live discharges among all diagnoses, finding that not-for-
profit hospice programs had a lower rate of hospice live discharges 
than for-profit hospice programs (14.6 percent vs. 22.4 percent, 
p<=.001). Small for-profit hospices in operation 5 years or less had a 
higher rate of hospice live discharges compared to older, for-profit 
hospices (31.5 percent vs. 12.8 percent, p<=.001). We are also 
concerned over patterns of revocations and elections of the Medicare 
hospice benefit for the purpose of potentially avoiding costly 
hospitalizations, expensive procedures, drugs, or services. In 2010, 
13,770 out of the 182,172 live discharges had a pattern of hospice 
discharge, hospital admission, and hospice readmission. These cases 
accounted for $126 million dollars in Medicare payments for the 
hospitalization between hospice election periods. Nearly half of these 
Medicare payments are accounted for in ten states with the highest rate 
of this pattern of discharges (that is, MS, OK, AL, SC, MD, VA, TX, NJ, 
GA, and LA accounted for $56.0 million dollars of the hospitalization 
costs).
---------------------------------------------------------------------------

    \5\ Carlson MD, Herrin J, Du Q, et al. Hospice characteristics 
and the disenrollment of patients with cancer. Health Serv Res. Dec 
2009;44(6):2004-2021.
---------------------------------------------------------------------------

    We understand that the rate of live discharges should not be zero, 
given the uncertainties of prognostication and the ability of patients 
and their families to revoke the hospice election at any time. However, 
Medicare hospice care is a comprehensive patient and family focused 
care model designed to optimize quality of life by anticipating, 
preventing, and treating pain and symptoms. We are concerned that 
patterns of discharge, hospital admission, and hospice readmission do 
not provide a comprehensive, coordinated care experience for terminally 
ill patients.
4. Non-hospice Spending for Hospice Beneficiaries During an Election
    When a beneficiary elects the Medicare hospice benefit, he or she 
waives the right to Medicare payment for services related to the 
terminal illness and related conditions, except for services provided 
by the designated hospice and the attending physician. However, 
Medicare payment is allowed for covered Medicare items or services 
which are unrelated to the terminal illness and related conditions. 
When a hospice beneficiary receives items or services unrelated to the 
terminal illness and related conditions from a non-hospice Part A or 
Part B provider, that provider can bill Medicare for the items or 
services, but must include on the claim a GW modifier (if billed on a 
professional claim) or condition code 07 (if billed on an institutional 
claim). When a hospice beneficiary with Part D coverage receives 
medications unrelated to the terminal illness and related conditions, 
Prescription Drug Events (PDEs) are billed to Part D and do not require 
a modifier or a condition code.
    In follow up to our initial analysis of hospice drugs being paid 
through Part D (78 FR 48245-48246), we analyzed the magnitude of 
Medicare spending outside of the hospice benefit for items or services 
provided to hospice beneficiaries during a hospice election from Parts 
A, B, and D. In CY 2012, we found that Medicare paid $710.1 million for 
Part A and Part B items or services while a beneficiary was receiving 
hospice care. We estimated that 76.5 percent of the $710.1 million 
included either a GW modifier or a condition code 07 on the claim, 
which indicated that the services identified by the provider or 
supplier as unrelated to the terminal illness and related conditions. 
The remaining 23.5 percent of this $710.1 million was for claims 
without a GW modifier or condition code 07, some of which may have been 
processed due to late filing of the notice of election (NOE).
    The $710.1 million paid for Part A and Part B items or services was 
for durable medical equipment (7.0 percent), inpatient care (care in 
long-term care hospitals, inpatient rehabilitation facilities, acute 
care hospitals; 28.6 percent), outpatient Part B services (16.9 
percent), other Part B services (also known as physician, practitioner 
and supplier claims, such

[[Page 50464]]

as labs and diagnostic tests, ambulance transports, and physician 
office visits; 37.4 percent), skilled nursing facility care (5.7 
percent), and home health care (4.5 percent). Part A and Part B non-
hospice spending occurred mostly for hospice beneficiaries who were at 
home (43.3 percent). We also found that 28.3 percent of hospice 
beneficiaries were in a nursing facility, 14.1 percent were in an 
inpatient setting, 10.2 percent were in an assisted living facility, 
and 4.1 percent were in other settings. Although the average daily rate 
of expenditures outside the hospice benefit was $7.91, we found 
differences amongst states where beneficiaries receive care. The 
highest rates per day occurred for hospice beneficiaries residing in 
West Virginia ($13.91), or in the South (Florida ($13.17), Texas 
($12.45), Mississippi ($11.91), and South Carolina ($10.16)).
    Another area of concern in high non-hospice Medicare spending 
occurring during a hospice election is hospital emergency department 
(ED) visits and observation stays. Ninety-five percent of these ED 
visits and observation stays were billed and paid outside of the 
hospice benefit with condition code 07 on the claim. Using data on CY 
2010 hospice admissions, followed through discharge or December 31, 
2011 (whichever came first), we found that 8.8 percent of hospice 
beneficiaries had a total of 87,720 ED visits/observation stays billed 
to Medicare during their hospice election, at a cost of $268.4 million. 
The majority of these beneficiaries (77.6 percent) only experienced a 
single ED visit/observation stay, but 20.9 percent had between 2 and 4 
ED visits/observation stays during their election, and 1.4 percent had 
more than 5 ED visits/observation stays during their hospice election. 
Although some beneficiaries may go directly to the ED rather than 
contacting the hospice first, 22.3 percent had 2 or more ED visits; 
these results may indicate that the hospice is not aware of the 
beneficiary's condition, the hospice is not being responsive to 
beneficiary needs, or related conditions are being treated as if they 
were unrelated. Most ED visits/observation stays occurred in younger 
beneficiaries with non-cancer diagnoses, in beneficiaries in newer 
hospices, and in beneficiaries receiving care in the South, with 
Mississippi and Oklahoma having the highest rates (21.1 and 20.5 ED 
visits/observation stays per 100 hospice admissions, respectively). The 
most frequently occurring Diagnosis Related Groups (DRGs) associated 
with these ED visits/observation stays were septicemia or severe 
sepsis, kidney and urinary tract infections, hip and femur procedures, 
simple pneumonia and pleurisy, and gastrointestinal hemorrhage. Some of 
these frequently occurring DRGs are conditions which are common at end-
of-life, and could be attended to in the home or with a GIP level of 
care. This raises concerns about whether the ED visits/observation 
stays were actually related to the terminal illness and related 
conditions and should have been covered by the hospice.
    In addition to analyzing data from Parts A and B of Medicare, we 
analyzed CY 2012 Part D data which showed $417.9 million in total drug 
spending by Medicare, states, beneficiaries, and other payers, for 
hospice beneficiaries during a hospice election. Table 4 details the 
various components of Part D spending.

    Table 4--Drug Cost Sources for Hospice Beneficiaries' 2012 Drugs
                         Received Through Part D
------------------------------------------------------------------------
                                                            $ Total
           Component                 Description          expenditures
------------------------------------------------------------------------
Patient Pay Amount............  The dollar amount the        $48,191,067
                                 beneficiary paid
                                 that is not
                                 reimbursed by a
                                 third party.
Low Income Cost-Sharing         Medicare payments to         117,558,814
 Subsidy.                        plans to subsidize
                                 the cost-sharing
                                 liability of
                                 qualifying low-
                                 income beneficiaries
                                 at the point of sale.
Other True Out-of-Pocket        Records all other              2,366,896
 Amount.                         third-party payments
                                 on behalf of
                                 beneficiary.
                                 Examples are state
                                 pharmacy assistance
                                 programs and
                                 charities.
Patient Liability Reduction     Amount patient                 3,120,834
 due to Other Payer Amount.      liability reduced
                                 due to other
                                 benefits. Examples
                                 are Veteran's
                                 Administration and
                                 TRICARE.
Covered Drug Plan Paid Amount.  Contains the net             217,370,068
                                 amount the plan paid
                                 for standard
                                 benefits.
Non-Covered Plan Paid Amount..  Contains the net              16,985,982
                                 amount the plan paid
                                 beyond standard
                                 benefits. Examples
                                 include supplemental
                                 drugs, supplemental
                                 cost-sharing, and
                                 OTC drugs paid under
                                 plan administrative
                                 costs.
                                                      ------------------
    Components' Total.........  .....................        405,593,660
Unknown.......................  Unreconciled/                 12,307,603
                                 Unreported
                                 Difference between
                                 total Gross Drug
                                 Costs and Reported
                                 payer sources
                                 (includes sales
                                 taxes, drug
                                 dispensing fees, and
                                 drugs' ingredient
                                 costs).
                                                      ------------------
    Gross Total Drug Costs,     .....................        417,901,263
     Reported.
------------------------------------------------------------------------
Source: Abt Associates analysis of 100% 2012 Medicare Claim Files. For
  more information on the components above and on Part D data, go to the
  Research Data Assistance Center's (ResDAC's) Web site at http://www.resdac.org/.

    The portion of the $417.9 million total Part D spending which was 
paid by Medicare is the sum of the Low Income Cost-Sharing Subsidy and 
the Covered Drug Plan Paid Amount, or $334.9 million.
    Medicare Spending: In total, actual non-hospice Medicare 
expenditures occurring during a hospice election in CY 2012 were $710.1 
million for Parts A and B spending, plus $334.9 million for Part D 
spending, or approximately $1 billion dollars. This figure is 
comparable to the estimated $1 billion MedPAC reported during its 
December 2013 public meeting.\6\ Associated with this $1 billion in 
Medicare spending were cost sharing liabilities such as co-payments and 
deductibles that beneficiaries incurred. Hospice beneficiaries had 
$135.5 million in cost-sharing for items and services that were billed 
to Medicare Parts A and B, and $48.2 million in cost-sharing for drugs 
that were billed to Medicare Part D, while they were in a hospice 
election. In total, this represents a 2012 beneficiary liability of 
$183.7 million for Parts A, B, and D items or services provided to 
hospice beneficiaries during a hospice election. Therefore, the total 
non-hospice costs paid by Medicare or

[[Page 50465]]

due from beneficiaries for items or services provided to hospice 
beneficiaries during a hospice election were over $1.2 billion in CY 
2012.
---------------------------------------------------------------------------

    \6\ MedPAC, ``Assessing payment adequacy and updating payments: 
hospice services'', December 13 2013. Available at: http://www.medpac.gov/transcripts/hospice_December2013_Public.pdf.
---------------------------------------------------------------------------

    All-Payer Spending: Under Part D, gross covered drug cost on a 
claim includes the amount paid by the Part D plan, the beneficiary's 
cost sharing, and any amounts paid by others on the beneficiary's 
behalf. These latter amounts include the low-income subsidy amount paid 
by Medicare for beneficiaries who are subsidy-eligible, amounts paid by 
other payers whose payments can be counted toward the beneficiary's 
true out-of-pocket (TrOOP) costs, and amounts paid by others whose 
payments, though not TrOOP-eligible, reduce the amount of the 
beneficiary's liability. Accumulated gross covered drug costs are used 
to establish the beneficiary's position in the benefit. That is, these 
costs determine when the beneficiary has met a plan's deductible, if 
any, and moves into the initial coverage period, and when his or her 
initial coverage period ends and the coverage gap begins. TrOOP, 
whether paid by the beneficiary or on the beneficiary's behalf by a 
TrOOP-eligible payer, determines when the beneficiary has met the 
annual out-of-pocket threshold and moves into the catastrophic phase of 
the benefit. Thus, administration of the Medicare prescription drug 
benefit is dependent upon both gross covered drug costs and TrOOP. As 
such, we are also describing total non-hospice Part D spending, both 
Medicare and non-Medicare. Non-hospice Part D spending for hospice 
beneficiaries during a hospice election was incurred by Medicare, by 
States, by the Veterans Administration, by TRICARE, by charities, and 
by other payers, in addition to the cost-sharing liabilities incurred 
by beneficiaries.
    Part D spending by all-payers that occurred for hospice 
beneficiaries during a hospice election, including beneficiary cost-
sharing, totaled $417.9 million in CY 2012. If this is added to the 
$710.1 million in Medicare spending for Parts A and B, and $135.5 
million in cost sharing for Parts A and B, total non-hospice costs are 
$1.3 billion. We do not have data on other payers' spending for Part A 
or Part B services. Of note, 51.6 percent of this $1.3 billion is 
associated with 373 hospices, with an average total per beneficiary of 
$1,289 in non-hospice costs.
    For the current guidance regarding the coordination between Part D 
sponsors and hospices, we refer readers to visit the Hospice Center Web 
page's Spotlight section or the Coordination of Benefit section at: 
http://www.cms.gov/Center/Provider-Type/Hospice-Center.html.
    The dollars spent by Part D and by beneficiaries for drugs covered 
outside of the hospice benefit for hospice beneficiaries during a 
hospice election raise concerns about whether some of these drugs 
should have been paid for by the hospice. We examined drug costs 
incurred by hospices from 2004 to 2012, using hospice cost report data 
adjusted to constant 2010 dollars. We saw a declining trend in the drug 
costs per patient day, with costs declining from a mean of $20 per 
patient-day in 2004 to $11 per patient-day in 2012 (see Table 5 below). 
We recognize that many hospices have become more efficient in their 
operations, but we are concerned that the decline in drug costs is of a 
magnitude that could suggest that some hospices are not providing, and 
thus are not incurring the costs for, all needed patient medications.

                                                  Table 5--Costs per Patient-Day by Year, 2010 Dollars
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          2004       2005       2006       2007       2008       2009       2010       2011       2012
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number...............................................  n = 1,047  n = 1,218  n = 1,490  n = 1,694  n = 1,834  n = 1,882  n = 1,929  n = 2,015  n = 2,054
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                             Provider-level drug costs per patient-day
--------------------------------------------------------------------------------------------------------------------------------------------------------
Mean.................................................        $20        $18        $17        $15        $14        $13        $12        $11        $11
Std dev..............................................       (10)       (11)       (11)        (9)        (9)        (9)        (7)        (6)        (6)
Median...............................................        $20        $17        $16        $15        $14        $13        $12        $11        $10
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                           Trimmed means
--------------------------------------------------------------------------------------------------------------------------------------------------------
1%-99%...............................................        $21        $19        $17        $16        $15        $14        $13        $12        $11
5%-95%...............................................        $20        $18        $16        $15        $14        $13        $12        $11        $10
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Freestanding hospice cost reports with HCRIS release date of 1/23/2014. The costs are averaged at the provider-level and adjusted to constant
  2010 dollars using the Producer Price Index for prescription pharmaceuticals.
 
Notes: We excluded cost reports with period less than 10 months or greater than 14 months, missing information or negative reported values for total
  costs or payments, were in the top and bottom 1% of cost per day, were in the top and bottom 5% of provider margins, and where the aggregate of cost
  centers does not equal total costs as reported.

    We will continue to monitor non-hospice Medicare spending for 
beneficiaries during hospice elections.

B. Solicitation of Comments on Definitions of ``Terminal Illness'' and 
``Related Conditions''

1. The Development of the Medicare Hospice Benefit
    Dame Cicely Saunders introduced the idea of hospice care in the 
United States during a lecture at Yale University in 1963. During the 
same decade, the international best-seller, On Death and Dying, 
published in 1969, by Dr. Elisabeth Kubler-Ross, helped to bring death 
out of secrecy and brought new public awareness and discussion about 
dying to health care policymakers. Her interviews with over 500 dying 
patients shed new light on the dying process, as well as the needs and 
treatment wishes of those who were at the end-of-life. Her hallmark 
work argued for end-of-life care provided in the home, rather than in 
an institution, and stressed the importance of patients' being an 
integral part of their treatment decision-making.\7\ In 1970, there 
were no formal hospice programs in the United States. However, 
healthcare providers started to recognize the need for a care delivery 
model to address the needs of those individuals who no longer wanted to 
seek out the aggressive, medical, curative model of healthcare for 
advancing illnesses and injuries. They also focused on a care delivery 
model that would provide pain and symptom relief that would offer an 
alternative to

[[Page 50466]]

hospitalization and would focus on the ``total person,'' as he or she 
approached the end-of-life. The hospice model of care, which had been 
previously introduced to the United States by Cicely Saunders, was 
viewed to be the type of care delivery model that could offer those 
services.
---------------------------------------------------------------------------

    \7\ Story, P., Knight, C. (2004). The Hospice/Palliative 
Medicine Approach to End-of-Life Care, 2nd ed. UNIPAC One.
---------------------------------------------------------------------------

    In 1972, Dr. Elisabeth Kubler-Ross testified at the first national 
hearings on the subject of death with dignity, conducted by the U.S. 
Senate Special Committee on Aging, and the first hospice legislation 
was introduced in the United States Senate, but was not enacted.\8\ 
Florence Wald, the Dean of the Yale School of Nursing, who attended the 
1963 lecture given by Cicely Saunders, along with two pediatricians and 
a chaplain, founded the first United States hospice, Connecticut 
Hospice, in 1974. Ongoing meetings between hospice providers and 
hospice leaders evolved into the formation of the National Hospice 
Organization in 1978 (now called the National Hospice and Palliative 
Care Organization, or NHPCO). The first ``Standards of a Hospice 
Program of Care'' were published by National Hospice Organization in 
1979. Even during the early stages of hospice development, hospice 
leaders were working with key legislative leaders to develop a system 
to reimburse hospice care in the United States.\9\ However, it was 
evident that before governmental reimbursement could occur, data had to 
be collected and analyzed to demonstrate what hospices actually 
provided and what costs were involved in rendering hospice care. The 
Health Care Finance Administration (HCFA)--now known as the Centers for 
Medicare & Medicaid Services (CMS)--conducted a national demonstration 
of 26 hospices throughout the country to study the effect of reimbursed 
hospice care. The results of this demonstration, as well as those 
sponsored by the private health insurance sector and private 
foundations, and along with the testimony of multiple hospice industry 
leaders, legislators and hospice families, helped to form the structure 
of the Medicare Hospice Benefit.
---------------------------------------------------------------------------

    \8\ Cefalu, C., Ruiz, M. (2011). The Medicare Hospice Benefit: A 
Changing Philosophy of Care? Annals of Long Term Care: Clinical Care 
and Aging. 19 (1); 43-48.
    \9\ Connor, S. (2007). Development of Hospice and Palliative 
Care in the United States. OMEGA. 56 (1); 89-99.
---------------------------------------------------------------------------

    During Congressional committee hearings regarding the development 
of a Medicare hospice benefit, testimony by Paul Willging, deputy 
administrator of HCFA, expressed caution about embracing benefit 
expansions that could lead to unexpected consequences and said that 
HCFA ``must clearly define what we would pay for and to whom, in order 
to meet our responsibilities to patients, providers and the 
taxpayers.'' \10\ Other stakeholders agreed that a Medicare hospice 
benefit needed to be structured to promote an optimum movement from a 
point of view of controlling costs and offering the most appropriate 
means of service without the development of a system that focused on 
just getting maximum reimbursement from Medicare. Stakeholders also 
agreed that unique characteristics of hospice care should be 
maintained. The goal was not to have the Federal government provide 
total support to hospice programs; rather, legislation would be enacted 
that would supplement the continued support of the local community, 
private sector and other resources which allow hospices to maintain 
their unique identity, spirit of volunteerism and altruistic focus.\11\ 
The National Hospice Organization president, Dr. Edwin Olsen, testified 
at the March 25, 1982 Congressional hearing that, at that time, most 
American hospices were community charities by design and intent, and 
that hospice offered an integrated service. Hospices functioned not as 
an add-on, but as a comprehensive alternative to the typical ways of 
caring for the terminally ill and their families. The hospice industry, 
as discussed in Dr. Olsen's testimony, was very clear that their goal 
was to maintain that alternative service for those who were approaching 
end-of-life.
---------------------------------------------------------------------------

    \10\ Testimony by Paul Willging, deputy administrator of HCFA, 
to the Subcommittee on Health of the Committee of Ways and Means, 
House of Representatives, March 25, 1982.
    \11\ Testimony by Congressman Leon Panetta, to the Subcommittee 
on Health of the Committee of Ways and Means, House of 
Representatives, March 25, 1982.
---------------------------------------------------------------------------

    Hospice industry leaders also expressed the importance of hospice 
program accountability. Hospices would be accountable for and be able 
to control the quality and delivery of patients admitted for hospice 
care, instead of having to ``broker'' the patients out to other 
providers for reimbursement and convenience.\12\ Hospice advocates 
stressed the importance of maintaining continuous clinical control over 
all aspects of care to ensure a successful hospice program and framers 
of the benefit recognized this fact by requiring professional 
management responsibility.\13\ Although there were ongoing concerns by 
HCFA, the Congress, and the hospice industry about the potential misuse 
of a new hospice benefit,14 15 Section 122 of the Tax Equity 
and Fiscal Responsibility Act (TEFRA) of 1982 (Pub. L. 97-248, enacted 
on September 3, 1982) expanded the scope of Medicare benefits by 
authorizing coverage for hospice care for terminally ill beneficiaries.
---------------------------------------------------------------------------

    \12\ Written testimony by Dr. Edwin J. Olsen, director of the 
National Hospice Organization, to the Subcommittee on Health of the 
Committee of Ways and Means, House of Representatives, March 25, 
1982.
    \13\ Health Care Financing Administration, Office of Research 
and Demonstrations. September, 1987. ``Medicare Hospice Benefit 
Program Evaluation.'' Health Care Financing Extramural Report. HCFA 
Pub. No. 03248.
    \14\ Testimony by Paul Willging, deputy administrator of HCFA, 
to the Subcommittee on Health of the Committee of Ways and Means, 
House of Representatives, March 25, 1982.
    \15\ Comments by Congressman Bill Gradison, at the Hearing 
before the Subcommittee on Health of the Committee of Ways and 
Means, House of Representatives, March 25, 1982.
---------------------------------------------------------------------------

2. Legislative History of the Medicare Hospice Benefit
    After Medicare coverage of hospice care was authorized by the 
Congress, the General Accounting Office (now Government Accountability 
Office, or GAO) summarized the legislative intent of the Medicare 
hospice benefit in a July 13, 1983 letter. In this letter, the GAO 
acknowledged that there was no standard definition of what a hospice 
was or what services an organization must provide to be considered a 
hospice. However, the GAO stated that it was generally agreed upon that 
the hospice concept in the United States is one program of care in 
which an organized interdisciplinary team systematically provides 
palliative care (relief of pain and other symptoms) and supportive 
services to patients with terminal illnesses.\16\ This letter further 
stated that the hospice objective is to make a patient's remaining days 
as comfortable and meaningful as possible and to help the family cope 
with the stress by making the necessary adjustments to the changes in 
the patient's illness and death. The GAO letter also reiterated that 
hospices must directly provide certain core services including nursing 
care, physician services and counseling services and must either 
directly, or through arrangements, provide physical therapy, 
occupational therapy, speech-language pathology, home hospice aides, 
homemaker services, drugs, medical supplies and appliances and short-
term inpatient care. The letter concluded by stating that the Congress 
would continue to monitor the effectiveness of

[[Page 50467]]

the hospice demonstration program, which was ongoing at the time of 
enactment, the equity of the reimbursement system, method and benefit 
structure put into effect under the hospice provision, including the 
feasibility and advisability of a prospective reimbursement system for 
hospice care and other aspects of the hospice program.\17\
---------------------------------------------------------------------------

    \16\ ``Hospice Care-A Growing Concept in the United States.'' 
(HRD-79-50), March 6, 1979.
    \17\ GAO Letter, ``Comments on the Legislative Intent of 
Medicare's Hospice Care Benefit,'' GAO-HRD-83-72, July 12, 1983.
---------------------------------------------------------------------------

    Further description of the Medicare hospice benefit design was 
provided in a report prepared by the Congressional staff for the Senate 
Committee on Finance on September 9, 1983. In this report, four basic 
principles were presented, which according to hospice advocates, 
distinguish hospice care from the traditional health care system:
    1. The patient and his/her family are considered the unit of care.
    2. A multidisciplinary team is used to assess the physical, 
psychological and spiritual needs of the patient and family to develop 
an overall plan of care and to provide coordinated care.
    3. Pain and collateral symptoms associated with the terminal 
illness and previous treatments are controlled, but no heroic efforts 
are made to cure the patient.
    4. Bereavement follow-up is provided to help the family cope with 
their emotional suffering.\18\
---------------------------------------------------------------------------

    \18\ ``Background Materials on Medicare Hospice Benefit 
Including Description of Proposed Implementing Regulations,'' 
September 9, 1983. Committee on Finance, United States Senate, S. 
Prt. 98-88, p. 1.
---------------------------------------------------------------------------

    It was also noted that the statute provides that an individual, 
upon making an election to receive hospice coverage, would be deemed to 
have waived payments for certain other benefits in addition to choosing 
a palliative mode of treatment, except in ``exceptional and unusual 
circumstances'' as the Secretary may provide (section 1812(d)(2)(A) of 
the Act). Furthermore, the hospice plan of care must include assessment 
of the individual's needs and identification of the services to meet 
those needs including the management of discomfort and symptom relief.
    Several Senators testified at a September 15, 1983 Hearing before 
the Subcommittee on Health of the Committee on Finance regarding 
ongoing concerns with the new Medicare hospice benefit. These Senators 
made it clear that the new healthcare delivery system--hospice--was to 
offer an alternative to institutionalized care for the terminally ill. 
Concerns were expressed over the possibility that ``store front'' 
hospices would crop up as a result of Medicare reimbursement being made 
available for this service. The Senators stated that they wanted to 
maintain flexibility within the benefit without creating incentives for 
fraud and abuse.\19\ Similarly, industry advocates were also concerned 
that availability of Medicare reimbursement would attract interest from 
those simply interested in a new source of revenue. The hospice 
industry agreed that the Medicare hospice benefit was created, not as a 
new revenue source for providers, but as a benefit choice for patients 
and their families.\20\ Terminally ill Medicare beneficiaries could 
decide not to elect hospice care, and they would continue to be able to 
receive all other Medicare services available, such as home health 
services that include skilled nursing and home health aide care, 
inpatient hospital services, supplies, medications, and DME. For 
example, in response to recent home health rulemaking, we received 
anecdotal comments that some home health agencies are providing 
palliative care to homebound terminally ill individuals who have not 
elected the hospice benefit. In those instances, the patient is 
receiving home health aide services, nursing care, and supplies needed 
under the home health benefit, and the DME and medications that the 
patient needs are still covered under Medicare Parts B and D. However, 
we note that, with the exception of home health, these services 
typically have associated co-payments and would be rendered through 
various different providers or suppliers, perhaps with a lack of 
continuity and coordination that would be provided under the Medicare 
hospice benefit. Under the Medicare hospice benefit, the hospice-
eligible individual would receive all of those services, and more, with 
the hospice provider assuming the clinical and professional 
responsibility of coordinating all of the necessary care and services 
with minimal beneficiary cost sharing required outside of the hospice 
benefit.
---------------------------------------------------------------------------

    \19\ Testimony by Senators George Mitchell and Roger W. Jepsen. 
Testimony before the Subcommittee on Health of the Committee on 
Finance, United States Senate, September 15, 1983.
    \20\ Position paper submitted by Donald J. Gaetz, president, 
National Hospice Organization. ``Subcontracting for Nursing Services 
under the Medicare Hospice Benefit.'' Testimony before the 
Subcommittee on Health of the Committee on Finance, United States 
Senate, September 15, 1983.
---------------------------------------------------------------------------

3. Hospice Care Today
    The Medicare hospice benefit was a unique addition to the U.S. 
health care system. Prior to the implementation of the Medicare hospice 
benefit, the government reimbursed providers based on the cost of 
delivering care. Reimbursement under the Medicare hospice benefit is a 
fixed, per day, per level of care prospective payment structure. By 
creating a fixed payment for hospice care, the provider is at risk for 
costs that exceed the payment amount; and, if the fixed payment exceeds 
the cost of care, the hospice is allowed to keep the gain. Under the 
Medicare hospice benefit, the provider has clinical flexibility in how 
hospices can render care to best meet the needs of the individual 
patient and his or her family. This is viewed as a joint partnership 
between the providers of care and the federal government to provide 
services and the financial payment for those services for those who are 
dying. Hospice advocates, during the development of the benefit, 
welcomed this type of reimbursement structure for the flexibility it 
afforded in providing individualized hospice services.\21\ The hospice 
industry continues to recognize that the Medicare hospice benefit has 
always been a risk-based clinical and economic model of care stating 
that the fixed reimbursement model means ``a fixed sum for all-
inclusive end of life care.'' \22\ Similar to the more recent medical 
home model for primary care, hospice has always been patient-centered, 
comprehensive, team-based, coordinated, accessible, focused on quality 
and safety, and extends throughout the continuum of care.
---------------------------------------------------------------------------

    \21\ Testimony by Dr. Daniel Hadlock, Hospice, Inc, before the 
Select Committee on Aging. House of Representatives, May 25, 1983.
    \22\ ``NHPCO Comments on Washington Post Article'', Retrieved on 
December 27, 2013. http://www.nhpco.org/press-room/press-releases/nhpco-responds-washington-post.
---------------------------------------------------------------------------

    Throughout the development of the Medicare hospice benefit, experts 
in the hospice field believed that the success or failure of hospice, 
under Medicare, would depend on the hospice plan of care, appropriate 
implementation of the plan of care, and the hospice team sharing the 
same philosophy of patient-centered, comprehensive, and holistic 
care.\23\ A coordinated, collaborative approach to each and every 
hospice patient and his or her family was considered to be the most 
important component of the success of the Medicare hospice benefit.\24\ 
During the

[[Page 50468]]

development of the Medicare hospice benefit, there were concerns by 
both the Congress and the hospice industry regarding the potential for 
fraud and abuse by some providers resulting from the enactment of a 
Medicare hospice benefit.\25\ One drafter of the legislation expressed 
that he wanted to maintain benefit flexibility by allowing hospices to 
render individualized care, promoting access to needed services, and 
providing high quality care while maintaining fiscal integrity of the 
Medicare Trust Funds.\26\ This was a benefit founded in trust--trust 
that hospices would provide the comprehensive care and services 
promised during the benefit development and trust that Medicare would 
be a partner in helping to share the costs.\27\ It was very clear 
throughout the development, and years after the implementation of the 
Medicare hospice benefit, that hospices were expected to make good on 
their promise to do a better job than conventional Medicare services 
for those who were at end-of-life.\28\ Deliberately, the law made no 
provision for discharging a hospice patient except under very limited 
circumstances and only after making attempts to rectify those 
circumstances.\29\ This meant that once a beneficiary elected hospice 
and was under one of the three 60-day election periods, a hospice could 
not just discharge a patient for the sake of cost or convenience. 
Currently, there are two 90-day election periods and unlimited 60-day 
election periods, as long as the beneficiary continues to meet 
eligibility criteria. However, hospices are still limited in the 
reasons for discharge, and still cannot discharge a hospice beneficiary 
for cost or convenience. Our regulations at Sec.  418.26(a) state the 
reasons a hospice can discharge a beneficiary from hospice services.
---------------------------------------------------------------------------

    \23\ Cefalau, C., Ruiz, M. The Medicare Hospice Benefit: A 
Changing Philosophy of Care? Annals of Long-Term Care: Clinical Care 
and Aging. 2011; 19(1): 43-48.
    \24\ Cefalau, C., Ruiz, M. The Medicare Hospice Benefit: A 
Changing Philosophy of Care? Annals of Long-Term Care: Clinical Care 
and Aging. 2011; 19(1): 43-48.
    \25\ Comments by Congressman Bill Gradison, at the Hearing 
before the Subcommittee on Health of the Committee of Ways and 
Means, House of Representatives, March 25, 1982; Testimony by 
Rosemary Johnson-Hurzeler, CEO, The Connecticut Hospice, Testimony 
before the Subcommittee on Health of the Committee on Finance, 
United States Senate, September 15, 1983; Testimony by Margaret 
Cushman, MSN, RN, Chairman of Governmental Affairs, National 
Association of Home Health and Hospice Care (NAHC) before the 
Subcommittee on Health of the Committee on Finance, United States 
Senate, September 15, 1983.
    \26\ Comments by Congressman Bill Gradison, at the Hearing 
before the Subcommittee on Health of the Committee of Ways and 
Means, House of Representatives, March 25, 1982.
    \27\ Testimony by Congressman Leon Panetta, to the Subcommittee 
on Health of the Committee of Ways and Means, House of 
Representatives, March 25, 1982.
    \28\ Hoyer, T. (1998). A History of the Medicare Hospice 
Benefit. The Hospice Journal, 13(1-2), 61-69.
    \29\ Hoyer, T. (1998). A History of the Medicare Hospice 
Benefit. The Hospice Journal, 13(1-2), 61-69.
---------------------------------------------------------------------------

    Since the implementation of the Medicare hospice benefit, hospice 
utilization continues to grow. More Medicare beneficiaries are becoming 
aware and educated of the benefits of hospice care. In recent years, 
the percentage of Medicare deaths for patients under a hospice election 
has increased from 20 percent in 2000 to 44 percent in 2012. Total 
expenditures have increased from over $9.2 billion in 2006 to over 
$15.1 billion in 2013. This observed growth far outpaces the annual 
market basket increases and is not solely reflective of an increase in 
utilization. We note that average spending per beneficiary has 
increased substantially between 2006 and 2013 from approximately $9,833 
in 2006 to $11,458 in 2013.\30\
---------------------------------------------------------------------------

    \30\ Calendar year 2013 expenditures and average spending per 
beneficiary were calculated using hospice claims data from the 
Chronic Conditions Data Warehouse (CCW), accessed on February 27, 
2014.
---------------------------------------------------------------------------

    Section 3132(a) of the Affordable Care Act provides statutory 
authority for CMS to reform the hospice payment system no earlier than 
October 1, 2013. We presented data in the FY 2014 Hospice Wage Index 
and Payment Rate Update Final Rule, regarding diagnosis reporting on 
hospice claims and opioids paid under Part D for beneficiaries in a 
hospice election (78 FR 48234). Recent analysis of other Part A, Part B 
and Part D spending in 2012 (including beneficiary cost-sharing 
payments of $135.5 million for Parts A and B and $48.2 million for Part 
D) shows that there was an additional $1 billion in total Medicare 
spending during a hospice election (see section III.A.4). This includes 
Part A payments for inpatient hospitalizations and SNF stays, as well 
as Part B payments for outpatient and physician services, diagnostic 
tests and imaging, and ambulance transports. There is concern that many 
of these services should have been provided under the Medicare hospice 
benefit as they very likely were for services related to the terminal 
illness and related conditions. This strongly suggests that hospice 
services are being ``unbundled'', negating the hospice philosophy of 
comprehensive, holistic care and shifting the costs to other parts of 
Medicare, and creating additional cost-sharing burden to those 
vulnerable Medicare beneficiaries who are at end-of-life. Duplicative 
payments for hospice-covered services also threaten the program 
integrity and fiscal viability of the hospice benefit.
    Reports by both the Medicare Payment Advisory Committee (MedPAC) 
and the Office of the Inspector General (OIG) expressed similar 
concerns regarding the unbundling of services meant to be covered under 
the hospice per diem, capitated payment system. Similar to the analysis 
presented above, MedPAC also analyzed non-hospice utilization and 
spending patterns through Parts A, B and D for Medicare hospice 
beneficiaries. MedPAC also concluded that over $1 billion FFS spending 
was attributed to providing services reported as unrelated to the 
terminal conditions of hospice enrollees. MedPAC went on to state that 
58 percent of Medicare hospice enrollees received a service or drug 
outside of the hospice benefit over the course of a hospice episode. 
The highest shares of spending were on drugs and inpatient 
services.\31\ In addition, the OIG reported in June of 2012 that 
Medicare could be paying twice for prescription drugs for beneficiaries 
receiving services under the Medicare hospice benefit and recommended 
that CMS increase its oversight to make sure that Part D is not paying 
for medications already included in the Medicare hospice per diem 
payment rates.\32\ As a result of the OIG report, the CMS' Center for 
Program Integrity (CPI) began recoupment efforts for analgesics from 
Part D plan sponsors.
---------------------------------------------------------------------------

