[Federal Register Volume 91, Number 147 (Monday, August 3, 2026)]
[Rules and Regulations]
[Pages 49118-49176]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2026-15686]
[[Page 49117]]
Vol. 91
Monday,
No. 147
August 3, 2026
Part V
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Part 418
Medicare Program; FY 2027 Hospice Wage Index and Payment Rate Update
and Hospice Quality Reporting Program Requirements; Final Rule
Federal Register / Vol. 91, No. 147 / Monday, August 3, 2026 / Rules
and Regulations
[[Page 49118]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 418
[CMS-1851-F]
RIN 0938-AV78
Medicare Program; FY 2027 Hospice Wage Index and Payment Rate
Update and Hospice Quality Reporting Program Requirements
AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of
Health and Human Services (HHS).
ACTION: Final rule.
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SUMMARY: This final rule updates the hospice wage index, payment rates,
and aggregate cap amount for fiscal year 2027. This final rule also
includes an analysis of Medicare non-hospice spending, including
details regarding a hospice service and spending variation index, and
finalizes the requirement that hospices provide the hospice election
statement addendum to all Medicare beneficiaries at the time of hospice
election. Additionally, this rule finalizes conforming changes to
discharge from hospice care regulations and changes to the face-to-face
encounter regulations. This final rule also includes a summary of
comments received on our requests for information regarding community-
based palliative care; the construction of a hospice specific wage
index; and the overlap between hospice and medical aid in dying laws.
Finally, this rule finalizes changes to the Hospice Quality Reporting
Program.
DATES: These regulations are effective on October 1, 2026.
FOR FURTHER INFORMATION CONTACT:
For general questions about hospice payment policy, send your
inquiry via email to: [email protected].
For questions regarding the CAHPS[supreg] Hospice Survey, contact
Lauren Fuentes at (410) 786-2290.
For questions regarding the hospice quality reporting program,
contact Jermama Keys at (410) 786-7778.
SUPPLEMENTARY INFORMATION:
I. Executive Summary
A. Purpose
This final rule updates the hospice wage index, payment rates, and
cap amount for Fiscal Year (FY) 2027 as required under section 1814(i)
of the Social Security Act (the Act). This final rule also includes an
analysis of Medicare non-hospice spending under a hospice election,
including details regarding a hospice spending variation index (SSVI).
The SSVI includes a scoring system that monitors nine claims-based
metrics in order to comprehensively assess hospice services and yield a
provider ranking that can be utilized by beneficiaries to make more
informed health decisions and support program integrity efforts. This
rule also finalizes the requirement that hospices provide the hospice
election statement addendum to all Medicare beneficiaries at the time
of hospice election. Additionally, this rule finalizes conforming
regulation text changes to allow a physician designee or physician
member of the interdisciplinary group (IDG), in addition to the hospice
medical director, to discharge a patient from hospice care. This final
rule also finalizes conforming regulation text changes to the hospice
telehealth face-to-face policy for the sole purpose of hospice
recertification codified at Sec. 418.22(a)(4)(ii) to align with the
end date and new requirement to include modifiers or codes for such
encounters as set forth in statute at section 1814(a)(7)(D)(i)(II) of
the Act, as well as a subclause that prohibits the use of telehealth to
conduct the face-to-face encounter in specific situations related to
moratoriums (section 1866(j)(7) of the Act), enhanced oversight
(section 1866(j)(3) of the Act), or enrollment status (section 1866(j)
of the Act). This final rule also includes summaries of comments
received on the RFIs regarding community-based palliative care; the
construction of a hospice specific wage index; and the overlap between
hospice and Medical Aid in Dying (MAID) laws. Finally, this rule
finalizes the addition of an icon to the Medicare.gov Compare Tool as
part of the Hospice Quality Reporting Program (HQRP).
B. Summary of the Major Provisions
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 FY 2027 hospice
payment update percentage.
Section III.A.3. of this final rule includes the FY 2027 hospice
payment rates.
Section III.A.4. of this final rule updates the hospice cap amount
for FY 2027 by the hospice payment update percentage.
Section III.B.1. of this final rule includes analysis of Medicare
non-hospice spending under a hospice election.
Section III.B.2. of this final rule includes details regarding a
hospice SSVI.
Section III.C. of this final rule makes the hospice election
statement addendum mandatory for all hospice elections.
Section III.D.1. of this final rule clarifies a regulation text
change at Sec. 418.26(b) that aligns the Conditions of Participation
(CoPs) and payment regulations regarding who may discharge a patient
from hospice care.
Section III.D.2. of this final rule includes technical regulation
text changes at Sec. 418.22(a)(4)(ii) to extend the end date of the
telehealth allowance for the face-to-face encounter until December 31,
2027, as set forth at section 1814(a)(7)(D)(i)(II) of the Act, and to
include a new requirement to include modifiers or codes for such
encounters, and prohibit the use of telehealth to conduct the face-to-
face encounter in specific situations related to moratoriums (section
1866(j)(7) of the Act), enhanced oversight (section 1866(j)(3) of the
Act), or enrollment status (section 1866(j) of the Act).
Section III.E.1. of this final rule includes a summary of comments
on our RFI on ways to enhance the provision of community-based
palliative care outside of hospice care.
Section III.E.2. of this final rule includes a summary of comments
on our RFI regarding the construction of a hospice specific wage index.
Section III.E.3. of this final rule includes a summary of comments
on our RFI on Medical Aid in Dying laws.
Section III.F. of this final rule provides updates to the HQRP to
include public reporting timeframes, future measures and adds a data
submission icon to the Care Compare tool.
C. Summary of Impacts
The overall economic impact of this final rule is estimated to be
$755 million in increased payments to hospices in FY 2027.
II. Background
A. Hospice Care
Hospice care is a comprehensive, holistic approach to treatment
that recognizes the impending death of a terminally ill individual and
warrants a change in the focus from curative care to palliative care
for relief of pain and for symptom management. Medicare regulations
define ``palliative care'' as patient and family-centered care that
optimizes quality of life by anticipating,
[[Page 49119]]
preventing, and treating suffering. Palliative care throughout the
continuum of illness involves addressing physical, intellectual,
emotional, social, and spiritual needs and to facilitate patient
autonomy, access to information, and choice (42 CFR 418.3). Palliative
care is at the core of hospice philosophy and care practices and is a
critical component of the Medicare hospice benefit.
The goal of hospice care is to help terminally ill individuals
continue life with minimal disruption to normal activities while
remaining primarily in the home environment. A hospice uses an
interdisciplinary approach to deliver medical, nursing, social,
psychological, emotional, and spiritual services through a
collaboration of professionals and other caregivers, with the goal of
making the beneficiary as physically and emotionally comfortable as
possible. Hospice is compassionate beneficiary- and family/caregiver-
centered care for those who are terminally ill.
As referenced in our regulations at Sec. 418.22(c)(1), to be
certified for Medicare hospice services, the patient's attending
physician (if any) and the hospice medical director, physician
designee, or physician member of the hospice 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 Sec. 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 (Sec. 418.22(b)(1)). The regulations at Sec. 418.22(b)(2)
require that clinical information and other documentation that support
the medical prognosis accompany the certification and be filed in the
medical record with the written certification. The regulations at Sec.
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 Sec. 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 Sec. 418.204. A minimum of
8 hours of nursing care or nursing and aide care must be furnished on a
particular day to qualify for the CHC rate (Sec. 418.302(e)(4)).
Hospices covered by this rule must comply with applicable civil
rights laws, including section 504 of the Rehabilitation Act of 1973
(Pub. L. 93-112, September 26, 1973), the Americans with Disabilities
Act (Pub. L. 101-336, July 26, 1990), and section 1557 of the Patient
Protection and Affordable Care Act (Pub. L. 111-148, March 23, 2010),
which prohibit covered entities from discriminating against individuals
based on disability. This includes requiring covered entities to take
appropriate steps to ensure that communication 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\
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\1\ Hospices receiving Medicare Part A funds or other Federal
financial assistance from the Department are also subject to
additional Federal civil rights laws, including the Age
Discrimination Act, and are subject to conscience and religious
freedom laws where applicable. CMS must ensure that pursuant to 42
U.S.C. 1396a(w) facilities provide written information to residents
of their rights to have and make advance directives and that care
facilities must respect the conscience rights of providers and
healthcare workers in caring for patients with respect to advance
directives and under 42 U.S.C. 1396a(w)(3).
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Covered entities must also take reasonable steps to provide
meaningful access to individuals with limited English proficiency.
Language assistance services such as the provision of interpreter and
translation services must be provided free of charge.
B. Services Covered by the Medicare Hospice Benefit
Coverage under the Medicare hospice benefit requires that hospice
services must be reasonable and necessary for the palliation and
management of the terminal illness and related conditions. Section
1861(dd)(1) of the Act establishes the services that are to be rendered
by a Medicare-certified hospice program. These covered services
include: nursing care; physical therapy; occupational therapy; speech-
language pathology 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
[[Page 49120]]
benefit must be available to beneficiaries as needed, 24 hours a day, 7
days a week (section 1861(dd)(2)(A)(i) of the Act).
Upon the implementation of the hospice benefit, the Congress also
expected hospices to continue to use volunteer services, 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.
C. Medicare Payment for Hospice Care
Sections 1812(d), 1813(a)(4), 1814(a)(7), 1814(i), and 1861(dd) of
the Act, and the regulations in 42 CFR part 418, establish eligibility
requirements, payment standards and procedures; define covered
services; and delineate the conditions a hospice must meet to be
approved for participation in the Medicare program. Part 418, subpart
G, provides for a per diem payment based on one of four prospectively
determined rate categories of hospice care (RHC, CHC, IRC, and GIP),
based on each day a qualified Medicare beneficiary is under hospice
care (once the individual has elected 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\
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\2\ Hospice Regulations and Notices. https://www.cms.gov/medicare/payment/fee-for-service-providers/hospice/hospice-regulations-and-notices.
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III. Provisions of the Final Rule
A. FY 2027 Hospice Wage Index and Rate Update
1. FY 2027 Hospice Wage Index
a. Background
The hospice wage index is used to adjust payment rates for hospices
under the Medicare program to reflect local differences in area wage
levels, based on the location where services are furnished. The hospice
wage index utilizes the wage adjustment factors used by the Secretary
for purposes of section 1886(d)(3)(E) of the Act for hospital wage
adjustments. Our regulations at Sec. 418.306(c) require each labor
market to be established using the most current hospital wage data
available, including any changes made by the Office of Management and
Budget (OMB) to 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.whitehouse.gov/wp-content/uploads/2023/07/OMB-Bulletin-23-01.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 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
Wage Index and Rate Update 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.
b. Hospice Floor and 5 Percent Cap Policies
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
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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 Bulletin 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.
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.
Once the county's wage index value calculated using the new OMB
delineation is higher than 95 percent of their previous FY's wage
index, the county will no longer use their assigned transition code.
Instead, 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.
While we did not propose any changes to the 5 percent cap policy
for FY 2027, 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: A few commenters expressed support for the finalized 5
percent cap policy.
Response: We thank the commenters for their support.
Comment: Other commenters recommended changes to the finalized cap
percentage. A commenter recommended that CMS limit any reductions in
wage index adjustments to an amount equal to or less than the market
basket update. Alternatively, the commenter recommended that CMS only
permit upward adjustments in CBSA wage index values. Another commenter
recommended lowering the cap to 2.5 or 3 percent in order to protect
hospice providers who are already operating with negative or ``razor-
thin'' operating margins.
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. Additionally, we continue to
believe that a 5 percent cap on wage index decreases is sufficient as
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, 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 or to only permit upward wage index
adjustments.
Final Decision: We did not propose any changes to finalized hospice
floor and 5 percent cap policies. Therefore, the FY 2027 hospice wage
index will continue to include the hospice floor as well as the 5
percent cap on wage index decreases. For FY 2027, the 5 percent cap on
wage index decreases will also continue to be calculated at the county
level. While some counties that required a transition code for FY 2025
and FY 2026 will continue to use the same transition code for FY 2027,
other counties that previously required a transition code will no
longer require a transition code in FY 2027. 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
[[Page 49122]]
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.
c. FY 2027 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 2027, we
proposed that the hospice wage index would be based on the FY 2027
hospital pre-floor, pre-reclassified wage index for hospital cost
reporting periods beginning on or after October 1, 2022 and before
October 1, 2023 (FY 2023 cost report data). We noted that the FY 2027
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 (BBA)
of 1997 (Pub. L. 105-33, August 5, 1997) 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. We proposed that the FY 2027 hospice wage index would
continue to include the hospice floor as well as the 5 percent cap on
wage index decreases.
We noted that the appropriate FY 2027 wage index value would be
applied to the labor portion of the hospice payment rate based on the
geographic area in which the beneficiary resides when receiving RHC or
CHC. We also noted that the appropriate FY 2027 wage index value would
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 2027, the
only CBSA without a hospital from which hospital wage data can be
derived is 25980, Hinesville, Georgia. As such, we proposed that the FY
2027 hospice wage index for Hinesville, Georgia would be 0.8917. Based
on updated wage index data, the final FY 2027 hospice wage index value
for Hinesville, Georgia is 0.8915.
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 2027
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 would result in a proposed FY 2027 hospice
wage index of 0.8299 for rural North Dakota. Based on updated wage
index data, the final FY 2027 hospice wage index value for rural North
Dakota is 0.8297.
Additionally, in the FY 2026 Hospice Wage Index and Rate Update
final rule (90 FR 37410), using our established methodology for rural
areas with no hospitals, we finalized a policy that 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. 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 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 2027 pre-hospice floor unadjusted wage index for
rural Puerto Rico was 0.2577 subsequently adjusted by the hospice floor
to equal 0.2964. Because 0.2964 is more than a 5 percent decline in the
FY 2026 wage index, the adjusted proposed FY 2027 wage index with the 5
percent cap applied would equal 0.95 multiplied by 0.4200 (that is, the
FY 2026 wage index with 5 percent cap), which would result in a
proposed FY 2027 wage index value of 0.3990. Based on updated wage
index data, the final FY 2027 pre-hospice floor unadjusted wage index
for rural Puerto Rico is 0.2572 subsequently adjusted by the hospice
floor to equal 0.2962. Because 0.2962 is more than a 5 percent decline
from the FY 2026 wage index, the adjusted FY 2027 wage index for rural
Puerto Rico with the 5 percent cap
[[Page 49123]]
applied would equal 0.95 multiplied by 0.4200 (that is, the FY 2026
wage index with 5 percent cap), which results in a final FY 2027 wage
index value of 0.3990.
The hospice wage index applicable for FY 2027 (October 1, 2026
through September 30, 2027) is available on the Hospice Regulations and
Notices web page at https://www.cms.gov/medicare/payment/fee-for-service-providers/hospice/hospice-regulations-and-notices and the
Hospice Wage Index web page located at https://www.cms.gov/medicare/payment/fee-for-service-providers/hospice/hospice-wage-index.
We received several comments on the proposed FY 2027 hospice wage
index. A summary of the comments and our responses to those comments
are as follows:
Comment: Commenters broadly supported the concept of updating the
hospice wage index but opposed the current hospital-based methodology
as fundamentally misaligned with hospice labor markets. Multiple
commenters argued that basing hospice wages on acute care hospital cost
report data fails to capture hospice-specific costs such as clinician
travel, home-based care delivery, and a workforce mix dominated by
nurses, social workers, and aides rather than hospital occupational
categories.
A few commenters expressed concern that hospice providers are
unable to benefit from IPPS hospital wage index policies such as
geographic reclassification and the rural floor. A commenter
recommended that CMS develop a hospice-specific geographic
reclassification pathway.
Another commenter recommended several smoothing methodologies that
better reflect shared labor markets and reduce artificial payment
cliffs such as regional rural smoothing across contiguous States;
blended wage index methodologies that limit extreme variation
unsupported by labor cost data; and transition policies that protect
access to care and workforce stability during wage index reform.
Response: We appreciate the commenters' concerns related to the FY
2027 hospice wage index and thank the commenters for their
recommendations. While we did not propose any changes to the FY 2027
hospice wage index methodology in the proposed rule, we did request
information on changes to the hospice wage index methodology and may
consider these recommendations and the comments received on the RFI in
future rulemaking. A discussion of the comments received on the RFI for
a new hospice specific wage index can be found in section III.E.2. of
this final rule.
Comment: A commenter recommended technical improvements to the Wage
Index file. This commenter requested a separate column in the
Transition Codes tab of the final Wage Index file that distinguishes
those counties that completed their transition in a prior FY from those
newly entering or continuing transition in FY 2027. The commenter
stated that the addition of this column to the file would help EHR
developers and hospice billing staff determine, from the FY 2027 file
alone, which county wage index values reflect a completed transition
versus an ongoing one.
Response: We thank the commenter for the recommendation. We have
updated the FY 2027 Wage Index File with a new column labeled
``Transition Code Status''. This column outlines whether the transition
code should continue to be used for FY 2027 or the FY that the code was
phased out.
Final Decision: After consideration of public comments, we are
finalizing our proposal to use the FY 2027 pre-floor, pre-reclassified
hospital wage index data as the basis for the FY 2027 hospice wage
index. The wage index applicable for FY 2027 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
2027 is effective October 1, 2026, through September 30, 2027.
2. FY 2027 Hospice Payment Update Percentage
Section 4441(a) of the BBA of 1997 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. In
the FY 2026 IPPS/LTCH PPS final rule (90 FR 36859 through 36866), we
finalized the rebased and revised IPPS market basket to reflect a 2023
base year, to begin in FY 2026.
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 Act
defines the productivity adjustment to be equal to the 10-year moving
average of changes in annual economy-wide private nonfarm business
multifactor productivity 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.
The productivity measure referenced in section 1886(b)(3)(B)(xi)(II) of
the Act is published by BLS as private nonfarm business total factor
productivity (TFP) (previously referred to as multifactor
productivity).\3\ We refer readers to https://www.bls.gov/ productivity
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.
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\3\ https://www.bls.gov/productivity/notices/2021/mfp-to-tfp-term-change.htm.
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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 2027 was based on the most
recent estimate of the inpatient hospital market basket (based on IGI's
fourth quarter 2025 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 2027 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 2027 was 0.8 percentage point (based on
IGI's fourth quarter 2025 forecast). Therefore, the proposed hospice
payment update percentage for FY 2027 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 this 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
[[Page 49124]]
appropriate, to determine the hospice payment update percentage in the
FY 2027 Hospice Wage Index and Rate Update final rule.
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 public comments on our proposal for the FY 2027 hospice
payment update percentage. The following is a summary of the comments
we received and our responses.
Comment: Numerous commenters, including national associations,
State hospice associations, large health systems, and individual
providers, expressed strong concerns that the proposed 2.4 percent FY
2027 hospice payment update is insufficient to keep pace with the
actual cost of delivering high-quality hospice care. Commenters
specifically stated that this proposed update would not sufficiently
account for the cost pressures, including rising labor costs,
transportation expenses, and medical supply inflation. Commenters
stated they continue to grapple with a healthcare workforce shortage
causing intense competition for skilled staff, including nurses, social
workers, aides, and other professionals, driving wages upward.
Commenters referenced the BLS data which indicate that the Employment
Cost Index (ECI) for Compensation for Healthcare and Social Assistance
increased by 4 percent on average over the most recent year (12 months
ending March 2026). Commenters also raised concerns about the impact of
rapidly increasing gas prices on transportation costs, particularly for
rural and nonprofit hospices that they stated have margins that are
extremely limited and at times negative.
A commenter also stated that the hospice Medicare per diem payment
increased approximately 16.1 percent from 2018 through the proposed FY
2027 rates while general inflation as measured by the Consumer Price
Index (CPI) increased approximately 28.3 percent. The commenter
acknowledged that the CPI is not a hospice-specific cost index, but
stated it illustrates the broader inflationary pressure facing the
hospice labor and transportation intensive model of care. Several
commenters expressed that inadequately funding hospice services risks
access for vulnerable Medicare beneficiaries, especially in rural and
underserved communities.
Several commenters recommended CMS use the most recent data
available to more accurately align the FY 2027 payment update with
rising cost pressures (including increasing operational and regulatory
costs) and actual inflationary increases. Several commenters also noted
that pharmaceutical, durable medical equipment (DME), and supply costs
are rising at a faster rate than the proposed payment update.
Commenters also pointed out that the new regulatory and compliance
burdens introduced in the FY 2027 Hospice Wage Index and Rate Update
proposed rule (for example, Hospice Outcomes and Patient Evaluation
(HOPE) tool implementation, the Service and Spending Variation Index
(SSVI), and the mandatory election statement addendum) require
additional staffing and technology investments that the proposed update
does not take into account.
Commenters further noted that nonprofit hospice providers are
particularly vulnerable, with Medicare Payment Advisory Commission
(MedPAC) reporting an aggregate Medicare margin of -1.3 percent for
nonprofit hospices in 2023, compared to 13.7 percent for for-profit
providers. Several commenters reported that nonprofit and rural
hospices are increasingly relying on philanthropic funds to sustain
operations. Commenters urged CMS to finalize the highest payment update
supported by the most current available data, with specific
recommendations ranging from a modest additional increase (for example,
+0.6 percent by UHG) to more substantial adjustments (for example, 6
percent by THAH, 8 percent by Pennant).
Several commenters recommended that CMS continue to evaluate
whether the inpatient hospital market basket remains an appropriate
proxy for hospice cost structures and supported the development of a
hospice-specific market basket as a long-term policy priority.
Response: We acknowledge and appreciate the commenters' concerns
regarding the proposed FY 2027 hospice payment update and acknowledge
the cost pressures described by commenters as they relate to labor,
transportation, pharmaceuticals, supplies, and regulatory compliance.
We recognize that hospice care is a labor-intensive, community-based
benefit and that providers face real and ongoing financial challenges
in the current economic environment. We acknowledge commenters request
for a higher FY 2027 update or an alternative payment update that
deviates from the statutorily required IPPS market basket percentage
increase reduced by the productivity adjustment.
We also appreciate the commenters' request for the development of a
hospice-specific market basket; however, we are required to update
hospice payments pursuant to section 1814(i)(1)(C)(ii)(VII) of the Act
which requires us to update hospice PPS payments by the IPPS market
basket percentage increase (as defined in section 1886(b)(3)(B)(iii) of
the Act) reduced by the productivity adjustment described in section
1886(b)(3)(B)(xi)(II) of the Act. We do not have discretionary
authority to deviate from this statutory formula. We note in the FY
2026 IPPS/LTCH final rule (90 FR 36859 through 36873), we rebased and
revised 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 FY, 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. As
noted previously, we rebased and revised the IPPS market basket to
reflect a 2023 base year effective for the FY
[[Page 49125]]
2026 IPPS payment update (90 FR 36859 through 36873).
We highlight that the market basket percentage increase is a
forecast of the price pressures that hospitals are expected to face in
FY 2027. 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 (including but not limited to
overall economic growth and the impact of rising fuel prices). 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 2027 IPPS/LTCH proposed rule (91 FR 19312), we
proposed a FY 2027 applicable percentage increase of 2.4 percent,
reflecting the 2023-based IPPS market basket percentage increase of 3.2
percent and a productivity adjustment of 0.8 percent. We also proposed
that if more recent data became available, we would use such data, if
appropriate, to derive the final FY 2027 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 2027 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. Therefore, for FY 2027, based on more recent data available
for this final rule (that is, IGI's second quarter 2026 forecast of the
2023-based IPPS market basket percentage increase with historical data
through the first quarter of 2026), we estimate that the FY 2027 IPPS
market basket increase is 3.2 percent, which is the same as was
included in the proposed rule.
Based on IGI's second quarter 2026 forecast, we are also projecting
a productivity adjustment of 0.9 percent that is 0.1 percentage point
higher than in the proposed rule primarily due to the incorporation of
historical TFP data from BLS. Therefore, for FY 2027 a final IPPS
market basket update of 2.3 percent (3.2 percent less 0.9 percentage
point) will be applicable, which is slightly lower than the proposed
IPPS market basket update of 2.4 percent.
We acknowledge commenters' concerns regarding the adequacy of the
inpatient hospital market basket as a proxy for hospice-specific cost
structures, particularly with respect to labor, transportation, and
community-based care delivery costs. We will continue to monitor
hospice payment adequacy, including through MedPAC's annual analyses of
hospice margins and access indicators, and will consider whether future
rulemaking actions are warranted to better reflect the cost structure
of hospice care. We also encourage interested parties to continue
working with Congress on legislative solutions to address payment
adequacy concerns that fall outside CMS' administrative authority.
Productivity Adjustment
Comment: Multiple commenters raised concerns about the
appropriateness of applying the 0.8 percentage point total factor
productivity (TFP) adjustment to hospice payment updates. 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 adjustment. Commenters
stated that the productivity adjustment largely reflects output growth
driven by technology, capital investment, and process efficiencies--
factors more applicable to manufacturing and other capital-intensive
sectors.
Commenters noted that technology has been transformative in other
parts of healthcare, such as through the use of artificial intelligence
(AI) in imaging and diagnostics, but those gains do not translate to
the hands-on, relational work of hospice and note that unlike
institutional providers, hospices have limited ability to achieve
productivity gains through technology adoption or workflow
optimization, as the majority of costs are driven by direct labor and
travel. 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 economy-wide productivity gains.
Several commenters urged CMS to acknowledge in the final rule that
the productivity adjustment does not reflect hospice-specific workforce
realities, and several commenters recommended that CMS work with the
Congress to repeal or suspend the productivity adjustment for hospice,
or at minimum moderate its application for FY 2027. A commenter
specifically requested that CMS seek legislative language repealing
section 3401(g) of the Affordable Care Act as it applies to hospice
reimbursement.
