[Federal Register Volume 85, Number 150 (Tuesday, August 4, 2020)]
[Rules and Regulations]
[Pages 47070-47098]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-16991]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 418

[CMS-1733-F]
RIN 0938-AU09


Medicare Program; FY 2021 Hospice Wage Index and Payment Rate 
Update

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

ACTION: Final rule.

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SUMMARY: This final rule updates the hospice wage index, payment rates, 
and cap amount for fiscal year (FY) 2021. This rule also revises the 
hospice wage index to reflect the current Office of Management and 
Budget area delineations, with a 5 percent cap on wage index decreases. 
In addition, this rule responds to comments on the modified election 
statement and the addendum examples that were posted on the Hospice 
Center web page to assist hospices in understanding the content 
requirements finalized in the FY 2020 Hospice Wage Index and Payment 
Rate Update final rule, effective for hospice elections beginning on 
and after October 1, 2020.

DATES: These regulations are effective on October 1, 2020.

FOR FURTHER INFORMATION CONTACT: 
    For general questions about hospice payment policy, send your 
inquiry via email to: [email protected].

SUPPLEMENTARY INFORMATION:

I. 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 eligible for general 
inpatient care (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, inpatient respite 
care (IRC) is also available

[[Page 47071]]

because of the absence or need for relief of the family or other 
caregivers. Additionally, an individual can receive continuous home 
care (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 (routine home 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 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 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.

[[Page 47072]]

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 service intensity add-on payment payable for services during 
the last 7 days of the beneficiary's life, equal to the CHC hourly 
payment rate multiplied by the amount of direct patient care provided 
by a registered nurse (RN) or social worker that occurs during the last 
7 days (80 FR 47177).
    In addition to the hospice payment reform changes discussed, the FY 
2016 Hospice Wage Index and Rate Update final rule (80 FR 47185) 
implemented changes mandated by the IMPACT Act, in which the cap amount 
for accounting years that end after September 30, 2016

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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 Hospice Quality Reporting Program (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.

II. Provisions of the Final Rule

A. Hospice Wage Index Changes

1. Implementation of New Labor Market Delineations
    In general, the Office of Management and Budget (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 made revisions to the 
delineations of Metropolitan Statistical Areas (MSAs), Micropolitan 
Statistical Areas, and Combined 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. This bulletin states it ``provides 
the delineations of all MSAs, 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 
through 37252), and Census Bureau data.'' On March 6, 2020 OMB issued 
Bulletin No. 20-01 (available 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 the FY 2021 Hospice Wage 
Index and Rate Update proposed rule.
    While the revisions OMB published on September 14, 2018, are not as 
sweeping as the changes made when we adopted the Core-Based Statistical 
Area (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 an 
accurate and up-to-date payment system that reflects the reality of 
population shifts and labor market conditions. Using the most current 
OMB delineations creates a more accurate representation of geographic 
variation in wage levels. In the FY 2021 Hospice Wage Index and Payment 
Rate Update proposed rule (85 FR 20953), we proposed 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 No. 20-01 was not 
issued in time for development of the proposed rule. As we stated in 
the proposed rule, we do not believe that the minor updates included in 
OMB Bulletin No. 20-01 would impact our proposed updates to the CBSA-
based labor market area delineations. However, if needed, we would 
include any updates from this bulletin in future rulemaking.
i. Micropolitan Statistical Areas
    As discussed in the FY 2006 Hospice Wage Index and Payment Rate 
Update proposed rule (70 FR 22397) and final rule (70 FR 45132), CMS 
considered how to use the Micropolitan Statistical Area definitions in 
the calculation of the wage index. OMB defines a ``Micropolitan 
Statistical Area'' as a ``CBSA'' associated with at least one

[[Page 47074]]

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 (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-MSAs.
    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 and Payment Rate Update 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 proposed 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
    Under 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 lists the 34 counties that would change to rural status 
with the implementation of the new OMB delineations.

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[GRAPHIC] [TIFF OMITTED] TR04AU20.002

iii. Rural Counties Becoming Urban
    Under 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 lists the 47 counties that would change to urban status.

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[GRAPHIC] [TIFF OMITTED] TR04AU20.003


[[Page 47077]]


[GRAPHIC] [TIFF OMITTED] TR04AU20.004

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 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 lists CBSAs that 
would change the name and/or CBSA number only.

[[Page 47078]]

[GRAPHIC] [TIFF OMITTED] TR04AU20.005

    Upon adoption of 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

[[Page 47079]]

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. Table 4 lists the urban counties that would move from one urban 
CBSA to a newly or modified CBSA under the new OMB delineations.
[GRAPHIC] [TIFF OMITTED] TR04AU20.006

2. Transition Period
    As discussed previously, 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 adopting new OMB delineations 
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 
impacts on hospices following the adoption of the new CBSA delineations 
based on the 2010 decennial census data in the FY 2016 Hospice Wage 
Index and Payment Rate Update final rule (80 FR 47142). Specifically, 
we applied a blended wage index for 1 year (FY 2016) for all geographic 
areas that would consist of a 50/50 blend of the wage index values 
using OMB's old area delineations and the wage index values using OMB's 
new area delineations. 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 
also proposed a transition policy to help mitigate any significant 
negative impacts that hospices may experience due to our proposal to 
adopt the revised OMB delineations. For FY 2021 as a transition, we 
proposed 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.

[[Page 47080]]

Because we believe that using the new OMB delineations would create a 
more accurate payment adjustment for differences in area wage levels we 
proposed 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 solicited comments on this 
proposed transition methodology.
    We received approximately 12 comments on the FY 2021 hospice wage 
index proposals from various stakeholders including hospices, national 
industry associations and MedPAC. A summary of these comments and our 
responses to those comments appear below:
    Comment: Nearly all commenters stated that they support the 
adoption of the revised OMB delineations from the September 14, 2018 
Bulletin No. 18-04 and the proposed transition methodology that would 
apply a 5 percent cap on decreases to a geographic area's wage index 
value relative to the wage index value from the prior fiscal year.
    Response: We appreciate the commenters' support of the adoption of 
the new OMB delineations and a 5 percent cap on wage index decreases 
for FY 2021 as an appropriate transition policy.
    Comment: A few commenters stated that the adoption of the New 
Brunswick-Lakewood, NJ CBSA would result in a reduction in 
reimbursement for the four New Jersey counties that would make up the 
new CBSA. One commenter recommended that CMS delay finalizing the 
proposal to implement the new OMB delineations. While another commenter 
suggested that the transition policy is critical to offset economic 
losses for hospices like those in the impacted New Jersey counties 
throughout the country.
    Response: We appreciate the concerns sent in by the commenters 
regarding the impact of implementing the New Brunswick-Lakewood, NJ 
CBSA designation on their specific counties. While, we understand the 
commenters' concern regarding the potential financial impact, we 
believe that implementing the revised OMB delineations will create more 
accurate representations of labor market areas nationally and result in 
hospice wage index values being more representative of the actual costs 
of labor in a given area. Although this comment only addressed the 
negative impact on the commenter's geographic area, we believe it is 
important to note that there are many geographic locations and hospice 
providers that will experience positive impacts upon implementation of 
the revised CBSA designations. We believe that the OMB delineations for 
Metropolitan and Micropolitan Statistical Areas are appropriate for use 
in accounting for wage area differences and that the values computed 
under the revised delineations will result in more appropriate payments 
to providers by more accurately accounting for and reflecting the 
differences in area wage levels.
    We recognize that there are areas which will experience a decrease 
in their wage index. As such, it is our longstanding policy to provide 
temporary adjustments to mitigate negative impacts from the adoption of 
new policies or procedures. In the FY 2021 Hospice Wage Index and 
Payment Rate Update proposed rule, we proposed a transition in order to 
mitigate the resulting short-term instability and negative impacts on 
certain providers and to provide time for providers to adjust to their 
new labor market delineations. We continue to believe that the 1-year 5 
percent cap transitional policy provides an adequate safeguard against 
any significant payment reductions, allows for sufficient time to make 
operational changes for future fiscal years, and provides a reasonable 
balance between mitigating some short-term instability in hospice 
payments and improving the accuracy of the payment adjustment for 
differences in area wage levels. Therefore, we believe that it is 
appropriate to implement the new OMB delineations without delay.
    Comment: A few commenters including MedPAC suggested alternatives 
to the 5 percent cap transition policy. MedPAC suggested that the 5 
percent cap limit should apply to both increases and decreases in the 
wage index so that no provider would have its wage index value increase 
or decrease by more than 5 percent for FY 2021. One commenter suggested 
that wage index decreases should be capped at 3 percent instead of 5 
percent. Finally, several commenters recommended that CMS consider 
implementing a 5 percent cap, similar to that which we proposed for FY 
2021, for years beyond the implementation of the revised OMB 
delineations.
    Response: We appreciate MedPAC's suggestion that the cap on wage 
index movements of more than 5 percent should also be applied to 
increases in the wage index. However, as we discussed in the proposed 
rule, the purpose of the proposed transition policy is to help mitigate 
the significant negative impacts of certain wage index changes. 
Additionally, we believe that the 5 percent cap on wage index decreases 
is an adequate safeguard against any significant payment reductions and 
do not believe that capping wage index decreases at 3 percent instead 
of 5 percent is appropriate. We believe that 5 percent is a reasonable 
level for the cap rather than 3 percent because it would more 
effectively mitigate any significant decreases in a hospice's wage 
index for FY 2021, while still balancing the importance of ensuring 
that area wage index values accurately reflect relative differences in 
area wage levels. Furthermore, a 5 percent cap on wage index decreases 
in FY 2021 provides a degree of predictability in payment changes for 
providers and allows providers time to adjust to any significant 
decreases they may face in FY 2022, after the transition period has 
ended. Finally, with regards to the comments recommending that CMS 
consider implementing this type of transition in future years, we 
believe that this would be counter to the purpose of the wage index, 
which is used to adjust payments to account for local differences in 
area wage levels. While we believe that a transition is necessary to 
help mitigate the negative impact from the revised OMB delineations in 
the first year of implementation, this transition must be balanced 
against the importance of ensuring accurate payments.
    Final Decision: We are finalizing our proposal to adopt the revised 
OMB delineations from the September 14, 2018 OMB Bulletin 18-04 and 
apply a 1-year 5 percent cap on wage index decreases as proposed, 
meaning the counties impacted will receive a 5 percent cap on any 
decrease in a geographic area's wage index value from the wage index 
value from the prior fiscal year for FY 2021 effective October 1, 2020.
    The final wage index applicable to FY 2021 can be found on our 
website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/Hospice. The final hospice wage index for FY 2021 is 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 revised OMB

