[Federal Register Volume 81, Number 82 (Thursday, April 28, 2016)]
[Proposed Rules]
[Pages 25498-25538]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-09631]



[[Page 25497]]

Vol. 81

Thursday,

No. 82

April 28, 2016

Part II





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 2017 Hospice Wage Index and Payment Rate Update 
and Hospice Quality Reporting Requirements; Proposed Rule

  Federal Register / Vol. 81 , No. 82 / Thursday, April 28, 2016 / 
Proposed Rules  

[[Page 25498]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 418

[CMS-1652-P]
RIN 0938-AS79


Medicare Program; FY 2017 Hospice Wage Index and Payment Rate 
Update and Hospice Quality Reporting Requirements

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

ACTION: Proposed rule.

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SUMMARY: This proposed rule would update the hospice wage index, 
payment rates, and cap amount for fiscal year (FY) 2017. In addition, 
this rule proposes changes to the hospice quality reporting program, 
including proposing new quality measures. The proposed rule also 
solicits feedback on an enhanced data collection instrument and 
describes plans to publicly display quality measures and other hospice 
data beginning in the middle of 2017. Finally, this proposed rule 
includes information regarding the Medicare Care Choices Model (MCCM).

DATES: To be assured consideration, comments must be received at one of 
the addresses provided below, no later than 5 p.m. on June 20, 2016.

ADDRESSES: In commenting, please refer to file code CMS-1652-P. Because 
of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission.
    You may submit comments in one of four ways (please choose only one 
of the ways listed):
    1. Electronically. You may submit electronic comments on this 
regulation to http://www.regulations.gov. Follow the ``Submit a 
comment'' instructions.
    2. By regular mail. You may mail written comments to the following 
address ONLY:
    Centers for Medicare & Medicaid Services, Department of Health and 
Human Services, Attention: CMS-1652-P, P.O. Box 8010, Baltimore, MD 
21244-8010.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments to 
the following address ONLY:
    Centers for Medicare & Medicaid Services, Department of Health and 
Human Services, Attention: CMS-1652-P, Mail Stop C4-26-05, 7500 
Security Boulevard, Baltimore, MD 21244-1850.
    4. By hand or courier. Alternatively, you may deliver (by hand or 
courier) your written comments ONLY to the following addresses prior to 
the close of the comment period:
    a. For delivery in Washington, DC--Centers for Medicare & Medicaid 
Services, Department of Health and Human Services, Room 445-G, Hubert 
H. Humphrey Building, 200 Independence Avenue SW., Washington, DC 
20201.
    (Because access to the interior of the Hubert H. Humphrey Building 
is not readily available to persons without Federal government 
identification, commenters are encouraged to leave their comments in 
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing 
by stamping in and retaining an extra copy of the comments being 
filed.)
    b. For delivery in Baltimore, MD--Centers for Medicare & Medicaid 
Services, Department of Health and Human Services, 7500 Security 
Boulevard, Baltimore, MD 21244-1850.
    If you intend to deliver your comments to the Baltimore address, 
call telephone number (410) 786-9994 in advance to schedule your 
arrival with one of our staff members.
    Comments erroneously mailed to the addresses indicated as 
appropriate for hand or courier delivery may be delayed and received 
after the comment period.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

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.)
    Inspection of Public Comments: All comments received before the 
close of the comment period are available for viewing by the public, 
including any personally identifiable or confidential business 
information that is included in a comment. We post all comments 
received before the close of the comment period on the following Web 
site as soon as possible after they have been received: http://www.regulations.gov. Follow the search instructions on that Web site to 
view public comments.
    Comments received timely will also be available for public 
inspection as they are received, generally beginning approximately 3 
weeks after publication of a document, at the headquarters of the 
Centers for Medicare & Medicaid Services, 7500 Security Boulevard, 
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 
a.m. to 4 p.m. To schedule an appointment to view public comments, 
phone 1-800-743-3951.

Table of Contents

I. Executive Summary
    A. Purpose
    B. Summary of the Major Provisions
    C. Summary of Impacts
II. Background
    A. Hospice Care
    B. History of the Medicare Hospice Benefit
    C. Services Covered by the Medicare Hospice Benefit
    D. Medicare Payment for Hospice Care
    1. Omnibus Budget Reconciliation Act of 1989
    2. Balanced Budget Act of 1997
    3. FY 1998 Hospice Wage Index Final Rule
    4. FY 2010 Hospice Wage Index Final Rule
    5. The Affordable Care Act
    6. FY 2012 Hospice Wage Index Final Rule
    7. FY 2015 Hospice Wage Index and Payment Rate Update Final Rule
    8. Impact Act of 2014
    9. FY 2016 Hospice Wage Index and Payment Rate Update Final Rule
    E. Trends in Medicare Hospice Utilization
    F. Use of Health Information Technology
III. Provisions of the Proposed Rule
    A. Monitoring for Potential Impacts--Affordable Care Act Hospice 
Reform
    1. Hospice Payment Reform: Research and Analyses
    a. Pre-Hospice Spending
    b. Non-Hospice Spending
    c. Live Discharge Rates
    d. Skilled Visits in the Last Days of Life
    2. Monitoring for Impacts of Hospice Payment Reform
    B. Proposed FY 2017 Hospice Wage Index and Rates Update
    1. Proposed FY 2017 Hospice Wage Index
    a. Background
    b. FY 2016 Implementation of New Labor Market Delineations
    2. Proposed FY 2017 Hospice Payment Update Percentage
    3. Proposed FY 2017 Hospice Payment Rates
    4. Hospice Cap Amount for FY 2017
    C. Proposed 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 of HQRP Measures Adopted for Previous 
Payment Determination

[[Page 25499]]

    4. Previously Adopted Quality Measures for FY 2017 and FY 2018 
Payment Determination
    5. Proposed Removal of Previously Adopted Measures
    6. Proposed New Quality Measures for FY 2019 Payment 
Determinations and Subsequent Years and Concepts Under Consideration 
for Future Years
    a. Background and Considerations in Developing New Quality 
Measures for the HQRP
    b. New Quality Measures for the FY 2019 Payment Determination 
and Subsequent Years
    7. Form, Manner, and Timing of Quality Data Submission
    a. Background
    b. Previously Finalized 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. Previously Finalized Data Submission Timelines and 
Requirements for FY 2018 Payment Determination and Subsequent Years
    e. Previously Finalized HQRP Data Submission and Compliance 
Thresholds for the FY 2018 Payment Determination and Subsequent 
Years
    f. New Data Collection and Submission Mechanisms under 
Consideration for Future Years
    8. HQRP Submission Exemption and Extension Requirements for the 
FY 2017 Payment Determination and Subsequent Years
    9. Hospice CAHPS[supreg] Participation Requirements for the 2019 
APU and 2020 APU
    a. Background Description of the Survey
    b. Participation Requirements to Meet Quality Reporting 
Requirements for the FY 2019 APU
    c. Participation Requirements to Meet Quality Reporting 
Requirements for the FY 2020 APU
    d. Annual Payment Update
    e. Hospice CAHPS[supreg] Reconsiderations and Appeals Process
    10. HQRP Reconsideration and Appeals Procedures for the FY 2017 
Payment Determination and Subsequent Years
    11. Public Display of Quality Measures and other Hospice Data 
for the HQRP
    D. The Medicare Care Choices Model
IV. Collection of Information Requirements
V. Economic Analyses
VI. Federalism Analysis and Regulations Text

Acronyms

    Because of the many terms to which we refer by acronym in this 
proposed rule, we are listing the acronyms used and their corresponding 
meanings in alphabetical order:
APU Annual Payment Update
ASPE Assistant Secretary of Planning and Evaluation
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
CMMI Center for Medicare & Medicaid Innovation
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
MAC Medicare Administrative Contractor
MAP Measure Applications Partnership
MCCM Medicare Care Choices Model
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
PEPPER Program for Evaluating Payment Patterns Electronic Report
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 for this Proposed Rule

A. Purpose

    This rule proposes updates to the hospice payment rates for fiscal 
year (FY) 2017, as required under section 1814(i) of the Social 
Security Act (the Act). This rule also proposes new quality measures 
and provides an update on the hospice quality reporting program (HQRP) 
consistent with the requirements of section 1814(i)(5) of the Act, as 
added by section 3004(c) 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, the Affordable Care 
Act). 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 payments. 
Finally, this proposed rule shares information on the Medicare Care 
Choices Model developed in accordance with the authorization under 
section 1115A of the Act for the Center for Medicare and Medicaid 
Innovation (CMMI) to test innovative payment and service models that 
have the potential to reduce Medicare, Medicaid, or Children's Health 
Insurance Program (CHIP) expenditures while maintaining or improving 
the quality of care.

B. Summary of the Major Provisions

    Section III.A of this proposed rule describes current trends in 
hospice utilization and provider behavior, as well as our efforts for 
monitoring potential impacts related to the hospice reform policies 
finalized in the FY 2016 Hospice Wage Index and Payment Rate Update 
final rule (80 FR 47142). In section III.B.1 of this proposed rule, we 
propose to update the hospice wage index with updated wage data and to 
make the application of the updated wage data budget neutral for all 
four levels of hospice care. In section III.B.2 we discuss the FY 2017 
hospice

[[Page 25500]]

payment update percentage of 2.0 percent. Sections III.B.3 and III.B.4 
update the hospice payment rates and hospice cap amount for FY 2017 by 
the hospice payment update percentage discussed in section III.B.2.
    In section III.C of this proposed rule, we discuss updates to HQRP, 
including the proposal of two new quality measures as well as of the 
possibility of utilizing a new assessment instrument to collect quality 
data. As part of the HQRP, the new proposed measures would be: (1) 
Hospice Visits When Death is Imminent, assessing hospice staff visits 
to patients and caregivers in the last week of life; and (2) Hospice 
and Palliative Care Composite Process Measure, assessing the percentage 
of hospice patients who received care processes consistent with 
existing guidelines. In section III.C we will also discuss the 
potential enhancement of the current Hospice Item Set (HIS) data 
collection instrument to be more in line with other post-acute care 
settings. This new data collection instrument would be a comprehensive 
patient assessment instrument, rather than the current chart 
abstraction tool. Additionally, in this section we discuss our plans 
for sharing HQRP data publicly during Calendar Year (CY) 2016 as well 
as plans to provide public reporting via a Compare Site in CY 2017.
    Finally, in section III.D, we are providing information regarding 
the Medicare Care Choices Model (MCCM). This model offers a new option 
for Medicare and dual eligible beneficiaries with certain advanced 
diseases who meet the model's other eligibility criteria to receive 
hospice-like support services from MCCM participating hospices while 
receiving care from other Medicare providers for their terminal 
illness. This model is designed to: (1) Increase access to supportive 
care services provided by hospice; (2) improve quality of life and 
patient/family/caregiver satisfaction; and (3) inform new payment 
systems for the Medicare and Medicaid programs.

C. Summary of Impacts

                         Table 1--Impact Summary
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           Provision description                      Transfers
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FY 2017 Hospice Wage Index and Payment      The overall economic impact
 Rate Update.                                of this proposed rule is
                                             estimated to be $330
                                             million in increased
                                             payments to hospices during
                                             FY 2017.
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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 beneficiary as physically and emotionally comfortable as possible. 
Hospice is compassionate beneficiary 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 transition 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 
June 5, 2008). The goal of palliative care in hospice is to improve the 
quality of life of beneficiaries, 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 that may arise. This is achieved by 
the hospice interdisciplinary team working with the beneficiary 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. The beneficiary's 
comprehensive care plan will shift over time to meet the changing needs 
of the individual, family, and caregiver(s) 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 a beneficiary is terminally ill, many health 
problems are brought on by underlying condition(s), as bodily systems 
are interdependent. In the 2008 Hospice Conditions of Participation 
final rule, 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.'' (73 FR 32176). 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).
    While the goal of hospice care is to allow the beneficiary 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 treatment 
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 beneficiary can return to his or her 
home environment. Limited, short-term, intermittent, inpatient respite 
services are also available to the family/caregiver of the hospice 
patient 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 care, or nursing and 
aide care,

[[Page 25501]]

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 and 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 beneficiary 
``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, 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 beneficiary's 
physical, psychosocial, emotional, and spiritual needs related to the 
terminal illness and related conditions, and address those needs in 
order to promote the beneficiary'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 beneficiary'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), 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 and the responsibility of the hospice to address and treat.
---------------------------------------------------------------------------

    \1\ Connor, Stephen. (2007). Development of Hospice and 
Palliative Care in the United States. OMEGA. 56(1), p. 89-99.
    \2\ Paolini, DO, Charlotte. (2001). Symptoms Management at End 
of Life. JAOA. 101(10). p. 609-615.
---------------------------------------------------------------------------

    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 
beneficiary 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, if requested, for death 
while receiving expert symptom management and other supportive 
services. Election of hospice care also requires waiving the right to 
Medicare payment for curative treatment for the terminal prognosis, and 
instead receiving palliative care to manage pain or other 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, at the 
beginning of each period, a physician must certify that the beneficiary 
has 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 
biologicals); medical appliances; counseling services (including 
dietary counseling); short-term inpatient care in a hospital, nursing 
facility, or hospice inpatient facility (including both respite care 
and procedures necessary for pain control and acute or chronic symptom 
management); 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

[[Page 25502]]

an interdisciplinary group (described in section 1861(dd)(2)(B) of the 
Act). The services offered under the Medicare hospice benefit must be 
available to beneficiaries as needed, 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 comprise 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 (Routine Home Care (RHC), 
Continuous Home Care (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 needed to manage the 
beneficiary's care, as required by section 1861(dd)(1) of the Act. 
There has been little change in the hospice payment structure since the 
benefit's inception. The per diem rate based on level of care was 
established in 1983, and this payment structure remains today with some 
adjustments, as noted below:
1. Omnibus Budget Reconciliation Act of 1989
    Section 6005(a) of the Omnibus Budget Reconciliation Act of 1989 
(Pub. L. 101-239) amended section 1814(i)(1)(C) of the Act and provided 
for the following two changes in the methodology concerning updating 
the daily payment rates: (1) Effective January 1, 1990, the daily 
payment rates for 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 composed of 
representatives from national hospice associations; rural, urban, large 
and small hospices, and multi-site hospices; consumer groups; and a 
government representative. The Committee decided that in updating the 
hospice wage index, aggregate Medicare payments to hospices would 
remain budget neutral to payments calculated using the 1983 wage index, 
to cushion the impact of using a new wage index methodology. To 
implement this policy, a Budget Neutrality Adjustment Factor (BNAF) was 
computed and applied annually to the pre-floor, pre-reclassified 
hospital wage index when deriving the hospice wage index, subject to a 
wage index floor.
4. FY 2010 Hospice Wage Index Final Rule
    Inpatient hospital pre-floor and pre-reclassified wage index 
values, as described in the August 8, 1997 Hospice Wage Index final 
rule, are subject to either a budget neutrality adjustment or 
application of the wage index floor. Wage index values of 0.8 or 
greater are adjusted by the BNAF. Starting in FY 2010, a 7-year phase-
out of the BNAF began (FY 2010 Hospice Wage Index final rule, (74 FR 
39384, August 6, 2009)), 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 continued with an 
additional 15 percent reduction for a total reduction of 85 percent in 
FY 2015, an additional, and final, 15 percent reduction for complete 
elimination in FY 2016. We note that the BNAF was an

[[Page 25503]]

adjustment which increased the hospice wage index value. Therefore, the 
BNAF phase-out reduced the amount of the BNAF increase applied to the 
hospice wage index value. It was not a reduction in the hospice wage 
index value itself 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 is 
subject to annual reductions related to changes in economy-wide 
productivity, as specified in section 1814(i)(1)(C)(iv) 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 specified in 
section 1814(i)(1)(C)(v) of the Act).
    In addition, sections 1814(i)(5)(A) through (C) of the Act, as 
added 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 which fail to report quality data will have their market 
basket update reduced by 2 percentage points.
    Section 1814(a)(7)(D)(i) of the Act, as added by section 3132(b)(2) 
of the Affordable Care Act, 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 would 
correspond to the beneficiary's third or subsequent benefit periods. 
Further, section 1814(i)(6) of the Act, as added 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 could capture 
accurate resource utilization, which could be collected on claims, cost 
reports, and possibly other mechanisms, as the Secretary determined to 
be appropriate. The data collected could 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 were 
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 has been 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 was defined as the period from November 1st to 
October 31st. 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, we announced that subsequently, the hospice aggregate cap 
would be calculated using the patient-by-patient proportional 
methodology, within certain limits. We allowed existing hospices the 
option of having their cap calculated via the original streamlined 
methodology, also within certain limits. As of FY 2012, new hospices 
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 exceeds the hospice aggregate cap, then the hospice must repay the 
excess back to Medicare.
7. FY 2015 Hospice Wage Index and Payment 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. 
The FY 2015 Hospice Wage Index and Payment Rate Update final rule (79 
FR 50452) finalized a requirement that requires the Notice of Election 
(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 
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 be processed and paid. 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. 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 Wage Index 
and Payment 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 (Sec.  
418.26(e)).
    A hospice ``attending physician'' is described by the statutory and 
regulatory definitions as a medical doctor, osteopath, or nurse 
practitioner whom the beneficiary 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 person's designated attending physician 
and a third of hospice patients had multiple providers submit Part B 
claims as the ``attending physician,'' using a claim modifier. The FY 
2015 Hospice Wage Index and Payment Rate Update final rule finalized a 
requirement that the election form 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

[[Page 25504]]

Care Survey for informal caregivers of hospice patients surveyed in 
2015. The FY 2015 Hospice Wage Index and Payment 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 set out participation requirements 
for CY 2015 and discussed vendor oversight activities and the 
reconsideration and appeals process for entities that failed to win CMS 
approval as vendors (79 FR 50496).
    Finally, the FY 2015 Hospice Wage Index and Payment Rate Update 
final rule required providers to complete their aggregate cap 
determination not sooner than 3 months after the end of the cap year, 
and not later than 5 months after, and remit any overpayments. Those 
hospices that fail to timely 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 of 2014 
(Pub. L. 113-185) (IMPACT Act) became law on October 6, 2014. Section 
3(a) of the IMPACT Act mandated that all Medicare certified hospices be 
surveyed every 3 years beginning April 6, 2015 and ending September 30, 
2025. In addition, section 3(c) of the IMPACT Act requires medical 
review of hospice cases involving beneficiaries receiving more than 180 
days care in select hospices that show a preponderance of such 
patients; section 3(d) of the IMPACT Act contains a new provision 
mandating that the 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 consumer price index for 
urban consumers (CPI-U) for medical care expenditures.
9. FY 2016 Hospice Wage Index and Payment Rate Update Final Rule
    In the FY 2016 Hospice Rate Update final rule, we created two 
different payment rates for RHC that resulted in a higher base payment 
rate for the first 60 days of hospice care and a reduced base payment 
rate for all subsequent days of hospice care (80 FR 47172). We also 
created a Service Intensity Add-on (SIA) payment payable for services 
during the last 7 days of the beneficiary's life, equal to the CHC 
hourly payment rate multiplied by the amount of direct patient care 
provided by a registered nurse (RN) or social worker that occurs during 
the last 7 days (80 FR 47177).
    In addition to the hospice payment reform changes discussed, the FY 
2016 Hospice Wage Index and Payment Rate Update final rule implemented 
changes mandated by the IMPACT Act, in which the cap amount for 
accounting years that end after September 30, 2016 and before October 
1, 2025 is updated by the hospice payment update percentage rather than 
using the CPI-U. This was applied to the 2016 cap year, starting on 
November 1, 2015 and ending on October 31, 2016. In addition, we 
finalized a provision to align the cap accounting year for both the 
inpatient cap and the hospice aggregate cap with the fiscal year for FY 
2017 and later (80 FR 47186). This allows for the timely implementation 
of the IMPACT Act changes while better aligning the cap accounting year 
with the timeframe described in the IMPACT Act.
    Finally, the FY 2016 Hospice Wage Index and Payment Rate Update 
final rule clarified 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 payment refinements. 
Reporting of all diagnoses on the hospice claim aligns with current 
coding guidelines as well as admission requirements for hospice 
certifications.