Response: As we noted in the proposed rule, the productivity
adjustment is required by section 1886(b)(3)(B)(xi)(II) of the Act, as
amended by section 3401(g) of the Affordable Care Act, which mandates
that starting with FY 2013 (and in subsequent FYs), the hospice payment
update percentage be annually reduced by changes in economy-wide
productivity. As required by statute, the FY 2027 productivity
adjustment is derived based on the 10-year moving average growth in
economy-wide private nonfarm business total factor productivity for the
period ending FY 2027. We recognize the commenters' concerns 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 acknowledge commenters' observations that the TFP metric, which
is derived from economy-wide productivity trends, may not fully reflect
the productivity gains realistically achievable in a labor-intensive,
home-based care model such as hospice. To the extent that commenters
believe the statutory productivity adjustment is inappropriate for
hospice, we encourage interested parties to engage with the Congress on
potential legislative modifications to section 3401(g) of the
Affordable Care Act. We will continue to work with the Congress and
interested parties on longer-term payment reform issues that fall
within the scope of our current administrative authority.
The general method for calculating the productivity adjustment is
available on the CMS website including a link to the most recent BLS
historical TFP data, which allows interested parties to obtain
historical TFP annual index levels for 1987 through 2025. 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 2026 and 2027. The annual index
level derived from this method is then interpolated to quarterly
levels, and the FY 2027 productivity adjustment is equal to the percent
change in the 40-quarter moving average projected level for the period
ending September 30, 2027, relative to the 40-quarter moving average
projected level for the period ending September 30, 2026. We believe
[[Page 49126]]
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 FY, year, cost reporting period, or other
annual period).
At the time of this final rule, the 2027 productivity adjustment
reflects BLS historical TFP data through 2025 (released on March 19,
2026) and IGI's forecasted TFP growth for 2026 and 2027. The average
annual growth rate of historical TFP published by BLS for 2018 through
2025 is currently 1.0 percent and IGI is projecting average TFP growth
of about 0.7 percent for 2026 and 2027 based on IGI's second quarter
2026 forecast. Combining the historical and projected TFP data over the
entire 10-year time period and interpolating into quarterly index
levels results in a 10-year moving average growth rate of TFP of 0.9
percent for FY 2027. The productivity adjustment (based on the 10-year
period ending with FY 2027) for the FY 2027 Hospice Wage Index and Rate
Update final rule is 0.1 percentage point higher than the productivity
adjustment for the FY 2027 Hospice Wage Index and Rate Update proposed
rule mainly due to the incorporation of updated BLS historical data.
Forecast Error
Comment: Many commenters raised concerns about the cumulative
financial impact of persistent market basket forecast errors on hospice
payment adequacy. Commenters noted that CMS' annual payment updates are
based on forecasts of future price growth rather than actual historical
price inflation, and that these forecasts have consistently
underestimated actual inflation over the past 5 years. Many commenters
requested CMS make a one-time market basket adjustment to account for
the cumulative shortfall in hospice payment rates due to forecast
errors from FYs 2022 through 2026. 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 $30.3 billion in FY 2025 so a 4 percent shortfall equates
to over $1 billion in annual underpayments relative to what payments
would have been with accurate market basket updates and that hospices
are almost entirely dependent on Medicare, which accounts for
approximately 90 percent of hospice payments nationally, leaving
providers with no alternative payer source to offset Medicare
underpayments.
Commenters urged CMS to consider any and all opportunities to
implement one-time catch-up adjustment for hospice payments, as has
been done in the past for other payment systems such as the Skilled
Nursing Facility PPS. Some commenters requested that CMS establish a
formal regulatory mechanism for correcting hospice market basket
forecast errors going forward.
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. As we have
previously indicated (88 FR 51173), there is currently no mechanism to
adjust for market basket forecast error in the hospice payment update.
Furthermore, beginning in 1989, the 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 2025 (the last historical FY) were under forecast (actual
increases less forecasted increases were positive), this was largely
due to unanticipated inflationary and labor market pressures as the
economy emerged from the COVID-19 public health emergency. 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.
Final Decision: We are finalizing the FY 2027 hospice payment
update using the methodology outlined. Based on the more recent IGI
second quarter 2026 forecast with historical data through the first
quarter of 2026, the 2023-based IPPS market basket increase factor for
FY 2027 is 3.2 percent. The FY 2027 productivity adjustment based on
the more recent IGI second quarter 2026 forecast is 0.9 percentage
point. Therefore, we are finalizing for FY 2027, a hospice payment
update percentage of 2.3 percent (3.2 percent market basket percentage
increase less a 0.9 percentage point productivity adjustment).
3. Final FY 2027 Hospice Payment Rates
There are four payment categories that are distinguished by the
location and intensity of the hospice services provided. The base
payments are adjusted for geographic differences in wages by
multiplying the labor share, which varies by category, of each base
rate by the applicable hospice wage index. A hospice is paid the RHC
rate for each day the beneficiary is enrolled in hospice, unless the
hospice provides CHC, IRC, or GIP. CHC is provided during a period of
patient crisis to maintain the patient at home; IRC is short-term care
to allow the usual caregiver to rest and be relieved from caregiving;
and GIP 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 day
61 and subsequent days. 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 occur 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 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 2027, the proposed SIA budget neutrality factor is 0.9999 for RHC
days 1-60 and 0.9999 for RHC days 61+. With updated FY 2025 claims data
(as of May 12, 2026), the final CY 2027 SIA budget neutrality factor is
0.9999 for days 1-60 and 0.9999 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 to eliminate the aggregate effect of annual
variations in hospital wage data. For FY 2027 hospice rate setting, we
are continuing our longstanding policy of using the most recent data
available. Specifically, we proposed using FY 2025 claims data (as of
January 15, 2026) for the FY 2027 payment rate updates. We note that
the budget neutrality factors and payment rates would be updated with
more complete FY 2025 claims data in the FY 2027 Hospice Wage Index and
Rate Update final rule. The wage index
[[Page 49127]]
standardization factor is calculated by simulating total payments using
FY 2025 hospice utilization claims data with the FY 2026 wage index
(pre-floor, pre-reclassified hospital wage index with the hospice floor
and the 5 percent cap on wage index decreases) and FY 2026 payment
rates and compare it to our simulation of total payments using FY 2025
utilization claims data, the FY 2027 hospice wage index (pre-floor,
pre-reclassified hospital wage index with hospice floor, and the 5
percent cap on wage index decreases) and FY 2026 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 2026 wage index and FY 2026
payment rates for each level of care by the FY 2027 wage index and FY
2026 payment rates, we obtain a wage index standardization factor for
each level of care.
With updated claims data (as of May 12, 2026), the wage index
standardization factor was calculated by simulating total payments
using FY 2025 hospice utilization claims data with the FY 2026 wage
index (pre-floor, pre-reclassified hospital wage index with the hospice
floor and the 5 percent cap on wage index decreases) and FY 2026
payment rates and compare it to our simulation of total payments using
FY 2025 utilization claims data, the FY 2027 hospice wage index (pre-
floor, pre- reclassified hospital wage index with hospice floor, and
the 5 percent cap on wage index decreases) and FY 2026 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 2026 wage index and FY 2026
payment rates for each level of care by the FY 2027 wage index and FY
2026 payment rates, we obtain a wage index standardization factor for
each level of care. The final FY 2027 wage index standardization
factors using FY 2025 claims data (as of May 12, 2026) for each level
of care are shown in Tables 1 and 2.
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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 for 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
[[Page 49128]]
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 2027 rates for
hospices that do not submit the required quality data would be updated
by -1.7 percent, which is the final FY 2027 hospice payment update
percentage of 2.3 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.
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We did not receive any comments on the proposed FY 2027 hospice
payment rates.
Final Decision: We are finalizing the FY 2027 hospice payment
rates, SIA budget neutrality factor, and wage index standardization
factors. The final FY 2027 RHC payment rates are shown in Table 1. The
final FY 2027 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.
4. Hospice Cap Amount for FY 2027
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
[[Page 49129]]
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 Sec.
418.309 to reflect the provisions of the CAA, 2021. Division P, section
312 of the CAA, 2022 (Pub. L. 117-103, March 15, 2022) 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. 117-328, December 29, 2022)
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, March 9, 2024)
extends this provision to October 1, 2033.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 Sec. 418.309 to reflect the revisions at section
1814(i)(2)(B) of the Act.
Division J, section 6218 of the Consolidated Appropriations Act,
2026 (CAA, 2026) (Pub. L. 119-75, February 3, 2026) amended section
1814(i)(2)(B) of the Act and extended the accounting years impacted by
the adjustment made to the hospice cap calculation until 2035. 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, 2033. Therefore, for accounting years
that end after September 30, 2016, and before October 1, 2035, the
hospice cap amount is updated by the hospice payment update percentage
rather than the CPI-U. As a result of the changes mandated by the CAA,
2026, we proposed conforming regulation text changes at Sec. 418.309
to reflect the revisions at section 1814(i)(2)(B) of the Act.
The proposed hospice cap amount for the FY 2027 cap year was
$36,210.11, which is equal to the FY 2026 cap amount ($35,361.44)
updated by the proposed FY 2027 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 2027 Hospice Wage Index and
Rate Update final rule. Using updated FY 2025 hospice claims data (as
of May 12, 2026), the final cap amount for the FY 2027 cap year will be
$36,174.75 which is equal to the FY 2026 cap amount ($35,361.44)
increased by the final FY 2027 hospice payment update of 2.3 percent.
We received public comments on our proposed update to the hospice
cap for FY 2027. The following is a summary of the comments we received
and our responses.
Comment: While some commenters expressed support for the proposed
2.4 percent update to the FY 2027 hospice cap amount, most commenters
recommended a higher hospice update percentage than the proposed 2.4
percent increase. A commenter recommended that the cap amount be
updated by a minimum of 8 percent to match rising costs and ensure
equitable hospice access. Other commenters argued that the current
hospice cap methodology disproportionately impacts providers in high-
cost States and recommended that the hospice cap amount be
geographically adjusted. A commenter suggested that the wage index can
at times cause hospice providers in States like California to reach
hospice cap payment thresholds in less than 4 months. This commenter
recommended that the hospice cap be calculated with a hospice specific
wage index and cap threshold across all States.
Several commenters recommended more far-reaching reforms to the
hospice cap methodology than the proposed wage index policies outlined
in the FY 2027 Hospice Wage Index and Rate Update proposed rule. These
commenters recommended replacing the aggregate cap with more targeted
program integrity tools such as claims-based analytics, ownership
screening and the SSVI, and focusing enforcement on ownership patterns,
abnormal utilization, and suspicious billing rather than penalizing
compliant providers through a uniform national dollar threshold.
Several commenters argued that the hospice cap is outdated and may
create unintended consequences for compliant hospices as well as
beneficiaries. A commenter suggested that the cap creates challenges
for responsible hospices that admit patients who are appropriate for
hospice but have used multiple benefit periods under care with a bad
actor, including hospices that may have admitted or retained patients
inappropriately. Another commenter recommended that CMS examine the
impact of the hospice aggregate cap on providers serving larger shares
of low-income and otherwise economically vulnerable beneficiaries and
suggested that the hospice cap can create incentives to avoid patients
who are expected to need longer stays or more complex supportive
services.
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
replace the hospice cap, update the cap amount in a different manner,
nor account for regional cost differentials by geographically adjusting
the hospice cap.
Final Decision: We are finalizing the update to the hospice cap
amount for FY 2027 in accordance with statutorily mandated requirements
and the proposed regulation text change at Sec. 418.309 to reflect the
revisions at section 1814(i)(2)(B) of the Act, which require that, for
accounting years that end after September 30, 2016, and before October
1, 2035, the hospice cap amount be updated by the hospice payment
update percentage rather than the CPI-U. The final cap amount for the
FY 2027 cap year will be $36,174.75, which is equal to the FY 2026 cap
amount ($35,361.44) increased by the final FY 2027 hospice payment
update of 2.3 percent.
B. Non-Hospice Spending During a Hospice Election
1. Medicare Non-Hospice Spending
a. Background
The Medicare hospice per diem payment amounts were developed to
cover all services needed for the palliation and management of the
terminal illness and related conditions, as described in section
1861(dd)(1) of the Act. Hospice services provided under a written plan
of care (POC)
[[Page 49130]]
should reflect patient and family goals and interventions based on the
problems identified in the initial, comprehensive, and updated
comprehensive assessments as outlined in the hospice CoPs at Sec.
418.56. As referenced in our regulations at Sec. 418.64, a hospice
must routinely provide all core services directly by hospice employees
and they must be provided in a manner consistent with acceptable
standards of practice. Under the current payment system, hospices are
paid for each day that a beneficiary is enrolled in hospice care,
regardless of whether services are rendered on any given day.
Additionally, when a beneficiary elects the Medicare hospice
benefit, he or she waives the right to Medicare payment for services
related to the treatment of the terminal illness and related
conditions, except for services provided by the designated hospice and
the attending physician. The comprehensive nature of the services
covered under the Medicare hospice benefit is structured so that
hospice beneficiaries would not have to routinely seek items, services,
and medications beyond those provided by hospice. We believe that it
would be unusual and exceptional to see services provided outside of
hospice for those individuals who are approaching the end of life, and
we have reiterated since 1983 that ``virtually all'' care needed by the
terminally ill individual would be provided by the hospice (48 FR
56010, 84 FR 38509, 85 FR 47091, 86 FR 19713, 88 FR 20032, 89 FR
64202). Hospices are required to provide the individual (or
representative) with information indicating that services unrelated to
the terminal illness and related conditions are exceptional and unusual
and the hospice should be providing virtually all care needed by the
individual who has elected hospice, as codified in regulations at Sec.
418.24(b)(3).
b. Medicare Non-Hospice Spending Since Implementation of the Hospice
Election Statement Addendum
Since the implementation of the hospice election statement addendum
requirement in FY 2020 (84 FR 38484), which must be provided upon
request, Medicare non-hospice spending for beneficiaries who have
elected the hospice benefit has shown substantial and consistent
growth. In the FY 2027 Hospice Wage Index and Payment Rate Update
proposed rule (91 FR 17338), we provided data on nonhospice spending
during a hospice election. Specifically, we noted that Medicare paid
over $2.8 billion in non-hospice spending during a hospice election in
FY 2024 for items and services under Parts A, B, and D (see Figures B1
and B2).
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Medicare payments for non-hospice Part A and Part B items and
services received by hospice beneficiaries during a hospice election
increased from nearly $790 million in FY 2020 to over $2 billion in FY
2024 (see Figure B1). This represents an increase in non-hospice
Medicare spending for Parts A and B of nearly $1.3 billion, or 160
percent. The most substantial increase in a single year occurred from
FY 2023 to FY 2024, which demonstrated an increase in non-hospice
Medicare spending for Part A and Part B items and services of $770
million, or 60 percent.
While there is minimal beneficiary cost sharing under the Medicare
hospice benefit,\4\ non-hospice services received outside of the
Medicare hospice benefit are subject to beneficiary cost sharing. In FY
2024, the total beneficiary cost sharing amount for beneficiaries
electing the hospice benefit was $510 million for Parts A and B.\5\ In
FY 2024, beneficiaries receiving hospice services from for-profit
hospices had, on average, nearly 167 percent higher non-hospice
spending per day compared to beneficiaries under non-profit hospice
care. This represents a significant increase from FY 2022, when
beneficiaries receiving hospice services from for-profit hospices had,
on average, 60 percent higher non-hospice spending per day compared to
beneficiaries under non-profit hospice care.
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\4\ The amount of coinsurance for each prescription approximates
five percent of the cost of the drug or biological to the hospice
determined in accordance with the drug copayment schedule
established by the hospice, except that the amount of coinsurance
for each prescription may not exceed $5. The amount of coinsurance
for each respite care day is equal to five percent of the payment
made by CMS for a respite care.
\5\ Part A and B cost sharing is calculated by summing together
the deductible and coinsurance amounts for each claim.
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We also examined non-hospice spending during a hospice election by
claim type for Part A and Part B items and services, as shown in Table
5. In percentage terms, we found the most dramatic increase in billing
related to carrier/physician supply. From FY 2020 to FY 2024, non-
hospice spending related to carrier/physician supply increased 317.5
percent with a notable single year spike from FY 2022 to FY 2023 of
63.5 percent, and the largest increase in one year occurred from FY
2023 to FY 2024 with an increase of 90.8 percent. The diagnosis code
for carrier claims with the largest increase in spending in FY 2024 was
for pressure
[[Page 49132]]
ulcers, largely associated with skin substitutes, which accounted for
47 percent, almost half of the carrier claim spending. Carrier claims
for ulcers from FY 2020 to FY 2024 increased by almost 4,000 percent,
rising from $18 million in FY 2020 to $714 million in FY 2024. CMS is
aware of the increased provision of skin substitutes overall and
changes were made to the reimbursement for skin substitutes beginning
in 2026. Effective January 1, 2026, CMS implemented major changes to
skin substitute payments, transitioning most products to a single,
national unified rate of approximately $127.14 per cm\2\ (90 FR 49266,
90 FR 53448) in CY 2026, with the intent to propose payment rates that
differentiate among three FDA regulatory categories in future years.
This policy, applicable to both non-facility and hospital outpatient
settings, classifies products as ``incident-to'' supplies to eliminate
the Average Sales Price (ASP) + 6 percent model, aiming to
significantly reduce Medicare spending. Additionally, it is not unusual
for terminally ill patients to have skin breakdown as a result of their
deconditioned state and where wound care would be appropriate for
comfort. As such, we question why hospices would not be providing
needed wound care for pressure ulcers (which could potentially require
a skin substitute in certain circumstances) given that pressure ulcers
generally develop from unrelieved pressure as a result of limited
mobility and in terminally ill individuals who are chairbound or
bedbound.
Additionally, we found notable consistent increases in outpatient
and inpatient services in recent years, as shown in Table 5. From FY
2020 to FY 2024, non-hospice spending related to outpatient services
increased 40.4 percent and inpatient services increased by 26.9 percent
in the same time frame. Additionally, we found that 30.1 percent and
25.9 percent of the non-hospice spending that occurred in FY 2024 was
related to the primary hospice diagnosis of Alzheimer's disease/
dementia/Parkinson's and heart conditions (Congestive Heart Failure and
other heart disease), respectively. We also found that daily rates of
non-hospice spending for services in FY 2024 are greater for every
claim type, and 166.9 percent higher in total spending per day, for
patients receiving hospice services in for-profit vs. non-profit
hospices. We also noted that 67 percent of non-hospice spending
occurred after hospice election day 60.
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Hospices are responsible for covering drugs and biologicals related
to the palliation and management of the terminal illness and related
conditions while the patient is under hospice care. After a hospice
election, many maintenance drugs or drugs used to treat or cure a
condition are typically discontinued as the focus of care shifts to
palliation and comfort measures. However, those same drugs may be
appropriately continued, as they may offer symptom relief for the
palliation and management of the terminal prognosis.\6\ Similar to the
increase in non-hospice spending during a hospice election for Medicare
Parts A and B items and services, non-hospice spending for Part D drugs
increased from $552.9 million in FY 2020 to $813.1 million in FY 2024,
which represents an increase of over a 47 percent (Figure B2).
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\6\ Update on Part D Payment Responsibility for Drugs for
Beneficiaries Enrolled in Medicare Hospice. November 2016. https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/Hospice/Downloads/2016-11-15-Part-D-Hospice-Guidance.pdf.
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Table 6 details the various components of Part D spending for
patients receiving hospice care for FYs 2020 to FY 2024. The portion of
the FY 2020 to FY 2024 Part D spending that was paid by Medicare is the
sum of the Low-Income Cost-Sharing Subsidy and the Covered Drug Plan
Paid Amount, approximately $3.3 billion. The beneficiary cost sharing
amount was approximately $335.1 million.\7\
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\7\ Part D cost sharing is calculated by summing together the
``the patient pay amount'' and the ``other true out of pocket''
amount that are recorded on the Part D PDE.
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We also note hospice beneficiaries with principal diagnoses of
neurological and degenerative diseases, circulatory and cerebrovascular
diseases, respiratory diseases, and neoplasms have received clinically
indicated services for these conditions outside the hospice benefit.
This issue may arise from hospices misclassifying conditions, referring
patients to non-hospice providers, failing to coordinate care, or
deliberately avoiding costs. We have examined principal hospice
diagnoses on claims and identified Part B items and services paid
outside the hospice benefit and have found concerning trends in non-
hospice spending. Our intent in including data regarding non-hospice
spending related to hospice principal diagnosis codes in the proposed
rule is to highlight items and services we believe should be covered
under the hospice benefit. For example, it is not clear why medications
like bronchodilators or oxygen would be considered unrelated to a
respiratory condition indicated as the primary hospice diagnosis.
As we discussed previously, the hospice model is interdisciplinary
and focuses on symptom management rather than curative treatment.
Covering related services under the hospice benefit reinforces this
philosophy by ensuring that care for the terminal condition, including
medications, equipment, supplies, and therapies, is managed and
integrated by the hospice IDG. We question whether increased spending
outside of the hospice benefit is indicative of diminishing
comprehensive and patient-centered care. Covering all items and
services related to the terminal illness and related conditions ensures
that patients receive coordinated medical, nursing, psychosocial, and
supportive services that address the full scope of a patient's end-of-
life needs. This approach reduces fragmentation, prevents gaps in care,
and supports comfort, dignity, and quality of life. Further, it reduces
the burden of navigating additional coverage and cost sharing that the
patient would not have under the hospice benefit.
As the hospice benefit requires hospice coverage of all items and
services related to the terminal illness
[[Page 49134]]
and any related conditions, the increase in non-hospice spending,
particularly for items and services that appear objectively related to
the principal diagnosis, may suggest non-compliance with statutory and
regulatory requirements and inappropriate cost-shifting to other
Medicare benefits. Covering items and services related to the principal
hospice diagnosis is essential to maintaining the integrity of the
hospice benefit, ensuring coordinated and compassionate end-of-life
care, protecting beneficiaries, and supporting responsible stewardship
of Medicare resources. In the following section, we describe in more
detail spending data on non-hospice services from FY 2024.
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Additionally, we analyzed the same principal diagnosis coding
groups for Part D drugs paid outside of the hospice benefit.
[GRAPHIC] [TIFF OMITTED] TR03AU26.032
Neurological and Degenerative Diseases
We grouped claims in this diagnostic coding group using ICD-10-CM
codes for G30, G31, and G20. This group includes Alzheimer's disease,
Parkinson's disease, and other degenerative diseases of the nervous
system. In FY 2024 claims, there are about 48,840,937 hospice days and
1,951,568 hospice claims in this diagnosis coding group. The non-
hospice spending for this category for DME and carrier claim types was
about $576 million. DME services that were billed during hospice stays
related to these conditions during the same time included medical/
surgical supplies, such as wound care supplies, catheters
[[Page 49135]]
and incontinence supplies, tubing, masks, and needles, costing about
$400 million, and wheelchairs, oxygen supplies, and hospital beds
together cost about $0.5 million. Part D drugs that were billed during
hospice stays related to these conditions included (but are not limited
to) about $44.5 million for common palliative drugs, such as
analgesics, anxiolytics, antiemetics, and laxatives; $1.7 million for
therapeutic nutrients and electrolytes; and $0.8 million for diuretics.
Circulatory and Cerebrovascular Diseases
We grouped claims in this diagnostic coding group using ICD-10-CM
codes for I11, I25, I50, I63, I67, I69, and I13. This group includes
circulatory and cerebrovascular diseases, such as heart failure,
cerebrovascular diseases (stroke), ischemic heart disease, and
hypertensive heart/kidney disease. In FY 2024 claims, there are about
47,380,977 hospice days and 1,938,372 hospice claims in this diagnosis
coding group. The non-hospice spending for these conditions for DME and
carrier claim types was about $590 million. DME services that were
billed during hospice stays related to these conditions during the same
time included (but are not limited to) medical/surgical supplies
costing about $402 million; wheelchairs, oxygen supplies, and hospital
beds together cost about $1.1 million. Part D drugs that were billed
during hospice stays related to these conditions included about $177
million for anticoagulants, blood cell stimulations, beta blockers,
vasodilators, and anti-hypertensives; $18.6 million for common
palliative drugs, such as analgesics, anxiolytics, antiemetics, and
laxatives; $3 million for therapeutic nutrients and electrolytes; and
$2.2 million for diuretics.
Respiratory Diseases
We grouped claims in this diagnostic coding group using ICD-10-CM
codes for J44 and J96. This group includes chronic obstructive
pulmonary disease and respiratory. In FY 2024 claims, there are about
11,101,869 hospice days and 511,917 hospice claims in this diagnosis
coding group. The non-hospice spending for this category for DME and
carrier claim types was about $95 million. DME services that were
billed during hospice stays related to these conditions during the same
time included medical/surgical supplies costing about $50 million;
wheelchairs, oxygen supplies, and hospital beds together costing about
$0.5 million. Part D drugs that were billed during hospice stays
related to this condition included (but are not limited to) about $24
million for bronchodilators; $7 million for common palliative drugs,
such as analgesics, anxiolytics, antiemetics, and laxatives; $0.6
million for therapeutic nutrients and electrolytes; and $0.5 million
for diuretics.
All Cancers
We grouped claims in this diagnostic coding group using ICD-10-CM
codes for C00-D49. This group included all the diagnosis codes in the
Neoplasms (C00-D49) Chapter in the ICD-10-CM. In FY 2024 claims, there
are about 18,721,188 hospice days and 1,008,342 hospice claims in this
diagnosis coding group. The non-hospice spending for this category for
DME and carrier claim types was about $106 million. DME services that
were billed during hospice stays related to these conditions during the
same time included medical/surgical supplies costing about $46 million;
wheelchairs, oxygen supplies, and hospital beds together cost about
$0.3 million. Part D drugs that were billed during hospice stays
related to these conditions included (but are not limited to) about
$5.6 million for common palliative drugs, such as analgesics,
anxiolytics, antiemetics, and laxatives; $0.5 million for therapeutic
nutrients and electrolytes; and $0.4 million for diuretics.
