[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]


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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.

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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.
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    \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.
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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.
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    \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.
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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
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               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.
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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.


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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]
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