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 benefit utilization. The number of Medicare beneficiaries 
receiving hospice services has grown from 513,000 in FY 2000 to nearly 
1.4 million in FY 2015. Similarly, Medicare hospice expenditures have 
risen from $2.8 billion in FY 2000 to an estimated $15.5 billion in FY 
2015. Our Office of the Actuary (OACT) projects that hospice 
expenditures are expected to continue to increase, by approximately 7 
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.
    There have also been changes in the diagnosis patterns among 
Medicare hospice enrollees. Specifically, as described in Table 2, 
there have been notable increases between 2002 and 2015 in 
neurologically-based diagnoses, including various dementia and 
Alzheimer's diagnoses. Additionally, there had 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 are returned to the provider if ``debility'' and ``adult 
failure to thrive'' are coded as the principal hospice diagnosis as 
well as other ICD-9-CM (and as of October 1, 2015, ICD-10-CM) codes 
that are not permissible as principal diagnosis codes per ICD-9-CM (or 
ICD-10-CM) coding guidelines. In the FY 2015 Hospice Wage Index and 
Payment Rate Update final rule (79 FR 50452), we reminded the hospice 
industry that this policy would go into effect and claims would start 
to be returned to the provider effective October 1, 2014. As a result 
of this, there has been a shift in coding patterns on hospice claims. 
For FY 2015, the most common hospice principal diagnoses were 
Alzheimer's disease, Congestive Heart Failure, Lung Cancer, Chronic 
Airway Obstruction and Senile Dementia which constituted approximately 
35 percent of all claims-reported principal diagnosis codes reported in 
FY 2015 (see Table 2).

 Table 2--The Top Twenty Principal Hospice Diagnoses, FY 2002, FY 2007,
                            FY 2013, FY 2015
------------------------------------------------------------------------
                       ICD-9/reported
       Rank         principal diagnosis        Count        Percentage
------------------------------------------------------------------------
                              Year: FY 2002
------------------------------------------------------------------------
1................  162.9 Lung Cancer....          73,769              11
2................  428.0 Congestive               45,951               7
                    Heart Failure.
3................  799.3 Debility                 36,999               6
                    Unspecified.

[[Page 25505]]

 
4................  496 COPD.............          35,197               5
5................  331.0 Alzheimer's              28,787               4
                    Disease.
6................  436 CVA/Stroke.......          26,897               4
7................  185 Prostate Cancer..          20,262               3
8................  783.7 Adult Failure            18,304               3
                    To Thrive.
9................  174.9 Breast Cancer..          17,812               3
10...............  290.0 Senile                   16,999               3
                    Dementia, Uncomp.
11...............  153.0 Colon Cancer...          16,379               2
12...............  157.9 Pancreatic               15,427               2
                    Cancer.
13...............  294.8 Organic Brain            10,394               2
                    Synd Nec.
14...............  429.9 Heart Disease            10,332               2
                    Unspecified.
15...............  154.0 Rectosigmoid              8,956               1
                    Colon Cancer.
16...............  332.0 Parkinson's               8,865               1
                    Disease.
17...............  586 Renal Failure               8,764               1
                    Unspecified.
18...............  585 Chronic Renal               8,599               1
                    Failure (End 2005).
19...............  183.0 Ovarian Cancer.           7,432               1
20...............  188.9 Bladder Cancer.           6,916               1
------------------------------------------------------------------------
                              Year: FY 2007
------------------------------------------------------------------------
1................  799.3 Debility                 90,150               9
                    Unspecified.
2................  162.9 Lung Cancer....          86,954               8
3................  428.0 Congestive               77,836               7
                    Heart Failure.
4................  496 COPD.............          60,815               6
5................  783.7 Adult Failure            58,303               6
                    To Thrive.
6................  331.0 Alzheimer's              58,200               6
                    Disease.
7................  290.0 Senile Dementia          37,667               4
                    Uncomp..
8................  436 CVA/Stroke.......          31,800               3
9................  429.9 Heart Disease            22,170               2
                    Unspecified.
10...............  185 Prostate Cancer..          22,086               2
11...............  174.9 Breast Cancer..          20,378               2
12...............  157.9 Pancreas                 19,082               2
                    Unspecified.
13...............  153.9 Colon Cancer...          19,080               2
14...............  294.8 Organic Brain            17,697               2
                    Syndrome NEC.
15...............  332.0 Parkinson's              16,524               2
                    Disease.
16...............  294.10 Dementia In             15,777               2
                    Other Diseases w/o
                    Behav. Dist.
17...............  586 Renal Failure              12,188               1
                    Unspecified.
18...............  585.6 End Stage Renal          11,196               1
                    Disease.
19...............  188.9 Bladder Cancer.           8,806               1
20...............  183.0 Ovarian Cancer.           8,434               1
------------------------------------------------------------------------
                              Year: FY 2013
------------------------------------------------------------------------
1................  799.3 Debility                127,415               9
                    Unspecified.
2................  428.0 Congestive               96,171               7
                    Heart Failure.
3................  162.9 Lung Cancer....          91,598               6
4................  496 COPD.............          82,184               6
5................  331.0 Alzheimer's              79,626               6
                    Disease.
6................  783.7 Adult Failure            71,122               5
                    to Thrive.
7................  290.0 Senile                   60,579               4
                    Dementia, Uncomp.
8................  429.9 Heart Disease            36,914               3
                    Unspecified.
9................  436 CVA/Stroke.......          34,459               2
10...............  294.10 Dementia In             30,963               2
                    Other Diseases w/o
                    Behavioral Dist..
11...............  332.0 Parkinson's              25,396               2
                    Disease.
12...............  153.9 Colon Cancer...          23,228               2
13...............  294.20 Dementia                23,224               2
                    Unspecified w/o
                    Behavioral Dist..
14...............  174.9 Breast Cancer..          23,059               2
15...............  157.9 Pancreatic               22,341               2
                    Cancer.
16...............  185 Prostate Cancer..          21,769               2
17...............  585.6 End-Stage Renal          19,309               1
                    Disease.
18...............  518.81 Acute                   15,965               1
                    Respiratory Failure.
19...............  294.8 Other                    14,372               1
                    Persistent Mental
                    Dis.-classified
                    elsewhere.
20...............  294.11 Dementia In             13,687               1
                    Other Diseases w/
                    Behavioral Dist..
------------------------------------------------------------------------
                              Year: FY 2015
------------------------------------------------------------------------
1................  331.0 Alzheimer's             195,469              13
                    disease.
2................  428.0 Congestive              114,240               8
                    heart failure,
                    unspecified.
3................  162.9 Lung Cancer....          87,661               6
4................  496 COPD.............          80,081               5
5................  331.2 Senile                   46,610               3
                    degeneration of
                    brain.
6................  332.0 Parkinson's              34,734               2
                    Disease.

[[Page 25506]]

 
7................  429.9 Heart disease,           31,695               2
                    unspecified.
8................  436 CVA/Stroke.......          28,985               2
9................  437.0 Cerebral                 26,765               2
                    atherosclerosis.
10...............  174.9 Breast Cancer..          23,742               2
11...............  153.9 Colon Cancer...          23,677               2
12...............  185 Prostate Cancer..          23,061               2
13...............  157.9 Pancreatic               22,906               2
                    Cancer.
14...............  585.6 End stage renal          22,763               2
                    disease.
15...............  491.21 Obstructive             21,283               1
                    chronic bronchitis
                    with (acute)
                    exacerbation.
16...............  518.81 Acute                   19,965               1
                    respiratory failure.
17...............  429.2 Cardiovascular           16,843               1
                    disease, unspecified.
18...............  434.91 Cerebral                15,642               1
                    artery occlusion,
                    unspecified with
                    cerebral infarction.
19...............  414.00 Coronary                15,566               1
                    atherosclerosis of
                    unspecified type of
                    vessel.
20...............  188.9 Bladder Cancer.          11,517               1
------------------------------------------------------------------------
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 preliminary FY 2015 hospice claims data from the CCW, accessed on
  January 25, 2016.

    While there has been a shift in the reporting of the principal 
diagnosis as a result of diagnosis clarifications, a significant 
proportion of hospice claims (49 percent) in FY 2014 only reported a 
single principal diagnosis, which may not fully explain the 
characteristics of Medicare beneficiaries who are approaching the end 
of life. To address this pattern of single diagnosis reporting, the FY 
2015 Hospice Wage Index and Payment Rate Update final rule (79 FR 
50498) reiterated ICD-9-CM coding guidelines for the reporting of the 
principal and additional diagnoses on the hospice claim. We reminded 
providers to report all diagnoses on the hospice claim for the terminal 
illness and related conditions, including those that affect the care 
and clinical management for the beneficiary. Additionally, in the FY 
2016 Hospice Wage Index and Payment Rate Update final rule (80 FR 
47201), we provided further clarification regarding diagnosis reporting 
on hospice claims. We clarified 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. Preliminary analysis of FY 2015 
hospice claims show that only 37 percent of hospice claims include a 
single, principal diagnosis, with 63 percent submitting at least two 
diagnoses and 46 percent including at least three.\3\
---------------------------------------------------------------------------

    \3\ FFY15 Hospice Claims from CCW; Pulled Jan 06 2016
---------------------------------------------------------------------------

F. Use of Health Information Technology

    HHS believes that the use of certified health IT by hospices can 
help providers improve internal care delivery practices and advance the 
interoperable exchange of health information across care partners to 
improve communication and care coordination. The Department of Health 
and Human Services (HHS) has a number of initiatives designed to 
encourage and support the adoption of health information technology and 
promote nationwide health information exchange to improve health care. 
The Office of the National Coordinator for Health Information 
Technology (ONC) leads these efforts in collaboration with other 
agencies, including CMS and the Office of the Assistant Secretary for 
Planning and Evaluation (ASPE). In 2015, ONC released a document 
entitled ``Connecting Health and Care for the Nation: A Shared 
Nationwide Interoperability Roadmap'' (available at: https://www.healthit.gov/sites/default/files/hie-interoperability/nationwide-interoperability-roadmap-final-version-1.0.pdf) which includes a near-
term focus on actions that will enable a majority of individuals and 
providers across the care continuum to send, receive, find and use a 
common set of electronic clinical information at the nationwide level 
by the end of 2017. The 2015 Edition Health IT Certification Criteria 
(2015 Edition) builds on past rulemakings to facilitate greater 
interoperability for several clinical health information purposes and 
enables health information exchange through new and enhanced 
certification criteria, standards, and implementation specifications. 
The 2015 Edition also focuses on the establishment of an interoperable 
nationwide health information infrastructure. More information on the 
ONC Health IT Certification Program is available at: https://www.healthit.gov/policy-researchers-implementers/2015-edition-final-rule

III. Provisions of the Proposed Rule

A. Monitoring for Potential Impacts--Affordable Care Act Hospice Reform

1. Hospice Payment Reform: Research and Analyses
a. Pre-Hospice Spending
    In 1982, the Congress introduced hospice into the Medicare program 
as an alternative to aggressive curative 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 
consistently reported that hospices provided high-quality, 
compassionate and humane care while also offering a reduction in 
Medicare costs.\4\ Additionally, a Congressional Budget Office (CBO) 
study asserted that hospice care would result in sizable savings over 
conventional hospital care.\5\ Those savings estimates were based on a 
comparison of spending in 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

[[Page 25507]]

death.\6\ Therefore, the original language for section 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. Recent analysis conducted 
by MedPAC showed that hospice appears to modestly raise end-of-life 
costs.\7\ While hospice reduces costs for cancer decedents on average, 
hospice does not reduce costs for individuals with long hospice stays.
---------------------------------------------------------------------------

    \4\ Subcommittee of Health of the Committee of Ways and Means, 
House of Representatives, March 25, 1982.
    \5\ Mor V. Masterson-Allen S. (1987): Hospice care systems: 
Structure, process, costs and outcome. New York: Springer Publishing 
Company.
    \6\ Fogel, Richard. (1983): Comments on the Legislative Intent 
of Medicare's Hospice Benefit (GAO/HRD-83-72).
    \7\ Hogan, C. (2015): Spending in the Last Year of Life and the 
Impact of Hospice on Medicare Outlays. http://www.medpac.gov/documents/contractor-reports/spending-in-the-last-year-of-life-and-the-impact-of-hospice-on-medicare-outlays-(updated-august-
2015).pdf?sfvrsn=0
---------------------------------------------------------------------------

    Analysis was conducted to evaluate pre-hospice spending for 
beneficiaries who used hospice and who died in FY 2014. 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). 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 $64.87 per day compared to the daily RHC rate 
of $156.06 in FY 2014. Closer to 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 $96.99 
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 
$143.48 in the 180 days prior to hospice admission and increased to 
$293.64 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 2014 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 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 2014
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          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
       Primary Hospice Diagnosis at  Admission       ------------------------------------------------------------------------------------------   Total
                                                        25th                75th      25th                75th      25th                75th     Hospice
                                                        Pct.     Median     Pct.      Pct.     Median     Pct.      Pct.     Median     Pct.      Days
--------------------------------------------------------------------------------------------------------------------------------------------------------
All Diagnoses.......................................    $46.92   $117.77   $241.97    $55.70   $157.92   $340.24    $58.07   $268.98   $548.00      73.9
Alzheimer's, Dementia, and Parkinson's..............     22.56     64.87    160.29     22.16     78.62    216.75     20.18     96.99    357.49     118.8
CVA/Stroke..........................................     51.05    111.22    233.33     70.13    158.29    338.67    102.64    320.20    588.60      55.6
Cancers.............................................     62.37    143.48    268.44     77.91    188.66    364.64     80.81    293.64    576.16      47.3
Chronic Kidney Disease..............................     87.81    203.97    389.33    117.38    273.72    524.18    174.13    435.90    796.26      29.8
Heart (CHF and Other Heart Disease).................     57.03    130.15    251.14     72.85    177.45    357.43     84.57    308.69    572.53      78.8
Lung (COPD and Pneumonias)..........................     63.10    140.46    268.43     87.05    196.62    396.02    114.58    360.29    676.46      69.4
All Other Diagnoses.................................     44.75    115.05    245.91     54.25    158.65    357.24     59.98    285.65    590.73      78.2
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: All Medicare Parts A, B, and D claims for FY 2014 from the Chronic Conditions Data Warehouse (CCW) retrieved February, 2016. Note(s): Estimates
  drawn from FY2014 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 2014 dollars using the Consumer Price Index (Medical Care; All
  Urban Consumers).

    In the FY 2014 Hospice Wage Index and Payment Rate Update proposed 
and final rules (78 FR 27843 and 78 FR 48272, respectively), we 
discussed whether a case mix system could be created in future 
refinements to differentiate hospice payments according to patient 
characteristics. 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 indicates 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.
b. Non-hospice Spending
    When a beneficiary elects the Medicare hospice benefit, he or she 
waives the right to Medicare payment for services related to the 
treatment of the individual's condition with respect to which a 
diagnosis of terminal illness has been made, except for services 
provided by the designated hospice and the attending physician. Hospice 
services are to be comprehensive and inclusive and we have reiterated 
since 1983 that ``virtually all'' care needed by the terminally ill 
individual would be provided by hospice, given the

[[Page 25508]]

interrelatedness of body systems. We believe that it would be unusual 
and exceptional to see services provided outside of hospice for those 
individuals who are approaching the end of life. However, we have 
conducted ongoing analysis of non-hospice spending during a hospice 
election over the past several years and this analysis seems to suggest 
unbundling of services that perhaps should have been provided and 
covered under the Medicare hospice benefit.
    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) and FY 2013 non-hospice spending during 
a hospice election in the FY 2016 Hospice Wage Index and Payment Rate 
Update final rule (80 FR 47153). In this rule, we updated our analysis 
of non-hospice spending during a hospice election using FY 2014 data. 
Medicare payments for non-hospice Part A and Part B services received 
by hospice beneficiaries during hospice election were $710.1 million in 
CY 2012, $694.1 million in FY 2013, and $600.8 million in FY 2014 (See 
Figure 1). Non-hospice spending has decreased each year since we began 
reporting these findings: down 2.2 percent from CY 2012 to FY 2013 and 
then down 13.4 percent in from FY 2013 to FY 2014--a much more 
significant decline. Overall, from CY 2012 to FY 2014 non-hospice 
spending during hospice election declined 15.4 percent.
[GRAPHIC] [TIFF OMITTED] TP28AP16.003

    Hospice beneficiaries had $122.5 million in Parts A and B cost-
sharing for items and services that were billed to Medicare Parts A and 
B for a total of $723.3 million for FY 2014.
    We also examined Part D for CY 2012 and FY 2013 spending for those 
beneficiaries under a hospice election and reported those findings in 
our FY 2015 and FY 2016 hospice final rules, respectively. We updated 
our analysis of FY 2014 Part D Prescription Drug Event data, which 
shows Medicare payments for non-hospice Part D drugs received by 
hospice beneficiaries during a hospice election were $334.9 million in 
CY 2012, $347.1 million in FY 2013, and $291.6 million in FY 2014 (see 
Figure 2).

[[Page 25509]]

[GRAPHIC] [TIFF OMITTED] TP28AP16.004

    Table 4 details the various components of Part D spending for 
patients receiving hospice care. The portion of the $371.7 million 
total Part D spending that was paid by Medicare is the sum of the Low 
Income Cost-Sharing Subsidy and the Covered Drug Plan Paid Amount, or 
$291.6 million.

   Table 4--Drug Cost Sources for Hospice Beneficiaries' FY 2014 Drugs
                         Received Through Part D
------------------------------------------------------------------------
                                                               FY 2014
                         Component                          expenditures
------------------------------------------------------------------------
Patient Pay Amount........................................   $41,722,567
Low Income Cost-Sharing Subsidy...........................    95,389,484
Other True Out-of Pocket Amount...........................     1,704,601
Patient Liability Reduction due to Other Payer Amount.....    12,816,746
Covered Drug Plan Paid Amount.............................   196,242,194
Non-Covered Plan Paid Amount..............................    18,428,208
Six Payment Amount Totals.................................   366,303,799
Unknown/Unreconciled......................................     5,374,873
Gross Total Drug Costs, Reported..........................   371,678,672
------------------------------------------------------------------------
Source: Analysis of 100% FY 2014 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/.

    We further analyzed Part D drug expenditures by the top twenty most 
frequently reported principal diagnoses on hospice claims for 
beneficiaries under a hospice election. These Part D expenditures 
included those for common palliative drugs, which include analgesics 
(anti-inflammatory, non-narcotic, and opioids), antianxiety agents, 
antiemetics, and laxatives. The analysis also includes other drugs 
typically associated with the conditions reported. Table 5 details Part 
D spending for hospice beneficiaries by the top twenty most frequently 
reported principal diagnoses on hospice claims. Overlapping hospice 
claims are defined as claims for any Part D drugs that were dispensed 
on a day that the beneficiary also received hospice care.