For more detailed non-hospice spending data, the full file is
available in the downloads section found at the FY 2027 Hospice Wage
Index and Rate Update final rule link on the Hospice Center web page at
https://www.cms.gov/medicare/enrollment-renewal/providers-suppliers/hospice-center.
2. Service and Spending Variation Index (SSVI)
CMS currently monitors and publicly shares data related to hospice
utilization. Using the most recent, complete claims data, CMS analyzes
Medicare spending, utilization by level of care, lengths of stay, live
discharge rates, and skilled visits during the last days of life.
Interested parties report that such data is useful in highlighting
certain issues and trends regarding Medicare policies. Additionally, we
monitor a variety of other metrics from claims data including: percent
of beneficiaries discharged with length of stay 180 days or more,
percent of total discharges that were live discharges, total number of
discharges (live or dead), average minutes of direct patient care per
RHC day, average visits per RHC day, percent of RHC days on the weekend
with at least one skilled visit, non-hospice spending per day, the
percent of live discharges where a beneficiary returns to the same
hospice within seven days, and total amount of non-hospice spending. By
analyzing hospice utilization and other metrics, CMS can evaluate the
behaviors of hospices to combat potential risks to the integrity of the
Medicare program. For example, we focus on differences in live
discharges because a brief discharge and quick readmittance can disrupt
end of life care and may signal an agency is discharging patients to
avoid covering costly treatments.
Analyzing these particular Medicare hospice metrics together is
important because patterns across them can signal potential program
integrity risks, inappropriate utilization, or quality of care
concerns, especially when they deviate substantially between different
hospices or from expected norms. For example, long lengths of stay
combined with high live discharge rates may signal inappropriate
enrollment of ineligible beneficiaries. Low number of visits, shorter
visits, or fewer weekend visits may indicate minimal service provision.
We recognize that patient census could vary year to year for each
hospice (for example, in a given year, it may be possible that a
hospice had a patient census that did not require any general inpatient
level of care) and does not necessarily signal that a hospice is acting
in an inappropriate manner. As such, we developed a scoring system, the
SSVI, that is calculated using nine claims-based measures, each
representing different aspects of hospice utilization as well as non-
hospice spending. To calculate the SSVI score, we first determined a
threshold for each of the nine metrics. For the non-hospice spending
component of the SSVI score, we created eight separate thresholds for
total non-hospice spending, as the degree to which a hospice spends
outside of the hospice benefit can indicate varying levels of concern.
For example, a hospice with higher non-hospice spending levels receives
a higher number of points than a hospice with about 12.5 percent less
non-hospice spending. Metrics related to utilization reflect visit and
discharge patterns. The SSVI can be used to identify hospices that are
outliers across many different utilization metrics and those that have
a high level of non-hospice spending. We established thresholds using
percentiles. For most of the individual measures, we established the
threshold at the top or bottom 25 percent of the distribution. It is
important to note that falling into this quartile on a single measure
does not necessarily indicate poor performance
[[Page 49136]]
or improper practices. There are often legitimate operational reasons
for a hospice to be an outlier in an isolated area. Instead, this 25
percent threshold acts as a preliminary filter. The objective of the
SSVI is not to evaluate hospices based on a single metric, but to
identify hospices that are outliers across multiple independent
metrics. A hospice triggering the 25 percent threshold on at least one
metric is not uncommon. A hospice triggering that threshold across many
distinct metrics could indicate unusual utilization that may require
further review.
For these utilization metrics, when a hospice's outcome for that
metric surpasses the metric's threshold, then the hospice receives one
point in its score for that metric. Second, we add each of the nine
scores, that is, one score per metric, together to calculate the SSVI
score. The total SSVI score is derived by adding together a hospice's
total non-hospice spending score and their utilization score.
The lowest SSVI score a hospice can receive is zero, that is, a
score of zero for each of the nine metrics, and the maximum SSVI score
is 16, that is, with the highest points assigned for each of the nine
metrics. A higher SSVI score represents a potential higher level of
concern, as this may signal potential program integrity risks or
inappropriate utilization especially when a hospice's SSVI score is
substantially higher than its peers. In Table 9, we describe each of
the nine metrics and the threshold values for those metrics. Given that
we calculate a hospice's SSVI score using an evaluation of nine
metrics, a high SSVI score indicates to CMS that a hospice might have
more than one area of concern and may require additional targeted
education or oversight, such as medical review, education, and
investigations that could result in payment suspension, and revocation,
if there is identified fraud, waste, or abuse. In other words, each
score used to calculate the SSVI score can be used to identify a
specific area of concern for a hospice, and the SSVI score itself
provides an aggregate measure to evaluate a hospice as a whole. The
SSVI can assist interested parties in comparing hospices on a holistic
scale. Likewise, the SSVI is potentially another vehicle to target, and
address fraud, waste, and abuse. For example, higher spending outside
the Medicare hospice benefit may be indicative of abusive billing
because a hospice is paid a comprehensive per diem to cover essentially
all care at the end of life. Excessive non-hospice spending, for either
unrelated care or services and supplies which should be the hospice's
responsibility, may undermine the financial integrity of the hospice
benefit.
BILLING CODE 4169-69-P
[[Page 49137]]
[GRAPHIC] [TIFF OMITTED] TR03AU26.033
We plan to determine the SSVI for individual hospices each FY using
that applicable year's data. In this final rule, we are publishing the
SSVI scores calculated from data for FYs 2024 and 2025 because these
are our most recent
[[Page 49138]]
and complete years of claims data. In subsequent rulemaking cycles, we
would publish the updated SSVI, using the most recent claims data, with
the final rule. The FY 2024 hospice SSVI includes 6,409,155 hospice
claims, representing 6,735 hospices and a total of 148,012,785 hospice
days. The FY 2025 hospice SSVI includes 6,773,919 hospice claims,
representing 6,673 hospices and a total of 156,995,825 hospice days.
Table 10 shows the distribution of the number of hospices by their
total score for hospices in FYs 2024 and 2025 claims.
[GRAPHIC] [TIFF OMITTED] TR03AU26.034
BILLING CODE 4169-69-C
We will post the metrics and the SSVI scores for FYs 2024 and 2025,
additional data from claims-based measures, and related documentation
on the methodology on our Hospice Information web page at https://www.cms.gov/hospice-information-center. Our goal is to identify
individual hospice vulnerabilities to help focus program integrity
efforts, such as conducting medical reviews, providing additional
education, and conducting investigations into individual hospices that
could result in administrative actions like payment suspension and/or
revocation of hospices demonstrating fraudulent behavior. We also
believe the public will benefit from the enhanced transparency this
data provides, allowing beneficiaries and their families the ability to
make more informed choices regarding care at the end of life. We sought
feedback on the metrics used to calculate the SSVI score as well as
thoughts and suggestions regarding the threshold values and point
assignments.
We received public comments on the metrics used to calculate the
SSVI scores. The following is a summary of the comments we received and
our responses.
Comment: We received comments from interested parties opposing the
use of the SSVI due to methodological concerns, such as thresholds used
for the scoring assignment, the validity of
[[Page 49139]]
the measures used, divergence between SSVI and the hospice care index
(HCI), and the overemphasis on non-hospice spending in the scoring.
Some commenters recommended CMS take down the SSVI from public view,
opposed the use of the SSVI for targeting oversight efforts, and
recommended delaying the implementation of the SSVI. Many commenters
opposed the use of the SSVI and the overall use of administrative data
for oversight, stating that claims-based measures may not help target
medical reviews and investigations related to fraud, waste, and abuse.
Commenters described the current SSVI framework as unable to
distinguish between inappropriate utilization and clinically
appropriate hospice care. Commenters also requested more transparency,
such as provider-specific preview reports, clear attribution rules,
threshold and point-assignment logic, and correction and
reconsideration rights.
Response: We thank the commenters for their recommendations. We
remind commenters that the SSVI is a descriptive tool that uses a
scoring system that represents different aspects of hospice
utilization, as well as non-hospice spending, thereby scoring hospices
comprehensively, rather than on a single care dimension. In other
words, the SSVI can be used to identify specific areas of concern
indicated for a hospice as well as aggregate different measures to
simplify comparison between hospices. This approach supports our
transparency efforts for hospices, beneficiaries, and advocacy
organizations to have more information about how a specific hospice may
be performing relative to other hospices.
The SSVI will be one of several sources of information that
contributes to program integrity actions. The concerns about the
thresholds used for the scoring assignment, such as the use of the 25th
and 75th percentiles as a threshold for flagging hospices, highlight a
misunderstanding of how the SSVI tool can be used to compare hospices.
We agree that identifying the 25 percent of hospices on each measure is
not a valid approach to identifying outliers. The current scoring
assignment for the SSVI aims to identify outliers by flagging hospices
with a high score based on the thresholds for multiple measures. In
other words, when hospices are assigned a point for multiple measures,
we can see that those hospices have utilization that is different from
their peers. We would consider a hospice with 13 or more points an
outlier as it would be at 99th percentile of the hospices based on the
distribution of the SSVI score. We believe that the SSVI is vital to
provide information to interested parties, such as beneficiaries and
caregivers, about hospice providers that are not publicly available
outside of this tool. Therefore, we do not believe it is in the best
interest of beneficiaries and their caregivers to remove the SSVI from
the CMS website. Providing this information publicly supports CMS'
efforts to provide transparent data to interested parties.
Based on the distribution of the SSVI score for FY 2025 claims
presented in Table 10, we see that there are 69 hospices that have an
SSVI score above 13. The SSVI helps identify hospices that received 13
points or more as above the 99th percentile of total hospices. We can
also see that the hospices with 13 points or more have higher levels of
non-hospice spending at the 7th or 8th octile and also have a score
higher than 4 for the score related to utilization measures. In other
words, hospices that have high total non-hospice spending levels also
have utilization trends that may be areas of concern. This is important
as we are using the SSVI score as a summary to aggregate measures to
describe hospices relative to each other.
The measures and scoring assignment for the SSVI may change over
time as we consider the comments received and changes in hospice
trends. We remind commenters that the SSVI is a tool that aggregates
and presents information for the hospice patients, interested party
groups, and the general public to be able to compare hospices without
needing to conduct analysis and obtain a data use agreement. We
describe the score assignment logic and attribution rules in the
accompanying document, titled ``SSVI Overview'', which was posted along
with the SSVI. We will continue to provide the document with the SSVI
along with this final rule and subsequent rulemaking cycles.
We acknowledge the limits of claim-based measures and are open to
learning more about the available data for analysis to distinguish
between inappropriate utilization and clinically appropriate hospice
care. We believe the measures we chose, including but not limited to
``Total Non-Hospice Spending'', ``Percent of Live Discharges where
Beneficiaries Return to the Same Hospice in Seven Days'', ``Percent of
Beneficiaries who Died in Hospice and Last Two Days were RHC with at
Least One Skilled Visit During Last Two Days'', and ``Percent of
Discharges (Live or Dead) that Were Live Discharges'', are reasonable
measures to identify hospices that exceed the criterion threshold as
potential indicators of inappropriate utilization.
For total non-hospice spending, we acknowledge that hospices with a
higher hospice beneficiary census would likely have higher non-hospice
spending. The SSVI also shows that the top 100 hospices for total non-
hospice spending includes hospices with less than 5,000 hospice days to
more than 25,000. The range of hospice size that contributes to high
levels of total non-hospice spending suggests that non-hospice spending
is a behavior that is occurring across the hospice market and warrants
further analysis. In addition, we provide a measure of ``Non-Hospice
Spending per Day (All Days Only From Beneficiaries with Non-Hospice
Spending)'' that provides a per-capita measure that standardizes total
non-hospice spending. If non-hospice spending is a behavior that is
occurring across the hospice market, then focusing on non-hospice
spending per day may not properly highlight the hospices with high
total non-hospice spending and higher census of beneficiaries.
We chose to assign scoring for total non-hospice spending to a
distribution using octiles to weigh non-hospice spending in the scoring
to reflect the concern of growing non-hospice spending and to highlight
the widespread practice of non-hospice spending. We chose octile
distribution for score assignment related to non-hospice spending to
apply an equal weight to address concerns for non-hospice spending and
utilization patterns. We assign eight points for crossing threshold for
utilization patterns and points that correspond with the octile for
non-hospice spending level. Our scoring assignment decision for
comparing individual hospice non-hospice spending levels aims to
improve public transparency around the amount billed to other Medicare
providers rather than hospices. As stated earlier, non-hospice spending
is an issue that may arise from hospices misclassifying conditions,
referring patients to non-hospice providers, failing to coordinate
care, or deliberately avoiding costs. We chose the scoring assignment
to simplify comparison for non-hospice spending patterns between
hospices and to account for the total amount billed outside of the
Medicare hospice benefit. We want interested parties to be aware of the
hospice for which the non-hospice spending is attributed. It is
important information relevant to beneficiaries and caregivers because
non-hospice services received outside of the Medicare hospice benefit
are subject to beneficiary cost sharing. In FY 2024, the total
beneficiary cost
[[Page 49140]]
sharing amount for beneficiaries electing the hospice benefit was $510
million for Parts A and B.
We monitor live discharges from hospice as long lengths of stay
combined with high live discharge rates may signal inappropriate
enrollment of ineligible beneficiaries. We are interested to learn more
about what commenters meant by the many legitimate reasons for
administrative discharge. When FY 2025 claims show that more than 400
hospices have 90 to 100 percent live discharge rates and 25 hospices
have 50 percent or more live discharge rates returning in 7 days, it is
unclear whether the high live discharge rates are due to beneficiary
choice or whether there is inappropriate enrollment and the hospices
warrant further review.
We are also concerned that there are over 100 hospices that have no
beneficiaries who died in hospice with the last two days as RHC with at
least one skilled visit during last 2 days. The hospices that have 0 to
25 percent of beneficiaries under this measure range in hospice size
and total non-hospice spending. We believe that this measure in
conjunction with other utilization measures highlight concerning
utilization patterns.
The SSVI is designed to complement the HCI's claim-based measures.
We expected that the specificity of the SSVI utilization measures with
25 and 75 percentiles as thresholds for score assignment would help
identify hospices that have more than one area of concern. Since the
measures are claims-based and will not replace any existing measures,
it is unclear how we would include a reconsideration process for
changing the SSVI score or a provider-specific preview for individual
hospices. In other words, the claims-based measures used in the SSVI
use data inputs from finalized claims submitted by the hospices.
Similarly to the HCI, the SSVI will help patients, families, and
caregivers choose between hospice providers based on the factors that
matter most to them so they can make the best possible decisions. For
these reasons, we believe that we should proceed with publicly
releasing information and the SSVI to improve beneficiary choice for
hospice care.
Final Decision: We thank commenters for these comments. After
consideration of public comments, we are maintaining the design of the
SSVI using the current measures and scoring assignments.
C. Election Statement Addendum Changes
1. Background
Hospice care is a comprehensive, holistic approach to treatment
that recognizes the impending death of an individual may necessitate a
transition from curative to palliative care if the individual so
chooses. Medicare hospice care services are virtually all-inclusive,
and are focused on meeting the physical, emotional, psychosocial, and
spiritual needs of the terminally ill individual and his or her family.
In order to make an informed choice about whether to receive hospice
care, the patient, family, and caregiver must have an understanding of
what services are going to be provided by the hospice and that, because
there is no longer a reasonable expectation for a cure, care should now
focus on comfort and quality of life. The services covered under the
Medicare hospice benefit are comprehensive such that, upon election,
the individual waives all rights to Medicare payment for services
related to the treatment of the individual's condition with respect to
which a diagnosis of terminal illness has been made, except when
provided by the designated hospice or attending physician. Because of
the significance of this decision, the terminally ill individual must
elect hospice care in order to receive services under the Medicare
hospice benefit. Since we first implemented the Medicare hospice
benefit in 1983, it has been our general view that the waiver required
by law requires hospices to provide virtually all the care that is
needed by terminally ill patients (48 FR 56010). In the FY 2020 Hospice
Wage Index and Payment Rate Update final rule (84 FR 38484), we
finalized a policy, for elections beginning on and after October 1,
2020, that requires hospices to provide a hospice election statement
addendum to beneficiaries, their representatives, non-hospice
providers, or Medicare contractors, upon request. The purpose of the
addendum is to notify the hospice beneficiary (or representative) of
those conditions, items, services, and drugs the hospice will not be
covering because the hospice has determined they are unrelated to the
beneficiary's terminal illness and related conditions. The addendum is
subject to review and must be updated, as needed, when the plan of care
is updated in accordance with Sec. 418.56. The hospice must provide
these updates, in writing, to the beneficiary (or representative).
Currently, if the beneficiary (or representative) requests an
addendum at the time of hospice election (that is, within the first 5
days of the hospice election date), the hospice would have 5 days from
the date of the request to furnish this information in writing. If the
addendum is requested during the course of hospice care (that is, after
the first 5 days of the date of the hospice election), the hospice has
3 days from the date of the request to provide the addendum in writing.
However, if the beneficiary dies, revokes, or is discharged within the
required timeframes, the hospice would not be required to furnish the
addendum in this circumstance. These timeframes, and others, for
providing the addendum are outlined in Sec. 418.24(d). The required
content of the hospice election statement addendum is outlined
generally below and described in Sec. 418.24(c) (OMB Control Number:
0938-1067/Expiration date: 2/28/2029):
The addendum title (``Patient Notification of Hospice Non-
Covered Items, Services, and Drugs'');
Hospice name;
Individual's name and medical record identifier;
Identification of the terminal illness and related
conditions;
A list of the individual's conditions present on hospice
admission (or upon POC update) and the associated items, services, and
drugs not covered by the hospice because they have been determined by
the hospice to be unrelated to the terminal illness and related
conditions;
A written clinical explanation written in language that
the beneficiary (or representative) can understand;
References to relevant any clinical practice, policy, or
coverage guidelines;
Information on the purpose of the addendum and the right
to immediate advocacy through the Medicare Beneficiary and Family
Centered Care-Quality Improvement Organization (BFCC-QIO) if the
individual (or representative) disagrees with the hospice's
determination;
Individual (or representative) name, signature, and date
signed, along with a statement that signing the addendum (or its
updates) is only acknowledgement of receipt of the addendum (or its
updates) and not the individual's (or representative's) agreement with
the hospice determinations; and
The date the hospice furnished the addendum.
2. Mandatory Hospice Election Statement Addendum for All Elections
We proposed requiring that hospices provide the hospice election
statement addendum to all Medicare beneficiaries at the time of hospice
election for hospice elections beginning on or after
[[Page 49141]]
October 1, 2026. Section 1812(d)(1) of the Act requires beneficiaries
to affirmatively elect hospice care, and the hospice election involves
a significant waiver of Medicare rights, as beneficiaries waive all
rights to Medicare payment for services related to the treatment of
their terminal illness and related conditions, except for services
provided by the designated hospice and attending physician, pursuant to
section 1812(d)(2)(A) of the Act. Given the magnitude of this decision
and its impact on beneficiary rights and access to care, it is
essential that beneficiaries receive complete information about what
services will and will not be covered by the hospice at the time of
election to ensure truly informed consent. Covered entities must
furnish appropriate auxiliary aids and services when necessary to
ensure effective communication with individuals with disabilities. They
also must take reasonable steps to provide meaningful access to
individuals who are limited English proficient including the provision
of interpreter and translation services free of charge when needed.
Additionally, section 1871 of the Act provides the Secretary with
broad authority to prescribe regulations necessary to carry out the
administration of the Medicare program, including the authority to
establish provider conditions of participation, payment requirements,
and beneficiary rights and protections. Specifically, section
1871(f)(1) specifies that the Secretary should make efforts to reduce
inconsistency or conflicts for individuals entitled to Medicare
benefits. Under this authority, and consistent with our obligation to
ensure beneficiary protection and program integrity, we require that
hospices provide comprehensive disclosure of coverage determinations to
all beneficiaries electing the hospice benefit.
In the FY 2020 Hospice Wage Index and Payment Rate Update proposed
rule (84 FR 17570), CMS reiterated that hospice services should be
providing virtually all the care needed by the terminally ill
individual. CMS also reiterated that coverage decisions and treatment
determinations should take into account multiple factors, including not
only the opinion of the treating physician, but also other factors such
as the condition of the patient upon admission, the nature of the
principal diagnosis, and the existence of comorbid conditions, as these
all play an important role in coverage determinations. Determinations
about unrelated conditions, items, services, and drugs for each patient
should take into account the needs, preferences, and goals of the
terminally ill individual and his or her family; review of all of the
beneficiary's conditions, related and unrelated to the terminal illness
and related conditions; and current clinically relevant information
supporting all diagnoses as required by regulation at Sec. 418.25.
This process requires clinical judgment in which hospices need to
consider clinical practice guidelines and relevant research when making
determinations of whether items, services, and drugs are related or
unrelated to the terminal illness and related conditions.
The significant increases in non-hospice spending patterns, as
discussed in section III.B.1. of this final rule, suggest that the
current framework, where the hospice election statement addendum is
provided only upon request, has not achieved the intended
accountability objective of ensuring that hospices provide virtually
all care needed by terminally ill individuals as required under the
comprehensive and holistic Medicare hospice benefit. Most notably, as
discussed in section III.B.1. of this final rule, Medicare non-hospice
spending for Parts A and B increased from nearly $790 million in FY
2020 to over $2 billion in FY 2024, representing a 160 percent
increase, demonstrating that the voluntary nature of the current
addendum requirement has not adequately addressed coverage transparency
concerns or stemmed inappropriate billing of services outside of the
hospice benefit. Additionally, many beneficiaries may not understand
the importance of requesting the addendum, may not understand their
right to receive this information, or may not receive it in time to
make fully informed decisions about their care, also not achieving the
intended transparency objective. Further, the substantial growth in
non-hospice spending, particularly for services that may be related to
the terminal illness and related conditions, indicates potential gaps
in coverage transparency and coordination between hospice and non-
hospice providers.
Per the hospice CoPs at Sec. 418.56(e)(5), hospices are required
to develop and maintain a system of communication and integration among
all providers furnishing care to the terminally ill patient. This
includes the ongoing sharing of information with other non-hospice
healthcare providers and suppliers furnishing services unrelated to the
terminal illness and related conditions is necessary to ensure
coordination of services and to meet the patient, family, and caregiver
needs. Despite this CoP requirement, we continue to receive reports
from non-hospice providers stating that they are not provided a
beneficiary's addendum when requested from the hospice, are unable to
reach, or do not receive communication from the hospice to discuss the
hospice beneficiary's coordination of services that the hospice has
determined unrelated to his or her terminal illness and related
condition(s). Similarly, we have also received reports from non-hospice
providers who state that hospices are requesting that services be
billed to Medicare Part A and B, other inquiries where non-hospice
providers are requesting payment from hospices for services that should
be the hospices' coverage responsibility but where the hospices have
not paid for such services or do not respond to these requests, and
hospices who state they were unaware that patients had received care
from non-hospice providers. Additionally, if a beneficiary receives
services related to the terminal illness and related conditions and the
hospice did not arrange for such care, the beneficiary, potentially
unknowingly, would be liable for the costs related to those services.
Likewise, Medicare would be making duplicative payments for care
related to the terminal illness and related conditions if non-hospice
providers bill Medicare for services that should have been the coverage
responsibility of the hospice.
Additionally, the Office of Inspector General (OIG) has completed
audits on non-hospice spending for outpatient services provided to
hospice beneficiaries,\8\ Medicare payments to non-hospice providers
for items and services provided to hospice beneficiaries,\9\ and
improper Medicare payments for durable medical equipment, prosthetics,
orthotics, and supplies provided to hospice beneficiaries.\10\ These
reports highlight vulnerabilities in the Medicare hospice
[[Page 49142]]
benefit and describe fragmented care that beneficiaries may experience
under a hospice election.
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\8\ Medicare Improperly Paid Acute-Care Hospitals an Estimated
$190 Million Over 5 Years for Outpatient Services Provided to
Hospice Enrollees (A-09-23-03024). November 12, 2024. https://oig.hhs.gov/documents/audit/10055/A-09-23-03024.pdf.
\9\ Medicare Payments of $6.6 Billion to Nonhospice Providers
Over 10 Years for Items and Services Provided to Hospice
Beneficiaries Suggest the Need for Increased Oversight (A-09-20-
03015). February 14, 2022. https://oig.hhs.gov/documents/audit/9604/A-09-20-03015-Complete%20Report.pdf.
\10\ Medicare Improperly Paid Suppliers an Estimated $117
Million Over 4 Years for Durable Medical Equipment, Prosthetics,
Orthotics, and Supplies Provided to Hospice Beneficiaries (A-09-20-
03026). November 16, 2021. https://oig.hhs.gov/documents/audit/9609/A-09-20-03026-Complete%20Report.pdf.
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In the FY 2022 Hospice Wage Index and Payment Rate Update proposed
rule (86 FR 42528), we requested feedback from interested parties as to
whether the hospice election statement addendum has changed the way
hospices make care decisions and how the addendum is used to prompt
discussions with beneficiaries and non-hospice providers to promote the
care needs of hospice beneficiaries. The responses revealed that the FY
2020 addendum provisions (84 FR 38484) enhanced communication during
the admission process and prompted hospice providers to ensure patients
are receiving all services necessary for symptom management regardless
of the primary diagnosis. However, the feedback also included reports
that very few patients and their representatives had requested the
addendum and that the burden of implementation of the addendum
outweighed the benefit.
In the FY 2024 Hospice Wage Index and Payment Rate Update proposed
rule (88 FR 20022), we solicited feedback on how to work with hospice
providers to ensure Medicare beneficiaries and their families are aware
of coverage under the hospice benefit and how to enhance transparency.
Comments discussed in the FY 2024 Hospice Wage Index and Payment Rate
Update final rule (88 FR 51164) emphasized the critical need for CMS
education directed toward patients and families about transitioning
from curative to palliative interventions at the time of hospice
admission. Specifically, several commenters suggested that the hospice
election statement addendum (titled ``Patient Notification of Hospice
Non-Covered Items, Services, and Drugs'') should be provided to all
patients at the time of hospice election or as part of the care plan,
rather than only upon request. Commenters noted that hospice providers,
non-hospice providers, Medicare beneficiaries, and their families need
more information to understand coverage distinctions and that hospice
providers must share this information with patients at the time of, and
throughout, the hospice election.
