[Federal Register Volume 85, Number 73 (Wednesday, April 15, 2020)]
[Proposed Rules]
[Pages 20949-20967]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-07959]
-----------------------------------------------------------------------
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 418
[CMS-1733-P]
RIN 0938-AU09
Medicare Program; FY 2021 Hospice Wage Index and Payment Rate
Update
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: This proposed rule would update the hospice wage index,
payment rates, and cap amount for fiscal year (FY) 2021. This rule also
proposes changes to the hospice wage index by adopting the most recent
Office of
[[Page 20950]]
Management and Budget statistical area delineations, with a 5 percent
cap on wage index decreases. Finally, this proposed rule summarizes the
changes to the hospice election statement finalized in the FY 2020
Hospice Wage Index and Rate Update final rule and effective for October
1, 2020; and provides hospices with a model election statement and
sample addendum.
DATES: To be assured consideration, comments must be received at one of
the addresses provided below, no later than 5 p.m. on June 9, 2020.
ADDRESSES: In commenting, refer to file code CMS-1733-P.
Comments, including mass comment submissions, must be submitted in
one of the following three ways (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-1733-P, P.O. Box 8010,
Baltimore, MD 21244-1850.
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-1733-P, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT: For general questions about hospice
payment policy, send your inquiry via email to:
[email protected].
SUPPLEMENTARY INFORMATION: 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 website as soon as possible after they have been
received: http://www.regulations.gov. Follow the search instructions on
that website to view public comments.
Wage index addenda will be available only through the internet on
our website at: (https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/Hospice/Hospice-Wage-Index.html.)
I. Executive Summary
A. Purpose
This rule proposes updates to the hospice wage index, payment
rates, and cap amount for fiscal year (FY) 2021, as required under
section 1814(i) of the Social Security Act (the Act). In addition, this
rule proposes to adopt the most recent Office of Management and Budget
(OMB) statistical area delineations and apply a 5 percent cap on wage
index decreases; and proposes to sunset the Service Intensity Add-on
(SIA) budget neutrality factor.
B. Summary of the Major Provisions
Section III.A.1 of this rule proposes to adopt the OMB statistical
area delineations outlined in a September 14, 2018, OMB bulletin.
Section III.A.2 proposes to apply a 5 percent cap on wage index
decreases. Section III.B.1 proposes updates to the hospice wage index
and makes the application of the updated wage data budget neutral for
all four levels of hospice care. In section III.B.2 of this proposed
rule we discuss the proposed FY 2021 hospice payment update percentage
of 2.6 percent. Section III.B.3 of this proposed rule proposes to
sunset the service intensity add-on budget neutrality factor (SBNF) and
update the hospice payment rates. Section III.B.4 proposes the hospice
cap amount for FY 2021 by the hospice payment update percentage
discussed in section III.B.2 of this rule. Finally, section III.C
discusses the modifications to the hospice election statement and the
election statement addendum that were finalized in the FY 2020 Hospice
final rule (84 FR 38484) and solicits comments on model examples of the
modified election statement and the addendum.
C. Summary of Impacts
The overall economic impact of this proposed rule is estimated to
be $580 million in increased payments to hospices for FY 2021.
II. Background
A. Hospice Care
Hospice care is a comprehensive, holistic approach to treatment
that recognizes the impending death of a terminally ill individual and
warrants a change in the focus from curative care to palliative care
for relief of pain and for symptom management. 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.
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 a
collaboration 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/caregiver-
centered care for those who are terminally ill.
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 regulations at
Sec. 418.22(b)(3) require that the certification and recertification
forms include a brief narrative explanation of the clinical findings
that support a life expectancy of 6 months or less.
Under the Medicare hospice benefit, the election of hospice care is
a patient choice and once a terminally ill patient elects to receive
hospice care, a hospice interdisciplinary group is essential in the
seamless provision of services. These hospice services are provided
primarily in the individual's home. The hospice interdisciplinary group
works with the beneficiary, family, and caregivers to develop a
coordinated, comprehensive care plan; reduce unnecessary diagnostics or
ineffective therapies; and maintain ongoing communication with
individuals and their families about changes in their condition. The
beneficiary's 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.
If, in the judgment of the hospice interdisciplinary team, which
includes the hospice physician, the patient's symptoms cannot be
effectively managed at home, then the patient is
[[Page 20951]]
eligible for GIP, a more medically intense level of care. GIP must be
provided in a Medicare-certified hospice freestanding facility, skilled
nursing facility, or hospital. GIP is provided to ensure that any new
or worsening symptoms are intensively addressed so that the beneficiary
can return to his or her home and continue to receive routine home
care. Limited, short-term, intermittent, IRC is also available because
of the absence or need for relief of the family or other caregivers.
Additionally, an individual can receive CHC during a period of crisis
in which an individual requires continuous care to achieve palliation
or management of acute medical symptoms so that the individual can
remain at home. Continuous home care may be covered 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, must be furnished on a
particular day to qualify for the continuous home care rate (Sec.
418.302(e)(4)).
Hospices must comply with applicable civil rights laws,\1\
including section 504 of the Rehabilitation Act of 1973 and the
Americans with Disabilities Act, under which covered entities must take
appropriate steps to ensure effective communication with patients and
patient care representatives with disabilities, including the
provisions of auxiliary aids and services. Additionally, they must take
reasonable steps to ensure meaningful access for individuals with
limited 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.
---------------------------------------------------------------------------
\1\ Hospices are also subject to additional Federal civil rights
laws, including the Age Discrimination Act, Section 1557 of the
Affordable Care Act, and conscience and religious freedom laws.
---------------------------------------------------------------------------
B. Services Covered by the Medicare Hospice Benefit
Coverage under the Medicare Hospice benefit requires 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 (here 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 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 also
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). As stated in the FY 1983 Hospice Wage Index and Rate Update
proposed rule (48 FR 38149), the hospice interdisciplinary group should
comprise paid hospice employees as well as hospice volunteers, and that
``the hospice benefit and the resulting Medicare reimbursement is not
intended to diminish the voluntary spirit of hospices.'' This
expectation supports the hospice philosophy of community based,
holistic, comprehensive, and compassionate end of life care.
C. 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 42 CFR part 418, establish eligibility
requirements, payment standards and procedures; define covered
services; and delineate the conditions a hospice must meet to be
approved for participation in the Medicare program. Part 418, subpart
G, provides for a per diem payment in one of four prospectively-
determined rate categories of hospice care (RHC, CHC, IRC, and GIP),
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 and items needed to manage the
beneficiary's care, as required by section 1861(dd)(1) of the Act.
While payment is made to hospices is to cover all items, services,
and drugs for the palliation and management of the terminal illness and
related conditions, federal funds cannot be used for the prohibited
activities, even in the context of a per diem payment. Recent news
reports \2\ have brought to light the potential role hospices could
play in medical aid in dying (MAID) where such practices have been
legalized in certain states. We wish to remind hospices that The
Assisted Suicide Funding Restriction Act of 1997 (ASFRA) (Pub. L. 105-
12) prohibits the use of federal funds to provide or pay for any health
care item or service or health benefit coverage for the purpose of
causing, or assisting to cause, the death of any individual including
mercy killing, euthanasia, or assisted suicide. However, pursuant to
section 3(b)(4) of ASFRA, the prohibition does not apply to the
provision of an item or service for the purpose of alleviating pain or
discomfort, even if such use may increase the risk of death, so long as
the item or service is not furnished for the specific purpose of
causing or accelerating death.
---------------------------------------------------------------------------
\2\ Nelson, R., Should Medical Aid in Dying Be Part of Hospice
Care? Medscape Nurses. February 26, 2020. https://www.medscape.com/viewarticle/925769#vp_1.
---------------------------------------------------------------------------
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
changes in the methodology concerning updating the daily payment rates
based on the hospital market basket percentage increase applied to the
payment rates in effect during the previous federal FY.
2. Balanced Budget Act of 1997
Section 4441(a) of the Balanced Budget Act of 1997 (BBA) (Pub. L.
105-33) established that updates to the hospice payment rates beginning
FY 2002 and subsequent FYs be the hospital market basket percentage
increase for the FY.
3. FY 1998 Hospice Wage Index Final Rule
The FY 1998 Hospice Wage Index final rule (62 FR 42860),
implemented a
[[Page 20952]]
new methodology for calculating the hospice wage index and instituted
an annual Budget Neutrality Adjustment Factor (BNAF) so aggregate
Medicare payments to hospices would remain budget neutral to payments
calculated using the 1983 wage index.
4. FY 2010 Hospice Wage Index Final Rule
The FY 2010 Hospice Wage Index and Rate Update final rule (74 FR
39384) instituted an incremental 7-year phase-out of the BNAF beginning
in FY 2010 through FY 2016. The BNAF phase-out reduced the amount of
the BNAF increase applied to the hospice wage index value, but 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 addition, sections 1814(i)(5)(A) through (C) of the Act, as
added by section 3132(a) of the Patient Protection and Affordable Care
Act (PPACA) (Pub. L. 111-148), required hospices to begin submitting
quality data, based on measures specified by the Secretary of the
Department of Health and Human Services (the Secretary), for FY 2014
and subsequent FYs. Beginning in FY 2014, hospices that fail to report
quality data have their market basket percentage increase reduced by 2
percentage points.
