[Federal Register Volume 79, Number 89 (Thursday, May 8, 2014)]
[Proposed Rules]
[Pages 26537-26587]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-10505]



[[Page 26537]]

Vol. 79

Thursday,

No. 89

May 8, 2014

Part III





Department of Health and Human Services





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Centers for Medicare & Medicaid Services





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42 CFR Parts 405 and 418





Medicare Program; FY 2015 Hospice Wage Index and Payment Rate Update; 
Hospice Quality Reporting Requirements and Process and Appeals for Part 
D Payment for Drugs for Beneficiaries Enrolled in Hospice; Proposed 
Rule

Federal Register / Vol. 79, No. 89 / Thursday, May 8, 2014 / Proposed 
Rules

[[Page 26538]]


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Department of Health and Human Services

Centers for Medicare & Medicaid Services

42 CFR Parts 405 and 418

[CMS-1609-P]
RIN 0938-AS10


Medicare Program; FY 2015 Hospice Wage Index and Payment Rate 
Update; Hospice Quality Reporting Requirements and Process and Appeals 
for Part D Payment for Drugs for Beneficiaries Enrolled in Hospice

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

ACTION: Proposed rule.

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SUMMARY: This proposed rule would update the hospice payment rates and 
the wage index for fiscal year (FY) 2015 and continue the phase out of 
the wage index budget neutrality adjustment factor (BNAF). This rule 
provides an update on hospice payment reform analyses and solicits 
comments on ``terminal illness'' and ``related conditions'' 
definitions, and on a process and appeals for Part D payment for drugs, 
while beneficiaries are under a hospice election. Also, this rule 
proposes timeframes for filing the notice of election and the notice of 
termination/revocation; adding the attending physician to the hospice 
election form; a requirement that hospices complete their hospice 
inpatient and aggregate cap determinations within 5 months after the 
cap year ends, and remit any overpayments; and updates for the hospice 
quality reporting program.
    In addition, this rule would provide guidance on determining 
hospice eligibility, information on the delay in the implementation of 
the International Classification of Diseases, 10th Revision, Clinical 
Modification (ICD-10-CM), and would further clarify how hospices are to 
report diagnoses on hospice claims. Finally, the rule proposes to make 
a technical regulatory text change.

DATES: To be assured consideration, comments must be received at one of 
the addresses provided below, no later than 5 p.m. on July 1, 2014.

ADDRESSES: In commenting, please refer to file code CMS-1609-P. Because 
of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission.
    You may submit comments in one of four ways (please choose only one 
of the ways listed):
    1. Electronically. You may submit electronic comments on this 
regulation to http://www.regulations.gov. Follow the ``Submit a 
comment'' instructions.
    2. By regular mail. You may mail written comments to the following 
address ONLY: Centers for Medicare & Medicaid Services, Department of 
Health and Human Services, Attention: CMS-1609-P, P.O. Box 8010, 
Baltimore, MD 21244-8010.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments to 
the following address ONLY: Centers for Medicare & Medicaid Services, 
Department of Health and Human Services, Attention: CMS-1609-P, Mail 
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.

    4. By hand or courier. Alternatively, you may deliver (by hand or 
courier) your written comments ONLY to the following addresses prior to 
the close of the comment period:
    a. For delivery in Washington, DC--Centers for Medicare & Medicaid 
Services, Department of Health and Human Services, Room 445-G, Hubert 
H. Humphrey Building, 200 Independence Avenue SW., Washington, DC 
20201.

(Because access to the interior of the Hubert H. Humphrey Building is 
not readily available to persons without Federal government 
identification, commenters are encouraged to leave their comments in 
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing 
by stamping in and retaining an extra copy of the comments being 
filed.)

    b. For delivery in Baltimore, MD--Centers for Medicare & Medicaid 
Services, Department of Health and Human Services, 7500 Security 
Boulevard, Baltimore, MD 21244-1850.

If you intend to deliver your comments to the Baltimore address, call 
telephone number (410) 786-9994 in advance to schedule your arrival 
with one of our staff members.

    Comments erroneously mailed to the addresses indicated as 
appropriate for hand or courier delivery may be delayed and received 
after the comment period.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Debra Dean-Whittaker, (410) 786-0848 
for questions regarding the CAHPS[supreg] Hospice Survey. Robin Dowell, 
(410) 786-0060 for questions regarding the hospice quality reporting 
program. Deborah Larwood, (410) 786-9500 for questions regarding 
process and appeals for Part D payment for drugs while beneficiaries 
are under a hospice election. Owen Osaghae, (410) 786-7550 for 
questions regarding the hospice inpatient and aggregate cap 
determinations.
    For general questions about hospice payment policy please send your 
inquiry via email to: hospicepolicy@cms.hhs.gov.

SUPPLEMENTARY INFORMATION: Wage index addenda will be available only 
through the internet on the CMS Web site at: (http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/Hospice/index.html.) Readers 
who experience any problems accessing any of the wage index addenda 
related to the hospice payment rules that are posted on the CMS Web 
site identified above should contact Hillary Loeffler at 410-786-0456.
    Inspection of Public Comments: All comments received before the 
close of the comment period are available for viewing by the public, 
including any personally identifiable or confidential business 
information that is included in a comment. We post all comments 
received before the close of the comment period on the following Web 
site as soon as possible after they have been received: http://www.regulations.gov. Follow the search instructions on that Web site to 
view public comments.
    Comments received timely will also be available for public 
inspection as they are received, generally beginning approximately 3 
weeks after publication of a document, at the headquarters of the 
Centers for Medicare & Medicaid Services, 7500 Security Boulevard, 
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 
a.m. to 4 p.m. To schedule an appointment to view public comments, 
phone 1-800-743-3951.

Table of Contents

I. Executive Summary
    A. Purpose
    B. Summary of the Major Provisions
    C. Summary of Costs, Benefits, and Transfers
II. Background
    A. Hospice Care
    B. History of the Medicare Hospice Benefit
    C. Services Covered by the Medicare Hospice Benefit
    D. Medicare Payment for Hospice Care
    1. Omnibus Budget Reconciliation Act of 1989
    2. Balanced Budget Act of 1997
    3. FY 1998 Hospice Wage Index Final Rule
    4. FY 2010 Hospice Wage Index Final Rule

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    5. The Affordable Care Act
    6. FY 2012 Hospice Wage Index Final Rule
    E. Trends in Medicare Hospice Utilization
III. Provisions of the Proposed Rule
    A. Hospice Payment Reform: Research and Analyses
    1. Beneficiaries Dying Without Skilled Visits in the Last Days 
of Life
    2. General Inpatient Care, Continuous Home Care, and Inpatient 
Respite Care Utilization
    3. Hospice Live Discharges
    4. Non-hospice Spending for Hospice Beneficiaries During an 
Election
    B. Solicitation of Comments on Definitions of ``Terminal 
Illness'' and ``Related Conditions''
    1. The Development of the Medicare Hospice Benefit
    2. Legislative History of the Medicare Hospice Benefit
    3. Hospice Care Today
    4. Definition of ``Terminal Illness''
    5. Definition of ``Related Conditions''
    C. Guidance on Determining Beneficiaries' Eligibility
    D. Proposed Timeframe for Hospice Cap Determinations and 
Overpayment Remittances
    E. Proposed Timeframes for Filing the Notice of Election and 
Notice of Termination/Revocation
    1. Proposed Timeframe for Filing the Notice of Election
    2. Proposed Timeframe for Filing the Notice of Termination/
Revocation
    F. Proposed Addition of the Attending Physician to the Hospice 
Election Form
    G. FY 2015 Hospice Wage Index and Rates Update
    1. FY 2015 Hospice Wage Index
    2. FY 2015 Wage Index with an Additional 15 Percent Reduced 
Budget Neutrality Adjustment Factor (BNAF)
    3. Proposed Hospice Payment Update Percentage
    4. Proposed FY 2015 Hospice Payment Rates
    H. Proposed Updates to the Hospice Quality Reporting Program
    1. Background and Statutory Authority
    2. Measures for Hospice Quality Reporting Program and Data 
Submission Requirements for Payment Years FY 2014 and FY 2015
    3. Quality Measures for Hospice Quality Reporting Program and 
Data Submission Requirements for Payment Year FY 2016 and Beyond
    4. Future Measure Development
    5. Public Availability of Data Submitted
    6. Proposed Adoption of the CAHPS[supreg] Hospice Survey for the 
FY 2017 Payment Determination
    a. Background and Description of the Survey
    b. Participation Requirements to Meet Quality Reporting 
Requirements for the FY 2017 APU
    c. Participation Requirements to Meet Quality Reporting 
Requirements for the FY 2018 APU
    d. Vendor Participation Requirements for the 2017 APU
    e. Annual Payment Update
    f. CAHPS[supreg] Hospice Survey Oversight Activities
    7. Procedures for Payment Year 2016 and Subsequent Years
    I. Solicitation of Comments on Coordination of Benefits Process 
and Appeals for Part D Payment for Drugs While Beneficiaries are 
Under a Hospice Election
    1. Part D Sponsor Coordination of Payment with Hospice Providers
    2. Hospice Coordination of Payment with Part D Sponsors and 
Other Payers
    3. Beneficiary Rights and Appeals
    J. Update on the International Classification of Diseases, 10th 
Revision, Clinical Modification (ICD-10-CM) and Coding Guidelines 
for Hospice Claims Reporting
    1. International Classification of Diseases, 10th Revision, 
Clinical Modification (ICD-10-CM)
    2. Coding Guidelines for Hospice Claims Reporting
    K. Technical Regulatory Text Change
IV. Collection of Information Requirements
    A. Proposed Changes Related to Hospice Payment Policy
    1. Proposed Changes to the Election Statement (Sec.  418.24)
    2. Proposed Changes to Inpatient and Aggregate Cap Determination 
Reporting (Sec.  418.308)
    B. CAHPS[supreg] Hospice Survey
V. Regulatory Impact Analysis
    A. Statement of Need
    B. Introduction
    C. Overall Impact
    1. Detailed Economic Analysis
    a. Effects on Hospices
    b. Hospice Size
    c. Geographic Location
    d. Type of Ownership
    e. Hospice Base
    f. Effects on Other Providers
    g. Effects on the Medicare and Medicaid Programs
    h. Alternatives Considered
    i. Accounting Statement
    j. Conclusion
    2. Regulatory Flexibility Act Analysis
    3. Unfunded Mandates Reform Act Analysis
VI. Federalism Analysis and Regulations Text

Acronyms

    Because of the many terms to which we refer by acronym in this 
proposed rule, we are listing the acronyms used and their corresponding 
meanings in alphabetical order below:

