[Federal Register Volume 87, Number 145 (Friday, July 29, 2022)]
[Rules and Regulations]
[Pages 45669-45702]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-16214]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 418

[CMS-1773-F]
RIN 0938-AU83


Medicare Program; FY 2023 Hospice Wage Index and Payment Rate 
Update and Hospice Quality Reporting Requirements

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

ACTION: Final rule.

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SUMMARY: This rule updates the hospice wage index, payment rates, and 
aggregate cap amount for Fiscal Year (FY) 2023. This final rule 
establishes a permanent mitigation policy to smooth the impact of year-
to-year changes in hospice payments related to changes in the hospice 
wage index. In addition, this rule updates the Hospice Quality 
Reporting Program (HQRP) and discusses further development of the 
Hospice Outcomes and Patient Evaluation (HOPE) assessment instrument; 
updates the Quality Measures (QMs) that will be in effect in FY 2023 
for the HQRP and future QMs; updates the Consumer Assessment of 
Healthcare Providers and Systems, Hospice Survey Mode Experiment, 
discusses a request for information on health equity, and updates the 
hospice survey and enforcement procedures.

DATES: These regulations are effective on October 1, 2022.

FOR FURTHER INFORMATION CONTACT: 
    For general questions about hospice payment policy, send your 
inquiry via email to: [email protected].
    For questions regarding the CAHPS[supreg] Hospice Survey, contact 
Lori Teichman at (410) 786-6684 and Lauren Fuentes at (410) 786-2290.
    For questions regarding the hospice quality reporting program, 
contact Cindy Massuda at (410) 786-0652.
    For information regarding the hospice special focus program, send 
your inquiry via email to [email protected].

SUPPLEMENTARY INFORMATION:

I. Executive Summary

    This final rule updates the hospice wage index, hospice payment 
rates, and aggregate cap amount for FY 2023, as required under section 
1814(i) of the Social Security Act (the Act). This rule also finalizes 
the permanent mitigation policy to smooth the impact of year-to-year 
changes in hospice payments related to changes in the hospice wage 
index. In addition, in this final rule, CMS discusses updates to the 
Hospice Quality Reporting Program (HQRP) that include the Hospice 
Outcomes and Patient Evaluation (HOPE) with national beta testing; the 
Consumer Assessment of Healthcare Providers and Systems (CAHPS) Hospice 
Survey with Star Ratings; developing a web-based survey; Public 
Reporting; a request for information that builds from last year's 
discussion on health equity, updates on advancing a health information 
exchange, and updates on hospice survey and enforcement procedures.

II. Background

A. Hospice Care

    Hospice care is a comprehensive, holistic approach to treatment 
that

[[Page 45670]]

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 provides 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 has a medical prognosis that his or her life expectancy 
is 6 months or less if the illness runs its normal course. The 
regulations at Sec.  418.22(b)(2) require that clinical information and 
other documentation that support the medical prognosis accompany the 
certification and be filed in the medical record with it. Additionally, 
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, once a terminally ill patient 
elects to receive hospice care, a hospice interdisciplinary group (IDG) 
is essential in ensuring the provision of primarily home-based 
services, keeping the choices of the patient and family first and 
foremost. The hospice IDG works with the beneficiary, family, and 
caregiver(s) 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 and care. 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 IDG, 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 their home and continue to receive routine home care 
(RHC). Limited, short-term, intermittent, inpatient respite care (IRC) 
is also available to provide relief for the family or other caregivers, 
or when the family or other caregivers are absent. 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. CHC may be covered for as much as 24 
hours a day, and these periods must be predominantly nursing care, in 
accordance with the 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 CHC 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. In addition, 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 (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, 
the 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 (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 
Medicare does not pay for these volunteer services (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 must have an 
interdisciplinary group composed of 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,

[[Page 45671]]

comprehensive, and compassionate end of life care.

C. Medicare Payment and Quality for Hospice Care

    Sections 1812(d), 1813(a)(4), 1814(a)(7), 1814(i), and 1861(dd) of 
the Act, and the 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 based on one of four prospectively-
determined rate categories of hospice care (RHC, CHC, IRC, and GIP), 
based on each day a qualified Medicare beneficiary is under hospice 
care (once the individual has elected). This per diem payment is meant 
to cover 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 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 
(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. This means 
that while payments made to hospices are to cover all items, services, 
and drugs for the palliation and management of the terminal illness and 
related conditions, Federal funds cannot be used for the prohibited 
activities, even in the context of a per diem payment. However, the 
prohibition does not pertain 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 fiscal year.
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 in subsequent FYs are to be the hospital market basket 
percentage increase for the current FY. Section 4442 of the BBA amended 
section 1814(i)(2) of the Act, effective for services furnished on or 
after October 1, 1997, to require that hospices submit claims for 
payment for hospice care furnished in an individual's home only on the 
basis of the geographic location at which the service is furnished. 
Previously, local wage index values were applied based on the 
geographic location of the hospice provider, regardless of where the 
hospice care was furnished. Section 4443 of the BBA amended sections 
1812(a)(4) and 1812(d)(1) of the Act to provide for hospice benefit 
periods of two 90-day periods, followed by an unlimited number of 60-
day periods.
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.
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 are 
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. Since FY 2014, hospices that fail to report quality 
data have their market basket percentage increase reduced by 2 
percentage points. Note that with the passage of the Consolidated 
Appropriations Act, 2021 (hereafter referred to as CAA 2021) (Pub. L. 
116-260), the reduction changes to 4 percentage points beginning in FY 
2024.
    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, the Centers for Medicare & Medicaid 
Services (CMS) 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 ACA 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, CMS was 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. Existing hospices had the

[[Page 45672]]

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 percentage 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). As with 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, described eligibility criteria, 
identified survey respondents, and otherwise implemented 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 
47142), CMS finalized two different payment rates for RHC: a higher per 
diem base payment rate for the first 60 days of hospice care and a 
reduced per diem base payment rate for subsequent days of hospice care. 
CMS also finalized a service intensity add-on (SIA) payment payable for 
certain services during the last 7 days of the beneficiary's life. A 
service intensity add-on payment will be made for the social worker 
(SW) visits and nursing visits provided by a registered nurse (RN), 
when provided during routine home care in the last 7 days of life. The 
SIA payment is in addition to the routine home care rate. The SIA 
payment is provided for visits of a minimum of 15 minutes and a maximum 
of 4 hours per day (80 FR 47172).
    In addition to the hospice payment reform changes discussed, the FY 
2016 Hospice Wage Index and Rate Update final rule implemented changes 
mandated by the IMPACT Act, in which the cap amount for accounting 
years that end after September 30, 2016 and before October 1, 2025 
would be updated by the hospice payment update percentage rather than 
using the CPI-U (80 FR 47186). In addition, we finalized a provision to 
align the cap accounting year for both the inpatient cap and the 
hospice aggregate cap with the FY 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 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), CMS finalized several new policies and requirements related to 
the HQRP. First, CMS codified the 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, CMS would 
continue to utilize the measure in its new endorsed status, without 
going through new notice-and-comment rulemaking. CMS would continue to 
use rulemaking to adopt substantive updates made by the NQF to the 
endorsed measures 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: (1) Hospice Visits when Death is Imminent Measure 
Pair; and (2) 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 Hospice Item Set 
(HIS), and the measures were effective April 1, 2017. Regarding the 
CAHPS[supreg] Hospice Survey, CMS 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 CAHPS[supreg] requirements 
due to newness (81 FR 52182). The exemption is determined by CMS and is 
only for 1 year.
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 
38484), we finalized rebased 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).

[[Page 45673]]

    In addition, we 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), and added a requirement for hospices, 
upon request, to furnish an election statement addendum effective 
beginning in FY 2021. The addendum must list items, services, and drugs 
the hospice has determined to be unrelated to the terminal illness and 
related conditions, to increase coverage transparency for beneficiaries 
under a hospice election.
12. Consolidated Appropriations Act, 2021
    Division CC, section 404 of the CAA 2021 amended section 
1814(i)(2)(B) of the Act and extended the provision that currently 
mandates the hospice cap be updated by the hospice payment update 
percentage (hospital market basket update reduced by the productivity 
adjustment) rather than the CPI-U for accounting years that end after 
September 30, 2016 and before October 1, 2030. Prior to enactment of 
this provision, the hospice cap update was set to revert to the 
original methodology of updating the annual cap amount by the CPI-U 
beginning on October 1, 2025. Division CC, section 407(b) of CAA 2021 
revised section 1814(i)(5)(A)(i) to increase the payment reduction for 
hospices who fail to meet hospice quality measure reporting 
requirements from 2 percentage points to 4 percentage points beginning 
with FY 2024.
13. FY 2022 Hospice Wage Index and Payment Rate Update Final Rule
    In the FY 2022 Hospice Wage Index and Rate Update final rule (86 FR 
42532 through 42539), we finalized a policy to rebase and revise the 
labor shares for CHC, RHC, IRC and GIP using Medicare cost report (MCR) 
data for freestanding hospices (collected via CMS Form 1984-14, OMB NO. 
0938-0758) for 2018. We established separate labor shares for CHC, RHC, 
IRC, and GIP based on the calculated compensation cost weights for each 
level of care from the 2018 MCR data. The revised labor shares were 
implemented in a budget neutral manner through the use of labor share 
standardization factors.
    In the FY 2022 final rule, we removed the seven original Hospice 
Item Set (HIS) measures from the program because a more broadly 
applicable measure (across settings, populations, or conditions) for 
the particular topic is available and already publicly reported. The 
Hospice Comprehensive Assessment Measure, NQF #3235, is one measure 
that is calculated and rolled up by completion of the seven individual 
measures. This measure helps to ensure all hospice patients receive a 
holistic comprehensive assessment. Also, in or after May 2022, we will 
start publicly reporting the two new claims-based measures. 
Specifically, this includes the: (1) Hospice Visits in the Last Days of 
Life (HVLDL) (which replaces the HIS Hospice Visits when Death is 
Imminent measure pair); and (2) Hospice Care Index (HCI) that includes 
10 indicators that collectively represent different aspects of hospice 
care and aim to convey a comprehensive characterization of the quality 
of care furnished by a hospice throughout the hospice stay. Related to 
these changes, we finalized reporting eight quarters of claims data in 
order to display small providers. We finalized the public reporting of 
Consumer Assessment of Healthcare Providers and Systems (CAHPS[supreg]) 
Hospice Survey Star ratings on Care Compare to begin no sooner than FY 
2022.

III. Analysis of and Responses to Public Comments

    We received approximately 73 comments from stakeholders including 
national hospice associations, state associations, hospices, health 
systems, electronic health record vendors, and individuals. We reviewed 
each commenter's letter and grouped related comments. Some comments 
were identical. After associating like comments, we placed them in 
categories based on subject matter or based on the section(s) of the 
regulation affected. Summaries of the public comments received and our 
responses to those comments are provided in the appropriate sections in 
the preamble of this final rule.

IV. Provisions of the Final Rule

A. FY 2023 Hospice Wage Index and Rate Update

1. FY 2023 Hospice Wage Index
    The hospice wage index is used to adjust payment rates for hospices 
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 the Office of Management and 
Budget (OMB) to the Metropolitan Statistical Areas (MSAs) definitions.
    In general, 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 March 6, 2020, OMB issued 
Bulletin No. 20-01, which provided updates to and superseded OMB 
Bulletin No. 18-04 that was issued on September 14, 2018. The 
attachments to OMB Bulletin No. 20-01 provided detailed information on 
the update to statistical areas since September 14, 2018, and were 
based on the application of the 2010 Standards for Delineating 
Metropolitan and Micropolitan Statistical Areas to Census Bureau 
population estimates for July 1, 2017 and July 1, 2018. (For a copy of 
this bulletin, we refer readers to the following website: https://www.whitehouse.gov/wp-content/uploads/2020/03/Bulletin-20-01.pdf. In 
OMB Bulletin No. 20-01, OMB announced one new Micropolitan Statistical 
Area, one new component of an existing Combined Statistical Area (CSA), 
and changes to New England City and Town Area (NECTA) delineations. In 
the FY 2021 Hospice Wage Index final rule (85 FR 47070) we stated that 
if appropriate, we would propose any updates from OMB Bulletin No. 20-
01 in future rulemaking. After reviewing OMB Bulletin No. 20-01, we 
determined that the changes in Bulletin 20-01 encompassed delineation 
changes that would not affect the Medicare wage index for FY 2022. 
Specifically, the updates consisted of changes to NECTA delineations 
and the redesignation of a single rural county into a newly created 
Micropolitan Statistical Area. The Medicare wage index does not utilize 
NECTA definitions, and, as most recently discussed in the FY 2021 
Hospice Wage Index final rule (85 FR 47070), we include hospitals 
located in Micropolitan Statistical areas in each state's rural wage 
index.
    In the FY 2020 Hospice Wage Index final rule (84 FR 38484), we 
finalized the proposal to use the current FY's hospital wage index data 
to calculate the hospice wage index values. In the FY 2021 Hospice Wage 
Index final rule (85 FR 47070), we adopted the revised OMB delineations 
with a 5-percent cap on wage index decreases, where the estimated 
reduction in a geographic area's wage index would be capped at 5-
percent in FY 2021 and no cap would be applied to wage index decreases 
for

[[Page 45674]]

the second year (FY 2022). For FY 2023, the final hospice wage index 
will be based on the FY 2023 hospital pre-floor, pre-reclassified wage 
index for hospital cost reporting periods beginning on or after October 
1, 2018 and before October 1, 2019 (FY 2019 cost report data). The 
final FY 2023 hospice wage index will 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 FY 2023 
hospice wage index will include a 5-percent cap on wage index 
decreases, as discussed later in this section. The appropriate wage 
index value would be applied to the labor portion of the hospice 
payment rate based on the geographic area in which the beneficiary 
resides when receiving RHC or CHC. The appropriate wage index value is 
applied to the labor portion of the payment rate based on the 
geographic location of the facility for beneficiaries receiving GIP or 
IRC.
    In the FY 2006 Hospice Wage Index final rule (70 FR 45135), we 
adopted the policy that, for urban labor markets without a hospital 
from which hospital wage index data could be derived, all of the 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 2023, the only CBSA without a 
hospital from which hospital wage data can be derived is 25980, 
Hinesville-Fort Stewart, Georgia. The FY 2023 final wage index value 
for Hinesville-Fort Stewart, Georgia is 0.8628.
    There exist some geographic areas where there were no hospitals, 
and thus, no hospital wage data on which to base the calculation of the 
hospice wage index. In the FY 2008 Hospice Wage Index final rule (72 FR 
50217 through 50218), we implemented a methodology to update the 
hospice wage index for rural areas without hospital wage data. In cases 
where there was a rural area without rural hospital wage data, we use 
the average pre-floor, pre-reclassified hospital wage index data from 
all contiguous CBSAs, to represent a reasonable proxy for the rural 
area. The term ``contiguous'' means sharing a border (72 FR 50217). 
Currently, the only rural area without a hospital from which hospital 
wage data could be derived is Puerto Rico. However, for rural Puerto 
Rico, we would not apply this methodology due to the distinct economic 
circumstances that exist there (for example, due to the close proximity 
of almost all of Puerto Rico's various urban areas to 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 2023, we proposed to continue using 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 
previously discussed, the pre-floor, pre-reclassified hospital wage 
index values below 0.8 will be further adjusted by a 15 percent 
increase subject to a maximum wage index value of 0.8. For example, if 
County A has a pre-floor, pre-reclassified hospital wage index value of 
0.3994, we would multiply 0.3994 by 1.15, which equals 0.4593. Since 
0.4593 is not greater than 0.8, then County A's hospice wage index 
would be 0.4593. In another example, if County B has a pre-floor, pre-
reclassified hospital wage index value of 0.7440, we would multiply 
0.7440 by 1.15, which equals 0.8556. Because 0.8556 is greater than 
0.8, County B's hospice wage index would be 0.8.
    The final hospice wage index applicable for FY 2023 (October 1, 
2022 through September 30, 2023) is available on the CMS website at: 
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/Hospice/Hospice-Wage-Index.html.
    We received 8 comments on the proposed FY 2023 hospice wage index 
from various stakeholders including hospices and national industry 
associations. A summary of these comments and our responses to those 
comments are as follows:
    Comment: A few commenters expressed concerns regarding the CBSA 
designation of Montgomery County, Maryland and its associated wage 
index value. These commenters stated that hospices in Montgomery 
County, Maryland are at a disadvantage because they are not included in 
the Washington-Arlington-Alexandria, DC-VA-MD-WV CBSA (CBSA 47894). Two 
commenters requested that CMS reconsider the Frederick-Gaithersburg-
Rockville, Maryland metropolitan division to resolve the hospice 
payment inequity in Montgomery County. Another commenter recommended 
three possible solutions to resolve the wage index issue they believe 
exists in Montgomery County, Maryland. These recommended solutions 
include: CMS assigning the District of Columbia (DC) hospice wage index 
valuation to the Montgomery/Frederick County CBSA; CMS assigning the 
highest wage index valuation from among the MSAs' metropolitan 
divisions, also known as CBSAs, for the purpose of hospice Medicare 
reimbursement; CMS pursuing either option for a time limited period, 
such as 5 years, in order to evaluate the impact on Montgomery County 
hospices.
    Response: We thank the commenters for these recommendations. 
However, we have used CBSAs for determining hospice payments since FY 
2006, and 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. CBSAs provide a uniform 
and consistent basis for determining statistical area delineations, 
based on long-standing statistical standards maintained by OMB. 
Further, OMB conducts periodic review of the standards to ensure their 
continued usefulness and relevance. Additionally, other provider types, 
such as Inpatient Prospective Payment System (IPPS) hospitals, home 
health agencies (HHAs), skilled nursing facilities (SNFs), inpatient 
rehabilitation facilities (IRFs), and dialysis facilities, all use 
CBSAs to define their labor market areas. Therefore, we believe it is 
important to apply this method consistently among providers. Using the 
most current OMB delineations provides an accurate representation of 
geographic variation in wage levels; therefore, we do not believe it 
would be appropriate to allow hospices to be assigned a higher CBSA 
designation or to allow a 5-year limited increase in hospice wage index 
payments for hospices only in the Montgomery County Metropolitan 
Divisions. However, if Montgomery County is ever redesignated into CBSA 
47894, we would propose this change in future rulemaking consistent 
with our longstanding approach of adopting OMB statistical area 
delineations outlined in the most recent OMB bulletins.
    Comment: One commenter stated that the pre-floor, pre-reclassified 
hospital wage index is inadequate for adjusting hospice and home health 
costs, particularly in states that have the nation's highest labor 
costs. The commenter stated that these costs will never be adequately 
addressed if CMS continues to use the pre-floor, pre-reclassified 
hospital wage index to