Section 1814(a)(7)(D)(i) of the Act, as added by section 3132(b)(2)
of the PPACA, required, 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 FY 2011 Hospice Wage
Index 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 PPACA, authorized 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 PPACA 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
In the FY 2012 Hospice Wage Index final rule (76 FR 47308 through
47314) we announced that beginning in 2012, 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 through 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. If a hospice's total Medicare payments for
the cap year exceed the hospice aggregate cap, then the hospice must
repay the excess back to Medicare.
7. IMPACT Act of 2014
The Improving Medicare Post-Acute Care Transformation Act of 2014
(IMPACT Act) (Pub. L. 113-185) 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 of 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.
8. FY 2015 Hospice Wage Index and Payment Rate Update Final Rule
The FY 2015 Hospice Wage Index and Rate Update final rule (79 FR
50452) finalized a requirement that 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 within 5 calendar days after the effective date of the
discharge/revocation (unless the hospice has already filed a final
claim) through the submission of a final claim or a Notice of
Termination or Revocation (NOTR).
The FY 2015 Hospice Wage Index and Rate Update final rule (79 FR
50479) also 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.
In addition, the FY 2015 Hospice Wage Index and Rate Update final
rule (79 FR 50496) provided background, eligibility criteria, survey
respondents, and implementation of the Hospice Experience of Care
Survey for informal caregivers. Hospice providers were required to
begin using this survey for hospice patients as of 2015.
Finally, the FY 2015 Hospice Wage Index and 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
submit their aggregate cap determinations on a timely basis will have
their payments suspended until the determination is completed and
received by the Medicare contractor (79 FR 50503).
9. FY 2016 Hospice Wage Index and Payment Rate Update Final Rule
In the FY 2016 Hospice Wage Index and Rate Update final rule (80 FR
47172), 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 subsequent days of hospice care. We also
created a 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
[[Page 20953]]
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 Rate Update final rule (80 FR 47186)
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 would be 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 thereafter. Finally, the FY 2016 Hospice
Wage Index and Rate Update final rule (80 FR 47144) clarified that
hospices would have to 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.
10. FY 2017 Hospice Wage Index and Payment Rate Update Final Rule
In the FY 2017 Hospice Wage Index and Rate Update final rule (81 FR
52160), we finalized several new policies and requirements related to
the HQRP. First, we codified our policy that if the National Quality
Forum (NQF) made non-substantive changes to specifications for HQRP
measures as part of the NQF's re-endorsement process, we would continue
to utilize the measure in its new endorsed status, without going
through new notice-and-comment rulemaking. We would continue to use
rulemaking to adopt substantive updates made by the NQF to the endorsed
measures we have adopted for the HQRP; determinations about what
constitutes a substantive versus non-substantive change would be made
on a measure-by-measure basis. Second, we finalized two new quality
measures for the HQRP 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 (81 FR 52173). The data collection mechanism
for both of these measures is the HIS, and the measures were effective
April 1, 2017. Regarding the CAHPS[supreg] Hospice Survey, we finalized
a policy that hospices that receive their CMS Certification Number
(CCN) after January 1, 2017 for the FY 2019 Annual Payment Update (APU)
and January 1, 2018 for the FY 2020 APU will be exempted from the
Hospice Consumer Assessment of Healthcare Providers and Systems
(CAHPS[supreg]) requirements due to newness (81 FR 52182). The
exemption is determined by CMS and is for 1 year only.
11. FY 2020 Hospice Wage Index and Payment Rate Update Final Rule
In the FY 2020 Hospice Wage Index and Rate Update final rule (84 FR
38487), we rebased the payment rates for CHC and GIP and set those
rates equal to their average estimated FY 2019 costs per day. We also
rebased IRC per diem rates equal to the estimated FY 2019 average costs
per day, with a reduction of 5 percent to the FY 2019 average cost per
day to account for coinsurance. We finalized the FY 2020 proposal to
reduce the RHC payment rates by 2.72 percent to offset the increases to
CHC, IRC, and GIP payment rates to implement this policy in a budget-
neutral manner in accordance with section 1814(i)(6) of the Act (84 FR
38496). We also finalized a policy to use the current year's pre-floor,
pre-reclassified hospital inpatient wage index as the wage adjustment
to the labor portion of the hospice rates. Finally, in the FY 2020
Hospice Wage Index and Rate Update final rule (84 FR 38505) we
finalized modifications to the hospice election statement content
requirements at Sec. 418.24(b) by requiring hospices, upon request, to
furnish an election statement addendum effective beginning in FY 2021.
The addendum must list those items, services, and drugs the hospice has
determined to be unrelated to the terminal illness and related
conditions, increasing coverage transparency for beneficiaries under a
hospice election.
III. Provisions of the Proposed Rule
A. Proposed Hospice Wage Index Changes
1. Proposed Implementation of New Labor Market Delineations
Generally, OMB issues major revisions to statistical areas every 10
years, based on the results of the decennial census. However, OMB
occasionally issues minor updates and revisions to statistical areas in
the years between the decennial censuses. On April 10, 2018, OMB issued
OMB Bulletin No. 18-03 which superseded the August 15, 2017 OMB
Bulletin No. 17-01. On September 14, 2018, OMB issued OMB Bulletin No.
18-04, which superseded the April 10, 2018 OMB Bulletin No. 18-03.
These bulletins established revisions to the delineations of
Metropolitan Statistical Areas (MSA), Micropolitan Statistical Areas,
and Combines Statistical Areas, and guidance on uses of the delineation
in these areas. A copy of the September 14, 2018 bulletin is available
online at: https://www.whitehouse.gov/wp-content/uploads/2018/09/Bulletin-18-04.pdf. (We note, on March 6, 2020 OMB issued Bulletin 20-
01 (available on the web at https://www.whitehouse.gov/wp-content/uploads/2020/03/Bulletin-20-01.pdf), and as discussed below was not
issued in time for development of this proposed rule.) This bulletin
states 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.''
While the revisions OMB published on September 14, 2018, are not as
sweeping as the changes made when we adopted the CBSA geographic
designations for FY 2006, the September 14, 2018 bulletin does contain
a number of significant changes. For example, there are new CBSAs,
urban counties that have become rural, rural counties that have become
urban, and existing CBSAs that have been split apart. We believe it is
important for the hospice wage index to use the latest OMB delineations
available in order to maintain a more accurate and up-to-date payment
system that reflects the reality of population shifts and labor market
conditions. We further believe that using the most current OMB
delineations would increase the integrity of the hospice wage index by
creating a more accurate representation of geographic variation in wage
levels. We are proposing to implement the new OMB delineations as
described in the September 14, 2018 OMB Bulletin No. 18-04 for the
hospice wage index effective beginning in FY 2021. As noted above, the
March 6, 2020 OMB Bulletin 20-01 was not issued in time for development
of this proposed rule. While we do not believe that the minor updates
included in OMB Bulletin 20-01 would impact our proposed updates to the
CBSA-based labor market area delineations, if needed we would include
any updates from this bulletin in any changes that would be adopted in
the FY 2021 hospice final rule.
i. Micropolitan Statistical Areas
As discussed in the FY 2006 Hospice Wage Index proposed rule (70 FR
22397) and final rule (70 FR 45132), CMS considered how to use the
Micropolitan Statistical Area definitions
[[Page 20954]]
in the calculation of the wage index. OMB defines a ``Micropolitan
Statistical Area'' as a ``CBSA'' associated with at least one urban
cluster that has a population of at least 10,000, but less than 50,000
(75 FR 37252). We refer to these as Micropolitan Areas. After extensive
impact analysis, consistent with the treatment of these areas under the
IPPS as discussed in the FY 2005 IPPS final rule (69 FR 49029 through
49032), CMS determined the best course of action would be to treat
Micropolitan Areas as ``rural'' and include them in the calculation of
each state's Hospice rural wage index (see 70 FR 22397 and 70 FR
45132). Thus, the hospice statewide rural wage index is determined
using IPPS hospital data from hospitals located in non-Metropolitan
Statistical Areas (MSA).