ACA Affordable Care Act
APU Annual Payment Update
BBA Balanced Budget Act of 1997
BIPA Benefits Improvement and Protection Act of 2000
BNAF Budget Neutrality Adjustment Factor
BLS Bureau of Labor Statistics
CAHPS[supreg] Consumer Assessment of Healthcare Providers and 
Systems
CBSA Core-Based Statistical Area
CCW Chronic Conditions Data Warehouse
CFR Code of Federal Regulations
CHC Continuous Home Care
CMS Centers for Medicare & Medicaid Services
COPD Chronic Obstructive Pulmonary Disease
CoPs Conditions of Participation
CR Change Request
CVA Cerebral Vascular Accident
CWF Common Working File
CY Calendar Year
DDE Direct Data Entry
DME Durable Medical Equipment
DRG Diagnostic Related Group
DTRR Daily Transaction Reply Report
ER Emergency Room
FEHC Family Evaluation of Hospice Care
FR Federal Register
FY Fiscal Year
GAO Government Accountability Office
GIP General Inpatient Care
HCFA Healthcare Financing Administration
HHS Health and Human Services
HIPPA Health Insurance Portability and Accountability Act
HIS Hospice Item Set
HQRP Hospice Quality Reporting Program
IACS Individuals Authorized Access to CMS Computer Services
ICD-9-CM International Classification of Diseases, Ninth Revision, 
Clinical Modification
ICD-10-CM International Classification of Diseases, Tenth Revision, 
Clinical Modification
ICR Information Collection Requirement
IDG Interdisciplinary Group
IPPS Inpatient Prospective Payment System
IRC Inpatient Respite Care
LCD Local Coverage Determination
MAC Medicare Administrative Contractor
MAP Measure Applications Partnership
MedPAC Medicare Payment Advisory Commission
MFP Multi-Factor Productivity
MSA Metropolitan Statistical Area
NCPDP National Council for Prescription Drug Programs
NHPCO National Hospice and Palliative Care Organization
NF Long Term Care Nursing Facility
NOE Notice of Election
NOTR Notice of Termination/Revocation
NP Nurse Practitioner
NPI National Provider Identifier
NQF National Quality Forum
OIG Office of the Inspector General
OACT Office of the Actuary
OIG Office of Inspector General
OMB Office of Management and Budget
ONC Office of the National Coordinator for Health Information 
Technology
PA Prior Authorization
PBM Pharmacy Benefit Manager
PDE Prescription Drug Event
PRA Paperwork Reduction Act
PRRB Provider Reimbursement Review Board
PS&R Provider Statistical and Reimbursement Report
Pub. L. Public Law
QAPI Quality Assessment and Performance Improvement
QIO Quality Improvement Organization
QRP Quality Reporting Program
RFA Regulatory Flexibility Act
RHC Routine Home Care
SAF Standard Analytic File
SBA Small Business Administration
SNF Skilled Nursing Facility

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TEFRA Tax Equity and Fiscal Responsibility Act of 1982
TEP Technical Expert Panel
TrOOP True Out-of-Pocket
U.S.C. United States Code

I. Executive Summary for This Proposed Rule

A. Purpose

    This rule proposes updates to the payment rates for hospices for 
fiscal year (FY) 2015 as required under section 1814(i) of the Social 
Security Act (the Act). The proposed updates incorporate the use of 
updated hospital wage index data, the 6th year of the 7-year Budget 
Neutrality Adjustment Factor (BNAF) phase-out, and an update to the 
hospice payment rates by the hospice payment update percentage. In 
addition, section 3004(c) of the Patient Protection and Affordable Care 
Act (Pub. L. 111-148) as amended by the Health Care and Education 
Reconciliation Act (Pub. L. 111-152) (the Affordable Care Act) 
established a quality reporting program for hospices. Starting in FY 
2014, hospices that failed to meet quality reporting requirements 
received a two percentage point reduction to their market basket 
update. The Affordable Care Act also requires the Secretary to 
implement revisions to the hospice payment methodology no earlier than 
October 1, 2013. As such, this proposed rule provides an update of our 
hospice payment reform activities. This rule solicits comments on: 
Definitions of ``terminal illness'' and ``related conditions''; and 
process and appeals for Part D payment for drugs while beneficiaries 
are under a hospice election. This rule proposes timeframes for filing 
the hospice notice of election and the notice of termination/
revocation; adding the attending physician to the hospice election 
form; expediting hospice inpatient and aggregate cap determinations; 
and updates to the hospice quality reporting program. Additionally, 
this proposed rule provides guidance on determining a patient's 
eligibility for hospice, discusses the delay in the implementation of 
the International Classification of Diseases, 10th Revision, Clinical 
Modification (ICD-10-CM), clarifies how hospices would report 
diagnoses, in accordance with current ICD-9-CM guidelines, on hospice 
claims, and proposes a technical regulations text change.

B. Summary of the Major Provisions

    In this rule we propose to update the hospice payment rates for FY 
2015 by 1.3 percent as described in section III.G.3. The hospice wage 
index would be updated with more current wage data and the BNAF would 
be reduced by an additional 15 percent for a total BNAF reduction of 85 
percent as described in section III.G.2. The total BNAF phase-out would 
be complete by FY 2016. In 2010, the Congress amended section 
1814(i)(6) of the Act with section 3132(a) of the Affordable Care Act. 
The amendment authorized the Secretary to collect additional data and 
information determined appropriate to revise payments for hospice care 
(no earlier than October 1, 2013) and for other purposes. An initial 
step of hospice payment reform in this proposed rule is to clarify and 
enforce hospice payment policy, when necessary, in order to safeguard 
beneficiaries and the Medicare hospice benefit. In section III.A, we 
provide information on hospice behavior and trends that raise program 
integrity concerns; the impact of beneficiary access to quality end of 
life care; and the effect of hospice providers' market driven goals 
rather than preserving the intent of the Medicare Hospice benefit. In 
response to the concerning trends and comments received in response to 
prior rulemaking, we are soliciting comments on definitions of 
``terminal illness'' and ``related conditions'' in section III.B, in 
order to strengthen and clarify the current concepts of holistic and 
comprehensive hospice care under the Medicare hospice benefit. In 
section III.I, we are soliciting comments on processes that Part D plan 
sponsors could use to coordinate with Medicare hospices in determining 
coverage of drugs for hospice beneficiaries and resolving disagreements 
between the parties. In section III.E, we propose to require hospices 
to file both the notice of election (NOE) and the notice of 
termination/revocation (NOTR) on behalf of beneficiaries within 3 
calendar days of admission/discharge. If an NOE is not filed timely, 
the days from the effective date of election to the date of filing the 
NOE would be the financial responsibility of the hospice. In section 
III.F, we propose to require the hospice to identify the attending 
physician on the election form. In section III.D, we propose that 
hospices complete their cap determinations, using a pro-forma 
spreadsheet, within 150 days after the cap period, and remit any 
overpayments at that time. Given concerns about hospices increasingly 
exceeding their aggregate cap, along with the average overpayment per 
beneficiary, we believe that this procedural change is necessary in 
order to better safeguard the Medicare Trust Fund.
    This proposed rule, in section III.H, discusses updates to the 
hospice quality reporting program, including participation requirements 
for CY 2015 regarding the CAHPS[supreg] Hospice Survey, and reminds the 
hospice industry that last year we set the July 1, 2014 implementation 
date for the Hospice Item Set and the January 1, 2015 implementation 
date for the CAHPS[supreg] Hospice Survey.
    More than seven new quality measures would be derived from these 
tools; therefore, no new measures are proposed this year. Section III.H 
of this rule also proposes changes related to the reconsideration 
process, extraordinary circumstance extensions or exemptions, and 
hospice quality reporting program (HQRP) eligibility requirements for 
newly certified hospices. Finally, this proposed rule provides: 
guidance on determining the beneficiary's eligibility for hospice in 
section III.C; discusses the delay in the implementation of the 
International Classification of Diseases, 10th Revision, Clinical 
Modification (ICD-10-CM); clarifies appropriate diagnosis reporting on 
hospice claims. We propose that, effective October 1, 2014, claims 
would be returned to the provider if the claim listed a non-specific 
symptom diagnosis as the principal hospice diagnosis in section III. J. 
We also propose a technical regulations text change in section III.K 
pertaining to the definition of ``social worker''.

C. Summary of Impacts

                      Table 1--Impact Summary Table
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         Provision description                      Transfers
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FY 2015 Hospice Wage Index and Payment   The overall economic impact of
 Rate Update.                             this proposed rule is
                                          estimated to be $230 million
                                          in increased payments to
                                          hospices during FY 2015.
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         Provision description                     Total costs
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New Quality Reporting Requirements for   $8.77 million.
 Hospices (FY 2015).
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II. Background

A. Hospice Care

    Hospice care is an approach to treatment that recognizes that the 
impending death of an individual warrants a change in the focus from 
curative care to palliative care for relief of pain and for symptom 
management.

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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 use of a broad spectrum of professionals 
and other caregivers, with the goal of making the individual as 
physically and emotionally comfortable as possible. Hospice is 
compassionate patient and family-centered care for those who are 
terminally ill. It is a comprehensive, holistic approach to treatment 
that recognizes that the impending death of an individual necessitates 
a change from curative to palliative care.
    Medicare regulations define palliative care as ``patient and 
family-centered care that optimizes quality of life by anticipating, 
preventing, and treating suffering.'' Palliative care throughout the 
continuum of illness involves addressing physical, intellectual, 
emotional, social, and spiritual needs and to facilitate patient 
autonomy, access to information, and choice'' (42 CFR 418.3). 
Palliative care is at the core of hospice philosophy and care 
practices, and is a critical component of the Medicare hospice benefit. 
As stated in the June 5, 2008 Hospice Conditions of Participation final 
rule (73 FR 32088), palliative care is an approach that ``optimizes 
quality of life by anticipating, preventing, and treating suffering.'' 
The goal of palliative care in hospice is to improve the quality of 
life of individuals, and their families, facing the issues associated 
with a life-threatening illness through the prevention and relief of 
suffering by means of early identification, assessment and treatment of 
pain and other issues. This is achieved by the hospice 
interdisciplinary team working with the patient and family to develop a 
comprehensive care plan focused on coordinating care services, reduce 
unnecessary diagnostics or ineffective therapies, and offering ongoing 
conversations with individuals and their families about changes in the 
disease. It is expected that this comprehensive care plan would shift 
over time to meet the changing needs of the patient and family as the 
individual approaches the end-of-life.
    Medicare hospice care is palliative care for individuals with a 
prognosis of living 6 months or less if the terminal illness runs its 
normal course. As generally accepted by the medical community, the term 
``terminal illness'' refers to an advanced and progressively 
deteriorating illness, and that the illness is diagnosed as incurable 
(please see section III.B for a discussion and solicitation of comments 
on a possible Medicare hospice definition of ``terminal illness''). 
When an individual is terminally ill, many health problems are brought 
on by underlying condition(s), as bodily systems are interdependent. In 
the June 5, 2008 Hospice Conditions of Participation final rule (73 FR 
32088), we stated that ``the medical director must consider the primary 
terminal condition, related diagnoses, current subjective and objective 
medical findings, current medication and treatment orders, and 
information about unrelated conditions when considering the initial 
certification of the terminal illness.'' As referenced in our 
regulations at Sec.  418.22(b)(1), to be eligible for Medicare hospice 
services, the patient's attending physician (if any) and the hospice 
medical director must certify that the individual is terminally ill, 
that is, the individual's prognosis is for a life expectancy of 6 
months or less if the terminal illness runs its normal course as 
defined in section 1861(dd)(3)(A) of the Act and our regulations at 
Sec.  418.3. The certification of terminal illness 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 and 
recertification forms, as stated in Sec.  418.22(b)(3).
    The goal of hospice care is to make the hospice patient as 
physically and emotionally comfortable as possible, with minimal 
disruption to normal activities, while remaining primarily in the home 
environment. Hospice care uses an interdisciplinary approach to deliver 
medical, nursing, social, psychological, emotional, and spiritual 
services through the use of a broad spectrum of professional and other 
caregivers and volunteers. While the goal of hospice care is to allow 
for the individual to remain in his or her home environment, 
circumstances during the end-of-life may necessitate short-term 
inpatient admission to a hospital, skilled nursing facility (SNF), or 
hospice facility for procedures necessary for pain control or acute or 
chronic symptom management that cannot be managed in any other setting. 
These acute hospice care services are to ensure that any new or 
worsening symptoms are intensively addressed so that the individual can 
return to his or her home environment under a home level of care. 
Short-term, intermittent, inpatient respite services are also available 
to the family of the hospice patient when needed to relieve the family 
or other caregivers. Additionally, an individual can receive continuous 
home care during a period of crisis in which an individual requires 
primarily continuous nursing care to achieve palliation or management 
of acute medical symptoms so that the individual can remain at home. 
Continuous home care may be covered on a continuous basis for as much 
as 24 hours a day, and these periods must be predominantly nursing care 
per our regulations at Sec.  418.204. A minimum of 8 hours of care must 
be furnished on a particular day to qualify for the continuous home 
care rate (Sec.  418.302(e)(4)).
    Hospices are expected to comply with all civil rights laws, 
including the provision of auxiliary aids and services to ensure 
effective communication with patients or patient care representatives 
with disabilities consistent with Section 504 of the Rehabilitation Act 
of 1973 and the Americans with Disabilities Act, and to provide 
language access for such persons who are limited in English 
proficiency, consistent with Title VI of the Civil Rights Act of 1964. 
Further information about these requirements may be found at http://www.hhs.gov/ocr/civilrights.