Based on the FY 2022 feedback from interested parties indicating a
low volume of requests, the continued growth in non-hospice spending,
and the FY 2024 feedback from interested parties requesting mandatory
provision of the addendum at the time of election, we proposed
requiring that hospices provide the hospice election statement addendum
to all Medicare beneficiaries at the time of hospice election for
hospice elections beginning on or after October 1, 2026. We noted that
we would require hospices to furnish the addendum within the first 5
days of a hospice election (that is, within the first 5 days of the
effective date of the hospice election), and any updates to the
addendum within 3 days of changes to the plan of care that impact the
addendum determinations, in writing, to the individual (or
representative), and to make the addendum available for non-hospice
providers and Medicare contractors. We also noted that this proposal
would modify the current requirement at Sec. 418.24(b)(6), (c), and
(d), which establishes the addendum as a condition of payment only when
requested by beneficiaries, their representatives, non-hospice
providers, or Medicare contractors. As such, we proposed amending Sec.
418.24 to include the previously stated provisions related to making
the hospice addendum mandatory at the time of hospice election. We
reminded readers that hospices may provide the election statement
addendum in any format that best suits their needs, provided that the
content requirements at Sec. 418.24(b) and (c) are met (85 FR 47070);
however, if desired, a model hospice election statement addendum is
available in the Downloads section on the Hospice web page at https://www.cms.gov/medicare/payment/fee-for-service-providers/hospice.
As discussed in the FY 2020 Hospice Wage Index and Payment Rate
Update final rule (84 FR 38484), and again in section IV.B. of this
final rule, hospices are already required to make determinations about
related versus unrelated conditions, items, and services as part of
their comprehensive assessment and care planning processes. The
mandatory addendum requirement would formalize and standardize the
communication of these existing determinations to beneficiaries and
their representatives. A one-time form development burden estimate was
completed in FY 2020 Hospice Wage Index and Rate Update final rule (84
FR 38484). This burden estimate also accounted for the approximate
amount of time it would take a hospice to complete the addendum and
used the assumption that hospices would provide the addendum to all
beneficiaries; it reflected an estimated $11.2 million in total costs
to hospice providers. Despite this estimated cost to providers, the FY
2020 Hospice Wage Index and Rate Update final rule (84 FR 38484)
reflected an estimated $5.2 million net reduction in total provider
(that is, hospice provider and non-hospice provider) burden. This net
reduction resulted from an estimated $16.5 million burden reduction for
non-hospice providers due to reduced time spent by non-hospice
providers, including institutional, non-institutional and pharmacy
providers on obtaining needed information for treatment decisions and
accurate claims submissions.
While the burden estimates completed in FY 2020 (84 FR 38484)
already assumed that hospices would provide the addendum to all
beneficiaries, we have updated the burden estimates, in section IV.C.
of this final rule, with more recent data that reflects the increase in
hospices and hospice elections on the estimated hospice burden
associated with the mandatory election statement addendum for all
elections; this includes a burden reduction estimate for non-hospice
providers. The FY 2027 burden estimates continue to demonstrate a
significant total overall burden reduction for non-hospice providers of
$40.6 million, as well as a net hospice provider burden reduction of
$20.8 million.
We received a significant number of public comments on our proposal
to make the hospice election statement addendum mandatory for all
hospice elections, not just upon request. The comments also addressed
non-hospice spending and burden estimates associated with the election
statement addendum. Commenters included hospices, non-hospice
providers, national and State industry associations, individual
commenters, as well as the Medicare Payment Advisory Commission
(MedPAC). The following is a summary of the comments we received and
our responses.
Non-Hospice Spending
Comment: Commenters specifically raised skin substitutes as a
primary driver of non-hospice spending growth and argued that hospices
should not be held accountable for spending they do not control. Some
of the commenters raised concerns for beneficiaries' safety as they
received reports of instances where wound care companies refuse to stop
treating hospice enrolled beneficiaries when the hospice has deemed the
wound care related to the terminal condition or related conditions.
Other commenters raised concerns about hospices frequently classifying
wound care inappropriately as unrelated to the terminal illness,
specifically for patients with non-cancer diagnoses, such as those with
dementia and cardiac disease, who are at higher risk for pressure
ulcers; these
[[Page 49143]]
commenters questioned whether hospices are performing adequate skin
integrity assessments and properly addressing wound care needs.
Similarly, several commenters reported that hospices frequently
classify chronic conditions such as diabetes, arthritis, gout,
hypothyroidism, glaucoma, and macular degeneration as unrelated to the
terminal illness. Commenters noted their belief that these situations
are significantly contributing to the growth of Part D non-hospice
spending. Additionally, one commenter argued that some non-hospice
spending is a result of the patient choosing to continue taking
medications that they noted promote their well-being, despite hospice
education indicating that the medication may no longer be medically
necessary. A few commenters also raised concerns related to modifier
codes and claims processing workflow concerns that may be contributing
to Medicare non-hospice spending such as CC07 and GW modifier bypass
mechanisms process claims without semantic interrogation, GV and GW
modifier claims incorrectly included in non-hospice spending data,
reports that hospices unaware when GV modifiers are attached to non-
hospice bills, and a report that 22 percent of claims have no modifier.
MedPAC, patient advocacy groups, and a non-hospice provider group
submitted comments that were contrary to those of hospice providers and
hospice agency advocacy groups, citing concerns regarding duplicate
billing and confusion, wasted resources, communication burden,
inability to reach hospice providers, as well as unexpected and
increased out-of-pocket costs and cost-sharing obligations to
beneficiaries. MedPAC specifically expressed significant concern about
non-hospice spending for hospice enrollees and reported that they have
been tracking non-hospice spending and identified several reasons for
their concerns including duplicate Medicare payments, increased
beneficiary cost-sharing, and fragmented care that may be increasing
confusion not only for beneficiaries, but also for their families,
hospices, other providers, pharmacies, and Part D plans.
Response: We acknowledge the commenters' concerns regarding skin
substitute fraud as a significant driver of non-hospice spending
growth. As documented in this year's proposed rule (91 FR 17338),
carrier claims for pressure ulcers increased by nearly 4,000 percent
from FY 2020 to FY 2024; these claims are largely associated with skin
substitutes. As previously stated in the FY 2027 Hospice Wage Index and
Rate Update proposed rule (91 FR 17338), we have already taken
significant action to address this issue, such as implementing major
changes to skin substitute payments, and transitioning most products to
a single national unified rate, addressing overutilization concerns,
and requiring prior authorization for skin allograft HCPCS codes.
However, we disagree with the characterization that skin substitute
spending during hospice elections is solely attributable to non-hospice
provider fraud outside the hospice's control. Pressure ulcers are a
foreseeable and preventable complication of terminal illness,
particularly for bedbound and chairbound patients with neurological,
cardiac, and respiratory diagnoses, which collectively account for
approximately 75 percent of documented non-hospice spending.
Additionally, we continue to reiterate that the hospice is required to
provide virtually all care needed by the beneficiary who has elected
hospice for the management of their terminal illness and any related
conditions; any items, services, or drugs that the hospice deems
unrelated to the terminal illness or related conditions should be
exceptional, rare, and unusual (Sec. 418.24(b)(3), 48 FR 56010, 84 FR
38509, 85 FR 47091, 86 FR 19713, 88 FR 20032, 89 FR 64202). As such,
pressure ulcers that develop as a direct consequence of the patient's
deconditioned state, due to their terminal illness or related
conditions, would not be exceptional or unusual and, therefore, are
expected to be covered under the hospice benefit. As stated in the
proposed rule and by some commenters, the high incidence of wound care
needs in hospice patients raises concerns as to why hospices are not
providing needed wound care for pressure ulcers, given that these
wounds generally develop from unrelieved pressure as a result of
limited mobility in terminally ill individuals who are chairbound or
bedbound, a condition directly related to the terminal illness or
related conditions that should be covered under the hospice benefit.
We are also concerned that the dramatic increase in non-hospice
skin substitute billing suggests that some hospices may not be
conducting adequate skin integrity assessments at admission and on an
ongoing basis, properly documenting the relationship between skin
breakdown and the terminal illness or related conditions, including
wound care in the plan of care, or covering wound care under the
hospice benefit as required under Sec. Sec. 418.54 and 418.56. The
proposed mandatory election statement addendum directly addresses this
concern by requiring hospices to document and disclose all items,
services, and drugs determined to be unrelated to the terminal illness
or related conditions, thereby improving hospice accountability and
transparency for the hospice beneficiary. The addendum could also be
used by MACs and for program integrity efforts to combat some
inappropriate wound care company practices described by some
commenters.
Additionally, we acknowledge the clinical complexity of coverage
determinations for chronic conditions in patients whose terminal
illness or related conditions have a documented metabolic,
cardiovascular, or musculoskeletal component. Coverage determinations
must be made on an individualized, patient-specific basis. When a
patient's terminal illness or related conditions includes a condition
with a documented metabolic component, medications needed to treat
these chronic conditions are likely related to the terminal illness or
related conditions and should be covered under the hospice benefit.
Similarly, when a chronic condition has a documented inflammatory or
vascular component that interacts with the terminal illness or related
conditions, medications to manage these chronic conditions may also be
related. Some commenters reported that hospices frequently classify
diabetes and arthritis medications as unrelated to the terminal
condition without individualized clinical justification; this scenario
is inconsistent with our long-standing position that virtually all care
needed by the terminally ill beneficiary should be covered by the
hospice (48 FR 56010). The proposed mandatory addendum supports
appropriate coverage determinations for these conditions by requiring
documentation and disclosure of all unrelated determinations, creating
a record that MACs can review to assess whether classifications are
clinically defensible, and increasing hospices' accountability,
transparency, and beneficiary (or representatives) education regarding
why specific items, services, or drugs have been determined to be
unrelated to the terminal illness or related conditions.
Finally, we appreciate commenters' remarks and suggestions related
to modifier codes and claims processing workflow concerns that may be
contributing to Medicare non-hospice spending. We routinely provide
information on various aspects of the Medicare program, including
educational materials on Medicare
[[Page 49144]]
benefits and claims processing, MLN[supreg] matters articles,\11\ and
the Medicare claims processing manual \12\ to provide education and
resources to physicians, other providers of services, and MACs. We also
appreciate comments that support our efforts to address non-hospice
spending, and we agree with commenters' concerns related to
beneficiaries' rights, program integrity concerns, duplicate billing,
wasted resources, communication burden, inappropriate cost-sharing, and
lack of transparency. We will continue to consider the concerns raised
and the suggestions provided for future rulemaking, as appropriate.
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\11\ https://www.cms.gov/medicare/payment/prospective-payment-systems/hospice/hospice-educational-resources.
\12\ https://www.cms.gov/regulations-and-guidance/guidance/manuals/downloads/clm104c11.pdf.
---------------------------------------------------------------------------
We received public comments on our proposed burden estimates. The
following is a summary of the comments we received and our responses.
Burden Estimates
Comment: Several commenters noted their belief that CMS' burden
estimate is outdated, underestimated, or otherwise flawed; reasons
reported included current operational realities, staffing shortages,
the complexity of individualized addendum preparation, a limited number
of beneficiaries currently requesting the addendum and that only a
small percentage of admissions have a completed addendum, electronic
health record configuration costs, reports of the proposed timeframe
requirements creating unintended consequences. In addition, a commenter
reported that the addendum process and contents were not changed making
the proposal for a mandatory election statement less feasible; another
commenter reported that busy hospice agencies will experience a higher
administrative burden and that the requirement will be cumbersome.
Additionally, one commenter reported that 55 percent of hospice
beneficiaries did not have any non-hospice spending in FY 2024, arguing
that this statistic supports retaining the current request-only
addendum framework. Conversely, a non-hospice provider group supported
the projected net burden reduction for non-hospice providers,
specifically noting that the amount of time needed to communicate with
hospice providers would reduce significantly.
Response: We appreciate the detailed operational feedback provided
by commenters regarding the burden estimate for the proposed mandatory
election statement addendum. We acknowledge commenters' concerns and
take seriously the operational challenges identified by hospice
providers, hospice advocacy groups, and electronic health record
vendors. As commenters acknowledge, the burden estimate completed in
the FY 2020 Hospice Wage Index and Rate Update final rule (84 FR 38534)
was calculated under the assumption that hospices would provide the
addendum to all beneficiaries, not just those who request it. This
means that the FY 2020 estimate already accounted for the full volume
of addenda that would be required under the mandatory proposal. A one-
time addendum form development cost was accounted for in the FY 2020
burden estimates and despite the cost for initial form development,
there was still a $5.2 million net reduction in total provider burden.
The FY 2027 updated burden estimates continue to demonstrate a
significant total overall burden reduction to hospice and non-hospice
providers. Furthermore, addenda completed for beneficiaries with no
non-covered items would require significantly less time for the hospice
to complete given that the form would not have a documented list of
items, services or drugs or the hospice could simply acknowledge on the
form that there are no unrelated items, services or drugs, thereby
reducing the overall estimated burden.
We appreciate commenters reiterating that the FY 2020 burden
estimate assumed hospices would provide the addendum to all
beneficiaries, and that some individuals do not have any non-covered
items; specifically, one commenter reported that 55 percent of hospice
beneficiaries did not have any non-hospice spending in FY 2024. Given
this information, the burden for those hospice beneficiaries would be
lower than what the burden estimate accounts for, as addenda with no
non-covered items would be significantly faster to complete and explain
to the patient. The addendum for a patient with no non-covered items
is, by definition, a straightforward document and the clinical
determination that all care is related to the terminal illness or
related conditions is one that hospices are already required to make as
part of the comprehensive assessment and care planning process under
the hospice CoPs.
We reiterate that it is a longstanding CoP (Sec. 418.56(e)(5))
that hospices are already required to develop and maintain a system of
communication and integration among all providers furnishing care to
the terminally ill patient. This includes the ongoing sharing of
information with other non-hospice healthcare providers and suppliers
furnishing services unrelated to the terminal illness and related
conditions, which is necessary to ensure coordination of services and
to meet the patient, family, and caregiver needs. The mandatory
addendum requirement does not create a new substantive clinical
obligation; rather, it formalizes and standardizes the communication of
existing determinations that hospices are already required to make. As
hospices are already required to review, determine, and document
information on unrelated conditions per the hospice regulations and
CoPs, the incremental burden of converting those determinations into a
written, beneficiary-facing addendum is appropriately characterized in
the burden estimates. The numerous comments received regarding concerns
about the burden associated with communication obligations that have
been longstanding CoP requirements, in conjunction with the drastic
increases in non-hospice spending, reports from electronic health
record vendors that there are common unrelated items identified for
hospice beneficiaries, and the significant opposition from hospice
providers to providing addenda to hospice beneficiaries, raise concern
as to why hospice providers are opposed to providing written
documentation of information that is already required to be
communicated among all providers, hospice beneficiaries, and their
families, and why hospice providers are stating that more time is
needed to complete the addendum when hospices should be providing
virtually all of the care that is needed for terminally ill
beneficiaries (48 FR 56010, Sec. 418.24(b)(3)), which includes not
only the beneficiary's terminal diagnosis but also any related
conditions.
We received numerous public comments on our proposal to require the
election statement addendum be provided at the time of hospice
election. A summary of the comments and our responses to those comments
are as follows:
Election Statement Addendum
Comment: Many commenters stated that the proposed mandatory
statement addendum would not address the root causes of non-hospice
spending, report concerns that the addendum may confuse patients, claim
denial concerns, and requested explanations as to why a mandatory
election statement addendum is necessary and appropriate first step,
even if it does not fully resolve the growth in non-hospice spending.
We also received comments
[[Page 49145]]
that supported the proposed mandatory addendum for its potential to
save Medicare program expenditures, reduce beneficiary cost-sharing,
support more complete corrective architecture to help at-risk elderly
populations, and to decrease non-hospice spending. A commenter
requested evidence that the proposed mandatory addendum would
meaningfully reduce non-hospice spending. Another commenter reported
that 55 percent of hospice beneficiaries in FY 2024 had no non-hospice
spending and argued that this is a reason to retain the request-only
addendum framework. A commenter reported that only 1 in 5 patients
requests the addendum, and another commenter reported that 5 to 7
percent of admissions have completed addenda. Some commenters raised
concerns regarding the proposed mandatory addendum's impact on claims
processing, specifically claims denials. A commenter also recommended
that we develop national examples for items, services, and drugs that
are commonly identified as related to the terminal illness and related
conditions, such as inhalers, oxygen, wound care supplies, durable
medical equipment, anticoagulants, diabetic supplies, and medications
used for both disease treatment and symptom relief, to assist hospices
in making and documenting individualized relatedness determinations.
Response: We acknowledge commenters request for evidence that the
proposed mandatory addendum would meaningfully reduce non-hospice
spending and concerns that the proposed mandatory hospice election
statement addendum does not, by itself, resolve all root causes of non-
hospice spending growth. We agree that non-hospice spending is a
multifactorial problem with various contributing causes. As referenced
in this year's proposed rule (91 FR 17338), audits completed by the OIG
found that Medicare improperly paid for services provided to hospice
enrollees, specifically, one audit noted that in situations where
Medicare improperly paid for services, neither the beneficiary nor the
non-hospice provider had access to the addendum; the OIG identified
that having an addendum available would have assisted non-hospice
providers in appropriately billing Medicare for hospice beneficiary
services.\13\
---------------------------------------------------------------------------
\13\ Medicare Improperly Paid Acute-Care Hospitals an Estimated
$190 Million Over 5 Years for Outpatient Services Provided to
Hospice Enrollees (A-09-23-03024). November 12, 2024. https://oig.hhs.gov/documents/audit/10055/A-09-23-03024.pdf.
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However, we disagree with the characterization that the proposed
mandatory election statement addendum is unnecessary or ineffective.
The data documented in the proposed rule, along with comments received
in support of requiring the addendum to be provided at the time of
hospice election, raises serious and specific concerns about whether
hospices are fulfilling their existing statutory and regulatory
obligations; obligations that exist independent of the proposed
addendum requirement. Specifically, the data shared in this year's
proposed rule (91 FR 17338) identify that non-hospice spending is
heavily concentrated in the same diagnostic categories that define the
most common hospice terminal diagnoses. We are particularly concerned
by the data showing that items, services, and drugs that are
foundational to hospice care, and are not exceptional or unusual, such
as, but not limited to, wheelchairs, hospital beds, oxygen supplies,
wound care supplies, incontinence supplies, catheters, needles, and
common palliative drugs, are being billed outside the hospice benefit
for patients whose terminal diagnoses directly and foreseeably give
rise to the need for these items. Our concerns are further amplified by
anecdotal reports from beneficiary representatives who are inquiring
whether there is a limit to basic supplies that are provided by the
hospice, such as adult diapers, as hospices are not providing or
limiting the amount supplied to beneficiaries. These anecdotal reports,
combined with the support of patient advocacy groups and other
commenters who have been requesting increased transparency since before
the implementation of the addendum in FY 2020, and the ongoing support
and requests for a mandatory requirement underscores the need to
empower beneficiaries to make informed decisions about their care
during their most vulnerable time in life. Commenters who support the
proposal to make the addendum mandatory report that beneficiaries are
not fully aware of the services available to them under the hospice
benefit and that some hospices may not be fulfilling their coverage
obligations.
In response to a comment that reported 55 percent of hospice
beneficiaries in FY 2024 had no non-hospice spending and argued that
this is a reason to retain the request-only addendum framework, this
statistic underscores the importance of ensuring that the 45 percent of
beneficiaries who do incur non-hospice spending, and who are most
likely to be experiencing coverage gaps, inappropriate cost-shifting,
or inadequate care coordination, have timely, written access to the
hospice's coverage determinations.
In response to the comments that only 1 in 5 patients request the
addendum and that 5 to 7 percent of admissions have completed addenda,
we note that the exceptionally low reported request rate raise concerns
about whether hospices are fulfilling their required obligations and
properly informing beneficiaries of their rights and coverage
determinations. In addition, comments from patient advocacy groups,
non-hospice provider groups, and other commenters supporting the
availability of the addendum for all hospice beneficiaries and
anecdotal reports of non-hospice providers reporting inability to
obtain the addendum when requested raise the same concerns. We remind
readers that section 1812(d)(1) of the Act requires beneficiaries to
affirmatively elect hospice care, and that the hospice election
involves a significant waiver of Medicare rights, as beneficiaries
waive all rights to Medicare payment for services related to the
treatment of their terminal illness and related conditions. Hospice
beneficiaries are among the most vulnerable Medicare population, and
they, along with their entire care team, need to have access to
complete information about what services will and will not be covered
by the hospice at the time of election to ensure that the beneficiary
is truly informed when providing consent to elect the hospice benefit,
which waives significant Medicare rights.
Covered entities must furnish appropriate auxiliary aids and
services when necessary to ensure effective communication with
individuals with disabilities. They also must take reasonable steps to
provide meaningful access to individuals who are limited English
proficient including the provision of interpreter and translation
services free of charge when needed.
Additionally, as described in detail in this year's proposed rule
(91 FR 17338), we identified that non-hospice spending growth increased
160 percent from FY 2020 to FY 2024, despite the addendum's
availability upon request. The growth in non-hospice spending also
means that beneficiaries' out of pocket costs have also significantly
increased. Therefore, CMS believes that beneficiaries should not have
to expend additional effort to request coverage information that
Sec. Sec. 418.52(c)(7)-(8) set out as a patient right, and that CMS
believes should be proactively provided to every beneficiary, in
language the
[[Page 49146]]
individual (or representative) can understand, at the time of hospice
election.
We are particularly concerned by reports that non-hospice providers
have at times been unable to obtain the addendum when requested, a
circumstance that raises serious questions about how difficult it must
be for beneficiaries, who are terminally ill and often cognitively or
physically impaired, to obtain the same information. If non-hospice
providers, who are healthcare professionals with knowledge of the
system, cannot reliably obtain the addendum upon request, it is
unreasonable to expect that beneficiaries and their families,
navigating one of the most difficult periods of their lives, can do so.
Additionally, we remind readers that under Sec. 418.24(b)(3),
hospices are required to inform beneficiaries that virtually all care
needed by the beneficiary who has elected hospice will be provided by
the hospice, and that services unrelated to the terminal illness and
related conditions are exceptional and unusual. Further, under Sec.
418.24(b)(6), hospices are already required to notify beneficiaries of
their right to receive the addendum if there are conditions, items,
services, or drugs the hospice has determined to be unrelated. A
written document outlining the hospices' determination of what is
covered and what is not covered under the hospice election would assist
beneficiaries in adequately advocating for themselves, help them
understand coverage determinations, and facilitate coordination with
non-hospice providers.
In response to commenters that raised concerns regarding the
proposed mandatory addendum's impact on claims processing, specifically
claims denials, we note that the proposed mandatory addendum serves a
distinct and complementary function to the claims processing workflow.
Without a universally documented and delivered addendum, there is no
reliable record against which a MAC could evaluate whether a non-
hospice claim is consistent with the hospice's documented relatedness
determinations. The mandatory addendum and the claims process are not
competing alternatives, but rather sequential steps in a more complete
program integrity process.
Finally, we acknowledge the commenter's recommendation that we
develop national examples for items, services, and drugs. Due to each
beneficiary having a unique, patient-specific situation, we are unable
to enumerate all situations where specific items, services, or drugs
would be applicable or provide standardized mechanisms to confirm
relatedness. However, we continue to remind readers that it would be
unusual and exceptional to see services provided outside of hospice for
those individuals who are approaching the end of life, and we have
reiterated since 1983 that virtually all care needed by the terminally
ill beneficiary would be provided by the hospice (48 FR 56010, 84 FR
38509, 85 FR 47091, 86 FR 19713, 88 FR 20032, 89 FR 64202). CMS will
continue to consider commenters' requests and update sub-regulatory
guidance as appropriate to assist hospices in making individualized,
patient-specific determinations of whether items, services, and drugs
are related or unrelated to the terminal illness and related
conditions.
Comment: Some hospice provider advocacy groups and hospices raised
concerns that requiring that the election statement addendum which was
described by a hospice as a highly technical instead of clear and
compassionate communication, be provided to every beneficiary at
admission risks overwhelming the beneficiary, creating confusion,
distress and administrative burden during a vulnerable time.
Additionally, several commenters stated that they disagree with
requiring beneficiaries to acknowledge and sign the information on the
addendum arguing that this requirement is neither appropriate nor
effective. A hospice provider group also reported concerns with having
to update the addendum, especially as beneficiaries approach the end-
of-life and their needs quickly evolve. Similarly, one hospice provider
group commented that hospice beneficiaries want to focus on end of life
needs rather than distinguishing between hospice and non-hospice
coverage. A patient advocacy group and a non-hospice provider group
submitted comments that were contrary to those of hospice providers and
hospice advocacy groups. The patient advocacy group stated that the
addendum is needed for beneficiaries who are facing financial hardship
and need to be aware of situations involving a risk of cost-shifting to
the patient or family, as well as alternative sources of coverage,
appeal rights, and awareness that an addendum can be requested, and
requested that the addendum be written in plain language with clear
explanations that beneficiaries and their families, especially those
with limited health literacy or language barriers, can understand. The
non-hospice provider group reported that the mandatory addendum would
save health care providers time, increase beneficiary and family
awareness of coverage determinations, and reduce overall Medicare
spending. There was also mixed support from various commenters who
identified benefits of the addendum; however, these comments also
include overarching themes of administrative burden concerns and
challenges with beneficiaries understanding the addendum as the
addendum is often described as not being written in plain language.