[[Page 47081]]

delineations that will be in effect in FY 2021. This file shows each 
state and county and its corresponding wage index along with the 
previous CBSA number, the new CBSA number or alternate identification 
number, and the new CBSA name.

B. FY 2021 Hospice Wage Index and Rate Update

1. 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 MSAs.
    In the FY 2020 Hospice Wage Index and Payment Rate Update 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 
the FY 2021 Hospice Wage Index and Payment Rate Update proposed rule 
(85 FR 20957) we discussed our proposal to use the FY 2021 pre-floor, 
pre-reclassified hospital wage index data to calculate the hospice wage 
index values 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 and Payment Rate Update 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 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 
0.8527.
    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 and Payment Rate 
Update 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 will continue to use the most recent pre-floor, pre-reclassified 
hospital wage index value 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 pre-floor, pre-reclassified hospital wage index 
values below 0.8 will be 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 final 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 .
    A summary of the general comments on the hospice wage index and our 
responses to those comments appear below:
    Comment: One commenter expressed concern that hospices in 
Montgomery County, Maryland are at a long-term competitive disadvantage 
due to a Medicare hospice federal payment inequity involving CBSAs. 
This commenter suggested that since CMS began using CBSAs to determine 
payment, hospices in Montgomery County have received lower payments 
than hospices in adjacent counties due to Montgomery County being 
carved out of Washington DC. The commenter recommended two options to 
resolve this issue: allow hospices serving patients in MSAs that are 
large enough to be subdivided into metropolitan divisions to opt for 
the higher wage index valuation within the MSA's respective CBSAs or 
assigning the highest wage index valuation from among the MSA's 
metropolitan divisions for the purpose of hospice Medicare 
reimbursement.
    Response: We thank the commenter for the recommendation. However, 
we continue to believe that the OMB's geographic area delineations 
represent a useful proxy for differentiating between labor markets and 
that the geographic area delineations are appropriate for use in 
determining Medicare hospice payments. The general concept of the CBSAs 
is that of an area containing a recognized population nucleus and 
adjacent communities that have a high degree of integration with that 
nucleus. The purpose of the standards is to provide nationally 
consistent definitions for collecting, tabulating, and publishing 
federal statistics for a set of geographic areas. CBSAs include 
adjacent counties that have a minimum of 25 percent commuting to the 
central counties of the area. This is an increase over the minimum 
commuting threshold for outlying counties applied in the previous 
definition of MSAs of 15 percent. Based on the OMB's current 
delineations, Montgomery County belongs in a separate CBSA from the 
areas defined in the Washington-Arlington-Alexandria, DCVA CBSA. Unlike 
inpatient prospective payment system (IPPS) hospitals, inpatient 
rehabilitation facilities (IRFs), and

[[Page 47082]]

skilled nursing facilities (SNFs), where each provider uses a single 
CBSA, hospice agencies may be reimbursed based on more than one wage 
index. Payments are based upon the location of the beneficiary for 
routine and continuous home care or the location of the facility for 
respite and general inpatient care. Hospices in Montgomery County, 
Maryland may provide RHC and CHC to patients in the ``Washington 
Arlington-Alexandria, DC-VA'' CBSA and to patients in the ``Baltimore-
Columbia-Towson, Maryland'' CBSA. We have used CBSAs for determining 
hospice payments since FY 2006. Additionally, other provider types, 
such as IPPS hospitals, home health agencies (HHAs), SNFs, IRFs, and 
the dialysis facilities all used CBSAs to define their labor market 
areas. We believe that using the most current OMB delineations provides 
a more accurate representation of geographic variation in wage levels 
and do not believe it would be appropriate to allow hospices to opt for 
or be assigned a higher CBSA designation.
    Comment: Many commenters recommended more far-reaching revisions 
and reforms to the wage index methodology used under Medicare fee-for-
service. MedPAC recommended that Congress repeal the existing hospital 
wage index and instead implement a market-level wage index for use 
across other prospective payment systems that would use wage data from 
all employers and industry-specific occupational weights, and adjust 
for geographic differences in the ratio of benefits to wages. 
Additionally, many commenters recommended that CMS develop and 
implement a wage index model that is consistent across all provider 
types, incorporates some means by which providers are protected against 
substantial payment reductions due to dramatic reductions in wage index 
values from one year to the next, allows hospices and other post-acute 
providers to utilize a reclassification board and guarantees that wage 
index values do not drop below the rural wage index value applicable in 
the state of operation. Finally, one commenter recommended that CMS 
implement a policy similar to that of the FY 2020 IPPS final rule which 
increased the wage index for hospitals with a wage index value below 
the 25th percentile in order to address the discrepancies between 
counties whose wage index falls below the statewide rural wage index.
    Response: We appreciate the commenters' recommendations; however, 
these comments are outside the scope of the proposed rule. Any changes 
to the way we adjust hospice payments to account for geographic wage 
differences, beyond the wage index proposals discussed in the FY 2021 
Hospice Wage Index and Rate Update proposed rule, would have to go 
through notice and comment rulemaking. While CMS and other stakeholders 
have explored potential alternatives to the current CBSA-based labor 
market system, no consensus has been achieved regarding how best to 
implement a replacement system. We believe that in the absence of 
hospice specific wage data, using the pre-floor, pre-reclassified 
hospital wage data is appropriate and reasonable for hospice payments.
    Additionally, the regulations that govern hospice reimbursement do 
not provide a mechanism for allowing hospices to seek geographic 
reclassification or to utilize the rural floor provisions that exist 
for IPPS hospitals. The reclassification provision found in section 
1886(d)(10) of the Act is specific to hospitals. Section 4410(a) of the 
Balanced Budget Act of 1997 (Pub. L. 105-33) provides that the area 
wage index applicable to any hospital that is located in an urban area 
of a state may not be less than the area wage index applicable to 
hospitals located in rural areas in that state. This rural floor 
provision is also specific to hospitals. Because the reclassification 
provision and the hospital rural floor applies only to hospitals, and 
not to hospices, we continue to believe the use of the pre-floor and 
pre-reclassified hospital wage index results in the most appropriate 
adjustment to the labor portion of the hospice payment rates. This 
position is longstanding and consistent with other Medicare payment 
systems (for example, SNF PPS, IRF PPS, and HH PPS). However, the 
hospice wage index does include the hospice floor which is applicable 
to all CBSAs, both rural and urban. Pre-floor, pre-reclassified 
hospital wage index values below 0.8 are adjusted by a 15 percent 
increase subject to a maximum wage index value of 0.8. Finally, with 
regards to the wage index changes detailed in the FY 2020 IPPS final 
rule, we would like to note that the hospice wage index is derived from 
hospital wage data. As such, any changes in the wage data of hospitals 
extend to the hospice setting, as hospital data is used to establish 
the wage index for hospices.
    Final Decision: After considering the comments received in response 
to the proposed rule and for the reasons discussed previously, we are 
finalizing our proposal to use the FY 2021 pre-floor, pre-reclassified 
hospital wage index data as the basis for the FY 2021 hospice wage 
index. The wage index applicable for FY 2021 is available on our 
website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/Hospice/Hospice-Wage-Index. The hospice wage index for FY 2021 
is effective October 1, 2020 through September 30, 2021.
2. 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.
    In the FY 2021 Hospice Wage Index and Payment Rate Update proposed 
rule (85 FR 20958), we proposed the market basket percentage increase 
of 3.0 percent for FY 2021 using the most current estimate of the 
inpatient hospital market basket (based on IHS Global Inc.'s fourth-
quarter 2019 forecast with historical data through the third quarter 
2019). We also stated if more recent data became available after the 
publication of the proposed rule and before the publication of the 
final rule (for example, more recent estimates of the inpatient 
hospital market basket update and/or multifactor productivity (MFP) 
adjustment), we would use such data to determine the hospice payment 
update percentage for FY 2021 in the final rule. For this final rule, 
based on IHS Global Inc.'s (IGIs) second-quarter 2020 forecast with 
historical data through the first quarter 2020 of the inpatient 
hospital market basket update, the market basket percentage increase 
for FY 2021 is 2.4 percent. We note that the fourth quarter 2019 
forecast used for the proposed market basket update was developed prior 
to the economic impacts of the COVID-19 pandemic. This lower update 
(2.4 percent) for FY 2021, relative to the proposed rule (3.0 percent), 
is primarily driven by slower anticipated compensation growth for both 
health-related and other occupations as labor markets are expected to 
be significantly impacted during the recession that started in February 
2020 and throughout the anticipated recovery.

