On September 21, 2021, Carson applied for an amendment to supplemental type certificate (STC) No. SR02507NY to add a hoist with an OLPD to be installed on Sikorsky Model S-61A, S-61L, and S-61N (including those modified by STC No. SH640NE, which shortens the S-61N by 50 inches) helicopters. The Model S-61 helicopters subject to these special conditions, currently approved under Type Certificate Nos. H2EA and 1H15, are twin-engine rotorcraft. The maximum takeoff weight is between 19,000 and 22,000 pounds, depending on configuration, and the helicopter has a maximum capacity of 39 passengers and a crew of 2.

Under the provisions of § 21.101, Carson must show that the helicopters for which it makes application to modify by STC No. SR02507NY, as changed, continue to meet the applicable provisions of the regulations listed in each helicopter's respective type certificate or the applicable regulations in effect on the date of application for the change except for earlier amendments as agreed upon by the FAA.

If the Administrator finds that the applicable airworthiness regulations ( e.g., 14 CFR part 29) do not contain adequate or appropriate safety standards for the Sikorsky Model S-61A, S-61L, and S-61N (including those modified by STC No. SH640NE) helicopters because of a novel or unusual design feature, special conditions are prescribed under the provisions of § 21.16.

Special conditions are initially applicable to the model for which they are issued. Should the applicant apply for a supplemental type certificate to modify any other model included on the same type certificate to incorporate the same novel or unusual design feature, these special conditions would also apply to the other model under § 21.101.

In addition to the applicable airworthiness regulations and special conditions, the Sikorsky Model S-61A, S-61L, and S-61N (including those modified by STC No. SH640NE) helicopters must comply with the exhaust-emission requirements of part 34 and the noise-certification requirements of part 36.

The FAA issues special conditions, as defined in § 11.19, in accordance with § 11.38, and they become part of the type certification basis under § 21.101.

The Sikorsky Model S-61A, S-61L, and S-61N (including those modified by STC No. SH640NE) helicopters will incorporate the following novel or unusual design feature:

An OLPD installed in a hoist.

These special conditions are necessary because regulations concerning external load carriage requirements for part 29 rotorcraft do not address hoists that include an OLPD feature.

In 1991 the FAA tasked the External Load Working Group (Working Group) of the Aviation Rulemaking Advisory Committee (ARAC) with investigating the need to complement the rotorcraft 14 CFR part 133 Class D external load carriage regulations (including transport of passengers external to the rotorcraft). Upon completion of their review, the Working Group issued a report  1 recommending updates to the external load regulations in 14 CFR part 27 and part 29.

Based on the Working Group's report, the FAA recommended several changes to part 27 and part 29 to improve safety. On July 13, 1998, the FAA published a Notice of Proposed Rulemaking  2 (NPRM) (63 FR 37746). This NPRM proposed amendments to the airworthiness standards for rotorcraft load combination certification. The FAA issued the final rule based on this NPRM for part 27 at amendment 27-36 and part 29 at amendment 29-43; however, the revised parts 27 and 29 did not address OLPD features in hoist systems. As a result, the current §§ 27.865 and 29.865 do not address hoist systems with OLPD features.

The hoist being installed by Carson includes an OLPD in its design. The OLPD reduces the likelihood of the loss of rotorcraft and crew due to an entanglement of the hoist cable. Upon activation, the OLPD affords the pilot time to respond and potentially jettison the load to save the aircraft and the crew onboard.

Because the OLPD activation range is less than the limit static load factor for human external cargo published in §§ 27.865 and 29.865, it introduces a risk that the cable could completely unspool ( i.e., loss of cargo), particularly if unspooling is not subsequently arrested once the load is reduced below the activation threshold. Despite this risk, the overall safety will be improved with the inclusion of this OLPD. Meeting the requirements of these special conditions demonstrates that the OLPD in the hoist installed by Carson will allow an OLPD activation and recapture in response to the load conditions outlined in these special conditions. By “activation” the FAA means uncommanded cable payout ( i.e., slippage). The FAA intends the activation range to bound payout. The FAA is requiring an activation range for these special conditions of 2.2 to 3.5 times the rated load. The functionality and activation requirement comes from SAE AS6342, “Minimum Operational Performance Standard (MOPS) for Helicopter Hoist Systems,” December 2020, section 4.7 paragraph 2. 3

The OLPD must activate within the range of 2.2 to 3.5 times the rated load. These special conditions do not change the structural limit load factors specified in §§ 27.865 and 29.865. These special conditions contain the additional safety standards that the Administrator considers necessary to establish a level of safety equivalent to that established by the existing airworthiness standards.

In addition to the activation range explained previously, the OLPD must be designed to continue working correctly or as expected in every way ( i.e., function properly) when experiencing the maximum external limit load specified in §§ 27.865 and 29.865.

The FAA issued Notice of Proposed Special Conditions No. 29-24-02-SC for Sikorsky Model S-61A, S-61L, and S-61N (including those modified by STC No. SH640NE, which shortens the S-61N by 50 inches) helicopters, which published in the Federal Register on March 26, 2025 (90 FR 13705).

The FAA received comments from five commenters, including Carson, Onboard Systems, Airbus Helicopters, and the European Union Aviation Safety Agency (EASA).

The FAA received a comment from an anonymous commenter, who supported the proposed special conditions without change.

Paragraph (a)(1) of the special conditions requires the OLPD to function properly. EASA requested the FAA clarify paragraph (a)(1) regarding the following points: (1) a single failure should not lead to a catastrophic event, which includes serious injury or fatality of human external cargo; and (2) the reliability of the OLPD should be in accordance with the potential failure criticality.

The FAA addresses structural requirements through 14 CFR 29.571 and system requirements through 14 CFR 29.1309. The FAA's current guidance on reliability and failure criticality is contained in Advisory Circular (AC) No. 29-2C, “Certification of Transport Category Rotorcraft.” AC No. 29-2C at change 9 references ARP4761 “Guidelines and Methods for Conducting the Safety Assessment Process on Civil Airborne Systems and Equipment,” which provides guidance on labeling the severity and probability and assigning an assurance level requirement for which to hold the applicant accountable.

Airbus Helicopters, Onboard Systems, and Carson requested the FAA revise the special conditions to define activation consistent with SAE AS6342. Onboard Systems stated activation should be limited to the OLPD static response, and the OLPD dynamic response should be characterized or demonstrated through tests in SAE AS6342 Section 5.1.9.1. Carson requested the FAA define activation solely as the initiation of slip (static slip point). Airbus Helicopters stated that while the lower limit of the activation band can be well controlled, the upper limit may be higher than 3.2 times the rated load, that the 3.2 value is arbitrary, and that any upper limit should be justified depending on the undesired event the OLPD is designated for. Airbus Helicopters further stated that in this context, the upper limit as specified in paragraph (a)(2) of the special conditions appears to be redundant with paragraph (a)(3)(i). Airbus Helicopters and Onboard Systems expressed concern that, under the special conditions as written, existing hoist/OLPD designs would be ineligible for installation certification and new designs would be unable to meet the requirements.

The FAA agrees and has revised the Discussion section to clarify that “activation” means uncommanded cable payout ( i.e., slippage). The FAA also agrees that the proposed maximum limit of the activation range tolerance is too restrictive for both OLPD activation and recapture and has revised paragraph (a)(2) of the special conditions to change the activation range to 2.2 to 3.5 times the rated load. The FAA has also added a requirement to paragraph (a)(2) that recapture must occur before the load falls below 2.2 times the rated load (2.2 or greater). Paragraph (a)(3)(i) of the special conditions requires that the OLPD prevent excess cable tension that could result in cable failure or pulling the aircraft into an unrecoverable attitude.

The FAA notes that it did not choose the proposed 3.2 value arbitrarily. Over several years of discussions among the FAA, EASA, and industry, 3.2 was determined to be an appropriate value that would provide enough protection from cable failure due to excessive loads. This number also keeps the energy from a broken cable low enough to prevent the cable from rebounding into the rotor system. However, as previously explained, the FAA has increased the limit to 3.5 times the rated load to provide additional range to the tolerance band. Regarding the comment on justification for the upper limit setting, the FAA has determined that the minimum operational performance for OLPD is that it must prevent excess cable tension that might result in cable failure or loads on the helicopter that endanger the aircraft. Paragraphs (a)(2) and (a)(3)(i) are two separate requirements. Paragraph (a)(2) establishes a maximum hoist design point, while paragraph (a)(3) contains installation level requirements protecting the aircraft and HEC. EASA requested the FAA evaluate whether the minimum load factor of 2.2 is sufficiently above the normal operational load to prevent the activation of the OLPD during normal operation.

The FAA acknowledges the comment and finds the 2.2 load factor acceptable, as established and published in SAE AS6342. No changes were made as a result of this comment.

Carson recommended that OLPD activation must not occur below 2.2 times the rated load to prevent unintentional OLPD activation.

The FAA agrees. Paragraph (a)(2) of the special condition already requires a minimum activation range of 2.2 times the rated load. No changes are necessary as a result of this comment.

Carson recommended the FAA revise paragraph (a)(3)(iv) of the proposed special conditions to address arresting cable slip (recapture) separately.

The FAA agrees. The Discussion section of the proposed special conditions defined activation as all states of its intended function (uncommanded cable payout and recapture). The FAA has revised the Discussion section of these final special conditions to limit the definition of activation as cable payout (slippage). Recapture is a separate event from OLPD activation. Recapture must occur before the load falls below 2.2 times the rated load as stated in paragraph (a)(2).

EASA stated that the proposed special conditions do not address the aging of the OLPD through time or through an OLPD activation event and that friction material could degrade over time, which could lower the OLPD set point below the prescribed value. EASA requested the FAA revise the proposed special conditions to account for these factors.

The FAA agrees and has revised paragraph (a)(2) of the special conditions to clarify that production and maintenance tolerances include aging and wear considerations.

EASA requested the FAA clarify that “design activation limit ( i.e. defined set point(s))” in paragraph (a)(3) of the proposed special conditions corresponds to the activation range in paragraph (a)(2).

The FAA concurs with EASA that the “design activation limit ( i.e. defined set point(s))” corresponds to the activation range and added clarification to the special condition.

Airbus Helicopters commented that the OLPD effectivity may be impacted when the hoist-cable is fully reeled-out due to the cable being attached to the drum. Airbus Helicopters stated that in this condition, the load required to break the cable off the drum can be even higher than the OLPD upper activation limit.

The FAA disagrees. The OLPD would not be further impacted from the cable being fixed to the drum causing even higher loads to break the cable from the drum. There is a minimum requirement of cable wraps around the drum determined by the hoist manufacturers that must be present in order to maintain load capacity.

Airbus Helicopters commented that with state-of-the-art hoists available on the market, arresting the cable after a triggering event may occur close to or slightly below the lower OLPD activation limit due to the physics of friction. Airbus Helicopters further stated that the time or cable-length to arrest the load after an activation event is dependent on various conditions, such as actual payload, cable-length, cable-reeling (slipping) speed, and temperature.

The FAA disagrees that the hoist will not recapture below 2.2 times the rated load. Industry set this condition in SAE AS6342 Section 4.7. The FAA will not certify a hoist installation that allows the load to go below 2.2 times the rated load.

The FAA received some comments that were beyond the scope of the proposed special conditions. The FAA did not make any changes as a result of these comments.

EASA requested the FAA revise the proposed special conditions to include a requirement that the cable sustain a minimum load of 3.2g.

These special conditions address the OLPD installed on the hoist system and do not address the cable. The cable is part of the hoist critical load path and is addressed through compliance with 14 CFR 29.865 and other relevant regulations within 14 CFR part 29 Subparts C and D.

EASA requested the FAA revise paragraph (a)(3)(iv) of the proposed special conditions to include a maximum unspooling length before arresting the human external cargo (HEC) and a maximum arresting load similar to the one in the EASA ETSO-2C208 paragraph 5.1.9.1.2. EASA expressed concern that a full cable unspooling or significant shock load from the cable arresting could cause injury to the HEC.

The FAA disagrees. While the FAA acknowledges the comment that human external cargo could experience bodily injury from a full cable unspooling or shock loads from recapture, these conditions are out of scope for these special conditions. These events are speculative, and the FAA does not have data to support this happens regularly during operations in the field.

Except as discussed above and in the Summary of Changes, the special conditions are adopted as proposed.

As discussed above, these special conditions are applicable to the Model S-61 helicopters listed on the approved model list (AML) of STC No. SR02507NY, which is available at https://drs.faa.gov/. Should Carson apply at a later date for a change to STC No. SR02507NY to include any other model on the AML to incorporate the same novel or unusual design feature, these special conditions would apply to that model as well.

Under standard practice, the effective date of final special conditions would be 30 days after the date of publication in the Federal Register . However, as the certification date for Sikorsky Model S-61A, S-61L, and S-61N (including those modified by STC No. SH640NE, which shortens the S-61N by 50 inches) helicopters, as modified by Carson, is imminent, the FAA finds that good cause exists to make these special conditions effective upon publication.

This action only affects certain novel or unusual design features for the helicopters listed on the AML of STC No. SR02507NY. It is not a rule of general applicability and affects only the applicant who applied to the FAA for approval of these features on the helicopter.

The authority citation for these special conditions is as follows:

Accordingly, pursuant to the authority delegated to me by the Administrator, the following special conditions are issued as part of the type certification basis for the Sikorsky Model S-61A, S-61L, and S-61N, and S-61N (including those modified by STC No. SH640NE) helicopters listed on the AML of STC No. SR02507NY, as modified by Carson.

(a) The Overload Protection Device (OLPD) must:

(1) Function properly for all loads up to and including the § 29.865(a) maximum external limit load.

(2) Be designed to hold any load up to 2.2 times the rated load and shall activate between 2.2 times the rated load and 3.5 times the rated load. This activation range must take into account production and maintenance tolerances (including aging and wear considerations), variations due to the environment ( e.g., temperature and humidity), and operations ( e.g., length of cable paid out). The above requirements must be met over the entire activation range. Recapture must never be below 2.2 times the rated load.

(3) Protect the helicopter and cargo by incorporating design activation limits ( i.e., defined set point(s) established in paragraph (a)(2)) which:

(i) Prevent excess cable tension that might result in cable failure or loads on the helicopter that endanger the aircraft,

(ii) Prevent uncommanded cable payout when experiencing cable loads below the activation range,

(iii) Allow cable payout when experiencing loads above the activation range, and

(iv) Arrest cable unspooling to prevent loss of cargo after an activation event.

(b) The OLPD installation, maintenance, and inspection instructions must be made a part of the applicable section(s) of the Instructions for Continued Airworthiness (ICA).

The FAA invites you to send any written relevant data, views, or arguments about this final rule. Send your comments using a method listed under the ADDRESSES section. Include “Docket No. FAA-2025-1726; Project Identifier 2008-NM-169-AD” at the beginning of your comments. The most helpful comments reference a specific portion of the final rule, explain the reason for any recommended change, and include supporting data. The FAA will consider all comments received by the closing date and may amend this final rule because of those comments.

Except for Confidential Business Information (CBI) as described in the following paragraph, and other information as described in 14 CFR 11.35, the FAA will post all comments received, without change, to regulations.gov , including any personal information you provide. The agency will also post a report summarizing each substantive verbal contact received about this final rule.

CBI is commercial or financial information that is both customarily and actually treated as private by its owner. Under the Freedom of Information Act (FOIA) (5 U.S.C. 552), CBI is exempt from public disclosure. If your comments responsive to this AD contain commercial or financial information that is customarily treated as private, that you actually treat as private, and that is relevant or responsive to this AD, it is important that you clearly designate the submitted comments as CBI. Please mark each page of your submission containing CBI as “PROPIN.” The FAA will treat such marked submissions as confidential under the FOIA, and they will not be placed in the public docket of this AD. Submissions containing CBI should be sent to Darren Gassetto, Aviation Safety Engineer, FAA, 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; phone: 516-228-7323; email: 9-AVS-AIR-BACO-COS@faa.gov. Any commentary that the FAA receives which is not specifically designated as CBI will be placed in the public docket for this rulemaking.

The FAA issued AD 2010-09-11, Amendment 39-16276 (85 FR 23568, May 4, 2010) (AD 2010-09-11), for all BAE SYSTEMS (Operations) Limited Model BAe 146-series and Model Avro 146-RJ series airplanes. AD 2010-09-11 required repetitive X-ray inspections to detect fatigue cracks in the left- and right-wing upper skins, joint straps, and stringers in the vicinity of rib `0' until the following inspections are initially done:

• Repetitive high frequency eddy current (HFEC) inspections of the front and rear spar flanges, a detailed visual inspection of the stringers, and a detailed visual inspection of the stringer crown fittings, all at the rib `0' joint strap for cracking and corrosion.

AD 2010-09-11 also required repetitive detailed visual and HFEC inspections to detect cracking and corrosion of the rib `0' strap, radiographic inspections of the rib `0' joint, and ultrasonic inspections of the skin at the rib `0' joint strap; repairing any cracking or corrosion; and reporting initial inspection findings.

AD 2010-09-11 was prompted by AD 2008-0168, dated September 2, 2008, issued by the European Union Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Union. EASA determined that a revised inspection program for the wing top skin and joint strap at rib `0' is necessary to ensure the continued structural integrity of this area. The FAA issued AD 2010-09-11 to address cracking of the wing center section top skin, which could lead to structural failure and consequent loss of the airplane.

Since the FAA issued AD 2010-09-11, the United Kingdom Civil Aviation Authority (UK CAA), which is the aviation authority for the United Kingdom, issued UK CAA AD G-2021-0011, dated October 8, 2021 (UK CAA AD G-2021-0011). UK CAA AD G-2021-0011 applies to all BAE SYSTEMS (Operations) Limited Model BAe 146-series and Model Avro 146-RJ series airplanes and requires revising the maintenance or inspection program, as applicable, to incorporate new or revised structural inspection requirements. UK CAA AD G-2021-0011 superseded EASA AD 2008-0168; however, instead of superseding FAA AD 2010-09-11, the FAA issued AD 2022-06-14, Amendment 39-21980 (87 FR 22126, April 14, 2022) (AD 2022-06-14). Therefore, certain structural inspections required by AD 2022-06-14 conflict with, and are more restrictive than, the inspections required by AD 2010-09-11. The FAA has determined that accomplishment of the more restrictive inspections in AD 2022-06-14 is necessary to adequately address the unsafe condition of AD 2010-09-11.

Upon further consideration, the FAA has determined that the actions required by AD 2010-09-11 are no longer appropriate. Accordingly, this AD removes all actions of AD 2010-09-11. Removal of AD 2010-09-11 does not preclude the FAA from issuing another related action or commit the FAA to any course of action in the future.

Section 553(b) of the Administrative Procedure Act (APA) (5 U.S.C. 551 et seq. ) authorizes agencies to dispense with notice and comment procedures for rules when the agency, for “good cause,” finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under this section, an agency, upon finding good cause, may issue a final rule without providing notice and seeking comment prior to issuance. Further, section 553(d) of the APA authorizes agencies to make rules effective in less than thirty days, upon a finding of good cause.

AD 2010-09-11 requires unnecessary structural inspections because the unsafe condition identified in AD 2010-09-11 is corrected by the actions in AD 2022-06-14. In addition, the structural inspections required by AD 2022-06-14 are appropriate because they are more restrictive and more adequately address the unsafe condition. Accordingly, notice and opportunity for prior public comment are unnecessary pursuant to 5 U.S.C. 553(b). In addition, for the foregoing reasons, the FAA finds that good cause exists pursuant to 5 U.S.C. 553(d) for making this amendment effective in less than 30 days.

The requirements of the Regulatory Flexibility Act (RFA) do not apply when an agency finds good cause pursuant to 5 U.S.C. 553 to adopt a rule without prior notice and comment. Because the FAA has determined that it has good cause to adopt this rule without prior notice and comment, RFA analysis is not required.

There are no costs of compliance with this AD because this AD removes AD 2010-09-11 from 14 CFR part 39. Therefore, operators are no longer required to take any actions to show compliance with AD 2010-09-11.

Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII: Aviation Programs, describes in more detail the scope of the Agency's authority.

The FAA is issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701: General requirements. Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority.

The FAA determined that this AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.

For the reasons discussed above, I certify that this AD:

(1) Is not a “significant regulatory action” under Executive Order 12866,

(2) Will not affect intrastate aviation in Alaska, and

Accordingly, under the authority delegated to me by the Administrator, the FAA amends 14 CFR part 39 as follows:

This TFR establishes a visa bond pilot program (“Pilot Program”) under section 221(g)(3) of the Immigration and Nationality Act, as amended (INA), 8 U.S.C. 1201(g)(3), which authorizes consular officers to require the posting of a Maintenance of Status and Departure Bond (“visa bond”) by an alien applying for, and otherwise eligible to receive, a business visitor/tourist (B-1/B-2) visa  1 “to insure that at the expiration of the time for which such alien has been admitted . . . or upon failure to maintain the status under which [the alien] was admitted, or to maintain any status subsequently acquired under section 1258 of this title [(INA section 248)], such alien will depart from the United States.”

Historically, Department guidance generally discouraged consular officers from exercising their authority to require visa bonds under INA section 221(g)(3), as reflected in guidance published in Volume 9 of the Foreign Affairs Manual (“9 FAM”), section 403.9-8(A) Bonds Should Rarely Be Used, 2 which states, “[t]he mechanics of posting, processing and discharging a bond are cumbersome,” and notes possible misperception of a bond requirement by the public. This view of a bond requirement is not supported by any recent examples or evidence, as visa bonds have not generally been required in any recent period, notwithstanding a 2020 pilot program that did not provide any substantive data. The Immigration and Naturalization Service Data Management Improvement Act of 2000 mandated the implementation of an integrated entry and exit data system with annual reports to Congress including among other information, “the number of aliens who arrived pursuant to a nonimmigrant visa . . . for whom no matching departure data have been obtained through the system or through other means as of the end of the alien's authorized period of stay, with an accounting by the alien's country of nationality and date of arrival in the United States.” A review of these reports going back over a decade demonstrates that hundreds of thousands of nonimmigrant visitors fail to timely depart in accord with the terms of their visitor visa. 3 The Pilot Program will enable the Department to assess the operational feasibility of posting, processing, and discharging visa bonds, in coordination with the Department of the Treasury (“Treasury”) and the Department of Homeland Security (“DHS”), and to inform any future decision concerning the possible use of visa bonds to ensure nonimmigrants using these visa categories comply with the terms and conditions of their visas and timely depart the United States.

The Department published a temporary final rule in 2020 initiating a six-month visa bond pilot program, aimed at assessing the operational feasibility of a visa bond program, 85 FR 74875 (Nov. 24, 2020). However, in light of the worldwide reduction in global travel as a result of the COVID-19 pandemic, the Department did not implement the pilot and consequently it did not provide any data on the feasibility for full implementation.

This Pilot Program responds to Executive Order 14159, “Protecting The American People Against Invasion,” which directs the Secretary of the Treasury, in coordination with the Secretaries of State and Homeland Security, to “establish a system to facilitate the administration of all bonds” under the provisions of the INA. 4 Under the Pilot Program, as discussed further below, visa bonds may be required from certain applicants for B-1/B-2 visas who are nationals of countries identified by the Department of State as having high visa overstay rates, where screening and vetting information is deemed deficient or, Citizenship by Investment (“CBI”), if the alien obtained citizenship with no residency requirement. The Department will announce the covered countries via Travel.State.Gov no fewer than 15 days before the Pilot Program takes effect, and this list may be amended throughout the pilot, with 15 days from announcement to enactment. 5 In announcing the covered countries, the Department will also provide a brief explanation of the basis for requiring bonds consistent with this rule. The face value of visa bonds will be deposited in the appropriate account using the Treasury-hosted https://www.Pay.Gov website via Form I-352, Immigration Bond.

DHS regulations at 8 CFR 103.6 provide for the posting, processing, and cancellation of such visa bonds. However, the Secretary of Homeland Security delegated the authority to the employees of the Department of State, as designated by the Secretary of State, to perform duties related to the acceptance and processing of maintenance of status and visa bonds. 6 The Secretary of State consents to Department of State employees performing duties related to the acceptance and processing of visa bonds as described in this TFR. The Department will accept and approve the I-352. Under the process for this Pilot Program, consular officers will require the visa bond be posted via https://www.Pay.Gov as a condition of visa issuance for certain visa applicants. After receiving the visa bond monies, the Treasury will place the visa bond monies in a DHS account, akin to an escrow account, held by Treasury subject to directions from DHS and/or the Department related to breach or cancellation of the visa bond as described in this TFR.

The Department is publishing this TFR to establish the Pilot Program, including: (1) the criteria for identifying visa applicants who will be required to post visa bonds; (2) three levels for the amount of the bond, with the level to be selected by the consular officer based on an alien's individual circumstances; (3) how covered countries will be announced; and (4) the duration of the Pilot Program. The Pilot Program will help the Department assess the operational feasibility of posting, processing, and discharging visa bonds, in coordination with Treasury and DHS, for the purpose of ensuring the legally required departure of an alien from the United States as described in section 221(g)(3) of the INA. This Pilot Program will inform any future decision concerning the possible use of visa bonds to address the national security and foreign policy priorities articulated in Executive Order 14159. The Pilot Program is further designed to serve as a diplomatic tool to encourage foreign governments to take all appropriate actions to ensure robust screening and vetting for all citizens in matters of identity verification and public safety, to create safeguards in CBI programs that provide citizenship without any residency in the country, and to encourage specified countries with visa overstays to ensure their nationals timely depart the United States after making temporary visits.

Executive Order 14159 directs the Secretary of the Treasury, in consultation with the Secretary of State and the Secretary of Homeland Security, to “establish a system to facilitate the administration of all bonds that the Secretary of State or the Secretary of Homeland Security may lawfully require to administer the provisions of the INA.”  7 The Department intends to use the results of the Pilot Program to assess the operational feasibility of posting, processing, and discharging visa bonds and to assess the burden such a program places on government agencies, which will inform any future decision concerning the possible use of visa bonds to address visa overstay rates and other security concerns, relative to operational considerations. The operational feasibility of posting, processing, and discharging visa bonds focuses on assessing the burdens such a program places on government agencies and identifying challenges that might arise from the interagency process for implementing visa bonds. While this Pilot Program is primarily designed to study the operational feasibility of implementing visa bonds, data collected during the Pilot may also be used to determine the effectiveness of visa bonds at reducing overstays, evaluate concerns about insufficient identity verification, and the extent to which visa bonds may deter otherwise legitimate B-1 and B-2 visa applicants from traveling to the United States.

Executive Order 14159 directs Treasury, in coordination with DHS and the Department, to take all appropriate action to implement a visa bond program. By its design and intention, the Pilot Program is a tool of diplomacy, intended to encourage foreign governments to take immediate action to reduce the overstay rates of their nationals when traveling to the United States for temporary visits, and to encourage countries to improve screening and vetting and the security of travel and civil documents, including in the granting of citizenship. As such, the rule properly is described as a key pillar of the Trump Administration's foreign policy to protect the United States from the clear national security threat posed by visa overstays and deficient screening and vetting.

The Secretary of State determined in Public Notice 12682   8 that securing America's borders and protecting its citizens from external threats is the first and highest priority of the foreign affairs function of the United States. 9 This effort requires the United States to marshal all available resources and authorities in support of securing the borders of the United States, including removing individual aliens who remain in the United States unlawfully. Executive Order 14159 states that “[m]any of these aliens unlawfully present in the United States present significant threats to national security and public safety, committing vile and heinous acts against innocent Americans. Others are engaged in hostile activities, including espionage, economic espionage, and preparations for terror-related activities. Many have abused the generosity of the American people, and their presence in the United States has cost taxpayers billions of dollars at the Federal, State, and Local levels.” This TFR addresses the Trump Administration's call to protect the American people by faithfully executing the immigration laws of the United States.

DHS produces annual reports containing nonimmigrant overstay data. In the DHS FY 2023 Overstay Report, DHS data indicated there were over 500,000 “Suspected In-Country Overstays  10 ( i.e., aliens who remained in the country past the end of their authorized stay and had yet to depart the country) among nonimmigrants admitted through air or sea ports of entry. 11 The Department's review of DHS nonimmigrant reports, which have been regularly published since 2015, indicates that the average number of aggregated annual overstays is typically in the hundreds of thousands, with several countries having significant percentages or numbers of individual aliens who are believed to have overstayed their nonimmigrant visas. 12 Furthermore, the total number of annual overstays among foreign nationals admitted to the United States at an air or sea port of entry as nonimmigrant visitors for business or pleasure on a B-1 or B-2 visa, excluding travelers from Mexico, Canada, and Visa Waiver Program (VWP) participating countries, 13 has fluctuated in recent years, based on statistics published by DHS. For fiscal years beginning 2015, DHS has published an “Overstay Report” with a broad range of statistics relating to “overstays,” which DHS defines, for purposes of these reports, as “a nonimmigrant who was lawfully admitted to the United States for an authorized period but stayed in the United States beyond [his or her] authorized admission period.”  14 As explained in the report, if a nonimmigrant timely applies for an extension of the authorized period of admission or applies to change or adjust status, the authorized period of admission may be extended, thereby avoiding being counted as overstay. The reports for fiscal years 2015 through 2023 include statistics on foreign nationals who entered the United States at an airport or sea port of entry on a B-1 or B-2 visa, excluding travelers from Mexico, Canada, and VWP participating countries. For fiscal year 2019, DHS reported a total of 320,086 overstays among this category of nonimmigrant visitors, including “out-of-country” overstays ( i.e., those who departed some time before the end of FY 2019) and in-country overstays ( i.e., those who remained in the United States at the end of FY 2019). 15 The number of such overstays fluctuated during and after the COVID pandemic, rising from 352,748 for FY 2020, 16 to 504,636 for FY 2022, 17 finally back to 314,111 for FY 2023. 18

By focusing the Pilot Program on certain countries identified as having high visa overstay rates among aliens admitted to the United States for business or pleasure (B-1/B-2) via air and sea ports of entry, 19 where screening and vetting information is deemed deficient, or which offer CBI with no residency requirement, the Department sends a message to all countries to take immediate action to encourage their nationals to comply with U.S. immigration law and address insufficient identity verification and criminal records, including for naturalized citizens of CBI countries without residency requirement. The countries subject to the Pilot Program will be announced on https://www.travel.state.gov and may modified on a rolling basis.

As detailed below, the INA grants, and Department regulations implement, consular officer authority to require bonds in appropriate circumstances. Although, historically, as a matter of policy, Department guidance has discouraged consular officers from exercising their authority to require bonds, 20 a fresh review of DHS entry-exit data has been compiled since 2015, and pursuant to authorities set forth in 1996 by the Illegal Immigration Reform and Immigrant Responsibility Act, amended by the Immigration and Naturalization Service Data Management Improvement Act of 2000, and viewed in conjunction with E.O. 14159 and Public Notice 12682, the Department is revisiting this historical guidance by first determining the feasibility of a different approach to addressing the significant foreign policy and national security threats presented by the hundreds of thousands of annual nonimmigrant visitor overstays. 21

Section 221(g)(3) of the INA, 8 U.S.C. 1201(g)(3), authorizes consular officers to require the posting of a bond by an alien applying for, and otherwise eligible to receive, a business/tourist (B-1/B-2) visa “to insure that at the expiration of the time for which such alien has been admitted . . . or upon failure to maintain the status under which [the alien] was admitted, or to maintain any status subsequently acquired under section 1258 of this title [(INA sec. 248)], such alien will depart from the United States.” INA sec. 221(g)(3), 8 U.S.C. 1201(g)(3), implicitly recognizes that there is no guarantee that an alien will depart in a timely fashion, even when an applicant is found otherwise eligible for the visa. Consequently, the same INA section contemplates that it may be appropriate to require a bond when an applicant is otherwise eligible for a visa.