B. History of the Medicare Hospice Benefit

    Before the creation of the Medicare hospice benefit, hospice was 
originally run by volunteers who cared for the dying. During the early 
development stages of the Medicare hospice benefit, hospice advocates 
were clear that they wanted a Medicare benefit available that provided 
all-inclusive care for terminally-ill individuals, provided pain relief 
and symptom management, and offered the opportunity to die with dignity 
in the comfort of one's home rather than in an institutional 
setting.\1\ As stated in the August 22, 1983 proposed rule entitled 
``Medicare Program; Hospice Care'' (48 FR 38146), ``the hospice 
experience in the United States has placed emphasis on home care. It 
offers physician services, specialized nursing services, and other 
forms of care in the home to enable the terminally ill individual to 
remain at home in the company of family and friends as long as 
possible.'' The concept of a patient ``electing'' the hospice benefit 
and being certified as terminally ill were two key components in the 
legislation responsible for the creation of the Medicare Hospice 
Benefit (section 122 of the Tax Equity

[[Page 26542]]

and Fiscal Responsibility Act of 1982 (TEFRA), (Pub. L. 97-248)). 
Section 122 of TEFRA created the Medicare Hospice Benefit, which was 
implemented on November 1, 1983. Under sections 1812(d) and 1861(dd) of 
the Social Security Act (the Act), codified at 42 U.S.C. 1395d(d) and 
1395x(dd), we provide coverage of hospice care for terminally ill 
Medicare beneficiaries who elect to receive care from a Medicare-
certified hospice. Our regulations at Sec.  418.54(c) stipulate that 
the comprehensive hospice assessment must identify the patient's 
physical, psychosocial, emotional, and spiritual needs related to the 
terminal illness and related conditions, and address those needs in 
order to promote the hospice patient's well-being, comfort, and dignity 
throughout the dying process. The comprehensive assessment must take 
into consideration the following factors: the nature and condition 
causing admission (including the presence or lack of objective data and 
subjective complaints); complications and risk factors that affect care 
planning; functional status; imminence of death; and severity of 
symptoms (Sec.  418.54(c)). The Medicare hospice benefit requires the 
hospice to cover all reasonable and necessary palliative care related 
to the terminal prognosis and related conditions, as described in the 
patient's plan of care. The December 16, 1983 Hospice final rule (48 FR 
56008) requires hospices to cover care for interventions to manage pain 
and symptoms. Clinically, related conditions are any physical or mental 
conditions that are related to or caused by either the terminal illness 
or the medications used to manage the terminal illness.\2\ See section 
III.B of this proposed rule for a discussion and solicitation of 
comments on a possible Medicare hospice definition of ``related 
conditions.'' Additionally, the hospice Conditions of Participation at 
Sec.  418.56(c) require that the hospice must provide all services 
necessary for the palliation and management of the terminal illness, 
related conditions and interventions to manage pain and symptoms. 
Therapy and interventions must be assessed and managed in terms of 
providing palliation and comfort without undue symptom burden for the 
hospice patient or family.\3\ For example, a hospice patient with lung 
cancer (the principal terminal diagnosis) may receive inhalants for 
shortness of breath (related to the terminal condition). The patient 
may also suffer from metastatic bone pain (a related condition) and 
would be treated with opioid analgesics. As a result of the opioid 
therapy, the patient may suffer from constipation (a related condition) 
and require a laxative for symptom relief. It is often not a single 
diagnosis that represents the terminal prognosis of the patient, but 
the combined effect of several conditions that makes the patient's 
condition terminal. In the December 16, 1983 Hospice final rule (48 FR 
56010 through 56011), regarding what is related versus unrelated to the 
terminal illness, we stated: ``. . . we believe that the unique 
physical condition of each terminally ill individual makes it necessary 
for these decisions to be made on a case-by-case basis. It is our 
general view that hospices are required to provide virtually all the 
care that is needed by terminally ill patients.'' Therefore, unless 
there is clear evidence that a condition is unrelated to the terminal 
prognosis, all services would be considered related. It is also the 
responsibility of the hospice physician to document why a patient's 
medical needs would be unrelated to the terminal prognosis.
---------------------------------------------------------------------------

    \1\ Connor, Stephen. (2007). Development of Hospice and 
Palliative Care in the United States. OMEGA. 56(1), p89-99.
    \2\ Harder, PharmD, CGP, Julia. (2012). To Cover or Not To 
Cover: Guidelines for Covered Medications in Hospice Patients. The 
Clinician. 7(2), p1-3.
    \3\ Paolini, DO, Charlotte. (2001). Symptoms Management at End 
of Life. JAOA. 101(10). p609-615.
---------------------------------------------------------------------------

    As stated in the December 16,1983 Hospice final rule, the 
fundamental premise upon which the hospice benefit was designed was the 
``revocation'' of traditional curative care and the ``election'' of 
hospice care for end-of-life symptom management and maximization of 
quality of life (48 FR 56008). After electing hospice care, the patient 
typically returns to the home from an institutionalized setting or 
remains in the home, to be surrounded by family and friends, and to 
prepare emotionally and spiritually for death while receiving expert 
symptom management and other supportive services. Election of hospice 
care also includes waiving the right to Medicare payment for curative 
treatment for the terminal prognosis, and instead receiving palliative 
care to manage pain or symptoms.
    The benefit was originally designed to cover hospice care for a 
finite period of time that roughly corresponded to a life expectancy of 
6 months or less. Initially, beneficiaries could receive three election 
periods: Two 90-day periods and one 30-day period. Currently, Medicare 
beneficiaries can elect hospice care for two 90-day periods and an 
unlimited number of subsequent 60-day periods; however, the expectation 
remains that beneficiaries have a life expectancy of 6 months or less 
if the terminal illness runs its normal course.

C. Services Covered by the Medicare Hospice Benefit

    One requirement for coverage under the Medicare Hospice Benefit is 
that hospice services must be reasonable and necessary for the 
palliation and management of the terminal illness and related 
conditions. Section 1861(dd)(1) of the Act establishes the services 
that are to be rendered by a Medicare certified hospice program. These 
covered services include: Nursing care; physical therapy; occupational 
therapy; speech-language pathology therapy; medical social services; 
home health aide services (now called hospice aide services); physician 
services; homemaker services; medical supplies (including drugs and 
biologics); medical appliances; counseling services (including dietary 
counseling); short-term inpatient care (including both respite care and 
procedures necessary for pain control and acute or chronic symptom 
management) in a hospital, nursing facility, or hospice inpatient 
facility; continuous home care during periods of crisis and only as 
necessary to maintain the terminally ill individual at home; and any 
other item or service which is specified in the plan of care and for 
which payment may otherwise be made under Medicare, in accordance with 
Title XVIII of the Act.
    Section 1814(a)(7)(B) of the Act requires that a written plan for 
providing hospice care to a beneficiary who is a hospice patient be 
established before care is provided by, or under arrangements made by, 
that hospice program and that the written plan be periodically reviewed 
by the beneficiary's attending physician (if any), the hospice medical 
director, and an interdisciplinary group (described in section 
1861(dd)(2)(B) of the Act). The services offered under the Medicare 
hospice benefit must be available, as needed, to beneficiaries 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 expected hospices 
to continue to use volunteer services, though these services are not 
reimbursed by Medicare (see Section 1861(dd)(2)(E) of the Act and (48 
FR 38149)). As stated in the August 22, 1983 Hospice proposed rule, the 
hospice interdisciplinary group should be comprised of paid hospice 
employees as well as hospice volunteers (48 FR 38149). This expectation 
is in line with the history of hospice and philosophy of holistic, 
comprehensive, compassionate, end-of-life care.
    Before the Medicare hospice benefit was established, Congress 
requested a demonstration project to test the

[[Page 26543]]

feasibility of covering hospice care under Medicare. The National 
Hospice Study was initiated in 1980 through a grant sponsored by the 
Robert Wood Johnson and John A. Hartford Foundations and CMS (then, the 
Health Care Financing Administration (HCFA)). The demonstration project 
was conducted between October 1980 and March 1983. The project 
summarized the hospice care philosophy as the following:
     Patient and family know of the terminal condition.
     Further medical treatment and intervention are indicated 
only on a supportive basis.
     Pain control should be available to patients as needed to 
prevent rather than to just ameliorate pain.
     Interdisciplinary teamwork is essential in caring for 
patient and family.
     Family members and friends should be active in providing 
support during the death and bereavement process.
     Trained volunteers should provide additional support as 
needed.

The cost data and the findings on what services hospices provided in 
the demonstration project were used to design the Medicare hospice 
benefit. The identified hospice services were incorporated into the 
service requirements under the Medicare hospice benefit. Importantly, 
in the August 22, 1983 hospice proposed rule, we stated ``the hospice 
benefit and the resulting Medicare reimbursement is not intended to 
diminish the voluntary spirit of hospices'' (48 FR 38149).

D. Medicare Payment for Hospice Care

    Sections 1812(d), 1813(a)(4), 1814(a)(7), 1814(i), and 1861(dd) of 
the Act, and our regulations in part 418, establish eligibility 
requirements, payment standards and procedures, define covered 
services, and delineate the conditions a hospice must meet to be 
approved for participation in the Medicare program. Part 418, subpart 
G, provides for a per diem payment in one of four prospectively-
determined rate categories of hospice care (routine home care, 
continuous home care, inpatient respite care, and general inpatient 
care), based on each day a qualified Medicare beneficiary is under 
hospice care (once the individual has elected). This per diem payment 
is to include all of the hospice services needed to manage the 
beneficiaries' care, as required by section 1861(dd)(1) of the Act. 
There has been little change in the hospice payment structure since the 
benefit's inception. The per diem rate based on level of care was 
established in 1983, and this payment structure remains today with some 
adjustments, as noted below:
1. Omnibus Budget Reconciliation Act of 1989
    Section 6005(a) of the Omnibus Budget Reconciliation Act of 1989 
(Pub. L. 101-239) amended section 1814(i)(1)(C) of the Act and provided 
for the following two changes in the methodology concerning updating 
the daily payment rates: (1) Effective January 1, 1990, the daily 
payment rates for routine home care and other services in included in 
hospice care were increased to equal 120 percent of the rates in effect 
on September 30, 1989; and (2) the daily payment rate for routine home 
care and other services included in hospice care for fiscal years 
beginning on or after October 1, 1990, were the payment rates in effect 
during the previous Federal fiscal year increased by the hospital 
market basket percentage increase.
2. Balanced Budget Act of 1997
    Section 4441(a) of the Balanced Budget Act of 1997 (BBA) (Pub. L. 
105-33) amended section 1814(i)(1)(C)(ii)(VI) of the Act to establish 
updates to hospice rates for FYs 1998 through 2002. Hospice rates were 
updated by a factor equal to the hospital market basket percentage 
increase, minus 1 percentage point. Payment rates for FYs from 2002 
have been updated according to section 1814(i)(1)(C)(ii)(VII) of the 
Act, which states that the update to the payment rates for subsequent 
FYs will be the hospital market basket percentage increase for the FY. 
The Act requires us to use the inpatient hospital market basket to 
determine hospice payment rates.
3. FY 1998 Hospice Wage Index Final Rule
    In the August 8, 1997 FY 1998 Hospice Wage Index final rule (62 FR 
42860), we implemented a new methodology for calculating the hospice 
wage index based on the recommendations of a negotiated rulemaking 
committee. The original hospice wage index was based on 1981 Bureau of 
Labor Statistics hospital data and had not been updated since 1983. In 
1994, because of disparity in wages from one geographical location to 
another, the Hospice Wage Index Negotiated Rulemaking Committee was 
formed to negotiate a new wage index methodology that could be accepted 
by the industry and the government. This Committee was comprised of 
representatives from national hospice associations; rural, urban, large 
and small hospices, and multi-site hospices; consumer groups; and a 
government representative. The Committee decided that in updating the 
hospice wage index, aggregate Medicare payments to hospices would 
remain budget neutral to payments calculated using the 1983 wage index, 
to cushion the impact of using a new wage index methodology. To 
implement this policy, a Budget Neutrality Adjustment Factor (BNAF) 
would be computed and applied annually to the pre-floor, pre-
reclassified hospital wage index when deriving the hospice wage index, 
subject to a wage index floor.
4. FY 2010 Hospice Wage Index Final Rule
    Inpatient hospital pre-floor and pre-reclassified wage index 
values, as described in the August 8, 1997 Hospice Wage Index final 
rule, are subject to either a budget neutrality adjustment or 
application of the wage index floor. Wage index values of 0.8 or 
greater are adjusted by the (BNAF). Starting in FY 2010, a 7-year 
phase-out of the BNAF began (August 6, 2009 FY 2010 Hospice Wage Index 
final rule, (74 FR 39384)), with a 10 percent reduction in FY 2010, an 
additional 15 percent reduction for a total of 25 percent in FY 2011, 
an additional 15 percent reduction for a total 40 percent reduction in 
FY 2012, an additional 15 percent reduction for a total of 55 percent 
in FY 2013, and an additional 15 percent reduction for a total 70 
percent reduction in FY 2014. The phase-out would continue with an 
additional 15 percent reduction for a total reduction of 85 percent in 
FY 2015, and an additional 15 percent reduction for complete 
elimination in FY 2016. Note that the BNAF is an adjustment which 
increases the hospice wage index value. Therefore, the BNAF reduction 
is a reduction in the amount of the BNAF increase applied to the 
hospice wage index value. It is not a reduction in the hospice wage 
index value, or in the hospice payment rates.
5. The Affordable Care Act
    Starting with FY 2013 (and in subsequent fiscal years), the market 
basket percentage update under the hospice payment system referenced in 
sections 1814(i)(1)(C)(ii)(VII) and 1814(i)(1)(C)(iii) of the Act will 
be annually reduced by changes in economy-wide productivity, as 
specified in section 1886(b)(3)(B)(xi)(II) of the Act, as amended by 
section 3132(a) of the Patient Protection and Affordable Care Act (Pub. 
L. 111-148) as amended by the Health Care and Education Reconciliation 
Act (Pub. L. 111-152) (the Affordable Care Act)). In FY 2013 through FY 
2019, the market