    \31\ MedPAC, ``Assessing payment adequacy and updating payments: 
hospice services'', December 13 2013. Available at: http://www.medpac.gov/transcripts/hospice_December2013_Public.pdf.
    \32\ Office of the Inspector General, Department of Health and 
Human Services. Medicare Could be Paying Twice for Prescription 
Drugs for Beneficiaries in Hospice. June, 2012. A-06-10-00059.
---------------------------------------------------------------------------

    Ongoing Part D memo guidance has also been issued to clarify 
existing coverage and payment policies. All Part D memo guidance can be 
found on the Hospice Center Web page under ``Coordination of Benefits'' 
at http://www.cms.gov/Center/Provider-Type/Hospice-Center.html. In 
addition, the proposed rule solicited comments on processes that could 
be developed to address the inappropriate Part D reimbursement for 
medications that should be covered under the Medicare hospice per diem 
(see Section III.I). The purpose of these Part D guidance memos, in 
response to OIG reports of possible duplication of payment for drugs 
under the hospice per diem and Part D plans, was to outline the 
expectations regarding coordination of benefits and coverage 
responsibility between Part D plan sponsors and hospices. The ongoing 
concern is that

[[Page 50469]]

hospices are not providing the broad range of medications required by 
hospice beneficiaries during a hospice election, especially for those 
drugs classified as analgesics, antianxiolytic, antiemetics and 
laxatives (generally considered essential medications for palliation in 
a hospice population).\33\ Comments received, regarding this memo 
guidance, highlighted that there are multiple interpretations as to the 
meaning of what are considered ``related conditions.'' Additionally, it 
was noted in these comments that the terms, ``terminal illness'', 
``terminal diagnosis'', ``qualifying terminal diagnosis'', and 
``terminal prognosis'' were used interchangeably and with varying 
interpretations as to their meanings.
---------------------------------------------------------------------------

    \33\ World Health Organization. (January, 2013). Essential 
Medications in Palliative Care.
---------------------------------------------------------------------------

    We believe the summary of the ``Development of the Hospice 
Benefit'' and the ``Legislative history of the Medicare Hospice 
Benefit'' clearly captures the expectation that hospices are to provide 
holistic and comprehensive services under the Medicare hospice benefit. 
As stated in the 1983 proposed and final rules, and reiterated in the 
FY 2014 Hospice Wage Index and Rate Update proposed and final rules: 
``It is our general view that the waiver required by law is a broad one 
and that hospices are required to provide virtually all of the care 
that is needed by terminally ill patients'' (48 FR 56010). Our 
expectation continues to be that hospices offer and provide 
comprehensive, virtually all-inclusive care, and with a patient-
centered approach. In order to preserve the Medicare hospice benefit 
and ensure that Medicare beneficiaries continue to have access to 
comprehensive, high-quality and appropriate end-of-life hospice care, 
we will continue to examine program vulnerabilities and implement 
appropriate safeguards in the Medicare hospice benefit, when 
appropriate.
4. Definition of ``Terminal Illness''
    Since the implementation of the Medicare hospice benefit, we have 
defined a ``terminally ill'' individual to mean ``that the individual 
has a medical prognosis that his or her life expectancy is 6 months or 
less if the illness runs its normal course'' (Sec.  418.3). We have 
always interpreted ``terminally ill'' to mean a time frame of life 
expectancy and expect that the individual's whole condition plays a 
role in that prognosis. Comments received in response to prior years' 
proposed rules state that longstanding, preexisting conditions should 
not be considered related to a patient's terminal illness or related 
conditions and that chronic, stable conditions play little to no role 
in a patient's terminal illness or related conditions. Commenters have 
also stated that controlled pain and symptoms are not considered to be 
related to a patient's terminal illness or related conditions, that not 
all pain is related to the terminal illness and related conditions, and 
that comorbidities and the maintenance of comorbidities are not related 
to a patient's terminal illness or related conditions. These commenters 
believed these types of conditions should not be included in the bundle 
of services covered under the Medicare hospice benefit. As previously 
stated in response to those comments, we believe these conditions are 
included in the bundle of covered hospice services. The original 
implementing regulations of the Medicare hospice benefit, beginning 
with the 1983 Hospice proposed and final rules (48 FR 38146 and 48 FR 
56008), articulate a set of requirements that do not delineate between 
pre-existing, chronic, or controlled conditions. To be eligible to 
receive hospice services under the Medicare hospice benefit, the 
individual must be entitled to Part A and must be certified as being 
terminally ill, meaning that his or her medical prognosis is a life 
expectancy of 6 months or less if the illness runs its normal course. 
We have recognized throughout the federal regulations at 42 CFR Part 
418 that the total person is to be assessed, including acute and 
chronic conditions, as well as controlled and uncontrolled conditions, 
in determining an individual's terminal prognosis. All body systems are 
interrelated; all conditions, active or not, have the potential to 
affect the total individual. The presence of comorbidities is 
recognized as potentially contributing to the overall status of an 
individual and should be considered when determining the terminal 
prognosis. The National Hospice and Palliative Care Organization 
(NHPCO) defines ``comorbidity,'' as: ``known factors or pathological 
disease impacting on the primary health problem and generally 
attributed to increased risk for poor health status outcomes.'' \34\
---------------------------------------------------------------------------

    \34\ National Hospice and Palliative Care Organization: 
``Standards of Practices for Hospice Programs'', 2010. Retrieved on 
February 20, 2014 from: http://www.nhpco.org/nhpco-standards-practice.
---------------------------------------------------------------------------

    We have defined ``palliative care''--the nature of the care 
provided under the hospice benefit--in our regulations at Sec.  418.3 
to mean patient and family-centered care that optimizes quality of life 
by anticipating, preventing and treating suffering. Palliative care 
throughout the continuum of illness involves addressing physical, 
intellectual, emotional, social and spiritual needs and to facilitate 
patient autonomy, access to information and choice. Note that, in this 
definition, palliative care is to anticipate and prevent, as well as 
treat, suffering. This indicates that hospices are to be proactive in 
their care approach and not just reactive to pain and symptoms after 
they arise.
    Because hospice care is unique in its comprehensive, holistic, and 
palliative philosophy and practice, we want to ensure that the hospice 
services under the Medicare hospice benefit are preserved and not 
diluted, or unbundled in any way. For context, the definition of 
illness means ``an abnormal process in which aspects of the social, 
physical, emotional, or intellectual condition and function of a person 
are diminished or impaired compared with that person's previous 
condition''.\35\ An intensive review of the history of hospice, hospice 
philosophy and legislative actions described above provided the basis 
for discussion among several CMS clinical leaders across several agency 
components as to the meaning of ``terminal illness'' within the context 
of the Medicare hospice benefit. After a review of all of the history 
listed above, the clinical collaborative effort across CMS solicited 
comments on the following definition of ``terminal illness'': 
``Abnormal and advancing physical, emotional, social and/or 
intellectual processes which diminish and/or impair the individual's 
condition such that there is an unfavorable prognosis and no reasonable 
expectation of a cure; not limited to any one diagnosis or multiple 
diagnoses, but rather it can be the collective state of diseases and/or 
injuries affecting multiple facets of the whole person, are causing 
progressive impairment of body systems, and there is a prognosis of a 
life expectancy of 6 months or less''. We did not propose any 
definitions but asked for public input on this definition for possible 
future rulemaking.
---------------------------------------------------------------------------

    \35\ Mosby's Medical Dictionary, 8th edition, 2009, Elsevier.
---------------------------------------------------------------------------

 5. Definition of ``Related Conditions''
    Section 1812(d)(2) of the Act provides that an individual, upon 
making an election to receive hospice coverage, would be deemed to have 
waived payments for certain other benefits

[[Page 50470]]

except in ``exceptional and unusual circumstances as the Secretary may 
provide.'' Comments received on the 1983 Hospice proposed rule 
specifically asked for further CMS clarification regarding the concept 
of ``related conditions.'' Specifically, the commenters suggested a 
more detailed definition of what constitutes care for a patient's 
terminal illness or related conditions (which is the responsibility of 
the hospice) and what constitutes care for unrelated conditions (for 
which out-of-hospice Medicare payment may be made) (48 FR 56010). Our 
response was: ``. . . we have not received any suggestions for 
identifying `exceptional or unusual' circumstances that warranted the 
inclusion of a specific provision in the regulations to accommodate 
them. Most of the comments that were made attempted to suggest this 
exception as a means of routinely providing non-hospice Medicare 
financing for the expense of costly services needed by hospice 
patients, and we do not view this as an appropriate interpretation of 
the law'' (48 FR 56011). The law allows for circumstances in which 
services needed by a hospice beneficiary would be completely unrelated 
to the terminal illness and related conditions, but we believe that 
this situation would be the rare exception rather than the norm. We 
reiterated this position in the FY 2014 Hospice Wage Index and Rate 
Update proposed rule (78 FR 27826) as a reminder of the expectation of 
the holistic nature of hospice services that shall be provided under 
the hospice benefit, as well as to remind hospices about diagnosis 
reporting on hospice claims.
    Therefore, in keeping with the tenets of hospice philosophy 
described in this section, the intent of the Medicare hospice benefit, 
expectations of comprehensive care, and in response to previous and 
ongoing stakeholder comments, the CMS clinical collaborative effort 
solicited comments on the following definition of ``related 
conditions'': ``Those conditions that result directly from terminal 
illness; and/or result from the treatment or medication management of 
terminal illness; and/or which interact or potentially interact with 
terminal illness; and/or which are contributory to the symptom burden 
of the terminally ill individual; and/or are conditions which are 
contributory to the prognosis that the individual has a life expectancy 
of 6 months or less.'' We did not propose any new regulations but asked 
for public input on this definition for possible future rulemaking.
    We received a significant number of comments representing diverse 
stakeholder groups on the definitions of ``terminal illness'' and 
``related conditions'' and the impact it may have on the stakeholder 
groups whom provided comments. We will consider these comments and the 
issues raised for possible future rulemaking.
    We also received several comments from End Stage Renal Disease 
(ESRD) stakeholder groups, noting that the solicitation of comments on 
the definition of ``terminal illness'' and ``related conditions'' would 
impede access to hospice services for ESRD beneficiaries with non-renal 
terminal conditions. These commenters stated that many hospices do not 
admit patients with ESRD because they do not want to bear the financial 
liability for covering dialysis. These commenters went on to say that 
if CMS proposes these definitions, that there should be an exception to 
allow those patients receiving dialysis to continue to do so under Part 
B while receiving hospice care under Part A. We would like to clarify 
that the solicitation of comments regarding the definitions of 
``terminal illness'' and ``related conditions'' was not intended to 
address ESRD beneficiary access to hospice services with non-renal 
terminal conditions. As such, the current policy at Chapter 11 of the 
Medicare Benefit Policy Manual (Pub. 100-02), which states: ``If the 
patient's terminal condition is not related to ESRD, the patient may 
receive covered services under both the ESRD benefit and the hospice 
benefit. Hospice agencies can provide hospice services to patients who 
wish to continue dialysis treatment'', remains in effect.

C. Guidance on Determining Beneficiaries' Eligibility for Hospice

    An individual must be certified by the hospice medical director and 
the individual's attending physician (if designated by the individual) 
as being terminally ill, meaning that the individual has a medical 
prognosis of a life expectancy of 6 months or less in order to receive 
the Medicare hospice benefit. However, we also have recognized the 
challenges in prognostication. It has always been our expectation that 
the certifying physicians will use their best clinical judgment, based 
on the initial and updated comprehensive assessments and collaboration 
with the hospice interdisciplinary group (IDG) to determine if the 
individual has a life expectancy of six months or less with each 
certification and recertification. As stated in previous rules, in 
reaching a decision to certify that the patient is terminally ill, the 
hospice medical director must consider at least the following 
information per our regulations at Sec.  418.25(b):
     Diagnosis of the terminal condition of the patient.
     Other health conditions, whether related or unrelated to 
the terminal condition.
     Current clinically relevant information supporting all 
diagnoses.
    We do recognize that making a prognosis is not an exact science. 
Section 322 of the Benefits Improvement and Protection Act of 2000 
(BIPA) (Pub. L. 106-554) amended section 1814(a) of the Act by 
clarifying that the certification of an individual who elects hospice 
``shall be based on the physician's or medical director's clinical 
judgment regarding the normal course of the individual's illness.'' The 
amendment clarified that the certification is based on a clinical 
judgment regarding the usual course of a terminal illness, and 
recognizes the fact that making medical prognostications regarding life 
expectancy is not exact. However, the amendment regarding the 
physician's clinical judgment does not negate the fact that there must 
be a clinical basis for a certification. A hospice is required to make 
certain that the physician's clinical judgment can be supported by 
clinical information and other documentation that provide a basis for 
the certification of 6 months or less if the illness runs its normal 
course.
    While the expectation remains that the hospice physician will 
determine a beneficiary's eligibility for hospice, this is not to say 
that this decision cannot be reviewed if there is a question as to 
whether or not the clinical documentation supports a patient's hospice 
eligibility as hospice services provided must be reasonable and 
necessary for the palliation and management of the terminal illness and 
related conditions. The goal of any review for eligibility is to ensure 
that hospices are thoughtful in their eligibility determinations so 
that hospice beneficiaries are able to access their benefits 
appropriately. CMS' right to review clinical documentation that 
supports physician certifications has been established in federal court 
and by the agency in an administrative ruling. (See, for example, HCFA 
Ruling, 93-1 Weight to be Given to a Treating Physician's Opinion in 
Determining Medicare Coverage of Inpatient Care in a Hospital or 
Skilled Nursing Facility (May 18, 1993); Maximum Comfort, Inc v. 
Leavitt (512 F.3d 1081 (9th Cir. 2007); MacKenzie Medical Supply v. 
Leavitt (506 F.3d 341 (4th Cir. 2007))). In order

[[Page 50471]]

to be covered under Medicare Part A, the care must also be reasonable 
and necessary. There has always been a statutory prohibition (section 
1862 (a)(1)(C) of the Act) against payment under the Medicare program 
for services which are not reasonable and necessary for the palliation 
or management of terminal illness. Additionally, section 1869(a)(1) of 
the Act makes clear that the Secretary makes determinations concerning 
entitlement, coverage and payment of benefits under part A and part B 
of Medicare.
    We are reminding providers that there are multiple public sources 
available to assist in determining whether a patient meets Medicare 
hospice eligibility criteria (that is, industry-specific clinical and 
functional assessment tools and information on MAC Web sites). 
Additionally, we expect that hospices will use their expert clinical 
judgment in determining eligibility for hospice services. We expect 
that documentation supporting a 6-month or less life expectancy is 
included in the beneficiary's medical record and available to the MACs 
when requested.
    If a beneficiary improves and/or stabilizes sufficiently over time 
while in hospice such that he/she no longer has a prognosis of 6 months 
or less from the most recent recertification evaluation or definitive 
interim evaluation, that beneficiary should be considered for discharge 
from the Medicare hospice benefit. Such beneficiaries can be re-
enrolled for a new benefit period when a decline in their clinical 
status is such that their life expectancy is again 6 months or less. On 
the other hand, beneficiaries in the terminal stage of their illness 
that originally qualified for the Medicare hospice benefit but 
stabilize or improve while receiving hospice care, yet have a 
reasonable expectation of continued decline for a life expectancy of 
less than 6 months, remain eligible for hospice care. The hospice 
medical director must assess and evaluate the full clinical picture of 
the Medicare hospice beneficiary to make the determination whether the 
beneficiary still has a medical prognosis of 6 months or less, 
regardless of whether the beneficiary has stabilized or improved. There 
are prognostication tools available for hospices to assist in 
thoughtful evaluation of Medicare beneficiaries for determining 
terminally ill eligibility for the Medicare hospice benefit. We expect 
hospice providers to use the full range of tools available, including 
guidelines, comprehensive assessments, and the complete medical record, 
as necessary, to make responsible and thoughtful determinations 
regarding terminally ill eligibility.
    We have always acknowledged the uniqueness of every Medicare 
beneficiary and support thorough and thoughtful evaluation in 
determining whether beneficiaries meet the eligibility criteria for 
being certified as terminally ill. We continue to support the concept 
of shared decision-making, patient choice and the right care at the 
right time to allow Medicare beneficiaries full and appropriate access 
to their Medicare benefits, including hospice care. Furthermore, 
Medicare hospice beneficiaries have certain guaranteed rights. If the 
hospice or designated attending physician believes that the hospice 
beneficiary is no longer eligible for hospice care because his or her 
condition has improved, and the beneficiary does not agree with that 
determination, the hospice beneficiary has the right to ask for a 
review of his or her case. The hospice should provide the hospice 
beneficiary with a notice that explains his or her right to an 
expedited review by a contracted independent reviewer hired by 
Medicare, called a Quality Improvement Organization (QIO). If the 
hospice beneficiary asks for this appeal, the QIO will determine if the 
beneficiary continues to meet eligibility requirements for hospice 
services. The provider is expected to continue to provide services for 
the patient following a favorable decision by a QIO. In the QIO 
decision, the QIO should advise the provider as to why it disagrees 
with the hospice, which should help the provider to re-evaluate the 
discharge decision. If at another point in time during a hospice 
election, the hospice believes that the patient is no longer hospice 
eligible, the provider should timely deliver a CMS-10123 to notify the 
patient of its decision to discharge. The patient could again appeal to 
the QIO. Medicare beneficiaries have the right to be included in 
decisions about their care, the right to a fair process to appeal 
decisions about payment of services, and the right to privacy and 
confidentiality. No proposals were made regarding hospice eligibility 
nor were comments solicited. This discussion only provides background 
information regarding current procedures for determining eligibility 
for hospice services under the Medicare hospice benefit and beneficiary 
appeal rights.

D. Timeframe for Hospice Cap Determinations and Overpayment Remittances

    When the Medicare hospice benefit was implemented, the Congress 
included 2 limits on payments to hospices: an inpatient cap and an 
aggregate cap, as described in sections 1861(dd)(2)(A)(iii) and 
1814(i)(2)(A) through (C) of the Act. The hospice inpatient cap limits 
the total number of Medicare inpatient days to no more than 20 percent 
of a hospice's total Medicare hospice days. The intent of the inpatient 
cap was to ensure that hospice remained a home-based benefit. The 
hospice aggregate cap limits the total aggregate payment any individual 
hospice can receive in a year. The intent of the hospice aggregate cap 
was to protect Medicare from spending more for hospice care than it 
would for conventional care at the end of life.
    The aggregate cap amount was set at $6,500 per beneficiary when 
first enacted in 1983; this was an amount hospice advocates agreed was 
well above the average cost of caring for a hospice patient.\36\ The 
$6,500 amount is adjusted annually by the change in the medical care 
expenditure category of the consumer price index for urban consumers 
from March 1984 to March of the cap year. For the 2013 cap year, the 
cap amount was $26,157.50 per beneficiary. The cap year is defined as 
the period from November 1st to October 31st, and was set in place in 
the December 16, 1983 hospice final rule (48 FR 56022).
---------------------------------------------------------------------------

    \36\ National Hospice and Palliative Care Organization (NHPCO), 
``A Short History of the Medicare Hospice Cap on Total 
Expenditures.'' Retrieved on February 19, 2014 at: http://www.nhpco.org/sites/default/files/public/regulatory/History_of_Hospice_Cap.pdf
---------------------------------------------------------------------------

    The cap amount is multiplied by the number of Medicare 
beneficiaries who received hospice care from a particular hospice 
during the year, resulting in its hospice aggregate cap, which is the 
allowable amount of total Medicare payments that hospice can receive 
for that cap year. There are two different methods for counting a 
hospice's beneficiaries: the streamlined and the patient-by-patient 
proportional methods. Which method a hospice can use to count 
beneficiaries depends on a number of factors, as described in our 
regulations at Sec.  418.309 and in section 90.2.3 of the hospice 
Benefit Policy Manual (IOM 100-02, chapter 9, available at http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/bp102c09.pdf). A hospice's total Medicare payments for the cap year 
cannot exceed the hospice's aggregate cap. If its aggregate cap is 
exceeded, then the hospice must repay the excess back to Medicare.
    While hospices rarely exceed the inpatient cap, in its March 2012 
Report to the Congress, MedPAC reported that

[[Page 50472]]

an increasing number of hospices are exceeding the aggregate cap. 
MedPAC also noted that above-cap hospices were almost all for-profit 
with very long lengths of stay, high live discharge rates, and very 
high profit margins before the return of cap overpayments.\37\ The 
percentage of hospices exceeding the aggregate cap rose from 2.6 
percent in 2002 to a peak of 12.5 percent in 2009. In 2010, the 
percentage of hospices exceeding the aggregate cap decreased to 10.1 
percent.\38\
---------------------------------------------------------------------------

    \37\ MedPAC, ``Report to Congress: Medicare Payment Policy'', 
March 2012, pp. 293-295, 302.
    \38\ MedPAC, ``Report to Congress: Medicare Payment Policy'', 
March 2013, p. 276.
---------------------------------------------------------------------------

    Our hospice reform contractor also performed analysis on the number 
of hospices exceeding the aggregate cap with results similar to 
MedPAC's, where an increasing percentage of hospices exceeded their 
caps from 2006 (9.1 percent) to a peak in 2009 (12.8 percent), followed 
by a decline through 2011 (10.5 percent). However, the analysis shows 
an increase in 2012, with 11.6 percent of hospices exceeding their 
aggregate caps. Additionally, analysis of above-cap hospices showed 
that the average overpayment per beneficiary has increased over time, 
up 35.2 percent from 2006 ($7,384) to 2012 ($9,983). Using above-cap 
hospices, we also found that the average overpayment amount went from 
$732,103 in 2006 to $440,727 in 2011, but that this downward trend is 
estimated to change in 2012, when the average overpayment amount is 
estimated to increase to $547,011.
    We also compared hospices' year-end percentage of their aggregate 
cap total that they had received in Medicare payments over time. 
Specifically, we examined where hospices ended their cap year in terms 
of Medicare reimbursements received, relative to that year's aggregate 
cap limit, by comparing the 2006 cap year to the 2012 cap year. 
Analysis revealed that more hospices ended the 2012 cap year ``just 
below'' their aggregate cap than in 2006. The cap analyses which are 
referenced in this section are available in the May 2014 Technical 
Report was posted in May, 2014 on our Hospice Center Web page at: 
http://www.cms.gov/Center/Provider-Type/Hospice-Center.html.
    The results from these recent analyses on the hospice aggregate cap 
highlight the importance of hospices monitoring their aggregate cap and 
ensuring that the beneficiaries under their care are truly eligible for 
hospice services. In the FY 2010 hospice wage index proposed rule, we 
solicited comments on the aggregate hospice cap (74 FR 18920-18922). 
Many commenters wanted more timely notification of cap overpayments. 
Many also requested that hospices be given access to beneficiaries' 
full hospice utilization history, as having this information would 
enable hospices to better manage their aggregate cap. In response to 
concerns from hospices, we redesigned the Provider Statistical and 
Reimbursement (PS&R) system in 2011, so that hospices can now easily 
manage their inpatient and aggregate caps. The redesigned PS&R enables 
hospices to calculate estimated caps to monitor their cap status at 
different points during the cap year, and also enables them to 
calculate their caps after the cap year ends.
    Our current practice is for the Medicare Administrative Contractors 
(MACs) to complete the hospice cap determinations for both the 
inpatient and the aggregate caps 16 to 24 months after the cap year in 
order to demand any overpayment. We are concerned about this long 
timeframe, particularly given that the percentage of hospices exceeding 
the aggregate cap is increasing, along with the average overpayment per 
beneficiary. To better safeguard the Medicare Trust Funds, we believe 
that demands for cap overpayments should occur sooner. This is now 
possible due to the redesigned PS&R system.
    Therefore, for the 2014 cap year and subsequent cap years, we 
proposed to amend Sec.  418.308 and require that hospices complete 
their inpatient and aggregate caps determination within 5 months after 
the cap year ends (that is, by March 31) and remit any overpayments at 
that time. We proposed that the MACs would then reconcile all payments 
at the final cap determination. If a provider fails to file its 
inpatient and aggregate cap determination 5 months after the end of the 
cap year, we proposed that payments to the provider would be suspended 
in whole or in part until the self-determined cap is filed with the 
Medicare contractor. We proposed to further amend Sec.  418.308 and 
Sec.  405.371 to state that payments to a hospice would be suspended in 
whole or in part, for failure to file a self-determined inpatient and 
aggregate cap determination. This is similar to the current practice 
followed by all other provider types that file cost reports with MACs.
    We proposed that hospices would be provided a pro-forma spreadsheet 
that they would use to calculate their caps to remit any overpayments. 
The redesigned PS&R system provides the inpatient days, total days, 
beneficiary counts, and Medicare payments that are needed to calculate 
any inpatient or aggregate cap overpayments. The redesigned system can 
provide needed data whether a hospice uses the streamlined method or 
the patient-by-patient proportional method for its aggregate cap 
calculation. All hospices are required to register in Individuals 
Authorized Access to CMS Computer Services (IACS) and obtain their PS&R 
report from the PS&R system. Hospices experiencing difficulties can 
request a copy of their PS&R report from their MAC.
    Twenty six public comments and our responses are summarized below.
    Comment: Several commenters suggested that the Medicare 
Administrative Contractors (MACs) should complete the initial cap 
determination instead of the hospices. Some of the concerns are that 
the proposal would increase the hospices administrative costs, and this 
would be especially burdensome for small hospices. There were 
suggestions that CMS establish criteria to target providers that are 
more likely to exceed the cap if the concern was about the MACs 
workload.
    Response: The reason for this proposal is for hospices to determine 
and remit any overpayment. We do not believe this proposal would be 
overly burdensome to the hospices; some hospices are already using the 
information needed to complete the self-determined cap to manage their 
cap. The net reimbursement and beneficiary count needed to calculate 
the cap overpayment are reported on the Provider Statistical & 
Reimbursement (PS&R) report. A pro-forma spreadsheet for calculating 
the cap will be provided. The MACs are still required to issue the 
final cap determination and reconcile any overpayments received.
    Comment: Some commenters suggested that the cap calculation should 
be integrated with the cost report that hospices are currently required 
to file in order to minimize the administrative burden on the hospices.
    Response: This suggestion is not practical at this time. The 
hospice cap period of November 1-October 31 is not aligned with the 
hospices' various cost reporting fiscal years, and the hospice cap 
calculation is not based on the Medicare cost report.
    Comment: Commenters were concerned that the proposal for hospices 
to file a self-determined cap calculation and remit any overpayment 
within 5 months after the cap period would not achieve the stated goal 
of protecting the Medicare Trust Funds. Early calculation of the 
hospice cap liability will underestimate the amount owed by hospices 
that are over the cap. The 5

[[Page 50473]]

months proposed for hospices to file their self-determined cap is 
vulnerable to gaming because a hospice could choose to perform its cap 
calculation immediately after the close of the cap year when its cap 
liability will be lowest. Some commenters suggested that CMS should 
instruct providers not to request data to calculate their cap liability 
earlier than 90 days after the end of the cap period in order to allow 
for most of the hospice claims to be processed before the completion of 
the cap calculation.
    Response: We agree that allowing up to 5 months to calculate the 
cap without a minimum time for allowing claims to process is vulnerable 
to ``gaming'' by hospices. The goal is to require the hospices to 
submit an accurate cap determination within 5 months of the end of the 
cap year. In order to increase the reliability of the determination, we 
will require that hospices use payment data not earlier than 3 months 
after the cap year to determine their cap overpayment due 5 months 
after the cap year. This will improve the accuracy of the calculation 
by ensuring that most claims have been processed, while still allowing 
a reasonable period of time for the hospice to complete the 
calculation.
    For example, the cap year ending October 31, 2015 would result in 
the hospice providing its cap determination and any associated 
overpayment to their MAC by March 31, 2016. In order to allow a 
reasonable number of claims to be processed, the hospice shall wait at 
least 3 months after the end of the cap year, or January 31, 2016, 
before attempting to calculate the cap overpayment. Thus, the cap 
determination would be calculated after January 31, 2016 but before 
March 31, 2016 and the overpayment would be submitted at the same time 
as the cap determination.
    We plan to continue to monitor hospices that may be ``gaming'' the 
system, and CMS has the option of performing a cap review at any time 
after the end of the cap year, if needed. In addition, MACs will review 
the hospices' cap determinations at a later time in order to ensure 
that they are accurate and to reconcile them with updated claims data.
    Comment: Several commenters suggested that CMS should not recoup 
any overpayment as a result of the self-determined cap calculation 
until the MACs issue the final cap determination.
    Response: While completing the self-determined calculation as 
proposed will inform hospices about whether or not they are over the 
cap as early as possible, it will not protect the Medicare Trust Fund 
if the overpayments are not recouped. Other provider types that file 
Medicare cost reports 5 months after the cost reporting year end are 
required to remit any overpayments at the time the cost reports are 
filed. Sometimes the final settlements of Medicare cost reports are 
issued 2 to 3 years after the cost reports were filed. The same process 
is proposed for hospice providers, since the cap calculations are not 
reconciled on the cost reports themselves. MACs will reconcile the 
final payments when it issues the final cap determination. The final 
cap determination includes the appeal rights for the hospice.
    Comment: Several commenters were concerned that the proposal did 
not address the availability of the Extended Repayment Schedule (ERS) 
for providers that exceed the cap.
    Response: This proposal is not changing the current ERS 
availability. Providers that have overpayments as a result of the self-
determined cap calculation will follow the same overpayment processes 
that were in effect prior to this requirement.
    Comment: A commenter suggested that CMS should consider eliminating 
the requirement that hospices determine the inpatient cap overpayment 
because the calculation involved is more complex than those required 
for determining the aggregate cap. Since most providers do not exceed 
the inpatient cap, they are not experienced in performing the 
calculation required.
    Response: We agree with the commenter that most providers do not 
exceed the inpatient cap limitation, and that calculation of the 
inpatient cap is more complex than the aggregate cap calculation. We 
are eliminating the requirement that hospices complete a self-
determined inpatient cap liability in order to address stakeholders 
concerns regarding the complexity of the calculation. The Medicare 
contractors will continue to calculate the inpatient cap limitation. We 
will continue to monitor the inpatient cap and consider implementing in 
the future if needed. However, the self-determined aggregate cap 
calculation proposal is being implemented in this final rule.
    Comment: Some commenters suggested that the MACs be required to 
review the providers' submitted self-determined cap amounts and alert 
hospices of any discrepancies in the calculation or provide notice of 
acceptance of the hospices calculations. Some commenters suggested that 
a formal adjudication process should be included in the proposal if 
there is discrepancy between the providers' data and the Providers 
Statistical and Reimbursement (PS&R) system.
    Response: The MACs will review the submitted self-determined cap 
calculation for errors but not necessarily recalculate the submitted 
cap in all cases for accuracy. The MACs will issue a final cap 
determination at a later date. Under the current process, providers 
have the option of using their data to file the cap report if they 
disagree with the PS&R report. Providers using their data to file their 
cap calculation will need to provide documentation to support the 
calculations. The MAC will subsequently issue a final cap 
determination, which will include appeal rights for the hospice.
    Comment: A commenter suggested that the MACs should provide advance 
notification to the hospices regarding the requirement to file a cap 
determination and the due date.
    Response: We are not requiring the MACs to send advance 
notification to the hospices at this time. We will work with the MACs 
in order to distribute educational material regarding the calculation 
of the cap, and access to the PS&R. While all providers have been 
instructed to obtain their own PS&R reports, some may not have used 
such reports. Hospices will be informed of their requirements through 
various educational materials.
    Comment: A commenter that supported the proposal suggested that CMS 
delay this requirement to allow providers time to prepare for the 
changes, and allow those that currently do not have access to the PS&R 
system to register. Another suggested that CMS phase-in the proposal 
over a three year period.
    Response: We do not believe phasing the requirement that hospices 
calculate their cap overpayment over a three year period will reduce 
the burden on hospices and will ensure hospices' ability to calculate 
the cap accurately. We appreciate the commenter's concern about 
providers who are not currently registered to obtain their PS&R report. 
Providers have received instructions regarding access to the PS&R 
system on numerous occasions, and we will work with the MACs to remind 
providers how to access the PS&R system, and explain how to access and 
utilize the hospice reports.
    Comment: Some commenters raised concern about the ability of 
hospices that are not registered in CMS' authentication and 
authorization system (IACS) to obtain a copy of their PS&R report. A 
commenter stated that since most providers only access the PS&R system 
once in a year, their accounts are deactivated after six months of 
inactivity and would be unable to obtain a copy of their PS&R report. 
The

[[Page 50474]]

commenter suggested that CMS change the deactivation of account after 
six months of inactivity.
    Response: The security protocol of the CMS authentication and 
authorization system needed to access the PS&R system is beyond the 
scope of this proposal. It should be noted, however, that accounts are 
not deactivated after six months of inactivity. Accounts are only 
deactivated when a user fails to recertify its account, which is 
usually once a year. The system sends out several notification emails 
45 days prior to the recertification date, and everyday 15 days prior 
to the due date. Providers that failed to change their password every 
60 days need only to complete the specific password steps in order to 
reset their password. Since the PS&R reports will be a source of 
information for calculation of the caps, we do not expect problems with 
system inactivity subsequent to the issuance of this final rule.
    Comment: A commenter suggested that the CMS employ electronic 
delivery of important notices, like overpayment determinations.
    Response: This is outside the scope of this proposal.
    Comment: A commenter was concerned that providers are not able to 
obtain the beneficiary count for patients served by more than one 
provider, and that this information is only available to the MACs.
    Response: This statement is not accurate. The PS&R report provides 
summary beneficiary count for patients served by more than one hospice, 
and the summary report is available for providers to request.
    Comment: Some commenters suggested that CMS should include in the 
proposal a time frame for the MACs to complete the final cap reviews
    Response: We are not proposing a requirement at this time. We will 
continue to work with the MACs regarding this process.
    Comment: A commenter noted that the proposed rulemaking under the 
Affordable Care Act required that Medicare providers and suppliers to 
report and return overpayments 60 days from the date the liability is 
identified. CMS should provide hospices 60 days from 150 days to refund 
any overpayment as a result of the self-cap determination.
    Response: We agree that the Affordable Care Act requires that 
providers and suppliers report and refund overpayments within 60 days 
from when identified. The Overpayment rule resulting from the 
Affordable Care Act has not been finalized as of the date this rule was 
finalized; and therefore, is outside of the scope of this proposal. As 
noted above, the requirement that hospices pay the overpayment when 
they file their cap determination is similar to the requirement for 
other provider types that final payment reconciliation are completed on 
the Medicare cost report.
    Comment: Some commenters applauded the proposal stating that it 
allows hospices to better manage their cap, and they will be aware of 
their cap situation soon after the cap year in order to implement 
changes to better manage their cash flow in light of hospices' 
responsibility to reconcile their overpayments with amounts allowed by 
CMS.
    Response: We agree with the commenters and thank them for their 
support.
    Final action: We are finalizing the proposal to require hospices to 
submit the aggregate cap determination 5 months after the end of the 
cap year and refund any overpayment with the filed cap determination. 
We are eliminating the proposal that hospices complete the self-
determined inpatient cap limitation as part of this proposal, but will 
continue to monitor the inpatient cap and consider implementing in the 
future if needed. In addition, we are requiring hospices to wait at 
least 3 months after the end of the cap year to calculate the self-
determined aggregate cap, in order to include a reasonable number of 
claims. Finally, we are finalizing the proposal that hospices which 
fail to file their self-determined cap determination will have their 
payments suspended.