Based upon the 2010 Decennial Census data, a number of urban
counties have switched status and have joined or became Micropolitan
Areas, and some counties that once were part of a Micropolitan Area,
have become urban. Overall, there are fewer Micropolitan Areas (542)
under the new OMB delineations based on the 2010 Census than existed
under the latest data from the 2000 Census (581). We believe that the
best course of action would be to continue the policy established in
the FY 2006 Hospice Wage Index final rule and include Micropolitan
Areas in each state's rural wage index. These areas continue to be
defined as having relatively small urban cores (populations of 10,000
to 49,999). Therefore, in conjunction with our proposal to implement
the new OMB labor market delineations beginning in FY 2021 and
consistent with the treatment of Micropolitan Areas under the IPPS, we
are proposing to continue to treat Micropolitan Areas as ``rural'' and
to include Micropolitan Areas in the calculation of each state's rural
wage index.
ii. Urban Counties Becoming Rural
If we adopt the new OMB delineations (based upon the 2010 decennial
Census data), a total of 34 counties (and county equivalents) that are
currently considered urban would be considered rural beginning in FY
2021. Table 1 below lists the 34 counties that would change to rural
status if we finalize our proposal to implement the new OMB
delineations.
Table 1--Counties That Would Change to Rural Status
----------------------------------------------------------------------------------------------------------------
County name State CBSA CBSA name
----------------------------------------------------------------------------------------------------------------
BAKER................................... GA.................. 10500 Albany, GA.
NEWTON.................................. TX.................. 13140 Beaumont-Port Arthur, TX.
GOLDEN VALLEY........................... MT.................. 13740 Billings, MT.
WALKER.................................. AL.................. 13820 Birmingham-Hoover, AL.
SIOUX................................... ND.................. 13900 Bismarck, ND.
FLOYD................................... VA.................. 13980 Blacksburg-Christiansburg-
Radford, VA.
DE WITT................................. IL.................. 14010 Bloomington, IL.
FORD.................................... IL.................. 16580 Champaign-Urbana, IL.
BUCKINGHAM.............................. VA.................. 16820 Charlottesville, VA.
ARANSAS................................. TX.................. 18580 Corpus Christi, TX.
MC DONALD............................... MO.................. 22220 Fayetteville-Springdale-Rogers,
AR-MO.
LE FLORE................................ OK.................. 22900 Fort Smith, AR-OK.
WELLS................................... IN.................. 23060 Fort Wayne, IN.
HOOD.................................... TX.................. 23104 Fort Worth-Arlington, TX.
SOMERVELL............................... TX.................. 23104 Fort Worth-Arlington, TX.
HAMILTON................................ NE.................. 24260 Grand Island, NE.
BARRY................................... MI.................. 24340 Grand Rapids-Wyoming, MI.
KALAWAO................................. HI.................. 27980 Kahului-Wailuku-Lahaina, HI.
VAN BUREN............................... MI.................. 28020 Kalamazoo-Portage, MI.
SCOTT................................... IN.................. 31140 Louisville/Jefferson County, KY-
IN.
TRIMBLE................................. KY.................. 31140 Louisville/Jefferson County, KY-
IN.
BENTON.................................. MS.................. 32820 Memphis, TN-MS-AR.
SIBLEY.................................. MN.................. 33460 Minneapolis--St. Paul--
Bloomington, MN-WI.
HICKMAN................................. TN.................. 34980 Nashville-Davidson-Murfreesboro-
Franklin, TN.
GULF.................................... FL.................. 37460 Panama City, FL.
CUSTER.................................. SD.................. 39660 Rapid City, SD.
CAROLINE................................ VA.................. 40060 Richmond, VA.
WEBSTER................................. LA.................. 43340 Shreveport-Bossier City, LA.
PLYMOUTH................................ IA.................. 43580 Sioux City, IA-NE-SD.
UNION................................... SC.................. 43900 Spartanburg, SC.
PEND OREILLE............................ WA.................. 44060 Spokane-Spokane Valley, WA.
COLUMBIA................................ WA.................. 47460 Walla Walla, WA.
PULASKI................................. GA.................. 47580 Warner Robins, GA.
KINGMAN................................. KS.................. 48620 Wichita, KS.
----------------------------------------------------------------------------------------------------------------
iii. Rural Counties Becoming Urban
If we finalize our proposal to implement the new OMB delineations
(based upon the 2010 decennial Census data), a total of 47 counties
(and county equivalents) that are currently designated rural would be
considered urban beginning in FY 2021. Table 2 below lists the 47
counties that would change to urban status.
[[Page 20955]]
Table 2--Counties That Would Change to Urban Status
----------------------------------------------------------------------------------------------------------------
County name State CBSA CBSA name
----------------------------------------------------------------------------------------------------------------
GREENE.................................. AL.................. 46220 Tuscaloosa, AL.
WASHINGTON.............................. AL.................. 33660 Mobile, AL.
FRANKLIN................................ AR.................. 22900 Fort Smith, AR-OK.
LEVY.................................... FL.................. 23540 Gainesville, FL.
STEWART................................. GA.................. 17980 Columbus, GA-AL.
TALBOT.................................. GA.................. 17980 Columbus, GA-AL.
POWER................................... ID.................. 38540 Pocatello, ID.
FULTON.................................. IL.................. 37900 Peoria, IL.
JOHNSON................................. IL.................. 16060 Carbondale-Marion, IL.
FRANKLIN................................ IN.................. 17140 Cincinnati, OH-KY-IN.
PARKE................................... IN.................. 45460 Terre Haute, IN.
WARREN.................................. IN.................. 29200 Lafayette-West Lafayette, IN.
BOONE................................... IA.................. 11180 Ames, IA.
JASPER.................................. IA.................. 19780 Des Moines-West Des Moines, IA.
GEARY................................... KS.................. 31740 Manhattan, KS.
CARTER.................................. KY.................. 26580 Huntington-Ashland, WV-KY-OH.
ASSUMPTION.............................. LA.................. 12940 Baton Rouge, LA.
MOREHOUSE............................... LA.................. 33740 Monroe, LA.
FRANKLIN................................ MA.................. 44140 Springfield, MA.
IONIA................................... MI.................. 24340 Grand Rapids-Kentwood, MI.
SHIAWASSEE.............................. MI.................. 29620 Lansing-East Lansing, MI.
LAKE.................................... MN.................. 20260 Duluth, MN-WI.
COVINGTON............................... MS.................. 25620 Hattiesburg, MS.
HOLMES.................................. MS.................. 27140 Jackson, MS.
STONE................................... MS.................. 25060 Gulfport-Biloxi, MS.
COOPER.................................. MO.................. 17860 Columbia, MO.
HOWARD.................................. MO.................. 17860 Columbia, MO.
STILLWATER.............................. MT.................. 13740 Billings, MT.
ANSON................................... NC.................. 16740 Charlotte-Concord-Gastonia, NC-
SC.
CAMDEN.................................. NC.................. 47260 Virginia Beach-Norfolk-Newport
News, VA-NC.
GRANVILLE............................... NC.................. 20500 Durham-Chapel Hill, NC.
HARNETT................................. NC.................. 22180 Fayetteville, NC.
OTTAWA.................................. OH.................. 45780 Toledo, OH.
CLARENDON............................... SC.................. 44940 Sumter, SC.
GIBSON.................................. TN.................. 27180 Jackson, TN.
STEWART................................. TN.................. 17300 Clarksville, TN-KY.
HARRISON................................ TX.................. 30980 Longview, TX.
STERLING................................ TX.................. 41660 San Angelo, TX.
KING AND QUEEN.......................... VA.................. 40060 Richmond, VA.
MADISON................................. VA.................. 47894 Washington-Arlington-Alexandria,
DC-VA-MD-WV.
SOUTHAMPTON............................. VA.................. 47260 Virginia Beach-Norfolk-Newport
News, VA-NC.
FRANKLIN CITY........................... VA.................. 47260 Virginia Beach-Norfolk-Newport
News, VA-NC.
JACKSON................................. WV.................. 16620 Charleston, WV.
MORGAN.................................. WV.................. 25180 Hagerstown-Martinsburg, MD-WV.
LINCOLN................................. WI.................. 48140 Wausau-Weston, WI.
ADJUNTAS................................ PR.................. 38660 Ponce, PR.
LAS MARIAS.............................. PR.................. 32420 Mayag[uuml]ez, PR.
----------------------------------------------------------------------------------------------------------------
iv. Urban Counties Moving to a Different Urban CBSA
In addition to rural counties becoming urban and urban counties
becoming rural, several urban counties would shift from one urban CBSA
to another urban CBSA under our proposal to adopt the new OMB
delineations. In other cases, applying the new OMB delineations would
involve a change only in CBSA name or number, while the CBSA continues
to encompass the same constituent counties. For example, CBSA 19380
(Dayton, OH) would experience both a change to its number and its name,
and become CBSA 19430 (Dayton-Kettering, OH), while all of its three
constituent counties would remain the same. In other cases, only the
name of the CBSA would be modified, and none of the currently assigned
counties would be reassigned to a different urban CBSA. Table 3 below
lists CBSAs where we are proposing to change either the name or CBSA
number only.
Table 3--Counties That Would Change Name or CBSA Number
----------------------------------------------------------------------------------------------------------------
Current CBSA
Proposed CBSA code Proposed CBSA title code Current CBSA title
----------------------------------------------------------------------------------------------------------------
10540............................... Albany-Lebanon, OR.......... 10540 Albany, OR.