Response: We acknowledge the overwhelming opposing views from
hospice provider groups, the support from hospice beneficiary advocates
and non-hospice providers, as well as the mixed support from various
commenters. The significant number of comments from hospice providers
and hospice advocacy groups raising concerns about beneficiary burden
and administrative complexity is particularly notable given that the
addendum has been a condition of payment since FY 2020 and hospices
have been required to provide it upon request since that time; if
hospices had been routinely fulfilling this existing obligation, the
administrative processes and workflows necessary to support a mandatory
requirement should already be largely in place. Combined with reports
from non-hospice providers and patient advocacy groups describing
difficulty or inability to obtain the addendum when requested, this
raises serious concerns that some hospices may be avoiding providing
the addendum altogether. We are deeply concerned that the overwhelming
volume of comments citing administrative burden, combined with hospice
providers potentially making unilateral determinations that
beneficiaries do not want the addendum or may feel overwhelmed by
coverage information, may reflect a pattern of non-compliance with
existing disclosure obligations rather than a genuine patient-centered
concern. We note that the decision of whether a beneficiary wants or
needs coverage information is not the hospice's determination to make,
it is the beneficiary's right to receive.
We are further concerned by reports from all parties, including
hospice providers, non-hospice providers, and patient advocates,
describing the addendum as complex and not written in plain language.
We remind all hospices that the addendum is explicitly required under
Sec. 418.24(c)(6) to include ``a written clinical
[[Page 49147]]
explanation, in language the individual (or representative) can
understand, as to why the identified conditions, items, services, and
drugs are considered unrelated to the terminal illness and related
conditions.'' The requirement that the addendum be written in language
that the beneficiary can understand is not a suggestion, it is a
regulatory requirement. If hospices are producing addenda that are not
written in language the individual (or representative) can understand,
as required in the regulations at Sec. 418.24(c)(6), this represents a
failure of compliance with the existing regulatory standard, not a
reason to oppose the mandatory requirement.
Comment: Several commenters requested a standardized plain-language
addendum template and implementation guidance. In addition, several
commenters specifically requested that CMS remove the signature
requirement, stating that obtaining signatures is logistically
difficult, time-consuming, and particularly challenging when
beneficiaries are cognitively impaired, in rapid decline, or when
representatives are unreachable or unavailable to sign. Some commenters
requested specific guidance and clarification on how to document the
addendum when all items are covered. A few commenters argued that
generating a blank form would be cumbersome, clinically meaningless,
and an unnecessary administrative burden. One commenter reported that
55 percent of hospice beneficiaries in FY 2024 had no non-hospice
spending, arguing that this statistic supports limiting the mandatory
addendum requirement to only those beneficiaries with identified non-
covered items, services, or drugs. Additionally, a commenter reported
that electronic health records have the capability to pre-populate
common unrelated items based on terminal diagnosis and prompt the IDG
to review and confirm but would still require clinical judgment.
Response: We acknowledge commenters' requests for a standardized,
plain-language addendum template and appreciate the feedback regarding
the operational complexity of developing and implementing the addendum.
However, as stated in the FY 2020 Hospice Wage Index and Rate Update
final rule (84 FR 38484), CMS believes that hospices are best
positioned to develop an addendum, with the required content elements,
that meets their patients' needs and aligns with their current
admission processes and other business procedures. We remind readers
that hospices were expected to develop their own addenda in a format
that suits them to best meet the requirements and patient needs while
minimizing operational burden by the (delayed) implementation date of
FY 2021. Additionally, the burden estimate completed in the FY 2020
Hospice Wage Index and Rate Update final rule (84 FR 38484) already
accounted for the assumption that hospices would provide the addendum
to all beneficiaries. As such, hospices have been on notice since FY
2020 that their processes and systems should be capable of producing an
addendum for every beneficiary, in writing, if requested. The
transition to a mandatory framework in the FY 2027 Hospice Wage Index
and Rate Update proposed rule formalizes what the FY 2020 burden
estimate already assumed and hospices have had since FY 2020 to develop
the necessary workflows, documentation processes, and, where
applicable, electronic health record configurations to support this
requirement. Additionally, we acknowledge the electronic health records
capabilities and appreciate that the commenter identified that clinical
judgement is required to make final determinations; however, the
commenter identifying that there are common unrelated items that are
populated raise concerns as to why hospices are not covering items when
they are commonly noted which supports that the commonly reported items
are likely contributing factors to the beneficiaries' terminal
prognosis that requires hospice care. We remind readers that the
terminal diagnosis should not be the only diagnosis considered as the
hospice benefit should cover all items, services, and drugs related to
not only the terminal illness but also any related conditions; items,
services, and drugs not covered under the hospice benefit should be
exceptional, rare, and unusual as articulated since the hospice benefit
was implemented in 1983 (48 FR 56008, 56010, December 16, 1983).
The signature concerns raised by commenters are already addressed
in our existing regulations; hospices are not required to obtain a
signature in every circumstance, and the inability to obtain a
signature does not result in a claim denial provided the hospice
documents the reason it was unable to obtain the signature. The
signature is an acknowledgment of receipt, not an agreement with the
hospice's determinations.
We appreciate commenters' concerns surrounding documentation of
addenda for beneficiaries with no non-covered items and disagree with
the characterization that an addendum reflecting no non-covered items
is clinically meaningless or an unnecessary administrative burden.
Since the addendum is required to include a list of the individual's
conditions present on hospice admission (or upon plan of care update)
and the associated items, services, and drugs not covered by the
hospice, if there are no such items, the list would reflect that
determination. An addendum documenting that all items, services, and
drugs have been determined to be related to the terminal illness and
related conditions is not a blank form; it is a meaningful clinical
record that confirms the hospice conducted the required individualized
assessment and determined that all care is covered under the hospice
benefit. This documentation serves an important program integrity
function, as it creates an auditable record of the hospice's coverage
determination that beneficiaries and their representatives, MACs, and
other oversight entities can reference and utilize when advocating for
beneficiary rights or evaluating the appropriateness of non-hospice
claims submitted for a specific hospice beneficiary. As stated in the
FY 2020 Hospice Wage Index and Rate Update final rule (84 FR 38484), we
continue to believe that once a beneficiary elects the hospice benefit,
most items, services, and drugs would be for the palliation and
management of the terminal illness and related conditions and that
there would be few things that would be unrelated; for this reason, we
believe most addenda, not just 55 percent as reported by one commenter,
should reflect the determination that there are no items, services, or
drugs that are not covered by the hospice. This further supports that
the burden of completing an addendum for beneficiaries with no non-
covered items would be minimal, as the determination is straightforward
and the documentation brief. The argument that such an addendum is
cumbersome or clinically meaningless is inconsistent with the hospice's
existing obligation to conduct and document individualized coverage
determinations for every beneficiary as part of the comprehensive
assessment and care planning process CoPs at Sec. Sec. 418.54 and
418.56; the addendum simply formalizes and communicates that
determination in writing, in language the individual (or
representative) can understand, to the beneficiary.
We have already stated that the format of the addendum is not
standardized (84 FR 38484); the format should be presented in a way
that best suits the
[[Page 49148]]
hospice, while meeting the requirements and patient needs, and
minimizing operational burden. Similarly, there is no standardized
method to document that all services are covered by the hospice; if
there are no non-covered items, the addendum would reflect that
determination in plain language that the beneficiary or representative
understands. The proposed mandatory addendum would serve a very
meaningful purpose, strengthening program integrity efforts and
improving consistency, transparency, accessibility, and clarity for not
only hospice providers, but also non-hospice providers, MACs,
beneficiaries, and their families. This consistency could also improve
the workflow and decrease confusion for hospices, non-hospice
providers, and MACs, as the addendum would be always available in the
beneficiary's medical record.
Additionally, in response to comments in previous rules requesting
a template for the addendum, we developed a model hospice election
statement addendum to assist hospices in developing their own. As
stated in this year's proposed rule (91 FR 17338), there is no required
standardized form for the addendum; however, if desired, hospices can
use the model hospice election statement addendum that is available on
the hospice center web page.\14\ Additionally, while a written addendum
is required to be provided to the beneficiary, a supplemental copy via
an electronic delivery option can also be made available to the
beneficiary if the hospice agency chooses to include this option in
their workflow. We want to ensure that every beneficiary has access to
their coverage determinations and that access to these determinations
is not confusing or dependent on having and managing electronic
devices, unique applications, or other resources, such as a printer,
when beneficiaries are focusing on their end-of-life needs. Providing
beneficiaries and their families with an option for a supplemental
electronic copy could be beneficial; therefore, we appreciate and agree
with commenters' suggestions regarding ways to provide beneficiaries
with additional resources during their most vulnerable time in life.
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\14\ https://www.cms.gov/medicare/enrollment-renewal/providers-suppliers/hospice-center.
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Specifically, regarding signatures on the addendum, electronic or
written signatures are acceptable; however, a hospice cannot require an
electronic signature in lieu of a written signature if the beneficiary
or representative does not have access to the necessary resources or
the understanding required to complete the electronic method of
acknowledgement.
We will also consider comments provided when updating educational
materials including sub-regulatory guidance.
Comment: Many commenters requested that CMS delay implementation
for up to 18 months. Additionally, a few commenters requested that the
proposed mandatory addendum timeframe be extended; with requests
ranging from beyond 5 days and up to 15 days.
Response: We acknowledge the widespread requests for a delayed
implementation timeline and an extended requirement timeline to provide
beneficiaries with the proposed mandatory addendum. However, hospices
have had since FY 2020, when the addendum was initially finalized, to
implement the addendum requirements with the assumption that every
beneficiary could request an addendum. We remind readers we provided a
delayed implementation date of FY 2021 in response to commenters'
requests in the FY 2020 Hospice Wage Index and Rate Update final rule
(84 FR 38484).
Similarly, in the FY 2020 Hospice Wage Index and Rate Update final
rule (84 FR 38484), we extended the timeframe for furnishing the
addendum from 48 hours to 5 days to align with the comprehensive
assessment requirements, in response to commenters' requests for
additional time and to align the addendum timeframe with existing
hospice admission regulations. Moreover, if a beneficiary dies prior to
the addendum being furnished, within the required timeframe, the
hospice is not required to complete the addendum; this circumstance
accounts for about 19 percent of hospice beneficiaries who may not be
provided with necessary information regarding their care and services
when they need it most. If the addendum timeframe was potentially
delayed until day 14 or 15, the proportion of beneficiaries who may not
be provided with necessary information regarding their care and
services would drastically increase to almost 34 percent and 35
percent, respectively.
For these reasons, we do not agree with extending the
implementation timeline as this would negate what the majority of
commenters requested in FY 2020, specifically, to align the addendum
implementation timeline with the comprehensive assessment requirement
timeline; changing the current requirements' implementation timeline
could be more detrimental to hospice beneficiaries as they could easily
be confused by their inability to receive an addendum in the timeframe
that current hospice beneficiaries have already been educated on; and
each additional day that the addendum is delayed significantly
increases the proportion of beneficiaries and their families that may
not have access to the transparency, patient protections, and
information regarding the risks of inappropriate cost-sharing related
to items, services, and drugs when they need it most. Every beneficiary
should have timely, written access to the coverage information they are
already entitled to under existing regulations and the appropriate
resources to advocate for themselves and question inappropriate
coverage determinations, and assurance that hospices are fulfilling
their existing obligation to provide virtually all care needed by the
beneficiary who has elected hospice and services unrelated to the
terminal illness and related conditions are exceptional, rare, and
unusual (Sec. 418.24(b)(3)).
Final Decision: After considering the public comments received, we
are finalizing as proposed our proposal to make the election statement
addendum mandatory for all hospice elections, not just upon request.
D. Clarifying Regulation Text Changes
1. Discharge From Hospice Care
In the FY 2025 Hospice Wage Index and Rate Update final rule (89 FR
64202), we finalized conforming text changes to align the medical
director CoP and the hospice payment requirements. Specifically, we
amended Sec. 418.102(b) by adding the physician member of the hospice
interdisciplinary group (IDG), as defined in Sec. 418.56(a)(1)(i), as
an individual who may provide the initial certification of terminal
illness. We also amended the medical director CoP in Sec. 418.102(c)
to include the medical director, or physician designee, as defined at
Sec. 418.3, if the medical director is not available, or physician
member of the IDG among the specified physicians who may review
clinical information as part of the recertification of the terminal
illness. Further, to align payment regulations regarding the
certification of the terminal illness and admission to hospice care
under Sec. Sec. 418.22 and 418.25 with the CoPs at Sec. 418.102, we
added ``physician designee (as defined in Sec. 418.3)'' to clarify
that when the medical director is not available, a physician designated
by the hospice, who is assuming the same responsibilities and
obligations as the medical director, may certify terminal
[[Page 49149]]
illness and determine admission to hospice care. We clarified that this
does not connote a change in policy; rather, we stated that we believe
aligning the language at Sec. Sec. 418.22(c) and 418.25 with the CoPs
at Sec. 418.102 allows for greater clarity and consistency between key
components of hospice regulations and policies (89 FR 64231).
In response to comments received on the proposed amendments to
Sec. Sec. 418.22 and 418.25, in the FY 2025 Hospice Wage Index and
Rate Update proposed rule (89 FR 64202) to add physician designee to
the hospice certification and admission payment policies, we again
agreed with commenters who stated that our regulations at Sec. 418.25
identifying which physicians can determine admission to hospice care
should be consistent with those at Sec. 418.22 identifying who can
provide the certification of terminal illness. Accordingly, in the FY
2026 Hospice Wage Index and Rate Update final rule (90 FR 37416), to
align with the updated payment and CoP regulations at Sec. Sec.
418.22(c)(1)(i) and 418.102(b), respectively, we finalized the addition
of ``the physician member of the hospice interdisciplinary group'' at
Sec. 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 stated that we believe
aligning the language at Sec. 418.25(a) and (b) with the language at
Sec. Sec. 418.102(b) and 418.22(c)(1)(i) would allow for greater
consistency between key components of hospice regulations and policies.
We noted that Sec. 418.26(b) requires that prior to discharging a
patient for any reason listed in Sec. 418.26, the hospice must obtain
a written physician's discharge order from the hospice medical
director. To align with the updated payment regulations at Sec. Sec.
418.22, 418.102(b), and 418.25(a) and (b) and to create greater
consistency between key components of hospice regulations and policies,
we proposed conforming additions to Sec. 418.26(b) to state the
hospice may also obtain the written physician's discharge order from
the physician designee, as defined at Sec. 418.3, or physician member
of IDG.
We received public comments on our proposal to make conforming
additions to Sec. 418.26(b) to state the hospice may also obtain the
written physician's discharge order from the physician designee, as
defined at Sec. 418.3, or physician member of IDG. A summary of the
comments and our responses to those comments are as follows:
Comment: All commenters supported this proposal, stating that they
would welcome the clarification that hospices may obtain written
physician discharge orders from a physician designee (as defined at
Sec. 418.3) or a physician member of the IDG. Commenters broadly noted
that this change would reflect current real-world practice, align with
other recent regulatory language changes, and would allow hospices to
complete discharge orders on a timelier basis. One commenter applauded
CMS' willingness to broaden authorizations and encouraged CMS to extend
similar flexibilities to qualified non-physician health professionals
such as physician assistants (PAs) where possible.
Response: We thank commenters for their support.
Final Decision: We are finalizing the proposed additions to Sec.
418.26(b) as proposed.
2. Face-to-Face Encounter
Section 6209(f)(1)(A) of the CAA, 2026 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 recertifying the patient's
eligibility for hospice, through December 31, 2027. Additionally,
section 6209(f)(1)(B) of the CAA, 2026 amended section
1814(a)(7)(D)(i)(II) of the Act to include a prohibition on the use of
telehealth to conduct the face-to-face encounter in the case of such an
encounter with an individual occurring on or after January 31, 2026, if
such individual is located in an area that is subject to a moratorium
on the enrollment of hospice programs under this title pursuant to
section 1866(j)(7) of the Act, if such individual is receiving hospice
care from a provider that is subject to enhanced oversight under this
title pursuant to section 1866(j)(3) of the Act, or if such encounter
is performed by a hospice physician or nurse practitioner who is not
enrolled under section 1866(j) of the Act and is not an opt-out
physician or practitioner. Section 6209(f)(2) of the CAA, 2026 amended
section 1814(a)(7)(D)(i)(II) of the Act to require (for face-to-face
encounters conducted via telehealth occurring on or after January 1,
2027) that hospice claims include one or more modifiers or codes (as
specified by the Secretary) to indicate that such encounter was
conducted via telehealth.
In accordance with section 6209(f) of the CAA, 2026, we proposed
amending Sec. 418.22(a)(4)(ii) to align with the provisions described
previously. The regulatory language would require the hospice to
collect data reflecting face-to-face encounters furnished using
telecommunications technology, which includes, at a minimum, the use of
audio and video equipment permitting two-way, real-time interactive
communication between the patient and the distant site hospice
physician or hospice nurse practitioner, and the hospice would do so by
reporting a G-code identifying that a face-to-face encounter was
furnished using such technology, that is, telehealth. We solicited
comments on these amendments and on the use of the new G-code
identifying face-to-face encounters furnished via telehealth. The
coding requirement will enable CMS to enforce the prohibition on the
use of telehealth to conduct the face-to-face encounter when the
circumstances described in section 6209(f)(1)(B) of the CAA, 2026 are
present because we will be able to identify those face-to-face
encounters conducted via telehealth. We will not require that in-person
face-to-face encounters for the purposes of recertification to be
collected on claims. In accordance with section 6209(h) of the CAA,
2026, we will issue further subregulatory guidance on implementation of
this provision, including the exclusion from this permissible use of
telehealth, via a Change Request (CR).
Comment: The majority of commenters support the proposal to amend
Sec. 418.22(a)(4)(ii) in alignment with the CAA 2026, agreeing that
the requirement to report a G-code identifying telehealth-conducted
face-to-face encounters would not be overly burdensome and is feasible
for most hospice providers. No commenters directly opposed the
proposal.
Response: We thank commenters for their support.
Comment: Some commenters raised significant clarification concerns,
including ambiguity around the scope of the telehealth prohibition
(nationwide vs. regional/State/county moratorium), the inability to
search nurse practitioner enrollment status in the Order and Referring
dataset, and the lack of face-to-face practitioner identification on
hospice claims, recommending CMS pause enforcement until an identifying
G-code is established and all interested parties have sufficient
implementation notice. Key suggestions include making telehealth
flexibilities for face-to-face encounters permanent (particularly for
rural and underserved providers), extending the flexibility to
physician assistants, and ensuring MACs and audit contractors refrain
from issuing claim denials during the interim period before full
implementation guidance is issued.
[[Page 49150]]
Response: The CAA, 2026 only temporarily extends the telehealth
flexibilities for face-to-face recertifications and therefore, we are
statutorily prohibited from making this provision permanent, nor does
it extend recertification to physician assistants at this time. In
addition, there is no need to delay enforcement as the G-code along
with its reporting guidance and instructions will be issued prior to
implementation of this requirement, which does not take effect until
January 1, 2027. Further, the use of the G-code is not intended to be
used to check provider identification or enrollment status. We note
that hospices that are already enrolled in Medicare can continue to
utilize telehealth to conduct recertification face-to-face encounters
and are not impacted by the home health and hospice nationwide
moratorium. We issued clarification regarding the home health and
hospice nationwide moratorium and its impact on the hospice face-to-
face telehealth flexibility, which can be found at https://www.cms.gov/files/document/hh-hospice-moratorium-faqs.pdf.
Final Decision: After considering the public comments received, we
are finalizing as proposed our proposal to amend Sec.
418.22(a)(4)(ii).
E. Requests for Information on Medicare Services and Payment Structure
1. Request for Information on Ways To Enhance the Provision of
Palliative Care Outside of Hospice Care: Current Coverage, Billing
Practices, and Opportunities for Improvement
Palliative care is often thought of in concert with hospice care;
however, it is not mutually exclusive to the end of life. Medicare
defines 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 (Sec. 418.3). The Medicare hospice benefit provides
comprehensive interdisciplinary palliative care once a patient is
certified as having a life expectancy of 6 months or fewer; however,
many palliative care patients are not yet ready or eligible for
hospice. Therefore, as palliative care is a method of care delivery
that is provided throughout the continuum of illness, it can be
furnished under various Medicare benefits prior to a beneficiary's
decision to elect hospice care. In particular, community-based
palliative care plays an essential role in improving the quality of
life for individuals living with serious illness. The home is an ideal
environment for individuals to receive palliative care services, as
remaining in the home during a serious illness may help alleviate
psychological and mental distress and allow for more intimate
caregiving to be provided by family members. Although Medicare does not
currently offer a dedicated palliative care benefit, because palliative
services are offered across existing Medicare programs, we solicited
public feedback regarding ways in which we can optimize current
coverage and billing practices under various outpatient or home-based
benefits to result in more cohesive, integrated, person-centered care
as beneficiaries approach hospice care. We stated that understanding
how Medicare providers currently support palliative care, how providers
bill for these services, and where gaps persist is critical to
strengthening community-based palliative care within today's regulatory
and payment structure.
Although Medicare covers many services that are core to palliative
care, coverage can be indirect. Most community palliative care services
fall under Medicare Part B, which reimburses for reasonable and
medically necessary outpatient care. Medicare Part B also supports
access to mental and behavioral health services, including counseling
provided by clinical social workers, and rehabilitation therapies such
as physical, occupational, and speech therapy aimed at reducing symptom
burden and maintaining function. Telehealth, expanded in recent years,
further enhances access to palliative expertise for homebound or
mobility-limited patients. Medicare Part B also covers certain medical
supplies and equipment needed for palliative care, such as oxygen and
wheelchairs.
While Medicare Part A primarily covers inpatient services, it does
provide limited outpatient-related support. Care delivered in hospital
outpatient departments may be covered, as well as home health services
for patients who are homebound and require skilled care. These
benefits, though not palliative-specific, can provide essential
nursing, social work, aide, and therapy support that aligns with
palliative goals.
Medicare Part D further contributes to outpatient palliative care
by covering prescription medications for symptom management, such as
analgesics, antiemetics, and anxiolytics.
Understanding Billing Practices and Delivering Palliative Care
Because Medicare does not recognize palliative care as a distinct
billable service, providers must rely on a variety of codes and benefit
categories. Physicians and advanced practice providers typically bill
evaluation and management (E/M) visits for outpatient or home-based
palliative encounters. Clinicians may provide symptom management,
chronic disease support, advance care planning (ACP), and behavioral
health care through standard E/M visits or specialized billing codes.
For example, ACP services are reimbursable through CPT codes 99497 and
99498, allowing providers to conduct structured discussions about
patient values, goals, and treatment preferences. Similarly, chronic
care management (CCM), complex CCM, principal care management (PCM),
and transitional care management (TCM) codes support ongoing
coordination of care, which is central to high-quality palliative care
for complex conditions. Code Z51.5 Encounter for Palliative Care can be
used; however, it does not specify what services this code encompasses.
These codes also may not reflect the time-intensive nature of holistic,
interdisciplinary palliative care. We requested comments regarding ways
in which community providers bill for palliative services, which CPT or
HCPCS codes they rely on, and what barriers they face in using ACP,
care management, or telehealth codes. Specifically:
Do the E/M codes, care management codes, and ACP codes
represent the majority of the billing codes providers use to capture
community palliative care services?
What services are typically provided when Z51.5 is billed?
Are there challenges in meeting documentation requirements
or integrating non-billable team members, such as social workers,
chaplains, or nurses who are crucial to palliative care delivery?
Is there uncertainty about compliance requirements or
concern that billing for palliative care will result in claims denials?
What non-medical services, such as caregiver training or
spiritual care, would most benefit patients if reimbursed? And what
enhancements to existing benefits (not requiring legislation) could
strengthen palliative care? These might include expanding social worker
billing privileges or creating standardized codes or definitions for
serious-illness care.
[[Page 49151]]
Understanding Program and Beneficiary Needs
Gathering information from providers and beneficiaries is essential
to identify how outpatient or community palliative care is currently
provided under Medicare and where gaps remain. In addition to providing
feedback on billing practices, we requested interested parties offer
insight into broader systemic challenges, staffing limitations, claim
denials, and palliative services they provide but cannot bill for under
Medicare's current structure. Specifically:
What aspects of palliative care are financially
unsustainable for providers?
What documentation requirements do providers typically
use, or suggest using, to identify the provision of palliative care?
Do providers commonly refer patients for home health
services when a patient needs palliative care concurrently with
curative or life-sustaining care?
What services do providers typically offer patients who
are not eligible or ready to elect hospice care but require palliative
services?
The Path Forward
Medicare's current structure provides several pathways for
delivering community palliative care; however, these programs may seem
siloed, making it difficult for patients to understand how palliative
services are provided outside of the hospice benefit. We stated that
interested party feedback is essential for guiding CMS toward policies
that expand access to high-quality community palliative care without
requiring legislative reform or the creation of an entirely new
benefit. By gathering detailed input from those who deliver and manage
palliative care services, we can better understand how to strengthen
community palliative care under existing benefits. In addition to the
questions previously listed, we solicited input on any additional
targeted enhancements within current benefits, such as expanding
billable services, simplifying documentation, standardizing
definitions, or increasing beneficiary education that could
meaningfully expand access to palliative care services. As the
population ages and the prevalence of serious illness grows, refining
how Medicare supports community palliative care, prior to hospice care,
is both a practical necessity and an opportunity to enhance the well-
being of millions of beneficiaries.
We received public comments on our request for information on ways
to enhance the provision of palliative care outside of hospice care. A
summary of the comments and our responses to those comments are as
follows:
Comment: Commenters broadly support CMS' interest in expanding
community-based palliative care, citing strong evidence that palliative
care reduces avoidable hospitalizations, improves symptom management,
and facilitates more timely and appropriate hospice elections. Many
commenters stated that existing evaluation and management, care
management, and advanced care planning codes do not capture the full
interdisciplinary scope of palliative care, particularly services
provided by nurses, aides, social workers, chaplains, and community
health workers, leaving many programs financially unsustainable.
