[Federal Register Volume 80, Number 151 (Thursday, August 6, 2015)]
[Rules and Regulations]
[Pages 47142-47207]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-19033]



[[Page 47141]]

Vol. 80

Thursday,

No. 151

August 6, 2015

Part III





Department of Health and Human Services





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Centers for Medicare & Medicaid Services





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42 CFR Part 418





 Medicare Program; FY 2016 Hospice Wage Index and Payment Rate Update 
and Hospice Quality Reporting Requirements; Final Rule

  Federal Register / Vol. 80 , No. 151 / Thursday, August 6, 2015 / 
Rules and Regulations  

[[Page 47142]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 418

[CMS-1629-F]
RIN 0938-AS39


Medicare Program; FY 2016 Hospice Wage Index and Payment Rate 
Update and Hospice Quality Reporting Requirements

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) 2016 (October 1, 2015 through September 
30, 2016), including implementing the last year of the phase-out of the 
wage index budget neutrality adjustment factor (BNAF). Effective on 
January 1, 2016, this rule also finalizes our proposals to 
differentiate payments for routine home care (RHC) based on the 
beneficiary's length of stay and implement a service intensity add-on 
(SIA) payment for services provided in the last 7 days of a 
beneficiary's life, if certain criteria are met. In addition, this rule 
will implement changes to the aggregate cap calculation mandated by the 
Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT 
Act), align the cap accounting year for both the inpatient cap and the 
hospice aggregate cap with the federal fiscal year starting in FY 2017, 
make changes to the hospice quality reporting program, clarify a 
requirement for diagnosis reporting on the hospice claim, and discuss 
recent hospice payment reform research and analyses.

DATES: Effective Date: These regulations are effective on October 1, 
2015 and the implementation date for the RHC rates and the SIA payment 
rates will be January 1, 2016.

FOR FURTHER INFORMATION CONTACT: Debra Dean-Whittaker, (410) 786-0848 
for questions regarding the CAHPS[supreg] Hospice Survey. Michelle 
Brazil, (410) 786-1648 for questions regarding the hospice quality 
reporting program. 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).

Table of Contents

I. Executive Summary
    A. Purpose
    B. Summary of the Major Provisions
    C. Summary of Costs, Benefits, and Transfers
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
    7. FY 2015 Hospice Rate Update Final Rule
    8. Impact Act of 2014
    E. Trends in Medicare Hospice Utilization
III. Provisions of the Proposed Rule and Responses to Comments
    A. Hospice Payment Reform: Research and Analyses
    1. Pre-Hospice Spending
    2. Non-Hospice Spending for Hospice Beneficiaries During an 
Election
    3. Live Discharge Rates
    B. Routine Home Care Rates and Service Intensity Add-On (SIA) 
Payment
    1. Background and Statutory Authority
    a. U-Shaped Payment Model
    b. Tiered Payment Model
    c. Visits During the Beginning and End of a Hospice Election
    2. Routine Home Care Rates
    3. Service Intensity Add-On Payment
    C. FY 2016 Hospice Wage Index and Rates Update
    1. FY 2016 Hospice Wage Index
    a. Background
    b. Elimination of the Wage Index Budget Neutrality Factor (BNAF)
    c. Implementation of New Labor Market Delineations
    2. Hospice Payment Update Percentage
    3. FY 2016 Hospice Payment Rates
    4. Hospice Aggregate Cap and the IMPACT Act of 2014
    D. Alignment of the Inpatient and Aggregate Cap Accounting Year 
With the Federal Fiscal Year
    1. Streamlined Method and Patient-by-Patient Proportional Method 
for Counting Beneficiaries To Determine Each Hospice's Aggregate Cap 
Amount
    2. Inpatient and Aggregate Cap Accounting Year Timeframe
    E. Updates to the Hospice Quality Reporting Program
    1. Background and Statutory Authority
    2. General Considerations Used for Selection of Quality Measures 
for the HQRP
    3. Policy for Retention on HQRP Measures Adopted for Previous 
Payment Determination
    4. Previously Adopted Measures for FY 2016 and FY 2017 Payment 
Determination
    5. HQRP Quality Measures and Concepts Under Consideration for 
Future Years
    6. Form, Manner, and Timing of Quality Data Submission
    a. Background
    b. Policy for New Facilities To Begin Submitting Quality Data
    c. Previously Finalized Data Submission Mechanism, Collection 
Timelines, and Submission Deadlines for the FY 2017 Payment 
Determination
    d. Data Submission Timelines and Requirements for FY 2018 
Payment Determination and Subsequent Years
    e. HQRP Data Submission and Compliance Thresholds for the FY 
2018 Payment Determination and Subsequent Years
    7. HQRP Submission Exception and Extension Requirements for the 
FY 2017 Payment Determination and Subsequent Years
    8. Adoption of the CAHPS Hospice Survey for the FY 2017 Payment 
Determination
    a. Background 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 FY 2017 APU
    9. Previously Finalized HQRP Reconsideration and Appeals 
Procedures for the FY 2016 Payment Determination and Subsequent 
Years
    10. Public Display of Quality Measures Data for HQRP
    11. Public Display of Other Hospice Information
    F. Clarification Regarding Diagnosis Reporting on Hospice Claims
    1. Background
    2. Current Discussions About Hospice Vulnerabilities
    3. Medicare Hospice Eligibility Requirements
    4. Assessment of Conditions and Comorbidities Required by 
Regulation
    5. Clarification Regarding Diagnosis Reporting on Hospice Claims
IV. Collection of Information Requirements
V. Regulatory Impact Analysis
    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,

[[Page 47143]]

we are listing the acronyms used and their corresponding meanings in 
alphabetical order below:

APU Annual Payment Update
ASPE Assistant Secretary of Planning and Evaluation
AHIMA American Health Information Management Association
BBA Balanced Budget Act of 1997
BETOS Berenson-Eggers Types of Service
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
CCN CMS Certification Number
CCW Chronic Conditions Data Warehouse
CFR Code of Federal Regulations
CHC Continuous Home Care
CHF Congestive Heart Failure
CMS Centers for Medicare & Medicaid Services
COPD Chronic Obstructive Pulmonary Disease
CoPs Conditions of Participation
CPI Center for Program Integrity
CPI-U Consumer Price Index-Urban Consumers
CR Change Request
CVA Cerebral Vascular Accident
CWF Common Working File
CY Calendar Year
DME Durable Medical Equipment
DRG Diagnostic Related Group
ER Emergency Room
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
HIPPA 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
IMPACT Act Improving Medicare Post-Acute Care Transformation Act of 
2014
IOM Institute of Medicine
IPPS Inpatient Prospective Payment System
IRC Inpatient Respite Care
LCD Local Coverage Determination
LPN Licensed Practical Nurse
MAC Medicare Administrative Contractor
MAP Measure Applications Partnership
MedPAC Medicare Payment Advisory Commission
MFP Multifactor Productivity
MSA Metropolitan Statistical Area
MSS Medical Social Services
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
OMB Office of Management and Budget
PRRB Provider Reimbursement Review Board
PS&R Provider Statistical and Reimbursement Report
Pub. L Public Law
QAPI Quality Assessment and Performance Improvement
RHC Routine Home Care
RN Registered Nurse
SBA Small Business Administration
SEC Securities and Exchange Commission
SIA Service Intensity Add-on
SNF Skilled Nursing Facility
TEFRA Tax Equity and Fiscal Responsibility Act of 1982
TEP Technical Expert Panel
UHDDS Uniform Hospital Discharge Data Set
U.S.C. United States Code

I. Executive Summary

A. Purpose

    This final rule updates the payment rates for hospices for fiscal 
year (FY) 2016, as required under section 1814(i) of the Social 
Security Act (the Act) and reflects the final year of the 7-year Budget 
Neutrality Adjustment Factor (BNAF) phase-out finalized in the FY 2010 
Hospice Wage Index final rule (74 FR 39407). Our updates to payment 
rates for hospices also include changes to the hospice wage index by 
incorporating the new Office of Management and Budget (OMB) core-based 
statistical area (CBSA) definitions, changes to the aggregate cap 
calculation required by section 1814(i)(2)(B)(ii) of the Act, and 
includes aligning the cap accounting year for both the inpatient cap 
and the hospice aggregate cap with the federal fiscal year starting in 
FY 2017. In addition, pursuant to the discretion granted the Secretary 
under section 1814(i)(6)(D)(i) of the Act and effective on January 1, 
2016; this rule will create two different payment rates for routine 
home care (RHC) that will result in a higher base payment rate for the 
first 60 days of hospice care and a reduced base payment rate for days 
61 and over of hospice care; and a service intensity add-on (SIA) 
payment that will result in an add-on payment equal to the Continuous 
Home Care (CHC) hourly payment rate multiplied by the amount of direct 
patient care provided by a registered nurse (RN) or social worker 
provided during the last 7 days of a beneficiary's life, if certain 
criteria are met. In addition, section 3004(c) of the Affordable Care 
Act established a quality reporting program for hospices. In accordance 
with section 1814(i)(5)(A) of the Act, starting in FY 2014, hospices 
that have failed to meet quality reporting requirements receive a 2 
percentage point reduction to their payment update percentage. Although 
this rule does not implement new quality measures, it provides updates 
on the hospice quality reporting program. Finally, this rule includes a 
clarification regarding diagnosis reporting on the hospice claim form.

B. Summary of the Major Provisions

    Section III.A of this rule provides an update on hospice payment 
reform research and analysis. As a result of the hospice payment reform 
research and analysis conducted over the past several years, some of 
which is described in section III.A of this rule and in various 
technical reports available on the CMS Hospice Center Web page (http://www.cms.gov/Center/Provider-Type/Hospice-Center.html) we proposed 
several provisions to address issues identified and strengthen the 
Medicare hospice benefit. Section III.B implements the creation of two 
different payment rates for RHC that will result in a higher base 
payment rate for the first 60 days of hospice care and a reduced base 
payment rate for days 61 and over of hospice care. Section III.B also 
implements SIA payment, in addition to the per diem rate for the RHC 
level of care, that will result in an add-on payment equal to the CHC 
hourly payment rate multiplied by the amount of direct patient care 
provided by an RN or social worker that occurs during the last 7 days 
of a beneficiary's life, if certain criteria are met.
    In section III.C.1 of this rule, we update the hospice wage index 
using a 50/50 blend of the existing CBSA designations and the new CBSA 
designations outlined in a February 28, 2013, OMB bulletin. Section 
III.C.2 of this rule implements year 7 of the 7-year BNAF phase-out 
finalized in the FY 2010 Hospice Wage Index final rule (74 FR 39407). 
In section III.C.3, we update the hospice payment rates for FY 2016 by 
1.6 percent. Section III.C.4 implements changes mandated by the 
Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT 
Act), in which the aggregate cap for accounting years that end after 
September 30, 2016 and before October 1, 2025, will be updated by the 
hospice payment update percentage rather than using the consumer price 
index for urban consumers (CPI-U). Specifically, the 2016 cap year, 
starting on November 1, 2015 and ending on October 31, 2016, will be 
updated by the FY 2016 hospice update percentage for hospice care. In

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addition, in section III.D, we are aligning the cap accounting year for 
both the inpatient cap and the hospice aggregate cap with the fiscal 
year for FY 2017 and later. We believe that this will allow for the 
timely implementation of the IMPACT Act changes while better aligning 
the cap accounting year with the timeframe described in the IMPACT Act.
    In section III.E of this rule, we discuss updates to the hospice 
quality reporting program, including participation requirements for 
current year (CY) 2015 regarding the Consumer Assessment of Healthcare 
Providers and Systems (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 (HIS) 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 implemented this year. Also, Section III.E of this 
rule will make changes related to the reconsideration process, 
extraordinary circumstance extensions or exemptions, hospice quality 
reporting program (HQRP) eligibility requirements for newly certified 
hospices and new data submission timeliness requirements and compliance 
thresholds. Finally, in Section III.F, we clarify that hospices must 
report all diagnoses of the beneficiary on the hospice claim as a part 
of the ongoing data collection efforts for possible future hospice 
refinements. We believe that reporting of all diagnoses on the hospice 
claim aligns with current coding guidelines as well as admission 
requirements for hospice certifications.

C. Summary of Impacts

                      Table 1--Impact Summary Table
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        Provision description                      Transfers
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FY 2016 Hospice Wage Index and         The overall economic impact of
 Payment Rate Update.                   this final rule is estimated to
                                        be $160 million in increased
                                        payments to hospices during FY
                                        2016.
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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. 
See also Hospice Conditions of Participation final rule (73 FR 32088) 
(2008). 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 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 
their condition. 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. 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,'' as defined in section 
1861(dd)(3)(A) of the Act and our regulations at Sec.  418.3 that is, 
the individual's prognosis is for a life expectancy of 6 months or less 
if the terminal illness runs its normal course. 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 set out at 
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 at a home level of care. Short-
term, intermittent, inpatient respite services are also available to 
the

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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 
in accordance with 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 
programs were originally operated 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 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 of 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 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, 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. Additionally, the 
hospice Conditions of Participation (CoPs) 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.\2\ 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 conditions are considered to be related to the terminal 
prognosis. 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\ 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 
care necessary for pain control and acute or chronic symptom 
management) in a hospital, nursing

[[Page 47146]]

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 
supports the hospice 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 and principles 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).

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 (RHC, CHC, 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 set out at section 1861(dd)(1) of the Act that are needed to 
manage the beneficiary's care. 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 RHC 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 RHC and other services 
included in hospice care for fiscal years (FYs) 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 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

[[Page 47147]]

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 FYs), 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) (collectively referred to as 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 of the Department of Health and Human Services (the 
Secretary), for FY 2014 and subsequent FYs. Beginning in FY 2014, 
hospices that 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 finalized 
in the CY 2011 Home Health Prospective Payment System final rule (75 FR 
70435) that the 180th-day recertification and subsequent 
recertifications corresponded to the beneficiary's third or subsequent 
benefit periods. 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 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 RHC 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.
7. FY 2015 Hospice Rate Update Final Rule
    When electing hospice, a beneficiary waives Medicare coverage for 
any care for the terminal illness and related conditions except for 
services provided by the designated hospice and attending physician. A 
hospice is to file a Notice of Election (NOE) as soon as possible to 
establish the hospice election within the claims processing system. 
Late filing of the NOE can result in inaccurate benefit period data and 
leaves Medicare vulnerable to paying non-hospice claims related to the 
terminal illness and related conditions and beneficiaries possibly 
liable for any cost-sharing associated costs. The FY 2015 Hospice Rate 
Update final rule (79 FR 50452) finalized a requirement that requires 
the NOE be filed within 5 calendar days after the effective date of 
hospice election. If the NOE is filed beyond this 5 day period, hospice 
providers are liable for the services furnished during the days from 
the effective date of hospice election to the date of NOE filing (79 FR 
50454, 50474). Similar to the NOE, the claims processing system must be 
notified of a beneficiary's discharge from hospice or hospice benefit 
revocation. This update to the beneficiary's status allows claims from 
non-hospice providers to process and be paid. Upon live discharge or 
revocation, the beneficiary immediately resumes the Medicare coverage 
that had been waived when he or she elected hospice. The FY 2015 
Hospice Rate Update final rule also finalized a requirement that 
requires hospices to file a notice of termination/revocation within 5 
calendar days of a beneficiary's live discharge or revocation, unless 
the hospices have already filed a final claim. This requirement helps 
to protect beneficiaries from delays in accessing needed care (79 FR 
50509).

[[Page 47148]]

    A hospice ``attending physician'' is described by the statutory and 
regulatory definitions as a medical doctor, osteopath, or nurse 
practitioner whom the patient identifies, at the time of hospice 
election, as having the most significant role in the determination and 
delivery of his or her medical care. We received reports of problems 
with the identification of the patient's designated attending physician 
and a third of hospice patients had multiple providers submit Part B 
claims as the ``attending physician'' using a modifier. The FY 2015 
Hospice Rate Update final rule finalized a requirement that the 
election form must include the beneficiary's choice of attending 
physician and that the beneficiary provide the hospice with a signed 
document when he or she chooses to change attending physicians (79 FR 
50479).
    Hospice providers are required to begin using a Hospice Experience 
of Care Survey for informal caregivers of hospice patients surveyed in 
2015. The FY 2015 Hospice Rate Update final rule provided background 
and a description of the development of the Hospice Experience of Care 
Survey, including the model of survey implementation, the survey 
respondents, eligibility criteria for the sample, and the languages in 
which the survey is offered. The FY 2015 Hospice Rate Update final rule 
also outlined participation requirements for CY 2015 and discussed 
vendor oversight activities and the reconsideration and appeals process 
(79 FR 50496).
    Finally, the FY 2015 Hospice Rate Update final rule requires 
providers to complete their aggregate cap determination within 5 months 
after the cap year, but not sooner than 3 months after the end of the 
cap year, and remit any overpayments. Those hospices that do not submit 
their aggregate cap determinations will have their payments suspended 
until the determination is completed and received by the Medicare 
Administrative Contractor (MAC) (79 FR 50503).
8. IMPACT Act of 2014
    The Improving Medicare Post-Acute Care Transformation Act (IMPACT 
Act) of 2014 became law on October 6, 2014 (Pub. L. 113-185). Section 
3(a) of the IMPACT Act mandates that all Medicare certified hospices be 
surveyed every 3 years beginning April 6, 2015 and ending September 30, 
2025, as it was found that surveys of hospices were being performed on 
an infrequent basis. In addition, the IMPACT Act also implements a 
provision set forth in the Affordable Care Act that requires medical 
review of hospice cases involving patients receiving more than 180 days 
care in select hospices that show a preponderance of such patients, and 
the IMPACT Act contains a new provision mandating that the aggregate 
cap amount for accounting years that end after September 30, 2016, and 
before October 1, 2025 be updated by the hospice payment update rather 
than using the CPI-U for medical care expenditures. Specifically, the 
2016 cap year, which starts on November 1, 2015 and ends on October 31, 
2016, will be updated by the FY 2016 payment update percentage for 
hospice care. In accordance with the statute, we will continue to do 
this through any cap year ending before October 1, 2025 (that is, 
through cap year 2025).

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 
$2.8 billion in FY 2000 to an estimated $15.3 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 98.5 days in FY 2013, an increase of 82 percent.
    There have also been 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 2013, 
``debility'' and ``adult failure to thrive'' were the first and sixth 
most common hospice diagnoses, respectively, accounting for 
approximately 14 percent of all diagnoses. Effective October 1, 2014, 
hospice claims were returned to the provider if ``debility'' and 
``adult failure to thrive'' were coded as the principal hospice 
diagnosis as well as other ICD-9-CM codes that are not permissible as 
principal diagnosis codes per ICD-9-CM coding guidelines. We reminded 
the hospice industry that this policy would go into effect and claims 
would start to be returned October 1, 2014 in the FY 2015 hospice rate 
update final rule. As a result of this, there has been a shift in 
coding patterns on hospice claims. For FY 2014, the most common hospice 
principal diagnoses were Alzheimer's disease, Congestive Heart Failure, 
Lung Cancer, Chronic Airway Obstruction and Senile Dementia which 
constituted approximately 32 percent of all claims-reported principal 
diagnosis codes reported in FY 2014 (see Table 2 below).

             Table 2--The Top Twenty Principal Hospice Diagnoses, FY 2002, FY 2007, FY 2013, FY 2014
----------------------------------------------------------------------------------------------------------------
                    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

[[Page 47149]]

 
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
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 w/         15,777               2
                                              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 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 w/         30,963               2
                                              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 w/         13,687               1
                                              Behavioral Dist..
----------------------------------------------------------------------------------------------------------------
                                                  Year: FY 2014
----------------------------------------------------------------------------------------------------------------
1..........................................  331.0 Alzheimer's disease..........         128,844               9
2..........................................  428.0 Congestive heart failure,             107,540               8
                                              unspecified.
3..........................................  162.9 Lung Cancer..................          90,689               6
4..........................................  496 COPD...........................          79,249               6
5..........................................  290.0 Senile dementia,                       40,269               3
                                              uncomplicated.
6..........................................  429.9 Heart disease, unspecified...          37,129               3
7..........................................  436 CVA/Stroke.....................          33,759               2
8..........................................  294.20 Dementia, unspecified,                33,329               2
                                              without behavioral disturbance.
9..........................................  332.0 Parkinson's Disease..........          30,292               2
10.........................................  153.9 Colon Cancer.................          23,634               2
11.........................................  174.9 Breast Cancer................          23,569               2
12.........................................  157.9 Pancreatic Cancer............          22,789               2
13.........................................  185 Prostate Cancer................          22,374               2
14.........................................  585.6 End stage renal disease......          21,713               2
15.........................................  294.10 Dementia in conditions                19,660               1
                                              classified elsewhere w/o behav
                                              disturbance.

[[Page 47150]]

 
16.........................................  331.2 Senile degeneration of brain.          18,847               1
17.........................................  518.81 Acute respiratory failure...          17,624               1
18.........................................  290.40 Vascular dementia,                    17,318               1
                                              uncomplicated.
19.........................................  491.21 Obstructive chronic                   16,168               1
                                              bronchitis with (acute)
                                              exacerbation.
20.........................................  429.2 Cardiovascular disease,                14,305               1
                                              unspecified.
----------------------------------------------------------------------------------------------------------------
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 and 2007 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 and FY
  2014 hospice claims data from the CCW, accessed on July 6, 2015.

A. Hospice Payment Reform Research and Analyses

    In 2010, the Congress amended section 1814(i)(6) of the Act with 
section 3132(a) of the Affordable Care Act. The amendment authorizes 
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 RHC and 
other hospice services (in a budget-neutral manner in the first year), 
no earlier than October 1, 2013, as described in section 1814(i)(6)(D) 
of the Act. The Secretary is required to consult with hospice programs 
and the Medicare Payment Advisory Commission (MedPAC) regarding 
additional data collection and payment reform options.
    Since 2010, we have undertaken efforts to collect the data needed 
to establish what revisions to the methodology for determining the 
hospice payment rates may be necessary. Effective April 1, 2014, we 
began requiring additional information on hospice claims regarding 
drugs and certain durable medical equipment and effective October 1, 
2014, we finalized changes to the hospice cost report to improve data 
collection on the costs of providing hospice care.\3\ In addition, our 
research contractor, Abt Associates, conducted a hospice literature 
review; held stakeholder meetings; and developed and maintained an 
analytic plan, which supports effort towards implementing hospice 
payment reform. During the stakeholder meetings, attendees articulated 
concerns of sweeping payment reform changes and encouraged us to 
consider incremental steps or to use existing regulatory authority to 
refine the hospice program. We also held five industry technical expert 
panels (TEPs) via webinar and in-person meetings; consulted with 
federal hospice experts; provided annual updates on findings from our 
research and analyses and reform options in the FY 2014 and FY 2015 
Hospice Wage Index and Payment Rate Update proposed and final rules (78 
FR 48234 and 79 FR 50452); and updated the hospice industry on reform 
work through Open Door Forums, industry conferences and academic 
conferences.\4\ We have taken into consideration the recommendations 
from MedPAC on reforming hospice payment, as articulated in the MedPAC 
Reports to Congress since 2009. The MedPAC recommendations and research 
provided a foundation for our development of an analytic plan and 
additional payment reform concepts. Furthermore, MedPAC participated in 
post-TEP meetings with other federal hospice experts. These meetings 
provided valuable feedback regarding the TEP's comments and discussed 
potential research and analyses to consider for hospice payment reform.
---------------------------------------------------------------------------

    \3\ CMS Transmittal 2864, ``Additional Data Reporting 
Requirements for Hospice claim''. Available at http://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/Downloads/R2864P.pdf.
    \4\ http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/Hospice/Downloads/Hospice-Project-Background.pdf.
---------------------------------------------------------------------------

    The FY 2012 Hospice Wage Index final rule (76 FR 47324) noted our 
collaboration with the Assistant Secretary of Planning and Evaluation 
(ASPE) to develop analyses that were used to inform our research 
efforts. The results from such analyses were used by Abt Associates to 
facilitate discussion, in 2012, of potential payment reform options and 
to guide the identification of topics for further analysis. In early 
2014, we began working with Acumen, LLC, using real-time claims data, 
to monitor the vulnerabilities identified in the 2013 and 2014 Abt 
Associates' Hospice Payment Reform Technical Reports. On September 18, 
2014, the IMPACT Act, mandated that the Centers for Medicare & Medicaid 
(CMS) undertake additional hospice monitoring and oversight activities. 
As noted previously, the IMPACT Act requires CMS to survey hospices at 
least as frequently as every 3 years for the next 10 years and review 
medical records of hospice beneficiaries on the hospice benefit for 180 
days or greater as specified by the Secretary. CMS is actively engaged 
in cross-agency collaboration to meet the intent of the IMPACT Act to 
increase monitoring and oversight of hospice providers.
    The majority of the research and analyses conducted by CMS and 
summarized in this rule were based on analyses of FY 2013 Medicare 
claims and cost report data conducted by our research contractor, Abt 
Associates, unless otherwise specified. In addition, we cite research 
and analyses, conducted by Acumen, LLC that are based on real-time 
claims data from the Integrated Data Repository (IDR). In the sections 
below, analysis conducted on pre-hospice spending, non-hospice spending 
for hospice beneficiaries during a hospice election, and live discharge 
rates highlight potential vulnerabilities of the Medicare hospice 
benefit.
1. Pre-Hospice Spending
    In 1982, the Congress introduced hospice into the Medicare program 
as an alternative to aggressive treatment at the end of life. During 
the development of the benefit, multiple testimonies from industry 
leaders and hospice families were heard and it was reported that 
hospices provided high-quality, compassionate and humane care while 
also offering a reduction in Medicare costs.\5\ Additionally, a 
Congressional Budget Office (CBO) study asserted that hospice care 
would result in sizable savings over conventional hospital care.\6\ 
Those savings estimates were based on a comparison of spending in

[[Page 47151]]

the last 6 months of life for a cancer patient not utilizing hospice 
care versus the cost of hospice care for the 6 months preceding 
death.\7\ The original language for Sec.  1814(i) of the Act (prior to 
August, 29, 1983) set the hospice aggregate cap amount at 40 percent of 
the average Medicare per capita expenditure amount for cancer patients 
in the last 6 months of life. When the hospice benefit was created, the 
average lifetime length of stay for a hospice patient was between 55 
and 75 days. Since the implementation of the Medicare hospice benefit, 
the principal diagnosis for patients electing the hospice benefit has 
changed from primarily cancer diagnoses in 1983 to primarily non-cancer 
diagnoses in FY 2014.\8\ Alzheimer's disease and Congestive Heart 
Failure (CHF) were the most reported principal diagnoses comprising 17 
percent of all diagnoses reported (see Table 2 in section II.E) in FY 
2014.
---------------------------------------------------------------------------

    \5\ Subcommittee of Health of the Committee of Ways and Means, 
House of Representatives, March 25, 1982.
    \6\ Mor V. Masterson-Allen S. (1987): Hospice care systems: 
Structure, process, costs and outcome. New York: Springer Publishing 
Company.
    \7\ Fogel, Richard. (1983): Comments on the Legislative Intent 
of Medicare's Hospice Benefit (GAO/HRD-83-72).
    \8\ Connor, S. (2007). Development of Hospice and Palliative 
Care in the United States. OMEGA. 56(1), 89-99. doi:102190/OM.5.1.h
---------------------------------------------------------------------------

    Analysis was conducted to evaluate pre-hospice spending for 
beneficiaries who used hospice and who died in FY 2013. To evaluate 
pre-hospice spending, we calculated the median daily Medicare payments 
for such beneficiaries for the 180 days, 90 days, and 30 days prior to 
electing hospice care. We then categorized patients according to the 
principal diagnosis reported on the hospice claim. The analysis 
revealed that for some patients, the Medicare payments in the 180 days 
prior to the hospice election were lower than Medicare payments 
associated with hospice care once the benefit was elected (see Table 3 
and Figure 1 below). Specifically, median Medicare spending for a 
beneficiary with a diagnosis of Alzheimer's disease, non-Alzheimer's 
dementia, or Parkinson's in the 180 days prior to hospice admission 
(about 20 percent of patients) was $66.84 per day compared to the daily 
RHC rate of $153.45 in FY 2013 (see Table 3 below). Closer to the 
hospice admission, the median Medicare payments per day increase, as 
would be expected as the patient approaches the end of life and patient 
needs intensify. However, 30 days prior to a hospice election, median 
Medicare spending was $105.24 for patients with Alzheimer's disease, 
non-Alzheimer's dementia, or Parkinson's. In contrast, the median 
Medicare payments prior to hospice election for patients with a 
principal hospice diagnosis of cancer were $143.56 in the 180 days 
prior to hospice admission and increased to $289.85 in the 30 days 
prior to hospice admission. The average length of stay for hospice 
elections where the principal diagnosis was reported as Alzheimer's 
disease, non-Alzheimer's Dementia, or Parkinson's is greater than 
patients with other diagnoses, such as cancer, Cerebral Vascular 
Accident (CVA)/stroke, chronic kidney disease, and Chronic Obstructive 
Pulmonary Disease (COPD). For example, the average lifetime length of 
stay for an Alzheimer's, non-Alzheimer's Dementia, or Parkinson's 
patient in FY 2013 was 119 days compared to 47 days for patients with a 
principal diagnosis of cancer (or in other words, 150 percent longer).

  Table 3--Median Pre-Hospice Daily Spending Estimates and Interquartile Range Based on 180, 90, and 30 Day Look-Back Periods Prior to Initial Hospice
                  Admission With Estimates of Average Lifetime Length of Stay (LOS) by Primary Diagnosis at Hospice Admission, FY 2013
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                    Estimates of daily non-hospice medicare spending prior to first hospice admission
                                           ---------------------------------------------------------------------------------------------------    Mean
                                                   180 day look-back                 90 day look-back                 30 day look-back          lifetime
                                           ---------------------------------------------------------------------------------------------------    LOS
                                            25th Pct.    Median   75th Pct.  25th Pct.    Median   75th Pct.  25th Pct.    Median   75th Pct.
--------------------------------------------------------------------------------------------------------------------------------------------------------
All Diagnoses.............................     $47.04    $117.73    $240.73     $55.75    $157.89    $337.97     $57.66    $266.84    $545.44       73.8
Alzheimer's, Dementia, and Parkinson's....      23.39      66.84     162.60      23.06      82.00     220.12      21.02     105.24     368.30      119.3
CVA/Stroke................................      56.18     116.86     239.30      82.32     170.40     352.74     150.21     352.41     622.23       47.4
Cancers...................................      62.81     143.56     265.58      78.30     188.08     360.92      81.52     289.85     569.67       47.1
Chronic Kidney Disease....................      94.78     217.46     402.10     126.41     293.18     541.41     199.01     466.25     820.78       27.3
Heart (CHF and Other Heart Disease).......      61.28     135.48     255.53      80.62     186.52     364.24     101.80     325.15     588.50       77.2
Lung (COPD and Pneumonias)................      65.53     142.78     272.13      90.68     201.02     401.12     126.51     367.68     685.17       67.5
All Other Diagnoses.......................      36.00      99.80     222.25      39.45     132.88     316.15      38.96     213.84     504.57       85.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: All Medicare Parts A, B, and D claims for FY 2013 from the Chronic Conditions Data Warehouse (CCW) retrieved March, 2015.
Note(s): Estimates drawn from FY2013 hospice decedents who were first-time hospice admissions, ages 66+ at hospice admission, admitted since 2006, and
  not enrolled in Medicare Advantage prior to admission. All payments are inflation-adjusted to September 2013 dollars using the Consumer Price Index
  (Medical Care; All Urban Consumers).


[[Page 47152]]

[GRAPHIC] [TIFF OMITTED] TR06AU15.000

    In the FY 2014 Hospice Wage Index and Payment Rate Update proposed 
and final rules (78 FR 27843 and 78 FR 48272), we discussed whether a 
case-mix system could be created in future refinements to differentiate 
hospice payments according to patient characteristics. While we do not 
have the necessary data on the hospice claim form at this time to 
conduct more thorough research to determine whether a case-mix system 
is appropriate, analyzing pre-hospice spending was undertaken as an 
initial step in determining whether patients required different 
resource needs prior to hospice based on the principal diagnosis 
reported on the hospice claim. Table 3 and Figure 1 above indicate that 
hospice patients with the longest length of stay had lower pre-hospice 
spending relative to hospice patients with shorter lengths of stay. 
These hospice patients tend to be those with neurological conditions, 
including those with Alzheimer's disease, other related dementias and 
Parkinson's disease. Typically, these conditions are associated with 
longer disease trajectories, progressive loss of functional and 
cognitive abilities, and more difficult prognostication.
    Research has shown that the majority of dementia patients are cared 
for at home, leading to increased informal care costs that put an 
economic burden on families rather than on healthcare systems.\9\ 
Additionally, research using the National Long-Term Care Survey (NLCS) 
merged with Medicare claims; found that patients with Alzheimer's 
disease and related conditions do not have higher Medicare expenditures 
over the last 5 years of their life compared to non-demented 
elderly.\10\ Some researchers have measured whether hospice care 
reduces overall Medicare costs at the end of life. Research conducted 
by the RAND Corporation and published in the Annals of Internal 
Medicine in February of 2004 found that ``adjusted mean [Medicare] 
expenditures were 4.0 percent higher overall among hospice enrollees 
than among non-enrollees. Adjusted mean [Medicare] expenditures were 1 
percent lower for hospice enrollees with cancer than for patients with 
cancer who did not use hospice. Savings were highest (7 percent to 17 
percent) among enrollees with lung cancer and other very aggressive 
types of cancer diagnosed in the last year of life. [Medicare] 
Expenditures for hospice enrollees without cancer were 11 percent 
higher than for non-enrollees, ranging from 20

[[Page 47153]]

percent to 44 percent for patients with dementia and 0 percent to 16 
percent for those with chronic heart failure or failure of most other 
organ systems.'' \11\ While analyses examining pre-hospice spending for 
hospice patients according to their diagnosis reported on the hospice 
claim has some limitations, it does show that, depending on the type of 
research study design selected, different conclusions can be drawn 
regarding the effect of Alzheimer's disease and dementia on medical 
care costs.\12\ An article was released in May of 2015 by the New 
England Journal of Medicine titled ``Changes in Medicare Costs with the 
Growth of Hospice Care in Nursing Homes,'' that examined the impact of 
hospice use for nursing home residents on end of life costs. This 
article found that between 2004 and 2009, the expansion of hospice was 
associated with a mean net increase in Medicare expenditures of $6,761 
(95 percent confidence interval, 6,335 to 7,186), reflecting greater 
additional spending on hospice care ($10,191) than reduced spending on 
hospital and other care ($3,430). The growth in hospice care for 
nursing home residents was associated with less aggressive care near 
death but at an overall increase in Medicare expenditures.'' \13\
---------------------------------------------------------------------------

    \9\ Schaller, S., Mauskopf, J., Kriza, C., Wahlster, P., 
Kolominsky-Rabas, P. (2015). The main cost drivers in dementia: a 
systematic review. International Journal of Geriatric Psychiatry. 
15, 111-129. doi: 10.1002/gps.4198.
    \10\ Ayyagari, P., M. Salm, and F. Sloan. 2008. ``Effects of 
Diagnosed Dementia on Medicare and Medicaid Program Costs.'' Inquiry 
44 (Winter 2007/2008): 481-94. Lamb, V., F. Sloan, and A. Nathan. 
2008. ``Dementia and Medicare at Life's End.'' Health Services 
Research 43 (2): 714-32.
    \11\ http://www.rand.org/pubs/external_publications/EP20040207.html. Accessed on April 23, 2015.
    \12\ Yang, Z., Zhang, K., Lin, P., Clevenger, C., & Atherly, A. 
(2012). A Longitudinal Analysis of the Lifetime Cost of Dementia. 
Health Services Research, 47(4), 1660-1678. doi:10.1111/j.1475-
6773.2011.01365.x.
    \13\ Gozalo, P., Plotske, M., Mor, V., Miller, S. & Teno, J. 
(2015). Changes in Medicare Costs with the Growth of Hospice Care in 
Nursing Homes. New England Journal of Medicine, 372:19, 1823-1831.
---------------------------------------------------------------------------

2. 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 (as described in 
section II of this rule). However, Medicare payment is allowed for 
covered Medicare items and services that are unrelated to the terminal 
illness and related conditions (that is, the terminal prognosis). When 
a hospice beneficiary receives items or services unrelated to the 
terminal illness and related conditions from a non-hospice provider, 
that provider can bill Medicare for the items or services, but must 
include on the claim a GW (service not related to the hospice patient's 
terminal condition) modifier (if billed on a professional claim),\14\ 
or condition code 07 (if billed on an institutional claim).\15\ 
Prescription Drug Events (PDEs) unrelated to the terminal prognosis for 
which hospice beneficiaries are receiving hospice care are billed to 
Part D and do not require a modifier or a condition code. We reported 
initial findings on CY 2012 non-hospice spending during a hospice 
election in the FY 2015 Hospice Wage Index and Payment Rate Update 
final rule (79 FR 50452). This section updates our analysis of non-
hospice spending during a hospice election using FY 2013 data.
---------------------------------------------------------------------------

    \14\ Medicare Claims Processing Manual, Chapter 11-Processing 
Hospice Claims, Section 30.4-Claims from Medicare Advantage 
Organizations, B-Billing of Covered Services. http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/clm104c11.pdf.
    \15\ Medicare Claims Processing Manual, Chapter 11-Processing 
Hospice Claims, Section 30.3-Data Required on the Institutional 
Claim to Medicare Contractors, Conditions Codes. http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/clm104c11.pdf.
---------------------------------------------------------------------------

    For FY 2013, we found that Medicare paid $694.1 million for Part A 
and Part B items or services while a beneficiary was receiving hospice 
care. The $694.1 million paid for Part A and Part B items or services 
was for durable medical equipment (6.4 percent), inpatient care (care 
in long- term care hospitals, inpatient rehabilitation facilities, 
acute care hospitals; 28.6 percent), outpatient Part B services (16.6 
percent), other Part B services (also known as physician, practitioner 
and supplier claims, such as labs and diagnostic tests, ambulance 
transports, and physician office visits; 38.8 percent), skilled nursing 
facility care (5.3 percent), and home health care (4.3 percent). Part A 
and Part B non-hospice spending occurred mostly for hospice 
beneficiaries who were at home (56.0 percent). We also found that on 
hospice service days in which non-hospice spending occurred, 25.7 
percent of hospice beneficiaries were in a nursing facility, 1.9 
percent were in an inpatient setting, 15.1 percent were in an assisted 
living facility, and 1.3 percent were in other settings. Although the 
average daily rate of expenditures outside the hospice benefit was 
$7.65, we found geographic differences where beneficiaries receive 
care. The highest rates per day occurred for hospice beneficiaries 
residing in West Virginia ($13.74), Delaware ($12.76), Mississippi 
($12.31), South Florida ($12.24), and Texas ($12.10).
    Table 4 below details the various components of Part D spending for 
patients receiving hospice care. The portion of the $439.5 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 
$347.1 million.