11500............................... Anniston-Oxford, AL......... 11500 Anniston-Oxford-
Jacksonville, AL.
12060............................... Atlanta-Sandy Springs- 12060 Atlanta-Sandy Springs-
Alpharetta, GA. Roswell, GA.
12420............................... Austin-Round Rock- 12420 Austin-Round Rock, TX.
Georgetown, TX.
13460............................... Bend, OR.................... 13460 Bend-Redmond, OR.
13980............................... Blacksburg-Christiansburg, 13980 Blacksburg-Christiansburg-
VA. Radford, VA.
[[Page 20956]]
14740............................... Bremerton-Silverdale-Port 14740 Bremerton-Silverdale, WA.
Orchard, WA.
15380............................... Buffalo-Cheektowaga, NY..... 15380 Buffalo-Cheektowaga-Niagara
Falls, NY.
19430............................... Dayton-Kettering, OH........ 19380 Dayton, OH.
24340............................... Grand Rapids-Kentwood, MI... 24340 Grand Rapids-Wyoming, MI.
24860............................... Greenville-Anderson, SC..... 24860 Greenville-Anderson-Mauldin,
SC.
25060............................... Gulfport-Biloxi, MS......... 25060 Gulfport-Biloxi-Pascagoula,
MS.
25540............................... Hartford-East Hartford- 25540 Hartford-West Hartford-East
Middletown, CT. Hartford, CT.
25940............................... Hilton Head Island-Bluffton, 25940 Hilton Head Island-Bluffton-
SC. Beaufort, SC.
28700............................... Kingsport-Bristol, TN-VA.... 28700 Kingsport-Bristol-Bristol,
TN-VA.
31860............................... Mankato, MN................. 31860 Mankato-North Mankato, MN.
33340............................... Milwaukee-Waukesha, WI...... 33340 Milwaukee-Waukesha-West
Allis, WI.
34940............................... Naples-Marco Island, FL..... 34940 Naples-Immokalee-Marco
Island, FL.
35660............................... Niles, MI................... 35660 Niles-Benton Harbor, MI.
36084............................... Oakland-Berkeley-Livermore, 36084 Oakland-Hayward-Berkeley,
CA. CA.
36500............................... Olympia-Lacey-Tumwater, WA.. 36500 Olympia-Tumwater, WA.
38060............................... Phoenix-Mesa-Chandler, AZ... 38060 Phoenix-Mesa-Scottsdale, AZ.
39150............................... Prescott Valley-Prescott, AZ 39140 Prescott, AZ.
23224............................... Frederick-Gaithersburg- 43524 Silver Spring-Frederick-
Rockville, MD. Rockville, MD.
44420............................... Staunton, VA................ 44420 Staunton-Waynesboro, VA.
44700............................... Stockton, CA................ 44700 Stockton-Lodi, CA.
45940............................... Trenton-Princeton, NJ....... 45940 Trenton, NJ.
46700............................... Vallejo, CA................. 46700 Vallejo-Fairfield, CA.
47300............................... Visalia, CA................. 47300 Visalia-Porterville, CA.
48140............................... Wausau-Weston, WI........... 48140 Wausau, WI.
48424............................... West Palm Beach-Boca Raton- 48424 West Palm Beach-Boca Raton-
Boynton Beach, FL. Delray Beach, FL.
----------------------------------------------------------------------------------------------------------------
We are not discussing these proposed changes in this section
because, in our view, they are inconsequential changes with respect to
the hospice wage index. However, in other cases, if we adopt the new
OMB delineations, counties would shift between existing and new CBSAs,
changing the constituent makeup of the CBSAs. In another type of
change, some CBSAs have counties that would split off to become part of
or to form entirely new labor market areas. Finally, in some cases, a
CBSA would lose counties to another existing CBSA if we adopt the new
OMB delineations. Table 4 below lists the urban counties that would
move from one urban CBSA to a newly or modified CBSA if we adopt the
new OMB delineations.
Table 4--Counties That Would Change to a Different CBSA
------------------------------------------------------------------------
Previous CBSA New CBSA County State
------------------------------------------------------------------------
16974........................ 16984 COOK........... IL.
16974........................ 16984 DU PAGE........ IL.
16974........................ 16984 GRUNDY......... IL.
16974........................ 20994 KENDALL........ IL.
16974........................ 16984 MC HENRY....... IL.
16974........................ 16984 WILL........... IL.
20524........................ 39100 DUTCHESS....... NY.
20524........................ 35614 PUTNAM......... NY.
26580........................ 16620 LINCOLN........ WV.
28940........................ 34100 GRAINGER....... TN.
35084........................ 35154 SOMERSET....... NJ.
35614........................ 35154 MIDDLESEX...... NJ.
35614........................ 35154 MONMOUTH....... NJ.
35614........................ 35154 OCEAN.......... NJ.
35614........................ 39100 ORANGE......... NY.
38660........................ 49500 GUANICA........ PR.
38660........................ 49500 GUAYANILLA..... PR.
38660........................ 49500 PENUELAS....... PR.
38660........................ 49500 YAUCO.......... PR.
------------------------------------------------------------------------
2. Proposed Transition Period
As discussed above, overall, we believe that our proposal to adopt
the revised OMB delineations for FY 2021 would result in hospice wage
index values being more representative of the actual costs of labor in
a given area. However, we also recognize that some hospices would
experience decreases in their area wage index values as a result of our
proposal. We also realize that many hospices would have higher area
wage index values under our proposal.
To mitigate the potential impacts of proposed policies on hospices,
we have in the past provided for transition periods when adopting
changes that have significant payment implications, particularly large
negative impacts. For example, we have proposed and finalized budget
neutral transition policies to help mitigate negative
[[Page 20957]]
impacts on hospices following the adoption of the new CBSA delineations
based on the 2010 decennial census data in the FY 2016 hospice final
rule (80 FR 47142). Specifically, we implemented a 1-year 50/50 blended
wage to the new OMB delineations. We applied a blended wage index for
one year (FY 2016) for all geographic areas that would consist of a 50/
50 blend of the wage index values using OMB's old area delineations and
the wage index values using OMB's new area delineations. That is, for
each county, a blended wage index was calculated equal to 50 percent of
the FY 2016 wage index using the old labor market area delineation and
50 percent of the FY 2016 wage index using the new labor market area
delineation, which resulted in an average of the two values. While we
believed that using the new OMB delineations would create a more
accurate payment adjustment for differences in area wage levels, we
also recognized that adopting such changes may cause some short-term
instability in hospice payments, in particular for hospices that would
be negatively impacted by the proposed adoption of the updates to the
OMB delineations. Therefore, we are proposing a transition policy to
help mitigate any significant negative impacts that hospices may
experience due to our proposal to adopt the revised OMB delineations.
Specifically, for FY 2021 as a transition, we are proposing to apply a
5 percent cap on any decrease in a geographic area's wage index value
from the wage index value from the prior FY. This transition would
allow the effects of our proposed adoption of the revised CBSA
delineations to be phased in over 2 years, where the estimated
reduction in a geographic area's wage index would be capped at 5
percent in FY 2021 (that is, no cap would be applied to the reduction
in the wage index for the second year (FY 2022)). We believe a 5
percent cap on the overall decrease in a geographic area's wage index
value would be appropriate for FY 2021, as it provides predictability
in payment levels from FY 2020 to the upcoming FY 2021 and additional
transparency because it is administratively simpler than our prior 1-
year 50/50 blended wage index approach. We believe 5 percent is a
reasonable level for the cap because it would effectively mitigate any
significant decreases in a geographic area's wage index value for FY
2021. Because we believe that using the new OMB delineations would
create a more accurate payment adjustment for differences in area wage
levels we are proposing to include a cap on the overall decrease in a
geographic area's wage index value.
Overall, the impact between the FY 2021 wage index using the old
OMB delineations and the proposed FY 2021 wage index using the new OMB
delineations would be 0.0 percent due to the wage index standardization
factor, which ensures that wage index updates and revisions are
implemented in a budget-neutral manner. We invite comments on our
proposed transition methodology.
The proposed wage index applicable to FY 2021 can be found in on
the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/Hospice. The proposed hospice wage index for FY 2021
would be effective October 1, 2020 through September 30, 2021.
The wage index file also provides a crosswalk between the FY 2021
wage index using the current OMB delineations and the FY 2021 wage
index using the proposed revised OMB delineations that would be in
effect in FY 2021 if these proposed changes are finalized. This file
shows each state and county and its corresponding proposed wage index
along with the previous CBSA number, the new CBSA number or alternate
identification number, and the new CBSA name.
B. Proposed Routine FY 2021 Hospice Wage Index and Rate Update
1. Proposed FY 2021 Hospice Wage Index
The hospice wage index is used to adjust payment rates for hospice
agencies under the Medicare program to reflect local differences in
area wage levels, based on the location where services are furnished.