[[Page 45675]]

adjust hospice and home health costs. Several commenters recommended 
more far-reaching revisions and reforms to the wage index methodology 
used under Medicare fee-for-service, such as instituting a policy that 
no hospice be paid below the rural floor for their state or considering 
a rural floor for hospices that exceed a 3 percent or greater gap 
between their urban versus average rural rate. Other commenters 
recommended that CMS allow hospices and other post-acute providers to 
utilize a reclassification board similar to hospitals. Another 
commenter suggested that CMS revisit MedPAC's 2007 proposal, which 
recommended that the Congress repeal the existing hospital wage index 
statute, including reclassifications and exceptions, and give the 
Secretary authority to establish new wage index systems.
    Response: We appreciate the commenters' recommendations; however, 
these comments are outside the scope of the proposed rule. Any changes 
regarding the adjustment of the hospice payments to account for 
geographic wage differences, beyond the wage index proposals discussed 
in the FY 2023 Hospice Wage Index and Rate Update proposed rule, would 
have to go through notice and comment rulemaking. While CMS and other 
interested parties, such as MedPAC, 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 payment 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 is 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. The hospice floor adjusts pre-
floor, pre-reclassified hospital wage index values below 0.8 by a 15 
percent increase subject to a maximum wage index value of 0.8.
    Final Decision: We are finalizing our proposal to use the FY 2023 
pre-floor, pre-reclassified hospital wage index data as the basis for 
the FY 2023 hospice wage index. The wage index applicable for FY 2023 
is available on our website at https://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/Hospice/Hospice-Wage-Index. The hospice wage 
index for FY 2023 is effective October 1, 2022 through September 30, 
2023.
2. Permanent Cap on Wage Index Decreases
    As discussed in this section, we have proposed and finalized 
temporary transition policies in the past to mitigate significant 
changes to payments due to changes to the hospice wage index. 
Specifically, in the FY 2016 Hospice Wage Index and Payment Rate Update 
final rule (80 FR 47142) we implemented a 50/50 blend for all 
geographic areas consisting of the wage index values using the then-
current OMB area delineations and the wage index values using OMB's new 
area delineations based on OMB Bulletin No. 13-01. In the FY 2021 
Hospice Wage Index final rule (85 FR 47070), we adopted the revised OMB 
delineations with a 5-percent cap on wage index decreases, where the 
estimated reduction in a geographic area's wage index would be capped 
at 5-percent in FY 2021 and no cap would be applied to wage index 
decreases for the second year (FY 2022). As explained, we believed the 
5-percent cap would provide greater transparency and be 
administratively less complex than the prior methodology of applying a 
50/50 blended wage index. We noted that this transition approach struck 
an appropriate balance by providing a transition period to mitigate the 
resulting short-term instability and negative impacts on providers and 
time for them to adjust to their new labor market area delineations and 
wage index values.
    In the FY 2022 Hospice Wage Index and Payment Rate Update final 
rule (86 FR 42541), a few commenters stated that providers should be 
protected against substantial payment reductions due to dramatic 
reductions in wage index values from one year to the next. Because we 
did not propose to modify the transition policy that was finalized in 
the FY 2021 Hospice final rule, we did not extend the transition period 
for FY 2022. In the FY 2022 Hospice final rule, we stated that we 
continued to believe that applying the 5-percent cap transition policy 
in year one provided an adequate safeguard against any significant 
payment reductions associated with the adoption of the revised CBSA 
delineations in FY 2021, allowed for sufficient time to make 
operational changes for future FYs, and provided 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. However, we acknowledged that certain changes to wage 
index policy may significantly affect Medicare payments. In addition, 
we reiterated that our policy principles with regard to the wage index 
include generally using the most current data and information available 
and providing that data and information, as well as any approaches to 
addressing any significant effects on Medicare payments resulting from 
these potential scenarios, in notice and comment rulemaking. With these 
policy principles in mind, we considered for the FY 2023 Hospice 
proposed rule how best to address the potential scenarios about which 
commenters raised concerns; that is, scenarios in which changes to wage 
index policy may significantly affect Medicare payments.
    In the past, we have established transition policies of limited 
duration to phase in significant changes to labor market areas. In 
taking this approach in the past, we sought to mitigate short term 
instability and fluctuations that can negatively impact providers due 
to wage index changes. In accordance with the requirement of our 
regulations at Sec.  418.306(c) each labor market is established using 
the most current hospital wage data available, including any changes 
made by the OMB to the Metropolitan Statistical Areas (MSAs) 
definitions. We have previously stated that, because the wage index is 
a relative measure of the value of labor in prescribed labor market 
areas, we believe it is important to implement new labor market area 
delineations with as minimal a transition as is reasonably possible. 
However, we recognize that changes to the wage index have the potential 
to create instability and significant negative impacts on certain 
providers even when labor market areas do not change. In addition, 
year-to-year fluctuations in an area's wage index can

[[Page 45676]]

occur due to external factors beyond a provider's control, such as the 
COVID-19 public health emergency (PHE), and for an individual provider, 
these fluctuations can be difficult to predict. We also recognize that 
predictability in Medicare payments is important to enable providers to 
budget and plan their operations.
    In light of these considerations, for FY 2023 and subsequent years, 
we proposed to apply a permanent 5-percent cap on any decrease to a 
geographic area's wage index from its wage index in the prior year, 
regardless of the circumstances causing the decline. That is, we 
proposed that a geographic area's wage index for FY 2023 would not be 
less than 95 percent of its final wage index for FY 2022, regardless of 
whether the geographic area is part of an updated CBSA, and that for 
subsequent years, a geographic area's wage index would not be less than 
95 percent of its wage index calculated in the prior FY. We further 
proposed that if a geographic area's prior FY wage index is calculated 
based on the 5-percent cap, then the following year's wage index would 
not be less than 95 percent of the geographic area's capped wage index 
in the prior FY. For example, if a geographic area's wage index for FY 
2023 is calculated with the application of the 5-percent cap, then its 
wage index for FY 2024 would not be less than 95 percent of its capped 
wage index in FY 2023. Likewise, we proposed to make the corresponding 
regulations text changes at Sec.  418.306(c) as follows: starting on 
October 1, 2022, CMS applies a cap on decreases to the hospice wage 
index such that the wage index applied to a geographic area is not less 
than 95 percent of the wage index applied to that geographic area in 
the prior FY. This 5-percent cap on negative wage index changes would 
be implemented in a budget neutral manner through the use of wage index 
standardization factors. Furthermore, the 5-percent cap would be 
applied after the application of the hospice wage index floor. 
Therefore, pre-floor, pre-reclassified hospital wage index values below 
0.8 would be adjusted by the 15 percent increase, subject to a maximum 
wage index value of 0.8. If there is a 5-percent decrease from the 
previous FY's wage index value after the application of the hospice 
wage index floor, then the 5-percent cap on wage index decreases would 
also be applied. We stated that we believe that applying a 5-percent 
cap on all wage index decreases, from the prior year, would have a 
small overall impact on the labor market area wage index system. We 
estimate that applying a 5-percent cap on all wage index decreases, 
from the prior year, will have a very small effect on the wage index 
budget standardization factors for FY 2023. Because the wage index is a 
measure of the value of labor (wage and wage-related costs) in a 
prescribed labor market area relative to the national average, we 
anticipate that most providers will not experience year-to-year wage 
index declines greater than 5-percent in any given year. We believe 
that applying a 5-percent cap on all wage index decreases, from the 
prior year, would continue to maintain the accuracy of the overall 
labor market area wage index system.
    In section III.A.4 of this final rule, we estimate the impact to 
payments for providers in FY 2023 based on this final policy. We also 
note that we would examine the effects of this policy on an ongoing 
basis in the future in order to assess its appropriateness.
    We received 23 comments on the proposed permanent cap on wage index 
decreases. A summary of these comments and our responses to those 
comments are as follows:
    Comment: The majority of commenters expressed support for the 
proposal to cap wage index decreases at 5 percent.
    Response: We thank the commenters for their support of the proposed 
wage index cap policy.
    Comment: MedPAC expressed support for the wage index cap proposal, 
but recommended that the 5-percent cap also extend to wage index 
increases of more than 5 percent, such that no geographic area would 
have its wage index value increase or decrease by more than 5 percent 
in any given year. In addition, MedPAC recommended that the 
implementation of the revised relative wage index values (where changes 
are limited to plus or minus 5 percent) should be done in a budget-
neutral manner.
    Response: We appreciate MedPAC's suggestion that the cap on wage 
index changes of more than 5 percent should also be applied to 
increases in the wage index. However, as we discussed in the proposed 
rule, one purpose of the proposed policy is to help mitigate the 
significant negative impacts of certain wage index changes. As we noted 
in the FY 2023 Hospice proposed rule (87 FR 19447), we believe applying 
a 5-percent cap on all wage index decreases would support increased 
predictability about hospice payments for providers, enabling them to 
more effectively budget and plan their operations. That is, we proposed 
to cap decreases because we believe that a provider would be able to 
more effectively budget and plan when there is predictability about its 
expected minimum level of hospice payments in the upcoming fiscal year. 
We did not propose to limit wage index increases because we do not 
believe such a policy would enable hospices to more effectively budget 
and plan their operations. Rather, we believe it would be more 
appropriate to allow providers that would experience an increase in 
their wage index value to receive the full benefit of their increased 
wage index value.
    Comment: A few commenters recommended lowering the threshold 
percentage of the cap to percentages ranging from 2 percent to 4 
percent. In general, these commenters believe that a more gradual 
approach to lowering the cap would better allow hospices to plan their 
operations. One commenter stated that lowering the threshold of the 
wage index cap would protect hospice providers who are already 
operating with negative operating margins and still experiencing 
multiple negative consequences due to the COVID pandemic, such has 
increased costs and loss of staff. Another commenter recommended that 
CMS finalize the permanent cap on hospice wage index decreases to 2 
percent in a non-budget neutral way.
    Response: We believe that the 5-percent cap on wage index decreases 
is an adequate safeguard against any significant payment reductions and 
that lowering the cap on wage index decreases below 5 percent is not 
appropriate. We also believe that 5 percent is a reasonable level for 
the cap because it would more effectively mitigate any significant 
decreases in a hospice's wage index for future FYs, while still 
balancing the importance of ensuring that area wage index values 
accurately reflect relative differences in area wage levels. 
Additionally, we believe that a 5-percent cap on wage index decreases 
in FY 2023 and beyond is sufficient and provides a degree of 
predictability in payment changes for providers; and it would not be 
appropriate to implement the cap policy in a non-budget neutral manner. 
Our longstanding policy is to apply the wage index standardization 
factors to hospice payments to eliminate the aggregate effect of wage 
index updates and revisions, such as updates in the underlying hospital 
wage data as well as other proposed wage index policies, resulting in 
any wage index changes being budget-neutral in the aggregate. In the FY 
2023 hospice proposed rule (87 FR 19448), we stated that we believe 
that applying a 5-percent cap on all wage index decreases, from the 
prior year, would have a small overall impact

[[Page 45677]]

on the labor market area wage index system. We estimate that applying a 
5- percent cap on all wage index decreases, from the prior year, will 
have a very small effect on the wage index budget standardization 
factors for FY 2023 and we expect the impact to the wage index budget 
neutrality factor in future years will continue to be minimal.
    Comment: A few commenters requested a temporary transition policy 
for providers that saw decreases in their FY 2022 wage indexes. Several 
commenters recommended CMS adopt a transition policy that treats 
affected hospice providers' FY 2023 wage index as if a 5-percent cap 
had also been implemented for FY 2022, while other commenters requested 
that CMS retroactively apply the permanent wage index cap proposal to 
FY 2022 payments.
    Response: We thank commenters for these recommendations. In FY 2021 
rulemaking, CMS proposed and finalized the one-year transition policy 
for FY 2021 only. We have historically implemented 1-year transitions, 
as discussed in the FY 2006 (70 FR 45137) and FY 2016 (80 FR 47142) 
final rules, to address CBSA changes due to substantial updates to OMB 
delineations. Our policy principles with regard to the wage index are 
to use the most current data and information available. Therefore, we 
proposed that the FY 2023 Hospice wage index policy would be 
prospective to mitigate any significant decreases beginning in FY 2023, 
not retroactively.
    As such, we did not calculate or propose the FY 2023 wage index as 
if the cap was in place for 2022. We note that we received comments on 
the FY 2022 proposed rule requesting an extension to the one-year 
transition policy for FY 2021; however, because we did not propose this 
policy, or the wage index standardization factors that we would have 
anticipated such a potential policy proposal to require in the FY 2023 
proposed rule, we did not propose a policy that treats affected hospice 
providers' FY 2023 wage index as if a 5-percent cap had also been 
implemented for FY 2022, or include any data and information that 
warrant the use of a cap for FY 2022 data in order to calculate the FY 
2023 wage index. While such a policy may benefit some providers, it 
would change the wage index standardization factors, and would impact 
the FY 2023 payment rates for all providers without allowing them the 
opportunity to comment.
    Final Decision: CMS is finalizing for FY 2023 and subsequent years 
the application of a permanent 5-percent cap on any decrease to a 
geographic area's wage index from its wage index in the prior year, 
regardless of the circumstances causing the decline. That is, we are 
finalizing our policy that a geographic area's wage index for FY 2023 
would not be less than 95 percent of its final wage index for FY 2022, 
regardless of whether the geographic area is part of an updated CBSA, 
and that for subsequent years, a geographic area's wage index would not 
be less than 95 percent of its wage index calculated in the prior FY. 
We are codifying the permanent cap on wage index decreases in 
regulation at Sec.  418.306(c).
    As previously discussed, we believe this methodology will maintain 
the hospice wage index as a relative measure of the value of labor in 
prescribed labor market areas, increase predictability of hospice 
payments for providers, and mitigate instability and significant 
negative impacts to providers resulting from significant changes to the 
wage index. In section X of this final rule, we estimate the impact to 
payments for providers in FY 2023 based on this policy. We also note 
that we will examine the effects of this policy on an ongoing basis in 
the future in order to assess its appropriateness.
3. FY 2023 Hospice Payment Update Percentage
    Section 4441(a) of the 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 2022 IPPS final rule 
CMS finalized the proposal to rebase and revise the IPPS market baskets 
to reflect a 2018 base year. We refer readers to the FY 2022 IPPS final 
rule for further information (86 FR 45194 through 45208).
    Section 3401(g) of the Affordable Care Act mandated that, starting 
with FY 2013 (and in subsequent FYs), the hospice payment update 
percentage would be annually reduced by changes in economy-wide 
productivity as specified in section 1886(b)(3)(B)(xi)(II) of the Act. 
The statute defines the productivity adjustment to be equal to the 10-
year moving average of changes in annual economy-wide private nonfarm 
business multifactor productivity (MFP) as projected by the Secretary 
for the 10-year period ending with the applicable FY, year, cost 
reporting period, or other annual period) (the ``productivity 
adjustment''). The United States Department of Labor's Bureau of Labor 
Statistics (BLS) publishes the official measures of productivity for 
the United States economy. We note that previously the productivity 
measure referenced in section 1886(b)(3)(B)(xi)(II) was published by 
BLS as private nonfarm business multifactor productivity. Beginning 
with the November 18, 2021 release of productivity data, BLS replaced 
the term ``multifactor productivity'' with ``total factor 
productivity'' (TFP). BLS noted that this is a change in terminology 
only and will not affect the data or methodology. As a result of the 
BLS name change, the productivity measure referenced in section 
1886(b)(3)(B)(xi)(II) of the Act is now published by BLS as ``private 
nonfarm business total factor productivity.'' However, as mentioned, 
the data and methods are unchanged. We refer readers to http://www.bls.gov for the BLS historical published TFP data. A complete 
description of IGI's TFP projection methodology is available on the CMS 
website at https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareProgramRatesStats/MarketBasketResearch. In addition, in the FY 2022 IPPS final rule (86 
FR 45214), we noted that beginning with FY 2022, CMS changed the name 
of this adjustment to refer to it as the ``productivity adjustment'' 
rather than the ``MFP adjustment''.
    In the FY 2023 Hospice Wage Index and Payment Rate Update proposed 
rule (87 FR 19448), we proposed a hospice market basket increase of 3.1 
percent for FY 2023 using the most current estimate of the inpatient 
hospital market basket (based on IHS Global Inc.'s fourth quarter 2021 
forecast with historical data through the third quarter 2021). Due to 
the requirements at sections 1886(b)(3)(B)(xi)(II) and 1814(i)(1)(C)(v) 
of the Act, the proposed inpatient hospital market basket update for FY 
2023 of 3.1 percent was reduced by a productivity adjustment as 
mandated by the Affordable Care Act (estimated in the proposed rule to 
be 0.4 percentage point for FY 2023). Therefore, the proposed hospice 
payment update percentage for FY 2023 was 2.7 percent.
    We stated that 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