[[Page 25510]]



                 Table 5--Summary of Overlapping Part D Drugs by Top 20 Most Frequently Reported Hospice Principal Diagnoses in FY 2014
--------------------------------------------------------------------------------------------------------------------------------------------------------
                  Terminal condition                                                                                Number of
------------------------------------------------------       Drug therapeutic          Number of       Hospice     overlapping   Number of      Part D
                                                              classification            hospice     beneficiaries    hospice     Part D Rx    gross drug
         3D-DGN                   Description                                        beneficiaries       (%)          claims                 payment ($)
--------------------------------------------------------------------------------------------------------------------------------------------------------
331....................  Cerebral Degenerations......  ............................       167,677           12.6   ...........  ...........  ...........
                                                       Common Palliative Drugs.....  .............  .............       50,537       61,310    1,880,621
                                                       Psychotherapeutic and         .............  .............       48,764       72,774   11,563,443
                                                        Neurological Agents--Misc.
                                                       Antipsychotics/Antimanic      .............  .............       35,307       46,857    3,229,221
                                                        Agents.
428....................  Heart Failure...............  ............................       132,174            9.9   ...........  ...........  ...........
                                                       Common Palliative Drugs.....  .............  .............       38,110       46,448    1,589,113
                                                       Cardiovascular Agents--Misc.  .............  .............          509          602    1,243,362
                                                       Antihypertensives...........  .............  .............       24,889       29,843      783,221
                                                       Antianginal Agents..........  .............  .............       11,118       13,085      688,201
                                                       Diuretics...................  .............  .............       38,081       50,186      485,243
                                                       Beta Blockers...............  .............  .............       29,545       32,833      480,877
                                                       Vasopressors................  .............  .............          775          857       71,657
162....................  Lung Cancer.................  ............................       100,984            7.6   ...........  ...........  ...........
                                                       Common Palliative Drugs.....  .............  .............       20,689       25,723    1,182,222
                                                       Antineoplastics and           .............  .............        2,042        2,217    2,093,837
                                                        Adjunctive Therapies.
294....................  Mental Disorder (Chronic)...  ............................        81,364            6.1   ...........  ...........  ...........
                                                       Common Palliative Drugs.....  .............  .............       26,355       32,457      971,792
                                                       Psychotherapeutic and         .............  .............       21,181       31,800    4,868,784
                                                        Neurological Agents--Misc.
                                                       Antipsychotics/Antimanic      .............  .............       18,076       24,244    1,826,575
                                                        Agents.
496....................  COPD........................  ............................        79,267            6.0   ...........  ...........  ...........
                                                       Common Palliative Drugs.....  .............  .............       33,098       42,194    1,941,201
                                                       Antiasthmatic and             .............  .............       30,968       47,903    8,768,675
                                                        Bronchodilator Agents.
                                                       Respiratory Agents--Misc....  .............  .............           41           47      289,214
                                                       Corticosteroids.............  .............  .............       11,600       13,516      195,780
290....................  Mental Disorder (Senile &     ............................        70,852            5.3   ...........  ...........  ...........
                          Presenile).
                                                       Common Palliative Drugs.....  .............  .............       24,206       29,992      877,181
                                                       Psychotherapeutic and         .............  .............       19,923       29,954    4,527,689
                                                        Neurological Agents--Misc.
                                                       Antipsychotics/Antimanic      .............  .............       16,323       21,700    1,555,710
                                                        Agents.
429....................  Other Heart Diseases........  ............................        51,616            3.9   ...........  ...........  ...........
                                                       Common Palliative Drugs.....  .............  .............       16,072       19,902      735,511
                                                       Antihyperlipidemics.........  .............  .............       14,071       16,122      657,115
                                                       Antihypertensives...........  .............  .............       11,363       13,585      394,125
                                                       Cardiovascular Agents--Misc.  .............  .............          152          167      379,608
                                                       Antianginal Agents..........  .............  .............        4,821        5,778      378,205
                                                       Beta Blockers...............  .............  .............       11,955       13,190      203,521
                                                       Diuretics...................  .............  .............       12,378       15,606      152,209
                                                       Calcium Channel Blockers....  .............  .............        5,880        6,462      115,265
                                                       Vasopressors................  .............  .............          374          420       29,475
436....................  Stroke(Acute)...............  ............................        33,766            2.5   ...........  ...........  ...........
                                                       Common Palliative Drugs.....  .............  .............        7,349        8,871      270,278
                                                       Antihypertensives...........  .............  .............        7,397        9,257      245,294
                                                       Antihyperlipidemics.........  .............  .............        6,776        8,019      239,749
                                                       Anticoagulants..............  .............  .............        1,948        3,318      236,426
                                                       Hematological Agents--Misc..  .............  .............        3,602        4,006      216,792
                                                       Beta Blockers...............  .............  .............        7,044        7,988      103,034
                                                       Calcium Channel Blockers....  .............  .............        4,698        5,467       72,363
                                                       Cardiotonics................  .............  .............        1,198        1,336       36,175
                                                       Diuretics...................  .............  .............        4,149        5,119       34,962
                                                       Cardiovascular Agents--Misc.  .............  .............           22           24       24,149
                                                       Vasopressors................  .............  .............           90           94        7,624
332....................  Parkinson's disease.........  ............................        30,906            2.3   ...........  ...........  ...........
                                                       Common Palliative Drugs.....  .............  .............       10,305       12,639      388,887
                                                       Antiparkinson Agents........  .............  .............       15,969       22,317    2,470,058
                                                       Psychotherapeutic and         .............  .............       10,059       14,280    2,331,283
                                                        Neurological Agents--Misc.
                                                       Antipsychotics/Antimanic      .............  .............        6,581        8,859      809,845
                                                        Agents.
585....................  Chronic Renal Failure.......  ............................        27,945            2.1   ...........  ...........  ...........
                                                       Common Palliative Drugs.....  .............  .............        4,888        6,026      191,297
                                                       Hematological Agents--Misc..  .............  .............        1,204        1,350       57,443
                                                       Diuretics...................  .............  .............        3,292        4,266       44,415
                                                       Nutrients...................  .............  .............           92          138       21,096
                                                       Minerals & Electrolytes.....  .............  .............          775          921       17,458
                                                       Vitamins....................  .............  .............           22           22          123
438....................  Stroke(Late Effect).........  ............................        27,443            2.1   ...........  ...........  ...........
                                                       Common Palliative Drugs.....  .............  .............        7,178        8,974      275,151
                                                       Antihypertensives...........  .............  .............        6,813        8,557      233,267
                                                       Anticoagulants..............  .............  .............        1,827        3,281      200,116
                                                       Antihyperlipidemics.........  .............  .............        5,310        6,159      195,822

[[Page 25511]]

 
                                                       Hematological Agents--Misc..  .............  .............        2,989        3,311      184,818
                                                       Beta Blockers...............  .............  .............        7,192        8,170      109,777
                                                       Calcium Channel Blockers....  .............  .............        4,635        5,427       75,992
                                                       Diuretics...................  .............  .............        3,826        4,991       36,531
                                                       Cardiovascular Agents--Misc.  .............  .............           22           29       23,212
157....................  Pancreatic Cancer...........  ............................        26,858            2.0   ...........  ...........  ...........
                                                       Common Palliative Drugs.....  .............  .............        4,809        5,854      302,932
                                                       Digestive Aids..............  .............  .............          554          610      269,356
                                                       Antineoplastics and           .............  .............          367          403      146,428
                                                        Adjunctive Therapies.
518....................  Lung Diseases...............  ............................        26,683            2.0   ...........  ...........  ...........
                                                       Common Palliative Drugs.....  .............  .............        3,045        3,719      129,314
                                                       Antiasthmatic and             .............  .............        1,704        2,515      396,030
                                                        Bronchodilator Agents.
                                                       Corticosteroids.............  .............  .............          754          854       11,081
414....................  Ischemic Heart Disease......  ............................        26,673            2.0   ...........  ...........  ...........
                                                       Common Palliative Drugs.....  .............  .............        8,831       10,882      425,098
                                                       Antihyperlipidemics.........  .............  .............        7,927        8,987      367,409
                                                       Antianginal Agents..........  .............  .............        3,741        4,577      276,861
                                                       Antihypertensives...........  .............  .............        6,448        7,674      222,786
                                                       Beta Blockers...............  .............  .............        6,817        7,506      117,183
                                                       Cardiovascular Agents--Misc.  .............  .............           32           37       61,455
                                                       Calcium Channel Blockers....  .............  .............        3,163        3,492       54,946
                                                       Cardiotonics................  .............  .............        1,164        1,272       33,187
153....................  Colon Cancer................  ............................        26,668            2.0   ...........  ...........  ...........
                                                       Common Palliative Drugs.....  .............  .............        5,906        7,458      322,177
                                                       Antineoplastics and           .............  .............          523          574      387,221
                                                        Adjunctive Therapies.
174....................  Breast Cancer...............  ............................        25,174            1.9   ...........  ...........  ...........
                                                       Common Palliative Drugs.....  .............  .............        7,080        9,151      384,738
                                                       Antineoplastics and           .............  .............        2,529        2,855      680,720
                                                        Adjunctive Therapies.
185....................  Prostate Cancer.............  ............................        22,334            1.7   ...........  ...........  ...........
                                                       Common Palliative Drugs.....  .............  .............        4,446        5,655      293,249
                                                       Antineoplastics and           .............  .............        1,500        1,668    2,363,693
                                                        Adjunctive Therapies.
491....................  Chronic bronchitis..........  ............................        18,846            1.4   ...........  ...........  ...........
                                                       Common Palliative Drugs.....  .............  .............        6,469        8,157      364,686
437....................  Other Cerebrovascular         ............................        17,859            1.3   ...........  ...........  ...........
                          Disease.
                                                       Common Palliative Drugs.....  .............  .............        3,991        4,907      164,769
155....................  Liver Cancer................  ............................        15,242            1.1   ...........  ...........  ...........
                                                       Common Palliative Drugs.....  .............  .............        3,317        4,174      166,550
                                                       Antineoplastics and           .............  .............          300          326    1,106,663
                                                        Adjunctive Therapies.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: CWF Claims Data, Prescription Drug TAP, Medicare Enrollment Database. Claims data through 12/18/2015. Included all beneficiaries with a paid
  hospice claim (excluding hospice claims for pre-election counselling and evaluation services) for which Part D drugs were filled on a day that the
  beneficiary also received hospice care.

    Hospices are required to cover drugs for the palliation and 
management of the terminal prognosis; we remain concerned that common 
palliative and other disease-specific drugs for hospice beneficiaries 
are being covered and paid for through Part D. Because hospices are 
required to provide a comprehensive range of services, including drugs, 
to Medicare beneficiaries under a hospice election, we believe that 
Medicare could be paying twice for drugs that are already covered under 
the hospice per diem payment by also paying for them under Part D.\8\
---------------------------------------------------------------------------

    \8\ oig.hhs.gov/oas/region6/61000059.pdf ``Medicare Could Be 
Paying Twice for Prescriptions For Beneficiaries in Hospice.''
---------------------------------------------------------------------------

    Total non-hospice spending paid by either Medicare or by 
beneficiaries that occurred during a hospice election was $723.3 
million ($600.8 million Medicare spending plus $122.5 million in 
beneficiary cost-sharing liabilities) for Parts A and B plus $371.6 
million ($291.6 million Medicare spending plus $80 million in 
beneficiary cost-sharing liabilities) for Part D spending, or 
approximately $1.1 billion dollars total in FY 2014.
c. Live Discharge Rates
    Currently, federal regulations allow a beneficiary who has elected 
to receive Medicare hospice services to revoke their hospice election 
at any time and for any reason. Specifically, the regulations state 
that if the hospice beneficiary (or his/her representative) revokes the 
hospice election, Medicare coverage of hospice care for the remainder 
of that period is forfeited. The beneficiary may, at any time, re-elect 
to receive hospice coverage for any other hospice election period that 
he or she is eligible to receive (Sec.  418.24(e) and Sec.  
418.28(c)(3)). 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 the effective date of the revocation. A hospice 
cannot ``revoke'' a beneficiary's

[[Page 25512]]

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 through Medicare.
    Federal regulations limit the circumstances in which a Medicare 
hospice provider may 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 discharge the 
patient at their discretion, even if the care may be costly or 
inconvenient for the hospice program. 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 beneficiaries 
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 beneficiary 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 2014 
claims to identify those beneficiaries who were discharged alive. 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.
    While Figure 3 demonstrates an incremental decrease in average 
annual rates of live discharge rates from 2006 to 2014, peaking in 
2007, there has been a leveling off at around 18 percent over the past 
several years. 
[GRAPHIC] [TIFF OMITTED] TP28AP16.005

    Among hospices with 50 or more discharges (discharged alive or 
deceased), there is significant variation in the rate of live discharge 
between the 10th and 90th percentiles (see Table 6). Most notably, 
hospices at the 95th percentile discharged 50 percent or more of their 
patients alive in FY 2014.

  Table 6--Distribution of Live Discharge Rates in FY 2014 for Hospices
                     With 50 or More Live Discharges
------------------------------------------------------------------------
                                                          Live discharge
                        Statistic                            rate (%)
------------------------------------------------------------------------
5th Percentile..........................................             7.4
10th Percentile.........................................             8.9
25th Percentile.........................................            12.3
Median..................................................            17.5
75th Percentile.........................................            26.2
90th Percentile.........................................            39.1
95th Percentile.........................................            50.0
Note: n = 3,135.........................................  ..............
------------------------------------------------------------------------
Source: FY 2014 claims from SSS Analytic File.

    In FY 2014, we found that hospices with high live discharge rates 
also, on average, provided fewer visits per week. Those hospices with 
live discharge rates at or above the 90th percentile provided, on 
average, 4.05 visits per week. Hospices with live discharge rates below 
the 90th percentile provided, on average, 4.73 visits per week. We also 
found in FY 2014 that, when focusing on visits classified as skilled 
nursing or medical social services, hospices with live discharge rates 
at or above the 90th percentile provided, on average, 1.88 visits per 
week versus hospices with live discharge rates below the 90th 
percentile that provided, on average, 2.34 visits per week.
    We examined whether there was a relationship between hospices with 
high live discharge rates, average lengths of stay, and non-hospice 
spending per beneficiary per day (see Table 7 and Figure 2). Hospices 
with patients that, on average, accounted for $27 per day in non-
hospice spending while in hospice (decile 10 in Table 7 and Figure 4) 
had live discharge rates that were, on average, about 34.7 percent and 
had an

[[Page 25513]]

average lifetime length of stay of 158 days. In contrast, hospices with 
patients that, on average, accounted for only $3.66 per day in non-
hospice spending while in a hospice election (decile 1 in Table 7 and 
Figure 4) had live discharge rates that were, on average, about 18.2 
percent and had an average lifetime length of stay of 99.8 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 90 
percent and 58 percent higher, respectively, than the hospices in 
lowest decile.

 Table 7--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, FY 2014
------------------------------------------------------------------------
                                         Non-hospice
                                      Medicare ($) per     Total  non-
               Decile                  hospice service       hospice
                                             day          Medicare  ($)
------------------------------------------------------------------------
1...................................             $3.66       $21,981,020
2...................................              5.50        39,167,526
3...................................              6.88        52,038,093
4...................................              8.11        67,119,545
5...................................              9.26        79,829,044
6...................................             10.63        99,430,439
7...................................             12.12       143,575,036
8...................................             14.03       163,323,857
9...................................             16.84       162,402,299
10..................................             26.60       233,419,872
All Hospices........................             11.37     1,062,286,730
------------------------------------------------------------------------
Note: Analysis of 100 percent Medicare Analytic Files, FY 2014. Cohort
  is hospices with 50+ total discharges in FY 2014 [n = 3,135]. Hospice
  deciles are based on estimates of total non-hospice Medicare
  utilization ($) per hospice service day, excluding utilization on
  hospice admission or live discharge days.


[[Page 25514]]

[GRAPHIC] [TIFF OMITTED] TP28AP16.006

    The analytic findings in Table 7 and Figure 4 suggest that some 
hospices may be using the Medicare Hospice program inappropriately as a 
long-term care (``custodial'') benefit rather than an end of life 
benefit for terminal beneficiaries. As previously discussed in reports 
by MedPAC, there is a concern that hospices may be admitting 
beneficiaries who do not legitimately meet hospice eligibility 
criteria. Additionally, the Office of the Inspector General (OIG), has 
raised concerns about the potential for hospices to target 
beneficiaries who have long lengths of stay or certain diagnoses 
because they may offer the hospices the greatest financial gain.\9\ We 
continue to communicate and collaborate across CMS to improve 
monitoring and oversight activities of hospice activities. We expect to 
analyze more recent hospice claims and cost report data as they become 
available to determine whether additional regulatory proposals to 
reform and strengthen the Medicare hospice benefit are warranted.
---------------------------------------------------------------------------

    \9\ Medicare Hospices Have Financial Incentives To Provide Care 
in Assisted Living Facilities OEI-02-14-00070.
---------------------------------------------------------------------------

d. Skilled Visits in the Last Days of Life
    As we noted in the FY 2016 Hospice Wage Index and Payment Rate 
Update final rule (80 FR 47164), 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 2014 claims 
data shows that on any given day during the last 7 days of a hospice 
election, nearly 47 percent of the time the patient has not received a 
skilled visit (skilled nursing or social worker visit) (see Table 8). 
Moreover, on the day of death nearly 26 percent of beneficiaries did 
not receive a skilled visit (skilled nursing or social work visit). 
While Table 8 shows the frequency and length of skilled nursing and 
social work visits combined during the last 7 days of a hospice 
election in FY 2014, Tables 9 and 10 show the frequency and length of 
visits for skilled nursing and social work separately. Analysis of FY 
2014 claims data shows that on any given day during the last 7 days of 
a hospice election, almost 49 percent of the time the patient had not 
received a visit by a skilled nurse, and 91 percent of the time the 
patient had not received a visit by a

[[Page 25515]]

social worker (see Tables 9 and 10, respectively). We believe it is 
important to assure that beneficiaries and their families and 
caregivers are, in fact, receiving the level of care necessary during 
critical periods such as the very end of life.

      Table 8--Frequency and Length of Skilled Nursing and Social Work Visits (Combined) During the Last Seven Days of a Hospice Election, FY 2014
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                              Last seven
                                                     Day of      One day      Two days    Three days   Four days    Five days     Six days       days
                  Visit length                       death        before       before       before       before       before       before      combined
                                                                death  (%)   death  (%)   death  (%)   death  (%)   death  (%)   death  (%)      (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
No visit........................................         25.8         39.0         45.7         50.2         53.5         56.2         58.5         46.3
15 mins to 1 hr.................................         24.6         28.5         26.6         25.4         24.3         23.5         22.7         25.1
1 hr 15 m to 2 hrs..............................         24.9         19.1         17.1         15.6         14.4         13.4         12.6         16.9
2 hrs 15 m to 3 hrs.............................         12.7          7.0          5.7          4.9          4.4          4.1          3.5          6.3
3 hrs 15 m to 3 hrs 45m.........................          4.4          2.3          1.8          1.6          1.3          1.2          1.1          2.0
4 or more hrs...................................          7.6          4.2          3.0          2.4          2.1          1.8          1.6          3.4
rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr
    Total.......................................        100.0        100.0        100.0        100.0        100.0        100.0        100.0        100.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: FY 2014 hospice claims data from the Standard Analytic Files for CY 2013 (as of June 30, 2014) and CY 2014 (as of December 31, 2015).


                    Table 9--Frequency and Length of Skilled Nursing Visits During the Last Seven Days of a Hospice Election, FY 2014
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                              Last seven
                                                     Day of      One day      Two days    Three days   Four days    Five days     Six days       days
                  Visit length                       death        before       before       before       before       before       before      combined
                                                                death  (%)   death  (%)   death  (%)   death  (%)   death  (%)   death  (%)      (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
No visit........................................         27.2         41.6         48.6         53.1         56.5         59.2         61.5         48.9
15 mins to 1 hr.................................         25.1         29.5         27.1         25.5         24.3         23.3         22.3         25.5
1 hr 15 m to 2 hrs..............................         25.2         18.6         16.5         14.8         13.6         12.6         11.8         16.4
2 hrs 15 m to 3 hrs.............................         12.3          5.5          4.4          3.7          3.3          2.9          2.6          5.2
3 hrs 15 m to 3 hrs 45m.........................          4.0          1.7          1.3          1.0          0.8          0.8          0.8          1.6
4 or more hrs...................................          6.3          3.2          2.2          1.8          1.5          1.3          1.2          2.6
rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr
    Total.......................................        100.0        100.0        100.0        100.0        100.0        100.0        100.0        100.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: FY 2014 hospice claims data from the Standard Analytic Files for CY 2013 (as of June 30, 2014) and CY 2014 (as of December 31, 2015).


                     Table 10--Frequency and Length of Social Work Visits During the Last Seven Days of a Hospice Election, FY 2014
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                              Last seven
                                                     Day of      One day      Two days    Three days   Four days    Five days     Six days       days
                  Visit length                       death        before       before       before       before       before       before      combined
                                                                death  (%)   death  (%)   death  (%)   death  (%)   death  (%)   death  (%)      (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
No visit........................................         91.6         89.1         90.2         90.9         91.5         91.9         92.3         91.0
15 mins to 1 hr.................................          4.9          7.1          6.4          6.1          5.7          5.5          5.2          5.8
1 hr 15 m to 2 hrs..............................          2.5          3.1          2.8          2.6          2.4          2.2          2.1          2.6
2 hrs 15 m to 3 hrs.............................          0.6          0.6          0.4          0.3          0.2          0.2          0.2          0.4
3 hrs 15 m to 3 hrs 45m.........................          0.2          0.0          0.0          0.0          0.0          0.0          0.0          0.0
4 or more hrs...................................          0.2          0.1          0.1          0.0          0.0          0.0          0.0          0.1
rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr
    Total.......................................        100.0        100.0        100.0        100.0        100.0        100.0        100.0        100.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: FY 2014 hospice claims data from the Standard Analytic Files for CY 2013 (as of June 30, 2014) and CY 2014 (as of December 31, 2015).