The hospice wage index utilizes the wage adjustment factors used by the
Secretary for purposes of section 1886(d)(3)(E) of the Act for hospital
wage adjustments. 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.
In the FY 2020 Hospice Wage Index final rule (84 FR 38484), we
finalized the proposal to use the current FY's hospital wage index data
to calculate the hospice wage index values. In section III.A above we
discuss our proposal to use the pre-floor, pre-reclassified hospital
wage index data to calculate the hospice wage index values. For FY
2021, the proposed hospice wage index would be based on the FY 2021
hospital pre-floor, pre-reclassified wage index with a 5 percent cap on
wage index decreases. This means that the hospital wage data used for
the hospice wage index would reflect the new OMB delineations but would
not 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 hospice 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 IRC.
In the FY 2006 Hospice Wage Index final rule (70 FR 45135), we
adopted the policy that, for urban labor markets without a hospital
from which hospital wage index data could be derived, all of the Core-
Based Statistical Areas (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.
For FY 2021, the only CBSA without a hospital from which hospital wage
data can be derived is 25980, Hinesville-Fort Stewart, Georgia. The FY
2021 adjusted wage index value for Hinesville-Fort Stewart, Georgia is
0.8539.
There exist some geographic areas where there were no hospitals,
and thus, no hospital wage data on which to base the calculation of the
hospice wage index. In the FY 2008 Hospice Wage Index final rule (72 FR
50217 through 50218), we implemented a methodology to update the
hospice wage index for rural areas without hospital wage data. In cases
where there was a rural area without rural hospital wage data, we use
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, for rural Puerto
Rico, we would not apply this methodology due to the distinct economic
circumstances that exist there (for example, due to the close proximity
to one another of almost all of Puerto Rico's various urban and non-
urban areas, this methodology would produce a wage index for rural
Puerto Rico that is higher than that in half of its urban areas);
instead, we would continue to use the most recent wage index previously
available for that area. For FY 2021, we propose to continue to use the
most recent pre-floor, pre-reclassified hospital wage index value
[[Page 20958]]
available for Puerto Rico, which is 0.4047, subsequently adjusted by
the hospice floor.
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 subject to application of the hospice floor to compute
the hospice wage index used to determine payments to hospices. As
discussed above the adjusted pre-floor, pre-reclassified hospital wage
index values below 0.8 will be further 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.
The proposed hospice wage index applicable for FY 2021 (October 1,
2020 through September 30, 2021) is available on our website at:
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/Hospice/Hospice-Wage-Index.html.
2. Proposed FY 2021 Hospice Payment Update Percentage
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
to be updated by a factor equal to the inpatient hospital market basket
percentage increase 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 increase for that FY.
Section 3401(g) of the Affordable Care Act mandated that, starting
with FY 2013 (and in subsequent FYs), the hospice payment update
percentage would 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).
The proposed hospice payment update percentage for FY 2021 is based
on the current estimate of the inpatient hospital market basket update
of 3.0 percent (based on IHS Global Inc.'s fourth-quarter 2019 forecast
with historical data through the third quarter 2019). Due to the
requirements at sections 1886(b)(3)(B)(xi)(II) and 1814(i)(1)(C)(v) of
the Act, the inpatient hospital market basket update for FY 2021 of 3.0
percent must be reduced by a MFP adjustment as mandated by Affordable
Care Act (currently estimated to be 0.4 percentage point for FY 2021).
In effect, the proposed hospice payment update percentage for FY 2021
would be 2.6 percent. If more recent data becomes available after the
publication of this proposed rule and before the publication of the
final rule (for example, more recent estimates of the inpatient
hospital market basket update and MFP adjustment), we would use such
data to determine the hospice payment update percentage for FY 2021 in
the 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 2021 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 CHC,
IRC, or GIP. CHC is provided during a period of patient crisis to
maintain the patient at home; IRC is short-term care to allow the usual
caregiver to rest and 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 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 that final rule, we implemented a
SIA payment for RHC 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 service intensity add-on
budget neutrality factor (SBNF). The SBNF is used to reduce the overall
RHC rate in order to ensure that SIA payment are budget-neutral. At the
beginning of every fiscal year, SIA utilization is compared to the
prior year in order calculate a budget neutrality adjustment.
As shown in Table 5, for FY 2016 through FY 2020, there have been
very minor SBNF adjustments suggesting that the utilization of the SIA
from one year to the next remains relatively constant. Because the SBNF
remains stable, we are proposing to remove the factor to simplify the
RHC payment rate updates. Therefore, the RHC payment rates would
typically only be updated by the wage index standardization factor and
the hospice payment update percentage. We invite comments on this
proposal.
Table 5--FY 2016-FY 2020 SIA Budget Neutrality Factors
------------------------------------------------------------------------
Days 1-60 Days 61+
------------------------------------------------------------------------
FY 2016....................................... 0.9806 0.9957
FY 2017....................................... 1.0000 0.9999
FY 2018....................................... 1.0017 1.0005
FY 2019....................................... 0.9991 0.9998
FY 2020....................................... 0.9924 0.9982
------------------------------------------------------------------------
In the FY 2017 Hospice Wage Index and Rate Update final rule (81 FR
52156), we initiated a policy of applying a wage index standardization
factor to hospice payments in order to eliminate the aggregate effect
of annual variations in hospital wage data. In order to calculate the
wage index standardization factor, we simulate total payments using the
FY 2020 hospice wage index and FY 2020 payment rates and compare it to
our simulation of total payments using the FY 2021 wage index with a 5
percent cap on wage index decreases and FY 2020 payment rates. By
dividing payments for each level of care (RHC days 1 through 60, RHC
days 61+, CHC, IRC, and GIP) using the FY 2020 wage index and payment
rates by payments for each level of care using the FY 2021 wage index
and payment
[[Page 20959]]
rates, we obtain a wage index standardization factor for each level of
care. The wage index standardization factors for each level of care are
shown in the tables below.
The proposed FY 2021 RHC rates shown in Table 6 will only be
updated by the wage index standardization factor and the hospice
payment update percentage as mentioned previously. The proposed FY 2021
payment rates for CHC, IRC, and GIP are shown in Table 7.
Table 6--Proposed FY 2021 Hospice RHC Payment Rates
--------------------------------------------------------------------------------------------------------------------------------------------------------
Wage index Proposed FY 2021
Code Description FY 2020 standardization hospice payment Proposed FY 2021
payment rates factor update payment rates
--------------------------------------------------------------------------------------------------------------------------------------------------------
651.......................................... Routine Home Care (days 1-60)... $194.50 x 0.9989 x 1.026 $199.34
651.......................................... Routine Home Care (days 61+).... 153.72 x 0.9990 x 1.026 157.56
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table 7--Proposed FY 2021 Hospice CHC, IRC, and GIP Payment Rates
--------------------------------------------------------------------------------------------------------------------------------------------------------
Wage index
Code Description FY 2020 standardization FY 2021 hospice FY 2021 payment
payment rates factor payment update rates
--------------------------------------------------------------------------------------------------------------------------------------------------------
652.......................................... Continuous Home Care Full Rate = $1,395.63 x 0.9991 x 1.026 * $1,430.63
24 hours of care.
655.......................................... Inpatient Respite Care.......... 450.10 x 0.9993 x 1.026 461.48
656.......................................... General Inpatient Care.......... 1,021.25 x 0.9988 x 1.026 1,046.55
--------------------------------------------------------------------------------------------------------------------------------------------------------
* ($59.61 per hour.)
Sections 1814(i)(5)(A) through (C) of the Act require that hospices
submit quality data, based on measures to be specified by the
Secretary. In the FY 2012 Hospice Wage Index final rule (76 FR 47320
through 47324), we implemented a HQRP as required by section 3004 of
the Affordable Care Act. Hospices were required to begin collecting
quality data in October 2012, and submit that quality data in 2013.
Section 1814(i)(5)(A)(i) of the Act requires that beginning with FY
2014 and each subsequent FY, the Secretary shall reduce the market
basket update by 2 percentage points for any hospice that does not
comply with the quality data submission requirements with respect to
that FY. The proposed FY 2021 rates for hospices that do not submit the
required quality data would be updated by the proposed FY 2021 hospice
payment update percentage of 2.6 percent minus 2 percentage points.
These rates are shown in Tables 8 and 9.