[[Page 26544]]

basket percentage update under the hospice payment system will be 
reduced by an additional 0.3 percentage point (although for FY 2014 to 
FY 2019, the potential 0.3 percentage point reduction is subject to 
suspension under conditions as specified in section 1814(i)(1)(C)(v) of 
the Act).
    In addition, sections 1814(i)(5)(A) through (C) of the Act, as 
amended by section 3132(a) of the Affordable Care Act, require hospices 
to begin submitting quality data, based on measures to be specified by 
the Secretary, for FY 2014 and subsequent fiscal years. Beginning in FY 
2014, hospices which fail to report quality data will have their market 
basket update reduced by 2 percentage points.
    Section 1814(a)(7)(D)(i) of the Act was amended by section 3132 
(b)(2)(D)(i) of the Affordable Care Act, and requires, effective 
January 1, 2011, that a hospice physician or nurse practitioner have a 
face-to-face encounter with an individual to determine continued 
eligibility of the individual for hospice care prior to the 180th-day 
recertification and each subsequent recertification, and to attest that 
such visit took place. When implementing this provision, we decided 
that the 180th-day recertification and subsequent recertifications 
corresponded to the recertification for a beneficiary's third or 
subsequent benefit periods (CY 2011 Home Health Prospective Payment 
System final rule (75 FR 70435)). Further, section 1814(i)(6) of the 
Act, as amended by section 3132(a)(1)(B) of the Affordable Care Act, 
authorizes the Secretary to collect additional data and information 
determined appropriate to revise payments for hospice care and other 
purposes. The types of data and information suggested in the Affordable 
Care Act would capture accurate resource utilization, which could be 
collected on claims, cost reports, and possibly other mechanisms, as 
the Secretary determines to be appropriate. The data collected may be 
used to revise the methodology for determining the payment rates for 
routine home care and other services included in hospice care, no 
earlier than October 1, 2013, as described in section 1814(i)(6)(D) of 
the Act. In addition, we are required to consult with hospice programs 
and the Medicare Payment Advisory Commission (MedPAC) regarding 
additional data collection and payment revision options.
6. FY 2012 Hospice Wage Index Final Rule
    When the Medicare Hospice Benefit was implemented, the Congress 
included an aggregate cap on hospice payments, which limits the total 
aggregate payments any individual hospice can receive in a year. The 
Congress stipulated that a ``cap amount'' be computed each year. The 
cap amount was set at $6,500 per beneficiary when first enacted in 1983 
and is adjusted annually by the change in the medical care expenditure 
category of the consumer price index for urban consumers from March 
1984 to March of the cap year (section 1814(i)(2)(B) of the Act). The 
cap year is defined as the period from November 1st to October 31st. As 
we stated in the August 4, 2011 FY 2012 Hospice Wage Index final rule 
(76 FR 47308 through 47314), for the 2012 cap year and subsequent cap 
years, the hospice aggregate cap will be calculated using the patient-
by-patient proportional methodology, within certain limits. We will 
allow existing hospices the option of having their cap calculated via 
the original streamlined methodology, also within certain limits. New 
hospices will have their cap determinations calculated using the 
patient-by-patient proportional methodology. The patient-by-patient 
proportional methodology and the streamlined methodology are two 
different methodologies for counting beneficiaries when calculating the 
hospice aggregate cap. A detailed explanation of these methods is found 
in the August 4, 2011 FY 2012 Hospice Wage Index final rule (76 FR 
47308 through 47314). If a hospice's total Medicare reimbursement for 
the cap year exceeded the hospice aggregate cap, then the hospice would 
have to repay the excess back to Medicare.

E. Trends in Medicare Hospice Utilization

    Since the implementation of the hospice benefit in 1983, and 
especially within the last decade, there has been substantial growth in 
hospice utilization. The number of Medicare beneficiaries receiving 
hospice services has grown from 513,000 in FY 2000 to over 1.3 million 
in FY 2013. Similarly, Medicare hospice expenditures have risen from 
$2.9 billion in FY 2000 to an estimated $15.1 billion in FY 2013. Our 
Office of the Actuary (OACT) projects that hospice expenditures are 
expected to continue to increase, by approximately 8 percent annually, 
reflecting an increase in the number of Medicare beneficiaries, more 
beneficiary awareness of the Medicare Hospice Benefit for end-of-life 
care, and a growing preference for care provided in home and community-
based settings. However, this increased spending is partly due to an 
increased average lifetime length of stay for beneficiaries, from 54 
days in 2000 to 86 days in 2011, an increase of 59 percent.
    There have also been noted changes in the diagnosis patterns among 
Medicare hospice enrollees. Specifically, there were notable increases 
between 2002 and 2007 in neurologically-based diagnoses, including 
various dementia diagnoses. Additionally, there have been significant 
increases in the use of non-specific, symptom-classified diagnoses, 
such as ``debility'' and ``adult failure to thrive.'' In FY 2012, both 
``debility'' and ``adult failure to thrive'' were the first and third 
most common hospice diagnoses, respectively. ``Debility'' and ``adult 
failure to thrive'' continue to be among the most common hospice 
principal diagnoses (14 percent), and those, combined with ``dementia'' 
and Alzheimer's disease constituted approximately 30 percent of all 
claims-reported principal diagnosis codes reported in FY 2013 (see 
Table 2 below).

 Table 2--The Top Twenty Principal Hospice Diagnoses, FY 2002, FY 2007,
                            FY 2012, FY 2013
------------------------------------------------------------------------
                        ICD-9/Reported
        Rank               principal           Count        Percentage
                           diagnosis
------------------------------------------------------------------------
                              Year: FY 2002
------------------------------------------------------------------------
1...................  162.9 Lung Cancer.          73,769              11
2...................  428.0 Congestive            45,951               7
                       Heart Failure.
3...................  799.3 Debility              36,999               6
                       Unspecified.
4...................  496 COPD..........          35,197               5
5...................  331.0 Alzheimer's           28,787               4
                       Disease.
6...................  436 CVA/Stroke....          26,897               4
7...................  185 Prostate                20,262               3
                       Cancer.
8...................  783.7 Adult                 18,304               3
                       Failure To Thrive.

[[Page 26545]]

 
9...................  174.9 Breast                17,812               3
                       Cancer.
10..................  290.0 Senile                16,999               3
                       Dementia, Uncomp..
11..................  153.0 Colon Cancer          16,379               2
12..................  157.9 Pancreatic            15,427               2
                       Cancer.
13..................  294.8 Organic               10,394               2
                       Brain Synd Nec.
14..................  429.9 Heart                 10,332               2
                       Disease
                       Unspecified.
15..................  154.0 Rectosigmoid           8,956               1
                       Colon Cancer.
16..................  332.0 Parkinson's            8,865               1
                       Disease.
17..................  586 Renal Failure            8,764               1
                       Unspecified.
18..................  585 Chronic Renal            8,599               1
                       Failure (End
                       2005).
19..................  183.0 Ovarian                7,432               1
                       Cancer.
20..................  188.9 Bladder                6,916               1
                       Cancer.
------------------------------------------------------------------------
 
                              Year: FY 2007
------------------------------------------------------------------------
1...................  799.3 Debility              90,150               9
                       Unspecified.
2...................  162.9 Lung Cancer.          86,954               8
3...................  428.0 Congestive            77,836               7
                       Heart Failure.
4...................  496 COPD..........          60,815               6
5...................  783.7 Adult                 58,303               6
                       Failure To Thrive.
6...................  331.0 Alzheimer's           58,200               6
                       Disease.
7...................  290.0 Senile                37,667               4
                       Dementia Uncomp..
8...................  436 CVA/Stroke....          31,800               3
9...................  429.9 Heart                 22,170               2
                       Disease
                       Unspecified.
10..................  185 Prostate                22,086               2
                       Cancer.
11..................  174.9 Breast                20,378               2
                       Cancer.
12..................  157.9 Pancreas              19,082               2
                       Unspecified.
13..................  153.9 Colon Cancer          19,080               2
14..................  294.8 Organic               17,697               2
                       Brain Syndrome
                       NEC.
15..................  332.0 Parkinson's           16,524               2
                       Disease.
16..................  294.10 Dementia In          15,777               2
                       Other Diseases w/
                       o Behav. Dist.
17..................  586 Renal Failure           12,188               1
                       Unspecified.
18..................  585.6 End Stage             11,196               1
                       Renal Disease.
19..................  188.9 Bladder                8,806               1
                       Cancer.
20..................  183.0 Ovarian                8,434               1
                       Cancer.
------------------------------------------------------------------------
 
                              Year: FY 2012
------------------------------------------------------------------------
1...................  799.3 Debility             161,163              12
                       Unspecified.
2...................  162.9 Lung Cancer.          89,636               7
3...................  783.7 Adult                 86,467               7
                       Failure To Thrive.
4...................  428.0 Congestive            84,333               6
                       Heart Failure.
5...................  496 COPD..........          74,786               6
6...................  331.0 Alzheimer's           64,199               5
                       Disease.
7...................  290.0 Senile                56,234               4
                       Dementia, Uncomp..
8...................  429.9 Heart                 32,081               2
                       Disease
                       Unspecified.
9...................  436 CVA/Stroke....          31,987               2
10..................  294.10 Dementia In          27,417               2
                       Other Diseases w/
                       o Behavioral Dist.
11..................  174.9 Breast                22,421               2
                       Cancer.
12..................  153.9 Colon Cancer          22,197               2
13..................  157.9 Pancreatic            22,007               2
                       Cancer.
14..................  332.0 Parkinson's           21,183               2
                       Disease.
15..................  185 Prostate                21,042               2
                       Cancer.
16..................  294.8 Other                 17,762               1
                       Persistent Mental
                       Dis.--classified
                       elsewhere.
17..................  585.6 End Stage             17,545               1
                       Renal Disease.
18..................  518.81 Respiratory          12,962               1
                       Failure.
19..................  294.11 Dementia In          11,751               1
                       Other Diseases w/
                       Behavioral Dist.
20..................  188.9 Bladder               10,511               1
                       Cancer.
------------------------------------------------------------------------
 
                              Year: FY 2013
------------------------------------------------------------------------
1...................  799.3 Debility             127,308               9
                       Unspecified.
2...................  428.0 Congestive            95,850               7
                       Heart Failure.
3...................  162.9 Lung Cancer.          91,263               6
4...................  496 COPD..........          81,944               6
5...................  331.0 Alzheimer's           79,360               6
                       Disease.
6...................  783.7 Adult                 71,033               5
                       Failure to Thrive.
7...................  290.0 Senile                60,441               4
                       Dementia, Uncomp..
8...................  429.9 Heart                 36,817               3
                       Disease
                       Unspecified.