    A recent article published in the Journal of American Medicine 
(JAMA) titled ``Examining Variation in Hospice Visits by Professional 
Staff in the Last 2 Days of Life'' also highlighted concerns regarding 
the lack of visits by professional hospice staff (defined as nursing 
staff (RN and LPN), social workers, nurse practitioners, or physicians) 
in the last days of a hospice episode. This study found that, of the 
661,557 Medicare hospice beneficiaries who died in FY 2014, 81,478 
(12.3 percent) received no professional staff visits in the last 2 days 
of life. Furthermore, professional staff from 281 hospice programs, 
with at least 30 discharges during federal fiscal year 2014, did not 
visit any of their patients who were entitled to have received such RHC 
services during the last 2 days of life. Additionally, the 
investigation demonstrated that black patients and frail, older adults 
residing in nursing homes and enrolled in Medicare hospice often did 
not receive visits from hospice staff in the last 2 days of life, 
raising concerns over disparities of care. The authors believe that 
further research is needed in order to understand

[[Page 25516]]

whether a lack of visits by professional staff affects the quality of 
care for the dying person and their family.\10\ The last week of life 
is typically the period in the terminal illness trajectory with the 
highest symptom burden. Particularly during the last few days before 
death, patients experience a myriad of physical and emotional symptoms, 
necessitating close care and attention from the integrated hospice 
team. Several organizations and panels have identified care of the 
imminently dying patient as an important domain of palliative and 
hospice care and established guidelines and recommendations related to 
this high priority aspect of healthcare that affects a large number of 
people. This is discussed further in section III.C.6, Proposed Updates 
to the Hospice Quality Reporting Program, where a new hospice quality 
reporting measure is proposed, ``Hospice Visits when Death is 
Imminent''. We believe that the implementation of the Service Intensity 
Add-on (SIA) payment, finalized in the FY 2016 Hospice Wage Index and 
Payment Rate Update final rule (80 FR 47164 through 47177), represents 
an incremental step toward encouraging higher frequency of much-needed 
end of life care by encouraging visits during beneficiaries' most 
intensive time of need for skilled care--the last 7 days of life.
---------------------------------------------------------------------------

    \10\ Teno, J., Plotzke, M., Christian, T. & Gozalo, P. (2016). 
Examining Variation in Hospice Visits by Professional Staff in the 
Last 2 Days of Life. Journal of American Medicine Internal Medicine. 
Published online February 8, 2016. doi:10.1001/
jamainternmed.2015.7479.
---------------------------------------------------------------------------

2. Monitoring for Impacts of Hospice Payment Reform
    As noted above, in the FY 2016 Hospice Wage Index and Payment Rate 
Update final rule (80 FR 47142), we finalized the creation of two RHC 
rates--one RHC rate for the first 60 days of hospice care and a second 
RHC rate for days 61 and beyond. As noted in section III.A.1.d, in the 
same final rule, we also created a SIA payment. The SIA payment is paid 
in addition to the RHC per diem payment for direct care provided by a 
RN or social worker in the last 7 days of life. The two RHC rates and 
the SIA payment became effective on January 1, 2016. The goal of these 
hospice payment reform changes is to more accurately align hospice 
payment with resource utilization while encouraging appropriate, high-
quality hospice care, and maximizing beneficiary, family, and caregiver 
satisfaction with care. As noted in the FY 2016 final rule, as data 
become available, we will monitor the impact of the hospice payment 
reform changes finalized in the rule as well as continue to monitor 
general hospice trends to help inform future policy efforts and program 
integrity measures. This monitoring and analysis will include, but not 
be limited to, monitoring hospice diagnosis reporting, lengths of stay, 
live discharge patterns and their relationship with the provision of 
services and the aggregate cap, non-hospice spending for Parts A, B and 
D during a hospice election, trends of live discharge at or around day 
61 of hospice care, and readmissions after a 60 day lapse since live 
discharge.
    Specifically, we will work with our monitoring contractor, Acumen 
LLC, to conduct comprehensive, real time monitoring and analysis of 
hospice claims to help identify program vulnerabilities, as well as 
potential areas of fraud and abuse. To monitor overall usage and 
payment trends in hospice, Acumen will track monthly and annual changes 
in the following metrics.

1. Percentage of Medicare beneficiaries electing hospice
2. Total number of Medicare hospice patients
3. Demographic and geographic location characteristics among Medicare 
hospice patients
4. Number and share of Medicare hospice patients presenting with 
various terminal conditions, aggregated by broader clinical categories
5. Total payment for hospice care (also by level of care)
6. Number and share of live discharges
7. Number and rate of readmissions
8. Average length of episodes
9. Proportion of days by level of care (RHC, CHC, general inpatient 
care (GIP), and inpatient respite care (IRC))
10. Volume and payments for non-hospice services used during hospice 
stays

Additionally, to address policy impacts, specifically for the hospice 
payment reform provisions finalized in the FY 2016 Hospice Wage Index 
and Payment Rate Update final rule, Acumen will longitudinally monitor 
the effect of changes in the RHC payment rate on volume and payments 
for hospice care using the following metrics:

1. Average length of hospice stays
2. Total number and share of live discharges
3. Average readmissions rates within or after 60 days

    Acumen will monitor the effects of the new SIA payment policy using 
the following metrics:

1. Total number of nursing visits (also separately for RNs and LPNs)
2. Total number of visits by social workers
3. Average number of services billed per discharge
4. Average number of hours billed per discharge and per hospice day
5. Average number of services billed during the first 7 days, middle of 
a stay, and last 7 days of a hospice stay
6. Intensity of services billed during the first 7 days, middle of a 
stay, and last 7 days of a hospice stay

    These measures are further broken down by level of care (for 
example, RHC versus CHC) to understand the effect of the SIA payment 
policy on incentivizing care at the RHC level.
    The monitoring analysis can be examined at the aggregate level as 
well as at the individual provider level. This comprehensive and 
provider-level monitoring will not only inform future policymaking 
decisions but targeted program integrity efforts as well.
    In addition to Acumen LLC's comprehensive, real time monitoring and 
analysis of hospice claims, we have developed a hospice Program for 
Evaluating Payment Patterns Electronic Reports (PEPPER), which 
generates informational tables provided to hospices that summarize 
provider-specific Medicare data statistics for target areas often 
associated with Medicare improper payments due to billing, coding and/
or admission necessity issues. The intent of the hospice PEPPER is to 
help inform hospices of potential program administration and other 
vulnerabilities to provide the opportunity for improvement. 
Specifically, these reports can be used to compare performance of a 
specific hospice to that of other hospices in various geographic 
delineations, including the nation, specific MAC jurisdictions, and 
states. PEPPER can also be used to compare data statistics over time to 
identify changes in billing practices, to pinpoint areas in need of 
auditing and monitoring, identify other potential problems and to help 
hospices achieve CMS' goal of reducing and preventing improper 
payments. The hospice PEPPER provides various metrics, including 
several markers of live discharges on various time intervals, markedly 
long lengths of stay, as well as information regarding levels and 
frequency of hospice care provided in various settings. Recently added 
metrics include differentiating reasons for live discharges (for 
example, beneficiary being no longer terminally ill, patient

[[Page 25517]]

revocations), live discharges with length of stay between 61 to179 
days, claims with a single diagnosis coded, and hospice episodes of 
care when no GIP or CHC is provided.

B. Proposed FY 2017 Hospice Wage Index and Rate Update

1. Proposed FY 2017 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 FY's hospital wage index data to calculate the 
hospice wage index values. For FY 2017, the hospice wage index will be 
based on the FY 2016 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 changes 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.
    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 adopted the policy that for urban labor markets without a 
hospital from which hospital wage index data could be derived, all of 
the CBSAs within the state would be used to calculate a statewide urban 
average pre-floor, pre-reclassified hospital wage index value to use as 
a reasonable proxy for these areas. In FY 2016, the only CBSA without a 
hospital from which hospital wage data could be derived is 25980, 
Hinesville-Fort Stewart, 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 value 
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. In this proposed rule, for FY 2017, we 
propose to continue to use the most recent pre-floor, pre-reclassified 
hospital wage index value available for Puerto Rico, which is 0.4047.
    As described in the August 8, 1997 Hospice Wage Index final rule 
(62 FR 42860), the pre-floor and pre-reclassified hospital wage index 
is used as the raw wage index for the hospice benefit. These raw wage 
index values are then subject to application of the hospice floor to 
compute the hospice wage index used to determine payments to hospices. 
Pre-floor, pre-reclassified hospital wage index values below 0.8 are 
adjusted by 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.
b. FY 2016 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 Combines 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.'' In the FY 2016 Hospice Wage Index final rule 
(80 FR 47178), we adopted the OMB's new area delineations using a 1-
year transition. In the FY 2016 Hospice Wage Index and Payment Rate 
Update final rule (80 FR 47178), we stated that beginning October 1, 
2016, the wage index for all hospice payments would be fully based on 
the new OMB delineations.
    The proposed wage index applicable for FY 2017 is available on the 
CMS Web site at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/Hospice/index.html. The proposed wage index applicable for FY 
2017 will not be published in the Federal Register. The proposed 
hospice wage index for FY 2017 would be effective October 1, 2016 
through September 30, 2017.
2. Proposed 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 inpatient hospital market basket index 
set out under section 1886(b)(3)(B)(iii) of the Act, minus 1 percentage 
point. Payment rates for FYs since 2002 have been updated according to 
section 1814(i)(1)(C)(ii)(VII) of the Act, which states that the update 
to the payment rates for subsequent FYs must be the inpatient 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

[[Page 25518]]

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 proposed hospice 
payment update percentage for FY 2017 is based on the estimated 
inpatient hospital market basket update of 2.8 percent (based on IHS 
Global Insight, Inc.'s first quarter 2016 forecast with historical data 
through the fourth 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 2017 of 2.8 percent must 
be reduced by a MFP adjustment as mandated by Affordable Care Act 
(currently estimated to be 0.5 percentage point for FY 2017). The 
estimated inpatient hospital market basket update for FY 2017 is 
reduced further by 0.3 percentage point, as mandated by the Affordable 
Care Act. In effect, the proposed hospice payment update percentage for 
FY 2017 is 2.0 percent. We are also proposing that if more recent data 
are subsequently available (for example, a more recent estimate of the 
inpatient hospital market basket update and MFP adjustment), we would 
use such data, if appropriate, to determine the FY 2017 market basket 
update and the MFP adjustment in the FY 2017 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.
3. Proposed FY 2017 Hospice Payment Rates
    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 person at home; IRC 
is short-term care to allow the usual caregiver to rest and be relieved 
from caregiving; and GIP is to treat symptoms that cannot be managed in 
another setting.
    As discussed in the FY 2016 Hospice Wage Index and Payment Rate 
Update final rule (80 FR 47172), we implemented two different RHC 
payment rates, one RHC rate for the first 60 days and a second RHC rate 
for days 61 and beyond. In addition, in the final rule, we adopted a 
Service Intensity Add-on (SIA) payment, when direct patient care is 
provided by a RN or social worker during the last 7 days of the 
beneficiary's life. The SIA payment is 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, if certain criteria 
are met. In order to maintain budget neutrality, as required under 
section 1814(i)(6)(D)(ii) of the Act, the new RHC rates were adjusted 
by a SIA budget neutrality factor.
    As discussed in the FY 2016 Hospice Wage Index and Payment Rate 
Update final rule (80 FR 47177), we will continue to make the SIA 
payments budget neutral through an annual determination of the SIA 
budget neutrality factor (SBNF), which will then be applied to the RHC 
payment rates. The SBNF will be calculated for each FY using the most 
current and complete FY utilization data available at the time of 
rulemaking. For FY 2017, the budget neutrality adjustment that would 
apply to days 1 through 60 is calculated to be 1.0001. The budget 
neutrality adjustment that would apply to days 61 and beyond is 
calculated to be 0.9999.
    For FY 2017, we are proposing to apply a wage index standardization 
factor to the FY 2017 hospice payment rates in order to ensure overall 
budget neutrality when updating the hospice wage index with more recent 
hospital wage data. Wage index standardization factors are applied in 
other payment settings such as under home health Prospective Payment 
System (PPS), IRF PPS, and SNF PPS. Applying a wage index 
standardization factor to hospice payments would eliminate the 
aggregate effect of annual variations in hospital wage data. We believe 
that adopting a hospice wage index standardization factor would provide 
a safeguard to the Medicare program as well as to hospices because it 
would mitigate fluctuations in the wage index by ensuring that wage 
index updates and revisions are implemented in a budget neutral manner. 
To calculate the wage index standardization factor, we simulated total 
payments using the FY 2017 hospice wage index and compared it to our 
simulation of total payments using the FY 2016 hospice wage index. By 
dividing payments for each level of care using the FY 2017 wage index 
by payments for each level of care using the FY 2016 wage index, we 
obtain a wage index standardization factor for each level of care (RHC 
days 1-60, RHC days 61+, CHC, IRC, and GIP).
    Lastly, the hospice payment rates for hospices that submit the 
required quality data would be increased by the full proposed FY 2017 
hospice payment update percentage of 2.0 percent as discussed in 
section III.C.3. The proposed FY 2017 RHC rates are shown in Table 11. 
The proposed FY 2017 payment rates for CHC, IRC, and GIP are shown in 
Table 12.

[[Page 25519]]



                                                  Table 11--Proposed FY 2017 Hospice RHC Payment Rates
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                              FY 2017
                                                                                                         Proposed  wage      proposed
                                                                            FY 2016                           index           hospice         FY 2017
                 Code                            Description             payment rates       SBNF        standardization      payment        proposed
                                                                                                             factor           update       payment rates
                                                                                                                            percentage
--------------------------------------------------------------------------------------------------------------------------------------------------------
651..................................  Routine Home Care (days 1-60)..         $186.84        x 1.0001          x 0.9990         x 1.020         $190.41
651..................................  Routine Home Care (days 61+)...          146.83        x 0.9999          x 0.9995         x 1.020          149.68
--------------------------------------------------------------------------------------------------------------------------------------------------------


                       Table 12--Proposed FY 2017 Hospice CHC, IRC, and GIP Payment Rates
----------------------------------------------------------------------------------------------------------------
                                                                                      FY 2017
                                                                 Proposed  wage      proposed
                                                    FY 2016           index           hospice         FY 2017
           Code                Description       payment rates   standardization      payment        proposed
                                                                     factor           update       payment rates
                                                                                    percentage
----------------------------------------------------------------------------------------------------------------
652......................  Continuous Home             $944.79          x 1.0000         x 1.020         $963.69
                            Care.
                           Full Rate = 24
                            hours of care
                           40.16 = FY 2017
                            hourly rate
655......................  Inpatient Respite            167.45          x 1.0000         x 1.020          170.80
                            Care.
656......................  General Inpatient            720.11          x 0.9996         x 1.020          734.22
                            Care.
----------------------------------------------------------------------------------------------------------------

    Sections 1814(i)(5)(A) through (C) of the Act require that hospices 
begin submitting quality data, based on measures to be specified by the 
Secretary. In the FY 2012 Hospice Wage Index final rule (76 FR 47320 
through 47324), we implemented a Hospice Quality Reporting Program 
(HQRP) as required by section 3004 of the Affordable Care Act. Hospices 
were required to begin collecting quality data in October 2012, and 
submit that quality data in 2013. Section 1814(i)(5)(A)(i) of the Act 
requires that beginning with FY 2014 and each subsequent FY, the 
Secretary shall reduce the market basket update by 2 percentage points 
for any hospice that does not comply with the quality data submission 
requirements with respect to that FY. The proposed FY 2017 rates for 
hospices that do not submit the required quality data would be updated 
by the proposed FY 2017 hospice payment update percentage of 2.0 
percent minus 2 percentage points. These rates are shown in Tables 13 
and 14.

                     Table 13--Proposed FY 2017 Hospice RHC Payment Rates for Hospices That DO NOT Submit the Required Quality Data
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                              FY 2017
                                                                                                                             proposed
                                                                                                         Proposed  wage       hospice
                                                                            FY 2016                           index           payment         FY 2017
                 Code                            Description             payment rates       SBNF        standardization  update of 2.0%     proposed
                                                                                                             factor           minus 2     payment  rates
                                                                                                                            percentage
                                                                                                                           points = 0.0%
--------------------------------------------------------------------------------------------------------------------------------------------------------
651..................................  Routine Home Care (days 1-60)..         $186.84        x 1.0001          x 0.9990         x 1.000         $186.67
651..................................  Routine Home Care (days 61+)...          146.83        x 0.9999          x 0.9995         x 1.000          146.74
--------------------------------------------------------------------------------------------------------------------------------------------------------


 Table 14--Proposed FY 2017 Hospice CHC, IRC, and GIP Payment Rates for Hospices That DO NOT Submit the Required
                                                  Quality Data
----------------------------------------------------------------------------------------------------------------
                                                                                      FY 2017
                                                                                     proposed
                                                                 Proposed  wage       hospice
                                                    FY 2016           index           payment         FY 2017
           Code                Description       payment rates   standardization     update of       proposed
                                                                     factor        2.0% minus  2   payment rates
                                                                                    percentage
                                                                                   points = 0.0%
----------------------------------------------------------------------------------------------------------------
652......................  Continuous Home             $944.79          x 1.0000         x 1.000         $944.79
                            Care.
                           Full Rate = 24
                            hours of care.
                           $39.37 = FY 2017
                            hourly rate.
655......................  Inpatient Respite            167.45          x 1.0000         x 1.000          167.45
                            Care.
656......................  General Inpatient            720.11          x 0.9996         x 1.000          719.82
                            Care.
----------------------------------------------------------------------------------------------------------------


[[Page 25520]]

4. Hospice Cap Amount for FY 2017
    As discussed in the FY 2016 Hospice Wage Index and Payment Rate 
Update final rule (80 FR 47183), we implemented changes mandated by the 
Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT 
Act). Specifically, for accounting years that end after September 30, 
2016 and before October 1, 2025, the hospice cap is updated by the 
hospice payment update percentage rather than using the consumer price 
index for urban consumers (CPI-U). As required by section 
1814(i)(2)(B)(ii) of the Act, the hospice cap amount for the 2016 cap 
year, starting on November 1, 2015 and ending on October 31, 2016, is 
equal to the 2015 cap amount ($27,382.63) updated by the FY 2016 
hospice payment update percentage of 1.6 percent. As such, the 2016 cap 
amount is $27,820.75.
    In the FY 2016 Hospice Wage Index and Payment Rate Update final 
rule (80 FR 47142), we finalized aligning the cap accounting year with 
the federal fiscal year beginning in 2017. Therefore, the 2017 cap year 
will start on October 1, 2016 and end on September 30, 2017. Table 26 
in the FY 2016 Hospice Wage Index and Payment Rate Update final rule 
(80 FR 47185) outlines the timeframes for counting beneficiaries and 
payments during the 2017 transition year. The hospice cap amount for 
the 2017 cap year will be $28,377.17, which is equal to the 2016 cap 
amount ($27,820.75) updated by the FY 2017 hospice payment update 
percentage of 2.0 percent.