[[Page 47083]]

    Section 1814(i)(1)(C)(iv)(I), as added by section 3401(g) of the 
Act, requires, starting with FY 2013 (and in subsequent FYs), that the 
market basket percentage increase be annually reduced by changes in 
economy-wide productivity 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 MFP.
    In the FY 2021 Hospice Wage Index and Payment Rate Update proposed 
rule (85 FR 20958), we proposed a MFP adjustment of 0.4 percentage 
point based on IGIs fourth quarter 2019 forecast. Based on the more 
recent data available for this final rule, the current estimate of the 
MFP adjustment for FY 2021 is projected to be -0.1 percentage point. 
This MFP adjustment is based on the most recent macroeconomic outlook 
from IGI at the time of rulemaking (released June 2020) in order to 
reflect more current historical economic data. IGI produces monthly 
macroeconomic forecasts, which include projections of all of the 
economic series used to derive MFP. In contrast, IGI only produces 
forecasts of the more detailed price proxies used in the inpatient 
hospital market basket on a quarterly basis. Therefore, IGI's second 
quarter 2020 forecast is the most recent forecast of the inpatient 
hospital market basket update.
    We note that it has typically been our practice to base the 
projection of the market basket price proxies and MFP in the final rule 
on the second quarter IGI forecast. For the FY 2021 Hospice Wage Index 
and Payment Rate Update final rule, we are using the IGI June 
macroeconomic forecast for MFP because it is a more recent forecast, 
and it is important to use more recent data during this period when 
economic trends, particularly employment and labor productivity, are 
notably uncertain because of the COVID-19 pandemic. Historically, the 
MFP adjustment based on the second quarter IGI forecast has been very 
similar to the MFP adjustment derived with IGI's June macroeconomic 
forecast. Substantial changes in the macroeconomic indicators in 
between monthly forecasts are atypical.
    Given the unprecedented economic uncertainty as a result of the 
COVID-19 pandemic, the changes in the IGI macroeconomic series used to 
derive MFP between the second quarter 2020 IGI forecast and the IGI 
June 2020 macroeconomic forecast is significant. Therefore, we believe 
it is technically appropriate to use IGI's more recent June 2020 
macroeconomic forecast to determine the MFP adjustment for the final 
rule as it reflects more current historical data. For comparison 
purposes, the 10-year moving average growth of MFP for FY 2021 is 
projected to be -0.1 percentage point based on IGI's June 2020 
macroeconomic forecast compared to a FY 2021 projected 10-year moving 
average growth of MFP of 0.7 percentage point based on IGI's second 
quarter 2020 forecast. Mechanically subtracting the negative 10-year 
moving average growth of MFP from the market basket percentage increase 
using the data from the IGI June, 2020 macroeconomic forecast of the FY 
2021 MFP adjustment would have resulted in a 0.1 percentage point 
increase in the FY 2021 hospice payment update percentage. However, 
under sections 1886(b)(3)(B)(xi)(I) and 1814(i)(1)(C)(v) of the Act, 
the Secretary is required to reduce (not increase) the hospice market 
basket percentage increase by changes in economy-wide productivity. 
Accordingly, we will be applying a 0.0 percentage point MFP adjustment 
to the market basket percentage increase. Therefore, the hospice 
payment update percentage for FY 2021 is 2.4 percent.
    The labor portion of the hospice payment rates are as follows: For 
RHC, 68.71 percent; for CHC, 68.71 percent; for GIP, 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 are as follows: For RHC, 31.29 
percent; for CHC, 31.29 percent; for GIP, 35.99 percent; and for 
Respite Care, 45.87 percent.
    A summary of the comments we received regarding the payment update 
percentage and our responses to those comments appear below:
    Comment: Nearly all commenters noted their support of the proposed 
hospice payment update percentage.
    Response: We appreciate the comments in support of the hospice 
payment update percentage.
    Comment: MedPAC recognizes that CMS is required by statute to 
update the hospice payments rates for FY 2021 (an increase of 2.4 
percent as outlined in this final rule), however, they noted that in 
their March 2020 report to Congress, they recommended that Congress 
eliminate the payment update for FY 2021 (that is, hold the payment 
rates for FY 2021 at the FY 2020 levels).
    Response: We appreciate the comment, however, we do not have the 
statutory authority to eliminate the annual payment updates to the 
hospice payment rates for FY 2021.
    Final Decision: We are finalizing the 2.4 percent hospice payment 
update percentage for FY 2021. Based on IHS Global, Inc.'s updated 
forecast of the inpatient hospital market basket update and the MFP 
adjustment, the hospice payment update percentage for FY 2021 will be 
2.4 percent for hospices that submit the required quality data and 0.4 
percent (FY 2021 hospice payment update of 2.4 percent minus 2.0 
percentage points) for hospices that do not submit the required data.
3. 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.
    Additionally, in the FY 2016 Hospice Wage Index and Payment Rate 
Update final rule (80 FR 47172), we implemented two different RHC 
payment rates, one RHC rate for the first 60 days and a second RHC rate 
for days 61 and beyond. In that final rule we also 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 on the day of service (up to 4 hours), 
if certain criteria are met. In order to maintain budget neutrality in 
the first year of implementation, 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 
payments 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. For FY 2021, we calculated the SBNF using FY 
2019 utilization data. For FY 2021, the SBNF that would apply to days 1 
through 60 is calculated to be 1.0002 and the SBNF that would apply to 
days 61 and beyond is calculated to be 1.0001.
    As discussed in the FY 2021 Hospice Wage Index and Payment Rate 
Update

[[Page 47084]]

proposed rule (85 FR 20958), there have been very minor SBNF 
adjustments over the past several years suggesting that the utilization 
of the SIA from one year to the next remains relatively constant. 
Because the SBNF remains stable, we proposed to remove the factor to 
simplify the RHC payment rate updates.
    In the FY 2017 Hospice Wage Index and Payment 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 FY 2020 payment 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 
5 and 6.
    The FY 2021 RHC payment rates are shown in Table 5. The FY 2021 
payment rates for CHC, IRC, and GIP are shown in Table 6.
[GRAPHIC] [TIFF OMITTED] TR04AU20.007

    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 and Payment Rate Update 
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 FY 2021 payment rates for hospices that do not 
submit the required quality data would be updated by the FY 2021 
hospice payment update percentage of 2.4 percent minus 2 percentage 
points. These rates are shown in Tables 7 and 8.

[[Page 47085]]

[GRAPHIC] [TIFF OMITTED] TR04AU20.008

    A summary of the comments we received regarding the payment rates 
and the elimination of the SBNF and our responses to those comments 
appear below:
    Comment: Several commenters did not support CMS's proposal to 
sunset the SBNF and believes the SBNF recalibration should continue on 
an annual basis. They suggested that the SBNF serves an important 
purpose to retain budget neutrality going forward if visits in the last 
seven days of life increase. They stated that the SIA payments have 
served to align payment with costs of care and that the SIA payments 
help balance the cost of short-length-of stay patients for whom 
hospices receive very little reimbursement, but may provide many hours 
of intense care by professional staff. A few commenters stated that the 
FY 2020 payment rule's recalibration of the payment rates has resulted 
in a considerable increase in the hourly rate for CHC, and could have 
an impact on SIA utilization going forward; that is, the significant 
increase in the CHC rate may incentivize an increase in visits made 
during the last 7 days of life. On the other hand, several commenters 
were supportive of CMS' efforts to simplify Medicare payment 
calculations where warranted, and understands CMS' rationale for 
eliminating the SBNF. They stated that the removal of the SBNF from RHC 
payment updates would result in a more administratively simple 
application of the RHC payment rate updates. One commenter recommended 
that CMS wait to implement this change. Many commenters requested that 
CMS continue to monitor visits in the last 7 days of life to ensure 
that current trends do not change in light of the increased payment 
amount associated with the CHC rate.
    Response: After considering the comments received in response to 
the proposed removal of the SBNF, we are not finalizing the removal of 
the SBNF for FY 2021. As noted by commenters, we rebased the CHC 
payment amount in FY 2020. Given the increase to the CHC hourly rate in 
FY 2020, we agree that it is prudent to evaluate FY 2020 utilization 
data prior to eliminating the SBNF. We will continue to analyze data on 
visits in the last 7 days of life and whether there are changes in 
utilization that could affect overall budget neutrality. If there 
continues to be very minor SBNF adjustments in the future, suggesting 
that the utilization of the SIA from one year to the next remains 
relatively constant, we may propose to remove the factor to simplify 
the RHC payment rate updates in future rulemaking.
    Comment: While outside the scope of the proposed rule, two 
commenters noted their support of the suspension of the sequestration 
reduction due to the public health emergency (PHE) in response to the 
COVID-19 pandemic. One commenter recommended that quality reporting be 
suspended for the duration of CY 2020 and that hospices be held 
harmless from a negative payment adjustment for the remainder of the 
2020 performance period.
    Response: While the HQRP is statutorily mandated under section 
1814(i)(5)(A)(i) of the Act, we provided an exemption under its 
extraordinary and extenuating circumstances policy for the COVID-19 
pandemic as discussed in the FY 2016 Final Rule (80 FR 47194). We may 
grant exemptions or