[[Page 45678]]

inpatient hospital market basket update and productivity adjustment), 
we would use such data, if appropriate, to determine the hospice 
payment update percentage for FY 2023 in the final rule. For this final 
rule, based on IHS Global Inc.'s (IGI) second quarter 2022 forecast 
with historical data through the first quarter 2022 of the inpatient 
hospital market basket update, the market basket percentage increase 
for FY 2023 is 4.1 percent. The productivity adjustment for FY 2023, 
based on IGI's second quarter 2022 forecast, is 0.3 percent. Therefore, 
the hospice payment update percentage for FY 2023, based on more recent 
data, is 3.8 percent.
    We continue to believe it is appropriate to routinely update the 
hospice payment system so that it reflects the best available data 
about differences in patient resource use and costs among hospices as 
required by the statute. Therefore, we proposed to: (1) update hospice 
payments using the methodology outlined and apply the 2018-based IPPS 
market basket update for FY 2023 of 4.1 percent, reduced by the 
statutorily required productivity adjustment of 0.3 percentage point 
along with the wage index budget neutrality adjustment to update the 
payment rates; and (2) use the FY 2023 hospice wage index which uses 
the FY 2023 pre-floor, pre-reclassified IPPS hospital wage index as its 
basis.
    In the FY 2022 Hospice Wage Index final rule (86 FR 42532 through 
42539), we rebased and revised the labor shares for RHC, CHC, GIP and 
IRC using MCR data for freestanding hospices (CMS Form 1984-14, OMB 
Control Number 0938-0758) from 2018. The current labor portion of the 
payment rates are: for RHC, 66.0 percent; for CHC, 75.2 percent; for 
GIP, 63.5 percent; and for IRC, 61.0 percent. The non-labor portion is 
equal to 100 percent minus the labor portion for each level of care. 
The non-labor portion of the payment rates are as follows: for RHC, 
34.0 percent; for CHC, 24.8 percent; for GIP, 36.5 percent; and for 
IRC, 39.0 percent.
    We received 28 comments on the proposed hospice update percentage 
of 2.7 percent. A summary of the comments and our responses to those 
comments are as follows:
    Comment: One commenter expressed support for the 2.7 percent 
payment update and the 2-percentage point reduction for hospices that 
do not provide quality data.
    Response: We thank the commenter for their support of the hospice 
payment update percentage.
    Comment: MedPAC stated that while the commission recognizes that 
CMS is required by statute to propose an increase to the FY 2023 base 
rates by 2.7 percent, they recommend no update to the FY 2022 payment 
rates for FY 2023 (that is, hold the payment rates for FY 2023 at the 
FY 2022 levels).
    Response: We thank the commission for their recommendation; 
however, we are statutorily required to update the payment rates for FY 
2023 and do not have the authority to hold the payment rates to FY 2022 
levels. Section 1814(i)(1)(C)(iii) of the Act requires the Secretary, 
for years subsequent to the first FY in which payment revisions 
described in paragraph (6)(D) are implemented, to update the payment 
rates by the market basket percentage increase (as defined in section 
1886(b)(3)(B)(iii)) of the Act for the FY; section 1814(i)(1)(C)(iv)(I) 
of the Act requires that subsequent to such increase, the payment rates 
be reduced by the productivity adjustment described in section 
1886(b)(3)(B)(xi)(II) of the Act.
    Comment: Many commenters expressed concerns about the proposed 2.7 
percent payment rate update, especially when the 2 percent 
sequestration resumes in July 2022. Commenters stated hospice providers 
have incurred increased costs due to inflation and a health care 
workforce shortage, which is driving up the cost to hire and retain 
qualified staff. Several commenters stated hospices have also continued 
to incur costs to address the COVID-19 PHE, including for personal 
protective equipment and other infection control efforts. Several 
commenters noted the increase in gas prices and its impact on hospices, 
given the preponderance of home-based care delivery.
    Several commenters noted that CMS stated that if more recent data 
became available after the publication of the proposed rule and before 
the publication of the final rule, it would consider such data to 
determine the hospice payment update percentage for FY 2023 in the 
final rule. They encouraged CMS to review the data carefully and 
exercise its flexibilities to more accurately determine adjustments to 
the hospice payment rates to account for inflation, ensuring adequate 
reimbursement.
    Other commenters encouraged CMS to finalize a payment rate increase 
reflective of the current cost of care recommending that CMS pursue all 
possible administrative options available and provide a higher payment 
update for FY 2023. One commenter stated that to the extent CMS is 
restricted by statutory formulas for updating hospice payments, they 
recommend CMS work with the Congress to effectuate a higher, more 
sustainable hospice payment update percentage for FY 2023. Several 
commenters stated that if CMS is considering other alternatives to the 
hospital rate update that would take into account costs and challenges 
due to the COVID-19 PHE and inflation, then CMS should consider 
applying these same updates to the hospice rates. Commenters also 
requested CMS examine trends relative to IHS Global Inc.'s forecasts to 
determine whether more recently available data used for the final FY 
2023 rule would result in a higher market basket update and determine 
whether additional updates could be made during the course of FY 2023 
to provide additional support to hospice and other providers.
    Response: Section 1814(i)(1)(C) of the Act, requires hospice 
payment rates be updated by the inpatient hospital market basket update 
and reduced by a productivity adjustment as mandated by the Affordable 
Care Act.
    As described in the FY 2022 IPPS final rule (86 FR 45194 through 
45214), the IPPS market basket is a fixed-weight, Laspeyres-type index 
that measures price changes over time of the mix of goods and services 
that hospitals purchase (hospital inputs) to furnish inpatient care. It 
would not reflect increases in costs associated with changes in the 
volume or intensity of input goods and services. As such, the IPPS 
market basket update would reflect the prospective price pressures 
described by the commenters as increasing during a high inflation 
period (such as faster wage growth or higher energy prices), but would 
not reflect other factors that might increase the level of costs, such 
as the quantity of labor used.
    We agree with the commenters that recent higher inflationary trends 
have impacted the outlook for price growth over the next several 
quarters. At the time of the FY 2023 hospice proposed rule, based on 
IHS Global Inc. fourth quarter 2021 forecast with historical data 
through third quarter 2021, IHS Global Inc. forecasted the 2018-based 
IPPS market basket update of 3.1 percent for FY 2023 reflecting 
forecasted compensation price growth of 3.8 percent (by comparison, 
compensation price growth in the IPPS market basket averaged 2.1 
percent over the 2012-2021 time period). In the FY 2023 Hospice 
proposed rule, we proposed that if more recent data became available, 
we would use such data, if appropriate, to derive the final FY 2023 
hospice payment update for the final rule. For this final rule, we now 
have an updated forecast of the price proxies

[[Page 45679]]

underlying the market basket that incorporates more recent historical 
data and reflects a revised outlook regarding the United States economy 
and expected price inflation for FY 2023 for IPPS hospitals. Based on 
the IHS Global Inc. second quarter 2022 forecast with historical data 
through first quarter 2022, we are projecting a FY 2023 IPPS market 
basket update of 4.1 percent (reflecting forecasted compensation price 
growth of 4.8 percent) and productivity adjustment of 0.3 percentage 
point. Therefore, for FY 2023 a final hospice payment update of 3.8 
percent (4.1 percent less 0.3 percentage point) will be applicable, 
compared to 2.7 percent as proposed. We note that the final FY 2023 
IPPS market basket growth rate of 4.1 percent would be the highest 
market basket update implemented in an IPPS final rule going back to FY 
1998.
    Comment: A few commenters requested that CMS consider updating the 
base year for the hospital IPPS market basket from the current base 
year of 2018 to a more current base year. The commenter stated that 
this update will more accurately reflect the cost structure of hospital 
IPPS during the pandemic for inflationary adjustments to be applied 
against within the hospice wage index formula. One commenter noted that 
while they recognize that more recent final data may not yet be 
available, it should be clear that providers' cost structures have 
changed since 2018, including changes in operations that have been 
required as a result of the COVID-19 PHE.
    Response: The CMS market baskets are fixed-weight, Laspeyres-type 
indexes in that they measure ``pure'' price changes only. Any changes 
in the quantity or mix of goods and services (that is, intensity) 
purchased over time are not measured. Changes in quantity or mix of 
goods and services do eventually get incorporated into the market 
basket cost weights when it is rebased. Therefore, we rebase the market 
baskets periodically so that the cost weights reflect more recent 
purchases of goods and services used by providers to furnish medical 
care. The IPPS market basket was last rebased in the FY 2022 IPPS final 
rule using 2018 Medicare cost reports (86 FR 45194 through 45207), the 
most recent year of complete data available at the time of the 
rebasing. We did not propose to rebase the IPPS market basket in the FY 
2023 IPPS proposed rule. However, we did review the most recent 
Medicare cost report (MCR) data available for IPPS hospitals submitted 
as of March 2022, which includes data for 2019 through 2020. The MCR 
data for 2019 showed little change in the reported cost weights and MCR 
data for 2020 showed a slight decrease in the compensation cost weight 
(roughly 1 percentage point) relative to the 2018-based IPPS market 
basket cost weight. Data through 2021 are incomplete at this time. 
Based on this preliminary analysis, the impact on the cost weights 
through 2020 are minimal and it is unclear whether these trends 
(particularly the compensation cost weight) through 2020 are reflective 
of sustained shifts in the cost structure for hospitals or whether they 
were temporary as a result of the COVID-19 PHE. Therefore, we continue 
to believe it is premature at this time to use more recent MCR data to 
derive a rebased and revised IPPS market basket. We will continue to 
monitor these data and any changes to the IPPS market basket will be 
proposed in future rulemaking.
    Final Decision: We are finalizing the hospice payment update 
percentage of 3.8 percent for FY 2023. Based on IHS Global, Inc.'s more 
recent forecast of the inpatient hospital market basket update and the 
productivity adjustment, the hospice payment update percentage for FY 
2023 will be 3.8 percent for hospices that submit the required quality 
data and 1.8 percent (FY 2023 hospice payment update of 3.8 percent 
minus 2 percentage points) for hospices that do not submit the required 
data.
4. FY 2023 Hospice Payment Rates
    There are four payment categories that are distinguished by the 
location and intensity of the hospice services provided. The base 
payments are adjusted for geographic differences in wages by 
multiplying the labor share, which varies by category, of each base 
rate by the applicable hospice wage index. A hospice is paid the RHC 
rate for each day the beneficiary is enrolled in hospice, unless the 
hospice provides CHC, IRC, or GIP. CHC is provided during a period of 
patient crisis to maintain the patient at home; IRC is short-term care 
to allow the usual caregiver to rest and be relieved from caregiving; 
and GIP is to treat symptoms that cannot be managed in another setting.
    As discussed in the FY 2016 Hospice Wage Index and Rate Update 
final rule (80 FR 47172), we implemented two different RHC payment 
rates: (1) RHC rate for the first 60 days; and (2) RHC rate for days 61 
and beyond. In addition, in that final rule, we implemented an SIA 
payment for RHC when direct patient care is provided by an RN or social 
worker during the last 7 days of the beneficiary's life. The SIA 
payment is equal to the CHC hourly rate multiplied by the hours of 
nursing or social work provided (up to 4 hours total) that occurred on 
the day of service, if certain criteria are met. In order to maintain 
budget neutrality, as required under section 1814(i)(6)(D)(ii) of the 
Act, the new RHC rates were adjusted by a service intensity add-on 
budget neutrality factor (SBNF). The SBNF is used to reduce the overall 
RHC rate in order to ensure that SIA payments are budget-neutral. At 
the beginning of every FY, SIA utilization is compared to the prior 
year in order calculate a budget neutrality adjustment.
    In the FY 2017 Hospice Wage Index and Rate Update final rule (81 FR 
52156), we initiated a policy of applying a wage index standardization 
factor to hospice payments to eliminate the aggregate effect of annual 
variations in hospital wage data. Typically, the wage index 
standardization factor is calculated using the most recent, complete 
hospice claims data available. However, due to the COVID-19 PHE, in the 
FY 2022 Hospice Wage Index and Payment Rate Update proposed rule we 
looked at using hospice claims data before the declaration of the 
COVID-19 PHE (FY 2019) to determine if there were significant 
differences between utilizing 2019 and 2020 claims data. The difference 
between using FY 2019 and FY 2020 hospice claims data was minimal. 
Therefore, in the FY 2022 Hospice Wage Index and Payment Rate Update 
final rule (86 FR 42543), we stated that we would continue our practice 
of using the most recent, complete hospice claims data available. For 
FY 2023 hospice rate setting, we saw minimal differences in using the 
updated data; therefore, we are continuing our longstanding policy of 
using the most recent data available. Specifically, we are using FY 
2021 claims data with the FY 2023 payment rate updates. In order to 
calculate the wage index standardization factor, we simulate total 
payments using FY 2021 hospice utilization claims data with the FY 2022 
wage index (pre-floor, pre-reclassified hospital wage index with the 
hospice floor, without the 5-percent cap on wage index decreases) and 
FY 2022 payment rates and compare it to our simulation of total 
payments using the FY 2023 hospice wage index (pre-floor, pre-
reclassified hospital wage index with hospice floor, with the 5-percent 
cap on wage index decreases) and FY 2022 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 2022 wage index and payment rates for 
each level

[[Page 45680]]

of care by the FY 2023 wage index and FY 2022 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 1 and 2.
    The FY 2023 RHC rates are shown in Table 1. The FY 2023 payment 
rates for CHC, IRC, and GIP are shown in Table 2.
[GRAPHIC] [TIFF OMITTED] TR29JY22.642

[GRAPHIC] [TIFF OMITTED] TR29JY22.643

    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 Rate Update final rule 
(76 FR 47320 through 47324), we implemented a HQRP as required by those 
sections. Hospices were required to begin collecting quality data in 
October 2012 and submit those 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 
2023 rates for hospices that do not submit the required quality data 
would be updated by the FY 2023 hospice payment update percentage of 
3.8 percent minus 2 percentage points. These rates are shown in Tables 
3 and 4.