Regulations regarding visa bonds include 22 CFR 41.11(b)(2), which provides that, “[i]n a borderline case in which an alien appears to be otherwise entitled to receive a visa under INA 101(a)(15)(B) or (F) but the consular officer concludes that the maintenance of the alien's status or the departure of the alien from the United States as required is not fully assured, a visa may nevertheless be issued upon the posting of a bond with the Secretary of Homeland Security under terms and conditions prescribed by the consular officer.” Additionally, 22 CFR 41.31(a)(1) references consular officer authority to require bonds from applicants for visas for temporary visits for business or pleasure (B-1/B-2) whose maintenance of status or departure “does not seem fully assured.” 8 CFR 221.1 provides, “The district director having jurisdiction over the intended place of residence of an alien may accept a bond on behalf of an alien defined in section 101(a)(15)(B) or (F) of the Act prior to the issuance of a visa to the alien or upon receipt of a request directly from a U.S. consular officer or upon presentation by an interested person of a notification from the consular officer requiring such a bond; such a bond also may be accepted by the district director with jurisdiction over the port of entry or pre-inspection station where inspection of the alien takes place.” 8 CFR 221.1 also outlines some procedural aspects of bond processing and refers to 8 CFR 103.6 for more procedural rules relating to bonds. Lastly, 8 CFR 103.6 outlines the procedures relating to bond riders, acceptable sureties, cancellation, or breaching of bonds in detail. These regulations reinforce the broad scope of the statutory authority of the Department and consular officers to require bonds to help ensure the timely departure from the United States of any visitor on a B-1/B-2 visa, when the alien is otherwise eligible for a visa, because an alien's departure after entering the United States can never be fully assured at the time of visa issuance or admission to this country.

Despite the regulatory foundation for consular officers to issue visa bonds, historically, as a matter of policy, the Department has discouraged consular officers from exercising their authority to require bonds, as reflected in volume 9 of the Foreign Affairs Manual at section 403.9-8(A), which provides, “[a]lthough 22 CFR 41.11(b)(2) permits consular officers, in certain cases, to require a maintenance of status and departure bond, it is Department policy that such bonds will rarely, if ever, be used.” The FAM section indicates that this policy relies, in part, on an assessment that “[t]he mechanics of posting, processing and discharging a bond are cumbersome.” The Pilot Program will help the Department assess the continued reliance upon the untested historical assessment that imposing visa bonds to achieve the foreign policy and national security goals of the United States remains too cumbersome to be practical. The pilot program will allow the Department to truly determine the operational feasibility of posting, processing, and discharging visa bonds, in coordination with Treasury and DHS, and inform future decisions concerning the use of visa bonds as a diplomatic tool to address overstays and insufficient identity verification, including for citizens of CBI countries who obtained citizenship with no residency requirement. The Pilot Program will constitute an exception to that general guidance with respect to the categories of aliens covered by the Pilot Program, during the 12-month duration of the Pilot Program.

The Pilot Program will last 12 months, beginning on the effective date of this TFR. The program will be limited to aliens who are: applying for B-1/B-2 nonimmigrant visas and are nationals of countries that the Department has identified: (1) as having high visa overstay rates; (2) where screening and vetting information is deemed deficient; or (3) as offering CBI, if the alien obtained citizenship with no residency requirement. The Department has selected these criteria as the bases for requiring a bond because they are generally indicators that an applicant may pose a higher potential to overstay his or her admitted stay in the United States or otherwise fail to maintain the status in which he or she was admitted, or to maintain any nonimmigrant status subsequently acquired. The Department has reached this conclusion for the following reasons. First, the Department finds that a country's high overstay rate is an indicator that a national of that country is at a higher risk of overstaying than nationals of countries with lower overstay rates. Second, the Department finds that nationals of countries where vetting and screening are deficient are nationals for whom there are concerns about overstay risks because the Department has difficulty obtaining full background and criminal history information. Third, nationals of a country with CBI who obtained citizenship with no residency requirement may have insufficient personal history within or connections to their country of nationality for sufficient screening and vetting checks to be conducted. Covered visa applicants will be required to post a bond of up to $15,000 as a condition of visa issuance, with the exact amount of the bond based upon the applicant's circumstances as determined by the consular officer but in an amount of no less than $5,000, unless the bond requirement is waived. Compliance with the bond will require arrival into and departure from the United States by air from one of the airports pre-selected for use during this pilot program, based on their capacity to automatically confirm that the alien has departed the United States in accordance with the bond's conditions. The selected airports will be announced on www.travel.state.gov 15 days ahead of bonds being implemented and may be modified on a rolling basis.

For purposes of the Pilot Program, country overstay rates will be determined based on the DHS FY 2023 Overstay Report, which is the most recent edition of this report and was published on August 5, 2024. 22 The countries subject to the pilot program will be determined based on DHS published data on overstays by nationals of the country admitted to the United States as a temporary visitor for business or pleasure (B-1/B-2 nonimmigrant status) via air and seaports of entry. The data set excluded Canada, Mexico, and countries participating in the VWP. 23 Regarding countries that have deficient screening and vetting information, Executive Order 14161 directs the Secretary of State to identify “countries throughout the world for which vetting and screening information is so deficient as to warrant a partial or full suspension on the admission of nationals.” Following that review, on June 4, 2025, President Trump issued Proclamation 10949, titled “Restricting the Entry of Foreign Nationals To Protect the United States From Foreign Terrorists and Other National Security and Public Safety Threats,” in which the President determined to either fully or partially restrict and limit the entry of nationals from specific countries. 24 Finally, regarding nationals of countries with CBI who obtained citizenship without any residence requirement, these applicants are sometimes able to undergo a name change to conceal past criminal or other illicit ties, and are not tied to the host country`s screening and vetting apparatus. Furthermore, Executive Order 14161 directed the Secretary to “evaluate all visa programs to ensure that they are not used by foreign nation-states or other hostile actors to harm the security, economic, political, cultural, or other national interests of the United States.” The countries covered by the Pilot Program will be announced via travel.state.gov 15 days ahead of bonds being implemented and may be modified on a rolling basis.

The DHS FY 2023 Overstay Report provides data on departures and overstays, by country of nationality, for foreign visitors to the United States who were expected to depart in FY 2023 (October 1, 2022-September 30, 2023). For purposes of the DHS FY 2023 Overstay Report and this Pilot Program, a “visa overstay” is an alien who was lawfully admitted to the United States and remains in the United States beyond the period of admission authorized by DHS. The initial authorized admission period is a fixed period determined by DHS at the time a B-1/B-2 visa holder applies for admission to the United States, but in some circumstances, an admission period may be extended by U.S. Citizenship and Immigration Services (USCIS) upon adjudication of an application for an extension of stay or change of nonimmigrant status.

Under the terms of the Pilot Program, an alien admitted to the United States for a temporary period as a nonimmigrant will have his or her bond cancelled if the alien (a) complies with all the conditions of each specific nonimmigrant status which she or he is accorded while classified in such status, including the condition that the alien should not accept unauthorized employment, and (b) departs from the United States on or before the date to which he or she is authorized to remain in the United States. An alien will also have his or her bond cancelled if he or she (a) is granted or has timely and properly filed an application for an extension of stay or a change in nonimmigrant status, (b) complies with all the conditions of each specific nonimmigrant status which he or she is accorded while in such status, including the condition that the alien should not accept unauthorized employment, and (c) departs from the United States on or before the extended date to which she or he is authorized to remain in the United States.

The bond obligation shall become due and payable if the alien breaches the visa bond by: (a) violating any condition of his or her status; (b) filing an unexcused untimely application for change of status or extension of his or her lawful admission; (c) remaining in the United States after expiration of the period of admission or (d), if the alien timely and properly files an application for change of status or extension of her or his lawful temporary stay, the alien does not depart the United States within 10 days after denial of such request.

As noted above, the purpose of the Pilot Program is to assess, in coordination with Treasury and DHS, the operational feasibility of: (1) posting the bond via Treasury's www.Pay.Gov service; and (2) processing, and discharging visa bonds, to inform any future decision concerning the possible use of visa bonds to address overstays and other identified immigration policy concerns.

To determine the feasibility of the Pilot Program, the Department is conducting a pilot to collect data and limiting the pilot to aliens whose authorized period of admission in the United States should be concluded within the designated time period, allowing for data collection at all stages of the process. Although section 221(g)(3), of the INA, 8 U.S.C. 1201(g)(3), authorizes consular officers to require visa bonds from applicants for B-1/B-2 visas and F (student) visas, the Pilot Program is limited to B-1/B-2 visa applicants, because their authorized period of stay after admission to the United States is fixed by DHS Customs and Border Protection (CBP) officers at the port of entry and typically lasts a matter of months. CBP officers typically authorize a maximum of one year for business visitors pursuant to 8 CFR 214.2(b)(1), and typically six months for tourists, in accordance with 8 CFR 214.2(b)(2). In contrast, F-1 nonimmigrant students generally are admitted for the duration of their status as of the time this rule was published, pursuant to 8 CFR 214.2(f)(5), which commonly is multiple years. Because the Pilot Program will last only for a limited duration, F-1 nonimmigrant students, who are in most cases likely to be authorized to remain in the United States for multiple years, would be unlikely to complete the bond cycle (which ends with cancellation or breach of the bond) during the duration of the Pilot Program. B-1/B-2 visas issued to aliens covered by the Pilot Program will be annotated to reflect the visa bond requirement. That annotation may be taken into account by CBP officers which will generally limit the period of admission for any such visa holders to 30 days.

For the duration of the Pilot Program, there will be no bond waiver application process. Section 41.11(c)(3) of the Department's regulations in title 22 CFR grants the Deputy Assistant Secretary (DAS) for Visa Services discretionary authority to waive the bond requirement, for an alien or a category of aliens, if the DAS assesses that a waiver would not be contrary to the national interest. Because all visa applicants will be presumed to want a waiver of the bond requirement, and because the only information that might be provided by an applicant that would be relevant to a waiver decision is the applicant's purpose of travel and possibly employment, which already is requested from all applicants, there will be no bond waiver application process. However, consular officers will have the authority to request waivers in very limited circumstances, such as travel for U.S. Government employees or urgent humanitarian needs, and the DAS for Visa Services has the discretionary authority to grant or deny those recommendations.

In accordance with the statutory and regulatory framework described above, the Department, through consular officers, has broad authority to require a visa applicant to post a bond in such sum and with such conditions as would help ensure the alien's timely departure from the United States. To promote the efficiency of the Pilot Program and avoid arbitrary and inconsistent bond amounts, the Department is setting guidelines for the bond amount. Because INA section 221(g)(3), 8 U.S.C. 1201(g)(3), indicates consular officers must consider each visa applicant's personal circumstances in setting the bond amount, by its reference to the consular officer prescribing a bond's sum and conditions to be sufficient to insure “such alien will depart from the United States” in a timely manner, the Department is providing consular officers three options for bond amounts: $5,000, $10,000, and $15,000. The Department believes these three levels will provide consular officers discretion to require a bond in an amount that is sufficient enough to ensure the alien does not overstay, while taking into account the visa applicant's circumstances.

Consular officers will be expected to set the bond amount at $10,000, unless the officer has reason to believe the visa applicant's circumstances would render the applicant unable to pay that amount (but yet remain sufficiently financed to pay all travel expenses through the period of intended stay in the United States), in which case the bond would be set at $5,000. Alternatively, if the alien's circumstances, including the nature and extent of the alien's contacts in the United States, would suggest a $10,000 bond would not be sufficient to ensure the alien would timely depart the United States, the officer would require a $15,000 bond as a condition of visa issuance. In making such determinations, consular officers will take into account the totality of the circumstances, including any information provided by the visa applicant on the visa application or in the visa interview regarding the alien's purpose of travel, current employment, income, skills, and education.

The three options for bond amounts were set following consultations with Treasury and DHS. In setting the amounts, the Department took into consideration costs associated with removal, including the full Immigration Enforcement Lifecycle cost (including mission support costs) ending with removal, as computed by DHS at approximately $17,121 per alien. 25 The Department viewed these costs as relevant, because an alien who overstays his or her authorized period of stay and who must be placed into removal proceedings requires the U.S. government to incur immigration enforcement-related costs that otherwise would not be incurred. For the purposes of the Pilot Program, an alien who breaches a bond would generally forfeit the bond amount, which could be used, in part, to reimburse the U.S. government for expenses incurred in the collection of breached bonds and for expenses associated with the detention of illegal aliens, necessitated by the alien overstaying his or her authorized period of stay. 26

The Department will conduct the Pilot Program for 12 months, beginning on August 20, 2025. The Department determined, in consultation with Treasury and DHS, that 12 months is an adequate period to ensure that multiple visa applicants will have completed the full bond cycle, from the visa interview, through travel to the United States, to a final determination of bond cancellation or breach. Experience with each of the steps of the bond cycle is necessary to assess the operational feasibility of posting, processing and discharging a visa bond, in coordination with Treasury and DHS. Following the conclusion of the Pilot Program, consular officers no longer will require the posting of bonds based on the guidance set out in this TFR; however, any visa bonds posted as part of the Pilot Program will remain in effect until either breached or cancelled, in accordance with terms and conditions set out on Form I-352, Immigration Bond, even after the Pilot Program period has ended.

All applicants from covered countries as listed on Travel.State.Gov will apply for nonimmigrant visas by following the standard procedures including scheduling an appointment at the consular section at a U.S. embassy or consulate and paying the associated Machine-Readable Visa fees.

During the course of the visa interview, a consular officer will determine if an applicant is otherwise eligible for a visa, and if the applicant falls within the scope of the Pilot Program. If the applicant falls within the scope of the Pilot Program, the consular officer will inform the applicant of the bond requirement and the amount of the required bond, whether $5,000, $10,000, or $15,000. The consular officer will advise the applicant that he or she must post a bond and the consular officer will deny the visa under INA section 221(g), 8 U.S.C. 1201(g), to provide further information about posting the bond through the www.Pay.Gov interface. That denial may be overcome if a bond in the required amount is duly posted within 30 days of the interview by the visa applicant or on the visa applicant's behalf by a single payer. The officer will provide to the applicant: (1) a notice explaining the bond requirement and procedures for posting a cash bond via www.Pay.Gov and (2) the link to the www.Pay.Gov site for posting the bond. DHS regulations at 8 CFR 103.6 currently provide for the posting, processing, and cancellation of such visa bonds. Due to the short duration of the visas being issued, should the visa applicant post the bond more than 30 days after the interview, the consular officer may conduct a further interview to reconfirm the applicant's purpose of travel.

The Department will email the applicant, using the contact information provided by the applicant, providing him or her a link to submit a Form I-352 associated with his or her application and the required bond amount payable through www.Pay.Gov. Submission of the Form I-352 includes submission of the required bond amount. All terms and conditions set out on Form I-352 applicable to maintenance of status and departure bonds shall apply. The obligor on the bond, whether a person who posts a cash bond on behalf of the visa applicant or the visa applicant, will be informed if the visa applicant fails to comply with the terms and conditions of the bond and, consequently, that the bond has been breached. The procedures for determining and enforcing a breach are set out on Form I-352 and in DHS regulations, including 8 CFR 103.6. However, as stated above, the Secretary of Homeland Security delegated the authority to the employees of the Department of State, as designated by the Secretary of State, to perform duties related to the acceptance and processing of maintenance of status and visa bonds. 27 State will receive confirmation from Treasury that the bond has been posted, at which point State will approve the Form I-352 and return an electronic copy to the applicant.

The consular section where the visa applicant applied will rely on contact information provided by the applicant to contact the applicant regarding the final process to issue the visa. If, upon further review, the consular officer determines the applicant is not eligible for the requested visa, the consular officer will deny the visa, and the bond will be cancelled. If the required bond is posted, and the consular officer subsequently determines the applicant remains otherwise eligible for a visa, the officer will issue the visa, valid for a single entry within three months of the date of visa issuance, with an annotation indicating the posting of a visa bond.

• This limited visa validity period is necessary to increase the likelihood that travel, notwithstanding the terms of the bond, is completed within a time frame conducive to gathering data from the Pilot Program.

• During the Pilot Program, as a condition of the bond, these visa holders may only enter and depart the United States through pre-selected ports of entry. These ports of entry will be announced via travel.state.gov.

• The visa annotation will alert CBP officers at these ports of entry that the applicant has posted a visa bond under the Pilot Program.

• CBP officers at the port of entry will limit the period of admission to 30 days.

Pursuant to 8 CFR 103.6(c)(3), the bond should be canceled when there has been “substantial performance of all conditions imposed by the terms of the bond.”  28 Bond proceeds will be returned for any visa holder who complies with the terms and conditions of the bond, based on information provided by DHS through the Arrival and Departure Information System (ADIS) in the following circumstances:

• Following the timely departure from the United States of a visa holder for whom a bond was posted, as captured in the visa holder's departure from the United States through a designated air port of entry.

• Upon expiration of the visa, if the visa holder did not travel to the United States, as captured by ADIS.

• Following CBP deeming the visa holder inadmissible and cancelling the visa by CBP at the port of entry, as captured by ADIS.

The applicant on any canceled bond will be entitled to a full refund. There will be no accrued interest on visa bonds that are issued and canceled as part of this pilot program. The Department also will provide the applicant with a Notice—Immigration Bond Cancelled (Form I-391), which confirms compliance with the conditions of the bond.

A visa holder may pursue cancellation of the bond by requesting an appointment with consular officials outside the United States within 30 days of his or her departure from the United States, or if a visa holder wishes to cancel the bond before the visa expires and without traveling. A consular officer will only approve this appointment if the consular officer confirms that the visa holder's departure was not registered in ADIS. A visa holder may confirm his or her identity by presenting a passport and responding to questions by the consular officer to confirm identity. He or she should also provide evidence demonstrating that he or she departed the United States on or before the expiration of their authorized period of stay. There are no particular documents required to demonstrate timely departure from the United States. Travelers may present to the consular officer a variety of information, including but not limited to:

• Original boarding passes used to depart the United States;

• Photocopies of entry or departure stamps in a passport indicating entry to another country after departure from the United States (the traveler should copy all passport pages that are not completely blank, and include the biographical page containing his or her photograph); and

• Photocopies of other supporting evidence, such as:

• Dated pay slips or vouchers from an employer to indicate work in another country after departure from the United States,

• Dated bank records showing transactions to indicate presence in another country after departure from the United States,

• School records showing attendance at a school outside the United States after departure from the United States, and

• Dated credit card receipts showing the traveler's name, with the credit card number deleted, for purchases made after leaving the United States.

The visa holder may also be required to demonstrate that he or she maintained the conditions of his or her status while admitted to the United States. A consular officer then will assess the information received to make a preliminary determination regarding whether the applicant has complied with the terms of the bond or breach has occurred.

If a visa holder fails to comply with the terms and conditions set forth in Form I-352, the bond will be considered breached, and the bond deposit will be forfeited. If the Department makes a preliminary finding that a visa holder has not complied with the terms and conditions of the bond, the Department will then forward the case to DHS, which is responsible for making the final determination pursuant to 8 CFR 103.6(c)(3). A visa bond will be forfeited when there has been a substantial violation of the terms and conditions set forth in paragraph G(4) of Form I-352.

At the conclusion of the Pilot Program, consular officers will no longer require the posting of bonds based on this TFR; however, any bonds posted under the Pilot Program will remain in effect until either breached or cancelled in accordance with their terms and conditions of issuance.

The rights relating to the appeal of a DHS determination of a bond breach, including which rights would accrue after DHS makes a bond breach determination, are detailed in the instructions on Form I-352 and Form I-290B.

The benefit of this Pilot Program will be a practical assessment of the operational feasibility of posting, processing, and discharging visa bonds and to assess the burden such a program places on government agencies, which will inform any future decision concerning the possible use of visa bonds to address visa overstay rates and other immigration policy goals, relative to operational considerations. If the visa bond program is determined to be operationally feasible, it would serve as a critical diplomatic tool to compel other countries to address overstays by their nationals and to address deficiencies in their identity verification standards and practices.

Until the Pilot Program countries are selected, the Department is unable to estimate the number of visa applicants that will fall within the scope of the Pilot Program. However, the Department expects the parameters of, and the countries included in, the Pilot Program to be limited due to the number of aliens expected to be found otherwise qualified for visas, and uncertainty as to the number of aliens who will choose to post a visa bond. For these reasons, the Department assumes visa bonds will be required for 2,000 visa applicants during the 12-month Pilot Program. If the average bond is $10,000 (from options of $5,000, $10,000, and $15,000), the initial cost to aliens of bonds for 2,000 visa applicants will be $20,000,000. However, assuming all nonimmigrants for whom bonds are posted comply with the terms and conditions of the bond, the actual bond amount is a temporary expenditure that will be fully refunded if cash bonds are posted.

The estimated amount of time needed for an average respondent to complete Form I-352 is thirty minutes (.50 hours) per response. The estimated additional time burden associated with this TFR, which will include arranging for the posting of a bond and returning to a consular section following their departure from the United States to confirm their compliance with the terms and conditions of the bond, is estimated to be two hours. 29 The 2024 Bureau of Labor Statistics estimate for the median U.S. hourly wage for all occupations is $23.80, 30 thus the Department estimates that this will cost each alien $47.60.

The total cost to the government associated with this Pilot Program will be determined by the number of visa applicants that will fall within the scope of the Pilot Program. That amount will include printing costs, the collection and processing burden for each Form I-352, and additional processing by consular officers. The cost of printing two forms per response is $0.75. The collection and processing of each Form I-352 takes an average of 6 hours and will be conducted by a government employee with an average hourly wage plus overhead, estimated to be $28.02. The estimated additional time a consular officer with an average hourly wage of $135 will expend for each case subject to a bond is 30 minutes. If a traveler breaches a bond posted pursuant to this TFR, DHS will incur some cost in collecting on the bond. Because DHS has no reliable basis for estimating the number of travelers or the percentage of travelers posting bonds who will breach the terms and conditions of the bond, DOS is unable to estimate the cost associated with enforcing bond breaches.

The Secretary of State has determined that all policy related to visa operations and issuance, among other matters, constitutes a foreign affairs function of the United States under the Administrative Procedure Act (5 U.S.C. 553(a)(1)). 31 The subject matter of this TFR involves visa policy, which is a foreign affairs function of the United States, directly implicating relationships between the United States and the specific countries whose nationals may be subject to the Pilot Program. The Pilot Program will, among other things, allow the Department to study the feasibility of using nonimmigrant visa bonds as a potential diplomatic tool to encourage foreign governments to take immediate action to ensure that their nationals timely depart the United States after making temporary visits. Therefore, this TFR clearly and directly impacts the foreign affairs functions of the United States and “implicat[es] matters of diplomacy directly.” City of N.Y. v. Permanent Mission of India to the U.N., 618 F.3d 172, 202 (2d Cir. 2010).

Consistent with the Secretary's determination regarding rules that involve a foreign affairs function, the Pilot Program is a tool of diplomacy to influence actions by foreign governments. By requiring visa bonds for visa applicants from the listed countries with high overstay rates for B-1/B-2 visa holders, inadequate documentation or screening and vetting, and CBI without residency, the Pilot Program aims to encourage those countries to cooperate with the United States in ensuring timely departure of their citizens/nationals from the United States and to signal to other countries that the United States takes overstays seriously. The Department's focus on these countries will demonstrate the United States' intolerance of visa overstays and encourage the foreign governments to cooperate in addressing overstays by their nationals. Accordingly, this TFR is properly viewed as one that “clearly and directly involve[s] activities or actions characteristic to the conduct of international relations.” Capital Area Immigrants' Rights Coal. v. Trump, 471 F. Supp. 3d 25, 53 (D.D.C. 2020).

This TFR would not regulate “small entities” as that term is defined in 5 U.S.C. 601(6) and as such would not have a significant economic impact on a substantial number of small entities. This TFR only proposes to regulate individual visa applicants. The Department affirms that this proposed rule would not have a significant economic impact on a substantial number of small entities.

The Unfunded Mandates Reform Act of 1995, 2 U.S.C. 1532, generally requires agencies to prepare a statement before proposing any rule that may result in an annual expenditure of $100 million or more by State, local, or tribal governments, or by the private sector. This TFR does not require the Department to prepare a statement because it will not result in any such expenditure, nor will it significantly or directly affect small governments, including State, local, or tribal governments, or the private sector. This TFR involves visas for aliens, and does not directly or substantially affect State, local, or tribal governments, or businesses.

The Office of Information and Regulatory Affairs has determined that this TFR is not a major rule as defined in 5 U.S.C. 804, for purposes of congressional review of agency rulemaking. This TFR will not result in an annual effect on the economy of $100 million or more; a major increase in costs or prices; or significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of companies based in the United States to compete with foreign based companies in domestic and import markets.

Executive Orders 12866 (Regulatory Planning and Review) and 13563 (Improving Regulation and Regulatory Review), direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. These Executive Orders stress the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. The Office of Information and Regulatory Affairs has determined that this is a significant regulatory action under Section 3(f) of Executive Order 12866.

This Temporary Final Rule will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. Nor will the Temporary Final Rule have federalism implications warranting the application of Executive Orders 12372 and 13132.

The Department has determined that this rulemaking will not have tribal implications, will not impose substantial direct compliance costs on Indian tribal governments, and will not pre-empt tribal law. Accordingly, the requirements of Section 5 of Executive Order 13175 do not apply to this rulemaking.

The Department has reviewed this TFR in light of sections 3(a) and 3(b)(2) of Executive Order 12988 to eliminate ambiguity, minimize litigation, establish clear legal standards, and reduce burden.

This rule is not an Executive Order 14192 regulatory action because it is being issued with respect to foreign affairs and immigration related functions of the United States. The rule's primary direct purpose is to implement or interpret the immigration laws of the United States (as described in INA § 101(a)(17); 8 U.S.C. 1101(a)(17)) or any other function performed by the U.S. Federal Government with respect to aliens.

This TFR does not impose any new reporting or record-keeping requirements subject to the Paperwork Reduction Act, 44 U.S.C. Chapter 35. The Department of State will rely on form I-352 from the Department of Homeland Security, OMB Control Number 1653-0022, to implement the provisions of this rule. The Department of Homeland Security has accounted for this use of the form in its information collection requests to the Office of Management and Budget.

For the reasons stated in the preamble, the Department amends 22 CFR part 41 to read as follows:

Background information. This direct final rule revises the Department's regulations, which are administered by BOEM, that contain a provision specifying that at least every 2 years, the Secretary of the Interior (Secretary) will publish a 5-year schedule of anticipated lease sales in section 585.150 of title 30 of the Code of Federal Regulations. Upon reviewing this regulation, the Department has determined that it should be rescinded because this schedule of anticipated lease sales is not mandated by the authorizing statute, the Outer Continental Shelf Lands Act (OCSLA), and unnecessarily limits the Secretary's discretion over scheduling renewable lease sales. Moreover, on January 20, 2025, President Trump invoked section 12(a) of OCSLA (43 U.S.C. 1341(a)) to temporarily but indefinitely withdraw unleased areas on the OCS from wind leasing, and, because that withdrawal prevents future renewable energy leasing while it is in effect, it serves no purpose for the Department to publish a schedule of sales every 2 years. The Department has determined that these reasons justify rescission of 30 CFR 585.150. The Department has no interest in maintaining a rule that is unnecessary.

The Department has determined that this rule is not controversial and is administrative in nature and is therefore issuing this action as a direct final rule. Rescinding § 585.150 does not prevent BOEM from publishing a schedule of renewable lease sales if the Secretary determines that such a schedule is warranted, and, indeed, BOEM had done so in the past before § 585.150 was promulgated. Moreover, publication of a renewable lease sale schedule does not mandate that BOEM ultimately hold any particular lease sale. This rescission will be effective September 4, 2025 unless significant adverse comments are received by August 20, 2025. For purposes of this section, an adverse comment is one which explains why the rule would be inappropriate, including a challenge to the rule's underlying premise or approach, or why the rule would be ineffective or unacceptable without changes. Comments that are insubstantial or opinion only will not be considered adverse under this procedure. A comment recommending a rule change in addition to the rule will not be considered an adverse comment, unless there is a statement of why the rule would be unacceptable without the additional change.

Organization of this document. The information in this preamble is organized as follows:

30 CFR 585.150 directs a schedule for publication of projected renewable energy lease sales. A projected schedule of lease sales is not mandated by the authorizing statute, the OCSLA. The Department does not wish to maintain unnecessary rules, and this section will be removed. This final action removes 30 CFR 585.150.

30 CFR 585.150 does not regulate the public. This is an administrative change only and its removal does not affect any legal rights, obligations, or interests of any affected party.

In addition to being available in the docket, BOEM will post an electronic copy of this direct final rule at: https://www.boem.gov/about-boem/regulations-guidance/published-rules.

Section 5 of OCSLA (43 U.S.C. 1334) authorizes the Secretary to issue regulations to administer leasing on the Outer Continental Shelf (OCS). Section 5(a) of OCSLA (43 U.S.C. 1334(a)) authorizes the Secretary to “prescribe such rules and regulations as may be necessary to carry out [provisions of OCSLA]” related to leasing on the OCS. Also, subsection 8(p)(8) of OCSLA (43 U.S.C. 1337(p)(8)) authorizes the Secretary to “issue any necessary regulations to carry out this subsection.” This rule only makes administrative changes to remove a section from part 585 of title 30 that does not regulate the public.

E.O. 12866 gives OMB the authority to review regulatory actions that are categorized as “significant”; i.e., those actions that are likely to result in a rule that may:

• Have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy; a sector of the economy; productivity; competition; jobs; the environment; public health or safety; or state, local or tribal governments or communities;

• Create a serious inconsistency or otherwise interfere with an action taken or planned by another agency;

• Materially alter the budgetary impacts of entitlements, grants, user fees or loan programs or the rights and obligations of recipients thereof; or

• Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order.

E.O. 12866 provides that the Office of Information and Regulatory Affairs (OIRA) in the Office of Management and Budget (OMB) will review all significant rules. OIRA has determined that this action is not a significant regulatory action, and therefore, it was not submitted to OMB for review.

E.O. 13563 reaffirms the principles of E.O. 12866 while calling for improvements in the Nation's regulatory system to promote predictability and reduce uncertainty, and to use the best, most innovative, and least burdensome tools for achieving regulatory ends. E.O. 13563 directs agencies to consider regulatory approaches that reduce burdens and maintain flexibility and freedom of choice for the public where these approaches are relevant, feasible, and consistent with regulatory objectives. BOEM has developed this rule in a manner consistent with these requirements.

The RFA, 5 U.S.C. 601-612, requires agencies to prepare a regulatory flexibility analysis for any rule subject to notice and comment rulemaking requirements under the Administrative Procedure Act (APA) unless the rule will not have a significant economic impact on a substantial number of small entities. The RFA generally requires agencies to analyze the economic impact of regulations when there is likely to be a significant economic impact on a substantial number of small entities and to consider regulatory alternatives that will achieve the agency's goals while minimizing the burden on small entities. This action will not have a significant economic impact on small entities under the RFA because it does not impose any requirements on small entities. The rescission of section 585.150 does not regulate the public.

The SBREFA, 5 U.S.C. 804(2), requires BOEM to perform a regulatory flexibility analysis, provide guidance, and help small businesses comply with statutes and regulations for major rulemakings. This action is not subject to the SBREFA because it: (1) does not have an annual effect on the economy of $100 million or more; (2) will not cause a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions; and (3) does not have significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of U.S.-based enterprises to compete with foreign-based enterprises.

BOEM anticipates the final rule would have neither significant employment nor small business impacts; nor cause major price increases for consumers, businesses, or governments; nor significantly degrade competition, employment, investment, productivity, innovation, or the ability of U.S. businesses to compete against foreign businesses. The rule only rescinds a section that does not regulate the public.

Small businesses may send comments on the actions of Federal employees who enforce or otherwise determine compliance with Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman, and to the Regional Small Business Regulatory Fairness Board. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of BOEM, call 1-888-REG-FAIR (1-888-734-3247).