Table 8--Proposed FY 2021 Hospice RHC Payment Rates for Hospices That DO NOT Submit the Required Quality Data
--------------------------------------------------------------------------------------------------------------------------------------------------------
Proposed FY 2021
hospice payment
FY 2020 Wage index update of 2.6% Proposed FY 2021
Code Description payment rates standardization minus 2 payment rates
factor percentage points
= +0.6%
--------------------------------------------------------------------------------------------------------------------------------------------------------
651.......................................... Routine Home Care (days 1-60)... $194.50 x 0.9989 x 1.006 $195.45
651.......................................... Routine Home Care (days 61+).... 153.72 x 0.9990 x 1.006 154.49
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table 9--Proposed FY 2021 Hospice CHC, IRC, and GIP Payment Rates for Hospices That DO NOT Submit the Required Quality Data
--------------------------------------------------------------------------------------------------------------------------------------------------------
Proposed FY 2021
hospice payment
FY 2020 Wage index update of 2.6% Proposed FY 2021
Code Description payment rates standardization minus 2 payment rates
factor percentage points
= +0.6%
--------------------------------------------------------------------------------------------------------------------------------------------------------
652.......................................... Continuous Home Care Full Rate= $1,395.63 x 0.9991 x 1.006 * $1,402.74
24 hours of care.
655.......................................... Inpatient Respite Care.......... 450.10 x 0.9993 x 1.006 452.48
656.......................................... General Inpatient Care.......... 1,021.25 x 0.9988 x 1.006 1,026.14
--------------------------------------------------------------------------------------------------------------------------------------------------------
* ($58.45 per hour.)
[[Page 20960]]
4. Proposed Hospice Cap Amount for FY 2021
As discussed in the FY 2016 Hospice Wage Index and Rate Update
final rule (80 FR 47183), we implemented changes mandated by the IMPACT
Act of 2014 (Pub. L. 113-185). 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 CPI-U. The proposed hospice cap amount for the FY 2021 cap
year will be $30,743.86, which is equal to the FY 2020 cap amount
($29,964.78) updated by the proposed FY 2021 hospice payment update
percentage of 2.6 percent.
C. Election Statement Content Modifications and Addendum To Provide
Greater Coverage Transparency and Safeguard Patient Rights
In the FY 2020 Hospice final rule (84 FR 38484), we finalized
modifications to the hospice election statement content requirements at
Sec. 418.24(b) to increase coverage transparency for patients under a
hospice election. In addition to the existing election statement
content requirements at Sec. 418.24(b), we finalized that hospices
also would be required to include the following on the election
statement:
Information about the holistic, comprehensive nature of
the Medicare hospice benefit.
A statement that, although it would be rare, there could
be some necessary items, drugs, or services that will not be covered by
the hospice because the hospice has determined that these items, drugs,
or services are to treat a condition that is unrelated to the terminal
illness and related conditions.
Information about beneficiary cost-sharing for hospice
services.
Notification of the beneficiary's (or representative's)
right to request an election statement addendum that includes a written
list and a rationale for the conditions, items, drugs, or services that
the hospice has determined to be unrelated to the terminal illness and
related conditions and that immediate advocacy is available through the
Beneficiary and Family Centered Care Quality Improvement Organization
(BFCC-QIO) if the beneficiary (or representative) disagrees with the
hospice's determination.
Also in the CY 2020 hospice final rule, we finalized the
requirements as set forth at Sec. 418.24(c) for the hospice election
statement addendum titled, ``Patient Notification of Hospice Non-
Covered Items, Services, and Drugs'' and would include the following
content requirements:
1. Name of the hospice;
2. Beneficiary's name and hospice medical record identifier;
3. Identification of the beneficiary's terminal illness and related
conditions;
4. A list of the beneficiary's current diagnoses/conditions present
on hospice admission (or upon plan of care update, as applicable) and
the associated items, services, and drugs, not covered by the hospice
because they have been determined by the hospice to be unrelated to the
terminal illness and related conditions;
5. A written clinical explanation, in language the beneficiary and
his or her representative can understand, as to why the identified
conditions, items, services, and drugs are considered unrelated to the
terminal illness and related conditions and not needed for pain or
symptom management. This clinical explanation would be accompanied by a
general statement that the decision as to whether or not conditions,
items, services, and drugs is related is made for each patient and that
the beneficiary should share this clinical explanation with other
health care providers from which they seek services unrelated to their
terminal illness and related conditions;
6. References to any relevant clinical practice, policy, or
coverage guidelines.
7. Information on:
a. The purpose of Addendum; and
b. the patient's right to immediate advocacy.
8. Name and signature of Medicare hospice beneficiary (or
representative) and date signed, along with a statement that signing
this addendum (or its updates) is only acknowledgement of receipt of
the addendum (or its updates) and not necessarily the beneficiary's
agreement with the hospice's determinations.
We finalized a policy requiring that the election statement
modifications apply to all hospice elections. However, the addendum
only would be furnished to beneficiaries, their representatives, non-
hospice providers, or Medicare contractors who requested such
information. Additionally, we finalized a policy that if the
beneficiary (or representative) requested an addendum at the time of
hospice election, the hospice would have 5 days from the start of
hospice care to furnish this information in writing. Furthermore, if
the beneficiary requested the election statement at the time of hospice
election, but died within 5 days, the hospice would not be required to
furnish the addendum as the requirement would be deemed to have been
met in this circumstance. If the addendum was requested during the
course of hospice care (that is, after the date of the hospice
election), we finalized a policy that the hospice would have 72 hours
from the date of the request to provide the written addendum.
The election statement modifications and the election statement
addendum requirements will be effective for hospice elections beginning
on and after October 1, 2020 (that is, FY 2021). While we finalized the
content requirements for the election statement addendum, we did not
finalize a specific form, and hospices will develop and design the
addendum to meet their needs, similar to how hospices develop their own
hospice election statement.
Additionally, we finalized a policy that the signed addendum (and
any signed updates) would be a new condition for payment. However, this
does not mean in order to meet this condition for payment that the
beneficiary (or representative), or non-hospice provider would have to
agree with the hospice's determination. For purposes of this condition
for payment, we finalized the policy that the signed addendum was only
an acknowledgement of the beneficiary's (or representative's) receipt
of the addendum (or its updates) and this payment requirement would be
met if there was a signed addendum (and any signed updates) in the
requesting beneficiary's medical record with the hospice. This addendum
would not be required to be submitted routinely with each hospice
claim. Likewise, the hospice beneficiary (or representative) would not
have to separately consent to the release of this information to non-
hospice providers furnishing services for unrelated conditions, because
the Health Insurance Portability and Accountability Act of 1996 (HIPAA)
Privacy Rule allows those doctors, nurses, hospitals, laboratory
technicians, and other health care providers that are covered entities
to use or disclose protected health information, such as X-rays,
laboratory and pathology reports, diagnoses, and other medical
information for treatment purposes without the patient's express
authorization. This includes sharing the information to consult with
other providers, including providers who are not covered entities, to
treat a different patient, or to refer the patient (45 CFR 164.506).
We delayed the effective date of the election statement content
modifications and the hospice election statement addendum until FY 2021
to allow hospices adequate time to make the necessary modifications to
their current election statements, develop
[[Page 20961]]
their own election statement addendum, and make any changes to their
current software and business processes to accommodate the
requirements. Furthermore, in the FY 2020 Hospice final rule, we stated
we would examine the operational and logistical issues highlighted by
commenters in response to the election statement addendum to determine
if any additional proposals would be required for FY 2021 rulemaking.
These issues included concerns about the best way to furnish this
information to patients and their representatives in the most clear and
unobtrusive way; mechanisms to make necessary changes or adjustments to
the addendum content; obtaining necessary signature(s) on the addendum;
expected documentation in the hospice's medical record to determine
whether the addendum was requested, when it was requested, whether it
was present, and whether the condition for payment requirement has been
met; expectations as to the auditing process by the Medicare
Administrative Contractors (MACs) when an Additional Documentation
Request (ADR) was made; and the provision of MAC and BFCC-QIO
education.
As noted in the FY 2020 Hospice final rule (84 FR 38509), the
hospice Conditions of Participation (CoPs) at Sec. 418.52(a) require
that during the initial assessment visit, in advance of furnishing
care, the hospice must provide the patient or representative with
verbal (meaning spoken) and written notice of the patient's rights and
responsibilities in a language and manner that the patient understands.
Furthermore, hospices are to inform the beneficiary of the services
covered under the Medicare hospice benefit, as well as the scope of
such services. The intent of this standard was to ensure that patients
were aware of their potential out-of-pocket costs for hospice care,
such as co-payments, so that they would not be surprised by financial
concerns at this stressful time (73 FR 32097). Therefore, hospices are
already tasked with providing detailed information on hospice services
and limitations to those services to the patient upon election of the
benefit. We believe that the addendum further complements these
requirements by ensuring that the hospice informs them of any items,
services, or drugs which the terminally ill individual would have to
seek outside of the benefit. As we also noted in the FY 2020 Hospice
final rule, we stated that we would furnish a modified model election
statement and election statement addendum to provide the industry as
they move forward making the changes to their own election statements
and as they develop an addendum to communicate those items, services,
and drugs they will not be covering because they have determined them
to be unrelated to the terminal illness and related conditions. We have
posted the modified model election statement and addendum on the
Hospice Center web page, https://www.cms.gov/Center/Provider-Type/Hospice-Center, to give hospices an idea as to the requirements and how
they can develop their own forms. Because we detailed the content
requirements in the FY 2020 Hospice final rule, we believe that
hospices have been provided with specific information in order to
develop their own election statement addendum without any further
proposals. We expect to issue an MLN Matters[supreg] article to
accompany this proposed rule to further educate the hospice community
as to the election statement and addendum content requirements
effective for hospice elections beginning on and after October 1, 2020.