[[Page 26546]]

 
9...................  436 CVA/Stroke....          34,330               2
10..................  294.10 Dementia In          30,884               2
                       Other Diseases w/
                       o Behavioral Dist.
11..................  332.0 Parkinson's           25,308               2
                       Disease.
12..................  153.9 Colon Cancer          23,133               2
13..................  294.20 Dementia             23,108               2
                       Unspecified w/o
                       Behavioral Dist.
14..................  174.9 Breast                22,986               2
                       Cancer.
15..................  157.9 Pancreatic            22,267               2
                       Cancer.
16..................  185 Prostate                21,701               2
                       Cancer.
17..................  585.6 End-Stage             19,212               1
                       Renal Disease.
18..................  518.81 Acute                15,900               1
                       Respiratory
                       Failure.
19..................  294.8 Other                 14,337               1
                       Persistent Mental
                       Dis.--classified
                       elsewhere.
20..................  294.11 Dementia In          13,648               1
                       Other Diseases w/
                       Behavioral Dist.
------------------------------------------------------------------------
Note(s): The frequencies shown represent beneficiaries that had at least
  one claim with the specific ICD-9-CM code reported as the principal
  diagnosis. Beneficiaries could be represented multiple times in the
  results if they have multiple claims during that time period with
  different principal diagnoses.
Source: FY 2002, 2007, and 2012 hospice claims data from the Chronic
  Conditions Data Warehouse (CCW), accessed on February 14 and February
  20, 2013. FY 2013 hospice claims data from the CCW, accessed on
  February 27, 2014.

III. Provisions of the Proposed Rule

A. Hospice Payment Reform: Research and Analyses

    In 2010, the Congress amended section 1814(i)(6) of the Act with 
section 3132(a) of the Affordable Care Act. The amendment authorized 
the Secretary to collect additional data and information determined 
appropriate to revise payments for hospice care and for other purposes. 
The data collected may be used to revise the methodology for 
determining the payment rates for routine home care and other services 
included in hospice care, no earlier than October 1, 2013, as described 
in section 1814(i)(6)(D) of the Act. We are also required to consult 
with hospice programs and the Medicare Payment Advisory Commission 
(MedPAC) regarding additional data collection and payment revision 
options. Since 2010, we have been working with our hospice reform 
contractor, Abt Associates, to review the most current peer-reviewed 
literature; conduct research and analyses; identify potential 
vulnerabilities in the current payment system; and research and develop 
hospice payment model options. We recently required additional 
information on hospice claims regarding drugs and certain durable 
medical equipment, effective April 1, 2014; and are in the process of 
finalizing changes to the hospice cost report to better collect data on 
the costs of providing hospice care. The additional information on 
hospice claims and the hospice cost report will be used in our hospice 
payment reform efforts, once the data are available for analysis.
    The research and analyses conducted thus far on available Medicare 
claims and cost report data have highlighted hospice utilization trends 
that could raise concerns regarding the viability of the Medicare 
hospice program and the impact of beneficiary access to quality end of 
life care. In March 2009, the Medicare Payment Advisory Commission 
(MedPAC) recommended that Medicare improve its payment system for 
hospice services to address a misalignment between Medicare's payments 
and hospice's costs that created incentives for providers to enroll 
patients who are more likely to have long stays because those stays are 
more profitable than short ones (http://www.medpac.gov/chapters/Mar09_Ch06.pdf). MedPAC 's June 2013 Report To Congress on Medicare and the 
Health Care Delivery System reiterated concerns about utilization 
trends and suggested that such trends were driven by a misalignment in 
the payment system (http://www.medpac.gov/chapters/Jun13_Ch05.pdf). 
MedPAC's June 2013 report added that, while payment reform would better 
align payments with costs, additional administrative controls were 
necessary to balance incentives and strengthen provider compliance. As 
such, we believe that a critical goal of the Medicare hospice payment 
system is to strengthen and safeguard the current scope of the Medicare 
hospice benefit. This will provide a solid foundation on which to 
reform the methodology used to pay for Medicare hospice services. 
Program integrity is being addressed immediately while we fully develop 
our data and research to address payment reform in the near future.
    Abt Associates, with its subcontractor Brown University, has 
developed a technical report entitled, ``Medicare Hospice Payment 
Reform: Analyses to Support Payment Reform'', dated May 1, 2014 
(hereafter, referred to as the May 2014 Technical Report) that 
thoroughly describes the analytic file and extensive work performed on 
analyzing current hospice utilization data, of which many of the 
results of the analyses are presented in this proposed rule. Both the 
May 2014 Technical Report and an updated literature review will be 
available on our hospice center Web page in May, 2014 at: http://www.cms.gov/Center/Provider-Type/Hospice-Center.html in the ``Research 
and Analyses'' section. We further examined hospice utilization data 
and developed a provider-level file to identify aberrant hospice 
behavior. The provider-level file contains information on beneficiaries 
who were discharged (alive or deceased) in Calendar Year (CY) 2012 and 
includes claims data from January 1, 2010 through December 31, 2012. 
Some of the findings described in this section, are based on this 
provider-level file.
1. Beneficiaries Dying Without Skilled Visits in the Last Days of Life
    Hospice clinicians are experts in recognizing changes as a patient 
is approaching the last few days of life and helping to prepare and 
support the patient and family. Most individuals approaching end-of-
life have noted declines over the several days prior to death. As such, 
the expectation is that there would be an increased need for hospice 
services in the days leading up to the hospice beneficiary's death. 
Although we recognize that prognostication is not an exact science, 
there are hallmark physical, functional, nutritional and cognitive 
changes that are typically present leading up the hospice patient's 
death (see section III.C of this proposed rule).
    When looking at skilled visits provided in the last days of life, 
as reported on the hospice claim, our

[[Page 26547]]

analysis found that a relatively high percentage (28.9 percent) of 
hospice decedents who were receiving RHC on their last day of life did 
not receive a skilled visit on that day (see Table 3 below). This could 
be explained, in part, by sudden or unexpected death. Expanding this 
analysis to skilled visits provided in the last two to four days of 
life, we found that 14.4 percent of hospice decedents did not receive 
skilled visits in the last 2 days of life and 6.2 percent of hospice 
decedents did not receive skilled visits in the last 4 days of life. 
While this could also be explained, in part, by sudden or unexpected 
death, we are concerned with the possibility that those beneficiaries 
and their families are not receiving hospice care and support at the 
very end of life. If hospices are actively engaging with the 
beneficiary and the family throughout the election period, we would 
expect to see skilled visits during those last days of life.

  Table 3--Frequency and Percentage of Decedents Not Receiving Skilled
              Visits at the End of Life, Calendar Year 2012
------------------------------------------------------------------------
                                                           Percentage of
                                             Number of    decedents with
                                             decedents      no skilled
                                                              visits
------------------------------------------------------------------------
No skilled visits on last day (and last          656,355            28.9
 day was RHC)...........................
No skilled visits on last two days (and          622,334            14.4
 last two days were RHC)................
No skilled visits on last three days             585,648             9.1
 (and last three days were RHC).........
No skilled visits on last four days (and         551,359             6.2
 last four days were RHC)...............
------------------------------------------------------------------------
Note(s): Skilled visit was considered to be a visit from a social
  worker, therapist, or nurse.
Source: Beneficiaries whose last days of hospice enrollment were billed
  to the RHC level of care using 100% of hospice days from the Hospice
  Standard Analytic File (SAF), Calendar Year (CY) 2012.

    Further analysis of skilled visits during the last two days of life 
found that 10.3 percent of very short stay decedents (5 days or less) 
did not receive skilled visits during the last two days of life. In 
contrast, 15.9 percent of decedents with lengths of stay 181 days or 
longer did not receive visits in the last two days of life. Newer 
hospices (5 years or less since Medicare certification) were more 
likely to have decedents with no skilled visits during the last two 
days of life (17.8 percent) compared to older hospices (6 years or more 
since Medicare certification) (14.0 percent). We also found geographic 
differences in this analysis. The five states with the lowest 
percentage of decedents with no skilled visits on the last two days of 
life included: Wisconsin (5.7 percent), North Dakota (7.3 percent), 
Vermont (7.5 percent), Tennessee (7.5 percent), and Kansas (8.7 
percent). The five states with the highest percentage of decedents with 
no skilled visits on the last two days of life included: New Jersey (23 
percent), Massachusetts (22.9 percent), Oregon (21.2 percent), 
Washington (21 percent), and Minnesota (19.4 percent).
    Using the provider-level file referenced above, we also found that, 
on average, hospices did not report any skilled visits in the last two 
days of life for 9.7 percent of their decedents who died receiving 
routine home care.\4\ Nearly 5 percent of hospices did not provide any 
skilled visits in the last two days of life to more than 50 percent of 
their decedents receiving routine home care on those last two days; the 
average lifetime length of stay among those decedents was 143 days. We 
note that the average lifetime length of stay in our provider-level 
file was 95.4 days (among beneficiaries who were discharged alive or 
deceased in CY 2012). Furthermore, we found that 34 hospices did not 
make any skilled visits in the last 48 hours of life to any of their 
decedents who died while receiving routine home care.
---------------------------------------------------------------------------

    \4\ The provider-level analysis conducted on whether skilled 
visits were provided in the last two days of life only examined 
instances where the decedent was receiving routine home care in the 
last two days of life. We note that 21 providers did not have any 
decedents that died while on routine home care.
---------------------------------------------------------------------------

2. General Inpatient Care, Continuous Home Care, and Inpatient Respite 
Care Utilization
    Medicare Conditions of Participation require hospices to 
demonstrate that they are able to provide all four levels of care--
Routine Home Care (RHC), General Inpatient Care (GIP), Continuous Home 
Care (CHC) and Inpatient Respite Care (IRC) to be a certified Medicare 
hospice provider. As stated in our regulations at Sec.  418.302(b)(4), 
a general inpatient care (GIP) day is a day in which an individual who 
has elected hospice care, receives general inpatient care in an 
inpatient facility for pain control or acute or chronic symptom 
management which cannot be managed in other settings. For FY 2014, the 
payment rate for GIP was $694.19 per day compared to $156.06 for a day 
of RHC.
    While the goal of hospice care is to allow for the individual to 
remain in his or her home environment, circumstances during the end-of-
life may necessitate short-term inpatient admission to a hospital, 
skilled nursing facility (SNF), or hospice inpatient facility for 
procedures necessary for pain control or acute or chronic symptom 
management that cannot be managed in any other setting. These acute 
hospice care services are to ensure that any new or worsening symptoms 
are intensively addressed so that the individual can return to his or 
her home environment under a home level of care.
    As part of our reform work, we analyzed CY 2012 data to better 
understand GIP utilization. We found that 77.3 percent of beneficiaries 
did not have any GIP care in 2012. Using provider-level data for 
beneficiaries discharged in 2012, we also found that 21.1 percent of 
hospices did not provide any GIP care to their beneficiaries. While 
there are appropriate circumstances where a hospice provides no GIP 
(for example, when a provider only has a few patients, none of whom 
needs GIP), we are concerned that more than a fifth of hospices not 
providing any GIP may be an indication that hospice beneficiaries do 
not have adequate access to a necessary level of care for acute or 
chronic symptom management. We also found that there were site of 
service differences such that the longest GIP length of stay was in the 
inpatient hospice setting (6.1 days) and shortest at in the inpatient 
hospital setting (4.5 days). Over two-thirds of GIP days were provided 
in an inpatient hospice setting (68 percent), and about a quarter of 
GIP days were provided in an inpatient hospital (24.9 percent). Only 
5.5 percent of GIP days were provided in a SNF.