[[Page 47086]]

extensions to hospices without a request if it determines that an 
extraordinary circumstances exemption (ECE), such as an act of nature 
including a pandemic, affects an entire region or locale. Accordingly, 
to allow all Medicare-certified hospices to focus on patient care 
during the start of the COVID-19 pandemic, we granted such an exemption 
that ended on June 30, 2020. This limited timeframe allowed hospices 
time to address issues and continue with submitting quality data for 
public reporting starting on July 1, 2020. Further, in coordination 
with other provider-types who have also been given blanket waivers, CMS 
expects to suspend penalties for Quarter 1 (Q1) and Q2 of 2020 (January 
1 through June 30, 2020). Therefore, the calendar year 2020 data used 
for meeting the HQRP requirements include July 1 through December 31, 
2020. This means that even if hospice providers submit the Hospice Item 
Set and CAHPS[supreg] Hospice Survey data for Q1 and Q2 2020, we will 
not include any of that data for purposes of calculating whether a 
hospice meets the HQRP requirements impacting FY 2022 payments. We 
provided a tip sheet to assist providers with this issue that can be 
accessed at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Hospice-Quality-Reporting/HQRP-Requirements-and-Best-Practices.
    Final Decision: We are finalizing the FY 2021 payment rates in 
accordance with statutorily-mandated requirements. We are not 
finalizing the removal of the SBNF at this time; the SBNF will be 
applied to the payment rates as shown in Tables 6 and 8.
4. Hospice Cap Amount for FY 2021
    As discussed in the FY 2016 Hospice Wage Index and Payment 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 hospice cap amount for the FY 2021 cap year 
will be $30,683.93, which is equal to the FY 2020 cap amount 
($29,964.78) updated by the FY 2021 hospice payment update percentage 
of 2.4 percent.
    A summary of the two comments we received regarding the hospice cap 
amount and our responses to those comments appear below:
    Comment: MedPAC recommended reducing the hospice aggregate cap by 
20 percent and wage adjusting the hospice aggregate cap.
    Response: We appreciate the commission's recommendation, however, 
we do not have the statutory authority to wage adjust or reduce the 
hospice cap amount.
    Comment: Another commenter suggested that the cap amount is an area 
that CMS could explore under its program integrity authority using 
available claims and quality data to target enforcement activities to 
hospices that regularly come close to or go over their aggregate cap 
amount.
    Response: We appreciate the commenter's suggestion to consider 
looking into the practices of hospices that regularly come close to or 
exceed their aggregate cap to target further program integrity efforts. 
We will continue to closely monitor this issue and address any 
identified concerns, if necessary.
    Final Decision: We are finalizing the update to the hospice cap in 
accordance with statutorily-mandated requirements.

C. Election Statement Content Modifications and Addendum To Provide 
Greater Coverage Transparency and Safeguard Patient Rights

    In the FY 2020 Hospice Wage Index and Payment Rate Update 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 FY 2020 Hospice Wage Index and Payment Rate Update 
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'' to 
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.
    While we finalized that the election statement modifications apply 
to all hospice elections, the addendum is only required to 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 has 
5 days from the start of hospice care to furnish this information in 
writing.

[[Page 47087]]

Furthermore, if the beneficiary requested the election statement at the 
time of hospice election, but died within 5 days, the hospice is not 
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 has 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 mandate that hospices use a specific 
form. Hospices are to develop and design the addendum to meet their 
needs, similar to how hospices develop their own hospice election 
statement (84 FR 38507). Additionally, we finalized a policy that the 
signed addendum (and any signed updates) are 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 needs to agree with the hospice's determination. For purposes 
of this condition for payment, we finalized the policy that the signed 
addendum is only an acknowledgement of the beneficiary's (or 
representative's) receipt of the addendum (or its updates) and this 
payment requirement is met if there is a signed addendum (and any 
signed updates) in the requesting beneficiary's medical record with the 
hospice. This addendum is not required to be submitted routinely with 
each hospice claim. Likewise, the hospice beneficiary (or 
representative) does 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 their own election statement 
addendum, and make any changes to their current software and business 
processes to accommodate the requirements. Additionally, with 
publication of the FY 2021 Hospice Wage Index and Payment Rate Update 
proposed rule, we posted a modified model election statement and 
addendum on the Hospice Center web page to give hospices an 
illustrative example as they modify and develop own forms to meet the 
content requirements and best meet their respective needs.
    While we did not make any proposals in the FY 2021 Hospice Wage 
Index and Payment Rate Update proposed rule to the finalized election 
statement and election statement addendum content requirements at Sec.  
418.24, or the October 1, 2020 effective date, we solicited comments on 
both of these model examples to see if they are helpful in educating 
hospices in how to meet these requirements effective for hospice 
elections beginning in FY 2021. We received 45 comments from primarily 
hospices and industry associations. Below is a summary of those 
comments and our responses.
    Comment: In general, commenters had many suggested revisions for 
the modified election statement and the election statement addendum. 
Comments on the modifications to the model election statement and the 
addendum included formatting changes and reordering the required items 
for ease of use and readability. Some commenters suggested language 
revisions to make some of the content requirements more clear. Other 
suggestions included the removal of certain statements because they are 
not content requirements, outlined in regulation, and a few commenters 
suggested adding additional language to further explain the purpose of 
the addendum.
    Several commenters questioned what recourse the hospice has if the 
patient/representative refuses to sign the addendum, given the 
beneficiary signature is a content requirement. These commenters 
suggested a process similar to the Notices of Medicare Non-Coverage 
(NOMNC) where CMS has stated that ``[i]f the beneficiary refuses to 
sign the NOMNC the provider should annotate the notice to that effect 
and indicate the date of refusal on the notice.'' And finally, one 
commenter requested an example of a completed addendum as they stated 
that it would be helpful for hospices to understand what CMS expects in 
terms of the way to write the rationale for an unrelated condition, 
item, service, or drug that is considered to be communicated in a 
language the beneficiary can understand.
    Response: We appreciate commenters taking the time and thoroughly 
reviewing the model examples of the modifications to the election 
statement and the election statement addendum posted on the Hospice 
Center web page. As noted in the proposed rule and in this final rule, 
these examples are only meant to be illustrative and are not required 
to be in the exact format as provided. We have accepted the majority of 
commenters' suggestions and have incorporated them into the model 
examples, which we will post on the Hospice Center web page with this 
final rule. We removed language and checkboxes that are not content 
requirements at Sec.  418.24(b) or (c) for the election statement or 
the addendum. We did not accept those recommendations to add language 
that are not regulatory requirements. The model examples of the 
election statement and the addendum posted with this final rule include 
only those content requirements set forth at Sec.  418.24(b) and (c). 
However, as we noted in the proposed rule, hospices can develop their 
election statement and election statement addendum in any format that 
best suits their needs as long as the content requirements at Sec.  
418.24(b) and (c) are met. The examples were intended to assist 
hospices in understanding how they could format their election 
statement and addendum to meet the content requirements.
    To address the comment of beneficiary (or representative) refusal 
to sign the addendum, we again point to the statement that must be 
included on the addendum that the signature is only acknowledgement of 
receipt and not a tacit agreement to its contents. Additionally, if the 
beneficiary (or representative) requests the addendum, we believe that 
hospices would conduct due diligence that the beneficiary (or 
representative) has been informed about the purpose of the addendum and 
the rationale for the signature. However, we recognize that there may 
be those rare instances in which the beneficiary (or representative) 
may refuse to sign the addendum, even though he or she has requested 
the form. We did not make any proposals addressing situations in which 
the beneficiary (or representative)