The UMRA, 2 U.S.C. 1531-1538, requires Federal agencies, unless otherwise prohibited by law, to assess the effects of regulatory actions on state, local and Tribal governments, and the private sector. Section 202 of UMRA generally requires Federal agencies to prepare a written statement, including a cost-benefit analysis, for each proposed and final rule with “Federal mandates” that may result in expenditures by state, local, and Tribal governments, in the aggregate, or to the private sector of $100 million or more in any one year. BOEM has determined this action does not contain any unfunded mandate as described in UMRA 2, U.S.C. 1531-1538, and does not significantly or uniquely affect small groups.

The action imposes no enforceable duty on any State, local, or Tribal governments or the private sector.

E.O. 12630 ensures that government actions affecting the use of private property are undertaken on a well-reasoned basis with due regard for the potential financial impacts imposed on the government. This action does not effect a taking of private property or otherwise have taking implications under E.O. 12630. A takings implication assessment is not required.

E.O. 13132 (64 FR 43255, August 4, 1999) revoked and replaced E.O.s 12612 (Federalism) and 12875 (Enhancing the Intergovernmental Partnership). E.O. 13132 took effect on November 2, 1999, and thus applies to actions published on or after November 2, 1999. Sections 3 and 6 of E.O. 13132 apply to policies with federalism implications, defined in the Executive Order as including actions that have “substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.”

Regulatory actions that have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government are subject to E.O. 13132. Under the criteria in section 1 of E.O. 13132, this rule does not have sufficient federalism implications to warrant the preparation of a federalism summary impact statement. It will not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government.

E.O. 12988 requires that rules:

(1) Meet the criteria of section 3(a) requiring that all regulations be reviewed to eliminate errors and ambiguity and be written to minimize litigation; and

(2) Meet the criteria of section 3(b)(2) requiring that all regulations be written in clear language and contain clear legal standards.

This rule complies with the requirements of E.O. 12988.

The Department and BOEM strive to strengthen their government-to-government relationships with Indian Tribes through a commitment to consultation with Indian Tribes and recognition of the Tribes' right to self-governance and Tribal sovereignty. BOEM evaluated this rule under the Department's consultation policy, Departmental Manual part 512, chapters 4 and 5, and E.O. 13175. BOEM determined that this rule has no substantial direct effects on federally recognized Indian Tribes or Alaska Native Claims Settlement Act Corporations and that consultation under existing Department and BOEM policies is not required.

This rule does not contain information collection requirements, and a submission to the OMB under the PRA (44 U.S.C. 3501 et seq. ) is not required. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number.

This rule does not constitute a major Federal action significantly affecting the quality of the human environment. A detailed environmental analysis under NEPA is not required because the final rule is covered by a categorical exclusion (see 43 CFR 46.205). This final rule meets the criteria set forth at 43 CFR 46.210(i) for a Departmental categorical exclusion in that this final rule is “of an administrative, financial, legal, technical, or procedural nature.” BOEM has also determined that the final rule does not involve any of the extraordinary circumstances listed in 43 CFR 46.215 that would require further analysis under NEPA.

In promulgating this rule, BOEM did not conduct or use a study, experiment, or survey requiring peer review under the Data Quality Act (Pub. L. 106-554, app. C, sec. 515, 114 Stat. 2763, 2763A-153-154). In accordance with the Data Quality Act, the Department has issued guidance regarding the quality of information that it relies upon for regulatory decisions. This guidance is available at the Department's website at: https://www.doi.gov/ocio/policy-mgmt-support/information-and-records-management/iq.

E.O. 13211 was issued on May 22, 2001, and requires Federal agencies to prepare a “Statement of Energy Effects” when undertaking certain regulatory actions. A Statement of Energy Effects describes the adverse effects of a “significant energy action” on energy supply, distribution and use; reasonable alternatives to the action; and the expected effects of the alternatives on energy supply, distribution and use.

Under E.O. 13211, BOEM is required to prepare and submit to OMB a “Statement of Energy Effects” for “significant energy actions.” This should include a detailed statement of any adverse effects on energy supply, distribution, or use (including a shortfall in supply, price increases, and increased use of foreign supplies) expected to result from the action and a discussion of reasonable alternatives and their effects. This action is not subject to E.O. 13211, because it is not a significant regulatory action under E.O. 12866.

The CRA, 5 U.S.C. 801-808, established a mechanism to expedite congressional review of agency rules. The CRA generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. It is important to note that the CRA applies only to final rules; it does not apply to proposed rules. BOEM generally submits a report containing the rule and other required information to the U.S. Senate, the U.S. House of Representatives and the Comptroller General of the United States prior to publication of the rule in the Federal Register . A “major rule” cannot take effect until 60 days after it is published in the Federal Register or is submitted to Congress, whichever is later.

This rule is exempt from the CRA because it is a rule of department organization, procedure or practice that does not substantially affect the rights or obligations of non-agency parties (5 U.S.C. 804(3)).

This action by the Assistant Secretary is taken pursuant to an existing delegation of authority.

For the reasons stated in the preamble, the Department of the Interior amends 30 CFR part 585.150 as follows:

Throughout this document “we,” “us,” and “our” refer to EPA.

The EPA is approving Iowa's Regional Haze plan for the second planning period and adding three Iowa source-specific permits into the Iowa SIP submitted on August 15, 2023. The Iowa Department of Natural Resources (IDNR) submitted the plan to satisfy the regional haze program requirements pursuant to CAA sections 169A and 169B and 40 Code of Federal Regulations (CFR) 51.308. As required by section 169A of the CAA, the federal RHR calls for state and federal agencies to work together to improve visibility in 156 national parks and wilderness areas. The rule requires the states, in coordination with the EPA, the National Parks Service (NPS), the U.S. Fish and Wildlife Service (FWS), the U.S. Forest Service (USFS), and other interested parties, to develop and implement air quality protection plans to reduce the pollution that causes visibility impairment. Visibility impairing pollutants include fine and coarse particulate matter (PM) ( e.g., sulfates, nitrates, organic carbon, elemental carbon, and soil dust) and their precursors ( e.g., sulfur dioxide (SO 2 ), nitrogen oxides (NO X ), and, in some cases, volatile organic compounds (VOC) and ammonia (NH 3 )). As discussed in further detail in our Notice of Proposed Rulemaking (NPRM) the EPA finds that Iowa has submitted a Regional Haze plan that meets the Regional Haze requirements for the second planning period. The State's submission and NPRM can be found in the docket for this action.

On August 15, 2023, IDNR submitted a revision to the Iowa SIP to address its regional haze obligations for the second implementation period, which runs through 2028. The long-term strategy for Iowa's Regional Haze plan includes emission limits contained in three air construction permits issued to three sources owned by MidAmerican Energy Company (MidAmerican) and submitted by Iowa for incorporation into the SIP in 40 CFR 52.820(d) EPA approved state source-specific requirements. Louisa Generating Station (LGS) permit #05-A-031-P6 contains a SO 2 emission limit of 800 lb/hr based on a 30-day rolling average for the main boiler. Walter Scott Jr. Energy Center unit 3 (WSEC-3) permit #75-A-357-P9 contains a SO 2 emission limit of 770 lb/hr based on a 30-day rolling average. Walter Scott Jr. Energy Center unit 4 (WSEC-4) permit #03-A-425-P4 contains a SO 2 emission limit of 0.1 lb/MMBtu and a NO X emission limit of 0.07 lb/MMBtu. The state's SIP submission requested that the EPA not act on Condition 11 of the permits for LGS and WSEC-3 nor Condition 6 of the permit for WSEC-4, and accordingly those conditions are not included in this action. The full permits are included in appendix E of the state submission in the docket for this action.

The State's submission met the public notice requirements in accordance with 40 CFR 51.102. The submission also satisfied the completeness criteria of 40 CFR part 51, appendix V. Iowa made its 2023 Regional Haze SIP submission available for public comment from February 13, 2023, through March 16, 2023. IDNR received and responded to public comments and included the comments and responses to those comments in its submission.

On August 2, 2024 (89 FR 63258), the EPA published the NPRM proposing approval of Iowa's SIP submission as satisfying the regional haze requirements for the second planning period contained in the CAA and 40 CFR 51.308. The EPA is now determining that the Iowa Regional Haze SIP submission for the second RHR planning period meets the applicable statutory and regulatory requirements in CAA section 169A and 40 CFR 51.308 and is thus approving Iowa's submission into its SIP.

The public comment period on the EPA's proposed rule opened August 2, 2024, the date of its publication in the Federal Register and closed on September 3, 2024. During this period, the EPA received four sets of comments. One set of comments originated from a group of six conservation organizations: the Sierra Club, National Parks Conservation Association, Coalition to Protect America's National Parks, Interfaith Power and Light, Environmental Law and Policy Center, and Iowa Environmental Council (collectively referred to as “the Conservation Groups” throughout this document). A second set of 88 nearly identical comment letters were submitted from Iowa Sierra Club members (collectively referred to as “Sierra Club members” throughout this document). The remaining two sets of comments were submitted from individual organizations. All the public comments are available in the docket for this final action via Docket ID Number EPA-R07-OAR-2024-0313 on the https://www.regulations.gov website.

We determined that one comment was not germane to our action, for the following reasons. One commenter expressed opposition to the cultivation of cannabis, asserting general air pollution concerns. The commenter did not provide any tangible connection to the regional haze requirements or the Iowa submission. The EPA acknowledges the commenter's concerns; however, the comment is outside the scope of this action and does not indicate that the EPA's approval of the SIP submission is inconsistent with the CAA. Oversight of cannabis farms is unrelated to this regional haze action.

In the rest of this section, the EPA has summarized and provided responses to the adverse comments received on the NPRM. EPA has also considered the comments received in support of the NPRM. Having done so, the EPA is finalizing its approval of the Iowa SIP submission for the RHR second planning period.

Comment 1: Iowa Sierra Club Members comment that Iowa is not taking adequate steps to control air pollution from the LGS, WSEC-3, WSEC-4, George Neal North (GNN), and George Neal South (GNS) coal plants. The comments state that under the RHR, IDNR must require cost-effective controls at these plants for both SO 2 and NO X . The commenters request that the EPA reject Iowa's SIP and promptly issue a strong Federal Implementation Plan (FIP) that will curb haze-causing pollution at its source. The commenters conclude that haze-causing pollutants cause health impacts.

Response 1: The EPA disagrees that Iowa has not taken adequate steps to limit haze-causing pollution and that Iowa's second planning period SIP submission must include additional SO 2 and NO X controls at LGS, WSEC-3, WSEC-4, GNN, and GNS. The CAA and the RHR require states to evaluate and determine the emission reduction measures that are necessary to make reasonable progress towards natural visibility conditions in Class I areas by considering the four statutory factors. 1 As long as these determinations are reasonable, states have substantial discretion in making them, and the EPA will not insist on a particular combination of analyses and control measures as a condition of approval. The RHR requires each State to “submit a long-term strategy (LTS) that addresses regional haze visibility impairment for each mandatory Class I Federal area within the State and for each mandatory Class I Federal area located outside the State that may be affected by emissions from the State. The LTS must include enforceable emissions limitations, compliance schedules, and other measures that are necessary to make reasonable progress.”  2 As detailed in the NPRM and the State submission, Iowa selected two electric generating units (EGUs) with the largest SO 2 and NO X emissions for four-factor analysis: LGS and WSEC-3. As a result of the four-factor analysis conducted for LGS and WSEC-3, Iowa required MidAmerican to optimize the operation of existing scrubber controls and required compliance with new regional haze SO 2 limits by December 31, 2023. The EPA finds that Iowa has satisfied the requirement that states determine the emission reduction measures that are necessary to make reasonable progress by considering the four factors, and the EPA also finds that the operational improvements required by Iowa at LGS and WSEC-3 meet the LTS requirements for the second planning period.

In addition, the EPA has reviewed power sector emissions data collected by EPA's Clean Air Markets Program Division (CAMPD) under 40 CFR part 75. This data is publicly available through the CAMPD Database. 3 Following the 2023 compliance deadline, the 2024 annual SO 2 emissions decreased at LGS and WSEC-3 by a combined total of 11,169 tons, as compared to the 2017-2019 average used as a baseline in Iowa's 2023 SIP.

The commenter correctly notes that haze-causing pollutants cause health impacts. However, as stated in Iowa's submission at section 12.1. Response to Public Comments: (1) The purpose of the RHR is to restore natural visibility conditions in Class I areas and not to evaluate health impacts from criteria pollutants in areas outside Class I areas. Implementation of the National Ambient Air Quality Standards (NAAQS) is provided for in section 110 of the CAA; and (2) the EPA and IDNR have stated that the regulatory requirements at 40 CFR 51.308 do not apply to the NAAQS and do not provide for the requirement that states consider ancillary benefits. To further substantiate this position, as IDNR notes, all ambient air quality monitors in Iowa are currently measuring attainment with the NAAQS. As discussed in the NPRM and in this notice of final rulemaking, the EPA evaluated Iowa's SIP submission against the statutory and regulatory regional haze requirements and determined that it satisfies the requirements. Thus, the EPA is finalizing its approval of the Iowa SIP submission and has no obligation to promulgate a FIP.

Comment 2: The Conservation Groups comment that Iowa's cost analyses for MidAmerican's LGS and WSEC-3 include costs and cost assumptions that are inconsistent with EPA's Control Cost Manual. The commenters argue that the EPA must disapprove IDNR's unreasonable use of a firm-specific interest rate until IDNR and MidAmerican present sufficient documentation on the underlying assumptions and costs of the firm-specific interest rate. The Conservation Groups state that because “IDNR fails to provide any documentation supporting MidAmerican's inclusion of AFUDC costs, its weighted cost of capital, or its use of a firm-specific interest rate,” the EPA must disapprove the SIP submission for failure to provide proper documentation for its cost analysis and issue a FIP using an interest rate that is supported by the record at the time of the final decision.

Response 2: The EPA disagrees with the Conservation Groups' assertions that the 7.862 percent firm-specific interest rate is unreasonable, and that MidAmerican did not provide sufficient justification. IDNR used the tools provided and recommended by the EPA for calculating control cost estimates at LGS and WSEC-3. In accordance with EPA's Air Pollution Control Cost Manual (Control Cost Manual), 4 IDNR requested that MidAmerican provide additional justification to support the use of a firm-specific interest rate, and that information is included in appendix D-3 of the state submission. Furthermore, at the time of the state public comment period, the prime lending rate was 7.75 percent. In section 12.1. Response to Public Comments, IDNR states, “differences in costs calculations between those based on a 7.75 percent bank prime rate versus those using the justified firm-specific interest rate of 7.862 percent are inconsequential.” Finally, we note that the bank prime lending rate since the SIP submission by IDNR has been as high as 8.50 percent. The EPA does not agree that IDNR's use of a 7.862 percent interest rate is unreasonable and warrants issuance of a FIP because Iowa's cost analyses satisfied the requirements of 40 CFR 51.308(f)(2).

Comment 3: The Conservation Groups' comment that Iowa's cost-effective analyses failed to justify the truncated 20-year useful life of SO 2 and NO X control options at LGS and WSEC-3 and that such a justification is required by the RHR. The comment asserts that unjustifiably shorter useful life assumptions skew the cost analysis, making post-combustion controls seem less cost effective. The commenters conclude that because of IDNR's failure to provide a reasonable explanation for the remaining useful life, the EPA must disapprove the SIP submission and issue a FIP that assumes the typical 30-year useful life for the control equipment.

Response 3: The EPA disagrees that Iowa's cost analyses are inconsistent with the Control Cost Manual or the RHR. For NO X controls, Iowa's cost analysis for selective catalytic reduction (SCR) used 30 years for the equipment life, consistent with the Control Cost Manual and the commenter's assertion that 30 years is the appropriate equipment life. Iowa's cost analysis for selective non-catalytic reduction (SNCR) used 20 years for equipment life, consistent with the Control Cost Manual.

For SO 2 controls, Iowa concurred with the MidAmerican cost analyses' useful life estimates. The MidAmerican cost analyses used a 20-year useful life to evaluate operational improvements to the existing dry flue gas desulfurization (FGD) systems and new wet FGD systems. The Control Cost Manual specifies that EPA has generally used equipment life estimates of 20 to 30 years for analyses using acid gas scrubbers, although these estimates are recognized to be low for many installations. 5 Though EPA generally recommends a 30-year equipment life for acid gas scrubbers, Iowa's use of a 20-year useful life in its 2023 SIP is not inconsistent with the Control Cost Manual. While we acknowledge that changing the useful life variable to 30 years in these analyses may result in a higher cost-effectiveness of both wet and dry FGD systems, as demonstrated in the Conservation Groups' submitted analysis, we do not agree that assuming a useful life of 30 years would impact the final control decision, due to the very high capital costs of installing new wet FGD systems at LGS and WSEC-3 as compared to improved operation of the existing dry FGD systems, which would incur no equipment related capital costs. Furthermore, Iowa's useful life assumptions did not prevent Iowa from requiring new control measures for those sources. Iowa's 2023 Regional Haze SIP includes cost-effective control measures that require MidAmerican to optimize the operation of existing dry scrubber controls at LGS and WSEC-3, which will reduce actual SO 2 emissions by a combined total of approximately 9,700 tons per year compared to the 2017-2019 emissions baseline. Iowa concluded that these improvements were necessary to make reasonable progress towards natural visibility conditions in linked Class I areas. As discussed in the NPRM and in this notice of final rulemaking, the EPA has evaluated Iowa's SIP submission against the applicable statutory and regulatory regional haze requirements. We find the submission satisfies the regional haze requirements of 40 CFR 51.308(f)(2)(i) regarding both the sources selected for evaluation and the emission reduction measures necessary to make reasonable progress during the second implementation period.

Comment 4: The Conservation Groups' comment that Iowa's cost analysis failed to evaluate the highest SO 2 removal efficiency that could be achieved with upgrades to existing dry FGD systems and new wet FGD systems at LGS and WSEC-3. The commenters conclude that the EPA must disapprove Iowa's SO 2 four-factor analysis for LGS and WSEC-3 and promulgate a FIP requiring dry FGD system upgrades to achieve at least 95% control, with a floor of 0.05 lb/MMBtu, and include an evaluation of and requirements for a wet FGD retrofit to achieve an annual average SO 2 rate of 0.03 lb/MMBtu at LGS and at WSEC-3. The Commenters' specific comments on this topic are addressed in Comments 4.a through 4.c below.

Comment 4.a: The commenters state that “data shows that several coal-fired power plant units with wet scrubbers achieve SO 2 rates lower than 0.04 lb/MMBtu on an annual basis,” and the analysis must evaluate the wet FGD retrofit to achieve an annual average SO 2 rate of 0.03 lb/MMBtu at LGS and WSEC-3. The commenters state that “the EPA has long indicated that states must evaluate controls at their most efficient levels.”

Response 4.a: The EPA disagrees with the Conservation Groups' assertion that the EPA must promulgate a FIP requiring wet FGD retrofit to achieve an annual average SO 2 rate of 0.03 lb/MMBtu at LGS and WSEC-3. The EPA notes that the quote in the comment summary stating “the EPA has long indicated that states must evaluate controls at their most efficient levels” is a direct quote from the Conservation Groups' comment letter. The commenters cite to 70 FR 39166 (July 6, 2005) to support the quoted language. The cited Federal Register document is titled Regional Haze Regulations and Guidelines for Best Available Retrofit Technology (BART) Determinations. The published final rule makes changes to the 1999 iteration of the RHR after it was challenged in the D.C. Circuit, including “requir[ing] the States to consider the degree of visibility improvement resulting from a source's installation and operation of retrofit technology, along with the other statutory factors set out in CAA section 169A(g)(2), when making a BART determination.”  6 Notably, this rulemaking pertained to 40 CFR 51.308(e), which contains the BART guidelines and requirements for the first implementation plans due under the regional haze program. Therefore, this 2005 preamble is not a useful resource for interpreting non-BART related requirements for the second planning period set forth in 40 CFR 51.308(f).

Furthermore, the cited page of the Federal Register document does not support the Conservation Groups' contention. This page covers step 3 of the BART analysis: evaluation of technically feasible alternatives. In answering the question “how do I evaluate control techniques with a wide range of emission performance levels,” the preamble states “[i]t is not [the EPA's] intent to require analysis of each possible level of efficiency for a control technique as such an analysis would result in a large number of options. It is important, however, that in analyzing the technology you take into account the most stringent emission control level that the technology is capable of achieving.”  7 This section further advises “[w]hile you must consider the most stringent level as one of the control options, you may consider less stringent levels of control as additional options. This would be useful, particularly, in cases where the selection of additional options would have widely varying costs and other impacts.”  8

The BART determinations required by 40 CFR 51.308(e) during the regional haze program's first planning period are distinct from the reasonable progress determinations required during the second planning period under 40 CFR 51.308(f). The first planning period source-specific BART analysis required states to examine the “best available” system of compliance for eligible sources, while there is no such requirement for the second planning period under the reasonable progress regulations at 40 CFR 51.308(f). Therefore, as the Conservation Groups' argument that Iowa failed to evaluate the highest SO 2 efficiency that could be achieved with a wet FGD system is based upon the first planning period requirements for BART controls, the EPA does not find it to be compelling.

Comment 4.b: For dry FGD systems, the comment asserts MidAmerican evaluated improvements that would achieve an SO 2 rate of 0.10 lb/MMBtu, which reflects only a 78 percent control efficiency. The commenters state that Iowa must evaluate FGD upgrades to meet a 90 percent reduction level or an annual average emission rate of 0.05 lb/MMBtu at both LGS and WSEC-3 and must also impose an SO 2 emission limit of 0.06 lb/MMBtu on a 30-day rolling average basis at both units. The Conservation Groups argue that the Control Cost Manual indicates that in multiple locations, SDA systems are capable of meeting 95 percent control efficiency while treating coal with sulfur content up to three percent. The commenters point to the EPA's December 28, 2011, first planning period Oklahoma FIP (76 FR 81728), stating that the EPA indicated that underperforming SDA scrubbers should be evaluated at 95 percent control and a floor of a 0.06 lb/MMBtu emission rate.

Response 4.b: The EPA disagrees with the assertion that Iowa must evaluate dry FGD system upgrades to achieve at least 90 percent control efficiency or impose an SO 2 emission limit of 0.06 lb/MMBtu. The commenters point to the Oklahoma FIP, which was promulgated under the first planning period, and the specific citation from the comment letter, which is referring to that planning period's BART guidelines. 9 As outlined above in Response 4.a, the requirements for the second planning period differ from the first planning period. As the Conservation Groups' argument that Iowa failed to evaluate improvements to the dry FGD systems at LGS and WSEC-3 is again based on first planning period requirements for BART controls rather than second planning period requirements set forth at 40 CFR 51.308(f), the EPA does not find it to be compelling.

Comment 4.c: Finally, the comment argues that IDNR's cost-effectiveness values for new wet FGD systems at LGS and WSEC-3 were unreasonable in that they failed to evaluate the top level SO 2 removal efficiency that is achievable. The comment asserts that once the analysis is corrected, the controls should be even more cost-effective.

Response 4.c: Iowa's control cost analysis evaluated new wet FGD systems at LGS and WSEC-3 to achieve an emission limit of 0.06 lb/MMBtu and found the costs to be over $6,000/ton at LGS and $8,000/ton at WSEC-3. However, consistent with 40 CFR 51.308(f)(2)(i), IDNR also considered the other factors ( i.e., the time necessary for compliance, the energy and nonair quality environmental impacts of compliance, and the remaining useful life of any potentially affected anthropogenic source of visibility impairment). As detailed in the NPRM and the State submission, the new wet FGD systems required a longer time necessary for compliance and presented additional energy and nonair quality environmental impacts when compared to the improved operation of the existing dry FGD systems. We acknowledge that evaluating the control at a lower emission rate may result in a slightly higher cost-effectiveness of the wet FGD system, as shown in the Conversation Groups' submitted analysis. However, the EPA does not agree that evaluating the wet FGD control systems at a rate of 0.03 lb/MMBtu, compared to 0.06 lb/MMBtu, as used by IDNR, would significantly impact the control decisions made through the State's complete four-factor analysis, due to consideration of the other factors and inarguably higher cost effectiveness of improved operation of the existing dry FGD systems. We therefore find that Iowa's analysis was reasonable and resulted in an LTS that achieves reasonable progress for the second planning period. Iowa has satisfied the requirements of 40 CFR 51.308(f), and the EPA approves Iowa's SIP submission.

Comment 5: The Conservation Groups comment that it appears that the dry FGD system at LGS is equipped with a scrubber bypass, and the EPA must evaluate the elimination of the bypass during the four-factor analysis when promulgating a FIP. The Conservation Groups assert that IDNR improperly skewed the analysis to make it appear that the facility is achieving a greater emission reduction than it actually is and effectively ignores cost-effective pollution reductions.

Response 5: We disagree with this comment. The EPA was unable to find any data to support this assertion. The Environmental Groups referenced the attached report, Utility FGD Design Trends, which is available in the docket for this action, that cited data collected by the U.S. Energy Information Administration (EIA) for 2008 (EIA-860 data Schedules 6-G & 6-H). 10 However, as IDNR stated in section 12.1 Response to Public Comments, EIA-860 data does not support this assertion. The EIA data for 2023 and previous years shows LGS is not equipped with FGD bypass. 11 Furthermore, IDNR stated in section 12.1, “the emission limits apply at all times, thus the presence or absence of FGD bypass is irrelevant.”

Comment 6: The Conservation Groups assert that a new wet FGD system should also be considered a cost-effective option at WSEC-3 and LGS. The commenters' analysis asserts a cost-effectiveness of $4,907/ton at WSEC-3, which the comment argues is below IDNR's threshold and within the range of the EPA's determinations in the first planning period, and $6,968/ton at LGS, which is below the cost effectiveness thresholds used by Colorado, Nevada, and New Mexico. Furthermore, the comment argues that “IDNR was wrong to suggest that there is inherent flexibility on costs, as Congress clearly set requirements for national consistency throughout the country in implementing the Act's programs.”

Response 6: The EPA acknowledges that the cost effectiveness of a new wet FGD system at WSEC-3 and LGS may be within the range of costs of controls implemented by other states in their LTS. However, the EPA disagrees that specific controls must be required for Iowa's SIP to meet the second planning period's criteria. The RHR does not require a specific cost effectiveness threshold to be applied when states consider new control measures. Rather, cost effectiveness is one of four factors to be considered holistically. In this case, IDNR identified technically feasible control options and reasonably evaluated the cost effectiveness of controls for both sources. Whether the cost effectiveness of a new wet FGD system is $6,160/ton at WSEC-3 and $8,920/ton at LGS, as asserted by the MidAmerican analysis, or $4,907/ton at WSEC-3 and $6,968/ton at LGS, as estimated by the Conservation Groups, the EPA does not see a compelling basis to dispute IDNR's final control determination. In comparison, MidAmerican estimated the cost of the improved operation of existing dry FGD systems to be less than $300/ton at each facility.

Iowa concluded that the optimization of existing dry scrubbers at LGS and WSEC-3 was necessary to make reasonable progress towards natural visibility conditions in linked Class I areas and required MidAmerican to implement these control measures in its 2023 Regional Haze SIP. The EPA evaluated Iowa's SIP submission against the applicable statutory and regulatory regional haze requirements and finds the submission satisfies the regional haze requirements of 40 CFR 51.308(f)(2)(i).

Comment 7: The Conservation Groups comment that Iowa's control cost analysis understated the NO X removal efficiency of SCR and SNCR systems at LGS and WSEC-3 and thus requires correction. The commenters state that MidAmerican evaluated SCR to achieve a NO X rate of 0.05 lb/MMBtu, reflecting 73 percent control across the SCR system at LGS and 77.6 percent across the SCR system for WSEC-3. The Conservation Groups argue that SCR systems are designed to achieve 90 percent or greater NO X control efficiency, resulting in annual average NO X emission rates with SCR, along with existing low NO X burners and overfire air, as low as 0.04 lb/MMBtu or even lower. The commenters state that MidAmerican also assumed that SNCR at LGS and WSEC-3 would achieve a NO X removal efficiency of 15 percent. The commenters argue that its analysis determined that SNCR at LGS should have an achievable NO X removal efficiency of 20.9 percent and an annual NO X emission rate of 0.15lb/MMBtu, and SCNR control at WSEC-3 should have an achievable NO X removal efficiency of 21.7 percent and an annual NO X emission rate of 0.17 lb/MMBtu. The Conservation Groups assert that the EPA must promulgate a FIP that evaluates NO X control options at these removal efficiencies.

Response 7: The EPA disagrees with the commenters' assertion that we must promulgate a FIP evaluating NO X controls that achieve the specified emission rates. As discussed in the response to Comment 4.a, there is no requirement for the state to evaluate control equipment at a specified removal efficiency under the second planning period regulations at 40 CFR 51.308(f). While it is important to consider the most stringent emission control level that the technology is capable of achieving, less stringent levels of control may be considered as well, such as in the case where the control options have varying costs and impacts.

As detailed in the 2023 SIP submission and appendix D-2 of the State submission, IDNR conducted its own assessments of NO X controls in which different scenarios were evaluated. In section 12.1 Response to Public Comments, Iowa asserted that the cost-effectiveness values for SNCR and SCR presented in the Conservation Groups' analysis are not significantly different than those estimated by the IDNR and, therefore, do not impact Iowa's control decision that neither SNCR nor SCR are reasonable at this time. Iowa further stated, “The DNR finds that the SNCR and SCR cost-effectiveness values for LGS and WSEC-3 are unreasonable in comparison to the SO 2 control costs and that SO 2 emission reductions from Iowa's EGUs provide greater visibility protections than NO X reductions.”  12

The EPA does not agree that evaluating NO X controls at increased removal efficiencies would impact the State's control decisions. We find that Iowa's analysis was reasonable and that it resulted in a LTS that achieves reasonable progress for the second planning period.

Comment 8: The Conservation Groups comment that MidAmerican's cost-effectiveness analyses show that both SNCR and SCR must be considered cost-effective controls for LGS and WSEC-3, as their implementation costs are within the range of the cost effectiveness thresholds used by Colorado, Nevada, Minnesota, New Mexico, Arizona, and Washington. The comment further asserts that IDNR failed to meaningfully respond to public comments and the FLM's comments regarding cost effectiveness values and the thresholds established by these other states. The commenters conclude that it was unreasonable for Iowa to ignore these comments from the public and FLMs, and the EPA must promulgate a FIP in which the cost effectiveness of SNCR at LGS and of SCR at WSEC-3 are considered to be reasonable.

Response 8: The EPA acknowledges that the cost effectiveness of SCR and SNCR at WSEC-3 and LGS may be within the range of costs of controls implemented by other states in their LTS. However, as explained in Response 6, the EPA disagrees that specific controls must be required for reasonable progress. The EPA also disagrees with the commenters' assertion that Iowa did not adequately respond to comments.

The EPA reviews each submission against the applicable requirements of the CAA and RHR. The RHR does not provide a specific cost-effectiveness or emission threshold which States must meet when considering installation or upgrade of emission controls under the four statutory factors. Thresholds used by some states in a reasonable exercise of the discretion afforded by the CAA and RHR do not bind other states, nor do they preclude the EPA from finding other cost effectiveness thresholds (or the decision to forgo using a hard threshold) are reasonable.

Additionally, the commenters impart a requirement into the regulations that does not exist by asserting a State must “meaningfully” address the comments received. The commenters incorrectly argue that for a State to adequately respond to public comments, the State must amend the SIP to align with the comments. This is incorrect. But it is also irrelevant here. The EPA's role in this process is to review whether SIP submissions meet minimum federal law standards for approvability. As set forth in 40 CFR 51.102, “States must provide notice, provide the opportunity to submit written comments and allow the public the opportunity to request a public hearing.” As detailed below in Response 24, IDNR provided public notice, provided the opportunity for the public to submit written comments and held a public hearing on the SIP revision. It received comments and responded to those comments. Therefore, Iowa satisfied the requirements of 40 CFR 51.102.