E. Timeframes for Filing the Notice of Election and Notice of 
Termination/Revocation

1. Timeframe for Filing the Notice of Election
    A distinctive characteristic of the Medicare hospice benefit is 
that it requires patients (or their representative) to intentionally 
choose hospice care through an election. As part of that election, 
patients (or their representative) acknowledge that they fully 
understand the palliative, rather than curative, nature of hospice 
care. Another important aspect of the election is a waiver of 
beneficiary rights to Medicare payment for any Medicare services 
related to the terminal illness and related conditions during a hospice 
election except when provided by, or under arrangement by, the 
designated hospice, or by the individual's attending physician if he/
she is not employed by the designated hospice (Sec.  418.24(d)).
    Because of this waiver, providers other than the designated hospice 
or attending physician cannot receive payment for services to a hospice 
beneficiary unless those services are unrelated to the terminal illness 
and related conditions. For our claims processing system to properly 
enforce this waiver, it is necessary for the hospice election to be 
recorded in the claims processing system as soon as possible after the 
election occurs. A survey of the four Medicare Administrative 
Contractors (MACs) revealed that 16.2 percent of NOEs are filed within 
2 days of the effective date of election, 39.2 percent of NOEs are 
filed within 5 days of the effective date of election, and 62.1 percent 
of NOEs are filed within 10 days of the effective date of election. 
Prompt recording of the notice of election (NOE) prevents inappropriate 
payments, as claims filed by providers other than the hospice or the 
attending physician will be rejected by the system, unless those claims 
are for items or services unrelated to the terminal illness and related 
conditions. Prompt filing of the NOE also protects beneficiaries from 
financial liability from deductibles and cost sharing for items or 
services provided during a hospice election which are related to the 
terminal prognosis.
    Once a NOE is filed, the hospice election and benefit period are 
established in the Common Working File (CWF) and in the Daily 
Transaction Reply Report (DTRR). The CWF is used by Part A and Part B 
providers, and the DTRR is used by Part D plan sponsors, to determine 
whether a beneficiary is a hospice patient. This information is 
necessary for providers and suppliers to properly handle claims for 
beneficiaries under a hospice election.
    Our hospice reform contractor has performed analyses of Medicare 
expenditures for drugs and services provided to hospice beneficiaries 
during a hospice election. These analyses found that Medicare Part D 
was paying for many drugs that should have been provided by the hospice 
during a hospice election. We also found that Parts A and B were paying 
claims for items or services from non-hospice providers during a 
hospice election (See section III.A.4), though some of these claims may 
have been appropriate. Once a hospice election is established in the 
CWF, in order for claims from other providers to process, the claim 
must be from the attending physician and coded with a ``GV'' modifier, 
or for items or services unrelated to the terminal illness and related 
conditions and must be coded with either a condition code of ``07'' or 
a ``GW'' modifier. However, in calendar year 2012, 10,500 claims and 
2.4 million line items, totaling $159

[[Page 50475]]

million were processed without the condition code or modifier. Of this 
$159 million, approximately $100 million was from physician/supplier 
Part B claims that include claims from physicians, laboratories, and 
ambulance companies, and approximately $46 million was billed as 
durable medical equipment. This suggests that these claims may have 
been processed in the time between when the beneficiary elected hospice 
and when the hospice filed its NOE. When Parts A, B, or D pay claims 
for items or services during a hospice election, there is typically an 
associated beneficiary liability (such as deductibles or copayments). 
For example, in 2012 the hospice beneficiary liability for items or 
services provided to hospice beneficiaries during a hospice election 
was $135.5 million for Part A or B claims, and $48.2 million for Part D 
claims. We want to safeguard hospice beneficiaries from inappropriate 
financial liability during a hospice election for items or services 
that should be provided by the hospice. Please see section III.A.4 of 
this final rule and the May 2014 Technical Report, which was posted on 
the CMS Hospice Center Web page in May 2014, for more details on 
Medicare payments made to non-hospice providers during a hospice 
election for hospice beneficiaries. The hospice center Web page can be 
accessed at http://www.cms.gov/Center/Provider-Type/Hospice-Center.html.
    In the April 1, 2013 CMS Part D Final Call Letter, it was noted 
that delays in the flow of hospice election information cause 
retroactive updates to the information sent to Part D plan sponsors on 
the DTRR, and plan sponsors requested that CMS improve the timeliness 
of the hospice data on the DTRR.\39\ More recently, CMS issued a 
memorandum on December 6, 2013 entitled ``Part D Payment for Drugs for 
Beneficiaries Enrolled in Hospice,'' which sought to clarify the 
criteria for determining payment responsibility for drugs for hospice 
beneficiaries.\40\ Industry commenters described the lag time in the 
notification of Part D plan sponsors that the beneficiary had elected 
hospice, revoked hospice, or been discharged alive from hospice as a 
key problem in determining payment responsibility. Commenters suggested 
that CMS require that the NOE be filed within a short timeframe of 
election (for example, within 48 hours).
---------------------------------------------------------------------------

    \39\ CMS, ``Calendar Year (CY) 2014 Medicare Advantage 
Capitation Rates and Medicare Advantage and Part D Payment Policies 
and Final Call Letter,'' issued April 1, 2013; available at http://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/downloads/Announcement2014.pdf.
    \40\ Tudor CG, Wilson L, and Majestic M. ``Part D Payment for 
Drugs for Beneficiaries Enrolled in Hospice--Request for Comments,'' 
memorandum issued December 6, 2013, available at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/Hospice/Downloads/Hospice-PartD-Payment.pdf.
---------------------------------------------------------------------------

    The CWF is also used by hospices to identify the current benefit 
period, which helps hospices determine when a face-to-face encounter is 
required. We have received requests for assistance from hospices where 
a beneficiary was previously admitted to and then discharged from 
another hospice, which had not yet filed the NOE, creating a problem 
for the current hospice in determining the correct benefit period. This 
can lead to the current hospice not meeting the face-to-face 
requirement. Additionally, because of sequential billing requirements, 
the current hospice would have to cancel its NOE and all of its billing 
for that beneficiary to allow the previous hospice to input its NOE and 
billing. Once the previous hospice had filed its claims and recorded 
the beneficiary's discharge, the current hospice could then resubmit 
its NOE and its claims. The failure of the first hospice to file its 
NOE promptly created an administrative burden for the second hospice.
    In summary, prompt filing of the NOE avoids compliance problems 
with the statutorily mandated face-to-face requirement. It also avoids 
creating burdensome situations for hospices when sequential billing 
requirements are not met. Finally, because Medicare payments for 
services related to the terminal illness and related conditions are 
waived once a hospice election is in place, it is crucial that the NOE 
be filed promptly to safeguard the integrity of the Medicare Trust Fund 
and enable smooth and efficient operation of other Medicare benefits 
(like Part D), and to safeguard hospice beneficiaries from 
inappropriate financial liability due to cost sharing and deductibles 
for services related to the terminal prognosis. For all of these 
reasons, we proposed that a hospice must file the NOE with its Medicare 
contractor within 3 calendar days after the hospice effective date of 
election, regardless of how the NOE is filed (by direct data entry, or 
sent by mail or messenger). We believe that this proposed requirement 
would relieve hospices of the burden created when some minority of 
hospices do not file their NOEs promptly, would avoid inappropriate 
payments to other Part A, Part B, or Part D providers, and would 
safeguard beneficiaries from inappropriate liability for copayments or 
deductibles.
    Currently, payment for hospice services begins on the effective 
date of the hospice election, regardless of when the NOE was filed. A 
commenter on the December 6, 2013 CMS memorandum clarifying drug 
payment responsibility between Part D, hospice, and beneficiaries 
suggested that without enforcement actions, hospices would not file 
NOEs within a short timeframe. We agree that providing a consequence 
for failing to file NOEs timely would encourage compliance. Therefore, 
we proposed that for those hospices that do not file the NOE timely 
(that is, within 3 calendar days after the effective date of election), 
Medicare would not cover and pay for days of hospice care from the 
effective date of election to the date of filing of the NOE. We 
proposed that these days be considered the financial responsibility of 
the hospice; the hospice could not bill the beneficiary for them. We 
believe that this is a reasonable step, which would not be burdensome 
to hospices, would help us to safeguard the integrity of the Medicare 
Trust Fund, and help protect beneficiaries from inappropriate 
liability.
    Once filed, the process of posting an NOE to the CWF after direct 
data entry (DDE) takes 1 to 5 days, depending on the host site. If an 
NOE is not submitted by DDE, the current policy requires hospices to 
send it to the Medicare contractor by mail or messenger. This policy 
remains in place; however, hospices may need to use overnight mail or 
an overnight messenger to ensure that paper NOEs are received by the 
Medicare contractor within the required timeframe after the effective 
date of election (On average, only 68 NOEs are filed by mail or 
messenger per year). Using a speedier form of delivery will ensure that 
a paper NOE's filing is not delayed by the transit time needed to get 
the document from the hospice to the Medicare contractor.
2. Timeframe for Filing the Notice of Termination/Revocation
    In accordance with 42 CFR 418.26, hospices may discharge patients 
for only three reasons: (1) Due to cause; (2) due to the patient's no 
longer being terminally ill; or (3) due to the patient's moving outside 
the hospice's service area. In contrast, hospice patients are free to 
revoke their election to hospice care at any time. Upon discharge or 
revocation, a beneficiary resumes the Medicare coverage that had 
previously been waived by the hospice election. It is important for 
hospices to record the beneficiary's discharge or revocation in the 
claims processing system in a timely manner. As previously noted, a 
number of those commenting on the December 6, 2013 CMS memorandum 
clarifying

[[Page 50476]]

drug payment responsibility between Part D, hospices, and beneficiaries 
wrote that it was critical for beneficiary revocations and live 
discharges from hospice to be recorded as soon as possible within CMS 
claims processing systems. Commenters on this Part D memorandum wrote 
that prompt recording of revocations or discharges is necessary to 
ensure that the beneficiary is able to access needed items or services, 
and to ensure that payment for the item or service is from the 
appropriate source. Providers are allowed 12 months to file a claim, so 
if a hospice is not prepared to file a final claim quickly, it should 
instead file a termination/revocation of election notice, so that the 
claims processing systems are updated to no longer show the beneficiary 
as being under a hospice election. Hereafter, we will refer to this as 
a Notice of Termination or Revocation (NOTR).
    We proposed to revise the regulations at Sec.  418.26 and Sec.  
418.28 to require hospices to file a NOTR within 3 calendar days after 
the effective date of a beneficiary's discharge or revocation, if they 
had not already filed a final claim. This would safeguard beneficiaries 
from any delays or difficulties in accessing needed drugs, items, or 
services that could occur if the CWF or DTRR continued to show a 
hospice election in place when in fact it was revoked or a discharge 
occurred. It would also avoid costs and administrative burden to non-
hospice providers and to the claims processing system that would occur 
for claims for items or services provided after discharge or 
revocation, which would be rejected if the claims processing systems 
continued to show the beneficiary as being under a hospice election.
    Comments we received with regard to the proposals to file the NOE 
and NOTR within 3 calendar days and the consequence for filing the NOE 
late are summarized below.
    Comment: Nearly all commenters supported placing timeframes around 
the NOE and NOTR for the reasons noted in the proposed rule, but 
hospices cited circumstances that would make it difficult for them to 
comply within the proposed timeframe and some requested we phase-in the 
proposal. Hospice commenters suggested using business days instead of 
calendar days, or timeframes of 5 to 10 calendar days. Primarily 
beneficiary advocacy groups, pharmacy groups, and Part D plan sponsors 
supported 3 calendar days, with one commenter supporting 2 calendar 
days for the NOE and the NOTR to be filed. These commenters also 
identified administrative burden issues and beneficiary impact concerns 
if the NOE and NOTR are not filed as soon as possible. A few commenters 
asked us to clarify the timeframe for NOE filing and for when a 
revocation begins. Another suggested that the NOE filing statistics in 
the rule demonstrated that hospices could not file their NOEs within a 
short timeframe.
    Response: In response to comments received, we are finalizing the 
requirement for hospices to file the NOE within 5 calendar days after 
the effective date of the election and to file the NOTR within 5 
calendar days after the date of the discharge or revocation (unless the 
hospice has already submitted the final claim). A timely-filed NOE is 
one that is submitted to, and accepted by, the Medicare contractor 
within 5 calendar days after the effective date of election. A timely-
filed NOTR is one that is submitted to, and accepted by, the Medicare 
contractor within 5 calendar days after the effective date of discharge 
or revocation. While a timely-filed NOE or NOTR is one that is 
submitted to and accepted by the Medicare contractor within 5 calendar 
days after the hospice election or hospice discharge/revocation, 
posting to the CWF may not occur within that same time frame. The date 
of posting to the CWF is not a reflection of whether the NOE or NOTR is 
considered timely-filed. We believe these timeframes provide an 
appropriate balance of concerns expressed by the diverse comments 
received on the proposal, and eliminates the need to phase-in the 
required timeframe implemented in this final rule. Prompt filing of the 
NOE and NOTR is essential to protecting the Medicare Trust Fund; 
minimizing the effect on beneficiaries' cost-sharing; and preserving 
access to non-hospice services. We considered the feasibility of using 
business days versus calendar days; however, the Medicare claims 
processing system cannot distinguish between calendar days and business 
days. Therefore, we are not able to consider counting business days for 
this policy. The NOE filing timeframe statistics included in the 
proposed rule only indicate historical filing practices and do not 
indicate hospices' inability to file NOEs in a more timely fashion once 
a filing timeframe is implemented. As described in the existing CMS 
Claims Processing Manual (IOM 100-04, Chapter 11, Section 20.1.1), 
hospices are to submit the NOE ``as soon as possible''. This final 
policy imposes an upper limit as to when the NOE is to be submitted 
without the imposition of provider liable days due to late filing of 
the NOE. We encourage hospices to submit the NOE and NOTR (if a final 
claim has not been submitted) as soon as possible and not wait until 
the 5th calendar day after the effective date of the election or 
discharge/revocation. For revocations, existing policy requires that 
the beneficiary must provide the hospice with a signed statement that 
he or she is revoking the benefit, including the effective date of the 
revocation, which cannot be a date earlier than the date the revocation 
is made, as described at 42 CFR 418.28.
    Some hospice commenters identified various technical reasons as to 
why an NOE or NOTR may not be timely-filed. We encourage hospices to 
consider available electronic means of transmitting data that nurses in 
the field may utilize to send the election statement to their 
administrative office. For example, secure fax or secure email is an 
easily accessible means of secure data transmission. We believe that it 
is prudent for hospices, as a business, to establish contingency plans 
for situations where administrative staff who normally file the NOEs or 
NOTRs are on vacation, unavailable due to illness, or are unexpectedly 
unavailable.
    We will continue to monitor the filing of NOEs and NOTRs, and will 
consider shortening the timeframe for what would be considered a 
timely-filed NOE or NOTR in future rulemaking.
    Comment: A few commenters opposed the proposed consequence for late 
NOEs. Some commenters felt it would be unfair for hospices to 
experience financial consequences due to exceptional circumstances that 
are beyond the control of the hospice, which cause the NOE to be filed 
untimely. Several commenters suggested that the provider liable days 
resulting from failing to meet the 3 calendar day timeframe for NOE 
filing could cause unintended consequences, including delaying 
admissions.
    Response: We agree that there are some circumstances that may be 
beyond the control of the hospice where it may not be possible to 
timely-file the NOE within 5 calendar days after the effective date of 
election or timely-file the NOTR within 5 calendar days after the 
effective date of a beneficiary's discharge or revocation, and 
appreciate the variety of examples to illustrate such exceptional 
circumstances. Therefore, we are finalizing an exception policy for the 
timely filing of the NOE, which would waive the consequences for 
failure to timely-file a NOE. The four circumstances that may qualify 
the hospice for an exception to the consequences of filing the NOE more

[[Page 50477]]

than 5 calendar days after the effective date of election are as 
follows:
    1. Fires, floods, earthquakes, or other unusual events that inflict 
extensive damage to the hospice's ability to operate;
    2. an event that produces a data filing problem due to a CMS or 
Medicare contractor systems issue that is beyond the control of the 
hospice;
    3. a newly Medicare-certified hospice that is notified of that 
certification after the Medicare certification date, or which is 
awaiting its user ID from its Medicare contractor; or,
    4. other circumstances determined by CMS to be beyond the control 
of the hospice.

If one of the four circumstances described above prevents a hospice 
from timely-filing its NOE, the hospice must document the circumstance 
to support a request for an exception, which would waive the 
consequences of filing the NOE late. Using that documentation, the 
hospice's Medicare contractor will determine if a circumstance 
encountered by a hospice qualifies for an exception to the consequences 
for filing an NOE more than 5 calendar days after the effective date of 
election. If the request for an exception is denied, the Medicare 
contractor will retain the decision of the denial. Hospices retain 
their usual appeal rights on the claim for payment. The Medicare 
contractors will provide hospices with information on how to request an 
exceptional circumstance and a waiver of the consequence of filing the 
NOE late after the publication of this final rule. Sub-regulatory 
guidance will detail the procedures a hospice would follow.
    Based on the exceptions described above, examples such as personnel 
issues; internal IT systems issues that the hospice may experience; the 
hospice not knowing the requirements; and failure of the hospice to 
have back-up staff to file the NOE are not acceptable circumstances 
that meet the exceptions. Therefore, late-filing consequences would be 
applied. For those hospices which do not timely-file the NOE (that is, 
the NOE is submitted to, and accepted by, the Medicare contractor 
within 5 calendar days after the effective date of election), Medicare 
will not cover and pay for the days of hospice care from the effective 
date of election up to the date the NOE is submitted to, and accepted 
by, the Medicare contractor. The date the NOE is submitted to, and 
accepted by, the Medicare contractor would be a covered day.
    Given the longer timeframe for timely-filing the NOE and the 
exceptional circumstances that we are implementing, we do not believe 
that hospices would delay admitting beneficiaries to avoid provider 
liable days. We will monitor for any unintended consequences of the 
policy.
    Under the Medicare hospice benefit, hospices are responsible for 
providing all care and services to the beneficiary for the palliation 
and management of the terminal illness and related conditions from the 
effective date of election to the date of death, or effective date of 
discharge/revocation, even if some of those days are a provider 
liability due to a late-filed NOE. The hospice remains responsible for 
covering all hospice medical, nursing, counseling, social work, and 
aide services, as well as all hospice drugs, DME, supplies, etc. as 
needed by the patient, in accordance with the plan of care, during 
provider liable days.
    Comment: Multiple commenters suggested a consequence for NOTRs 
filed late because they considered the filing of the NOTR as more 
critical from a beneficiary access to care standpoint. Late-filing of 
the NOTR could create problems for beneficiaries in accessing Part D 
medications or critical Medicare services, with a few commenters 
recommending a shorter timeframe than that for the NOE.
    Response: We appreciate the comments recommending a consequence for 
late-filing of NOTRs in order to protect the beneficiary's access to 
timely care and ensuring that the appropriate party is responsible for 
care and services. We are not implementing consequences for the late-
filing of the NOTR at this time, but will consider doing so in future 
rulemaking.
    Comment: Many commenters described systems issues which make filing 
NOEs and NOTRs cumbersome, or which lead to delays in posting NOE or 
NOTR data to CMS systems such as the CWF or Part D's DTRR. Some of 
these commenters noted concerns with the DDE filing system, the 
inability to batch and transmit data directly from electronic health 
records, the inability of FISS to accept electronic files, sequential 
billing requirements, and also offered other recommendations. Several 
commenters suggested that CMS address its systems issues, suggesting 
that CMS systems be required to post NOE information to CWF within 1 to 
3 days. Several comments requested various technical clarifications 
and/or shared concerns with CMS's data systems to support the proposal 
to timely-file the NOE and NOTR. One commenter asked if NOTR filing 
procedures should be consistent with current instructions for reporting 
occurrence codes in claims submissions so that the reason for the 
discharge would be clear.
    Response: Before the implementation of the HIPAA transactions and 
code sets standards in 2003, CMS accepted hospice NOEs via Electronic 
Data Interchange (EDI) batch submission using the UB-92 flat file claim 
format. HIPAA implementation eliminated the UB-92 flat file format for 
claims processing, replacing it with the 837 Institutional (837I) claim 
transaction. The 837I format requires reporting at least one delivered 
service and other data elements that are not appropriate to an NOE, so 
an EDI claim transaction could no longer be used for this purpose. At 
that time, a great majority of hospice NOEs were already being 
processed via Direct Data Entry (DDE) into Medicare claims processing 
systems. CMS determined that DDE submission of NOEs met the business 
needs of Medicare and most hospices. While many hospices have now 
adopted electronic health record technology that could facilitate the 
creation and submission of electronic NOEs, no standard for such 
submission currently exists. There would be significant implementation 
challenges associated with creating an interface between any new non-
claim format and Medicare claims processing systems. CMS plans to 
explore options to resume electronic batch submission of hospice NOEs 
in the future and welcomes input from the hospice industry regarding 
how electronic submission of NOEs could be feasible.
    Commenters who stated that sequential billing requirements prevent 
timely filing of NOEs are in error. While sequential billing 
requirements continue to apply, if a previous hospice has not filed any 
or all of its claims for a beneficiary, the current hospice is not 
prevented by CMS's claims processing systems from timely-filing its NOE 
(bill type 8xA). Similarly, there is no restriction within CMS claims 
processing systems on a current hospice's ability to file its NOTR if a 
previous hospice has not filed any or all of its claims for that 
beneficiary. We are investigating possible improvements or process 
changes within CMS systems to increase the timeliness of updates. As 
part of that, we are open to discussions with the industry regarding 
sequential billing requirements or the Electronic Data Interchange 
(EDI). Finally, since the claims processing function of the NOTR is 
simply to post a revocation date for the beneficiary in the CWF, 
additional information identifying the reason for the discharge is not 
necessary. This information would

[[Page 50478]]

duplicate what is provided when the claim is filed.
    Comment: One commenter asked if the proposals related to the NOE 
filing that we finalize would apply when Medicare is a secondary payer.
    Response: The timely-filing NOE requirement applies whether 
Medicare is the primary or secondary payer.
    Comment: We received comments in the context of coordinating Part D 
and hospice. These comments provided recommendations for various 
processes for information flow to be considered.
    Response: We appreciate the comments received related to 
coordination between hospices and Part D sponsors. We will consider 
these in the overall development of a coordination process, which we 
solicited comments on in Section III.I.
    Comments: A few hospice commenters stated that they may not know 
the principal diagnosis or the attending physician to include with the 
NOE within the proposed 3 calendar days after the effective date of 
election, and noted that the comprehensive assessment occurs over a 5 
day period.
    Response: As noted previously, we are finalizing a timely-filing 
NOE policy that requires the NOE to be submitted to, and accepted by, 
the Medicare contractor within 5 calendar days after the effective date 
of hospice election, which is 2 days longer than the proposed 
timeframe. Since beneficiaries must be certified as terminally ill by 
the hospice physician and the patient's attending physician (if any) 
within 2 calendar days after the effective date of election, the 
principal diagnosis and attending physician chosen by the beneficiary 
are known to the hospice prior to the end of the timely-filing NOE 
timeframe. In addition, coding guidelines are very clear as to how to 
determine a primary diagnosis when multiple potential principle 
diagnoses may exist. These coding guidelines can be found at: http://www.cdc.gov/nchs/data/icd/icd9cm_guidelines_2011.pdf. We also 
disagree that the comprehensive assessment must be completed for the 
hospice to know which diagnosis is the principal diagnosis. The initial 
assessment would determine the patient's immediate care and support 
needs within 48 hours after the election of hospice care, as described 
in 418.54, and would be completed within the timely-filing NOE 
timeframe. The initial assessment should support the information 
documented by hospice and/or attending physician (if any) during the 
patient certification of eligibility for hospice care. The hospice 
physician and/or attending physician should be able to provide that 
information because they have had to review the beneficiary's medical 
documentation to determine whether or not to certify the patient as 
eligible for hospice care. While the comprehensive assessment may 
determine the breadth of specific needs of the patient, it would not be 
the primary driver in determining the beneficiary's principal diagnosis 
to be included on the NOE.
    Final action: We are finalizing a timely-filing NOE policy that 
requires the NOE to be submitted to, and accepted by, the Medicare 
contractor within 5 calendar days after the effective date of election, 
and a timely-filing NOTR policy that requires the NOTR to be submitted 
to, and accepted by, the Medicare contractor within 5 calendar days 
after the effective date of the discharge/revocation (unless the 
hospice has already filed a final claim). We are finalizing provider 
liable days for late filing of NOEs, as proposed. We are also 
finalizing specific exceptions that, if applicable, would allow for a 
waiver of the provider liable days for not filing NOEs within 5 days 
after the effective date of election. We emphasize that prompt filing 
of the NOE and the NOTR is essential to protecting the Medicare Trust 
Fund; minimizing the effect on beneficiaries' cost-sharing; and 
preserving access to non-hospice services. This finalized policy 
imposes an upper limit as to when the NOE is to be submitted without 
the imposition of provider liable days due to late filing of the NOE 
and an upper limit to when the NOTR is to be submitted after the 
discharge or revocation of the hospice beneficiary. As such, we 
strongly encourage hospices to submit the NOE and NOTR as soon as 
possible and not wait until the 5th calendar day after the date of the 
election or discharge/revocation. We will continue to monitor the 
filing of NOEs and NOTRs, and will consider shortening the timeframe 
for what would be considered a timely-filed NOE or NOTR in future 
rulemaking. We have changed the regulatory text shown at the end of 
this final rule to reflect the policies described above.

F. Addition of the Attending Physician to the Hospice Election Form

    The term ``attending physician'' is defined differently in 
different health care settings. For the Medicare hospice benefit, 
``attending physician'' has a specific definition found in the Social 
Security Act at 1861(dd)(3)(B) that the term means, with respect to an 
individual, the physician (as defined in subsection (r)(1)) or nurse 
practitioner (as defined in subsection (aa)(5)), who may be employed by 
a hospice program, whom the individual identifies as having the most 
significant role in the determination and delivery of medical care to 
the individual at the time the individual makes an election to receive 
hospice care.
    Our regulations at Sec.  418.3 include a definition for ``attending 
physician,'' based on the above mentioned statutory language. We define 
it as either 1) a doctor of medicine or osteopathy legally authorized 
to practice medicine and surgery by the State in which he or she 
performs that function or action; or 2) a nurse practitioner who meets 
the training, education, and experience requirements described 
elsewhere in our regulations. The definition also sets out the 
requirement that the patient identify the attending physician at the 
time he or she elects to receive hospice care, as having the most 
significant role in the determination and delivery of the individual's 
medical care.
    We require that the National Provider Identifier (NPI) of the 
attending physician be included on the NOE and on each claim. An 
attending physician can be a physician or a nurse practitioner, as long 
as he or she meets the requirements outlined in our regulations 
discussed above. The hospice patient (or his or her representative), 
not the hospice, chooses the attending physician. This differs from 
some non-hospice settings, where an attending may be a clinician 
assigned to provide care to the patient. This requirement is included 
as part of the CoPs at Sec.  418.52(c)(4), which state that the patient 
has the right to choose his or her attending physician. The hospice 
CoPs at Sec.  418.64(a)(3) further require that if the attending 
physician is unavailable, the hospice medical director, hospice 
contracted physician, and/or hospice physician employee is responsible 
for meeting the medical needs of the patient. Therefore, the patient 
should receive all needed care, whether that care is provided by 
hospice doctors, hospice nurse practitioners (NPs), or by the 
designated attending physician. Hospices can bill Part A for reasonable 
and necessary physician services provided to hospice beneficiaries by 
its doctors, regardless of whether those doctors are the designated 
attending. However, our regulations at Sec.  418.304(e) do not permit 
Medicare to be billed for reasonable and necessary physician services 
provided by NPs unless the NP is the attending physician, as defined in 
Sec.  418.3.
    We have recently heard anecdotal reports of hospices changing a 
patient's attending physician when the patient moves to an inpatient 
setting for inpatient care, often to a nurse

[[Page 50479]]

practitioner. We have also heard reports of hospices assigning an 
attending physician based upon whoever is available. Medicare 
contractors noted that the NPI of the attending physician reported on 
claims was sometimes changing, and differed from that reported on the 
NOE. Additionally, using CY 2010 and CY 2011 data, we found that 35 
percent of beneficiaries had Part B claims during their hospice 
election from more than one physician who claimed to be their 
designated attending physician. The reports of hospices changing a 
patient's attending physician are of great concern since the statute 
emphasizes that the attending physician must be chosen by the patient 
(or his or her representative). Finally, we have also received 
anecdotal reports that some hospices are not getting the signature of 
the attending physician on the initial certification. If a beneficiary 
has designated an attending physician, that physician must sign the 
initial certification for Medicare to cover and pay for hospice 
services, unless the attending is a NP.
    To ensure the attending physician of record is properly documented 
in the patient's medical record, we proposed to amend the regulations 
at Sec.  418.24(b)(1) and require the election statement to include the 
patient's choice of attending physician. The proposed information 
identifying the attending physician should be recorded on the election 
statement in enough detail so that it is clear which physician or NP 
was designated as the attending physician. Hospices have the 
flexibility to include this information on their election statement in 
whatever format works best for them, provided the content requirements 
in Sec.  418.24(b) are met. The language on the election form should 
include an acknowledgement by the patient (or representative) that the 
designated attending physician was the patient's (or representative's) 
choice.
    In addition, we further proposed that if a patient (or 
representative) wants to change his or her designated attending 
physician, he or she must follow a procedure similar to that which 
currently exists for changing the designated hospice. Specifically, the 
patient (or representative) must file a signed statement with the 
hospice that identifies the new attending physician in enough detail so 
that it is clear which physician or NP was designated as the new 
attending physician. Additionally, we proposed that the statement 
include the date the change is to be effective, the date that the 
statement is signed, and the patient's (or representative's) signature, 
along with an acknowledgement that this change in the attending 
physician is the patient's (or representative's) choice. The effective 
date of the change in attending physician cannot be earlier than the 
date the statement is signed. We believe that such a change would help 
ensure that any changes in the identity of the attending physician 
would be the result of the patient's free choice.
    Public comments and our response to comments regarding the changes 
to Sec.  418.24(b)(1) and 418.24(f) requiring the election statement to 
include the patient's choice of attending physician and other 
requirements are summarized below.
    Comments: Nearly all commenters wrote that they supported 
protecting beneficiary choice of the attending physician. The majority 
of commenters supported our proposal to identify the attending 
physician on the election form, with several affirming that they 
already follow this procedure. The main objection to identifying the 
attending physician on the election form was concern that the patient 
may not know whom he or she would like to serve as his or her attending 
physician at the time of election, and that this requirement could 
delay admission. One commenter asked that the hospice physician or NP 
be allowed to act as the attending until the patient's choice could be 
determined. One commenter suggested that we require the election form 
to state that the beneficiary (or representative) has the right to 
choose his or her attending physician, and that the chosen physician 
does not need to be employed by the hospice. Another commenter asked 
that we use ``provider neutral'' language, and refer to the ``attending 
clinician'' rather than the attending physician, as the attending could 
be a physician (MD or DO) or an advanced practice nurse. Two commenters 
suggested we determine patient and family satisfaction with the 
attending physician before implementing new requirements.
    Some commenters felt that the proposal would not change existing 
behavior and that the proposed requirements increase administrative 
burden on the hospice. A few commenters encouraged Medicare contractor 
and/or hospice survey oversight rather than a regulation change.
    Response: We appreciate the comments supporting our proposal and 
the protection of beneficiary choice, and are implementing the 
requirement to identify the attending physician on the election form as 
proposed. Regarding comments that the beneficiary might not know the 
attending at the time of election, the definition of ``attending 
physician'' in the Medicare statute requires that the beneficiary 
identify the attending physician ``at the time of election''. 
Therefore, this timeframe for identifying the attending physician was 
not part of our proposal but is an existing statutory requirement at 
section 1861(dd)(3)(B) of the Act. Most beneficiaries have had 
encounters with physicians prior to their decision to elect hospice 
care and many typically have longstanding relationships with their 
healthcare providers. If a hospice beneficiary has had a physician 
actively involved in their care prior to a hospice election, it is 
reasonable to expect that the hospice beneficiary will not have 
difficulty identifying that physician who has the most significant role 
in the determination and delivery of medical care to them. And, for 
those individuals who do not have any established and/or longstanding 
relationships with a healthcare provider, he/she may choose not to 
identify an attending physician, or may choose to identify a hospice 
physician or NP as his or her attending physician. We do not prohibit a 
patient (or representative) from choosing a hospitalist as the 
attending physician, though we suggest that the hospice explain to the 
patient (or representative) that a hospitalist only follows patients 
who are hospitalized.
    As indicated in our regulations at 42 CFR 418.20, in order to be 
eligible to elect hospice care, the beneficiary must be certified as 
terminally ill. That certification process occurs before election, and 
involves the patient's attending physician (if any). We did not receive 
any comments raising concerns about identifying the attending physician 
at the time of election when the definition of ``attending physician'' 
was first proposed in 1983 (48 FR 56009). The definition of ``attending 
physician'' was changed in section 408 of the Medicare Modernization 
Act of 2003, and the hospice regulations were updated in the August 4, 
2005 FY 2006 Hospice Wage Index Final rule (70 FR 45139-45140). There 
were no comments received about this longstanding timeframe in the 
discussion of the changes to the definition of ``attending physician'' 
in this final rule. The June 5, 2008 Hospice Conditions of 
Participation final rule (73 FR 32089 through 32090) also discussed the 
definition of ``attending physician'', and again, there were no 
comments that raised concerns regarding this timeframe. Since 
identifying an attending physician at time of hospice election has been 
a requirement in place for over 30 years, and has not appeared to cause 
any delay in admission, we do