[[Page 47088]]

refuses to sign a requested addendum. While we believe that this would 
be a rare occurrence given this is primarily a beneficiary (or 
representative) request to receive such form, we will consider whether 
this issue needs to be addressed in future rulemaking.
    We do not believe that providing an example of a completed addendum 
would be particularly helpful because of the unique clinical conditions 
of hospice beneficiaries and given that determinations regarding what 
is related versus unrelated to a patient's terminal illness and related 
conditions are made on a case-by-case basis.
    As mentioned previously in this final rule, we did not propose any 
new policies as they relate to the modifications to the hospice 
election statement or the addendum requirements. These policies were 
finalized in the FY 2020 Hospice Wage Index and Payment Rate Update 
final rule with a delayed effective date of October 1, 2020. However, 
we still received comments on various aspects of the finalized policy 
and we have summarized these and responded below.
    Comment: One commenter questioned if there is any impact on the 
election statement if non-covered items, services, or drugs are 
requested after the initial admission to hospice. That is, whether 
there are any additional documentation requirements to note that the 
addendum was requested. Another questioned whether there is a different 
form to sign, other than the election statement, if the patient 
requests the addendum after the effective date of the election 
acknowledging that the addendum was requested.
    Response: If a beneficiary (or representative) requests the 
addendum after the effective date of the election, there is no impact 
on the election statement. Similarly, there is no separate form or 
additional documentation required if the beneficiary does request the 
addendum after the effective date of the election. As we stated in the 
FY 2020 Hospice Wage Index and Payment Rate Update final rule, we would 
expect hospices to document that the addendum was discussed with the 
patient (or representative) similar to how other patient and family 
discussions are documented. 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 workflow. This could be 
done however the hospice determines best meets its' needs.
    Comment: A commenter stated that the regulations for the election 
statement addendum do not include language addressing the issuance of a 
requested addendum at the time of hospice election but where the 
beneficiary dies within the first 5 days of hospice care. This 
commenter stated that the preamble of the FY 2020 Hospice Wage Index 
and Payment Rate Update final rule addressed this particular issue. 
Specifically, CMS stated that if a beneficiary requests the addendum at 
the time of hospice election and dies within 5 days from the start of 
the hospice election and before the hospice can furnish the addendum, 
the hospice would not be required to furnish such addendum after the 
patient has died, as this requirement would be deemed as being met in 
this circumstance.
    Response: Commenters are correct that, in the FY 2020 Hospice Wage 
Index and Payment Rate Update final rule (84 FR 38511), we stated that 
if the addendum is requested on the effective date of the hospice 
election (that is, the start of care date) and the beneficiary dies 
within the first 5 days from the start of hospice care and before the 
hospice is able to furnish the addendum, the addendum would not be 
required to be furnished after the patient has died, and this condition 
for payment would be considered met. While this was not codified in the 
regulations, we will issue sub-regulatory guidance to this effect and 
we will consider including this in the regulations in future 
rulemaking.
    Comment: Several commenters remarked that there is conflicting 
language in Sec.  418.24(c) as to who can request the addendum. 
Specifically, commenters referenced Sec.  418.24(c)(6), which states 
that the beneficiary or representative should request the addendum and 
share the information with other health care providers. However, 
commenters stated that Sec.  418.24(c) requires that the hospice 
provide the addendum to not only the requesting individual (or 
representative), but also to requesting non-hospice providers or 
Medicare contractors. One commenter expressed concern that the 
regulatory language at Sec.  418.24(c) allows non-hospice providers and 
Medicare contractors to request the addendum absent the beneficiary (or 
representative) requesting such information from the hospice and this 
violates the rights of the patient to have control over their protected 
health information. A few commenters expressed concern that any lack of 
clarity regarding the addendum requirements could result in non-payment 
for hospice services given the addendum is a condition for payment.
    Response: The regulations at Sec.  418.24(c) reference who can 
request the addendum, that is the beneficiary (or representative), non-
hospice provider, or Medicare contractor. Whereas, the regulations at 
Sec.  418.24(c)(6) refer to one of the specific content items required 
on the addendum form, along with the statement that the individual 
should share this clinical explanation with other health care providers 
from which they seek items, services, or drugs unrelated to their 
terminal illness and related conditions.
    We note that it is not a violation of patient rights to have 
control over their health information in the scenario where a non-
hospice provider or Medicare contractor requests the addendum absent 
the beneficiary (or representative) requesting such information. As 
discussed previously in this final rule, the hospice beneficiary (or 
representative) does 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 (45 CFR 164.506).
    Though non-hospice providers and Medicare contractors can request 
the addendum even in the event that the beneficiary (or representative) 
did not request this information, we remind commenters that this 
condition for payment is met only in those circumstances in which the 
beneficiary (or representative) has requested the addendum and there is 
a signed form in the hospice's medical record. In the event that a non-
hospice provider or Medicare contractor requests the addendum, but the 
beneficiary (or representative) did not already request and sign the 
addendum, this would not be a violation of the condition for payment as 
described previously. Hospices can develop processes (including how to 
document such requests from non-hospice providers and Medicare 
contractors) to address circumstances in which the addendum was 
requested by a non-hospice provider or Medicare contractor but where 
there was no previous beneficiary

[[Page 47089]]

(or representative) request to receive the addendum.
    Comment: One commenter requested that CMS clearly delineate in the 
final rule the differences between the election statement addendum and 
the Advance Beneficiary Notice (ABN) and provide guidance on when each 
document should be used as there are concerns that hospices may be 
confused as to each documents' purpose.
    Response: We agree that it is important to ensure that hospices do 
not conflate these two documents and their respective purposes. We note 
that we provided detailed information on the purpose and use of the ABN 
in the FY 2020 Hospice Wage Index and Payment Rate Update final rule 
(84 FR 38512).
    The ABN, Form CMS-R-131,\3\ is issued by providers (including 
independent laboratories, home health agencies, and hospices), 
physicians, practitioners, and suppliers to Original Medicare (Fee-for-
Service) beneficiaries in situations where Medicare payment is expected 
to be denied. The ABN is issued in order to transfer potential 
financial liability to the Medicare beneficiary in certain instances, 
and its use is very limited for hospices. The three situations that 
would require issuance of the ABN by a hospice are:
---------------------------------------------------------------------------

    \3\ CMS R-131. Advance Beneficiary Notice. https://www.cms.gov/Medicare/CMS-Forms/CMS-Forms/CMS-Forms-Items/CMS012932.
---------------------------------------------------------------------------

     Ineligibility because the beneficiary is not determined to 
be ``terminally ill'' as defined in section 1879(g)(2) of the Act;
     Specific items or services that are billed separately from 
the hospice per diem payment, such as physician services, that are not 
reasonable and necessary as defined in either sections 1862(a)(1)(A) or 
1862(a)(1)(C) of the Act; or
     The level of hospice care is determined to be not 
reasonable or medically necessary as defined in sections 1862(a)(1)(A) 
or 1862(a)(1)(C) of the Act.
    Guidelines for issuing the ABN are published in the Medicare Claims 
Processing Manual, chapter 30, section 50. An ABN is not required to be 
given to a beneficiary for those items and services the hospice has 
determined to be unrelated to the terminal illness and related 
conditions, as these still may be covered under other Medicare 
benefits. Additionally, an ABN cannot be issued to transfer liability 
to the beneficiary when Medicare would otherwise pay for items and 
services. The purpose of the ABN is to inform beneficiaries of the 
listed items and services that Medicare in general, is not expected to 
approve, and the specific denial reason (that is, not medically 
reasonable and necessary). The hospice election statement addendum is 
intended to inform beneficiaries of items and services that the hospice 
benefit will not cover as the hospice has determined them to be 
unrelated to the terminal illness and related conditions. However, 
these items, services, and drugs may be covered under other Medicare 
benefits it eligibility and coverage conditions are met. Table 9 
provides a quick reference as to the type of document that can be 
issued to Medicare hospice beneficiaries, the purpose of each document, 
the timing of when the document must be provided to the beneficiary, 
and when hospices would use the respective documents.

[[Page 47090]]

[GRAPHIC] [TIFF OMITTED] TR04AU20.009

    Comment: A few commenters urged CMS to encourage the use of an 
electronic format for both the hospice election statement and the 
addendum given the shift of most hospice providers to electronic 
platforms. Several other commenters questioned whether the addendum 
could be provided via an electronic patient portal and whether there 
could be an electronic version for potential use in communicating with 
other non-hospice providers. Another commenter recommended that CMS 
provide additional guidance for the hospice community and Medicare 
contractors on patient/representative electronic signatures and include 
in such guidance the ability to print an electronically signed document 
to provide a hard copy to a patient or representative. Other commenters 
stated that they are hopeful that if the election statement is in an 
electronic format then the electronic exchange of same data elements 
can be used to provide hospice election information to Part D plans 
more timely.
    Response: We agree with these commenters that the use of electronic 
platforms can help facilitate more timely notification of hospice 
elections and can be expanded to increase interoperability. As noted in 
the FY 2020 Hospice Wage Index and Payment Rate Update final rule (84 
FR 38511), hospices are free to develop their modified election 
statement and addendum to best meet their needs. This includes those 
hospices who develop these forms in an electronic format. As long as 
the content requirements at Sec.  418.24(b) and (c) are met, there is 
nothing precluding a hospice from having an election statement and 
addendum in an electronic format.
    While we did not specifically address the provision of the addendum 
via electronic patient portals or whether the addendum could be 
developed as an electronic version, we note that the requirement is 
that the information must be provided to the beneficiary (or 
representative), in writing. While we envisioned a hard copy document 
for ease of use and sharing with non-hospice providers, we note that we 
did not explicitly prohibit the use of an electronic patient portal or 
provision of the addendum as an electronic version, as we recognize 
information can be provided in a written, electronic format. We want 
hospices to be able to furnish