[[Page 45681]]

[GRAPHIC] [TIFF OMITTED] TR29JY22.644

[GRAPHIC] [TIFF OMITTED] TR29JY22.645

    Final Decision: We are finalizing the FY 2023 payment rates in 
accordance with statutorily mandated requirements.
5. Hospice Cap Amount for FY 2023
    As discussed in the FY 2016 Hospice Wage Index and Rate Update 
final rule (80 FR 47183), we implemented changes mandated by the IMPACT 
Act of 2014 (Pub. L. 113-185). Specifically, we stated that 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. Division CC, section 404 of the 
CAA 2021 extended the accounting years impacted by the adjustment made 
to the hospice cap calculation until 2030. In the FY 2022 Hospice Wage 
Index final rule (86 FR 42539), we finalized conforming regulations 
text changes at Sec.  418.309 to reflect the provisions of the CAA 
2021. Therefore, for accounting years that end after September 30, 2016 
and before October 1, 2030, the hospice cap amount is updated by the 
hospice payment update percentage rather than using the CPI-U.
    The hospice cap amount for the FY 2023 cap year is $32,486.92, 
which is equal to the FY 2022 cap amount ($31,297.61) updated by the FY 
2023 hospice payment update percentage of 3.8 percent.
    We received few comments regarding the hospice cap amount. A 
summary of these comments and our responses to those comments are as 
follows:
    Comment: MedPAC recommended that the hospice aggregate cap be wage 
adjusted and reduced by 20 percent. Another commenter recommended 
several refinements to the cap including: wage adjusting the cap to 
address wage variation in a budget neutral manner, phasing in the 
adjustment over multiple years to minimize the potential impact on 
access to care and to allow the most negatively impacted areas of the 
country to adjust; and limiting variation in the wage index applicable 
to the cap (creating a ``floor''

[[Page 45682]]

and a ``ceiling'') to protect hospice providers from the significant 
swings that can accompany wage index changes from year to year, 
ensuring the cap value remains more consistent. One commenter stated 
that they would support a cap structure that aligns with hospices 
taking risk, but that also considers high inflationary factors. This 
commenter believes that CMS should align payment to account for these 
factors.
    Response: We thank the commenters for their recommendations to 
improve the hospice cap; however, we are required by law to update the 
hospice cap amount from the preceding year by the hospice payment 
update percentage, in accordance with section 1814(i)(2)(B)(ii) of the 
Act. Therefore, we do not have the statutory authority to reduce the 
aggregate cap amount nor the statutory authority to wage-adjust the 
cap.
    Final Decision: We are finalizing the update to the hospice cap 
amount for FY 2023 in accordance with statutorily mandated 
requirements.

B. Updates to the Hospice Quality Reporting Program (HQRP)

1. Background and Statutory Authority
    The HQRP specifies reporting requirements for the Hospice Item Set 
(HIS), administrative data, and Consumer Assessment of Healthcare 
Providers and Systems (CAHPS[supreg]) Hospice Survey. Section 
1814(i)(5) of the Act requires the Secretary to establish and maintain 
a quality reporting program for hospices. Section 1814(i)(5)(A)(i) of 
the Act was amended by section 407(b) of Division CC, Title IV of the 
CAA 2021 (Pub. L. 116-260) to change the payment reduction for failing 
to meet hospice quality reporting requirements from 2 to 4 percentage 
points. This policy will apply beginning with FY 2024 annual payment 
update (APU) that is based on CY 2022 quality data. Specifically, the 
Act requires that, beginning with FY 2014 through FY 2023, the 
Secretary shall reduce the market basket update by 2 percentage points 
and beginning with the FY 2024 APU and for each subsequent year, the 
Secretary shall reduce the market basket update by 4 percentage points 
for any hospice that does not comply with the quality data submission 
requirements for that FY. Since this payment penalty increase to 4 
percent is statutorily required and self-implementing, we cannot 
address comments on this topic.
    Depending on the amount of the annual update for a particular year, 
a reduction of 2 percentage points through FY 2023 or 4 percentage 
points beginning in FY 2024 could result in the annual market basket 
update being less than zero percent for a FY and may result in payment 
rates that are less than payment rates for the preceding FY. A 
reduction of 2 percentage points through FY 2023 or 4 percentage points 
beginning in FY 2024 based on failure to comply with the reporting 
requirements, as required by section 1814(i)(5)(B) of the Act, would 
apply only for the specified year. Typically, about 18 percent of 
Medicare-certified hospices are found non-compliant with the HQRP 
reporting requirements and subject to the APU payment reduction for a 
given fiscal year.
    In the FY 2022 Hospice Wage Index and Payment Rate Update final 
rule (86 FR 42552), we finalized two new measures using claims data: 
(1) Hospice Visits in the Last Days of Life (HVLDL); and (2) Hospice 
Care Index (HCI). We also finalized a policy that claims-based measures 
will use 8 quarters of data in order to report on more hospices. In 
addition, we removed the seven Hospice Item Set (HIS) Process Measures 
from the program as individual measures and public reporting because 
the HIS Comprehensive Assessment Measure (NQF #3235) is sufficient for 
measuring care at admission without the seven individual process 
measures. For a detailed discussion of the historical use for measure 
selection and removal for the HQRP quality measures, we refer readers 
to the FY 2016 Hospice Wage Index and Rate Update final rule (80 FR 
47142) and the FY 2019 Hospice Wage Index and Rate Update final rule 
(83 FR 38622). In the FY 2022 Hospice Wage Index and Rate Update final 
rule (86 FR 42553), we finalized Sec.  418.312(b)(2), which requires 
hospices to provide administrative data, including claims-based 
measures, as part of the HQRP requirements for Sec.  418.306(b). In 
that same final rule, we provided CAHPS Hospice Survey updates. We 
finalized temporary changes to our public reporting policies based on 
the March 27, 2020 memorandum \3\ and provided another tip sheet, 
referred to as the Second Edition HQRP Public Reporting Tip Sheet on 
the HQRP Requirements and Best Practices web page.
---------------------------------------------------------------------------

    \3\ Exceptions and Extensions for Quality Reporting Requirements 
for Acute Care Hospitals, PPS-Exempt Cancer Hospitals, Inpatient 
Psychiatric Facilities, Skilled Nursing Facilities, Home Health 
Agencies, Hospices, Inpatient Rehabilitation Facilities, Long-Term 
Care Hospitals, Ambulatory Surgical Centers, Renal Dialysis 
Facilities, and MIPS Eligible Clinicians Affected by COVID-19. 
Available at: https://www.cms.gov/files/document/guidance-memo-exceptions-and-extensions-quality-reporting-and-value-based-purchasing-programs.pdf.
---------------------------------------------------------------------------

    As finalized in the FY 2022 Hospice Wage Index and Payment Rate 
Update final rule (86 FR 42552), the inaugural display of the two new 
claims-based quality measures (QMs), the Hospice Visits in Last Days of 
Life (HVLDL) and the Hospice Care Index (HCI) will be available on the 
Care Compare/Provider Data Catalogue (PDC) web pages. In the FY 2023 
Hospice proposed rule, we did not propose any new quality measures. 
However, we provide updates on already-adopted measures. Table 5 shows 
all quality measures finalized in the FY 2022 Hospice Wage Index and 
Payment Rate Update final rule and in effect for the FY 2023 HQRP.

[[Page 45683]]

[GRAPHIC] [TIFF OMITTED] TR29JY22.646

2. Hospice Outcomes & Patient Evaluation (HOPE) Update
    As finalized in the FY 2020 Hospice Wage Index and Payment Rate 
Update and Hospice Quality Reporting Requirements final rule (84 FR 
38484), we are developing a hospice patient assessment instrument 
identified as HOPE. HOPE would contribute to the patient's plan of care 
through patient assessments ongoing throughout the hospice stay. HOPE 
is intended to support the hospice conditions of participation (CoPs), 
including hospices' quality assessment and performance improvement 
(QAPI) programs and provide quality data to calculate outcome and other 
types of quality measures. Our primary objectives for HOPE are to 
provide quality data for the HQRP requirements through standardized 
data collection; support survey and certification processes; and 
provide additional clinical data that could inform future payment 
refinements.
    HOPE would include key items from the HIS and demographics like 
gender and race. Some HIS items would be modified for inclusion in HOPE 
to increase specificity. This approach to include key demographic 
information reflects stakeholder feedback discussed in the FYs 2017 and 
2018 Hospice Wage Index and Payment Rate Update final rules (81 FR 
52171 and 82 FR 36669, respectively).
    HOPE is multidisciplinary: the assessment instrument would be 
completed by nursing, social work, and spiritual care staff. We are 
undergoing testing with three distinct disciplinary assessments in beta 
field testing described in this section. We stated in the FY 2022 
Hospice Wage Index and

[[Page 45684]]

Payment Update final rule (86 FR 42528) that while the standardized 
patient assessment data elements for certain post-acute care providers 
required under the IMPACT Act of 2014 are not applicable to hospices, 
it would be reasonable to include some of those standardized elements 
that appropriately and feasibly apply to hospice to the extent 
permitted by our statutory authority. Some patients may move through 
the healthcare system to hospice. Therefore, considering tracking key 
demographic and social risk factor items that apply to hospice could 
support our goals for continuity of care, overall patient care and 
well-being, interoperability of electronic health information, and 
health equity that is also discussed in this rule.
    The draft of HOPE has undergone cognitive, pilot, and alpha 
testing, and is undergoing national beta field testing to establish 
reliability, validity, and feasibility of the assessment instrument. 
The purpose of the alpha test was to establish preliminary reliability 
and validity of the draft assessment items, and feasibility of 
implementing future requirements for hospices to utilize the HOPE 
assessment. Specifically, the objectives were to:
     Establish inter-rater reliability (IRR) of the assessment 
items.
     Demonstrate validity of the assessment items.
     Demonstrate feasibility of completing the assessment and 
time points during the hospice stay for data collection.
    HOPE alpha testing was completed at the end of January 2021. Based 
on the quantitative data analyses and feedback from assessors in alpha 
testing, the items generally support the feasibility of collecting the 
data items. Alpha testing also showed that HOPE exhibited acceptable 
inter-rater reliability ranging from moderate to very good with few 
exceptions and demonstrated evidence of convergent validity. We used 
findings of the alpha test to inform decisions about the next draft of 
the HOPE assessment, which are being tested in the national beta test 
that began in late fall 2021 and will continue through 2022.
    National beta testing allows us to obtain input from participating 
hospice teams about the assessment instrument and field testing to 
refine and support the final draft items and assessment time points for 
HOPE. It also allows us to estimate the time to complete the HOPE data 
items. We anticipate proposing HOPE in future rulemaking after testing 
and analyses are complete.
    We continue HOPE development in accordance with the Blueprint for 
the CMS Measures Management System. HOPE development is grounded in 
information gathering activities to identify and refine hospice 
assessment domains and candidate assessment items. We appreciate the 
industry's and national associations' engagement in providing input 
through information sharing activities, including listening sessions, 
expert interviews, key stakeholder interviews, and focus groups to 
support HOPE development. As CMS proceeds with field testing HOPE, we 
will continue to engage with stakeholders through sub-regulatory 
channels. In particular, we will continue to host HQRP Forums to allow 
hospices and other interested parties to engage with us on the latest 
updates and ask questions on the development of HOPE and related 
quality measures. We also have a dedicated email account, 
[email protected], for comments about HOPE.
    We will use field test results to create a final version of HOPE to 
propose in future rulemaking for national implementation. We will 
continue to engage all stakeholders throughout this process that 
includes a variety of sub-regulatory channels and regular HQRP 
communication strategies, such as Open Door Forums (ODF), Medicare 
Learning Network (MLN), CMS.gov website announcements, listserv 
messaging, and other ad hoc publicly announced opportunities. We 
appreciate the support for HOPE and reiterate our commitment to 
providing updates and engaging stakeholders through sub-regulatory 
means. HOPE updates can be found at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Hospice-Quality-Reporting/HOPE and engagement opportunities, including those regarding 
HOPE are at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Hospice-Quality-Reporting/Hospice-QRP-Provider-Engagement-Opportunities.
    We received many comments related to HQRP. A summary of these 
comments and our responses to those comments as it relates to the HOPE 
update are as follows:
    Comment: Commenters were generally supportive of HOPE and ongoing 
beta testing. Many commenters asked CMS to release additional 
information on HOPE, including reports and data, ahead of the official 
proposal to allow time for education, programming, and implementation 
of HOPE. Specifically, commenters asked for information regarding the 
timeline for HOPE implementation. There were numerous suggestions that 
HOPE could include health equity and social determinants of health 
(SDOH) data points, including those to support a structural health 
equity measure and assist hospices in assessing their own progress on 
health equity goals. One comment suggested HOPE as an opportunity to 
collect uniform self-reported data to support a future health equity 
structural measure.
    A few comments raised concerns about the potential additional 
regulatory burden of HOPE, such as duplicative documentation. Another 
comment suggested HOPE leverage certified health IT capabilities to 
reduce administrative burden. Some comments noted concerns about 
conducting beta testing during the COVID-19 pandemic, stating that 
staffing concerns have exacerbated the administrative burden of HOPE 
beta testing. There was one comment suggesting the inclusion of 
occupational therapy practitioners among the providers who can complete 
HOPE assessments.
    Response: We appreciate all stakeholders' input regarding HOPE 
development, and will take these comments into consideration for future 
rulemaking. We are committed to developing and implementing HOPE with a 
minimum burden to stakeholders. Additional information about HOPE will 
be presented to the public via sub-regulatory means, such as ODFs, 
Hospice Quality Reporting Program Forums, our HQRP web page, and other 
appropriate communications. We will propose HOPE in future rulemaking.
3. Update on Future Quality Measure (QM) Development
    In the FY 2020 Hospice Wage Index and Payment Rate Update final 
rule (84 FR 38484), we provided updates related to CMS's process for 
identifying high priority areas of quality measurement and improvement 
and for developing quality measures that address those priorities. 
Information on the current HQRP quality measures can be found at: 
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Hospice-Quality-Reporting/Current-Measures. In this final 
rule, we provide updates for hospice quality measure concepts based on 
future use of HOPE and administrative data. In section III.B.6, we 
summarize the public comments from hospices on the Request for 
Information (RFI) related to their health equity initiatives and a 
structural composite measure concept to inform future measure 
development.
    To support new measure development, our contractor convened two 
technical expert panel (TEP)

[[Page 45685]]

meetings in 2021. The TEP considered HOPE-based process measures that 
may be proposed with HOPE in future rulemaking. The TEP meetings in 
2021 included HOPE-based process measures intended to: (1) evaluate the 
rate at which hospices' use specific processes of care; (2) assist in 
reducing variation in care delivery; and (3) determine hospices' 
compliance with practices that are expected to improve outcomes. The 
TEP also considered potential areas for future quality measure 
development. We refer readers to the ``2021 Technical Expert Panel 
Meetings: Hospice Quality Reporting Program Summary Report'' available 
at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Hospice-Quality-Reporting/Hospice-QRP-Provider-Engagement-Opportunities.
    As stated in the FY 2022 Hospice Wage Index and Rate Update final 
rule (86 FR 42528), We continue to consider developing hybrid quality 
measures that could be calculated from multiple data sources: for 
example, claims, assessments (HOPE), or other data sources. Hybrid 
quality measures allow for a more comprehensive set of information 
about care processes and outcomes than can be calculated using claims 
data alone. As described in the ``2021 Technical Expert Panel Meetings: 
Hospice Quality Reporting Program Summary Report,'' the TEP discussed 
hybrid concepts such as hospitalizations during a hospice election and 
patterns of live discharge using claims data and HOPE data elements.
    We received several comments regarding the update on future QM 
development. A summary of these comments and our responses to those 
comments are as follows:
    Comment: Several commenters suggested CMS develop measures to 
monitor hospice telehealth services and to add telehealth to claims. 
Some commenters indicated that existing measures, such as the claims-
based HVLDL should be modified to recognize telehealth.
    Other commenters suggested that CMS develop or revise quality 
measures to better reflect how hospices meet patient care goals. These 
suggestions included new quality measures for advance care planning and 
patient-reported measures related to how much patients felt understood 
and whether patients received the pain help they wanted. Related to 
these care goals and for future quality measure consideration, 
commenters seek to recognize visits by the full interdisciplinary care 
team, add spiritual care to claims, and consider occupational therapy 
and/or include it in the NQF #3235, the HIS Comprehensive Assessment 
Measure.
    Commenters also recommended changes to the existing HVLDL measure, 
such as revising the specifications to recognize more hospice 
disciplines, including telehealth visits, or changing the timeframe the 
measure reflects.
    In addition, commenters suggested changes to the existing HCI 
measure, such as differentiating when patients refuse provider visits 
from when providers fail to offer visits, or changing the timeframe of 
the ``Visits Near Death'' indicator.
    Commenters made suggestions regarding how future QMs should be 
designed. These suggestions included considerations for hybrid measures 
and requests for more clarity on how CMS determines if proposed 
measures address quality of care. Other commenters emphasized the 
importance of minimizing the administrative burden of new quality 
measure implementation and data collection.
    Response: We appreciate the input regarding quality measure 
development, and will take these comments into consideration for future 
QM development initiatives. We are committed to the Meaningful Measures 
Initiative (https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityInitiativesGenInfo/CMS-Quality-Strategy) 
and Measures Management System Blueprint (https://mmshub.cms.gov/blueprint-measure-lifecycle-overview) that informs and guides quality 
measure development priorities and processes.
4. Updates to the CAHPS Hospice Survey Participation Requirements for 
the FY 2023 APU and Subsequent Years
a. Background and Description of the CAHPS Hospice Survey
    The CAHPS Hospice Survey is a component of the CMS HQRP, which is 
used to collect data on the experiences of hospice patients and the 
primary caregivers listed in their hospice records. We refer readers 
who may want more information about the development of the survey, 
originally called the Hospice Experience of Care Survey to see our 
discussions of the survey in the FY 2015 Hospice Wage Index final rule 
(79 FR 50452, 50491) and the FY 2014 Hospice Wage Index final rule (78 
FR 48234, 48261).).
b. Overview of the ``CAHPS Hospice Survey Measures''
    The CAHPS Hospice Survey measures were re-endorsed by NQF on 
November 20, 2020. The re-endorsement can be found on the NQF website 
at: https://www.qualityforum.org/Measures_Reports_Tools.aspx. The 
survey received its initial NQF endorsement on October 26, 2016 (NQF 
#2651). We adopted 8 survey-based measures for the CY 2018 data 
collection period and for subsequent years. These eight measures are 
publicly reported on a designated CMS website, Care Compare, https://www.medicare.gov/care-compare/.
c. CAHPS Hospice Survey Mode Experiment
    CMS recently conducted a mode experiment with the goal of testing 
the effects of adding a web-based mode to the CAHPS Hospice Survey. We 
are examining the impact of a web-based mode on survey response rates 
and scores. The survey currently has three approved modes without any 
web component (mail, telephone, and mail with telephone follow-up). In 
addition, the test will allow for examination of the effects of a 
shortened survey (that is, removing existing survey items) on response 
rate and scores; assessment of the measure properties of a limited 
number of supplemental survey items suggested by stakeholders; and 
calculation of item-level mode adjustments for the shortened survey in 
the currently-approved modes of CAHPS Hospice Survey administration, as 
well as the proposed new web-based mode.
    The mode experiment design applied all of the existing CAHPS 
Hospice Survey eligibility criteria, and sampled patients/caregivers 
across five arms. The first arm tested a new web-mail mode, in which 
invitations to the web survey were sent by email to those with email 
addresses. The email was personalized to the respondent and included a 
link to the web version of the survey, which can be completed on either 
a computer or a mobile device such as a smartphone or tablet. If the 
respondent did not complete the web survey after one week, or did not 
have a valid email address in which to send an email, up to two surveys 
were sent by mail. This arm used a shortened version of the CAHPS 
Hospice Survey.
    In the next three arms, the shortened version of the CAHPS Hospice 
Survey instrument was administered in the three currently-approved 
modes: mail only; telephone-only; and mixed mode (mail with telephone 
follow up). The fifth arm, in which the current survey instrument was 
administered via mail only served as a comparison for all other arms. 
Across all arms, half of sampled caregivers received a pre-notification 
letter to examine the effects of such a letter on response rates.