[[Page 26548]]

    As stated in our regulations at Sec.  418.302(b)(2), a continuous 
home care day is a day on which an individual who has elected to 
receive hospice care, is not in an inpatient facility, and receives 
hospice care consisting predominantly of nursing care on a continuous 
basis at home. Home health aide (also known as a hospice aide) or 
homemaker services, or both, may also be provided on a continuous 
basis. Continuous home care is only furnished during brief periods of 
crisis as described in Sec.  418.204(a), and only as necessary to 
maintain the terminally ill patient at home. Continuous home care may 
be covered on a continuous basis for as much as 24 hours a day, and 
these periods must be predominantly nursing care per our regulations at 
Sec.  418.204. A minimum of 8 hours of care must be furnished on a 
particular day to qualify for the continuous home care rate (Sec.  
418.302(e)(4)).
    As part of our reform work, we analyzed CY 2012 data to better 
understand CHC utilization. Overall, approximately 0.4 percent of all 
hospice days in 2012 were billed as CHC, but that percentage decreases 
to 0.2 when a large chain provider with a large percentage of its 
hospice days billed as CHC days was excluded. Although 42.7 percent of 
hospices billed at least 1 day of CHC, we found considerable variation 
in the share of CHC days among hospices that provided any CHC. Almost 
90 percent of hospices that provided any CHC had less than 1 percent of 
their days billed as CHC, but four hospices billed more than 10 percent 
of their days as CHC. Forty hospices accounted for 46 percent of all 
CHC days and a single hospice accounted for over a quarter of all CHC 
days. Among hospices who billed for providing CHC, 9.4 percent provided 
over half of their CHC days to beneficiaries residing in a nursing 
home. For CHC, a hospice must provide a minimum of 8 hours of care 
during a 24-hour day, which begins and ends at midnight.
    Finally, we analyzed inpatient respite care (IRC) utilization in 
CYs 2005 through 2012. IRC is provided in an approved facility, as 
needed, on an occasional basis to relieve the family caregivers for up 
to 5 consecutive days. Payment for IRC is subject to the requirement 
that it may not be provided consecutively for more than 5 days at a 
time. As stated in our regulations at Sec.  418.302(e)(5), payment for 
the sixth and any subsequent day of respite care is made at the routine 
home care rate. Overall, while the percentage of beneficiaries 
receiving at least 1 day of IRC care is increasing from 1.44 percent in 
CY 2005 to 3.4 percent in CY 2012, only a small percentage of 
beneficiaries utilize IRC. We also found that 26 percent of hospices 
did not bill for any IRC days in CY 2012. IRC is a critical part of the 
Medicare hospice benefit, providing vital support and relief to the 
patient's caregiver and family. We will continue to monitor utilization 
of IRC level of care, over time, to ensure beneficiaries receiving 
hospice care have access to respite services for their caregivers.
    The variation in the provision of GIP, CHC, and IRC could suggest 
that the level of hospice care that a beneficiary receives may not 
always be driven by patient factors. Medicare Conditions of 
Participation require hospices to demonstrate that they are able to 
provide all four levels of care--RHC, GIP, CHC, and IRC--in order to be 
a certified Medicare hospice provider. We will continue to monitor GIP, 
CHC, and IRC use to identify hospices with aberrant utilization 
patterns, to identify hospices that may be in violation of the CoPs or 
of payment regulations, and to refer hospices identified through our 
analysis to Survey and Certification, to the Office of Financial 
Management, and to the Center for Program Integrity for further 
investigation.
3. Hospice Live Discharges
    Currently, federal regulations allow a patient who has elected to 
receive Medicare hospice services to revoke that election at any time. 
That patient may re-elect hospice benefits at any time for any other 
election period that is still available. However, federal regulations 
provide limited opportunity for a Medicare hospice provider to 
discharge a patient from its care. Discharge from hospice care is 
permissible when the patient moves out of the provider's service area, 
is determined to be no longer terminally ill, or for cause. Hospices 
may not automatically or routinely discharge the patient at its 
discretion, even if the care may be costly or inconvenient. Neither 
should the hospice request or demand that the patient revoke his/her 
election.
    Our regulations also describe that if the hospice patient (or his/
her representative) revokes the hospice election, Medicare coverage of 
hospice care for the remainder of that period is forfeited. The patient 
may, at any time, re-elect to receive hospice coverage for any other 
hospice election period that he or she is eligible to receive (Sec.  
418.28(c)(3) and Sec.  418.24(e)). During the time period between 
revocation/discharge and the re-election of the hospice benefit, 
Medicare coverage would resume for those Medicare benefits previously 
waived.
    Prior to 2012, claims data provided limited information about the 
reason a hospice patient was discharged from a hospice's care. Starting 
July 1, 2012, the discharge information collected on the Medicare claim 
was expanded to capture the reason for all types of discharge, that is, 
if the discharge was due to a death, revocation, transfer to another 
hospice, moving out of the hospice's service area, discharge for cause, 
or due to the patient no longer being considered terminally ill (that 
is, no longer qualifying for hospice services). Between 2000 and 2012, 
the overall rate of live discharges increased from 13.2 percent of 
hospice discharges to 18.1 percent in 2012. In 2010, the rate of live 
discharges varied by state (from 12.8 percent in Connecticut to 40.5 
percent in Mississippi) and by hospice provider (from a 25th percentile 
9.5 percent to 75th percentile of 26.4 percent). Furthermore, analysis 
of our provider-level file shows that of the 3,702 hospices in our 
file, 71 hospices had a live discharge on 100 percent of their 
beneficiaries. The average lifetime length of stay for these hospices 
was 193 days compared to the national average lifetime length of stay 
of 95.4 days (among beneficiaries who were discharged alive or deceased 
in CY 2012). We have shared this information with the Office of 
Financial Management and with the Center for Program Integrity for 
their review and follow-up.
    One study of hospice live discharges in cancer patients noted that 
smaller hospices and for-profit hospices had a higher rate of hospice 
live discharges.\5\ Our subcontractors at Brown University studied 2010 
hospice live discharges among all diagnoses, finding that not-for-
profit hospice programs had a lower rate of hospice live discharges 
than for-profit hospice programs (14.6 percent vs. 22.4 percent, 
p<=.001). Small for-profit hospices in operations 5 years or less had a 
higher rate of hospice live discharges compared to older, for-profit 
hospices (31.5 percent vs. 12.8 percent, p<=.001). We are also 
concerned over patterns of revocations and elections of the Medicare 
hospice benefit for the purpose of potentially avoiding costly 
hospitalizations or expensive procedures. In 2010, 13,770 out of the 
182,172 live discharges had a pattern of hospice discharge, hospital 
admission, and hospice readmission. These cases

[[Page 26549]]

accounted for $126 million dollars in Medicare payments for the 
hospitalization between hospice election periods. Nearly half of these 
Medicare payments are accounted for in ten states with the highest rate 
of this pattern of discharges (that is, MS, OK, AL, SC, MD, VA, TX, NJ, 
GA, and LA accounted for $56.0 million dollars of the hospitalization 
costs).
---------------------------------------------------------------------------

    \5\ Carlson MD, Herrin J, Du Q, et al. Hospice characteristics 
and the disenrollment of patients with cancer. Health Serv Res. Dec 
2009;44(6):2004-2021
---------------------------------------------------------------------------

    We understand that the rate of live discharges should not be zero, 
given the uncertainties of prognostication and the ability of patients 
and their families to revoke the hospice election at any time. However, 
Medicare hospice care is a comprehensive patient and family focused 
care model designed to optimize quality of life by anticipating, 
preventing, and treating pain and symptoms. We are concerned that 
patterns of discharge, hospital admission, and hospice readmission do 
not provide a comprehensive, coordinated care experience for terminally 
ill patients.
4. Non-hospice Spending for Hospice Beneficiaries During an Election
    When a beneficiary elects the Medicare hospice benefit, he or she 
waives the right to Medicare payment for services related to the 
terminal illness and related conditions, except for services provided 
by the designated hospice and the attending physician. However, 
Medicare payment is allowed for covered Medicare items or services 
which are unrelated to the terminal illness and related conditions. 
When a hospice beneficiary receives items or services unrelated to the 
terminal illness and related conditions from a non-hospice provider, 
that provider can bill Medicare for the items or services, but must 
include on the claim a GW modifier (if billed on a professional claim) 
or condition code 07 (if billed on an institutional claim). 
Prescription Drug Events (PDEs) unrelated to the terminal illness and 
related conditions for which hospice beneficiaries are receiving 
hospice care are billed to Part D and do not require a modifier or a 
condition code.
    In follow up to our initial analysis of hospice drugs being paid 
through Part D (78 FR 48245-48246), we analyzed the magnitude of 
Medicare spending outside of the hospice benefit for items or services 
provided to hospice beneficiaries during a hospice election from Parts 
A, B, and D. In CY 2012, we found that Medicare paid $710.1 million for 
Part A and Part B items or services while a beneficiary was receiving 
hospice care. We estimated that 76.5 percent of the $710.1 million 
included either a GW modifier or a condition code 07 on the claim, 
which indicated that the services identified by the provider or 
supplier as unrelated to the terminal illness and related conditions. 
The remaining 23.5 percent of this $710.1 million was for claims 
without a GW modifier or condition code 07, some of which may have 
processed due to late filing of the notice of election (NOE).
    The $710.1 million paid for Part A and Part B items or services was 
for durable medical equipment (7.0 percent), inpatient care (care in 
long-term care hospitals, inpatient rehabilitation facilities, acute 
care hospitals; 28.6 percent), outpatient Part B services (16.9 
percent), other Part B services (also known as physician, practitioner 
and supplier claims, such as labs and diagnostic tests, ambulance 
transports, and physician office visits; 37.4 percent), skilled nursing 
facility care (5.7 percent), and home health care (4.5 percent). Part A 
and Part B non-hospice spending occurred mostly for hospice 
beneficiaries who were at home (43.3 percent). We also found that 28.3 
percent of hospice beneficiaries were in a nursing facility, 14.1 
percent were in an inpatient setting, 10.2 percent were in an assisted 
living facility, and 4.1 percent were in other settings. Although the 
average daily rate of expenditures outside the hospice benefit was 
$7.91, we found differences amongst states where beneficiaries receive 
care. The highest rates per day occurred for hospice beneficiaries 
residing in West Virginia ($13.91), or in the South (Florida ($13.17), 
Texas ($12.45), Mississippi ($11.91), and South Carolina ($10.16)).
    Another area of concern in high non-hospice Medicare spending 
occurring during a hospice election is hospital emergency room (ER) 
visits and observation stays. Ninety-five percent of these ER visits 
and observation stays were billed and paid outside of the hospice 
benefit with condition code 07 on the claim. Using data on CY 2010 
hospice admissions, followed through discharge or December 31, 2011 
(whichever came first), we found that 8.8 percent of hospice 
beneficiaries had a total of 87,720 ER visits/observation stays billed 
to Medicare during their hospice election, at a cost of $268.4 million. 
The majority of these beneficiaries (77.6 percent) only experienced a 
single ER visit/observation stay, but 20.9 percent had between 2 and 4 
ER visits/observation stays during their election, and 1.4 percent had 
more than 5 ER visits/observation stays during their hospice election. 
Although some beneficiaries may go directly to the ER rather than 
contacting the hospice first, 22.3 percent had 2 or more ER visits; 
these results may indicate that the hospice is not aware of the 
beneficiary's condition, the hospice is not being responsive to 
beneficiary needs, or related conditions are being treated as if they 
were unrelated. Most ER visits/observation stays occurred in younger 
beneficiaries with non-cancer diagnoses, in beneficiaries in newer 
hospices, and in beneficiaries receiving care in the South, with 
Mississippi and Oklahoma having the highest rates (21.1 and 20.5 ER 
visits/observation stays per 100 hospice admissions, respectively). The 
most frequently occurring Diagnostic Related Groups (DRGs) associated 
with these ER visits/observation stays were septicemia or severe 
sepsis, kidney and urinary tract infections, hip and femur procedures, 
simple pneumonia and pleurisy, and gastrointestinal hemorrhage. Some of 
these frequently occurring DRGs are conditions which are common at end-
of-life, and could be attended to in the home or with a GIP level of 
care. This raises concerns about whether the ER visits/observation 
stays were actually related to the terminal illness and related 
conditions and should have been covered by the hospice.
    In addition to analyzing data from Parts A and B of Medicare, we 
analyzed CY 2012 Part D data which showed $ 417.9 million in total drug 
spending by Medicare, states, beneficiaries, and other payers, for 
hospice beneficiaries during a hospice election. Table 4 details the 
various components of Part D spending.