   Table 4--Drug Cost Sources for Hospice Beneficiaries' FY 2013 Drugs
                         Received Through Part D
------------------------------------------------------------------------
                                                              FY 2013
                        Component                          expenditures
------------------------------------------------------------------------
(Patient Pay Amount)....................................     $50,871,517
(Low Income Cost-Sharing Subsidy).......................     116,890,745
(Other True Out-of Pocket Amount).......................       2,125,071
(Patient Liability Reduction due to Other Payer Amount).       6,678,561
(Covered Drug Plan Paid Amount).........................     230,216,153
(Non-Covered Plan Paid Amount...........................      28,733,518
(Six Payment Amount Totals).............................     435,515,566
(Unknown/Unreconciled)..................................       3,945,667
(Gross Total Drug Costs, Reported)......................     439,461,233
------------------------------------------------------------------------
Source: Abt Associates analysis of 100% FY 2013 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/.

    Non-hospice Medicare expenditures occurring during a hospice 
election in FY 2013 were $694.1 million for Parts A and B plus $347.1 
million for Part D spending, or approximately $1 billion dollars total. 
This figure is comparable to the estimated $1 billion MedPAC reported 
during its December 2013 public meeting.\16\ Associated with this $1 
billion in Medicare spending were cost sharing liabilities such as co-
payments and deductibles that beneficiaries incurred. Hospice 
beneficiaries had $132.5 million in cost-sharing for items and services 
that were billed to Medicare Parts A and B, and $50.9 million in cost-
sharing for drugs that were billed to Medicare Part D, while they were 
in a hospice election. In total, this represents an FY 2013 beneficiary 
liability of $183.4 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 beneficiaries for items 
or services provided to hospice beneficiaries during a hospice election 
were over $1.2 billion in FY 2013.
---------------------------------------------------------------------------

    \16\ MedPAC, ``Assessing payment adequacy and updating payments: 
hospice services'', December 13 2013. Available at: http://www.medpac.gov/documents/december-2013-meeting-transcript.pdf.
---------------------------------------------------------------------------

    In a recent report, the HHS Office of Inspector General (OIG) 
identified instances where Medicare may be

[[Page 47154]]

paying twice under Part D for drugs that should be provided by the 
hospice as part of the plan of care.\17\ To assist CMS in identifying 
and evaluating instances where drugs, supplies, durable medical 
equipment (DME), and Part B services provided to hospice patients 
appear to be related to the principal diagnosis reported on the hospice 
claim, but were billed separately to other parts of the Medicare 
program, Acumen, LLC developed case studies that were reviewed and 
evaluated by CMS clinical staff.\18\ Although hospice beneficiaries are 
allowed to continue receiving care outside the hospice benefit for 
conditions that are unrelated to the terminal illness and related 
conditions (that is, unrelated to the terminal prognosis), Sec.  
418.56(c) requires hospices to provide all services necessary for the 
palliation and management of the terminal illness and related 
conditions.
---------------------------------------------------------------------------

    \17\ oig.hhs.gov/oas/region6/61000059.pdf ``Medicare Could Be 
Paying Twice for Prescriptions For Beneficiaries in Hospice.''
    \18\ The case studies were developed using CY 2013 claims data 
for only those beneficiaries with Parts A, B and D coverage 
throughout their hospice. In identifying services that overlapped 
with a hospice election, we used two methods. The first method 
identified a match between the first three diagnosis codes of the 
hospice claim and the diagnosis codes of the overlapping services in 
the Part A, Part B, and Part D claim for the same beneficiary. The 
second method identified a match between the hospice diagnoses and 
the diagnosis codes of the overlapping services in the Part A, Part 
B and Part D based on a diagnosis code on the overlapping claim and 
any diagnosis on the hospice claim mapping to the same Healthcare 
Cost and Utilization Project (HCUP).
---------------------------------------------------------------------------

Durable Medical Equipment, Prosthetics, Orthotics, and Supplies Across 
Terminal Conditions
    Durable Medical Equipment, Prosthetics, Orthotics, and Supplies 
(DMEPOS) products whose use was initiated during a hospice stay are 
likely related to the terminal prognosis. Table 5 and 6 below 
summarizes total concurrent billing for DMEPOS products by Berenson-
Eggers Types of Service (BETOS) categories and concurrent DME billing 
by the top 20 principal diagnoses as reported on hospice claims in CY 
2013.\19\ These diagnoses comprised 2.3 million hospice stays, and 
accounted for $27.1 million in total concurrent spending for DME 
products. This amount does not include spending for DME rental products 
that beneficiaries began using prior to a hospice stay.
---------------------------------------------------------------------------

    \19\ DMEPOS HCPCS codes are summarized by Berenson-Eggers Types 
of Service (BETOS) categories. BETOS categories were developed by 
the American Medical Association (AMA) and aggregate HCPCS codes 
into clinically coherent groups.

 Table 5--Concurrent Payments for All DME Use Initiated During a Hospice
                     Stay by BETOS Category, CY 2013
------------------------------------------------------------------------
                                                           Total payment
                  DMEPOS BETOS category                     for related
                                                                DME
------------------------------------------------------------------------
Hospital Beds...........................................        $943,731
Wheelchairs.............................................       2,295,038
Oxygen and Supplies.....................................       2,412,281
Orthotics and Prosthetics...............................       4,400,353
Medical/Surgical Supplies...............................       7,467,616
Other DME...............................................       9,585,003
                                                         ---------------
    Total...............................................      27,104,022
------------------------------------------------------------------------


 Table 6--Concurrent Payments for All DME Use Initiated During a Hospice
  Stay by Top 20 Principal Diagnosis Reported on Hospice Claim, CY 2013
------------------------------------------------------------------------
                                                      Total payment  for
                 Principal diagnosis                     related  DME
------------------------------------------------------------------------
Heart failure.......................................          $3,365,348
Malignant neoplasm of trachea, bronchus, and lung...           1,519,514
Other cerebral degenerations........................           2,979,399
Other organic psychotic conditions (chronic)........           2,540,146
Chronic airways obstruction, not elsewhere                     2,610,628
 classified.........................................
Senile and presenile organic psychotic conditions...           2,868,760
Other ill-defined and unknown causes of morbidity              2,349,855
 and mortality......................................
Ill-defined descriptions and complications of heart            1,584,522
 disease............................................
Acute but ill-defined cerebrovascular disease.......           1,092,772
Other diseases of lung..............................             412,501
Chronic renal failure...............................             415,800
Symptoms concerning nutrition, metabolism, and                 1,390,685
 development........................................
Malignant neoplasm of pancreas......................             297,573
Malignant neoplasm of female breast.................             486,019
Malignant neoplasm of colon.........................             521,690
Parkinson's disease.................................             955,390
Malignant neoplasm of prostate......................             312,754
Late effects of cerebrovascular disease.............             559,253
Other forms of chronic ischemic heart disease.......             670,947
Malignant neoplasm of liver and intrahepatic bile                170,470
 ducts..............................................
------------------------------------------------------------------------

    We noted that hospice beneficiaries with hospice claims-reported 
principal diagnoses of chronic airway obstruction, congestive heart 
failure, cerebral degeneration and lung cancer were receiving services 
clinically indicated and recommended for these conditions outside of 
the hospice benefit, which is in violation of requirements regarding 
the Medicare hospice benefit. This could be attributed to hospices 
incorrectly classifying conditions as unrelated and referring patients 
to non-hospice providers, not communicating and coordinating the care 
and services needed to manage the needs of the hospice beneficiary, or 
deliberately, to avoid costs. The case studies below are focused on 
four of the most commonly reported principal hospice diagnoses on 
hospice claims (see Table 2 in section II.E) based on clinical 
guidelines as described for each principal hospice diagnosis.

[[Page 47155]]

Malignant Neoplasm of the Trachea, Bronchus, and Lung
    Malignant neoplasm of the trachea, bronchus, and lung (or lung 
cancer) is defined by ICD-9 diagnosis codes beginning with 162 and 
describes malignant cancers affecting various part of the pulmonary 
system. Symptoms for this class of conditions may include chronic and 
worsening cough, shortness of breath, chest pain, metastatic bone pain, 
and anorexia and weight loss. Clinical practice guidelines for end-
stage cancer recommend treatment and management of refractory symptoms 
including pain, mucositis, dyspnea, fatigue, depression and anorexia 
through the use of pharmacological interventions including nonsteroidal 
anti-inflammatories, corticosteroids, opioids and antidepressants.\20\ 
Additionally, evidence shows that palliative chemotherapy and 
radiotherapy can provide symptom relief from bone and brain 
metastasis.\21\ Recommended interventions for dyspnea include treatment 
of the underlying reason such as, thoracentesis for pleural effusion, 
bronchodilators and systemic corticosteroids for inflammation and 
secretions, and supportive measures such supplemental oxygen, opioids 
and anxiolytics to decrease the sensation of breathlessness.\22\
---------------------------------------------------------------------------

    \20\ Qaseem A, Snow V, Shekelle P, Casey DE, Cross JT, Owens DK, 
et al. Evidence-Based Interventions to Improve the Palliative Care 
of Pain, Dyspnea, and Depression at the End of Life: A Clinical 
Practice Guideline from the American College of Physicians. Ann 
Intern Med. 2008;148:141-146. doi:10.7326/0003-4819-148-2-200801150-
00009.
    \21\ Palliative care in lung cancer*: accp evidence-based 
clinical practice guidelines (2nd edition) Kvale PA, Selecky PA, 
Prakash US. Chest. 2007;132(3_suppl):368S-403S.
    \22\ Ibid.
---------------------------------------------------------------------------

    Our assessment of concurrently billed Part D drugs included 89,925 
stays for beneficiaries with ICD-9 code 162 listed as a primary 
diagnosis on the hospice claim. Our assessment of concurrently billed 
Part B services included 153,199 stays. In CY 2013, concurrent billing 
for all services related this terminal condition comprised $3.4 
million. Table 7 below summarizes concurrent payments for services that 
were potentially related to this class of conditions. Part D drugs that 
should have been covered under the hospice benefit for the treatment of 
this condition accounted for $2.1 million. DME services that were 
billed during hospice stays related to this condition during the same 
time cost $640,166. Concurrent services provided in Part B 
institutional settings accounted for $591,772.

      Table 7--Concurrent Payments for Services Provided to Hospice
   Beneficiaries With Malignant Neoplasm of the Trachea, Bronchus, and
                              Lung, CY 2013
------------------------------------------------------------------------
       Type of service              Description          Total payment
------------------------------------------------------------------------
Drugs/Part D.................  Common Palliative                $851,639
                                Drugs.
Drugs/Part D.................  Anti-neoplastics                1,321,507
                                (chemotherapy).
DME..........................  Oxygen Equipment and              454,068
                                Supplies.
DME..........................  Hospital Beds........              47,781
DME..........................  Wheelchairs..........             138,316
Part B Inst..................  Diagnostic Imaging...             341,601
Part B Inst..................  Radiation............             250,171
                                                     -------------------
    Total....................  .....................           3,405,083
------------------------------------------------------------------------

Chronic Airway Obstruction
    Chronic airway obstruction is defined by ICD-9 diagnosis codes 
beginning with 496 and includes chronic lung disease with unspecified 
cause, and is characterized by inflammation of the lungs and airways. 
Typical symptoms of these pulmonary diseases include increasing and 
disabling shortness of breath, labored breathing, increased coughing, 
increased heart rate, decreased functional reserve, increased 
infections and unintentional, progressive weight loss. Evidence-based 
practice supports the benefits of oral opioids, neuromuscular 
electrical stimulation, chest wall vibration, walking aids, respiratory 
assist devices and pursed-lip breathing in the management of dyspnea in 
the individual patient with advanced COPD.\23\ Oxygen is recommended 
for COPD patients with resting hypoxemia for symptomatic benefit.\24\ 
Additionally, clinical practice guidelines recommend inhaled 
bronchodilators, systemic corticosteroids, and pulmonary physiotherapy 
for the management of COPD exacerbations.\25\ Analysis conducted by 
Acumen, LLC, shows concurrently billed Part D drugs included 130,283 
stays for beneficiaries with ICD-9 code 469 listed as a primary 
diagnosis on the hospice claim. Additionally, concurrently billed Part 
B services included 198,098 such stays. Table 8 below summarizes 
concurrent payments for services that are potentially related to this 
class of conditions. In CY 2013, concurrent billing for all services 
related this terminal condition comprised $10.4 million. Part D drugs 
that should have been covered under the hospice benefit for the 
treatment of this condition accounted for $8.6 million. DME services 
that were billed during hospice stays related to this condition during 
the same time amounted to $1.2 million dollars.\26\ Finally, concurrent 
services provided in Part B institutional settings accounted for 
$605,110.
---------------------------------------------------------------------------

    \23\ DD Marciniuk, D Goodridge, P Hernandez, et al. (2011). 
Canadian Thoracic Society COPD Committee Dyspnea Expert Working 
Group. Managing dyspnea in patients with advanced chronic 
obstructive pulmonary disease: A Canadian Thoracic Society clinical 
practice guideline. Canadian Respiratory Journal. 18(2), 1-10.
    \24\ Ibid.
    \25\ National Clinical Guideline Centre for Acute and Chronic 
Conditions. Chronic obstructive pulmonary disease. Management of 
chronic obstructive pulmonary disease in adults in primary and 
secondary care. London (UK): National Institute for Health and 
Clinical Excellence (NICE); 2010 Jun. 61 p. (Clinical guideline; no. 
101). Retrieved from the National Guideline Clearinghouse on 
February 19, 2015. http://www.guideline.gov/.
    \26\ DMEPOS HCPCS codes are summarized by Berenson-Eggers Types 
of Service (BETOS) categories. BETOS categories were developed by 
the American Medical Association (AMA) and aggregate HCPCS codes 
into clinically coherent groups.

[[Page 47156]]



      Table 8--Concurrent Payments for Services Provided to Hospice
         Beneficiaries With Chronic Airway Obstruction, CY 2013
------------------------------------------------------------------------
        Type of service                Description        Total payment
------------------------------------------------------------------------
Drugs/Part D...................  Common Palliative            $1,757,326
                                  Drugs \27\.
Drugs/Part D...................  Antiasthmatics &              6,545,089
                                  Bronchodilators.
Drugs/Part D...................  Corticosteroids.......          141,179
Drugs/Part D...................  Respiratory Agents....          148,793
DME............................  Oxygen Equipment and            525,276
                                  Supplies \28\.
DME............................  Hospital Beds.........          480,854
DME............................  Wheelchairs...........          196,692
Part B Institutional...........  Diagnostic Imaging....          605,110
                                                        ----------------
    Total......................  ......................       10,400,319
------------------------------------------------------------------------

     
---------------------------------------------------------------------------

    \27\ Includes all analgesics, anxiolytics, antiemetics, and 
laxatives. These four drug types are considered ``nearly always 
covered under the hospice benefit'' and as such are rarely expected 
to be billed separately during a hospice stay.
    \28\ For COPD, we also include respiratory assist devices (RADs) 
in this category.
---------------------------------------------------------------------------

Cerebral Degeneration
    Cerebral degeneration is defined by ICD-9 diagnosis codes beginning 
with 331, and includes conditions such as Alzheimer's disease and 
Reye's syndrome. These conditions are typically characterized by a 
progressive loss of cognitive function with symptoms including the loss 
of memory and changes in language ability, behavior, and personality. 
Additionally, as these cerebral degenerations progress, other clinical 
manifestations occur such as dysphagia, motor dysfunction, impaired 
mobility, increased need for activities of daily living assistance, 
urinary and fecal incontinence, weight loss and muscle wasting. 
Individuals with these conditions are also at increased risk for 
aspiration, falls, pneumonias, decubitus ulcers and urinary tract 
infections. Clinical practice guidelines for the treatment of cerebral 
degenerative conditions includes pharmacological interventions 
including Angiotensin Converting Enzyme inhibitors, memantine or 
combination therapy depending on severity of disease, as well as 
antidepressants, antipsychotics, psychostimulants, mood stabilizers, 
benzodiazepines and neuroleptics, depending on behavioral 
manifestations. Non-pharmacological interventions recommended include 
mental, behavioral and cognitive therapy, speech language pathology to 
address swallowing issues, and other interventions to treat and manage 
manifestations including pressure ulcers, cachexia and infections.\29\
---------------------------------------------------------------------------

    \29\ Development Group of the Clinical Practice Guideline 
[trunc]. Clinical practice guideline on the comprehensive care of 
people with Alzheimer's disease and other dementias. Barcelona 
(Spain): Agency for Health Quality and Assessment of Catalonia 
(AQuAS); 2010. 499 p. Retrieved from the National Guideline 
Clearinghouse on February 19, 2015. http://www.guideline.gov/.
---------------------------------------------------------------------------

    Our assessment of concurrently billed Part D drugs included 208,346 
stays for beneficiaries with ICD-9 code 331 listed as a primary 
diagnosis on the hospice claim. Our assessment of concurrently billed 
Part B services included 318,044 stays. In CY 2013, concurrent billing 
for all services related to this principal diagnosis comprised $11.2 
million. Table 9 below summarizes concurrent payments for services that 
are potentially related to this class of conditions. Part D drugs that 
should have been covered under the hospice benefit for the treatment of 
this condition accounted for $10.3 million. Concurrently billed DME 
products that were related this condition cost Medicare an additional 
$390,476. Concurrent services provided in Part B institutional settings 
accounted for $496,790.

      Table 9--Concurrent Payments for Services Provided to Hospice
            Beneficiaries With Cerebral Degeneration, CY 2013
------------------------------------------------------------------------
        Type of service                Description        Total payment
------------------------------------------------------------------------
Drugs/Part D...................  Common Palliative            $1,184,005
                                  Drugs.
Drugs/Part D...................  Antipsychotic/                2,336,504
                                  Antimanic Agents.
Drugs/Part D...................  Psychotherapeutic &           6,752,270
                                  Neurological Agents.
DME............................  Hospital Beds.........          138,249
DME............................  Wheelchairs...........          252,228
Part B Inst....................  Diagnostic Imaging....          496,790
                                                        ----------------
    Total......................  ......................       11,160,046
------------------------------------------------------------------------

Congestive Heart Failure
    CHF is defined by ICD-9 diagnosis codes beginning with 428. CHF is 
characterized by symptoms such as shortness of breath, edema, 
diminished endurance, angina, productive cough and fatigue. For the 
management of congestive heart failure, clinical practice guidelines 
recommend pharmacological interventions including beta blockers, 
angiotensin converting enzyme inhibitors, angiotensin receptor 
blockers, diuretics, anti-platelets, anti-coagulants and digoxin, 
depending on symptomology and response or nonresponse to other 
treatments.\30\ Nonpharmacological interventions recommended include 
continuous positive airway pressure and supplemental oxygen for those 
with coexisting pulmonary disease.\31\
---------------------------------------------------------------------------

    \30\ Scottish Intercollegiate Guidelines Network (SIGN). 
Management of chronic heart failure. A national clinical guideline. 
Edinburgh (Scotland): Scottish Intercollegiate Guidelines Network 
(SIGN); 2007 Feb. 53 p. (SIGN publication; no. 95).
    \31\ Lindenfeld J, Albert NM, Boehmer JP, Collins SP, Ezekowitz 
JA, Givertz MM, Klapholz M, Moser DK, Rogers JG, Starling RC, 
Stevenson WG, Tang WHW, Teerlink JR, Walsh MN. Executive Summary: 
HFSA 2010 Comprehensive Heart Failure Practice Guideline. J Card 
Fail 2010;16:475e539.

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[[Page 47157]]

    Our assessment of concurrently billed Part D drugs included 158,220 
stays for beneficiaries with ICD-9 code 428 listed as a primary 
diagnosis on the hospice claim. Our assessment of concurrently billed 
Part B services included 256,236 stays. In CY 2013, concurrent billing 
for all services related this terminal condition comprised $5.8 
million. Table 10 below summarizes concurrent payments for services 
that are potentially related to this class of conditions. Part D drugs 
that should have been covered under the hospice benefit for the 
treatment of this condition accounted for $3.8 million. DME services 
that were billed during hospice stays related to this condition during 
this time cost $843,534. Concurrent services provided in Part B 
institutional settings accounted for $1.2 million.

     Table 10--Concurrent Payments for Services Provided to Hospice
          Beneficiaries With Congestive Health Failure, CY 2013
------------------------------------------------------------------------
        Type of service                Description        Total payment
------------------------------------------------------------------------
Drugs/Part D...................  Common Palliative            $1,229,748
                                  Drugs.
Drugs/Part D...................  Diuretics.............          334,700
Drugs/Part D...................  Beta Blockers.........          363,480
Drugs/Part D...................  Anti-hypertensives....          584,799
Drugs/Part D...................  Anti-anginal Agents...          468,333
Drugs/Part D...................  Cardiovascular Agents--         799,605
                                  Misc.
Drugs/Part D...................  Vasopressors..........           43,496
DME............................  Oxygen Equipment and            471,376
                                  Supplies.
DME............................  Hospital Beds.........           96,219
DME............................  Wheelchairs...........          275,940
Part B Inst....................  Diagnostic Imaging....          690,726
Part B Inst....................  EKGs..................           72,933
Part B Inst....................  Cardiac Devices.......          242,819
Part B Inst....................  Diagnostic Clinical              79,999
                                  Labs.
Part B Prof....................  Diagnostic Clinical              64,698
                                  Labs.
                                                        ----------------
    Total......................  ......................        5,818,871
------------------------------------------------------------------------

    Our regulations at Sec.  418.56(c) require that hospices provide 
all services necessary for the palliation and management of the 
terminal illness and related conditions. We have discussed recommended 
evidence-based practice clinical guidelines for the hospice claims-
reported principal diagnoses mentioned in this section. However, this 
analysis reveals that these recommended practices are not always being 
covered under the Medicare hospice benefit. We believe the case studies 
in this section highlight the potential systematic unbundling of the 
Medicare hospice benefit by some providers and may be valuable analysis 
to inform policy stakeholders.
3. Live Discharge Rates
    Currently, federal regulations allow a patient who has elected to 
receive Medicare hospice services to revoke their hospice election at 
any time and for any reason. The revocation shall act as a waiver of 
the right to have payment made for any hospice care benefits for the 
remaining time in such period. The patient may, at a subsequent time, 
re-elect to receive hospice coverage for additional hospice election 
periods if he or she is eligible to receive them (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. A 
revocation can only be made by the beneficiary, in writing, that he or 
she is revoking the hospice election; and must indicate the effective 
date of the revocation. A hospice cannot ``revoke'' a beneficiary's 
hospice election, nor is it appropriate for hospices to encourage, 
request or demand that the beneficiary revoke his or her hospice 
election. Like the hospice election, a hospice revocation is to be an 
informed choice based on the beneficiary's goals, values and 
preferences for the services they wish to receive.
    Federal regulations only provide limited opportunity for a Medicare 
hospice provider to discharge a patient from its care. In accordance 
with Sec.  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. As we indicated in the FY 2015 Hospice 
Wage Index and Payment Rate Update proposed and final rules, 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. On July 1, 
2012, we began collecting discharge information on the claim to capture 
the reason for all types of discharges which includes, 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). Based upon the additional discharge information, Abt 
Associates, our research contractor performed analysis on FY 2013 
claims to identify those beneficiaries who were discharged alive. The 
details of this analysis will be reported in the 2015 technical report 
and will be made available on the Hospice Center Web page. Several key 
conclusions from the 2015 technical report are included below. In order 
to better understand the characteristics of hospices with high live 
discharge rates, we examined the aggregate cap status, skilled visit 
intensity; average lengths of stay; and non-hospice spending rates per 
beneficiary.
    Between 2000 and 2013, the overall rate of live discharges 
increased from 13.2 percent in 2000 to 18.3 percent in 2013. Among 
hospices with 50 or more

[[Page 47158]]

discharges (discharged alive or deceased), there is significant 
variation in the rate of live discharge between the 10th and 90th 
percentiles (see Table 11 below). Most notably, hospices at the 95th 
percentile discharged 50 percent or more of their patients alive.

 Table 11--Distribution of Live Discharge Rates in FY 2013 for Hospices
                     With 50 or More Live Discharges
------------------------------------------------------------------------
                                                                 Live
                          Statistic                            discharge
                                                                rate  %
------------------------------------------------------------------------
5th Percentile..............................................         8.1
10th Percentile.............................................         9.5
25th Percentile.............................................        12.9
Median......................................................        18.3
75th Percentile.............................................        26.6
90th Percentile.............................................        39.1
95th Percentile.............................................        50.0
------------------------------------------------------------------------
Note: n = 3,096.

    We analyzed hospices' aggregate cap status to determine whether 
there is a relationship between live discharge rates and their 
aggregate cap status. As described in section III.4.C and section 
III.D, 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. Our FY 
2013 analytic file contained 3,061 hospices with aggregate cap 
information and with more than 50 discharges in FY 2013. We found that 
40.3 percent of hospices above the 90th percentile were also above the 
aggregate cap for the 2013 cap year. Conversely, only 3.8 percent of 
hospices below the 90th percentile were above the aggregate cap. As 
illustrated by the box plot below, the vertical axis represents the 
hospices' live discharge rates in FY 2013 and the horizontal axis 
represents the total payments hospices received at the end of the cap 
year of November 2012 through October 2013 relative to the total cap 
amount. Hospices under 100 percent on the X-axis are below the cap and 
those 100 percent or higher on the X-axis are above the cap. Our 
analysis found that hospices with higher live discharge rates are also 
above the cap. Specifically, the top of the rectangle represents the 
75th percentile of live discharge rates, the middle line represents the 
median for that group, and the bottom of the rectangle is the 25th 
percentile of live discharge rates among all hospices ending the year 
within the range of cap percentages of live discharge rates as 
indicated by the horizontal axis (see Figure 2 below). We found that 
there appears to be a relationship with hospices with high live 
discharge rates and those that are above the aggregate cap.

    Figure 2: Distribution of Hospice Live Discharge Rates by Hospice
Payment Received Relative to the Hospice's Aggregate Cap Amount, FY 2013
 
 
 
 
 

[GRAPHIC] [TIFF OMITTED] TR06AU15.001


[[Page 47159]]

BILLING CODE 4120-01-C
    In FY 2013, we found that hospices with high live discharge rates 
also, on average, provide fewer visits per week. Those hospices with 
live discharge rates at or above the 90th percentile provide, on 
average, 3.97 visits per week. Hospices with live discharge rates below 
the 90th percentile provide, on average, 4.48 visits per week. We also 
found in FY 2013 that, when focusing on visits classified as skilled 
nursing or medical social services, hospices with live discharge rates 
at or above the 90th percentile provide, on average, 1.91 visits per 
week versus hospices with live discharge rates below the 90th 
percentile that provide, on average, 2.35 visits per week.
    We examined whether there was a relationship between hospices with 
high live discharge rates, average length of stay, and non-hospice 
spending per beneficiary per day (see Table 12 and Figure 3 below). As 
described above in section III.A.2, we identified instances, in the 
aggregate and illustrated by case studies, where Medicare appeared to 
be paying for services twice because we would expect them to be covered 
by the hospice base payment rate, but were receiving items and services 
characterized as ``non-hospice'' under ``regular'' Medicare. Hospices 
with patients that, on average, accounted for $30 per day in non-
hospice spending while in hospice (decile 10 in Table 12 and Figure 3 
below) had live discharge rates that were, on average, about 33.8 
percent and had an average lifetime length of stay of 156 days. In 
contrast, hospices with patients that, on average, accounted for $4 per 
day in non-hospice spending while in a hospice election (decile 1 in 
Table 12 and Figure 3 below) had live discharge rates that were, on 
average, about 19.2 percent and an average lifetime length of stay of 
103 days. In other words, hospices in the highest decile, according to 
their level of non-hospice spending for patients in a hospice election, 
had live discharge rates and average lifetime lengths of stay that 
averaged 76 percent and 52 percent higher, respectively, than the 
hospices in lowest decile.

Table 12--Mean Daily Non-Hospice Medicare Utilization and Sum Total Non-
   Hospice Utilization by Hospice Provider Decile Based on Sorted Non-
         Hospice Medicare Utilization per Hospice Day, FFY 2013
------------------------------------------------------------------------
                                       Non-hospice
                                    medicare ($)  per     Total  non-
              Decile                 hospice  service  hospice  medicare
                                           day                ($)
------------------------------------------------------------------------
1.................................              $4.15        $24,683,958
2.................................               6.30         47,971,918
3.................................               7.86         56,871,943
4.................................               9.22         69,879,537
5.................................              10.63        105,399,628
6.................................              12.13        116,697,215
7.................................              13.82        154,499,596
8.................................              15.89        177,609,853
9.................................              19.43        214,073,434
10................................              29.47        256,226,963
                                   -------------------------------------
    All Hospices..................              12.89      1,223,914,046
------------------------------------------------------------------------
Note: Abt Associates analysis of 100% Medicare Analytic Files, FFY 2013.
  Cohort is hospices with 50+ total discharges in FFY 2013 [n = 3,096].
  Hospice deciles are based on estimates of total non-hospice Medicare
  utilization ($) per hospice service day, excluding utilization on
  hospice admission or live discharge days.


[[Page 47160]]

[GRAPHIC] [TIFF OMITTED] TR06AU15.002

    The analytic findings presented above suggests that some hospices 
may consider the Medicare Hospice program as a long-term custodial 
benefit rather than an end of life benefit for beneficiaries with a 
medical prognosis of 6 months or less if the illness runs its normal 
course. As previously discussed in reports by MedPAC and the OIG, there 
is a concern that hospices may be admitting individuals who do not meet 
hospice eligibility criteria. We continue to communicate and 
collaborate across CMS to improve monitoring and oversight activities. 
We expect to analyze the additional claims and cost report data 
reported by hospices in the future to determine whether additional 
regulatory proposals to reform and strengthen the Medicare Hospice 
benefit are warranted.
    We did not propose any new regulations or solicit any comments with 
this update on our hospice payment reform research and analyses. 
However, we received several comments.
    A few commenters asserted that the fact that CMS did not release 
the technical report with the rule prevented them from being able to 
fully evaluate the impact of hospice payment reform. The 2015 Technical 
Report, that is planned for release later in 2015, describes some of 
the findings described above in this section of the rule. The 2015 
Technical Report will not contain analyses described in section III.B 
related to hospice payment reform. All of the analysis in support of 
hospice payment reform can be found in section III.B of this final 
rule. In addition, a couple of commenters noted concerns about 
questionable provider behavior and asked what CMS plans to do in 
response to these findings. These providers felt that a targeted 
approach to address program integrity concerns may be more effective 
than a universal payment reform approach, which may harm those 
providers who are compliant with coverage requirements. Several 
commenters also noted concerns that a more timely and coordinated 
system is needed to address some of the payment vulnerabilities 
identified in our research. One industry commenter stated that there 
are many reasons that services are rendered outside of the Medicare 
hospice benefit and that often these reasons are result from a 
misunderstanding of the concept of ``relatedness''. This commenter 
discussed an industry-driven relatedness initiative that has been 
developed to help inform hospice decision making. Another commenter 
urged CMS to consider the reasons why hospices would counsel 
beneficiaries to revoke the hospice benefit to seek care outside of 
hospice. Several commenters stated that they have no control or 
knowledge over what services non-hospice providers are rendering or 
billing. They suggested that CMS provide outreach and education to 
hospitals, physicians, DME suppliers and other non-hospice providers on 
those services covered under the Medicare hospice benefit. Some 
commenters suggested a claims-based edit to prevent inappropriate 
payments. We appreciate these comments on the ongoing analysis 
presented and will continue to monitor hospice trends and 
vulnerabilities within the hospice

[[Page 47161]]

program to help inform future policy efforts and program integrity 
measures.

B. Routine Home Care Rates and Service Intensity Add-On Payment

1. Statutory Authority and Background
    Section 3132(a) of the Affordable Care Act amended 1814(i) of the 
Act by adding paragraph (6)(D), that instructs the Secretary, no 
earlier than October 1, 2013, to implement revisions to the methodology 
for determining the payment rates for RHC and other services included 
in hospice care as the Secretary determines to be appropriate. The 
revisions may be based on an analysis of new data and information 
collected and such revisions may include adjustments to per diem 
payments that reflect changes in resource intensity in providing such 
care and services during the course of the entire episode of hospice 
care. In addition, we are required to consult with hospice programs and 
MedPAC on the revised hospice payment methodology.
    This legislation emerged largely in response to MedPAC's March 2009 
Report to Congress, which cited rapid growth of for-profit hospices and 
longer lengths of stay that raised concerns regarding a per diem 
payment structure that encouraged inappropriate utilization of the 
benefit.\32\ MedPAC stated that a revised payment system would 
encourage hospice stays consistent with meeting the eligibility 
requirements of a medical prognosis of 6 months or less if the illness 
runs its normal course and increase greater provider accountability to 
monitor patients' conditions. In that same report, MedPAC stated that 
their goal was to ``strengthen the hospice payment system and not 
discourage enrollment in hospice, while deterring program abuse.''
---------------------------------------------------------------------------

    \32\ Medicare Payment Advisory Commission (MedPAC). ``Reforming 
Medicare's Hospice Benefit.'' Report to the Congress: Medicare 
Payment Policy. March, 2009. Web. 18 Feb. 2015. http://medpac.gov/documents/reports/Mar09_Ch06.pdf?sfvrsn=0.
---------------------------------------------------------------------------

    As described in section III.A, CMS has transparently conducted 
payment reform activities and released research findings to the public 
since 2010. At that time, Abt Associates conducted a literature review 
and carried out original research to provide background on the current 
state of the Medicare hospice benefit. The initial contract also 
included several technical expert panel meetings with national hospice 
association representatives, academic researchers, and a cross-section 
of hospice programs that provided valuable insights and feedback on 
baseline empirical analyses provided by ASPE. A subsequent award to Abt 
Associates continues to support the dissemination of research analyses 
and findings, which are located in the ``Research and Analyses'' 
section of the Hospice Center Web page (http://cms.hhs.gov/Center/Provider-Type/Hospice-Center.html). In addition, research findings and 
payment reform concepts were set out in a 2013 technical report and a 
2014 technical report, as well as in the FY 2014 Hospice Wage Index and 
Payment Rate Update final rule (78 FR 48234) and in the FY 2015 Hospice 
Wage Index and Payment Rate Update final rule (79 FR 50452). These 
research findings and concepts provide a basis for an important initial 
step toward payment reform outlined in section III.B.2 below.
    Over the past several years, MedPAC, the Government Accountability 
Office (GAO), and OIG, have all recommended that CMS collect more 
comprehensive data to better evaluate trends in utilization of the 
Medicare hospice benefit. Furthermore, section 3132(a)(1)(C) of the 
Affordable Care Act specifies that the Secretary may collect additional 
data and information on cost reports, claims, or other mechanisms as 
the Secretary determines to be appropriate. We have received many 
suggestions for ways to improve data collection to support larger 
payment reform efforts in the future. Based on those suggestions and 
industry feedback, we began collecting additional information on the 
hospice claim form as of April 1, 2014.\33\ Additionally, revisions to 
the cost report form for freestanding hospices became effective for 
cost reporting periods beginning on or after October 1, 2014. The 
instructions for completing the revised freestanding hospice cost 
report form are found in the Medicare Provider Reimbursement Manual-
Part 2, chapter 43.\34\ Once available, we expect the data from hospice 
claims and cost reports to provide more comprehensive information on 
the costs associated with the services provided by hospices to Medicare 
beneficiaries by level of care.
---------------------------------------------------------------------------

    \33\ CMS Transmittal 2864. ``Additional Data Reporting 
Requirements for Hospice Claims''. Available at: http://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/Downloads/R2864CP.pdf.
    \34\ http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Paper-Based-Manuals-Items/CMS021935.html?DLPage=1&DLSort=0&DLSortDir=ascending.
---------------------------------------------------------------------------

a. U-Shaped Payment Model
    For over a decade, MedPAC and other organizations have reported 
findings that suggest that the hospice benefit's fixed per-diem payment 
system is inconsistent with the true variance of service costs over the 
course of an episode. Specifically, MedPAC cited both academic and non-
academic studies, as well as its own analyses (as summarized and 
articulated in MedPAC's 2002,\35\ 2004,\36\ 2006,\37\ 2008 \38\ and 
2009 \39\ Reports to Congress), demonstrating that the intensity of 
services over the duration of a hospice stay manifests in a `U-Shaped' 
pattern (that is, the intensity of services provided is higher both at 
admission and near death and, conversely, is relatively lower during 
the middle period of the hospice episode). Since hospice care is most 
profitable during the long, low-cost middle portions of an episode, 
longer episodes have very profitable, long middle segments. This 
financial incentive appears to have resulted in hospices enrolling 
beneficiaries that are not truly eligible for the benefit (that is, do 
not have a life expectancy of 6 months or less) and ``may lead some 
patients, families, and providers to implicitly regard hospice as a 
source of basic health care for failing patients who did not qualify 
for skilled nursing facility or home health care and did not qualify 
for Medicaid or otherwise could not afford other sources of long-term 
custodial care,'' \40\ rather than the end-of-life care for which the 
benefit was originally designed.
---------------------------------------------------------------------------

    \35\ http://www.medpac.gov/documents/contractor-reports/report-to-the-congress-medicare-beneficiaries'-access-to-hospice-(may-
2002).pdf.
    \36\ http://www.medpac.gov/documents/reports/June04_ch6.pdf.
    \37\ http://www.medpac.gov/documents/reports/Jun06_Ch03.pdf.
    \38\ http://www.medpac.gov/documents/reports/Jun08_Ch08.pdf.
    \39\ http://www.medpac.gov/documents/reports/Mar09_Ch06.pdf.
    \40\ http://www.medpac.gov/documents/reports/Mar09_Ch06.pdf?sfvrsn=0.
---------------------------------------------------------------------------

    In its March 2009 report, ``Reforming Medicare's Hospice Benefit,'' 
MedPAC recommended that the Congress require CMS to implement a payment 
system that would adjust per-diem hospice rates based on the day's 
timing within the hospice episode, with the express goal of mitigating 
the apparent inconsistency between payments and resource utilization 
(that is, costs) in hospice episodes.\41\ Specifically, MedPAC 
recommended that payments near the beginning and ending of a stay be 
set at higher levels (weighted upwards) and payments during the

[[Page 47162]]

middle portion of care be set at lower levels (weighted downwards) to 
better mirror documented variation in cost over an episode's duration. 
Two primary weighting schemes were outlined in MedPAC's 2009 Report: A 
``larger intensity adjustment'' (essentially a deeper U-shaped payment 
model, paying twice the base rate in the first 30/last 7 days and just 
a quarter of the daily rate in days 181+) and a ``smaller intensity 
adjustment'' (a relatively shallower U-shaped model, paying 1.5 times 
the base rate in the first 30/last 7 days and 0.375 times the daily 
rate in days 181+).
---------------------------------------------------------------------------

    \41\ Medicare Payment Advisory Commission (MedPAC). ``Reforming 
Medicare's Hospice Benefit.'' Report to the Congress: Medicare 
Payment Policy. March, 2009. Web. 18 Feb. 2015. http://medpac.gov/documents/reports/Mar09_Ch06.pdf?sfvrsn=0.
---------------------------------------------------------------------------

    In its March 2015 Report to the Congress,\42\ MedPAC reiterated its 
continued concerns regarding the ``mismatch between payments and 
hospice service intensity'' in the current hospice system and the 
ongoing need for payment reform. The Commission stated that 
``Medicare's hospice payment system is not well aligned with the costs 
of providing care throughout a hospice episode. As a result, long 
hospice stays are generally more profitable than short stays.'' The 
Commission previously ``recommended that the hospice payment system be 
reformed to better match service intensity throughout a hospice episode 
of care (higher per diem payments at the beginning of the episode and 
at the end of the episode near the time of death and lower payments in 
the middle)''.
---------------------------------------------------------------------------

    \42\ http://medpac.gov/documents/reports/chapter-12-hospice-services-(march-2015-report).pdf?sfvrsn=0.
---------------------------------------------------------------------------

    Other organizations have also explored the concept of a U-shaped 
payment model. ASPE, in conjunction with its contractor, Acumen LLC, 
analyzed hospice enrollment and utilization data. ASPE's research 
demonstrated that the resource use curve becomes more pronounced as 
episode lengths increase for hospice users, indicating that this effect 
occurs because resource use declines more substantially for the middle 
days relative to beginning and ending days in longer episodes of 
hospice care than it does for shorter episodes. The decline in the 
center of the `U' is deeper for those users who receive RHC only during 
their hospice episode, which is the case for the majority of hospice 
patients. Recently, CMS' contracting partner, Abt Associates, conducted 
analysis of FY 2013 hospice claims data, showing that of the 
approximately 92 million hospice days billed, 97.45 percent are 
categorized as RHC.
b. Tiered Payment Model
    As required under section 3132(a) of the Affordable Care Act, CMS 
also explored other options for hospice payment reform. Taking into 
consideration the research and analysis performed by MedPAC, ASPE, and 
others, our payment reform contractor, Abt Associates, examined hospice 
utilization data and modeled a hypothetical ``tiered'' payment system 
similar to MedPAC's U-shaped payment model by paying different per-diem 
rates for RHC according to the timing of the RHC day in the patient's 
episode of care. However, because analysis of hospice claims data found 
that a relatively high percentage of patients were not receiving 
skilled visits during the last days of life, the ``tiered payment 
model'' made the increased payments at end of life contingent on 
whether skilled services were provided. As reported in the FY 2015 
Hospice Payment Rate Update final rule, in CY 2012, approximately 14 
percent beneficiaries did not receive any skilled visits in the last 2 
days of life (79 FR 50461). While this could be explained, in part, by 
sudden or unexpected death, the high percentage of beneficiaries with 
no skilled visits in the last 2 days of life causes concern as to 
whether beneficiaries and their families are not receiving needed 
hospice care and support at the very end of life. If hospices are 
actively engaging with the beneficiary and the family throughout the 
election, we would expect to see skilled visits during those last days 
of life. Therefore, in the tiered payment model, making the increased 
payment at the end of life contingent on whether skilled visits 
occurred in the last 2 days of life was thought of as one way to 
provide additional incentive for care to be provided when the patient 
needs it most.
    The groupings in the tiered payment model, presented in Table13 
below, were developed through Abt Associates' analyses of resource 
utilization over the hospice episode and clinical input. Using all RHC 
hospice service days from 2011, Abt then developed payment weights for 
each grouping by calculating its relative resource utilization rate 
compared to the overall estimate of resource use across all RHC days 
(see Table 13 below).