[[Page 47091]]

such information in the least burdensome way to facilitate the 
communication of this information to hospice patients and their 
families, and even potentially for communicating with non-hospice 
providers as suggested by the commenters. We also recognize that 
hospices may already have their existing election statements in an 
electronic format and hospices may prefer to have the addendum 
incorporated into their Electronic Medical Records (EMRs) as well. As 
long as the content requirements at Sec.  418.24 (b) and (c) are met, 
including securing the beneficiary's (or representative's) signature 
acknowledging receipt of the addendum, there is nothing precluding a 
hospice from leveraging such technology. However, we require that the 
information be provided in a language and format that the beneficiary 
(or representative) understands. Therefore, if the beneficiary (or 
representative) receives the addendum in an electronic format but 
requests to have a hard copy version for their records, we expect that 
the hospice would accommodate such request.
    The commenter is correct that there is no specific guidance 
addressing beneficiary (or representative) electronic signatures on the 
hospice election statement. Generally, it is at the contractor's 
discretion as to how they address patient (or representative) 
electronic signatures in their review of medical records. However, we 
will consider future guidance, if warranted, to address any issues as 
they relate to electronic signatures.
    Finally, we are aware of some of the issues where Part D Plans are 
not aware of a beneficiary's hospice election in a timely fashion. We 
understand that delayed notifications of a hospice election prevent the 
Part D plan from placing patient-specific prior authorization on the 
drugs in the four classes commonly paid by the hospice providers; 
analgesics, anti-nauseants (antiemetics), laxatives, and antianxiety 
drugs (anxiolytics). Currently, hospices are encouraged to use an OMB 
approved form entitled ``Hospice Information for Medicare Part D 
Plans'' (OMB NO 0938-1269) to communicate hospice election and drug use 
to Part D plans.\4\ However, since OMB form NO 0938-1269 was first 
approved, hospices have begun to use electronic health records (EHRs) 
in growing numbers. This development has opened the door to electronic 
transactions from the hospice to part D plans. The National Council for 
Prescription Drug Plans (NCPDP) convened a diverse task group which 
included payers, hospice organizations and processors to see if they 
could leverage hospice EHR capabilities to produce standard electronic 
transactions that can be used by Part D plans. CMS was pleased to learn 
that the NCPDP hospice task group is embarking upon a pilot project 
which extract data from a hospice's EHR and route that information to 
the correct Part D plan in real-time, thereby minimizing delays in the 
prior authorization process. We encourage hospices, their software 
vendors and Part D plans to participate in the pilot project and we 
await its outcome.
---------------------------------------------------------------------------

    \4\ Medicare Part D Hospice Care Hospice Information for 
Medicare Part D Plans. https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/Hospice/Downloads/Instruction-and-Form-for-Hospice-and-Medicare-Part-D.pdf.
---------------------------------------------------------------------------

    Comment: Most commenters still disagree with CMS's decision to make 
the election statement addendum a condition for payment. One commenter 
stated the addendum is redundant to existing obligations and that there 
is no basis for the addendum to be treated as a condition for payment 
for hospice services. This commenter added that the Social Security Act 
only authorizes the condition for hospice payment based on a patient's 
having made an election to receive hospice care and that an addendum, 
provided after the election, cannot and should not legally alter the 
election or make the election retroactively invalid for purposes of 
payment. Concerns about any errors to the addendum or an unreturned 
addendum could give rise to non-payment of hospice services for what 
CMS implies could be the patient's entire election period.
    Response: We disagree with commenters that the election statement 
addendum should not be a condition for payment given the enormity of 
the decision of a Medicare beneficiary electing to receive hospice 
services. In fact, the content requirements for the hospice election 
statement at Sec.  418.24 specifically state that there must be the 
individual's or representative's acknowledgement that he or she has 
been given a full understanding of the palliative rather than curative 
nature of hospice care, as it relates to the individual's terminal 
illness and related conditions, as well as beneficiary acknowledgement 
that certain Medicare services are waived by the election. Moreover, 
section 1812(d)(2)(A) of the Act makes it clear that ``except in such 
exceptional and unusual circumstances as the Secretary may provide . . 
. if an individual makes such an election for a period with respect to 
a particular hospice program, the individual shall be deemed to have 
waived all rights to have payment made by Medicare'' for services that 
are related to the treatment of the individual's condition for which a 
diagnosis of terminal illness has been made. The Secretary has not 
provided for any ``unusual and exceptional circumstances'' and in the 
1983 hospice final rule (48 FR 56010) we stated that hospices are 
required to provide virtually all the care needed by terminally ill 
patients. Our position remains the same today.
    We do not believe that the decision to elect hospice services can 
be made without full information and disclosure as to what items, 
services, and drugs the hospice will and will not be covering based on 
their determinations of what is and what is not related to the terminal 
illness and related conditions. As detailed in the FY 2020 Hospice Wage 
Index and Payment Rate Update final rule (84 FR 38518), we believe 
making the hospice election statement addendum a condition for payment 
is necessary to ensure that hospices are diligent in providing this 
information to Medicare hospice beneficiaries on request. We regard 
this addendum as a means of accountability for hospices to provide 
coverage information to beneficiaries electing the hospice benefit.
    In the FY 2020 Hospice Wage Index and Payment Rate Update proposed 
and final rules (84 FR 17570 and 84 FR 38484), we provided examples 
from OIG reports 5 6 that highlight the issues with a 
patient's lack of knowledge regarding hospices' limitation on their 
coverage, and the potential for hospice non-coverage of certain 
expected items, services, and drugs. Also, as described in the preamble 
of the FY 2020 Hospice Wage Index and Payment Rate Update proposed 
rule, the impetus for this policy was not only from these various OIG 
reports, but from numerous anecdotal reports received by CMS describing 
situations in which hospice beneficiaries and their families had to 
continually seek items, services, and drugs outside of the hospice 
benefit to receive needed care that they expected the hospice would 
cover and provide.
---------------------------------------------------------------------------

    \5\ Vulnerabilities in the Medicare Hospice Program Affect 
Quality Care and Program Integrity: An OIG Portfolio. July 2018. 
https://oig.hhs.gov/oei/reports/oei-02-16-00570.pdf.
    \6\ Medicare Could Be Paying Twice for Prescription Drugs for 
Beneficiaries in Hospice (A-06-10-00059). June 2012. https://oig.hhs.gov/oas/reports/region6/61000059.pdf.
---------------------------------------------------------------------------

    One commenter remarked that requiring an addendum is redundant, 
implying that because hospices are already making determinations of 
relatedness, the beneficiary (or representative) is already being

[[Page 47092]]