[[Page 50480]]

not believe that including the information that identifies the 
attending physician on the election form would now begin to create 
delays in admission to hospice care.
    In the proposed rule, we gave hospices the flexibility to include 
this information identifying the attending physician on their election 
statement in whatever format works best for them, provided the content 
requirements in Sec.  418.24(b) are met. We wrote that the language on 
the election form should include an acknowledgement by the patient (or 
representative) that the designated attending physician was the 
patient's (or representative's) choice. We believe that this language 
remains sufficient, and do not agree with the commenters that asked 
that the acknowledgement also include language indicating that the 
chosen attending physician need not be an employee of the hospice. The 
decision as to who is or is not the attending physician belongs solely 
to the patient (or representative) regardless of that attending 
physician's employment relationship (or lack thereof) with the hospice. 
We do not prohibit attending physicians from being hospice employees as 
long as it is the patient's choice to decide whether or not to have an 
attending physician and who that attending physician will be during the 
patient's hospice care.
    Because ``attending physician'' is defined in the statute, we are 
also unable to use provider neutral language such as ``attending 
clinician'' to describe this position. As articulated in this section, 
the statutory definition of the ``attending physician'' at section 
1861(dd)(3)(B) of the Act means either a physician or a nurse 
practitioner, and does not permit broadening the term to include other 
health care professionals.
    We do not agree that we should wait to consider patient or family 
satisfaction data before implementing any new requirements related to 
the attending physician. While a few commenters suggested that we not 
make this regulatory change to the election statement, but instead 
allow Medicare contractors and survey enforcement to deal with any 
failure to comply with the regulations, we expect this policy to 
improve Medicare contractor enforcement and oversight activities as 
well as State survey activities. The hospice CoPs at Sec.  418.52 
include regulations related to the choice of attending physician and 
are enforced by State surveys.
    Comment: While some commenters supported having changes in the 
attending physician documented by the hospice, many commenters felt 
that this would cause undue burden to the hospice and to patients or 
their families during a period of crisis. A number of commenters asked 
that we clarify what constitutes a change in the attending physician, 
and mentioned scenarios when changes frequently occur, such as when the 
patient receives GIP care. A number of commenters wrote that most 
changes come about because the attending is unwilling or unavailable to 
continue following the patient, particularly as the patient's care 
becomes more complex and the hospice physician's role increases.
    Some commenters asked that we allow verbal changes, or changes from 
representatives by email or by fax. One wrote that it would be unfair 
for an NP to provide physician services, and for the hospice not to be 
able to bill for those services because that NP is not the designated 
attending physician. One commenter was concerned that our proposal 
implied that changing the attending physician is not appropriate.
    Response: We recognize that there are many legitimate reasons for a 
patient to change an attending physician. However, the choice of the 
new attending physician belongs solely to the patient (or 
representative), and the intent of this proposal is to further 
safeguard and protect that beneficiary choice. A patient cannot be 
required or coerced to change his or her attending physician.
    The hospice should document, in the medical record, situations 
where the attending physician is no longer willing or available to 
follow the patient. The hospice can then inform the patient or 
representative that he or she may choose someone else to serve in that 
role. In making such a choice, the patient or representative should be 
informed that he or she can choose a physician or a nurse practitioner 
as the attending physician, and that this individual could be from the 
community or from the hospice. Because the attending physician is 
typically someone with whom the patient had a relationship before 
electing to receive hospice care, the role of the attending physician 
is to provide a long term perspective on the patient and family that 
takes into account their medical and personal history. Ideally, this 
conversation with the patient (or representative) would occur when the 
patient is stable, and the patient (or representative) is able to make 
a decision without the stress of a medical crisis or in the midst of a 
transition to inpatient care. The patient is not required to make a 
change, and if he or she chooses not to do so, then the hospice 
physician or NP would step in to provide all needed care.
    We are concerned that many commenters appear to believe that it is 
necessary to change the attending physician when a patient transitions 
to GIP or other inpatient care, and that changing the attending 
physician would cause undue burden to the hospice and to patients or 
their families during a period of crisis. A hospice patient is not 
required to change his or her attending physician in order to receive 
inpatient care, regardless of the setting. If the attending physician 
does not have privileges at the hospital(s) the hospice contracts with 
for inpatient care, or does not wish to care for the patient in an 
inpatient setting, then according to our CoPs at Sec.  418.64(a)(3), 
the hospice physician or NP must provide any needed physician's 
services. The patient does not need to designate the hospice physician 
or NP as his or her attending physician for this to occur. However, 
while the hospice can bill Medicare Part A for its employed or 
contracted physicians providing needed physician services to its 
patients, it can only do so for its NPs if the NP is the designated 
attending physician. This limitation on hospice NP billing is in the 
hospice regulations at Sec.  418.304(e) and is based on the statutory 
language surrounding physician billing. The statutory definition of 
``physician services'' at section 1861(q) of the Act requires that the 
individual performing the services be a physician. ``Physicians'' are 
defined at section 1861(r) of the Act, and do not include NPs. However 
the statute does permit attending physicians to bill for their services 
at section 1812(d)(2)(A) of the Act, and defines attending physicians 
to include NPs at section 1861(dd)(3)(B) of the Act.
    We noted in the preamble of the proposed rule that ``attending 
physician'' is defined differently in different settings. If the 
patient is in a hospital, the hospital may assign a hospitalist to the 
patient, and the hospital may consider that hospitalist to be the 
``attending physician.'' However, that individual does not meet the 
hospice definition of ``attending physician'' unless the beneficiary 
chooses the hospital assigned attending physician to be their hospice 
attending physician. The clinician who meets the hospice definition of 
``attending physician'' should provide needed care to the hospice 
patient in the hospital. If that hospice attending physician is 
unavailable, then the hospice physician or NP would need to do so. The 
hospice should coordinate the patient's care during the inpatient stay 
by communicating with the hospitalist. If the hospice attending 
physician is

[[Page 50481]]

involved in the patient's care during an inpatient stay, that hospice 
attending physician will need to coordinate with any hospitalists that 
the hospital may have assigned, and of course with the hospice.
    We believe that commenters' concerns about stress on families 
during times of transition, and the burden of additional paperwork, 
resulted from hospices' erroneously believing that the attending 
physician must be changed for each GIP stay. With the clarification 
provided in this rule, we do not believe that the procedures we 
proposed for documenting a change in attending physician need to be 
revised, and are implementing the proposal without changes. When an 
attending physician is changed by the beneficiary (or representative), 
the required information documenting that change can be securely faxed 
or emailed to the hospice.
    We reiterate that if the attending physician cannot provide needed 
physician services, then the hospice physician or NP is required by the 
hospice CoPs to do so.
    Comment: Several commenters felt that the proposals surrounding 
changes in the attending physician would still not address situations 
where different non-hospice physicians are filing claims as the 
attending physician. A few suggested we educate community physicians as 
well as hospices about the attending physician. Some commenters stated, 
that given the hospices' role as the beneficiaries' care coordinators, 
hospices should have a role in addressing the issue of patients seeing 
multiple community physicians and others suggested notifying the 
patients' community physicians of the hospice election. However, one 
commenter expressed concern over whether this approach would complicate 
referral relationships with community physicians. Suggestions for 
billing edits for claims processing were also made.
    Response: We agree that our proposals will not completely resolve 
the issues related to inappropriate physician billing. We expect that 
the hospice beneficiary receives all needed items and services for the 
palliation and management of the terminal illness and related 
conditions from the hospice or the attending physician. However, 
sometimes hospice beneficiaries decide to seek continued treatment 
without the knowledge of the hospice for their terminal illness and 
related conditions, utilizing items or services provided by or through 
entities other than the hospice or the designated attending physician. 
The hospice may need to remind beneficiaries of the waiver of Medicare 
payment for services related to the terminal illness and related 
conditions provided by non-hospice providers (other than the attending 
physician), which is part of their election, and of their liability for 
those related services. Hospice beneficiaries also retain their right 
to use non-hospice providers for items or services unrelated to the 
terminal illness and related conditions, and Medicare will pay for 
those covered items or services.
    The hospice CoPs at Sec.  418.56(e) require that hospices ``ensure 
that the interdisciplinary group maintains responsibility for 
directing, coordinating, and supervising the care and services 
provided'' whether the care and services are provided directly or under 
arrangement and to ``provide ongoing sharing of information with other 
non-hospice healthcare providers furnishing services unrelated to the 
terminal illness and related conditions.'' Therefore, the care 
coordination role of hospices is one that is to be collaborative with 
all providers of a beneficiary's care, including non-hospice providers. 
The expectation is that hospices would have established collaborative 
care coordination and communication relationships with other providers 
to ensure the best interests of its patients.
    We also agree that more education is needed around this issue to 
hospices and to physicians, and will be issuing a MedLearn Matters 
article and possibly other Medicare education products on the topic. We 
also plan to address Part B billing by physicians inappropriately using 
the attending physician modifier on claims in the future. Finally, we 
will update informational materials on the hospice benefit that 
Medicare makes available to beneficiaries to increase awareness of the 
choices available to them related to the attending physician.
    Comment: A commenter asked if a new election should be completed 
for each change in attending, or if the NOE should be updated in the 
claims processing system. One commenter was supportive that we are not 
limiting the number of times a change in attending physician occurs, 
but others noted that more than one attending could be in place during 
a billing period. Another commenter asked if CMS expected the same 
attending to sign off on all services provided for the date range of 
the claim, asked for clarification whether the attending physician 
shown on claims should be based on the statutory definition of 
attending physician or the 5010 TR3 manual definition of attending 
physician, and asked which definition would take precedence in an 
audit.
    Response: If the patient (or representative) chooses to make a 
change in the attending physician, then the patient (or representative) 
would need to file a signed statement with the hospice that identifies 
the new attending physician in enough detail so that it is clear which 
physician or NP was designated as the new attending physician. For 
example, ``Dr. Smith'' is likely not specific enough, as there could be 
more than one physician named ``Dr. Smith'' in the area. The hospice 
should include information such as the physician's full name, office 
address, or NPI number on the election form when needed to correctly 
identify the attending physician chosen by the beneficiary. The 
statement should include the date the change is to be effective, the 
date that the statement is signed, and the patient's (or 
representative's) signature, along with an acknowledgement that this 
change in the attending physician is the patient's (or 
representative's) choice. The effective date of the change in attending 
physician cannot be earlier than the date the statement is signed. The 
patient (or representative) does not need to complete a new election 
form. At this time, the hospice does not need to update the claims 
processing system with changes in the attending physician.
    When a change in attending physician occurs, Medicare could be 
billed for services provided by more than one attending physician 
during any given month. Hospices should follow the statutory definition 
of ``attending physician'' given in this final rule when recording 
attending physicians or billing for attending physicians on hospice 
claims. That definition is already included in the hospice claims 
processing manual (IOM 100-04, chapter 11, sections 40.1.2 and 40.1.3), 
and takes precedence in an audit.
    Comment: A commenter was concerned by anecdotal reports indicating 
that when services are being provided in a skilled nursing facility or 
other long term care facility, the hospices bypass the nursing facility 
medical directors or attending physicians and write new medical orders. 
This commenter wrote that the long-term care facility's attending 
physician or medical director should retain primary responsibility for 
the patient except in unusual circumstances. This commenter asked that 
hospices not be permitted to change medical orders without the 
involvement or permission of the long term care facility's attending 
physician.
    Response: The hospice CoPs at 418.56 require that the hospice be 
responsible for coordinating provision of the

[[Page 50482]]

patient's care and services in all settings. When a hospice patient 
resides in a nursing facility, the CoPs at 418.112 require that the 
hospice assume responsibility for professional management of the 
resident's hospice services provided, in accordance with the hospice 
plan of care. There must be a written agreement in place between the 
hospice and the facility which addresses care coordination with the 
facility staff. The CoPs at Sec.  418.112(e) requires the hospice IDG 
to designate one of its members to coordinate the patient's hospice 
care with representatives of the SNF/NF or ICF/MR. The designated IDG 
member must also communicate with representatives of the SNF/NF or ICF/
MR and any other health care providers to ensure quality care for the 
patient. Additionally, the designated IDG member must ensure that the 
hospice IDG communicates with the SNF/NF or ICF/MR medical director, 
the patient's attending physician, and any other physicians caring for 
the patient as needed to coordinate the patient's hospice care with the 
care provided by other entities. Through these mechanisms, the hospice 
maintains responsibility for all of its care and services for all of 
its patients and ensures that the care that it is providing complements 
the care being provided by others. In addition, the establishment of 
the written agreements and communication systems with SNFs, NFs, and 
ICFs/MR when hospices are furnishing hospice care to residents of those 
facilities promotes clear communication between the hospice and the 
SNF/NF or ICF/MR and will help hospices ensure that they are meeting 
their responsibility to furnish the care necessary to meet the needs of 
its patients. We believe that this coordinated process actively 
involves and engages all members of the patient's care team, both 
within the hospice and the facility, in care planning, and delivery.
    Comment: A commenter suggested that the attending physician be 
responsible for communicating with the beneficiary's pharmacy regarding 
which of a hospice beneficiary's drugs should be discontinued.
    Response: We appreciate this comment related to Part D coordination 
with pharmacies. We will consider this comment in the overall 
development of a coordination process which we solicited comments on in 
Section III.I and will address this comment in future rulemaking.
    Final action: We are implementing all the proposals related to the 
attending physician as proposed.

G. FY 2015 Hospice Wage Index and Rates Update

1. FY 2015 Hospice Wage Index
    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 based on the location where services are furnished. 
The hospice wage index utilizes the wage adjustment factors used by the 
Secretary for purposes of section 1886(d)(3)(E) of the Act for hospital 
wage adjustments, and our regulations at Sec.  418.306(c) require each 
labor market to be established using the most current hospital wage 
data available, including any changes by the Office of Management and 
Budget (OMB) to the Metropolitan Statistical Areas (MSAs) definitions. 
We have consistently used the pre-floor, pre-reclassified hospital wage 
index when deriving the hospice wage index. In our August 4, 2005 FY 
2006 Hospice Wage Index final rule (70 FR 45130), we began adopting the 
revised labor market area definitions as discussed in the OMB Bulletin 
No. 03-04 (June 6, 2003). This bulletin announced revised definitions 
for MSAs and the creation of Core-Based Statistical Areas (CBSAs). The 
bulletin is available online at http://www.whitehouse.gov/omb/bulletins/b03-04.html.
    In the FY 2006 Hospice Wage Index final rule, we implemented a 1-
year transition policy using a 50/50 blend of the CBSA-based wage index 
values and the MSA-based wage index values for FY 2006. The one-year 
transition policy ended on September 30, 2006. For FY 2007 and beyond, 
we have used CBSAs exclusively to calculate wage index values. OMB has 
published subsequent bulletins regarding CBSA changes. The most recent 
CBSA changes used for the FY 2015 hospice wage index are found in OMB 
Bulletin 10-02, available at: http://www.whitehouse.gov/sites/default/files/omb/assets/bulletins/b10-02.pdf.
    When adopting OMB's new labor market designations in FY 2006, 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. We also adopted the policy that for urban labor 
markets without a hospital from which hospital wage index data could be 
derived, all of the CBSAs within the state would be used to calculate a 
statewide urban average pre-floor, pre-reclassified hospital wage index 
value to use as a reasonable proxy for these areas in our August 6, 
2009 FY 2010 Hospice Wage Index final rule (74 FR 39386). In FY 2015, 
the only CBSA without a hospital from which hospital wage data could be 
derived is 25980, Hinesville-Fort Stewart, Georgia.
    In our August 31, 2007 FY 2008 Hospice Wage Index final rule (72 FR 
50214), we implemented a new methodology to update the hospice wage 
index for rural areas without a hospital, and thus no hospital wage 
data. In cases where there was a rural area without rural hospital wage 
data, we used the average pre-floor, pre-reclassified hospital wage 
index data from all contiguous CBSAs to represent a reasonable proxy 
for the rural area. In our August 31, 2007 FY 2008 Hospice Wage Index 
final rule, we noted that we interpret the term ``contiguous'' to mean 
sharing a border (72 FR 50217). Currently, the only rural area without 
a hospital from which hospital wage data could be derived is Puerto 
Rico. However, our policy of imputing a rural pre-floor, pre-
reclassified hospital wage index based on the pre-floor, pre-
reclassified hospital wage index (or indices) of CBSAs contiguous to a 
rural area without a hospital from which hospital wage data could be 
derived does not recognize the unique circumstances of Puerto Rico. 
While we have not identified an alternative methodology for imputing a 
pre-floor, pre-reclassified hospital 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. For FY 2008 
through FY 2013, we have used the most recent pre-floor, pre-
reclassified hospital wage index available for Puerto Rico, which is 
0.4047. In this final rule, for FY 2015, we continue to use the most 
recent pre-floor, pre-reclassified hospital wage index value available 
for Puerto Rico, which is 0.4047.
    For FY 2015, we used the 2014 pre-floor, pre-reclassified hospital 
wage index to derive the applicable wage index values for the FY 2015 
hospice wage index. We continue to use the pre-floor, pre-reclassified 
hospital wage data as a basis to determine the hospice wage index 
values because hospitals and hospices both compete in the same labor 
markets, and therefore, experience similar wage-related costs. We 
believe the use of the pre-floor, pre-reclassified hospital wage index 
data, as a basis for the hospice wage index, results in the appropriate 
adjustment to the labor portion of the costs. The FY 2015 hospice wage 
index values presented in this final rule were computed consistent with 
our pre-floor, pre-reclassified hospital (IPPS) wage index policy (that 
is, our historical policy of not taking into account IPPS geographic 
reclassifications in determining

[[Page 50483]]

payments for hospice). The FY 2015 pre-floor, pre-reclassified hospital 
wage index does not reflect OMB's new area delineations, based on the 
2010 Census, as outlined in OMB Bulletin 13-01, released on February 
28, 2013. Moreover, the final FY 2015 pre-floor, pre-reclassified 
hospital wage index does not contain OMB's new area delineations. CMS 
proposed changes to the FY 2015 hospital wage index based on the newest 
CBSA changes in the FY 2015 IPPS proposed rule. Therefore, if CMS 
incorporates OMB's new area delineations, based on the 2010 Census, in 
the FY 2015 hospital wage index, those changes would also be reflected 
in the FY 2016 hospice wage index.
    We received 3 comments regarding the wage index proposals.
    Comment: A commenter suggests that CMS implement a policy whereby 
the area wage index applicable to any hospice that is located in an 
urban area of a State may not be less than the area wage index 
applicable to hospices located in rural areas in that State.
    Response: The wage index is based on hospital wage data from each 
urban CBSA and rural area. Therefore, the wage index for each 
geographic area (whether urban or rural) should be an accurate 
reflection of hospital wages in that area. We will continue to monitor 
the effects of the wage index, look into whether or not we would have 
the authority to implement such a policy, and determine the 
appropriateness of such a policy before possibly considering this 
recommendation in future rulemaking.
    Comment: A commenter suggests placing Montgomery County, Maryland 
into CBSA 47894 ``Washington-Arlington-Alexandria, DC-VA-MD-WV''. 
Montgomery County, along with Frederick County, Maryland, is in CBSA 
13644 ``Bethesda-Rockville-Frederick, MD''. The commenter states that 
the cost of living in Montgomery County is no lower than the cost of 
living in the counties which comprise CBSA 47894.
    Response: The geographic area delineations are based on labor 
market definitions established by OMB. We proposed and finalized the 
adoption of the revised labor market area definitions as discussed in 
the OMB Bulletin No. 03-04 (June 6, 2003) in our August 4, 2005 FY 2006 
Hospice Wage Index final rule (70 FR 45130). Any revisions to the labor 
market area definitions will reflect updates to the geographic area 
delineations established by OMB.
    Comment: One commenter requests that the new OMB delineations be 
considered when computing the FY 2015 wage index for hospices, just as 
they are for other provider types such as inpatient hospital, SNF and 
home health.
    Response: As in previous years, the hospice wage index will be 
based on the previous year's IPPS hospital pre-floor, pre-reclassified 
wage index. For FY 2015, the hospice wage index will use the FY 2014 
IPPS hospital pre-floor, pre-reclassified wage index subject to either 
a budget neutrality adjustment or application of the hospice floor. The 
FY 2014 IPPS hospital wage index did not utilize the new OMB 
delineations. Therefore, the FY 2015 hospice wage index will not 
incorporate them in this rule. The new OMB delineations will be 
incorporated into the FY 2015 IPPS hospital wage index. We expect to 
propose to adopt those changes to the hospice wage index in future 
rulemaking.
    Final action: We are implementing the hospice wage index as 
discussed in the proposed rule.
2. FY 2015 Hospice Wage Index With an Additional 15 Percent Reduced 
Budget Neutrality Adjustment Factor (BNAF)
    In the FY 2015 Hospice Wage Index proposed rule, we proposed to 
update the hospice wage index values for FY 2015 using the FY 2014 pre-
floor, pre-reclassified hospital wage index. As described in the August 
8, 1997 Hospice Wage Index final rule (62 FR 42860), the pre-floor and 
pre-reclassified hospital wage index is used as the raw wage index for 
the hospice benefit. These raw wage index values are then subject to 
either a budget neutrality adjustment or application of the hospice 
floor to compute the hospice wage index used to determine payments to 
hospices. Pre-floor, pre-reclassified hospital wage index values below 
0.8 are adjusted by either: (1) the hospice budget neutrality 
adjustment factor (BNAF); or (2) the hospice floor subject to a maximum 
wage index value of 0.8; whichever results in the greater value.
    The BNAF is calculated by computing estimated payments using the 
most recent, completed year of hospice claims data. The units (days or 
hours) from those claims are multiplied by the updated hospice payment 
rates to calculate estimated payments. For the FY 2015 Hospice Wage 
Index final rule, that means estimating payments for FY 2015 using 
units (days or hours) from FY 2013 hospice claims data, and applying 
the final FY 2015 hospice payment rates. The FY 2015 hospice wage index 
values are then applied to the labor portion of the payments. The 
procedure is repeated using the same units from the claims data and the 
same payment rates, but using the 1983 Bureau of Labor Statistics 
(BLS)-based wage index instead of the updated raw pre-floor, pre-
reclassified hospital wage index (note that both wage indices include 
their respective floor adjustments). The total payments are then 
compared, and the adjustment required to make total payments equal is 
computed; that adjustment factor is the BNAF.
    The August 6, 2009 FY 2010 Hospice Wage Index final rule finalized 
a provision to phase out the BNAF over 7 years, with a 10 percent 
reduction in the BNAF in FY 2010, and an additional 15 percent 
reduction in each of the next 6 years, with complete phase out in FY 
2016 (74 FR 39384). Once the BNAF is completely phased out, the hospice 
floor adjustment would simply consist of increasing any wage index 
value less than 0.8 by 15 percent, subject to a maximum wage index 
value of 0.8. Therefore, in accordance with the FY 2010 Hospice Wage 
final rule, the BNAF for FY 2015 will be reduced by an additional 15 
percent for a total BNAF reduction of 85 percent (10 percent from FY 
2010, an additional 15 percent from FY 2011, an additional 15 percent 
for FY 2012, an additional 15 percent for FY 2013, an additional 15 
percent in FY 2014, and an additional 15 percent in FY 2015).
    The unreduced BNAF for FY 2015 is 0.062084 (or 6.2084 percent). An 
85 percent reduction to the BNAF is computed to be 0.009313 (or 0.9313 
percent). For FY 2015, this is mathematically equivalent to taking 15 
percent of the unreduced BNAF value, or multiplying 0.062084 by 0.15, 
which equals 0.009313 (0.9313 percent). The BNAF of 0.9313 percent 
reflects an 85 percent reduction in the BNAF. The 85 percent reduced 
BNAF (0.9313 percent) was applied to the pre-floor, pre-reclassified 
hospital wage index values of 0.8 or greater. The 10 percent reduced 
BNAF for FY 2010 was 0.055598, based on a full BNAF of 0.061775; the 
additional 15 percent reduced BNAF FY 2011 (for a cumulative reduction 
of 25 percent) was 0.045422, based on a full BNAF of 0.060562; the 
additional 15 percent reduced BNAF for FY 2012 (for a cumulative 
reduction of 40 percent) was 0.035156, based on a full BNAF of 
0.058593; the additional 15 percent reduced BNAF for FY 2013 (for a 
cumulative reduction of 55 percent) was 0.027197, based on a full BNAF 
of 0.060438; the additional 15 percent reduced BNAF for FY 2014 (for a 
cumulative reduction of 70 percent) was 0.018461, based on a full BNAF 
of 0.061538 and the additional 15 percent reduced BNAF for FY 2015 (for 
a cumulative reduction of 85 percent) is

[[Page 50484]]

0.009313, based on a full BNAF of 0.062084.
    Hospital wage index values which are less than 0.8 are subject to 
the hospice floor calculation. For example, if in FY 2015, County A had 
a pre-floor, pre-reclassified hospital wage index (raw wage index) 
value of 0.3994, we would perform the following calculations using the 
budget-neutrality factor (which for this example is an unreduced BNAF 
of 0.062084, less 85 percent, or 0.009313) and the hospice floor to 
determine County A's hospice wage index: Pre-floor, pre-reclassified 
hospital wage index value below 0.8 multiplied by 1+ 85 percent reduced 
BNAF: (0.3994 x 1.009313 = 0.4031); Pre-floor, pre-reclassified 
hospital wage index value below 0.8 multiplied by 1 + hospice floor: 
(0.3994 x 1.15 = 0.4593). Based on these calculations, County A's 
hospice wage index would be 0.4593.
    An Addendum A and Addendum B with the final FY 2015 wage index 
values for rural and urban areas will not be published in the Federal 
Register. The final FY 2015 wage index values for rural areas and urban 
areas are available via the internet at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/Hospice/index.html. The hospice wage 
index for FY 2015 set forth in this final rule includes the BNAF 
reduction and would be effective October 1, 2014 through September 30, 
2015.
3. Hospice Payment Update Percentage
    Section 4441(a) of the Balanced Budget Act of 1997 (BBA) amended 
section 1814(i)(1)(C)(ii)(VI) 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 FYs since 2002 have been 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 must be the 
market basket percentage for that FY. The Act requires us to use the 
inpatient hospital market basket to determine the hospice payment rate 
update. In addition, section 3401(g) of the Affordable Care Act 
mandates that, starting with FY 2013 (and in subsequent FYs), the 
hospice payment update percentage will be annually reduced by changes 
in economy-wide productivity as specified in section 
1886(b)(3)(B)(xi)(II) of the Act. In addition, section 3401(g) of the 
Affordable Care Act also mandates that in FY 2013 through FY 2019, the 
hospice payment update percentage will be reduced by an additional 0.3 
percentage point (although for FY 2014 to FY 2019, the potential 0.3 
percentage point reduction is subject to suspension under conditions 
specified in section 1814(i)(1)(C)(v) of the Act). The final hospice 
payment update percentage for FY 2015 will be the inpatient hospital 
market basket update of 2.9 percent (based on IHS Global Insight, 
Inc.'s second quarter 2014 forecast with historical data through the 
first quarter of 2014), less any mandated adjustments. Due to the 
requirements at 1886(b)(3)(B)(xi)(II) and 1814(i)(1)(C)(v) of the Act, 
the inpatient hospital market basket update for FY 2015 of 2.9 percent 
must be reduced by a productivity adjustment as mandated by Affordable 
Care Act (currently estimated to be 0.5 percentage point for FY 2015). 
The inpatient hospital market basket for FY 2015 is reduced further by 
a 0.3 percentage point, as mandated by the Affordable Care Act. In 
effect, the final hospice payment update percentage for FY 2015 is 2.1 
percent. We used the most recent data available (for example, the most 
recent inpatient hospital market basket and productivity adjustment), 
to determine the FY 2015 market basket update and the multi-factor 
productivity MFP adjustment in this FY 2015 Hospice PPS final rule.
    Currently, the labor portion of the hospice payment rates is as 
follows: for Routine Home Care, 68.71 percent; for Continuous Home 
Care, 68.71 percent; for General Inpatient Care, 64.01 percent; and for 
Respite Care, 54.13 percent. The non-labor portion is equal to 100 
percent minus the labor portion for each level of care. Therefore, the 
non-labor portion of the payment rates is as follows: for Routine Home 
Care, 31.29 percent; for Continuous Home Care, 31.29 percent; for 
General Inpatient Care, 35.99 percent; and for Respite Care, 45.87 
percent.
    We received 3 comments regarding the proposed payment update.
    Comment: The commenters stated that the proposed update is 
misleading and inaccurate due to cuts through the BNAF phase-out and 
sequestration. Commenters claim that hospices are incurring 
significant, additional regulatory costs and are forced to take dollars 
for these costs out of patient care. Some examples of additional 
regulatory burdens cited by the commenters include: the costs of CR 
8358 ``Additional Data Reporting Requirements for Hospice Claims'', the 
Experience of Care Survey which will be required in 2015, the burden of 
Part D prior authorization or appeal, and the proposed new cost report 
requiring new financial reporting systems and additional staff.
    Response: The comments on sequestration are outside the scope of 
this rule. We note that the impact analysis does reflect estimated 
reductions in FY 2015 payments to hospice as a result of the 6th year 
of the 7-year BNAF phase-out.
    Final action: We are implementing the hospice payment update as 
discussed in the proposed rule and consistent with the updated data to 
the hospital market basket update and multi-factor productivity (MFP) 
adjustment.
4. FY 2015 Hospice Payment Rates
    Historically, the hospice rate update has been published through a 
separate administrative instruction issued annually in the summer to 
provide adequate time to implement system change requirements; however, 
beginning in FY 2014 and for subsequent fiscal years, we are using 
rulemaking as the means to update payment rates. This change was 
proposed in the FY 2014 Hospice Wage Index and Payment Rate Update 
proposed rule and finalized in the FY 2014 Hospice Wage Index and 
Payment Rate Update final rule (78 FR 48270). It is consistent with the 
rate update process in other Medicare benefits, and provides rate 
information to hospices as quickly as, or earlier than, when rates are 
published in an administrative instruction.
    There are four payment categories that are distinguished by the 
location and intensity of the services provided. The base payments are 
adjusted for geographic differences in wages by multiplying the labor 
share, which varies by category, of each base rate by the applicable 
hospice wage index. A hospice is paid the routine home care rate for 
each day the beneficiary is enrolled in hospice, unless the hospice 
provides continuous home care, inpatient respite care, or general 
inpatient care. Continuous home care is provided during a period of 
patient crisis to maintain the patient at home; inpatient respite care 
is short-term care to allow the usual caregiver to rest; and general 
inpatient care is to treat symptoms that cannot be managed in another 
setting.
    The final FY 2015 payment rates will be the FY 2014 payment rates, 
increased by 2.1 percent, which is the final hospice payment update 
percentage for FY 2015 as discussed in section III.G.3. The final FY 
2015 hospice payment rates will be effective for care and services 
furnished on or after October 1, 2014, through September 30, 2015 (see 
Table 6 below).

[[Page 50485]]



          Table 6--FY 2015 Hospice Payment Rates Updated by the Final Hospice Payment Update Percentage
----------------------------------------------------------------------------------------------------------------
                                                                               Increase by the
                                                                                FY 2015 final
              Code                      Description          FY 2014 payment   hospice payment    FY 2015 final
                                                                  rates         update of 2.1     payment rate
                                                                                   percent
----------------------------------------------------------------------------------------------------------------
651............................  Routine Home Care........           $156.06            x1.021           $159.34
652............................  Continuous Home Care.....            910.78            x1.021
                                 Full Rate applies to 24                                                  929.91
                                  hours of care.
                                 Hourly rate = $38.75.....
655............................  Inpatient Respite Care...            161.42            x1.021            164.81
656............................  General Inpatient Care...            694.19            x1.021            708.77
----------------------------------------------------------------------------------------------------------------

    The Congress required in sections 1814(i)(5)(A) through (C) of the 
Act that hospices begin submitting quality data, based on measures to 
be specified by the Secretary. In the FY 2012 Hospice Wage Index final 
rule (76 FR 47320 through 47324), we implemented a Hospice Quality 
Reporting Program (HQRP) as required by section 3004 of the Affordable 
Care Act. Hospices were required to begin collecting quality data in 
October 2012, and submit that quality data in 2013. Section 
1814(i)(5)(A)(i) of the Act requires that beginning with FY 2014 and 
each subsequent FY, the Secretary shall reduce the market basket update 
by 2 percentage points for any hospice that does not comply with the 
quality data submission requirements with respect to that FY.). We 
remind hospices that this applies to payments in FY 2015 (See Table 7 
below). For more information on the HQRP requirements please see 
section III.H in this final rule.

 Table 7--FY 2015 Hospice Payment Rates Updated by the Final Hospice Payment Update Percentage for Hospices That
                                     DO NOT Submit the Required Quality Data
----------------------------------------------------------------------------------------------------------------
                                                                               Increase by the
                                                                               FY 2015 hospice
                                                                               payment update
                                                             FY 2014 payment    percentage of     FY 2015 final
              Code                      Description               rates          2.1 percent      payment rate
                                                                                   minus 2
                                                                                 percentage
                                                                                points = 0.1
----------------------------------------------------------------------------------------------------------------
651............................  Routine Home care........           $156.06            x1.001           $156.22
652............................  Continuous Home Care.....
                                 Full Rate applies to 24              910.78            x1.001            911.69
                                  hours of care.
                                 Hourly rate = $37.99.....
655............................  Inpatient Respite Care...            161.42            x1.001            161.58
656............................  General Inpatient Care...            694.19            x1.001            694.88
----------------------------------------------------------------------------------------------------------------

    To assist the hospice industry in planning and budgeting, CMS is 
informing the hospice industry of the aggregate cap amount for the 2014 
cap year in advance of the formal CMS administrative notice, which will 
be issued this summer. Additionally, we have included information about 
how we calculate the aggregate cap amount so that hospices can compute 
the amount themselves in the future if they so desire. This information 
is also in CMS' Internet-Only Manual 100-2, chapter 9, section 90.2.6. 
The manual can be accessed from the ``Manuals and Transmittals'' 
section of CMS' hospice Web site at http://www.cms.gov/Center/Provider-Type/Hospice-Center.html.
    The hospice aggregate cap amount for the 2014 cap year will be 
$26,725.79. The cap amount is calculated according to Sec.  
1814(i)(2)(B) of the Act. The cap amount for a given year is $6,500 
multiplied by the change in the Consumer Price Index for All Urban 
Consumers (CPI-U) Medical Care expenditure category, from the fifth 
month of the 1984 accounting year (March 1984) to the fifth month of 
the current accounting year (in this case, March 2014). The CPI-U for 
Medical Care expenditures (BLS series code CUUR0000SAM) for 1984 to 
present is available from the Bureau of Labor Statistics (BLS) Web site 
at: http://www.bls.gov/cpi/home.htm.