C. 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 for 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, including the endorsement of quality measures, 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 HQRP that promotes the delivery of high quality healthcare 
services. We seek to adopt measures for the HQRP that promote person-
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 
(https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityInitiativesGenInfo/CMS-Quality-Strategy.html). To 
the extent practicable, we have sought to adopt measures endorsed by 
member organizations of the National Consensus Project (NCP), 
recommended by multi -stakeholder organizations, and developed with the 
input of providers, purchasers/payers, and other stakeholders.
3. Policy for Retention of HQRP Measures Adopted for Previous Payment 
Determinations
    In the FY 2016 Hospice Wage Index final rule, for the purpose of 
streamlining the rulemaking process, we stated that when we adopt 
measures for the HQRP beginning with a payment determination year, 
these measures would automatically be adopted for all subsequent years' 
payment determinations, unless we proposed to remove, suspend, or 
replace the measures. Quality measures would be considered for removal 
by CMS if:
     Measure performance among hospices was so high and 
unvarying that meaningful distinction in improvements in performance 
could no longer be made;
     Performance or improvement on a measure did not result in 
better patient outcomes;
     A measure did not align with current clinical guidelines 
or practice;
     A more broadly applicable measure (across settings, 
populations, or conditions) for the particular topic was available;
     A measure that was more proximal in time to desired 
patient outcomes for the particular topic was available;
     A measure that was more strongly associated with desired 
patient outcomes for the particular topic was available; or
     Collection or public reporting of a measure led to 
negative unintended consequences.
    For any such removal, the public would be given an opportunity to 
comment through the annual rulemaking process. However, if there was 
reason to believe continued collection of a measure raised potential 
safety concerns, we would take immediate action to remove the measure 
from the HQRP and not wait for the annual rulemaking cycle. The 
measures would be promptly removed and we would immediately notify 
hospices and the public of such a decision through the usual CMS HQRP 
communication channels, including postings and

[[Page 25521]]

announcements on the CMS HQRP Web site, Medicare Learning Network (MLN) 
eNews communications, National provider association calls, and 
announcements on Open Door Forums and Special Open Door Forums. In such 
instances, the removal of a measure would be formally announced in the 
next annual rulemaking cycle.
    To further streamline the rulemaking process, we propose to codify 
that if measures we are using in the HQRP undergo non-substantive 
changes in the specifications as part of their NQF re-endorsement 
process, we would subsequently utilize the measure with their new 
endorsed status in the HQRP without going through new notice-and-
comment rulemaking. As mentioned previously, quality measures selected 
for the HQRP must be endorsed by the NQF unless they meet the statutory 
criteria for exception under section 1814(i)(5)(D)(ii) of the Act. The 
NQF is a voluntary consensus standard-setting organization with a 
diverse representation of consumer, purchaser, provider, academic, 
clinical, and other healthcare stakeholder organizations. The NQF was 
established to standardize healthcare quality measurement and reporting 
through its consensus measure development process (http://www.qualityforum.org/About_NQF/Mission_and_Vision.aspx). The NQF 
undertakes review of: (1) New quality measures and national consensus 
standards for measuring and publicly reporting on performance; (2) 
regular maintenance processes for endorsed quality measures; (3) 
measures with time limited endorsement for consideration of full 
endorsement; and (4) ad hoc review of endorsed quality measures, 
practices, consensus standards, or events with adequate justification 
to substantiate the review. Through NQF's measure maintenance process, 
NQF-endorsed measures are sometimes updated to incorporate changes that 
we believe do not substantially change the nature of the measure. 
Examples of such changes could be updated diagnosis or procedure codes, 
or changes to exclusions to a particular patient/consumer population or 
definitions. We believe these types of maintenance changes are distinct 
from more substantive changes to measures. Additionally, since the NQF 
endorsement and measure maintenance process is one that ensures 
transparency, public input, and discussion among representatives across 
the healthcare enterprise,\11\ we believe that the NQF measure 
endorsement and maintenance process itself is transparent, 
scientifically rigorous, and provides opportunity for public input. 
Thus, we propose to codify at Sec.  418.312 that if the NQF makes only 
non-substantive changes to specifications for HQRP measures in the 
NQF's re-endorsement process we would continue to utilize the measure 
in its new endorsed status. If NQF-endorsed specifications change and 
we do not adopt those changes, then we would propose the measure as an 
application (that is, with CMS modifications). An application of a NQF-
endorsed quality measure is utilized in instances when we have 
identified a need to use a NQF-endorsed measure in a QRP, but needs to 
use it with one or more modifications to the quality measure's 
specifications. We may modify one or more of the following aspects of a 
NQF-endorsed quality measure: (1) Numerator; (2) denominator; (3) 
setting; (4) look-back period; (5) calculation period; (6) risk 
adjustment; and (7) revisions to data elements used to collect the data 
the data required for the measure. Reasons for not adopting changes in 
measure specifications may include any of the aforementioned criteria 
for removal, including that the new specification does not align with 
clinical guidelines or practice, or that the new specification leads to 
negative unintended consequences. Finally, we will continue to use 
rulemaking to adopt substantive updates made by the NQF to the endorsed 
measures we have adopted for the HQRP. We continue to make these 
determinations about what constitutes a substantive vs non-substantive 
change on a measure-by-measure basis. We will continue to provide 
updates about changes to measure specifications as a result of NQF 
endorsement or maintenance processes through the normal CMS HQRP 
communication channels, including postings and announcements on the CMS 
HQRP Web site, MLN eNews communications, National provider association 
calls, and announcements on Open Door Forums and Special Open Door 
Forums.
---------------------------------------------------------------------------

    \11\ ``NQF: How Endorsement Happens--National Quality Forum.'' 
2010. 26 Jan. 2016 http://www.qualityforum.org/Measuring_Performance/ABCs/How_Endorsement_Happens.aspx.
---------------------------------------------------------------------------

4. Previously Adopted Quality Measures for FY 2017 and FY 2018 Payment 
Determination
    As stated in the CY 2013 HH PPS final rule (77 FR 67068 through 
67133), We 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, we developed, tested, and 
implemented a hospice patient-level item set, the HIS. Hospices are 
required to submit a HIS-Admission record and a HIS-Discharge record 
for each patient admission to hospice since 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 through 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 6 NQF endorsed 
measures and 1 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 after 
July 1, 2014, regardless of payer or patient age (78 FR 48234 through 
48258). We finalized a requirement in the FY 2014 Hospice Wage Index 
final rule (78 FR 48258) that hospice providers collect data on all 
patients 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 a HIS-Admission and a 
HIS-Discharge record for each patient admission. Hospices failing to 
report quality data via the HIS for patient admissions occurring in 
2016 will have their market basket update reduced by 2 percentage 
points in FY 2018 (beginning in October 1, 2017). In the FY 2015 
Hospice Wage Index final rule (79 FR 50485 through 50487), we

[[Page 25522]]

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).

 Table 15--Previously Finalized Quality Measures Affecting the FY 2017 Payment Determination and Subsequent Year
----------------------------------------------------------------------------------------------------------------
                                                                                               Data submission
         Quality measure            NQF ID No.          Type            Submission method         deadlines
----------------------------------------------------------------------------------------------------------------
Treatment Preferences............         1641  Process Measure.....  Hospice Item Set....  Within 30 days of
                                                                                             patient admission
                                                                                             or discharge (Event
                                                                                             Date).
Beliefs/Values Addressed.........         1647
Pain Screening...................         1634
Pain Assessment..................         1637
Dyspnea Screening................         1639
Dyspnea Treatment................         1638
Patients Treated with an Opioid           1617
 who are Given a Bowel Regimen.
----------------------------------------------------------------------------------------------------------------
 

5. Proposed Removal of Previously Adopted Measures
    As mentioned in section III.E.3, a measure that is adopted and 
implemented in the HQRP will be adopted for all subsequent years, 
unless the measure is proposed for removal, suspension, or replacement 
by CMS. Policies and criteria for removing a measure include those 
mentioned in section III.E.3 of this proposed rule. We are not 
proposing to remove any of the current HQRP measures at this time. Any 
future proposals regarding removal, suspension, or replacement of 
measures will be proposed in this section of future rules.
6. Proposed New Quality Measures for FY 2019 Payment Determinations and 
Subsequent Years and Concepts Under Consideration for Future Years
a. Background and Considerations in Developing New Quality Measures for 
the HQRP
    As noted in section III.E.2 of this proposed rule, our paramount 
concern is to develop quality measures that promote care that is 
person-centered, high quality, and safe. In identifying priority areas 
for future measure enhancement and development, we take into 
consideration input from numerous stakeholders, including the MAP, the 
MedPAC, Technical Expert Panels (TEP), 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, we takes into 
consideration vital feedback and input from research published by our 
payment reform contractor, as well as important observations and 
recommendations contained in the Institute of Medicine (IOM) report, 
titled ``Dying in America'', released in September 2014.\12\ 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.
---------------------------------------------------------------------------

    \12\ 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.
---------------------------------------------------------------------------

    As stated in the FY 2016 Hospice Wage Index final rule (80 FR 
47188), based on input from stakeholders, we identified several high 
priority areas for future measure development, including: A patient 
reported pain outcome measure; claims-based measures focused on care 
practices patterns, including skilled visits in the last days of life; 
responsiveness of the hospice to patient and family care needs; and 
hospice team communication and care coordination. Of the aforementioned 
measure areas, we have pursued measure development for 2 quality 
measures: Hospice Visits when Death is Imminent Measure Pair, and 
Hospice and Palliative Care Composite Process Measure-Comprehensive 
Assessment at Admission. These measures were included on CMS' List of 
Measures under Consideration (MUC list) for 2015, and discussed at the 
MAP meeting on December 14 and 15, 2015. All materials related to the 
MUC list and the MAP's recommendations for each measure can be found on 
the National Quality Forum Web site, MAP Post-Acute Care/Long-Term Care 
Workgroup Web page at: http://www.qualityforum.org/ProjectMaterials.aspx?projectID=75370. The MAP supported the direction 
of each proposed measure.
b. New Quality Measures for the FY 2019 Payment Determination and 
Subsequent Years
    We are proposing 2 new quality measures for the HRQP for the FY 
2019 payment determination and subsequent years: Hospice Visits when 
Death is Imminent Measure Pair, and Hospice and Palliative Care 
Composite Process Measure-Comprehensive Assessment at Admission.
(1) Proposed Quality Measure 1: Hospice Visits When Death is Imminent 
Measure Pair
    Measure Background. This measure set addresses whether a hospice 
patient and their caregivers' needs were addressed by the hospice staff 
during the last days of life. This measure is specified as a set of 2 
measures as follows:
    Measure 1--assesses the percentage of patients receiving at least 1 
visit from registered nurses, physicians, nurse practitioners, or 
physician assistants in the last 3 days of life and addresses case 
management and clinical care.
    Measure 2--assesses the percentage of patients receiving at least 2 
visits from medical social workers, chaplains or spiritual counselors, 
licensed practical nurses, or hospice aides in the last 7 days of life 
and gives providers the flexibility to provide individualized care that 
is in line with the patient, family, and caregiver's preferences and 
goals for care and contributing to the overall well-being of the 
individual and others important in their life.
    Measure Importance. The last week of life is typically the period 
in the terminal illness trajectory with the highest symptom burden. 
Particularly during the last few days before death, patients experience 
myriad physical and emotional symptoms, necessitating close care and 
attention from the

[[Page 25523]]

integrated hospice team. Hospice responsiveness during times of patient 
and caregiver need is an important aspect of care for hospice 
consumers. In addition, clinician visits to patients at the end of life 
have been demonstrated to be associated with improved outcomes such as 
decreased risk of hospitalization, emergency room visits, and hospital 
death, and decreased distress for caregivers and higher satisfaction 
with care.
    Several organizations and panels have identified care of the 
imminently dying patient as an important domain of palliative and 
hospice care and established guidelines and recommendations related to 
this high priority aspect of healthcare that affects a large number of 
people. The NQF 2006 report A Framework for Preferred Practices for 
Palliative Care Quality \13\ and the NCP Clinical Practice Guidelines 
for Quality Palliative Care \14\ recommend that signs and symptoms of 
impending death are recognized, communicated and educated, and care 
appropriate for the phase of illness is provided. The American College 
of Physicians Clinical Practice Guidelines \15\ recommend that 
clinicians regularly assess pain, dyspnea, and depression for patients 
with serious illness at the end of life. These measures address this 
high priority area by assessing hospice staff visits to patients and 
caregivers during the final days of life when patients and caregivers 
typically experience higher symptom and caregiving burdens, and 
therefore a higher need for care.
---------------------------------------------------------------------------

    \13\ National Quality Forum. A National Framework and Preferred 
Practices for Palliative and Hospice Care Quality. 2006; Available 
from: http://www.qualityforum.org/publications/2006/12/A_National_Framework_and_Preferred_Practices_for_Palliative_and_Hospice_Care_Quality.aspx.
    \14\ National Consensus Project, Clinical Practice Guidelines 
for Quality Palliative Care. 3rd edition. 2013, National Consensus 
Project: Pittsburgh, PA.
    \15\ Qaseem, A., 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. Annals of Internal Medicine, 2008. 148(2): p. 141-146.
---------------------------------------------------------------------------

    Measure Impact. The literature shows that health care providers' 
practice is responsive to quality measuring and reporting.\16\ We 
believe that this research, while not specific to hospices, reasonably 
predicts the effect of measures on hospice provider behavior. 
Collecting information about hospice staff visits for measuring quality 
of care, in addition to the requirement of reporting visits from some 
disciplines on hospice claims, will encourage hospices to visit 
patients and caregivers and provide services that will address their 
care needs and improve quality of life during the patients' last days 
of life.
---------------------------------------------------------------------------

    \16\ Werner, R., E. Stuart, and D. Polsky, Public reporting 
drove quality gains at nursing homes. Health Affairs, 2010. 29(9): 
p. 1706-1713.
---------------------------------------------------------------------------

    Performance Gap. The 2014 Abt Medicare Hospice Payment Reform 
Report indicated that 28.9 percent of Routine Home Care hospice 
patients did not receive a skilled visit on the last day of life.\17\ 
The Report defines a `skilled visit' as a visit from a nurse, social 
worker, or therapist. This percentage could be, in part, a result of 
rapid decline and unexpected death. The report revealed variation in 
receipt of visits at the end of life related to multiple factors. 
Patients who died on a weekday rather than a weekend, patients with a 
very short length of stay (5 days or less), and patients aged 84 and 
younger were more likely to receive a skilled visit in the last 2 days 
of life. Smaller hospices and hospices in operation for 5 years or less 
were slightly less likely to provide a visit at the end of life. States 
with the lowest rates of no visits in the last days of life were some 
of the more rural states (ND, WI, TN, KS, VT), whereas states with the 
highest rates of no visits were more urban (NJ, MA, OR, WA, MN).
---------------------------------------------------------------------------

    \17\ Plotzke, M., et al., Medicare Hospice Payment Reform: 
Analyses to Support Payment Reform. May 2014, Abt Associates Inc. 
Prepared for Centers for Medicare and Medicaid Services: Cambridge, 
MA.
---------------------------------------------------------------------------

    Existing Measures. This quality measure set will fill a gap by 
addressing hospice care provided at the end of life. No current HQRP 
measures address care beyond the hospice initial and comprehensive 
assessment period, nor do any current HQRP measures relate to the 
assessment of hospice staff visits to patients and caregivers in the 
last week of life.
    Stakeholder Support. A TEP convened by our measure development 
contractor, RTI International, on May 7 and 8, 2015, provided input on 
the measure concept. The TEP agreed that hospice visits when death is 
imminent is an important concept to measure and supported data 
collection using the HIS. A second TEP was convened October 19 and 21, 
2015, to provide input on the technical specifications of this quality 
measure pair. The TEP supported development of a measure set rather 
than a single measure, using different timeframes to measure the 
different types of care provided, and limiting the measures to patients 
receiving routine home care. The NQF MAP met on December 14th and 15th, 
2015 and provided input to CMS. The MAP encouraged continued 
development of the Hospice Visits when Death is Imminent measure pair 
in the HQRP. More information about the MAP's recommendations for this 
measure is available at: http://www.qualityforum.org/ProjectMaterials.aspx?projectID=75370. While this measure is not 
currently NQF endorsed, we recognize that the NQF endorsement process 
is an important part of measure development and plan to submit this 
measure pair for NQF endorsement.
    Form, Manner, and Timing of Data Collection and Submission. Data 
for this measure would be collected via the existing data collection 
mechanism, the HIS. We have proposed that 4 new items be added to the 
HIS-Discharge record to collect the necessary data elements for this 
measure. We expect that data collection for this quality measure via 
the 4 new HIS items would begin no earlier than April 1, 2017. Thus, 
under our current timelines, hospice providers would begin data 
collection for this measure for patient admissions and discharges 
occurring after April 1, 2017. Prior to the release of the new HIS data 
items, we will provide education and training to hospice providers to 
ensure all providers have adequate information and guidance to collect 
and submit data on this measure to CMS.
    Since the data collection mechanism is the HIS, providers would 
collect and submit data using the same processes that are outlined in 
sections III.E.7c through III.E.7e of this proposed rule. In those 
sections, we specify that data for the measure would be submitted to 
the Quality Improvement and Evaluation System (QIES) Assessment 
Submission and Processing (ASAP) system, in compliance with the 
timeliness criterion and threshold set out.
    For more information on the specifications and data elements for 
the measure set, Hospice Visits when Death is Imminent, we refer 
readers to the HQRP Specifications for the Hospice Item Set-based 
Quality Measures document, available on the ``Current Measures'' 
portion of the CMS HQRP Web site: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Hospice-Quality-Reporting/Current-Measures.html. In addition, to facilitate the reporting of HIS 
data as it relates to the implementation of the new measure, we 
submitted a request for approval to OMB for the Hospice Item Set 
version 2.00.0 under the Paperwork Reduction Act (PRA) process. The new 
HIS data items that would collect this measure data are also available 
for public viewing in the PRA package available at: https://www.cms.gov/Regulations-and-Guidance/Legislation/PaperworkReductionActof1995/PRA-Listing.html.

[[Page 25524]]

    We invite public comment on our proposal to implement the Hospice 
Visits when Death is Imminent measure pair beginning April 1, 2017, as 
previously
(2) Proposed Quality Measure 2: Hospice and Palliative Care Composite 
Process Measure--Comprehensive Assessment at Admission
    Measure Background. The Hospice and Palliative Care Composite 
Process Measure--Comprehensive Assessment at Admission is a composite 
measure that assesses whether a comprehensive patient assessment is 
completed at hospice admission by evaluating the number of individual 
care processes completed upon admission for each hospice patient stay. 
A composite measure, as defined by the NQF, is a combination of 2 or 
more component measures, each of which individually reflects quality of 
care, into a single performance measure with a single score.\18\ For 
more information on composite measure definitions, guiding principles, 
and measure evaluation criteria, we refer readers to the NQF Composite 
Performance Measure Evaluation Guidance Publication available at: 
https://www.qualityforum.org/Publications/2013/04/Composite_Performance_Measure_Evaluation_Guidance.aspx. A total of 7 
individual care processes will be captured in this composite measure, 
which include the 6 NQF-endorsed quality measures and 1 modified NQF-
endorsed quality measure currently implemented in the HQRP. Thus, the 
Hospice and Palliative Care Composite Process quality measure will use 
the current HQRP quality measures as its components. These individual 
component measures address care processes around hospice admission that 
are clinically recommended or required in the hospice CoPs.\19\ This 
measure calculates the percentage of patients who received all care 
processes at admission. To calculate this measure, the individual 
component of the composite measure are assessed separately for each 
patient and then aggregated into one score for each hospice.
---------------------------------------------------------------------------

    \18\ National Quality Forum. (2013). Composite Performance 
Measure Evaluation Guidance: National Quality Forum.
    \19\ Medicare and Medicaid Programs: Hospice Conditions of 
Participation, Part 418 subpart 54. Centers for Medicare and 
Medicaid Services, June 5, 2008.
---------------------------------------------------------------------------

    Measure Importance. This composite quality measure for 
comprehensive assessment at admission addresses high priority aspects 
of quality hospice care as identified by both leading hospice 
stakeholders and beneficiaries receiving hospice services. The NCP for 
Quality Palliative Care Clinical Practice Guidelines for Quality 
Palliative Care established 8 core palliative care domains, and this 
composite measure captures 4 of those domains.\20\ The 4 domains 
captured by this composite measure are: The Structure and Process of 
Care Domain; the Physical Aspects of Care Domain; the Spiritual, 
Religious, and Existential Aspects of Care Domain, and the Ethical and 
Legal Aspects of Care Domain. The NCP guidelines placed equal weight on 
both the physical and psychosocial domains, emphasizing a comprehensive 
approach to patient care. For more information on the NCP domains for 
palliative care, refer to: http://www.nationalconsensusproject.org/guidelines_download2.aspx. In addition, the Medicare Hospice CoPs 
require that hospice comprehensive assessments identify patients' 
physical, psychosocial, emotional, and spiritual needs, and address 
them to promote the hospice patient's comfort throughout the end-of-
life process. Furthermore, the person-centered, family, and caregiver 
perspective align with the domains identified by the CoPs and NCP, as 
patients and their families/caregiver also place value on physical 
symptom management and spiritual/psychosocial care as important factors 
at the end of life.21 22 A composite measure serves to 
ensure all hospice patients receive a comprehensive assessment for both 
physical and psychosocial needs at admission.
---------------------------------------------------------------------------

    \20\ The National Consensus Project for Quality Palliative Care 
Clinical Practice Guidelines for Quality Palliative Care 3rd edition 
2013.
    \21\ Singer PA, Martin DK, Kelner M. Quality End-of-Life Care: 
Patients' Perspectives. JAMA. 1999;281(2):163-168. doi:10.1001/
jama.281.2.163.
    \22\ Steinhauser KE, Christakis NA, Clipp EC, McNeilly M, 
McIntyre L, Tulsky JA. Factors Considered Important at the End of 
Life by Patients, Family, Physicians, and Other Care Providers. 
JAMA. 2000;284(19):2476-2482. doi:10.1001/jama.284.19.2476.
---------------------------------------------------------------------------

    Measure Impact. The literature indicates that health care 
providers' practice is responsive to quality measures reported.\23\ We 
believe this research, while not specific to hospices, reasonably 
predicts the effect of measures on hospice provider behavior. 
Collecting information about the total number of care processes 
conducted for each patient will incentivize hospices to conduct all 
desirable care processes for each patient and provide services that 
will address their care needs and improve quality during the time he/
she is receiving hospice care. Additionally, creating a composite 
quality measure for comprehensive assessment at admission will provide 
consumers and providers with a single measure regarding the overall 
quality and completeness of assessment of patient needs at hospice 
admission, which can then be used to meaningfully and easily compare 
quality across hospice providers and increase transparency.
---------------------------------------------------------------------------

    \23\ Werner, R., E. Stuart, and D. Polsky, Public reporting 
drove quality gains at nursing homes. Health Affairs, 2010. 29(9): 
p. 1706-1713.
---------------------------------------------------------------------------