Finally, the EPA disagrees with the commenters' argument regarding IDNR's response to the FLM's comments during the State and FLM Coordination. The requirements for this Coordination are set forth in 40 CFR 51.308(i). The only requirement regarding comments by FLMs states that Iowa “must include a description of how it addressed any comments provided by the [FLMs]” in developing its plan revision. 13 In the NPRM, the EPA discussed the informal and formal consultations IDNR conducted with FLMs. Furthermore, the EPA stated “Iowa responded to the FLM comments and included the responses in section 11.5 of its submission to EPA and their public notice, in accordance with the requirements in CAA section 169A(d) and § 51.308(i)(3).”  14 The commenters did not provide any citation to the CAA or the RHR to support its assertion that a State is required to “incorporate into the SIP the concerns of the agencies responsible for managing the Class I resources impacted by pollution from the state.” The EPA disagrees with the commenters about what is required during the State and FLM consultations and reiterates its conclusion that Iowa has satisfied the requirements for consultation as laid out in the CAA and the RHR.

Comment 9: The Conservation Groups comment that the EPA must disapprove Iowa's four-factor analysis because IDNR did not evaluate potential improvements or optimization to existing control equipment at WSEC-4. The Conservation Groups assert the EPA cannot approve IDNR's analysis of emission reductions at WSEC-4 because there are readily available, cost-effective measures that could be carried out at the unit to achieve additional SO 2 reductions, including optimizing the efficiency of the dry FGD scrubber to achieve an annual emission rate of 0.05 lb/MMBtu. Similarly, the commenters argue that IDNR's failure to evaluate potential upgrades to the SCR system at WSEC-4 was arbitrary because the Conservation Groups' analysis demonstrated the ability for the unit to meet a NO X emission limit of 0.04 lbs/MMBtu for months at a time. The Conservation Groups conclude that the EPA must promulgate a FIP that evaluates cost-effective improvements to the SCR system and requires WSEC-4 to meet an annual SO 2 emission rate of 0.05 lb/MMBtu.

Response 9: The EPA disagrees with the Conservation Groups' comment that a four-factor analysis is required for WSEC-4. Iowa's reliance on already-effective controls in lieu of four-factor analyses for WSEC-4 is not inconsistent with the CAA legislative history or EPA's interpretation and implementation of the CAA's regional haze requirements.

The EPA stated in the NPRM that Congress determined that “a visibility protection program is needed in addition to the [Clean Air Act]'s National Ambient Air Quality Standards [NAAQS] and Prevention of Significant Deterioration programs, as further emission reductions may be necessary to adequately protect visibility in Class I areas throughout the country.”  15 This statement does not say that Congress determined that every State must analyze the four factors for all sources, or for sources that are already well controlled. Further, the EPA specified that further emissions reductions “may be” necessary, which recognizes that additional reductions will not always be necessary, depending on the effectiveness of other existing programs. The preamble to the 2017 RHR states, “. . . we expect states to exercise reasoned judgment when choosing which sources, groups of sources or source categories to analyze.”  16

The EPA disagrees that “IDNR arbitrarily concludes that no further control analysis is necessary due to WSEC Unit 4's twenty-year-old BACT determination,” as the commenters argue. Instead, Iowa evaluated current control measures at WSEC-4, including applicable facility permits and actual emission rates, against current information in the EPA's RACT/BACT/LAER Clearinghouse and demonstrated that the high level of control already required makes it reasonable to conclude that a full four-factor analysis would likely result in the conclusion that no further controls are necessary. The State provided a description of this analysis in section 5.3.1 of the submittal. 17 We find that Iowa's analysis was reasonable.

Comment 10: The Conservation Groups assert that Iowa's consideration of visibility benefits was unreasonable. The commenters assert that neither the CAA nor the RHR lists visibility improvement as a fifth factor in the four-factor analysis and that the EPA has made clear that, for the second planning period, “a state should not use visibility to summarily dismiss cost-effective potential controls.” Here, they assert that Iowa wrongly rejected nearly all cost-effective controls based on visibility as an additional factor. The Conservation Groups also state there are multiple flaws with IDNR's visibility analysis. They therefore contend that the EPA's approval of IDNR's visibility benefits analysis is unreasonable, arbitrary, and capricious, and that the EPA must expressly disapprove IDNR's consideration of visibility impacts. The Commenters' specific comments on this topic are addressed in Comments 10.a and 10.b below.

Comment 10.a: The Commenters argue that IDNR provides no regulatory or statutory basis for applying a multi-step approach that compared relative sulfate impacts to relative nitrate impacts, resulting in the selection of controls for SO 2 emissions. The Commenters state that IDNR's approach to visibility does not comport with the examples of visibility considerations previously provided by EPA. Further, commenters note, IDNR considered visibility impacts on the most impaired days, rather than the maximum daily visibility impact on all days. The comment argues that IDNR did not explain how its visibility analysis complies with the RHR and the requirement to select sources based upon a four-factor analysis.

Response 10.a: The EPA disagrees that Iowa's visibility benefits analysis in the August 2023 SIP was inconsistent with the CAA or the RHR. The EPA interprets the CAA and the RHR to allow a State reasonable discretion to consider the anticipated visibility benefits of an emission control measure, along with the other factors, when determining whether the measure is necessary to make reasonable progress. The CAA is silent as to whether States or the EPA may consider additional factors in addition to the four statutory factors. 18 In our Response to Comments on the 2017 RHR, the EPA noted that the RHR “neither requires nor prohibits states from considering visibility when making reasonable progress determinations. . . . However, a state that elects to consider an additional factor such as visibility benefit must consider it in a reasonable way that does not undermine or nullify the role of the four statutory factors in determining what controls are necessary to make reasonable progress.”  19

Iowa performed its visibility analysis by apportioning the State's total modeled anthropogenic visibility impairment to LGS and WSEC on the 20% most impaired days at the linked Class I areas. 20 In doing so, the State made several conservative assumptions that resulted in greater estimated sulfate and nitrate impacts from these two sources. 21 For instance, the State's maximum sulfate and nitrate impacts on all linked Class I areas were selected as the basis for the analysis. In addition, the LGS and WSEC sources were assumed to emit the entirety of Iowa's EGU emissions when calculating the factors for allocating total anthropogenic visibility impairment to these two sources. 22

Based on this analysis, Iowa estimates that sulfate impacts to visibility in the linked Class I areas are 4.4 times greater than nitrate impacts for both LGS and WSEC. 23 Iowa used this result to inform its selection of cost-effective SO 2 controls over the NO X control options that were identified using the four statutory factors for LGS and WSEC. Contrary to the Commenters' assertion that Iowa “ignored” NO X controls because they were more expensive than SO 2 controls, Iowa's application of data and modeling showing that SO 2 and not NO X is the dominant visibility impairing pollutant, and that information led Iowa to select SO 2 control measures at LGS and WSEC-3. The EPA finds that Iowa's visibility analysis is reasonable and consistent with the CAA.

Comment 10.b: The comment argues IDNR unreasonably relied on LADCO's 2028 CAMx PSAT modeling results in selecting only five Class I areas for its visibility benefit analysis when the State was aware there were additional Class I areas of concern documented by the NPS.

Response 10.b: The Commenters did not provide a technical basis to support the claim that it was unreasonable for IDNR to rely on LADCO's 2028 CAMx PSAT modeling results for its visibility benefit analysis. IDNR utilized LADCO's 2028 PSAT results to identify linked Class I areas in other States, which is documented in section 2 of the State submission and summarized in the NPRM. IDNR then used the 2028 PSAT results to complete its visibility benefits analysis of the five Class I areas linked to Iowa, as explained in section 5.8 of the State submission and the NPRM. The EPA finds this approach to be reasonable and consistent with the CAA and RHR.

Comment 11: The Conservation Groups comment that the EPA must revise its notice and find that Iowa “unlawfully and unreasonably relied on the URP [Uniform Rate of Progress]—a non-statutory factor—to reject controls at LGS and WSEC-3.” The comment argues that the EPA failed to evaluate IDNR's URP assertions in the NPRM. Furthermore, the Conservation Groups assert that the EPA's review of those assertions is inconsistent with its review of other actions, namely the EPA's proposed disapproval of the Missouri SIP on the ground that the “State used the URP argument to avoid controls.” The Conservation Groups argue that projected visibility improvements at Class I areas impacted by Iowa's sources and the fact that those areas are below their respective URPs are not valid bases for the EPA to approve Iowa's decision to forgo additional controls at LGS and WSEC-3.

Response 11: The EPA disagrees that Iowa relied on the URP to reject controls at LGS and WSEC-3. In evaluating Iowa's control measure determinations, the EPA finds Iowa met all the requirements of 40 CFR 51.308(f)(2) and that Iowa did not rely on the fact that the Class I areas impacted by Iowa sources are below their respective URP glidepaths. Iowa's 2023 SIP states the 2028 projections for the Class I areas using LADCO's 2016 modeling platform are intended to satisfy the requirement at 40 CFR 51.308(f)(2)(iv)(E) that the State must consider the anticipated net effect on visibility due to projected changes in point, area, and mobile source emissions over the period addressed by the LTS. 24

Additionally, the LADCO modeling data provided by IDNR supported the conclusion that the linked Class I areas are all below their respective glidepaths and, therefore, Iowa was not required to conduct the “robust demonstration” detailed under 40 CFR 51.308(f)(3)(ii)(B). However, IDNR did not rely on that fact to avoid controls; rather the State plan required additional control measures at two facilities to further reduce SO 2 emissions and improve visibility in linked Class I areas. The EPA finds that the URP glidepath information provided by IDNR in the SIP submission meets the requirements of the CAA and RHR.

The EPA acknowledges that it recently finalized a change in policy regarding the role of the URP in the agency's review of second planning period regional haze SIPs. However, that policy change is not outcome-determinative in this action. The EPA reviewed Iowa's regional haze SIP submission under its prior review policy and proposed to approve it based on application of that policy. The agency is finalizing that proposed approval in this action. We note that Iowa's regional haze SIP for the second planning period is approvable under both the prior and recently announced policies regarding the role of the URP.

Comment 12: The Conservation Groups comment that the EPA must disapprove IDNR's SIP Submission because the permits for LGS and WSEC-3 contain SO 2 limits in units of lb/hour. The commenters state that the EPA must promulgate a FIP that requires emission limits in the permits to be in units of lb/MMBtu. The comment states that, “by imposing a lb/hr SO 2 limit rather than a lb/MMBtu limit, the emission limits fail to require the same level of control over all levels of operation and do not achieve the emissions rate IDNR said they are intended to achieve.” The commenters also state the NO X and SO 2 emission limits for WSEC-4 are based on lb/MMBtu, and the EPA must act consistently across a SIP, so the emission limits must be set consistently in terms of lb/MMBtu.

Response 12: The EPA disagrees that the emission limits established for regional haze must be in units of lb/MMBtu. Neither the CAA nor RHR prescribes the form that an emission limit must take.

As explained in the SIP submission and the NPRM, WSEC-4 went through BACT review under the Prevention of Significant Deterioration (PSD) program for SO 2 and NO X in 2003. 25 The requirements for determining BACT under the PSD program are not the same as the requirements for determining reasonable progress under the regional haze program. Iowa determined that WSEC-4 was already equipped with all feasible control options for SO 2 and NO X and included its rationale in the State submission. Iowa incorporated the existing emission limits into the SIP for the purpose of preventing future visibility impairment as a part of its LTS. The fact that the existing BACT emission limits for WSEC-4 are in units of lb/MMBtu does not preclude the State from establishing other emission limits under the regional haze program.

The emission limits are clearly stated in the permits included in appendix E of the State submission. The regional haze limit established for SO 2 in Permit Condition 1c. for LGS is 800 lb/hr, on a 30-day rolling average, and includes a footnote stating the limit is based on 65.6 percent reduction of SO 2 emissions from the baseline years of 2017 to 2019. The regional haze limit established for SO 2 in Permit Condition 1c. for WSEC-3 is 770 lb/hr, on 30-day rolling average, and includes a footnote stating that limit based on 72 percent reduction of SO 2 emissions from the baseline years of 2017 to 2019. The percent reductions in the submitted permits correspond to the levels of control MidAmerican assumed in its four-factor analysis and reflect the emissions reductions in Iowa's LTS for reasonable progress.

The permits for LGS and WSEC-3 required compliance with the regional haze SO 2 limits by December 31, 2023. As described above in Response 1, the actual SO 2 emissions for LGS and WSEC-3 for 2024 are available as reported to the CAMPD database. 26 The actual annual SO 2 emissions at LGS in 2024 is 1,179 tons, which is an 80.2 percent reduction of SO 2 emissions from the baseline years used in Iowa's 2023 SIP (2017-2019 average). The actual annual SO 2 emissions at WSEC-3 for 2024 is 1,644 tons, which is a 79.6 percent reduction of SO 2 emissions from baseline years. These emission reductions resulted in a combined total decrease of 11,169 tons in actual SO 2 emissions in 2024 compared to the baseline years and exceeded the emission reductions estimated by MidAmerican in the four-factor analysis. Therefore, we disagree with commenters' assertion that the emission limits do not achieve the emission rate that IDNR said they are intended to achieve.

We also note that the commenters did not raise any specific reason to suggest that the use of a lb/hr limit is inappropriate. Instead, they simply assert that a lb/hr limit does not require the same level of control over all levels of operation and state that the EPA must act consistently across the SIP by requiring all emission limits to be set in unit of lb/MMBtu. The EPA disagrees. While there are regulatory programs where emission limits are typically in the form of lb/MMBtu, such as a BACT analysis under the PSD program, that is not a requirement under the RHR, and a variety of units may be reasonable depending on the circumstances of their use.

Under the specific circumstances present here, the EPA finds that the emission limits Iowa established for regional haze are appropriate and meet the requirements of the CAA and RHR.

Comment 13: The Conservation Groups comment that Permit Condition R in the permits for LGS and WSEC-3 “exempts the facilities from meeting the minimum additive injection during periods of boiler start-up” and that this condition allows for uncontrolled excess emissions during startup events. The comment quotes the EPA's proposed partial approval and partial disapproval of Utah's regional haze SIP submission to assert that the minimum additive injection rates have “no defined parameters for the excess emissions that will occur during periods of startup, making the limitation less than continuous.” The commenters argue “the permit exemptions mean that emissions exceeding the normal operational limits under periods of startup would not be considered to violate the emission limitations.” The commenters conclude that the EPA must disapprove the emission limitations because of the startup exemption provisions.

Response 13: The EPA disagrees with the Conservation Groups' assertion that the emission limits for WSEC-3 and LGS are not continuous, or that Permit Condition 5.R. allows the facilities to exceed the emission limits during startup. The permits for LGS and WSEC-3 contain numerical emission limits that apply at all times, including periods of startup, shutdown, and malfunction (SSM). Permit Condition 1c., footnote 2 in both permits states that the “. . . [l]imit is applicable at all times including periods of Boiler startup, shutdown, and malfunction.” We recognize that Permit Condition 5.R. exempts the Permittee from maintaining the minimum additive injection rate during startup. However, despite the fact that the minimum additive injection rate is not required to be maintained during startup, the facility is still required to comply with the numerical SO 2 lb/hr regional haze emission limitation during all periods of operation, including startup.

SIPs can contain “other control measures, means, or techniques” per CAA 110(a)(2)(A), and such other measures, means, or techniques do not need to meet the CAA's definition of an “emission limitation,” including the requirement that it apply on a continuous basis. 27 In this case, the permits required that MidAmerican develop minimum additive injection rates “to maintain high SO 2 control efficiencies at all operating loads.”  28 However, the State's LTS is based on the numerical emission limits that apply at all times. The minimum additive injection rates provide a function that is separate from and supplemental to the numerical permit emission limits.

The permit at issue in the Utah SIP Submission is not analogous to the LGS and WSEC-3 permits because the Utah permit included “an automatic exemption for SSM events that occur when Intermountain power plant is operating prior to its closure.”  29 The permit also contained a provision providing that the emission limitations apply at all times except for periods of SSM or emergency conditions. 30

Permit Condition 5.R. is not an emission limitation, and the EPA disagrees that our partial disapproval of Utah's SIP is relevant to the evaluation of Permit Condition 5.R. Accordingly, the EPA is approving the emissions limitations and other control measures in Iowa's SIP submission.

Comment 14: The Conservation Groups comment that the EPA's assertion that the permits submitted by Iowa serve as the enforceable mechanism is unclear, because Iowa's intent regarding which permit provisions it wanted incorporated into the SIP was unclear. The comment states that the EPA's proposal indicates it intends to include the entire permits in the SIP, with the exception of Condition 11, but IDNR's SIP is unclear as to whether it sought to include Permit Condition 6 regarding Continuous Emissions Monitoring Systems (CEMS) in the SIP.

The commenters argue that if Permit Condition 6.C. is included as part of the SIP, that provision does not serve as the enforceable mechanism for CEMS because it fails to include requirements that the monitors accurately measure the pollutants and stack gas volumetric flow rate for each unit. The comment states that Permit Condition 6.C. “allows for use of methods that are not [included in] 40 CFR part 75, which EPA has generally required in the regional haze program.” The comment asserts IDNR's approach allows for just two data points for each 1-hour average, allows for data substitution, and does not require use of a diluent. The comment further states Condition 6.C.(3)(iii) provides that “[i]f the monitor data availability is less than 90.0%, the owner or operator shall obtain actual emission data by an alternate testing or monitoring method approved by the Department.” The commenters argue that the EPA is without authority to approve the provision that allows for alternative testing into the SIP.

Response 14: The EPA disagrees that Iowa's intent regarding the permits to be incorporated into the SIP is unclear or that the permit conditions are not enforceable. The transmittal letter included with Iowa's 2023 SIP submission states, “The air construction permits are provided in appendix E for adoption into the SIP, with the exceptions of Condition 11 in permit numbers 05-A-031-P6 and 75-A-357-P9 and Condition 6 in permit 03-A-425-P4.” Furthermore, as the commenter noted, the EPA's NPRM proposed to incorporate the entire permits into the SIP with the exceptions of permit Condition 11 for LGS and WSEC-3 and permit Condition 6 for WSEC-4. 31

Permit Condition 6 in the submitted permits for LGS (permit no. 05-A-031-P6) and WSEC-3 (permit no. 75-A-357-P9) are clearly intended to be incorporated into the SIP and contains the requirements for the SO 2 CEMS. Additionally, the SO 2 limit contained in Permit Condition 1c. Regional Haze Limit has a footnote stating that “Compliance with the limit is based on continuous emissions monitoring as specified in Permit Condition 6.” Permit Condition 6.A. requires SO 2 CEMS to meet EPA standards at 40 CFR part 60, appendix B Performance Specifications 2 and 6 and 40 CFR part 60, appendix F. Permit Condition 6.B. requires CEMS for SO 2 , and either O 2 or CO 2 to be operated and the data recorded during all periods of operation. Permit Condition 6.C. includes data requirements.

The commenters' assertion that the permit provision 6.C does not serve as the enforceable mechanism for CEMS is unclear. The permits as a whole are enforceable and serve as the enforceable mechanism for the SO 2 emission limits for regional haze. As stated in permit conditions 4.C. for LGS and WSEC-3, both units are subject to continuous emission monitoring requirements at 40 CFR part 75 under the federal Acid Rain program. The emissions data collected through CEMs are electronically submitted to the EPA CAMPD and made publicly available online. 32

As described in the SIP submittal and the NPRM, appendix E also includes the current permit for WSEC-4 (permit no. 03-A-425-P4) to incorporate its existing SO 2 and NO X BACT emission limits into Iowa's SIP. 33 The emission limits are contained in Condition 10.A., and there is a footnote stating compliance with the emission limits shall be demonstrated through the use of CEMS. Conditions 12 and 16 contain the CEMS requirements for that permit. Condition 13 states the unit is subject to monitoring requirements under the Acid Rain program.

The EPA notes that the quote in the comment summary stating that permit Condition 6.C. “allows for use of methods that are not [included in] 40 CFR part 75, which EPA has generally required in the regional haze program” is a direct quote from the Conservation Groups' comment letter. That assertion is inaccurate. There is no requirement at 40 CFR 51.308(f) for second planning period regional haze SIPs to comply with 40 CFR part 75. As explained in response 4.a above, the requirements for the second planning period differ from the first planning period. First planning period requirements at 40 CFR 51.308(e)(2) allow states an option to implement or require participation in an emissions trading program rather than requiring sources to implement BART. For first planning period SIPs that include an emissions trading program, there are requirements for monitoring, recordkeeping, and reporting provisions to comply with part 75. There are no such requirements for second planning period SIPs.

Iowa has broad discretion under 40 CFR 51.308(f) to determine appropriate compliance demonstration methodologies. For the hourly SO 2 emission limits, Iowa has proposed that the affected sources operate and maintain a CEMS. The EPA notes that, although it is not a requirement of the regional haze program, the CEMS requirements in the submitted permits adhere closely to the requirements in 40 CFR part 75.

The commenter referenced Permit Condition 6.C.(2) which allows the facility to calculate emissions based on two data points and that the permit does not require the use of a diluent. Regarding the use of two data points, the EPA notes that 40 CFR 75.10(d)(1) allows affected facilities to calculate emissions based on two data points. Permit Condition 6.A. requires O 2 or CO 2 to be monitored and Permit Condition 6.C.(2) requires CO 2 to be used in the calculation demonstrating compliance with the SO 2 emission limit. Permit condition 6.C.(3)(iii) is comparable with the standard missing data procedures for SO 2 at 40 CFR 75.33(b). Although Iowa's approach when monitoring data availability is less than 90 percent is not verbatim with Part 75, the EPA finds the State's approach is reasonable to ensure that the emissions are accurately calculated during such periods. Furthermore, Iowa SIP-approved regulations at 567 IAC 25.1 contain provisions on testing and sampling of new and existing equipment. As required by 567 IAC 25.1(9)c, “. . . all stack sampling and associated analytical methods used to evaluate compliance with emission limitations of 567—Chapter 23 or required in a permit issued by the department pursuant to 567—Chapter 22 or 33 shall be conducted using the methodology referenced in this rule.”

The EPA did not observe any deficiencies related to the State's proposed compliance demonstration methodology for the hourly SO 2 emission limitations. Due to the requirements to monitor emissions at all periods of operation and the public availability of emissions data, the EPA finds that the submitted permits establish enforceable emission limits in the State's LTS.

Comment 15: The Conservation Groups comment that the permit provisions for additive injection monitoring devices are not enforceable because (1) the provisions fail to specify the type of equipment required, leaving it to the source's discretion; and (2) the provisions provide sources with discretion on whether to include recorders with the monitoring devices for the additive injection. The comment concludes that the EPA must promulgate a FIP that (1) requires sources to report the manufacturer's recommendations, instructions, and operating manuals, or the facility-specific operation and maintenance plan and the facility's compliance with the manufacturer's instructions and manuals, or the facility-specific operation plan; and (2) requires the permit to include the criteria for determining the averaging period for the minimum injection rate.

Response 15: The NPRM does not include discussion of the additive injection monitoring devices because, for regional haze purposes, the SO 2 limits in the permits satisfy the LTS requirement to include enforceable emissions limitations at 40 CFR 51.308(f)(2). The established additive injection rates are not the direct compliance demonstration methodology for the federally enforceable emission limits that MidAmerican must meet at LGS and WSEC-3. The SO 2 CEMS serve that purpose. Finally, Condition 12.B.(4) requires the owner or operator of any facility required to install a continuous monitoring system to provide quarterly reports to the state.

In the NPRM, the EPA found that Iowa had satisfied the requirements for the LTS in § 51.308(f)(2). Neither the additive injection rate nor the additive injection rate monitoring was necessary to make that determination, and there is no reason for the EPA to disapprove the permit conditions. The EPA finds the emission limits are enforceable and is therefore approving them in this action.

Comment 16: The Conservation Groups comment that Iowa's regional haze permit provisions in Condition 5 subsections P, Q, and R do not contain adequate reporting requirements. The commenters assert that there are no requirements for the facility to report the following: (1) CEMS monitoring data, (2) completion date of the Lime Spray Dryer enhancements, (3) records of enhancements, (4) information regarding the additive injection rate to the LGS Lime Spray Dryer, (5) information regarding the averaging period (if applicable), and (6) corrective actions taken regarding the additive injection rate. The comment concludes that the EPA must disapprove the regional haze emission limitations because they fail to contain reporting provisions necessary for enforcement and include those provisions in a FIP.

Response 16: The EPA disagrees that the regional haze emission limitations do not contain reporting necessary for enforcement and notes the Conservation Groups' assertion that the permit does not require reporting is inaccurate. Permit Condition 1c. of the permits incorporated into the SIP contain SO 2 emission limits of 800 lb/hr at LGS and 770 lb/hr at WSEC-3 for regional haze, as detailed in Iowa's LTS. As stated in Condition 1c., compliance with the SO 2 limits is based on CEMS data, as specified in Permit Condition 6. Permit Condition 6.B. requires the data to be recorded during all periods of operation including period of startup, shutdown, malfunction, or emergency conditions, except for CEMS breakdowns, repairs, calibration checks, and zero and span adjustments. Permit condition 12.B.(3) requires reports on the operation of the emission units or control equipment outside of the operating parameters specified in Permit Condition 5 in accordance with the schedule set forth in 567 IAC 24.1. Permit Condition 12.B.(4) requires quarterly CEMS reports, and 12.C. requires all data, records, reports, documentation, construction plans, and calculations to be maintained.

As stated above, and in Permit Condition 4.C., both facilities are subject to CEMS requirements at 40 CFR part 75 under the Acid Rain program. The emissions data collected through CEMs are electronically submitted to the EPA Clean Air Markets Program Data and made publicly available online. Furthermore, both facilities are required to maintain a Title V Operating Permit. The Title V Operating permit requires the permittee to submit semi-annual monitoring reports and annual compliance certifications.

The federally enforceable emission limits in Permit Condition 1c. are the basis of Iowa's LTS for regional haze. The operating requirements in Condition 5 subsections P, Q, and R do not impact the federally enforceable emission limits that MidAmerican must meet at LGS and WSEC-3, which apply at all times. In the NPRM, the EPA found that Iowa had satisfied the requirements for the LTS in § 51.308(f)(2), including the requirement to establish enforceable emission limitations. The EPA finds the emission limits are enforceable and is therefore approving them in this action.

Comment 17: The Conservation Groups comment that the conditions of the permits fail to meet public notice and comment requirements because the minimum additive injection rate and averaging period for the minimum injection rate were determined through a required SO 2 emissions study after the permit was issued. The Conservation Groups argue that “EPA cannot approve a SIP that allows a state to revise the SIP without public notice and comment and submitting the revisions to EPA for review and action.”

Response 17: The EPA disagrees with the Conservation Groups that the permit conditions fail to meet public notice and comment requirements. The EPA further disagrees that we are required to disapprove the SIP based upon these permit conditions. Permit Condition 5.Q. in the Regional Haze Requirements in the permit for LGS specifically states that “[w]ithin 60 operating days after completion of the Lime Spray Dryer FGD (CE1B) enhancements, the owner or operator shall conduct an SO 2 emissions study to determine the minimum additive injection rate to achieve SO 2 reduction of 65.6 percent below the average of 2017-2019 baseline emissions. The minimum additive injection rate shall be determined during varying boiler operating loads.” The argument put forth by the Conservation Groups regarding Permit Condition 5.Q. ignores Permit Condition 5.P., which states “The owner or operator shall complete Lime Spray Dryer FGD (CE1B) enhancements to achieve the SO 2 emission limit specified in condition 1c. by December 31, 2023.” Condition 1c. sets a regional haze limit for SO 2 of 800 lb/hr, and the footnote to the limit states it is “based on 65.6 percent reduction of SO 2 emissions from the baseline years of 2017 to 2019.”

The provisions for WSEC-3 are identical, except Permit Condition 1c. sets the regional haze SO 2 limit at 770 lb/hr. In reading together Permit Conditions 1c., 5.P., and 5.Q., MidAmerican is required to meet the 800 lb/hr SO 2 limit at LGS, which is a 65.6 percent reduction of SO 2 emissions from the baseline years of 2017 to 2019, and the 770 lb/hr limit at WSEC-3, which is a 72 percent reduction of SO 2 emissions from the baseline years of 2017 to 2019.

Furthermore, Permit Condition 5.R. requires MidAmerican to “maintain the Lime Spray Dryer FGD (CE1B) minimum additive injection rate at the rates determined during the SO 2 emissions study at the corresponding boiler loads.”

As stated in the NPRM, the construction permits were modified to implement the operational improvements at the units and establish permanent emission limits for Iowa's regional haze LTS. 34 40 CFR 51.308(f)(2) requires each state to submit a LTS with its periodic revision of the SIP for regional haze. The LTS “must include the enforceable emissions limitations, compliance schedules, and other measures that are necessary to make reasonable progress.”  35 The permits for LGS and WSEC-3 establish federally enforceable SO 2 limits for these units and require compliance with the limit by December 31, 2023. The NPRM does not include discussion of the SO 2 emission studies or minimum additive injection rates because, for regional haze purposes, the SO 2 limits in the permits satisfy the LTS requirements in the RHR. In its SIP submittal, IDNR stated the purpose of the SO 2 emissions studies is to determine the minimum additive injection rate needed by the Lime Spray Dryer FGD to meet this limit and “maintain high SO 2 control efficiencies at all operating loads.”  36

The permit conditions require IDNR to approve the study results, and, as quoted above, require MidAmerican to maintain the additive injection rate established by the study and approved by IDNR. All permit conditions are federally enforceable, as required by 40 CFR 51.308(f)(2). Thus, the study results do not alter the permit conditions or the federally enforceable emission limits for SO 2 but serve to enhance operation of the Lime Spray Dryer FGD.

The commenters cite to section 110( l ) of the CAA to support the contention that the study results will result in revision of the SIP without required public participation. This provision of the CAA states “[e]ach revision to an implementation plan submitted by a State under this chapter shall be adopted by such State after reasonable notice and public hearing.”  37 IDNR provided reasonable notice and a public hearing on the proposed SIP revision and followed the requirements regarding public hearings for plan revisions set forth in 40 CFR 51.102.

The opportunity to comment on the permit conditions requiring SO 2 emissions studies to determine the minimum additive injection rate arose twice, during the public notice and comment period required for the construction permit under 567 IAC 33.3(17), and again during the public notice and comment period for IDNR's proposed SIP revision for the regional haze second planning period.

Iowa has not submitted a proposed SIP revision that seeks further revision of the SIP without notice and comment, and the EPA is therefore approving Iowa's SIP revision.

Comment 18: The comment states that the Lime Spray Dryer enhancements and the SO 2 emissions study results were due by December 31, 2023, but were not included in the docket for this action. The comment concludes that the EPA must disapprove the conditions in the LGS and WSEC-3 construction permits and issue a FIP containing all the elements necessary for practical enforceability.

Response 18: The EPA disagrees with the Conservation Groups' contention that the EPA must disapprove the SIP revision because IDNR did not update their submission to include the emission study results. As previously stated, the LTS must include enforceable emissions limitations, compliance schedules, and other measures that are necessary to make reasonable progress. 38 The SO 2 emission studies and the established additive injection rates do not impact the federally enforceable emissions limits that MidAmerican must meet at LGS and WSEC-3. In the NPRM, the EPA found that Iowa had satisfied the requirements for the LTS in § 51.308(f)(2). The emission study results were not necessary to make that determination, and there is no reason for the EPA to disapprove the permit conditions. Therefore, the EPA is approving the submitted source-specific permits into the Iowa SIP.