[[Page 45686]]

    Overall (across the five arms), CMS sampled 15,000 eligible 
caregivers from around 50 hospices over a six- to seven-month period. 
Caregivers were randomized within each hospice to one of the five arms.
    We continue to analyze the results of the mode experiment and will 
keep stakeholders informed on any plans for changes to the survey 
content or administration options through our regular stakeholder 
communication channels. In this final rule, there are no changes to the 
administration procedures or content for the CAHPS Hospice Survey. Any 
changes to the CAHPS Hospice Survey will be proposed in future 
rulemaking.
    We received several comments regarding the CAHPS Hospice Survey 
Mode Experiment. A summary of these comments and our responses to those 
comments are as follows:
    Comment: Most commenters support the development and testing of a 
web-based mode and a shortened version of the CAHPS Hospice Survey.
    Response: We appreciate the support of a web-based mode of survey 
administration and shorter CAHPS Hospice Survey instrument. Currently, 
CMS is completing analyses of data collected through a field test that 
included the web-based mode of survey administration and revisions to 
the survey. If and when a web-based mode is made available as one of 
the approved modes of CAHPS Hospice Survey administration, hospices 
would continue to have the option to choose among all approved modes 
(that is, web-based mode would not be required). Prior to introducing a 
revised survey instrument and/or new approved mode of administration, 
CMS will release detailed information regarding proposed changes to 
survey instrument content, survey administration protocols, and data 
adjustment procedures needed to promote fair comparisons between 
hospices selecting different modes of survey administration.
    Comment: Some commenters stated that CMS should examine the CAHPS 
Hospice Survey to ensure questions are appropriate for ethnically 
diverse families and provide information that can be used to address 
health equity.
    Response: We will continue to use data from hospices participating 
in the CAHPS Hospice Survey to assess how care experiences vary for 
subpopulations across hospices. In 2021, CMS conducted an experiment of 
a revised version of the CAHPS Hospice Survey that included new survey 
questions designed to assess cultural sensitivity of care and identify 
disparities in care by race and ethnicity. We will share information 
about the results of this test as it becomes available.
    Comment: Some commenters stated that CMS should compare response 
rates to the CAHPS Hospice Survey and other CAHPS surveys for non-
English speaking individuals to assess whether these rates vary from 
English-speaking individuals.
    Response: We thank commenters for this feedback and will take this 
suggestion into consideration. Data has shown for other CAHPS surveys 
that the likelihood of responding to survey differs by race/ethnicity 
and mode. We encourage hospices to consider their patient/caregiver 
population and work with their survey vendor to determine the best mode 
of data collection.
    Comment: One commenter stated that the CAHPS Hospice Survey is not 
an accurate reflection of care received since the primary caregiver 
completes the survey.
    Response: The Hospice CAHPS Survey is completed by the primary 
caregiver out of respect for the patient receiving end of life care. We 
do not feel it would be appropriate to have hospice patients fill out a 
survey about the care they are receiving at the very end of their life.
d. Data Sources
    In the FY 2020 Hospice Wage Index and Rate Update final rule (84 FR 
38484), we finalized the participation requirements for the CAHPS 
Hospice Survey. To meet the CAHPS Hospice Survey requirements for the 
HQRP, hospice facilities must contract with a CMS-approved vendor to 
collect survey data for eligible patients on a monthly basis and report 
that data to CMS on the hospice's behalf by the quarterly deadlines 
established for each data collection period.
e. Public Reporting of CAHPS Hospice Survey Results
    We began public reporting of the results of the CAHPS Hospice 
Survey on Hospice Compare as of February 2018. Before the COVID-19 PHE, 
we reported the most recent 8 quarters of data on the basis of a 
rolling average, with the most recent quarter of data being added and 
the oldest quarter of data removed from the averages for each data 
refresh. As finalized in the FY 2022 Hospice Wage Index and Payment 
Rule Update (86 FR 42528), we are not reporting Q1 2020 and Q2 2020 
data due to the COVID-19 PHE. Therefore, we have publicly reported the 
most recently available 8 quarters of CAHPS data that excluded Q1 2020 
and Q2 2020 data. These data were publicly reported starting with the 
February 2022 refresh and will continue through the May 2023 refresh on 
Care Compare. The Second Edition HQRP Public Reporting Tip Sheet dated 
Dec. 2021 on the HQRP Requirements and Best Practices web page 
summarizes CMS' approach to the HQRP as public reporting has resumed in 
February 2022. It also explains the HQRP public reporting changes 
associated with the FY 2022 Hospice Wage Index and Payment Rule Update 
final rule and provides a summary of the data refreshes.
f. Volume-Based Exemption for CAHPS Hospice Survey Data Collection and 
Reporting Requirements
    In the FY 2020 Hospice Wage Index and Rate Update final rule (84 FR 
38526), we finalized a policy making a volume-based exemption for CAHPS 
Hospice Survey Data Collection and Reporting requirements for FY 2021 
and every year thereafter.
    In this final rule, there will be no changes to this exemption. The 
exemption request form is available on the official CAHPS Hospice 
Survey website: http://www.hospiceCAHPSsurvey.org. Hospices that intend 
to claim the size exemption are required to submit to CMS their 
completed exemption request form by December 31, of the data collection 
year.
    Hospices that served a total of fewer than 50 survey-eligible 
decedent/caregiver pairs in the year before the data collection year 
are eligible to apply for the size exemption. Hospices may apply for a 
size exemption by submitting the size exemption request form. The size 
exemption is only valid for the year on the size exemption request 
form. If the hospice remains eligible for the size exemption, the 
hospice must complete the size exemption request form for every 
applicable FY APU period, as shown in Table 6.

[[Page 45687]]

[GRAPHIC] [TIFF OMITTED] TR29JY22.647

g. Newness Exemption for CAHPS Hospice Survey Data Collection and 
Public Reporting Requirements
    We previously finalized a one-time newness exemption for hospices 
that meet the criteria as stated in the FY 2017 Hospice Wage Index and 
Payment Rate Update final rule (81 FR 52181). In the FY 2019 Hospice 
Wage Index and Payment Rate Update final rule (83 FR 38642), we 
continued the newness exemption for FY 2023, and all subsequent years. 
We encourage hospices to keep the letter they receive providing them 
with their CMS Certification Number (CCN). The letter can be used to 
show when you received your number.
h. Survey Participation Requirements
    We previously finalized survey participation requirements for FY 
2022 through FY 2025 as stated in the FY 2018 and FY 2019 Hospice Wage 
Index and Payment Rate Update final rules (82 FR 36670 and 83 FR 38642 
through 38643). We also continued those requirements in all subsequent 
years (84 FR 38526). Table 7 restates the data submission dates for FY 
2023 through FY 2025.
[GRAPHIC] [TIFF OMITTED] TR29JY22.648

    For further information about the CAHPS Hospice Survey, we 
encourage hospices and other entities to visit: https://www.hospiceCAHPSsurvey.org. For direct questions, contact the CAHPS 
Hospice Survey Team at [email protected] or call 1 (844) 472-
4621.
i. CAHPS Hospice Survey Star Ratings
    We previously finalized a policy requiring us to display Hospice 
CAHPS Survey Star Ratings no sooner than FY 2022 as stated in the FY 
2022 Hospice Wage Index and Payment Rule Update rule (86 FR 42528). 
Star Ratings will be publicly reported on Care Compare on Medicare.gov 
beginning with the August 2022 refresh. This start date allowed CMS to 
conduct a dry run of the Star Ratings with reporting to hospices via 
preview reports. Hospices first saw their Star Ratings in their preview 
reports during the November 2021 and March 2022 preview periods for the 
February 2022 and May 2022 updates of Care Compare on Medicare.gov. 
However, the CAHPS Hospice Survey Star Ratings will not be publicly 
reported in February or May 2022. The reporting period for the dry run 
covers data from Q4 2018 through Q4 2019 and Q3 2020 through Q1 2021. 
Detailed information about the calculation and display of Hospice CAHPS 
Survey Star Ratings can be found on the official CAHPS Hospice Survey 
website: http://www.hospiceCAHPSsurvey.org. There are no changes to the 
Hospice CAHPS Survey Star Ratings for FY 2023.
    We received several comments regarding the CAHPS Survey Star 
Ratings. A summary of these comments and our responses to those 
comments are as follows:

[[Page 45688]]

    Comment: Some commenters expressed concerns that Star Ratings will 
only include data from the CAHPS Hospice Survey and therefore will not 
provide consumers with all the relevant information to decide on 
selecting a hospice.
    Response: Star Ratings using CAHPS Hospice Survey data is an 
initial step CMS is taking to provide consumers with an easy to 
understand method for comparing hospices. We will take the feedback to 
include other data sources into consideration as enhancements are made 
over time.
    Comment: A handful of commenters raised concern that low survey 
response rates will prevent hospices from being assigned a Star Rating 
and this could result in fewer hospices having Star Ratings. Several 
commenters stated that it is not clear how a consumer will perceive a 
hospice that is not assigned a Star Ratings.
    Response: CMS recently tested a web mode and shortened 
questionnaire with the goal of improving response rates. We are 
analyzing the data for potential future changes to the Hospice CAHPS 
Survey. For the August 2022 reporting period, most hospices with 
publicly reported CAHPS Hospice Survey measure scores (68 percent) met 
the threshold of 75 completed surveys and were assigned a Star Rating. 
The vast majority of 2020 Medicare decedents (approximately nine out of 
ten) received care from hospices that received a Star Rating in August 
2022. CMS presents footnotes and other documentation on the Care 
Compare website to clearly indicate why hospices with smaller numbers 
of completed surveys do not have Star Ratings.
    Comment: A commenter suggested that Star Ratings be calculated 
based on absolute rather than relative performance.
    Response: Similar to other CMS CAHPS Star Ratings, CMS finalized 
that the cut-point methodology used to determine CAHPS Hospice Survey 
stars use statistical clustering procedures that minimize the score 
differences within a star category and maximize the differences across 
star categories. This ensures that star assignments clearly 
differentiate performance across groups of hospices. Such comparative 
Star Ratings help consumers identify high and low performing hospices. 
Statistical clustering also allows cut points to adjust for 
unanticipated changes in performance within the industry. Setting 
absolute cut points has multiple issues, including variation in 
industry performance across measures, external or structural factors 
can lead to substantial changes from period to period rather than 
steady, slow year-over-year improvement, and diminished incentive to 
improve when a hospice knows they have reached a certain pre-
established performance threshold.
    Comment: A couple of commenters shared concerns that the time 
period of data used to calculate quality measures, including Star 
Ratings for the CAHPS Hospice Survey, includes data up to 3 years old 
which undermines the usefulness of the information being publicly 
reported.
    Response: Rolling up eight quarters of data instead of four ensures 
that measure scores are available for many more hospices, which 
improves the usefulness of the Compare web tools for hospice consumers. 
The eight-quarter approach does not result in a delay of when data 
becomes available (since the most recent quarters of data are included 
in the rolled-up score), but it does ensure more accurate measurement. 
The decision to use eight quarters of rolling data for hospices 
reflects sample size issues that are specific to hospice organizations, 
which differ in size and other dimensions from other types of entities, 
such as hospitals and MA contracts, for which CMS publicly reports 
scores and Star Ratings.
5. Form, Manner, and Timing of Quality Data Submission
a. Statutory Penalty for Failure To Report
    Section 1814(i)(5)(C) of the Act requires that each hospice submit 
data to the Secretary on quality measures specified by the Secretary. 
Such data must be submitted in a form and manner, and at a time 
specified by the Secretary. Section 1814(i)(5)(A)(i) of the Act was 
amended by the CAA 2021 and the payment reduction for failing to meet 
hospice quality reporting requirements is increased from 2 percent to 4 
percent beginning with FY 2024. The Act requires that, beginning with 
FY 2014 through FY 2023, the Secretary shall reduce the market basket 
update by 2 percentage points and then beginning in FY 2024 and for 
each subsequent year, the Secretary shall reduce the market basket 
update by 4 percentage points for any hospice that does not comply with 
the quality data submission requirements for that fiscal year. Last 
year, we revised our rule at Sec.  418.306(b)(2) in accordance with 
this statutory change (86 FR 42605).
b. Compliance
    HQRP Compliance requires understanding three timeframes for both 
HIS and CAHPS: (1) The relevant Reporting Year, payment FY and the 
Reference Year. The ``Reporting Year'' (HIS)/``Data Collection Year'' 
(CAHPS). This timeframe is based on the calendar year. It is the same 
CY for both HIS and CAHPS. If the CAHPS Data Collection year is CY 
2023, then the HIS reporting year is also CY 2023; (2) The APU is 
subsequently applied to FY payments based on compliance in the 
corresponding Reporting Year/Data Collection Year; and (3) For the 
CAHPS Hospice Survey, the Reference Year is the CY prior to the Data 
Collection Year. The Reference Year applies to hospices submitting a 
size exemption from the CAHPS survey (there is no similar exemption for 
HIS). For example, for the CY 2023 data collection year, the Reference 
Year, is CY 2022. This means providers seeking a size exemption for 
CAHPS in CY 2023 will base it on their hospice size in CY 2022. 
Submission requirements are codified in Sec.  418.312.
    For every CY all Medicare-certified hospices are required to submit 
HIS and CAHPS data according to the requirements in Sec.  418.312. 
Table 8 summarizes the three timeframes. It illustrates how the CY 
interacts with the FY payments, covering the CY 2021 through CY 2024 
data collection periods and the corresponding APU application from FY 
2023 through FY 2026.