Regarding mechanisms to make any necessary changes or adjustments
to the requested addendum content, hospices have the option to make
updates to the addendum, if necessary, to include such conditions,
items, services and drugs they determine to be unrelated throughout the
course of a hospice election in a format that works best for their
current processes. Hospices are already required to make updates to the
plan of care at least every 15 days, or more often as the patient's
condition warrants, in accordance with the requirements at Sec.
418.56(d). Therefore, hospices already have systems in place to address
and document the changing needs of the patient via the hospice plan of
care. We would expect that hospices would adopt a similar process for
making any necessary changes or adjustments to the election statement
addendum. Moreover, we do not expect that there would be frequent
changes to the addendum, especially as a patient continues in a hospice
election and where most conditions are or become related to the
terminal prognosis and therefore, the responsibility of the hospice to
manage.
The hospice election statement has always required the signature of
the electing individual (or their representative). This requirement has
not changed with the modifications to the election statement and if the
individual (or representative) requests the election statement
addendum, the finalized requirements include the signature of the
individual (or representative), as well as the date the addendum was
signed. We would expect that the signature on the addendum would be
similar to how each hospice obtains the individual's signature on the
election statement itself. That is, if the individual electronically
signs the election statement, there is nothing prohibiting the hospice
from having the addendum electronically signed. We note that it is at
the contractor's discretion as to how they address patient/
representative electronic signatures in their review of medical
records, so hospices should confirm with their respective Medicare
contractors as to the use of electronic signatures for beneficiary (or
representative) signatures. However, the addendum is required to be
furnished to the individual in writing so that the individual (or
representative) can understand the information provided, make treatment
decisions based on that information, and share such information with
non-hospice providers rendering items and services to the individual.
Therefore, the format of the addendum must be usable for the patient;
most often we would expect that this would be in a hard copy format
that the individual can keep for his/her own records, similar to how
hospices are required by the hospice CoPs at Sec. 418.52(a)(3) to
provide the individual a copy of the notice of patient rights and
responsibilities.
For purposes of this condition for payment, we finalized that the
signed addendum is only acknowledgement of the beneficiary's (or
representative's) receipt of the addendum (or its updates) and this
payment requirement would be met if there was a signed addendum (and
any signed updates) in the requesting beneficiary's medical record with
the hospice. The hospice CoPs at Sec. 418.104(a)(2) says that the
patient's record must include ``signed copies of the notice of patient
rights in accordance with Sec. 418.52 and election statement in
accordance with Sec. 418.24.'' As the addendum is part of the election
statement as set forth in Sec. 418.24, then it is also a required part
of the patient's record, if the addendum has been requested by the
beneficiary (or representative).
We believe that a signed addendum connotes that the hospice had the
discussion about the addendum and its content. Likewise, in the event
that the individual (or representative) did not request the addendum,
we would expect hospices to document, in some fashion, that the
addendum was discussed with the patient (or representative) at the time
of admission, similar to how other patient and family discussions are
documented in the hospice's clinical record. Hospices can develop a way
to
[[Page 20962]]
document whether or not the addendum was requested at the time of
hospice election (or at any time throughout the course of hospice
care). This could be done in checklist format or as anecdotal notes by
the nurse. However, we did not propose a specific format in which to
document such conversations and hospices can develop their own
processes to incorporate into their current workflow. We believe
careful documentation that the addendum was discussed and whether or
not it was requested would be an essential step hospices could take to
protect themselves from possible claims denials related to any absence
of an addendum (or addendum update) in the medical record. The model
election form and addendum posted on the Hospice Center web page will
provide one example as to how hospices can document that the addendum
was discussed at the time of election. We believe that hospices are the
best to determine how to assimilate this requirement into their current
processes and that it is not necessary to propose a specific process,
thereby creating extra burden for hospices.
For purposes of an ADR and to mitigate any concerns about
situations in which there was no beneficiary (or representative)
request for the addendum, hospices may submit any documentation as it
relates to the presence or non-presence of the addendum, given that it
is a condition for payment. That is, if the beneficiary (or
representative) requested the election statement addendum, then the
hospice should submit the signed addendum as part of any ADR. And if
the beneficiary (or representative) did not request the election
statement addendum, then the hospice can submit any documentation in
response to an ADR that indicates that no beneficiary (or
representative) request for an addendum was made to ensure that it is
clear that the hospice addressed the addendum with the beneficiary. We
believe that this situation is similar to the patient-designated
attending physician requirement on the hospice election statement. That
is, the hospice attending physician must be identified by the
beneficiary on the hospice election statement, but only if the
beneficiary designates one. We are aware that many hospices have
included a checkbox on their election statement to indicate when the
beneficiary has opted not to designate an attending physician. Hospices
may choose to adopt a similar process for the election statement
addendum to ensure that they have documented those situations when a
beneficiary does not request an addendum upon having been told of their
right to request one.
However, we understand stakeholder concerns regarding potential
claims denials in the event that there is no signed addendum in the
beneficiary's hospice clinical record because it was not requested.
While we believe that a consistent, comprehensive process for
documenting when a beneficiary (or representative) does not request the
addendum will help mitigate claim denial issues, upon display of this
proposed rule, we have posted a model hospice election statement and
addendum on the Hospice Center web page (https://www.cms.gov/Center/Provider-Type/Hospice-Center) to assist hospices in understanding the
content requirements. We remind hospices that the modifications to the
election statement are effective for all hospice elections beginning on
and after October 1, 2020. The model election statement posted on the
Hospice Center web page illustrates how hospices can incorporate the
finalized modifications into their own election statements. The model
addendum, also posted on the Hospice Center web page, demonstrates how
hospices can include all of the addendum requirements in a format that
could assimilate into their current processes. We are soliciting
comments on both of these model examples to see if they are helpful in
educating hospices in how to meet these requirements effective on
October 1, 2020. Additionally, we will provide education to Medicare
contractors to help ensure that these finalized policies are fully
understood by all relevant stakeholders.
We are not proposing any changes to the policies finalized in the
FY 2020 Hospice final rule regarding the election statement content
modifications or the requirements for the election statement addendum
as set forth at Sec. 418.24. These finalized policies will be
effective for all hospice elections beginning on and after October 1,
2020.
Note: There are no proposals or updates in this proposed rule to
the Hospice Quality Reporting Program.
IV. Collection of Information Requirements
This document does not impose information collection requirements,
that is, reporting, recordkeeping or third-party disclosure
requirements. Consequently, there is no need for review by the Office
of Management and Budget under the authority of the Paperwork Reduction
Act of 1995 (44 U.S.C. 3501 et seq.).
V. Response to Comments
Because of the large number of public comments we normally receive
on Federal Register documents, we are not able to acknowledge or
respond to them individually. We will consider all comments we receive
by the date and time specified in the DATES section of this preamble,
and, when we proceed with a subsequent document, we will respond to the
comments in the preamble to that document.
VI. Regulatory Impact Analysis
A. Statement of Need
This proposed rule meets the requirements of our regulations at
Sec. 418.306(c) and (d), which require annual issuance, in the Federal
Register, of the hospice wage index based on the most current available
CMS hospital wage data, including any changes to the definitions of
CBSAs or previously used Metropolitan Statistical Areas (MSAs), as well
as any changes to the methodology for determining the per diem payment
rates. This proposed rule would also update payment rates for each of
the categories of hospice care, described in Sec. 418.302(b), for FY
2021 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.
B. Overall Impacts
We estimate that the aggregate impact of the payment provisions in
this proposed rule would result in an estimated increase of $580
million in payments to hospices, resulting from the hospice payment
update percentage of 2.6 percent for FY 2021. The impact analysis of
this proposed rule represents the projected effects of the changes in
hospice payments from FY 2020 to FY 2021. Using the most recent data
available at the time of rulemaking, in this case FY 2019 hospice
claims data as of January 13, 2020, we apply the current FY 2020 wage
index. Then, using the same FY 2019 data, we apply the FY 2021 wage
index to simulate FY 2021 payments. Finally, we apply a budget
neutrality adjustment so that the aggregate simulated payments do not
increase or decrease due to changes in the wage index.
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
[[Page 20963]]
these changes could make it difficult to predict accurately the full
scope of the impact upon hospices.
We have examined the impacts of this rule as required by Executive
Order 12866 on Regulatory Planning and Review (September 30, 1993),
Executive Order 13563 on Improving Regulation and Regulatory Review
(January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19,
1980, Pub. L. 96-354), section 1102(b) of the Social Security Act,
section 202 of the Unfunded Mandates Reform Act of 1995 (March 22,
1995; Pub. L. 104-4), Executive Order 13132 on Federalism (August 4,
1999), the Congressional Review Act (5 U.S.C. 804(2)), and Executive
Order 13771 on Reducing Regulation and Controlling Regulatory Costs
(January 30, 2017).