Comment 19: The Conservation Groups comment that Iowa did not provide a rationale to support the use of a 50 percent contribution threshold for source selection and that the State must evaluate control measures for GNN and GNS. The comment also states that the EPA did not provide justification to support why selecting the two largest sources was sufficient when other States have selected a higher number of sources. The commenters state IDNR's source selection methodology results in the selection of sources that contributed a lower EWRT*Q/d value at Class I areas than GNN and GNS, and they argue this is an unreasonable outcome. The Conservation Groups conclude that GNN and GNS have relatively high SO 2 emissions, and thus the EPA must find IDNR's source selection methodology to be arbitrary and evaluate FGD upgrades at GNN and GNS in a FIP.

Response 19: The EPA disagrees that IDNR's source selection methodology was arbitrary, and that the EPA therefore must promulgate a FIP requiring FGD upgrades at GNN and GNS. As explained in the NPRM, the RHR does not require States to consider evaluating controls for all sources, all source categories, or any or all sources in a particular source category. Rather, States have discretion to choose any source selection methodology or threshold that is reasonable, provided that the choices they make are reasonably explained. 39 To this end, the RHR requires that a State's SIP submission must include “a description of the criteria it used to determine which sources or groups of sources it evaluated.”  40 The technical basis for source selection, which may include methods for quantifying potential visibility impacts such as emissions divided by distance metrics, trajectory analyses, residence time analyses, and/or photochemical modeling, must also be appropriately documented, as required by 40 CFR 51.308(f)(2)(iii).

In this instance, the EPA proposed to find that the information and explanation included in Iowa's SIP submittal indicated that the State developed a methodology and examined a reasonable set of sources, including its two EGUs with the largest SO 2 and NO X emissions, and this analysis resulted in emission reduction measures necessary to make reasonable progress for the second implementation period. 41 As such, Iowa satisfied its RHR obligations under 40 CFR 51.308(f)(2) through consideration and reasonable explanation of the methodology by which it selected and analyzed the particular sources that have the largest contribution to visibility impairment in Class I areas. In the NPRM, the EPA stated that the evaluation of these two sources had the potential to meaningfully reduce Iowa's contributions to visibility impairment in Class I areas. The EPA reviewed 2024 CAMPD data to substantiate the relative importance of emission reductions at LGS and WSEC-3 as compared to annual emissions from all EGUs in Iowa, the emission reductions at LGS and WSEC-3 contributed to a decrease in 2024 annual SO 2 emissions for all Iowa EGUs by 71 percent from baseline years.

As stated in the NPRM, the core component of a regional haze SIP submission is a LTS that addresses regional haze in each Class I area within a State's borders and each Class I area that may be affected by emissions from the State. The LTS must include the enforceable emissions limitations, compliance schedules, and other measures that are necessary to make reasonable progress, as determined pursuant to (f)(2)(i) through (iv). The amount of progress that is “reasonable progress” is based on consideration of the four statutory factors in CAA section 169A(g)(1) in an evaluation of potential control options for sources of visibility impairing pollutants, which is referred to as a “four-factor” analysis. The outcome of that analysis is the emission reduction measures that a particular source or group of sources needs to implement in order for the submitting state to make reasonable progress towards the national visibility goal. 42 Emission reduction measures must be represented by “enforceable emissions limitations, compliance schedules, and other measures” ( i.e., any additional compliance tools) in a State's LTS in its SIP. 43

Therefore, the outcome of a State's source selection process and subsequent evaluation of technically feasible and cost-effective emissions controls by considering the four factors determines what constitutes the State's LTS for that particular implementation period. IDNR's source selection process and evaluation of technically feasible and cost-effective controls resulted in a LTS that includes the enforceable emissions limitations, compliance schedules and other measures that are necessary to make reasonable progress. Therefore, the EPA finds Iowa's source selection and consideration of the four statutory factors to be reasonable and compliant with the RHR requirements.

Comment 20: The Conservation Groups argue that the SO 2 and NO X control systems at GNN and GNS are not achieving the levels of control the pollution control systems are designed to achieve. For dry FGD systems at GNN and GNS, the Groups assert an evaluation of controls for these units should presume dry FGD systems are capable of achieving at least 90 percent SO 2 removal. The commenters conducted a cost effectiveness analysis of dry FGD upgrades with the additional use of lime at GNN and GNS and concluded that these upgrades are cost effective and within the range of both cost thresholds other States have used and the costs that IDNR found reasonable for similar SO 2 pollution control upgrades at LGS and WSEC-3.

The commenters also argue that NO X controls at GNN and GNS are operating below the standard efficiency rates for SNCR, and the facilities have not had a significant decrease in NO X emission rates per MMBtu. The comments conclude that the EPA needs to promulgate a FIP that fully analyzes SO 2 and NO X controls at GNN and GNS through a four-factor analysis.

Response 20: The EPA disagrees with the Conservation Groups' conclusion that it must promulgate a FIP and conduct a four-factor analysis to evaluate controls at GNS and GNN. The EPA has responded to the Conservation Groups' comment regarding source selection in Response 20. The Conservation Groups' comments regarding pollution controls at GNS and GNN facilities are beyond the scope of this rulemaking because this rulemaking relates solely to Iowa's regional haze SIP revision, and Iowa did not select those sources for four-factor analysis. Therefore, neither the State nor the EPA has evaluated the efficiency rates of controls at GNS or GNN as a part of this action. As explained above, the RHR does not require States to consider controls for all sources, all source categories, or any or all sources in a particular source category, and the EPA finds that Iowa has satisfied the requirements of 40 CFR 51.308(f)(2)(i) related to evaluating sources.

Comment 21: The Conservation Groups comment that the EPA must disapprove Iowa's SIP submission because IDNR failed to meet the CAA and RHR requirements for FLM consultation. The comment argues that IDNR failed to meaningfully consider or incorporate any of the FLM's suggestions into the SIP. Furthermore, because the Conservation Groups assert that the EPA must disapprove Iowa's source selection method and four-factor analysis, they further argue that the FLM consultation was based on a SIP revision that did not meet the required statutory and regulatory requirements of the CAA and RHR and therefore, must also be disapproved.

Response 21: The EPA disagrees that Iowa did not meet the requirements for FLM consultation in CAA 169A(d) and 40 CFR 51.308(i). As described above in Response 8, IDNR met all of the FLM consultation statutory and regulatory requirements.

The requirements for FLM coordination are set forth in CAA 169A(d) and 40 CFR 51.308(i). The only mandate in regard to comments by FLMs states that Iowa “shall include a summary of the conclusions and recommendations of the Federal land managers in the notice to the public”  44 and “must include a description of how it addressed any comments provided by the [FLMs]” in developing its plan revision. 45 The commenters did not provide any citation to the CAA or the RHR to support its assertion that a state is required “to meaningfully consider and incorporate into the SIP the concerns of the agencies responsible for managing the Class I resources impacted by pollution from the state.”  46

Sections 11.3 Informal FLM Source Selection and LTS Discussions and 11.4 Formal FLM Consultation of Iowa's SIP revision contain documentation of the State's consultation outreach with NPS, FWS, USFS and responses to FLM comments during the consultation outreach. 47 This included meeting with FLMs on January 20, 2022, providing an October 11, 2022, draft of the regional haze plan explicitly for the purpose of FLM consultation, and meeting with FLMs on November 3, 2022. Additionally, the NPS met with IDNR again on November 29, 2022, to present their preliminary comments.

Section 11.5 Response to FLM Comments Received During Formal FLM Consultation contained Iowa's responses to comments received as part of the October 2022 FLM draft review process. 48 Notably, both FLM comment letters provided generally positive comments on the State's FLM consultation and the SIP's organizational structure, content, analytical techniques, and the SO 2 reductions required from LGS and WSEC-3. 49 In addition to the October 2022 FLM consultation draft process, IDNR provided opportunity for review and comment on the February 2023 public draft. The NPS used this opportunity to provide additional comments which are included in section 12.1.2 Comments from the National Park Service, along with IDNR's responses to the comments. 50 Additionally, as described in section 11.1 Regional Discussions, Iowa participated in the regional planning organization (RPO), Central States Air Resource Agencies (CenSARA), which included FLM representatives on regular planning calls between 2017 and 2023. 51

A key element of 40 CFR 51.308(i)(2) is that consultation occur early enough in a State's policy analyses of its LTS so that information and recommendations provided by the FLMs can meaningfully inform a State's decisions on the LTS. 52 40 CFR 51.308(i)(2) requires the FLM consultation to happen 60 days before the public notice. Consistent with the preamble of the EPA's 2017 RHR, IDNR made a good faith effort to involve the FLMs early in development of the LTS. IDNR used the comments and feedback from the October 11, 2022, to December 9, 2022, FLM consultation draft to inform the final control determinations contained in the draft provided for the public notice and comment period starting on February 13, 2023. Iowa's August 2023 SIP submission also contains a commitment to continuing consultation with FLMs through regional planning activities or by separate calls as requested by FLMs to address 40 CFR 51.308(i)(4). 53

For the reasons stated above, it is our determination that IDNR adequately conducted FLM consultation and has thus fulfilled the requirements of the CAA and RHR.

Comment 22: The Conservation Groups comment that the EPA's approval of Iowa's State-to-State consultation violates the CAA and the RHR because Iowa's four-factor analyses did not meet the requirements of the Act or the RHR. The commenters state that the EPA must issue a FIP that corrects the errors in IDNR's four-factor analyses and includes a consultation with South Dakota.

Response 22: The EPA disagrees with the commenters' assertion that Iowa did not meet the requirements for State-to-State consultation in 40 CFR 51.308(f)(2)(ii). Sections 11.1 Regional Discussions and 11.2 Individual State Consultation of Iowa's SIP submission contained documentation of Iowa's consultation with RPOs and individual States. 54 IDNR regularly participated in regional planning activities through the planning organizations, CenSARA and the Lake Michigan Air Directors Consortium. In addition to regional planning calls, Iowa also had individual State consultations with three States (Minnesota, Michigan, and Missouri) containing the five linked Class I areas in its 2023 SIP submission: Isle Royale, Seney, Boundary Waters, Voyageurs, and Hercules-Glades. Documentation of consultation with each State is contained in appendix H to Iowa's submittal.

Consistent with the preamble of the EPA's 2017 RHR, IDNR made a good faith effort to share its four-factor analyses and associated technical information with other States through its participation in regional planning calls and individual State consultations. 55 IDNR consulted with States reasonably expected to contribute to visibility impairment in Iowa's linked Class I areas for the second planning period. As stated in the 2017 RHR, “the consultation provisions were intended to foster and facilitate regional solutions, not to mandate specific outcomes.”  56

As explained in detail in the NPRM, the EPA finds that Iowa's August 2023 SIP submission meets all of the statutory and regulatory requirements of the CAA and RHR. 57 Furthermore, the EPA finds that IDNR fulfilled the requirements for consultation with other States reasonably expected to contribute to visibility impairment in Iowa's linked Class I areas for the second planning period through its participation in regional planning calls and individual State consultations. 58 Thus, the EPA proposes approval of Iowa's SIP and concludes a FIP is unnecessary.

Comment 23: The Conservation Groups comment that the EPA's proposed action failed to consider environmental justice impacts from GNN and GNS. The commenters also assert that Iowa's SIP lacks any consideration of environmental justice. The comment also states that, according to EPA's EJ Screen and Mapping Tool, the communities within a 20-mile radius of GNN, LGS, and WSEC rank “above average” in risk for respiratory health impacts as compared to other States' census block groups and that the socioeconomic indicator of low income is higher than 50 percent. The commenters also state that the environmental justice indices for PM 2.5 and ozone are high for the communities surrounding LGS; the ozone environmental justice index is of considerable concern at GNN; PM and ozone are above the State median percentile at WSEC; and the people of color percentiles range from 73rd to 88th percentile at the three facilities. The Conservation Groups conclude that the EPA must promulgate a FIP for Iowa sources and establish emission limitations that reduce impacts in both Class I areas and environmental justice communities.

Response 23: Neither the CAA nor the RHR require an evaluation of environmental justice with regard to a regional haze SIP. The focus of the regional haze SIP for Iowa is SO 2 and NO X emissions as they impact visibility in Class I areas. This action addresses two EGU sources (LGS and WSEC) of air pollution impacting Class I areas. As discussed in the NPRM and in this final rule, the EPA has evaluated Iowa's SIP submission against the statutory and regulatory regional haze requirements and determined that it satisfies those minimum requirements.

Comment 24: The Conservation Groups comment that Iowa did not provide meaningful access for persons with limited English proficiency to review and comment on the draft SIP because they did not provide a public translation of the notice in any language other than English. The commenters assert that the socioeconomic indicator for limited English-speaking households in communities surrounding GNN, LGS, and WSEC range from 74 to 89 percent.

Response 24: In reviewing Iowa's August 15, 2023, Regional Haze SIP revision, the EPA found that IDNR satisfied the public notice and comment requirements for the SIP revision. Iowa provided an opportunity to submit written comments and request a public hearing. IDNR made the SIP submission available for public comment from February 13, 2023, to March 16, 2023. 59 The publication included notification of the 30-day notice period and information about the date, place, and time of the public hearing, as required under 40 CFR 51.102(a). After reasonable notice, the public hearing was held virtually on March 16, 2023. 60 Finally, Iowa's revised SIP submittal includes a certification that the State satisfied the requirements in 40 CFR 51.102(a) and (d), as required by 40 CFR 51.102(f). 61

Furthermore, in section 12.1 Response to Public Comments, Iowa included additional details on the State's Notice of Nondiscrimination and Language Access Plan that are publicly available on IDNR's website and intended to provide meaningful access to individuals with limited English proficiency. 62 The EPA notes that the commenters do not allege that IDNR failed to fulfill its public notice and comment obligations, nor is there any indication that the commenters requested language assistance. In this instance, the State's public comment process meets the minimum requirements in the 40 CFR part 51, appendix V for SIP submissions.

The EPA is taking final action to amend the Iowa SIP by approving the State's submission received on August 15, 2023, as satisfying the regional haze requirements for the second implementation period contained in 40 CFR 51.308(f), (g), and (i). In addition, the EPA is approving and incorporating by reference in 40 CFR 52.820(d), EPA-Approved Iowa Source-Specific Orders/Permits the following source-specific requirements as part of Iowa's long-term strategy for regional haze:

• MidAmerican Energy Company—Louisa Station, permit #05-A-031-P6, state effective date July 20, 2023, not including permit condition 11.

• MidAmerican Energy Company—Walter Scott Jr. Energy Center, permit #75-A-357-P9, state effective date July 20, 2023, not including permit condition 11.

• MidAmerican Energy Company—Walter Scott, Jr. Energy Center permit #03-A-425-P4, state effective date December 5, 2011, not including permit condition 6.

In this document, the EPA is finalizing regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, the EPA is finalizing the incorporation by reference of the Iowa permits #05-A-031-P6, #75-A-357-P9, and #03-A-425-P4 discussed in sections I, II, and IV. of this preamble and as set forth below in the amendments to 40 CFR part 52. The EPA has made, and will continue to make, these materials generally available through https://www.regulations.gov and at the EPA Region 7 Office (please contact the person identified in the FOR FURTHER INFORMATION CONTACT section of this preamble for more information).

Therefore, these materials have been approved by the EPA for inclusion in the SIP, have been incorporated by reference by the EPA into that plan, are fully federally enforceable under sections 110 and 113 of the CAA as of the effective date of the final rulemaking of the EPA's approval, and will be incorporated by reference in the next update to the SIP compilation. 63

Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the CAA and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the CAA. Accordingly, this action merely approves state law as meeting Federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this action:

• Is not a significant regulatory action subject to review by the Office of Management and Budget under Executive Orders 12866 (58 FR 51735, October 4, 1993);

• Is not subject to Executive Order 14192 (90 FR 9065, February 6, 2025) because SIP actions are exempt from review under Executive Order 12866;

• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq. );

• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. );

• Does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4);

• Does not have federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);

• Is not subject to Executive Order 13045 (62 FR 19885, April 23, 1997) because it approves a state program;

• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001); and

• Is not subject to requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the CAA.

In addition, the SIP is not approved to apply on any Indian reservation land or in any other area where EPA or an Indian Tribe has demonstrated that a Tribe has jurisdiction. In those areas of Indian country, the rule does not have Tribal implications and will not impose substantial direct costs on Tribal governments or preempt Tribal law as specified by Executive Order 13175 (65 FR 67249, November 9, 2000).

This action is subject to the Congressional Review Act (CRA), and EPA will submit a rule report to each House of the Congress and to the Comptroller General of the United States. This action is not a “major rule” as defined by 5 U.S.C. 804(2).

Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by October 6, 2025. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements (see section 307(b)(2)).

For the reasons stated in the preamble, the EPA amends Title 40, chapter I, of the Code of Federal Regulations as follows:

This final rule updates the hospice wage index, payment rates, and cap amount for FY 2026 as required under section 1814(i) of the Social Security Act (the Act). In addition, this final rule amends the payment regulations to specify that the physician member of the hospice interdisciplinary group (IDG) may recommend admission to hospice. This final rule also amends the attestation requirements at 42 CFR 418.22(b)(4) to align with the original intent of the CY 2011 Home Health Prospective Payment System (HH PPS) final rule and statutory requirements under section 1814(a)(7) of the Act for the certification of terminal illness to include the physician's or nurse practitioner's signature and the date of the signature on each face-to-face encounter attestation, and incorporate commenter suggestions on the proposed policy. This rule also includes a waiver of proposed rulemaking making a technical correction to conform the end date of the allowance of telehealth to perform the face-to-face encounter for the sole purpose of hospice recertification codified at § 418.22(a)(4)(ii) to the end date set forth in statute at section 1814(a)(7)(D)(i)(II) of the Act and setting the wage index for hospices that provide services in the Northern Mariana Islands and American Samoa to the wage index for CBSA 99965 (Guam).

This final rule corrects an error in the regulations text at § 418.312(j). This rule also reinforces updates on the Hospice Quality Reporting Program (HQRP) and the Hospice Outcomes and Patient Evaluation (HOPE) instrument and public reporting, future quality measures (QMs), and the transition of hospice providers from the Quality Improvement and Evaluation System (QIES) to the internet Quality Improvement and Evaluation System (iQIES). The proposed rule (90 FR 18568) also included RFIs related to the transition to digital measures, nutrition, and well-being concepts.

Section III.A.1. of this final rule includes updates to the hospice wage index and makes the application of the updated wage data budget neutral for all four levels of hospice care.

Section III.A.2. of this final rule includes the final FY 2026 hospice payment update percentage of 2.6 percent.

Section III.A.3. of this final rule includes the final FY 2026 hospice payment rates.

Section III.A.4. of this final rule includes the final update to the hospice cap amount for FY 2026 by the hospice payment update percentage of 2.6 percent.

Section III.B. of this final rule specifies that the physician member of the interdisciplinary group is among the types of physicians who can recommend a patient's admission to hospice care and adds the physician member of the interdisciplinary group to the regulatory text at § 418.25.

Section III.C. of this final rule re-aligns the attestation requirements in the regulatory text at § 418.22(b)(4) with the original intent of the statutory requirements under section 1814(a)(7) of the Act and CY 2011 HH PPS final rule for the certification of terminal illness regulations to include the physician's or nurse practitioner's signature and the date of the signature on each face-to-face encounter attestation. This section also incorporates suggestions from commenters to allow the actual face-to-face encounter clinical note to satisfy the statutory requirement for the hospice physician or nurse practitioner to attest to the encounter.

Section III.D. of this final rule includes a technical correction to the regulatory text at § 418.22(a)(4)(ii) that was not proposed. This technical correction extends the use of telehealth by a hospice physician or hospice nurse practitioner to conduct a face-to-face encounter for the sole purpose of hospice recertification through September 30, 2025 in accordance with section 1814(a)(7)(D)(i)(II) of the Act, as amended by section 2207(f) of the Full-Year Continuing Appropriations and Extensions Act, 2025 (Pub. L. 119-4).

Section III.E. of this final rule includes a technical correction to a typographical error in the FY 2024 Hospice final rule at § 418.312(j). This section provides updates on the HOPE instrument, HQRP measures, and the transition to iQIES. This section also provides RFIs related to the transition to digital measures, nutrition, and well-being concepts.

Section IV. of this final rule includes a Waiver of Notice of Proposed Rulemaking for technical corrections to the regulatory text at § 418.22(a)(4)(ii) and to include, in the FY 2026 hospice wage index, the wage indexes for the Northern Mariana Islands and American Samoa. While we do not believe that either the corrections to § 418.22(a)(4)(ii) or the addition to the wage index requires notice and comment rulemaking, as explained in section IV, of this final rule, there is good cause to waive such rulemaking if it were required.

The overall economic impact of this final rule is estimated to be $750 million in increased payments to hospices in FY 2026.

Hospice care is a comprehensive, holistic approach to treatment that recognizes the impending death of a terminally ill individual and warrants a change in the focus from curative care to palliative care for relief of pain and for symptom management. Medicare regulations define “palliative care” as patient and family-centered care that optimizes quality of life by anticipating, preventing, and treating suffering. Palliative care throughout the continuum of illness involves addressing physical, intellectual, emotional, social, and spiritual needs and to facilitate patient autonomy, access to information, and choice (42 CFR 418.3). Palliative care is at the core of hospice philosophy and care practices and is a critical component of the Medicare hospice benefit.

The goal of hospice care is to help terminally ill individuals continue life with minimal disruption to normal activities while remaining primarily in the home environment. A hospice uses an interdisciplinary approach to deliver medical, nursing, social, psychological, emotional, and spiritual services through a collaboration of professionals and other caregivers, with the goal of making the beneficiary as physically and emotionally comfortable as possible. Hospice is compassionate beneficiary- and family/caregiver-centered care for those who are terminally ill.

As referenced in our regulations at § 418.22(c)(1), to be certified for Medicare hospice services, the patient's attending physician (if any) and the hospice medical director (or designee) or physician member of the interdisciplinary group must certify that the individual is “terminally ill,” as defined in section 1861(dd)(3)(A) of the Act and our regulations at § 418.3; that is, the individual has a medical prognosis that the individual's life expectancy is 6 months or less if the illness runs its normal course (42 CFR 418.22(b)(1)). The regulations at § 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 the written certification. The regulations at § 418.22(b)(3) require that the certification and recertification forms, or an addendum to the certification and recertification forms, include a brief narrative explanation of the clinical findings that supports a life expectancy of 6 months or less.

Under the Medicare hospice benefit, the election of hospice care is a patient choice, and once a terminally ill patient elects to receive hospice care, a hospice interdisciplinary group is essential in the seamless provision of primarily home-based services. The hospice interdisciplinary group works with the beneficiary, family, and caregivers to develop a coordinated, comprehensive care plan; reduce unnecessary diagnostics or ineffective therapies; and maintain ongoing communication with individuals and their families about changes in their condition. The beneficiary's care plan will shift over time to meet the changing needs of the individual, family, and caregiver(s) as the individual approaches the end of life.

If, in the judgment of the hospice interdisciplinary group (as specified at § 418.56(a)(1)), 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 home for hospice care (routine home care) (RHC). Limited, short-term, intermittent, inpatient respite care (IRC) is also available because of the absence or need for relief of the family or other caregivers. Additionally, an individual can receive continuous home care (CHC) during a period of crisis in which an individual requires continuous care to achieve palliation or management of acute medical symptoms so that the individual can remain at home. 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 § 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 (§ 418.302(e)(4)).

Hospices covered by this final rule must comply with applicable civil rights laws, including section 504 of the Rehabilitation Act of 1973 and the Americans with Disabilities Act, which prohibit covered entities from discriminating against individuals based on disability. This includes requiring covered entities to take appropriate steps to ensure that communications with applicants, participants, members of the public, and companions with disabilities are as effective as communications with others. Covered entities must also provide appropriate auxiliary aids and services when necessary to afford qualified individuals with disabilities, including applicants, participants, beneficiaries, companions, and members of the public, an equal opportunity to participate in, and enjoy the benefits of, a service, program or activity of a covered entity. 1

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 services; medical social services; home health aide services (called hospice aide services); physician's 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 and 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 such 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, Congress also expected hospices to continue to use volunteer services, although Medicare does not pay for these volunteer services (section 1861(dd)(2)(E) of the Act). As stated in the Health Care Financing Administration's (now Centers for Medicare & Medicaid Services (CMS)) proposed rule: Medicare Program; Hospice Care (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 with the resulting Medicare reimbursement is not intended to diminish the voluntary spirit of hospices.” This expectation supports the hospice philosophy of community based, holistic, comprehensive, and compassionate end of life care.

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 the benefit). This per diem payment is meant to cover all hospice services and items needed to manage the beneficiary's care, as required by section 1861(dd)(1) of the Act.

While payment made to hospices is to cover all items, services, and drugs for the palliation and management of the terminal illness and related conditions, federal funds cannot be used for prohibited activities, even in the context of a per diem payment. For example, hospices are prohibited from playing a role in medical aid in dying (MAID) where such practices have been legalized in certain States. The Assisted Suicide Funding Restriction Act of 1997 (Pub. L. 105-12, April 30, 1997) prohibits the use of federal funds to provide or pay for any health care item or service or health benefit coverage for the purpose of causing, or assisting to cause, the death of any individual including “mercy killing, euthanasia, or assisted suicide.” However, 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.

The Medicare hospice benefit has been revised and refined since its implementation after various Acts of Congress and Medicare rules. For a historical list of changes and regulatory actions, we refer readers to the background section of previous Hospice Wage Index and Payment Rate Update rules. 2

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 § 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 Metropolitan Statistical Area (MSA) definitions.

In general, OMB issues major revisions to statistical areas every 10 years based on the results of the decennial census. On July 21, 2023, OMB issued Bulletin No. 23-01, which updated and superseded OMB Bulletin No. 20-01, issued on March 6, 2020. OMB Bulletin No. 23-01 established revised delineations for the MSAs, Micropolitan Statistical Areas, Combined Statistical Areas (CSAs), and Metropolitan Divisions, collectively referred to as Core Based Statistical Areas (CBSAs). According to OMB, the delineations reflect the 2020 Standards for Delineating Core Based Statistical Areas (the “2020 Standards”), which appeared in the Federal Register (86 FR 37770 through 37778) on July 16, 2021, and application of those standards to Census Bureau population and journey-to-work data (for example, 2020 Decennial Census, American Community Survey, and Census Population Estimates Program data). A copy of OMB Bulletin No. 23-01 is available online at https://www.bls.gov/bls/omb-bulletin-23-01-revised-delineations-of-metropolitan-statistical-areas.pdf.

The July 21, 2023 OMB Bulletin No. 23-01 contained a number of significant changes. For example, it designated new CBSAs, split some existing CBSAs, and changed some urban counties to rural and some rural counties to urban. We believe it is important for the hospice wage index to use the latest OMB delineations available in order to maintain the most accurate and up-to-date payment system, reflecting the reality of population shifts and labor market conditions. We further believe that using the most current OMB delineations increases the integrity of the hospice wage index by creating a more accurate representation of geographic variation in wage levels. Therefore, in the FY 2025 Hospice final rule (89 FR 64208 through 64224), we finalized the implementation of new labor market areas based on the revisions in OMB Bulletin No. 23-01 beginning in FY 2025.

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. The pre-floor, pre-reclassified hospital wage index values below 0.8000 are adjusted by a 15 percent increase subject to a maximum wage index value of 0.8000. For example, if CBSA “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 0.8000, the CBSA “A's” hospice wage index would be 0.4593. In another example, if CBSA “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 0.8000, CBSA “B's” hospice wage index would be 0.8000.

In the FY 2023 Hospice Wage Index and Rate Update final rule (87 FR 45673), we finalized 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, so that a geographic area's wage index would not be less than 95 percent of its wage index calculated in the prior FY. When calculating the 5 percent cap on wage index decreases, we start with the current FY's pre-floor, pre-reclassification hospital wage index value for a CBSA or statewide rural area, and if that wage index value is below 0.8000, we apply the hospice floor as discussed previously in this section of the proposed rule. Next, we compare the current FY's wage index value after the application of the hospice floor to the final wage index value from the previous FY. If the current FY's wage index value is less than 95 percent of the previous year's wage index value, the 5 percent cap on wage index decreases would be applied and the final wage index value would be set equal to 95 percent of the previous FY's wage index value. If the 5 percent cap is applied in one FY, then in the subsequent FY, that year's pre-floor, pre-reclassification hospital wage index would be used as the starting wage index value and adjusted by the hospice floor. The hospice floor adjusted wage index value would be compared to the previous FY's wage index which had the 5 percent cap applied. If the hospice floor adjusted wage index value for that FY is less than 95 percent of the capped wage index from the previous year, then the 5 percent cap would be applied again, and the final wage index value would be 95 percent of the capped wage index from the previous FY. Using the example previously stated, if CBSA 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. If CBSA “A” had a wage index value of 0.6200 in the previous FY, then we would compare 0.4593 to the previous FY's wage index value. Since 0.4593 is less than 95 percent of 0.6200, then CBSA “A's” hospice wage index would be 0.5890, which is equal to 95 percent of the previous FY's wage index value of 0.6200. In the next FY, the updated wage index value would be compared to the wage index value of 0.5890.

Previously, this 5 percent cap methodology was applied to all the counties that make up a CBSA or rural area. However, beginning in FY 2025, we finalized a policy that the 5 percent cap methodology also be applied to individual counties. In the FY 2025 Hospice Wage Index and Rate Update final rule (89 FR 64202), as a transition to the adoption of the revised delineations from OMB No. 23-01, we finalized a policy applying the permanent 5 percent cap on wage index decreases at the county level. Specifically, counties that were impacted by the revised designations beginning in FY 2025 would receive a 5 percent cap on any decrease in a geographic area's wage index value from the wage index value from the prior FY. Also, beginning in FY 2025, counties that have a different wage index value than the CBSA or rural area into which they are designated due to the application of the 5 percent cap (including redesignated counties that will receive the 5 percent cap and redesignated counties that move into a CBSA or rural area where all other constituent counties receive the 5 percent cap) would use a wage index transition code. These special codes are five digits in length and begin with “50”. The 50XXX wage index transition codes are used only in specific counties. Counties located in CBSAs and rural areas that do not correspond to a different transition wage index value will still use the CBSA number.

Finally, we finalized a policy to apply the 5 percent cap to a county that corresponds to a different wage index value than the wage index value assigned to the CBSA or rural area in which they are designated due to a delineation change until the county's new wage index is more than 95 percent of the wage index from the previous FY. In order to capture the correct wage index value, the county will continue to use the assigned 50XXX transition code until the county's wage index value calculated for that FY using the new OMB delineations is not less than 95 percent of the county's capped wage index from the previous FY.

While we did not propose any changes to the hospice floor or 5 percent cap policies for FY 2026, we did receive a few comments on these finalized policies. A summary of the comments and our responses to those comments are as follows:

Comment: Several commenters expressed support for the continued application of the 5 percent cap on wage index decreases. A commenter stated that the 5 percent cap policy provides an important protection for hospices in areas experiencing wage index volatility due to the adoption of revised OMB statistical area delineations. This commenter also expressed support for the application of the cap at the county level, stating that the county-level application of the 5 percent cap represents a thoughtful approach to mitigating the financial impact of geographic reclassifications while maintaining the integrity of the wage index system.

Response: We thank the commenters for their support.

Comment: Other commenters recommended changes to the 5 percent cap policy. While MedPAC recommended that CMS also apply a cap to the wage index increase that a provider can experience in a given year, other commenters expressed concern that the 5 percent cap on wage index decreases may not be sufficient and recommended lowering the cap threshold. A commenter stated that even a 5 percent cut year-over-year can significantly strain hospice operations, especially amid rising costs. In addition, a commenter stated that a 5 percent cap on wage index decreases may stabilize some regions but still leaves many providers undercompensated, compromising access and quality. A few commenters expressed concern with the financial impact of wage index decreases in high cost of living areas, specifically in New York state and Northern California. A commenter stated that decreases to 6 of the 15 New York CBSAs for FY 2026 (with one reaching the 5 percent cap and three other CBSAs proposed to see decreases of 4.03 percent, 3.37 percent, and 2.86 percent), will make serving Medicare hospice beneficiaries in these areas of New York more challenging. Another commenter stated that the wage index for Sacramento has decreased since FY 2022 (from 1.7072 in FY 2022 to 1.631 in FY 2025, with CMS now proposing a further decrease to 1.5690 for FY 2026) and as a result, the projected payment for Hospice payments in FY 2026 will be less than the payment received in 2022 despite a cumulative nationwide inflation of 15.98 percent over the same period. The commenter expressed concern that hospice programs in Northern California cannot sustain 4 years with no increase in payment given the ongoing inflationary trends. This commenter stated they believe that in order to ensure stability, CMS should cap wage index decreases to the level of the market basket update.