informed of these determinations in order to allow them to make 
treatment decisions that best align with their preferences and goals of 
care. While we are encouraged that many hospices are already providing 
this important coverage information to hospice beneficiaries, both the 
OIG reports and anecdotal reports, as mentioned previously in this 
final rule, indicate that a lack of coverage transparency continues to 
be an issue for hospice beneficiaries.
    Comment: A few commenters requested clarity regarding transfer 
situations; when to update the addendum; situations where a beneficiary 
requests the addendum but where the hospice has determined that there 
are no unrelated conditions, items, services, or drugs; whether 
specific QIO language must be used; the timeframe for providing the 
addendum if requested after the effective date of the election but 
within the first 5 days of hospice care; handling situations in which 
the beneficiary elects hospice care but with a future hospice date; the 
timing to obtain a signature on the addendum; and whether the addendum 
must be provided to all individuals receiving hospice care, including 
non-Medicare patients.
    Response: Regarding the timeframe for providing the addendum to a 
requesting beneficiary who has transferred from one hospice to another, 
we remind commenters that a transfer does not change the effective date 
of hospice election. That means, if the beneficiary (or representative) 
requests the addendum from the receiving hospice, the hospice would 
have 72 hours (or 3 days) to furnish this information in writing. As to 
when hospices should update the addendum, in the FY 2020 Hospice Wage 
Index and Payment Rate Update final rule, we stated that 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. This could also 
include updating the addendum in situation where a condition, item, 
service or drug was previously considered unrelated, and therefore 
included on the addendum, is now considered related, and therefore 
would be covered by the hospice and removed from the addendum. Given 
that hospices develop their own addendum, hospices may add additional 
language to inform beneficiaries that the addendum reflects the most 
accurate information that the hospice has at the time the addendum is 
completed and that updates would be provided, in writing, if there are 
any changes that would need to be included based on any new 
information. Additionally, if the beneficiary (or representative) 
requested the addendum but the hospice has determined that all 
conditions, items, services, and drugs were related, and thereby 
covered by the hospice, the hospice could explain to the beneficiary 
(or beneficiary) that it is furnishing all care or the hospice can 
provide the addendum noting that at the time of the request, the 
hospice has determined that there were no unrelated conditions, items, 
services, and drugs. Hospices are free to develop any process for 
addendum updates to distinguish whether any updates are additions, 
deletions, or modifications, similar to processes hospices have in 
place for updates to the hospice plan of care.
    As for the comment regarding specific BFCC-QIO language, we note 
that we did include specific BFCC-QIO language in the FY 2020 Hospice 
Wage Index and Payment Rate Update proposed rule. We finalized a 
requirement that the election statement itself must include information 
on the BFCC-QIO (including the BFCC-QIO contact information), and both 
the election statement and the addendum must include a statement about 
the beneficiary's right to Immediate Advocacy. Hospices can use 
whatever language they choose as long as this information is included 
in accordance with the requirements at Sec.  418.24.
    If the beneficiary does not request the addendum on the effective 
date of the election (that it, the start of care date), but within the 
5-day timeframe after the effective date, the hospice would have 72 
hours (or 3 days) from the date of the request to furnish the addendum 
as the regulations are clear that the 5-day timeframe relates to 
whether the beneficiary (or representative) requested the addendum on 
the effective date of the election (that is, the start date of hospice 
care). Regarding those situations in which the beneficiary elects 
hospice care, but with a future effective date, we remind commenters 
that the addendum would be furnished to the beneficiary (or 
representative) within 5 days of the effective date of the election. 
For example, if the beneficiary elects hospice on May 1st with an 
effective date of May 7th, the addendum, if requested, would be 
provided within 5 days of May 7th. And because the beneficiary 
signature is an acknowledgement of receipt of the addendum, this means 
that the beneficiary would sign the addendum when the hospice provides 
it, in writing, to the beneficiary (or representative). We note that 
these finalized policies relating to the election statement 
modifications and the addendum are for beneficiaries receiving services 
under the Medicare hospice benefit. While the addendum is not required 
to be provided to non-Medicare patients, hospices can choose to do so.
    Comment: One commenter recommended that to effectively address 
inappropriate spending outside of the Medicare hospice benefit, CMS 
must take steps in addition to the addendum policy, to identify the 
breadth of issues that are contributing to the problem. The commenter 
suggested analysis of the spending data to determine what proportion of 
this spending is occurring within the first weeks of hospice care when 
CMS systems have not been updated with Medicare election information 
and what proportion of this spending is a result a hospice informing 
the provider that the item, service, or drug is unrelated. Finally, 
this commenter stated that CMS must look at any additional systems 
issues, as well as any other delays that slow the posting of new 
beneficiary status information. This commenter also stated that a large 
proportion of non-hospice spending is a result of related items, 
services, or drugs but which are not reasonable and necessary under a 
hospice plan of care.
    Response: We appreciate the suggestions made by this commenter and 
we note that we continue to analyze hospice utilization data, including 
analyzing data on live discharges, lengths of stay, pre-hospice 
spending, and non-hospice spending. We have previously shared these 
results through rulemaking and other mechanisms of communication. We 
also note that we have made every effort to enhance the processing time 
of the hospice NOE to ensure that Medicare systems are updated in a 
timelier fashion. Specifically, effective January 1, 2018, hospices can 
submit the NOE via Electronic Data Interchange (EDI). EDI transmission 
and receipt of NOEs would reduce, and potentially eliminate, problems 
with NOEs that result from Direct Data Entry (DDE) keying errors. 
Hospices could export data from their electronic medical record or 
other software system into the EDI format without human intervention. 
We continually look at ways to further streamline these processes and 
appreciate commenter suggestions. We will consider the commenter's 
recommendations moving forward as we continue to analyze the effects of 
current hospice policies and for any future rulemaking and other 
efforts.
    Comment: Most commenters recommended that CMS delay the

[[Page 47093]]

October 1, 2020 effective date because of the public health emergency 
declared by the Secretary in response to the COVID-19 pandemic. 
Specifically, commenters recommended a delay of at least one full year 
beyond the end date of the COVID-19 public health emergency because of 
concerns that hospices have shifted their operational priorities to 
address the pandemic and have not had time to complete the 
modifications to the election statement, develop the addendum, or 
establish new processes and train new staff on the new content 
requirements. Commenters also expressed concerns over EMR software 
readiness citing that EMR vendors have not provided any deliverables 
related to the modifications to the election statement and the 
addendum, and that hospices need delivery of software modifications in 
order to test the software, as well as develop processes and prepare 
for implementation.
    Commenters also stated that, based on their research and inquiries 
to the Medicare contractors and the BFCC-QIOs, there has been no 
communication from CMS to the contractors related to the addendum as a 
condition for payment, or to the BFCC-QIOs related to a patient/
representative request for Immediate Advocacy if the beneficiary (or 
representative) disagrees with the hospices determinations as to those 
items, services, and drugs the hospice has determined to be unrelated 
to the terminal illness and related conditions. These commenters cited 
the delayed implementation of OASIS-E as a result of the public health 
emergency as precedent and requested a similar delay for the addendum 
requirements as this would allow for adequate time for hospices, EMR 
vendors, Medicare contractors, and BFCC-QIOs to be fully prepared for 
these changes.
    Response: We appreciate the magnitude of efforts undertaken by 
hospice providers as our country responds to the public health 
emergency for the COVID-19 pandemic. The effective date for the 
election statement modifications and the addendum implementation are 
effective for hospice elections on and after October 1, 2020 and this 
finalized policy already reflects a delayed effective date of 1 year. 
We note that there were no proposed changes to the election statement 
modifications or the addendum in the FY 2021 Hospice Wage Index and 
Payment Rate Update proposed rule, therefore, all of the content 
requirements were finalized in the FY 2020 Hospice Wage Index and 
Payment Rate Update final rule. We expect that hospices have already 
begun making the modifications to their election statements and 
developing their addendums in anticipation of a FY 2021 effective date 
and well before the start of the public health emergency. We also 
anticipate that hospices already have engaged with their EMR vendors to 
start making the necessary changes resulting from a policy that was 
finalized in the FY 2020 Hospice Wage Index and Payment Rate Update 
final rule but with a delayed effective date. The expectation was that 
hospices would start making these modifications when these requirements 
were finalized in the FY 2020 Hospice Wage Index and Payment Rate 
Update final rule (published on August 6, 2019). The public health 
emergency underscores the importance of providing the ``Patient 
Notification of Hospice Non-Covered Items, Services, and Drugs'' to 
requesting hospice beneficiaries to ensure they are able to make 
treatment decisions to best meet their needs during this time.
    We continue to have ongoing discussions with the MACs and BFCC-QIOs 
and will continue to provide education throughout the upcoming months 
leading up to the effective date of this policy. This will include the 
release of sub-regulatory guidance, and MLN[supreg] articles to ensure 
education is furnished to all relevant stakeholders. We assure hospices 
that all parties will be aware of the policies and their respective 
roles. And with any new policy, we will continue to monitor and 
communicate with stakeholders to determine if any future changes are 
warranted. The goal is to ensure the least amount of burden to 
providers while also ensuring beneficiary protection and engagement.
    In summary, the hospice election statement modifications and the 
hospice election statement addendum requirements at 42 CFR 418.24(b) 
and (c) will be effective for hospice elections beginning on and after 
October 1, 2020 as finalized in the FY 2020 Hospice Wage Index and 
Payment Rate Update final rule (84 FR 38520). The hospice election 
statement addendum will remain a condition for payment and as 
finalized, this condition for payment would be met if there is a signed 
addendum (and its updates) in the requesting beneficiary's hospice 
medical record. The signed addendum is only acknowledgement of the 
beneficiary's (or representative's) receipt of the addendum and not 
agreement with the hospice's determination. To assist hospices in 
understanding these content requirements and based on comments 
received, we have posted with this final rule, the modified model 
examples of the hospice election statement and hospice election 
statement addendum on the Hospice Center web page as illustrative 
examples. As finalized in the FY 2020 Hospice Wage Index and Payment 
Rate Update final rule, hospices will make the election statement 
modifications and develop the addendum to best suit their needs as long 
as the content requirements are met.

D. Hospice Quality Reporting Program (HQRP)

    Although CMS did not propose any changes to the HQRP for FY 2021, 
some therapy associations commented and encouraged the agency to 
continue to provide adequate provider training to ensure accuracy and 
consistency in linking care planning and services with data collection 
to allow the data to effectively promote improved care planning and 
service implementation. Another commenter stated that CMS should 
require quality performance be factored into payment and determinations 
of any performance-based incentives for hospice providers. We thank 
commenters for their suggestions. While these comments are outside the 
scope of this rule, we assure commenters that we continue to consider 
ways to inform and educate hospices regarding quality reporting, data 
collection, and processes to ensure that hospice beneficiaries continue 
to receive high quality hospice care. We agree that quality performance 
should factor into performance-based incentives for hospice providers 
and the HQRP is one mechanism to promote such performance.