  Table 13--Average Daily Resource Use by Payment Groups in the Tiered
                         Payment Model, CY 2011
------------------------------------------------------------------------
               Group                 Days of hospice     Implied weight
------------------------------------------------------------------------
Group 1: RHC Days 1-5.............          2,800,144                2.3
Group 2: RHC Days 6-10............          2,493,004               1.11
Group 3: RHC Days 11-30...........          7,767,918               0.97
Group 4: RHC Days 31+.............         65,958,740               0.86
Group 5: RHC During Last Seven              2,832,620               2.44
 Days, Skilled Visits During Last
 2 Days...........................
Group 6: RHC During Last Seven                476,809               0.91
 Days, No Skilled Visits During
 Last 2 Days......................
Group 7: RHC When Hospice Length              510,787               3.64
 of Stay is 5 Days or Less,
 Patient Discharged as
 ``Expired''......................
                                   -------------------------------------
    Total.........................         82,840,022                1.0
------------------------------------------------------------------------

    The payment weighting scheme in this system, derived from observed 
resource utilization across the entire episode, would produce higher 
payments during times when service is more intensive (the beginning of 
a stay or the end of life) and produce lower payments during times when 
service is less intensive (such as the ``middle period'' of the stay). 
The tiered payment model was discussed in more detail in the FY 2014 
Hospice Wage Index final rule (78 FR 48271) and in the Hospice Study 
Technical Report issued in April of 2013.\43\
---------------------------------------------------------------------------

    \43\ http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/Hospice/Downloads/Hospice-Study-Technical-Report.pdf
---------------------------------------------------------------------------

c. Visits During the Beginning and End of a Hospice Election
    Updated analysis of FY 2013 hospice claims data continues to 
demonstrate a U-Shaped pattern of resource use. Increased utilization 
at both the beginning and end of a stay is demonstrated in Figure 4 
below, where

[[Page 47163]]

FY 2013 resource costs (as captured by wage-weighted minutes) are 
markedly higher in the first 2 days of a hospice election and once 
again in the 6 days preceding the date of death and on the date of 
death itself.
[GRAPHIC] [TIFF OMITTED] TR06AU15.003

    Analysis of skilled nursing and social work visits provided on the 
first day of a hospice election shows that nearly 89 percent of 
patients received a visit totaling 15 minutes or more, while 11 percent 
did not receive a skilled nursing visit or social work visit on the 
first day of a hospice election (see Table 14 below). The percentage of 
patients who did not receive a skilled nursing or social work visit on 
a given day increased to nearly 38 percent on the second day of a 
hospice election. In accordance with the hospice CoPs at Sec.  
418.54(a), hospices are required to have a RN complete an initial 
assessment of the hospice patient within 48 hours of election; 
therefore, we would expect to see a nursing visit occurring within the 
first 2 days of an election in order to be in compliance with the CoPs. 
We found that, in FY 2013, 96 percent of hospice patients did receive a 
skilled visit in the first 2 days of a hospice election. The percentage 
of patients that did not receive a skilled nursing or social work visit 
on any given day increased to about 65 percent by the sixth day of a 
hospice election. Overall, on any given day during the first 7 days of 
a hospice election, nearly 50 percent of the time the patient is not 
receiving a skilled visit (skilled nursing or social worker visit).

     Table 14--Frequency and Length of Skilled Nursing and Social Work Visits (Combined) During the First Seven Days of a Hospice Election, FY 2013
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                First
                                                   First day    Second day   Third day    Fourth day   Fifth day    Sixth day   Seventh day    through
                  Visit length                        (%)          (%)          (%)          (%)          (%)          (%)           (%)     seventh day
                                                                                                                                                  (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
No Visit........................................         11.0         37.7         56.0         59.1         62.0         65.6         64.2         49.3
15 mins to 1 hr.................................         12.8         27.1         22.2         20.6         20.4         20.1         22.3         20.7
1 hr 15 m to 2 hrs..............................         32.0         21.4         14.3         13.4         12.2         10.4         10.2         16.9
2 hrs 15 m to 3 hrs.............................         22.8          8.6          4.8          4.5          3.6          2.5          2.2          7.5
3 hrs 15 m to 3hrs45m...........................          8.5          2.6          1.3          1.2          0.9          0.6          0.5          2.4
4 or more hrs...................................         13.0          2.6          1.3          1.2          0.9          0.7          0.6          3.2
                                                 -------------------------------------------------------------------------------------------------------
    Total.......................................        100.0        100.0        100.0        100.0        100.0        100.0        100.0        100.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: FY 2013 hospice claims data from the Standard Analytic Files for CY 2012 (as of June 30, 2013) and CY 2014 (as of December 31, 2013).

    As we noted above, we are concerned that many beneficiaries are not 
receiving skilled visits during the last few days of life. At the end 
of life, patient needs typically surge and more intensive services are 
warranted. However, analysis of FY 2013 claims data shows that on any 
given day during the last 7 days of a hospice election, nearly 50 
percent of the time the patient is not receiving a skilled visit 
(skilled nursing or social worker visit) (see table 15 below). 
Moreover, on the day of death nearly 30 percent of beneficiaries did 
not receive a skilled visit (skilled nursing or social work visit).

[[Page 47164]]



                          Table 15--Frequency and Length of Skilled Nursing and Social Work Visits (Combined) During the Last Seven Days of a Hospice Election, FY 2013
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                      One day        Two days       Three days       Four days       Five days       Six days       Last seven
                        Visit length  (%)                          Day of death    before death    before death    before death    before death    before death    before death   days  combined
                                                                        (%)             (%)             (%)             (%)             (%)             (%)             (%)             (%)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
No Visit........................................................            27.8            38.7            45.2            49.8            53.2            55.8            58.0            46.3
15 mins to 1 hr.................................................            23.9            27.9            26.5            25.1            24.2            23.5            22.8            24.9
1 hr 15 m to 2 hrs..............................................            24.2            19.3            17.4            15.9            14.5            13.6            12.7            17.1
2 hrs 15 m to 3 hrs.............................................            12.3             7.2             5.9             5.1             4.5             4.1             3.8             6.3
3 hrs 15 m to 3hrs45m...........................................             4.4             2.4             1.9             1.6             1.4             1.2             1.1             2.1
4 or more hrs...................................................             7.4             4.3             3.0             2.4             2.1             1.9             1.6             3.4
                                                                 -------------------------------------------------------------------------------------------------------------------------------
    Total.......................................................           100.0           100.0           100.0           100.0           100.0           100.0           100.0           100.0
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Source: FY 2013 hospice claims data from the Standard Analytic Files for CY 2012 (as of June 30, 2013) and CY 2014 (as of December 31, 2013).

    We would expect that skilled visits are provided to the patient and 
family at end of life as the changing condition of the individual and 
the imminence of death often warrants frequent changes to care to 
alleviate and minimize symptoms and to provide support for the family. 
Although previous public comments stated that patients and families 
sometimes request no visits at the end of life, and there are rare 
instances where a patient passes away unexpectedly, we would expect 
that these instances would be rare and represent a small proportion of 
the noted days without visits at the end of life. However, the data 
presented in Table 15 above suggests that it is not rare for patients 
and families to have not received skilled visits (skilled nursing or 
social work visits) at the end of life. In the FY 2015 Hospice Wage 
Index and Payment Rate Update final rule, we noted that nearly 5 
percent of hospices did not provide any skilled visits in the last 2 
days of life to more than 50 percent of their decedents receiving 
routine home care on those last 2 days and 34 hospices did not make any 
skilled visits in the last 2 days of life to any of their decedents who 
died while receiving routine home care (79 FR 50462).
2. Routine Home Care Rates
    RHC is the basic level of care under the Hospice benefit, where a 
beneficiary receives hospice care, but remains at home. With this level 
of care, hospice providers are currently reimbursed per day regardless 
of the volume or intensity of services provided to a beneficiary on any 
given day. As stated in the FY 2014 Hospice Wage Index and Payment Rate 
Update final rule (78 FR 48234), ``it is CMS' intent to ensure that 
reimbursement rates under the Hospice benefit align as closely as 
possible with the average costs hospices incur when efficiently 
providing covered services to beneficiaries.'' However, as discussed in 
section III.B.1 above, there is evidence of a misalignment between the 
current RHC per diem payment rate and the cost of providing RHC. In 
order to help ensure that hospices are paid adequately for providing 
care to patients regardless of their palliative care needs during the 
stay, while at the same time encouraging hospices to more carefully 
determine patient eligibility relative to the statutory requirement 
that the patient's life expectancy be 6 months or less, in the FY 2016 
Hospice Wage Index and Payment Rate Update proposed rule (80 FR 25831), 
we proposed to use the authority under section 1814(i)(6)(D) of the 
Act, as amended by section 3132(a) of the Affordable Care Act to revise 
the current RHC per diem payment rate to more accurately align the per 
diem payments with visit intensity (that is, the cost of providing care 
for the clinical service (labor) components of the RHC rate). We 
proposed to implement, in conjunction with a SIA payment discussed in 
section III.B.3 below, two different RHC rates that would result in a 
higher base payment rate for the first 60 days of hospice care and a 
reduced base payment rate for days 61 and beyond of hospice care.
    The proposed two rates for RHC were based on an extensive body of 
research concerning visit intensity during a hospice episode as cited 
throughout this section. We consider a hospice ``episode'' of care to 
be a hospice election period or series of election periods. Visit 
intensity is commonly measured in terms of wage-weighted minutes and 
reflects variation in the provision of care for the clinical service 
(labor) components of the RHC rate. The labor components of the RHC 
rate comprise nearly 70 percent of the RHC rate (78 FR 48272). 
Therefore, visit intensity is a close proxy for the reasonable cost of 
providing hospice care absent data on the non-labor components of the 
RHC rate, such as drugs and DME. As shown in Figures 5 and 6 below, the 
daily cost of care, as measured wage-weighted minutes, declines quickly 
for individual patients during their hospice episodes, and for long 
episode patients, remains low for a significant portion of the episode. 
Thus, long episode patients are potentially more profitable than 
shorter episode patients under the current per diem payments system in 
which the payment rate is the same for the entire episode. At the same 
time, the percent of beneficiaries that enter hospice less than 7 days 
prior to death has remained relatively constant (approximately 30 
percent) over this time period, meaning the increase in the average 
episode length can be attributed to an increasing number of long stay 
patients. We found that the percent of episodes that are more than 6 
months in length has nearly doubled from about 7 percent in 1999 to 13 
percent in 2013.
    Figure 5 displays the pattern of wage-weighted minutes by time 
period within beneficiary episodes, but separating out the last 7 days 
of the episode for decedents. The wage-weighted minutes for the last 7 
days are displayed separately by the bar furthest to the right of the 
Figure 5. The visit intensity curve declines rapidly after 7 days and 
then at a slower rate until 60 days when the curve becomes flat 
throughout the remainder of episodes (excluding the last 7 days prior 
to death). It is for this reason that we proposed to pay a higher rate 
for the first 60 days and a lower rate thereafter. It is clear from the 
figure that visit utilization is constant from day 61 on, until the 
last 7 days for decedents. We believe the most important reason for 
implementing a different RHC rate for the first 60 days versus days 61 
and beyond is that we must account for differences in average visit 
intensity between episodes that will end within 60 days and those that 
will go on for longer episodes.

[[Page 47165]]

[GRAPHIC] [TIFF OMITTED] TR06AU15.004

    As Figure 6 demonstrates, beneficiaries whose entire episode is 
between 8 and 60 days do have higher wage-weighted minute usage than 
those with longer stays. Using 60 days for the high RHC rate as opposed 
to an earlier time assures that hospices have sufficient resources for 
providing high quality care to patients (for example, 1 through 60 
days) whose average daily visit intensity is higher than for longer 
stay patients.
[GRAPHIC] [TIFF OMITTED] TR06AU15.005

    Table 16 below describes the average wage-weighted minutes for RHC 
days in FY 2014, calculated both in specific phases within an episode 
as well as overall.

[[Page 47166]]



                          Table 16--Average Wage Weighted Minutes per RHC Day, FY 2014
----------------------------------------------------------------------------------------------------------------
                                                                                                 Ratio of wage
                                                                                               weighted minutes
                                                         Average wage-                           for each row
              Phase of days in episode                 weighted minutes        RHC days         divided by wage
                                                                                               weighted minutes
                                                                                                 for days 1-7
----------------------------------------------------------------------------------------------------------------
1-7 Days............................................              $39.29           5,446,868              1.0000
8-14 Days...........................................               20.12           4,310,630              0.5121
15-30 Days..........................................               17.96           7,752,375              0.4570
31-60 Days..........................................               16.09          10,758,904              0.4097
61-90 Days..........................................               15.44           8,123,686              0.3930
91-180 Days.........................................               14.93          16,271,786              0.3799
181-272 Days........................................               14.78          10,118,998              0.3762
273-365 Days........................................               14.90           6,876,814              0.3793
365 up Days.........................................               15.05          16,029,597              0.3830
                                                     -----------------------------------------------------------
    Total RHC Days..................................               17.21          85,689,658              0.4380
----------------------------------------------------------------------------------------------------------------

    In Table 16, the average wage-weighted minutes per day for days 1 
through 7 describe the baseline for the other phases of care, set at a 
value of one. Given the demands of the initial care in an episode, 
resource intensity is highest during this first week of an episode, and 
resource needs decline steadily over the course of an episode. The 
overall average wage-weighted minutes per day across all RHC days 
equals $17.21 as described in the last row in table 16 above. We then 
calculated the average wage-weighted minute costs for the two groups of 
days (Days 1 through 60 and Days 61+) utilizing FY 2014 RHC days 
multiplied by the 2013 Bureau of Labor Statistics (BLS) average hourly 
wage values for the relevant disciplines, as follows: Skilled Nursing: 
$40.07; Physical Therapy: $55.93; Occupational Therapy: $55.57; Speech 
Language Pathology: $60.21; Medical Social Services: $38.25; and Aide: 
$14.28. The average wage-weighted minute cost for days 1 through 60 
equals to $21.69 while the average wage weighted minutes for days 61 or 
more equals $15.01.
    To calculate the RHC payment rate for days 1 through 60, we 
compared the average wage-weighted minutes per day for days 1 through 
60 to the overall average wage-weighted minutes per day multiplied by 
the labor portion of the FY 2015 RHC rate (column 4 in Table 17 below), 
which equals ($21.69/$17.21)*$109.48 = $137.98. Similarly, the RHC 
payment rate for days 61+ equals the average wage-weighted minutes per 
day for days 61+ divided by the overall average wage-weighted minutes 
per day multiplied by the labor portion of the FY 2015 RHC rate (column 
4 in Table 17 below), which equals ($15.01/$17.21)*$109.48 = $95.49.

                                              Table 17--FY 2015 RHC Rate Revised Labor Portion Calculation
--------------------------------------------------------------------------------------------------------------------------------------------------------
                            (1)                                    (2)             (3)             (4)                   (5)                    (6)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               FY 2015 RHC     RHC Labor-      FY 2015 RHC      Average wage weighted       Revised FY
                                                              Payment rate    related share  Payment rate--        minutes for RHC          2015 labor
                                                                                              labor portion   differential rate/overall       portion
                                                                                                              RHC average wage weighted
                                                                                                                       minutes
--------------------------------------------------------------------------------------------------------------------------------------------------------
Days 1-60..................................................         $159.34        x 0.6871         $109.48     x 1.2603 ($21.69/$17.21)         $137.98
Days 61+...................................................          159.34        x 0.6871          109.48     x 0.8722 ($15.01/$17.21)           95.49
--------------------------------------------------------------------------------------------------------------------------------------------------------

    As discussed in section III.C of this rule, currently, the labor-
related share of the hospice payment rate for RHC is 68.71 percent. The 
non-labor share is equal to 100 percent minus the labor-related share, 
or 31.29 percent. Given the current base rate for RHC for FY 2015 of 
$159.34, the labor and non-labor components are as follows: For the 
labor-share portion, $159.34 multiplied by 68.71 percent equals 
$109.48; for the non-labor share portion, $159.34 multiplied by 31.29 
percent equals $49.86. After determining the labor portion for the RHC 
rate for the first 60 days and the labor portion for the RHC rate for 
days 61 and over, we add the non-labor portion ($49.86) to the revised 
labor portions. In order to maintain budget neutrality, as required 
under section 1814(i)(6)(D)(ii) of the Act, the RHC rates will be 
adjusted by a ratio of the estimated total labor payments for RHC using 
the current single rate for RHC to the estimated total labor payments 
for RHC using the two rates for RHC and taking into account area wage 
adjustment. This ratio results in a budget neutrality adjustment of 
0.9978, which is due to differences in the average wage index for days 
1-60 compared to days 61 and beyond, as shown in column 3 in Table 18 
below. Finally, adding the revised labor portion with budget neutrality 
to the non-labor portion results in revised FY 2015 RHC payment rates 
of $187.54 for days 1 through 60 and $145.14 for days 61 and beyond.

[[Page 47167]]



                            Table 18--RHC Budget Neutrality Adjustment for RHC Rates
----------------------------------------------------------------------------------------------------------------
               (1)                      (2)             (3)             (4)             (5)             (6)
----------------------------------------------------------------------------------------------------------------
                                    Revised FY        Budget        Revised FY     FY 2015 Non-       FY 2015
                                    2015 Labor      neutrality      2015 labor     labor portion    Revised RHC
                                      portion       factor \1\     portion with                    payment rates
                                                                      budget
                                                                    neutrality
----------------------------------------------------------------------------------------------------------------
Days 1-60.......................         $137.98        x 0.9978         $137.68          $49.86         $187.54
Days 61+........................           95.49        x 0.9978           95.28           49.86          145.14
----------------------------------------------------------------------------------------------------------------
\1\ The budget neutrality adjustment is required due to differences in the average wage index for days 1-60
  compared to days 61 and beyond.

    The RHC rates for days 1 through 60 and days 61 and over (column 6 
of Table 18 above) would replace the current single RHC per diem 
payment rate with two new RHC per diem rates for patients who require 
RHC level of care during a hospice election. In order to mitigate 
potential high rates of discharge and readmissions, we proposed that 
the count of days follow the patient. For hospice patients who are 
discharged and readmitted to hospice within 60 days of that discharge, 
his or her prior hospice days would continue to follow the patient and 
count toward his or her patient days for the receiving hospice upon 
hospice election. The hospice days would continue to follow the patient 
solely to determine whether the receiving hospice would receive payment 
at the day 1 through 60 or day 61 and beyond RHC rate. Therefore, we 
consider an ``episode'' of care to be a hospice election period or 
series of election periods separated by no more than a 60 day gap.
    Summaries of the public comments and our responses to comments on 
all aspects of the RHC payment rates are summarized below:
    Comment: Nearly all commenters were supportive of our proposal to 
create two RHC rates, one higher rate for the first 60 days of hospice 
care and a second lower rate for days 61 and beyond. MedPAC supported 
both the proposed new structure for RHC payments and the proposed 
Service Intensity Adjustment (SIA) in section III.B.3 below, and stated 
that these two proposals begin to better align payments with the u-
shaped pattern of hospice visits throughout an episode. Several 
commenters went on to add that the proposed RHC rates would increase 
reimbursement and accurately align the higher cost of care for 
relatively short stay patients while fairly reimbursing the lower cost 
of care for long stay patients.
    Response: We thank the commenters for their support. We agree that 
our proposal to create two RHC rates, one for days 1-60 and another for 
days 61 and beyond, addresses observed differences in resource 
intensity between the first 60 days of hospice care and hospice care 
that extends beyond 60 days.
    Comment: Several commenters questioned why CMS differentiated 
between a higher and a lower RHC rate at 60 days. Several commenters 
stated that the costs do not decrease after 60 days and that costs 
often increase near the end of life. While the proposed SIA, discussed 
in section III.B.3 below, helps to compensate for increased costs at 
end of life, the proposed RHC rates do not take into consideration the 
increased costs of medications, sometimes extra equipment, nor the real 
costs of providing care. One commenter stated that once a patient 
exceeds 60 days of care, the lower RHC rate simply re-introduces the 
current incentive to provide long spells of potentially unnecessary 
care. The commenter went on to add that the proposed RHC rates are, in 
reality, two flat per diem rates that perpetuate the shortcomings of 
the current payment approach.
    A few commenters recommended that CMS maintain consistency with 
already established benefit periods and should, instead of 
differentiating payment at 60 days, differentiate RHC payments between 
days 1-90 and days 91 and beyond, or even apply the higher rate for the 
first 6 months and then the lower rate thereafter to maintain 
consistency with the eligibility requirement of a ``life expectancy of 
6 months or less if the illness runs its normal course''. One commenter 
agreed with CMS' proposal to create two RHC rates, but recommended that 
in the future, CMS consider establishing a separate rate for the first 
7 or 14 days of care and a lower rate thereafter.
    Several commenters stated that while they support the proposal to 
create two RHC rates, further refinements may be necessary in the 
future. Specifically, one commenter stated that CMS may need to further 
weight the first 60 days or transition from the first to the second RHC 
rate earlier than day 61. Several commenters added that CMS may find 
that hospice payments should be adjusted based on beneficiary 
characteristics, such as comorbidities and socio-economic status and 
that CMS should develop a reimbursement methodology that reflects the 
actual cost of caring for individuals with different diagnoses related 
to the terminal illness as well as individuals that receive higher cost 
treatments (for example, chemotherapy, total parenteral nutrition).
    Response: As discussed above, visit intensity declines after 7 days 
of hospice care until day 60 of hospice care when the visit intensity 
becomes flat throughout the remainder of the hospice episode (excluding 
the last 7 days prior to death). It is for this reason that we proposed 
to pay a higher rate for the first 60 days and a lower rate thereafter. 
CMS did consider establishing an even higher rate for the first 7 days 
of care; however, given concerns voiced by the National Hospice and 
Palliative Care Organization (NHPCO), MedPAC, and others that short 
lengths of stay may prevent patients and family caregivers from 
benefiting fully from the range of specialized services and 
compassionate care that hospices offer, we decided to propose a higher 
RHC rate for days 1-60 and an lower RHC rate for days 61 and beyond as 
to not provide a larger incentive for hospices to target short stay 
patients. In addition to the higher RHC rate for days 1-60, the 
proposed SIA, discussed in section III.B.3 below, would increase the 
reimbursement further for short stay patients, including those with 
lengths of stay of 7 days or less, as long as skilled visits by a 
registered nurse or social worker are provided to the patient at end of 
life. For those commenters that suggested CMS pay a higher rate for the 
first 90 days and then a lower rate thereafter, we concur with MedPAC's 
comments on the proposed rule cautioning against any changes to the 
proposed structure that would lengthen the period for the initial 
payment rate (for example, days 1-90) because that would result in a 
lower initial payment rate and represent

[[Page 47168]]

a smaller increase in reimbursement for shorter stays.
    CMS recently revised the freestanding hospice cost report form for 
cost reporting periods beginning on or after October 1, 2014. On April 
1, 2014, we began requiring hospices to report on the hospice claim, in 
line item detail, the charges associated with infusion pumps and non-
injectable and injectable prescription drugs (as dispensed). In section 
III.F of this final rule, we are clarifying that, effective October 1, 
2015, hospices are to report all patient diagnoses (related and 
unrelated) on the hospice claim form. Once several years of additional 
data are available for analysis, we will determine whether additional 
changes to the hospice payment system are needed in the future, 
including analysis to determine whether a case-mix system for hospice 
payments would be an appropriate, viable option.
    Comment: Several commenters stated that the proposed RHC rates 
would allow some hospices to ``game the system'' by receiving the full 
benefit of the initial 60 day period then discharging the patient, 
leaving other smaller, non-profit hospices to assume care for someone 
with decreased reimbursement. Commenters expressed concern that this 
payment differential could provide an incentive for hospices to target 
and admit larger numbers of short stay patients, and to discharge or 
decline to admit, patients who hospice care would be paid at the lower 
rate causing more patients to show up at the emergency room multiple 
times for pain management and symptom control. One commenter stated 
that the proposed RHC rates could cause hospices to shift away from 
caring for patients with non-cancer diagnoses with unpredictable 
lengths of stay. Commenters further urged CMS to monitor for discharges 
around day 60 and to put mechanisms in place to prevent hospices from 
discharging a patient around day 60. Some commenters suggested that CMS 
address the areas of illegal and unethical behaviors of those 
individual hospices who do not comply with the rules and regulations of 
the Medicare hospice benefit and that CMS not apply a universal payment 
reform that impacts those hospice providers who are in compliance with 
the rules and regulations.
    Response: Reiterating what we stated in the FY 2016 Hospice Wage 
Index and Payment Rate Update proposed rule (80 FR 25831), we will 
monitor the impact of this proposal, including trends in discharges and 
revocations, and propose future refinements if necessary. We want to 
remind hospices that, pursuant to section 418.26, there are only three 
reasons why a hospice may discharge a patient--(1) If the hospice 
patient moves outside of the hospice's service area or transfers to 
another hospice; (2) if the hospice determines the patient is no longer 
terminally ill; or (3) for cause when the patient or others living in 
the patient's home are disruptive, abusive, or uncooperative. Program 
integrity and oversight efforts are being considered to address fraud 
and abuse and such efforts include, but are not limited to, medical 
review, MAC audits, Zone Program Integrity Contractor actions, RAC 
activities, or suspension of provider billing privileges.
    Comment: Commenters stated that the proposed RHC rates do not 
address the challenges faced by hospices with very short stay patients. 
A few commenters stated that instead of adding complexity to the 
billing process, CMS should target its efforts on ensuring 
beneficiaries are informed early and often on the value of services 
they are entitled to under the Medicare hospice benefit and target 
providers experiencing high profit margins and separately evaluate the 
level and intensity of such providers and those providers' case-mix and 
staffing strategies.
    Response: While the proposed RHC rates themselves do not 
specifically address very short stay patients, the proposed SIA, 
discussed in section III.B.3 below, would apply to the last 7 days of 
life. We believe that the higher RHC rate in conjunction with the 
proposed SIA payment will mitigate some of the financial concerns 
associated with these very short stay patients. CMS makes every effort 
to provide outreach and education to Medicare beneficiaries and 
providers regarding all Medicare benefits, including those services 
available under the Medicare hospice benefit. Information regarding 
benefit coverage is available via MLN articles, the annual Medicare & 
You handbook, and on the Medicare.gov Web site, to name a few. We will 
continue to monitor provider behavior and will continue efforts to 
protect beneficiary access to high quality, coordinated and 
comprehensive hospice care under the Medicare hospice benefit.
    Comment: Most commenters, including MedPAC, generally agreed that 
for hospice patients who are discharged and readmitted to hospice 
within 60 days of that discharge, his or her prior hospice days should 
continue to follow the patient and count toward his or her patient days 
for the receiving hospice upon hospice election. MedPAC stated that 
this policy is necessary to minimize financial incentives for hospice 
patients to be dis-enrolled and re-enrolled, or transferred between 
hospice providers, for the purposes of obtaining a higher payment rate. 
MedPAC went on to state that they would also support a longer ``break'' 
than 60 days, but does not believe this threshold should be shorter. A 
few commenters did not agree with having the hospice days follow the 
patient and added that concerns exist about instances where the patient 
transfers to another hospice and the inequities for the second hospice 
if they are not entitled to the higher RHC rate after 60 days have 
lapsed. A few commenters suggested that CMS allow the second hospice to 
receive the higher RHC rate or an add-on payment just for the first 
seven days of a new election after being discharged from a different 
hospice provider. One commenter suggested that for live discharges 
prior to 60 days, the lower tiered RHC rate be applied to all claims 
where a patient is in their initial 60 days. Other commenters suggested 
that CMS monitor this issue and whether it has any effect on access to 
hospice care. One commenter suggested that CMS' proposed ``episode'' 
definition (a hospice election period or series of election periods 
separated by no more than a 60 day gap) may be most appropriate to 
apply to those hospices that share common ownership rather than to all 
hospice providers.
    Response: We thank the commenters for their support. We want to 
reiterate that in order to mitigate potential high rates of discharge 
and readmissions (``churning''), we proposed that the count of days 
follow the patient. We continue to believe that this policy is both 
necessary and appropriate. Allowing for a higher payment for the first 
seven days of a new hospice election without a gap in hospice care of 
greater than 60 days goes against our intent to mitigate the incentive 
to discharge and readmit patients at or around day 60 for the purposes 
of obtaining a higher payment. As we stated above, we will monitor the 
impact of the new RHC rates policy based on claims data, including 
trends in discharges and revocations, and implement future refinements 
to the rates or policy changes, if necessary. In response to the 
commenter that suggested that for live discharges prior to 60 days, the 
lower tiered RHC rate be applied to all claims where a patient is in 
their initial 60 days, we will take this suggestion under advisement 
for future rulemaking after analyzing any trends in discharges and 
revocations as a result of the policy changes finalized in this rule. 
Finally, the Medicare claims processing

[[Page 47169]]

system is not able to identify hospices that share common ownership. In 
the future, if this capability is developed in the future, we will 
consider whether it would be appropriate to restrict the application of 
episode definition to hospices that share common ownership.
    Comment: Some commenters expressed concern about the ability of 
CMS, the state Medicaid agencies, and hospices to make the necessary 
systems changes and undertake education and training to be ready to 
implement the new billing system by October 1, 2015. Commenters urged 
CMS to be mindful to the challenges associated with any new hospice 
payment system that affects Medicaid. A few commenters suggested that 
CMS should pilot test this new methodology before implementation in 
order to determine any unintended consequences as well as better 
determine the administrative burden imposed. Other commenters suggested 
that CMS consider a one-year demonstration project to test the new RHC 
payment rates for all hospices under the jurisdiction of one MAC. A few 
commenters stated that the two RHC rates should be phased in, similar 
to how CMS implemented the new Ambulatory Surgical Center (ASC) payment 
system and the phase-out of the hospice BNAF. One commenter suggested 
that CMS delay implementation of this final rule until after ICD-10-CM 
implementation.
    Response: Although some commenters suggested that, before national 
implementation, CMS should conduct a demonstration project or pilot 
test the two proposed RHC rates, we do not believe that a demonstration 
project or pilot test is warranted. CMS has been working with our 
contractors to develop systems changes to the fullest extent possible 
in parallel with the development of this rule. Our system maintainers 
will have their full software development lifecycle to implement these 
changes. We do not have concerns about the readiness of Medicare 
systems on October 1, 2015. Regarding hospice system changes, we do not 
anticipate that this rule will require any changes to hospice billing 
instructions so systems for submitting claims and receiving Medicare 
payment should not be affected and the need for retraining billing 
staff should be limited, but hospices may need to change their internal 
accounting systems . Further, the data presented in the proposed rule 
sufficiently demonstrate that CMS needs to implement the proposed RHC 
payment rate change to better align hospice payments with resource use. 
Any phase-in of the proposed RHC rates would not be appropriate given 
the current misalignment between payments and resource use and the 
ability of CMS to effectively implement the required systems changes. 
Likewise, CMS does not believe that a delay in the implementation of 
the two RHC rates would be warranted due to the implementation of ICD-
10-CM.
    While CMS is ready and able to make the required systems changes to 
implement a change from a single RHC per diem payment rate to two RHC 
per diem payment rates, we anticipate that state Medicaid agencies may 
encounter difficulties in making the necessary systems and software 
changes to be ready to implement the proposed RHC rates on October 1, 
2015. Therefore, we will delay implementation of both the proposed RHC 
rates and the SIA payment until January 1, 2016 in order to ensure, to 
the greatest extent possible, that the state Medicaid agencies can 
likewise implement these changes. Between October 1, 2015 and December 
31, 2015, hospices will continue to be paid a single FY 2016 RHC per 
diem payment amount. Effective January 1, 2016, the RHC rates for days 
1 through 60 and days 61 and beyond would replace the single RHC per 
diem payment rate (the RHC per diem rates are listed in section III.C 
of this final rule). We assure hospices that CMS and the MACs will take 
steps to educate and train hospice providers and state Medicaid 
agencies on the policy changes and associated systems changes finalized 
in this rule so that hospices and the state Medicaid agencies are ready 
to implement the two RHC rates on January 1, 2016.
    Comment: Several commenters stated that the proposed rule did not 
describe how hospice days will be counted for beneficiaries in existing 
hospice episodes that continue through October 1, 2015. Several 
commenters, including MedPAC, stated that the patient's day count on 
October 1, 2015 should be based on the total number of days in the 
hospice episode, even those days prior to October 1, 2015 (taking into 
account the proposed policy that the episode days follow the patient 
and 60 days without hospice care would trigger a new hospice episode). 
A few commenters stated that the new RHC rates should apply just for 
new admissions starting on or after October 1, 2015 and a few other 
commenters added that existing admissions should continue to be paid 
the existing single RHC rate for a year after implementation. A few 
commenters asked whether the 60 day hospice episode period is counting 
60 days of continuous days of hospice care regardless of level of care 
or whether it is only counting days at the RHC level of care and 
whether days of care that were provided, but not billable, would be 
included in the count.
    Response: Table 16, used to establish the proposed RHC payment 
rates for days 1-60 and days 61 and beyond, takes into account the 
patient's episode day count based on the total number of days included 
in that episode regardless of level of care, whether those days were 
billable or not, and taking into account any instances where the 
patient was not receiving hospice care for more than 60 days, which 
would trigger a new hospice episode for the purpose of determining 
whether to pay the higher versus the lower RHC rate. We agree with 
MedPAC that it would not be appropriate to reset all hospice patients' 
episodes to day 1 on January 1, 2016 since patients who have already 
been in hospice for at least 60 days would not require the higher base 
payment rate associated with the first 60 days of the hospice episode. 
Likewise, we agree with MedPAC that allowing patients in existing 
elections to remain under the prior single RHC rate system would 
perpetuate concerns about payments being misaligned with costs for the 
longest-stay patients. Therefore, we believe that the most appropriate 
approach is to calculate the patient's episode day count based on the 
total number of days the patient has been receiving hospice care, 
separated by no more than a 60 day gap in hospice care, regardless of 
level of care or whether those days were billable or not. This 
calculation would include hospice days that occurred prior to January 
1, 2016.
    Comment: Some commenters stated that it was unclear from the 
proposal whether hospices will simply bill a RHC day and CMS will 
determine the count of days for the patient and pay the appropriate 
rate, or whether hospices will be responsible for determining the 
patient day count and billing at the correct rate. A few commenters 
questioned how CMS would address instances where a hospice is delayed 
in filing a Notice of Termination/Revocation and the days that the 
beneficiary was served by a previous hospice program may not be 
``visible'' for purposes of determining the day count and the 
appropriate billing rate. One commenter suggested that CMS should be 
responsible for the count of days, rather than individual hospices. One 
commenter recommended that CMS not finalize its proposal to have the 
count of days follow the patient as this could become problematic from 
a billing perspective for receiving hospices in instances where a 
previous hospice provider does not bill their

[[Page 47170]]

hospice claims for its patients in a timely manner. Another commenter 
recommended that CMS eliminate the sequential billing requirement so 
that there would be fewer implementation problems associated with the 
proposed reimbursement changes. Finally, one commenter questioned if 
payments are made to the hospice and are later found to have been the 
wrong rate because of missing or inaccurate information on the day 
count, what the process would be for reconciliation and recoupment and 
over what time period might this occur.
    Response: Hospices will not be required to change how they bill for 
RHC days to comply with the proposed higher RHC rate for the first 60 
days of care and a lower rate thereafter. CMS' claims processing system 
will be responsible for the count of days, rather than the individual 
hospices, and will pay the appropriate rate accordingly. We believe 
this should alleviate hospice providers' concerns about having access 
to timely information on the patients' day count. There may be cases 
where a hospice submits a claim for a new admission and expects payment 
days under the high RHC rate because they are unaware of a prior 
admission in a sequence of elections. If the prior hospice's benefit 
period is posted in the Common Working File (CWF) at the time the 
second hospice's claim is processed, Medicare systems will pay the low 
RHC rate on that claim and no recoupment will result. If the two 
hospices' benefit periods are processed out of sequence, this typically 
requires that the second hospice's claims be cancelled and reprocessed. 
When Medicare systems reprocess the claims, they will pay the low RHC 
rate and any difference between the two rates will be recouped on the 
provider's next remittance advice. While we are not eliminating the 
sequential billing requirement at this time, we will consider whether 
the elimination of that requirement may be appropriate in the future.
    Comment: Several commenters asked how hospices will be able to 
determine and confirm the days on service for a new hospice admission. 
One commenter recommended that a separate count be established to track 
and report the 60 day ``break'' in service so it is clear to hospice 
providers if a patient is within the first 60 days of a hospice 
episode. One commenter provided the following scenario:

 Patient begins hospice care on day one
 Patient discharged on day five
 Patient does not receive hospice care for 50 days
 Patient is then re-admitted.