(Step 1) From the BLS Web site given above, the March 2014 CPI-U for 
Medical Care expenditures is 433.369 and the 1984 CPI-U for Medical 
Care expenditures was 105.4.
(Step 2) Divide the March 2014 CPI-U for Medical Care expenditures by 
the 1984 CPI-U for medical care expenditures to compute the change.
    433.369/105.4 = 4.111660
(Step 3) Multiply the original cap base amount ($6,500) by the result 
from step 2) to get the updated aggregate cap amount for the 2014 cap 
year.
    $6,500 x 4.111660= $26,725.79

H. Updates to the Hospice Quality Reporting Program

1. Background and Statutory Authority
    Section 3004 of the Affordable Care Act amended the Act to 
authorize a quality reporting program for hospices. Section 
1814(i)(5)(A)(i) of the Act requires that beginning with FY 2014 and 
each subsequent FY, the Secretary shall reduce the market basket update 
by 2 percentage points for any hospice that does not comply with the 
quality data submission requirements with respect to that FY. Depending 
on the amount of the annual update for a particular year, a reduction 
of 2 percentage points could result in the annual market basket update 
being less than 0.0 percent for a FY and may result in payment rates 
that are less than payment rates for the preceding FY. Any reduction 
based on failure to comply with the reporting requirements, as required 
by section 1814(i)(5)(B) of the

[[Page 50486]]

Act, would apply only for the particular FY involved. Any such 
reduction would not be cumulative or be taken into account in computing 
the payment amount for subsequent FYs.
    Section 1814(i)(5)(C) of the Act requires that each hospice submit 
data to the Secretary on quality measures specified by the Secretary. 
The data must be submitted in a form, manner, and at a time specified 
by the Secretary. Any measures selected by the Secretary must have been 
endorsed by the consensus-based entity which holds a contract regarding 
performance measurement with the Secretary under section 1890(a) of the 
Act. This contract is currently held by the National Quality Forum 
(NQF). However, section 1814(i)(5)(D)(ii) of the Act provides that in 
the case of a specified area or medical topic determined appropriate by 
the Secretary for which a feasible and practical measure has not been 
endorsed by the consensus-based entity, the Secretary may specify 
measures that are not so endorsed as long as due consideration is given 
to measures that have been endorsed or adopted by a consensus-based 
organization identified by the Secretary.
    The successful development of a Hospice Quality Reporting Program 
(HQRP) that promotes the delivery of high quality healthcare services 
is our paramount concern. We seek to adopt measures for the HQRP that 
promote more efficient and safer care. Our measure selection activities 
for the HQRP take into consideration input we receive from the Measure 
Applications Partnership (MAP), convened by the National Quality Forum 
(NQF), as part of a pre-rulemaking process that we have established and 
are required to follow under section 1890A of the Act. The MAP is a 
public-private partnership comprised of multi-stakeholder groups 
convened by the NQF for the primary purpose of providing input to CMS 
on the selection of certain categories of quality and efficiency 
measures, as required by section 1890A(a)(3) of the Act. By February 
1st of each year, the NQF must provide that input to CMS. Input from 
the MAP is located at: (http://www.qualityforum.org/Setting_Priorities/Partnership/Measure_Applications_Partnership.aspx). For 
more details about the pre-rulemaking process, see the FY 2013 IPPS/
LTCH PPS final rule (77 FR 53376).
    We also take into account national priorities, such as those 
established by the National Priorities Partnership at (http://www.qualityforum.org/npp/), the HHS Strategic Plan http://www.hhs.gov/secretary/about/priorities/priorities.html), the National Strategy for 
Quality Improvement in Healthcare located at (http://www.ahrq.gov/workingforquality/nqs/nqs2013annlrpt.htm) and the CMS Quality Strategy 
at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityInitiativesGenInfo/CMS-Quality-Strategy.html.
    To the extent practicable, we have sought to adopt measures that 
have been endorsed by the national consensus organization, recommended 
by multi-stakeholder organizations, and developed with the input of 
providers, purchasers/payers, and other stakeholders.
2. Measures for Hospice Quality Reporting Program and Data Submission 
Requirements for Payment Years FY 2014 and FY 2015.
    As stated in the FY 2012 Hospice Wage Index final rule (76 FR 
47302, 47320), to meet the quality reporting requirements for hospices 
for the FY 2014 payment determination and in the CY 2013 Home Health 
Prospective Payment System (HH PPS) final rule (77 FR 67068, 67133), 
the quality reporting requirements for hospices for the FY 2015 payment 
determination, as set forth in section 1814(i)(5) of the Act, we 
finalized the requirement that hospices report two measures:
     An NQF-endorsed measure related to pain management, NQF 
#0209. The data for this measure are collected at the patient 
level, but are reported in the aggregate for all patients cared for 
within the reporting period, regardless of payer.
     A structural measure that is not endorsed by NQF: 
Participation in a Quality Assessment and Performance Improvement 
(QAPI) program that includes at least three quality indicators related 
to patient care.
3. Quality Measures for Hospice Quality Reporting Program and Data 
Submission Requirements for Payment Year FY 2016 and Beyond
    In the FY 2014 Hospice Wage Index and Payment Rate Update final 
rule (78 FR 48234, 48256), we finalized that the structural measure 
related to QAPI indicators and the NQF #0209 pain measure would 
not be required for the HQRP beyond data submission for the FY 2015 
payment determination. The data submission period for the FY2015 
payment determination closed on April 1, 2014.
    As stated in the CY 2013 HH PPS final rule (77 FR 67068, 67133), we 
considered an expansion of the required measures to include additional 
measures endorsed by NQF. We also stated that to support the 
standardized collection and calculation of quality measures by CMS, 
collection of the needed data elements would require a standardized 
data collection instrument. We developed and tested a hospice patient-
level item set, the Hospice Item Set (HIS) to be used by all hospices 
to collect and submit standardized data items about each patient 
admitted to hospice.
    In developing the standardized HIS, we considered comments offered 
in response to the CY 2013 HH PPS proposed rule (77 FR 41548, 41573). 
In the FY 2014 Hospice Wage Index final rule (78 FR 48257), and in 
compliance with section 1814(i)(5)(C) of the Act, we finalized the 
specific collection of data items that support the following six NQF 
endorsed measures and one modified measure for hospice:
     NQF #1617 Patients Treated with an Opioid who are 
Given a Bowel Regimen
     NQF #1634 Pain Screening
     NQF #1637 Pain Assessment
     NQF #1638 Dyspnea Treatment
     NQF #1639 Dyspnea Screening
     NQF #1641 Treatment Preferences
     NQF #1647 Beliefs/Values Addressed (if desired by 
the patient) (modified)
    To achieve a comprehensive set of hospice quality measures 
available for widespread use for quality improvement and informed 
decision making, and to carry out our commitment to develop a quality 
reporting program for hospices that uses standardized methods to 
collect data needed to calculate quality measures, we finalized the HIS 
effective July 2014 (78 FR 48257). To meet the quality reporting 
requirements for hospices for the FY 2016 payment determination and 
each subsequent year, we will require regular and ongoing electronic 
submission of the HIS data for each patient admission to hospice on or 
after July 1, 2014, regardless of payer or patient age (78 FR 48234, 
48258). Collecting data on all patients will provide CMS with the most 
robust, accurate reflection of the quality of care delivered to 
Medicare beneficiaries as compared with non-Medicare patients. 
Therefore, to measure the quality of care that is delivered to Medicare 
beneficiaries in the hospice setting, we will collect quality data 
necessary to calculate the adopted measures on all patients. We are 
requiring in our regulation that hospices collect data on all patients 
in hospice in order to ensure that all patients, regardless of payer, 
are receiving the same care and that provider metrics measure 
performance

[[Page 50487]]

across the spectrum of patients (78 FR 48258).
    Hospices are required to complete and submit an admission HIS and a 
discharge HIS for each patient admission. Hospices failing to report 
quality data via the HIS in 2014 will have their market basket update 
reduced by 2 percentage points in FY 2016. Although this has been 
implemented thus far pursuant to instructions set out in our preamble 
statements, we proposed to codify the HIS submission requirements at 
Sec.  418.312 in this final rule. The System of Record (SOR) Notice for 
the HIS, SOR number 09-07-0548, was published in the Federal Register 
on April 8, 2014 (79 FR 19341).
    Comment: Several commenters believed that hospices should not be 
subject to a reduction in the annual market basket update if they are 
unable to achieve 100 percent timely data submission during the FY 2015 
submission period.
    Response: We thank the commenters for their concern; however, we 
did not make any proposals regarding timely data submission. We also 
recognize that new hospices that receive their CCN after the yearly 
submission deadline are still required to submit the HIS for each 
patient, but those HIS submissions would fall after the submission 
deadline. If a hospice realizes that it will not meet the timeliness 
criteria for any given record, for whatever reason, it should still 
complete and submit that record. Late completion and submission of HIS 
records will result in a non-fatal warning error in the Quality 
Improvement and Evaluation System. However, the records can still be 
accepted by the system.
    Comment: Several commenters asserted that the Quality Reporting 
Program should be restricted to Medicare patients and stated that 
requiring data reporting on patients covered by other payers is outside 
CMS's regulatory authority.
    Response: We respectfully disagree with the commenters' assertions. 
We have proposed to codify the HIS submission requirements at Sec.  
418.312. Section 3004 of the ACA requires quality reporting, and CMS 
has required all facilities subject to quality reporting requirements 
to submit data on its entire patient population, including hospitals 
and inpatient rehabilitation facilities. The delivery of high quality 
care in hospice is imperative, regardless of payer. We believe that 
collecting quality data on all patients in the hospice setting supports 
CMS' mission to ensure quality care for Medicare beneficiaries and 
ensures that all patients, regardless of payer, are receiving the same 
care.
    Comment: Several commenters noted that the cost of the mandated 
quality program must be reflected in hospice reimbursement rates.
    Response: We thank the commenters for their concern; however, the 
cost of quality improvement programs should be reported on the cost 
reports. Cost report data may be considered in future payment reform.
    Comment: One commenter reported that more time is required to 
assure the quality of HIS information than the time it takes to collect 
it. While this situation may be the result of the newness of the tool 
and the learning curve required for implementation, the production of 
reliable and meaningful quality measures depends on the quality of the 
data collected.
    Response: We thank the commenters for taking the time to express 
their concerns regarding the HIS collection. Collection began on July 
1st, 2014 and we understand the commenter's perception that the newness 
of the process may make the process feel more burdensome. We appreciate 
the commenters' diligence ensuring quality and accuracy of the data 
submitted.
    Comment: A few commenters expressed disagreement with our estimate 
of the amount of regulatory burden on hospice agencies to carry out the 
HIS admission and discharge submissions.
    Response: We thank the commenters for taking the time to express 
these views and suggestions. CMS attempts to reduce the regulatory 
burden of our quality reporting programs to the greatest extent 
possible. As required by OMB, the burden to complete the HIS is 
included in the actual HIS (http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Hospice-Quality-Reporting/Downloads/HIS_Admission_Final_4-8-2014.pdf). Specifically, CMS 
estimates 19 minutes per response for the Admission HIS and 10 minutes 
per response for the Discharge HIS. Details regarding the estimate can 
be found at: http://www.cms.gov/Regulations-and-Guidance/Legislation/PaperworkReductionActof1995/PRA-Listing-Items/CMS1252151.html?DLPage=1&DLSort=1&DLSortDir=descending. Comments 
concerning the accuracy of the time estimate(s) or suggestions for 
improving the HIS can be directed to: CMS, 7500 Security Boulevard, 
Attn: PRA Reports Clearance Officer, Mail Stop C4-26-05, Baltimore, 
Maryland 21244-1850.
    Final action: After consideration of the comments, we are 
finalizing our proposal to codify the HIS submission requirements at 
Sec.  418.312 in this final rule as proposed without change.
    Hospice programs will be evaluated for purposes of the quality 
reporting program based on whether or not they submit data, not on 
their substantive performance level with respect to the required 
measures. We have provided hospices with information and details about 
use of the HIS through postings on the Hospice Quality Reporting 
Program Web page, Open Door Forums, announcements in the CMS MLN 
Connects Provider e-News (E-News), and provider training. Electronic 
data submission is required for HIS submission in CY 2014 and beyond; 
there are no other data submission methods available. CMS will make 
available submission software for the HIS to hospices at no cost. We 
intend to report to providers on the seven finalized measures on a 
schedule to be determined.
    We provided details on data collection and submission timing at 
http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Hospice-Quality-Reporting/Hospice-Item-Set-HIS.html.
    Submission of the HIS on all patient admissions to hospice, 
regardless of payer or patient age, is required. The data submission 
system provides reports upon successful submission and successful 
processing of the HIS records. The final validation report may serve as 
evidence of submission. This is the same data submission system used by 
nursing homes, inpatient rehabilitation facilities and long-term care 
hospitals for the submission of Minimum Data Set Version 3.0 (MDS 3.0), 
Inpatient Rehabilitation Facility--Patient Assessment Instrument (IRF-
PAI), and Long-Term Care Hospital Continuity Assessment Record & 
Evaluation Data Set (LTCH CARE), respectively.
    We also proposed that newly certified hospices that receive notice 
of their CMS certification number on or after November 1, 2014 for 
payments to be made in FY 2016 be excluded from the quality reporting 
requirements for the FY 2016 payment determination, as data submission 
and analysis would not be possible for a hospice receiving notification 
of their certification this late in the reporting time period.
    We proposed that in future years, hospices that receive 
notification of certification on or after November 1 of the preceding 
year involved would continue to be excluded from any payment penalty 
for quality reporting purposes for the following FY. We proposed to 
codify this requirement at Sec.  418.312.
    Comment: Several commenters support the proposal that hospices that

[[Page 50488]]

receive notification of certification on or after November 1 of the 
preceding year involved would continue to be excluded from any payment 
penalty for quality reporting purposes for the following FY and to 
codify this requirement at Sec.  418.312.
    Response: We thank commenters for taking the time to support our 
proposal.
    Final action: We are finalizing our proposal that hospices that 
receive notification of certification on or after November 1 of the 
preceding year involved would continue to be excluded from any payment 
penalty for quality reporting purposes for the following FY and to 
codify this requirement at Sec.  418.312.
    As is common in other quality reporting programs, we proposed to 
make accommodations in the case of natural disaster or other 
extenuating circumstances. Our experience with other quality reporting 
programs has shown that there are times when providers are unable to 
submit quality data due to extraordinary circumstances beyond their 
control (for example, natural or man-made disasters). A disaster may be 
widespread or impact multiple structures or be isolated and impact a 
single site only. We do not wish to penalize providers in these 
circumstances or to unduly increase their burden during these times. 
Therefore, we proposed a process, for the FY 2016 payment determination 
and subsequent payment determinations, for hospices to request and for 
CMS to grant extensions/exceptions with respect to the reporting of 
required quality data when there are extraordinary circumstances beyond 
the control of the provider. When an extension/exception is granted, a 
hospice will not incur payment reduction penalties for failure to 
comply with the requirements of the HQRP.
    Under the proposed process for the FY 2016 payment determination 
and subsequent payment determinations, a hospice may request an 
extension/exception of the requirement to submit quality data for a 
specified time period. We proposed a process that, in the event that a 
hospice requested an extension/exception for quality reporting purposes 
for the FY 2016 payment determination and subsequent payment 
determinations, the hospice would submit a written request to CMS. 
Requirements for requesting an extension/exception will be available on 
the Hospice Quality Reporting Web site at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Hospice-Quality-Reporting/index.html.
    This proposal does not preclude us from granting extensions/
exceptions to hospices that have not requested them when we determine 
that an extraordinary circumstance, such as an act of nature, affects 
an entire region or locale. We also proposed that we could grant an 
extension/exception to a hospice if we determine that a systemic 
problem with our data collection systems directly affected the ability 
of the hospice to submit data. If we make the determination to grant an 
extension/exception to hospices in a region or locale, we proposed to 
communicate this decision through routine communication channels to 
hospices and vendors, including, but not limited to, Open Door Forums, 
E-News and notices on https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Hospice-Quality-Reporting/.
    Public comments and our response to comments are summarized below. 
All comments received were supportive of the proposed extension/
exception policy.
    Comment: Several commenters supported the proposal to allow 
hospices to request and for CMS to grant extensions/exceptions with 
respect to the reporting of required quality data when there are 
extraordinary circumstances beyond the control of the provider.
    Response: We thank the commenters for taking the time to express 
their support for this proposal.
    Final action: After consideration of the public comments, we are 
finalizing our proposal without change to allow hospices to request and 
for CMS to grant extensions/exceptions with respect to the reporting of 
required quality data when there are extraordinary circumstances beyond 
the control of the provider.
4. Future Measure Development
    We did not propose any new measures for the HQRP in the FY 2015 
Hospice Wage Index and Payment Rate Update proposed rule. However, we 
believe future development of the HQRP should address existing measure 
gaps by focusing on two primary opportunities: to expand measures 
already in use in other quality reporting programs that could apply to 
the HQRP and to develop new measures if no suitable measures are ready 
for implementation or expansion. We are particularly interested in 
outcome measures for symptom management, particularly pain. We are also 
interested in measures of patient reported outcomes. In the proposed 
rule, we solicited comments and input on future measure development.
    Comment: Many comments were generally supportive of the Hospice 
Quality Reporting Program (HQRP), and quality measurement in general. 
Commenters indicated they were pleased that CMS was not proposing 
additional new measures for implementation at this time, and cautioned 
against implementing additional measures before the end of at least one 
full year of data collection using the current Hospice Item Set (HIS), 
allowing hospices time to focus on HIS implementation and the proposed 
CAHPS[supreg] Hospice Survey implementation. Commenters supported the 
addition of measures in the future, and agreed that pain outcome and 
patient reported measures are an important area of focus for measure 
development. Several commenters highlighted the need for additional 
measures to capture a more comprehensive picture of hospice quality of 
care.
    One commenter underscored the importance of developing and 
implementing quality measures that address the biopsychosocial model of 
distress, addressing depression, anxiety, personality and behavioral 
symptoms. In prioritizing future measure development areas, commenters 
recommended that CMS consider measure recommendations made by the NQF-
convened Measures Application Partnership and developments in other 
initiatives including the ``Measuring What Matters'' consensus project. 
In addition, commenters emphasized that measures should address matters 
that are important to patients and caregivers and meet the information 
needs of Medicare beneficiaries.
    Commenters specifically recommended measures that captured the 
following aspects of quality hospice care for patients with a variety 
of symptoms and diagnoses including: dementia; symptom management to 
comfortable or acceptable level; medication reconciliation; shared 
decision making and person and family-centered care; use of the 
interdisciplinary team; avoidance of unwanted CPR; avoidance of 
hospitalization and Emergency Department use; access and availability 
of hospice services, particularly time between initial referral and 
start of hospice care; appropriate staff training, degrees, or 
certifications; assessment of behavioral symptoms; assessment and 
management of caregiver burden; and assessment and management of 
caregiver and patient quality of life.

[[Page 50489]]

    Another commenter suggested that CMS, along with other 
stakeholders, develop outcome measures to address areas such as pain, 
dyspnea, bowel management, and/or caregiver satisfaction. A few 
commenters indicated concerns that quality measures based on symptoms 
(for example, measures related to pain, and dyspnea) only represent a 
subset of hospice patients (those with that particular symptom) and due 
to this smaller sample size may limit usefulness of the measures, 
particularly for public reporting.
    In addition, one commenter suggested that CMS reconsider the 
removal of the NQF #0209 measure from the HQRP, stating that it 
should be retained while CMS works with the measure steward to revise 
the measure to address the concerns CMS raised in last year's rule.
    Other commenters reiterated their support of CMS's decision to 
remove the NQF #0209 from the HQRP. Another commenter 
encouraged CMS to implement a patient assessment instrument in the 
future to collect quality measure data at defined time points.
    Finally, one commenter indicated that quality of care should be 
measured across settings.
    Response: CMS appreciates commenters' input and recommendations for 
future measure development areas for the HQRP. We plan to continue 
developing the HQRP to respond to the measure gaps identified by the 
Measures Application Partnership and others, and align measure 
development with the National Quality Strategy and the CMS Quality 
Strategy. We will take these comments into consideration in developing 
and implementing measures for future inclusion in the HQRP.
    We are also interested in understanding the current state of 
electronic health record (EHR) adoption and usage and Health 
Information Exchange (HIE) in the hospice community. Therefore, we 
solicited feedback and input from providers on topics such as decision 
support, whether hospices have adopted an EHR, if so, what functional 
aspects of the EHR do hospices find most important (for example, the 
ability to send or receive transfer of care information, ability to 
support medication orders/medication reconciliation); does the EHR used 
in the hospice setting support interoperable document exchange with 
other healthcare providers (for example, acute care hospitals, 
physician practices, and skilled nursing facilities)? In addition to 
seeking public input on the feasibility and desirability of electronic 
health record adoption and use of HIE in hospices, we solicited 
comments on the need to develop and the benefits and limitations of 
implementing electronic clinical quality measures for hospice 
providers.
    The Department of Health and Human Services (HHS) believes all 
patients, their families, and their healthcare providers should have 
consistent and timely access to their health information in a 
standardized format that can be securely exchanged between the patient, 
providers, and others involved in the patient's care. (HHS August 2013 
Statement, Principles and Strategies for Accelerating Health 
Information Exchange.) HHS is committed to accelerating health 
information exchange (HIE) through the use of electronic health records 
(EHRs) and other types of health information technology (HIT) across 
the broader care continuum through a number of initiatives including: 
(1) alignment of incentives and payment adjustments to encourage 
provider adoption and optimization of HIT and HIE services through 
Medicare and Medicaid payment policies; (2) adoption of common 
standards and certification requirements for interoperable HIT; (3) 
support for privacy and security of patient information across all HIE-
focused initiatives; and (4) governance of health information networks. 
These initiatives are designed to encourage HIE among all health care 
providers, including professionals and hospitals eligible for the 
Medicare and Medicaid EHR Incentive Programs and those who are not 
eligible for the EHR Incentive Programs, and are designed to improve 
care delivery and coordination across the entire care continuum. To 
increase flexibility in the Office of the National Coordinator for 
Health Information Technology's (ONC) HIT Certification Program and 
expand HIT certification, ONC has issued a proposed rule concerning a 
voluntary 2015 Edition EHR certification criteria which would more 
easily accommodate certification of HIT used in other types of health 
care settings where individual or institutional health care providers 
are not typically eligible for incentive payments under the Medicare 
and Medicaid EHR Incentive Programs, such as long-term and post-acute 
care and behavioral health settings.
    We believe that HIE and the use of certified EHRs by Hospice (and 
other types of providers that are ineligible for the Medicare and 
Medicaid EHR Incentive Programs) can effectively and efficiently help 
providers improve internal care delivery practices, support management 
of patient care across the continuum, and enable the reporting of 
electronically specified clinical quality measures (eCQMs). More 
information on the identification of EHR certification criteria and 
development of standards applicable to Hospice can be found at:
    http://healthit.gov/policy-researchers-implementers/standards-and-certification-regulations
    http://www.healthit.gov/facas/FACAS/health-it-policy-committee/hitpc-workgroups/certificationadoption
    http://wiki.siframework.org/LCC+LTPAC+Care+Transition+SWG
    http://wiki.siframework.org/Longitudinal+Coordination+of+Care
    Summaries of the public comments and our responses to comments on 
the current state of electronic health record (EHR) adoption and usage 
and Health Information Exchange (HIE) in the hospice community are 
provided below:
    Comment: Commenters expressed support of the adoption and use of 
EHRs in the hospice setting, noting that it may lead to more consistent 
care and better symptom management.
    Response: We thank the commenters for their support.
    Comment Summary: CMS received several comments in response to its 
solicitation for input related to Electronic Health Record (EHR) 
adoption and usage and Health Information Exchange (HIE) in the hospice 
community. Most commenters noted that EHRs are important to aid in 
quality outcomes, and in general supported the use of certified EHRs if 
given sufficient time and resources for implementation. A commenter 
expressed that EHR adoption exists among hospices, however they lack 
standardization. Some commenters conveyed the importance of EHR and HIE 
adoption and use for patient coordination, and that information 
exchange should be required and available across providers; noting that 
it may lead to more consistent care and better symptom management. A 
commenter noted continued use of fax and mail services for the delivery 
of patient information. Several commenters supported EHR use, but 
suggested that there are current limitations related to the lack of 
decision support software and adequate health information exchange 
amongst the providers. In addition, they expressed concerns related to 
barriers to EHR and HIE adoption, as well as electronic quality 
measures. Commenters suggested that specific barriers and limitations 
pertained to funding, feasibility, and adequate interoperability. 
Commenters suggested that a major barrier to the adoption of EHR 
technology in the hospice setting is

[[Page 50490]]

that hospice EHRs are not always interoperable with the technology used 
by hospitals and/or physicians. The commenters recommended that 
government officials review and adjust regulations that inhibit the 
exchange of electronic health information and that CMS mandate the 
development and use of uniform standards to govern the Health 
Information Exchange. All commenters suggested that funding incentives/
levers could enable adoption of EHR technology. Some commenters 
recommended that CMS consider the establishment of financial 
incentives, (for example, funding tied to quality improvement/cost 
savings for hospices to implement EHR technology), noting that small 
and/or rural hospices have lower financial margins and lack of capital 
to implement EHR technology. One commenter suggested low-interest loans 
programs to aid in the funding of EHR technology. Additional commenters 
expressed that all EHR/HIE systems should include adequate education 
and system testing to ensure data integrity and the protection of 
confidential information, and that CMS should facilitate health 
information technology that includes tele-health technology. One 
commenter stated that CMS should not develop electronic clinical 
quality measures for the hospice setting until a framework is developed 
that includes the certification of electronic medical records for post-
acute care providers and the financial assistance to support system 
implementation.
    Response: We thank the commenters for their support of EHR and HIE 
utilization and for their recommendations. We are encouraged to learn 
about hospice adoption of EHRs and their efforts related to 
interoperability. We believe that the recommendations provided (for 
example, testing, education, use of uniform standards, exchange of 
appropriate information across providers), as well as the concerns that 
were conveyed related to barriers in EHR and HIE adoption (for example, 
adequate information exchange and interoperability, feasibility, 
testing and financial barriers), are important considerations related 
to EHR adoption and HIE usage in the hospice setting.
5. Public Availability of Data Submitted
    Under section 1814(i)(5)(E) of the Act, the Secretary is required 
to establish procedures for making any quality data submitted by 
hospices available to the public. Measures reported publicly will not 
display patient identifiable information. The procedures ensure that a 
hospice would have the opportunity to review the data regarding the 
hospice's respective program before it is made public. In addition, 
under section 1814(i)(5)(E) of the Act, the Secretary is authorized to 
report quality measures that relate to services furnished by a hospice 
on the CMS Web site. We recognize that public reporting of quality data 
is a vital component of a robust quality reporting program and are 
fully committed to developing the necessary systems for public 
reporting of hospice quality data. We also recognize that it is 
essential that the data made available to the public be meaningful and 
that comparing performance between hospices requires that measures be 
constructed from data collected in a standardized and uniform manner. 
The development and implementation of a standardized data set for 
hospices must precede public reporting of hospice quality measures. 
Once hospices have implemented the standardized data collection 
approach, we will have the data needed to establish the scientific 
soundness of the quality measures that can be calculated using the 
standardized data collection. It is critical to establish the 
reliability and validity of the measures prior to public reporting in 
order to demonstrate the ability of the measures to distinguish between 
the quality of services provided. To establish reliability and validity 
of the quality measures, at least four quarters of data will need to be 
analyzed. Typically the first two quarters of data reflect the learning 
curve of the providers as they adopt a standardized data collection; 
these data are not used to establish reliability and validity. This 
means that, since we will begin data collection in CY 2014 (Q3), the 
data from CY 2014 (Q3, Q4) will not be used for assessing validity and 
reliability of the quality measures. Data collected by hospices during 
Q1-3 CY 2015 will be analyzed starting in CY 2015. Decisions about 
whether to report some or all of the quality measures publicly will be 
based on the findings of analysis of the CY 2015 data. In addition, the 
Affordable Care Act requires that reporting be made public on a CMS Web 
site and that providers have an opportunity to review their data prior 
to public reporting. CMS will develop the infrastructure for public 
reporting, and provide hospices an opportunity to review their data. In 
light of all the steps required prior to data being publicly reported, 
public reporting will not be implemented in FY 2016. Public reporting 
may occur during FY 2017, allowing ample time for data analysis, review 
of measures' appropriateness for use for public reporting, and allowing 
hospices the required time to review their own data prior to public 
reporting. We will announce the timeline for public reporting of data 
in future rulemaking. We solicited comments on what we should consider 
when developing future proposals related to public reporting.
    Summaries of the public comments and our responses to comments are 
provided below:
    Comment: One commenter suggested that CMS delay public reporting 
until a full year of the HIS submission so that data can better reflect 
the totality of hospice, and another stated that reporting in 2017 may 
be too soon. They believe that the HIS needs to be more fully developed 
to include additional outcome measures in order to provide a more 
complete picture of the care provided by hospices. The data from the 
CAHPS[supreg] Hospice Survey should be included in public reporting.
    Response: We recognize the importance of providing patients and 
families/caregivers and other stakeholders accurate, scientifically 
sound, usable, and relevant information to support their decision-
making regarding hospice care.
    Comment: Several commenters recommended that CMS continue to ask 
for stakeholder input concerning the reliability and validity of the 
measures and maintain frequent communication with the hospice provider 
community prior to public reporting.
    Response: We thank the commenters for this recommendation. CMS 
encourages stakeholder involvement throughout the measure development 
process. CMS considers input from the NQF Measure Applications 
Partnership (MAP) as part of the measure selection and maintenance 
process. The MAP is composed of multi-stakeholder groups convened by 
NQF for the primary purpose of providing input to CMS on the selection 
of certain categories of quality and efficiency measures, as required 
by section 1890(a)(3) of the Act. The MAP was created to provide input 
to the Department of Health and Human Services (HHS) on the selection 
of performance measures for public reporting and performance-based 
payment programs, and will continue to provide input to CMS as the HQRP 
moves toward public reporting. Additional information about the MAP can 
be found at: http://www.qualityforum.org/Setting_Priorities/Partnership/Measure_Applications_Partnership.aspx
    Comment: One commenter supported public reporting of hospice 
quality data, but strongly believes that public reporting must be 
preceded by valid

[[Page 50491]]

benchmarking to ensure data are collected in a standardized way to be 
more meaningful to the public.
    Response: We thank the commenter for this suggestion and will 
consider these comments as we begin planning for public reporting.
6. Adoption of the CAHPS[supreg] Hospice Survey for the FY 2017 Payment 
Determination
    In the FY 2014 Hospice Wage Index and Payment Rate Update final 
rule (78 FR 48234), we stated that CMS would start national 
implementation of the CAHPS[supreg] Hospice Survey as of January 1, 
2015. (Previously, known as the Hospice Experience of Care Survey, 
HECS) We are maintaining our existing policy and are moving forward 
with national implementation of this survey. The CAHPS[supreg] Hospice 
Survey is a component of CMS' quality reporting program that emphasizes 
the experiences of hospice patients and their primary caregivers listed 
in the hospice patients' records. Measures from the survey will be 
submitted to the National Quality Forum (NQF) for approval as hospice 
quality measures. We refer readers to our extensive discussion of the 
Hospice Experience of Care Survey in the Hospice Wage Index FY 2014 
final rule for a description of the measurements involved and their 
relationship to the statutory requirement for hospice quality reporting 
(78 FR 48261-48266).
a. Background and Description of the Survey
    Before the development of the CAHPS[supreg] Hospice Survey, there 
was no official national standard hospice experience of care survey 
that included standard survey administration protocols. The 
CAHPS[supreg] Hospice Survey includes detailed survey administration 
protocols which will allow for fair comparisons across hospices.
    CMS developed the CAHPS[supreg] Hospice Survey with input from many 
stakeholders, including other government agencies, industry 
stakeholders, consumer groups and other key individuals and 
organizations involved in hospice care. The Survey was designed to 
measure and assess the experiences of patients who died while receiving 
hospice care as well as the experiences of their informal caregivers. 
The goals of the survey are to--
     Produce comparable data on patients' and caregivers' 
perspectives of care that allow objective and meaningful comparisons 
between hospices on domains that are important to consumers;
     Create incentives for hospices to improve their quality of 
care through public reporting of survey results; and
     Hold hospice care providers accountable by informing the 
public about the providers' quality of care.
    The development process for the survey began in 2012 and included a 
public request for information about publically available measures and 
important topics to measure (78 FR 5458); a review of the existing 
literature on tools that measure experiences with end-of-life care; 
exploratory interviews with caregivers of hospice patients; a technical 
expert panel attended by survey development and hospice care quality 
experts; cognitive interviews to test draft survey content; 
incorporation of public responses to Federal Register notices (78 FR 
48234) and a field test conducted by CMS in November and December 2013.
    The CAHPS[supreg] Hospice Survey treats the dying patient and his 
or her informal caregivers (family members or friends) as the unit of 
care. The Survey seeks information from the informal caregivers of 
patients who died while enrolled in hospices. Caregivers will be 
identified using hospice records. Fielding timelines give the 
respondent some recovery time (2 to 3 months), while simultaneously not 
delaying so long that the respondent is likely to forget details of the 
hospice experience. The survey focuses on topics that are important to 
hospice users and for which informal caregivers are the best source for 
gathering this information. Caregivers will be presented with a set of 
standardized questions about their own experiences and the experiences 
of the patient in hospice care. During national implementation of this 
survey, hospices are required to conduct the survey to meet the hospice 
quality reporting requirements, but individual caregivers will respond 
only if they voluntarily choose to do so. We have launched a Web site 
as part of national implementation which is intended as the primary 
information resource for hospices and vendors 
(www.hospicecahpssurvey.org). The CAHPS[supreg] Hospice Survey will 
initially be available in English and Spanish. CMS will provide 
additional translations of the survey over time in response to 
suggestions for any additional language translations. Requests for 
additional language translations should be made to the CMS Hospice 
CAHPS[supreg] Project Team at [email protected].
    In general, hospice patients and their caregivers are eligible for 
inclusion in the survey sample with the exception of the following 
ineligible groups: primary caregivers of patients under the age of 18 
at the time of death; primary caregivers of patients who died within 48 
hours of admission to hospice care; patients for whom no caregiver is 
listed or available, or for whom caregiver contact information is not 
known; patients whose primary caregiver is a legal guardian unlikely to 
be familiar with care experiences; patients for whom the primary 
caregiver has a foreign (Non-US or US Territory address) home address; 
patients or caregivers of patients who request that they not be 
contacted (those who sign ``no publicity'' requests while under the 
care of hospice or otherwise directly request not to be contacted) . 
Identification of patients and caregivers for exclusion will be based 
on hospice administrative data.
    Hospices with fewer than 50 survey-eligible decedents/caregivers 
during the prior calendar year are exempt from the CAHPS[supreg] 
Hospice Survey data collection and reporting requirements for payment 
determination. Hospices with 50 to 699 survey-eligible decedents/
caregivers in the prior year will be required to survey all cases. For 
hospices with 700 or more survey-eligible decedents/caregivers in the 
prior year, a sample of 700 will be drawn under an equal-probability 
design.
    Survey-eligible decedents/caregivers are defined as that group of 
decedent and caregiver pairs that meet all the criteria for inclusion 
in the survey sample.
    For national implementation, we have assumed an eligibility rate of 
85 percent and a response rate of 50 percent based on experience in the 
2013 field test of the CAHPS[supreg] Hospice Survey instrument. These 
rates will result in an estimated 300 completed questionnaires for each 
hospice with 700 or more survey-eligible decedents/caregivers in the 
calendar year and between 21 and 300 completed questionnaires for 
hospices with between 50 and 699 survey-eligible decedents/caregivers 
during the calendar year. Assuming a total of 300 completes within each 
hospice and an intraclass correlation coefficient (ICC) of 0.01, which 
measures the amount of variability between hospices, we would achieve 
an interunit reliability of 0.75. Note that in Medicare CAHPS[supreg] a 
reliability of 0.75 is regarded as a minimal acceptable standard.
    We will move forward with a model of national survey implementation 
which is similar to that of other CMS patient experience of care 
surveys. Medicare-certified hospices will contract with a third-party 
vendor that is CMS-trained and approved to

[[Page 50492]]

administer the survey on their behalf. Hospices are required to 
contract with independent survey vendors to ensure that the data are 
unbiased and collected by an organization that is trained to collect 
this type of data. It is important that survey respondents feel 
comfortable sharing their experiences with an interviewer not directly 
involved in providing the care. We have successfully used this mode of 
data collection in other settings, including for Medicare-certified 
home health agencies. The goal is to ensure that we have comparable 
data across all hospices.
    Hospices will be required to provide their vendor with the sampling 
frame on a monthly basis. Participation requirements for the survey 
begin January 1, 2015 for the FY 2017 Annual Payment Update. For 
hospices, this means they will have to start conducting the survey as 
of January 1, 2015 and will incur the costs of hiring a survey vendor. 
The survey vendor would be the business associate of the hospice.
    A list of approved vendors will be provided on http://www.hospicecahpssurvey.org closer to the launch of national 
implementation. Beginning summer 2014, interested vendors may apply to 
become approved CAHPS[supreg] Hospice Survey vendors. The application 
process will be online at http://www.hospicecahpssurvey.org. Vendors 
conducting the survey are required to offer a toll free assistance line 
which respondents can call for help. This help could include reading 
the survey to a respondent. The toll free line must have staff that can 
respond to questions in any language in which the vendor is offering 
the survey. Vendors must accommodate alternate telephone 
communications, including TTY.
    In the FY 2015 Hospice Wage Index proposed rule we proposed to 
codify the requirements for being an approved CAHPS[supreg] Hospice 
Survey vendor for the FY 2017 APU.
    Consistent with many other CMS CAHPS[supreg] surveys that are 
publicly reported on CMS Web sites, CMS will publicly report hospice 
data when at least 12 months of data are available, so that valid 
comparisons can be made across hospice providers in the United States, 
to help patients, family and friends choose a hospice program for 
themselves or their loved ones.
b. Participation Requirements To Meet Quality Reporting Requirements 
for the FY 2017 APU
    In section 3004 of the Affordable Care Act, the Secretary is 
directed to establish quality reporting requirements for Hospice 
Programs. The CAHPS[supreg] Hospice Survey is a component of the CMS 
Quality Reporting Requirements for the FY 2017 APU and subsequent 
years.
    The CAHPS[supreg] Hospice Survey is the only nationally implemented 
survey of civilian patient and caregiver experiences with hospice that 
includes both a standard questionnaire and standard survey 
administration protocols. Such standardization is needed in order to 
establish that the resulting survey data is comparable across hospices 
and is suitable for public reporting.
    The CAHPS[supreg] Hospice Survey includes the measures detailed in 
Table 8. The measures map directly to the CAHPS[supreg] Hospice Survey. 
The individual survey questions that comprise each measure are listed 
under the measure. These measures are in the process of being submitted 
to the National Quality Forum (NQF).