    Table 4--Drug Cost Sources for Hospice Beneficiaries' 2012 Drugs
                         Received Through Part D
------------------------------------------------------------------------
                                                              Total
           Component                  Description         Expenditures
------------------------------------------------------------------------
Patient Pay Amount............  The dollar amount the        $48,191,067
                                 beneficiary paid that
                                 is not reimbursed by
                                 a third party.
Low Income Cost-Sharing         Medicare payments to         117,558,814
 Subsidy.                        plans to subsidize
                                 the cost-sharing
                                 liability of
                                 qualifying low-income
                                 beneficiaries at the
                                 point of sale.

[[Page 26550]]

 
Other True Out-of-Pocket        Records all other              2,366,896
 Amount.                         third-party payments
                                 on behalf of
                                 beneficiary. Examples
                                 are state pharmacy
                                 assistance programs
                                 and charities.
Patient Liability Reduction     Amount patient                 3,120,834
 due to Other Payer Amount.      liability reduced due
                                 to other benefits.
                                 Examples are
                                 Veteran's
                                 Administration and
                                 TRICARE.
Covered Drug Plan Paid Amount.  Contains the net             217,370,068
                                 amount the plan paid
                                 for standard benefits.
Non-Covered Plan Paid Amount..  Contains the net              16,985,982
                                 amount the plan paid
                                 beyond standard
                                 benefits. Examples
                                 include supplemental
                                 drugs, supplemental
                                 cost-sharing, and OTC
                                 drugs paid under plan
                                 administrative costs.
Components' Total.............  ......................       405,593,660
Unknown.......................  Unreconciled/                 12,307,603
                                 Unreported Difference
                                 between total Gross
                                 Drug Costs and
                                 Reported payer
                                 sources (includes
                                 sales taxes, drug
                                 dispensing fees, and
                                 drugs' ingredient
                                 costs).
Gross Total Drug Costs,         ......................       417,901,263
 Reported.
------------------------------------------------------------------------
Source: Abt Associates analysis of 100% 2012 Medicare Claim Files. For
  more information on the components above and on Part D data, go to the
  Research Data Assistance Center's (ResDAC's) Web site at http://www.resdac.org/.

    The portion of the $417.9 million total Part D spending which was 
paid by Medicare is the sum of the Low Income Cost-Sharing Subsidy and 
the Covered Drug Plan Paid Amount, or $334.9 million.
    Medicare Spending: In total, actual non-hospice Medicare 
expenditures occurring during a hospice election in CY 2012 were $710.1 
million for Parts A and B spending, plus $334.9 million for Part D 
spending, or $1 billion dollars. This figure is comparable to the 
estimated $1 billion MedPAC reported during its December 2013 public 
meeting.\6\ Associated with this $1 billion in Medicare spending were 
cost sharing liabilities such as co-payments and deductibles that 
beneficiaries incurred. Hospice beneficiaries had $135.5 million in 
cost-sharing for items and services that were billed to Medicare Parts 
A and B, and $48.2 million in cost-sharing for drugs that were billed 
to Medicare Part D, while they were in a hospice election. In total, 
this represents a 2012 beneficiary liability of $183.7 million for 
Parts A, B, and D items or services provided to hospice beneficiaries 
during a hospice election. Therefore, the total non-hospice costs paid 
by Medicare or due from beneficiaries for items or services provided to 
hospice beneficiaries during a hospice election were over $1.2 billion 
in CY 2012.
---------------------------------------------------------------------------

    \6\ MedPAC, ``Assessing payment adequacy and updating payments: 
hospice services'', December 13 2013. Available at: http://www.medpac.gov/transcripts/hospice_December2013_Public.pdf.
---------------------------------------------------------------------------

    All-Payer Spending: Under Part D, gross covered drug cost on a 
claim includes the amount paid by the Part D plan, the beneficiary's 
cost sharing, and any amounts paid by others on the beneficiary's 
behalf. These latter amounts include the low-income subsidy amount paid 
by Medicare for beneficiaries who are subsidy-eligible, amounts paid by 
other payers whose payments can be counted toward the beneficiary's 
true out-of-pocket (TrOOP) costs, and amounts paid by others whose 
payments, though not TrOOP-eligible, reduce the amount of the 
beneficiary's liability. Accumulated gross covered drug costs are used 
to establish the beneficiary's position in the benefit. That is, these 
costs determine when the beneficiary has met plan's deductible, if any, 
and moves into the initial coverage period, and when his or her initial 
coverage period ends and the coverage gap begins. TrOOP, whether paid 
by the beneficiary or on the beneficiary's behalf by a TrOOP-eligible 
payer, determines when the beneficiary has met the annual out-of-pocket 
threshold and moves into the catastrophic phase of the benefit. Thus, 
administration of the Medicare prescription drug benefit is dependent 
upon both gross covered drug costs and TrOOP. As such, we are also 
describing total non-hospice Part D spending, both Medicare and non-
Medicare. Non-hospice Part D spending for hospice beneficiaries during 
a hospice election was incurred by Medicare, by States, by the Veterans 
Administration, by TRICARE, by charities, and by other payers, in 
addition to the cost-sharing liabilities incurred by beneficiaries.
    Part D spending by all-payers that occurs for hospice beneficiaries 
during a hospice election, including beneficiary cost-sharing, totaled 
$417.9 million in CY 2012. If this is added to the $710.1 million in 
Medicare spending for Parts A and B, and $135.5 million in cost sharing 
for Parts A and B, total non-hospice costs are $1.3 billion. We do not 
have data on other payers' spending for Part A or Part B services. Of 
note, 51.6 percent of this $1.3 billion is associated with 373 
hospices, with an average total per beneficiary of $1,289 in non-
hospice costs.
    On December 6, 2013 and March 3, 2014, we issued memoranda to all 
Part D plan sponsors and Medicare hospice providers (available at 
http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/Hospice/Downloads/Hospice-PartD-Payment.pdf and http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/Hospice/Downloads/Part-D-Payment-Hospice-Final-2014-Guidance.pdf, respectively). These memoranda 
reiterated longstanding policy regarding the coverage of drugs in the 
Medicare hospice benefit, and Part D guidance regarding payment for 
drugs for hospice beneficiaries under Part D. These memoranda also 
contained new clarified guidance for addressing the determination of 
payment responsibility for Part D drugs for hospice beneficiaries in 
2014 and the need for rulemaking to address the use of standardized 
processes for determining payment responsibility, recovering payment 
when the wrong party has paid, and resolving disputes regarding payment 
responsibility. We encourage providers to review these important 
memoranda at: http://www.cms.gov/Center/Provider-Type/Hospice-Center.html, and in section III.I in this proposed rule.
    The dollars spent by Part D and by beneficiaries for drugs covered 
outside of the hospice benefit for hospice beneficiaries during a 
hospice election raise concerns about whether some of these drugs 
should have been paid for by the hospice. We examined drug costs 
incurred by hospices from 2004 to 2012, using hospice cost report data 
adjusted to constant 2010 dollars. We saw a declining trend in the drug 
costs per patient day, with costs declining from a mean of $20 per 
patient-day in 2004 to

[[Page 26551]]

$11 per patient-day in 2012 (see Table 5 below). We recognize that many 
hospices have become more efficient in their operations, but are 
concerned that the decline in drug costs is of a magnitude that could 
suggest that some hospices are not providing, and thus are not 
incurring the costs for, all needed patient medications.

                                                  Table 5--Costs per Patient-Day by Year, 2010 Dollars
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                         2004         2005         2006         2007         2008         2009         2010         2011         2012
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number.............................    n = 1,047    n = 1,218    n = 1,490    n = 1,694    n = 1,834    n = 1,882    n = 1,929    n = 2,015    n = 2,054
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                        Provider-level drug costs per patient-day
--------------------------------------------------------------------------------------------------------------------------------------------------------
Mean...............................          $20          $18          $17          $15          $14          $13          $12          $11          $11
Std dev............................         (10)         (11)         (11)          (9)          (9)          (9)          (7)          (6)          (6)
Median.............................          $20          $17          $16          $15          $14          $13          $12          $11          $10
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      Trimmed means
--------------------------------------------------------------------------------------------------------------------------------------------------------
1%-99%.............................          $21          $19          $17          $16          $15          $14          $13          $12          $11
5%-95%.............................          $20          $18          $16          $15          $14          $13          $12          $11          $10
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Freestanding hospice cost reports with HCRIS release date of 1/23/2014. The costs are averaged at the provider-level and adjusted to constant
  2010 dollars using the Producer Price Index for prescription pharmaceuticals.
Notes: We excluded cost reports with period less than 10 months or greater than 14 months, missing information or negative reported values for total
  costs or payments, were in the top and bottom 1% of cost per day, were in the top and bottom 5% of provider margins, and where the aggregate of cost
  centers does not equal total costs as reported.

    We will continue to monitor non-hospice Medicare spending for 
beneficiaries in hospice elections.