The commenter asked whether the day count would leave 55 more days to 
be paid the higher RHC rate, or only 5 days to be paid at the higher 
RHC rate. One commenter questioned how the count of days would work for 
transfers where both hospices may bill on the day of transition.
    Response: If a patient is discharged and readmitted within 60 days 
of that discharge, then the day count would start back where they were 
at discharge. In the scenario described above, the day count would 
leave 55 more days to be paid the higher RHC rate. When a patient 
transfers hospices and there is no gap in care, the transfer day (both 
hospices will be including the same date on their claim) will only be 
counted as 1 day. Hospices can access this information through the 
HIPAA Eligibility Transaction System (HETS), which is intended to allow 
the release of eligibility data to Medicare Providers, Suppliers, or 
their authorized billing agents for the purpose of preparing an 
accurate Medicare claim, determining Beneficiary liability or 
determining eligibility for specific services. The hospice data 
provided by the Common Working File (CWF) and the HETS system includes 
the actual start and end date of the hospice benefit days. That 
information will help hospices determine how many days the hospice 
benefit was utilized. The HETS system allowable date span is up to 12 
months in the past, based on the date the transaction was received. The 
data return in the HETS system is driven by the date requested in the 
hospice's eligibility request. To ensure that all hospice episodes 
available in the HETS system are returned, hospices should request a 
date 12 months prior from the date of the request. If a hospice does 
not have access to the CWF or the HETS system, the hospice can access 
this data via their MAC's Portal, the MAC's Interactive Voice Response 
(IVR) unit, or request a direct access to the HETS system. A hospice 
that uses a clearinghouse may already have access to the HETS system.
    Comment: A few commenters had extensive comments on the technical 
aspects in implementing the proposed RHC rates and the SIA payments. 
For example, some commenters questioned: (1) Whether the claims 
processing system can accommodate a break in line item detail when the 
revenue code does not change, but the rate does; (2) how the electronic 
remittance advice will reflect multiple payment rates for revenue code 
0651; (3) will the two RHC rates affect revenue reporting on the 
hospice cost report, and if so, will the PS&R report summarize the 
needed data appropriately; and (4) how will Medicare secondary payer 
processing apply the two RHC rates on claims billed to a primary payer 
that utilizes a single rate.
    Response: We do not anticipate that this rule will require any 
changes to the hospice cost report form to differentiate between the 
two RHC rates and thus we do not anticipate that this rule will require 
CMS modify the PS&R report. There will often be cases where the RHC 
rate changes during a period RHC that is shown on a single line item on 
a claim (for example, an RHC line shows 20 days of care and the high 
RHC rate ends after day 10). The line item should not be split in this 
case. Medicare billing instructions for hospice are not changing due to 
this rule. Existing instructions require that level of care revenue 
code lines should only be repeated if the site of service changes. A 
claim submitted with consecutive RHC lines reporting the same site of 
service HCPCS code will be returned to the provider. Medicare systems 
will combine the high and low RHC rates for the applicable days in the 
total payment for the RHC line item. No changes to the electronic 
remittance advice are planned as a result of this rule. If remittance 
advice coding to identify lines that are paid using the high RHC rate 
or that are paid at multiple rates would be beneficial, CMS will 
consider requesting and implementing such coding in future program 
instructions. Regarding Medicare Secondary Payer (MSP), a primary 
payer's method of payment frequently differs from Medicare's method. 
This policy does not change the calculation of MSP amounts. The primary 
payer's total payment for the claim, the claim charges and the Medicare 
primary payment amount are subject to the MSP calculations required by 
law and the MSP payment is determined accordingly.
    Comment: One commenter stated that its state Medicaid system does 
not utilize the CMS 1450 claim form for hospice elections nor do they 
make benefit utilization information available to providers and 
questioned whether Medicaid reimbursement would be changing to a two-
tiered system for RHC level of care. A few commenters stated that the 
Affordable Care Act authorized concurrent care for children, so they 
could receive hospice services while continuing to receive treatment 
intended to prolong their lives and was specifically intended to enable 
children and their parents to access hospice services earlier in the 
course of disease.

[[Page 47171]]

The commenter stated that a reduction in reimbursement for services 
longer than 60 days could undercut the intent of the concurrent care 
provision. One commenter asked whether any provisions would be made to 
facilitate a later implementation date for Medicaid if there is no 
delay to the October 1, 2015 effective date of the proposals in the 
proposed rule.
    Response: Section 2302 of the Affordable Care Act requires states 
to make hospice services available to children eligible for Medicaid 
without forgoing any other service to which the child is entitled under 
Medicaid for treatment of the terminal condition. As a general matter, 
individuals under age 21 in Medicaid receive all medically necessary 
services coverable under the mandatory and optional categories in 
section 1905(a) of the Social Security Act, including hospice. 
Therefore, payment changes in the Medicaid hospice program should not 
affect the curative services a child receives. As we noted above, we 
will finalize a delay in the implementation of both the proposed RHC 
rates and the proposed SIA payment until January 1, 2016. Between 
October 1, 2015 and December 31, 2015, hospices will continue to be 
paid a single FY 2016 RHC per diem payment amount while the operational 
transition is being finalized at CMS. Effective January 1, 2016, the 
RHC rates for days 1 through 60 and days 61 and beyond would replace 
the single RHC per diem payment rate (the RHC per diem rates are listed 
in section III.C of this final rule). Therefore, the effective date for 
both Medicare and Medicaid will be January 1, 2016. As we noted above, 
for Medicare reimbursement, hospices will not be required to change how 
the bill for RHC days to comply with the proposed higher RHC rate for 
the first 60 days of care and a lower rate thereafter. CMS' claims 
processing system will be responsible for the count of days, rather 
than the individual hospices, and will pay the appropriate rate 
accordingly. We defer to the states on how they will implement this 
change in Medicare reimbursement for their state Medicaid programs.
    Comment: One commenter questioned, with two RHC rates, how CMS and 
the MACs will determine which RHC payment rate will be applicable when 
a hospice exceeds the General Inpatient Cap and the rate is changed to 
the RHC rate.
    Response: If a hospice's inpatient days (GIP and respite) exceed 20 
percent of all hospice days then, for inpatient care, the hospice is 
paid: (1) The sum of the total reimbursement for inpatient care 
multiplied by eighty percent, the maximum allowable inpatient days 
percentage; and (2) The sum of the actual number of inpatient days in 
excess of the limitation multiplied by the routine home care rate. 
Since the inpatient cap determination is done in the aggregate and not 
on an individual claim-by-claim basis, CMS will be using the RHC rate 
for days 61 and beyond when reconciling payments for hospices that 
exceed the inpatient cap. Using the RHC rate for days 61 and beyond is 
the most appropriate RHC rate to use for this purpose since the RHC 
rate for days 1-60 currently exceeds the inpatient respite care (IRC) 
payment rate.
    Comment: One commenter stated that some hospice patients revoke the 
hospice benefit to pursue curative treatment and then return to the 
benefit in a matter of days or weeks. Does the 60 day period start and 
stop with these patient requests?
    Response: CMS will not count the days in between an election as 
hospice days. Anytime there is a discharge (patient revocation, patient 
discharged as no longer terminally ill, patient transfer, patient 
discharge for cause) the days where the patient was receiving care 
under the Medicare hospice benefit will be included as part of the 
hospice day count for the next election, unless the patient does not 
receive hospice services for 60 consecutive days. As we stated above, 
we consider a hospice ``episode'' of care to be a hospice election 
period or series of election periods separated by no more than a 60 day 
gap in hospice care. However, we note that if a patient is electing the 
hospice benefit, revoking the hospice benefit to seek curative care, 
and then re-electing the hospice benefit within a few days, we are 
concerned about whether these patients are truly appropriate for the 
hospice benefit and/or whether hospices are fully explaining and 
obtaining patient acknowledgement of the palliative versus curative 
nature of hospice care.
    Comment: One commenter expressed confusion in how CMS calculated 
the budget neutrality factors for the proposed RHC payment rates in 
Table 18. The commenter provided a series of tables that used 
information in Table 16 in an effort to replicate the budget neutrality 
factor.
    Response: The commenter was using information in Table 16 to 
calculate the budget neutrality factor in Table 18 above. Table 16 is 
used to create the two RHC rates that are budget neutral to one another 
without the application of area wage adjustment. Once we calculate RHC 
payments taking into account area wage adjustment, an additional budget 
neutrality factor is necessary to ensure overall hospice payments 
remain budget neutral. The footnote for Table 18 above notes that a 
budget neutrality adjustment to the two RHC rates is required to 
maintain overall budget neutrality for the hospice benefit due to 
differences in the average wage index for days 1-60 compared to days 61 
and over when making payments based on the two RHC rates, rather than 
the one RHC rate.
    Comment: One commenter stated that after the revision to the labor 
portion applicable to the proposed two RHC rate structure, the labor 
portion of each rate is now different. The commenter questioned whether 
CMS would be revising the labor-related share for each of the two 
proposed RHC rates or whether CMS would still be applying the labor-
related share of 68.71 percent to each of the two proposed RHC rates.
    Response: The calculations in Tables 17 and 18 above make 
adjustments to the labor portion of the FY 2015 RHC rate to create two 
new RHC rates based on observed differences in visit intensity (as 
measured by wage-weighted minutes) between days 1-60 of the hospice 
episode of care and days 61 and beyond. These calculations were 
performed to set two RHC rates that sufficiently align with the 
expected visit intensity differences observed in days 1-60 versus days 
61 and beyond in accordance with section 1814(i)(1)(A) of the Act, 
which requires hospice payment amounts to equal the reasonable cost of 
providing hospice care. As outlined in Table 19 below, multiplying the 
labor-portion of the two RHC rates, prior to the budget neutrality 
adjustment for average wage index differences between days 1-60 and 
days 61 and beyond, in column 2 of Table 18 above ($137.98 for days 1-
60 and $95.49 for days 61+) by the number of respective RHC days 
(column 2 in Table 19 below), produces the total amount of RHC payments 
attributable to the labor portion of the two RHC rates. Total RHC 
payments attributable to the labor portion is equal to the sum of 
payments for the two RHC rates attributable to the labor portion and 
likewise for the payments attributable to the non-labor portion. Table 
19 below shows the results.

[[Page 47172]]



Table 19--Estimated RHC Labor Portion Payments, RHC Non-Labor Portion Payments and Total RHC Payments for Days 1-
                                       60 and Days 61 and Beyond, FY 2015
----------------------------------------------------------------------------------------------------------------
                                                     Labor portion of    Non-labor portion
                                      RHC days           payments           of payments         Total payments
----------------------------------------------------------------------------------------------------------------
Days 1-60........................      28,052,004    $3,870,615,511.92    $1,398,672,919.44    $5,269,288,431.36
Days 61+.........................      57,082,561     5,450,813,749.89     2,846,136,491.46     8,296,950,241.35
                                  ------------------------------------------------------------------------------
    Total........................  ..............     9,321,429,261.81     4,244,809,410.90    13,566,238,672.71
----------------------------------------------------------------------------------------------------------------

    When you divide the amount of total payments attributable to the 
labor portion of the proposed RHC rates of $9,321,429,261.81 by the 
amount of total payments of $13,566,238,672.71, the result is 68.71 
percent, which is the labor-related share for the RHC rate. Therefore, 
these calculations do not ultimately change the labor-related share of 
68.71 percent that will be used for geographic area wage adjustment 
required per section 1814(i)(2)(D) of the Act. We will consider changes 
to the labor-related share for the purposes of geographic wage 
adjustment once cost report data by level of care is available for 
analysis.
    Comment: One commenter asked if CMS performed any analysis on how 
the proposed RHC rates would impact hospices that exceed their 
aggregate cap.
    Response: Yes, CMS did perform analysis on how the proposed RHC 
payment rates for days 1-60 and days 61 and beyond would impact both 
hospice providers who did not exceed their aggregate cap in 2013 and 
for those hospice providers who did exceed their aggregate cap in 2013. 
For those hospice providers who did not exceed their aggregate cap in 
2013, we estimated that the proposed RHC rates would result in a 0.14 
percent increase in payments. However, for those hospice providers that 
exceeded their aggregate cap, hospice payments were estimated to 
decrease by 5.40 percent.
    Comment: One commenter objected to payment rates being based, at 
least in part, on information that has never been audited (cost 
reports). The commenter implored CMS to develop a strategy to establish 
a base year and audit hospice cost reports to determine costs for 
future rate setting and/or further changes in payment methodologies. 
Another commenter noted that the data used to determine the proposed 
RHC rates are old data that do not reflect the shift in coverage 
occurring as a result in the clarification by CMS that hospices are 
expected to cover ``virtually all'' care. The commenter stated that 
additional analysis of more recent data is needed to determine a 
sufficient base rate for RHC.
    Response: We note that the proposed RHC rates and the proposed SIA 
payment policy were established based on analysis of visit intensity 
during a hospice episode of care and visit patterns during the last 
seven days of life using hospice claims data. As noted above, CMS 
recently revised the freestanding hospice cost report form for cost 
reporting periods beginning on or after October 1, 2014. Once the new 
cost report data are available for analysis, we will be able to analyze 
hospice costs by level of care. We want to remind hospices that each 
hospice cost report is required to be certified by the Officer or 
Administrator of the hospice and that the Hospice Medicare Cost Report 
(MCR) Form (CMS-1984-14) states the following:

MISREPRESENTATION OR FALSIFICATION OF ANY INFORMATION CONTAINED IN 
THIS COST REPORT MAY BE PUNISHABLE BY CRIMINAL, CIVIL, AND 
ADMINISTRATIVE ACTION, FINE AND/OR IMPRISONMENT UNDER FEDERAL LAW. 
FURTHERMORE, IF SERVICES IDENTIFIED IN THIS REPORT WERE PROVIDED 
THROUGH THE PAYMENT DIRECTLY OR INDIRECTLY OF A KICKBACK OR WERE 
OTHERWISE ILLEGAL, CRIMINAL, CIVIL, AND ADMINISTRATIVE ACTION, FINES 
AND/OR IMPRISONMENT MAY RESULT.

I HEREBY CERTIFY that I have read the above certification statement 
and that I have examined the accompanying electronically filed or 
manually submitted cost report and the Balance Sheet and Statement 
of Revenue and Expenses prepared by _____ {Provider Name(s) and 
Provider CCN(s){time}  for the cost reporting period beginning ___ 
and ending ___ and that to the best of my knowledge and belief, this 
report and statement are true, correct, complete and prepared from 
the books and records of the provider in accordance with applicable 
instructions, except as noted. I further certify that I am familiar 
with the laws and regulations regarding the provision of health care 
services, and that the services identified in this cost report were 
provided in compliance with such laws and regulations.

    As always, we encourage providers to fill out the Medicare cost 
reports as accurately as possible.
    Comment: Some commenters urged CMS to review its policies and 
payments for CHC and General Inpatient Care (GIP). One commenter stated 
that both these levels of care are highly abused and used for the wrong 
reasons. The commenter suggested that CMS require pre-authorization for 
those two levels of care. The commenter stated that they are pressured 
to admit patients to GIP at the end of a hospital stay or in a SNF just 
because they are dying and stated that many nursing homes/hospices/
hospitals are operating in this matter. The commenter went on to state 
that all states should require a Certificate of Need for hospice and 
all hospices should be non-profit as it is very disturbing to see 
companies that own nursing homes and hospices gaming payments to 
increase profits. Other commenters expressed frustration regarding the 
Notice of Election (NOE) timely filing requirement that was finalized 
in the FY 2015 Hospice Wage Index and Payment Rate Update final rule 
(79 FR 50452).
    Response: While these comments are outside the scope of this rule, 
we thank the commenters for their comments and will take them under 
consideration for future rulemaking.
    Final Action: We are finalizing this proposal as proposed with an 
effective date of January 1, 2016. This delay in implementation from 
October 1, 2015 to January 1, 2016 will allow for state Medicaid 
agencies to make the necessary systems and software changes. Between 
October 1, 2015 and December 31, 2015, hospices will continue to be 
paid a single FY 2016 RHC per diem payment amount. Effective January 1, 
2016, a higher RHC rate for days 1 through 60 of a hospice episode of 
care and a lower RHC rate for days 61 and beyond of a hospice episode 
of care will replace the single RHC per diem payment rate (the RHC per 
diem rates are listed in section III.C of this final rule). An episode 
of care for hospice RHC payment purposes is a hospice election period 
or series of election periods separated by no more than a 60 day gap in 
hospice care. For hospice patients who are discharged and readmitted to 
hospice within 60 days of that discharge, a patient's prior hospice 
days would continue to follow the patient and count toward his or her 
patient days for the new hospice

[[Page 47173]]

election. We will calculate the patient's episode day count based on 
the total number of days the patient has been receiving hospice care 
separated by no more than a 60 day gap in hospice care, regardless of 
level of care or whether those days were billable or not. This 
calculation would include hospice days that occurred prior to January 
1, 2016.
3. Service Intensity Add-On (SIA) Payment
    Section 1814(i)(1)(A) of the Act states that payment for hospice 
services must be equal to the costs which are reasonable and related to 
the cost of providing hospice care or which are based on such other 
tests of reasonableness as the Secretary may prescribe in regulations. 
In addition, section 1814(i)(6)(D) of the Act, as amended by section 
3132(a) of the Affordable Care Act, requires the Secretary to implement 
revisions to the methodology for determining the payment rates for the 
RHC level of care and other services included in hospice care under 
Medicare Part A as the Secretary determines to be appropriate as 
described in section III.B.1 above. Given that independent analyses 
demonstrate a U-shaped cost pattern across hospice episodes, CMS 
believes that implementing revisions to the payment system that align 
with this concept supports the requirements of reasonable cost in 
section 1814(i)(A) of the Act.
    As articulated in section III.B.1.b above, CMS considered 
implementing a tiered payment model as described in the FY2014 Hospice 
Wage Index final rule (78 FR 48271) and in the Hospice Study Technical 
Report issued in April of 2013,\44\ in order to better align payments 
with observed resource use over the length of a hospice stay. However, 
operational concerns and programmatic complexity led us to explore the 
concept of an approach that could be implemented with minimal systems 
changes that limit reprocessing of hospice claims due to sequential 
billing requirements. In addition, while the tiered model represented a 
move toward better aligning payments with resource use, it only 
accounted for whether skilled services were provided in the last 2 days 
of life (Groups 5 and 6 in Table 13 above). Section III.B.1.c, above 
notes that on any given day during the first 7 days of a hospice 
election and last 7 days of life, only about 50 percent of the time are 
visits being made. In our view, increasing payments at the end of life 
for days where visits are not occurring does not align with the 
requirements of reasonable cost articulated in statute in section 
1814(i)(A) of the Act. Therefore, as one of the first steps in 
addressing the observed misalignment between resource use and 
associated Medicare payments and in improving patient care through the 
promotion of skilled visits at end of life with minimal claims 
processing systems changes, CMS proposed to provide an SIA payment if 
the conditions outlined below are satisfied.
---------------------------------------------------------------------------

    \44\ http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/Hospice/Downloads/Hospice-Study-Technical-Report.pdf.
---------------------------------------------------------------------------

    To qualify for the SIA payment, the following criteria must be met: 
(1) The day is a RHC level of care day; (2) the day occurs during the 
last 7 days of life (and the beneficiary is discharged dead); and, (3) 
direct patient care is provided by a RN or a social worker (as defined 
by Sec.  418.114(c) and Sec.  418.114(b)(3), respectively) that day. 
The SIA payment will be equal to the CHC hourly payment rate (the 
current FY 2015 CHC rate is $38.75 per hour), multiplied by the amount 
of direct patient care provided by a RN or social worker for up to 4 
hours total, per day, as long as the three criteria listed above are 
met. The SIA payment will be paid in addition to the current per diem 
rate for the RHC level of care.
    CMS will create two separate G-codes for use when billing skilled 
nursing visits (revenue center 055x), one for a RN and one for a 
Licensed Practical Nurse (LPN). During periods of crisis, such as the 
precipitous decline before death, patient needs intensify and RNs are 
more highly trained clinicians with commensurately higher payment rates 
who can appropriately meet those increased needs. Moreover, our rules 
at Sec.  418.56(a)(1) require the RN member of the hospice 
interdisciplinary group to be responsible for ensuring that the needs 
of the patient and family are continually assessed. We expect that at 
end of life, the needs of the patient and family will need to be 
frequently assessed; thus the skills of the interdisciplinary group RN 
are required.
    We note that social workers also often play a crucial role in 
providing support for the patient and family when a patient is at end 
of life. While the nature of the role of the social worker does 
facilitate interaction via the telephone, CMS will only pay an SIA for 
those social work services provided by means of in-person visits. 
Analysis conducted by Abt Associates on the FY 2013 hospice claims data 
shows that in the last 7 days of life only approximately 10 percent of 
beneficiaries received social work visits of any kind. Moreover, we 
also found that only about 13 percent of social work ``visits'' are 
provided via telephone; therefore, the proportion of social work calls 
likely represents a very small fraction of visits overall in the last 
few days of life. The SIA payment will be in addition to the RHC 
payment amount. The costs associated with social work phone 
conversations; visits by LPNs, hospice aides, and therapists; 
counseling; drugs; medical supplies; DME; and any other item or service 
usually covered by Medicare will still be covered by the existing RHC 
payment amount in accordance with section 1861(dd)(1) of the Act.
    In 2011, the OIG published a report that focused specifically on 
Medicare payments to hospices that served a high percentage of nursing 
facility residents. The OIG found that from 2005 to 2009, the total 
Medicare spending for hospice care for nursing facility residents 
increased from $2.55 billion to $4.31 billion, an increase of almost 70 
percent (OIG, 2011). When looking at hospices that had more than two-
thirds of their beneficiaries in nursing facilities, the OIG found that 
72 percent of these facilities were for-profit and received, on 
average, $3,182 more per beneficiary in Medicare payments than hospices 
overall. High-percentage hospices were found to serve beneficiaries who 
spent more days in hospice care, to the magnitude of 3 weeks longer 
than the average beneficiary. In addition, when looking at 
distributions in diagnoses, OIG found that high-percentage hospices 
enrolled beneficiaries who required less skilled care. In response to 
these findings, OIG recommended that CMS modify the current hospice 
reimbursement system to reduce the incentive for hospices to seek out 
beneficiaries in nursing facilities, who often receive longer but less 
complex and costly care.\45\ Given the OIG recommendation, CMS proposed 
excluding SNF/NF sites of service from eligibility for the SIA payment.
---------------------------------------------------------------------------

    \45\ http://oig.hhs.gov/oei/reports/oei-02-10-00070.pdf.
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    The for-profit provider community has frequently highlighted its 
concerns regarding the lack of adequate reimbursement for hospice short 
stays in its public filings with the Securities and Exchange Commission 
(SEC) as described in MedPAC's 2008 Report to Congress.\46\ 
Specifically, MedPAC cited records from the SEC for publicly traded 
for-profit hospice chains as evidence of a general acknowledgement of 
the nonlinear cost function of resource use within hospice episodes. 
For instance:
---------------------------------------------------------------------------

    \46\ http://www.medpac.gov/documents/reports/Jun08_Ch08.pdf.

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[[Page 47174]]

     VistaCare: ``Our profitability is largely dependent on our 
ability to manage costs of providing services and to maintain a patient 
base with a sufficiently long length of stay to attain profitability,'' 
and that ``cost pressures resulting from shorter patient lengths of 
stay . . . could negatively impact our profitability.'' \47\
---------------------------------------------------------------------------

    \47\ Health Care Strategic Management. 2004. Hospice companies 
benefit from favorable Medicare rates. Health Care Strategic 
Management 22, no. 1: 13-14.
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     Odyssey HealthCare: ``Length of stay impacts our direct 
hospice care expenses as a percentage of net patient service revenue 
because, if lengths of stay decline, direct hospice care expenses, 
which are often highest during the earliest and latter days of care for 
a patient, are spread against fewer days of care.'' \48\
---------------------------------------------------------------------------

    \48\ Odyssey HealthCare, Inc. 2004. Annual report to 
shareholders, form 10-K. Filed with the Securities and Exchange 
Commission, Washington, DC, March 11. Dallas, TX: Odyssey 
HealthCare, Inc.
---------------------------------------------------------------------------

    Short lengths of stay were also cited as a source of financial 
difficulties for small rural hospices (implying that longer stays were 
more profitable).\49\ In the FY 2014 Hospice Wage Index and Payment 
Rate Update proposed rule, we stated that ``analysis conducted by Abt 
Associates found that very short hospice stays have a flatter curve 
than the U-shaped curve seen for longer stays, and that average hospice 
costs are much higher. These short stays are less U-shaped because 
there is not a lower-cost middle period between the time of admission 
and the time of death.'' The FY 2014 Hospice Wage Index and Payment 
Rate Update proposed rule went on to note that a ``short stay add-on'' 
was under consideration as a possible reform option (78 FR 27843). 
Public comments received in response to the proposed rule were 
favorable regarding a possible short stay add-on payment.
---------------------------------------------------------------------------

    \49\ Virnig, B. A., I. S. Moscovice, S. B. Durham, et al. 2004. 
Do rural elders have limited access to Medicare hospice services? 
Journal of the American Geriatrics Society 52, no. 5: 731-735.
---------------------------------------------------------------------------

    Since the SIA payment will be applicable to any 7-day period of 
time ending in a patient's death, hospice elections with short lengths 
of stay are eligible to receive an additional payment that will help 
mitigate the marginally higher costs associated with short lengths of 
stay, consistent with the `reasonable cost' structure of the hospice 
payment system. For FY 2013, 32 percent of hospice stays were 7 days or 
less with 60 percent of stays lasting 30 days or less. The median 
length of stay in FY 2013 was 17 days.
    Although Figure 4 above demonstrates that there is increased 
resource use during the first 2 days of an election, we are not 
proposing an additional SIA payment for the first or second day of a 
hospice election when the length of stay is beyond 7 days. The SIA 
payment for the last 7 days of life will provide additional 
reimbursement to help to mitigate the higher costs for stays lasting 
less than the median length of stay, where spreading out the initial 
costs of the first 2 days of the election over a smaller number of days 
may not be enough to make the overall stay profitable. Any stay of 7 
days or less before death will be eligible for SIA payment on all RHC 
days.
    We believe that the SIA payment would help to address MedPAC and 
industry concerns regarding the visit intensity at end of life and the 
concerns associated with the profitability of hospice short stays. The 
RHC rates described in section III.B.2 above and SIA payment will 
advance hospice payment reform incrementally, as mandated by the 
Affordable Care Act while simultaneously maintaining flexibility for 
future refinements. Since this approach will be implemented within the 
current constructs of the hospice payment system, no major overhaul of 
the claims processing system or related claims/cost report forms will 
be required, minimizing burden for hospices as well as for Medicare.
    As required by Section 1814(i)(6)(D)(ii) of the Act, any changes to 
the hospice payment system must be made in a budget neutral manner in 
the first year of implementation. Based on the desire to improve 
patient care through the promotion of skilled visits at end of life, 
regardless of the patient's lifetime length of stay, we proposed that 
the SIA payments would be budget neutral through a reduction to the RHC 
rates. The SIA payment budget neutrality factor (SBNF) used to reduce 
the RHC rates is outlined in section III.C.3.
    Finally, we solicited public comment on all aspects of the SIA 
payment as articulated in this section as well as the corresponding 
changes to the regulations at Sec.  418.302 in section VI. We also 
proposed changing the word ``Intermediary'' to ``Medicare 
Administrative Contractor'' in the regulations text at Sec.  418.302 
and technical regulations text changes to Sec.  418.306 as described in 
section VI.
    Summaries of the public comments and our responses to comments on 
all aspects of the SIA payment are summarized below:
    Comment: Nearly all commenters support the implementation of the 
SIA payment policy, stating that the need for skilled direct patient 
care and support is greater at end of life, causing an increase in 
hospice costs. Many commenters further suggested that implementation 
occur as soon as possible and appreciate the opportunity for 
incremental payment reform.
    Response: We thank the commenters for their support. We agree that 
our proposal helps to reinforce the provision of skilled direct patient 
care when the need is greater at end of life.
    Comment: Several commenters suggested that services provided by 
chaplains and other spiritual care counselors should be eligible for 
the SIA payment. In addition, several commenters asked whether services 
provided by LPNs, hospice aides, and other professionals (therapists, 
etc.) would be covered under the SIA payment provisions. Many 
commenters note that the services provided by LPNs are currently 
covered in the CHC level of care. One commenter asked if visits for the 
pronouncement of death will be considered eligible for the SIA payment.
    Response: While we acknowledge the tremendous value delivered by 
spiritual care counseling and other disciplines during hospice 
episodes, Section 1814(i)(1)(A) of the Act explicitly precludes 
Medicare payment for bereavement counseling and other counseling 
services (including nutritional and dietary counseling) as separate 
services. Therefore, no payment will be extended for those services 
under the SIA policy. While CMS recognizes that the services rendered 
by all hospice professionals, including LPNs, are extremely valuable, 
the primary goal of the SIA policy is to promote the highest-quality, 
skilled care to beneficiaries at the end of life. Given that RNs 
provide higher-skilled services, as required by CMS's Conditions of 
Participation, and social workers provide a skilled level of support 
for both the patient and family, CMS will only pay an SIA amount for 
those services rendered by RNs and social workers. CMS will not pay an 
SIA amount for those services rendered by other professionals. The base 
RHC rate is intended to cover other skilled and non-skilled services 
that may be needed at the end of life. However, at the end of life, 
where a rapid decline is often expected, patient and family needs 
intensify and typically there are frequent care plan changes 
necessitating the immediate need for RN and SW services. In accordance 
with the hospice CoPs, an RN, and not an LPN, is required to be part of 
the hospice IDT to provide coordination of care and to ensure 
continuous assessment of the patient. Therefore, to ensure continuous

[[Page 47175]]

assessment and coordination of care at the very end of life, the skills 
of an RN would be needed and we believe hospices should be encouraged 
to meet the needs of the patient and family. Additionally, given 
commenters' overwhelming support for incremental payment reform, CMS 
hopes to advance hospice payment changes over time; therefore, in the 
future, we will re-evaluate whether the inclusion of services provided 
by LPNs for the SIA is warranted and re-assess the policies and 
payments around the CHC level of care as well as other facets of the 
Medicare Hospice Benefit.
    Comment: Several commenters noted that they are concerned that 
setting the SIA add-on payment equal to the CHC hourly payment rate 
multiplied by the amount of direct patient care up to 4 hours total per 
day does not adequately cover the cost of hospice care, especially for 
individuals with certain diagnoses related to their terminal illness. 
The commenters also noted that the Continuous Home Care Payment rate 
currently has a minimum 8 hour requirement to meet these complex needs. 
One commenter asked if the CHC level of care could still be provided in 
the last 7 days of an episode.
    Response: The primary purpose of the SIA payment is to promote 
visits during the end of life and account for the associated increased 
resources required. We believe that using the CHC hourly payment rate 
is a reasonable proxy for the costs of providing such care. The CHC 
level of care will still be available to both beneficiaries and 
providers, as the patient's status dictates. For the purposes of the 
SIA payment, the claims processing systems will evaluate all 7 days 
prior to death. If any of the days meet the eligibility criteria (RHC 
level of care with appropriate staffing, etc.), then those days will be 
eligible for the SIA payment. Other levels of hospice care are still 
eligible for payment as appropriate. Given that CMS intends to promote 
direct patient care in the 7 days prior to death, visits for the 
pronouncement of death will not be included as eligible visits for SIA 
payments. As CMS collects more data related to the costs of providing 
care, specifically data included in the newly-revised cost reports, we 
will reassess the appropriate payment level for all aspects of the 
hospice payment system, including the SIA payment as well as the four 
levels of care.
    Comment: Several commenters suggested that hospices should be given 
the opportunity to provide additional RN and social work services 
approved by the patient's physician in order to deliver more than 4 
hours of RN or social work time and receive payment for these 
additional service hours. One commenter requested clarification 
regarding the payment for services for concurrent care from both a RN 
and social worker during the last 7 days of life.
    Response: While we understand the interest in providing a SIA 
payment for services beyond the 4 hour threshold established by the SIA 
policy, we do believe that the RHC rate level of care plus the SIA 
payment for services up to 4 hours will provide sufficient payment to 
cover the increased cost of patient care. If a patient's needs 
intensify further, requiring more intensive supports, hospices will 
still be able to provide the CHC level of care for 8 hours of service 
and beyond as well as utilize the other levels of hospice care as 
appropriate. CMS acknowledges that there may be a need for concurrent 
care from both an RN and a social worker during the days preceding 
death. The natures of the two disciplines are distinct, and we 
acknowledge that the RN may need to focus on the clinical aspects of 
the patient while the social worker meets separately with the family 
and others to process anticipatory grief. Therefore, concurrent 
services will be eligible for the SIA payment, according to the 
criteria outlined above.
    Comment: Many commenters had concerns regarding the ``billing'' of 
SIA days and requested clarification of the provider's responsibility 
for ``billing'' days for the SIA payment. In addition, several 
commenters requested clarification on the time increments provided by 
the RN and social workers that would be eligible for the SIA payment, 
asking for detail on whether or not service should be tracked in 15 
minute increments. One commenter asked how the SIA payment will apply 
if a patient's last 7 days of life spans 2 months. Another commenter 
questioned whether CMS has the time, energy, and staff to review all 
claims for appropriate distribution of SIA payments.
    Response: Hospices will continue to submit claims with revenue 
center lines appropriately noted in appropriate increments. CMS' claims 
processing system will assess the last 7 days of services before end of 
life and determine if the RHC level of care was provided on any of 
those 7 days, regardless of other levels of care also provided during 
that period. We acknowledge that the term `billing' may have been 
misleading. Hospices should submit claims per the established 
protocols, and the claims processing system will determine the SIA 
payment eligibility of the 7 days preceding death. For eligible stays, 
the SIA payment will be calculated by the number of hours (in 15 minute 
increments) of service provided by an RN or social worker during last 7 
days of life for a minimum of 15 minutes and up to 4 hours total per 
day. CMS appreciates the concern regarding the appropriate disbursement 
of SIA payments. We will be working with our operational staff and 
contracting partners in order to fully automate the review of claims 
with a discharge of death in order to identify eligible visits and 
generate appropriate SIA outlays.
    Comment: Several commenters recommended that CMS include episodes 
in SNF/NF as eligible for the SIA payment. The commenters stated that 
the needs of dying patients were not specific to any particular 
physical location. Commenters stated that more intensive services are 
merited in any `home' setting. Additionally, commenters noted that the 
Medicare Conditions of Participation for hospices require the provision 
of the same level of care and service to patients, regardless of 
setting.
    Response: We agree that the payment of the SIA for additional RN 
and SW services during the last 7 days of life in these settings is 
appropriate and thus we are finalizing a policy that pays the SIA 
payment for patients that reside in a SNF/NF. We will monitor the SIA 
based on claims data and continue to investigate whether a differential 
site of service payment could be an appropriate mechanism to address 
OIG and MedPAC concerns.
    Comment: One commenter asked whether the SIA payment policy will 
apply for both new and existing hospice elections. Several commenters 
asked if different or additional documentation would be required for 
SIA visits. Some commenters suggested that criteria be developed 
demonstrating the need for additional hours per day similar to the 
protocols around CHC. Such documentation could potentially require that 
the clinician document why additional hours are needed. Several 
commenters expressed concern that hospice providers may begin making 
`unnecessary' visits to hospice patients at the end of life in order to 
capitalize on potential SIA payments. The same commenters further 
suggested that CMS not use an SIA-type payment approach but instead 
utilize a high RHC rate for the last 7 days of life.
    Response: Both new and existing hospice elections will be eligible 
for the SIA payment, as long as the criteria for the add-on are met. No 
additional documentation will be required in order to receive the SIA 
payment. The Medicare claims processing system will evaluate the days 
within a hospice