Commenters suggested creating a new comprehensive palliative care
assessment and care planning G-code; establishing palliative care as a
defined Medicare benefit with a bundled or capitated payment model;
adding billing codes for nursing case management, social work, and
community health workers; making telehealth for palliative care
permanent; incorporating social risk and financial hardship factors
into any future model design; creating a ``palliative track'' within
the Home Health Quality Reporting Program (HHQRP); and developing a
formal `Serious Illness Transition Program' to bridge the gap between
serious illness diagnosis and hospice election. Several commenters
stated that the home health benefit is utilized for palliative care and
appreciated the acknowledgment in the proposed rule. Some commenters
supported retaining the existing coding structure, stating that
existing codes (mainly the chronic care management, advanced care
planning, and evaluation and management codes) are sufficient to
capture palliative care services, and adding additional codes would
likely introduce unnecessary complexity. Another commenter recommended
implementing a modifier that designates services as palliative care and
suggested that the modifier should also differentiate between inpatient
and home-based services.
Response: We appreciate the feedback and will take all suggestions
into consideration to the extent possible.
2. Request for Information Regarding Construction of a Hospice Specific
Wage Index
The hospice wage index is used to adjust payment rates for hospices
under the Medicare program to reflect local differences in area wage
levels, based on the location where services are furnished, as
determined by the Secretary, in accordance with sections 1814(i)(1)(A)
and 1814(i)(2)(D) of the Act. As described in the FY 1998 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. Additionally, our regulations at Sec. 418.306(c)
require that each labor market 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.
However, CMS has received numerous comments regarding the use of
the Inpatient Prospective Payment System (IPPS) wage index to adjust
for the geographic variation of wages for hospice staff through the
annual hospice rulemaking. Specifically, commenters have stated that
the IPPS wage index uses data from four FYs prior to the current
payment year and that the time lag may underestimate the changes in
relative wages for hospice staff. Commenters have also stated that
hospitals may have different labor costs and occupational mix than
hospices and have requested that, like inpatient hospitals, hospices be
able to reclassify their wage index in some instances. Additionally, we
have received feedback opposing our proposals to adopt the new revised
OMB CBSA delineations and the wage index values assigned to their
geographic areas, wage index values assigned to rural areas, and
adjusting wage index differences between high wage index and low wage
index hospices in adjacent local areas through exceptions.
We have also received recommendations from MedPAC to include all-
employer, occupation-level wage data to establish different weights for
setting-specific occupational labor mix to capture labor costs faced by
all employers of the related occupations. In 2007 and 2022, MedPAC
proposed using the BLS for wage data and to construct new wage indexes
to more accurately reflect local area differences in labor costs
between and within MSAs and statewide rural areas.15 16
Following the MedPAC analysis, a CMS-commissioned study issued in 2009
concluded that despite some limitations, BLS wage information is more
accurate and reliable than the
[[Page 49152]]
current source of wage information.\17\ In a separate commissioned
study from the Institute of Medicine (IOM), the committee examined ways
to improve the accuracy of data sources and methods used for making the
adjustments to payment to reflect geographic variation in labor
prices.\18\
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\15\ MedPAC, Report to Congress, 2007, p.124-125.
\16\ MedPAC, Report to Congress, 2023, p.386.
\17\ MaCurdy et al., Revision of Medicare Wage Index.
\18\ Committee on Geographic Adjustment Factors in Medicare
Payment; Board on Health Care Services; Institute of Medicine;
Edmunds M, Sloan FA, editors. Geographic Adjustment in Medicare
Payment: Phase I: Improving Accuracy, Second Edition. Washington
(DC): National Academies Press (US); 2011 Jun 1. Available at
https://www.ncbi.nlm.nih.gov/books/NBK190070/ doi: 10.17226/13138.
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In response to these numerous, ongoing comments from interested
parties regarding the hospice wage index, we have examined possible
alternatives to using the IPPS wage index for geographically adjusting
hospice payments. We note that other non-hospital settings have also
investigated alternatives to the IPPS wage index, as hospital cost
reports may not be representative of the occupations relative to the
post-acute care settings. Most recently, in the CY 2025 End Stage Renal
Disease (ESRD) PPS final rule (89 FR 89116), we finalized changes to
the ESRD PPS wage index using BLS Occupational Employment and Wage
Statistics (OEWS) data. Furthermore, in the 2023 Report to Congress,
MedPAC recommended using county-level wage data from the BLS with an
occupational mix to construct a wage index that is more specific to the
payment setting.\19\
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\19\ MedPAC, Report to Congress, 2023, p.386.
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CMS hosted a Technical Expert Panel (TEP) on September 10, 2025,
inviting 14 participants representing various interested parties
including industry associations, academia, and hospices, to seek
feedback on a proposed alternative to the current hospice wage index.
We also provided a technical report for the TEP panelists that gave
additional details regarding the potential methodology that could be
used to construct a new hospice specific wage index and preliminary
results for how specific hospices would be impacted. The TEP summary
report, which summarizes the discussion and recommendations of the TEP,
as well as the TEP technical report, which provides a detailed
examination of the discussed alternative approaches, may be found at
https://www.cms.gov/medicare/payment/prospective-payment-systems/hospice/hospice-educational-resources. In the proposed rule, we sought
feedback on how the BLS OEWS data, and other public data can be used to
construct a hospice specific wage index.\20\ CMS requests input to
understand the advantages and limitations of the suggested approach in
using BLS data and cost reports to support the construction of a
hospice specific wage index. In addition, as discussed elsewhere in the
Federal Register, we note that we are also considering the potential
use of alternative data sources in other payment systems including the
Inpatient Rehabilitation Facilities (IRF) PPS and Skilled Nursing
Facilities (SNF) PPS. We sought feedback on the unique considerations
applicable to hospices that should inform how CMS considers the
potential use of alternative data sources. We sought comment on the
following suggested components of how a new hospice specific wage index
would be constructed:
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\20\ https://www.bls.gov/oes/.
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(1) Source data for determining area wages: When considering a
source for wage data, we believe it is important that the data used is
public to promote transparency, such that relevant interested parties
would have access to the data and can conduct their own analyses. The
IPPS hospital wage index is updated annually, based on a survey of
wages and wage-related costs of short-term, acute care hospitals, as
required by section 1886(d)(3)(E) of the Act. The final FY 2026 hospice
wage index is 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 (using FY 2022 cost report
data).
The BLS OEWS data provides MSA-level wage data for health
professionals, including clinical and administrative office staff, that
is updated annually using a pooled sample of six semi-annual
surveys.\21\ BLS OEWS data includes information on the wages that
employers paid to their employees. It does not include self-employed
contract labor wages or benefits paid to employees.
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\21\ https://www.bls.gov/oes/current/oes_tec.htm.
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The hospice specific wage index would also include the use of
freestanding hospice cost reports, claims, and Census Bureau population
data. We would only be using freestanding hospice cost reports to
ensure cost accuracy, as facility-based reports may share costs with
the larger facility. Claims data is used to retrieve the total minutes
of care delivered by the seven different disciplines of care (physical
therapy, occupational therapy, speech language pathology, skilled
nursing, medical social service, and home health aide) that are
currently billed as visits on the claims form. Census Bureau population
data is used to calculate weighted averages when aggregating wage data.
(2) Occupational mix weights: In the IOM study, the committee
recommended using a fixed national set of weights based on the hours of
each occupation employed nationwide. When considering the construction
of a hospice specific wage index, we need to better understand how
hospices currently employ staff and determine what would be appropriate
for using as fixed national weights. We want to gather feedback on
relevant occupational categories to include in this calculation, which
may include billable occupations, such as aides, registered nurses,
licensed practical nurses, nurse practitioners, nurse assistants,
medical social workers, physicians, occupational therapists, physical
therapists, and speech pathologists. Since the full-time equivalent
hours for the occupations are not reported in hospice cost reports, we
would need to estimate using the most complete claims data available.
The occupational mix determines how much weight each occupation's
wage receives in the overall calculation of the wage level for each
geographic area and the national level. Our suggested approach uses
expenses reported in hospice cost reports and minutes reported in
hospice claims data for 10 occupational categories (hospice aide,
registered nurses, nursing administration, physician services, licensed
practical nurse, licensed vocational nurse, medical social services,
nurse practitioner, physical therapy, occupational therapy, and speech
language pathology) shown in Table 11. Three occupations are available
on cost reports but not claims (Nursing Administration, Physician
Services, Nurse Practitioner). Those three occupations accounted for
22.05 percent of costs on the cost report and their share of the
occupational mix was set to this percentage. The remaining 77.95
percent of the occupational mix was allocated among the other seven
occupations based on their respective shares of minutes from claims
data. We sought input on this suggested approach, as well as any other
potential methodologies.
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[GRAPHIC] [TIFF OMITTED] TR03AU26.035
(3) Hospice Specific Wage Index Construction: Similar to as
described in the CY 2025 ESRD PPS final rule (89 FR 89104), we could
construct a wage index for each CBSA by calculating an hourly wage for
each CBSA (reflecting a weighted average of the occupational mix) and
dividing by the aggregate hourly wage (reflecting a weighted average of
the occupational mix).The specific computational steps used to
calculate the new ESRD PPS wage index were provided in the
supplementary document Addendum C of the CY 2025 ESRD PPS proposed
rule.\22\ In the following sections we present a potential methodology
for constructing a potential hospice specific wage index:
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\22\ https://www.cms.gov/files/document/addendum-c-cms-1805-p-esrd-pps-proposed-wage-index-construction-methodology.pdf.
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Step 1: Estimate the Hospice National Average Occupational Mix
We would use the combination of the share of costs from cost
reports and share of minutes from claims to develop a hospice national
occupational mix (as shown in Table 11).
Step 2: Calculate Occupation-Specific, CBSA-Level Wage Estimates
To determine how hourly wages in an area compare with national wage
levels for specific occupations, we would calculate a CBSA-level wage
estimate for each occupation included in the hospice labor mix. The
hourly wages provided in areas available in the BLS data do not exactly
align with the CBSAs and State-wide rural areas for which wage index
values are calculated, therefore we would first map the BLS data to
counties. We then impute missing wage estimates at the county-level.
Wages for an area could be missing due to small sample size or data
quality issues. Finally, we would aggregate county-level hourly wage
estimates to the CBSA level using a county population-weighted average
of the county-level wage estimates.
Step 3: Calculate Cross-Occupation, CBSA-Level Wage Estimates
For each CBSA, we calculate an average wage by multiplying the
occupation-specific, CBSA-level wages by the hospice national
occupational mix percentage (that is, registered nurse hourly wage
times the 28.46 percent in Table 11) and then summing the wages for all
occupations in Table 11. This is the numerator for the CBSA's hospice
specific wage index value before adjustments.
Step 4: Calculate the Cross-Occupation, National Wage Estimate
We would calculate the cross-occupation, national wage estimate,
which is the denominator of the hospice specific wage index value
before adjustments. We calculate a national weighted average of each
occupation-specific wage estimate by weighting the occupation-specific
wage estimate in each CBSA by the population in a CBSA. We would then
weight the national averages by the share in the national occupational
mix to obtain a cross-occupation, national wage estimate.
Step 5: Calculating Initial Hospice Wage Index Values
The initial hospice wage index value for each CBSA would be
calculated by dividing the cross-occupation, CBSA-level wage estimate
from Step 3 by the cross-occupation, national wage estimate from Step
4.
Step 6: Adjustments to the Initial Wage Index Values
We would recalibrate to ensure center of distribution equals the
center of the legacy wage index. We would then apply the hospice floor
and 5 percent cap on decreases to calculate the final hospice wage
index.
We sought feedback on any steps that may need to be modified to be
applicable to the data available for hospices and related occupations.
(4) Labor market areas: The final FY 2026 hospice wage index does
not consider any geographic reclassification of hospitals, including
those in accordance with section 1886(d)(8)(B) or 1886(d)(10) of the
Act. The final FY 2026 hospice wage index includes a 5 percent cap on
wage index decreases. The appropriate wage index value would be applied
to the labor portion of the hospice payment rate based on the
geographic area in which the beneficiary resides when receiving RHC or
CHC. The appropriate wage index value is applied to the labor portion
of the payment rate based on the geographic location of the facility
for beneficiaries receiving GIP or IRC. MedPAC recommended applying the
wage index to a blend of MSA/statewide rural and counties as geographic
delineation to set wage index values and smooth wage index differences
greater than 10 percent between adjacent areas.\23\ Currently, county
information is not
[[Page 49154]]
available to examine geographic variation of hospice labor costs.
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\23\ https://www.medpac.gov/wp-content/uploads/2022/07/Wage-index-March-2023-SEC.pdf.
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For the purpose of constructing a hospice specific wage index, we
sought feedback on the level of geographic delineation of labor market
area to be applied to a new wage index and considerations for when
neighboring areas have large differences in wage index values. In past
rules, we have stated that 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. While we continue to hold this belief, we
sought feedback from interested parties on what other delineation would
be appropriate and what data sources could be used to support the
changes.
(5) Transition policy: We sought feedback on what an appropriate
transition policy may be when shifting from a wage index using hospital
IPPS wage data to a hospice specific wage index using BLS wage data.
We appreciate hospices and national organizations sharing their
support and commitment to offering meaningful comments for
consideration. In addition to the methodological questions, we
solicited public comment on the following questions:
What data sources and changes should be considered to
develop a wage index specific for hospices?
What are the advantages of the suggested approach to
constructing wage indexes, relative to the current system?
What are the main limitations of the suggested approach?
Can any limitations be addressed through changes to the
data sources mentioned, such as cost reports and claims?
What occupations should be included in the occupational
mix to estimate geographic differences in expected prices to employ
healthcare staff in hospices?
What additional labor categories, if any, should be added
to cost reports to support the revision of the hospice wage index? Are
any other changes to the cost reports required for this purpose?
How should we appropriately compare wages between
geographic areas that match the way hospice services are delivered?
Should we maintain the use of CBSA, or consider other geographic
delineation, such as county, census area, etc.?
How should we reduce large differences in wage index
values for adjacent geographic areas?
How should we consider policy to support the transition
between the current hospice wage index approach to a new one?
We received several public comments on our request for information
regarding the development of a hospice specific wage index. A summary
of the comments and our responses to those comments are as follows:
Comment: In general, commenters expressed support in the difference
in labor used in hospitals relative to hospices and interest in the
creation of a wage index that captures the occupations used in
hospices. Many commenters were concerned about whether the methodology
would be appropriate to capture local geographic variation with the
national occupational mix and wages. Several commenters raised concerns
such as transparency of the information used to reflect the hospice
labor mix, rural service areas and the non-billable work needed to
provide home-based care. Specific concerns about the preliminary
hospice occupational mix included opposition to the occupational mix
because occupations that are not tied directly to billable
reimbursement were excluded from the occupational mix, such as
chaplains. Some commenters recommended that CMS account for rural
travel, mileage, on-call coverage, provider-level impact modeling, and
delay in implementation to avoid abrupt geographic disruptions.
Response: We thank all the commenters for these comments and for
raising their concerns regarding the development of a hospice-specific
wage index. While we are not responding to specific comments in
response to the RFI in this final rule, we will take this feedback into
consideration as we continue to examine possible alternatives to using
the IPPS wage index for geographically adjusting hospice payments.
3. Request for Information Regarding Medical Aid in Dying (MAID)
The Assisted Suicide Funding Restriction Act of 1997 (Pub. L. 105-
12, April 30,1997) prohibits the use of Federal funds (through
Medicare, Medicaid, and other Federal programs) 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, sometimes
referred to as ``medical aid in dying'' (MAID).\24\ This law amended
section 1862(a) of the Act (exclusions from coverage and Medicare as
secondary payor) by adding a new paragraph (16) to the list of programs
for which no payment may be made under Part A or Part B. CMS codified
the exclusion of assisted suicide from coverage in regulation at Sec.
411.15(q). This regulation clarifies that the prohibition does not
pertain to the withholding or withdrawing of medical treatment or care,
nutrition or hydration or to the provision of a service for the purpose
of alleviating pain or discomfort, even if the use may increase the
risk of death, so long as the service is not furnished for the specific
purpose of causing death. MAID is not legal under Federal law; however,
it is considered an end-of-life option for terminally ill adults to
self-administer life-ending medication prescribed by a physician in
certain States where it is allowed under State law. It is currently
legal in 11 States and Washington, DC, and under these existing State
laws, strict criteria require a prognosis of 6 months or less to live.
More States are passing laws allowing MAID, creating new challenges for
hospices and other providers that participate in Federal health
programs on how to navigate relevant State and Federal laws.
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\24\ CMS notes that entities must also comply with Section 1553
of the Affordable Care Act. Section 1553 prohibits the Federal
Government, and any State or local government or health care
provider that receives Federal financial assistance under the ACA,
or any health plan created under the ACA from discriminating against
an individual or health care entity on the basis that the individual
or entity does not provide any health care item or service for
assisted suicide, euthanasia, or mercy killing. Section 1553
clarifies it does not apply to withholding or withdrawing medical
treatment or medical care, nutrition or hydration, abortion, or use
of item or service to alleviate pain or discomfort withholding or
withdrawing of medical treatment or care, nutrition or hydration or
to the provision of a service for the purpose of alleviating pain or
discomfort, even if the use may increase the risk of death, so long
as the service is not furnished for the specific purpose of causing
or assisting in causing, death, for any reason. CMS also notes that
covered entities violate 42 U.S.C. 14406 if they interpret 42 U.S.C.
1395cc(f) or 1396a(w) to require covered entities or their employees
``to inform or counsel any individual regarding any right to obtain
an item or service furnished for the purpose of causing, or the
purpose of assisting in causing, the death of the individual, such
as by assisted suicide, euthanasia, or mercy killing; or to apply to
or to affect any requirement with respect to a portion of an advance
directive that directs the purposeful causing of, or the purposeful
assisting in causing, the death of any individual, such as by
assisted suicide, euthanasia, or mercy killing.'' 42 U.S.C. 14406.
The Office for Civil Rights investigates complaints related
conscience statutes such as Section 1553,42 U.S.C. 14406, or
religious nondiscrimination provisions. See https://www.hhs.gov/conscience/your-protections-against-discrimination-based-on-conscience-and-religion/index.html.
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Because of State requirements (where MAID is allowed under State
law) that a patient be terminally ill, we requested
[[Page 49155]]
information in the proposed rule from hospice providers and other
interested parties regarding issues that may arise when a Medicare
hospice patient requests MAID. In particular we asked:
What information do hospice providers give to these
patients and how often is there overlap when a patient pursues MAID? In
other words, do hospices generally continue to provide clinical care
while a patient seeks qualification for MAID and do patients generally
remain on service until death?
Conversely, do hospices encourage patients to revoke their
election if they choose to utilize MAID?
Is there confusion amongst hospices regarding visits or
other comfort measures that can be provided during this process,
especially on the day of death?
Do hospices have written policies regarding caring for
patients using MAID? We are especially interested in understanding what
hospices do with any unused lethal medications prescribed for MAID.
We also reiterated that no Medicare funds, including hospice
payments, may be used to facilitate MAID, including physician
consultation services, prescribing or dispensing of medications used
for the purpose of causing death, or assistance with the ingestion of
such medications. As such, we requested information on any additional
CMS oversight mechanisms that should be in place to safeguard the use
of Federal funds for the provision of MAID items and services. We
requested additional information regarding hospices' experience with
patients choosing to utilize MAID, with the expectation that hospice
providers and staff are adhering to Federal law.
We received public comments on our request for information
regarding State MAID laws and the provision of hospice care. A summary
of the comments and our responses to those comments are as follows:
Comment: A few commenters, while acknowledging funds for MAID are
federally prohibited, urged CMS to consider that integrating MAID into
comprehensive hospice care is in the best interest of terminally ill
patients. These commenters stated patients often must revoke hospice to
pursue MAID and in doing so lose access to continuity of care, pain
management, and emotional support. A few commenters (who identified
themselves as hospice providers) stated that most hospices continue to
provide hospice care to patients who choose MAID until the day of
death, while still respecting the restrictions outlined in the Assisted
Suicide Funding Restriction Act of 1997. These commenters noted that,
in States where MAID laws exist, patients should have the right to
receive hospice care regardless of their decision to seek MAID, and
that hospices have very clearly outlined policies (including for unused
medication) in place for these patients in order to adhere to Federal
law. These commenters also noted that hospices do not encourage
revocation of hospice care when patients express an interest in MAID.
Overwhelmingly, commenters opposed any potential CMS policy that
would integrate MAID into Medicare-funded hospice care, primarily
citing the Assisted Suicide Funding Restriction Act, ethical concerns
rooted in the Hippocratic tradition, risks to vulnerable populations,
and the importance of using different terminology (``assisted
suicide,'' rather than MAID). Several physician commenters also raised
concerns about billing fraud and the need for stronger CMS oversight,
such as service audits. Another commenter stated that accreditation
requirements should clearly outline how the hospice agency complies
with Federal statutes on funding in those States where assisted suicide
is allowed.
Response: We thank all commenters for their comments and would like
to note that this request for information was in no way intended to
precede a proposal or to indicate that we are considering the
integration of MAID into hospice care. Our intent was to gain a better
understanding of the landscape around hospice care and MAID to
determine whether more oversight is required to safeguard the use of
Federal funds from the provision of MAID items and services.
F. Updates for the Hospice Quality Reporting Program (HQRP)
1. Background and Statutory Authority
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 Outcomes and
Patient Evaluation (HOPE) administrative data, and Consumer Assessment
of Healthcare Providers and Systems (CAHPS[supreg]), 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 (Sec. 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 provided for that FY.
In the FY 2024 Hospice final rule (88 FR 51164), we codified the
application of the 4-percentage point payment reduction for failing to
meet hospice quality reporting requirements and set completeness
thresholds at Sec. 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[supreg] 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[supreg] 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
[[Page 49156]]
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 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 Sec. 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 Sec. 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 would 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 would 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/meaningful-measures-initiative.
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 Sec. 418.312(b)(2), which
requires hospices to provide administrative data, including claims-
based measures, as part of the HQRP requirements for Sec. 418.306(b).
In that same final rule, we provided CAHPS Hospice Survey updates. 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. The FY 2026 Hospice Wage Index final rule provided
updates on the HOPE instrument and public reporting.
Table 12 shows the current quality measures in effect for the FY
2027 HQRP, which were updated and finalized in the FY 2025 Hospice Wage
Index and Payment Rate Update final rule.
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2. Updates Regarding the HOPE Measures
The HOPE tool was developed as the new patient data collection 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 implemented on
October 1, 2025. 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).
As finalized in the FY 2025 Hospice Wage Index final rule (89 FR
64202), public reporting of the HOPE quality measures would be
implemented no earlier than FY 2028. CMS still expects to begin public
reporting in November 2027, but this may change based on the quality
and reportability of the data as determined by the CMS analysis of CY
2026 data, which would begin in CY 2027.
To meet the assessment timeliness threshold under the Annual
Payment Update (APU), hospices must achieve a timely submission rate of
90 percent or higher for FY2027. This means that 90 percent of all HIS
and/or HOPE assessments must be submitted to, and accepted by, CMS
within 30 days of the patient's admission or discharge date. For HIS
assessments, the reporting period is based on the submission of HIS
admission or discharge assessments between January 1, 2025, and
September 30, 2025. HOPE assessments began submission on October 1,
2025; therefore, the reporting period is based on the submission of the
HOPE admission, discharge, and/or HOPE Update Visit (HUV) records
between October 1, 2025, and December 31, 2025.
Due to the newness of the HOPE tool along with the migration to the
iQIES platform, CMS has granted a waiver to all HOPE records dated
October 1, 2025, through December 31, 2025, and as a result, all HOPE
records with a target date in 2025 will be considered timely.
[[Page 49158]]
CMS continues to 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.
Available trainings can be found on the HQRP Training and Education
Library web page at https://www.cms.gov/medicare/quality/hospice/hqrp-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 received several public comments on the updates regarding the
HOPE measures. The following is a summary of the comments we received
and our responses.
Comment: Commenters generally supported CMS' transition to the HOPE
tool and appreciate the temporary timeliness waiver for 2025
assessments, viewing it as a necessary accommodation during early
implementation. Generally, interested parties emphasized that hospices
continue to face major operational challenges, including vendor
readiness, iQIES transition issues, workflow redesign, staff training
needs, and existing workforce shortages. Many commenters recommend
phased implementation, expanded technical assistance, clearer guidance,
hardship or reconsideration pathways, and continued flexibility so
compliance expectations remain realistic and do not divert resources
from patient care. Several commenters also requested that CMS ensure
HOPE measures are clinically meaningful and actionable, including
consideration of telehealth flexibility for reassessments and stronger
attention to psychosocial, spiritual, and access-to-care dimensions.
Response: We appreciate the input on the implementation of the HOPE
tool, which began October 1, 2025. We understand some providers still
face challenges in implementing the HOPE tool and transitioning to
iQIES; however, we believe the timeliness waiver finalized in this rule
for all 2025 HOPE records will mitigate challenges and the transition
to iQIES. When considering future updates to the HOPE tool, we will
take these comments into consideration regarding implementation. We
have also reiterated in this final rule, where providers can seek
resources regarding the HOPE tool.
3. Adding an Icon for Hospices on Medicare.gov Compare Tool To Indicate
Failure To Meet Reporting Requirements
Since the creation of the Medicare.gov Compare Tool (https://www.medicare.gov/care-compare/) in 2020, CMS has made improvements to
the information available to consumers to drive quality improvement
among care settings. Due to the unique challenge of caring for patients
in their last days of life, the HQRP has very few publicly reported
measures compared to other care settings. Therefore, this lack of
information in comparison can make it more challenging for consumers to
differentiate between hospices when searching for end-of-life care. To
help provide additional information and context to consumers, while
also serving to highlight non-compliant hospices, we proposed to add an
icon identifying hospice facilities, on the Medicare.gov Compare Tool,
that have failed to meet reporting requirements for the HQRP.