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). Section
3(f) of Executive Order 12866 defines a ``significant regulatory
action'' as an action that is likely to result in a rule: (1) Having an
annual effect on the economy of $100 million or more in any 1 year, or
adversely and materially affecting a sector of the economy,
productivity, competition, jobs, the environment, public health or
safety, or state, local or tribal governments or communities (also
referred to as ``economically significant''); (2) creating a serious
inconsistency or otherwise interfering with an action taken or planned
by another agency; (3) materially altering the budgetary impacts of
entitlement grants, user fees, or loan programs or the rights and
obligations of recipients thereof; or (4) raising novel legal or policy
issues arising out of legal mandates, the President's priorities, or
the principles set forth in the Executive Order.
A regulatory impact analysis (RIA) must be prepared for major rules
with economically significant effects ($100 million or more in any 1
year). We estimate that this rulemaking is ``economically significant''
as measured by the $100 million threshold, and hence also a major rule
under the Congressional Review Act. Accordingly, we have prepared a RIA
that, to the best of our ability presents the costs and benefits of the
rulemaking.
C. Anticipated Effects
The Regulatory Flexibility Act (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 greater than 5 percent of
providers reach a threshold of 3 to 5 percent or more of total revenue
or total costs. The effect of the FY 2021 hospice payment update
percentage results in an overall increase in estimated hospice payments
of 2.6 percent, or $580 million. The distributional effects of the
proposed FY 2021 hospice wage index do not result in a greater than 5
percent of hospices experiencing decreases in payments of 3 percent or
more of total revenue. Therefore, the Secretary has determined that
this rule will not create a significant economic impact on a
substantial number of small entities.
In addition, section 1102(b) of the Social Security 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 603 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 rule
will only affect hospices. Therefore, the Secretary has determined that
this rule will not have a significant impact on the operations of a
substantial number of small rural hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) 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. The 2020 UMRA
threshold is $156 million. This rule is not anticipated to have an
effect on state, local, or tribal governments, in the aggregate, or on
the private sector of $156 million or more.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct requirement costs on state
and local governments, preempts state law, or otherwise has Federalism
implications. We have reviewed this rule under these criteria of
Executive Order 13132, and have determined that it will not impose
substantial direct costs on state or local governments.
If regulations impose administrative costs on private entities,
such as the time needed to read and interpret this proposed rule, we
should estimate the cost associated with regulatory review. Due to the
uncertainty involved with accurately quantifying the number of entities
that will review the rule, we assume that the total number of unique
commenters on last year's proposed rule will be the number of reviewers
of this proposed rule. We acknowledge that this assumption may
understate or overstate the costs of reviewing this proposed rule. It
is possible that not all commenters reviewed last year's rule in
detail, and it is also possible that some reviewers chose not to
comment on the proposed rule. For these reasons we thought that the
number of past commenters would be a fair estimate of the number of
reviewers of this proposed rule.
Using the wage information from the Bureau of Labor Statistics
(BLS) for medical and health service managers (Code 11-9111), we
estimate that the cost of reviewing this rule is $107.38 per hour,
including overhead and fringe benefits (https://www.bls.gov/oes/current/oes_nat.htm). This proposed rule consists of approximately
15,000 words. Assuming an average reading speed of 250 words per
minute, it would take approximately 0.50 hours for the staff to review
half of it. For each hospice that reviews the rule, the estimated cost
is $53.69 (0.50 hour x $107.38). Therefore, we estimate that the total
cost of reviewing this regulation is $7,946.12 ($53.69 x 148
reviewers).
D. Detailed Economic Analysis
1. Proposed Hospice Payment Update for FY 2021
The FY 2021 hospice payment impacts appear in Table 11. We tabulate
the resulting payments according to the classifications (for example,
provider type, geographic region, facility size), and compare the
difference between current and future payments to determine the overall
impact. The first column shows the breakdown of all hospices by
provider type and control (non-profit, for-profit, government,
[[Page 20964]]
other), facility location, facility size. The second column shows the
number of hospices in each of the categories in the first column. The
third column shows the effect of using the FY 2021 updated wage data.
This represents the effect of moving from the FY 2020 hospice wage
index to the FY 2021 unadjusted hospice wage index with the old OMB
delineations. The fourth column shows the effect of moving from the old
OMB delineations to the new OMB delineations with a 5 percent cap on
wage index decreases. The aggregate impact of the changes in columns
three and four is zero percent, due to the hospice wage index
standardization factor. However, there are distributional effects of
the FY 2021 hospice wage index. The fifth column shows the proposed FY
2021 hospice payment update percentage of 2.6 percent as mandated by
section 1814(i)(1)(C) of the Act, and is consistent for all providers.
The 2.6 percent hospice payment update percentage is based on an
estimated 3.0 percent inpatient hospital market basket update, reduced
by a 0.4 percentage point productivity adjustment. It is projected that
aggregate payments would increase by 2.6 percent, assuming hospices do
not change their service and billing practices. The sixth column shows
the estimated total impact for FY 2021.
We note that simulated payments are based on utilization in FY 2019
as seen on Medicare hospice claims (accessed from the CCW in January of
2020) and only include payments related to the level of care and do not
include payments related to the service intensity add-on.
As illustrated in Table 10, the combined effects of all the
proposals vary by specific types of providers and by location.
BILLING CODE 4120-01-P
[[Page 20965]]
[GRAPHIC] [TIFF OMITTED] TP15AP20.015
[[Page 20966]]
[GRAPHIC] [TIFF OMITTED] TP15AP20.016
BILLING CODE 4120-01-C
E. Alternatives Considered
For the FY 2021 Hospice Wage Index and Rate Update proposed rule,
we considered alternatives to the proposals articulated in section
III.A. We considered not adopting the OMB delineations. However, we
have historically adopted the latest OMB delineations as we believe
that implementing the new OMB delineations would result in wage index
values being more representative of the actual costs of labor in a
given area. Additionally, we considered not implementing the 1-year 5
percent cap on wage index decreases. However, we decided that the 5
percent cap was a better option for the transition because it would
mitigate potential negative impacts from the transition to the new OMB
delineations and allow providers the opportunity to adjust to the
changes in their wage index values gradually.
F. Accounting Statement
As required by OMB Circular A-4 (available at http://www.whitehouse.gov/omb/circulars/a004/a-4.pdf), in Table 11, we have
prepared an accounting statement showing the classification of the
expenditures associated with the provisions of this proposed rule.
Table 11 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 4,408 hospices in
our impact analysis file, which was constructed using FY 2019 claims
available in January 2020. All expenditures are classified as transfers
to hospices.
Table 11--Accounting Statement: Classification of Estimated Transfers
and Costs, From FY 2020 to FY 2021
------------------------------------------------------------------------
Category Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers $580 million. *
From Whom to Whom? Federal Government to
Medicare Hospices.
------------------------------------------------------------------------
* The net increase of $580 million in transfer payments is a result of
the 2.6 percent hospice payment update compared to payments in FY
2020.
[[Page 20967]]
G. Regulatory Reform Analysis Under E.O. 13771
Executive Order 13771, entitled ``Reducing Regulation and
Controlling Regulatory Costs,'' was issued on January 30, 2017 (82 FR
9339, February 3, 2017) and requires that the costs associated with
significant new regulations ``shall, to the extent permitted by law, be
offset by the elimination of existing costs associated with at least
two prior regulations.'' It has been determined that this proposed rule
is an action that primarily results in transfers and does not impose
more than de minimis costs as described above and thus is not a
regulatory or deregulatory action for the purposes of Executive Order
13771.
H. Conclusion
We estimate that aggregate payments to hospices in FY 2021 will
increase by $580 million, or 2.6 percent, compared to payments in FY
2020. We estimate that in FY 2021, hospices in urban areas will
experience, on average, 2.6 percent increase in estimated payments
compared to FY 2020. While hospices in rural areas will experience, on
average, 2.8 percent increase in estimated payments compared to FY
2020. Hospices providing services in the Middle Atlantic region would
experience the largest estimated increases in payments of 3.0 percent.
Hospices serving patients in areas in the New England and Outlying
regions would experience, on average, the lowest estimated increase of
1.7 percent and 1.8 percent, respectively in FY 2021 payments.
In accordance with the provisions of Executive Order 12866, this
regulation was reviewed by the Office of Management and Budget.
Dated: March 24, 2020.
Seema Verma,
Administrator, Centers for Medicare & Medicaid Services.
Dated: April 9, 2020.
Alex M. Azar II,
Secretary, Department of Health and Human Services.
[FR Doc. 2020-07959 Filed 4-10-20; 4:15 pm]
BILLING CODE 4120-01-P