[[Page 47176]]

election for SIA eligibility and calculate the add-on payment 
accordingly. We appreciate the concern that some hospices may attempt 
to capitalize on extra payments made possible through the SIA policy. 
CMS will certainly continue to monitor hospice behavior for any 
concerning patterns as well as any impact to future payment updates. 
However, we maintain that providing payment for increased services at 
the end of life is consistent with the goal of responding to and 
providing for intensified patient needs. Conversely, paying an 
increased RHC rate for the last 7 days of life regardless of whether or 
not skilled visits (RN or social worker) are provided would not 
encourage the hospice to schedule skilled visits during that timeframe. 
With this SIA policy, we strive to encourage the hospice to provide 
skilled care in a patient's most intense moments of need by dispersing 
additional payment for actual services rendered by the appropriate 
skilled staff.
    Comment: Several commenters raised concerns regarding the criteria 
that the RN and SW visit be an in-person visit in order to be 
reimbursable, stating that there are many hospice patients in rural and 
frontier areas that require long travel times for hospice staff. The 
commenters stated that telephone interaction becomes an important part 
of the hospice service and suggested that as long as hospice providers 
document the reason for the telephone call versus an in-person visit 
the call should be reimbursable.
    Response: We appreciate the comments regarding the value of hospice 
social work services provided via the telephone. CMS recognizes that 
this support is vital and provides needed assistance in crucial 
circumstances. However, the primary purpose of the SIA payment is to 
encourage direct patient care in the last days of life. Therefore, CMS 
will only be paying the SIA payment for those services provided 
directly to the patient in his/her last week of life by an RN or SW in 
his or her home setting.
    Comment: Several commenters noted their support for CMS' proposal 
to continue to make the SIA payments budget neutral in future years 
through annual determination of the Service Intensity Add-On Budget 
Neutrality Factor (SBNF) based on the most current and complete fiscal 
year utilization data available at the time of rulemaking.
    Response: We appreciate the support of our budget neutrality 
approach for the SIA payment policy proposal. We believe that this will 
help to create an incentive in the longer term for the provision of 
services in patients' moments of most intensive need.
    Comment: Several commenters stated that CMS should provide 
stakeholders adequate time to test, assess, perform necessary software 
updates, receive education, and provide feedback on changes due to the 
SIA payments, either by delaying its implementation or initiating a 
pilot program before applying the policy across all providers. Many 
commenters noted concern over the potential impact of the SIA payment 
proposal to state Medicaid programs, which are currently unprepared for 
the transition to this payment methodology and would need time to 
prepare for this significant change.
    Response: CMS has been working with our contractors to develop 
systems changes to the fullest extent possible in parallel with the 
development of this rule. Our system maintainers will have their full 
software development lifecycle to implement these changes. We do not 
have concerns about the readiness of Medicare systems on October 1, 
2015. Regarding hospice system changes, we do not anticipate that this 
rule will require any changes to hospice billing instructions so 
systems for submitting claims and receiving Medicare payment should not 
be affected and the need for retraining billing staff should be 
limited, but hospices may need to change their internal accounting 
systems. However, given the delay in the implementation date for the 
two RHC rates in section III.B.2 above, CMS will delay the effective 
date of the SIA policy to January 1, 2016 in order to better coordinate 
implementation of hospice payment reforms.
    Comment: Several commenters noted concern that the length of stay 
for a beneficiary is out of the patient's control and should not be 
factored into the SIA. Additionally, several commenters further noted 
that hospice providers will not likely be able to forecast an accurate 
and reliable operating budget to include the proposed 7 day payment 
add-on at the patient's end of life.
    Response: CMS appreciates that the nature of the hospice population 
leads to difficulty in prognosticating the required length of services. 
However, the SIA payment policy is meant to encourage visits in the 
last 7 days of life, regardless of the length of stay, so an episode 
will be eligible for the payment regardless of the patient's overall 
total days in hospice care. Moreover, CMS notes that the expectation is 
that providers would be supplying the needed services to patients 
during the RHC and other levels of care, regardless of budgeting 
prognostication for any potential SIA payment amounts.
    Comment: A few commenters expressed concern over the two proposed 
SIA budget neutrality factors, stating that the proposed budget 
neutrality factor for days 61 and beyond is higher than that of days 1-
60, leading to a greater reduction to the High RHC rate for days 1-60. 
The commenters argue that a single SIA budget neutrality factor would 
yield a more equitable overall reduction with less of a decrease to the 
higher RHC rate.
    Response: CMS appreciates the feedback regarding the application of 
the SIA budget neutrality factors. Because of the interaction between 
the SIA payment policy and the two RHC rates, we believe that it is 
appropriate that two factors be generated for each rate, maintaining a 
budget neutral system for the whole of the Medicare hospice benefit, so 
that our rates accurately align with and account for resource use 
differences during the first 60 versus days 61 and beyond of hospice 
care. However, CMS will consider this and other refinements to the 
policy for future payment and policy updates.
    Comment: Several commenters suggested that CMS should increase its 
oversight of hospice providers not delivering the services required 
under the Hospice Conditions of Participation and exhibiting 
inappropriate practices highlighted by the OIG and the MedPAC.
    Response: CMS appreciates the encouragement to continue overseeing 
and monitoring provider behavior for questionable activity. CMS is 
committed to encouraging providers to supply the best quality care in 
the most appropriate ways, and we will continue to work to incentivize 
and monitor for the most appropriate practices in the hospice provider 
community.
    Comment: Several commenters requested information regarding the 
forthcoming G-codes that will be used to differentiate LPN and RN 
services. One commenter suggested that CMS provide detailed 
instructions and answer operational questions in this final rule as 
opposed to Change Requests, Medicare Learning Network articles, and 
other sub-regulatory guidance as is the typical process.
    Response: Per the CMS protocols, the details regarding these newly-
created G-codes will be forthcoming through the established Change 
Request process. CMS appreciates the desire for more education 
regarding the SIA; however, we will continue to utilize the established 
means to convey the systems changes as well as to educate the provider 
community regarding the policy and operational changes.

[[Page 47177]]

    Comment: One commenter requested that CMS continue to evaluate cost 
data in order to identify any trends in `co-factors' that may be 
related to service intensity at the end of life, such as visits from 
the Spiritual Care Coordinator and other disciplines, and propose 
further adjustments as data directs.
    Response: CMS will continue to monitor and analyze data related to 
the cost of providing care in the hospice population. We will re-
evaluate policies and payments in accordance to observed trends in the 
cost and other data gathered so long as it does not violate the Act.
    Comment: One commenter requested that CMS consider paying the SIA 
to those hospices that receive a transfer hospice patient from another 
provider, as this additional funding could help mitigate the receiving 
hospice's costs for starting care.
    Response: CMS recognizes that a hospice who receives a transfer 
hospice patient may experience increased start-of-care costs. However, 
we are not proposing to provide SIA payments at the start of an 
episode. We believe that the SIA payment coupled with the new RHC rates 
finalized in section III.B.2 above, provide sufficient payment for the 
delivery of hospice care.
    Final Action: We are finalizing the SIA proposal as proposed; 
however, we will include episodes in SNF/NF as eligible for the SIA 
payment. We are finalizing the SIA proposal with an effective date of 
January 1, 2016 in order to better coordinate implementation of the 
hospice payment reforms, including the finalization of the new RHC 
rates discussed in section III.B.2 above. Finally, we will also 
finalize our proposal to continue to make the SIA payments budget 
neutral through an annual determination of the SBNF, which will then be 
applied to the RHC payment rates. The SBNF for the SIA payments will be 
calculated for each FY using the most current and complete fiscal year 
utilization data available at the time of rulemaking.

C. FY 2016 Hospice Wage Index and Rate Update

1. FY 2016 Hospice Wage Index
a. Background
    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. 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 made by OMB to the Metropolitan 
Statistical Areas (MSAs) definitions.
    We use the previous fiscal year's hospital wage index data to 
calculate the hospice wage index values. We have consistently used the 
pre-floor, pre-reclassified hospital wage index to derive the hospice 
wage index. For FY 2016, the hospice wage index will be based on the FY 
2015 hospital pre-floor, pre-reclassified wage index. This means that 
the hospital wage data used for the hospice wage index is not adjusted 
to take into account any geographic reclassification of hospitals 
including those in accordance with section 1886(d)(8)(B) or 1886(d)(10) 
of the Act. The appropriate wage index value is applied to the labor 
portion of the payment rate based on the geographic area in which the 
beneficiary resides when receiving RHC or CHC. The appropriate wage 
index value is applied to the labor portion of the payment rate based 
on the geographic location of the facility for beneficiaries receiving 
GIP or Inpatient Respite Care (IRC).
    In the FY 2006 Hospice Wage Index final rule (70 FR 45130), we 
adopted 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 micropolitan statistical areas 
and combined statistical areas. The bulletin is available online at 
http://www.whitehouse.gov/omb/bulletins/b03-04.html. In adopting the 
CBSA geographic designations for FY 2006, we provided for a 1-year 
transition with a blended wage index for all providers. For FY 2006, 
the wage index for each geographic area consisted of a blend of 50 
percent of the FY 2006 MSA-based wage index and 50 percent of the FY 
2006 CBSA-based wage index. Since the expiration of this 1-year 
transition on September 30, 2006, we have used the full CBSA-based wage 
index values.
    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, which to base the calculation of the 
hospice wage index. In the FY 2010 Hospice Wage Index final rule (74 FR 
39386), 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 will 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 FY 2016, the only CBSA without a 
hospital from which hospital wage data could be derived is 25980, 
Hinesville, Georgia.
    In the 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. The term ``contiguous'' means 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. For FY 2016, we will continue to use the most recent 
pre-floor, pre-reclassified hospital wage index value available for 
Puerto Rico, which is 0.4047.
b. Elimination of the Wage Index Budget Neutrality Factor (BNAF)
    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 were 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 were adjusted by either: (1) The 
hospice BNAF; or (2) the hospice floor--a 15 percent increase subject 
to a maximum wage index value of 0.8; whichever results in the greater 
value.
    The FY 2010 Hospice Wage Index 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). As discussed 
in the proposed rule, (80 FR 25860), the hospice BNAF for FY 2016 is 
reduced by an additional and final 15 percent for a cumulative 
reduction of 100 percent. Therefore, for FY 2016, the BNAF is 
completely phased-out and eliminated.

[[Page 47178]]

    Hospital wage index values which are less than 0.8 are still 
subject to the hospice floor calculation. The hospice floor equates to 
a 15 percent increase, subject to a maximum wage index value of 0.8. 
For example, if County A has a pre-floor, pre-reclassified hospital 
wage index value of 0.3994, we would multiply 0.3994 by 1.15, which 
equals 0.4593. Since 0.4593 is not greater than 0.8, then County A's 
hospice wage index would be 0.4593. In another example, if County B has 
a pre-floor, pre-reclassified hospital wage index value of 0.7440, we 
would multiply 0.7440 by 1.15 which equals 0.8556. Because 0.8556 is 
greater than 0.8, County B's hospice wage index would be 0.8.
c. Implementation of New Labor Market Delineations
    OMB has published subsequent bulletins regarding CBSA changes. On 
February 28, 2013, OMB issued OMB Bulletin No. 13-01, announcing 
revisions to the delineation of MSAs, Micropolitan Statistical Areas, 
and Combined Statistical Areas, and guidance on uses of the delineation 
in these areas. A copy of this bulletin is available online at: http://www.whitehouse.gov/sites/default/files/omb/bulletins/2013/b-13-01.pdf. 
This bulletin states that it ``provides the delineations of all 
Metropolitan Statistical Areas, Metropolitan Divisions, Micropolitan 
Statistical Areas, Combined Statistical Areas, and New England City and 
Town Areas in the United States and Puerto Rico based on the standards 
published on June 28, 2010, in the Federal Register (75 FR 37246-37252) 
and Census Bureau data.''
    Overall, we believe that implementing the new OMB delineations will 
result in wage index values being more representative of the actual 
costs of labor in a given area. Among the 458 total CBSA and statewide 
rural areas, 20 (4 percent) will have a higher wage index using the 
newer delineations. However, 34 (7.4 percent) will have a lower wage 
index using the newer delineations. Therefore, to remain consistent 
with the manner in which we ultimately adopted the revised OMB 
delineations for FY 2006 (70 FR 45138), we are implementing a 1-year 
transition to the new OMB delineations. Specifically, we will apply a 
blended wage index for 1 year (FY 2016) for all geographic areas that 
will consist of a 50/50 blend of the wage index values using OMB's old 
area delineations and the wage index values using OMB's new area 
delineations. That is, for each county, a blended wage index will be 
calculated equal to 50 percent of the FY 2016 wage index using the old 
labor market area delineation and 50 percent of the FY 2016 wage index 
using the new labor market area delineation. This results in an average 
of the two values. We refer to this blended wage index as the FY 2016 
hospice transition wage index.
    This 1-year transition policy is also consistent with the 
transition policies adopted by both the FY 2015 SNF PPS (79 FR 25767) 
and the CY 2015 HH PPS (79 FR 66032). This transition policy will be 
for a 1-year period, going into effect on October 1, 2015, and 
continuing through September 30, 2016. Thus, beginning October 1, 2016, 
the wage index for all hospice payments will be fully based on the new 
OMB delineations.
    The wage index applicable to FY 2016 is available as a wage index 
file on the CMS Web site at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/Hospice/index.html. The wage index will not be 
published in the Federal Register. The hospice wage index for FY 2016 
will be effective October 1, 2015 through September 30, 2016.
    The wage index file provides a crosswalk between the FY 2016 wage 
index using the current OMB delineations in effect in FY 2015 and the 
FY 2016 wage index using the revised OMB delineations, as well as the 
transition wage index values that will be in effect in FY 2016. The 
wage index file shows each state and county and its corresponding 
transition wage index along with the previous CBSA number, the new CBSA 
number, and the new CBSA name.
    Due to the way that the transition wage index is calculated, some 
CBSAs and statewide rural areas may have more than one transition wage 
index value associated with that CBSA or rural area. However, each 
county will have only one transition wage index. For counties located 
in CBSAs and rural areas that correspond to more than one transition 
wage index value, the CBSA number will not be able to be used for FY 
2016 claims. In these cases, a number other than the CBSA number will 
be necessary to identify the appropriate wage index value on claims for 
hospice care provided in FY 2016. These numbers are five digits in 
length and begin with ``50.'' These codes are shown in the last column 
of the wage index file in place of the CBSA number where appropriate. 
For counties located in CBSAs and rural areas that still correspond to 
only one wage index value, the CBSA number will still be used.
    A summary of the comments we received regarding the wage index and 
our responses to those comments appears below.
    Comment: Several commenters support the use of the revised OMB CBSA 
delineations, which incorporate the 2010 Census data for FY 2016 and 
the proposed transition methodology that would apply a blended wage 
index for 1 year (FY 2016) for all geographic areas that would consist 
of a 50/50 blend of the wage index values using OMB's old area 
delineations and the wage index values using OMB's new area 
delineations. We received a few comments regarding the transition to 
the new delineations requesting a longer transition period or 
clarification of the transition year. One commenter requests that CMS 
review the impact this has on provider reimbursement and determine if 
changes need to be made beyond the 1 year transition period.
    Response: We appreciate the commenters' support of the new 
delineations which will be incorporated into hospice reimbursement 
beginning in FY 2016. We established the use of the latest OMB 
delineations that are available since FY 2006 (70 FR 45138) in order to 
maintain a more accurate and up-to-date payment system that reflects 
the reality of population shifts and labor market conditions. We also 
agree that applying 50/50 blend of the wage index values using OMB's 
old area delineations and the wage index values using OMB's new area 
delineations for 1 year is an appropriate transition policy. We 
incorporated the CBSAs for FY 2006 using a 1-year transition policy and 
we continue to believe that 1 year is an appropriate length of time to 
transition to the new area delineations.
    In order to determine the 50/50 blended wage index for FY 2016, we 
calculate the wage index values for each county by adding the wage 
index value under the county's old area delineation with the wage index 
value under the county's new area delineation. Then, we divide by two. 
The wage index values for each county may be found in the wage index 
file located at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/Hospice/index.html. For claim submission, hospices will use 
either the CBSA code or the special 50xxx number found in column L of 
the wage index file. The special 50xxx numbers will be applicable to FY 
2016 claims only. Hospices need to use the correct CBSA or alternate 
50xxx number. Our claims processing systems will match the correct wage 
index with the CBSA or alternate 50xxx number submitted on the claim. 
Hospices will not need to calculate the transition wage

[[Page 47179]]

index. Once the 1-year transition to the new area delineations is over, 
the 50xxx numbers will not be needed. We provide an impact analysis in 
Section V. ``Regulatory Impact Analysis'' of this final rule. At this 
time, our impact analysis does not lead us to conclude that changes 
need to be made beyond the 1 year transition period.
    Comment: A commenter notes that hospices that serve more than one 
county may see large variations in the wage index even though the 
hospice pays standardized wages for all of their staff. We received a 
comment expressing concerns that the reduction in the wage index does 
not align with local market pressure. The commenter states that hospice 
wages and benefits are not reflective of those in hospitals and would 
like to see an approach focused solely on hospice data and trends. A 
commenter believes that the use of the hospital wage index methodology 
for both the hospice and home health benefits creates payment 
inaccuracies that, unlike those applied to hospitals, are not subject 
to correction through a reclassification process. The commenter urges 
CMS to take action to create a fair and level playing field through 
reform of the wage index process.
    Response: For many years, hospices have been able to manage their 
business operations (including staff compensation) while receiving 
different reimbursements based on serving patients in a variety of 
locales which have differing wage indexes. Developing a wage index that 
utilizes data specific to hospices would require us to engage resources 
in an audit process. In order to establish a hospice specific wage 
index, we would need to collect data that is specific to hospices. This 
is not currently feasible due to the volatility of existing hospice 
wage data and the significant amount of resources that would be 
required to assess the quality of that data. Furthermore, hospices have 
expressed concerns over the past few years with recent data collection 
efforts to support payment reform, the Hospice Item Set Quality 
Reporting Program, and the CAHPS[supreg] Hospice Survey. At this time, 
we are not collecting hospice specific wage data that may place an 
additional burden on hospices. We continue to believe that in the 
absence of hospice or home health specific wage data, using the pre-
floor, pre-reclassified hospital wage data is appropriate and 
reasonable for hospice reimbursement purposes.
    The regulations that govern hospice reimbursement do not provide a 
mechanism for allowing hospices to seek geographic reclassification or 
to utilize the rural floor provisions that exist for IPPS hospitals. 
The rural floor provision in section 4410 of the Balanced Budget Act of 
1997 (BBA) (Pub. L. 105-33) is specific to hospitals. The 
reclassification provision found in section 1886(d)(10) of the Act is 
also specific to hospitals. CMS is exploring opportunities to reform 
the hospital wage index. We refer readers to the CMS Web site at: 
www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatientPPS/Wage-Index-Reform.html).
    Comment: A commenter believes that hospices in rural and frontier 
areas incur higher labor costs due to the need for staff to travel long 
distances. The commenter encourages CMS to analyze the impact of the 
change in the wage index area delineations especially on labor costs 
for hospices in rural and frontier areas.
    Response: We appreciate the commenter's recommendation. Based on 
the limited hospice cost report data, we do not have the ability to 
determine whether an add-on or an adjustment to account for labor costs 
in different geographic areas would be appropriate at this time.
    Comment: Commenters protest using CBSAs to determine the wage index 
for hospice and suggest that we discontinue the use of CBSAs. These 
commenters specifically mention Montgomery County, Maryland in their 
comments. Commenters stated that in the ten years since CMS has used 
CBSAs to determine payment, Montgomery Hospice has received lower 
payments than neighboring hospices in the Washington-Arlington-
Alexandria, DC-VA-MD, WV CBSA. These commenters believe that Montgomery 
County has a similar cost of living compared to Washington, DC and that 
Montgomery County shares the same labor market when competing for 
labor. Therefore, commenters state that hospices in Montgomery County 
should be reimbursed at the same level as hospices in the Washington, 
DC area. Commenters stated that Montgomery County should be paid 
similarly to Washington, DC due to close commuting ties with the 
District and also due to the fact that Montgomery County is contiguous 
with Washington, DC. A commenter also protests the use of CBSAs to 
determine the wage index, specifically in Montgomery County, also notes 
that OMB cautions agencies concerning the use of the geographic area 
delineations in non-statistical programs.
    Response: In the FY 2005 proposed rule (70 FR 22394), we indicated 
that the MSA delineations as well as the CBSA delineations are 
determined by the OMB. The OMB reviews its Metropolitan Area 
definitions preceding each decennial census to reflect recent 
population changes. We also indicated in the proposed rule, that we 
believed that the OMB's CBSA designations reflect the most recent 
available geographic classifications and were a reasonable and 
appropriate way to define geographic areas for purposes of wage index 
values. Ten years ago, in our FY 2006 Hospice Wage Index final rule (70 
FR 45130), we finalized the adoption of the revised labor market area 
definitions as discussed in the OMB Bulletin No. 03-04 (June 6, 2003). 
In the December 27, 2000 Federal Register (65 FR 82228 through 82238), 
OMB announced its new standards for defining metropolitan and 
micropolitan statistical areas. According to that notice, OMB defines a 
CBSA, beginning in 2003, as ``a geographic entity associated with at 
least one core of 10,000 or more population, plus adjacent territory 
that has a high degree of social and economic integration with the core 
as measured by commuting ties. The general concept of the CBSAs is that 
of an area containing a recognized population nucleus and adjacent 
communities that have a high degree of integration with that nucleus. 
The purpose of the standards is to provide nationally consistent 
definitions for collecting, tabulating, and publishing Federal 
statistics for a set of geographic areas. CBSAs include adjacent 
counties that have a minimum of 25 percent commuting to the central 
counties of the area. This is an increase over the minimum commuting 
threshold for outlying counties applied in the previous MSA definition 
of 15 percent.
    Based on the OMB's current delineations, as described in the 
February 28, 2013 OMB Bulletin No. 13-01, Montgomery County (along with 
Frederick County, Maryland) belongs in a separate CBSA from the areas 
defined in the Washington-Arlington-Alexandria, DC-VA CBSA. Unlike 
IPPS, IRF, and SNF, where each provider uses a single CBSA, hospice 
agencies may be reimbursed based on more than one wage index. Payments 
are based upon the location of the beneficiary for routine and 
continuous home care or the location of the agency for respite and 
general inpatient care. It is very likely that hospices in Montgomery 
County, Maryland provide RHC and CHC to patients in the ``Washington-
Arlington-Alexandria, DC-VA'' CBSA in addition to serving patients in 
the ``Baltimore-Columbia-Towson, Maryland'' CBSA.
    While CMS and other stakeholders have explored potential 
alternatives to

[[Page 47180]]

the current CBSA-based labor market system (we refer readers to the CMS 
Web site at: www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Reform.html), no consensus has been 
achieved regarding how best to implement a replacement system. As 
discussed in the FY 2005 IPPS final rule (69 FR 49027), ``While we 
recognize that MSAs are not designed specifically to define labor 
market areas, we believe they do represent a useful proxy for this 
purpose.'' We further believe that using the most current OMB 
delineations will increase the integrity of the hospice wage index by 
creating a more accurate representation of geographic variation in wage 
levels. We have reviewed our findings and impacts relating to the new 
OMB delineations, and have concluded that there is no compelling reason 
to further delay implementation. We are implementing the new OMB 
delineations as described in the February 28, 2013 OMB Bulletin No. 13-
01 for the hospice wage index effective beginning in FY 2016.
    We recognize that the OMB cautions that the delineations should not 
be used to develop and implement Federal, state, and local 
nonstatistical programs and policies without full consideration of the 
effects of using these delineations for such purposes. The OMB states 
that, ``In cases where there is no statutory requirement and an agency 
elects to use the Metropolitan, Micropolitan, or Combined Statistical 
Area definitions in nonstatistical programs, it is the sponsoring 
agency's responsibility to ensure that the definitions are appropriate 
for such use. When an agency is publishing for comment a proposed 
regulation that would use the definitions for a nonstatistical purpose, 
the agency should seek public comment on the proposed use.''
    While we recognize that OMB's geographic area delineations are not 
designed specifically for use in non-statistical programs or for 
program purposes, including the allocation of Federal funds, we 
continue to believe that the OMB's geographic area delineations 
represent a useful proxy for differentiating between labor markets and 
that the geographic area delineations are appropriate for use in 
determining Medicare hospice payments. In implementing the use of CBSAs 
for hospice payment purposes in our FY 2006 rule (70 FR 45130), we 
considered the effects of using these delineations. We have used CBSAs 
for determining hospice payments for ten years (since FY 2006). In 
addition, other provider types, such as IPPS hospital, home health, 
SNF, inpatient rehabilitation facility (IRF), and the ESRD program, 
have used CBSAs to define their labor market areas for the last decade.
    Comment: A commenter noted that in Table 20 of the proposed rule 
(80 FR 25862), the state attributed to a county listed under CBSA 41540 
``Salisbury, MD-DE'' is incorrect.
    Response: We thank the commenter for bringing this error to our 
attention. Worcester County, Maryland is part of CBSA 41540. We made a 
typographical error when we referred to Worcester County, Maryland as 
``Worcester County, MA''. The correct reference should be ``Worcester 
County, MD''.
    Final Action: We are implementing the hospice wage index with a 1-
year transition period as proposed, meaning the counties impacted will 
receive 50 percent of the rate from the current CBSA and 50 percent 
from the new OMB CBSA delineations for FY 2016 effective October 1, 
2015.
2. 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 one 
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. The statute defines the productivity 
adjustment to be equal to the 10-year moving average of changes in 
annual economy-wide private nonfarm business multifactor productivity 
(MFP) (as projected by the Secretary for the 10-year period ending with 
the applicable FY, year, cost reporting period, or other annual period) 
(the ``MFP adjustment''). A complete description of the MFP projection 
methodology is available on our Web site at http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareProgramRatesStats/MarketBasketResearch.html.
    In addition to the MFP adjustment, 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 hospice payment 
update percentage for FY 2016 is based on the estimated inpatient 
hospital market basket update of 2.4 percent (based on IHS Global 
Insight, Inc.'s second quarter 2015 forecast with historical data 
through the first quarter of 2015). Due to the requirements at 
1886(b)(3)(B)(xi)(II) and 1814(i)(1)(C)(v) of the Act, the estimated 
inpatient hospital market basket update for FY 2016 of 2.4 percent must 
be reduced by a MFP adjustment as mandated by Affordable Care Act 
(currently estimated to be 0.5 percentage point for FY 2016). The 
estimated inpatient hospital market basket update for FY 2016 is 
reduced further by a 0.3 percentage point, as mandated by the 
Affordable Care Act. In effect, the hospice payment update percentage 
for FY 2016 is 1.6 percent. If more recent data are subsequently 
available (for example, a more recent estimate of the inpatient 
hospital market basket update and MFP adjustment), we will use such 
data, if appropriate, to determine the FY 2016 market basket update and 
the MFP adjustment in the FY 2016 Hospice Rate Update final rule.
    Currently, the labor portion of the hospice payment rates is as 
follows: For RHC, 68.71 percent; for CHC, 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 RHC, 31.29 percent; for CHC, 31.29 percent; 
for General Inpatient Care, 35.99 percent; and for Respite Care, 45.87 
percent.
    A summary of the comments we received regarding the payment rates 
and our responses to those comments appear below.
    Comment: Several commenters expressed appreciation for the positive 
payment update for FY 2016. However, the commenters believe that the 
update does not keep pace with the cost of providing highest quality 
care for beneficiaries. One commenter states that costs associated with 
workforce recruitment and training, supplies, and technology are all 
rising faster than reimbursement. The commenter further states that 
non-profit, mission-based hospices already operate on extremely slim 
margins: MedPAC calculated average non-profit hospice margins at

[[Page 47181]]

3.7 percent for 2012 with an expectation for margins to decline further 
(MedPAC March 2015). Some commenters note that margins for non-profit 
hospices are much lower than margins for for-profit hospices. The 
commenters strongly encourage CMS to reevaluate the payment update for 
FY 2016.
    Response: The payment update to the hospice rates is based in 
statute as previously described in detail in this section and we do not 
have regulatory authority to alter the payment update.
    Final Action: We are implementing the hospice payment update as 
discussed in the proposed rule.
3. FY 2016 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 FY, 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 RHC rate for each day the 
beneficiary is enrolled in hospice, unless the hospice provides 
continuous home care, IRC, or general inpatient care. CHC is provided 
during a period of patient crisis to maintain the patient at home; IRC 
is short-term care to allow the usual caregiver to rest; and GIP is to 
treat symptoms that cannot be managed in another setting.
    As discussed in section III.B, of this final rule, we will delay 
implementation of both the proposed RHC rates and the SIA payment until 
January 1, 2016. Between October 1, 2015 and December 31, 2015, 
hospices will continue to be paid a single RHC per diem payment amount. 
Effective January 1, 2016, the RHC rates for days 1 through 60 and days 
61 and beyond would replace the single RHC per diem payment rate. As 
discussed in section III.B.3, we will make a SIA payment, in addition 
to the daily RHC payment, when direct patient care is provided by a RN 
or social worker during the last 7 days of the patient's life. The SIA 
payment will be equal to the CHC hourly rate multiplied by the hours of 
nursing or social work provided (up to 4 hours total) that occurred on 
the day of service. The SIA payment will also be adjusted by the 
appropriate wage index. In order to maintain budget neutrality, as 
required under section 1814(i)(6)(D)(ii) of the Act, for the SIA 
payment, the RHC rates will need to be adjusted by a budget neutrality 
factor. The budget neutrality adjustment that will apply to days 1 
through 60 is equal to 1 minus the ratio of SIA payments for days 1 
through 60 to the total payments for days 1 through 60 and is 
calculated to be 0.9806. The budget neutrality adjustment that will 
apply to days 61 and beyond is equal to 1 minus the ratio of SIA 
payments for days 61 and beyond to the total payments for days 61 and 
beyond and is calculated to be 0.9957. Lastly, the RHC rates will be 
increased by the FY 2016 hospice payment update percentage of 1.6 
percent as discussed in section III.C.3. The FY 2016 RHC rate for 
hospice claims between October 1, 2015 and December 31, 2015 is shown 
in Table 20. The FY 2016 RHC rates for hospice claims for January 1, 
2016 through September 30, 2016 are shown in Table 21. The FY 2016 
payment rates for CHC, IRC, and GIP will be the FY 2015 payment rates 
increased by 1.6 percent. The rates for these three levels of care are 
shown in Table 22. The FY 2016 rates for hospices that do not submit 
the required quality data are shown in Tables 23, 24, and 25. The FY 
2016 hospice payment rates will be effective for care and services 
furnished on or after October 1, 2015 through September 30, 2016.

          Table 20--FY 2016 Hospice Payment Rate for RHC for October 1, 2015 Through December 31, 2015
----------------------------------------------------------------------------------------------------------------
                                                                                FY 2016 Hospice
               Code                        Description         FY 2015 Payment  payment  update  FY 2016 Payment
                                                                     rate          percentage          rate
----------------------------------------------------------------------------------------------------------------
651...............................  Routine Home Care........         $159.34          x 1.016          $161.89
----------------------------------------------------------------------------------------------------------------


                             Table 21--FY 2016 Hospice Payment Rates for RHC for January 1, 2016 Through September 30, 2016
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                              FY 2016
                                                                                                            SIA Budget        Hospice
                      Code                                     Description                   Rates \1\      neutrality        payment         FY 2016
                                                                                                              factor          update       Payment rates
                                                                                                            adjustment      percentage
--------------------------------------------------------------------------------------------------------------------------------------------------------
651............................................  Routine Home Care (days 1-60)..........         $187.54        x 0.9806         x 1.016         $186.84
651............................................  Routine Home Care (days 61+)...........          145.14        x 0.9957         x 1.016          146.83
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ See section III.B.2 for the RHC rates for days 1-60, and days 61 and beyond before accounting for the Service Intensity Add-on (SIA) payment budget
  neutrality factor and the FY 2016 hospice payment update percentage of 1.6 percent as required by section 1814(i)(1)(C) of the Act.


[[Page 47182]]


                          Table 22--FY 2016 Hospice Payment Rates for CHC, IRC, and GIP
----------------------------------------------------------------------------------------------------------------
                                                                                      FY 2016
                                                                                      Hospice
                Code                         Description              FY 2015         payment         FY 2016
                                                                   Payment rates      update       Payment rate
                                                                                    percentage
----------------------------------------------------------------------------------------------------------------
652................................  Continuous Home Care.......         $929.91         x 1.016         $944.79
                                     Full Rate = 24 hours of
                                      care.
                                     $ = 39.37 FY 2016 hourly
                                      rate.
655................................  Inpatient Respite Care.....          164.81         x 1.016          167.45
656................................  General Inpatient Care.....          708.77         x 1.016          720.11
----------------------------------------------------------------------------------------------------------------

    We reiterate in this final rule, that 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 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 2016 
(See Tables 23 through 25 below). For more information on the HQRP 
requirements please see section III.E in this final rule.

 Table 23--FY 2016 Hospice Payment Rate for RHC for October 1, 2015 Through December 31, 2015 for Hospices That
                                     DO NOT Submit the Required Quality Data
----------------------------------------------------------------------------------------------------------------
                                                                                FY 2016 Hospice
                                                                                     payment
                                                                                 update of  1.6
             Code                        Description           FY 2015 Payment   percent minus   FY 2016 Payment
                                                                     rate         2 percentage         rate
                                                                                 points = -0.4
                                                                                    percent
----------------------------------------------------------------------------------------------------------------
651...........................  Routine Home Care............         $159.34          x 0.996          $158.70
----------------------------------------------------------------------------------------------------------------


Table 24--FY 2016 Hospice Payment Rates for RHC for January 1, 2016 Through September 30, 2016 for Hospices That DO NOT Submit the Required Quality Data
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                              FY 2016
                                                                                                                              Hospice
                                                                                                            SIA Budget        payment
                                                                                                            neutrality    update of  1.6      FY 2016
                      Code                                     Description                 RHC Rates \1\      factor       percent minus   Payment rates
                                                                                                            adjustment     2 percentage
                                                                                                                           points = -0.4
                                                                                                                              percent
--------------------------------------------------------------------------------------------------------------------------------------------------------
651............................................  Routine Home Care (days 1-60)..........         $187.54        x 0.9806         x 0.996         $183.17
651............................................  Routine Home Care (days 61+)...........          145.14        x 0.9957         x 0.996          143.94
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ See section III.B.2 for the RHC rates for days 1-60, and days 61 and beyond before accounting for the Service Intensity Add-on (SIA) payment budget
  neutrality factor and the FY 2016 hospice payment update percentage of 1.6 percent as required by section 1814(i)(1)(C) of the Act.


   Table 25--FY 2016 Hospice Payment Rates for CHC, IRC, and GIP for Hospices That DO NOT Submit the Required
                                                  Quality Data
----------------------------------------------------------------------------------------------------------------
                                                                                      FY 2016
                                                                                      Hospice
                                                                                      payment
                                                                      FY 2015      update of 1.6      FY 2016
                Code                         Description           Payment rates   percent minus   Payment rate
                                                                                   2 percentage
                                                                                   points = -0.4
                                                                                      percent
----------------------------------------------------------------------------------------------------------------
652................................  Continuous Home Care Full           $929.91         x 0.996         $926.19
                                      Rate = 24 hours of care $
                                      = 38.67 hourly rate.
655................................  Inpatient Respite Care.....          164.81         x 0.996          164.15

[[Page 47183]]

 
656................................  General Inpatient Care.....          708.77         x 0.996          705.93
----------------------------------------------------------------------------------------------------------------

4. Hospice Aggregate Cap and the IMPACT Act of 2014
    When the Medicare hospice benefit was implemented, the Congress 
included 2 limits on payments to hospices: An inpatient cap and an 
aggregate cap. As set out in sections 1861(dd)(2)(A)(iii) and 
1814(i)(2)(A) through (C) of the Act, respectively, the hospice 
inpatient cap limits the total number of Medicare inpatient days 
(general inpatient care and respite care) 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.\50\ Since 
1983, the $6,500 amount has been adjusted annually by the change in the 
medical care expenditure category of the consumer price index for urban 
consumers (CPI-U) from March 1984 to March of the cap year, as required 
by section 1814(i)(2)(B) of the Act. 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. The cap year is currently 
November 1 to October 31, and was set in place in the December 16, 1983 
Hospice final rule (48 FR 56022).
---------------------------------------------------------------------------

    \50\ National Hospice and Palliative Care Organization (NHPCO), 
``A Short History of the Medicare Hospice Cap on Total 
Expenditures.'' Web 19 Feb. 2014. http://www.nhpco.org/sites/default/files/public/regulatory/History_of_Hospice_Cap.pdf.
---------------------------------------------------------------------------

    Section 1814(i)(2)(B)(i) and (ii) of the Act, as added by section 
3(b) of the IMPACT Act requires, effective for the 2016 cap year 
(November 1, 2015 through October 31, 2016), that the cap amount for 
the previous year to be updated by the hospice payment update 
percentage, rather than the original $6,500 being annually adjusted by 
the change in the CPI-U for medical care expenditures since 1984. This 
new provision will sunset for cap years ending after September 30, 
2025, at which time the annual update to the cap amount will revert 
back to the original methodology. This provision is estimated to result 
in $540 million in savings over 10 years starting in 2017.
    As a result, we will update Sec.  418.309 to reflect the new 
language added to section 1814(i)(2)(B) of the Act.
    In accordance with section 1814(i)(2)(B)(i) of the Act, the hospice 
aggregate cap amount for the 2015 cap year, starting on November 1, 
2014 and ending on October 31, 2015, will be $27,382.63. This amount 
was calculated by multiplying the original cap amount of $6,500 by the 
change in the CPI-U medical care expenditure category, from the fifth 
month of the 1984 accounting year (March 1984) to the fifth month the 
current accounting year (in this case, March 2015). The CPI-U for 
medical care expenditures for 1984 to present is available from the BLS 
Web site at: http://www.bls.gov/cpi/home.htm.
    Step 1: From the BLS Web site given above, the March 2015 CPI-U for 
medical care expenditures is 444.020 and the 1984 CPI-U for medical 
care expenditures was 105.4.
    Step 2: Divide the March 2015 CPI-U for medical care expenditures 
by the 1984 CPI-U for medical care expenditures to compute the change.
444.020/105.4 = 4.212713
    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 
2015 cap year.
$6,500 x 4.212713 = $27,382.63
    As required by section 1814(i)(2)(B)(ii) of the Act, the hospice 
aggregate cap amount for the 2016 cap year, starting on November 1, 
2015 and ending on October 31, 2016, will be the 2015 cap amount 
updated by the FY 2016 hospice payment update percentage (see section 
III.C.2 above). As such, the 2016 cap amount will be $27,820.75 
($27,382.63 * 1.016). A Change Request with the finalized hospice 
payment rates, a finalized hospice wage index, the Pricer for FY 2016, 
and the hospice cap amount for the cap year ending October 31, 2015 
will be issued in the summer.
    A summary of the comments we received regarding the aggregate cap 
and our responses to those comments appears below.
    Comment: A number of commenters supported the use of payment update 
data to update the hospice aggregate cap. Some commenters suggested 
that CMS reduce the hospice aggregate cap between ten to fifteen 
percent and that a portion of the savings be utilized to support 
innovation and research around end-of-life, hospice, and palliative 
care. Another commenter stated that the aggregate cap should be 
adjusted to account for regional differences in payment. The commenter 
argued that providers in areas with an overall higher cost of living 
would hit the aggregate cap sooner than providers in areas with a lower 
cost of living and that the aggregate cap should be applied on a CBSA 
basis, not a national basis.
    Response: We thank the commenters for their support. We reiterate 
that the use of hospice payment update percentage to update the hospice 
aggregate cap is mandated by the IMPACT Act. We also note that while we 
find the suggestion to adjust the hospice aggregate cap compelling, we 
would need statutory authority to reduce the hospice aggregate cap. In 
addition, we do not have statutory authority to change the aggregate 
cap amount by region or CBSA.
    Comment: A commenter noted an error in our calculation of the 
aggregate cap amount for the 2015 cap year. In the proposed rule, (80 
FR 25867), in Step 2,

[[Page 47184]]

we should have divided the March 2015 CPI-U for medical care 
expenditures, 444.020, by the 1984 CPI-U for medical care expenditures, 
105.4. However, we inadvertently divided 440.020 by 105.4.
    Response: We would like to thank the commenter for noticing the 
error and alerting us. We have corrected the error in the calculation 
in this final rule.