[[Page 45689]]

[GRAPHIC] [TIFF OMITTED] TR29JY22.649

    As illustrated in Table 8, CY 2021 data submissions compliance 
impacts the FY 2023 APU. CY 2022 data submissions compliance impacts 
the FY 2024 APU. CY 2023 data submissions compliance impacts FY 2025 
APU. This CY data submission impacting FY APU pattern follows for 
subsequent years.
c. Submission Data and Requirements
    As finalized in the FY 2016 Hospice Wage Index and Payment Rate 
Update final rule (80 FR 47142, 47192), hospices' compliance with HIS 
requirements beginning with the FY 2020 APU determination (that is, 
based on HIS-Admission and Discharge records submitted in CY 2018) are 
based on a timeliness threshold of 90 percent. This means CMS requires 
that hospices submit 90 percent of all required HIS records within 30-
days of the event (that is, patient's admission or discharge). The 90-
percent threshold is hereafter referred to as the timeliness compliance 
threshold. Ninety percent of all required HIS records must be submitted 
and accepted within the 30-day submission deadline to avoid the 
statutorily-mandated payment penalty. Hospice compliance with claims 
data requirements is based on administrative data collection. Since 
Medicare claims data are already collected from claims, hospices are 
considered 100 percent compliant with the submission of these data for 
the HQRP. There is no additional submission requirement for 
administrative data.
    To comply with CMS' quality reporting requirements for CAHPS, 
hospices are required to collect data monthly using the CAHPS Hospice 
Survey. Hospices comply by utilizing a CMS-approved third-party vendor. 
Approved Hospice CAHPS vendors must successfully submit data on the 
hospice's behalf to the CAHPS Hospice Survey Data Center. A list of the 
approved vendors can be found on the CAHPS Hospice Survey website: 
www.hospicecahpssurvey.org. Table 9. HQRP Compliance Checklist 
illustrates the APU and timeliness threshold requirements.
[GRAPHIC] [TIFF OMITTED] TR29JY22.650

    Most hospices that fail to meet HQRP requirements do so because 
they miss the 90 percent threshold. We offer many training and 
education opportunities through our website, which are available 24/7, 
365 days per year, to

[[Page 45690]]

enable hospice staff to learn at the pace and time of their choice. We 
want hospices to be successful with meeting the HQRP requirements. We 
encourage hospices to use the website at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Hospice-Quality-Reporting/Hospice-Quality-Reporting-Training-Training-and-Education-Library. For more information about HQRP Requirements, we refer readers 
to visit the frequently-updated HQRP website and especially the Best 
Practice, Education and Training Library, and Help Desk web pages at: 
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Hospice-Quality-Reporting. We also encourage readers to 
visit the HQRP web page and sign-up for the Hospice Quality ListServ to 
stay informed about HQRP.
6. Request for Information Related to the HQRP Health Equity Initiative
    CMS defines health equity as ``the attainment of the highest level 
of health for all people, where everyone has a fair and just 
opportunity to attain their optimal health regardless of race, 
ethnicity, disability, sexual orientation, gender identity, 
socioeconomic status, geography, preferred language, or other factors 
that affect access to care and health outcomes.'' CMS is working to 
advance health equity by designing, implementing, and operationalizing 
policies and programs that support health for all the people served by 
our programs, eliminating avoidable differences in health outcomes 
experienced by people who are disadvantaged or underserved, and 
providing the care and support that our enrollees need to thrive. CMS' 
goals are in line with Executive Order 13985, on Advancing Racial 
Equity and Support for Underserved Communities Through the Federal 
Government, which can be found at: https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/20/executive-order-advancing-racial-equity-and-support-for-underserved-communities-through-the-federal-government/.
    Belonging to an underserved community is often associated with 
worse health outcomes.4 5 6 7 8 9 10 11 Such disparities in 
health outcomes are the result of multiple factors. Although not the 
sole determinants, poor access to care and provision of lower quality 
health care are important contributors to health disparities notable 
for CMS programs. Health inequities persist in hospice and palliative 
care, where Black and Hispanic populations are less likely to utilize 
care and over 80 percent of patients are White.12 13 14 15 
After hospice admission, racial and ethnic disparities appear to impact 
quality of care and health outcomes.\16\ Black patients may receive 
fewer supportive care medications despite higher symptom burdens, 
experience care less consistent with their expressed preferences, and 
encounter worse end-of-life communication.17 18 19 20 21 In 
response to a survey regarding these disparities, 70 percent of home 
health organizations, including 22 percent that are hospices, indicated 
they would increase the resources dedicated to diversity, equity, and 
inclusion starting in 2021.\22\ One important strategy for addressing 
these disparities is improving data collection to allow for better 
measurement and reporting on equity across our programs and 
policies.23 24
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    \4\ Joynt KE, Orav E, Jha AK. Thirty-Day Readmission Rates for 
Medicare Beneficiaries by Race and Site of Care. JAMA. 2011; 
305(7):675-681.
    \5\ Lindenauer PK, Lagu T, Rothberg MB, et al. Income Inequality 
and 30 Day Outcomes After Acute Myocardial Infarction, Heart 
Failure, and Pneumonia: Retrospective Cohort Study. British Medical 
Journal. 2013; 346.
    \6\ Trivedi AN, Nsa W, Hausmann LRM, et al. Quality and Equity 
of Care in U.S. Hospitals. New England Journal of Medicine. 2014; 
371(24):2298- 2308.
    \7\ Polyakova, M., et al. Racial Disparities In Excess All-Cause 
Mortality During The Early COVID-19 Pandemic Varied Substantially 
Across States. Health Affairs. 2021; 40(2): 307-316.
    \8\ Rural Health Research Gateway. Rural Communities: Age, 
Income, and Health Status. Rural Health Research Recap. November 
2018.
    \9\ https://www.minorityhealth.hhs.gov/assets/PDF/Update_HHS_Disparities_Dept-FY2020.pdf.
    \10\ www.cdc.gov/mmwr/volumes/70/wr/mm7005a1.htm.
    \11\ Poteat TC, Reisner SL, Miller M, Wirtz AL. COVID-19 
Vulnerability of Transgender Women With and Without HIV Infection in 
the Eastern and Southern U.S. Preprint. medRxiv. 
2020;2020.07.21.20159327. Published 2020 Jul 24. doi:10.1101/
2020.07.21.20159327.
    \12\ Addressing Disparities in Hospice & Palliative Care. 
Nalley, Catlin. Oncology Times: March 20, 2021--Volume 43--Issue 6--
p 1,10doi: 10.1097/01.COT.0000741732.73529.bb.
    \13\ https://journalofethics.ama-assn.org/article/racial-disparities-hospice-moving-analysis-intervention/2006-09.
    \14\ Capital Caring, Seasons Execs: Improving Hospice Diversity 
Starts from the Inside Out. 11/17/21. Holly Vossel. Capital Caring, 
Seasons Execs: Improving Hospice Diversity Starts from the Inside 
Out--Hospice & Palliative Care Network of Maryland https://hospicenews.com/2021/11/17/capital-caring-seasons-execs-improving-hospice-diversity-starts-from-the-inside-out/.
    \15\ Disparities in Palliative and Hospice Care and Completion 
of Advance Care Planning and Directives Among Non-Hispanic Blacks: A 
Scoping Review of Recent Literature (nih.gov).
    \16\ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3822363/.
    \17\ Naming the Problem: A Structural Racism Framework to 
Examine Disparities in Palliative Care--ScienceDirect.
    \18\ Johnson KS. Racial and ethnic disparities in palliative 
care. J Palliat Med 2013;16:1329-1334.
    \19\ Elk R, Felder TM, Cayir E, Samuel CA. Social inequalities 
in palliative care for cancer patients in the United States: a 
structured review. Semin Oncol Nurs 2018;34:303-315.
    \20\ Elliott AM, Alexander SC, Mescher CA, Mohan D, Bar-nato AE. 
Differences in physicians' verbal and nonverbal communication with 
black and white patients at the end of life. J Pain Symptom Manage 
2016;51:1-8.
    \21\ Johnson RL, Roter D, Powe NR, Cooper LA. Patient race/
ethnicity and quality of patient-physician communication during 
medical visits. Am J Public Health 2004;94:2084-2090.
    \22\ Capital Caring, Seasons Execs: Improving Hospice Diversity 
Starts from the Inside Out. 11/17/21. Holly Vossel. Capital Caring, 
Seasons Execs: Improving Hospice Diversity Starts from the Inside 
Out--Hospice & Palliative Care Network of Maryland https://hospicenews.com/2021/11/17/capital-caring-seasons-execs-improving-hospice-diversity-starts-from-the-inside-out/.
    \23\ https://hospicenews.com/2021/05/27/hospice-providers-leverage-data-to-reach-the-underserved/.
    \24\ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3822363/.
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    We are committed to achieving equity in health care outcomes for 
our beneficiaries by supporting providers in quality improvement 
activities to reduce health inequities, enabling beneficiaries to make 
more informed decisions, and promoting provider accountability for 
health care disparities.25 26 CMS is committed to closing 
the equity gap in CMS quality programs. As discussed in the RFI from 
the FY 2022 Hospice Wage Index and Rate Update proposed rule (86 FR 
19700), we are focused at making information on the quality of health 
care providers and services, including disparities, more transparent.
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    \25\ https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityInitiativesGenInfo/Downloads/CMS-Quality-Strategy.pdf.
    \26\ Report to Congress: Improving Medicare PostAcute Care 
Transformation (IMPACT) Act of 2014 Strategic Plan for Accessing 
Race and Ethnicity Data. January 5, 2017. Available at https://www.cms.gov/About-CMS/Agency-Information/OMH/Downloads/Research-Reports-2017-Report-to-Congress-IMPACT-ACT-of-2014.pdf.
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    In the FY 2022 Hospice Wage Index and Rate Update final rule, we 
received comments supportive of gathering standardized patient 
assessment data elements and additional SDOH data to improve health 
equity. In parallel, commenters advocated for education efforts for 
beneficiaries, providers, and stakeholders on the benefits of 
collecting and reporting demographic and social risk factor data. We 
received many comments about the use of standardized patient assessment 
data elements in the hospice setting to assess health equity and SDOH, 
some of which raised concerns around whether such use may have 
unintended consequences. Many commenters noted that hospice patients 
have different goals of care than non-hospice patients, which does not 
align with standardized

[[Page 45691]]

data elements for patient assessment. Commenters encouraged CMS to only 
utilize certain aspects of standardized data elements for patient 
assessment (specifically, Z-codes 55-65) in collecting health equity 
data. We refer the readers to review the summary of public comments 
received in the FY 2022 Hospice Wage Index and Rate Update final rule 
(86 FR 42528).
    We will continue to take all comments and suggestions into account 
as we work to develop policies on this important topic. We appreciate 
hospices and national organizations sharing their support and 
commitment to addressing health disparities and offering meaningful 
comments for consideration in the FY 2022 Hospice Wage Index and Rate 
Update final rule (86 FR 42528). Given the value of the comments thus 
far and the ongoing development of activities to improve health equity, 
we solicited public comment in the proposed rule on the following 
questions:
     What efforts does your hospice employ to recruit staff, 
volunteers, and board members from diverse populations to represent and 
serve underserved populations?
     How does your hospice attempt to bridge any cultural gaps 
between your personnel and beneficiaries/clients?
     How does your hospice measure whether this has an impact 
on health equity?
     How does your hospice currently identify barriers to 
access in your community or service area?
     What are barriers to collecting data related to 
disparities, social determinants of health, and equity?
     What steps does your hospice take to address these 
barriers?
     How does your hospice collect self-reported data such as 
race/ethnicity, veteran status, socioeconomic status, housing, food 
security, access to interpreter services, caregiving status, and 
marital status and use this to inform its health equity initiatives?
     How is your hospice using qualitative data collection and 
analysis methods to measure the impact of its health equity 
initiatives?
    We received several comments in response to our request for 
information on the HQRP Health Equity initiative. A summary of these 
comments and our responses to those comments are as follows:
    Comment: Many commenters supported CMS's efforts to create health 
equity measures. However, commenters wanted more clarity on CMS's plans 
for health equity measures and what measurement criteria CMS would 
consider applying to hospices. Comments suggested that CMS should 
encourage all health care providers and organizations across the 
continuum of care to collect and stratify patient and caregiver data 
based on key variables of inequities in patient care for all types of 
measures.
    Comment: Commenters reiterated and acknowledged health disparities 
in hospice care and were broadly supportive of CMS' efforts to advance 
health equity and generally expressed appreciation for the opportunity 
to partner with CMS to address disparities in hospice settings. Many 
shared their organization's efforts to promote health equity, including 
staff training and hiring. Despite the overall appreciation, commenters 
noted that there is great variation in organizational readiness to 
develop and implement health equity initiatives; for example, hospice 
providers serving smaller rural communities may not be as far along in 
integrating health equity activities as larger providers associated 
with robust hospital systems. Similarly, other comments noted that, to 
varying degrees, providers may experience the following challenges in 
implementing a health equity framework and respective quality 
improvement activities: financial limitations, data collection burden, 
and workforce shortages. In light of these considerations, commenters 
requested CMS support in the form of financial and other resources (for 
example, trainings), ample time for hospices to develop and implement 
activities to improve health equity, and the use of incentive-based 
rather than punitive measures to promote reporting. One commenter 
recommended stratifying the volume and detail of data collected based 
on the size, independence, and geographic profile of a given hospice. 
Some suggested convening a Technical Expert Panel (TEP) to inform the 
development of health equity measures until after HOPE becomes 
available.
    Several commenters highlighted the need for more sociodemographic 
and social determinants of health (SDOH) data to effectively evaluate 
health equity in hospice settings. Commenters suggested efforts to 
standardize the sociodemographic and SDOH data collected across 
provider settings and across third party vendors (for example, EMRs) 
and other tools. There was some support for the stratification of 
confidential data reports by sociodemographic factors. Multiple 
commenters also recommended incorporating SDOH items into HOPE and 
delaying public reporting of a health equity measure until HOPE is 
available.
    Comment: Commenters stated that some hospice providers have made 
progress in recruiting and employing diverse staff to better represent 
historically underserved populations. Successful strategies have 
included job marketing and community outreach, educational efforts and 
partnering with colleges and universities, developing partnerships with 
groups and associations to promote employment and leadership 
opportunities, development of diversity, equity, and inclusion (DEI) 
recruitment teams,\27\ sign on bonuses for certain qualifications (for 
example, bilingual), and scholarships for staff who are members of 
disproportionately affected populations. Several commenters highlighted 
the wide variation across hospices with regards to resources and 
progress made in diversity of staff and leadership and stated that 
smaller organizations may need additional resources and support to 
implement recruitment and retention efforts. Other commenters stated 
that a limited pool of applicants due to workforce shortages is a major 
challenge across all organizations. One commenter stated that hospice 
workforce diversity is not necessarily reflective of the diversity in 
the underlying community and that this is a broader issue which will 
need to be addressed through coordinated efforts, such as, to recruit 
more diverse student populations in healthcare and social work 
programs. Approaches to bridge cultural gaps between personnel and 
beneficiaries include community outreach and partnerships, DEI training 
for staff and leadership, DEI organizational assessments, centering 
equity in organizational mission, values, and goals, and expansion of 
linguistic capacities.
---------------------------------------------------------------------------

    \27\ Diversity recruiting is the practice of hiring candidates 
using a process that is free from bias for or against any individual 
or group of candidates. Diverse teams help companies to be more 
innovative, be more creative, and achieve better results. https://www.dictionary.com/.
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    Comment: Several commenters responded to CMS's request for 
information about barriers that might prevent community members from 
seeking hospice care. Commenters reported that strategies to identify 
and address barriers include training staff, building partnerships, 
employing community liaisons to work with patients and caretakers, 
including social determinant of health (SDOH) information in social 
work assessments and workplans (for example, housing and food 
insecurity), using toolkits and resources freely available to the 
public on websites, including national hospice organizations' websites, 
and working