We stated that the proposed icon will identify hospices failing to
submit any data or submitting less than the required 90 percent of HOPE
submissions within 30 days of the target dates for HOPE admission,
HUVs, and discharge within a year period. Despite the APU penalty
increase from 2 percent to 4 percent in FY 2024, we have not observed a
significant improvement in the number of hospices meeting the QRP
reporting requirements. In FY 2023, prior to the APU percentage
increase to 4 percent, 20.07 percent of hospices were found to be non-
compliant with the HIS reporting requirements. In FY 2024, the first
year of the 4 percent APU penalty, 22.06 percent of hospices were found
to be non-compliant. In FY 2025, the percentage of non-compliant
hospices increased to 23.53 percent and in FY 2026 the percentage of
non-compliant hospices was 20.37 percent. The consistent lack of data
for approximately one-fifth of hospices limits the ability of CMS to
accurately measure the quality of care provided by hospices and limits
the amount of data available to a consumer. We proposed to add an icon
to provide an incentive for hospices to comply with the quality data
submission requirements, while also communicating to consumers that CMS
may not have enough data to adequately determine the quality of the
hospice.
We proposed to add the icon to the Medicare.gov Compare Tool no
earlier than FY 2028 (October 1, 2027) to align with the addition of
HOPE data to the Medicare.gov site, and the data will be based on CY
2026 APU submission data received from January 1, 2026, through
December 31, 2026. We stated that the proposed icon will be added or
removed on an annual basis to give hospices an ample amount of time to
review and correct data, and to comply with the 90 percent threshold.
We also stated that the proposed icon would be visible both on the
provider search page, as well as the individual hospice page on the
Compare Tool, similar to how the icons appear for nursing homes and
hospitals on the Medicare.gov site. Additional information will be
added to the Compare Tool to ensure consumers are aware of what the
icon means and how it should be taken into consideration. The aim of
the icon would be to notify consumers that the hospice did not report
sufficient data to CMS. Additional information about HQRP reporting
requirements and APU penalty can be found on the HQRP Requirements and
Best Practices website at https://www.cms.gov/medicare/quality/hospice/hqrp-requirements-and-best-practices. We sought public comment on our
proposal to include an icon for hospices on the Medicare.gov Compare
Tool to identify hospices that do not comply with the quality data
submission requirements for the APU.
We would like to clarify that the icon will only be based on HOPE
submissions (admissions, HUVs, and discharges) and will not include
CAHPS data submission compliance. As many hospices are exempt from
CAHPS due to size limitations, we made the decision to not include
CAHPS reporting compliance at this time. We would also like to make
clear that any hospice that is exempted from HQRP reporting
requirements due to extraordinary circumstances will not be identified
by the icon. This may also apply to new hospices that receive a CCN
letter late in the calendar year, whereby the hospice will be excluded
from the HQRP reporting requirements and APU penalty for the
corresponding FY. For more information, please see the HQRP Extension
and Exemption Requests webpage (https://www.cms.gov/medicare/quality/hospice/hqrp-extensions-and-exemption-requests).
We received 42 public comments on adding an icon for Hospices on
the Medicare.gov Compare Tool. The following is a summary of the
comments we received and our responses.
Comment: Several commenters supported the proposal to add an icon
to the Medicare.gov Compare Tool, noting the icon is an appropriate
measure to promote transparency and improve quality reporting
compliance. Among the commenters who supported
[[Page 49159]]
the icon, there were requests for CMS to ensure the icon is presented
in a consumer-friendly way so that it is easily understandable by
consumers. They noted the importance of using clear language indicating
that the presence of the icon is due to a failure to meet reporting
requirements and not due to quality of care or safety issues at the
hospice. There were also requests to clarify how CAHPS non-
participation would be included in the icon and how exemptions would be
applied with the icon.
Response: We appreciate all commenters input regarding the proposal
to add an icon to the Medicare.gov Compare Tool. In this final rule, we
clarify whether CAHPS reporting will be included in the icon, and
whether hospices that are excluded from the reporting requirements will
be identified with the icon. We understand that many commenters are
worried about how the icon will affect consumers searching for
hospices, not wanting patients and families to confuse failing
reporting requirements with the quality or safety of care provided by a
hospice. We will work to ensure that the icon will not cause undue
concern and will include a plain-language explanation of what the icon
means. We will also ensure nondiscrimination in the use of the icon and
will, on an ongoing basis, make reasonable efforts to identify uses of
patient care decision support tools that employ input variables or
factors that measure race, color, national origin, sex, age, or
disability.
Comment: Many commenters requested that CMS distinguish between two
groups, those that do not submit any data to the HQRP and those that do
submit data but fall below the 90 percent threshold in the 30 day
period. Their concern was for hospices that may make good faith
efforts, but experience technical or administrative challenges that may
affect their ability to submit timely data to meet requirements,
particularly for small and rural providers.
Response: We understand commenters' concerns around trying to
differentiate hospices that consistently submit no HOPE data and those
that submit data but fall short of the 90 percent minimum within the
30-day period. However, as the percentage of hospices not meeting HQRP
reporting requirements has remained consistent at around 20 percent
since FY 2023, we believe this indicates a consistent lack of
improvement and not that hospices are just falling short of the
guidelines every so often. We want to remind commenters that 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 and encourage hospices to
review the available trainings that can be found on the HQRP Training
and Education Library web page at https://www.cms.gov/medicare/quality/hospice/hqrp-training-and-education-library and the additional
resources that 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 plan to monitor the number of hospices that continue to
meet, and miss, the HOPE reporting requirements for the APU to
understand the effect the icon may have on HQRP compliance across all
hospices beginning in FY 2028.
Comment: Other commenters were strongly opposed to the addition of
an icon to the Compare Tool. A few commenters opposed the icon as they
feared it would mislead consumers, duplicate existing penalties, and
not distinguish between hospices that do not submit any data and those
that are not able to submit timely data due to technical issues. One
commenter thought that CMS should only use positive icons, such as
those used to designate Birthing-Friendly hospitals, rather than
negative icons. Lastly, one commenter believed the icon would be
insufficient and instead requested that CMS adopt stronger incentives
for participation.
Response: We recognize that many providers would prefer that CMS
not add an icon to the Compare Tool. As noted, we will work to ensure
the icon includes plain-language to ensure consumers understand the
meaning of the icon. Regarding the desire to only have positive icons
on the Compare Tool, we note that multiple provider settings use
negative icons, such as Nursing Homes which uses a negative icon to
note when a facility has been cited for abuse. We believe a negative
icon is a more effective incentive for hospices to meet HQRP
requirements rather than a positive icon.
We also appreciate that some commenters stated stronger enforcement
related actions are needed to increase the number of hospices meeting
the HQRP requirements. We may consider strong reporting-related
enforcement to increase transparency and accountability processes in
future rulemaking proposals.
Comment: A small handful of commenters also requested that CMS add
a confidential preview period, where providers who will have the icon
applied to their hospice have an opportunity to review their data and
request a reconsideration of the icon.
Response: Regarding a preview period, providers currently have a
reconsideration request process if a hospice is found to be non-
compliant with the HQRP requirements. Once a hospice receives a letter
of non-compliance, hospices have 30 days to submit a reconsideration
request to CMS. Given this existing mechanism, we will not provide an
additional review period for the icon. More information about the APU
reconsideration process can be found on the HQRP Reconsiderations
Request web page (https://www.cms.gov/medicare/quality/hospice/hqrp-reconsideration-requests).
After consideration of public comments, we are finalizing the icon
as proposed.
4. Future Measures Update
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) HVLDL; and (2) 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.
A Technical Expert Panel (TEP) convened in November 2024 provided
input on potential new HCI indicators. This report can be found at
https://www.cms.gov/files/document/fall-2024-hqrp-tep-summary-report508c.pdf. Based on this feedback, along with input from other
interested parties and additional analysis of the measure and its
indicators, CMS is currently considering making changes to the HCI
measure and plans to submit the updated measure to the 2026 MUC list.
The aim of re-specifying the HCI measure is to make it more useful and
important to providers and consumers.
We received several public comments on the future measure updates
regarding HCI. The following is a summary of the
[[Page 49160]]
comments we received and our responses.
Comment: Commenters generally supported CMS' effort to refine and
re-specify the HCI, viewing it as an opportunity to improve the
measure's validity, reliability, and usefulness for providers and
consumers. Several commenters agreed with the TEP's concerns that some
existing indicators--particularly those related to continuous home
care, general inpatient care, and certain burdensome transition and
live discharge measures--may not accurately reflect hospice quality and
can be affected by billing rules, patient preferences, or hospice case-
mix. Multiple commenters called for reducing redundancy, such as
removing measures that overlap with existing hospice visit indicators,
and for greater transparency around CMS' methodology, testing, and
impact analyses before finalizing changes. Commenters also emphasized
the need for risk adjustment and equity review to ensure the revised
HCI does not unfairly penalize small, rural, or clinically complex
hospices. Overall, commenters encouraged CMS to preserve meaningful
quality measurement while revising scoring and indicator design to
better distinguish true differences in hospice performance.
Response: We thank the commenters for their thoughts and input into
the re-specification of HCI. These comments will be taken into
consideration as CMS continues to further develop the revised HCI.
5. Form, Manner, and Timing of Quality Measure Data Submission
a. Statutory Penalty for Failure To Report
Section 1814(i)(5)(C) of the Act requires that each hospice submit
data to the Secretary on quality measures specified by the Secretary.
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 Sec.
418.306(b)(2) in accordance with this statutory change.
b. Compliance
HQRP Compliance requires understanding the different timeframes for
both HIS (or HOPE) 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) 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).\25\ 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.
---------------------------------------------------------------------------
\25\ CAHPS Hospice Survey, Participation Exemption for Size.
https://www.hospicecahpssurvey.org/en/participation-exemption-for-size/.
---------------------------------------------------------------------------
Submission requirements are codified at Sec. 418.312. Table 13
summarizes the three timeframes. It illustrates how the CY interacts
with the FY payments, covering the CY 2025 through CY 2028 data
collection periods and the corresponding APU application from FY 2027
through FY 2030. Please note that for the final quarter of CY 2025, CMS
has granted a waiver to all HOPE records dated October 1, 2025 through
December 31, 2025, and as a result, all HOPE records with a target date
in 2025 will be considered timely.
[GRAPHIC] [TIFF OMITTED] TR03AU26.037
As illustrated in Table 13, CY 2025 data submissions compliance
impacts the FY 2027 APU. CY 2026 data submissions compliance impacts
the FY 2028 APU. CY 2027 data submissions compliance impacts FY 2029
APU. This CY data submission impacting FY APU pattern follows for
subsequent years.
c. Submission of Data Requirements
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
[[Page 49161]]
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 applied the same submission requirements for HOPE admission,
discharge, and up to two hospice update visit (HUV) records. 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 14, HQRP Compliance Checklist, illustrates the APU and
timeliness threshold requirements.
[GRAPHIC] [TIFF OMITTED] TR03AU26.038
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/hospice.
Available trainings can be found on the HQRP Training and Education
Library web page at https://www.cms.gov/medicare/quality/hospice/hqrp-training-and-education-library and additional
[[Page 49162]]
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 Lists.
IV. Collection of Information Requirements
Under the Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. 3501-
3520, we are required to provide notice in the Federal Register and
solicit public comment before a collection of information requirement
is submitted to the Office of Management and Budget (OMB) for review
and approval. To fairly evaluate whether an information collection
should be approved by OMB, 44 U.S.C. 3506(c)(2)(A) requires that we
solicit comment on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our estimate of the information collection
burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
We solicited public comment on each of these issues for the
following sections of this document that contain information collection
requirements (ICRs):
A. Wage Data Used for the Mandatory Election Statement Addendum
To derive average (mean) costs, we are using May 2024 data from the
U.S. Bureau of Labor Statistics' (BLS's) National Industry-Specific
Occupational Employment and Wage Estimates for all wage estimates
(https://www.bls.gov/oes/special-requests/oesm24in4.zip). In this
regard, Table 15 outlines BLS's median hourly wage, our estimated cost
of fringe benefits and other overhead costs (calculated at 100 percent
of salary), and our adjusted hourly wage. Table 15 contains our wage
rate data for the mandatory Election Statement Addendum: ``Patient
Notification of Hospice Non-Covered Items, Services, and Drugs''
discussed in section III.B. of this final rule.
[GRAPHIC] [TIFF OMITTED] TR03AU26.039
B. Information Collection Requirements (ICRs)
1. Burden Related to Mandatory Election Statement Addendum: ``Patient
Notification of Hospice Non-Covered Items, Services, and Drugs''
[GRAPHIC] [TIFF OMITTED] TR03AU26.040
Section 1814(a)(7) of the Act requires that for the first 90-day
period of a hospice election, the individual's attending physician (as
defined in section 1861(dd)(3)(B) of the Act) (which for purposes of
this subparagraph does not include a nurse practitioner or a physician
assistant), and the medical director (or physician member of the
interdisciplinary group (IDG) described in section 1861(dd)(2)(B) of
the Act) of the hospice program providing (or arranging for) the care,
each certify in writing, at the beginning of the period, that the
[[Page 49163]]
individual is terminally ill (as defined in section 1861(dd)(3)(A) of
the Act). The regulations codified at Sec. Sec. 418.22 and 418.25
provide the requirements regarding the certification of terminal
illness and admission to hospice care. The hospice medical director
must specify that the individual's prognosis is for a life expectancy
of 6 months or less if the terminal illness runs its normal course.
Additionally, clinical information and other documentation that support
the medical prognosis must accompany the certification and must be
filed in the medical record with the written certification. The
physician must include a brief narrative explanation of the clinical
findings that supports a life expectancy of 6 months or less as part of
the certification. The aforementioned regulations also require that the
hospice medical director must consider both related and unrelated
conditions and current clinically relevant information when making the
decision to certify the individual as terminally ill. Likewise, the
hospice CoPs at Sec. 418.102(b) provide the requirements regarding the
certification responsibility of the hospice medical director or hospice
physician designee, which includes a review of the clinical
information, including both related and unrelated conditions, for each
hospice patient.
To receive hospice services under the Medicare hospice benefit,
eligible beneficiaries must elect to receive hospice care by completing
an election statement. By signing this election statement, the
individual acknowledges that he or she waives all rights to Medicare
payments for treatment related to the terminal illness and related
conditions. The required content of the hospice election statement is
outlined in part below and described in Sec. 418.24(b):
Identification of the particular hospice and of the
attending physician that will provide care to the individual. The
individual or representative must acknowledge that the identified
attending physician was his or her choice.
The individual's or representative's acknowledgement that
he or she has been given a full understanding of the palliative rather
than curative nature of hospice care, as it relates to the individual's
terminal illness.
Acknowledgement that certain Medicare services, as set
forth in Sec. 418.24(d), are waived by the election.
The effective date of the election, which may be the first
day of hospice care or a later date but may be no earlier than the date
of the election statement.
The signature of the individual or representative.
Once a beneficiary is certified as terminally ill and elects the
Medicare hospice benefit, the hospice conducts an initial assessment
visit in advance of furnishing care. During this visit, the hospice
must provide the patient or representative with verbal and written
notice of the patient's rights and responsibilities as required by the
CoPs at Sec. 418.52. Likewise, the regulations at Sec. 476.78 state
that providers must inform Medicare beneficiaries at the time of
admission, in writing, that the care for which Medicare payment is
sought will be subject to Quality Improvement Organization (QIO)
review.
The beneficiary needs identified in the initial and comprehensive
assessments drive the development and revisions of an individualized
written plan of care for each patient as required by the hospice CoPs
at Sec. 418.56. The hospice plan of care is established, reviewed, and
updated by the hospice IDG and must include all services necessary for
the palliation and management of the terminal illness and related
conditions. While needs unrelated to the terminal illness and related
conditions are not the responsibility of the hospice, the hospice may
choose to furnish services for those needs regardless of
responsibility. However, if a hospice does not choose to furnish
services for those needs unrelated to the terminal illness and related
conditions, the hospice is to communicate and coordinate with those
health care providers who are caring for the unrelated needs, as
described in Sec. 418.56(e). In accordance with the CoPs, the hospice
must document the services and treatments that address how they will
meet the patient and family-specific needs related to the terminal
illness and related conditions in the plan of care, and those needs
unrelated to the terminal illness and related conditions that are
present when the patient elects hospice should also be documented. This
documentation ensures that the hospice is aware of those unrelated
needs and who is addressing them. This documentation provides the
support for the hospices' financial responsibility for the hospice
services they will be providing. There is limited beneficiary financial
liability for hospice services upon election of the Medicare hospice
benefit. However, for any services received that are unrelated to the
terminal illness and related conditions, the beneficiary would incur
any associated copayments and coinsurance.
Hospices already are required to review, determine, and document
information on unrelated conditions per the hospice regulations and
CoPs. The FY 2020 Hospice Wage Index and Rate Update final rule (84 FR
38484) finalized the requirement at Sec. 418.24(b) and (c) for an
election statement addendum titled ``Patient Notification of Hospice
Non-Covered Items, Services, and Drugs'' that must be issued to the
patient (or representative), upon request, within 5 days of the hospice
election date, or within 3 days of the request during the course of
hospice care (that is, after the first 5 days of the hospice election
date), to ensure that Medicare beneficiaries are fully informed whether
or not all items, services, and drugs identified on the hospice plan of
care will be furnished by the hospice. The addendum statement is not
required if the beneficiary dies within the required timeframe for
furnishing the addendum. This addendum accompanies the hospice election
statement. This requirement for payment is codified in the regulations
at Sec. 418.24(b) and (c).
To ensure Medicare beneficiaries are provided disclosure of those
conditions, items, services, and drugs the hospice has determined to be
unrelated to the terminal illness and related conditions at the time of
admission, we proposed to make the issuance of the hospice election
statement addendum, in writing, mandatory for all elections at the time
of election, rather than upon request of the beneficiary (or
representative). Currently, the regulations at Sec. 418.24(b) and (c),
require the election statement addendum titled ``Patient Notification
of Hospice Non-Covered Items, Services, and Drugs'' to be issued to the
individual (or representative) upon request. We proposed that the
issuance of the hospice election statement addendum would be mandatory
for all elections made on or after October 1, 2026, and would accompany
the hospice election statement at the time of hospice election.
A one-time burden estimate for each hospice to develop and design
their own addendum template to best meet their needs was completed in
the FY 2020 Hospice Wage Index and Rate Update final rule (84 FR
38484). In the same rule, we also estimated the hospice's burden to
complete the addendum; however, we will update these burden estimates
to account for changes in the number of hospice elections and number of
hospices. As mentioned in the FY 2020 Hospice Wage Index and Rate
Update final rule (84 FR 38484), we believe there is no associated
burden for hospices to communicate/coordinate with non-hospice
providers regarding
[[Page 49164]]
the content of the addendum statement because the hospice CoPs, as
described previously, have always required hospices to have a system of
communication with non-hospice providers in place. However, we believe
that making the election statement addendum mandatory would reduce
burden for non-hospice providers through a consistent and streamlined
process by which non-hospice providers can make informed treatment
decisions and accurately submit claims with the appropriate condition
code or modifier. This requirement for payment is included in
regulations at Sec. 418.24(b) and (c).
The relevant information collection requirements are currently
approved under OMB Control Number: 0938-1067/Expiration date: 2/28/
2029.
C. Estimated Hospice Burden Related to Mandatory Election Statement
Addendum
1. Estimated Time for Hospice To Complete Addendum
In accordance with the hospice CoPs at Sec. 418.56(a), the hospice
must designate a registered nurse that is a member of the IDG to
provide coordination of care and to ensure continuous assessment of
each patient's and family's needs and implementation of the
interdisciplinary plan of care. The hospice CoPs at Sec. 418.54
require that a registered nurse conduct the initial assessment,
therefore, the registered nurse would be responsible for completing the
addendum for each hospice election as part of the routine admission
paperwork. We estimate that there would be 1,873,148 hospice elections
in a year based on FY 2024 claims data. However, if a beneficiary dies
within the first five days of the hospice election, an addendum would
not be required to be provided. Approximately 19 percent (0.19) of
hospice beneficiaries die within the first five days of hospice care.
Therefore, the estimated total number of hospice elections in FY 2027
that would require the hospice election statement addendum would be
(1,873,148 x 0.81) = 1,517,250. There are 6,732 Medicare-certified
hospices, so on average there would be (1,517,250/6,732) = 225 hospice
elections per hospice. The estimated burden for the hospice registered
nurse to extrapolate this information from the existing documentation
in the patient's hospice medical record and complete this addendum
would be 10 minutes (10/60 = 0.1667). At $78.68 per hour for a
registered nurse over 10 minutes (0.1667 x $78.68 = $13.12), we
estimate the total cost of RN time to complete the addendum per hospice
in FY 2027 to be ($13.12 x 225) = $2,952.00, and the total cost of RN
time to complete the addendum for all hospices in FY 2027 would be
($2,952.00 x 6,732) = $19,872,864.00. The estimated total per hospice
and total annual hospice cost associated with the mandatory addendum in
FY 2027 are shown in Table 17. These total costs only include the cost
for the RN to complete the addendum statement, as a one-time burden
estimate for the addendum form development was accounted for in FY 2020
(84 FR 38484). Additionally, providing this information to the
beneficiary is currently part of the routine admissions process and, as
such, incurs no additional burden to that process.
[GRAPHIC] [TIFF OMITTED] TR03AU26.041
2. Burden Estimate Without Election Statement Addendum for Non-Hospice
Providers
In order for non-hospice providers to make treatment decisions
regarding services, items, and drugs for hospice beneficiaries and to
submit the appropriate modifier or condition code on Medicare claims,
they need supporting information from the hospice regarding related and
unrelated conditions. As such, we first estimate the current burden
associated with this communication and coordination in the absence of
the election statement addendum. We believe this would require the non-
hospice providers to contact the hospice and have a detailed phone call
to obtain and document the information on unrelated conditions, items,
services, and medications. For non-hospice providers submitting
institutional claims (including inpatient acute care hospitals, SNFs,
HHAs, and institutional outpatient providers), typically nurse case
managers provide coordination of care for those beneficiaries in these
settings who are receiving inpatient services or who are preparing to
transition to a post-acute care setting or home. The estimated burden
for the registered nurse to contact the hospice to obtain the needed
information would be 15 minutes (15/60 = 0.25). The average number of
hospice beneficiaries receiving services per institutional, non-hospice
provider is 15.6 per year, which would mean each institutional, non-
hospice provider would have an average of 15.6 communication encounters
with hospice. The total number of institutional, non-hospice providers
servicing hospice beneficiaries in FY 2024 was 24,068. At $78.68 per
hour for a registered nurse (0.25 x $78.68) = $19.67, we estimate the
total cost per institutional, non-hospice provider furnishing services
to hospice beneficiaries in FY 2027 to be ($19.67 x 15.6) = $306.85 and
the annual total cost for all institutional, non-hospice providers in
FY 2027 would be ($306.85 x 24,068) = $7,385,265.80.
For non-institutional, non-hospice providers (including
physicians), we also expect that a nurse would contact
[[Page 49165]]
the hospice to obtain the needed clinical information on unrelated
conditions, items, services and drugs. The estimated burden for the
registered nurse to contact the hospice to obtain the needed
information would be 15 minutes (15/60 = 0.25). The average number of
hospice beneficiaries receiving services per non-institutional, non-
hospice provider is 15.5 per year, which would mean each provider would
have an average of 15.5 communication encounters with a hospice. The
total number of non-institutional, non-hospice providers servicing
hospice beneficiaries in FY 2024 was 135,407. At $78.68 per hour for a
registered nurse (0.25 x $78.68) = $19.67, we estimate the total cost
per non-institutional, non-hospice provider furnishing services to
hospice beneficiaries in FY 2027 to be ($19.67 x 15.5) = $304.89 and
the annual total cost for all non-institutional, non-hospice providers
in FY 2027 would be ($304.89 x 135,407) = $41,284,240.23.
For pharmacies dispensing Part D drugs to hospice beneficiaries,
the estimated burden for the pharmacy technician at the point of
service to contact the hospice to obtain the needed clinical
information regarding the drugs deemed by the hospice as unrelated to
the terminal illness and related conditions would be 15 minutes (15/60
= 0.25). The average number of hospice beneficiaries receiving services
per pharmacy dispensing Part D maintenance drugs is 18.6 per year,
which would mean each pharmacy would have an average of 18.6
communication encounters with hospice. The total number of pharmacies
dispensing Part D maintenance drugs to hospice beneficiaries in FY 2024
was 57,642. At $45.80 per hour for a pharmacy technician (0.25 x
$45.80) = $11.45, we estimate the total cost per pharmacy dispensing
Part D maintenance drugs to be ($11.45 x 18.6) = $212.97 and the annual
total cost for all pharmacies dispensing Part D maintenance drugs to be
($212.97 x 57,642) = $12,276,016.74. The estimated total annual burden
for all non-hospice providers furnishing services, items and
medications to hospice beneficiaries in FY 2027 without the
availability of the hospice election statement addendum identifying
unrelated conditions, items, services and drugs would be $60,945,522.77
($7,385,265.80 + $41,284,240.23 + $12,276,016.74).
3. Burden Reduction Estimate With the Mandatory Election Statement
Addendum for Non-Hospice Providers
With the availability of the ``Patient Notification of Hospice
Covered/Non-Covered Items, Services, and Drugs'' election statement
addendum, we believe the estimated burden would be reduced for non-
hospice providers through a streamlining of the communication and
coordination process. Following the same approach used in FY 2020
Hospice Wage Index and Rate Update final rule (84 FR 38484), we
analyzed all Medicare Parts A and B non-hospice claims for
beneficiaries under a hospice election in FY 2024. We also examined the
Part D claims for drugs provided to hospice beneficiaries under a
hospice election. Specifically, we analyzed the following:
The total number of non-hospice, institutional claims with
condition code 07 (to indicate the services were unrelated to the
terminal illness and related conditions).