D. Alignment of the Inpatient and Aggregate Cap Accounting Year With 
the Federal Fiscal Year

    As noted in section III.C.4, when the Medicare hospice benefit was 
implemented, the Congress included two limits on payments to hospices: 
An aggregate cap and an inpatient cap. 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. If a 
hospice's total Medicare payments for the cap year exceed such 
hospice's aggregate cap amount, then the hospice must repay the excess 
back to Medicare. The intent of the inpatient cap was to ensure that 
hospice remained a home-based benefit. If a hospice's inpatient days 
(GIP and respite) exceed 20 percent of all hospice days then, for 
inpatient care, the hospice is paid: (1) The sum of the total 
reimbursement for inpatient care multiplied by the ratio of the maximum 
number of allowable inpatient days to actual number of all inpatient 
days; and (2) the sum of the actual number of inpatient days in excess 
of the limitation by the routine home care rate.
1. Streamlined Method and Patient-by-Patient Proportional Method for 
Counting Beneficiaries To Determine Each Hospice's Aggregate Cap Amount
    The aggregate cap amount for any given hospice is established by 
multiplying the cap amount by the number of Medicare beneficiaries who 
received hospice services during the year. Originally, the number of 
Medicare beneficiaries who received hospice services during the year 
was determined using a ``streamlined'' methodology whereby each 
beneficiary is counted as ``1'' in the initial cap year of the hospice 
election and is not counted in subsequent cap years. Specifically, the 
hospice includes in its number of Medicare beneficiaries those Medicare 
beneficiaries who have not previously been included in the calculation 
of any hospice cap, and who have filed an election to receive hospice 
care in accordance with Sec.  418.24 during the period beginning on 
September 28th (34 days before the beginning of the cap year) and 
ending on September 27th (35 days before the end of the cap year), 
using the best data available at the time of the calculation. This is 
applicable for cases in which a beneficiary received care from only one 
hospice. If a beneficiary received care from more than one hospice, 
each hospice includes in its number of Medicare beneficiaries only that 
fraction which represents the portion of a patient's total days of care 
with that hospice in that cap year, using the best data available at 
the time of the calculation. Using the streamlined method, a different 
timeframe from the cap year is used to count the number of Medicare 
beneficiaries because it allows those beneficiaries who elected hospice 
near the end of the cap year to be counted in the year when most of the 
services were provided (48 FR 38158).
    During FY 2012 rulemaking, in addition to the streamlined method, 
CMS added a ``patient-by-patient proportional'' method as a way of 
calculating the number of Medicare beneficiaries who received hospice 
services during the year in determining the aggregate cap amount for 
any given hospice (76 FR 47309). This method specifies that a hospice 
should include in its number of Medicare beneficiaries only that 
fraction which represents the portion of a patient's total days of care 
in all hospices and all years that was spent in that hospice in that 
cap year, using the best data available at the time of the calculation. 
The total number of Medicare beneficiaries for a given hospice's cap 
year is determined by summing the whole or fractional share of each 
Medicare beneficiary that received hospice care during the cap year, 
from that hospice. Under the patient-by-patient proportional 
methodology, the timeframe for counting the number of Medicare 
beneficiaries is the same as the cap accounting year (November 1 
through October 31). The aggregate cap amount for each hospice is now 
calculated using the patient-by-patient proportional method, except for 
those hospices that had their cap determination calculated under the 
streamlined method prior to the 2012 cap year, did not appeal the 
streamlined method used to determine the number of Medicare 
beneficiaries used in the aggregate cap calculation, and opted to 
continue to have their hospice aggregate cap calculated using the 
streamlined method no later than 60 days after receipt of its 2012 cap 
determination.
2. Inpatient and Aggregate Cap Accounting Year Timeframe
    As stated in section III.C.4, the cap accounting year is currently 
November 1 to October 31. In the past, CMS has considered changing the 
cap accounting year to coincide with the hospice rate update year, 
which is the federal fiscal year (October 1 through September 30). In 
the FY 2011 Hospice Wage Index notice (75 FR 42951), CMS solicited 
comments on aligning the cap accounting year for both the inpatient and 
aggregate hospice cap to coincide with the FY. In the FY 2012 Hospice 
Wage Index proposed rule, we summarized the comments we received, 
stating that ``several commenters supported the idea of our aligning 
the cap year with the federal fiscal year; with some noting that the 
change would be appropriate for a multi-year apportioning approach (the 
patient-by-patient proportional method).'' Other commenters stated that 
we should not change the cap year at this time, and recommended that we 
wait for this to be accomplished as part of hospice payment reform (76 
FR 26812).
    In FY 2012, we decided not to finalize changing the cap accounting 
year to the FY, partly because of a concern that a large portion of 
providers could still be using the streamlined method. As stated 
earlier, the streamlined method has a different timeframe for counting 
the number of beneficiaries than the cap accounting year, allowing 
those beneficiaries who elected hospice near the end of the cap year to 
be counted in the year when most of the services were provided. 
However, for the 2013 cap year, only 486 hospices used the streamlined 
method to calculate the number of Medicare hospice patients and the 
remaining providers used the patient-by-patient proportional method. 
Since the majority of providers now use the patient-by-patient 
proportional method, we believe there is no longer an advantage to 
defining the cap accounting year differently from the hospice rate 
update year; maintaining a cap accounting year (as well as the period 
for counting beneficiaries under the streamlined method) that is 
different from the federal fiscal year creates an added layer of 
complexity that can lead to hospices unintentionally calculating their 
aggregate cap determinations incorrectly. In addition, shifting the cap 
accounting year timeframes to coincide with the hospice rate update 
year (the federal fiscal year) will better align with the intent of the 
new cap calculation methodology required by the IMPACT Act of 2014, as 
discussed in section III.C.4. Therefore, we are aligning the cap 
accounting year for both the inpatient cap and the hospice aggregate 
cap with the federal fiscal year for FYs 2017 and later. In addition to 
aligning the cap accounting year with the federal fiscal year, we will 
also align the

[[Page 47185]]

timeframe for counting the number of beneficiaries with the federal 
fiscal year. This will eliminate timeframe complexities associating 
with counting payments and beneficiaries differently from the federal 
fiscal year and will help hospices avoid mistakes in calculating their 
aggregate cap determinations.
    In shifting the cap accounting year to match the federal fiscal 
year, we note that new section 1814(i)(2)(B)(ii) of the Act, as added 
by section 3(b) of the IMPACT Act, requires the cap amount for 2016 to 
be updated by the hospice payment update percentage in effect ``during 
the FY beginning on the October 1 preceding the beginning of the 
accounting year''. In other words, we interpret this to mean that the 
statute requires the 2016 cap amount to be updated using the most 
current hospice payment update percentage in effect at the start of 
that cap year. For the 2016 cap year, the 2015 cap amount will be 
updated by the FY 2016 hospice payment update percentage outlined in 
section III.C.2. For the 2017 cap year through the 2025 cap year, we 
will update the previous year's cap amount by the hospice payment 
update percentage for that current federal fiscal year. For the 2026 
cap year and beyond, changing the cap accounting year to coincide with 
the federal fiscal year will require us to use the CPI-U for February 
when updating the cap amount, instead of the current process which uses 
the March CPI-U to update the cap amount. Section 1814(i)(2)(B) of the 
Act requires us to update the cap amount by the same percentage as the 
percentage increase or decrease in the medical care expenditure 
category of the CPI-U from March 1984 to the ``fifth month of the 
accounting year '' for all years except those accounting years that end 
after September 30, 2016 and before October 1, 2025.
    In shifting the cap year to match the federal fiscal year, we are 
aligning the timeframes in which beneficiaries and payments are counted 
for the purposes of determining each individual hospice's aggregate cap 
amount (see table 26 below) as well as the timeframes in which days of 
hospice care are counted for the purposes determining whether a given 
hospice exceeded the inpatient cap. In the year of transition (2017 cap 
year), for the inpatient cap, we will calculate the percentage of all 
hospice days of care that were provided as inpatient days (GIP care and 
respite care) from November 1, 2016 through September 30, 2017 (11 
months). For those hospices using the patient-by-patient proportional 
method for their aggregate cap determinations, for the 2017 cap year, 
we will count beneficiaries from November 1, 2016 to September 30, 
2017. For those hospices using the streamlined method for their 
aggregate cap determinations, we will allow 3 extra days to count 
beneficiaries in the year of transition. Specifically, for the 2017 cap 
year (October 1, 2016 to September 30, 2017), we will count 
beneficiaries from September 28, 2016 to September 30, 2017, which is 
12 months plus 3 days, in that cap year's calculation. For hospices 
using either the streamlined method or the patient-by-patient 
proportional method, we will count 11 months of payments from November 
1, 2016 to September 30, 2017 for the 2017 cap year. For the 2018 cap 
year (October 1, 2017 to September 30, 2018), we will count both 
beneficiaries and payments for hospices using the streamlined or the 
patient-by-patient proportional methods from October 1, 2017 to 
September 30, 2018. Likewise, for the 2018 cap year, we will calculate 
the percentage of all hospice days of care that were provided as 
inpatient days (GIP care or respite care) from October 1, 2017 to 
September 30, 2018. Because of the non-discretionary language used by 
Congress in determining the cap for a year, the actual cap amount for 
the adjustment year will not be prorated for a shorter time frame. We 
solicited public comment on all aspects of the proposed alignment of 
the cap accounting year for both the inpatient cap and hospice 
aggregate cap, as well as the timeframe for counting the number of 
beneficiaries for the hospice aggregate cap, with the federal fiscal 
year, as articulated in this section, as well as the corresponding 
proposed changes to the regulations at Sec.  418.308(c) in section VI.

 Table 26--Hospice Aggregate Cap Timeframes for Counting Beneficiaries and Payments for the Alignment of the Cap Accounting Year With the Federal Fiscal
                                                                          Year
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Beneficiaries                                       Payments
                                                     ---------------------------------------------------------------------------------------------------
                      Cap year                                                    Patient-by-patient                                Patient-by-patient
                                                         Streamlined method      proportional method       Streamlined method      proportional method
--------------------------------------------------------------------------------------------------------------------------------------------------------
2016................................................          9/28/15-9/27/16         11/1/15-10/31/16         11/1/15-10/31/16         11/1/15-10/31/16
2017 (Transition Year)..............................          9/28/16-9/30/17          11/1/16-9/30/17          11/1/16-9/30/17          11/1/16-9/30/17
2018................................................         10/1/17- 9/30/18         10/1/17- 9/30/18         10/1/17- 9/30/18         10/1/17- 9/30/18
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Summaries of the public comments and our responses to comments on 
all aspects of the proposed alignment of the cap accounting year with 
the federal fiscal year as well as the proposed changes to the 
regulations at Sec.  418.308(c) are summarized below:
    Comment: Commenters supported the proposed alignment of the 
inpatient and aggregate cap with the federal fiscal year, as well as 
the alignment of the timeframe for counting the number of beneficiaries 
with the federal fiscal year, and supported the proposed methodology 
for the transition year. Commenters encouraged CMS to issue, and direct 
the MACs to provide, timely notice of forthcoming changes and reminders 
to minimize confusion when hospice providers calculate and self-report 
their aggregate cap and to allow hospices to adequately track their cap 
status. Commenters wanted education and information on the transition 
and changes to the cap accounting year timeframe.
    Response: We thank the commenters for their support and will 
finalize this policy as proposed. We note that the MACs currently send 
a reminder notice to hospices no later than 30 days prior to the due 
date of the self-determined cap. We encourage hospices to visit their 
respective MAC Web site regularly for announcements and updates 
regarding the hospice program. Please contact your MAC if you need 
information regarding the cap calculation or additional information.
    Comment: Some commenters stated that the proposed rule eliminates 
the reference to March 31st in Sec.  418.308 and requested that the 
final rule clarify that hospices are still required to file a self-
determined inpatient and aggregate cap determination on or before March 
31, 2017 for the 2016 cap year and on or before February 28, 2018 for 
the 2017

[[Page 47186]]

cap year. One commenter requested that CMS provide early notice on the 
due date for filing the aggregate cap determination each year since the 
removal of the reference to March 31st may be a source of confusion for 
hospice providers.
    Response: We note that the regulatory text still states that 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 and remit any overpayment due at that time. Therefore, the 
regulatory text change continues to provide hospices with sufficient 
information to determine when aggregate cap self-determinations must be 
submitted to the MAC. Hospices are required to file a self-determined 
inpatient and aggregate cap determination on or before March 31, 2017 
for the 2016 cap year and on or before February 28, 2018 for the 2017 
cap year. We will finalize this policy as proposed, aligning the cap 
accounting year with the federal fiscal year and removing the reference 
to March 31st in Sec.  418.308. The end of the cap accounting year for 
the 2017 cap year and future years will be the same as the end of the 
fiscal year. Therefore, it is clear that the clause in the regulation 
text ``5 months after the end of the cap year'' refers to the end of 
February for cap years 2017 and beyond.
    Final Action: We are finalizing the proposal and proposed 
methodology to align the inpatient and aggregate cap accounting year, 
as well as the timeframe for counting the number of beneficiaries, with 
the federal fiscal year. We are also finalizing the proposed changes to 
Sec.  418.308(c).

E. Proposed Updates to the Hospice Quality Reporting Program (HQRP)

1. Background and Statutory Authority
    Section 3004(c) of the Affordable Care Act amended section 
1814(i)(5) of 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 
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.
2. General Considerations Used for Selection of Quality Measures for 
the HQRP
    Any measures selected by the Secretary must be 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. Our paramount concern is the 
successful development of a Hospice Quality Reporting Program (HQRP) 
that promotes the delivery of high quality healthcare services. We seek 
to adopt measures for the HQRP that promote patient-centered, high 
quality, and safe care. Our measure selection activities for the HQRP 
take into consideration input from the Measure Applications Partnership 
(MAP), convened by the NQF, as part of the established CMS pre-
rulemaking process required 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. 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, (http://www.ahrq.gov/workingforquality/nqs/nqs2013annlrpt.htm) and the CMS Quality Strategy (http://www.cms.gov/Medicare/Quality-Initiatives-Patient-AssessmentInstruments/QualityInitiativesGenInfo/CMS-Quality-Strategy.html). To the extent 
practicable, we have sought to adopt measures endorsed by member 
organizations of the National Consensus Project recommended by multi-
stakeholder organizations, and developed with the input of providers, 
purchasers/payers, and other stakeholders.
3. Proposed Policy for Retention of HQRP Measures Adopted for Previous 
Payment Determinations
    Beginning with the FY 2018 payment determination, for the purpose 
of streamlining the rulemaking process, we proposed that when we adopt 
measures for the HQRP beginning with a payment determination year, 
these measures are automatically adopted for all subsequent years' 
payment determinations, unless we propose to remove, suspend, or 
replace the measures.
    Quality measures may be considered for removal by CMS if:
     Measure performance among hospices is so high and 
unvarying that meaningful distinctions in improvements in performance 
can be no longer be made;
     Performance or improvement on a measure does not result in 
better patient outcomes;
     A measure does not align with current clinical guidelines 
or practice;
     A more broadly applicable measure (across settings, 
populations, or conditions) for the particular topic is available;
     A measure that is more proximal in time to desired patient 
outcomes for the particular topic is available;
     A measure that is more strongly associated with desired 
patient outcomes for the particular topic is available; or
     Collection or public reporting of a measure leads to 
negative unintended consequences.
    For any such removal, the public will be given an opportunity to 
comment through the annual rulemaking process. However, if there is 
reason to believe continued collection of a measure raises potential 
safety concerns, we will take immediate action to remove the measure 
from the HQRP and will not wait for the annual rulemaking cycle. The 
measures will be promptly removed and we will immediately notify 
hospices and the public of such a decision through the

[[Page 47187]]

usual HQRP communication channels, including listening sessions, memos, 
email notification, and Web postings. In such instances, the removal of 
a measure will be formally announced in the next annual rulemaking 
cycle.
    CMS did not propose to remove any measures for the FY 2017 
reporting cycle. We invited public comment only on our proposal that 
once a quality measure is adopted, it be retained for use in the 
subsequent fiscal year payment determinations unless otherwise stated.
    Public comments and our response to comments are summarized below. 
All comments received were supportive of the proposed policy that once 
a quality measure is adopted, it be retained for use in the subsequent 
fiscal year payment determinations until otherwise stated, as proposed.
    Comment: CMS received several comments on our proposal that once a 
quality measure is adopted, it be retained for use in the subsequent 
fiscal year payment determinations until otherwise stated. All 
commenters were supportive of this proposal. Commenters appreciated the 
clarification from CMS and noted that the proposed reasons for removal 
of a measure are reasonable.
    Response: CMS thanks commenters for their support of our proposal 
to retain measures that have been adopted for use in subsequent fiscal 
year payment determinations, unless otherwise stated.
    Comment: Two commenters noted the effort required by hospices in 
reporting quality data, and stated that measures should be 
systematically reviewed on a regular basis to ensure they are able to 
distinguish performance among hospices, do not result in unintended 
consequences, and have demonstrated potential to improve care.
    Response: CMS agrees with commenters that regularly assessing 
measures to ensure their value in distinguishing performance and 
improving care is vital to the success of the HQRP. For all measures 
implemented for use in the HQRP, CMS regularly conducts measure testing 
activities according to the blueprint for the CMS Measures Management 
System (http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/MeasuresManagementSystemBlueprint.html) to 
ensure that measures continue to demonstrate scientific acceptability 
(including reliability and validity) and meet the goals of the HQRP, 
which include distinguishing performance among hospices and 
contributing to better patient outcomes. If measure testing activities 
reveal that a measure meets one of the conditions for removal that is 
listed the proposed rule (measure performance among hospices high and 
unvarying, performance or improvement in a measure does not result in 
better patient outcomes, etc.), the measure will be considered for 
removal from the HQRP to avoid unintended consequences and ensure that 
providers' data collection efforts are meaningful and are contributing 
to quality of care.
    Comment: Finally, one commenter noted that both current and new 
measures should be thoroughly evaluated and tested before removal from 
or introduction to the HQRP. This commenter recommended that measure 
data from the first two quarters after implementation not be used for 
measure evaluation, and that a minimum of 1 years' worth of measure 
data after implementation be used to evaluate measures. The commenter 
also noted that the measure evaluation process should include analysis 
to demonstrate not only the psychometric properties of measures, but 
also evidence of the measure's relationship to meaningful outcomes.
    Response: CMS thanks the commenter for their recommendation, and 
agrees that testing the measure's relationship to meaningful patient 
and family outcomes is an important part of the measure development and 
testing process, especially for process measures. As part of the 
validity testing, specifically convergent validity testing, CMS 
examines the relationship between various measures (for example, 
process and outcome measures) to support measure development and 
demonstrate relationships between processes and outcomes of care.
    Final Action: After consideration of the comments, we are 
finalizing our proposal that once a quality measure is adopted, it be 
retained for use in the subsequent fiscal year payment determinations 
until otherwise stated, as proposed.
4. Previously Adopted Quality Measures for FY 2016 and FY 2017 Payment 
Determination
    As stated in the CY 2013 HH PPS final rule (77 FR 67068, 67133), 
CMS expanded the set of 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. In response, CMS developed and tested a 
hospice patient-level item set, the Hospice Item Set (HIS). Hospices 
are required to submit an HIS-Admission record and an HIS-Discharge 
record for each patient admission to hospice on or after July 1, 2014. 
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 1, 2014 (78 FR 48258). To meet the quality reporting 
requirements for hospices for the FY 2016 payment determination and 
each subsequent year, we 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 provides 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 delivered to Medicare 
beneficiaries in the hospice setting, we collect quality data necessary 
to calculate the adopted measures on all patients. We finalized in the 
FY 2014 Hospice Wage Index (78 FR 48258) that hospice providers collect 
data on all patients in order to ensure that all patients regardless of 
payer or patient age are receiving the same care and that provider 
metrics measure performance across the spectrum of patients.
    Hospices are required to complete and submit an HIS-Admission and 
an HIS-Discharge record for each patient admission. Hospices failing to 
report quality data via the HIS in FY 2015 will have their market 
basket update reduced by 2 percentage points in FY 2017 beginning in 
October 1, 2016. In the FY

[[Page 47188]]

2015 Hospice Wage Index final rule (79 FR 50485, 50487), we finalized 
the proposal to codify the HIS submission requirement at Sec.  418.312. 
The System of Record (SOR) Notice titled ``Hospice Item Set (HIS) 
System,'' SOR number 09-70-0548, was published in the Federal Register 
on April 8, 2014 (79 FR 19341).
5. HQRP Quality Measures and Concepts Under Consideration for Future 
Years
    We did not propose any new measures for FY 2017. However, we 
continue to work with our measure development and maintenance 
contractor to identify measure concepts for future implementation in 
the HQRP. In identifying priority areas for future measure enhancement 
and development, CMS takes into consideration input from numerous 
stakeholders, including the Measures Application Partnership (MAP), the 
Medicare Payment Advisory Commission (MedPAC), Technical Expert Panels, 
and national priorities, such as those established by the National 
Priorities Partnership, the HHS Strategic Plan, the National Strategy 
for Quality Improvement in Healthcare, and the CMS Quality Strategy. In 
addition, CMS takes into consideration vital feedback and input from 
research published by our payment reform contractor as well as from the 
Institute of Medicine (IOM) report, titled ``Dying in America'', 
released in September 2014.\51\ Finally, the current HQRP measure set 
is also an important consideration for future measure development 
areas; future measure development areas should complement the current 
HQRP measure set, which includes HIS measures and Consumer Assessment 
of Healthcare Providers and Systems (CAHPS[supreg]) Hospice Survey 
measures. Based on input from stakeholders, CMS has identified several 
high priority concept areas for future measure development:
---------------------------------------------------------------------------

    \51\ IOM (Institute of Medicine). 2014. Dying in America: 
Improving quality and honoring individual preferences near the end 
of life. Washington, DC: The National Academies Press.
---------------------------------------------------------------------------

     Patient reported pain outcome measure that incorporates 
patient and/or proxy report regarding pain management;
     Claims-based measures focused on care practice patterns 
including skilled visits in the last days of life, burdensome 
transitions of care for patients in and out of the hospice benefit, and 
rates of live discharges from hospice;
     Responsiveness of hospice to patient and family care 
needs;
     Hospice team communication and care coordination
    These measure concepts are under development, and details regarding 
measure definitions, data sources, data collection approaches, and 
timeline for implementation will be communicated in future rulemaking. 
CMS invited comments about these four high priority concept areas for 
future measure development.
    Summaries of the public comments and our responses to comments 
regarding the four high priority concept areas for future measure 
development are provided below:
    Comment Summary: Many comments were received about the HQRP quality 
measures and concepts under consideration for future years. Overall, 
commenters were supportive of CMS's efforts to develop a more robust 
quality reporting program that includes development of outcome 
measures, and additional measures that better capture hospice 
performance. One of the commenters, MedPAC, supported the development 
of the measure areas identified by CMS in the proposed rule, strongly 
encouraging CMS to pursue the development of these measures. Several 
commenters were supportive of CMS's approach to quality measure 
development in the HQRP, specifically, the use of Technical Expert 
Panels (TEP) and listening sessions to obtain expert and other 
stakeholder input. In regards to the pain outcome measure, a majority 
of commenters were supportive of this measure concept as pain outcomes 
remain an important indicator of quality end of life care. Several 
commenters noted the complexities associated with developing a pain 
outcome measure, including the fact that pain is a subjective value and 
that pain outcome measures should take into account patient preference 
for pain levels and treatment, not just reduction in pain intensity. A 
few commenters noted additional complexities in proxy reporting of 
patient's pain. One commenter cautioned CMS against a pain outcome 
measure that could bear the risk of contacting the patient or family 
for feedback ``at the wrong time''. With respect to claims-based 
measures, although several commenters were supportive of the claims-
based measure concept areas identified in the proposed rule, the 
majority of commenters had concerns about using claims data as a source 
for quality measures. Commenters also had concerns about linking these 
claims-based measure concepts to quality of care. Several commenters 
noted that performance measures should guide and promote the quality of 
direct care received by hospice patients and families. Commenters 
expressed that performance measures should not be implemented in order 
to discourage or correct undesirable organizational practices. These 
commenters felt that utilization metrics should be linked to quality of 
care or patient/caregiver perception of quality of care. Several 
commenters were concerned that given CMS's criteria for measure 
retention, which include measure performance that relates to better 
patient outcomes and ensuring that measures do not lead to unintended 
consequences, claims-based utilization metrics may be at risk for 
elimination from the HQRP unless they are specifically linked to 
quality of care outcomes. To help establish such a link between 
utilization metrics and quality of care, one commenter suggested that 
CMS compare claims-based data to Hospice CAHPS[supreg] survey data to 
verify whether any claims-based utilization metrics are correlated with 
caregiver perception of quality of care. Several commenters also stated 
that, as a data source, hospice claims were insufficient sources of 
information for quality measure purposes. These commenters noted that 
claims do not have sufficient information to inform performance 
measures. For example, several commenters stated that hospice claims do 
not capture visits offered by chaplains, spiritual care professionals, 
or volunteers. These commenters felt these disciplines made important 
contributions to hospice care and their role and involvement should be 
captured on claims in any claims-based quality metric. With respect to 
the live discharges measure concept, a few commenters questioned how 
CMS would calculate the live discharge rate, noting that there are both 
legitimate and questionable reasons why a live discharge may occur, and 
that claims data could not distinguish between the two. Two commenters 
suggested CMS use the Program for Evaluating Payment Patterns 
Electronic Report (PEPPER) report definition of live discharge. In 
regards to the responsiveness and communication and care coordination 
measure concepts, commenters had mixed opinions on this measure area. A 
few commenters supported measure development in these areas, but other 
commenters had concerns about developing quality measures that address 
these aspects of care. A few commenters had concerns about the 
subjective nature of these areas of care. One commenter noted that 
there are few data points or metrics that CMS could utilize for 
comparative analysis of these aspects of care, and that CMS would

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have to develop new definitions and benchmarks to capture data on these 
areas of care. Several commenters requested additional information on 
the measure areas identified by CMS in the rule. These commenters 
requested CMS provide more information on the proposed measure concept 
areas to allow for more thorough provider input. Additionally, a few 
commenters noted that several of the measure concepts under 
consideration by CMS are also captured, in some way, by the Hospice 
CAHPS[supreg] survey. Providers cautioned CMS against developing new 
measures that were duplicative of other HQRP requirements. Several 
commenters urged CMS to explore measure development in other areas not 
mentioned in the proposed rule. One commenter encouraged CMS to 
consider measure development for other psychosocial symptoms, such as 
anxiety and depression. Another commenter suggested CMS explore 
development measures around the provision of bereavement care and 
services, such as contacts made by hospices to the bereaved. This 
commenter also suggested that CMS consider measuring value as part of 
the HQRP; the commenter suggested such metrics as mean cost per diem 
and percent of dollars directly related to care and services for the 
patient/family. Another commenter requested that CMS consider the role 
that occupational therapists play in future measure development work. 
Finally, one commenter suggested that CMS take into consideration the 
American Academy of Hospice and Palliative Medicine (AAHPM) and Hospice 
and Palliative Nurses Association (HPNA), ``Measuring What Matters'' 
recommendations when considering future measure development areas. One 
commenter supported the development of a standardized patient 
assessment instrument that would include the collection for quality 
measure data. A few commenters reiterated the ACA requirements that any 
measures that are part of the HQRP must be: ``. . . endorsed by the 
consensus-based entity . . . . However . . . 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 . . .'' 
Commenters requested that CMS keep this statutory requirement in mind 
when developing and adopting measures for the HQRP. A few commenters 
asked that CMS be mindful of burden when considering new quality 
measures for adoption since quality data collection requires 
significant time and effort by providers. One commenter expressed 
concern about burden of data collection efforts, especially for small 
non-profit providers.
    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. CMS would 
like to take this opportunity to respond to commenters' concerns about 
the claims-based measure concepts outlined in the proposed rule, as 
well as commenters' concerns about using claims as a data source for 
quality performance measures. CMS appreciates commenters' concerns 
about linking any claims-based utilization or pattern of care measures 
with quality of care prior to implementation of any such measure in the 
HQRP. As noted by one commenter, developing and adopting measures that 
benefit patient outcomes and do not lead to negative unintended 
consequences is of the utmost importance to CMS. CMS convened a 
Technical Expert Panel (TEP) in May 2015 to inform the development of 
these measures under consideration, and linking these claims-based 
measure concepts to quality of care was an issue discussed by the TEP. 
Throughout the measure development process, CMS will conduct continued 
quantitative and qualitative analysis to determine correlation between 
these measure concepts and quality of care. CMS agrees that 
establishing a relationship between a measure concept and quality of 
care is a vital consideration in the measure development process. CMS 
submits all candidate measures for the HQRP for review by the Measure 
Applications Partnership (MAP), a public-private partnership convened 
by the National Quality Forum (NQF) and takes the MAP input into 
consideration in the measure development and implementation process. 
Per the requirements set forth in the ACA, CMS also re-iterates that 
our intent is to adopt measures that have been endorsed by NQF if at 
all possible. For more information on these measure concepts, CMS 
encourages readers to review the Measures Under Consideration (MUC) 
list and the MAP report, which are both published annually. More 
information on the MUC list and MAP report, as they relate to statutory 
requirements for pre-rulemaking can be found on the CMS Web site: 
http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityMeasures/Pre-Rule-Making.html. Lastly, with respect 
to commenters' concerns about burden, CMS thanks 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 the Paperwork Reduction Act 
(PRA) of 1995, any new data collection efforts or extensions of ongoing 
data collection efforts are submitted to the Office of Management and 
Budget (OMB) to ensure that federal agencies do not overburden the 
public with federally sponsored data collections.
6. Form, Manner, and Timing of Quality Data Submission
a. Background
    Section 1814(i)(5)(C) of the Act requires that each hospice submit 
data to the Secretary on quality measures specified by the Secretary. 
Such data must be submitted in a form and manner, and at a time 
specified by the Secretary. Section 1814(i)(5)(A)(i) of the Act 
requires that beginning with the FY 2014 and for 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.
b. Proposed Policy for New Facilities To Begin Submitting Quality Data
    In the FY 2015 Hospice Wage Index and Payment Rate Update final 
rule (79 FR 50488) we finalized a policy stating that any hospice that 
receives its CCN notification letter on or after November 1 of the 
preceding year involved is excluded from any payment penalty for 
quality reporting purposes for the following FY. For example, if a 
hospice provider receives its CMS Certification Number (CCN) (also 
known as the Medicare Provider Number) notification letter on November 
2, 2015 they would not be required to submit quality data for the 
current reporting period ending December 31, 2015 (which would affect 
the FY 2017 APU). In this instance, the hospice would begin with the 
next reporting period beginning January 1,

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2016 and all subsequent years. However, if a hospice provider receives 
their CCN notification letter on October 31, 2015, they would be 
required to submit quality data for the current reporting period ending 
December 31, 2015 (which would affect the FY 2017 APU) and all 
subsequent years. This requirement was codified at Sec.  418.312.
    We proposed to modify our policies for the timing of new providers 
to begin reporting to CMS. Beginning with the FY 2018 payment 
determination and for each subsequent payment determination, we 
proposed that a new hospice be responsible for HQRP quality data 
reporting beginning on the date they receive their CCN notification 
letter from CMS. Under this proposal, hospices would be responsible for 
reporting quality data on patient admissions beginning on the date they 
receive their CCN notification.
    Currently, new hospices may experience a lag between Medicare 
certification and receipt of their actual CCN Number. Since hospices 
cannot submit data to the Quality Improvement and Evaluation System 
(QIES) Assessment Submission and Processing (ASAP) system without a 
valid CCN Number, CMS proposed that new hospices begin collecting HIS 
quality data beginning on the date they receive their CCN notification 
letter by CMS. We believe this policy will provide sufficient time for 
new hospices to establish appropriate collection and reporting 
mechanisms to submit the required quality data to CMS. We invited 
public comment on this proposal that a new hospice be required to begin 
reporting quality data under HQRP beginning on the date they receive 
their CCN notification letter from CMS.
    Summaries of the public comments and our responses to comments that 
a new hospice be required to begin reporting quality data under HQRP 
beginning on the date they receive their CCN notification from CMS are 
provided below:
    Comment: CMS received several comments regarding the proposal for 
new hospices to begin reporting quality data under the HQRP beginning 
on the date they receive their CCN notification letter from CMS. The 
vast majority of commenters expressed support for this proposal since 
it provides a clear start date for HIS reporting, and allows sufficient 
time for hospices to establish processes for collection and submission 
of HIS data.
    Response: CMS appreciates commenters support for this proposal.
    Comment: Two commenters suggested alternative policies for new 
facilities to begin reporting quality data to CMS. One commenter 
recommended that the submission policy require facilities to collect 
data during the period leading up to Medicare certification and begin 
submitting their data as soon as they receive their CCN. Another 
commenter suggested that, to minimize the risk of penalties due to 
issues such as opening the CCN notification letter a day after it is 
received, the submission policy should require facilities to begin data 
collection at the start of the month following the CCN notification.
    Response: In response to the commenter's suggestion to begin report 
data during the period leading up to Medicare certification and as soon 
as they receive their CCN, CMS would like to clarify the reasoning for 
our proposal for new providers to begin reporting HIS data on the date 
they receive their CCN notification letter. CMS proposed that providers 
begin reporting HIS data on the date they receive their CCN 
notification letter since hospices cannot register for the relevant 
QIES ASAP accounts needed to submit HIS data without a valid CCN. Thus, 
requiring quality data reporting beginning on the date the hospice 
receives their CCN notification letter aligns CMS policy for 
requirements for new providers with the functionality of the HIS data 
submission system (QIES ASAP). CMS would like to further clarify our 
proposal for new providers, including how our proposal in this year's 
proposed rule intersects with prior policies for new hospices. There 
are two considerations for providers to keep in mind with respect to 
HIS reporting; the first is when providers should begin reporting HIS 
data, the second is when providers will be subject to the potential two 
(2) percentage point APU reduction for failure to comply with HQRP 
requirements. CMS would like to clarify that, as stated in our 
proposal, providers are required to begin reporting data on the date 
that they receive their CCN notification letter. However, if the CCN 
notification letter were received on or after November 1st, they would 
not be subject to any financial penalty for failure to comply with HQRP 
requirements for the relevant reporting year. For example, if a 
provider receives their CCN notification letter on November 5th, 2015, 
that provider should begin submitting HIS data for patient admissions 
occurring on or after November 5th, 2015. However, since the hospice 
received their CCN notification letter after November 1st, they would 
not be evaluated for, or subject to any payment penalties for the 
relevant FY APU update (which in this instance is the FY 2017 APU, 
which is associated with patient admissions occurring 1/1/15-12/31/15). 
This proposed policy allows CMS to receive HIS data on all patient 
admissions on or after the date a hospice receives their CCN 
notification letter, while at the same time allowing hospices 
flexibility and time to establish the necessary accounts for data 
submission, before they are subject to the potential APU reduction for 
a given reporting year. Finally, to address the commenter's concern 
about providers being subject to payment penalties if they open the CCN 
notification letter the day after it is received, CMS believes our 
proposed policy grants providers ample time to establish the necessary 
accounts and operating systems for HIS data collection and submission, 
since there is often a significant lag time between the Medicare CCN 
application process and receipt of a provider's CCN Notification 
letter.
    Comment: Finally, one commenter requested clarification on how the 
date the CCN notification letter was received would be verified by CMS.
    Response: CMS would like to clarify that the ``date CCN 
notification letter is received'' would be the date listed in the 
letterhead of the CCN Notification Letter. This date is tracked by the 
Medicare Administrative Contractors (MACs) and is verifiable in MAC 
records.
    Final Action: After consideration of the comments, we are 
finalizing our proposal that new providers be required to begin 
reporting quality data under for the HQRP beginning on the date they 
receive their CCN Notification Letter from CMS.
c. Previously Finalized Data Submission Mechanism, Collection Timelines 
and Submission Deadlines for the FY 2017 Payment Determination
    In the FY 2015 Hospice Wage Index final rule (79 FR 50486) we 
finalized our policy requiring that, for the FY 2017 reporting 
requirements, hospices must complete and submit HIS records for all 
patient admissions to hospice on or after July 1, 2014. Electronic 
submission is required for all HIS records. Although electronic 
submission of HIS records is required, hospices do not need to have an 
electronic medical record to complete or submit HIS data. In the FY 
2014 Hospice Wage Index (78 FR 48258) we finalized that, to complete 
HIS records, providers can use either the Hospice Abstraction Reporting 
Tool (HART) software, which is free to download and use, or a vendor-
designed software. HART provides an alternative option for hospice 
providers to collect