[[Page 45692]]

with EMR vendors to better collect sociodemographic information.
    Comment: Many commenters cited barriers to collecting data related 
to disparities, social determinants of health, and equity. Those 
barriers included a lack of uniformity and interoperability across EMRs 
and other tools, lack of standard definitions for sociodemographic and 
SDOH variables, limited communication channels for administering CAHPS 
and other data collection instruments, patient mistrust in providing 
these data, and the administrative burden of data collection.
    Commenters provided recommendations to address these barriers such 
as the standardization of sociodemographic and SDOH data collected 
across systems, the use of a universal database, and the inclusion of 
new codes that measure patients' SDOH needs (Z codes) into hospice 
claims.
    Comment: Commenters reported variation in how self-reported data to 
inform health equity are collected across hospice providers; some 
collect these data at referral or admissions, while others collect 
during social work or psychosocial assessments. Some providers are not 
yet collecting these data and request additional guidance. Although 
certain sociodemographic or social determinant of health (SDOH) data 
points are collected through EMR fields, commenters identified issues 
related to the use of these data. The issues include lack of industry 
standards noted by several commenters in definitions for these 
variables and the limits of the EMR system in how the data is stored 
that impacts the ability to share the data. For example, one commenter 
described limits with sharing the data because some self-reported 
variables (for example, race/ethnicity) are collected in parts of the 
EMR that cannot be easily shared while other variables (for example, 
need for interpreter services and food insecurity) are collected 
through other parts of the EMR system and can be shared with partner 
organizations for referrals and other purposes. Another commenter 
stated that staff at an organization can use different versions of an 
EMR, which results in inconsistencies in data.
    Many commenters expressed a need for guidance on how to collect 
health equity related data (for example, sociodemographic and SDOH data 
points) and how to effectively use them to assess health equity 
impacts. Commenters indicated a strong need to identify effective 
methods for collecting sociodemographic and SDOH data among hospice 
providers. Specifically, several commenters recommended the inclusion 
of languages other than English (for example, need for bilingual 
services), whether culture was respected, sexual orientation and gender 
identity, expanded racial/ethnic categories to capture more detailed 
information, socioeconomic status, food security, community deprivation 
level, and caregiving status information. Suggested tools for 
collecting some of these data points included the CAHPS[supreg] Hospice 
Survey, the anticipated HOPE tool, and use of Z codes on hospice 
claims.
    Comment: Commenters stated that most hospice providers have not yet 
implemented initiatives to measure the impact of health equity 
initiatives with qualitative data. Some hospice providers stated that 
they collect qualitative social determinant of health information 
through admissions or social work assessments. Commenters requested 
guidance to support better qualitative data collection and analysis and 
sought examples of how this has been done. Several commenters requested 
consideration of the wide variety of existing support, infrastructure, 
and funding across hospice providers when determining support, 
flexibility, and requirements related to health equity measurement 
initiatives.
    Response: CMS appreciates all stakeholder feedback received on this 
request for information. These comments will help inform CMS's future 
efforts to incorporate health equity and social determinants of health 
into the HQRP. CMS remains committed to creating meaningful quality 
measures based on robust and accurate data that follows the Meaningful 
Measures Framework and Blueprint, without imposing unnecessary burden 
on providers.
    In addition, we sought comments on a future structural composite 
measure that would address aspects of health equity. Specifically, the 
structural composite measure could include organizational activities to 
address access to and the quality of hospice care for underserved 
populations. The composite structural measure concept could include 
hospice reported data on hospice activities to address underserved 
populations' access to hospice care. For example, a hospice could 
receive a point for each domain where data are submitted to a CMS 
portal, regardless of the hospice's action in that domain (such as, 
reporting whether or not the hospice provided training for board 
members, leaders, staff and volunteers in culturally and linguistically 
appropriate services (CLAS), health equity, and implicit bias). The 
data could reflect the hospice's completed actions for each 
corresponding domain (for a total of three points) in a reporting year. 
A hospice could submit information such as documentation, examples, or 
narratives to qualify for the measure numerator. We solicited comments 
on how to score a domain for a hospice that submitted data reflecting 
no actions or partial actions in the given domain.
    Examples of the domains we considered are described in the 
following outline. We solicited comment on each of these domains.
    Domain 1: Hospice commitment to reducing disparities is 
strengthened when equity is a key organizational priority. Candidate 
domain 1 could be satisfied when a hospice submits data on its actions 
regarding the role of health equity and community engagement in their 
strategic plan. Hospices could self-report data in the reporting year 
about their actions in each of the following areas, and submission of 
data for all elements could be required to qualify for the measure 
numerator.
     Hospice attests whether its strategic plan includes 
approaches to address health equity in the reporting year.
     Hospice reports community engagement and key stakeholder 
activities in the reporting year.
     Hospice reports on any attempts to measure input from 
patients and caregivers about care disparities it may experience and 
recommendations or suggestions.
    Domain 2: Training board members, leaders, staff and volunteers in 
culturally and linguistically appropriate services (CLAS),\28\ health 
equity, and implicit bias is an important step hospices take to provide 
quality care to diverse populations. Candidate domain 2 could focus on 
hospices' diversity, equity, inclusion and CLAS training for board 
members, employed staff, and volunteers by capturing the following 
self-reported actions in the reporting year. Submission of relevant 
data for all elements could be required to qualify for the measure 
numerator.
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    \28\ https://www.cms.gov/About-CMS/Agency-Information/OMH/Downloads/CLAS-Toolkit-12-7-16.pdf.
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     Hospice attests whether employed staff were trained in 
CLAS and culturally sensitive care mindful of social determinants of 
health (SDOH) in the reporting year. Example data include specific 
training programs or training requirements for staff.
     Hospice attests whether it provided resources to staff and 
volunteers about health equity, SDOH, and equity

[[Page 45693]]

initiatives in the reporting year. Examples include the materials 
provided, webinars, or learning opportunities.
    Domain 3: Leaders and staff could improve their capacity to address 
disparities by demonstrating routine and thorough attention to equity 
and setting an organizational culture of equity. This candidate domain 
could capture activities related to organizational inclusion 
initiatives and capacity to promote health equity. Examples of equity-
focused factors include proficiency in languages other than English, 
experience working with populations in the service area, experience 
working on health equity issues, and experience working with 
individuals with disabilities.
    Submission of relevant data for all elements could be required to 
qualify for the measure numerator.
     Hospice attests whether equity-focused factors were 
included in the hiring of hospice senior leadership, including chief 
executives and board of trustees, in the previous reporting year.
     Hospice attests whether equity-focused factors were 
included in the hiring of hospice senior leadership, including chief 
executives and board of trustees, is more reflective of the services 
area patient than in the previous reporting year.
     Hospice attests whether equity-focused factors were 
included in the hiring of direct patient care staff (for example, RNs, 
medical social workers, aides, volunteers, chaplains, or therapists) in 
the previous reporting year.
     Hospice attests whether equity focused factors were 
included in the hiring of indirect care or support staff (for example. 
administrative, clerical, or human resources) in the previous reporting 
year.
    We stated that we are interested in developing health equity 
measures based on information collected by hospices not currently 
available on claims, assessments, or other publicly available data 
sources to support development of future quality measures. We solicited 
public comments on the conceptual domains and quality measures 
described in this section. Furthermore, we solicited public comments on 
publicly reporting a composite structural health equity quality 
measure; displaying descriptive information on Care Compare from the 
data hospices provide to support health equity measures; and the impact 
of the domains and quality measure concepts on organizational culture 
change.
    We received several comments regarding the request for information 
related to a health equity structural composite measure. A summary of 
the comments and our responses to those comments are as follows:
    Comment: Commenters were generally supportive of developing a 
health equity structural composite measure but recommended a number of 
steps for CMS to take prior to implementation and publishing of the 
measure. Commenters emphasized the need to engage stakeholders and 
strongly supported the convening of a TEP to guide the development of 
the health equity structural composite measure. Several commenters also 
requested that providers have an opportunity to review, analyze, and 
learn from results of the structural measure prior to CMS 
implementation.
    Comments focused on balancing administrative and resource burdens 
with the benefit of the information gathered. It was suggested that CMS 
leverage existing data collection tools and prioritize standardization 
of data collected across providers. Commenters also requested assurance 
that the data gathered be accurate, meaningful, and actionable. Several 
commenters recommended that the measure more explicitly incorporate 
social determinants of health data. Some commenters stated that there 
should be a focus on the impact of health equity-related activities on 
patient outcomes and disparities, in addition to the domains that are 
discussed.
    Several commenters suggested that hospice providers will need tools 
such as trainings, improved health IT interoperability, or other 
additional resources, and sufficient time to incorporate a health 
equity framework into their daily practice prior to beginning data 
collection for a structural composite measure. This was especially 
highlighted as a concern for under-resourced providers serving smaller 
and rural communities. Additionally, commenters requested that CMS 
postpone public reporting of hospice health equity measures to allow 
for HOPE implementation, testing of health equity metrics in other 
settings of care, and pilot testing of the structural composite 
measure.
    Comment: Commenters recognized strategic plans are a starting point 
to improve health equity, and supported a structural measure domain 
based on organizational commitment to health equity and community 
engagement in strategic planning. Some commenters recommended that CMS 
provide more specifics regarding information to be collected from the 
strategic plan, such as how disparities are being measured and by which 
tools. Some commenters encouraged CMS to ensure that measures related 
to this domain provide meaningful information about an organization's 
engagement and partnership with stakeholders. Commenters suggested 
measures such as providing education on the hospice benefit to targeted 
demographics, facilitating communication among providers and community 
partners, and finding ways to engage community members in 
nontraditional settings to reach patients who might not otherwise 
receive needed hospice care. There was also a concern that this domain 
would not assess whether outcomes are improved as a result of making 
equity a key organizational priority.
    Some commenters suggested that the CAHPS[supreg] Hospice Survey 
could be revised to include additional questions regarding caregiver 
experience and recommendation for improvement, but also pointed out 
that caregivers may not be able to answer such questions due to limited 
exposure to hospice before hospice election. Commenters requested 
hospices be afforded the time and tools to incorporate a health equity 
framework into their daily practices before data collection for this 
domain commences. One commenter recommended that CMS develop standards 
related to this data collection, to facilitate hospice implementation. 
Another commenter requested the opportunity to provide feedback on the 
measure once developed and prior to public reporting of data for this 
domain. Additionally, some commenters suggested convening a TEP to 
further develop this domain.
    Comment: Commenters generally supported and appreciated the 
attention toward culturally and linguistically appropriate services 
(CLAS) training and other health equity trainings. In addition to 
supporting cultural sensitivity efforts, several commenters recognized 
that efforts to improve organizational understanding of social 
determinants of health (SDOH) are equally needed. They recommended 
collecting data on SDOH and sociodemographic factors that may lead to 
poor outcomes. Specifically, respondents suggested collecting data on 
access to healthy foods, neighborhood safety, housing stability, income 
level, education quality, and transportation availability.
    Regarding CLAS and health equity trainings, one commenter suggested 
requesting more specific information such as training content, 
frequency, training evaluation results, and any documentation of 
patient or family member experience with CLAS received. Some commenters 
suggested

[[Page 45694]]

CMS develop or approve evidence-based trainings and/or certification 
available without imposing a financial burden on hospices.
    Comments were mixed when considering the collection of information 
for this domain, with some respondents asking for more detailed data 
collection requirements. There was some concern about the financial 
burden of providing additional trainings for certain staff. Lastly, 
there was a request to allow hospices a period of time to become 
familiar with CLAS and other health equity approaches prior to 
implementing required reporting for this domain.
    Comment: Commenters were generally supportive of the concept of 
setting an organizational culture of equity and of considering health 
equity in hiring across all levels as a means of achieving equity. Some 
comments particularly highlighted the importance of incorporating 
equity-focused factors in the hiring of senior leadership roles. 
However, several commenters also noted that hiring practices are not 
the only area in which a culture of equity can be promoted. These 
comments stated that the current workforce shortages are leaving 
employers with limited applicant pools and reduced potential to give 
adequate weight to equity considerations during the hiring process. 
Given this context, these commenters stated that focusing solely on 
hiring practices may not be the most appropriate approach to assessing 
organizational culture of equity. Commenters offered several 
suggestions, such as evaluating existing staff capacity to address 
disparities, assessing patient profile concordance with community 
profile, and borrowing from proposed measures in hospital and skilled 
nursing facility settings for this domain.
    Commenters recommended providing more specific definitions of each 
``equity focused factor'' and asking hospice providers to report on 
each of the factors. Some commenters also recommended that a TEP be 
convened to guide the development of the measures for this domain. 
Lastly, some comments noted that organizational readiness and capacity 
may be difficult to achieve and CMS should allow hospices time to build 
a culture of equity prior to adopting this domain. To facilitate the 
institutionalization of a culture of equity, commenters recommended 
that CMS develop educational opportunities for providers and establish 
health equity board committees to provide resources and support 
providers' equity work.
    Response: CMS appreciates the stakeholder comments received 
regarding a potential structural composite measure of health equity. 
Public input is very valuable for the continuing development of CMS' 
health equity quality measurement efforts and broader commitment to 
health equity; a key pillar of our strategic vision as further 
described here, https://www.cms.gov/files/document/health-equity-fact-sheet.pdf. CMS will take these questions and suggestions into 
consideration when further refining the measure concept. CMS remains 
committed to creating meaningful quality measures based on robust and 
accurate data that follows the Meaningful Measures Framework and 
Blueprint, without imposing unnecessary burden on providers. Continued 
stakeholder engagement and measure testing will be an important 
component of CMS's efforts to develop this structural measure.
7. Advancing Health Information Exchange Update
    The Department of Health and Human Services (HHS) has a number of 
initiatives designed to encourage and support the adoption of 
interoperable health information technology and to promote nationwide 
health information exchange to improve health care and patient access 
to their digital health information.
    To further interoperability in post-acute care settings, CMS and 
the Office of the National Coordinator for Health Information 
Technology (ONC) participate in the Post-Acute Care Interoperability 
Workgroup (PACIO) to facilitate collaboration with industry 
stakeholders to develop Health Level Seven International[supreg] (HL7) 
Fast Healthcare Interoperability Resources[supreg] (FHIR) 
standards.\29\ These standards could support the exchange and reuse of 
patient assessment data derived from the Minimum Data Set (MDS), 
Inpatient Rehabilitation Facility-Patient Assessment Instrument (IRF-
PAI), LTCH Continuity Assessment Record and Evaluation (CARE) Data Set 
(LCDS), Outcome and Assessment Information Set (OASIS), and other 
sources. The PACIO Project has focused on HL7 FHIR implementation 
guides for functional status, cognitive status and new use cases on 
advance directives, re-assessment timepoints, and Speech Language, 
Swallowing, Cognitive communication and Hearing (SPLASCH) pathology. We 
encourage PAC provider and health IT vendor participation as the 
efforts advance.
---------------------------------------------------------------------------

    \29\ http://pacioproject.org/.
---------------------------------------------------------------------------

    The CMS Data Element Library (DEL) continues to be updated and 
serves as a resource for PAC assessment data elements and their 
associated mappings to health IT standards, such as Logical Observation 
Identifiers Names and Codes (LOINC) and Systematized Nomenclature of 
Medicine Clinical Terms (SNOMED). The DEL furthers CMS' goal of data 
standardization and interoperability. Standards in the DEL (https://del.cms.gov/DELWeb/pubHome) can be referenced on the CMS website and in 
the ONC Interoperability Standards Advisory (ISA). The 2022 ISA is 
available at https://www.healthit.gov/isa.
    The 21st Century Cures Act (Cures Act) (Pub. L. 114-255, enacted 
December 13, 2016) required HHS and ONC to take steps to further 
interoperability for providers and settings across the care continuum. 
Section 4003(b) of the Cures Act required ONC to take steps to advance 
interoperability through the development of a trusted exchange 
framework and common agreement aimed at establishing full network-to-
network exchange of health information nationally. On January 18, 2022, 
ONC announced a significant milestone by releasing the Trusted Exchange 
Framework \30\ and Common Agreement Version 1.\31\ The Trusted Exchange 
Framework is a set of non-binding principles for health information 
exchange, and the Common Agreement is a contract that advances those 
principles. The Common Agreement and the incorporated by reference 
Qualified Health Information Network Technical Framework Version 1 \32\ 
establish the technical infrastructure model and governing approach for 
different health information networks and their users to securely share 
clinical information with each other--all under commonly agreed to 
terms. The technical and policy architecture of how exchange occurs 
under the Common Agreement follows a network-of-networks structure, 
which allows for connections at different levels and is inclusive of 
many different types of entities at those different levels, such as 
health information networks, healthcare practices, hospitals, public 
health agencies, and Individual Access

[[Page 45695]]

Services (IAS). For more information, we refer readers to https://www.healthit.gov/topic/interoperability/trusted-exchange-framework-and-common-agreement.
---------------------------------------------------------------------------

    \30\ The Trusted Exchange Framework (TEF): Principles for 
Trusted Exchange (Jan. 2022), https://www.healthit.gov/sites/default/files/page/2022-01/Trusted_Exchange_Framework_0122.pdf.
    \31\ Common Agreement for Nationwide Health Information 
Interoperability Version 1 (Jan. 2022), https://www.healthit.gov/sites/default/files/page/2022-01/Common_Agreement_for_Nationwide_Health_Information_Interoperability_Version_1.pdf.
    \32\ Qualified Health Information Network (QHIN) Technical 
Framework (QTF) Version 1.0 (Jan. 2022), https://rce.sequoiaproject.org/wp-content/uploads/2022/01/QTF_0122.pdf.
---------------------------------------------------------------------------

    We invited readers to learn more about these important developments 
and how they are likely to affect hospices.
    Comment: We received several comments on the information provided 
in this section. Commenters expressed support for efforts across CMS 
and ONC to advance development of standards and certification for 
health IT promoting health information exchange focused on enhancing 
person-centered longitudinal care and exchange of clinical data. 
Commenters specifically recommended that CMS and ONC develop guidance 
and expectations around the collection and sharing of SDOH information 
for hospices and other post-acute care providers, as well as health IT 
vendors serving these providers, to ensure there are consistent 
requirements supporting interoperability of this data.
    However, commenters identified a lack of interoperable health IT in 
hospices and other post-acute care settings as a major barrier to 
sharing health information quickly and easily across care settings. 
Commenters indicated that hospice and other post-acute care settings 
were not eligible for previous incentives to purchase technology 
certified under the ONC Health IT Certification Program, and that this 
has led to disparities in adoption between post-acute care and other 
settings that have received incentives. Commenters recommended that HHS 
continue to explore opportunities to use existing authorities to 
support technology adoption by hospice and other post-acute care 
providers in order to advance interoperability. Specific to exchange of 
SDOH information, commenters highlighted lack of clarity among 
stakeholders around how privacy rules apply to the sharing of this data 
as a potential barrier.
    Finally, commenters provided a number of specific recommendations 
for new resources and enhancements to existing resources that HHS could 
pursue to assist hospice and other post-acute care providers with 
advancing data standardization.
    Response: We appreciate the comments provided on interoperability 
initiatives and will take these comments into consideration as we 
coordinate with Federal partners, including ONC, on these initiatives, 
and to inform future rulemaking.