    Performance Gap. Analyses conducted by our measure development 
contractor, RTI International, show that hospice performance scores on 
the current 7 HQRP measures are high (a score of 90 percent or higher) 
however, these analyses also revealed that, on average, only 68.1 
percent of patient stays in a hospice had documentation that all of 
these desirable care processes were done at admission. Thus, by 
assessing hospices' performance of comprehensive assessment, the 
composite measure sets a higher standard of care for hospices and 
reveals a larger performance gap. A similar effect has been shown in 
the literature where facilities are achieving more than 90 percent 
compliance with individual measures, but compliance numbers decrease 
when multiple measures are combined as one.24 25 The 
performance gap identified by the composite measure creates 
opportunities for quality improvement and may motivate providers to 
conduct a greater number of high priority care processes for as many 
patients as possible upon admission to hospice.
---------------------------------------------------------------------------

    \24\ Nolan, T., & Berwick, D. M. (2006). All-or-none measurement 
raises the bar on performance. JAMA [H.W. Wilson--GS], 295(10), 
1168.
    \25\ Agency for Healthcare Research and Quality. (2004). 
National Healthcare Quality Report.
---------------------------------------------------------------------------

    Existing Measures. The Family Evaluation of Hospice Care (FEHC), 
NQF #0208, is a precursor of the Hospice CAHPS[supreg]. The surveys 
cover some similar domains. However, a major difference between them is 
the detailed requirements for survey administration of the 
CAHPS[supreg] Hospice Survey, which allow for comparison of hospice 
programs, The Hospice CAHPS[supreg] survey quality measure is not yet 
endorsed by NQF. We have recently submitted the CAHPS[supreg] Hospice 
Survey (experience of care) measure (NQF #2651) to be considered for 
endorsement under the Palliative and End-of-Life Care Project 2015-
2016. For more information regarding this project and the measure 
submitted, we refer readers to https://www.qualityforum.org/ProjectMeasures.aspx?projectID=80663. In addition, we refer readers to 
section III.E.9 of this proposed rule for more information on the 
Hospice CAHPS[supreg] survey and associated quality

[[Page 25525]]

measures. The CAHPS[supreg]-based quality measures submitted to NQF 
include patient and caregiver experience of care outcome measures, and 
our plan to propose these measures as part of the HQRP measure set in 
future rulemaking cycles. A key difference between the FEHC, Hospice 
CAHPS[supreg] and the Hospice and Palliative Care Composite Process 
Measure is that the FEHC and Hospice CAHPS[supreg] focus on the 
consumer's perspective of their health agency and experience, whereas 
the Hospice and Palliative Care Composite Process Measure focuses on 
the clinical care processes that are actually delivered by the hospice 
to each patient.
    Stakeholder Support. A TEP convened by our measure development 
contractor, RTI International, on December 2, 2015, provided input on 
this measure concept. The TEP unanimously agreed that a comprehensive 
hospice composite measure is an important measure and supported data 
collection using the HIS. The NQF MAP met on December 14th and 15th, 
2015 and provided input to CMS. In their final recommendation, the MAP 
encouraged continued development of the Hospice and Palliative Care 
Composite Process Measure--Comprehensive Assessment at Admission 
measure. More information about the MAP's recommendations for this 
measure is available at: http://www.qualityforum.org/ProjectMaterials.aspx?projectID=75370.
    While this measure is not currently NQF-endorsed, we recognize that 
the NQF endorsement process is an important part of measure development 
and plan to submit this measure for NQF endorsement. As noted, this 
quality measure will fill a gap by holding hospices to a higher 
standard of care and will motivate providers to conduct a greater 
number of high priority care processes for as many beneficiaries as 
possible upon admission as hospice patients. Furthermore, no current 
NQF-endorsed measures address the completion of a comprehensive care 
assessment at hospice admission.
    Form, Manner, and Timing of Data Collection and Submission. The 
data source for this measure will be currently implemented HIS items 
that are currently used in the calculation of the 7 component measures. 
These items and quality measure algorithms for the 7 component measures 
can be found in the HQRP Specifications for the Hospice Item Set-based 
Quality Measures document, which is available in the ``Downloads'' 
section of the ``Current Measures'' portion of the CMS HQRP Web site: 
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Hospice-Quality-Reporting/Current-Measures.html. Since the 
proposed measure is a composite measure whose components are currently 
adopted HQRP measures, no new data collection will be required; data 
for the composite measure will come from existing items from the 
existing 7 HQRP component measures. We propose to begin calculating 
this measure using existing data items, beginning April 1, 2017; this 
means patient admissions occurring after April 1, 2017 would be 
included in the composite measure calculation.
    Since the composite measure components are existing HIS data items, 
providers are already collecting the data needed to calculate the 
composite measure. Data collection will continue in accordance with 
processes outlined in sections III.E.7c through III.E.7e of this 
proposed rule.
    For more information on the specifications and data elements for 
the measure, Hospice and Palliative Care Composite Process Measure-
Comprehensive Assessment at Admission, we refer readers to the https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Hospice-Quality-Reporting/Current-Measures.html document, 
available on the ``Current Measures'' portion of the CMS HQRP Web site: 
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Hospice-Quality-Reporting/Current-Measures.html.
    We invite public comment on our proposal to implement the Hospice 
and Palliative Care Composite Process Measure--Comprehensive Assessment 
at Admission beginning April 1, 2017, as previously described for the 
HQRP.

 Table 16--Proposed Quality Measures and Data Collection Period Affecting the FY 2019 Payment Determination and
                                                Subsequent Years
----------------------------------------------------------------------------------------------------------------
                                                                                                       Data
          Quality measure             NQF ID No.             Type            Submission method     collection to
                                                                                                       begin
----------------------------------------------------------------------------------------------------------------
Hospice Visits when Death is                   TBD  Process Measure......  Hospice Item Set.....      04/01/2017
 Imminent.
Hospice and Palliative Care                    TBD
 Composite Process Measure.
----------------------------------------------------------------------------------------------------------------

7. 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 for that FY.
b. Previously Finalized Policy for New Facilities To Begin Submitting 
Quality Data
    In the FY 2015 Hospice Wage Index final rule (79 FR 50488), we 
finalized a policy stating that any hospice that receives its CMS 
Certification Number (CCN) (also known as the Medicare Provider Number) 
notification letter dated on or after November 1 of the preceding year 
involved is excluded from any payment penalty for quality reporting 
purposes for the following FY. This requirement was codified at Sec.  
418.312.
    In the FY 2016 Hospice Wage Index final rule (80 FR 47189), we 
further clarified and finalized our policy for the timing of new 
providers to begin reporting data to CMS. The clarified policy 
finalized in the FY 2016 Hospice Wage Index final rule (80 FR 47189) 
distinguished between when new hospice providers are required to begin 
submitting HIS data and when providers will be subject to the potential 
2 percentage point annual payment update (APU) reduction for failure to 
comply with HQRP requirements. In summary, the policy finalized in the 
FY 2016 Hospice Wage Index final rule (80 FR 47189 through 47190) 
clarified that providers must begin submitting HIS data on the date 
listed in the letterhead of the CCN Notification letter received

[[Page 25526]]

from us, but will be subject to the APU reduction based on whether the 
CCN Notification letter was dated before or after November 1st of the 
reporting year involved. Thus, beginning with the FY 2018 payment 
determination and for each subsequent payment determination, we 
finalized our policy that a new hospice be responsible for HQRP quality 
data submission beginning on the date of the CCN notification letter; 
we retained our prior policy that hospices not be subject to the APU 
reduction if the CCN notification letter was dated after November 1st 
of the year involved. For example, if a provider receives their CCN 
notification letter and the date in the letterhead is November 5, 2016, 
that provider will begin submitting HIS data for patient admissions 
occurring after November 5, 2016. However, since the CCN notification 
letter was dated 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 2018 APU, which is associated with 
patient admissions occurring January 1, 2016 through December 31, 2016.
    This policy allows us to receive HIS data on all patient admissions 
on or after the date that a hospice receives its 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. 
Currently, new hospices may experience a lag between Medicare 
certification and receipt of their actual CCN Number. Since hospices 
cannot submit data to the QIES ASAP system without a valid CCN Number, 
we proposed that new hospices begin collecting HIS quality data 
beginning on the date noted on the CCN notification letter. 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. Requiring quality data reporting beginning on the 
date listed in the letterhead of the CCN notification letter aligns CMS 
policy for requirements for new providers with the functionality of the 
HIS data submission system (QIES ASAP).
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 after July 1, 2014. For each HQRP program 
year, we require that hospices submit data on each of the adopted 
measures in accordance with the reporting requirements specified in 
sections III.E.7c through III.E.7e of that FY 2015 Hospice Wage Index 
final rule for the designated reporting period. This requirement 
applies to previously finalized and adopted measures, as well as new 
measures proposed through the rulemaking process. 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 final rule (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 vendor-
designed software. HART provides an alternative option for hospice 
providers to collect 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. We will continue to make HIS 
completion and submission software available to hospices at no cost. We 
provided details on data collection and submission timing under the 
downloads section of the HIS Web site on the CMS.gov Web site 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 and 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 site, Open Door Forums, 
announcements in the CMS MLN Connects Provider e-News (E-News), and 
provider training.
d. Previously Finalized 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 for the required quality measures. In 
order for us 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. In the FY 2016 Hospice Wage Index final rule (80 
FR 47191) we finalized our policy that beginning with the FY 2018 
payment determination 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 must 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 must 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 to establish a 
robust quality reporting program and ensure the scientific reliability 
of the data received.

[[Page 25527]]

    In the FY 2016 Hospice Wage Index final rule (80 FR 47191), we 
clarified the difference between the completion deadlines and the 
submission deadlines. Current sub-regulatory guidance produced by CMS 
(for example, HIS Manual, HIS trainings) states 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. 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 completion 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 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, we continue to recommend that providers 
complete and attempt to submit HIS records early, prior to the 
previously finalized submission deadline of 30 days, beginning in FY 
2018. 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 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 
CMS HQRP communication channels, including postings and announcements 
on the CMS HQRP Web site, MLN eNews communications, National provider 
association calls, and announcements on Open Door Forums and Special 
Open Door Forums.
e. Previously Finalized HQRP Data Submission and Compliance Thresholds 
for the FY 2018 Payment Determination and Subsequent Years
    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. In the FY 2016 Hospice 
Wage Index final rule (80 FR 47192), we finalized the timeliness 
criteria for submission of HIS-Admission and HIS-Discharge records 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.
    Last year, we finalized our policy (80 FR 47191 through 47192) that 
beginning with the FY 2018 payment determination and subsequent FY 
payment determinations, all HIS records would have to be submitted 
within 30 days of the event date, which is the patient's admission date 
or discharge date. In conjunction with this requirement, we also 
finalized our policy (80 FR 47192) to establish an incremental 
threshold for compliance over a 3 year period. To be compliant for the 
FY 2018 APU determination, hospices must 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. The timeliness threshold is 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 compliance 
rate of 90 percent or more.
    To summarize, in the FY 2016 Hospice Wage Index final rule (80 FR 
47193), we finalized our policy to implement the timeliness threshold 
requirement beginning with all HIS admission and discharge records that 
occur after January 1, 2016, in accordance with the following schedule.
     Beginning 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 January 1, 2017 to December 31, 2017, hospices 
must submit at least 80 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 2019.
     Beginning January 1, 2018 to December 31, 2018, hospices 
must submit at least 90 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 2020.
    Timely submission of data is necessary to accurately analyze 
quality measure data received by providers. To support the feasibility 
of a hospice to achieve the compliance thresholds, CMS's measure 
development contractor conducted some preliminary analysis of Quarter 3 
and Quarter 4 HIS data from 2014. According to this 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. We believe this analysis is further evidence 
that the compliance thresholds are reasonable and achievable by hospice 
providers.
    The current reports available to providers in the Certification and 
Survey Provider Enhanced Reports (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, we made available 3 new Hospice Reports in CASPER, which 
include reports that can list HIS Record Errors by Field by Provider 
and HIS records with a specific error number. We are working on 
expanding this functionality of CASPER reports to include a timeliness 
compliance threshold report that providers could run to determine their 
preliminary compliance with the timeliness compliance requirement. We 
expect these reports to be available by late spring/early summer of 
2016.
    In the FY 2016 Hospice Wage Index final rule (80 FR 47192 through 
47193), we provided clarification regarding the methodology used in 
calculating the 70 percent/80 percent/90 percent compliance thresholds. 
In general, HIS records submitted for patient admissions and discharges 
occurring during the reporting period (January 1st to December 31st of 
the reporting year involved) will be included in the denominator for 
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 the FY 
2016 Hospice Wage Index final rule (80 FR 47192), we stated that we 
would make allowances in the calculation methodology for two (2) 
circumstances. First, the calculation methodology will

[[Page 25528]]

be adjusted following the applicable reporting period for records for 
which a hospice is granted an extension or exemption by CMS. Second, 
adjustments will be made for instances of modification/inactivation 
requests (Item A0050. Type of Record = 2 or 3). Additional helpful 
resources regarding the timeliness compliance threshold for HIS 
submissions can be found under the downloads section of the Hospice 
Item Set Web site at CMS.gov at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Hospice-Quality-Reporting/Hospice-Item-Set-HIS.html. Lastly, as further details of the data 
submission and compliance threshold are determined by CMS, we 
anticipate communicating these details through the regular CMS HQRP 
communication channels, including postings and announcements on the CMS 
HQRP Web site, MLN eNews communications, National provider association 
calls, and announcements on Open Door Forums and Special Open Door 
Forums.
f. New Data Collection and Submission Mechanisms Under Consideration 
for Future Years
    We have made great progress in implementing the objectives set 
forth in the quality reporting and data collection activities required 
by Sections 3004 and 3132 of the Affordable Care Act. To date, we have 
established the HQRP, which includes 7 NQF-endorsed quality measures 
that are collected via the HIS. As stated in this rule, data on these 
measures are expected to be publicly reported sometime in 2017. 
Additionally, we have implemented the Hospice CAHPS[supreg] as part of 
the HQRP to gather important input on patient experience of care in 
hospice. Over the past several years, we have conducted data collection 
and analysis on hospice utilization and trends to help reform the 
hospice payment system. In the FY 2016 Hospice Wage Index final rule, 
we finalized payment reform measures, including changes to the RHC 
payment rate and the implementation of a Service Intensity Add-On (SIA) 
payment, effective January 1, 2016. As part of payment reform and 
ongoing program integrity efforts, we will continue ongoing monitoring 
of utilization trends for any future refinements.
    To facilitate continued progress towards the requirements set forth 
in both sections 3004 and 3132 of the Affordable Care Act, we are 
considering developing a new data collection mechanism for use by 
hospices. This new data collection mechanism would be a hospice patient 
assessment instrument, which would serve 2 primary objectives 
concordant with the Affordable Care Act legislation: (1) To provide the 
quality data necessary for HQRP requirements and the current function 
of the HIS; and (2) provide additional clinical data that could inform 
future payment refinements.
    We believe that the development of a hospice patient assessment 
tool could offer several benefits over the current mechanisms of data 
collection for quality and payment purposes, which include the 
submission of HIS data and the submission of claims data. For future 
payment refinements, a hospice patient assessment tool would allow us 
to gather more detailed clinical information, beyond the patient 
diagnosis and comorbidities that are currently reported on hospice 
claims. As stated in the FY 2016 Hospice Wage Index final rule (80 FR 
47203), detailed patient characteristics are necessary to determine 
whether a case mix payment system could be achieved. A hospice patient 
assessment tool would allow us to capture information on symptom 
burden, functional status, and patient, family, and caregiver 
preferences, all of which will inform future payment refinements.
    While systematic assessment is vital throughout the continuum of 
care, including palliative and end-of-life care, documentation 
confirming completion of systematic assessment in hospice settings is 
often inadequate or absent.\26\ The value of the introduction of 
structured approaches via a clinical assessment is well established, as 
it enables a more comprehensive and consistent way of identifying and 
meeting patient needs.\27\
---------------------------------------------------------------------------

    \26\ McMillan, S., Small, B., & Haley, W. (2011). Improving 
Hospice Outcomes through Systematic Assessment: A Clinical Trial. 
Cancer Nursing, 34(2), 89-97.
    \27\ Bourbonnais, F.F., Perreault, A., & Bouvette, M. (2004). 
Introduction of a pain and symptom assessment tool in the clinical 
setting--lessons learned. Journal of Nursing Management, 12(3), 194-
200.
---------------------------------------------------------------------------

    Moreover, symptoms are the leading reason that people seek medical 
care in the first place and frequently serve as the basis for 
establishing a diagnosis. Measures of physical function and disease 
burden have been used to identify older adults at high-risk for excess 
health care utilization, disability, or mortality.\28\ Currently, data 
collected on claims includes line-item visits by discipline, General 
Inpatient Care (GIP) visit reporting to hospice patients in skilled 
nursing facilities or hospitals, post-mortem visits, injectable and 
non-injectable drugs and infusion pumps. Industry representatives have 
communicated to us that required claims information is not sufficiently 
comprehensive to accurately reflect the provision and the cost of 
hospice care.
---------------------------------------------------------------------------

    \28\ Sha, M., Callahan, C., Counsell, S., Westmoreland, G., 
Stump, T., Kroenke, K. (2005). Physical symptoms as a predictor of 
health care use and mortality among older adults. 118, 301-306.
---------------------------------------------------------------------------

    For quality data collection, a hospice patient assessment 
instrument would support the goals of the HQRP as new quality measures 
are developed and adopted. Since the current quality data collection 
tool (HIS) is a chart abstraction tool, not a hospice patient 
assessment instrument, we are limited in the types of data that can be 
collected via the HIS. Instead of retrospective data collection 
elements, a hospice patient assessment tool would include data elements 
designed to be collected concurrent with provision of care. As such, we 
believe a hospice patient assessment tool would allow for more robust 
data collection that could inform development of new quality measures 
that are meaningful to hospice patients, their families and caregivers, 
and other stakeholders.
    Finally, a hospice patient assessment tool that provides clinical 
data that is used for both payment and quality purposes would align the 
hospice benefit with other care settings that use similar approaches, 
such as nursing homes, inpatient rehabilitation facilities, and home 
health agencies which submit data via the MDS 3.0, IRF-PAI, and OASIS, 
respectively.
    We envision the hospice patient assessment tool itself as an 
expanded HIS. The hospice patient assessment tool would include current 
HIS items, as well as additional clinical items that could be used for 
payment refinement purposes or to develop new quality measures. The 
hospice patient assessment tool would not replace existing requirements 
set forth in the Medicare Hospice CoPs (such as the initial nursing and 
comprehensive assessment), but would be designed to complement data 
that are collected as part of normal clinical care. If such a patient 
assessment were adopted, the new data collection effort would replace 
the current HIS, but would not replace other HQRP data collection 
efforts (that is, the Hospice CAHPS[supreg] survey), nor would it 
replace regular submission of claims data. We envision that patient 
assessment data would be collected upon a patient's admission to and 
discharge from any Medicare-certified hospice provider; additional 
interim data collection efforts are also possible. If we develop and 
implement a hospice patient assessment tool, we would provide several 
training opportunities to ensure providers are able to comply with any 
new requirements.