III. Collection of Information Requirements

    This final rule does not impose any new or revised ``collection of 
information'' requirements or burden. For the purpose of this section 
of the preamble, collection of information is defined under 5 CFR 
1320.3(c) of OMB's Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 
3501 et seq.) implementing regulations. Since this rule does not impose 
any new or revised collection of information requirements or burden, 
the rule is not subject to the requirements of the PRA.

IV. Regulatory Impact Analysis

A. Statement of Need

    This final 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

[[Page 47094]]

of CBSAs or previously used MSAs, as well as any changes to the 
methodology for determining the per diem payment rates. This final rule 
also updates payment rates for each of the categories of hospice care, 
described in Sec.  418.302(b), for FY 2020 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. Lastly, section 3004 of the 
Affordable Care Act amended the Act to authorize a quality reporting 
program for hospices, and this rule discusses changes in the 
requirements for the HQRP in accordance with section 1814(i)(5) of the 
Act.

B. Overall Impacts

    We estimate that the aggregate impact of the payment provisions in 
this rule will result in an increase of $540 million in payments to 
hospices, resulting from the hospice payment update percentage of 2.4 
percent for FY 2021. The impact analysis of this 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 May 12, 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 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 hospices and most other hospice-related 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 of hospice payments of 2.4 
percent, or $540 million. The distributional effects of the final 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 604 of the RFA. For purposes of section 1102(b) of the Act, we 
define a small rural hospital as a hospital that is located outside of 
a MSA 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. In 2020, that 
threshold is approximately $156 million. This final rule is not 
anticipated to have an effect on state, local, or tribal governments, 
in the aggregate, or on the private sector of $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 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

[[Page 47095]]

will be the number of reviewers of this rule. We acknowledge that this 
assumption may understate or overstate the costs of reviewing this 
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 believe that the 
number of past commenters would be a fair estimate of the number of 
reviewers of this final rule. We also recognize that different types of 
entities are in many cases affected by mutually exclusive sections of 
the proposed rule, and therefore, for the purposes of our estimate we 
assume that each reviewer reads approximately 50 percent of the rule.
    Using the wage information from the May 2019 Bureau of Labor 
Statistics (BLS) for medical and health service managers (Code 11-
9111), we estimate that the cost of reviewing this rule is $110.74 per 
hour, including overhead and fringe benefits (https://www.bls.gov/oes/current/oes_nat.htm). This rule consists of approximately 23,000 words. 
Assuming an average reading speed of 250 words per minute, it would 
take approximately 0.77 hours for the staff to review half of it. For 
each hospice that reviews the rule, the estimated cost is $85.27 (0.77 
hour x $110.74). Therefore, we estimate that the total cost of 
reviewing this regulation is $4,519.31 ($85.27 x 53 reviewers).

D. Detailed Economic Analysis

1. Hospice Payment Update for FY 2021
    The FY 2021 hospice payment impacts appear in Table 10. 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, 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 FY 2021 
hospice payment update percentage of 2.4 percent as mandated by section 
1814(i)(1)(C) of the Act, and is consistent for all providers. The 2.4 
percent hospice payment update percentage is based on an estimated 2.4 
percent inpatient hospital market basket update, reduced by a 0 
percentage point productivity adjustment. It is projected that 
aggregate payments would increase by 2.4 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 May 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.
[GRAPHIC] [TIFF OMITTED] TR04AU20.010


[[Page 47096]]


[GRAPHIC] [TIFF OMITTED] TR04AU20.011


[[Page 47097]]


[GRAPHIC] [TIFF OMITTED] TR04AU20.012

2. Hospice Election Statement Addendum
    In the FY 2020 Hospice Wage Index and Payment Rate Update final 
rule (84 FR 38553), we finalized modifications to the election 
statement content requirements at Sec.  418.24(b) and (c) to include a 
hospice election statement addendum, effective for hospice elections 
beginning on and after October 1, 2020. This effective date reflects a 
1-year delay to allow hospices to make the necessary modifications to 
their existing election statement, develop their own addendum to best 
meet their needs, and establish processes for incorporating the 
addendum into their work flow.
    In the FY 2020 Hospice Wage Index and Payment Rate Update final 
rule (84 FR 38532), we estimated that the addendum requirement would 
generate an annualized net reduction in burden of approximately $5.2 
million, or $3.7 million per year on an ongoing basis discounted at 7 
percent relative to year 2016, over a perpetual time horizon beginning 
in FY 2021.
    While we did not re-estimate this burden in the regulatory impact 
analysis in the FY 2021 Hospice Wage Index and Payment Rate Update 
proposed rule, we received the following comment regarding the hospice 
election statement burden estimate as described and calculated in the 
FY 2020 Hospice Wage Index and Payment Rate Update final rule.
    Comment: One commenter noted that there was no updated burden 
estimate in the FY 2021 Hospice Wage Index and Payment Rate Update 
proposed rule even though we stated in the FY 2020 Hospice Wage Index 
and Payment Rate Update final rule (84 FR 38533) that we would re-
estimate the burden estimate using more current data for 2021 
rulemaking. The commenter stated that the previous burden estimate 
underestimates the amount of time it takes to complete the addendum and 
requested an updated estimate in the FY 2021 Hospice Wage Index and 
Payment Rate Update final rule with an opportunity for stakeholder 
comment.
    Response: We apologize for any oversight in providing an updated 
burden estimate in the FY 2021 Hospice Wage Index and Payment Rate 
Update proposed rule. The calculated burden for completion of the 
hospice addendum is only an estimate using the most current data at the 
time of rulemaking. Hospices are already required to make 
determinations as to the items, services, and drugs that are to be 
included in the individualized hospice plan of care; therefore, this 
means they are also making decisions as what items, services, and drugs 
it will not be covering as the hospice has determined them to be 
unrelated to the terminal illness and related conditions.

[[Page 47098]]

We do not believe that a hospice can make a determination of what is 
related to the terminal illness and related conditions without also 
determining what is unrelated. Therefore, this decision making process 
is already occurring; the addendum is only requiring to furnish this 
information, in writing, to the beneficiary (or representative). We 
believe that hospices are developing their respective addendums to 
incorporate into their work flow processes in the most efficient way 
possible to ensure that the communication of these determinations is 
done in the most unobtrusive and least burdensome way possible.
    We recalculated the overall burden using the May, 2019 BLS wage 
data and 2019 hospice claims data for this final rule. To calculate 
this burden estimate, we used the same methodology described in the FY 
2020 Hospice Wage Index and Payment Rate Update final rule (84 FR 
38532). We calculated this updated estimate based on 1,387,331 hospice 
elections in FY 2019. Of these hospice elections, 27 percent of 
beneficiaries died within the first 5 days of hospice care, leaving 
1,012,752 eligible hospice elections for this burden estimate 
(1,387,331 x 0.73). We remind commenters that the addendum would not 
need to be furnished if the beneficiary dies within 5 days of the 
hospice effective date. For FY 2021, we estimate the annualized net 
burden for hospice providers with the one-time form development and 
completion of election statement addendum to be $12.8 million. This is 
slightly higher than the estimated $11.3 million in the FY 2020 Hospice 
Wage Index and Payment Rate Update final rule primarily because there 
were more eligible hospice elections using FY 2019 hospice claims data 
compared to the FY 2017 hospice claims data used in the previous 
calculation. We estimate the annualized monetized net reduction in 
burden for non-hospice providers with the regulations change at Sec.  
418.24, Election Statement Addendum, to be $19.3 million. This would 
result in a total annualized net reduction in burden with the election 
statement addendum in FY 2021 to be $6.5 million. Because we included 
these burden estimates in the accounting statement in the FY 2020 
Hospice Wage Index and Payment Rate Update final rule (84 FR 38543), 
this updated estimate is not included in accounting statement in this 
FY 2021 Hospice Wage Index and Payment Rate Update final rule.

E. Accounting Statement

    As required by OMB Circular A-4 (available at: https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/circulars/A4/a-4.pdf), in Table 11, we have prepared an accounting statement showing 
the classification of the transfers and costs associated with the 
provisions of this final rule. This table shows an estimated $540 
million in transfers to hospices in FY 2021. All expenditures are 
classified as transfers to hospices. The costs for the hospice election 
statement addendum were accounted for in the FY 2020 Hospice Wage Index 
and Payment Rate final rule (84 FR 38543) and therefore these are not 
accounted for in this FY 2021 final rule accounting statement.
[GRAPHIC] [TIFF OMITTED] TR04AU20.013

F. 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 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.

G. Conclusion

    We estimate that aggregate payments to hospices in FY 2021 will 
increase by $540 million, or 2.4 percent, compared to payments in FY 
2020. We estimate that in FY 2021, hospices in urban areas will 
experience, on average, 2.4 percent increase in estimated payments 
compared to FY 2020, while hospices in rural areas will experience, on 
average, 2.6 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 2.9 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 1.6 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: July 23, 2020.
Seema Verma,
Administrator, Centers for Medicare & Medicaid Services.
    Dated: July 29, 2020
Alex M. Azar II,
Secretary, Department of Health and Human Services.
[FR Doc. 2020-16991 Filed 7-31-20; 4:15 pm]
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