  Table 8--Hospice Experience of Care Survey Quality Measures and Their
                                  Items
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
Hospice Team Communication
    How often did the hospice team listen carefully to you when you
     talked with them about problems with your family member's hospice
     care?
    While your family member was in hospice care, how often did the
     hospice team listen carefully to you?
    While your family member was in hospice care, how often did the
     hospice team explain things in a way that was easy to understand?
    While your family member was in hospice care, how often did the
     hospice team keep you informed about your family's condition?
    While your family member was in hospice care, how often did the
     hospice team keep you informed about when they would arrive to care
     for your family member?
Getting Timely Care
    While your family member was in hospice care, when you or your
     family member asked for help from the hospice team, how often did
     you get help as soon as you needed it?
    How often did you get the help you needed from the hospice team
     during evenings, weekends, or holidays?
Treating Family Member with Respect
    While your family member was in hospice care, how often did the
     hospice team treat your family member with dignity and respect?
    While your family member was in hospice care, how often did you feel
     that the hospice team really cared about your family member?
Providing Emotional Support
    In the weeks after your family member died, how much emotional
     support did you get from the hospice team?
    While your family member was in hospice care, how much emotional
     support did you get from the hospice team?
Getting Help for Symptoms
    How often did your family member receive the help he or she needed
     from the hospice team for feelings of anxiety or sadness?
    Did your family member get as much help with pain as he or she
     needed?
    How often did your family member get the help he or she needed for
     constipation?
    How often did your family member get the help he or she needed for
     trouble breathing?
Information Continuity
    While your family member was in hospice care, how often did anyone
     from the hospice team give you confusing or contradictory
     information about your family member's condition or care?
Understanding the Side Effects of Pain Medication
    Side effects of pain medicine include things like sleepiness. Did
     any member of the hospice team discuss side effects of pain
     medicine with you or your family member?
Getting Hospice Care Training (Home Setting of Care Only)
    Did the hospice team give you enough training about what to do if
     your family member became restless or agitated?
    Did the hospice team give you enough training about if and when to
     give more pain medicine to your family member?
    Did the hospice team give you enough training about how to help your
     family member if he or she had trouble breathing?
    Did the hospice team give you enough training about what side
     effects to watch for from pain medicine?
------------------------------------------------------------------------


[[Page 50493]]

    To comply with CMS's quality reporting requirements, hospices will 
be required to collect data using the Consumer Assessment of Healthcare 
Providers and Systems (CAHPS[supreg]) Hospice Survey. Hospices would be 
able to comply by utilizing only CMS-approved third party vendors that 
are in compliance with the provisions at Sec.  418.312(e).
    In the FY 2014 Hospice Wage Index and Rate Update final rule (78 FR 
48234), we stated that national implementation of the CAHPS[supreg] 
Hospice Survey will begin with a ``dry run'' in the first quarter of CY 
2015. Hospices are required to contract with an approved survey vendor 
to conduct a dry run of the survey for at least one month during 
January 2015, February 2015, or March 2015. During this period the 
survey vendor will follow all the national implementation procedures, 
but the data will not be publicly reported. The dry run will provide 
hospices and their vendors with the opportunity to work together under 
test circumstances.
    Beginning April 1, 2015, all hospices are required to participate 
in the survey on an ongoing monthly basis. This means hospices need to 
contract with a survey vendor to conduct the survey monthly on their 
behalf. Participation for at least 1 month during the dry run, plus 
monthly participation for the 9 months between April 2015 and December 
2015 (inclusive) is required to meet the pay for reporting requirement 
of the Hospice Quality Reporting Program (HQRP) for the FY 2017 APU.
    Approved CAHPS[supreg] Hospice Survey vendors will submit data on 
the hospice's behalf to the CAHPS[supreg] Hospice Survey Data Center. 
The deadlines for data submission occur quarterly and are shown in 
Table 9 below. Deadlines are final; no late submissions will be 
accepted. However in the event of extraordinary circumstances beyond 
the control of the provider, the provider will be able to request an 
exemption as previously noted in the Quality Measures for Hospice 
Quality Reporting Program and Data Submission Requirements for Payment 
Year FY 2016 and Beyond section. Hospice providers are responsible for 
making sure that their vendors are submitting data in a timely manner.

   Table 9--Data Submission Dates 2015-2016 for CAHPS[supreg] Hospice
                                 Survey
------------------------------------------------------------------------
                                              Quarterly data submission
               Sample months                          deadlines
------------------------------------------------------------------------
Dry Run (January-March 2015)..............  August 12, 2015
Monthly data collection April-June 2015     November 1, 2015
 (Q2).
Monthly data collection July-September      February 10, 2016
 2015 (Q3).
Monthly data collection October-December    May 11, 2016
 2015 (Q4).
------------------------------------------------------------------------

    In the FY 2014 Hospice Wage Index and Rate Update final rule, we 
stated that we would exempt very small hospices from CAHPS[supreg] 
Hospice Survey requirements. Hospices that have fewer than 50 survey-
eligible decedents/caregivers in the period from January 1, 2014 
through December 31, 2014 are exempt from CAHPS[supreg] Hospice Survey 
data collection and reporting requirements for the 2017 APU. To qualify 
for the survey exemption for FY 2017, hospices must submit an exemption 
request form. This form will be available on the CAHPS[supreg] Hospice 
Survey Web site http://www.hospicecahpssurvey.org. Hospices are 
required to submit to CMS their total unique patient count for the 
period of January 1, 2014 through December 31, 2014. The due date for 
submitting the exemption request form for the FY 2017 APU is August 12, 
2015.
c. Participation Requirements To Meet Quality Reporting Requirements 
for the FY 2018 APU
    To meet participation requirements for the FY 2018 APU, we proposed 
that hospices collect data on an ongoing monthly basis from January 
2016 through December 2016 (inclusive). Data submission deadlines for 
the 2018 APU will be announced in future rulemaking.
    Hospices that have fewer than 50 survey-eligible decedents/
caregivers in the period from January 1, 2015 through December 31, 2015 
are exempt from CAHPS[supreg] Hospice Survey data collection and 
reporting requirements for the FY 2018 payment determination. To 
qualify, hospices must submit an exemption request form. This form will 
be available in first quarter 2016 on the CAHPS[supreg] Hospice Survey 
Web site http://www.hospicecahpssurvey.org.
    Hospices are required to submit to CMS their total unique patient 
count for the period of January 1, 2015 through December 31, 2015. The 
due date for submitting the exemption request form for the FY 2018 APU 
is August 10, 2016.
    Summaries of the public comments and our responses to comments are 
summarized below:
    Comment: For the CAHPS[supreg] Hospice Survey we received multiple 
comments concerning CMS' proposed exclusion of respondents who were 
family caregivers of patients who died within 48 hours or less of their 
admission to hospice care. Commenters were concerned that we were 
excluding this group's experience.
    Response: We appreciate these comments because they show a concern 
for evaluating the hospice care experience for all patients, regardless 
of the time spent in hospice care. CMS used the 48 hours or less 
exclusion because of the history of the Family Evaluation of Care 
Survey (FEHC) which has been in use in the industry for several years. 
The FEHC also recommended exclusion of patients with less than two days 
of hospice care. We set similar timeframe exclusions for other 
CAHPS[supreg] surveys such as the Medicare CAHPS[supreg] Health Plans 
Survey, where respondents need to be in the plans for at least six 
months, and the ICH CAHPS[supreg] survey where the respondents need to 
have at least three months of dialysis experience at the facility 
before they are eligible. If caregiver respondents do not have enough 
experience with the hospice, they will not be able to easily or 
reliably answer the questions on the current survey. Our technical 
expert panel also stated that shorter-stay patients would have 
difficulty answering the current questions on the survey and 
recommended developing a shorter questionnaire for shorter-stay 
respondents. In national implementation, we will move forward with the 
48-hour or less exclusion, but we will closely track the number of 
patients being excluded. We will consider developing and implementing 
an abbreviated CAHPS[supreg] Hospice Survey, depending upon the number 
of people affected.
    Comment: One commenter stated that it is important that the 
CAHPS[supreg] Hospice Survey document the length of stay, and

[[Page 50494]]

its relationship to the profit/non-profit status of the hospice, in 
order to provide an accurate picture of the caregiver's perception of 
the quality of care the hospice provided and to publicly report the 
data by length of stay.
    Response: We have not determined how the survey results will be 
publicly reported for hospices. However, we are aware that both length 
of stay and for-profit/non-profit status may have an impact on patient/
caregiver experiences. We would not control for for-profit or non-
profit status when we publicly report the data since that is under the 
control of the facility. If length of stay is a function of for-profit 
or non-profit status, it also should not be controlled for. During 
national implementation we will document the length of stay for sampled 
patients as part of the administrative data we obtain for all sampled 
patients. CMS will conduct analyses of the impact of length of stay and 
profit/non-profit status on the survey results to see if any 
adjustments are needed for length of stay.
    Comment: A small number of commenters said there should be no 
participation exemptions for hospices reporting fewer than 50 deaths 
per year.
    Response: We proposed to exempt hospices with fewer than 50 survey-
eligible decedents/caregivers annually because very small hospices will 
not have a sufficient number of survey responses to produce reliable 
measures. Survey data collected for very small samples tends to be 
unstable and can be influenced by relatively small changes in 
responses. This could result in the smallest hospices experiencing 
substantial variations in scores each year, not due to changes in care, 
but because only a small number of caregivers are answering the 
questions.
    Comment: One commenter said that the CAHPS[supreg] Hospice Survey 
should include a method for finding the respondent who is the most 
knowledgeable about the patient experience and noted that this person 
may not be the patient's closest relative.
    Response: The family caregiver listed in hospice administrative 
records is the individual who will be contacted to respond to the 
CAHPS[supreg] Hospice Survey. We agree this person may or may not be 
the most knowledgeable about the patient's care. However, for sampling 
purposes we must be able to objectively and clearly define our target 
population and we must have contact information to reach them by mail 
or telephone.
    Comment: One commenter stated that very few hospices experience 
fewer than 50 deaths a year. Conversely, 700 deaths are not necessarily 
indicative of a large hospice requiring only a sample survey. The 
commenter also stated that CMS may wish to analyze the sampling ranges 
in the year following initial implementation to determine if these 
ranges are appropriate, particularly for sampling.
    Response: We are excluding hospices with fewer than 50 survey-
eligible decedents/caregivers annually because small samples will not 
produce reliable results. The choice of 700 survey-eligible decedents/
caregivers annually is not intended to define a large hospice, but only 
to allow hospices with this many deaths (or more) to conduct a sample 
rather than require them to survey a census of all eligible caregivers. 
CMS will continuously monitor survey responses and vendor activities. 
We will revisit these ranges if we find evidence that we need to do so.
    Comment: One commenter stated that the CAHPS[supreg] Hospice Survey 
is too long and is not written in health literacy terms.
    Response: The CAHPS[supreg] Hospice Survey includes 47 items, not 
all of which apply to all respondents. This does make the survey 
slightly longer than the Hospital CAHPS[supreg] Survey (32 items) and 
the Home Health CAHPS[supreg] Survey (34 items). However, the hospice 
survey had to ask demographic questions for both the patient and the 
family caregiver, which partially accounts for its longer length. In 
addition, some items are only for patients in particular settings (for 
example, home care). The CAHPS[supreg] Hospice Survey was cognitively 
tested to learn how well respondents understood the items. The 
questionnaire was revised based upon the results of the cognitive 
testing. The text of the current instrument and the final reports on 
the testing of the instrument can be found at: http://www.hospicecahpssurvey.org.
    Comment: One commenter was concerned that the survey is missing 
specific references to mental/behavior health, psychosocial concerns 
and related occupations.
    Response: The CAHPS[supreg] Hospice Survey does not seek to address 
experiences with specific professional occupations, but rather asks 
about the entire hospice team. Items on the survey concern 
communication with the hospice team, as well as the patients' 
experience of anxiety and agitation. The survey also asks about 
spiritual and emotional support provided by the hospice. The survey was 
designed to capture topic areas that are most important from the 
perspective of family members/caregivers of the patients.
    Comment: One commenter said they understood that the proposal 
required that three different CAHPS surveys be distributed, based on 
the patient's location at the time of death. The commenter strongly 
disagreed with implementing the survey in this manner.
    Response: The CAHPS[supreg] Hospice survey consists of a single 
survey instrument for all settings in which hospice care is provided. 
The questionnaire will include a few items applicable only to certain 
settings of care (for example, home-based hospice) along with clear 
directions for the respondent. We do not limit our questions only to 
the final setting of care.
    Comment: One commenter said that for some questions in the survey, 
the use of choices such as never, sometimes, usually or always could 
affect the results. The commenter noted that some respondents may 
believe there is room for improvement and may be reluctant to choose 
``always'' as an answer. The commenter stated that a five-point rating 
scale may be a better choice.
    Response: The ``never to always'' scale has been tested extensively 
and used in CAHPS[supreg] surveys for many years. We are unaware of any 
evidence indicating respondents are reluctant to choose ``always'' as a 
response. In addition, we do not believe a 5-point rating scale would 
offer a significant improvement over the existing CAHPS[supreg] survey 
response methodology.
    Comment: One commenter stated that the CAHPS[supreg] Hospice Survey 
should include patients as respondents rather than exclusively 
interview informal caregivers.
    Response: CMS is aware of the value of collecting survey data on 
patients' experiences. During the survey development process we 
carefully considered the logistics of conducting surveys with two 
different populations: hospice patients and their informal caregivers. 
CMS concluded that attempting to survey two populations would pose 
additional logistical problems and burdens because it was not clear the 
same questionnaire could be used for both groups. It is also not clear 
how the two groups should be publicly reported. Other considerations 
include --(1) the difficulty of determining which hospice patients are 
capable of participating in the survey and; (2) the risk of upsetting 
families if a survey addressed to a patient were to arrive soon after 
the patient died. In addition, hospice patients cannot provide 
information about the totality of the hospice care provided. For these 
reasons, CMS decided to survey only

[[Page 50495]]

primary caregivers of deceased hospice patients.
    Comment: One commenter said that the hospice survey questionnaire 
should not be sent more than two months after the death of the patient, 
as the family member(s) may have difficulty recalling the experience. 
The commenter also noted that a prolonged delay in completion of the 
survey questionnaire could result in diminished recall by the patient's 
clinicians.
    Response: CMS is aware that a significant delay in the completion 
of the survey questionnaire following the death of a patient can 
diminish the ability of survey respondents to accurately recall events. 
However, sending the survey shortly after a patient's death has the 
potential to generate grief and pain for the respondent. Based on 
discussions with our technical expert panel and stakeholders, CMS has 
chosen to include what we believe is an appropriate period of delay 
following the death of the patient and survey administration procedures 
to provide a time for family members to grieve, but still respond 
regarding the particulars of hospice care. CMS has built in a two-month 
lag after the death before any contact is made with the potential 
respondent. Currently, the CAHPS[supreg] Hospice Survey does not 
consider clinicians as survey respondents, thus the commenter's 
concerns regarding their ability to recall patient care for the survey 
is outside the scope of the comment.
    Comment: Approximately one-third of commenters supported the 
CAHPS[supreg] Hospice Survey.
    Response: We thank the commenters for their support.
    Comment: One commenter recommended that the definition of criteria 
for exclusion be clarified for consistent interpretation and 
implementation.
    Response: Details of the groups that are ineligible for survey 
participation can be found under subsection a. Background and 
Description of the Survey in this rule.
    Final Action: As a result of these comments, we are finalizing the 
requirements as proposed. Hospices must participate in and report data 
from the Dry Run for at least 1 month in the first quarter of CY 2015 
(January 2015, February 2015, or March 2015). Continuous monthly data 
collection begins in April 1, 2015, continues through December 31, 
2015, and continues in subsequent years.
d. Vendor Participation Requirements for the 2017 APU
    CMS will train and approve vendors to administer CAHPS[supreg] 
Hospice Survey on behalf of hospices (78 FR 48233). In addition we 
stated that hospices will be required to contract with an approved 
survey vendor and to provide the sampling frame to the approved vendor 
on a monthly basis.
    We proposed that approved survey vendors must meet all of the 
minimum business requirements and follow the detailed technical 
specifications for survey administration as published in the 
CAHPS[supreg] Hospice Survey specifications manual, which will be 
posted on the Survey Web site: http://hospicecahpssurvey.org. In 
addition, to the specifications manual, the Web site will include 
information and updates regarding survey implementation and technical 
assistance, and a copy of the questionnaire.
    We proposed to codify the CAHPS[supreg] Hospice Survey vendor 
requirements to be effective with the FY 2017 APU (as proposed in Sec.  
418.312). We proposed that applicants wishing to become approved 
CAHPS[supreg] Hospice Survey vendors must have been in business for a 
minimum of 4 years and have conducted surveys for a minimum of 3 years 
using each the modes of survey administration for which they are 
applying. In addition the organization must have been conducting 
``surveys with patients'' for at least 2 years immediately preceding 
the application to become a survey vendor for the CAHPS[supreg] Hospice 
Survey. For purposes of the approval process for CAHPS[supreg] Hospice 
Survey vendors, a ``survey of individual patients'' is defined as the 
collection of data from at least 600 individual patients selected by 
statistical sampling methods and the data collected are used for 
statistical purposes.
    Vendors may not use home-based or virtual interviewers to conduct 
the CAHPS[supreg] Hospice Survey, nor may they conduct any survey 
administration processes (for example, mailings) from a residence to 
ensure the confidentiality of data.
    The following are examples of data collection activities will not 
satisfy the requirement of valid survey experience for approved vendors 
as defined for the CAHPS[supreg] Hospice Survey, and these will not be 
considered as part of the experience required of an approved vendor for 
CAHPS[supreg] Hospice Survey.
     Focus groups, cognitive interviews, or any other 
qualitative data collection activities;
     Surveys of fewer than 600 individuals;
     Surveys conducted that did not involve using statistical 
sampling methods;
     Internet or Web-based surveys; and
     Interactive Voice Recognition Surveys.
    We also proposed that no organization, firm, or business that owns, 
operates, or provides staffing for a hospice is permitted to administer 
its own Hospice CAHPS[supreg] survey or administer the survey on behalf 
of any other hospice in the capacity as a Hospice CAHPS[supreg] survey 
vendor. Such organizations will not be approved by CMS as CAHPS[supreg] 
Hospice Survey vendors.
    Summaries of the public comments and our responses to those 
comments are summarized below:
    Comment: CMS received no comments regarding Vendor Participation 
Requirements for the 2014 APU.
    Final Action: We are finalizing the requirements as proposed 
without change.
e. Annual Payment Update
    The Affordable Care Act requires that beginning with FY 2014 and 
each subsequent fiscal year, the Secretary shall reduce the market 
basket update by 2 percentage points for any hospice that does not 
comply with the quality data submission requirements with respect to 
the fiscal year, unless covered by specific exemptions. Any such 
reduction will not be cumulative and will not be taken into account in 
computing the payment amount for subsequent fiscal years. In the FY 
2015 Hospice Wage Index proposed rule, we proposed to add the 
CAHPS[supreg] Hospice Survey to the Hospice Quality Reporting Program 
requirements for the FY 2017 payment determination and determinations 
for subsequent years.
     To meet the FY 2017 requirements, hospices will 
participate in the Dry Run for at least 1 month of the first quarter of 
CY 2015 (January 2015, February 2015, March 2015). Hospices must 
collect the survey data on a monthly basis for the months of April 1, 
2015 through December 31, 2015 in order to qualify for the full APU.
     To meet the HQRP requirements for the FY 2018 payment 
determination, hospices would collect survey data on a monthly basis 
for the months of January 1, 2016 through December 31, 2016 to qualify 
for the full APU.
    Summaries of the public comments and our responses to comments are 
summarized below:

[[Page 50496]]

    Comment: A few commenters stated that the timeframe for 
implementing the CAHPS[supreg] Hospice Survey may not be sufficient to 
adequately finalize the survey questions, approve, train and hire 
vendors, complete the Dry Run and correct any concerns that may arise 
from the Dry Run.
    Response: We are aware that the timeframe for implementing the 
CAHPS[supreg] Hospice Survey is shorter than for other CAHPS[supreg] 
surveys. However, we have taken steps to mitigate the impact on 
hospices. The survey can be found on the CAHPS[supreg] Hospice Survey 
Web site, www.hospicecahpssurvey.org. We will post the Quality 
Assurance Guidelines technical manual in August 2014. We will also open 
the vendor application and approval process on the Web site in August 
2014. This should provide hospice programs with ample time to contact 
and select a vendor. Hospices may contact vendors prior to this time if 
they wish to do so. The Dry Run will occur over the first quarter of 
2015 (January-March 2015). We encourage hospices to participate in the 
Dry Run as early as possible and collaborate with their vendors to 
resolve any potential issues.
    Comment: A few commenters noted the cost of conducting the 
CAHPS[supreg] Hospice Survey imposes regulatory burden on hospice 
providers requiring the allocation of resources from patient care and 
potentially result in higher costs to the Medicare program due to 
patients being shifted to higher levels of care due to limited hospice 
staffing.
    Response: We respectfully disagree with the commenter's assertions. 
Similar to other CAHPS[supreg] surveys, the CAHPS[supreg] Hospice 
Survey will allow three modes of data collection, with each mode of 
data collection varying in price. The modes are: mail-only, telephone-
only, and mixed mode (mail with telephone follow-up. We urge hospices 
to call multiple vendors to discuss prices and services since the cost 
does vary by vendor and the extra services that they provide. It is 
unacceptable to change a patient's level of care due to staffing 
issues; such a change should be based on the patient's and family's 
needs, should meet the regulatory requirements for that level of care, 
and should be documented in the plan of care.
    Comment: One commenter noted that CMS should refrain from using 
data for public reporting until 2016.
    Response: We have not finalized plans for public reporting of 
CAHPS[supreg] Hospice Survey data. However, we will not publicly report 
data until we have accumulated a baseline data set of at least four 
quarters of data.
    Comment: One commenter said that CMS should ensure that public 
reporting will meet the needs of Medicare beneficiaries and their 
family caregivers. Among other things, the information should be 
beneficiary friendly and address matters of particular concern to 
beneficiaries and their families.
    Response: We agree that public reporting of data obtained from 
surveys should meet the needs of Medicare beneficiaries and their 
families. Prior to publicly reporting the data, the displays will be 
tested with potential users of the information. We thank the commenter 
for the reminder of the importance of public reporting to beneficiaries 
and their families.
    Comment: One commenter said that CMS should delay public reporting 
until the HIS is more fully developed and the data from the Hospice 
CAHPS is available.
    Response: CMS has not stated when public reporting of hospice 
survey results will commence. We will provide details on the schedule 
for public reporting in subsequent rulemaking.
    Comment: CMS should also consider instituting a hospice star rating 
system where hospice providers will be measured based on these quality 
metrics so family members/care givers are able to shop for hospice 
benefits based on quality rating.
    Response: We appreciate the comment and will take it under 
consideration as public displays are developed.
    Final Action: We are finalizing the requirements as proposed 
without change.
f. CAHPS[supreg] Hospice Survey Oversight Activities
    We proposed a requirement that vendors and hospice providers 
participate in CAHPS[supreg] Hospice Survey oversight activities to 
ensure compliance with Hospice CAHPS[supreg] technical specifications 
and survey requirements. The purpose of the oversight activities is to 
ensure that hospices and approved survey vendors follow the 
CAHPS[supreg] Hospice Survey technical specifications and thereby 
ensure the comparability of CAHPS[supreg] Hospice Survey data across 
hospices.
    We proposed that the reconsiderations and appeals process for 
hospices failing to meet the Hospice CAHPS[supreg] data collection 
requirements will be part of the Reconsideration and Appeals process 
already developed for the Hospice Quality Reporting program. We 
encourage hospices interested in learning more about the CAHPS[supreg] 
Hospice Survey to visit the CAHPS[supreg] Hospice Survey Web site: 
http://www.hospicecahpssurvey.org.
    Summaries of the public comments and responses to comments 
regarding the reconsiderations and appeals process for hospices that 
fail to meet the Hospice CAHPS[supreg] data collection requirements 
regarding are summarized below:
    Comment: CMS received no comments regarding CAHPS[supreg] Hospice 
Survey Oversight Activities
    Final Action: We are finalizing the requirements as proposed 
without change.
7. Procedures for Payment Year 2016 and Subsequent Years
    In the FY 2014 Hospice Wage Index and Payment Rate Update final 
rule (78 FR 48267), we notified hospice providers of the opportunity to 
seek reconsideration of our initial non-compliance decision for the FY 
2014 and FY 2015 payment determinations. We stated that we will notify 
hospices found to be non-compliant with the HQRP reporting requirements 
that they may be subject to the 2 percentage point reduction in their 
annual payment update. The process for filing a request for 
reconsideration is described on the CMS Web site at: http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Hospice-Quality-Reporting/Reconsideration-Requests.html. We 
proposed to codify this process at Sec.  418.312.
    Finally, we proposed to codify at Sec.  418.306 that beginning with 
FY 2014 and each subsequent FY, the Secretary shall reduce the market 
basket update by 2 percentage points for any hospice that does not 
comply with the quality data submission requirements with respect to 
that FY and solicited comments on all of the proposals in this section 
and the associated regulations text at Sec.  418.312 and in Sec.  
418.306 in section VI.
    Summaries of the public comments and our responses to comments are 
summarized below:
    Comment: CMS received no comments regarding Procedures for Payment 
Year 2016 and Subsequent Years.
    Final Action: We are finalizing the requirements as proposed 
without change.

I. Solicitation of Comments on Coordination of Benefits Process and 
Appeals for Part D Payment for Drugs While Beneficiaries are Under a 
Hospice Election

    The statutory definition of the term ``covered Part D drug'', as 
specified in section 1860D-2(e)(2)(B) of the Social

[[Page 50497]]

Security Act, excludes a drug if payment for such a drug, as so 
prescribed and dispensed or administered with respect to a Part D 
eligible individual, is available (or would be available but for the 
application of a deductible) under Part A or B for that individual. 
Therefore, drugs and biologicals for which coverage is available under 
the Medicare Part A per-diem payment to a hospice program are excluded 
from coverage under Part D. Our previous understanding was that hospice 
coverage of drugs was very broad and very inclusive. Therefore, Part D 
payment for drugs furnished to hospice beneficiaries would be rare and 
the need for controls was not critical.
    Section 1861(dd) of the Act states the hospice is responsible for 
covering all drugs or biologicals for the palliation and management of 
the terminal illness and related conditions. Our stated intention in 
the 1983 Hospice final rule (48 FR 56010) was that the hospice benefit 
provides virtually all care for the terminally ill individual. Despite 
our intention for a comprehensive and holistic benefit, gross covered 
drug costs in 2012 under Part D for beneficiaries during a hospice 
election totaled $417.9 million. Of this total, Medicare reimbursed 
approximately $334.9 million, and beneficiaries contributed $48.2 
million in possibly unnecessary cost-sharing.
1. Part D Sponsor Coordination of Payment with Hospice Providers
    In the proposed rule, we described various requirements we were 
considering to facilitate the coordination of payment between Part D 
sponsors and hospices and solicited comments on them. We refer you to 
the proposed rule (79 FR 26570 through 26575) for the discussion of the 
requirements we were considering and sought comment on. Prior to the 
proposed rule, we had issued interim guidance on March 10, 2014 (http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/Hospice/Downloads/Part-D-Payment-Hospice-Final-2014-Guidance.pdf) and, as a 
result of feedback from stakeholders, we amended the guidance on July 
18, 2014. In the interim guidance, we encourage Part D sponsors and 
Medicare hospices to take several of the actions that we stated in the 
proposed rule we are considering requiring. Our July 18, 2014 guidance 
can be accessed at (http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/Hospice/Downloads/2014-PartD-Hospice-Guidance-Revised-Memo.pdf); we plan that this guidance will remain in effect until 
requirements are finalized. The revised guidance expects Part D 
sponsors to use hospice prior authorization only on the four categories 
of drugs that the Office of Inspector General (http://oig.hhs.gov/oas/reports/region6/61000059.pdf), in consultation with hospice providers, 
identified as nearly always covered under the hospice benefit. These 
categories of drugs will require hospice prior authorizations 
analgesics, antinauseants, laxatives, and antianxiety drugs. Hospices 
may use the ``Hospice Information for Medicare Part D'' (http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/Hospice/Downloads/Hospice-Info-PartD.pdf) form to provide the necessary 
information generally requested by Medicare Part D sponsors.
    We appreciate the comments we received on the processes we were 
considering to facilitate the coordination of payment between Part D 
sponsors and hospices and will consider those comments in future 
rulemaking.
    In formulating the changes we were considering, we became aware 
that the regulatory requirement for a Part D sponsor to coordinate with 
other health benefit plans or programs at Sec.  423.464 (f)(1)(ix) is 
narrower than the requirement specified in statute. Section 1860D-24 of 
the Act requires Part D sponsors to coordinate with other drug plans, 
including, as specified in paragraph Sec.  423.464 (b)(5), with other 
health benefit plans or programs that provide coverage or financial 
assistance for the purchase or provision of prescription drug coverage 
on behalf of Part D eligible individuals. However, in codifying this 
requirement in the regulations at Sec.  423.464(f)(1)(ix), we specified 
that the other plans or programs are those that provide coverage or 
financial assistance for the purchase of or provision of Part D 
(emphasis added) prescription drugs. The regulation does not include 
the requirement for Part D sponsors to coordinate with providers of 
drugs covered under Part A, such as hospices, since those drugs 
prescribed, dispensed, or administered under Part A are excluded from 
the definition of a covered Part D drug. Because coordination between 
Part D sponsors and the Medicare hospices is essential to ensure Part D 
statutory coverage requirements are met, to reduce the potential for 
erroneous payment under Part D, and to facilitate the recovery of 
erroneous payments when they do occur, we also were considering 
amending the Part D regulations at Sec.  423.464(f) to align the 
definition of other prescription drug coverage in paragraph Sec.  
423.464(f)(1)(ix) with the statute by removing the phrase ``Part D.''
    We did not propose to amend the Part D regulations at Sec.  
423.464(f), but rather solicited comments on this change. We appreciate 
the comments received in response to our solicitation and will consider 
those comments in future rulemaking.
2. Solicitation of Comments on Hospice Coordination of Payment with 
Part D Sponsors and Other Payers
    As specified in section 1861(dd) of the Act, and in regulation at 
42 CFR Part 418, the hospice is responsible for covering all drugs and 
biologicals for the palliation and management of the terminal illness 
and related conditions. As noted in 418.202(f), drugs and biologicals 
for palliation of pain and symptom management are included in the 
Medicare Part A per-diem payment to a hospice. Therefore, such drugs 
and biologicals are excluded from coverage under Part D (see section 
III.I.1). Our payment regulations at Sec.  418.200 require that, to be 
covered, hospice services must be consistent with the plan of care, 
which must include the drugs and treatment necessary to meet the needs 
of the patient (Sec.  418.56(c)(2)). Additionally, the CoPs at Sec.  
418.56(e)(5) require hospices to share information with other non-
hospice healthcare providers furnishing services unrelated to the 
terminal illness and related conditions. As described in Sec.  
418.100(c)(2), hospices must be available 24 hours a day and 7 days a 
week to address beneficiary and family needs.
    We have received anecdotal reports from Medicare hospice 
beneficiaries that they are not receiving medications related to their 
terminal illness and related conditions from their hospice because, 
among other stated reasons, those medications are not on the hospice's 
formulary. These reports also have stated that hospice beneficiaries 
were advised to obtain drugs related to the terminal illness and 
related conditions from their Part D prescription drug plans. Per the 
regulations at Sec.  418.202(f), hospices must provide all drugs which 
are reasonable and necessary to meet the needs of the patient in order 
to provide palliation and symptom management of the terminal illness 
and related conditions. If the drugs on the hospice formulary are not 
providing the relief needed, then the hospice must provide alternatives 
in order to relieve pain and symptoms, even if it means providing drugs 
that are not on their formularies. Treatment decisions should not be 
driven by costs, as opposed to clinical

[[Page 50498]]

appropriateness. Hospices should use thoughtful clinical judgment, with 
a patient-centered focus, when developing the hospice plan of care, 
including the recommendations for medication management.
    We did not propose any requirements, but we described various 
requirements we are considering to facilitate coordination of payment 
responsibility between hospices and other payers and operational 
considerations. We refer you to the May 8, 2014 FY 2015 Hospice 
proposed rule (79 FR 26570-26575) for the discussion of the 
requirements we sought comments on. As articulated above in section 
I.1, the July 18, 2014 interim guidance (http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/Hospice/Downloads/2014-PartD-Hospice-Guidance-Revised-Memo.pdf) has been issued, and we plan that this 
guidance will remain in effect until requirements are finalized. We 
appreciate the comments on these issues and will consider the comments 
in future rulemaking.
3. Beneficiary Rights and Appeals
    Sometimes a beneficiary requests a certain medication that a 
hospice cannot or will not provide because the hospice has deemed that 
the specific medication is not reasonable and necessary for the 
palliation and management of the terminal illness and related 
conditions. Coverage of such medication would not be permissible under 
Part D coverage since the medication is not for any condition 
completely separate and distinct from the terminal illness and related 
conditions, nor is it covered under Part A, since it is not reasonable 
and necessary for the palliation and management of the terminal illness 
and related conditions. If the hospice does not provide the medication, 
the hospice is not obligated to provide any notice of non-coverage 
(including the Advance Beneficiary Notice of Non-coverage or ABN). If 
the hospice provides medication it believes is not reasonable and 
necessary for the palliation and management of the terminal illness and 
related conditions, the hospice must first issue an ABN in order to 
charge the beneficiary for the cost of such medication. Regardless of 
whether or not the hospice furnishes the drug, if the beneficiary 
independently obtains the drug, but believes that the Medicare hospice 
should have furnished or covered the cost of the drug as part of the 
hospice benefit, the beneficiary may submit a claim for the medication 
directly to Medicare on Form CMS-1490S (http://www.cms.gov/Medicare/CMS-Forms/CMS-Forms/CMS-Forms-Items/CMS012949.html). If the claim is 
denied, the beneficiary may file an appeal of that determination under 
the appeals process set forth in part 405, subpart I.
    There may also be instances where a beneficiary prefers a non-
formulary drug because, for example, he or she believes it to be more 
efficacious than the formulary drug prescribed by the hospice. In such 
instances, the hospice may have determined that the formulary drug 
prescribed is reasonable and necessary for the palliation and 
management of the terminal illness and related conditions; however, the 
beneficiary may prefer another brand of such drug that is off 
formulary, which the hospice believes is not reasonable and necessary, 
or more expensive but no more effective than the drug in the formulary. 
In those cases, the beneficiary may submit quality of care complaints 
to a Quality Improvement Organization. We plan to increase our 
beneficiary outreach efforts to advise beneficiaries and their 
families/caregivers of their rights and the available appeals process 
described in this section.