[[Page 47191]]

and maintain facility, patient, and HIS Record information for 
subsequent submission to the QIES ASAP system. Once HIS records are 
complete, electronic HIS files must be submitted to CMS via the QIES 
ASAP system. Electronic data submission via the QIES ASAP system is 
required for all HIS submissions; there are no other data submission 
methods available. Hospices have 30 days from a patient admission or 
discharge to submit the appropriate HIS record for that patient through 
the QIES ASAP system. CMS will continue to make HIS completion and 
submission software available to hospices at no cost. 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.
    The QIES ASAP system provides reports upon successful submission 
and 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, home 
health agencies, 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), Outcome Assessment 
Information Set (OASIS), and Long-Term Care Hospital Continuity 
Assessment Record & Evaluation Data Set (LTCH CARE), respectively. We 
have provided hospices with information and details about use of the 
HIS through postings on the HQRP Web page, Open Door Forums, 
announcements in the CMS MLN Connects Provider e-News (E-News), and 
provider training.
d. Proposed Data Submission Timelines and Requirements for FY 2018 
Payment Determination and Subsequent Years
    Hospices are 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 quality 
measures. In order for CMS to appropriately evaluate the quality 
reporting data received by hospice providers, it is essential HIS data 
be received in a timely manner.
    The submission date for any given HIS record is defined as the date 
on which a provider submits the completed record. The submission date 
is the date on which the completed record is submitted and accepted by 
the QIES ASAP system. Beginning with the FY 2018 payment determination, 
we proposed that hospices must submit all HIS records within 30 days of 
the Event Date, which is the patient's admission date for HIS-Admission 
records or discharge date for HIS-Discharge records.
     For HIS-Admission records, the submission date should be 
no later than the admission date plus 30 calendar days. The submission 
date can be equal to the admission date, or no greater than 30 days 
later. The QIES ASAP system will issue a warning on the Final 
Validation Report if the submission date is more than 30 days after the 
patient's admission date.
     For HIS-Discharge records, the submission date should be 
no later than the discharge date plus 30 calendar days. The submission 
date can be equal to the discharge date, or no greater than 30 days 
later. The QIES ASAP system will issue a warning on the Final 
Validation Report if the submission date is more than 30 days after the 
patient's discharge date.
    The QIES ASAP system validation edits are designed to monitor the 
timeliness and ensure that providers submitted records conform to the 
HIS data submission specifications. Providers are notified when timing 
criteria have not been met by warnings that appear on their Final 
Validation Reports. A standardized data collection approach that 
coincides with timely submission of data is essential in order to 
establish a robust quality reporting program and ensure the scientific 
reliability of the data received. We invited comments on the proposal 
that hospices must submit all HIS records within 30 days of the Event 
Date, which is the patient's admission date for HIS-Admission records 
or discharge date for HIS-Discharge records.
    Summaries of the public comments and our responses to comments on 
the proposed data submission timelines and requirements for FY 2018 
payment determination and subsequent years are provided below:
    Comment: CMS received several comments regarding our proposal that 
hospices must submit all HIS records within 30 days of the Event Date. 
All commenters were supportive of this proposed submission timeline. 
One commenter agreed that timely submission of HIS data is necessary to 
facilitate CMS evaluation of HIS data and hospices' performance on 
quality measures.
    Response: CMS appreciates commenters' support for our proposal that 
hospices must submit all HIS records within 30 days of the event date.
    Comment: Another commenter addressed what they felt were 
inconsistencies between the CMS billing practices and some of the 
requirements for HIS reporting. The commenter also noted the burden 
created by these discrepancies for providers. This commenter urges CMS 
to consider minimizing differences across various CMS systems when 
developing new policies.
    Response: CMS thanks the commenter for their concern regarding 
discrepancies between HIS reporting requirements and billing 
requirements. We believe that the provider is referring to HIS 
reporting requirements that are established and communicated to the 
provider community via sub-regulatory channels. This would include 
policies and guidelines regarding defining an ``admission'' and 
``discharge'' for the purposes of HIS reporting, and reporting HIS data 
in the case of special circumstances, such as traveling patients. These 
policies and guidelines are released by CMS through sub-regulatory 
mechanisms, including the HIS Manual and HIS trainings. CMS would like 
to clarify that the process for updating sub-regulatory guidance is 
based on questions received through the Help Desk and feedback from the 
provider community received through other communication channels, such 
as ODFs and listening sessions. CMS takes these considerations into 
account when updating guidance in the HIS Manual, HIS trainings, and 
other documents such as FAQs and Fact Sheets.
    Comment: Two commenters requested that CMS consider changing or 
removing the completion timelines for HIS records. One commenter noted 
that completion deadlines add to hospices' administrative burden for 
HIS data collection and do not facilitate compliance with submission 
deadline requirements.
    Response: CMS appreciates commenters input on the value of the 
completion deadlines. Current sub-regulatory guidance produced by CMS 
(for example, HIS Manual, HIS trainings) state that the completion 
deadlines for HIS records are 14 days from the Event Date for HIS-
Admission records and 7 days from the Event Date for HIS-Discharge 
records. Based on commenter input, CMS would like to clarify that the 
completion deadlines continue to reflect CMS guidance only; these 
guidelines are not statutorily specified and are not designated through 
regulation. These guidelines are intended to offer clear direction to 
hospice agencies in regards to the timely submission of HIS-Admission 
and HIS-Discharge records. The completion deadlines define only the 
latest possible date on which a hospice should complete each HIS 
record. This

[[Page 47192]]

guidance is meant to better align HIS completion processes with 
clinical workflow processes however, hospices may develop alternative 
internal policies to complete HIS records. Although it is at the 
discretion of the hospice to develop internal policies for completing 
HIS records, CMS continues to recommend that providers complete and 
attempt to submit HIS records early, prior to the proposed submission 
deadline of 30 days. Completing and attempting to submit records early 
allows providers ample time to address any technical issues encountered 
in the QIES ASAP submission process, such as correcting fatal error 
messages. Completing and attempting to submit records early will ensure 
that providers are able to comply with the proposed 30 day submission 
deadline. HQRP guidance documents, including the CMS HQRP Web site, HIS 
Manual, HIS trainings, Frequently Asked Questions (FAQs), and Fact 
Sheets continue to offer the most up-to-date CMS guidance to assist 
providers in the successful completion and submission of HIS records. 
Availability of updated guidance will be communicated to providers 
through the usual HQRP communication channels.
    Final Action: After consideration of the comments, we are 
finalizing our proposal that hospices must submit all records within 30 
days of the Event Date as proposed.
e. Proposed HQRP Data Submission and Compliance Thresholds for the FY 
2018 Payment Determination and Subsequent Years
    In order to accurately analyze quality reporting data received by 
hospice providers, it is imperative we receive ongoing and timely 
submission of all HIS-Admission and HIS-Discharge records. To date, the 
timeliness criteria for submission of HIS-Admission and HIS-Discharge 
records has never been proposed and finalized through rulemaking 
process. We believe this matter should be addressed by defining a clear 
standard for timeliness and compliance at this time. In response to 
input from our stakeholders seeking additional specificity related to 
HQRP compliance affecting FY payment determinations and, due to the 
importance of ensuring the integrity of quality data submitted to CMS, 
we proposed to set specific HQRP thresholds for timeliness of 
submission of hospice quality data beginning with data affecting the FY 
2018 payment determination and subsequent years.
    Beginning with the FY 2018 payment determination and subsequent FY 
payment determinations, we proposed that all HIS records must be 
submitted within 30 days of the Event Date, which is the patient's 
admission date or discharge date. To coincide with this requirement, we 
proposed to establish an incremental threshold for compliance with this 
timeliness requirement; the proposed threshold would be implemented 
over a 3 year period. To be compliant with timeliness requirements, we 
proposed that hospices would have to submit no less than 70 percent of 
their total number of HIS-Admission and HIS-Discharge records by no 
later than 30 days from the Event Date for the FY 2018 APU 
determination. The timeliness threshold would be set at 80 percent for 
the FY 2019 APU determination and at 90 percent for the FY 2020 APU 
determination and subsequent years. The threshold corresponds with the 
overall amount of HIS records received from each provider that fall 
within the established 30 day submission timeframes. Our ultimate goal 
is to require all hospices to achieve a timeliness requirement 
compliance rate of 90 percent or more.
    To summarize, we proposed to implement the timeliness threshold 
requirement beginning with all HIS admission and discharge records that 
occur on or after January 1, 2016, in accordance with the following 
schedule.
     Beginning on or after January 1, 2016 to December 31, 
2016, hospices must submit at least 70 percent of all required HIS 
records within the 30 day submission timeframe for the year or be 
subject to a 2 percentage point reduction to their market basket update 
for FY 2018.
     Beginning on or after January 1, 2017 to December 31, 
2017, hospices must score at least 80 percent for all HIS records 
received within the 30 day submission timeframe for the year or be 
subject to a 2 percentage point reduction to their market basket update 
for FY 2019.
     Beginning on or after January 1, 2018 to December 31, 
2018, hospices must score at least 90 percent for all HIS records 
received within the 30 day submission timeframe for the year or be 
subject to a 2 percentage point reduction to their market basket update 
for FY 2020.
    We invited public comment on our proposal to implement the new data 
submission and compliance threshold requirement, as described 
previously, for the HQRP. Summaries of the public comments and our 
responses to comments are provided below:
    Comment: CMS received many comments regarding the proposed 
establishment of data submission and compliance thresholds for FY2018 
payment determinations and for subsequent years. All commenters but one 
were supportive of CMS's proposal. Commenters noted that the proposed 
thresholds seemed reasonable and achievable given current experience 
with HIS submission and agreed with the incremental nature of the 
threshold.
    Response: CMS appreciates commenters' support of our proposed 
compliance thresholds. As stated in the proposed rule, we agree that 
timely submission of data is necessary to accurately analyze quality 
data received by providers. CMS is pleased that commenters find the 
proposed thresholds feasible given their current experience. To support 
feasibility of achieving these proposed compliance thresholds, CMS's 
measure development contractor conducted some preliminary analysis of 
Quarter 3 and Quarter 4 HIS data from 2014. According to preliminary 
analysis, the vast majority of hospices (92 percent) would have met the 
compliance thresholds at 70 percent. Moreover, 88 percent and 78 
percent of hospices would have met the compliance thresholds at 80 
percent and 90 percent, respectively. CMS believes this analysis is 
further evidence that these proposed compliance thresholds are 
reasonable and achievable by hospice providers.
    Comment: One commenter recommended that CMS not implement the 
proposed timeliness criteria and data submission and compliance 
threshold until CMS develops appropriate reporting tools to allow 
hospice providers to determine their compliance statistics in CMS's 
system of records. This provider stated that, at the present time, CMS 
systems do now allow providers to monitor their performance with 
respect to timely submission of records. Another commenter supported 
CMS's proposal, but recommended a performance report be made available 
to hospices before the data submission and compliance thresholds are 
implemented.
    Response: CMS agrees with commenters that having a reporting system 
that allows providers to monitor the timeliness of HIS record 
submission is important. However, CMS would like to clarify that the 
current reports available to providers in the CASPER system do allow 
providers to track the number of HIS records that are submitted within 
the 30 day submission timeframe. Currently, submitting an HIS record 
past the 30 day submission timeframe results in a non-fatal (warning) 
error. In April 2015, CMS made available three (3) new Hospice Reports 
in CASPER, which include

[[Page 47193]]

reports that can list HIS Record Errors by Field by Provider and HIS 
records with a specific error number. CMS will consider expanding this 
functionality in the future to tailor reporting functions to the exact 
data submission and compliance thresholds.
    Comment: CMS received two comments related to the calculation of 
the compliance thresholds. One commenter appreciated that CMS is 
proposing an extension and exemptions process that would afford 
hospices an opportunity to request an extension or exemption from the 
30 day submission timeframe for extenuating circumstances. Another 
commenter requested that CMS clarify the definition of a ``successful'' 
submission in the case of modification and inactivation requests.
    Response: CMS appreciates commenters' requests for clarification. 
CMS would like to clarify the methodology that would be used for 
calculating the proposed 70 percent/80 percent/90 percent compliance 
thresholds. In general, CMS would include HIS records (HIS-Admission 
and HIS-Discharge) submitted for patient admissions and discharges 
occurring during the reporting period in the denominator of the 
compliance threshold calculation. The numerator of the compliance 
threshold calculation would include any records from the denominator 
that were submitted within the 30 day submission deadline. In response 
to commenters' concerns about extension and exemptions and modification 
and inactivation requests, CMS would like to clarify that the 
aforementioned methodology would be appropriately adjusted for cases 
where hospices were granted extensions/exemptions, and instances of 
modification/inactivation requests so that these instances did not 
``count against'' providers in the proposed compliance threshold 
calculation.
    Comment: Finally, CMS received one comment requesting CMS provide 
education about the proposed data submission and compliance thresholds.
    Response: CMS appreciates the commenters' request for education and 
outreach about new requirements. CMS would like to reiterate that 
rulemaking is the official process through which new requirements are 
proposed, finalized, and communicated to the provider community. In 
addition, as further details of the data submission and compliance 
threshold are determined by CMS, we anticipate communicating these 
details through the regular HQRP communication channels, including Open 
Door Forums, webinars, listening sessions, memos, email notification, 
and web postings.
    Final Action: After consideration of comments, and given the 
clarification above, CMS is finalizing our proposal to implement the 
new data submission and compliance thresholds for the FY 2018 payment 
determination and subsequent FY payment determinations.
7. HQRP Submission Exemption and Extension Requirements for the FY 2017 
Payment Determination and Subsequent Years
    In the FY 2015 Hospice Wage Index and Payment Rate Update final 
rule (79, FR 50488), we finalized our proposal to allow hospices to 
request and for CMS to grant exemptions/extensions with respect to the 
reporting of required quality data when there are extraordinary 
circumstances beyond the control of the provider. When an extension/
exemption is granted, a hospice will not incur payment reduction 
penalties for failure to comply with the requirements of the HQRP. For 
the FY 2016 payment determination and subsequent payment 
determinations, a hospice may request an extension/exemption of the 
requirement to submit quality data for a specified time period. In the 
event that a hospice requests an extension/exemption for quality 
reporting purposes, the hospice would submit a written request to CMS. 
In general, exemptions and extensions will not be granted for hospice 
vendor issues, fatal error messages preventing record submission, or 
staff error.
    In the event that a hospice seeks to request an exemptions or 
extension for quality reporting purposes, the hospice must request an 
exemption or extension within 30 days of the date that the 
extraordinary circumstances occurred by submitting the request to CMS 
via email to the HQRP mailbox at [email protected]. 
Exception or extension requests sent to CMS through any other channel 
would not be considered as a valid request for an exception or 
extension from the HQRP's reporting requirements for any payment 
determination. In order to be considered, a request for an exemption or 
extension must contain all of the finalized requirements as outlined on 
our Web site at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospiceQuality-Reporting/index.html.
    If a provider is granted an exemption or extension, timeframes for 
which an exemption or extension is granted will be applied to the new 
timeliness requirement so providers are not penalized. If a hospice is 
granted an exemption, we will not require that the hospice submit any 
quality data for a given period of time. If we grant an extension to a 
hospice, the hospice will still remain responsible for submitting 
quality data collected during the timeframe in question, although we 
will specify a revised deadline by which the hospice must submit this 
quality data.
    This process does not preclude us from granting extensions/
exemptions 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 may grant an extension/exemption 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/
exemption to hospices in a region or locale, we will communicate this 
decision through routine communication channels to hospices and 
vendors, including, but not limited to, Open Door Forums, ENews and 
notices on https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Hospice-Quality-Reporting/. We proposed to 
codify the HQRP Submission Exemption and Extension Requirements at 
Sec.  418.312.
    Summaries of public comments and our responses to comments on our 
proposal to codify the HQRP submission exemption and extension 
requirements are provided below:
    Comment: CMS received several comments related to our previously 
finalized policy for extensions and exemptions. A few commenters had 
concerns about the process for requesting an extension or exemption, 
especially in the case of a widespread natural disaster. These 
commenters requested that CMS be able to accept requests for extensions 
and exemptions via means other than email. These commenters noted that 
in instances of certain widespread natural disasters, such as Hurricane 
Sandy or Hurricane Katrina, providers would not have been able to email 
CMS within 30 days of the event date. Commenters requested that CMS 
accept mail and verbal extension or exemption requests from providers, 
or that CMS extend the submission timeframe for requesting extensions 
or exemptions from 30 days to 90 days.
    Response: CMS appreciates the commenters' concern about the process 
for requesting an extension or exemption in the circumstance of an 
extreme natural disaster. We refer readers to the extension and 
exemption policy that was finalized in the FY 2015 Hospice Wage Index 
and Payment Rate Update final rule. Additionally, we re-

[[Page 47194]]

iterate our policy that in case of an extraordinary circumstance, such 
as an act of natural disaster similar to Hurricanes Sandy and Katrina, 
CMS may grant extensions/exemptions to an entire region or locale 
without the need for providers to request an extension/exemption. As 
stated in our policy, if CMS makes a determination to grant an 
extension/exemption to an entire locale, we will communicate this 
decision through routine communication channels, such as through ODFs, 
email notification, and web postings.
    Comment: CMS received two other comments about our previously 
finalized policy for extensions and exemptions. These two commenters 
requested that CMS consider revision of the criteria for granting an 
extension or exemptions to hospices that experience technological 
problems. These commenters noted that in some rare circumstances, a 
hospice may have collected and attempted to submit HIS data, but HIS 
record submissions were unsuccessful. One of the commenters also noted 
situations where an entire hospice's EHR is nonfunctional for a time 
due to issues with the vendor's cloud.
    Response: CMS appreciates the commenters' concern about our policy 
for extensions and exemption in the case of technological difficulty. 
We refer readers to the extension and exemption policy that was 
finalized in the FY 2015 Hospice Wage Index and Payment Rate Update 
final rule. In addition, we would like to re-iterate the availability 
of other reporting and submission systems that are accessible to 
providers who may be experiencing technological difficulties. First, 
CMS would like to highlight the availability of final validation 
reports that are provided upon submission of records to the QIES ASAP 
system. These final validation reports indicate whether attempted HIS 
record submissions were successful. CMS highly recommends providers 
review the final validation report for all HIS submissions to ensure 
that attempted record submissions are successful. If providers are 
experiencing issues with record rejections and fatal errors, they can 
contact the appropriate Help Desk for assistance. Help Desk contact 
information can be found on the CMS HQRP Web site: http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Hospice-Quality-Reporting/Help-Desks.html. Second, CMS would like to re-iterate 
the availability of the HART software. The HART software is free 
software made available by CMS that all providers can use as an 
alternative to vendor-designed software to maintain facility, patient, 
and HIS record information for subsequent submission to QIES ASAP. All 
providers can download and use HART, and CMS recommends that all 
providers download HART so that the software is available to use as an 
alternative, should a provider experience issues with vendor-designed 
software. More information on HART can be found on the CMS HQRP Web 
site: http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Hospice-Quality-Reporting/HIS-Technical-Information.html. Finally, CMS re-iterates our policy to grant an 
extension/exemptions to hospices that have not requested them in the 
case of systemic problems with CMS data collection systems that 
directly affect the ability of hospices to submit data.
    Final Action: After consideration of comments, and given the 
clarification above, CMS is finalizing our proposal to codify the HQRP 
Submission Extension and Exemption Requirements at Sec.  418.312.
8. Hospice CAHPS Participation Requirements for the 2018 APU and 2019 
APU
    In the FY 2015 Hospice Wage Index and Payment Rate Update final 
rule (79 FR 50452), we stated that CMS would start national 
implementation of the CAHPS[supreg] Hospice Survey as of January 1, 
2015. We started national implementation of this survey as planned. The 
CAHPS[supreg] Hospice Survey is a component of CMS' Hospice 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 endorsement as hospice quality measures. We referred 
readers to our extensive discussion of the Hospice Experience of Care 
Survey in the Hospice Wage Index FY 2015 final rule for a description 
of the measurements involved and their relationship to the statutory 
requirement for hospice quality reporting (79 FR 50450 also refer to 78 
FR 48261).
a. Background and Description of the Survey
    The CAHPS[supreg] Hospice Survey is the first national hospice 
experience of care survey that includes standard survey administration 
protocols that 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 hospice patients and their 
informal caregivers (family or friends). 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 publicly 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. Survey-eligible patients 
and caregivers are 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 are 
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. A survey Web site is the primary information resource for 
hospices and vendors (www.hospicecahpssurvey.org). The CAHPS[supreg] 
Hospice Survey is currently available in English, Spanish, Traditional 
Chinese, and Simplified Chinese. CMS will provide additional

[[Page 47195]]

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: Patients who are under the age of 18 at the time of 
their death; patients who died fewer than 48 hours after last 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; decedents or caregivers 
of decedents who voluntarily requested 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). Patients 
whose last admission to hospice resulted in a live discharge will also 
be excluded. Identification of patients and caregivers for exclusion 
will be based on hospice administrative data. Additionally, caregivers 
under the age of 18 are excluded.
    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.
    We moved forward with a model of national survey implementation, 
which is similar to that of other CMS patient experience of care 
surveys. Medicare-certified hospices are required to contract with a 
third-party vendor that is CMS-trained and approved to administer the 
survey on their behalf. A list of approved vendors can be found at this 
Web site: www.hospicecahpssurvey.org. 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.
    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 2018 APU
    In section 3004(c) 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 
Hospice Quality Reporting Requirements for the FY 2018 APU and 
subsequent years.
    The CAHPS[supreg] Hospice Survey includes the measures detailed in 
Table 24. 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 27--Hospice Experience of Care Survey Quality Measures and
                            Constituent Items
------------------------------------------------------------------------
                           Composite measures
-------------------------------------------------------------------------
Hospice team communication
     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?
     While your family member was in hospice care, how often did
     the hospice team explain things in a way that was easy to
     understand?
     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 keep you informed about your family member's
     condition?
     While your family member was in hospice care, how often did
     the hospice team listen carefully to you?
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
     While your family member was in hospice care, how much
     emotional support did you get from the hospice team?
     In the weeks after your family member died, how much
     emotional support did you get from the hospice team?
Getting help for symptoms
     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 trouble breathing?
     How often did your family member get the help he or she
     needed for trouble with constipation?
     How often did your family member get the help he or she
     needed from the hospice team for feelings of anxiety or sadness?
Getting hospice care training
     Did the hospice team give you the training you needed about
     what side effects to watch for from pain medicine?
     Did the hospice team give you the training you needed about
     if and when to give more pain medicine to your family member?
     Did the hospice team give you the training you needed about
     how to help your family member if he or she had trouble breathing?
     Did the hospice team give you the training you needed about
     what to do if your family member became restless or agitated?
Single Item Measures
Providing support for religious and spiritual beliefs

[[Page 47196]]

 
     (Support for religious or spiritual beliefs includes
     talking, praying, quiet time, or other ways of meeting your
     religious or spiritual needs.) While your family member was in
     hospice care, how much support for your religious and spiritual
     beliefs did you get from the hospice team?
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?
Global Measures
Overall rating of hospice
     Using any number from 0 to 10, where 0 is the worst hospice
     care possible and 10 is the best hospice care possible, what number
     would you use to rate your family member's hospice care?
Recommend hospice
     Would you recommend this hospice to your friends and
     family?
------------------------------------------------------------------------

    To comply with CMS's quality reporting requirements for the FY 2018 
APU, hospices will be required to collect data using the 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). Ongoing monthly participation in the survey is 
required January 1, 2016 through December 31, 2016 for compliance with 
the FY 2018 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 25 below. Deadlines are the second Wednesday of the submission 
months, which are August, November, February, and May. 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 Hospice CAHPS Survey data in a timely manner.

Table 28--CAHPS[supreg] Hospice Survey Data Submission Dates FY2017 APU,
                       FY2018 APU, and FY2019 APU
------------------------------------------------------------------------
 Sample months (that is, month of   Quarterly data submission deadlines
            death) \1\                              \2\
------------------------------------------------------------------------
                               FY2017 APU
------------------------------------------------------------------------
Dry Run January-March 2015 (Q1)..  August 12, 2015.
April-June 2015 (Q2).............  November 11, 2015.\3\
July-September 2015 (Q3).........  February 10, 2016.
October-December 2015 (Q4).......  May 11, 2016.
------------------------------------------------------------------------
                               FY2018 APU
------------------------------------------------------------------------
January-March 2016 (Q1)..........  August 10, 2016.
April-June 2016 (Q2).............  November 9, 2016.
July-September 2016 (Q3).........  February 8, 2017.
October-December 2016 (Q4).......  May 10, 2017.
------------------------------------------------------------------------
                               FY2019 APU
------------------------------------------------------------------------
January-March 2017 (Q1)..........  August 9, 2017.
April-June 2017 (Q2).............  November 8, 2017.
July-September 2017 (Q3).........  February, 14, 2018.
October-December 2017 (Q4).......  May 9, 2018.
------------------------------------------------------------------------
\1\ Data collection for each sample month initiates two months following
  the month of patient death (for example, in April for deaths occurring
  in January).
\2\ Data submission deadlines are the second Wednesday of the submission
  month.
\3\ Correction Notice published 80 FR 24222.

    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. We propose to continue that exemption: 
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 2018 APU. To qualify for the survey exemption for 
the FY 2018 APU, 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, 2015 
through December 31, 2015. The

[[Page 47197]]

previously finalized due date for submitting the exemption request form 
for the FY 2018 APU is August 10, 2016 (79 FR 50493).
c. Participation Requirements To Meet Quality Reporting Requirements 
for the FY 2019 APU
    To meet participation requirements for the FY 2019 APU, we proposed 
that hospices collect data on an ongoing monthly basis from January 
2017 through December 2017 (inclusive). Data submission deadlines for 
the 2019 APU will be announced in future rulemaking.
    Hospices that have fewer than 50 survey-eligible decedents/
caregivers in the period from January 1, 2016 through December 31, 2016 
are exempt from CAHPS[supreg] Hospice Survey data collection and 
reporting requirements for the FY 2019 payment determination. To 
qualify, hospices must submit an exemption request form. This form will 
be available in first quarter 2017 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, 2016 through December 31, 2016. The 
due date for submitting the exemption request form for the FY 2018 APU 
is August 10, 2016 (Finalized 79 FR 50493).
d. 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 
that 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, we added 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 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.
     To meet the HQRP requirements for the FY 2019 payment 
determination, hospices would collect survey data on a monthly basis 
for the months of January 1, 2017 through December 31, 2017 to qualify 
for the full APU.
e. CAHPS[supreg] Hospice Survey Oversight Activities
    We proposed to continue 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 would 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.
    Comment: A commenter encouraged CMS to compare scores on claims 
data to Hospice CAHPS[supreg] data to verify whether any of these are 
correlated with caregiver perception of quality care.
    Response: CMS plans to do a variety of analyses after we have 
accumulated at least four quarters of Hospice CAHPS[supreg] data. We 
will consider conducting an analysis of the relationship of Hospice 
CAHPS[supreg] data to other types of scores.
    Comment: A commenter supports the proposal related to the Hospice 
CAHPS[supreg] Survey oversight activities.
    Response: CMS thanks the commenter for their support.
    Comment: One commenter expressed the belief that the hospice 
CAHPS[supreg] survey was a mandate that placed an unfunded burden on 
hospices. The commenter requested that CMS consider including an 
administrative reimbursement mechanism in the final rule to help cover 
these costs.
    Response: The Hospice CAHPS[supreg] survey follows the model that 
we implement for other quality reporting programs where CMS pays for 
the federal implementation of the program, the vendor training, 
monitoring, direct oversight with site visits, technical assistance to 
participating facilities, new facilities with signing up assistance, 
technical assistance to vendors, creation and maintenance of the 
official Web site with all survey materials, and the hospice facilities 
pay for vendor services. We have approved numerous Hospice 
CAHPS[supreg] vendors and we strongly recommend that hospices shop 
around and check out multiple vendors to find the vendor that best 
meets their needs and provides a good value to them.
    Comment: A commenter asks that CMS clarify the role of the hospice 
facility in meeting performance standards for the Annual Payment 
Update. The commenter asked if hospices are responsible for making sure 
that their vendors are submitting data in a timely manner.
    Response: In the FY 2015 Final Rule (79 FR 50493), CMS stated: 
``Hospice providers are responsible for making sure that their vendors 
are submitting data in a timely manner. CMS intends that hospice 
providers are responsible for making sure that their vendors submit 
their Hospice CAHPS[supreg] Survey data in a timely manner and in 
compliance with the Hospice CAHPS[supreg] data submission deadlines. 
The CAHPS[supreg] Data Warehouse will provide hospices with data 
submission reports on the next business day after the submission. 
Hospices will receive email from the Warehouse each time a new report 
is placed in their warehouse folders letting them know that reports are 
available. However, we encourage hospices to work closely with their 
vendors to ensure their data is submitted in a timely manner. Please 
note that the survey vendors are acting on behalf of the hospice 
providers. This is the same policy for other CAHPS[supreg] surveys such 
as Hospital CAHPS[supreg] and Home Health CAHPS[supreg].
    Comment: A commenter reminded CMS of how challenging it is to 
capture patient-reported data from our patient population, which 
includes patients who are incapacitated or near death. They also 
reminded CMS of the importance of selecting future measures that matter 
to patients and reflect whole person needs, including social, cultural, 
and emotional dimensions.
    Response: Currently CMS is not considering a patient experience of 
care survey where hospice patients are the respondents. CMS agrees that 
interviewing patients in the hospice setting is extraordinarily 
difficult, for both the interviewer and the patients. Some difficulties 
in surveying patients in this setting could include identifying those 
who are cognitively able to answer the survey questions and the 
patient's potential fear of retribution. It would therefore be more 
feasible to collect information from patients who are not close to 
death. A sample composed only of such patients is likely to reflect 
only a portion of the entire hospice experience. The CAHPS[supreg] 
Hospice Survey considers the patient and caregiver as a single unit of 
care. The

[[Page 47198]]

Survey interviews caregivers of patients who died while under hospice 
care. The interviews occur 2-3 months after the patient's death. This 
allows the caregiver to reflect upon and report upon the entire hospice 
experience.
    Final Action: After consideration of comments, CMS is finalizing 
our proposal as proposed.
9. HQRP Reconsideration and Appeals Procedures for the FY 2016 Payment 
Determination and Subsequent Years
    In the FY 2015 Hospice Wage Index and Payment Rate Update final 
rule (79 FR 50496), we notified hospice providers on how to seek 
reconsideration if they received a noncompliance decision for the FY 
2016 payment determination and subsequent years. 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 
period. Reporting compliance is determined by successfully fulfilling 
both the Hospice CAHPS[supreg] Survey requirements and the HIS data 
submission requirements.
    We clarified that any hospice that wishes to submit a 
reconsideration request must do so by submitting an email to CMS 
containing all of the requirements listed on the HQRP Web site at 
http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Hospice-Quality-Reporting/Reconsideration-Requests.html. 
Electronic email sent to [email protected] is the only 
form of submission that will be accepted. Any reconsideration requests 
received through any other channel including U.S. postal service or 
phone will not be considered as a valid reconsideration request. We 
codified this process at Sec.  418.312. In addition, we codified 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 and the associated regulations text at Sec.  418.312 and 
in Sec.  418.306 in section VI.
    In the past, only hospices found to be non-compliant with the 
reporting requirements set forth for a given payment determination 
received a notification of this finding along with instructions for 
requesting reconsideration in the form of a certified United States 
Postal Service (USPS) letter. In an effort to communicate as quickly, 
efficiently, and broadly as possible with hospices regarding annual 
compliance, we proposed additions to our communications method 
regarding annual notification of reporting compliance in the HQRP. In 
addition to sending a letter via regular USPS mail, beginning with the 
FY 2017 payment determination and for subsequent fiscal years, we 
proposed to use the QIES National System for Certification and Survey 
Provider Enhanced Reports (CASPER) Reporting as an additional mechanism 
to communicate to hospices regarding their compliance with the 
reporting requirements for the given reporting cycle. The electronic 
APU letters would be accessed using the CASPER Reporting Application. 
Requesting access to the CMS systems is performed in two steps. Details 
are provided on the QIES Technical Support Office Web site (direct 
link), https://www.qtso.com/hospice.html. Once successfully registered, 
access the CMS QIES to Success Welcome page https://web.qiesnet.org/qiestosuccess/index.html and select the ``CASPER Reporting'' link. 
Additional information about how to access the letters will be provided 
prior to the release of the letters.
    We proposed to disseminate communications regarding the 
availability of hospice compliance reports in CASPER files through 
routine channels to hospices and vendors, including, but not limited to 
issuing memos, emails, Medicare Learning Network (MLN) announcements, 
and notices on http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Hospice-Quality-Reporting/Reconsideration-Requests.html.
    We further proposed to publish a list of hospices who successfully 
meet the reporting requirements for the applicable payment 
determination on the HQRP Web site http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Hospice-Quality-Reporting.html. We proposed updating the list after reconsideration 
requests are processed on an annual basis.
    We invited comments on the proposals to add CASPER Reporting as an 
additional communication mechanism for the dissemination of compliance 
notifications and to publish a list of compliant hospices on the HQRP 
Web site. Public comments and our response to comments are summarized 
below.
    Comment: CMS received three comments regarding our proposal to add 
CASPER Reporting as an additional communication mechanism for 
dissemination of compliance notifications. All commenters were 
supportive of this proposal. One commenter noted that adding CASPER as 
a communication mechanism will facilitate timely reconsideration 
requests, when appropriate.
    Response: CMS appreciates commenters' support of our proposal to 
add CASPER reporting as an additional communication mechanism for 
disseminating notifications of compliance. CMS agrees that adding 
CASPER as an additional reporting mechanism would expedite 
communication with providers and facilitate the reconsideration process 
for providers who wish to request reconsideration.
    Comment: CMS also received three comments on our proposal to 
publish a list of compliant hospices on the HQRP Web site. All 
commenters were supportive of this proposal; however, one commenter did 
request clarification from CMS on what information would be posted on 
the list of compliant providers. This commenter was also concerned that 
CMS was proposing to update the list after reconsideration requests 
were processed on an annual basis.
    Response: CMS appreciates commenters' support of our proposal and 
commenters' requests for clarification. CMS anticipates that the 
proposed published list of compliant hospices on the HQRP Web site 
would include limited organizational data, such as the name and 
location of the hospice. With respect to the commenters' concern about 
updating the list of compliant hospices after the reconsideration 
period, CMS feels that finalizing the list of compliant providers for 
any given year is most appropriately done after the final determination 
of compliance is made. It is CMS's intent for the proposed published 
list of compliant hospices to be as complete and accurate as possible, 
giving recognition to all providers who were compliant with HQRP 
requirements for that year. Finalizing the list after requests for 
reconsideration are reviewed and a final determination of compliance is 
made allows for a more complete and accurate listing of compliant 
providers than developing any such list prior to reconsideration. 
Developing the list after the final determination of compliance has 
been made allows providers whose initial determination of noncompliance 
was reversed to be included in the list of compliant hospices for that 
year. Thus, CMS believes that finalizing the list of compliant hospices 
annually, after the reconsideration period will provide the

[[Page 47199]]

most accurate listing of hospices compliant with HQRP requirements.
    Final Action: After consideration of comments, we are finalizing 
our proposal to add CASPER as an additional communication mechanism for 
disseminating notifications of noncompliance, as well as our proposal 
to publish a list of compliant hospices on the HQRP Web site.
10. Public Display of Quality Measures and Other Hospice Data for the 
HQRP
    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. The procedures must ensure that a 
hospice would have the opportunity to review the data regarding the 
hospice's respective program before it is made public.
    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. Hospices have been 
required to use a standardized data collection approach (HIS) since 
July 1, 2014. Data from July 1, 2014 onward is currently being used to 
establish the scientific soundness of the quality measures prior to the 
onset of public reporting of the seven quality measures implemented in 
the HQRP. We believe it is critical to establish the reliability and 
validity of the quality measures prior to public reporting in order to 
demonstrate the ability of the quality measures to distinguish the 
quality of services provided. To establish reliability and validity of 
the quality measures, at least four quarters of data will be analyzed. 
Typically, the first one or two quarters of data reflect the learning 
curve of the facilities as they adopt standardized data collection 
procedures; these data often are not used to establish reliability and 
validity. We began data collection in CY 2014; the data from CY 2014 
for Quarter 3 (Q3) will not be used for assessing validity and 
reliability of the quality measures. We are analyzing data collected by 
hospices during Quarter 4 (Q4) CY 2014 and Q1-Q3 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 quality measure data prior to publicly 
reporting information about the quality of care provided by ``Medicare-
certified'' hospice agencies throughout the nation. CMS also plans to 
make available provider-level feedback reports in the CASPER system. 
These provider-level feedback reports or ``quality reports'' will be 
separate from public reporting and will be for provider viewing only, 
for the purposes of internal provider quality improvement. As is common 
in other quality reporting programs, quality reports would contain 
feedback on facility-level performance on quality metrics, as well as 
benchmarks and thresholds. For the CY 2014 Reporting Cycle, there were 
no quality reports available in CASPER; however, CMS anticipates that 
provider-level quality reports will begin to be available sometime in 
CY 2015. CMS anticipates that providers would use the quality reports 
as part of their Quality Assessment and Performance Improvement (QAPI) 
efforts.
    As part of our ongoing efforts to make healthcare more transparent, 
affordable, and accountable, the HQRP is prepared to post hospice data 
on a public data set, the Medicare Provider Utilization and Payment 
Data: Physician and Other Supplier Public Use File located at https://data.cms.hhs.gov. This site includes information on services and 
procedures provided to Medicare beneficiaries by physicians and other 
healthcare professionals and serves as a helpful resource to the 
healthcare community. A timeline for posting hospice data on a public 
data set has not been determined by CMS. Should a timeline become 
available prior to the next annual rulemaking cycle, details would be 
announced via regular HQRP communication channels, including listening 
sessions, memos, email notification, and Web postings.
    Furthermore, to meet the requirement for making such data public, 
we will develop a CMS Compare Web site for hospice, which will list 
hospice providers geographically. Consumers can search for all Medicare 
approved hospice providers that serve their city or zip code (which 
would include the quality measures and CAHPS[supreg] Hospice Survey 
results) and then find the agencies offering the types of services they 
need. Like other CMS Compare Web sites, the Hospice Compare Web site 
will feature a quality rating system that gives each hospice a rating 
of between one (1) and five (5) stars. Hospices will have 
prepublication access to their own agency's quality data, which enables 
each agency to know how it is performing before public posting of data 
on the Compare Web site. Decisions regarding how the rating system will 
determine a providers star rating and methods used for calculations, as 
well as a proposed timeline for implementation will be announced via 
regular HQRP communication channels, including listening sessions, 
memos, email notification, provider association calls, Open Door 
Forums, and Web postings. We will announce the timeline for public 
reporting of quality measure data in future rulemaking.
    Summaries of public comments and our responses to comments 
regarding the public display of quality measures and other hospice data 
for the HQRP are provided below:
    Comment: CMS received several comments that were generally 
supportive of public reporting of quality measure data. Commenters 
noted that they were in favor of CMS's continued efforts to assess 
quality and have transparent reporting of results. Commenters were also 
in favor of the availability of provider-level quality reports in 
CASPER, noting that the availability of such reports is a way for 
hospices to engage in benchmarking to inform their QAPI efforts. 
Commenters supported CMS's movement towards quality benchmarking and 
public reporting since it supports a hospice's ability to identify and 
resolve performance gaps while increasing transparency and 
accountability in the health care sector. While no commenters were 
unsupportive of public reporting or provider-level feedback reports in 
general, several commenters did have suggestions, recommendations, and 
concerns about specific aspects of public availability of data.
    Response: CMS appreciates commenters' support of public reporting 
of quality measure data and the availability of provider-level feedback 
reports in CASPER. We address commenters' specific concerns with 
respect to public reporting and provider-level quality reports below.
    Comment: CMS received a few comments about the timing for public 
reporting of quality data. One commenter noted that although continued 
measure development for new measures is important, measure development 
should not slow efforts to provide timely feedback to hospices on 
existing measures and public reporting of any existing measures. 
Another