C. CAA 2021, Section 407. Establishing Hospice Program Survey and 
Enforcement Procedures Under the Medicare Program; Provisions Update

    Division CC, section 407 of the CAA 2021, amended Part A of Title 
XVIII of the Act to add a new section 1822, and amended sections 
1864(a) and 1865(b) of the Act, establishing new hospice program survey 
and enforcement requirements, required public reporting of survey 
information, and a new hospice hotline.
    This law (CAA 2021) requires public reporting of hospice program 
surveys conducted by both State Agencies (SAs) and Accrediting 
Organizations (AOs), as well as enforcement actions taken as a result 
of these surveys, on the CMS website in a manner that is prominent, 
easily accessible, searchable, and presented in a readily 
understandable format. It removes the prohibition at section 1865(b) of 
the Act of public disclosure of hospice surveys performed by AOs, and 
requires that AOs use the same survey deficiency reports as SAs (Form 
CMS-2567, ``Statement of Deficiencies'' or a successor form) to report 
survey findings.
    The law also requires hospice programs to measure and reduce 
inconsistency in the application of survey results among all surveyors, 
and requires the Secretary to provide comprehensive training and 
testing of SA and AO hospice program surveyors, including training with 
respect to review of written plans of care. The statute prohibits SA 
surveyors from surveying hospice programs for which they have worked in 
the last 2 years or in which they have a financial interest, requires 
hospice program SAs and AOs to use a multidisciplinary team of 
individuals for surveys conducted with more than one surveyor to 
include at least one registered nurse, and provides that each SA must 
establish a dedicated toll-free hotline to collect, maintain, and 
update information on hospice programs and to receive complaints.
    The provisions in the CAA 2021 also direct the Secretary to create 
a Special Focus Program (SFP) for poor-performing hospice programs, set 
out authority for imposing enforcement remedies for noncompliant 
hospice programs, and require the development and implementation of a 
range of remedies as well as procedures for appealing determinations 
regarding these remedies. These remedies can be imposed instead of, or 
in addition to, termination of the hospice programs' participation in 
the Medicare program. The remedies include civil money penalties 
(CMPs), suspension of all or part of payments, and appointment of 
temporary management to oversee operations.
    In the CY 2022 Home Health Prospective Payment System (HH PPS) 
final rule (86 FR 62240), we addressed provisions related to the 
hospice survey enforcement and other activities described in this 
section. A summary of the finalized CAA provisions can be found in the 
CY 2022 HH PPS final rule: https://www.govinfo.gov/content/pkg/FR-2021-11-09/pdf/2021-23993.pdf. We finalized all the CAA provisions in CY 
2022 rulemaking except for the SFP. As outlined in the CY 2022 HH PPS 
final rule, we stated that we would take into account comments that we 
received and work on a revised proposal, seeking additional 
collaboration with stakeholders to further develop the methodology for 
the SFP. Since the publication of the CY 2022 HH PPS final rule, we 
have decided to initiate a hospice Technical Expert Panel (TEP) in CY 
2022. Accordingly, CMS plans to use the TEP findings to further develop 
a proposal on the methodology for establishing the hospice SFP, and we 
plan to include a proposal implementing an SFP in the FY 2024 Hospice 
Wage Index and Payment Rate Update proposed rule.
    We received several comments regarding the SFP. A summary of those 
comments and our responses to those comments are as follows:
    Comment: Commenters were generally supportive of CMS's efforts to 
establish an SFP and convene a TEP to provide feedback on a potential 
methodology for identifying hospices in the SFP. Many of these 
commenters expressed support for the inclusion of a wide range of 
stakeholders to be considered for TEP with knowledge related to the 
hospice survey process including hospice staff who directly interact 
with patients and surveyors.
    A couple of commenters encouraged CMS to forgo the use of a quota 
system, as utilized in the Special Focus Facility (SFF) Program for 
nursing homes, in the new SFP for hospices. The commenters recommended 
CMS consider a national centralized SFP selection methodology rather 
than deferring to state priorities or agencies. Other commenters 
expressed support for standardizing the survey process, including 
standardizing surveyor training, before fully implementing the SFP to 
ensure there are no variances to how entities conduct their surveys.
    Response: We appreciate the commenters support for the SFP. We will 
consider the comments and TEP feedback as CMS develops the SFP 
methodology.

[[Page 45696]]

V. Collection of Information

    This document does not impose information collection requirements, 
that is, reporting, recordkeeping or third-party disclosure 
requirements. Consequently, there is no need for review by the Office 
of Management and Budget under the authority of the Paperwork Reduction 
Act of 1995 (44 U.S.C. 3501 et seq.).

VI. 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 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 2023 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 does not change 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 final rule would result in an estimated increase of $825 million 
in payments to hospices, resulting from the hospice payment update 
percentage of 3.8 percent for FY 2023. The impact analysis of this rule 
represents the projected effects of the changes in hospice payments 
from FY 2022 to FY 2023. In order to calculate the wage index 
standardization factor, we simulate total payments using FY 2021 
hospice utilization claims data; in this case claims accessed from the 
CCW on May 10, 2022 with the FY 2022 wage index (pre-floor, pre-
reclassified hospital wage index with the hospice floor, without the 5-
percent cap on wage index decreases) and FY 2022 payment rates, and 
compare it to our simulation of total payments using the FY 2023 
hospice wage index (pre-floor, pre-reclassified hospital wage index 
with hospice floor, with the 5-percent cap on wage index decreases) and 
FY 2022 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 2022 
wage index and payment rates for each level of care by the FY 2023 wage 
index and FY 2022 payment rates, we obtain a wage index standardization 
factor for each level of care.
    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), and the Congressional Review Act (5 U.S.C. 804(2)).
    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). 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). Based on our estimates, OMB's Office of Information and 
Regulatory Affairs has determined this final rule is ``economically 
significant'' as measured by the $100 million threshold, and hence also 
a major rule under Subtitle E of the Small Business Regulatory 
Enforcement Fairness Act of 1996 (also known as the Congressional 
Review Act). Accordingly, we have prepared an RIA that, to the best of 
our ability, presents the costs and benefits of the rulemaking.
    In accordance with the provisions of Executive Order 12866, this 
regulation was reviewed by the Office of Management and Budget.
    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. Detailed Economic Analysis

1. Hospice Payment Update for FY 2023
    The FY 2023 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 2023 updated wage index data 
with a 5-percent cap on wage index decreases. This represents the 
effect of moving from the FY 2022 hospice wage index to the FY 2023 
hospice wage index with a 5-percent cap on wage index decreases. The 
aggregate impact of the changes in column three is zero percent, due to 
the hospice wage index standardization factor. However, there are 
distributional effects of the FY 2023 hospice wage index. The fourth 
column shows the effect of the hospice payment update percentage as 
mandated by section 1814(i)(1)(C) of the Act, and is consistent for all 
providers. The hospice payment update percentage of 3.8 percent is 
based on the 4.1 percent inpatient hospital market basket update,

[[Page 45697]]

reduced by a 0.3 percentage point productivity adjustment. The fifth 
column shows the effect of all the changes on FY 2023 hospice payments. 
It is projected that aggregate payments would increase by 3.8 percent; 
assuming hospices do not change their billing practices. As illustrated 
in Table 10, the combined effects of all the proposals vary by specific 
types of providers and by location. We note that simulated payments are 
based on utilization in FY 2021 as seen on Medicare hospice claims 
(accessed from the CCW in May 10, 2022) 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.

[[Page 45698]]

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[[Page 45699]]


[GRAPHIC] [TIFF OMITTED] TR29JY22.652

2. Regulatory Review Cost Estimation
    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 this year's proposed rule will be the number of 
reviewers of this final 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 this year's proposed 
rule in detail, and it is also possible that some reviewers chose not 
to comment on the proposed rule. For these reasons we thought that the 
number of past commenters would be a fair estimate of the number of 
reviewers of this final rule. We also recognize that different types of 
entities are in many cases affected by mutually exclusive sections of 
this rule, and therefore for the purposes of our estimate we assume 
that each reviewer reads approximately 50 percent of the rule.
    Using the occupational wage information from the BLS for medical 
and health service managers (Code 11-9111) from May 2020; we estimate 
that the cost of reviewing this rule is $115.22 per hour, including 
overhead and fringe

[[Page 45700]]

benefits (https://www.bls.gov/oes/current/oes_nat.htm). This rule 
consists of approximately 29,289 words. Assuming an average reading 
speed of 250 words per minute, it would take approximately 0.98 hours 
for the staff to review half of it. For each hospice that reviews the 
rule, the estimated cost is $112.49 (0.98 hours x $115.22). Therefore, 
we estimate that the total cost of reviewing this regulation is 
$8,211.72 ($112.49 x 73 reviewers).

D. Alternatives Considered

    Since the hospice payment update percentage is determined based on 
statutory requirements, we did not consider not updating hospice 
payment rates by the payment update percentage. The 3.8 percent hospice 
payment update percentage for FY 2023 is based on a 4.1 percent 
inpatient hospital market basket update, reduced by a 0.3 percentage 
point productivity adjustment. Payment rates since FY 2002 have been 
updated according to section 1814(i)(1)(C)(ii)(VII) of the Act, which 
states that the update to the payment rates for subsequent years must 
be the market basket percentage for that FY. Section 3401(g) of the 
Affordable Care Act also mandates that, starting with FY 2013 (and in 
subsequent years), the hospice payment update percentage will be 
annually reduced by changes in economy-wide productivity as specified 
in section 1886(b)(3)(B)(xi)(II) of the Act.

E. Accounting Statement

    As required by OMB Circular A-4 (available at https://www.whitehouse.gov/wp-content/uploads/legacy_drupal_files/omb/circulars/A4/a-4.pdf), in Table 11, we have prepared an accounting 
statement showing the classification of the expenditures associated 
with the provisions of this rule. Table 11 provides our best estimate 
of the possible changes in Medicare payments under the hospice benefit 
as a result of the policies in this rule. This estimate is based on the 
data for 5,253 hospices in our impact analysis file, which was 
constructed using FY 2021 claims available in May 2022. All 
expenditures are classified as transfers to hospices.
[GRAPHIC] [TIFF OMITTED] TR29JY22.653

F. Regulatory Flexibility Act (RFA)

    The RFA requires agencies to analyze options for regulatory relief 
of small businesses if a rule has a significant impact on a substantial 
number of small entities. For purposes of the RFA, small entities 
include small businesses, nonprofit organizations, and small 
governmental jurisdictions. We consider all hospices as small entities 
as that term is used in the RFA. The North American Industry 
Classification System (NAICS) was adopted in 1997 and is the current 
standard used by the Federal statistical agencies related to the United 
States business economy. There is no NAICS code specific to hospice 
services. Therefore, we utilized the NAICS United States industry title 
``Home Health Care Services'' and corresponding NAICS code 621610 in 
determining impacts for small entities. The NAICS code 621610 has a 
size standard of $16.5 million.\33\ Table 12 shows the number of firms, 
revenue, and estimated impact per home health care service category.
---------------------------------------------------------------------------

    \33\ https://www.sba.gov/sites/default/files/2019-08/SBA%20Table%20of%20Size%20Standards_Effective%20Aug%2019%2C%202019_Rev.pdf.

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[[Page 45701]]

[GRAPHIC] [TIFF OMITTED] TR29JY22.654

    The Department of Health and Human Services 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 majority of hospice visits are Medicare paid visits and therefore 
the majority of hospice's revenue consists of Medicare payments. Based 
on our analysis, we conclude that the policies finalized in this rule 
would result in an estimated total impact of 3 to 5 percent or more on 
Medicare revenue for greater than 5 percent of hospices. Therefore, the 
Secretary has determined that this hospice final rule would have 
significant economic impact on a substantial number of small entities. 
We estimate that the net impact of the policies in this rule is a 3.8 
percent or approximately $825 million in increased revenue to hospices 
in FY 2023. The 3.8 percent increase in expenditures when comparing FY 
2023 payments to estimated FY 2022 payments is reflected in the last 
column of the first row in Table 10 and is driven solely by the impact 
of the hospice payment update percentage reflected in the fourth column 
of the impact table. In addition, small hospices would experience a 
greater estimated increase (4.1 percent), compared to large hospices 
(3.8 percent) due to the policy to cap wage index decreases at 5 
percent. Further detail is presented in Table 10, by hospice type and 
location.
    In addition, section 1102(b) of the Act requires us to prepare a 
regulatory impact analysis if a rule may have a significant impact on 
the operations of a substantial number of small rural hospitals. This 
analysis must conform to the provisions of section 604 of the RFA. For 
purposes of section 1102(b) of the Act, we define a small rural 
hospital as a hospital that is located outside of an 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 (see Table 10).

G. Unfunded Mandates Reform Act (UMRA)

    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 2022, that 
threshold is approximately $165 million. This rule is not anticipated 
to have an effect on state, local, or tribal governments, in the 
aggregate, or on the private sector of $165 million or more in any 1 
year.

H. Federalism

    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.

I. Conclusion

    We estimate that aggregate payments to hospices in FY 2023 will 
increase by $825 million as a result of the market basket update, 
compared to payments in FY 2022. We estimate that in FY 2023, hospices 
in both rural and urban areas will experience, on average, a 3.8 
percent increase in estimated payments compared to FY 2022. Hospices 
providing services in the Pacific and West South Central regions would 
experience the largest estimated increases in payments of 4.4 percent 
and 4.3 percent, respectively. Hospices serving patients in areas in 
the New England region would experience, on average, the lowest 
estimated increase of 3.3 percent in FY 2023 payments.
    This final regulation is subject to the Congressional Review Act 
provisions of the Small Business Regulatory Enforcement Fairness Act of 
1996 (5 U.S.C. 801 et seq.) and has been transmitted to the Congress 
and the Comptroller General for review.
    Chiquita Brooks-LaSure, Administrator of the Centers for Medicare & 
Medicaid Services, approved this document on July 22, 2022.

List of Subjects in 42 CFR Part 418

    Health facilities, Hospice care, Medicare, Reporting and 
recordkeeping requirements.

    For the reasons set forth in the preamble, the Centers for Medicare 
& Medicaid Services amends 42 CFR part 418 as set forth below.

[[Page 45702]]

PART 418--HOSPICE CARE

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

    Authority:  42 U.S.C. 1302 and 1395hh.


0
2. Section Sec.  418.306 is amended by revising paragraph (c) to read 
as follows:


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

* * * * *
    (c) Adjustment for wage differences. (1) Each hospice's labor 
market is determined based on definitions of Metropolitan Statistical 
Areas (MSAs) issued by OMB. CMS will issue annually, in the Federal 
Register, a hospice wage index based on the most current available CMS 
hospital wage data, including changes to the definition of MSAs. The 
urban and rural area geographic classifications are defined in Sec.  
412.64(b)(1)(ii)(A) through (C) of this chapter. The payment rates 
established by CMS are adjusted by the Medicare contractor to reflect 
local differences in wages according to the revised wage data.
    (2) Beginning on October 1, 2022, CMS applies a cap on decreases to 
the hospice wage index such that the wage index applied to a geographic 
area is not less than 95 percent of the wage index applied to that 
geographic area in the prior fiscal year.
* * * * *

    Dated: July 25, 2022.
Xavier Becerra,
Secretary, Department of Health and Human Services.
[FR Doc. 2022-16214 Filed 7-27-22; 4:15 pm]
BILLING CODE 4120-01-P