J. Update on the International Classification of Diseases, 10th 
Revision, Clinical Modification (ICD-10-CM) and Coding Guidelines for 
Hospice Claims Reporting

3. International Classification of Diseases, 10th Revision, Clinical 
Modification (ICD-10-CM)
    On April 1, 2014, the Protecting Access to Medicare Act of 2014 
(PAMA) (Pub. L. 113-93), was enacted. Section 212 of PAMA, titled 
``Delay in Transition from ICD-9 to ICD-10 Code Sets,'' provides that 
``[t]he Secretary of Health and Human Services may not, prior to 
October 1, 2015, adopt ICD-10 code sets as the standard for code sets 
under section 1173(c) of the Social Security Act (42 U.S.C. 1320d-2(c)) 
and section 162.1002 of title 45, Code of Federal Regulations.'' On May 
1, 2014, the Secretary announced plans to release an interim final rule 
in the near future that will include a new compliance date to require 
the use of ICD-10-CM beginning October 1, 2015. The interim final rule 
will also require HIPAA covered entities to continue to use ICD-9-CM 
through September 30, 2015. Although the Department has not yet 
published the rule, we are proceeding in accordance with the 
announcement. This means that ICD-9-CM diagnosis codes will continue to 
be used for hospice claims reporting until October 1, 2015, the new 
implementation date for ICD-10-CM. Diagnosis reporting on hospice 
claims must adhere to ICD-9-CM coding conventions and guidelines 
regarding the selection of principal diagnosis and the reporting of 
additional diagnoses. Additionally, the CMS' Hospice Claims Processing 
manual (Pub 100-04, chapter 11) requires that hospice claims include 
the reporting of additional/other diagnoses as required by ICD-9-CM 
coding guidelines.
    In the HIPAA regulations at 45 CFR 162.1002, the Secretary adopted 
the ICD-9-CM code set, including the Official ICD-9-CM Guidelines for 
Coding and Reporting. The current ICD-9-CM Coding Guidelines use the 
International Classification of Diseases, 9th Edition, Clinical 
Modification (ICD-9-CM) and are available through the CMS Web site at: 
http://www.cms.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/index.html or on the CDC's Web site at http://www.cdc.gov/nchs/icd/icd9cm.htm.
4. Coding Guidelines for Hospice Claims Reporting
    In the FY 2014 Hospice Wage Index and Payment Rate Update, we 
reiterated that diagnosis reporting on hospice claims should include 
the appropriate selection of principal diagnoses as well as the other, 
additional and coexisting diagnoses related to the terminal illness and 
related conditions (78 FR 48254). Additionally, in the July 27, 2012, 
FY 2013 Hospice Wage Index notice (77 FR 44247), we provided in-depth 
information regarding longstanding, existing ICD-9-CM Coding 
Guidelines. We also discussed related versus unrelated diagnosis 
reporting on claims and clarified that ``all of a patient's coexisting 
or additional diagnoses'' related to the terminal illness and related 
conditions should be reported on the hospice claim. The expectation was 
that hospices would report all diagnoses related to the terminal 
illness and related conditions on hospice claims to provide accurate 
information regarding the hospice beneficiaries for which they are 
providing hospice services.
    In the FY 2014 Hospice Wage Index and Payment Rate Update final 
rule, we stated that beginning on October 1, 2014, any claims with 
``debility'' or ``adult failure to thrive'' in the principal diagnosis 
field will be returned to the provider for more definitive coding (78 
FR48252). ``Debility'' and ``adult failure to thrive'' do not provide 
enough information to accurately describe Medicare hospice 
beneficiaries and the conditions that hospices are managing. Once these 
claims are resubmitted with more appropriate diagnosis codes,

[[Page 50499]]

following the ICD-9-CM Coding Guidelines, these claims will be 
processed accordingly. This is a reminder that claims with ``debility'' 
and ``adult failure to thrive'' coded in the principal diagnosis field 
will be returned to providers for more definitive coding effective 
October 1, 2014 (for those claims submitted on and after October 1, 
2014).
    Also in the FY 2014 Hospice Wage Index and Payment Rate Update 
final rule, we advised hospice providers to pay particular attention to 
dementia diagnoses which are found under two separate ICD-9-CM 
classifications: ``Mental, Behavioral, and Neurodevelopmental 
Disorders'' and ``Diseases of the Nervous System and Sense Organs''(78 
FR 48252-48253). Many of the codes relating to dementia manifestations 
found under the ICD-9-CM classification, ``Mental, Behavioral, and 
Neurodevelopmental Disorders'', are not appropriate as principal 
diagnoses because of etiology/manifestation guidelines or sequencing 
conventions under the ICD-9-CM Coding Guidelines. ICD-9-CM Coding 
Guidelines for this classification state that dementia is most commonly 
a secondary manifestation of an underlying causal condition. Codes 
found under this classification identify the common behavioral 
disturbances of dementia manifestations. Many of the dementia codes 
under the ICD-9-CM classification, ``Mental, Behavioral and 
Neurodevelopmental Disorders'' have coding conventions that require to 
code first the associated neurological condition. Many of the 
associated neurological conditions can be found under the 
classification, ``Diseases of the Nervous System'', including such 
conditions as ``Alzheimer's disease'' and ``Senile Degeneration of the 
Brain''. We advise hospices to pay close attention to the various 
coding and sequencing conventions found within The Official ICD-9-CM 
Guidelines for Coding and Reporting when reporting diagnoses on hospice 
claims.
    To ensure additional compliance with ICD-9-CM Coding Guidelines we 
will implement certain edits from Medicare Code Editor (MCE), which 
detect and report errors in the coding of claims data, for all hospice 
claims effective October 1, 2014 (for those claims submitted on or 
after October 1, 2014). Hospice claims containing inappropriate 
principal or secondary diagnosis codes, per ICD-9-CM coding conventions 
and guidelines, will be returned to the provider and will have to be 
corrected and resubmitted to be processed and paid.
    We will implement edits related to etiology/manifestation code 
pairs from the MCE; therefore, it is important for hospice providers to 
follow the ICD-9-CM Coding Guidelines regarding codes that fall under 
this coding convention. The etiology/manifestation coding convention 
states that there are certain conditions which have both an underlying 
cause (etiology) and subsequent multiple body system manifestations. 
For such conditions, ICD-9-CM coding convention requires the underlying 
condition be sequenced first, followed by the manifestation. Whenever 
such a combination exists, there is a ``use additional code'' note at 
the etiology code and a ``code first'' note at the manifestation code. 
These instructional notes indicate the proper sequencing order of the 
codes. In most cases, the manifestation codes will have in the code 
title, ``in diseases classified elsewhere.'' ``In diseases classified 
elsewhere'' codes are never permitted to be used as first-listed or 
principal diagnosis codes. They must be used in conjunction with an 
underlying condition code and they must be listed following the 
underlying condition. An example of this can be found under the 
category 294, ``Persistent mental disorders due to conditions 
classified elsewhere.'' However, there are manifestation codes that do 
not have ``in diseases classified elsewhere'' in the title. For such 
codes, there is ``use an additional code'' note at the etiology code 
and a ``code first'' note at the manifestation code and the rules for 
sequencing apply.
    There are sequencing conventions under ICD-9-CM coding guidelines 
that are not accounted for in the MCE edits. There are several dementia 
codes under the classification, ``Mental Behavioral and 
Neurodevelopmental Disorders'' that have a sequencing convention that 
require the underlying physiological condition to be coded first, but 
for which there is no edit in the MCE. We will be issuing technical 
guidance through a Change Request to include these codes for edits in 
the MCE to be consistent for claims processing under ICD-9-CM Coding 
Guidelines. We are reminding providers to utilize the ICD-9-CM coding 
guidelines when submitting hospice claims to ensure they are following 
the appropriate guidelines for coding so that claims are not returned 
to providers as a result of MCE edits. Following the ICD-9-CM coding 
guidelines will help hospice providers with appropriate code selection 
for hospice claims processing. This is not to say that hospice 
beneficiaries with various dementia conditions are not appropriate for 
hospice services, rather, this is merely a clarification regarding the 
ICD-9-CM coding guidelines for claims processing. We expect hospice 
providers to follow ICD-9-CM coding guidelines to ensure that the most 
accurate information is provided regarding the patients for whom 
hospices are providing services.
    Additional details describing the specific MCE edits that will be 
applied will be announced through a change request, an accompanying 
Medicare Learning Network article, and other CMS communication 
channels, such as the Home Health, Hospice, and DME Open Door Forum.
    We have clarified in previous rules that hospice providers are 
expected to report on hospice claims all ICD-9-CM codes to provide an 
accurate description of the patients' conditions. In the Hospice Wage 
Index for Fiscal Year 2013 (77 FR 44247) and again in the Hospice Wage 
Index for Fiscal Year 2014 (78 FR 48240), we reminded providers to 
follow ICD-9-CM Coding Guidelines for reporting diagnoses on hospice 
claims. HIPAA, federal regulations, and the Medicare claims processing 
manual all require that ICD-9-CM Coding Guidelines be applied to the 
coding and reporting of diagnoses on hospice claims. In the FY 2013 
hospice notice, we reported that our analyses showed that 77.2 percent 
of hospice claims from 2010 only reported a single, principal 
diagnosis. We provided in-depth information regarding longstanding, 
existing ICD-9-CM Coding Guidelines that require the reporting of all 
additional or co-existing diagnoses on hospice claims. We went on to 
state that coexisting or additional diagnoses could be related or 
unrelated to the hospice patient's terminal illness. As the Medicare 
hospice benefit covers hospice services for the palliation and 
management of the terminal illness and related conditions, we said, at 
that time, that hospice providers ``should report on hospice claims all 
coexisting or additional diagnoses that are related to the terminal 
illness; they should not report coexisting or additional diagnoses that 
are unrelated to the terminal illness'' (77FR 44248). We also stated 
that we do not believe that requiring reporting of coexisting or 
additional diagnoses that are related to the terminal illness would 
create a burden for hospice and that some providers already report 
these diagnoses on their claims.
    In the FY 2014 Hospice Wage Index and Payment Rate Update final 
rule, we reported that for the first quarter of FY 2013 (October 1, 
2012 through December 31, 2012) 72 percent of

[[Page 50500]]

hospice claims only reported a single, principal diagnosis (78 FR 
48240). We also discussed related versus unrelated diagnosis reporting 
on claims and clarified that ``all of a patient's coexisting or 
additional diagnoses'' related to the terminal illness or related 
conditions should be reported on the hospice claim. Information on a 
patient's related and unrelated diagnoses should already be included as 
part of the hospice comprehensive assessment and appropriate 
interventions should be incorporated into the patient's plan of care, 
as determined by the hospice IDG.
    Analysis conducted on FY 2013 hospice claims shows that 67 percent 
of hospice claims still only report a single, principal hospice 
diagnosis.\41\ Though this is a trend in the right direction, there 
still appears to be some confusion by the majority of hospice providers 
as to the requirements for diagnosis reporting on hospice claims. We 
are reminding providers to follow the ICD-9-CM Coding Guidelines, per 
longstanding policy, in regard to diagnosis reporting on claims.
---------------------------------------------------------------------------

    \41\ FY 2013 hospice claims data from the Chronic Conditions 
Data Warehouse (CCW) accessed on February 26, 2014.
---------------------------------------------------------------------------

    The ICD-9-CM Official Guidelines for Coding and Reporting state 
that for accurate reporting of ICD-9-CM diagnosis codes, ``The 
documentation should describe the patient's condition, using 
terminology which includes specific diagnoses, as well as symptoms, 
problems, and reasons for the encounter. List first the ICD-9-CM code 
for the diagnosis, condition, problem, or other reason for the 
encounter/visit shown in the medical record to be chiefly responsible 
for services provided.'' The coding guidelines also state to code all 
documented conditions that coexist at the time of the encounter/visit 
and require or affect patient care treatment or management. Therefore, 
this is a reminder that all diagnoses should be reported on the hospice 
claim for the terminal illness and related conditions, including those 
that can affect the care and management of the beneficiary. We will 
condition to monitor hospice claims to see if all conditions are being 
reported as required by ICD-9-CM Coding Guidelines. While we did not 
make any proposals regarding ICD-9-CM Coding Guidelines in the proposed 
rule, we received two comments requesting rapid dissemination of the 
ICD-9-CM diagnostic codes that will prompt an edit to return to the 
provider for more definitive coding. As mentioned above, more specific 
information will be provided, including the diagnostic codes, in sub-
regulatory guidance after the publication of this final rule. We will 
also issue provider education describing the specific MCE edits.

K. Technical Regulatory Text Change

    In the FY 2015 Hospice Wage Index proposed rule, we proposed to 
make a technical correction in Sec.  418.3 to delete the definition for 
a ``social worker.'' This definition is no longer accurate, and we 
intended to remove it as part of the June 5, 2008 final rule that 
amended the conditions of participation (CoPs) for hospices (73 FR 
32088). The 2008 final rule established new requirements for social 
workers at Sec.  418.114(b)(3), making the definition of ``social 
worker'' at Sec.  418.3 obsolete. However, the technical amendatory 
language included in the 2008 final rule did not instruct the Federal 
Register to delete the ``social worker'' definition.
    Public comments and our response to comments regarding the 
technical correction to delete the definition of social worker from 
Sec.  418.3 are summarized below.
    Comment: Three commenters acknowledged and agreed with this 
technical correction.
    Response: We appreciate the commenters support.
    Final action: We will implement the technical correction as 
proposed.

IV. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995, we are required to 
provide 30-day notice in the Federal Register and solicit public 
comment before a collection of information requirement is submitted to 
the Office of Management and Budget (OMB) for review and approval. In 
order to fairly evaluate whether an information collection should be 
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act 
of 1995 requires that we solicit comment on the following issues:
     The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
     The accuracy of our estimate of the information collection 
burden.
     The quality, utility, and clarity of the information to be 
collected.
     Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    We are soliciting public comment on each of these issues for this 
section of this document that contains information collection 
requirements (ICRs). This section includes ICR information on data 
collection (A) related to hospice payment policy, including changes to 
the election statement and changes to aggregate cap determination 
reporting; and (B) related to the CAHPS[supreg] Hospice Survey.

A. Changes Related to Hospice Payment Policy

    Sections A.1 and A.2 are associated with the information collection 
request (ICR) previously approved under OMB control number as 0938-
1067. We are currently seeking to have the ICR reinstated under notice 
and comment periods separate from those associated with the FY 2015 
Hospice Wage Index proposed rule. The following assumptions were used 
in estimating the burden for the proposed changes related to hospice 
payment policy:

      Table 10--Hospice Payment Policy Burden Estimate Assumptions
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Number of Medicare-participating hospices nationwide, CY 2012..    3,897
Number of Medicare-billing hospices, from CY 2012 claims.......    3,727
Number of Part D prescriptions per hospice, from CY 2012 claims      481
Hourly rate of registered nurse................................      $41
Hourly rate of accountant......................................      $40
Hourly rate of office employee.................................      $17
Hourly rate of administrator...................................      $63
------------------------------------------------------------------------
Note: CY = Calendar year.

All salary information is from the Bureau of Labor Statistics (BLS) Web 
site at http://www.bls.gov/oes/current/naics4_621600.htm and includes 
a fringe benefits package worth 30 percent of the base salary. Hourly 
rates are based on May 2012 BLS data for each discipline, for those 
providing ``home health care services.''
1. Changes to the Election Statement (Sec.  418.24)
    Section 1812(d) of the Act requires that patients elect hospice 
care in order for Medicare to cover and pay for hospice services. 
Section 1861(dd)(3)(B) of the Act defines an attending physician and 
requires that the patient, not the hospice, designate an attending 
physician at the time of election. Our regulations at Sec.  418.24 
outline current requirements for completion of a hospice election 
statement, but do not require that the attending physician designated 
by the patient be identified. To safeguard the patient's right to 
choose his or her attending physician, we proposed and have now 
finalized a change to our regulations at Sec.  418.24(b) to require 
that the election statement be modified to identify the attending 
physician chosen by the patient and to include language that the 
patient acknowledges that the attending

[[Page 50501]]

physician was his or her choice. All Medicare and Medicaid hospice 
patients are required to elect the benefit. Since election requirement 
is particular to the Medicare and Medicaid hospice benefits, hospices 
are free to establish a similar starting point for non-Medicare and 
Medicaid patients in their own policies, based on the needs of the 
hospice, its community, and any applicable State and local laws and 
regulations.
    We estimated that the burden for this requirement is the one-time 
burden to modify the election statement to include a place for 
identifying the attending physician and acknowledging that he or she 
was chosen by the patient or representative. Hospices are currently 
required to explain these processes to patients, so we do not believe 
there is any additional burden for discussing that part of the election 
statement with patients or their representatives. We estimate that it 
will take a hospice clerical staff person 20 minutes (20/60 = 0.33333 
hours) to modify the election form, and the hospice administrator 15 
minutes (15/60 = 0.25 hours) to review the revised form. The clerical 
time plus administrator time equals a one-time burden of 35 minutes or 
(35/60) = 0.58333 hours per hospice; for all 3,897 hospices, the total 
time required is (0.58333 x 3,897) = 2,273 hours. At $17 per hour for 
an office employee, the cost per hospice is (0.33333 x $17) = $5.66. At 
$63 per hour for the administrator's time, the cost per hospice will be 
(0.25 x $63) = $15.75. Therefore, the total one-time cost per hospice 
is $21.41, and the total one-time cost for all hospices is ($21.41 x 
3,897) = $83,435.
    Because of concerns related to the potential inappropriate changing 
of attending physicians by hospices, we also proposed and have now 
finalized a policy to add paragraph (f) to our regulations at Sec.  
418.24, to require that the patient (or representative) provide a 
statement identifying the new attending physician and the date the 
change is to be effective, and that the patient (or representative) 
sign and date the form. The form should also include an acknowledgement 
that this change is the patient's choice. The one-time burden to 
hospices is the time to develop a form for the patient to use. We 
estimate that it will take a hospice clerical staff person 20 minutes 
(20/60 = 0.33333 hours) to develop this form, and the hospice 
administrator 15 minutes (15/60 = 0.25 hours) to review the new form. 
The clerical time plus administrator time equals a one-time burden of 
35 minutes or (35/60) = 0.58333 hours per hospice; for all 3,897 
hospices, the total time required is (0.58333 x 3,897) = 2,273 hours. 
At $17 per hour for an office employee, the cost per hospice is 
(0.33333 x $17) = $5.66. At $63 per hour for the administrator's time, 
the cost per hospice is (0.25 x $63) = $15.75. Therefore, the total 
one-time cost per hospice to develop this new form for changing 
attending physicians is $21.41, and the total one-time cost for all 
hospices is ($21.41 x 3,897) = $83,435.
    Comment: Two commenters asked CMS to clarify the sentence from the 
proposed rule which read, ``Note that all hospices, including those 
that are not Medicare-participating, are required by the Conditions of 
Participation to have patients elect hospice care.''
    Response: All Medicare and Medicaid hospice patients are required 
to elect the benefit. Since the election requirement is particular to 
the Medicare and Medicaid hospice benefits, hospices are free to 
establish a similar starting point for non-Medicare and Medicaid 
patients in their own policies, based on the needs of the hospice, its 
community, and any applicable State and local laws and regulations. We 
have rephrased the sentence in this final rule to read as written in 
this response.
2. Changes to Aggregate Cap Determination Reporting (Sec.  418.308)
    Congress mandated two caps on hospice payments: an inpatient cap 
and an aggregate cap. The hospice cap year is November 1 through 
October 31. Medicare contractors complete the hospice cap determination 
approximately twelve to eighteen months after the cap year in order to 
demand any overpayments from the hospices. A cap determination consists 
in determining whether a hospice exceeds the inpatient cap and the 
aggregate hospice cap. Medicare hospice inpatient stays in excess of 
twenty percent of total Medicare hospice days are to be reimbursed at 
the routine homecare rate; the hospice must be repay any excess due to 
receiving payments at the higher inpatient rates for the excess 
inpatient days. Additionally, Medicare hospice payments are limited by 
an aggregate cap, which is computed by multiplying the ``cap amount'' 
by the number of beneficiaries. If the actual Medicare payments exceed 
the aggregate cap, the hospice must repay the difference. We proposed 
to change our regulations at Sec.  418.308(c) to require hospices to 
calculate their inpatient and aggregate caps five months after the cap 
year and remit any overpayment. We finalized a policy that only 
requires hospices to calculate their aggregate cap five months after 
the cap year and remit any overpayment (please see section III.D of 
this final rule for more specifics). This is similar to the process in 
Sec.  413.24(f), which requires other provider types that file a 
Medicare cost report to file their cost reports five months after the 
end of their cost reporting year. The regulation at Sec.  413.24(f) 
also requires other provider types that file a Medicare cost report to 
remit any amount due the program at the time of the cost report filing. 
Although hospices file cost reports, the cap determination is not based 
on the cost report; the hospice caps serve to limit total Medicare 
payments similar to the way cost reports limit those payments for other 
provider types that file a Medicare cost report. Requiring hospices to 
complete a cap determination and remit any overpayment is consistent 
with what is currently required of all other provider types that file a 
Medicare cost report.
    We expect that it will take a hospice about 1.5 hours to complete 
its cap determination. All information needed to file the cap 
determination is available in the Provider Statistical and 
Reimbursement (PS&R) system. For all 3,727 hospices that bill Medicare, 
this is (1.5 x 3,727) = 5,591 hours. We estimate that it will take one 
hour for an accountant to complete the cap determination worksheet 
provided by CMS for the cap year. At $40 per hour for an accountant, 
the cost is (1 x $40) = $40 per hospice, and (3,727 x $40) = $149,080 
for all hospices. We estimate that it will take a half hour for the 
administrator to review the worksheet prepared by the accountant. At 
$63 per hour for the administrator's time, the cost per hospice is (0.5 
x $63) = $31.50, and for all hospices is (3,727 x $31.50) = $117,401. 
Therefore the total estimated cost per hospice is ($40 + $31.50) = 
$71.50, and the total cost for all hospices is (3,727 x $71.50) = 
$266,481.

B. CAHPS[supreg] Hospice Survey

    This section is associated with a new information collection 
request that is required to start in January 2015. The Hospice Survey 
data collected in 2015 is required for the FY 2017 HQRP quality 
reporting requirements along with the submission of the clinical 
structural measures for the same payment period. This is a new 
information collection request seeking approval to assess experiences 
of care with hospice reported by primary caregivers (that is, bereaved 
family members of friends) of patients who died while receiving hospice 
care. This information data collection request is required to (1) 
assess experience of care at the respondent (caregiver) level, and (2) 
provide sufficient response to

[[Page 50502]]

generate hospice experience reports. Here are the estimates for the 
approximate annual cost of the CAHPS[supreg] Survey (Table 11).

  Table 11--Assumptions and Estimates for CAHPS[supreg] Hospice Survey
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Approximate Number of hospices required to  2,600
 do the CAHPS[supreg] Survey annually.
Approximate Cost to each hospice annually   $3,300
 for the CAHPS[supreg] Survey.
Approximate Cost for all CAHPS[supreg]      $8.58 million
 Hospices annually for the CAHPS[supreg]
 Survey.
Respondent Cost burden....................  $2.19 million
Approximate Total Cost of CAHPS[supreg]     $10.77 million
 Survey annually.
------------------------------------------------------------------------

    In implementing the HQRP, we seek to collect measure information 
with as little burden to the providers as possible, but which reflects 
the full spectrum of quality performance. As such, we are moving 
forward toward the implementation of the CAHPS[supreg] Hospice Survey 
to provide data to the public about the patients' families' and 
friends' perspectives of care of their loved ones who passed way while 
in hospices.
    The CAHPS[supreg] Hospice Survey data will provide the peoples' 
voices to hospice care in the United States. Based on the criteria 
outlined in the Preamble, some hospices that are too new and very small 
will be exempt from the HQRP. We estimate that 2,600 hospices will 
qualify to participate in the survey. From CMS experiences with 
surveys, we estimate an annual cost of $3,300 per hospice to 
participate in the CAHPS[supreg] Hospice Survey. The cost of $3,300 
includes the preparation of a monthly sampling frame for their approved 
vendor, as well as estimated vendor costs to conduct the data 
collection. The estimated annual cost for all hospices to do the survey 
is $8.58 million. As part of the survey requirement, all participating 
hospices will contract with an approved hospice survey vendor, and each 
hospice will be required to submit a monthly list of deceased patients' 
caregivers contact information, for patients that passed away in the 
hospice care two months prior to the date of the list. This list 
(essentially the sampling frame) for most hospices can be generated 
from existing databases with minimal effort. For some small hospices, 
preparation of a monthly sample frame may require more time. However, 
data elements needed on the sample frame will be kept at a minimum to 
reduce the burden on the hospices.
    The survey contains 47 items and is estimated to require an average 
administration time of 10.4 minutes in English, and 12.5 minutes in 
Spanish, for an average response time of 10.505 minutes or 0.175 hours, 
assuming that 5 percent of the survey respondents complete the survey 
in Spanish. These burden estimates are based on CMS' experiences with 
surveys of similar lengths that were fielded with Medicare 
beneficiaries. We estimate that approximately six surveys can be done 
an hour, at an hourly wage of $22.77. (We used the mean hourly wage 
from the ``National Compensation Survey: All United States December 
2009--January 2011,'' U.S. Department of Labor, Bureau of Labor 
Statistics. This was the most recent survey available at the time of 
OMB submission). With a total estimate of 550,000 respondents, we 
estimate a total respondent burden by multiplying 550,000 respondents 
by an estimated hourly burden per respondent of 0.175 hours to produce 
the total estimated number of burden hours (96,250). We then multiplied 
the number of hours (96,250) by $22.77 which equals at $2.19 million. 
The respondent burden does not represent an additional cost to the 
hospices, but instead refers to the time burden borne by respondents; 
the cost to the participating hospices is $8.58 million. Table 12 below 
provides a summary of the burden and cost estimates associated with 
both the hospice payment policy changes and the CAHPS[supreg] Hospice 
Survey requirements.

                                                   Table 12--Burden and Cost Estimates Associated With All Information Collection Requirements
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                    Burden per                     Hourly labor     Total labor
             Regulation section(s)                       OMB control No.             Number of       Number of       response      Total annual       cost of         cost of     Total cost ($)
                                                                                    respondents      responses        (hours)     burden (hours)   reporting ($)   reporting ($)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
418.24(b).....................................  0938-1067.......................           3,897           3,897        0.583333           2,273           21.41          83,435          83,435
418.24(f).....................................  0938-1067.......................           3,897           3,897        0.583333           2,273           21.41          83,435          83,435
418.308(c)....................................  0938-1067.......................           3,727           3,727        1.500000           5,591           71.50         266,481         266,481
418.312.......................................  0938-New........................       1,100,000         550,000          0. 175          96,250           22.77       2,191,612       2,191,612
                                                                                 ---------------------------------------------------------------------------------------------------------------
    Totals....................................  ................................       1,107,624         561,521  ..............         106,387  ..............  ..............       2,624,963
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

    There are no capital/maintenance costs associated with the 
information collection requirements contained in this rule; therefore, 
we have removed the associated column from Table 12.
    If you comment on these information collection and recordkeeping 
requirements, please submit your comments electronically as specified 
in the ADDRESSES section of this final rule.
    Please identify which Collection of Information requirement you are 
commenting on by indicating whether it is from subsection:
     A.1. Changes to the Election Statement (Sec.  418.24);
     A.2. Changes to Aggregate Cap Determination Reporting 
(Sec.  418.308); or
     B. CAHPS[supreg] Hospice Survey (Sec.  418.312).
    Comment: A commenter said the rates used in Table 10 do not reflect 
salary information in all regional areas, and therefore underestimate 
the administrative burden. This commenter felt that the time estimates 
were under-reported but did not suggest specific changes to the 
estimates.
    Response: We use salary data from the Bureau of Labor Statistics 
that is a national average, which reflects the variation in wages 
across the country. Our time estimates are based on the time an 
efficient hospice would require to complete a particular activity.

V. Regulatory Impact Analysis

A. Statement of Need

    This final rule follows Sec.  418.306(c) which requires annual 
issuance, in the Federal Register, of the hospice wage

[[Page 50503]]

index based on the most current available CMS hospital wage data, 
including any changes to the definitions of Core-Based Statistical 
Areas (CBSAs), or previously used Metropolitan Statistical Areas 
(MSAs). This final rule also updates payment rates for each of the 
categories of hospice care described in Sec.  418.302(b) for FY 2015 as 
required under section 1814(i)(1)(C)(ii)(VII) of the Act. The payment 
rate updates are subject to changes in economy-wide productivity as 
specified in section 1886(b)(3)(B)(xi)(II) of the Act. In addition, the 
payment rate updates may be reduced by an additional 0.3 percentage 
point (although for FY 2014 to FY 2019, the potential 0.3 percentage 
point reduction is subject to suspension under conditions specified in 
section 1814(i)(1)(C)(v) of the Act). In 2010, the Congress amended 
section 1814(i)(6) of the Act with section 3132(a) of the Affordable 
Care Act. The amendment authorized the Secretary to collect additional 
data and information determined appropriate to revise payments for 
hospice care and for other purposes. The data collected may be used to 
revise the methodology for determining the payment rates for routine 
home care and other services included in hospice care, no earlier than 
October 1, 2013, as described in section 1814(i)(6)(D) of the Act. In 
accordance with section 1814(i)(6)(D) of the Act, this final rule 
provides an update on hospice payment reform analysis.
    Section 1814(i)(2)(A) through (C) limits total Medicare payments a 
hospice can receive through the aggregate cap. This final rule also 
requires that providers submit their hospice aggregate cap 
determination to their Medicare Administrative Contractor (MAC) within 
5 months after the cap year ends, but not sooner than 3 months after 
the cap year ends, and remit any overpayments at that time. Hospices 
that fail to comply will be subject to suspension of payments.
    Section 1812(d) of the Act requires that hospice beneficiaries 
waive their right to Medicare payments for services related to the 
terminal illness and provided during a hospice election, except when 
provided by the hospice or by the attending physician. To properly 
enforce that requirement, it is necessary that a beneficiary's hospice 
status be up-to-date in the claims processing systems. Therefore, this 
final rule requires that hospice Notice of Elections (NOEs) and Notice 
of Terminations/Revocations (NOTRs) be filed with the Medicare 
contractor within 5 days after the effective date of election or the 
effective date of discharge/revocation. Hospices will be subject to 
provider-liable days when they file an NOE late, though we will allow 
for a waiver of these provider-liable days when late-filing is due to 
certain circumstances beyond the control of the hospice.
    Furthermore, in accordance with section 1860D-24 of the Act, drugs 
and biologicals that may be covered under the Medicare Part A per-diem 
payment to a hospice program are excluded from coverage under Part D. 
Section 1861(dd) of the Act states the hospice is responsible for 
covering all drugs or biologicals for the palliation and management of 
the terminal illness and related conditions. The FY 2015 Hospice Wage 
Index proposed rule, in accordance with sections 1860D-24 and 1861(dd) 
of the Act, solicited comments on a coordination of benefits process 
and appeals for Part D payment for drugs and biologicals while 
beneficiaries are under a hospice election. We did not make any 
proposals on the coordination of benefits process and appeals for Part 
D payment for drugs and biologicals while beneficiaries are under a 
hospice election.
    Finally, section 3004 of the Affordable Care Act amended the Act to 
authorize a quality reporting program for hospices, and this rule 
discusses changes in the requirements for the hospice quality reporting 
program in accordance with section 1814(i)(5) of the Act.

B. Introduction

    We have examined the impacts of this rule as required by Executive 
Order 12866 on Regulatory Planning and Review (September 30, 1993), 
Executive Order 13563 on Improving Regulation and Regulatory Review 
(January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19, 
1980, Pub. L. 96-354), section 1102(b) of the Act, section 202 of the 
Unfunded Mandates Reform Act of 1995 (UMRA, March 22, 1995; Pub. L. 
104-4), and the Congressional Review Act (5 U.S.C. 804(2)).
    Executive Orders 12866 and 13563 direct 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). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility. A regulatory impact analysis (RIA) must be prepared for 
major rules with economically significant effects ($100 million or more 
in any 1 year). This final rule has been designated as economically 
significant under section 3(f)(1)of Executive Order 12866 and thus a 
major rule under the Congressional Review Act. Accordingly, we have 
prepared a regulatory impact analysis (RIA) that to the best of our 
ability, presents the costs and benefits of the rulemaking. Finally, 
this rule has been reviewed by OMB.

C. Overall Impact

    The overall impact of this final rule is an estimated net increase 
in Federal payments to hospices of $230 million, or 1.4 percent for FY 
2015. This estimated impact on hospices is a result of the final 
hospice payment update percentage for FY 2015 of 2.1 percent and 
changes to the FY 2015 hospice wage index, including a reduction to the 
BNAF by an additional 15 percent, for a total BNAF reduction of 85 
percent (10 percent in FY 2010, and 15 percent per year for FY 2011 
through FY 2015). An 85 percent reduced BNAF is computed to be 0.009313 
(or 0.9313 percent). The BNAF reduction is part of a 7-year BNAF phase-
out that was finalized in the FY 2010 Hospice Wage Index final rule (74 
FR 39384), and is not a policy change.
1. Detailed Economic Analysis
    Column 4 of Table 13 shows the combined effects of the updated wage 
data (the 2013 pre-floor, pre-reclassified hospital wage index) and of 
the additional 15 percent reduction in the BNAF (for a total BNAF 
reduction of 85 percent), comparing estimated payments for FY 2014 to 
estimated payments for FY 2015. The FY 2014 payments used for 
comparison have a 70 percent reduced BNAF applied. We estimate that the 
total hospice payments for FY 2015 will decrease by 0.7 percent. This 
0.7 percent is the result of a 0.1 percent reduction due to the use of 
updated wage data (-$20 million), and a 0.6 percent reduction due to 
the additional 15 percent reduction in the BNAF (-$100 million). This 
estimate does not take into account the final hospice payment update 
percentage of 2.1 percent (+$350 million) for FY 2015.
    Column 5 of Table 13 shows the combined effects of the updated wage 
data (the 2013 pre-floor, pre-reclassified hospital wage index), the 
additional 15 percent reduction in the BNAF (for a total BNAF reduction 
of 85 percent), and the final hospice payment update percentage of 2.1 
percent. The final 2.1 percent hospice payment update percentage is 
based on a 2.9 percent inpatient hospital market basket update for FY 
2015 reduced by a 0.5 percentage

[[Page 50504]]

point productivity adjustment and by 0.3 percentage point as mandated 
by the Affordable Care Act. The estimated effect of the 2.1 percent 
final hospice payment update percentage is an increase in payments to 
hospices of approximately $350 million. Taking into account the 2.1 
percent final hospice payment update percentage (+$350 million), the 
use of updated wage data (-$20 million), and the additional 15 percent 
reduction in the BNAF (-$100 million), it is estimated that hospice 
payments will increase by $230 million in FY 2015 ($350 million - $20 
million - $100 million = $230 million) or 1.4 percent in FY 2015.
a. Effects on Hospices
    This section discusses the impact of the projected effects of the 
hospice wage index and the effects of a final 2.1 percent hospice 
payment update percentage for FY 2015. This final rule continues to use 
the CBSA-based pre-floor, pre-reclassified hospital wage index as a 
basis for the hospice wage index and continues to use the same policies 
for treatment of areas (rural and urban) without hospital wage data. 
The final FY 2015 hospice wage index is based upon the FY 2013 pre-
floor, pre-reclassified hospital wage index and the most complete 
hospice claims data available (FY 2013 hospice claims submitted as of 
March 31, 2014) with an additional 15 percent reduction in the BNAF 
(for a total BNAF reduction of 85 percent).
    For the purposes of our impacts, our baseline is estimated FY 2014 
payments with a 70 percent BNAF reduction, using the FY 2012 pre-floor, 
pre-reclassified hospital wage index. Our first comparison (column 3 of 
Table 13) compares our baseline to estimated FY 2015 payments (holding 
payment rates constant) using the updated wage data (FY 2013 pre-floor, 
pre-reclassified hospital wage index). Consequently, the estimated 
effects illustrated in column 3 of Table 13 show the distributional 
effects of the updated wage data only. The effects of using the updated 
wage data combined with the additional 15 percent reduction in the BNAF 
are illustrated in column 4 of Table 13.
    We have included a comparison of the combined effects of the 
additional 15 percent BNAF reduction, the updated wage data, and the 
final 2.1 percent hospice payment update percentage for FY 2015 (Table 
13, column 5). Presenting these data gives the hospice industry a more 
complete picture of the effects on their total revenue based on changes 
to the hospice wage index and the BNAF phase-out as discussed in this 
final rule and the final FY 2015 hospice payment update percentage. 
Certain events may limit the scope or accuracy of our impact analysis, 
because such an analysis is 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.