[[Page 47200]]

commenter had concerns about the unintended consequences of releasing 
data too hastily. This commenter suggested that public reporting of 
hospice performance data occur gradually and carefully to ensure the 
data is accurate and presented in a format that is meaningful and 
actionable for both patients and physicians. The commenter appreciated 
CMS's efforts to evaluate at least four quarters of data to establish 
reliability and validity of the quality measures prior to public 
reporting. However, the commenter noted their opinion that four 
quarters worth of data is an insufficient foundation on which to draw 
conclusions about the accuracy of these measures, especially given the 
newness of these reporting requirements. Another commenter supported 
CMS's plan to analyze four (4) quarters worth of data to establish 
reliability and validity of quality measures and ensure accuracy of 
data before public reporting begins.
    Response: CMS appreciates commenters' concerns about the timeline 
for public reporting of quality data. CMS agrees with the one 
commenter's sentiment that, while important, development of quality 
measures for future use in the HQRP should not delay public reporting 
or provider-level feedback reports. CMS is committed to ensuring the 
availability of public and provider-level data as soon as feasible, 
while ensuring that data is analyzed for scientific soundness and 
appropriateness for public reporting. CMS understands the unintended 
consequences of making data available to the public before 
comprehensive analyses have been conducted. CMS assures commenters that 
establishing the scientific soundness of data is of the utmost 
importance. In response to the commenter's concern about whether four 
(4) quarters of data is sufficient to establish reliability and 
validity of quality measures, we agree with the commenter that having 
sufficient evidence to support the reliability and validity of the 
measures is important prior to public reporting. We also agree that the 
data collected during the initial phase of the required reporting may 
reflect hospices' learning curve. To take this into account, as stated 
in the proposed rule, the reliability and validity testing will not use 
the data collected during the first reporting quarter (Q3, 2014). As 
stated in the proposed rule, CMS will use the four subsequent quarters 
of data (Q4 2014 and Q1-Q3 2015) for testing. Only measures that show 
sufficient reliability and validity will be identified as appropriate 
for public reporting. Furthermore, reliability and validity testing 
will be ongoing for all measures implemented in the HQRP as more 
quarters of data become available.
    Comment: Another commenter recommended that CMS delay public 
reporting until results from measures derived from the HIS and the 
CAHPS[supreg] hospice survey is available. This commenter felt that 
although the concept of hospice has fairly wide public recognition, 
knowledge about hospice practice is minimal among the public. The 
commenter noted that the public may not be familiar with the processes 
behind the measures derived from HIS data, nor might the public be able 
to understand the relationship of those processes to quality of care. 
Additionally, the commenter noted that the HIS measures are limited in 
scope and, presented alone, HIS data might fall short of presenting a 
comprehensive picture of hospice services. The commenter recommended 
that CMS delay public posting of data until analysis of HIS and 
CAHPS[supreg] data has been completed.
    Response: CMS appreciates the commenter's feedback on public 
reporting of HIS and CAHPS[supreg] data. CMS plans to use an approach 
for public reporting of these two data sources that mirrors approaches 
used in public reporting of quality data in other quality reporting 
programs, such as what is currently publicly displayed on Nursing Home 
Compare, Physician Compare, the Medicare Advantage Plan Finder, 
Dialysis Facility Compare, and Home Health Compare.
    Comment: Two commenters suggested that CMS take steps to understand 
and develop the form, manner, and context in which data would be 
presented to the public. One commenter urged CMS that prior to sharing 
these data with the public, CMS should take time to carefully analyze 
quality data to better understand what types, and formats of data are 
most valuable to patients and providers. Another commenter requested 
that CMS develop educational material that explains hospice practice to 
aid in interpretation of publicly reported data.
    Response: CMS agrees that any publicly reported data should be 
presented in a manner that is meaningful and understandable by the 
general public. CMS will take steps to ensure that any publicly 
reported data is displayed in an appropriate and meaningful manner. CMS 
will again mirror approaches used in other quality reporting programs 
and will solicit input from key stakeholders and technical experts in 
the development of the presentation of publicly available data, which 
includes a transparent process that will contain multiple opportunities 
for stakeholder input.
    Comment: One commenter requested clarification from CMS about the 
process for providers to review quality measure data prior to public 
reporting, specifically, what the purpose of this process was.
    Response: As stated in the proposed rule, CMS will develop the 
infrastructure for public reporting and method for hospices to preview 
their quality data prior to publicly reporting any such information. 
Exact details and reports will be forthcoming in future rules.
    Comment: CMS received several comments regarding the availability 
of provider-level quality reports in CASPER. As noted above, commenters 
were supportive of the availability of these reports, though a few 
commenters did have suggestions for CMS regarding quality reports. CMS 
received three comments about the timing of quality reports in CASPER. 
One commenter stated that CMS did not plan to make quality reports 
available in CASPER until 2020 or later. Another commenter requested 
that CMS provide non-public quarterly performance reports to hospices 
that include benchmarking data for at least one year before publishing 
the results publicly on a compare Web site. The commenter stated that 
this one year period would give hospices the chance to make 
improvements in their performance before data is publicly reported. 
Another commenter urged CMS to provide feedback reports as frequently 
as possible and on a timely basis so that hospices have sufficient 
opportunity to learn from the data and make adjustments to practice 
before incurring penalties. This commenter also encouraged CMS to 
ensure that the data in these reports is presented in a user-friendly 
and actionable format.
    Response: CMS thanks commenters for their feedback on the 
availability of provider-level quality reports in CASPER. First, we 
would like to clarify our timeline for the availability of quality 
reports. CMS agrees that providing feedback to hospice providers as 
soon as is feasible is a critical step in the process of quality 
improvement, since providers need data about their performance to 
inform QAPI and other performance improvement efforts. As stated in the 
proposed rule, CMS anticipates that quality reports will be available 
sometime in calendar year 2015; thus, we respectfully correct the 
commenter's misunderstanding that

[[Page 47201]]

provider-level quality reports would not be available until 2020. Given 
our anticipated timeline for the release of provider-level quality 
reports in 2015 and our timeline for public reporting, which we have 
stated in prior rules may occur in 2017, hospice providers would have 
all of 2016 to review their quality reports in CASPER and continue to 
develop performance improvement projects to improve quality measure 
scores prior to public reporting. We would also like to clarify that 
the intent of the provider-level feedback reports in CASPER would 
provide hospices with the ``benchmarking'' data mentioned by one 
commenter since, as stated in the proposed rule, the purpose of quality 
reports is to provide feedback on facility-level performance on quality 
metrics, including benchmarks and thresholds. CMS appreciates the 
commenter's request to make quality reports available quarterly; CMS 
will take this suggested quarterly timeframe under consideration as we 
consider how often quality data should be ``refreshed'' in CASPER 
quality reports. Finally, CMS agrees with the commenter that quality 
reports should provide user-friendly, actionable information. CMS will 
ensure that provider-level quality reports are meaningful and provide 
actionable information for providers to improve their care.
    Comment: Though commenters were generally supportive of public 
reporting of quality data, several commenters expressed concerns over 
the methodology for the 5-star rating that CMS proposes to use as part 
of the Hospice Compare Web site. Two commenters were concerned about 
the development of a 5-star methodology where the majority of providers 
would be placed in the ``average'' star range. These commenters were 
concerned about the consumer perception of an ``average'' rating and 
encouraged CMS to develop a 5-star rating system that allows all 
hospices to aim for and achieve a 5-star rating. Commenters also 
encouraged CMS to involve providers and stakeholders in the development 
of the methodology for the 5-star rating system. Commenters also 
encouraged CMS to ensure any 5-star methodology is based on accurate 
data and evidence-based methodologies, and to allow ample opportunity 
for feedback on any proposed methodology. Commenters encouraged CMS to 
carefully consider the structure and presentation of a the 5-star 
rating system, including a consumer-friendly explanation of quality 
measures so that the public can easily interpret the data and use it 
for meaningful health care decision-making. Finally, one commenter 
cautioned CMS to ensure the accuracy of information, including basic 
demographic data such as addresses and practice affiliations, in any 
Compare databases prior to their launch.
    Response: CMS appreciates commenters' input on the development of a 
Hospice Compare Web site and 5-star rating system for hospices. CMS 
would like to assure commenters that it is of paramount concern to 
develop a 5-star methodology that is tested and evidence-based, and can 
meaningfully distinguish between quality of care offered by providers. 
CMS agrees that presenting any 5-star rating in a manner that is 
meaningful and consumer-friendly is important, and CMS will ensure that 
publicly available data is displayed in a manner that is useful to the 
public. As with the development of 5-star methodology in other quality 
reporting programs, CMS will allow continued opportunities for the 
provider community and other stakeholders to comment on and provide 
input to the proposed rating system. In addition to regular HQRP 
communication channels, CMS will solicit input from the public 
regarding 5-star methodology through special listening sessions, 
invitation to submit comments via a Help Desk mailbox, Open Door 
Forums, and other opportunities.

F. Clarification Regarding Diagnosis Reporting on Hospice Claims

    To ensure hospices are aware of the issues and requirements when 
providing compassionate end-of-life care to Medicare beneficiaries, we 
provided extensive background regarding program vulnerabilities; 
hospice eligibility requirements; and the hospice assessment of 
conditions and comorbidities required by regulation in the proposed 
rule (80 FR 25877--25880). The International Classification of 
Diseases, Tenth Revision, Clinical Modification (ICD-10-CM) Coding 
Guidelines state the following regarding the selection of the principal 
diagnosis: The principal diagnosis is defined in the Uniform Hospital 
Discharge Data Set (UHDDS) as that condition established after study to 
be chiefly responsible for occasioning the admission of the patient to 
the hospital for care. In the case of selection of a principal 
diagnosis for hospice care, this would mean the diagnosis most 
contributory to the terminal prognosis of the individual. In the 
instance where two or more diagnoses equally meet the criteria for 
principal diagnosis, ICD-10-CM coding guidelines do not provide 
sequencing direction, and thus, any one of the diagnoses may be 
sequenced first, meaning to report all of those diagnoses meeting the 
criteria as a principal diagnosis. Per ICD-10-CM Coding Guidelines, for 
diagnosis reporting purposes, the definition for ``other diagnoses'' is 
interpreted as additional conditions that affect patient care in terms 
of requiring:
     clinical evaluation; or
     therapeutic treatment; or
     diagnostic procedures; or
     extended length of hospital stay; or
     increased nursing care and/or monitoring.
    The UHDDS item #11-b defines Other Diagnoses as all conditions that 
coexist at the time of admission, that develop subsequently, or that 
affect the treatment received and/or the length of stay. ICD-10-CM 
coding guidelines are clear that all diagnoses affecting the management 
and treatment of the individual within the healthcare setting are 
requirement to be reported. This has been longstanding existing policy. 
Adherence to coding guidelines when assigning ICD-9-CM diagnosis and 
procedure codes through September 30, 2015 or ICD-10-CM diagnosis and 
procedure codes on and after October 1, 2015 is required under HHS 
regulations at 45 CFR 162.1002(b) and (c), respectively, as well as our 
regulations at 45 CFR 162.1002.
    However, though established coding guidelines are required, it does 
not appear that all hospices are coding per coding guidelines on 
hospice claims. In 2010, over 77 percent of hospice claims reported 
only one diagnosis. Previous rules have discussed requirements for 
hospice diagnosis reporting on claims and the importance of complete 
and accurate coding. Preliminary analysis of FY 2014 claims data 
demonstrates that hospice diagnosis coding is improving; however, 
challenges remain. Analysis of FY 2014 claims data indicates that 49 
percent of hospice claims listed only one diagnosis.\52\ We conducted 
additional analysis on instances where only one diagnosis was reported 
on the FY 2014 hospice claim and found that 50 percent of these 
beneficiaries had, on average, eight or more chronic conditions and 75 
percent had, on average, five or more chronic conditions.\53\ These 
chronic, comorbid conditions include: hypertension, anemia, congestive 
heart failure, chronic obstructive pulmonary disease, ischemic heart 
disease, depression,

[[Page 47202]]

diabetes and atrial fibrillation, to name a few.
---------------------------------------------------------------------------

    \52\ Preliminary FY 2014 hospice claims data from the Chronic 
Conditions Data Warehouse (CCW), accessed on January 13, 2015.
    \53\ Preliminary FY 2014 hospice claims data from the Chronic 
Conditions Data Warehouse (CCW), accessed on January 21, 2015.
---------------------------------------------------------------------------

    In the Medicare Program; Hospice Wage Index for Fiscal Year 2013 
Notice (77 FR 44248) we stated that hospices 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, even though 
coding guidelines required the reporting of all diagnoses that affect 
patient assessment and planning. However, as discussed earlier in this 
section, there is widely varying interpretation as to what factors 
influence the terminal prognosis of the individual (that is, what 
conditions render the individual terminally ill and which conditions 
are related). Furthermore, based on the numerous comments received in 
previous rulemaking, and anecdotal reports from hospices, hospice 
beneficiaries, and non-hospice providers discussed above, we are 
concerned that hospices may not be conducting a comprehensive 
assessment nor updating the plan of care as articulated by the CoPs to 
recognize the conditions that affect an individual's terminal 
prognosis.
    Therefore, we are clarifying that hospices will report all 
diagnoses identified in the initial and comprehensive assessments on 
hospice claims, whether related or unrelated to the terminal prognosis 
of the individual effective October 1, 2015. This is in keeping with 
the requirements of determining whether an individual is terminally 
ill. This will also include the reporting of any mental health 
disorders and conditions that would affect the plan of care as hospices 
are to assess and provide care for identified psychosocial and 
emotional needs, as well as, for the physical and spiritual needs. Our 
regulations at Sec.  418.25(b) state, ``in reaching a decision to 
certify that the patient is terminally ill, the hospice medical 
director must consider at least the following information:
     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.
    ICD-10-CM Coding Guidelines state that diagnoses should be reported 
that develop subsequently, coexist, or affect the treatment of the 
individual. Furthermore, having these diagnoses reported on claims 
falls under the authority of the Affordable Care Act for the collection 
of data to inform hospice payment reform. Section 3132 a(1)(C) of the 
Affordable Care Act states that the Secretary may collect the 
additional data and information on cost reports, claims, or other 
mechanisms as the Secretary determines to be appropriate.
    We did not propose any new regulations nor solicit comments with 
this coding clarification as these clarifications are based on existing 
ICD-9-CM and ICD-10-CM coding guidelines, but received several 
comments.
    Most commenters asked whether hospices would have to identify 
diagnoses as related or unrelated on hospice claims and if there would 
be a modifier created for that identification. Some commenters stated 
it would be burdensome to identify and report all diagnoses, while 
others expressed concern that this would mean that hospices would be 
financially responsible for all reported diagnoses. Some commenters 
asked what the purpose is for collecting this information and felt that 
there is no value added by collecting all diagnoses. Several commenters 
stated that CMS should provide further clarification as to the scope of 
diagnoses hospices are expected to cover and more clear criteria as to 
what are unrelated conditions. One industry commenter felt that CMS 
should define ``terminal illness'' and ``related conditions'' to 
provide more clear criteria for the expectation as to what hospices are 
required to cover. One commenter stated the CMS has changed its 
interpretation of the hospice regulations and that this is a 
requirement without a purpose. Several commenters felt that the phrase 
``virtually all'' is a very ambiguous standard and CMS should provide 
greater clarity as to its meaning. And, as in previous years' rules, 
some commenters provided specific clinical scenarios as to why a 
condition was related or unrelated.
    We appreciate the varying interpretations of what hospices' view as 
holistic and comprehensive end of life care. However, as articulated in 
section II of this rule, since the implementation of the Medicare 
hospice benefit in 1983, we have stated that it is our general view 
that hospices are required to provide virtually all the care that is 
needed by terminally ill individuals and we would expect to see little 
being provided outside of the benefit. Admission to hospice must be 
based on the recommendation of the medical director in consultation 
with, or with input from, the patient's attending physician (if any). 
Therefore, we expect that the hospice medical director follow the 
requirements articulated at 42 CFR 418.25. In a separate section at 42 
CFR 418.54(c), hospice's are expected to uphold the responsibilities 
articulated in regulations regarding the requirements of the initial 
and comprehensive assessments which becomes part of the patient's 
hospice medical record and should not require an extensive historical 
review of previous healthcare records. Modifiers for the hospice claim 
form are not necessary at this time to identify related or unrelated 
conditions.
    The American Health Information Management Association (AHIMA) 
provides procedure instructions for diagnosis reporting using coding 
guidance for coding certification.\54\ These coding procedures are used 
for determining which diagnoses to report for those in the inpatient 
setting. Hospices follow coding guidelines for the inpatient setting. 
The guidelines state to sequence those diagnoses that are listed in the 
medical record with the principal diagnosis listed first. Additionally, 
these guidelines state to code other diagnoses that coexist at the time 
of admission, that develop subsequently, or that affect the treatment 
received and/or the length of stay. These represent additional 
conditions that affect patient care in terms of requiring clinical 
evaluation, therapeutic treatment, diagnostic procedures, extended 
length of hospital stay, or increased nursing care and/or monitoring. 
These additional diagnoses include those that require active 
intervention during hospitalization and those that require active 
management of chronic disease during hospitalization, which is defined 
as a patient who is continued on chronic management at time of 
hospitalization. These coding guidelines instruct to code diagnoses of 
chronic systemic or generalized conditions that are not under active 
management when a physician documents them in the record and that may 
have a bearing on the management of the patient. Specifically, all 
diagnoses affecting the plan of care for the individual, which is in 
line with the hospice coverage requirements which state that hospices 
are to provide services for the palliation and management of the 
terminal illness and related conditions, are to be reported on the 
hospice claim.
---------------------------------------------------------------------------

    \54\ http://www.ahima.org/~/media/AHIMA/Files/Certification/
CCS%20Coding%20Instructions.ashx?la=en.
---------------------------------------------------------------------------

    The purpose of collecting this data, which is required in every 
other healthcare setting as per coding guidelines, is to have adequate 
data on hospice patient characteristics. This data will help to inform 
thoughtful,

[[Page 47203]]

appropriate, and clinically relevant policy for future rulemaking. In 
order to consider any future refinements, such as a case mix system 
which utilizes diagnosis information as a few commenters suggested, it 
is imperative that detailed patient characteristics are available to 
determine whether a case mix payment system could be achieved. One 
industry association felt that we should consider a risk-adjusted 
payment system based on patient characteristics including 
comorbidities, which would also require more detailed information 
regarding the patient.

IV. Collection of Information Requirements

    This document does not impose additional information collection 
requirements, that is, reporting, recordkeeping or third-party 
disclosure requirements. All information collection discussed in this 
final rule have been approved by the Office of Management and Budget. 
Consequently, there is no need for review by the Office of Management 
and Budget under the authority of the Paperwork Reduction Act of 1995.

V. Regulatory Impact Analysis

A. Statement of Need

    This final rule meets the requirements of our regulations at Sec.  
418.306(c), which requires annual issuance, in the Federal Register, of 
the hospice wage index based on the most current available CMS hospital 
wage data, including any changes to the definitions of CBSAs, or 
previously used MSAs. This final rule will also update payment rates 
for each of the categories of hospice care described in Sec.  
418.302(b) for FY 2016 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. In accordance with 
section 1814(i)(6)(D) of the Act, this final rule will provide an 
update on hospice payment reform research and analyses and implement an 
SIA payment in accordance with the requirement to revise the 
methodology for determining hospice payments in a budget-neutral 
manner. 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 final 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. This final 
rule was also reviewed by OMB.

C. Overall Impact

    The overall impact of this final rule is an estimated net increase 
in Federal Medicare payments to hospices of $160 million, or 1.1 
percent, for FY 2016. The $160 million increase in estimated payments 
for FY 2016 reflects the distributional effects of the 1.6 percent FY 
2016 hospice payment update percentage ($250 million increase), the use 
of updated wage index data and the phase-out of the wage index budget 
neutrality adjustment factor (-0.7 percent/$120 million decrease) and 
the implementation of the new OMB CBSA delineations for the FY 2016 
hospice wage index with a 1-year transition (0.2 percent/$30 million 
increase). The elimination of the wage index budget neutrality 
adjustment factor (BNAF) was part of a 7-year phase-out that was 
finalized in the FY 2010 Hospice Wage Index final rule (74 FR 39384), 
and is not a policy change. The RHC rates and the SIA payment, outlined 
in section III.B, will be implemented in a budget neutral manner in the 
first year of implementation, as required per section 1814(i)(6)(D)(ii) 
of the Act. In section III.B, we are also finalizing our proposal make 
the SIA payments budget neutral annually. The RHC rate budget 
neutrality factors and the SBNF used to reduce the overall RHC rate are 
outlined in section III.C.3. Therefore, the RHC rates and the SIA 
payment will not result in an overall payment impact for the Medicare 
program or hospices.

D. Detailed Economic Analysis

    Table H1, Column 3 shows the combined effects of the use of updated 
wage data (the FY 2015 pre-floor, pre-reclassified hospital wage index) 
and the phase-out of the BNAF (for a total BNAF reduction of 100 
percent), resulting in an estimated decrease in FY 2016 payments of 0.7 
percent ($-120 million). Column 4 of Table 29, shows the effects of the 
50/50 blend of the FY 2016 hospice wage index values (based on the use 
of FY 2015 pre-floor, pre-reclassified hospital wage index data) under 
the old and the new CBSA delineations, resulting in an estimated 
increase in FY 2016 payments of 0.2 percent ($30 million). Column 5 
displays the estimated effects of the RHC rates, resulting in no 
overall change in FY 2016 payments for hospices as this will be 
implemented in a budget neutral manner. Column 6 shows the estimated 
effects of the SIA payment, resulting in no change in FY 2016 payments 
for hospices as this will be implemented in a budget neutral manner 
through a reduction to the overall RHC rate for FY 2016. Column 7 shows 
the effects of the FY 2016 hospice payment update percentage. The 1.6 
percent hospice payment update percentage is based on a 2.4 percent 
inpatient hospital market basket update for FY 2016 reduced by a 0.5 
percentage point productivity adjustment and by 0.3 percentage point

[[Page 47204]]

as mandated by the Affordable Care Act. The estimated effects of the 
1.6 percent hospice payment update percentage will result in an 
increase in payments to hospices of approximately $250 million. Taking 
into account the 1.6 percent hospice payment update percentage ($250 
million increase), the use of updated wage data and the phase-out of 
the BNAF (-$120 million), and the adoption of the new OMB CBSA 
delineations with a 1-year transition for the FY 2016 hospice wage 
index ($30 million), Column 8 shows that hospice payments are estimated 
to increase by $160 million ($250 million-$120 million + $30 million = 
$160 million), or 1.1 percent, in FY 2016. For the purposes of our 
impact analysis, we use the utilization observed in the most complete 
hospice claims data available at the time of rulemaking (FY 2014 
hospice claims submitted as of March 31, 2015). Presenting these data 
gives the hospice industry a more complete picture of the effects on 
their total revenue based on the use of updated hospital wage index 
data and the BNAF phase-out, the adoption of the new OMB CBSA 
delineations with a 1-year transition, the SIA payment, and the FY 2016 
hospice payment update percentage as discussed in this final rule. 
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. As 
illustrated in Table 29, the combined effects of all of the changes 
vary by specific types of providers and by location. We note that some 
individual hospices within the same group may experience different 
impacts on payments than others due to: the distributional impact of 
the FY 2016 wage index and phase-out of the BNAF; the extent to which 
hospices had varying volume in the number of RHC days in days 1-60 of 
the hospice episode versus days 61 and beyond; the number, length and 
type (discipline) of visits provided to patients during the last 7 days 
of life; and the degree of Medicare utilization.

                                  Table 29--Estimated Hospice Impacts by Facility Type and Area of the Country, FY 2016
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                          50/50 Blend of
                                                            Updated FY     FY 2016 wage    Routine home                       FY 2016
                                                             2016 wage     index values     care rates      FY 2016 SIA       Hospice      Total FY 2016
                                             Providers    index data and   under old and   (days 1 thru     payment  (%       payment      policies  (%
                                                           phase-out of      new CBSA       60 and days       change)         update          change)
                                                             BNAF  (%      delineations        61+)                        percentage (%
                                                              change)       (% change)                                        change)
--------------------------------------------------------------------------------------------------------------------------------------------------------
(1)                                                  (2)             (3)             (4)             (5)             (6)             (7)             (8)
--------------------------------------------------------------------------------------------------------------------------------------------------------
All Hospices............................           4,067            -0.7             0.2             0.0             0.0             1.6             1.1
Urban Hospices..........................           3,060            -0.7             0.3             0.0             0.0             1.6             1.2
Rural Hospices..........................           1,007            -0.3            -0.2             0.3             0.0             1.6             1.4
Urban Hospices--New England.............             140             0.0             0.1             0.9             0.0             1.6             2.6
Urban Hospices--Middle Atlantic.........             253            -0.7            -0.2             0.6             0.0             1.6             1.3
Urban Hospices--South Atlantic..........             416            -1.1             0.3            -0.5            -0.1             1.6             0.2
Urban Hospices--East North Central......             392            -0.8             0.7            -0.2             0.1             1.6             1.4
Urban Hospices--East South Central......             166            -0.7             0.5            -0.2             0.0             1.6             1.2
Urban Hospices--West North Central......             222            -0.7             0.6             0.6             0.2             1.6             2.3
Urban Hospices--West South Central......             602            -1.1             0.6            -0.9            -0.1             1.6             0.1
Urban Hospices--Mountain................             305            -0.6             0.2            -0.2            -0.1             1.6             0.9
Urban Hospices--Pacific.................             527            -0.1             0.0             0.8             0.0             1.6             2.3
Urban Hospices--Outlying................              37             0.0             0.3            -0.7            -0.3             1.6             0.9
Rural Hospices--New England.............              24            -0.3             0.0             2.4             0.2             1.6             3.9
Rural Hospices--Middle Atlantic.........              42             0.3            -0.1             1.3             0.4             1.6             3.5
Rural Hospices--South Atlantic..........             142            -0.6             0.0            -0.1            -0.1             1.6             0.8
Rural Hospices--East North Central......             137            -0.7            -0.4             0.6             0.2             1.6             1.3
Rural Hospices--East South Central......             137            -0.1            -0.1            -0.6            -0.2             1.6             0.6
Rural Hospices--West North Central......             186            -0.3            -0.1             1.7             0.2             1.6             3.1
Rural Hospices--West South Central......             185            -0.1            -0.1            -0.6            -0.1             1.6             0.7
Rural Hospices--Mountain................             104            -1.4            -0.6             0.3             0.0             1.6            -0.1
Rural Hospices--Pacific.................              47             2.1             0.1             2.5             0.1             1.6             6.4

[[Page 47205]]

 
Rural Hospices--Outlying................               3            -0.8            -0.2             1.4            -0.2             1.6             1.8
0-3,499 RHC Days (Small)................             886            -0.5             0.1             2.6             0.0             1.6             3.8
3,500-19,999 RHC Days (Medium)..........           1,923            -0.6             0.2             0.5             0.0             1.6             1.7
20,000+ RHC Days (Large)................           1,258            -0.7             0.3            -0.1             0.0             1.6             1.1
Non-Profit Ownership....................           1,073            -0.6             0.2             1.0             0.1             1.6             2.3
For Profit Ownership....................           2,449            -0.7             0.3            -0.7            -0.1             1.6             0.4
Govt/Other Ownership....................             545            -0.6             0.2             0.5             0.1             1.6             1.8
Freestanding Facility Type..............           3,070            -0.7             0.2            -0.2             0.0             1.6             0.9
HHA/Facility-Based Facility Type........             997            -0.4             0.2             1.4             0.1             1.6             2.9
Rate of RHC NF/SNF Days is in Lowest               1,016            -0.5             0.1             0.5            -0.1             1.6             1.6
 Quartile (Less than or equal to 3.1)...
Rate of RHC NF/SNF Days is in 2nd                  1,017            -0.6             0.1             0.3             0.0             1.6             1.4
 Quartile (Greater than 3.1 and Less
 than or equal to 16.7).................
Rate of RHC NF/SNF Days is in 3rd                  1,017            -0.8             0.3             0.0             0.0             1.6             1.1
 Quartile (Greater than 16.7 and less
 than or equal to 35.5).................
Rate of RHC NF/SNF Days is in Highest              1,017            -0.7             0.4            -0.4             0.0             1.6             0.9
 Quartile (Greater than 35.5)...........
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: FY 2014 hospice claims data from the Standard Analytic Files for CY 2013 (as of June 30, 2014) and CY 2014 (as of March 31, 2015).
Note(s): The 1.6 percent hospice payment update percentage for FY 2016 is based on an estimated 2.4 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

1E. Accounting Statement and Table

    As required by OMB Circular A-4 (available at http://www.whitehouse.gov/omb/circulars/a004/a-4.pdf), in Table 30 below, we 
have prepared an accounting statement showing the classification of the 
expenditures associated with this final rule. Table H2 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 
4,067 hospices in our impact analysis file constructed using FY 2014 
claims as of March 31, 2015.

[[Page 47206]]



 Table 30--Accounting Statement: Classification of Estimated Transfers,
                         From FY 2015 to FY 2016
                             [In $millions]
------------------------------------------------------------------------
                Category                            Transfers
------------------------------------------------------------------------
           FY 2015 Hospice Wage Index and Payment Rate Update
------------------------------------------------------------------------
Annualized Monetized Transfers.........  $160.
From Whom to Whom?.....................  Federal Government to Hospices.
------------------------------------------------------------------------

F. Conclusion

    In conclusion, the overall effect of this final rule is an 
estimated $160 million increase in Medicare payments to hospices. The 
$160 million increase in estimated payments for FY 2016 reflects the 
distributional effects of the 1.6 percent FY 2016 hospice payment 
update percentage ($250 million increase), the use of updated wage 
index data and the phase-out of the wage index budget neutrality 
adjustment factor (-0.7 percent/$120 million decrease) and the 
implementation of the new OMB CBSA delineations for FY 2016 hospice 
wage index with a 1-year transition (0.2 percent/$30 million increase). 
The SIA payment does not result in aggregate changes to estimate 
hospice payments for FY 2016 as this will be implemented in a budget 
neutral manner through an overall reduction to the RHC payment rate for 
all hospices.
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. 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 $7.5 million to 
$38.5 million in any 1 year), or being nonprofit organizations. For 
purposes of the RFA, we consider all hospices as small entities as that 
term is used in the RFA. 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 and the BNAF 
phase-out (-0.7 percent decrease or -$120 million) the implementation 
of the new OMB CBSA delineations for FY 2016 hospice wage index with a 
1-year transition (0.2 percent increase or $30 million), the SIA 
payment (no estimated aggregate impact on payments), and the FY 2016 
hospice payment update percentage (1.6 percent increase or $250 
million) results in an overall increase in estimated hospice payments 
of 1.1 percent, or $160 million, for FY 2016. 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 2015, that 
threshold is approximately $144 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 $144 million or more.

VI. Federalism Analysis and Regulations Text

    Executive Order 13132, Federalism (August 4, 1999) requires an 
agency to provide federalism summary impact statement when it 
promulgates a proposed rule (and subsequent final rule) that has 
federalism implications and which imposes substantial direct 
requirement costs on State and local governments which are not required 
by statute. We have reviewed this final rule under these criteria of 
Executive Order 13132, and have determined that it will not impose 
substantial direct costs on State or local governments.

List of Subjects

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 418--HOSPICE CARE

0
1. The authority citation for part 418 continues to read as follows:

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

Subpart G--Payment for Hospice Care

0
2. Section 418.302 is amended by--
0
a. Adding paragraph (b)(1)(i) and (ii).
0
b. Amending paragraphs (d)(1), (d)(2), (e) introductory text, (f)(2) 
and (f)(5)(ii) by removing the word ``intermediary'' and adding in its 
place the words ``Medicare Administrative Contractor''.
0
c. Revising paragraph (e)(1).
    The revisions and additions read as follows:


Sec.  418.302  Payment procedures for hospice care.

* * * * *
    (b)
    (1) * * *
    (i) Service intensity add-on. Routine home care days that occur 
during the last 7 days of a hospice election ending with a patient 
discharged due to death are eligible for a service intensity add-on 
payment.
    (ii) The service intensity add-on payment shall be equal to the 
continuous home care hourly payment rate, as described in paragraph 
(e)(4) of this section, multiplied by the amount of direct patient care 
actually provided by a RN and/or social worker, up to 4 hours total per 
day.
* * * * *
    (e) * * *
    (1) Payment is made to the hospice for each day during which the 
beneficiary is eligible and under the care of the hospice, regardless 
of the amount of services furnished on any given day

[[Page 47207]]

(except as set out in paragraph (b)(1)(i) of this section).
* * * * *

0
3. Section 418.306 is amended by revising the section heading and 
paragraphs (a), (b) and (c) to read as follows.


Sec.  418.306  Annual update of the payment rates and adjustment for 
area wage differences.

    (a) Applicability. CMS establishes payment rates for each of the 
categories of hospice care described in Sec.  418.302(b). The rates are 
established using the methodology described in section 1814(i)(1)(C) of 
the Act and in accordance with section 1814(i)(6)(D) of the Act.
    (b) Annual update of the payment rates. The payment rates for 
routine home care and other services included in hospice care are the 
payment rates in effect under this paragraph during the previous fiscal 
year increased by the hospice payment update percentage increase (as 
defined in sections1814(i)(1)(C) of the Act), applicable to discharges 
occurring in the fiscal year.
    (1) For fiscal year 2014 and subsequent fiscal years, in accordance 
with section 1814(i)(5)(A)(i) of the Act, in the case of a Medicare-
certified hospice that submits 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 hospice payment update 
percentage increase.
    (2) For fiscal year 2014 and subsequent fiscal years, in accordance 
with section 1814(i)(5)(A)(i) of the Act, 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 hospice 
payment update 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.
    (c) Adjustment for wage differences. Each hospice's labor market is 
determined based on definitions of Metropolitan Statistical Areas 
(MSAs) issued by OMB. CMS will issue annually, in the Federal Register, 
a hospice wage index based on the most current available CMS hospital 
wage data, including changes to the definition of MSAs. The urban and 
rural area geographic classifications are defined in Sec.  
412.64(b)(1)(ii)(A) through (C) of this chapter. The payment rates 
established by CMS are adjusted by the Medicare contractor to reflect 
local differences in wages according to the revised wage data.
* * * * *


Sec.  418.308  [Amended]

0
4. Section 418.308(c) is amended by removing the phrase ``(that is, by 
March 31st)''.
0
5. Section 418.309 is amended by revising the introductory text and 
paragraph (a) to read as follows:


Sec.  418.309  Hospice aggregate cap.

    A hospice's aggregate cap is calculated by multiplying the adjusted 
cap amount (determined in paragraph (a) of this section) by the number 
of Medicare beneficiaries, as determined by one of two methodologies 
for determining the number of Medicare beneficiaries for a given cap 
year described in paragraphs (b) and (c) of this section.
    (a) Cap Amount. The cap amount was set at $6,500 in 1983 and is 
updated using one of two methodologies described in paragraphs (a)(1) 
and (a)(2) of this section.
    (1) For accounting years that end on or before September 30, 2016 
and end on or after October 1, 2025, the cap amount is adjusted for 
inflation by using the percentage change in the medical care 
expenditure category of the Consumer Price Index (CPI) for urban 
consumers that is published by the Bureau of Labor Statistics. This 
adjustment is made using the change in the CPI from March 1984 to the 
fifth month of the cap year.
    (2) For accounting years that end after September 30, 2016, and 
before October 1, 2025, the cap amount is the cap amount for the 
preceding accounting year updated by the percentage update to payment 
rates for hospice care for services furnished during the fiscal year 
beginning on the October 1 preceding the beginning of the accounting 
year as determined pursuant to section 1814(i)(1)(C) of the Act 
(including the application of any productivity or other adjustments to 
the hospice percentage update).
* * * * *

    Dated: July 27, 2015
Andrew M. Slavitt,
Acting Administrator, Centers for Medicare & Medicaid Services.
    Dated: July 28, 2015
Sylvia M. Burwell,
Secretary, Department of Health and Human Services.
[FR Doc. 2015-19033 Filed 7-31-15; 4:15 pm]
 BILLING CODE 4120-01-P