Additionally, a commenter recommended that CMS consider lowering the cap to 2.5 or 3 percent to protect hospice providers who are operating with negative operating margins and are still experiencing multiple negative consequences due to the COVID-19 pandemic, such as increased costs and loss of staff. Another commenter recommended that CMS cap wage index reductions to the level of the market basket update or only permit upward adjustments in CBSA wage index values in order to ensure stability in hospice payments. Finally, a commenter recommended that CMS apply a zero percent floor to wage index adjustments in CBSAs with demonstrably increasing labor costs.

Response: We appreciate the commenters' recommendations; however, these comments are outside the scope of the proposed rule as we did not propose any changes to the wage index cap. Regarding MedPAC's suggestion that the wage index cap policy should also be applied to wage index increases, the purpose of the 5 percent cap policy is to help mitigate the significant negative impacts of wage index decreases. Therefore, we do not believe it would be appropriate to also cap wage index increases.

Furthermore, with respect to commenters' recommendations about lowering the cap on decreases, we continue to believe that the 5 percent cap on wage index decreases is sufficient to effectively mitigate any significant decreases in a hospice's wage index for a fiscal year, while still balancing the importance of ensuring that area wage index values accurately reflect relative differences in area wage levels. We continue to believe that a 5 percent cap on wage index decreases is sufficient because it provides a degree of predictability in payment changes for providers and allows providers time to adjust to any significant decreases they may face year to year. Also, while we appreciate the concerns raised by commenters on the financial impact of wage index decreases on high cost of living areas we believe that 5 percent is a reasonable level for the cap because it effectively mitigates 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. Therefore, we do not believe that it would be appropriate to lower the cap percentage, to apply a zero percent floor to wage index adjustments or to only permit upward wage index adjustments.

Comment: A few commenters expressed concern with the hospice floor policy. A commenter recommended that CMS reevaluate the hospice floor policy to ensure adequate reimbursement in persistently underserved rural regions, especially with declining wage index adjustments. Another commenter stated that even with the hospice-specific floor (capped at 0.8000), providers in rural areas receive substantially lower reimbursement for delivering the same services, limiting their ability to retain staff, cover operating expenses, and invest in care quality. Additionally, a commenter stated that without a wage index floor or multi-year transition strategy, many hospices, regardless of location, face abrupt and destabilizing reimbursement cuts.

Response: We appreciate these recommendations. However, these comments are out of scope as we did not propose any changes to the hospice floor policy. Regardless, we believe that the hospice floor, which adjusts the pre-floor, pre-reclassified hospital wage index values below 0.8000 by a 15 percent increase subject to a maximum wage index value of 0.8000, and the 5 percent cap on wage index decreases is sufficient to mitigate any potential negative impact for hospices serving beneficiaries in these rural areas.

Final Decision: We did not propose any changes to finalized hospice floor and 5 percent cap policies. Therefore, the FY 2026 hospice wage index will continue to include the hospice floor as well as the 5 percent cap on wage index decreases. For FY 2026, the 5 percent cap on wage index decreases will continue to be calculated at the county level . While some counties that required a transition code for FY 2025 will continue to use the same transition code for FY 2026, other counties that required a transition code in FY 2025 will no longer require a transition code in FY 2026. For these counties, the FY 2026 wage index of the CBSA or rural area that they are designated into has a wage index higher than 95 percent of their previous FY's wage index. Therefore, these counties will use the CBSA or rural county code of the area they were redesignated into based on OMB Bulletin No. 23-01.

More information regarding these special codes can be found in the FY 2025 Hospice Wage Index and Rate Update final rule (89 FR 64220 through 64224). Additionally, the list of counties that must use a 50XXX transition code for a given FY can be found as a separate tab in the hospice wage index file for that FY available on the CMS website at https://www.cms.gov/medicare/payment/fee-for-service-providers/hospice/hospice-wage-index.

In the FY 2020 Hospice Wage Index and Rate Update final rule (84 FR 38484) we finalized a policy to use the current FY's hospital wage index data to calculate the hospice wage index values. For FY 2026, we proposed that the hospice wage index would be based on the FY 2026 hospital pre-floor, pre-reclassified wage index for hospital cost reporting periods beginning on or after October 1, 2021 and before October 1, 2022 (FY 2022 cost report data). We noted that the FY 2026 hospice wage index would not consider any geographic reclassification of hospitals, including those in accordance with sections 1886(d)(8)(B) or 1886(d)(10) of the Act. 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 Inpatient Prospective Payment System (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 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 and the hospital rural floor policies apply to hospitals only, and not to hospices, we continue to believe the use of the pre-floor and pre-reclassified hospital wage index 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, the skilled nursing facility prospective payment system (SNF PPS), the inpatient rehabilitation facility prospective payment system (IRF PPS), and the home health prospective payment system (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 0.8000 by a 15 percent increase subject to a maximum wage index value of 0.8000.

The appropriate FY 2026 wage index value will 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 FY 2026 wage index value will be applied to the labor portion of the payment rate based on the geographic location of the facility for beneficiaries receiving GIP or IRC.

There exist some geographic areas where there are no hospitals, and thus, no hospital wage data on which to base the calculation of the hospice wage index. In the FY 2006 Hospice Wage Index and Rate Update final rule (70 FR 45135), we adopted the policy that, for urban labor markets without a hospital from which hospital wage index data could be derived, all 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 2026, the only CBSA without a hospital from which hospital wage data can be derived is 25980, Hinesville, Georgia. As such, the proposed FY 2026 hospice wage index for Hinesville, Georgia was 0.8892. Based on updated wage index data, the final FY 2026 hospice wage index value for Hinesville, Georgia is 0.8894.

In the FY 2008 Hospice Wage Index and Rate Update final rule (72 FR 50217 through 50218), we implemented a methodology to update the hospice wage index for rural areas without hospital wage data. In cases where there is 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). In the FY 2025 Hospice Wage Index and Rate Update final rule (89 FR 64207), as part of our adoption of the revised OMB delineations, rural North Dakota became a rural area without a hospital from which hospital wage data can be derived. Therefore, to calculate the proposed FY 2026 wage index for rural area 99935, North Dakota, we used as a proxy the average pre-floor, pre-reclassified hospital wage data (updated by the hospice floor and 5 percent cap) from the contiguous CBSAs: CBSA 13900-Bismark, ND, CBSA 22020-Fargo, ND-MN, CBSA 24220-Grand Forks, ND-MN and CBSA 33500, Minot, ND, which resulted in a proposed FY 2026 hospice wage index of 0.8486 for rural North Dakota. Based on updated wage index data, the final FY 2026 hospice wage index value for rural North Dakota is 0.8469.

Previously, the only rural area without a hospital from which hospital wage data could be derived was in Puerto Rico. However, for rural Puerto Rico, we did 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 of half of its urban areas). Instead, we used the most recent wage index previously available for that area, which was 0.4047, subsequently adjusted by the hospice floor for an adjusted wage index of 0.4654. For FY 2025, we noted as part of our adoption of the revised OMB delineations, there is now a hospital in rural Puerto Rico from which hospital wage data can be derived. Therefore, we finalized a wage index for rural Puerto Rico based on the hospital wage data for the area instead of the previously available pre-hospice floor wage index of 0.4047, which equaled an adjusted wage index value of 0.4654. The proposed FY 2026 pre-hospice floor unadjusted wage index for rural Puerto Rico was 0.2452 subsequently adjusted by the hospice floor to equal 0.2820. Because 0.2820 is more than a 5 percent decline in the FY 2025 wage index, the adjusted FY 2026 wage index with the 5 percent cap applied would equal 0.95 multiplied by 0.4421 (that is, the FY 2025 wage index with 5 percent cap), which resulted in a proposed FY 2026 wage index value of 0.4200. Based on updated wage index data, the final FY 2026 pre-hospice floor unadjusted wage index for rural Puerto Rico is 0.2443 subsequently adjusted by the hospice floor to equal 0.2809. Because 0.2809 is more than a 5 percent decline in the FY 2025 wage index, the adjusted FY 2026 wage index with the 5 percent cap applied would equal 0.95 multiplied by 0.4421 (that is, the FY 2025 wage index with 5 percent cap), which results in a final FY 2026 wage index value of 0.4200.

The final hospice wage index applicable for FY 2026 (October 1, 2025 through September 30, 2026) is available on the CMS website for the Hospice Wage Index page located at https://www.cms.gov/medicare/payment/fee-for-service-providers/hospice/hospice-wage-index as well as the FY 2026 Hospice Wage Index final rule web page at https://www.cms.gov/medicare/payment/fee-for-service-providers/hospice/hospice-regulations-and-notices.

We received 24 public comments on the proposed FY 2026 hospice wage index. A summary of the comments and our responses to those comments are as follows:

Comment: Several commenters including MedPAC recommended more far-reaching revisions and reforms to the wage index methodology used under Medicare fee-for-service than the proposed wage index policies outlined in the FY 2026 Hospice Wage Index and Rate Update proposed rule. MedPAC recommended that the Secretary use existing authority to adopt the Commission's June 2023 wage index plan that calls for Congress to repeal the existing Medicare wage index statutes, including current exceptions, and require the Secretary to phase in a new Medicare wage index system for hospitals and other types of providers that: uses all-employer, occupation-level wage data with different occupation weights for the wage index of each provider type; reflects local area level differences in wages between and within metropolitan statistical areas and statewide rural areas; and smooths wage index differences across adjacent local areas.

Other commenters urged CMS to engage with interested parties in exploring alternatives to the current reliance on hospital-based wage data to set hospice payments. A few commenters stated that the hospice wage index, based on inpatient hospital data, fails to adequately account for unique and considerable hospice-specific circumstances and costs such as the costs associated with travel to patients' homes. Another commenter requested changes to the hospice wage index methodology and stated that the pre-floor, pre-reclassified hospital wage index is wholly inadequate for adjusting hospice and home health costs in states like New York, which has some of the nation's highest labor costs, and which continue to increase. Finally, a commenter requested CMS publish a state- and county-level wage index impact analysis and consider an alternative hospice-specific wage index methodology in future rulemaking.

Response: We thank the commenters for their recommendations. While we did not propose any changes to the wage index methodology in the proposed rule, we may consider these recommendations in future rulemaking.

Comment: A few commenters expressed concern that hospice providers are unable to benefit from IPPS hospital wage index policies such as out-migration, reclassification, and the rural floor. Specifically, some commenters expressed concern that hospices in Kootenai County, ID do not benefit from the hospital outmigration policy and stated that CMS has already acknowledged the labor market overlap through this county's eligibility for a hospital wage index out-migration adjustment. They stated that it is inconsistent and financially unsound to recognize this disparity for hospitals but not for hospice providers operating in the same environment and serving the same communities.

Other commenters recommended that the hospice wage index incorporate the hospital reclassification policy. A commenter recommended that the reclassification provision be extended specifically to provider-based home health and hospice agencies affiliated with hospital or health systems. A commenter stated that the inability to reclassify leaves hospices uniquely vulnerable in a competitive labor market with a limited pipeline of available workers.

Finally, a commenter requested that CMS reinstitute its prior policy that no hospice be paid below the rural floor for their State.

Response: We remind interested parties that the statutory provisions that govern hospice payment do not provide a mechanism for allowing hospices to seek geographic reclassification or to utilize the rural floor or out-migration 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 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. Section 1886(d)(13) of the Act outlines the adjustment that is applied to hospitals that experience a significant shift in their patient population due to patients seeking care outside their geographic area (out-migration). Because the reclassification provision, the hospital rural floor, and the out-migration provision apply only to hospitals, and not to hospices (even those hospices that are affiliated with a hospital or other health care system), 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. However, we note that hospices do receive the hospice floor which adjusts the pre- floor, pre-reclassified hospital wage index values below 0.8000 by a 15 percent increase subject to a maximum wage index value of 0.8000 and the 5 percent cap on wage index decreases and these policies apply to both urban and rural areas.

Comment: A few commenters expressed concern with the CBSA designations and wage index values assigned to their specific geographic areas. Several commenters representing hospices in Coeur d'Alene, ID stated that the economy and cost-of-living of Coeur d'Alene, ID and Kootenai County, ID is not reflective of the rest of the Idaho region but rather is more reflective of the “Pacific” region that includes the Spokane, WA CBSA. A commenter stated that despite being part of a shared economic and labor market with neighboring counties in Washington and Montana, the Coeur d'Alene, ID reimbursement rate is falling behind at a time when costs are rising across the board. These commenters recommended that CMS align Coeur d'Alene, ID and Kootenai County's hospice reimbursement rate with that of the Spokane, WA metropolitan area.

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 IPPS hospitals, home health agencies (HHAs), skilled nursing facilities (SNFs), and inpatient rehabilitation facilities (IRFs), 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. For example, we do not believe it would be appropriate to allow Kootenai County, ID to be reassigned into a higher CBSA designation. However, if OMB redesignates Kootenai County, ID into the Spokane, WA, 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.

Final Decision: After consideration of public comments, we are finalizing our proposal to use the FY 2026 pre-floor, pre-reclassified hospital wage index data as the basis for the FY 2026 hospice wage index. Additionally, using our established methodology for rural areas with no hospitals, we are including in the FY 2026 hospice wage index the wage indexes for the Northern Mariana Islands and American Samoa. Consistent with our established methodology, we compute an appropriate wage index for rural areas with no hospital using the average wage index values from contiguous CBSAs to represent a reasonable proxy. We believe that CBSA 99965 (Guam) represents a reasonable proxy because the islands are located within the Pacific Rim and share a common status of US territories. While Guam does not share a land border with either the Northern Mariana Islands or American Samoa, we believe that Guam's wage index is a reasonable proxy for the wage indexes of American Samoa and the Northern Mariana Islands under our contiguous CBSA policy given that those two territories cannot share a land border with others CBSAs Therefore, hospices that provide services in the Northern Mariana Islands and American Samoa should use CBSA 99965 (Guam) and should receive the wage index assigned to CBSA 99965 (Guam) of 0.9611. Although we did not propose this in the proposed rule, we believe notice and comment rulemaking is not needed to add the wage indexes of the Northern Mariana Islands and American Samoa because their inclusion aligns with our current methodology, current law for establishing the wage index, and current practice. As stated previously, choosing Guam's wage index as the reasonable proxy for the wage indexes of the Northern Mariana Islands and American Samoa is the best application of CMS's contiguous CBSA policy to the anomalous situation of U.S. territories separated by the ocean, and applying the contiguous policy as described ensures that the Northern Mariana Islands and American Samoa have wage indexes per 42 CFR 418.306(c). The addition of the Northern Mariana Islands and American Samoa to the wage index would also have no effect on hospice payment because hospices in the two territories currently receive payment based on calculations using Guam's wage index. Moreover, there is good cause to waive rulemaking for the addition of the Northern Mariana Islands and American Samoa to the wage index. We explain why there is good cause for a waiver in section IV. of this final rule, Waiver of Proposed Rulemaking.

The wage index applicable for FY 2026 is available on our website at https://www.cms.gov/medicare/payment/fee-for-service-providers/hospice/hospice-wage-index. The hospice wage index for FY 2026 is effective October 1, 2025, through September 30, 2026.

Section 4441(a) of the Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33) amended section 1814(i)(1)(C)(ii)(VI) of the Act to establish updates to hospice rates for FYs 1998 through 2002. Hospice rates were to be updated by a factor equal to the inpatient hospital market basket percentage increase set out under section 1886(b)(3)(B)(iii) of the Act, minus one percentage point. Payment rates for FYs since 2002 have been updated as required by 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 hospital market basket percentage increase for that FY. In the FY 2022 IPPS/LTCH PPS final rule (86 FR 45194 through 45204), we finalized the rebased and revised IPPS market basket to reflect a 2018 base year. For FY 2026, we proposed to rebase and revise the IPPS market basket to reflect a 2023 base year. For more information on this proposal, we refer readers to the FY 2026 IPPS/LTCH PPS proposed rule (90 FR 18237 through 18247).

Section 3401(g) of the Affordable Care Act mandated that, starting with FY 2013 (and in subsequent FYs), the hospice payment update percentage 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) of the Act 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 would 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 IHS Global Inc.'s (IGIs) TFP projection methodology is available on the CMS website at https://www.cms.gov/data-research/statistics-trends-and-reports/medicare-program-rates-statistics/market-basket-research-and-information. 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”.

Consistent with our historical practice, we estimate the market basket percentage increase, and the productivity adjustment based on IGI's forecast, using the most recent available data. The proposed hospice payment update percentage for FY 2026 was based on the most recent estimate of the inpatient hospital market basket (based on IGI's fourth quarter 2024 forecast). 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 percentage increase for FY 2026 of 3.2 percent was required to be reduced by a productivity adjustment as mandated by section 3401(g) of the Affordable Care Act. The proposed productivity adjustment for FY 2026 was 0.8 percentage point (based on IGI's fourth quarter 2024 forecast). Therefore, the proposed hospice payment update percentage for FY 2026 was 2.4 percent. We also proposed that if more recent data became available after the publication of the proposed rule and before the publication of the final rule (for example, a more recent estimate of the inpatient hospital market basket percentage increase or productivity adjustment), we would use such data, if appropriate, to determine the hospice payment update percentage in the FY 2026 final rule. We continue to believe it is appropriate to routinely update the hospice payment system so that it reflects the best available data regarding differences in patient resource use and costs among hospices as required by the statute.

In the FY 2022 Hospice Wage Index and Rate Update final rule (86 FR 42532), we rebased and revised the labor shares for RHC, CHC, GIP, and IRC using Medicare cost report data for freestanding hospices (CMS Form 1984-14, OMB Control Number 0938-0758) from 2018. The current labor portion of the payment rates are: RHC, 66.0 percent; CHC, 75.2 percent; GIP, 63.5 percent; and 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: RHC, 34.0 percent; CHC, 24.8 percent; GIP, 36.5 percent; and IRC, 39.0 percent.

We received 37 public comments on our proposal for the FY 2026 hospice payment update percentage. A summary of the comments and our responses to those comments are as follows:

Comment: Several commenters expressed their appreciation for the proposed inpatient hospital market basket update for FY 2026; however, most commenters expressed their belief that the proposed 2.4 percent increase would not cover their increased operating costs. Specifically, these commenters stated that they have been facing unprecedented increases in labor costs which have far outpaced the market basket updates that hospices have received in recent years. They stated they continue to grapple with a healthcare workforce shortage causing intense competition for skilled staff (including but not limited to nurses, social workers, aides, among other professionals), driving wages upward. Several commenters noted that BLS data indicates that healthcare sector inflation continues to be higher than historical norms and wages, salaries, and employer costs for health care are increasing at higher rates. Several commenters noted that MedPAC reports nonprofit hospices have margins in the single digits which they stated makes it even more difficult for them in the midst of rising costs for medications, supplies, employee wages, and benefits.

The commenters also stated that the proposed payment update has not appropriately captured the inflation pressures experienced for non-labor operating expenses, specifically the increased costs for medical supplies, personal protective equipment, durable medical equipment, pharmaceuticals, rent and utilities. A commenter also noted that tariffs will only further increase the cost of doing business for hospice providers. A commenter stated that hospices incur substantial travel-related costs in their state. A commenter stated they believe the proposed payment update does not reflect the increased costs of the new EMR and information-technology management contracts to comply with the revised HIPAA Security Rule; the increased training and education requirements to meet new CMS hospice regulatory demands; and the additional administrative personnel required to manage medical reviews and investigations secondary to new CMS regulations, and payment issues from Managed Care and Medicare Advantage plans.

Several commenters recommended CMS increase the proposed FY 2026 hospice payment increase by a different update than the proposed IPPS market basket update. A commenter requested CMS to recognize the cost-saving value of hospice services to the Medicare program and implement a one-time catch-up adjustment to hospice payments to reflect the true cost of care. A commenter requested CMS examine trends relative to IHS Global Inc.'s forecasts to determine whether more recently available data could be used for the final FY 2026 rule, resulting in a higher market basket update. They also requested CMS determine whether additional updates could be made during the course of FY 2026 to provide additional support to hospice and other providers, such as through a one-time adjustment. A commenter requested that CMS continue to monitor profit margins, wage index variations, and the myriad of factors that impact nonprofit hospices as CMS moves forward with changes to the current methodology. Several commenters requested CMS pursue all possible administrative options available to support hospices and provide a higher payment update for FY 2026. To the extent that CMS' hands are tied by statutory formulas for updating hospice payments, they requested CMS work with Congress to address this need. A commenter stated that the hospice payment updates rely on cost reports that are 2 to 3 years old, failing to reflect real-time operational cost increases which they say is particularly damaging in periods of economic volatility. They requested that CMS consider implementing a prospective payment model based on current-year data, perhaps utilizing real-time provider-reported financial data or a claims-based adjustment mechanism. A commenter requested CMS index the base payment update to actual medical inflation or provide a targeted supplemental increase for providers serving a high proportion of dual-eligible beneficiaries.

Response: We acknowledge concerns about recent inflation trends and requests for a higher FY 2026 hospice payment update or an alternative payment recommendation that differs from the statutorily required productivity-adjusted IPPS market basket update.

However, section 1814(i)(1)(C)(ii)(VII) of the Act requires CMS to update hospice payments by the IPPS market basket percentage increase (as defined in section 1886(b)(3)(B)(iii) of the Act) adjusted for productivity. We note that in the FY 2026 IPPS/LTCH proposed rule (90 FR 18237 through 18247), we proposed to rebase and revise the IPPS market basket to reflect a 2023 base year. Section 1886(b)(3)(B)(iii) of the Act states the Secretary shall update IPPS payments based on a market basket percentage increase estimated by the Secretary before the beginning of the period or fiscal year, by which the cost of the mix of goods and services (including personnel costs but excluding nonoperating costs) comprising routine, ancillary, and special care unit inpatient hospital services, based on an index of appropriately weighted indicators of changes in wages and prices which are representative of the mix of goods and services included in such inpatient hospital services. The IPPS market basket is a fixed-weight, Laspeyres-type index that measures price changes over time and 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 during a high inflation period (such as faster wage growth or higher energy prices) but might not reflect other factors that could increase costs such as the quantity of labor used or any shifts between contract and staff nurses. We note that cost changes (that is, the product of price and quantities) would only be reflected when a market basket is rebased, and the base year weights are updated to a more recent time period.

We understand that the market basket updates may differ from other overall inflation indexes such as the CPI for Medical Care; however, we would reiterate that these topline indexes are not comparable since they measure different mixes of products, services, or wages than the legislatively defined CMS IPPS hospital market basket. We would highlight that the market basket percentage increase is a forecast of the price pressures that hospitals are expected to face in FY 2026. We also note that when developing its forecast for the various price indexes used in the IPPS market basket, IGI considers industry-specific and overall economic conditions. More specifically for the ECI for hospital workers (which is used to measure compensation prices), IGI considers overall labor market conditions (including the impact of wage pressures on skill mix) as well as trends in contract labor wages, which both have an impact on wage pressures for workers employed directly by the hospital.

As stated in the FY 2026 IPPS/LTCH proposed rule (90 FR 18266) we proposed a FY 2026 applicable percentage increase of 2.4 percent, reflecting the proposed 2023-based IPPS market basket rate-of-increase of 3.2 percent and proposed productivity adjustment of 0.8 percentage point. We also proposed that if more recent data became available, we would use such data, if appropriate, to derive the final FY 2026 IPPS market basket update for the final rule. We appreciate the commenters' concerns regarding inflationary pressure and the request to use more recent data to determine the FY 2026 IPPS market basket update. For this final rule, we are using an updated forecast of the price proxies underlying the market basket that incorporates more recent historical data and reflects a revised outlook regarding the U.S. economy. As published in the FY 2026 IPPS/LTCH final rule, based on more recent data available for this FY 2026 Hospice Wage Index and Rate Update final rule (that is, IGI's second quarter 2025 forecast of the 2023-based IPPS market basket rate-of-increase with historical data through the first quarter of 2025), we estimate that the FY 2026 IPPS market basket increase is 3.3 percent. Based on more recent data available as published in the FY 2026 IPPS/LTCH PPS final rule (that is, IGI's second quarter 2025 forecast of the productivity adjustment), the current estimate of the productivity adjustment for FY 2026 is 0.7 percentage point. Therefore, the final hospice payment update percentage for FY 2026 is 2.6 percent (0.2 percentage point higher than the proposed hospice payment update percentage). We note that while there are multiple offsetting factors contributing to differences in the forecasts underlying the proposed and final rules, the final FY 2026 IPPS market basket increase is slightly higher due to economic uncertainty.

Comment: Many commenters requested CMS make a one-time market basket adjustment of 4.9 percent to account for the cumulative shortfall in hospice payment rates due to forecast errors over FYs 2021 through 2025. Commenters also stated that because annual payment updates compound, the impact of forecast errors is cumulative. They further stated that Medicare hospice expenditures totaled about $27.5 billion in FY 2024 and so a 4.9 percent shortfall equates to roughly $1.3 billion in annual underpayments relative to what payments would have been with accurate market basket updates. Commenters also noted that skilled nursing facilities have received forecast error adjustments, including a 0.6 percentage point correction in FY 2024 and a 1.7 percentage points correction in FY 2025.

Commenters urged CMS to consider any and all opportunities to implement a one-time catch-up adjustment for hospice payments, as has been done in the past for other provider types in extraordinary circumstances to rectify cost disparities. Several commenters stated that if CMS is limited by statutory requirements to implement an adjustment for updating hospice payments that CMS work with Congress to include funding for a one-time market basket forecast error adjustment for hospice providers as a component of any end of year legislation taken up by the 119th Congress.

Response: We thank the commenters for their recommendations. The inpatient hospital market basket percentage increases are required by law to be set prospectively, which means that the update relies on a mix of both historical data for part of the period for which the update is calculated and forecasted data for the remainder. There is currently no mechanism to adjust for market basket forecast error in the hospice payment update. Furthermore, beginning in 1989, Congress gave hospices their first increase (20 percent) in reimbursement since 1986 and tied future increases to the annual increase in the hospital market basket through a provision contained in the Omnibus Budget Reconciliation Act of 1989. While the projected IPPS hospital market basket updates for FY 2021 through FY 2024 (the last historical fiscal year) were under forecast, this was largely due to unanticipated inflationary and labor market pressures as the economy emerged from the COVID-19 PHE. The forecast error has been both positive and negative during past years, and over longer periods of time the cumulative forecast has not deviated significantly from the historical measures. Only considering a forecast error for years when the final inpatient hospital market basket percentage increase was lower than the actual inpatient hospital market basket percentage increase does not consider the numerous years that providers benefited from a forecast error. We understand that the market basket updates may differ from other overall inflation indexes such as the topline ECI, CPI, or PPI; however, we would reiterate that comparisons between these topline indexes are not comparable since they measure different mixes of products, services, or wages than reflected in the legislatively defined CMS IPPS hospital market basket.

Comment: Commenters recognized that CMS is statutorily required to apply the productivity adjustment based on the 10-year moving average of changes in annual economy-wide private nonfarm business total factor productivity; however, they expressed concerns about the magnitude and methodology of the adjustment. Commenters stated that the productivity adjustment largely reflects output growth driven by technology, capital investment, and process efficiencies—factors more applicable to industrial or tech-driven sectors. They remained concerned that this adjustment does not fairly reflect the nature of hospice care, which is fundamentally labor-intensive and not amenable to typical productivity gains. Other commenters expressed concern regarding the increase in the productivity adjustment for FY 2026 relative to prior years, noting that the average was 0.5 percent over the 2012 to 2025 time period as well as noting the upward trend with 0.2 percent in FY 2024, 0.5 percent in FY 2025, and 0.8 percent in FY 2026. They stated this volatility underscores the inconsistency of applying a uniform, economy-wide productivity factor across all sectors and highlights the financial strain it imposes on labor-intensive providers such as hospice and home health, which lack the ability to realize capital-based efficiencies.

A commenter stated CMS should elect to implement the most de minimis productivity adjustment that may be applied under current law as a component of the FY 2026 hospice rate update. Other commenters requested CMS reevaluate the productivity adjustment methodology to account for the unique structure of hospice care.

Response: Section 3401(g) of the Affordable Care Act mandated that, starting with FY 2013 (and in subsequent FYs), the hospice payment update percentage be annually reduced by changes in 10-year moving average growth in economy-wide private nonfarm business multi-factor productivity as specified in section 1886(b)(3)(B)(xi)(II) of the Act. We recognize the concerns of the commenters regarding the appropriateness of the productivity adjustment; however, we are required pursuant to section 1886(b)(3)(B)(xi)(II) of the Act to apply the specific productivity adjustment described here.

We have always made available on the CMS website the general method for calculating the productivity adjustment. This includes providing a link to the most recent BLS historical total factor productivity (TFP) (previously referred to as multifactor productivity) data ( http://www.bls.gov ), which allows interested parties to obtain historical TFP annual index levels for 1987 through 2024. We also provided the IGI projection model ( https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and-reports/medicareprogramratesstats/downloads/tfp_methodology.pdf ), which is used to derive annual TFP growth rates for 2025 and 2026. The annual index level derived from this method is then interpolated to quarterly levels, and the FY 2026 productivity adjustment is equal to the percent change in the 40-quarter moving average projected level for the period ending September 30, 2026 relative to the 40-quarter moving average projected level for the period ending September 30, 2025. We believe our methodology for the productivity adjustment is consistent with section 1886(b)(3)(B)(xi)(II) of the Act which states that the productivity adjustment is equal to the 10-year moving average of changes in annual economy-wide private nonfarm business multi-factor productivity (as projected by the Secretary for the 10-year period ending with the applicable fiscal year, year, cost reporting period, or other annual period).

At the time of this final rule, the FY 2026 productivity adjustment reflects BLS historical TFP data through 2024 (released on March 21, 2025) and IGI's forecasted TFP growth for 2025 and 2026. The average annual growth rate of historical TFP published by BLS for 2017 through 2024 is currently 0.9 percent and IGI is projecting average TFP growth of about 0.0 percent for 2025 and 2026 based on IGI's second-quarter 2025 forecast. Combining the historical and projected TFP data over the entire 10-year time period results in a compound annual growth rate of TFP of 0.7 percent for 2026. The productivity adjustment (based on the 10-year period ending with FY 2026) for the FY 2026 IPPS/LTCH final rule is 0.1 percentage point lower than in the FY 2026 IPPS/LTCH proposed rule and primarily reflects the incorporation of a revised outlook from IGI that has lower projected economic growth over 2025 and 2026. The 0.7-percent productivity adjustment in the FY 2026 final rule is larger than the productivity adjustment in prior final rules for FY 2023 and FY 2024 mainly due to the incorporation of updated BLS historical data.

Final Decision: We are finalizing the hospice payment update using the methodology outlined. Based on the more recent IGI second quarter 2025 forecast with historical data through the first quarter of 2025 the 2023-based IPPS market basket increase factor for FY 2026 is 3.3 percent. The FY 2026 productivity adjustment based on the more recent IGI second quarter 2025 forecast is 0.7 percentage point. Therefore, CMS is finalizing for FY 2026, a hospice payment update percentage of 2.6 percent (3.3 percent market basket percentage increase less a 0.7 percentage point productivity adjustment).

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 care is intended to treat symptoms that cannot be managed in another setting.