The total number of non-hospice, non-institutional claims
with ``GW'' modifier (to indicate the services were unrelated to the
terminal illness and related conditions).
The total number of Part D claims for beneficiaries under
a hospice election.
The average number of hospice beneficiaries per non-
hospice provider with institutional claims with condition code 07.
The average number of hospice beneficiaries per non-
hospice provider with non-institutional claims with ``GW'' modifier.
The average number of hospice beneficiaries per non-
hospice provider with Part D claims.
To calculate the average number of hospice beneficiaries per non-
hospice provider, we count the number of unique beneficiaries
associated with each non-hospice provider as beneficiaries may receive
services by more than one non-hospice provider. This means that some
beneficiaries are double-counted. Because we double-counted
beneficiaries, we expect that average to be larger than the ratio of
unique beneficiaries to unique non-hospice providers. Table 18
summarizes Part A, B and D claims that overlap with hospice episodes in
FY 2024.
[GRAPHIC] [TIFF OMITTED] TR03AU26.042
[[Page 49166]]
For institutional, non-hospice providers (those who would submit
claims for unrelated services with condition code 07), the estimated
burden for the registered nurse to contact the hospice to obtain the
needed information would be reduced from 15 minutes in the absence of
the addendum to 5 minutes (5/60 = 0.0833). The average number of
hospice beneficiaries receiving services per institutional non-hospice
provider is 15.6 per year. The total number of institutional non-
hospice providers servicing hospice beneficiaries in FY 2024 was
24,068. At $78.68 per hour for a registered nurse (0.0833 x $78.68) =
$6.55, we estimate the total cost per institutional non-hospice
provider in FY 2024 to be ($6.55 x 15.6) = $102.18 and the annual total
cost for all institutional non-hospice providers in FY 2024 would be
($102.18 x 24,068) = $2,459,268.24, an annual decrease in burden by
($7,385,265.80 - $2,459,268.24) = $4,925,997.56.
For non-institutional, non-hospice providers (those who would
submit claims for unrelated services with modifier GW), the estimated
burden for the registered nurse to contact the hospice to obtain the
needed information would be reduced to 5 minutes (5/60 = 0.0833). The
average number of hospice beneficiaries receiving services per non-
institutional, non-hospice provider is 15.5 per year. The total number
of non-institutional, non-hospice providers servicing hospice
beneficiaries in FY 2024 was 135,407. At $78.68 per hour for a
registered nurse (0.0833 x $78.68) = $6.55, we estimate the total cost
per non-institutional, non-hospice provider in FY 2024 to be ($6.55 x
15.5) = $101.53 and the annual total cost for all non-institutional,
non-hospice providers in FY 2024 would be ($101.53 x 135,407) =
$13,747,872.71, an annual decrease in burden by ($41,284,240.23 -
$13,747,872.71) = $27,536,367.52.
For pharmacies dispensing Part D drugs to hospice beneficiaries,
the estimated burden for the pharmacy technician at the point of
service to contact the hospice to obtain the needed clinical
information regarding the drugs deemed by the hospice as unrelated to
the terminal illness and related conditions would be reduced to 5
minutes (5/60 = 0.0833). The average number of hospice beneficiaries
receiving services from pharmacies dispensing Part D maintenance drugs
is 18.6 per year. The total number of pharmacies dispensing Part D
maintenance drugs to hospice beneficiaries in FY 2024 was 57,642. At
$45.80 per hour for a pharmacy technicians (0.0833 x $45.80) = $3.82,
we estimate the total cost per pharmacy dispensing Part D maintenance
drugs to be ($3.82 x 18.6) = $71.05 and the annual total cost for all
pharmacies dispensing Part D maintenance drugs to be ($71.05 x 57,642)
= $4,095,464.10, an annual decrease in burden by ($12,276,016.74 -
$4,095,464.10) = $8,180,552.64.
The estimated total annual burden for all non-hospice providers
furnishing services, items, and drugs to hospice beneficiaries in FY
2024 with the availability of the hospice election statement addendum
identifying unrelated conditions, items, services, and medication would
be $20,302,605.05 ($2,459,268.24 + $13,747,872.71 + $4,095,464.10) for
an overall burden reduction of ($60,945,522.77 - $20,302,605.05) =
$40,642,917.72. The total reduction in burden for all institutional,
non-institutional, and Part D pharmacy non-hospice providers is
summarized in Table 19.
[GRAPHIC] [TIFF OMITTED] TR03AU26.043
The use of the ``Patient Notification of Hospice Non-Covered Items,
Services, and Drugs'' election statement addendum would result in an
estimated, annual net reduction in burden of $20,770,053.72
($40,642,917.72 - $19,872,864.00) in FY 2027. Table 20 summarizes the
FY 2027 estimated total burden reduction.
[[Page 49167]]
[GRAPHIC] [TIFF OMITTED] TR03AU26.044
Additionally, the use of the ``Patient Notification of Hospice Non-
Covered Items, Services, and Drugs'' election statement addendum would
result in an estimated, annual net reduction in burden of
$20,770,053.72 ($40,642,917.72 - $19,872,864.00) in FY 2027, compared
to an estimated annual net reduction in burden of $5,228,457.00
($16,505,172.00 minus $11,276,715.00) in FY 2020, representing an
increase in the estimated net burden reduction of $15,541,596.72
between FY 2020 and FY 2027. Table 21 summarizes the difference in the
estimated total provider burden between FY 2020 and FY 2027 resulting
from provision of the election statement addendum.
[GRAPHIC] [TIFF OMITTED] TR03AU26.045
We received public comments on our burden estimates associated with
the election statement addendum. Refer to section III.C.2. of this
final rule for a summary of the comments we received and our responses.
V. Regulatory Impact Analysis (RIA)
A. Statement of Need
1. Hospice Payment
This final rule meets the requirements of our regulations at Sec.
418.306(c) and (d), which require annual issuance, in the Federal
Register, of the Hospice Wage Index based on the most current available
CMS hospital wage data, including any changes to the definitions of
Core Based Statistical Areas (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
Sec. 418.302(b), for FY 2027 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.
2. Hospice Election Statement Addendum
This final rule will make the hospice election statement addendum
mandatory for all hospice elections. This will require hospices to
furnish the hospice election statement addendum within the first 5 days
of a hospice election (that is, within the first 5 days of the
effective date of the hospice election), and any updates to the
addendum within 3 days of changes to the plan of care that impact the
addendum determinations, in writing, to the to the individual (or
representative), and to make the addendum available for non-hospice
providers and Medicare contractors. This change will become effective
for hospice elections on and after October 1, 2026. The election
statement addendum will add no additional burden for communicating with
non-
[[Page 49168]]
hospice providers, as this decision-making process has been a long-
standing CoP requirement, as described in the preamble of this final
rule. As reviewed in section IV.B.1. of this final rule, hospices
already are required to review, determine, and document information on
unrelated conditions per the hospice regulations and CoPs.
Additionally, our previous burden estimate, completed in FY 2020
Hospice Wage Index and Rate Update final rule (84 FR 38484), assumed
that an addendum would be requested by every hospice beneficiary (or
representative) receiving non-hospice services. While the number of
hospice elections, and therefore the number of election statement
addendums, have increased since our last burden estimate was completed,
we continue to believe the actual burden would be less as hospices are
already required to be comprehensive in their approach to covered
services. As such, there will be hospices that will spend less time,
than estimated, to complete the addendum as the hospice will be
providing all items, services, and drugs. However, we believe that
making the election statement addendum mandatory will reduce burden for
non-hospice providers, including institutional, non-institutional and
pharmacy providers because less time will be spent trying to obtain
needed information for treatment decisions and accurate claims
submissions.
3. Quality Reporting Program
This final rule announces that CMS will add an icon to the
Medicare.gov Compare Tool to identify hospices that fail to meet the
reporting submission requirements for the Annual Payment Update (APU).
These requirements require hospices to submit 90 percent of HOPE
assessments within 30 days of a patient's admission or discharge date.
This new icon will allow consumers to identify hospices that may lack
sufficient data to accurately gauge quality and provide another
incentive for hospices to meet the 90 percent threshold.
B. Overall Impact
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; 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.
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. In accordance with the provisions of
Executive Order 12866, this regulation was reviewed by OMB.
1. Hospice Payment
We estimate that the aggregate impact of the payment provisions in
this final rule will result in an estimated increase of $755 million in
payments to hospices, resulting from the final hospice payment update
percentage of 2.3 percent for FY 2027. The impact analysis of this
final rule represents the projected effects of the changes in hospice
payments from FY 2026 to FY 2027. Using the most recent complete data
available at the time of rulemaking, in this case FY 2025 hospice
claims data as of May 12, 2026, we simulate total payments using the
final FY 2027 wage index (pre-floor, pre-reclassified hospital wage
index with the hospice floor, and the 5 percent cap on wage index
decreases) and FY 2026 payment rates and compare it to our simulation
of total payments using FY 2025 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 2026 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 2026 wage index and payment rates for each level of care
by the FY 2027 wage index and FY 2026 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.
2. Hospice Election Statement Addendum
As a result of this election statement addendum, we estimate that
this rule will generate $20.8 million in annualized cost savings to
providers, beginning in FY 2027. The estimated burden reduction for
this requirement is detailed in section IV.C. of this final rule and
the total annual estimated reduction is included in Table 20.
3. Hospice Quality Reporting Program
This final rule will add an icon to the Medicare.gov Compare Tool
for hospices. There are no associated economic impacts for hospices.
C. Detailed Economic Analysis
1. Hospice Payment Update for FY 2027
The FY 2027 hospice payment impacts appear in Table 22. 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 2027 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
[[Page 49169]]
factors. However, there are distributional effects of using the FY 2027
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 2.3 percent is based on the final 3.2 percent inpatient
hospital market basket percentage increase reduced by a final 0.9
percentage point productivity adjustment. The fifth column shows the
total effect of the updated wage data and the hospice payment update
percentage on FY 2027 hospice payments. As illustrated in Table 22, the
combined effects vary by specific types of providers and by location.
We note that simulated payments are based on utilization in FY 2025 as
seen on Medicare hospice claims (accessed from the Chronic Conditions
Warehouse (CCW) on May 12, 2026) 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 22, the combined effects vary by specific
types of providers and by location.
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We received a comment on the detailed economic analysis and impact
table. A summary of this comment and our response follows:
Comment: A commenter stated that they disagree with CMS's
characterization of the proposed FY 2027 payment provisions as a
meaningful $785 million increase. This commenter expressed concern that
while significant at the national level, the proposed 2.4 percent
update does
[[Page 49172]]
not reflect the financial realities providers are facing; such as
increases in labor costs driven by workforce shortages, along with
ongoing inflationary pressures related to transportation, medications,
medical supplies, contracted services, and compliance requirements.
Response: We acknowledge and appreciate the commenter's concerns
regarding the adequacy of the proposed FY 2027 hospice payment update
and acknowledge the cost pressures individual providers may be
experiencing. We recognize that hospice care is a labor-intensive,
community-based benefit and that providers face real and ongoing
financial challenges in the current economic environment. We reiterate
that we are required to update hospice payments pursuant to section
1814(i)(1)(C)(ii)(VII) of the Act which requires CMS to update hospice
PPS payments by the Inpatient Hospital PPS (IPPS) market basket
percentage increase (as defined in section 1886(b)(3)(B)(iii) of the
Act) reduced by the productivity adjustment described in section
1886(b)(3)(B)(xi)(II) of the Act. We do not have discretionary
authority to deviate from this statutory formula. Furthermore, we
estimate that the aggregate impact of the payment provisions in this
final rule will result in an estimated increase of $755 million in
payments to hospices, resulting from the final hospice payment update
percentage of 2.3 percent for FY 2027. The impact analysis of this
final rule represents the projected effects of the changes in hospice
payments from FY 2026 to FY 2027 using the most recent complete data
available at the time of rulemaking, in this case FY 2025 hospice
claims data as of May 12, 2026. 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.
D. Regulatory Review Cost Estimation
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
welcomed any public comments on the approach in estimating the number
of entities that would review the proposed rule. We did not receive any
public comments specific to our solicitation.
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. We sought public comments
on this assumption. We did not receive any public comments specific to
our solicitation.
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/tables.htm). Assuming an average reading speed we estimate that it
will 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 x $113.42). Therefore, we estimate that the
total cost of reviewing this regulation is approximately $43,118
($199.62 x 216 reviewers; which is based on the number of comments
received on the proposed rule, as described previously).
E. Alternatives Considered
1. Hospice Payment
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 final hospice payment update
percentage. The final 2.3 percent hospice payment update percentage for
FY 2027 is based on a final 3.2 percent inpatient hospital market
basket percentage increase for FY 2027, reduced by a final 0.9
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 FY.
Section 3401(g) of the Affordable Care Act also mandates that, starting
with FY 2013 (and in subsequent years), the hospice payment update
percentage will be annually reduced by changes in economy-wide
productivity as specified in section 1886(b)(3)(B)(xi)(II) of the Act.
For FY 2027, 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.
2. Hospice Election Statement Addendum
CMS considered not finalizing the requirement to make the election
statement addendum mandatory but rather keep the existing policy where
the addendum is only required when requested by the beneficiary, their
representative, non-hospice providers, or the Medicare administrative
contractors. However, as described in section III.C. of this final
rule, the intent of the election statement addendum is to increase
coverage transparency for beneficiaries. We believe that requiring the
provision of this addendum only when requested does not fulfill this
intent and that all beneficiaries deciding to elect hospice care in
lieu of curative care should have all the information they need to make
an informed election. We also stated our concerns that the continued
increase of non-hospice spending during a hospice election may signal
that beneficiaries are not being made aware of hospice coverage
responsibility and this may result in increased beneficiary cost
sharing and fragmented care which is counter to the comprehensive and
holistic nature of hospice care.
3. Quality Reporting Program
CMS considered proposing an icon that would indicate if a hospice
does not meet the submission requirements for HOPE, CAHPS, and claims.
However, since claims are required for payment, there is high
compliance, and, as many hospices are exempt from CAHPS due to size
limitations, CAHPS submissions would be excluded for a large number of
hospices so both CAHPS and claims were omitted. CMS also proposed an
icon that will indicate if a hospice has met the submission
requirements, however CMS is trying to induce the non-submitting
hospices to change behavior and believe a negative icon will be more
effective than a positive icon. Additionally, creating a positive icon
will also cause, at times, hospices with poor quality indicators to
[[Page 49173]]
receive this icon and possibly give mixed messages to the consumer as
to whether the hospice provides good quality of care.
CMS considered proposing a star rating, similar to those seen in
other care settings on the Medicare.gov Compare Tool. However, this
change will require the need for more public feedback and additional
analyses to create a star rating that will accurately reflect the care
a hospice is providing. There was also a desire to not add something to
the Compare Tool that may interfere with the changes that may be made
by the Hospice Special Focus Program (SFP).
F. Accounting Statement and Table
Consistent with OMB Circular A-4 (available at https://www.whitehouse.gov/wp-content/uploads/2025/08/CircularA-4.pdf), we have
prepared an accounting statement in Table 23 showing the classification
of the expenditures associated with the provisions of this final rule.
Table 23 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 6,673 hospices in
our impact analysis file, which was constructed using FY 2025 claims
(accessed from the CCW on May 12, 2026). All expenditures are
classified as transfers to hospices.
[GRAPHIC] [TIFF OMITTED] TR03AU26.048
G. Regulatory Flexibility Act (RFA)
The RFA requires agencies to analyze options for regulatory relief
of small entities if a rule has a significant economic 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.\26\
Table 24 shows the number of firms, revenue, and estimated impact per
home health care service category. Table 25 shows the number of
nonemployer establishments, total, and average revenue per nonemployer
establishment.
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\26\ https://www.sba.gov/sites/sbagov/files/2023-03/Table%20of%20Size%20Standards_Effective%20March%2017%2C%202023%20%281%29%20%281%29_0.pdf.
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BILLING CODE 4169-69-C
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,\27\ 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 not 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 not have significant economic impact on a substantial
number of small entities. Table 22 details the total percentage payment
increase by number of 30-day periods and impact by facility type, size,
and location. As shown in Table 22, when examining the distribution of
projected payment impacts across individual agency groups, a marginal
share of hospices are projected to receive a payment increase of 3
percent or more. For example, only agencies in the New England (162
hospices, 3.1 percent) and outlying (81 hospices, 3.4 percent) census
regions are estimated to receive an increase over 3.0 percent. Hospices
in these regions represent roughly 3.6 percent of all 6,673 hospices.
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\27\ The Medicare Payment Advisory Commission has observed that
in 2022 ``Medicare accounts for about 90 percent of hospice
days[.]'' Medicare Payment Advisory Comm'n, March 2024 Report to
Congress, Ch. 9, at 22 (March 15, 2024).
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[[Page 49175]]
Additionally, we estimate that the net impact of the policies in
this rule is 2.3 percent or approximately $755 million in increased
revenue to hospices in FY 2027. The 2.3 percent increase in
expenditures when comparing FY 2026 payments to estimated FY 2027
payments is reflected in the last column of the first row in Table 22
and is driven solely by the impact of the final 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
higher estimated increase (2.5 percent), compared to hospices with
greater than 20,000 RHC days (2.3 percent) due to the updated wage
index. We estimate that in FY 2027, hospices in urban areas will
experience, on average, a 2.2 percent increase in estimated payments
compared to FY 2026; while hospices in rural areas will experience, on
average, a 2.9 percent increase in estimated payments compared to FY
2026. Hospices providing services in the Outlying region will
experience the largest estimated increases in payments of 3.4 percent.
Further detail by hospice type and location is presented in Table 22.
The statement of need for the various proposed policies in this
rule is discussed in section V.A. of the RIA.
Additionally, the alternatives considered for the various finalized
policies in this rule are discussed in section V.E. of the RIA. We
considered potential alternatives for the policies finalized in this
rule, including the hospice payment update percentage and the hospice
election statement addendum. Because the hospice payment update
percentage is established annually in accordance with the statutory
requirements of section 1814(i)(1)(C) of the Act, we did not evaluate
alternative approaches for this provision. Similarly, we did not
consider alternatives for the regulatory text revisions, as these
changes either conform to policies already codified in regulation or
are mandated by the Consolidated Appropriations Act, 2026. For the
hospice election statement addendum, the proposed policy is expected to
generate savings for all hospices, including small entities. We also
considered an alternative in which the hospice statement addendum would
be optional rather than mandatory. However, this approach would not
fulfill the intended objective, as described in Section III.C. of this
final rule, of enhancing transparency for beneficiaries seeking to
elect the hospice benefit. We solicited comments on our proposed cost
analysis but did not receive any comments.
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.
H. Unfunded Mandates Reform Act (UMRA)
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any 1 year of $100
million in 1995 dollars, updated annually for inflation. In 2026, that
threshold is approximately $193 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.
I. Federalism
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct requirement costs on State
and local governments, preempts State law, or otherwise has Federalism
implications. We have reviewed this rule under these criteria of
Executive Order 13132 and have determined that it will not impose
substantial direct costs on State or local governments.
J. E.O. 14192, ``Unleashing Prosperity Through Deregulation''
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 expected to be an E.O. 14192 deregulatory action. We estimate
that this final rule will generate $12.69 million in annualized cost
savings at a 7 percent discount rate, discounted to relative to 2024,
over a perpetual time horizon.
K. Conclusion
We estimate that aggregate payments to hospices in FY 2027 will
increase by $755 million as a result of the final 2.3 percent hospice
payment update, compared to payments in FY 2026. We estimate that in FY
2027, hospices in urban areas will experience, on average, a 2.2
percent increase in estimated payments compared to FY 2026; while
hospices in rural areas will experience, on average, a 2.9 percent
increase in estimated payments compared to FY 2026. Hospices providing
services in the Outlying region will experience the largest estimated
increases in payments of 3.4 percent. Hospices serving patients in the
West South Central region will experience, on average, the lowest
estimated increase of 1.9 percent in FY 2027 payments.
Mehmet Oz, Administrator of the Centers for Medicare & Medicaid
Services, approved this document on July 28, 2026.
List of Subjects in 42 CFR Part 418
Health facilities, Hospice care, Medicare, Reporting and
recordkeeping requirements.
For the reasons set forth in the preamble, the Centers for Medicare
& Medicaid Services amends 42 CFR part 418 as set forth below:
PART 418--HOSPICE CARE
0
1. The authority citation for part 418 continues to read as follows:
Authority: 42 U.S.C. 1302 and 1395hh.
0
2. Section 418.22 is amended by revising paragraph (a)(4)(ii) to read
as follows:
Sec. 418.22 Certification of terminal illness.
(a) * * *
(4) * * *
(ii) During a Public Health Emergency, as defined in Sec. 400.200
of this chapter, or through December 31, 2027, whichever is later, if
the face-to-face encounter conducted by a hospice physician or hospice
nurse practitioner is for the sole purpose of hospice recertification,
such encounter may occur via telecommunications technology and is
considered an administrative expense. Telecommunications technology
means the use of interactive multimedia communications equipment that
includes, at a minimum, the use of audio and video equipment permitting
two-way, real-time interactive communication between the patient and
the distant site hospice physician or hospice nurse practitioner. For
face-to-face encounters occurring on or after
[[Page 49176]]
January 1, 2027, hospices must report any such encounters occurring via
telecommunications technology on the claim, in accordance with guidance
issued by CMS. Beginning January 31, 2026, telehealth may not be used
for the face-to-face recertification encounter if any of the following
conditions apply:
(A) The hospice patient is located in an area subject to a hospice
enrollment moratorium under section 1866(j)(7) of the Act;
(B) The patient is receiving care from a hospice provider that is
subject to enhanced oversight pursuant to section 1866(j)(3) of the
Act; or
(C) The face-to-face encounter is conducted by a hospice physician
or nurse practitioner who is not enrolled in Medicare under section
1866(j) and is not an opt-out physician or practitioner (as defined in
section 1802(b)(6)(D) of the Act.
* * * * *
0
3. Section 418.24 is amended by revising paragraphs (b)(6), (c)
introductory text, (c)(9) and (10), and (d) to read as follows:
Sec. 418.24 Election of hospice care.
(b) * * *
(6) For Hospice elections beginning on or after October 1, 2026,
the hospice must provide the individual (or representative) an election
statement addendum, as set forth in paragraphs (c) and (d) of this
section, which includes any conditions, items, services, and drugs the
hospice has determined to be unrelated to the individual's terminal
illness and related conditions and would not be covered by the hospice.
* * * * *
(c) Content of hospice election statement addendum. For hospice
elections beginning on or after October 1, 2026, the hospice must
provide the individual (or representative) an election statement
addendum. The election statement addendum (and its updates) must
include the following:
* * * * *
(9) Name and signature of the individual (or representative) and
date signed, along with a statement that signing this addendum (and its
updates) is only acknowledgement of receipt of the addendum and not the
individual's (or representative's) agreement with the hospice's
determinations. If the individual (or representative) refuses to sign
the addendum, the hospice must document on the addendum the reason the
addendum was not signed and the addendum would become part of the
patient's medical record. The addendum must also be available for non-
hospice providers and Medicare contractors, although non-hospice
providers and Medicare contractors are not required to sign the
addendum.
(10) Date the hospice furnished the addendum to the individual (or
representative).
(d) Timeframes for the hospice election statement addendum. (1) For
hospice elections beginning on or after October 1, 2026, the hospice
must provide the individual (or representative) an election statement
addendum, in writing, as set forth in paragraph (c) of this section, at
the time of the hospice election (that is, within the first 5 days of
the effective date of the hospice election). The hospice must also file
this information with the election statement, as set forth in
paragraphs (a) and (b) of this section, to be available for the
individual (or representative), non-hospice providers, and Medicare
contractors.
(2) If there are any changes to the plan of care during the course
of hospice care that impact the addendum determinations, the hospice
must update the addendum, within 3 days, with the contents described in
paragraph (c) of this section, and provide these updates, in writing,
to the individual (or representative), as well as update the addendum
on file in order to communicate these changes to the individual (or
representative), non-hospice providers, and Medicare contractors.
(3) If the individual dies, revokes, or is discharged within the
required timeframe for providing the addendum (and its updates) (as
outlined in paragraphs (d)(1) and (2) of this section), and before the
hospice has provided the addendum (and its updates), the addendum would
not be required to be provided, in writing, to the individual (or
representative). The hospice must note the reason the addendum (and its
updates) was not completed and/or provided, in writing, to the
individual (or representative) and this note would become part of the
patient's medical record. If completed, the hospice must still file the
addendum (and its updates) with the election statement, as set forth in
paragraphs (a) and (b) of this section, to be available for the
individual (or representative), non-hospice providers, and Medicare
contractors.
(4) If the individual dies, revokes, or is discharged prior to
signing the addendum (or its updates) (as outlined in paragraphs (d)(1)
and (2) with the required contents described in paragraph (c) of this
section), the addendum would not be required to be signed in order for
the hospice to receive payment. The hospice must note (on the addendum
itself) the reason the addendum (and any updates) was not signed and
the addendum would become part of the patient's medical record.
* * * * *
0
4. Section 418.26 is amended by revising paragraph (b) to read as
follows:
Sec. 418.26 Discharge from hospice care.
* * * * *
(b) Discharge order. Prior to discharging a patient for any reason
listed in paragraph (a) of this section, the hospice must obtain a
written physician's discharge order from the hospice medical director
(or physician designee, as defined at Sec. 418.3) or physician member
of the interdisciplinary group. If a patient has an attending physician
involved in his or her care, this physician should be consulted before
discharge and his or her review and decision included in the discharge
note.
* * * * *
Sec. 418.309 [Amended]
0
5. Section 418.309 is amended in paragraphs (a)(1) and (2) by removing
``2033'' and adding in its place ``2035''.
Robert F. Kennedy, Jr.,
Secretary, Department of Health and Human Services.
[FR Doc. 2026-15686 Filed 7-30-26; 4:15 pm]
BILLING CODE 4169-69-P