[[Page 25529]]

    We are not proposing a hospice patient assessment tool at this 
time; we are still in the early stages of development of an assessment 
tool to determine if it would be feasible to implement under the 
Medicare Hospice Benefit. In the development of such a hospice patient 
assessment tool, we will continue to receive stakeholder input from 
MedPAC and ongoing input from the provider community, Medicare 
beneficiaries, and technical experts. It is of the utmost importance to 
develop a hospice patient assessment tool that is scientifically 
rigorous and clinically appropriate, thus we believe that continued and 
transparent involvement of stakeholders is critical. Additionally, it 
is of the utmost importance to minimize data collection burden on 
providers; in the development of any hospice patient assessment tool, 
we will ensure that patient assessment data items are not duplicative 
or overly burdensome to providers, patients, caregivers, or their 
families.
    We solicit comments on a potential hospice patient assessment tool 
that would collect both quality, clinical, and other data with the 
ability to be used to inform future payment refinement efforts.
8. HQRP Submission Exemption and Extension Requirements for the FY 2017 
Payment Determination and Subsequent Years
    In the FY 2015 Hospice Wage Index final rule (79 FR 50488), we 
finalized our proposal to allow hospices to request, and for us to 
grant exemptions/extensions for the reporting of required HIS 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 will not be considered valid. The 
request for an exemption or extension must contain all of the finalized 
requirements as outlined on our Web site at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Hospice-Quality-Reporting/Extensions-and-Exemption-Requests.html.
    If a hospice is granted an exemption or extension, timeframes for 
which an exemption or extension is granted will be applied to the new 
timeliness requirement so such hospices 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. By contrast, 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 these 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 CMS HQRP communication channels, including 
postings and announcements on the CMS HQRP Web site, MLN eNews 
communications, National provider association calls, and announcements 
on Open Door Forums and Special Open Door Forums.
9. Hospice CAHPS[supreg] Participation Requirements for the 2019 APU 
and 2020 APU
    National Implementation of the Hospice CAHPS[supreg] Survey started 
January 1, 2015 as stated in the FY 2015 Hospice Wage Index and Payment 
Rate Update final rule (79 FR 50452). 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. Readers who want 
more information are referred 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 and 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. Consistent 
with many other CMS CAHPS[supreg] surveys that are publicly reported on 
CMS Web sites, we 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, in order to help 
patients, family, friends, and caregivers choose the right hospice 
program.
    The goals of the CAHPS[supreg] Hospice Survey are to:
     Produce comparable data on hospice 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.
     Hold hospice care providers accountable by informing the 
public about the providers' quality of care.
    Details regarding CAHPS[supreg] Hospice Survey national 
implementation, and survey administration as well as participation 
requirements, exemptions from the survey requirement, hospice patient 
and caregiver eligibility criteria, fielding schedules, sampling 
requirements, and the languages in which is questionnaire, are 
available on the CAHPS[supreg] Web site, www.HospiceCAHPSsurvey.org and 
in the Quality Assurance Guidelines (QAG) manual, which is also on the 
same site and is available for download. Measures from the survey will 
be submitted to the NQF for endorsement.
b. Participation Requirements To Meet Quality Reporting Requirements 
for the FY 2019 APU
    To meet participation requirements for the FY 2019 APU, hospices 
must collect survey data on an ongoing monthly basis from January 2017 
through December 2017 (inclusive). Data submission deadlines for the 
2019 APU can be found in Table 17. The data must be submitted by the 
deadlines listed in Table 17 by the hospice's authorized approved CMS 
vendor.

[[Page 25530]]

    Hospices provide lists of the patients who died under their care to 
form the sample for the Hospice CAHPS[supreg] Survey. We emphasize the 
importance of hospices providing complete and accurate information to 
their vendors in a timely manner. Hospices must contract with an 
approved Hospice CAHPS[supreg] Survey vendor to conduct the survey on 
their behalf. The hospice is responsible for making sure their vendor 
meets all data submission deadlines. Vendor failure to submit data on 
time will be the responsibility of the hospice.

  Table 17--CAHPS[supreg] Hospice Survey Data Submission Dates FY 2018
                    APU, FY 2019 APU, and FY 2020 APU
------------------------------------------------------------------------
  Sample months (that is, month of death)    Quarterly data  submission
                    \1\                             deadlines \2\
------------------------------------------------------------------------
                               FY 2018 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.
------------------------------------------------------------------------
                               FY 2019 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.
------------------------------------------------------------------------
                               FY 2020 APU
------------------------------------------------------------------------
January-March 2018 (Q1)...................  August 8, 2018.
April-June 2018 (Q2)......................  November 14, 2018.
July-September 2018 (Q3)..................  February 13, 2019.
October-December 2018 (Q4)................  May 8, 2019.
------------------------------------------------------------------------
\1\ Data collection for each sample month initiates 2 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
  months, which are August, November, February, and May.

    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 that want to claim 
the size exemption 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 
2019 APU is August 10, 2017.
    We propose that hospices that received their CCN after January 1, 
2017, are exempted from the FY 2019 APU Hospice CAHPS[supreg] 
requirements due to newness. This exemption will be determined by CMS. 
The exemption is for 1 year only.
c. Participation Requirements To Meet Quality Reporting Requirements 
for the FY 2020 APU
    To meet participation requirements for the FY 2020 APU, hospices 
must collect survey data on an ongoing monthly basis from January 2018 
through December 2018 (inclusive). Data submission deadlines for the 
2020 APU can be found in Table 17. The data must be submitted by the 
deadlines in Table 17 by the hospice's authorized approved CMS vendor.
    Hospices must contract with an approved Hospice CAHPS[supreg] 
survey vendor to conduct the survey on their behalf. The hospice is 
responsible for making sure their vendor meets all data submission 
deadlines. Vendor failure to submit data on time will be the 
responsibility of the hospice.
    Hospices that have fewer than 50 survey-eligible decedents/
caregivers in the period from January 1, 2017 through December 31, 2017 
are exempt from CAHPS[supreg] Hospice Survey data collection and 
reporting requirements for the FY 2020 payment determination. To 
qualify, hospices must submit an exemption request form. This form will 
be available in first quarter 2018 on the CAHPS[supreg] Hospice Survey 
Web site http://www.hospiceCAHPSsurvey.org. Hospices that want to claim 
the size exemption are required to submit to CMS their total unique 
patient count for the period of January 1, 2017 through December 31, 
2017. The due date for submitting the exemption request form for the FY 
2020 APU is August 10, 2018.
    We propose that hospices that received their CCN after January 1, 
2018, are exempted from the FY 2020 APU Hospice CAHPS[supreg] 
requirements due to newness. This exemption will be determined by CMS. 
The exemption is for 1 year only.
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 for 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 final rule, 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.

[[Page 25531]]

     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.
     To meet the HQRP requirements for the FY 2020 payment 
determination, hospices would collect survey data on a monthly basis 
for the months of January 1, 2018 through December 31, 2018 to qualify 
for the full APU.
e. Hospice CAHPS[supreg] Reconsiderations and Appeals Process
    Hospices are required to monitor their respective Hospice 
CAHPS[supreg] Survey vendors to ensure that vendors submit their data 
on time. The hospice CAHPS[supreg] data warehouse provides reports to 
vendors and hospices, including reports on the status of their data 
submissions. Details about the reports and emails received after data 
submission should be referred to the Quality Assurance Guidelines 
Manual. If a hospice does not know how to retrieve their reports, or 
lacks access to the reports, they should contact Hospice CAHPS[supreg] 
Technical Assistance at [email protected] or call them at 1-
844 -472-4621. Additional information can be found on page 113 of the 
Hospice CAHPS[supreg] Quality Assurance Guidelines manual Version 2.0 
which is available on the Hospice CAHPS[supreg] Web site, 
www.hospicecahpssurvey.org.
    In the FY 2017 payment determination and subsequent years, 
reporting compliance is determined by successfully fulfilling both the 
Hospice CAHPS[supreg] Survey requirements and the HIS data submission 
requirements. Providers would use the same process for submitting a 
reconsideration request that are outlined in section III.C.10 of this 
proposed rule.
10. HQRP Reconsideration and Appeals Procedures for the FY 2017 Payment 
Determination and Subsequent Years
    In the FY 2015 Hospice Wage Index 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. For the FY 
2017 payment determination and subsequent years, 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 the United States 
Postal Service or phone will not be considered as a valid 
reconsideration request. We codified this process at Sec.  418.312(h). 
In addition, we codified at Sec.  418.306(b)(2) 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 for that FY and 
solicited comments on all of the proposals and the associated 
regulations text at Sec.  418.312 and in Sec.  418.306. Official 
instructions regarding the payment reduction reconsideration process 
can be located under the Regulations and Guidance, Transmittals, 2015 
Transmittals Web site at https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/2015-Transmittals-Items/R52QRI.html?DLPage=1&DLEntries=10&DLSort=4&DLSortDir=descending.
    In the past, only hospices found to be non-compliant with the 
reporting requirements set forth for a given payment determination 
received a notification from CMS of this finding along with 
instructions for requesting reconsideration in the form of a United 
States Postal Service (USPS) letter. In the FY 2016 Hospice Wage Index 
final rule (80 FR 47198), we proposed to use the QIES CASPER reporting 
system as an additional mechanism to communicate to hospices regarding 
their compliance with the reporting requirements for the given 
reporting cycle. We will implement this additional communication 
mechanism via the QIES CASPER timeliness compliance reports. As stated 
in section III.E.7e, of this proposed rule these QIES CASPER reports 
will be automated reports that hospices will be able to generate at any 
point in time to determine their preliminary compliance with HQRP 
requirements, specifically, the timeliness compliance threshold for the 
HIS. We believe the QIES CASPER timeliness compliance reports meet our 
intent of developing a method to communicate as quickly, efficiently, 
and broadly as possible with hospices regarding their preliminary 
compliance with reporting requirements. We will continue to send 
notification of noncompliance via delivery of a letter via the United 
States Postal Service. Requesting access to the CMS systems is 
performed in 2 steps. Details are provided on the QIES Technical 
Support Office Web site at https://www.qtso.com/hospice.html. Providers 
may access the CMS QIES Hospice Users Guides and Training on the QIES 
Technical Support Office Web site and selecting Hospice and then 
selecting the CASPER Reporting Users Guide at https://www.qtso.com/hospicetrain.html. Additional information about how to access the QIES 
CASPER reports will be provided prior to the availability of these new 
reports.
    We proposed to disseminate communications regarding the 
availability of hospice compliance reports in CASPER files through CMS 
HQRP communication channels, including postings and announcements on 
the CMS HQRP Web site, MLN eNews communications, National provider 
association calls, and announcements on Open Door Forums and Special 
Open Door Forums. We further proposed to publish a list of hospices who 
successfully meet the reporting requirements for the applicable payment 
determination on the CMS HQRP Web site https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Hospice-Quality-Reporting/index.html. We proposed updating the list after 
reconsideration requests are processed on an annual basis. We clarified 
that the published list of compliant hospices on the CMS HQRP Web site 
would include limited organizational data, such as the name and 
location of the hospice. Finalizing the list of compliant providers for 
any given year is most appropriately done after the final determination 
of compliance is made. It is our intent for the 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

[[Page 25532]]

reversed to be included in the list of compliant hospices for that 
year. We believe that finalizing the list of compliant hospices 
annually, after the reconsideration period will provide the most 
accurate listing of hospices compliant with HQRP requirements.
11. 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. Such procedures shall ensure that a 
hospice program has the opportunity to review the data that is to be 
made public for the hospice program prior to such data being made 
public. The Secretary shall report quality measures that relate to 
hospice care provided by hospice programs on the CMS Web site.
    We recognize that public reporting of quality data is a vital 
component of a robust quality reporting program and are fully committed 
to developing the necessary systems for transparent 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 7 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 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 4 quarters of data will be analyzed. 
Typically, the first 1 or 2 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) was not used for assessing validity and reliability 
of the quality measures. We analyzed data collected by hospices during 
Quarter 4 (Q4) CY 2014 and Q1-Q3 CY 2015. Preliminary analyses of HIS 
data show that all 7 quality measures that can be calculated using HIS 
data are eligible for public reporting (NQF #1634, NQF #1637, NQF 
#1639, NQF #1638, NQF #1641, modified NQF #1647, NQF #1617). Based on 
analyses conducted to establish reportability of the measures, 71 
percent-90 percent of all hospices would be able to participate in 
public reporting, depending on the measure. For additional details 
regarding analysis, we refer readers to the Measure Testing Executive 
Summary document available on the ``Current Measures'' section of the 
CMS HQRP Web site: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Hospice-Quality-Reporting/Current-Measures.html. Although analyses show that many hospices perform well 
on the 7 measures from the HIS measure set, the measures still show 
variation, especially among hospices with suboptimal performance, 
indicating that these measures are still meaningful for comparing 
quality of care across hospice providers. In addition to conducting 
quantitative analysis to establish scientific acceptability of the HIS 
measures, CMS's measure development contractor, RTI International, also 
conducted interviews with family and caregivers of hospice patients. 
The purpose of these interviews was to determine what information 
patients and caregivers would find useful in selecting hospices, as 
well as gathering input about patient and caregiver experience with 
hospice care. Results from these interviews indicate that all 7 HIS 
quality measures provide consumers with useful information. Interview 
participants stated that quality measure data would be especially 
helpful in identifying poor quality outliers that inform beneficiaries, 
families, caregivers, and other hospice stakeholders.
    To inform which of the HIS measures are eligible for public 
reporting, CMS's measure development contractor, RTI International, 
examined the distribution of hospice-level denominator size for each 
quality measure to assess whether the denominator size is large enough 
to generate the statistically reliable scores necessary for public 
reporting. This goal of this analysis is to establish the minimum 
denominator size for public reporting, and is referred to as 
``reportability'' analysis. Reportability analysis is necessary since 
small denominators may not yield statistically meaningful QM scores. 
Thus, for other quality reporting programs, such as Nursing Home 
Compare,\29\ CMS sets a minimum denominator size for public reporting, 
as well as the data selection period necessary to generate the minimum 
denominator size. Reportability analysis showed that calculating and 
publicly displaying measures based on 12 months of data would allow for 
sufficient measure denominator size. Having ample denominator size 
ensures that quality measure scores that are publicly reported are 
reliable and stable; a minimum sample size of 20 stays is commonly 
applied to assessment-based quality measures in other reporting 
programs. The 12 month data selection period produced significantly 
larger mean and median sample sizes among hospices, which will generate 
more reliable quality measure scores. Additionally, our analysis 
revealed that when applying a minimum sample size of 20 stays, using 
rolling 12 months of data to create QMs would only exclude about 10 
percent-29 percent of hospices from public reporting, depending on the 
measure. For more information on analyses conducted to determine 
minimum denominator size and data selection period, we refer readers to 
the Reportability Analysis Section of the Measure Testing Executive 
Summary, available on the ``Current Measures'' portion of the CMS HQRP 
Web site: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Hospice-Quality-Reporting/Current-Measures.html.
---------------------------------------------------------------------------

    \29\ ``CMS Nursing Home Quality Initiative--Centers for 
Medicare* * *'' 2011. 25 Jan. 2016, https://www.cms.gov/nursinghomequalityinits/45_nhqimds30trainingmaterials.asp.
---------------------------------------------------------------------------

    Based on reportability analysis and input from other stakeholders, 
we have determined that all 7 HIS measures are eligible for public 
reporting. Thus, we plan to publicly report all 7 HIS measures on a CMS 
Compare Web site for hospice agencies. For more details on each of the 
7 measures, including information on measure background, justification, 
measure specifications, and measure calculation algorithms, we refer 
readers to the HQRP QM User's Manual v1.00 Final document, which is 
available on the downloads portion of the Hospice Item Set Web site, 
CMS HQRP Web site: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Hospice-Quality-Reporting/Current-Measures.html. Individual scores for each of the 7 HIS measure scores 
would be reported on a new publicly available CMS Hospice Compare Web 
site. Current reportability analysis indicates that a minimum 
denominator size of 20 based on 12 rolling months of data would be 
sufficient for public reporting of all HIS quality measures. Under this 
methodology, hospices with a quality measure denominator size of 
smaller than 20 patient stays would not have the

[[Page 25533]]

quality measure score publicly displayed since a quality measure score 
on the basis of small denominator size may not be reliable. We will 
continue to monitor quality measure performance and reportability and 
will adjust public reporting methodology in the future if needed.
    Reportability analysis is typically conducted on a measure-by-
measure basis. We would like to clarify that any new measure adopted as 
part of the HQRP will undergo reportability analysis to determine: (1) 
if the measure is eligible for public reporting; and (2) the data 
selection period and minimum denominator size for the measure. Results 
of reportability analyses conducted for new measures will be 
communicated through future rulemaking.
    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. We are currently 
developing the infrastructure for public reporting, and will 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. These 
quality measure data reports or ``preview reports'' will be made 
available in the CASPER system prior to public reporting and will offer 
providers the opportunity to review their quality measure data prior to 
public reporting on the CMS Compare Web site for hospice agencies. 
Under this process, providers would have the opportunity to review and 
correct data they submit on all measures that are derived from the HIS. 
Reports would contain the provider's performance on each measure 
calculated based on HIS submission to the QIES ASAP system. The data 
from the HIS submissions would be populated into reports with all data 
that have been submitted by the provider. We will post preview reports 
with sufficient time for providers to be able to submit, review data, 
make corrections to the data, and view their data. Providers are 
encouraged to regularly evaluate their performance in an effort to 
ensure the most accurate information regarding their agency is 
reflected.
    We also plan to make available additional provider-level feedback 
reports, which are 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 2015 
Reporting Cycle, several new quality reporting provider participation 
reports were made available in CASPER. Providers can access a detailed 
list and description of each of the 12 reports currently available to 
hospices on the QIES Web site, under the Training and Education 
Selections, CASPER Reporting Users Guide at https://www.qtso.com/hospicetrain.html. We anticipate that providers would use the quality 
reports as part of their Quality Assessment and Performance Improvement 
(QAPI) efforts.
    Furthermore, to meet the requirement for making such data public, 
we are developing a CMS Hospice Compare Web site, which will provide 
valuable information regarding the quality of care provided by 
Medicare-certified hospice agencies throughout the nation. Consumers 
would be able to 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, along with provider 
quality information. Based on the efforts necessary to build the 
infrastructure for public reporting, we anticipate that public 
reporting of the eligible HIS quality measures on the CMS Compare Web 
site for hospice agencies will begin sometime in the spring/summer of 
CY 2017. To help providers prepare for public reporting, we will offer 
opportunities for stakeholder engagement and education prior to the 
rollout of a Hospice Compare site. We will offer outreach opportunities 
for providers through the MLN eNews, Open Door Forums and Special Open 
Door Forums; we will also post additional educational materials 
regarding public reporting on the CMS HQRP Web site. Finally, we will 
offer training to all hospice providers on the systems and processes 
for reviewing their data prior to public reporting; availability of 
trainings will be communicated through the regular CMS HQRP 
communication channels, including postings and announcements on the CMS 
HQRP Web site, MLN eNews communications, National provider association 
calls, and announcements on Open Door Forums and Special Open Door 
Forums.
    Like other CMS Compare Web sites, the Hospice Compare Web site 
will, in time, feature a quality rating system that gives each hospice 
a rating of between 1 and 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 Hospice 
Compare Web site. Public comments regarding how the rating system would 
determine a hospice's star rating and the methods used for 
calculations, as well as a proposed timeline for implementation will be 
announced via regular CMS HQRP communication channels, including 
postings and announcements on the CMS HQRP Web site, MLN eNews 
communications, provider association calls, and announcements on Open 
Door Forums and Special Open Door Forums. We will announce the timeline 
for development and implementation of the star rating system in future 
rulemaking.
    Lastly, as part of our ongoing efforts to make healthcare more 
transparent, affordable, and accountable for all hospice stakeholders, 
the HQRP is prepared to post hospice data on a public data set, the 
Data.Medicare.gov Web site, and directory located at https://data.medicare.gov. This site includes the official datasets used on the 
Medicare.gov Compare Web sites provided by CMS. In addition, this data 
will serve as a helpful resource regarding information on Medicare-
certified hospice agencies throughout the nation. In an effort to move 
toward public reporting of hospice data, we will initially post 
demographic data of hospice agencies that have been registered with 
Medicare. This list will include addresses, phone numbers, and services 
provided for each agency. The timeline for posting hospice demographic 
data on a public dataset is scheduled for sometime late spring/summer 
CY 2016. Additional details regarding hospice datasets will be 
announced via regular CMS HQRP communication channels, including 
postings and announcements on the CMS HQRP Web site, MLN eNews 
communications, National provider association calls, and announcements 
on Open Door Forums and Special Open Door Forums. In addition, we will 
provide the applicable list of CASPER/ASPEN coordinators in the event 
the Medicare-certified agency is either not listed in the database or 
the characteristics/administrative data (name, address, phone number, 
services, or type of ownership) is incorrect or has changed. To 
continue to meet Medicare enrollment requirements, all Medicare 
providers are required to report changes to their information in their 
enrollment application as outlined in the Provider -Supplier Enrollment 
Fact Sheet Series located at https://www.cms.gov/Outreach-and-
Education/Medicare-Learning-Network-MLN/MLNProducts/

[[Page 25534]]

downloads/MedEnroll_InstProv_FactSheet_ICN903783.pdf.