As discussed in the FY 2016 Hospice Wage Index and Rate Update final rule (80 FR 47172), we implemented two different RHC payment rates, one RHC rate for the first 60 days and a second RHC rate for days 61 and beyond. In addition, in that final rule, we implemented a Service Intensity Add-On (SIA) payment for RHC when direct patient care is provided by a registered nurse (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. To maintain budget neutrality, as required under section 1814(i)(6)(D)(ii) of the Act, the new RHC rates were adjusted by an SIA 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. For FY 2026, the proposed SIA budget neutrality factor was 1.0005 for RHC days 1-60 and 1.0001 for RHC days 61+. With updated FY 2024 claims data (as of May 9, 2025), the final SIA budget neutrality factor is 1.0005 for days 1-60 and 1.0001 for RHC days 61+.

In the FY 2017 Hospice Wage Index and Rate Update final rule (81 FR 52156), we initiated a policy of applying a wage index standardization factor to hospice payments in order to eliminate the aggregate effect of annual variations in hospital wage data. For FY 2026 hospice rate setting, we are continuing our longstanding policy of using the most recent data available. Specifically, we proposed to use FY 2024 claims data (as of January 13, 2025) for the FY 2026 payment rate updates. We noted that the budget neutrality factors and payment rates would be updated with more complete FY 2024 claims data for the final rule. With updated claims data (as of May 9, 2025), the wage index standardization factor was calculated by simulating total payments using FY 2024 hospice utilization claims data with the FY 2025 wage index (pre-floor, pre-reclassified hospital wage index with the hospice floor and the 5 percent cap on wage index decreases) and FY 2025 payment rates and compare it to our simulation of total payments using FY 2024 utilization claims data, the FY 2026 hospice wage index (pre-floor, pre-reclassified hospital wage index with hospice floor, and the 5 percent cap on wage index decreases) and FY 2025 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 2025 wage index and FY 2025 payment rates for each level of care by the FY 2026 wage index and FY 2025 payment rates, we obtain a wage index standardization factor for each level of care. The final wage index standardization factors using FY 2024 claims data (as of May 9, 2025) for each level of care are shown in Tables 1 and 2.

The final FY 2026 RHC payment rates are shown in Table 1. The final FY 2026 payment rates for CHC, IRC, and GIP are shown in Table 2.

Sections 1814(i)(5)(A) through (C) of the Act require that hospices submit quality data 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 Hospice Quality Reporting Program (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 FY 2014 through FY 2023, the Secretary shall reduce the market basket percentage increase by 2 percentage points for any hospice that does not comply with the quality data submission requirements with respect to that FY. Section 1814(i)(5)(A)(i) of the Act was amended by section 407(b) of Division CC, Title IV of the Consolidated Appropriations Act (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. Depending on the amount of the annual update for a particular year, a reduction of 4 percentage points beginning in FY 2024 makes a negative payment update more likely than the previous 2 percent reduction. This 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. We applied this policy beginning with the FY 2024 Annual Payment Update (APU), which we based on CY 2022 quality data. Therefore, the final FY 2026 rates for hospices that do not submit the required quality data would be updated by −1.4 percent, which is the final FY 2026 hospice payment update percentage of 2.6 percent minus 4 percentage points. The final payment rates for hospices that do not submit the required quality data are shown in Tables 3 and 4.

We received two public comments on our proposals for the FY 2026 hospice payment rates. A summary of the comments and our responses to those comments are as follows:

Comment: A commenter expressed concern with the enforcement of the 4 percent payment reduction for hospices that fail to meet reporting requirements. This commenter stated that the strict enforcement of this penalty could disproportionately impact smaller or resource-limited providers and ultimately affect vulnerable patients.

Another commenter recommended that the Service Intensity Add-On (SIA) payment be expanded to include social work visits beyond the final 7 days to improve holistic end-of-life care.

Response: We appreciate the commenters' recommendations. However, these comments are outside the scope of the FY 2026 Hospice Wage Index and Payment Update proposed rule as we did not propose any changes to these policies. Furthermore, the 4 percent payment reduction for failing to meet hospice quality reporting requirements is required by statute. Any changes to these policies would need to be proposed through rulemaking or updated through statute.

Final Decision: We are finalizing the FY 2026 hospice payment rates, SIA budget neutrality factor, and wage index standardization factors. The final FY 2026 RHC payment rates are shown in Table 1. The final FY 2026 payment rates for CHC, IRC, and GIP are shown in Table 2. The final payment rates for hospices that do not submit the required quality data are shown in Tables 3 and 4.

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, Oct. 6, 2014). 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 consumer price index for all urban consumers (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 and Rate Update final rule (86 FR 42539), we finalized conforming regulation text changes at § 418.309 to reflect the provisions of the CAA, 2021. Division P, section 312 of the CAA, 2022 (Pub. L. 117-103) amended section 1814(i)(2)(B) of the Act and extended the provision that mandates the hospice cap be updated by the hospice payment update percentage (the inpatient hospital market basket percentage increase reduced by the productivity adjustment) rather than the CPI-U for accounting years that end after September 30, 2016 and before October 1, 2031. Division FF, section 4162 of the CAA, 2023 (Pub. L. 118-328) 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 (the inpatient hospital market basket percentage increase reduced by the productivity adjustment) rather than the CPI-U for accounting years that end after September 30, 2016 and before October 1, 2032. Division G, Section 308 of the Consolidated Appropriations Act, 2024 (CAA, 2024) (Pub. L. 118-42) extends this provision to October 1, 2033. Before the 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, 2032. Therefore, for accounting years that end after September 30, 2016, and before October 1, 2033, the hospice cap amount is updated by the hospice payment update percentage rather than the CPI-U. In the FY 2025 Hospice Wage Index and Rate Update final rule (89 FR 64202), as a result of the changes mandated by the CAA, 2024, we finalized conforming regulation text changes at § 418.309 to reflect the revisions at section 1814(i)(2)(B) of the Act.

The proposed hospice cap amount for the FY 2026 cap year was $35,292.51, which was equal to the FY 2025 cap amount ($34,465.34) updated by the proposed FY 2026 hospice payment update of 2.4 percent. We also proposed that if more recent data became available after the publication of the proposed rule and before the publication of this final rule (for example, a more recent estimate of the hospice payment update percentage), we would use such data, if appropriate, to determine the hospice cap amount in the FY 2026 final rule. Using the updated data, the final cap amount for the FY 2026 cap year will be $35,361.44 which is equal to the FY 2025 cap amount ($34,465.34) updated by the final FY 2026 hospice payment update percentage of 2.6 percent.

We received eight public comments on our proposed update to the hospice cap for FY 2026. A summary of the comments and our responses to those comments are as follows:

Comment: A commenter expressed support for the proposed FY 2026 hospice cap amount.

Response: We thank this commenter for their support.

Comment: Most commenters opposed the proposed 2.4 percent update to the hospice cap amount for FY 2026. These commenters expressed concern that the proposed hospice cap update does not reflect the rising costs that hospices are currently facing. A commenter stated that the hospice cap warrants reevaluation to ensure it aligns with actual per-patient costs and does not disproportionately impact high-need populations. Another commenter recommended CMS reform the aggregate cap to account for patient mix, acuity, and regional cost differentials, ensuring that providers serving complex patients are not penalized. This commenter stated that the cap disproportionately penalizes providers caring for patients with non-cancer diagnoses; dual-eligible individuals requiring wraparound services and extended hospice stays; and vulnerable populations with limited access to caregivers or community support. The commenter also stated that even with the cap increase, many hospices will still exceed the limit due to factors beyond their control which creates disincentives to admit or retain high-need patients and exacerbates disparities in access to care. Finally, a commenter recommended that CMS abolish the hospice cap and stated that the hospice aggregate cap disincentivizes hospices from serving the most complex, high-need patients.

Response: We thank the commenters for their recommendations pertaining to 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 update the cap amount in a different manner nor account for patient mix, acuity, or regional cost differentials.

Final Decision: We are finalizing the update to the hospice cap amount for FY 2026 in accordance with statutorily mandated requirements.

The Medicare hospice benefit provides coverage for a comprehensive set of services described in section 1861(dd)(1) of the Act for individuals who are deemed “terminally ill” based on a medical prognosis that the individual's life expectancy is 6 months or less, as described in section 1861(dd)(3)(A) of the Act. As such, section 1814(a)(7)(A) of the Act requires the individual's attending physician (if the patient designates an attending physician) and hospice medical director (or physician member of the interdisciplinary group (IDG)) to certify in writing at the beginning of the first 90-day period of hospice care that the individual is “terminally ill” based on the physician's or medical director's clinical judgment regarding the normal course of the individual's illness. In a subsequent 90- or 60-day period of hospice care, only the hospice medical director or the physician member of the IDG recertifies at the beginning of the period that the patient is terminally ill based on such clinical judgment.

Operation Restore Trust (ORT), a government initiative that began in 1995, coordinated with the Centers for Medicare & Medicaid Services (CMS), the Office of the Inspector General (OIG), and the Administration on Aging (AoA) to identify vulnerabilities in the Medicare program and to pursue ways to reduce Medicare's exposure to fraud and abuse. Through audits, ORT identified several areas of weakness in the hospice benefit, primarily in the area of hospice eligibility. In response to concerns raised by ORT regarding beneficiaries who had been receiving hospice care for more than 210 days but who were later determined to have not been eligible  3 and to reduce Medicare exposure to abusive practices, the FY 2006 Medicare Program; Hospice Care Amendments final rule (70 FR 70532, 70535, 70547) added a new § 418.25, “Admission to hospice care,” which established specific requirements that must be met before a hospice provider admits a patient to its care.

Section 418.25(a) requires that the hospice admit a patient only on the recommendation of the medical director (or the physician designee, as defined in § 418.3) in consultation with, or with input from, the patient's attending physician (if any). Section 418.25(b) sets out the information that the hospice medical director (or the physician designee, as defined in § 418.3) must consider in reaching a decision to certify that the patient is terminally ill. Section 418.25(b) is not the only regulation that discusses the certification of terminal illness. Section 418.22(c)(1) sets forth the sources of the certification of terminal illness and § 418.102(b) provides the standard for the initial certification of terminal illness in the condition of participation (CoP) for hospice medical directors. However, while each of these regulations pertains to the determination that a patient is terminally ill, they do not align regarding the physicians who can make these determinations.

In particular, § 418.25 only describes any of the two physicians on the recommendation of whom the hospice may admit a patient: the medical director or the physician designee (in addition to the patient's attending physician, if any). However, the payment certification of terminal illness and medical director CoP regulations at §§ 418.22(c)(1)(i) and 418.102(b), respectively, list any of three physicians who provide the written certification of terminal illness: the medical director of the hospice, the physician designee, or physician member of the hospice IDG.

Several out of scope comments were received regarding the FY 2025 Hospice Wage Index and Rate Update final rule (89 FR 64231), specifically requesting that the physician member of the IDG be added to the hospice admission regulation at § 418.25. Specifically, commenters requested that the language regarding which physicians can make determinations for hospice admission align with current certification requirements and CoPs. We did not make a change to § 418.25 in the FY 2025 hospice final rule as we did not propose this change.

We agree with the commenters that our regulations should consistently describe the physicians who can certify terminal illness and determine patient admission to hospice care. Accordingly, to align with the current payment and CoP regulations at §§ 418.22(c)(1)(i) and 418.102(b), respectively, we proposed to add the text “or the physician member of the hospice interdisciplinary group” at § 418.25(a) and (b) to indicate that, in addition to the medical director or physician designee, the physician member of the hospice IDG may also determine admission to hospice care. We noted that we believe aligning the language at § 418.25(a) and (b) with the language at §§ 418.102(b) and 418.22(c)(1)(i) would allow for greater consistency between key components of hospice regulations and policies.

We received 31 public comments on our proposed changes to § 418.25(a) and (b). A summary of the comments and our responses to those comments are as follows:

Comment: Commenters overwhelmingly supported the proposal to add the physician member of the hospice IDG to § 418.25(a) and (b) and a few commenters expressed appreciation that CMS was responsive to the out of scope requests provided in the FY 2025 Hospice Wage Index and Rate Update final rule (89 FR 64231). Specifically, commenters stated that the regulation change would reduce ambiguity and improve clarity, leading to improved patient access to hospice care; reduce delays in services; improve timeliness of hospice services; improve accurate payment determinations; prevent inappropriate hospice citations; and align language with hospice certification payment requirements and CoPs.

Response: We thank commenters for their support.

Comment: We received a comment that opposed the addition of the physician member of the hospice IDG due to concerns that such a physician may materially benefit from recommending hospice if the physician has significant ownership in the for-profit hospice.

Response: We appreciate the concern raised; however, we would like to remind readers that § 418.25 simply aligns the admission process requirements with the certification requirements. The certification source for certifying a patient for hospice at § 418.22(c) includes the physician member of the IDG and also requires the individual's attending physician, if the individual has one, to certify the individual for hospice in the initial 90-day certification for hospice admission. Additionally, a patient must still meet eligibility requirements under § 418.20. The text change aligns language between payment policies and the CoPs in order to reduce ambiguity.

Comment: Several commenters requested clarification regarding whether the proposed regulatory changes to § 418.25(a) and (b) would also apply to § 418.26 (Discharge from hospice care) or whether we would be proposing this change (and include additional physician types) in future rulemaking. Some of these commenters requested that the same proposed physician language in § 418.25 be applied to § 418.26 for consistency and clarity, to improve timely discharge situations, and to further align hospice regulatory language.

Response: We thank commenters for their comments and recommendations. CMS is only finalizing the proposed changes to § 418.25(a) and (b) and is not amending § 418.26. We may consider adding “physician member of the interdisciplinary group” or additional physician types to § 418.26 in future rulemaking.

Comment: A commenter requested allowing nurse practitioners (NPs) and physician assistants (PAs) to certify a beneficiary as terminally ill.

Response: We thank this commenter for their suggestion; however, allowing NPs and PAs to certify a beneficiary as terminally ill is not permitted under the statute.

Final Decision: After consideration of public comments, we are finalizing our proposal to add the text “or the physician member of the hospice interdisciplinary group” to § 418.25(a) and (b) to indicate that, in addition to the medical director or physician designee, the physician member of the hospice IDG may also determine admission to hospice care.

The Medicare Program; Home Health Prospective Payment System Rate Update for Calendar Year 2011; Changes in Certification Requirements for Home Health Agencies and Hospices final rule (CY 2011 HH PPS final rule) implemented the requirements in section 1814(a)(7)(D) of the Act, as added by section 3132(b) of the Affordable Care Act (75 FR 70435). Subclause (i) of section 1814(a)(7)(D) requires that on and after January 1, 2011, a hospice physician or nurse practitioner (NP) must have a face-to-face encounter with a hospice patient to determine the patient's continued eligibility for hospice care prior to the 180-day recertification, and prior to each subsequent recertification. Section 1814(a)(7)(D)(i) also requires that the hospice physician or NP attest that such a visit took place, in accordance with procedures established by the Secretary. Additionally, as existing regulatory text at § 418.22 requires, if the face-to-face encounter was not performed by the certifying physician, the attestation of the physician or nurse practitioner who performed the face-to-face encounter shall state that the clinical findings of that visit were provided to the certifying physician for use in determining continued eligibility for hospice care. These requirements were codified at § 418.22 to ensure that a hospice patients' continued eligibility is appropriately assessed through a face-to-face encounter conducted by either a hospice physician or NP.

As explained in the CY 2011 HH PPS final rule, the regulation at § 418.22(b)(4) set forth that the physician or NP who performs the face-to-face encounter with the patient must attest in writing that he or she had a face-to-face encounter with the patient and, at that time, set forth that the attestation of the nurse practitioner shall state that the clinical findings of that visit were provided to the certifying physician, for use in determining whether the patient continues to have a life expectancy of 6 months or less, should the illness run its normal course. Further, the regulation set forth that the attestation, its accompanying signature, and the date signed, must be a separate and distinct section of, or an addendum to, the recertification form, and must be clearly titled (75 FR 70463).

In the FY 2012 Hospice Wage Index final rule (76 FR 47314), as a result of interested parties' concerns regarding access risks resulting from the policy implemented in the CY 2011 HH PPS final rule, we finalized that any hospice physician can perform the face-to-face encounter regardless of whether that physician recertifies the patient's terminal illness and composes the recertification narrative. Additionally, we amended the regulatory text at § 418.22(b)(4) to provide that the attestation of the NP or a non-certifying hospice physician shall state that the clinical findings of that encounter were provided to the certifying physician, for use in determining continued eligibility for hospice.

In that final rule, however, we inadvertently omitted from the regulatory text at § 418.22(b)(4) the explicit requirements that the attestation include the accompanying signature of the practitioner who performed the -face encounter, and the date signed. While the CY 2011 HH PPS final rule regulatory text required the hospice physician or the NP conducting the encounter to attest to its occurrence, including the date and their signature, the unintentional omission of this explicit requirement in the FY 2012 Hospice Wage Index final rule led to discrepancies in documentation practices and introduced potential ambiguity into compliance requirements along with inconsistencies in implementation among hospice providers. Specifically, the lack of clarity regarding the full attestation requirements complicated documentation standards and audit processes, led to confusion about the expectations for what elements the attestation should minimally include, and thereby undermined of the intent of the original statute and rule to require verifiable documentation of appropriately assessed continued eligibility.

As such, we proposed to amend § 418.22(b)(4) to set forth that the physician, or NP who performs the face-to-face encounter attest that the face-to-face encounter occurred, and the attestation must include the signature of the physician or NP who conducted the face-to-face encounter and the date it was signed. Further, we proposed that the attestation, its accompanying signature, and the date signed must be a separate and distinct section of, or an addendum to, the recertification form, and must be clearly titled. With these proposals, we sought to realign the regulatory text at § 418.22(b)(4) with the original intent of the CY 2011 HH PPS final rule and the statutory requirement in section 1814(a)(7)(D)(i)(I) of the Act.

Accordingly, we proposed to clarify the current regulation at § 418.22(b)(4) as follows: The physician or nurse practitioner who performs the face-to-face encounter with the patient described in paragraph (a)(4) of this section must attest in writing that he or she had a face-to-face encounter with the patient, including the date of that visit. The attestation must include the physician's or nurse practitioner's signature and the date it was signed. The attestation, its accompanying signature, and the date signed, must be a separate and distinct section of, or an addendum to, the recertification form, and must be clearly titled. If the face-to-face encounter was not performed by the certifying physician, the attestation of the physician or nurse practitioner who performed the face-to-face encounter shall state that the clinical findings of that visit were provided to the certifying physician for use in determining continued eligibility for hospice care.

We noted that these additions would help to resolve current ambiguities, improve documentation standards, and promote consistent implementation across providers.

In total, we received 26 public comments on our proposed clarification of the regulation text regarding the face-to-face attestation. The following is a summary of the comments we received, our responses, and the final decision.

Comment: Several commenters supported the proposed regulatory text changes at § 418.22(b)(4), citing that a more detailed face-to-face encounter attestation process will strengthen program integrity. Commenters also stated the proposed attestation changes are already supported by hospice electronic medical records, reflect the current practice at many hospices, and are not expected to disrupt operations.

Response: We thank the commenters for this feedback.

Comment: A few commenters requested that CMS work with Congress to expand telehealth flexibility for face-to-face recertification.

Response: We appreciate the commenters' recommendations; however, these comments are outside the scope of the proposed rule. Please note that section 2207(f) of the Full-Year Continuing Appropriations and Extensions Act, 2025 (Pub. L. 119-4, March 15, 2025), amended section 1814(a)(7)(D)(i)(II) of the Act and extended the use of telehealth by a hospice physician or hospice nurse practitioner to conduct a face-to-face encounter for the sole purpose of hospice recertification through September 30, 2025.

Comment: A commenter stated Advanced Practice Registered Nurses (APRN) should be permitted to both perform and sign the attestation when conducting the face-to-face encounter to reduce redundancy, improve timeliness, and enhance access to care especially given access issues in rural areas and their scope of practice under state law. As such, this commenter strongly encouraged CMS to revise the regulation to authorize APRNs, within their scope of practice, to both conduct and sign the face-to-face encounter attestation for hospice recertification.

Response: We thank the commenter and acknowledge the critical role APRNs play in hospice care delivery. We remind commenters that in accordance with subclause (i) of section 1814(a)(7)(D) of the Act, a hospice physician or NP may conduct a face-to- face encounter with a hospice patient to determine the patient's continued eligibility for hospice care prior to the 180-day recertification, and prior to each subsequent recertification. However, the statute limits the practitioners who may conduct a face-to-face, and thereby does not permit other APRNs such as clinical nurse specialists (CNS), certified registered nurse anesthetists (CRNA), or certified nurse midwives (CNM) to perform this function.

Comment: A few commenters noted that the requirement for attesting that findings were shared with the certifying physician is redundant given existing narrative requirements. Specifically, commenters stated that § 418.22(b)(3)(v) already require the certifying physician's narrative to include an explanation of why the clinical findings of the face-to-face encounter support a life expectancy of 6 months or less, and that it would not be possible for the certifying physician to include this in the narrative if the physician was not provided with the clinical findings from the encounter (contained in the clinical note from the encounter).

Response: While we appreciate this comment, it is outside the scope of the proposal in the CY 2026 hospice proposed rule. We may consider this issue in future rulemaking.

Comment: While there was agreement that the proposed clarification to the regulation text at § 418.22(b)(4) requiring the signature and date of the signature be included with the face-to-face attestation will increase the integrity of this process, the majority of the commenters believe that implementation of this proposal would increase provider documentation burden. Commenters contend that the attestation process should prioritize appropriate clinical oversight rather than introduce administrative barriers that could delay care for vulnerable patients. Commenters suggested this proposal may result in a potential increase in delayed care for the most vulnerable patient populations. Additionally, several commenters remarked that the proposed attestation formatting requirements introduce an increase in audit vulnerability, compliance pitfalls and technical denials. They stated flexibility should be permitted, especially due to EMR constraints and costs, and that CMS should remove the proposed specific formatting requirement for face-to-face attestations.

Response: We appreciate these comments and agree that regulatory requirements should support, rather than hinder, timely access to appropriate hospice care. We also recognize the importance of balancing program integrity with administrative feasibility and remain committed to employing documentation requirements that do not impede care delivery. Additionally, we agree with commenters who pointed out that we have historically allowed hospices discretion in how documentation is structured, including for example, with the hospice election statement and addendum.

Comment: Several interested parties requested that CMS consider allowing a signed clinical note to serve as a substitute to a separate attestation that the face-to-face encounter occurred, highlighting that the statutory intent under section 1814(a)(7)(D)(i) of the Act is met if signed and dated clinical documentation clearly demonstrates that the encounter occurred and is filed in the medical record.

Response: Section 1814(a)(7)(D)(i) of the Act specifies that the medical record must include evidence that a face-to-face encounter occurred prior to each recertification for hospice services. While CMS previously required a separate attestation to ensure that this statutory requirement was met, we recognize the burden in requiring a separate attestation when the information is already documented within a signed and dated clinical note. Therefore, we believe the statutory requirement is met through the signed and dated clinical note, without an additional attestation. CMS generally aims to reduce burden when appropriate, and we appreciate commenters bringing this to our attention.

Final Decision: In response to commenters' aforementioned concerns regarding potential administrative burden, and CMS' goal to maintain the validity of the recertification process, we are finalizing a modification to the regulation text at § 418.22(b)(4) to clarify that the attestation requirement may be fulfilled by not only a clearly titled section of or an addendum to the recertification form, but also by a signed and dated clinical note within the medical record that documents clear indication that the face-to-face encounter occurred and includes the date of the visit, the signature of the practitioner who conducted the face-to-face encounter, and the date of the signature.

The proposed revisions to § 418.22(b)(4) align with our proposal to implement a revised attestation policy. As we stated in the proposed rule, our goal remains to resolve ambiguities that stem from prior rulemaking by clarifying that the attestation is identifiable and verifiable and therefore, must include the signature and date of the practitioner who conducted the face-to-face encounter in accordance with the statutory requirement at section 1814(a)(7)(D)(i) of the Act. The objective in the aforementioned revision to allow the face-to-face clinical note to serve as meeting the attestation requirement also achieves the regulatory intent that was first implemented in the CY 2011 HH PPS final rule and amended in the FY 2012 Hospice Wage Index final rule, as the clinical note still requires a dated signature from the practitioner who conducted the face-to-face encounter in order to allow clear identification of the attestation within the medical record. Moreover, a dated signature on the face-to-face clinical note serves to meet the definition of a medical attestation since it is a formal statement by a qualified practitioner verifying the accuracy of medical documentation which would include the clinical findings of the face-to-face encounter, the date of the visit, and the signature of the physician or nurse practitioner who conducted the face-to-face encounter, and the date of the signature. Given that these changes collectively address interested party concerns and provide increased clarity and standardization, while also preserving the statutory requirement at section 1814(a)(7)(D)(i) of the Act that a face-to-face encounter occur and be sufficiently documented by the practitioner who conducted said visit for each recertification for continued eligibility, these revisions fall within the scope of what a reasonable commenter would have understood from the FY 2026 Hospice proposed rule.

Therefore, we are finalizing a revision to the regulation text at § 418.22(b)(4) to state, the physician or nurse practitioner who performs the face-to-face encounter with the patient described in paragraph (a)(4) must attest in writing that he or she had a face-to-face encounter with the patient, including the date of that visit. The attestation must include the physician's or nurse practitioner's signature and the date it was signed. The attestation could be a separate and distinct section of, or an addendum to, the recertification or the signed and dated face-to-face clinical note itself, as long as said clinical note indicates the face-to-face encounter occurred, and includes the clinical findings of the face-to-face encounter, the date of the visit, the signature of the physician or nurse practitioner who conducted the face-to-face encounter, and the date of the signature. If the attestation of the nurse practitioner or a non-certifying hospice physician is a separate and distinct section of, or an addendum to, the recertification, the attestation shall state that the clinical findings of that visit were provided to the certifying physician for use in determining continued eligibility for hospice care.

In this final rule, we include a technical change that conforms the regulatory text at § 418.22(a)(4)(ii) with its underlying statute at section 1814(a)(7)(D)(i)(II) of the Act by changing the date “December 31, 2024” to “September 30, 2025”. We inadvertently omitted this date change in the proposed rule. A discussion of this change is included in section IV. of this final rule, Waiver of Proposed Rulemaking.

Section 1814(i)(5) of the Act requires the Secretary to establish and maintain a quality reporting program for hospices. The Hospice Quality Reporting Program (HQRP), consisting of Hospice Item Set (HIS), administrative data, and Consumer Assessment of Healthcare Providers and Systems (CAHPS®), Hospice Survey, specifies reporting requirements that hospices complete and submit a standardized set of items for each patient to capture patient-level data, regardless of payer or patient age (§ 418.312(b)). Beginning with FY 2014, section 1814(i)(5) of the Act requires the Secretary to reduce the market basket update by 2 percentage points for those hospices failing to meet quality reporting requirements. Section 407(b) of Division CC, Title IV of the Consolidated Appropriations Act (CAA), 2021 amended section 1814(i)(5)(A)(i) of the Act to change the payment reduction for failing to meet hospice quality reporting requirements from 2 to 4 percentage points beginning in FY 2024 for any hospice that does not comply with the submission requirements above for that FY. In the FY 2024 Hospice final rule, we codified the application of the 4-percentage point payment reduction for failing to meet hospice quality reporting requirements and set completeness thresholds at § 418.312(j).

Depending on the amount of the annual update for a particular year, a reduction of 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. Any reduction based on failure to comply with the reporting requirements, as required by section 1814(i)(5)(B) of the Act, would apply only for the specified year.

In the FY 2014 Hospice Wage Index and Payment Rate Update final rule (78 FR 48234, 48257 through 48262), and in compliance with section 1814(i)(5)(C) of the Act, we finalized a new standardized patient-level data collection vehicle called the Hospice Item Set (HIS). We also finalized the specific collection of data items that support eight consensus-based entity (CBE)-endorsed measures for hospice.

In the FY 2015 Hospice Wage Index and Payment Rate Update final rule (79 FR 50452), we finalized national implementation of the CAHPS® Hospice Survey, 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. Readers who want more information about the development of the survey, originally called the Hospice Experience of Care Survey, may refer to the FY 2014 and FY 2015 Hospice Wage Index and Payment Update final rules (78 FR 48234 and 79 FR 50452, respectively) or to https://www.hospicecahpssurvey.org/. National implementation commenced January 1, 2015. We adopted eight CAHPS® survey-based measures for the CY 2018 data collection period and for subsequent years. These eight measures are publicly reported on the Care Compare website.

In the FY 2016 Hospice Wage Index and Rate Update final rule (80 FR 47142, 47186 through 47188), we finalized the policy for retention of HQRP measures adopted for previous payment determinations and seven factors for removal. In that same final rule, we discussed how we would provide public notice through rulemaking of measures under consideration for removal, suspension, or replacement. We also stated that if we had reason to believe continued collection of a measure raised potential safety concerns, we would take immediate action to remove the measure from the HQRP and not wait for the annual rulemaking cycle. The measures would be promptly removed, and we would immediately notify hospices and the public of such a decision through the usual HQRP communication channels, including but not limited to listening sessions, email notifications, Open Door Forums, and Web postings. In such instances, the removal of a measure would be formally announced in the next annual rulemaking cycle.

On August 31, 2020, we added correcting language to the FY 2016 Hospice Wage Index and Payment Rate Update and Hospice Quality Reporting Requirements; Correcting Amendment (85 FR 53679) hereafter referred to as the FY 2021 HQRP Correcting Amendment. In the correcting amendment, we made updates to § 418.312 to correct technical errors identified in the FY 2016 Hospice Wage Index and Payment Rate Update final rule. Specifically, the FY 2021 HQRP Correcting Amendment (85 FR 53679) added paragraph (i) to § 418.312 to reflect our exemptions and extensions requirements for reporting, which were referenced in the preamble but inadvertently omitted from the regulations text. Thus, these exemptions or extensions can occur when a hospice encounters certain extraordinary circumstances.

In the FY 2017 Hospice Wage Index and Payment Rate Update final rule, we finalized the “Hospice Visits When Death is Imminent” measure pair (HVWDII, Measure 1 and Measure 2), effective April 1, 2017. We refer the public to the FY 2017 Hospice Wage Index and Payment Rate Update final rule (81 FR 52144, 52163 through 52169) for a detailed discussion.

As stated in the FY 2019 Hospice Wage Index and Rate Update final rule (83 FR 38622, 38635 through 38648), we launched the “Meaningful Measures Initiative” (which identifies high priority areas for quality measurement and improvement) to improve outcomes for patients, their families, and providers while also reducing burden on clinicians and providers. The Meaningful Measures Initiative is not intended to replace any existing CMS quality reporting programs but will help such programs identify and select individual measures. The Meaningful Measures Initiative priority areas are intended to increase measure alignment across our quality programs and other public and private initiatives. Additionally, it will point to high priority areas where there may be gaps in available quality measures while helping to guide our efforts to develop and implement quality measures to fill those gaps. More information about the Meaningful Measures Initiative can be found at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityInitiativesGenInfo/MMF/General-info-Sub-Page.html.

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 removed the HVWDII measure, as it was replaced by HVLDL. We also finalized a policy that claims-based measures would use 8 quarters of data, which would allow CMS to publicly report on more hospices. Additionally, the rule indicated that public data reflecting hospices' reporting of the two new claims-based quality measures (QMs), the HVLDL and the HCI measures, would be available on the Care Compare/Provider Data Catalogue (PDC) web pages as of the August 2022 refresh.

In addition, we removed the seven HIS Process Measures from the program as individual measures, and ceased their public reporting because, in our view, the HIS Comprehensive Assessment Measure is sufficient for measuring care at admission without the seven individual process measures. In the FY 2022 Hospice Wage Index and Rate Update final rule (86 FR 42553), we finalized § 418.312(b)(2), which requires hospices to provide administrative data, including claims-based measures, as part of the HQRP requirements for § 418.306(b). In that same final rule, we provided CAHPS Hospice Survey updates.