 Table 13--Anticipated Impact on Medicare Hospice Payments of Updating the Pre-floor, Pre-Reclassified Hospital
   Wage Index Data, Reducing the Budget Neutrality Adjustment Factor (BNAF) by an Additional 15 Percent (for a
  Total BNAF Reduction of 85 Percent) and Applying a 2.1 Percent Hospice Payment Update Percentage, Compared to
                         the FY 2014 Hospice Wage Index With a 70 Percent BNAF Reduction
----------------------------------------------------------------------------------------------------------------
                                                                                                  Percent change
                                                                                  Percent change    in hospice
                                                                                    in hospice     payments due
                                                                                   payments due    to wage index
                                                     Number of    Percent change   to wage index      change,
                                     Number of     routine home     in hospice        change,     additional 15%
                                     hospices      care days in    payments due   additional 15%   reduction in
                                                     thousands    to FY2014 wage   reduction in       budget
                                                                   index change       budget        neutrality
                                                                                    neutrality    adjustment and
                                                                                    adjustment     market basket
                                                                                                      update
                                             (1)             (2)             (3)             (4)             (5)
----------------------------------------------------------------------------------------------------------------
ALL HOSPICES....................           3,752          88,006            -0.1            -0.7             1.4
URBAN HOSPICES..................           2,779          77,199            -0.1            -0.7             1.4
RURAL HOSPICES..................             973          10,808            -0.2            -0.5             1.6
BY REGION--URBAN:
    NEW ENGLAND.................             128           2,783             0.0            -0.7             1.4
    MIDDLE ATLANTIC.............             252           7,920             0.5            -0.1             2.0
    SOUTH ATLANTIC..............             391          16,855            -0.6            -1.2             0.9
    EAST NORTH CENTRAL..........             363          12,012            -0.1            -0.8             1.3
    EAST SOUTH CENTRAL..........             156           4,494            -0.3            -0.7             1.4
    WEST NORTH CENTRAL..........             210           4,775            -0.8            -1.4             0.7
    WEST SOUTH CENTRAL..........             558          10,459            -0.2            -0.8             1.3
    MOUNTAIN....................             278           6,639            -0.3            -0.9             1.2
    PACIFIC.....................             408          10,039             0.9             0.2             2.3
    OUTLYING....................              35           1,222             0.7             0.7             2.8
BY REGION--RURAL:
    NEW ENGLAND.................              24             238            -0.1            -0.7             1.4
    MIDDLE ATLANTIC.............              44             571             0.3            -0.3             1.8
    SOUTH ATLANTIC..............             137           2,330            -0.6            -1.0             1.1
    EAST NORTH CENTRAL..........             137           1,783            -0.7            -1.3             0.8
    EAST SOUTH CENTRAL..........             132           1,916             0.0             0.0             2.1
    WEST NORTH CENTRAL..........             181           1,228             0.4            -0.1             2.0
    WEST SOUTH CENTRAL..........             174           1,530            -0.3            -0.3             1.8
    MOUNTAIN....................              96             693             0.5             0.1             2.2
    PACIFIC.....................              47             504             0.8             0.1             2.2
    OUTLYING....................               1              13             0.0             0.0             2.1

[[Page 50505]]

 
BY SIZE/DAYS:
    0-3499 DAYS (small).........             668           1,135             0.1            -0.4             1.7
    3500-19,999 DAYS (medium)...           1,797          18,352             0.0            -0.5             1.6
    20,000+ DAYS (large)........           1,287          68,519            -0.1            -0.7             1.4
TYPE OF OWNERSHIP:
    VOLUNTARY...................           1,032          29,283            -0.1            -0.6             1.5
    PROPRIETARY.................           2,195          48,857            -0.1            -0.7             1.4
    GOVERNMENT..................             525           9,866            -0.1            -0.7             1.4
HOSPICE BASE:
    FREESTANDING................            2797          73,257            -0.1            -0.7             1.4
    HOME HEALTH AGENCY..........             489           9,129             0.1            -0.5             1.6
    HOSPITAL....................             444           5,380             0.2            -0.4             1.7
    SKILLED NURSING FACILITY....              22             241             0.2            -0.4             1.7
----------------------------------------------------------------------------------------------------------------
Source: FY 2013 Hospice claims data from the Standard Analytic Files for CY 2012 (as of June 30, 2013) and CY
  2013 (as of March 31, 2014) and the Provider of Service (POS) file (as of March 2014).
Note: The final 2.1 percent hospice payment update percentage for FY 2015 is based on a 2.9 percent inpatient
  hospital market basket update, reduced by a 0.5 percentage point productivity adjustment and by 0.3 percentage
  point. Starting with FY 2013 (and in subsequent fiscal years), the market basket percentage update under the
  hospice payment system as described in section 1814(i)(1)(C)(ii)(VII) or section 1814(i)(1)(C)(iii) of the Act
  will be annually reduced by changes in economy-wide productivity as set out at section 1886(b)(3)(B)(xi)(II)
  of the Act. In FY 2013 through FY 2019, the market basket percentage update under the hospice payment system
  will be reduced by an additional 0.3 percentage point (although for FY 2014 to FY 2019, the potential 0.3
  percentage point reduction is subject to suspension under conditions set out under section 1814(i)(1)(C)(v) of
  the Act).
Region Key:
New England=Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont; Middle
  Atlantic=Pennsylvania, New Jersey, New York; South Atlantic=Delaware, District of Columbia, Florida, Georgia,
  Maryland, North Carolina, South Carolina, Virginia, West Virginia; East North Central=Illinois, Indiana,
  Michigan, Ohio, Wisconsin; East South Central=Alabama, Kentucky, Mississippi, Tennessee; West North
  Central=Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota; West South Central=Arkansas,
  Louisiana, Oklahoma, Texas; Mountain=Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah, Wyoming;
  Pacific=Alaska, California, Hawaii, Oregon, Washington; Outlying=Guam, Puerto Rico, Virgin Islands

    Table 13 shows the results of our analysis. In column 1, we 
indicate the number of hospices included in our analysis as of March 
31, 2014, which had also filed claims in FY 2013. 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. Columns 3, 4, and 5 compare FY 2014 estimated payments with those 
estimated for FY 2015. The estimated FY 2014 payments incorporate a 
BNAF, which has been reduced by 70 percent. Column 3 shows the 
percentage change in estimated Medicare payments for FY 2015 due to the 
effects of the updated wage data only, compared with estimated FY 2014 
payments. The effect of the updated wage data can vary from region to 
region depending on the fluctuations in the wage index values of the 
pre-floor, pre-reclassified hospital wage index. Column 4 shows the 
percentage change in estimated hospice payments from FY 2014 to FY 2015 
due to the combined effects of using the updated wage data and reducing 
the BNAF by an additional 15 percent. Column 5 shows the percentage 
change in estimated hospice payments from FY 2014 to FY 2015 due to the 
combined effects of using updated wage data, an additional 15 percent 
BNAF reduction, and the final 2.1 percent hospice payment update 
percentage.
    The impact of changes in this final rule has been analyzed 
according to the type of hospice, geographic location, type of 
ownership, hospice base, and size. Table 13 categorizes hospices by 
various geographic and hospice characteristics. The first row of data 
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 2,779 hospices located in urban areas and 973 
hospices located in rural areas. The next two row groupings in the 
table indicate the number of hospices by census region, also broken 
down by urban and rural hospices. The next 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

[[Page 50506]]

number of routine home care days provided in FY 2013. 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 column 1 of Table 13, there are 3,752 hospices 
included in the regulatory impact analysis (the number of hospices in 
Table 13 differs from the number of hospices shown in Table 10 because 
the data were obtained from different sources). Approximately 41.5 
percent of Medicare-certified hospices are identified as voluntary 
(non-profit) or government agencies; a majority (58.5 percent) are 
proprietary (for-profit), with 1,557 designated as non-profit or 
government hospices, and 2,195 as proprietary. In addition, 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, and the vast majority of hospices are freestanding.
b. Hospice Size
    Under the Medicare hospice benefit, hospices can provide four 
different levels of care. The majority of the days provided by a 
hospice are routine home care (RHC) days, representing about 97 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. We currently use 
three size designations to present the impact analyses. The three 
categories are--(1) small agencies having 0 to 3,499 RHC days; (2) 
medium agencies having 3,500 to 19,999 RHC days; and (3) large agencies 
having 20,000 or more RHC days. The FY 2015 updated wage data before 
any BNAF reduction are anticipated to decrease payments to large 
hospices by 0.1 percent, and increase 0.1 for small hospices. Medium 
hospices' payments are anticipated to stay stable (column 3). The 
updated wage data and the additional 15 percent BNAF reduction (for a 
total BNAF reduction of 85 percent) are anticipated to decrease 
estimated payments to small hospices by 0.4 percent, to medium hospices 
by 0.5 percent, and to large hospices by 0.7 percent (column 4). 
Finally, the updated wage data, the additional 15 percent BNAF 
reduction (for a total BNAF reduction of 85 percent), and the final 2.1 
percent hospice payment update percentage are projected to increase 
estimated payments by 1.7 percent for small hospices, by 1.6 percent 
for medium hospices, and by 1.4 percent for large hospices (column 5).
c. Geographic Location
    Column 3 of Table 13 shows the estimated impact of using updated 
wage data without the BNAF reduction. Urban hospices are anticipated to 
experience a decrease of 0.1 percent and rural hospices are anticipated 
to experience a decrease of 0.2 percent in payments. Urban hospices can 
anticipate an increase in payments in Middle Atlantic of 0.5 percent, 
in the Pacific of 0.9 percent and in the Outlying area of 0.7 percent. 
Urban hospices can anticipate a decrease in payments ranging from 0.8 
percent in the West North Central region to 0.1 percent in the East 
North Central region. Urban hospices in New England are not anticipated 
to be affected by the updated wage data.
    Rural hospices are estimated to see a decrease in payments in four 
regions, ranging from 0.7 percent in the East North Central region to 
0.1 percent in the New England region. Rural hospices can anticipate an 
increase in payments in four regions ranging from 0.3 percent in the 
Middle Atlantic region to 0.8 percent in the Pacific region. There is 
no anticipated change in payments for the East South Central and 
Outlying regions due to the use of updated wage data.
    Column 4 shows the combined effect of the updated wage data and the 
additional 15 percent BNAF reduction on estimated payments, as compared 
to the FY 2014 estimated payments using a BNAF with a 70 percent 
reduction. Overall, hospices are anticipated to experience a 0.7 
percent decrease in payments, with urban hospices experiencing an 
estimated decrease of 0.7 percent and rural hospices experiencing an 
estimated decrease of 0.5 percent. All urban areas other than Outlying 
and Pacific are estimated to see decreases in payments, ranging from 
1.4 percent in the West North Central region to 0.7 percent in the New 
England and East South Central regions. The urban Pacific and Outlying 
regions are anticipated to see increases in payments of 0.2 percent and 
0.7 percent, respectively.
    Rural hospices are estimated to experience a decrease in payments 
in six regions, ranging from 1.3 percent in the East North Central 
region to 0.1 percent in the West North Central region. Payments in the 
rural Mountain and Pacific regions are anticipated to increase by 0.1 
percent, while payments in the rural Outlying and East South Central 
regions are anticipated to stay relatively stable.
    Column 5 shows the combined effects of the updated wage data, the 
additional 15 percent BNAF reduction, and the final 2.1 percent hospice 
payment update percentage on estimated FY 2015 payments as compared to 
estimated FY 2014 payments. Overall, hospices are anticipated to 
experience a 1.4 percent increase in payments, with urban hospices 
anticipated to experience a 1.4 percent increase in payments, and rural 
hospices anticipated to experience a 1.6 percent increase in payments. 
Urban hospices are anticipated to experience an increase in estimated 
payments in every region, ranging from 0.7 percent in the West North 
Central region to 2.8 percent in Outlying area. Rural hospices in every 
region are estimated to see an increase in payments ranging from 0.8 
percent in East North Central to 2.2 percent in the Mountain and 
Pacific regions.
d. Type of Ownership
    Column 3 demonstrates the effect of the updated wage data on FY 
2015 estimated payments, versus FY 2014 estimated payments. We 
anticipate that using the updated wage data will decrease estimated 
payments to proprietary (for-profit), voluntary (non-profit), and 
Government hospices by 0.1 percent. Column 4 demonstrates the combined 
effects of the updated wage data and of the additional 15 percent BNAF 
reduction. Estimated payments to voluntary (non-profit), proprietary 
(for-profit), and government hospices are anticipated to decrease by 
0.6 percent, 0.7 percent and 0.7 percent, respectively. Column 5 shows 
the combined effects of the updated wage data, the additional 15 
percent BNAF reduction (for a total BNAF reduction of 85 percent), and 
the final 2.1 percent hospice payment update percentage on estimated 
payments, comparing FY 2015 to FY 2014. Estimated FY 2015 payments are 
anticipated to increase for voluntary (non-profit) hospices by 1.5 
percent, for proprietary (for-profit) hospices by 1.4 percent, and 
government hospices by 1.4 percent.
e. Hospice Base
    Column 3 demonstrates the effect of using the updated wage data, 
comparing estimated payments for FY 2015 to FY 2014. Estimated payments 
are anticipated to decrease for freestanding hospices by 0.1 percent. 
Estimated payments are anticipated to increase for home health agency, 
hospital, and skilled nursing facility based hospices by 0.1 percent, 
0.2 percent, and by 0.2 percent, respectively. Column 4 shows the 
combined effects of the updated wage data and reducing the BNAF by an 
additional 15 percent, comparing estimated payments for FY 2015 to FY 
2014. All hospice facilities are

[[Page 50507]]

anticipated to experience decrease in payments ranging from 0.7 percent 
for freestanding hospices to 0.4 percent for hospital and skilled 
nursing facility based hospices. Column 5 shows the combined effects of 
the updated wage data, the additional 15 percent BNAF reduction, and 
the final 2.1 percent hospice payment update percentage on estimated 
payments, comparing FY 2015 to FY 2014. Estimated payments are 
anticipated to increase for all hospices, ranging from 1.4 percent for 
freestanding hospices to 1.7 percent for hospital and skilled nursing 
facility based hospices.
f. Effects on Other Providers
    This final rule will only affect Medicare hospices, and therefore 
has no effect on other provider types. We note that our suggested 
approaches with respect to Part D coordination with hospice payments 
may ultimately have an effect on Part D spending, if subsequently 
proposed and adopted.
g. Effects on the Medicare and Medicaid Programs
    This final rule only affects Medicare hospices, and therefore has 
no effect on Medicaid programs. As described previously, estimated 
Medicare payments to hospices in FY 2015 are anticipated to decrease by 
$20 million due to the update in the wage index data, and to decrease 
by $100 million due to the additional 15 percent reduction in the BNAF 
(for a total 85 percent reduction in the BNAF). However, the final 
hospice payment update percentage of 2.1 percent is anticipated to 
increase Medicare payments by $350 million. Therefore, the total effect 
on Medicare hospice payments is estimated to be a $230 million increase 
(1.4 percent).
h. Alternatives Considered
    In continuing the reduction to the BNAF by an additional 15 
percent, for a total BNAF reduction of 85 percent (10 percent in FY 
2010, and 15 percent per year for FY 2011 through FY 2015), and 
implementing the hospice payment update percentage and the updated wage 
index, the aggregate impact will be a net increase of $230 million in 
payments to hospices. In the proposed rule for FY 2015, we did not 
consider discontinuing the additional 15 percent reduction to the BNAF 
as the 7-year phase-out of the BNAF was finalized in the FY 2010 
Hospice Wage Index final rule (74 FR 39384). However, if we were to 
discontinue the reduction to the BNAF by an additional 15 percent, 
Medicare will pay an estimated $100 million more to hospices in FY 
2015.
    Since the hospice payment update percentage is determined based on 
statutory requirements, we did not consider updating the hospice 
payment rates by a percentage less than the payment update percentage. 
The final 2.1 percent hospice payment update percentage for FY 2015 is 
based on a final 2.9 percent inpatient hospital market basket update 
for FY 2015, reduced by a 0.5 percentage point productivity adjustment 
and by an additional 0.3 percentage point. Payment rates for FYs since 
2002 have been 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 must be the market basket percentage for that FY. The 
Act requires us to use the inpatient hospital market basket to 
determine the hospice payment rate update. In addition, section 3401(g) 
of the Affordable Care Act mandates that, starting with FY 2013 (and in 
subsequent FYs), the hospice payment update percentage will be annually 
reduced by changes in economy-wide productivity as specified in section 
1886(b)(3)(B)(xi)(II) of the Act. In addition, section 3401(g) of the 
Affordable Care Act also mandates that in FY 2013 through FY 2019, the 
hospice payment update percentage will be reduced by an additional 0.3 
percentage point (although for FY 2014 to FY 2019, the potential 0.3 
percentage point reduction is subject to suspension under conditions 
specified in section 1814(i)(1)(C)(v) of the Act).
    Regarding alternative timeframes for timely-filing of the Notice of 
Election (NOE) and of the Notice of Termination/Revocation (NOTR), we 
considered using 4 days after the effective date of election or of 
discharge/revocation, but decided to allow 5 days. We will continue to 
monitor the filing of NOEs and NOTRs, and will consider shortening the 
timeframe for what would be considered a timely-filed NOE or NOTR in 
future rulemaking. To ensure the attending physician of record is 
properly documented in the patient's medical record, we finalized, in 
section III.F, changes to the regulations at Sec.  418.24(b)(1) 
requiring the election statement to include the patient's choice of 
attending physician. We considered limiting the number of times that a 
beneficiary can change his/her attending to once per election period 
(similar to the current regulations at Sec.  418.30(a) that only allows 
a beneficiary to change a hospice provider once during an election 
period). However, we first want to conduct additional analyses of 
hospice Part A billing for physician services provided by nurse 
practitioners and Part B attending physician billing to determine how 
frequently beneficiaries change attending physicians.
i. Accounting Statement
    As required by OMB Circular A-4 (available at http://www.whitehouse.gov/omb/circulars/a004/a-4.pdf), in Table 14 below, we 
have prepared an accounting statement showing the classification of the 
expenditures associated with this final rule. Table 14 provides our 
best estimate of the increase in Medicare payments under the hospice 
benefit as a result of the changes presented in this final rule for 
3,752 hospices in our impact analysis file constructed using FY 2013 
claims as of March 31, 2014. Table 14 also includes the costs 
associated with (1) a hospice accountant to complete the cap 
determination worksheet, and for a hospice administrator to review the 
final worksheet, for a total annual burden of $266,481 as noted in 
section IV.A; and (2) the cost to hospices to participate in the 
CAHPS[supreg] survey, including the preparation of a monthly sampling 
frame for their approved vendor, as well as estimated survey vendor 
costs, for an estimated total annual cost of $8.58 million to all 
hospices in the survey. Table 14 below does not reflect a one-time cost 
of modifying the current hospice election statement to record the 
patient's choice of attending physician ($83,435) and the one-time cost 
of creating a new hospice form for changing the attending physician 
($83,435), for a total one-time burden of $166,870 as noted in section 
IV.B.

 Table 14--Accounting Statement: Classification of Estimated Transfers,
                         From FY 2014 to FY 2015
                             [in $Millions]
------------------------------------------------------------------------
                 Category                             Transfers
------------------------------------------------------------------------
      FY 2015 Final Rule Hospice Wage Index and Payment Rate Update
------------------------------------------------------------------------
Annualized Monetized Transfers............  $230
From Whom to Whom?                          Federal Government to
                                             Hospices
------------------------------------------------------------------------
Category                                    Costs
------------------------------------------------------------------------
Annualized Monetized Costs for Hospice      $8.85
 Providers \1\.
------------------------------------------------------------------------
\1\ Costs associated with hospice aggregate cap reporting and with the
  CAHPS[supreg] Hospice Survey.


[[Page 50508]]

j. Conclusion
    In conclusion, the overall effect of this final rule is an 
estimated $230 million increase in Medicare payments to hospices due to 
the wage index changes (including the additional 15 percent reduction 
in the BNAF) and the final hospice payment update percentage of 2.1 
percent. Also, starting in FY 2015, hospices are estimated to incur 
annual burden costs of $266,481 for a hospice accountant to complete 
the cap determination worksheet, and for a hospice administrator to 
review the final worksheet. Finally, starting in FY 2015 hospices are 
estimated to incur annual burden costs of $8.58 million for 
participation in the CAHPS[supreg] hospice survey.
2. Regulatory Flexibility Act Analysis
    The RFA requires agencies to analyze options for regulatory relief 
of small businesses if a rule has a significant impact on a substantial 
number of small entities. For purposes of the RFA, we estimate that 
almost all hospices are small entities as that term is used in the RFA. 
The great majority of hospitals and most other health care providers 
and suppliers are small entities by meeting the Small Business 
Administration (SBA) definition of a small business (in the service 
sector, having revenues of less than $7.0 million to $35.5 million in 
any 1 year), or being nonprofit organizations. While the SBA does not 
define a size threshold in terms of annual revenues for hospices, it 
does define one for home health agencies ($14 million; see http://www.sba.gov/sites/default/files/files/Size_Standards_Table(1).pdf). 
For the purposes of this final rule, because the hospice benefit is a 
home-based benefit, we are applying the SBA definition of ``small'' for 
home health agencies to hospices; we will use this definition of 
``small'' in determining if this final rule has a significant impact on 
a substantial number of small entities (for example, hospices). We 
estimate that 95 percent of hospices have Medicare revenues below $14 
million or are nonprofit organizations and therefore are considered 
small entities.
    HHS's practice in interpreting the RFA is to consider effects 
economically ``significant'' only if they reach a threshold of 3 to 5 
percent or more of total revenue or total costs. As noted above, the 
combined effect of the updated wage data, the additional 15 percent 
BNAF reduction, and the final FY 2015 hospice payment update percentage 
of 2.1 percent results in an increase in estimated hospice payments of 
1.4 percent for FY 2015. For small and medium hospices (as defined by 
routine home care days), the estimated effects on revenue when 
accounting for the updated wage data, the additional 15 percent BNAF 
reduction, and the final FY 2015 hospice payment update percentage 
reflect increases in payments of 1.7 percent and 1.6 percent, 
respectively. Therefore, the Secretary has determined that this final 
rule will not create a significant economic impact on a substantial 
number of small entities.
    In addition, section 1102(b) of the Act requires us to prepare a 
regulatory impact analysis if a rule may have a significant impact on 
the operations of a substantial number of small rural hospitals. This 
analysis must conform to the provisions of section 604 of the RFA. For 
purposes of section 1102(b) of the Act, we define a small rural 
hospital as a hospital that is located outside of a metropolitan 
statistical area and has fewer than 100 beds. This final rule only 
affects hospices. Therefore, the Secretary has determined that this 
final rule will not have a significant impact on the operations of a 
substantial number of small rural hospitals.
3. Unfunded Mandates Reform Act Analysis
    Section 202 of the Unfunded Mandates Reform Act of 1995 also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule whose mandates require spending in any 1 year of $100 
million in 1995 dollars, updated annually for inflation. In 2014, that 
threshold is approximately $141 million. This final rule is not 
anticipated to have an effect on State, local, or tribal governments, 
in the aggregate, or on the private sector of $141 million or more.

VI. Federalism Analysis

    Executive Order 13132 on Federalism (August 4, 1999) 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 substantial 
direct effects on the rights, roles, and responsibilities of States, 
local or tribal governments.

VII. Waiver of 60-Day Delay in the Effective Date

    We ordinarily provide a 60-day delay in the effective date of the 
provisions of a rule in accordance with the Administrative Procedure 
Act (APA) (5 U.S.C. 553(d), which requires a 30-day delayed effective 
date, and the Congressional Review Act (5 U.S.C. 801(a)(3), which 
requires a 60-day delayed effective date for major rules. However, we 
can waive the delay in the effective date if the Secretary finds, for 
good cause, that the delay is impracticable, unnecessary, or contrary 
to the public interest, and incorporates a statement of the finding and 
the reasons in the rule issued. 5 U.S.C. 553(d)(3); 5 U.S.C. 808(2).
    The hospice payment system is a fiscal year payment system, and we 
typically issue the final rule by August 1 of each year to both comply 
with the requirement to annually review and update these payment 
systems and ensure that the payment policies for these systems are 
effective, following the required 60-day delay in the effective date, 
on October 1, the first day of the fiscal year to which the policies 
are intended to apply. If the agency finds, for good cause, that a 60-
day delay is impracticable, unnecessary, or contrary to the public 
interest, and the agency incorporates a statement of the findings and 
its reasons in the rule issued, the agency may specify an earlier 
effective date. The timeframes for developing annual rules are 
extremely compressed and processing issues complicated this year's 
rule. We believe it would be contrary to the public interest to delay 
the effective date of the hospice payment system. We therefore specify 
that those portions of the rule will be effective October 1.

List of Subjects

42 CFR Part 405

    Administrative practice and procedure, Health facilities, Medicare, 
Reporting and recordkeeping requirements.

42 CFR Part 418

    Health facilities, Hospice care, Medicare, Reporting and 
recordkeeping requirements.
    For the reasons set forth in the preamble, the Centers for Medicare 
and Medicaid Services amends 42 CFR chapter IV as set forth below:

PART 405--FEDERAL HEALTH INSURANCE FOR THE AGED AND DISABLED

Subpart C--Suspension of Payment, Recovery of Overpayments, and 
Repayment of Scholarships and Loans

0
1. The authority citation for part 405, subpart C continues to read:


[[Page 50509]]


    Authority: Secs. 1102, 1815, 1833, 1842, 1862, 1866, 1870, 1871, 
1879 and 1892 of the Social Security Act (42 U.S.C. 1302, 1395g, 
1395l, 1395u, 1395y, 1395cc, 1395gg, 1395hh, 1395pp and 1395ccc) and 
31 U.S.C. 3711.

0
2. Section 405.371 is amended by revising paragraph (c)(1) and adding 
paragraph (e) to read as follows:


Sec.  405.371  Suspension, offset, and recoupment of Medicare payments 
to providers and suppliers of services.

* * * * *
    (c) * * * (1) Except as provided in paragraphs (d) and (e) of this 
section, CMS or the Medicare contractor suspends payments only after it 
has complied with the procedural requirements set forth at Sec.  
405.372.
* * * * *
    (e) Suspension of payment in the case of unfiled hospice cap 
determination reports. (1) If a provider has failed to timely file an 
acceptable hospice cap determination report, payment to the provider is 
immediately suspended in whole or in part until a cap determination 
report is filed and determined by the Medicare contractor to be 
acceptable.
    (2) In the case of an unfiled hospice cap determination report, the 
provisions of Sec.  405.372 do not apply. (See Sec.  405.372(a)(2) 
concerning failure to furnish other information.)

PART 418--HOSPICE CARE

0
3. 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).


Sec.  418.3  [Amended]

0
4. Section 418.3 is amended by removing the definition of ``Social 
worker''.
0
5. Section 418.24 is amended by revising paragraphs (a) and (b)(1) and 
adding paragraph (f) to read as follows:


Sec.  418.24  Election of hospice care.

    (a) Filing an election statement. (1) General. An individual who 
meets the eligibility requirement of Sec.  418.20 may file an election 
statement with a particular hospice. If the individual is physically or 
mentally incapacitated, his or her representative (as defined in Sec.  
418.3) may file the election statement.
    (2) Notice of election. The hospice chosen by the eligible 
individual (or his or her representative) must file the Notice of 
Election (NOE) with its Medicare contractor within 5 calendar days 
after the effective date of the election statement.
    (3) Consequences of failure to submit a timely notice of election. 
When a hospice does not file the required Notice of Election for its 
Medicare patients within 5 calendar days after the effective date of 
election, Medicare will not cover and pay for days of hospice care from 
the effective date of election to the date of filing of the notice of 
election. These days are a provider liability, and the provider may not 
bill the beneficiary for them.
    (4) Exception to the consequences for filing the NOE late. CMS may 
waive the consequences of failure to submit a timely-filed NOE 
specified in paragraph (a)(2) of this section. CMS will determine if a 
circumstance encountered by a hospice is exceptional and qualifies for 
waiver of the consequence specified in paragraph (a)(3) of this 
section. A hospice must fully document and furnish any requested 
documentation to CMS for a determination of exception. An exceptional 
circumstance may be due to, but is not limited to the following:
    (i) Fires, floods, earthquakes, or similar unusual events that 
inflict extensive damage to the hospice's ability to operate.
    (ii) A CMS or Medicare contractor systems issue that is beyond the 
control of the hospice.
    (iii) A newly Medicare-certified hospice that is notified of that 
certification after the Medicare certification date, or which is 
awaiting its user ID from its Medicare contractor.
    (iv) Other situations determined by CMS to be beyond the control of 
the hospice.
    (b) * * *
    (1) Identification of the particular hospice and of the attending 
physician that will provide care to the individual. The individual or 
representative must acknowledge that the identified attending physician 
was his or her choice.
* * * * *
    (f) Changing the attending physician. To change the designated 
attending physician, the individual (or representative) must file a 
signed statement with the hospice that states that he or she is 
changing his or her attending physician.
    (1) The statement must identify the new attending physician, and 
include the date the change is to be effective and the date signed by 
the individual (or representative).
    (2) The individual (or representative) must acknowledge that the 
change in the attending physician is due to his or her choice.
    (3) The effective date of the change in attending physician cannot 
be before the date the statement is signed.

0
6. Section 418.26 is amended by adding a new paragraph (e) to read as 
follows:


Sec.  418.26  Discharge from hospice care.

* * * * *
    (e) Filing a notice of termination of election. When the hospice 
election is ended due to discharge, the hospice must file a notice of 
termination/revocation of election with its Medicare contractor within 
5 calendar days after the effective date of the discharge, unless it 
has already filed a final claim for that beneficiary.

0
7. Section 418.28 is amended by adding a new paragraph (d) to read as 
follows:


Sec.  418.28  Revoking the election of hospice care.

* * * * *
    (d) When the hospice election is ended due to revocation, the 
hospice must file a notice of termination/revocation of election with 
its Medicare contractor within 5 calendar days after the effective date 
of the revocation, unless it has already filed a final claim for that 
beneficiary.

0
8. Section 418.306 is amended by adding paragraph (b)(6) to read as 
follows:


Sec.  418.306  Determination of payment rates.

* * * * *
    (b) * * *
    (6) For FY 2014 and subsequent fiscal years, in the case of a 
Medicare-certified hospice that does not submit hospice quality data, 
as specified by the Secretary, the payment rates are equal to the rates 
for the previous fiscal year increased by the applicable market basket 
percentage increase, minus 2 percentage points. Any reduction of the 
percentage change will apply only to the fiscal year involved and will 
not be taken into account in computing the payment amounts for a 
subsequent fiscal year.
* * * * *

0
9. Section 418.308 is amended by revising paragraph (c) to read as 
follows:


Sec.  418.308  Limitation on the amount of hospice payments.

* * * * *
    (c) The hospice must file its aggregate cap determination notice 
with its Medicare contractor no later than 5 months after the end of 
the cap year (that is, by March 31st) and remit any overpayment due at 
that time. Hospices shall file the aggregate cap using data no earlier 
than 3 months after the end of

[[Page 50510]]

the cap period. The Medicare contractor will notify the hospice of the 
final determination of program reimbursement in accordance with 
procedures similar to those described in Sec.  405.1803 of this 
chapter. If a provider fails to file its self-determined cap 
determination with its Medicare contractor within 5 months after the 
cap year, payments to the hospice will be suspended in whole or in 
part, until a self-determined cap determination is filed with the 
Medicare contractor, in accordance withSec.  405.371(e) of this 
chapter.
* * * * *

0
10. Subpart G is amended by adding a new Sec.  418.312 to read as 
follows:


Sec.  418.312  Data submission requirements under the hospice quality 
reporting program.

    (a) General rule. Except as provided in paragraph (g) of this 
section, Medicare-certified hospices must submit to CMS data on 
measures selected under section 1814(i)(5)(C) of the Act in a form and 
manner, and at a time, specified by the Secretary.
    (b) Submission of Hospice Quality Reporting Program data. Hospices 
are required to complete and submit an admission Hospice Item Set (HIS) 
and a discharge HIS for each patient admission to hospice, regardless 
of payer or patient age. The HIS is a standardized set of items 
intended to capture patient-level data.
    (c) A hospice that receives notice of its CMS certification number 
before November 1 of the calendar year before the fiscal year for which 
a payment determination will be made must submit data for the calendar 
year.
    (d) Medicare-certified hospices must contract with CMS-approved 
vendors to collect the CAHPS[supreg] Hospice Survey data on their 
behalf and submit the data to the Hospice CAHPS[supreg] Data Center.
    (e) If the hospice's total, annual, unique, survey-eligible, 
deceased patient count for the prior calendar year is less than 50 
patients, the hospice is eligible to be exempt from the CAHPS[supreg] 
Hospice Survey reporting requirements in the current calendar year. In 
order to qualify for this exemption the hospice must submit to CMS its 
total, annual, unique, survey-eligible, deceased patient count for the 
prior calendar year.
    (f) Vendors that want to become CMS-approved CAHPS[supreg] Hospice 
Survey vendors must meet the minimum business requirements. Survey 
vendors must have been in business for a minimum of 4 years, have 
conducted surveys in the approved survey mode for a minimum of 3 years, 
and have conducted surveys of individual patients for a minimum of 2 
years. For Hospice CAHPS[supreg], a ``survey of individual patients'' 
is defined as the collection of data from at least 600 individual 
patients selected by statistical sampling methods, and the data 
collected are used for statistical purposes. Vendors may not use home-
based or virtual interviewers to conduct the CAHPS[supreg] Hospice 
Survey, nor may they conduct any survey administration processes (for 
example, mailings) from a residence.
    (g) No organization, firm, or business that owns, operates, or 
provides staffing for a hospice is permitted to administer its own 
Hospice CAHPS[supreg] survey or administer the survey on behalf of any 
other hospice in the capacity as a Hospice CAHPS[supreg] survey vendor. 
Such organizations will not be approved by CMS as CAHPS[supreg] Hospice 
Survey vendors.
    (h) Reconsiderations and appeals of Hospice Quality Reporting 
Program decisions. (1) A hospice may request reconsideration of a 
decision by CMS that the hospice has not met the requirements of the 
Hospice Quality Reporting Program for a particular reporting period. A 
hospice must submit a reconsideration request to CMS no later than 30 
days from the date identified on the annual payment update notification 
provided to the hospice.
    (2) Reconsideration request submission requirements are available 
on the CMS Hospice Quality Reporting Web site on CMS.gov.
    (3) A hospice that is dissatisfied with a decision made by CMS on 
its reconsideration request may file an appeal with the Provider 
Reimbursement Review Board under part 405, subpart R of this chapter.

    Dated: July 24, 2014.
Marilyn Tavenner,
Administrator, Centers for Medicare & Medicaid Services.
    Approved: July 30, 2014.
Sylvia M. Burwell
Secretary, Department of Health and Human Services.
[FR Doc. 2014-18506 Filed 8-4-14; 4:15 pm]
BILLING CODE 4120-01-P