D. The Medicare Care Choices Model

    The Medicare Care Choices Model (MCCM) offers a new option for 
Medicare beneficiaries with certain advanced diseases who meet the 
model's other eligibility criteria to receive hospice-like support 
services from MCCM participating hospices while receiving care from 
other Medicare providers for their terminal illness. This 5 year model 
is being tested to encourage greater and earlier use of the Medicare 
and Medicaid hospice benefit to determine whether it can improve the 
quality of life and care received by Medicare beneficiaries, increase 
beneficiary, family, and caregiver satisfaction, and reduce Medicare or 
Medicaid expenditures. Participation in the model will be limited to 
Medicare and dual eligible beneficiaries with advanced cancers, chronic 
obstructive pulmonary disease (COPD), congestive heart failure, and 
Human Immunodeficiency Virus/Acquired Immune Deficiency Syndrome who 
qualify for the Medicare or Medicaid hospice benefit and meet the 
eligibility requirements of the model. The model includes over 130 
hospices from 39 states across the country and is projected to serve 
100,000 beneficiaries by 2020. The first cohort of MCCM participating 
hospices began providing services under the model in January 2016, and 
the second cohort will begin to provide services under the model in 
January 2018. The last patient will be accepted into the model 6 months 
before the December 31, 2020 model end date.
    For more information, see the MCCM Web site: https://innovation.cms.gov/initiatives/Medicare-Care-Choices/.

IV. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995, we are required to 
provide 60-day notice in the Federal Register and solicit public 
comment before a collection of information requirement is submitted to 
the Office of Management and Budget (OMB) for review and approval. To 
fairly evaluate whether an information collection should be approved by 
OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act of 1995 
requires that we solicit comment on the following issues:
     The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
     The accuracy of our estimate of the information collection 
burden.
     The quality, utility, and clarity of the information to be 
collected.
     Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    We are soliciting public comment on each of the following 
information collection requirements (ICRs).

A. Proposed Information Collection Requirements

    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. 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).
    Data for the aforementioned 7 measures is collected via the HIS. 
Data collection for the 7 NQF-endorsed measures via the HIS V1.00.0 was 
approved by the Office of Management and Budget April 3, 2014 (OMB 
control number 0938-1153--Hospice Quality Reporting Program). As 
outlined in this proposed rule, we continue data collection for these 7 
NQF-endorsed measures.
    In this proposed rule, we propose the implementation of two new 
measures. The first measure is the Hospice and Palliative Care 
Composite Process Measure--Comprehensive Assessment at Admission. Seven 
individual care processes will be captured in this composite measure, 
which includes the six NQF-endorsed quality measures and one modified 
NQF-endorsed quality measure currently implemented in the HQRP. Thus, 
the Hospice and Palliative Care Composite Process quality measure will 
use the current HQRP quality measures as its components. The data 
source for this measure will be currently implemented HIS items that 
are currently used in the calculation of the seven component measures. 
Since the proposed measure is a composite measure created from 
components, which are currently adopted HQRP measures, no new data 
collection will be required; data for the composite measure will come 
from existing items from the existing seven HQRP component measures. We 
propose to begin calculating this measure using existing data items, 
beginning April 1, 2017; this means patient admissions occurring on or 
after April 1, 2017, would be included in the composite measure 
calculation.
    The second measure is the Hospice Visits when Death is Imminent 
Measure Pair. Data for this measure would be collected via the existing 
data collection mechanism, the HIS. We proposed that four new items be 
added to the HIS-Discharge record to collect the necessary data 
elements for this measure. We expect that data collection for this 
quality measure via the four new HIS items would begin no earlier than 
April 1, 2017. Thus, under current CMS timelines, hospice providers 
would begin data collection for this measure for patient admissions and 
discharges occurring on or after April 1, 2017.
    We proposed the HIS V2.00.0 to fulfill the data collection 
requirements for the 7 currently adopted NQF measures and the 2 new 
proposed measures. The HIS V2.00.0 contains:
     All items from the HIS V1.00.0, which are necessary to 
calculate the 7 adopted NQF measures (and thus the proposed composite 
measure), plus the HIS V1.00.0 administrative items necessary for 
patient identification and record matching
     One new item for measure refinement of the existing 
measure NQF #1637 Pain Assessment.
     New items to collect data for the Hospice Visits when 
Death is Imminent measure pair.
     New administrative items for patient record matching and 
future public reporting of hospice quality data.
    Hospice providers will submit an HIS-Admission and an HIS-Discharge 
for each patient admission. Using HIS data for assessments submitted 
October 1, 2014 through September 30, 2015, we have estimated that 
there will be approximately 1,248,419 discharges across all hospices 
per year; therefore, we would expect that there should be 1,248,419 HIS 
(consisting of one admission and one discharge assessment per patient), 
submitted across all hospices yearly. Over a 3-year period, we expect 
3,745,257 Hospice Item Sets across all hospices. There were 4,259 
certified hospices in the United States as of January 2016; \30\ we 
estimate that each individual hospice

[[Page 25535]]

will submit on average 293 Hospice Item Sets annually, which is 
approximately 24 Hospice Items Sets per month or 879 Hospice Item Sets 
over three years.
---------------------------------------------------------------------------

    \30\ Quality Improvement and Evaluation System (QIES) List of 
Hospice Providers, January 2016.
---------------------------------------------------------------------------

    The HIS consists of an admission assessment and a discharge 
assessment. As noted above, we estimate that there will be 1,248,419 
hospice admissions across all hospices per year. Therefore, we expect 
there to be 2,496,838 HIS assessment submissions (admission and 
discharge assessments counted separately) submitted across all hospices 
annually, which is 208,070 across all hospices monthly, or 7,490,514 
across all hospices over 3 years. We further estimate that there will 
be 586 Hospice Item Set submissions by each hospice annually, which is 
approximately 49 submissions monthly or 1,759 submissions over 3 years.
    For the Admission Hospice Item Set, we estimate that it will take 
14 minutes of time by a clinician such as a Registered Nurse at an 
hourly wage of $67.10 \31\ to abstract data for Admission Hospice Item 
Set. This would cost the facility approximately $15.66 for each 
admission assessment. We further estimate that it will take 5 minutes 
of time by clerical or administrative staff person such as a medical 
data entry clerk or medical secretary at an hourly wage of $32.24 \32\ 
to upload the Hospice Item Set data into the CMS system. This would 
cost each facility approximately $2.69 per assessment. For the 
Discharge Hospice Item Set, we estimate that it will take 9 minutes of 
time by a clinician, such as a nurse at an hourly wage of $67.10 to 
abstract data for Discharge Hospice Item Set. This would cost the 
facility approximately $10.07. We further estimate that it will take 5 
minutes of time by clerical or administrative staff, such as a medical 
data entry clerk or medical secretary at an hourly wage of $32.24 to 
upload data into the CMS system. This would cost each facility 
approximately $2.69. The estimated cost for each full Hospice Item Set 
submission (admission assessment and discharge assessment) is $31.10.
---------------------------------------------------------------------------

    \31\ The adjusted hourly wage of $67.10 per hour for a 
Registered Nurse was obtained using the mean hourly wage from the 
U.S. Bureau of Labor Statistics, $33.55. This mean hourly wage is 
adjusted by a factor of 100 percent to include fringe benefits. See 
http://www.bls.gov/oes/current/oes291141.htm.
    \32\ The adjusted hourly wage of $32.24 per hour for a Medical 
Secretary was obtained using the mean hourly wage from the U.S. 
Bureau of Labor Statistics, $16.12. This mean hourly wage is 
adjusted by a factor of 100 percent to include fringe benefits. See 
http://www.bls.gov/oes/current/oes436013.htm.
---------------------------------------------------------------------------

    We estimate that the total nursing time required for completion of 
both the admission and discharge assessments is 23 minutes at a rate of 
$67.10 per hour. The cost across all Hospices for the nursing/clinical 
time required to complete both the admission and discharge Hospice Item 
sets is estimated to be $32,111,417 annually, or $96,334,252 over 3 
years, and the cost to each individual Hospice is estimated to be 
$7,539.66 annually, or $22,618.98 over 3 years. The estimated time 
burden to hospices for a medical data entry clerk to complete the 
admission and discharge Hospice Item Set assessments is 10 minutes at a 
rate of $32.24 per hour. The cost for completion of the both the 
admission and discharge Hospice Item sets by a medical data entry clerk 
is estimated to be $6,708,171 across all Hospices annually, or 
$20,124,514 across all Hospices over 3 years, and $1,575.06 to each 
Hospice annually, or $4,725.17 to each Hospice over 3 years.
    The total combined time burden for completion of the Admission and 
Discharge Hospice Item Sets is estimated to be 33 minutes. The total 
cost across all hospices is estimated to be $38,819,589 annually or 
$116,458,766 over 3 years. For each individual hospice, this cost is 
estimated to be $9,114.72 annually or $27,344.16 over 3 years. See 
Table 17 for breakdown of burden and cost by assessment form.

                                                       Table 17--Summary of Burden Hours and Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                              Total
                                        OMB      Number of                            Burden per response     annual     Hourly labor cost    Total cost
       Regulation section(s)          control   respondents    Number of responses          (hours)           burden     of reporting  ($)       ($)
                                        No.                                                                  (hours)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Hospice Item Set Admission           0938-1153        4,259  1,248,419 per year....  0.233 clinician          395,333  Clinician at $67.10   $22,900,166
 Assessment.                                                                          hours; 0.083                      per hour; Clerical
                                                                                      clerical hours.                   staff at $32.24 per
                                                                                                                        hour.
Hospice Item Set Discharge           0938-1153        4,259  1,248,419 per year....  0.150 clinician          291,298  Clinician at $67.10    15,919,423
 Assessment.                                                                          hours; 0.083                      per hour; Clerical
                                                                                      clerical hours.                   staff at $32.24 per
                                                                                                                        hour.
3-year total......................   0938-1153        4,259  7,490,514.............  0.55 hours...........  2,059,891  Clinician at $67.10   116,458,766
                                                                                                                        per hour; Clerical
                                                                                                                        staff at $32.24 per
                                                                                                                        hour.
--------------------------------------------------------------------------------------------------------------------------------------------------------

C. Submission of PRA-Related Comments

    We have submitted a copy of this proposed rule to OMB for its 
review of the rule's information collection and recordkeeping 
requirements. These requirements are not effective until they have been 
approved by the OMB.
    To obtain copies of the supporting statement and any related forms 
for the proposed collections discussed above, please visit CMS' Web 
site at www.cms.hhs.gov/[email protected]">www.cms.hhs.gov/[email protected], or call the Reports 
Clearance Office at 410-786-1326.
    We invite public comments on these potential information collection 
requirements. If you wish to comment, please submit your comments 
electronically as specified in the ADDRESSES section of this proposed 
rule and identify the rule (CMS-1652-P) the ICR's CFR citation, CMS ID 
number, and OMB control number.
    ICR-related comments are due June 27, 2016.

V. Economic Analyses

A. Regulatory Impact Analysis

1. Introduction
    We have examined the impacts of this proposed 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

[[Page 25536]]

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 proposed 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 
proposed rule was also reviewed by OMB.
2. Statement of Need
    This proposed 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 
Core-Based Statistical Areas (CBSAs), or previously used Metropolitan 
Statistical Areas (MSAs). This proposed rule would also update payment 
rates for each of the categories of hospice care described in Sec.  
418.302(b) for FY 2017 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 
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 the FY 2016 Hospice Wage Index and Rate Update 
final rule (80 FR 47164), we finalized the creation of two different 
payment rates for RHC that resulted 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 and created a SIA payment, in addition to 
the per diem rate for the RHC level of care, 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. 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.
3. Overall Impacts
    We estimate that the aggregate impact of this proposed rule would 
be an increase of $330 million in payments to hospices, resulting from 
the hospice payment update percentage of 2.0 percent. The impact 
analysis of this proposed rule represents the projected effects of the 
changes in hospice payments from FY 2016 to FY 2017. Using the most 
recent data available at the time of rulemaking, in this case FY 2015 
hospice claims data, we apply the current FY 2016 wage index and labor-
related share values to the level of care per diem payments and SIA 
payments for each day of hospice care to simulate FY 2016 payments. 
Then, using the same FY 2015 data, we apply the proposed FY 2017 wage 
index and labor-related share values to simulate FY 2017 payments. 
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.
4. Detailed Economic Analysis
    The FY 2017 hospice payment impacts appear in Table 19. We tabulate 
the resulting payments according to the classifications in Table 19 
(for example, facility type, geographic region, facility ownership), 
and compare the difference between current and proposed payments to 
determine the overall impact.
    The first column shows the breakdown of all hospices by urban or 
rural status, census region, hospital-based or freestanding status, 
size, and type of ownership, and hospice base. The second column shows 
the number of hospices in each of the categories in the first column.
    The third column shows the effect of the annual update to the wage 
index. This represents the effect of using the proposed FY 2017 hospice 
wage index. The aggregate impact of this change is zero percent, due to 
the proposed hospice wage index standardization factor. However, there 
are distributional effects of the proposed FY 2017 hospice wage index.
    The fourth column shows the effect of the proposed hospice payment 
update percentage for FY 2017. The proposed 2.0 percent hospice payment 
update percentage for FY 2017 is based on an estimated 2.8 percent 
inpatient hospital market basket update, reduced by a 0.5 percentage 
point productivity adjustment and by a 0.3 percentage point adjustment 
mandated by the Affordable Care Act, and is constant for all providers.
    The fifth column shows the effect of all the proposed changes on FY 
2017 hospice payments. It is projected that aggregate payments will 
increase by 2.0 percent, assuming hospices do not change their service 
and billing practices in response.
    As illustrated in Table 19, the combined effects of all the 
proposals vary by specific types of providers and by location. For 
example, due to the changes proposed in this rule, the estimated 
impacts on FY 2017 payments range from a 1.0 percent increase for 
hospices providing care in the rural West North Central region to a 2.7 
percent increase for hospices providing care in the rural Pacific 
region.

[[Page 25537]]



                               Table 19--Projected Impact to Hospices for FY 2017
----------------------------------------------------------------------------------------------------------------
                                                                                     Proposed
                                                     Number of     Updated wage       hospice      FY 2017 total
                                                     providers       data  (%)        payment       change (%)
                                                                                    update (%)
(1)                                                          (2)             (3)             (4)             (5)
----------------------------------------------------------------------------------------------------------------
All Hospices....................................           4,142             0.0             2.0             2.0
Urban Hospices..................................           3,151             0.0             2.0             2.0
Rural Hospices..................................             991            -0.1             2.0             1.9
Urban Hospices--New England.....................             137             0.4             2.0             2.4
Urban Hospices--Middle Atlantic.................             252             0.2             2.0             2.2
Urban Hospices--South Atlantic..................             419            -0.1             2.0             1.9
Urban Hospices--East North Central..............             396            -0.1             2.0             1.9
Urban Hospices--East South Central..............             160            -0.1             2.0             1.9
Urban Hospices--West North Central..............             218            -0.5             2.0             1.5
Urban Hospices--West South Central..............             610            -0.2             2.0             1.8
Urban Hospices--Mountain........................             312            -0.3             2.0             1.7
Urban Hospices--Pacific.........................             608             0.6             2.0             2.6
Urban Hospices--Outlying........................              39            -0.7             2.0             1.3
Rural Hospices--New England.....................              23            -0.4             2.0             1.6
Rural Hospices--Middle Atlantic.................              41            -0.2             2.0             1.8
Rural Hospices--South Atlantic..................             136             0.2             2.0             2.2
Rural Hospices--East North Central..............             139             0.1             2.0             2.1
Rural Hospices--East South Central..............             129            -0.1             2.0             1.9
Rural Hospices--West North Central..............             184            -1.0             2.0             1.0
Rural Hospices--West South Central..............             183            -0.2             2.0             1.8
Rural Hospices--Mountain........................             106            -0.2             2.0             1.8
Rural Hospices--Pacific.........................              47             0.7             2.0             2.7
Rural Hospices--Outlying........................               3            -0.1             2.0             1.9
0--3,499 RHC Days (Small).......................             887             0.0             2.0             2.0
3,500-19,999 RHC Days (Medium)..................           2,000             0.0             2.0             2.0
20,000+ RHC Days (Large)........................           1,255             0.0             2.0             2.0
Non-Profit Ownership............................           1,069             0.1             2.0             2.1
For Profit Ownership............................           2,523            -0.1             2.0             1.9
Govt Ownership..................................             159             0.5             2.0             2.5
Other Ownership.................................             391            -0.1             2.0             1.9
Freestanding Facility Type......................           3,151             0.0             2.0             2.0
HHA/Facility-Based Facility Type................             991             0.1             2.0             2.1
----------------------------------------------------------------------------------------------------------------
Source: FY 2015 hospice claims data from the Standard Analytic Files for CY 2014 (as of June 30, 2015) and CY
  2015 (as of December 31, 2015).
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.

5. Alternatives Considered
    Since the hospice payment update percentage is determined based on 
statutory requirements, we did not consider not updating hospice 
payment rates by the payment update percentage. The proposed 2.0 
percent hospice payment update percentage for FY 2017 is based on a 
proposed 2.8 percent inpatient hospital market basket update for FY 
2017, reduced by a 0.5 percentage point productivity adjustment and by 
an additional 0.3 percentage point. Payment rates since FY 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 years 
must be the market basket percentage for that FY. Section 3401(g) of 
the Affordable Care Act also mandates that, starting with FY 2013 (and 
in subsequent years), the hospice payment update percentage will be 
annually reduced by changes in economy-wide productivity as specified 
in section 1886(b)(3)(B)(xi)(II) of the Act. In addition, section 
3401(g) of the Affordable Care Act 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).
    We considered not proposing a hospice wage index standardization 
factor. However, as discussed in section III.C.1 of this proposed rule, 
we believe that adopting a hospice wage index standardization factor 
would provide a safeguard to the Medicare program, as well as to 
hospices, because it will mitigate changes in overall hospice 
expenditures due to annual fluctuations in the hospital wage data from 
year-to-year by ensuring that hospice wage index updates and revisions 
are implemented in a budget neutral manner. We estimate that if the 
hospice wage index standardization factor is not finalized, total 
payments in a given year would increase or decrease by as much as 0.3 
percent or $50 million.
6. Accounting Statement
    As required by OMB Circular A-4 (available at http://www.whitehouse.gov/omb/circulars/a004/a-4.pdf), in Table 20, we have 
prepared an accounting statement showing the classification of the 
expenditures

[[Page 25538]]

associated with the provisions of this proposed rule. Table 20 provides 
our best estimate of the possible changes in Medicare payments under 
the hospice benefit as a result of the policies in this proposed rule. 
This estimate is based on the data for 4,067 hospices in our impact 
analysis file, which was constructed using FY 2015 claims available as 
of December 31, 2015. All expenditures are classified as transfers to 
hospices.

 Table 20--Accounting Statement: Classification of Estimated Transfers,
                         From FY 2016 to FY 2017
                             [In $millions]
------------------------------------------------------------------------
                 Category                             Transfers
------------------------------------------------------------------------
           FY 2017 Hospice Wage Index and Payment Rate Update
------------------------------------------------------------------------
Annualized Monetized Transfers............  $330.*
From Whom to Whom?                          Federal Government to
                                             Medicare Hospices.
------------------------------------------------------------------------
* The net increase of $330 million in transfer payments is a result of
  the 2.0 percent hospice payment update percentage compared to payments
  in FY 2016.

7. Conclusion
    We estimate that aggregate payments to hospices in FY 2017 would 
increase by $330 million, or 2.0 percent, compared to payments in FY 
2016. We estimate that in FY 2017, hospices in urban and rural areas 
would experience, on average, a 2.0 percent and a 1.9 percent increase, 
respectively, in estimated payments compared to FY 2016. Hospices 
providing services in the urban Pacific and rural Pacific regions would 
experience the largest estimated increases in payments of 2.6 percent 
and 2.7 percent, respectively. Hospices serving patients in rural areas 
in the West North Central region would experience the lowest estimated 
increase of 1.0 percent in FY 2017 payments.

B. 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. 
The effect of the proposed FY 2017 hospice payment update percentage 
results in an overall increase in estimated hospice payments of 2.0 
percent, or $330 million. Therefore, the Secretary has determined that 
this proposed 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 proposed rule only 
affects hospices. Therefore, the Secretary has determined that this 
proposed rule would not have a significant impact on the operations of 
a substantial number of small rural hospitals.

C. 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 2016, that 
threshold is approximately $146 million. This proposed rule is not 
anticipated to have an effect on State, local, or tribal governments, 
in the aggregate, or on the private sector of $146 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 proposed 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 in 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 proposes to amend 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).

0
2. Section 418.312 is amended by adding paragraph (i) to read as 
follows:


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

* * * * *
    (i) Retention of HQRP Measures Adopted for Previous Payment 
Determinations. If HQRP measures are re-endorsed by the NQF without 
substantive changes in specifications, CMS will implement the measure 
without notice and comment rulemaking.

    Dated: April 1, 2016.
Andrew M. Slavitt,
Acting Administrator, Centers for Medicare & Medicaid Services.
    Approved: April 14, 2016.
Sylvia M. Burwell,
Secretary, Department of Health and Human Services.
[FR Doc. 2016-09631 Filed 4-21-16; 4:15 pm]
 BILLING CODE 4120-01-P