In the FY 2023 and FY 2024 Hospice Wage Index final rules, we did not propose any new quality measures. However, we provided updates on already-adopted measures.

In the FY 2025 Hospice Wage Index final rule, the HQRP finalized two measures, including new data collection through the Hospice Outcomes and Patient Evaluation (HOPE) tool and plans for further development.

Table 5 shows the current quality measures in effect for the FY 2026 HQRP, which were updated and finalized in the FY 2025 Hospice Wage Index and Payment Rate Update final rule.

We retained key items from the HIS in HOPE v1.0 and continue to collect data to inform the Comprehensive Assessment at Admission (CBE #3235) while gathering additional data to support new quality measures. The Comprehensive Assessment Measure assesses the proportion of patients for whom the hospice performed all seven care processes, as applicable, at admission.

First endorsed by the National Quality Forum (NQF) in July 2017, the measure was endorsed again by NQF in July 2021, and this measure endorsement has been extended through Fall 2026 under the new CBE, Battelle.

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).

Our measure selection activities for the HQRP take into consideration input we receive from the CBE, as part of a pre-rulemaking process that we have established and are required to follow under section 1890A of the Act. The CBE convenes interested parties from multiple groups to provide CMS with recommendations on the Measures Under Consideration (MUC) list. This input informs how CMS selects certain categories of quality and efficiency measures as required by section 1890A(a)(3) of the Act. By February 1st of each year, the CBE must provide that input to CMS. On July 26, 2022, the CBE endorsed the claims-based HVLDL measure. More information can be found on the HQRP Quality Measure Development web page at https://www.cms.gov/medicare/hospiceequality-reporting-program/quality-measure-development and the HQRP Current Measures web page at https://www.cms.gov/medicare/quality/hospice/current-measures. In November 2024, HVLDL was sent to the CBE advisory group for endorsement extension. HVLDL was re-endorsed with conditions in February 2025 and is endorsed through 2027. We are considering respecifying HCI, see the Hospice Technical Expert Panel (TEP) and Caregiver Report on this web page at https://www.cms.gov/medicare/quality/hospice/provider-and-stakeholder-engagement.

We received two public comments on the Hospice Claims-based Measures. The following is a summary of the comments we received and our responses.

Comment: A commenter urged CMS to re-evaluate HVLDL to evaluate correlation of the measure with other disciplines and the new CAHPS satisfaction surveys to allow time for provider and TEP engagement. Another commenter encouraged CMS to revisit the HCI scoring methodology to more accurately reflect the care provided by hospices.

Response: We thank commenters for their recommendations and will take them into consideration as we consider the re-specification of HCI and updates to HVLDL.

The HOPE assessment was developed as the new patient assessment tool to replace the HIS as part of the HQRP. HOPE was finalized in the FY 2025 Hospice Wage Index final rule (89 FR 64202) and once implemented in FY 2026 (October 1, 2025), will provide value to hospice providers, patients, and families. Additional information regarding HOPE and its associated costs and burden can be found in the FY 2025 Paperwork Reduction Act of 1995 (PRA) submission (CMS-10390; OMB Control Number: 0938-1153).

HOPE will provide assessment-based quality data to enhance the HQRP through standardized data collection, provide a better understanding of patient care needs, contribute to the patient's plan of care, and provide additional clinical data that could inform future payment refinements.

We encourage providers and vendors to visit the HOPE Technical Information web page at https://www.cms.gov/medicare/quality/hospice-quality-reporting-program/hospice-outcomes-and-patient-evaluation-hope-technical-information for the latest updates and resources related to HOPE data submission specifications and other technical information. More detailed comprehensive training will be available on the HQRP Training and Education Library web page linked previously in this section.

As finalized in the FY 2025 Hospice Wage Index final rule (89 FR 64202), public reporting of the HOPE quality measures will be implemented no earlier than FY 2028. Data collected by hospices during the four quarters of CY 2026 (for example, Q 1, 2, 3 and 4 CY 2026) will be analyzed starting in CY 2027. We will inform the public of the decisions about whether CMS will report some or all of the quality measures publicly based on the findings of analysis of the CY 2026 data through future rulemaking. Providers will have the opportunity to preview HOPE data before it is publicly reported, with the first HOPE-based QM public reporting anticipated to be no earlier than November 2027 (FY 2028). Table 6 shows the anticipated schedule for HOPE public reporting, should CMS decide that this information will be publicly reported.

Lastly, as stated in the FY 2022 Hospice Wage Index final rule (86 FR 42528), we continue to consider developing hybrid quality measures that could be calculated from multiple data sources, such as claims, HOPE data, or other data sources (for example, CAHPS Hospice Survey). We also intend to develop several quality measures based on information collected by HOPE after HOPE is implemented. More information on measure development can be found on the HQRP Quality Measure Development web page at https://www.cms.gov/medicare/hospice-quality-reporting-program/quality-measure-development.

We received 30 public comments on the HOPE Instrument and Public Reporting and Future Quality Measure (QM) Development. The following is a summary of the comments we received and our responses.

Comment: Many commenters raised concerns about the transition from HIS to the HOPE tool, slated to begin October 1, 2025. Commenters expressed concerns about the lack of technical readiness among providers and vendors due to some final technical specifications not yet being released as of the publication of the proposed rule and only one vendor call occurring in November 2024. Some commenters expressed concern about additional financial burden and potential delays with the transition to the new CMS submission and reporting system, which is set to be implemented concurrently with the HOPE tool. To account for these issues, many commenters suggested delaying HOPE implementation until 6 months after the final specifications and trainings have been released, with a few suggesting delaying implementation by a year, and waiving timeliness penalties for providers for the first two quarters of HOPE. Some commenters also suggested phasing in penalties over the course of HOPE implementation, up to three years, to allow time for providers to adjust to HOPE. A few commenters were supportive of the transition to HOPE and noted no concerns with the implementation timeline.

A few commenters requested additional updates to or clarifications about HOPE, including that CMS consider allowing telehealth for HOPE, requesting that CMS collect data on chaplain services using the Healthcare Common Procedure Coding System (HCPCS) codes for chaplains, and asking for clarification around Medicare Advantage payer source coding.

Response: We appreciate interested parties' input regarding the transition to the HOPE tool. In this final rule we have provided updates as to where providers and vendors can find current information about HOPE, including the HOPE Guidance Manual, HOPE Item Sets, and Data Submission Specifications as well as training for HOPE implementation. Although most HOPE items are derived from the original HIS items, we recognize that providers will be acclimating to a new tool and submission system as of October 1, 2025, and will take this transition into consideration. For example, we will monitor the first quarter of HOPE data collection (quarter 4 of 2025) and provide sub-regulatory guidance on when public reporting of the two HOPE measures will begin. We will closely monitor the first quarter of HOPE data and expect providers to submit accurate and complete HOPE data beginning on October 1, 2025. Regarding other suggestions about the HOPE instrument, we will take them into consideration, and if modifications to the HOPE instrument or HOPE implementation are made, we will propose them in future rulemaking.

Regarding the comment about payer source coding, the intent of Item A1400 is to identify all of the payers that the patient has regardless of whether the payer is expected or likely to provide reimbursement during the hospice stay. We are not changing this guidance for HOPE, since it remains the same as long-standing HIS guidance.

Comment: Many commenters raised concerns about the HOPE burden calculated in the finalized PRA package (CMS-10390; OMB Control Number: 0938-1153), noting that CMS used the median wage rather than the mean wage and used 2022 Bureau of Labor Statistics (BLS) data  4 rather than more recent 2024 BLS data. Commenters also believe in-person follow-up visits should be included in the estimated burden. Due to these concerns, commenters felt CMS underestimated the burden of the HOPE tool on providers.

Response: We thank commenters for their input regarding the HOPE burden calculations. When this PRA package was finalized for HOPE (CMS-10390; OMB Control Number: 0938-1153), no comments were received regarding these concerns. However, when comparing the finalized burden calculations using 2022 BLS Median wages, we find that using the 2022 BLS Mean wages instead would have resulted in a 9.5 percent increase in the additional annual cost per hospice. If the data were updated using the 2024 BLS Median wages, this would have resulted in a 15.3 percent increase in the additional annual cost per hospice and using the 2024 BLS Mean wages would have resulted in 21.1 percent increase. We recognize these differences may be significant for hospices and these concerns will be taken into consideration in anticipation of the next PRA package submission for the HOPE tool in 2026. We also understand commenters' concerns about the potential staffing burdens of in-person visits, but remind commenters that we selected this requirement based on expert input regarding hospice best practices during the beta test that noted these visits align with their usual practices ( https://www.federalregister.gov/d/2024-16910/p-224 ).

In the FY 2020 Hospice Wage Index and Payment Rate Update final rule (84 FR 38484), we finalized migrating our systems for submitting and processing assessment data and the reporting system. Hospices are currently required to submit HIS data to CMS using the Quality Improvement and Evaluation System (QIES) Assessment and the Submission Processing (ASAP) system and obtain reports in the Certification and Survey Provider Enhanced Reports (CASPER) system. The FY 2020 Hospice Wage Index and Payment Rate Update final rule (84 FR 38484) finalized the proposal to migrate to a new single CMS submission and reporting system.

In the FY 2025 Hospice Wage Index and Payment Rate Update final rule (86 FR 64202), we finalized the HOPE tool to replace the HIS as part of the HQRP. Beginning on October 1, 2025, the new CMS submission and reporting system will begin accepting the data from HOPE, in line with the start of HOPE data collection. Provider reports will also be available in this system beginning October 1, 2025. The QIES system will stop accepting HIS records for hospice admissions and discharges that occurred prior to October 1, 2025, including any corrections, after February 15, 2026.

Although we did not propose the transition to the new CMS submission and reporting system in the proposed rule, we received 13 public comments. The following is a summary of the comments we received and our responses.

Comment: Commenters raised concerns about the feasibility of transitioning hospice providers to the new CMS system due to historical delays as other provider types transitioned into the new CMS system and the intensive process needed to enroll providers and staff members. As noted in the prior section, commenters also raised concerns around this transition occurring alongside the transition to the HOPE tool, creating additional burden for providers.

Response: We appreciate commenters' input regarding the transition to the new CMS submission and reporting system. We note that while providers and vendors will be submitting HOPE data to a new CMS system on October 1, 2025, we expect hospice providers to onboard successfully and as planned, as has occurred with the assessment submission and reporting migrations for other provider types. The submission process will be similar to the process for submitting data to QIES. In addition, we will provide a similar set of provider, APU, and QM reports to enable providers to monitor their data submissions.

We note that although there is a different enrollment process for the new CMS submission and reporting system, there are several benefits to the new system that are intended to provide a more streamlined user experience. The new system is web-based and accessible with a single login for submitting HOPE data and accessing HOPE-related reports, replacing the current two-step process that requires two different login credentials. In addition, the new system enables a provider to have unlimited users able to submit HOPE data and access reports, with user access managed internally by a provider's designated security official, which is designed to promote timely data submission and support APU compliance.

In this final rule we have provided updates as to where providers and vendors can find additional information about this transition. Providers and vendors should visit the HOPE Technical Information web page at https://www.cms.gov/medicare/quality/hospice-quality-reporting-program/hospice-outcomes-and-patient-evaluation-hope-technical-information for the latest updates and resources related to HOPE data submission specifications, including the final Hospice Outcomes and Patient Evaluation (HOPE) data submission specifications (V1.00.1) and other technical information. As noted in this final rule, providers must have access to iQIES by October 1, 2025, to submit HOPE assessments and the QIES system will no longer accept HIS records after February 15, 2026. Additional questions about the transition to iQIES can be addressed to the iQIES Help Desk at iqies@cms.hhs.gov.

Section 1814(i)(5)(C) of the Act requires that each hospice submit data to the Secretary on quality measures specified by the Secretary. The data must be submitted in a form 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 was increased from 2 percent to 4 percent beginning with FY 2024. During FYs 2014 through 2023, the Secretary reduced the market basket update by 2 percentage points for non-compliance. Beginning in FY 2024 and for each subsequent year, the Secretary will reduce the market basket update by 4 percentage points for any hospice that does not comply with the quality measure data submission requirements for that FY. In the FY 2023 Hospice Wage Index final rule (87 FR 45669), we revised our regulations at § 418.306(b)(2) in accordance with this statutory change.

HQRP Compliance requires understanding the different timeframes for both HIS (or HOPE, once implemented) and CAHPS: The relevant Reporting Year, the payment FY, and the Reference Year.

• The “Reporting Year”' (HIS or HOPE) or “Data Collection Year”' (CAHPS) is based on the calendar year (CY). It is the same CY for both HIS (or HOPE, once it is implemented) and CAHPS. If the CAHPS Data Collection year is CY 2025, then the HIS (or HOPE) reporting year is also CY 2025.

• In the “Payment FY”, the APU is subsequently applied to FY payments based on compliance in the corresponding Reporting Year/Data Collection Year.

• For the CAHPS Hospice Survey, the Reference Year is the CY before 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 or HOPE). 5 For example, for the CY 2025 data collection year, the Reference Year is CY 2024. This means providers seeking a size exemption for CAHPS in CY 2025 will base it on their hospice size in CY 2024.

Submission requirements are codified at § 418.312. Table 7 summarizes the three timeframes. It illustrates how the CY interacts with the FY payments, covering the CY 2023 through CY 2026 data collection periods and the corresponding APU application from FY 2025 through FY 2028. Please note that during the first reporting year that implements HOPE, APUs may be based on fewer than four quarters of data. We will provide additional subregulatory guidance regarding APUs for the HOPE implementation year.

As illustrated in Table 7, CY 2024 data submissions compliance impacts the FY 2026 APU. CY 2025 data submissions compliance impacts the FY 2027 APU. CY 2026 data submissions compliance impacts FY 2028 APU. This CY data submission impacting FY APU pattern follows for subsequent years.

As finalized in the FY 2016 Hospice Wage Index 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.

We will apply the same submission requirements for HOPE admission, discharge, and up to two hospice update visit (HUV) records. After HIS is phased out, hospices will continue to be required to submit 90 percent of all required HOPE records to support the quality measures within 30 days of the event or completion date (patient's admission, discharge, and based on the patient's length of stay up to two HUV timepoints).

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 at https://www.hospicecahpssurvey.org.

Table 8 HQRP Compliance Checklist illustrates the APU and timeliness threshold requirements.

Most hospices that fail to meet HQRP requirements do so because they miss the 90 percent threshold. We offer many trainings and educational opportunities through our websites, which are available 24/7, 365 days per year, to 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 visit the frequently-updated HQRP website at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Hospice-Quality-Reporting. Available trainings can be found on the HQRP Training and Education Library web page at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Hospice-Quality-Reporting/Hospice-Quality-Reporting-Training-Training-and-Education-Library and additional resources are located on the Requirements and Best Practices web page at https://www.cms.gov/medicare/quality/hospice/hqrp-requirements-and-best-practices. We also encourage readers to stay informed about HQRP by visiting the HQRP Provider and Stakeholder Engagement web page at https://www.cms.gov/medicare/quality/hospice/provider-and-stakeholder-engagement to sign-up for the Hospice Quality Listserv.

We proposed to revise the regulatory text at § 418.312(j)(2) to correct a reference to another part of the regulations. Specifically, we proposed replacing a reference to § 412.306(b)(2) with the correct reference to § 418.306(b)(2).

We received a comment in support of this proposal to revise § 418.312(j)(2) and we are finalizing as proposed.

Under 5 U.S.C. 553(b) of the Administrative Procedure Act (APA), the agency is required to publish a notice of the proposed rule in the Federal Register before the provisions of a rule take effect. Specifically, 5 U.S.C. 553 requires the agency to publish a notice of the proposed rule in the Federal Register that includes a reference to the legal authority under which the rule is proposed, and the terms and substance of the proposed rule or a description of the subjects and issues involved. Similarly, section 1871(b)(1) of the Act requires the Secretary to provide for notice of the proposed rule in the Federal Register and provide a period of not less than 60 days for public comment for rulemaking to carry out the administration of the Medicare program under title XVIII of the Act. Sections 553(b)(B) and 553(d)(3) of the APA provide for exceptions from the notice and comment and delay in effective date APA requirements. In cases in which these exceptions apply, sections 1871(b)(2)(C) and 1871(e)(1)(B)(ii) of the Act also provide exceptions from the notice and 60-day comment period and delay in effective date requirements of the Act. In this final rule, we are not waiving the delay in effective date of the finalized provisions, but rather we are exercising the waiver of notice and comment rulemaking for the provisions summarized in this section. Section 553(b)(B) of the APA and section 1871(b)(2)(C) of the Act authorize an agency to dispense with normal rulemaking requirements for good cause if the agency makes a finding that the notice and comment process are impracticable, unnecessary, or contrary to the public interest.

Here, we are making two technical changes to the regulations for which there is good cause to waive notice and comment rulemaking.

First, we are making a technical change to § 418.22(a)(4)(ii) that was not proposed to align the regulation with its underlying statute. We believe that there is good cause to waive advance notice and comment because public participation is unnecessary for this technical change that will conform the regulatory text at § 418.22(a)(4)(ii) with its underlying statute, that is, section 1814(a)(7)(D)(i)(II) of the Act. Section 2207(f) of the Full-Year Continuing Appropriations and Extensions Act, 2025 (Pub L. 119-4) amended section 1814(a)(7)(D)(i)(II) of the Act to extend the use of telehealth by a hospice physician or hospice nurse practitioner to conduct a face-to-face encounter for the sole purpose of hospice recertification through September 30, 2025. However, the regulation at § 418.22(a)(4)(ii) continued to use “December 31, 2024” instead of “September 30, 2025” because we inadvertently omitted this date change in the proposed rule underlying § 418.22(a)(4)(ii). Given that this final rule simply conforms the regulation with its implementing statute, notice-and-comment rulemaking is unnecessary, and thus there is good cause to waive such rulemaking.

Second, as discussed in the comments and responses in section III.A.1.c. of this final rule, we are including in the FY 2026 hospice wage index the wage indexes for the Northern Mariana Islands and American Samoa using our established methodology for rural areas with no hospitals. The Northern Mariana Islands and American Samoa are rural areas with no hospital data from which a wage index can be calculated. Consistent with our established methodology, we compute an appropriate wage index for rural areas with no hospital using the average wage index values from contiguous CBSAs to represent a reasonable proxy. We believe that CBSA 99965 (Guam) represents a reasonable proxy because the islands are located within the Pacific Rim and share a common status of US territories. While Guam does not share a land border with either the Northern Mariana Islands or American Samoa, we believe that Guam's wage index is a reasonable proxy for the wage indexes of American Samoa and the Northern Mariana Islands under our contiguous CBSA policy given that those two territories cannot share a land border with other CBSAs. Therefore, hospices that provide services in the Northern Mariana Islands and American Samoa should use CBSA 99965 (Guam) and should receive the wage index assigned to CBSA 99965 (Guam) of 0.9611.

While CMS believes that notice-and-comment rulemaking is not required for the addition of the wage indexes for the Northern Mariana Islands and American Samoa, were it required, there is good cause to waive such rulemaking as unnecessary. Notice-and-comment rulemaking is unnecessary because CMS is applying the existing methodology, that is, calculating the wage index of a rural area without a hospital based on the wage indexes of contiguous CBSAs, to the circumstances of the Northern Mariana Islands and American Samoa, and those two territories have historically and are currently receiving payment using Guam's wage index. As CMS is not altering a current wage index calculation methodology, there is good cause to waive notice and comment rulemaking to finalize the addition of the Northern Mariana Islands and American Samoa to the FY 2026 hospice wage index.

In the proposed rule we noted that this rule, if finalized, would revise the attestation requirements at § 418.22(b)(4) to better align with the original intent of the statutory requirements under section 1814(a)(7) of the Act and CY 2011 HH PPS final rule for the certification of terminal illness regulations to include the physician's or nurse practitioner's signature and the date of the signature on each face-to-face encounter attestation. These underlying attestation requirements are collections of information that require approval under the PRA and were previously approved in the ICR for the Hospice Conditions of Participation (OMB Control Number 0938-1067). However, the revisions we proposed were minor and would not substantively change the scope of the attestation requirement or the burden that it would entail and thus do not require any additional approval that would go beyond the coverage provided by 0938-1067.

We received public comments on the attestation requirements regarding collection of information requirements, which are summarized in section III.C. of this final rule, stating that implementation of some of the proposed regulatory language would increase provider documentation and administrative burden. Therefore, we are finalizing only the proposed signature and date requirement of the attestation (which would not substantively change the scope of the attestation requirement) and not finalizing the proposed language stating that the attestation must be a separate and distinct section of, or an addendum to, the recertification form, and must be clearly titled. This language accounted for the part of the proposal that commenters stated would increase provider burden. Additionally, we clarified that if the signed and dated face-to-face encounter clinical note is included in the medical record, this could substitute for a signed and dated attestation, with the belief that this will further decrease administrative burden.

We are seeking approval from OMB to reinstate Control Number 0938-1067 separately from this rulemaking via the standard PRA process. The revisions to the attestation requirements that are being finalized in this rule will take effect once OMB approves the reinstatement.

This final rule meets the requirements of our regulations at § 418.306(c) and (d), which require annual issuance, in the Federal Register , of the Hospice Wage Index based on the most current available CMS hospital wage data, including any changes to the definitions of CBSAs or previously used Metropolitan Statistical Areas (MSAs), as well as any changes to the methodology for determining the per diem payment rates. This final rule updates the payment rates for each of the categories of hospice care, described in § 418.302(b), for FY 2026 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.

We have examined the impacts of this rule as required by Executive Order 12866, “Regulatory Planning and Review”; Executive Order 13132, “Federalism”; Executive Order 13563, “Improving Regulation and Regulatory Review”; Executive Order 14192, “Unleashing Prosperity Through Deregulation”; the Regulatory Flexibility Act (RFA) (Pub. L. 96-354); section 1102(b) of the Social Security Act; and section 202 of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4); and the Congressional Review Act (5 U.S.C. 804(2)).

Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select those regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; and distributive impacts). Section 3(f) of Executive Order 12866 defines a “significant regulatory action” as any regulatory action that is likely to result in a rule that may: (1) have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities; (2) create a serious inconsistency or otherwise interfere with an action taken or planned by another agency; (3) materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) raise novel legal or policy issues arising out of legal mandates, or the President's priorities.

A regulatory impact analysis (RIA) must be prepared for a regulatory action that is significant under section 3(f)(1) of E.O. 12866. Based on our estimates, OMB's Office of Information and Regulatory Affairs has determined this rulemaking is significant per section 3(f)(1) of E.O. 12866. Accordingly, we have prepared a regulatory impact analysis that presents the costs and benefits of the rulemaking to the best of our ability. Furthermore, pursuant to Subtitle E of the Small Business Regulatory Enforcement Fairness Act of 1996 (also known as the Congressional Review Act), OIRA has determined that this rule meets the criteria set forth in 5 U.S.C. 804(2). Therefore, OMB has reviewed this final rule and the Department has provided the following assessment of its impact.

We estimate that the aggregate impact of the payment provisions in this final rule will result in an estimated increase of $750 million in payments to hospices, resulting from the final hospice payment update percentage of 2.6 percent for FY 2026. The impact analysis of this final rule represents the projected effects of the changes in hospice payments from FY 2025 to FY 2026. Using the most recent complete data available at the time of rulemaking, in this case FY 2024 hospice claims data as of May 9, 2025, we simulate total payments using the FY 2025 wage index (pre-floor, pre-reclassified hospital wage index with the hospice floor, and the 5 percent cap on wage index decreases) and FY 2025 payment rates and compare it to our simulation of total payments using FY 2024 utilization claims data, the final FY 2026 Hospice Wage Index (pre-floor, pre-reclassified hospital wage index with hospice floor, and the 5 percent cap on wage index decreases) and FY 2025 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 2025 wage index and payment rates for each level of care by the FY 2026 wage index and FY 2025 payment rates, we obtain a wage index standardization factor for each level of care. We apply the wage index standardization factors so that the aggregate simulated payments do not increase or decrease due to changes in the wage index.

Certain events may limit the scope or accuracy of our impact analysis, because such an analysis is susceptible to forecasting errors due to other changes in the forecasted impact time-period. The nature of the Medicare program is such that the changes may interact, and the complexity of the interaction of these changes could make it difficult to predict accurately the full scope of the impact upon hospices.

There were no new proposals related to the Hospice Quality Reporting Program for FY 2026; accordingly, there are no impacts.

The FY 2026 hospice payment impacts appear in Table 9. 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, and 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 2026 updated wage index data with a 5 percent cap on wage index decreases. The aggregate impact of the change in column three is zero percent, due to the hospice wage index standardization factors. However, there are distributional effects of using the FY 2026 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 2.6 percent is based on the final 3.3 percent inpatient hospital market basket percentage increase reduced by a 0.7 percentage point productivity adjustment. The fifth column shows the total effect of the updated wage data and the hospice payment update percentage on FY 2026 hospice payments. As illustrated in Table 9, the combined effects vary by specific types of providers and by location. We note that simulated payments are based on utilization in FY 2024 as seen on Medicare hospice claims (accessed from the CCW on May 9, 2025) 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 9, the combined effects vary by specific types of providers and by location.

We received a comment on the detailed economic analysis and impact table. A summary of this comment and our response follows:

Comment: A commenter recommended enhanced data transparency regarding the files used to categorize hospice provider types by ownership and facility type in the FY 2026 hospice impact table. This commenter requested further information about the differences in the two files used to source this data and stated that CMS must be transparent about this measure.

Response: Ownership and facility type have typically been sourced from the provider of services (POS) file (https://data.cms.gov/resources/pos-file-iqies-for-hha-asc-and-hospice-providers-methodology ). In recent years, ownership and facility type have increasingly been missing from the POS. Starting with the FY 2026 proposed rule, we also incorporated cost report data. We first assign ownership and facility type using information from the cost reports. Then, if there is missing data, we use the POS data to determine ownership and facility type. This improved our ability to assign ownership and facility type, with 6,305 hospices having ownership type information and 5,788 having facility type information. We encourage all hospices to review their POS and cost report data to ensure information on ownership and facility type are available and accurate. Missing information on ownership or facility type only impacts the rows of the impact table that are associated with ownership or facility type. Other calculations throughout the rule are not impacted by missing data on ownership or facility type.

If regulations impose administrative costs on private entities, such as the time needed to read and interpret this final rule, we should estimate the cost associated with the 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 this year's proposed rule will be the number of reviewers of this final rule. However, we acknowledge that this assumption may understate or overstate the costs of reviewing this final rule. It is possible that not all commenters reviewed this year's proposed rule in detail, and it is also possible that some reviewers chose not to comment on the proposed rule. Despite these limitations, we believe that the number of commenters on this year's proposed rule is a fair estimate of the number of reviewers of this final rule. We received no comments on the approach to estimating the number of entities that will review this final rule. We also recognize that different types of entities are in many cases affected by mutually exclusive sections of this final rule, and therefore for the purposes of our estimate we assume that each reviewer reads approximately 50 percent of the rule.

Using the May 2024 National median hourly wage rate (doubled for benefits and overhead) for medical and health service managers (Code 11-9111); we estimate that the cost of reviewing this rule is $113.42 per hour, including overhead and fringe benefits ( https://www.bls.gov/oes/current/oes_nat.htm ). Assuming an average reading speed we estimate that it would take approximately 1.76 hours for staff to review half of this final rule. For each hospice that reviews the rule, the estimated cost is $199.62 (1.76 hours × $113.42). Therefore, we estimate that the total cost of reviewing this regulation is $11,977.20 ($199.62 × 60 reviewers; which is based on the number of comments received for the proposed rule).

Since the hospice payment update percentage is determined based on statutory requirements, we did not consider alternatives to updating the hospice payment rates by the hospice payment update percentage. The final 2.6 percent hospice payment update percentage for FY 2026 is based on a final 3.3 percent inpatient hospital market basket percentage increase for FY 2026, reduced by a final 0.7 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 increase for that fiscal year. 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. For FY 2026, since the hospice payment update percentage is determined based on statutory requirements at section 1814(i)(1)(C) of the Act, we did not consider alternatives for the hospice payment update percentage.

Consistent with OMB Circular A-4 (available at https://trumpwhitehouse.archives.gov/sites/whitehouse.gov/files/omb/circulars/A4/a-4.pdf ), we have prepared an accounting statement in Table 10 showing the classification of the expenditures associated with the provisions of this final rule. Table 10 provides our best estimate of the possible changes in Medicare payments under the hospice benefit as a result of the policies in this final rule. This estimate is based on the data for 6,735 hospices in our impact analysis file, which was constructed using FY 2024 claims (accessed from the CCW on May 9, 2025). All expenditures are classified as transfers to hospices.

The RFA requires agencies to analyze options for regulatory relief of small entities 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 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 U.S. business economy. There is no NAICS code specific to hospice services. Therefore, we utilized the NAICS U.S. 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 $19 million. 6 Table 11 shows the number of firms, revenue, and estimated impact per home health care service category.

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 agency revenue consists of Medicare payments. Based on our analysis, we conclude that the policies finalized in this rule will 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 will have significant economic impact resulting in a net increase in positive revenue on a substantial number of small entities. We estimate that the net impact of the policies in this rule is 2.6 percent or approximately $750 million in increased revenue to hospices in FY 2026. The 2.6 percent increase in expenditures when comparing FY 2025 payments to estimated FY 2026 payments is reflected in the last column of the first row in Table 9 and is driven solely by the impact of the hospice payment update percentage reflected in the fourth column of the impact table. In addition, hospices with less than 3,500 RHC days will experience a lower estimated increase (1.8 percent), compared to hospices with 3,500-19,999 RHC days (2.2 percent) and hospices with greater than 20,000 RHC days (2.7 percent) due to the final updated wage index. We estimate that in FY 2026, hospices in urban areas would experience, on average, a 2.6 percent increase in estimated payments compared to FY 2025; while hospices in rural areas would experience, on average, a 3.0 percent increase in estimated payments compared to FY 2025. Hospices providing services in the New England region would experience the largest estimated increases in payments of 3.9 percent. Hospices serving patients in the Pacific region will experience, on average, the lowest estimated increase of 1.5 percent in FY 2026 payments. Further detail is presented in Table 9 by hospice type and location. The analysis in this section along with the rest of the regulatory impact analysis in this final rule constitutes our final regulatory flexibility analysis. We did not receive any comments on our proposed cost analysis.

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. As this rule will only affect hospices, 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 9).

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 2025, that threshold is approximately $187 million. This rule will not have an unfunded effect on state, local, or tribal governments, in the aggregate, or on the private sector that exceeds this threshold in any 1 year.

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.

Executive Order 14192, entitled “Unleashing Prosperity Through Deregulation” was issued on January 31, 2025, and requires that “any new incremental costs associated with new regulations shall, to the extent permitted by law, be offset by the elimination of existing costs associated with at least 10 prior regulations.” Therefore, this final rule is not an E.O. 14192 regulatory action since it does not impose any more than de minimis regulatory costs.

We estimate that aggregate payments to hospices in FY 2026 will increase by $750 million as a result of the 2.6 percent final hospice payment update, compared to payments in FY 2025. We estimate that in FY 2026, hospices in urban areas would experience, on average, a 2.6 percent increase in estimated payments compared to FY 2025; while hospices in rural areas would experience, on average, a 3.0 percent increase in estimated payments compared to FY 2025. Hospices providing services in the New England region would experience the largest estimated increases in payments of 3.9 percent. Hospices serving patients in the Pacific region will experience, on average, the lowest estimated increase of 1.5 percent in FY 2026 payments.

In accordance with the provisions of Executive Order 12866, this regulation was reviewed by the Office of Management and Budget.

Mehmet Oz Administrator of the Centers for Medicare & Medicaid Services, approved this document on July 21, 2025.

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