B. Solicitation of Comments on Definitions of ``Terminal Illness'' and 
``Related Conditions''

1. The Development of the Medicare Hospice Benefit
    Dame Cicely Saunders introduced the idea of hospice care in the 
United States during a lecture at Yale University in 1963. During the 
same decade, the international best-seller, On Death and Dying, 
published in 1969, by Dr. Elisabeth Kubler-Ross, helped to bring death 
out of secrecy and brought new public awareness and discussion about 
dying for the first time. Her interviews with over 500 dying patients 
shed new light on the dying process, as well as the needs and treatment 
wishes of those who were at the end-of-life. Her hallmark work argued 
for end-of-life care provided in the home, rather than in an 
institution, and stressed the importance of patients' being an integral 
part of their treatment decision-making.\7\ In 1970, there were no 
formal hospice programs in the United States. However, healthcare 
providers started to recognize the need for a care delivery model to 
address the needs of those individuals who no longer wanted to seek out 
the aggressive, medical, curative model of healthcare for advancing 
illnesses and injuries. They also focused on a care delivery model that 
would provide pain and symptom relief that would offer an alternative 
to hospitalization and would focus on the ``total person,'' as he or 
she approached the end-of-life. The hospice model of care, which had 
been previously introduced to the United States by Cicely Saunders, was 
viewed to be the type of care delivery model that could offer those 
services.
---------------------------------------------------------------------------

    \7\ Story, P., Knight, C. (2004). The Hospice/Palliative 
Medicine Approach to End-of-Life Care, 2nd ed. UNIPAC One.
---------------------------------------------------------------------------

    In 1972, Dr. Elisabeth Kubler-Ross testified at the first national 
hearings on the subject of death with dignity, conducted by the U.S. 
Senate Special Committee on Aging, and the first hospice legislation 
was introduced in the United States Senate, but was not enacted.\8\ 
Florence Wald, the Dean of the Yale School of Nursing, who attended the 
1963 lecture given by Cicely Saunders, along with two pediatricians and 
a chaplain, founded the first United States hospice, Connecticut 
Hospice, in 1974. Ongoing meetings between hospice providers and 
hospice leaders evolved into the formation of the National Hospice 
Organization in 1978 (now called the National Hospice and Palliative 
Care Organization, or NHPCO). The first ``Standards of a Hospice 
Program of Care'' were published by National Hospice Organization in 
1979. Even during the early stages of hospice development, hospice 
leaders were working with key legislative leaders to develop a system 
to reimburse hospice care in the United States.\9\ However, it was 
evident that before governmental reimbursement could occur, data had to 
be collected and analyzed to demonstrate what hospices actually 
provided and what costs were involved in rendering hospice care. The 
Health Care Finance Administration (HCFA)--now known as the Centers for 
Medicare & Medicaid Services (CMS) conducted a national demonstration 
of 26 hospices throughout the country to study the effect of reimbursed 
hospice care. The results of this demonstration, as well as those 
sponsored by the private health insurance sector and private 
foundations, and along with the testimony of multiple hospice industry 
leaders, legislators and hospice families, helped to form the structure 
of the Medicare Hospice Benefit.
---------------------------------------------------------------------------

    \8\ Cefalu, C., Ruiz, M. (2011). The Medicare Hospice Benefit: A 
Changing Philosophy of Care? Annals of Long Term Care: Clinical Care 
and Aging. 19 (1); 43-48.
    \9\ Connor, S. (2007). Development of Hospice and Palliative 
Care in the United States. OMEGA. 56 (1); 89-99.
---------------------------------------------------------------------------

    During Congressional committee hearings regarding the development 
of a Medicare hospice benefit, testimony by Paul Willging, deputy 
administrator of HCFA, expressed caution about embracing benefit 
expansions that could lead to unexpected consequences and said that 
HCFA ``must clearly define what we would pay for and to whom, in order 
to meet our responsibilities to patients, providers and the 
taxpayers.'' \10\ Other stakeholders agreed that a Medicare hospice 
benefit needed to be structured to promote an optimum movement from a 
point of view of controlling costs and offering the most appropriate 
means of service without the development of a system that focused on 
just getting maximum reimbursement from Medicare.

[[Page 26552]]

Stakeholders also agreed that unique characteristics of hospice care 
should be maintained. The goal was not to have the Federal government 
provide total support to hospice programs; rather, legislation would be 
enacted that would supplement the continued support of the local 
community, private sector and other resources which allow hospices to 
maintain their unique identity, spirit of volunteerism and altruistic 
focus.\11\ The National Hospice Organization president, Dr. Edwin 
Olsen, testified at the March 25, 1982 Congressional hearing that, at 
that time, most American hospices were community charities by design 
and intent, and that hospice offered an integrated service. Hospices 
functioned not as an add-on, but as a comprehensive alternative to the 
typical ways of caring for the terminally ill and their families. The 
hospice industry, as discussed in Dr. Olsen's testimony, was very clear 
that their goal was to maintain that alternative service for those who 
were approaching end-of-life.
---------------------------------------------------------------------------

    \10\ Testimony by Paul Willging, deputy administrator of HCFA, 
to the Subcommittee on Health of the Committee of Ways and Means, 
House of Representatives, March 25, 1982.
    \11\ Testimony by Congressman Leon Panetta, to the Subcommittee 
on Health of the Committee of Ways and Means, House of 
Representatives, March 25, 1982.
---------------------------------------------------------------------------

    Hospice industry leaders also expressed the importance of hospice 
program accountability. Hospices would be accountable for and be able 
to control the quality and delivery of patients admitted for hospice 
care, instead of having to ``broker'' the patients out to other 
providers for reimbursement and convenience.\12\ Hospice advocates 
stressed the importance of maintaining continuous clinical control over 
all aspects of care to ensure a successful hospice program and framers 
of the benefit recognized this fact by requiring professional 
management responsibility.\13\ Although there were ongoing concerns by 
HCFA, the Congress, and the hospice industry about the potential misuse 
of a new hospice benefit,14 15 Section 122 of the Tax Equity 
and Fiscal Responsibility Act (TEFRA) of 1982 (Pub. L. 97-248, enacted 
on September 3, 1982) expanded the scope of Medicare benefits by 
authorizing coverage for hospice care for terminally ill beneficiaries.
---------------------------------------------------------------------------

    \12\ Written testimony by Dr. Edwin J. Olsen, director of the 
National Hospice Organization, to the Subcommittee on Health of the 
Committee of Ways and Means, House of Representatives, March 25, 
1982.
    \13\ Health Care Financing Administration, Office of Research 
and Demonstrations. September, 1987. ``Medicare Hospice Benefit 
Program Evaluation.'' Health Care Financing Extramural Report. HCFA 
Pub. No. 03248.
    \14\ Testimony by Paul Willging, deputy administrator of HCFA, 
to the Subcommittee on Health of the Committee of Ways and Means, 
House of Representatives, March 25, 1982.
    \15\ Comments by Congressman Bill Gradison, at the Hearing 
before the Subcommittee on Health of the Committee of Ways and 
Means, House of Representatives, March 25, 1982.
---------------------------------------------------------------------------

2. Legislative History of the Medicare Hospice Benefit
    After Medicare coverage of hospice care was authorized by the 
Congress, the General Accounting Office (now Government Accountability 
Office, or GAO) summarized the legislative intent of the Medicare 
hospice benefit in a July 13, 1983 letter. In this letter, the GAO 
acknowledged that there was no standard definition of what a hospice 
was or what services an organization must provide to be considered a 
hospice. However, the GAO stated that it was generally agreed that the 
hospice concept in the United States is a program of care in which an 
organized interdisciplinary team systematically provides palliative 
care (relief of pain and other symptoms) and supportive services to 
patients with terminal illnesses.\16\ This letter further states that 
the hospice objective is to make a patient's remaining days as 
comfortable and meaningful as possible and to help the family cope with 
the stress by making the necessary adjustments to the changes in the 
patient's illness and death. The GAO letter also reiterates that 
hospices must directly provide certain core services including nursing 
care, physician services and counseling services and must either 
directly, or through arrangements, provide physical therapy, 
occupational therapy, speech-language pathology, home hospice aides, 
homemaker services, drugs, medical supplies and appliances and short-
term inpatient care. The letter concluded by stating that the Congress 
would continue to monitor the effectiveness of the hospice 
demonstration program, which was ongoing at the time of enactment, the 
equity of the reimbursement system, method and benefit structure put 
into effect under the hospice provision, including the feasibility and 
advisability of a prospective reimbursement system for hospice care and 
other aspects of the hospice program.\17\
---------------------------------------------------------------------------

    \16\ ``Hospice Care-A Growing Concept in the United States.'' 
(HRD-79-50), March 6, 1979.
    \17\ GAO Letter, ``Comments on the Legislative Intent of 
Medicare's Hospice Care Benefit,'' GAO-HRD-83-72, July 12, 1983.
---------------------------------------------------------------------------

    Further description of the Medicare hospice benefit design was 
provided in a report prepared by the Congressional staff for the Senate 
Committee on Finance on September 9, 1983. In this report, four basic 
principles were presented, which according to hospice advocates, 
distinguish hospice care from the traditional health care system:
    1. The patient and his/her family are considered the unit of care.
    2. A multidisciplinary team is used to assess the physical, 
psychological and spiritual needs of the patient and family to develop 
an overall plan of care and to provide coordinated care.
    3. Pain and collateral symptoms associated with the terminal 
illness and previous treatments are controlled, but no heroic efforts 
are made to cure the patient.
    4. Bereavement follow-up is provided to help the family cope with 
their emotional suffering.\18\
---------------------------------------------------------------------------

    \18\ ``Background Materials on Medicare Hospice Benefit 
Including Description of Proposed Implementing Regulations,'' 
September 9, 1983. Committee on Finance, United States Senate, 24-
525 0.
---------------------------------------------------------------------------

    It was also noted that the statute provides that an individual, 
upon making an election to receive hospice coverage, would be deemed to 
have waived payments for certain other benefits in addition to choosing 
a palliative mode of treatment, except in ``exceptional and unusual 
circumstances'' as the Secretary may provide (section 1812(d)(2)(A) of 
the Act). Furthermore, the hospice plan of care must include assessment 
of the individual's needs and identification of the services to meet 
those needs including the management of discomfort and symptom relief.
    Several Senators testified at a September 15, 1983 Hearing before 
the Subcommittee on Health of the Committee on Finance regarding 
ongoing concerns with the new Medicare hospice benefit. These Senators 
made it clear that the new healthcare delivery system--hospice--was to 
offer an alternative to institutionalized care for the terminally ill. 
Concerns were expressed over the possibility that ``store front'' 
hospices would crop up as a result of Medicare reimbursement being made 
available for this service. The Senators stated that they wanted to 
maintain flexibility within the benefit without creating incentives for 
fraud and abuse.\19\ Similarly, industry advocates were also concerned 
that availability of Medicare reimbursement would attract interest from 
those simply interested in a new source of revenue. The hospice 
industry agreed that the Medicare hospice benefit was created, not as a 
new revenue source for providers, but as a benefit

[[Page 26553]]

choice for patients and their families.\20\ Terminally ill Medicare 
beneficiaries could decide not to elect hospice care and they would 
continue to be able to receive all other Medicare services available, 
such as home health services that include skilled nursing and home 
health aide care, inpatient hospital services, supplies, medications, 
and DME. For example, in response to recent home health rulemaking we 
received anecdotal comments that some home health agencies commented 
that they are providing palliative care to homebound terminally ill 
individuals who have not elected the hospice benefit. In those 
instances, the patient is receiving home health aide services, nursing 
care, and supplies needed under the home health benefit and the DME and 
medications that the patient needs are still covered under Medicare 
Parts B and D. However, we note that, with the exception of home 
health, these services typically have associated co-payments and would 
be rendered through various different providers or suppliers, perhaps 
with a lack of continuity and coordination that would be provided under 
the Medicare hospice benefit. Under the Medicare hospice benefit, the 
hospice-eligible individual would receive all of those services, and 
more, with the hospice provider assuming the clinical and professional 
responsibility of coordinating all of the necessary care and services 
without the beneficiary assuming responsibility for the associated cost 
sharing required outside of the hospice benefit.
---------------------------------------------------------------------------

    \19\ Testimony by Senators George Mitchell and Roger W. Jepsen. 
Testimony before the Subcommittee on Health of the Committee on 
Finance, United States Senate, September 15, 1983.
    \20\ Position paper submitted by Donald J. Gaetz, president, 
National Hospice Organization. ``Subcontracting for Nursing Services 
under the Medicare Hospice Benefit.'' Testimony before the 
Subcommittee on Health of the Committee on Finance, United States 
Senate, September 15, 1983.
---------------------------------------------------------------------------

3. Hospice Care Today
    The Medicare hospice benefit was a unique addition to the U.S. 
health care system. Prior to the implementation of the Medicare hospice 
benefit, the government reimbursed providers based on the cost of 
delivering care. Reimbursement under the Medicare hospice benefit is a 
fixed, per day, per level of care prospective payment structure. By 
creating a fixed payment for hospice care, the provider is at risk for 
costs that exceed the payment amount; and, if the fixed payment exceeds 
the cost of care, the hospice is allowed to keep the gain. Under the 
Medicare hospice benefit, the provider has clinical flexibility in how 
hospices can render care to best meet the needs of the individual 
patient and his or her family. This is viewed as a joint partnership 
between the providers of care and the federal government to provide 
services and the financial payment for those services for those who are 
dying. Hospice advocates, during the development of the benefit, 
welcomed this type of reimbursement structure for the flexibility it 
afforded in providing individualized hospice services \21\. The hospice 
industry continues to recognize that the Medicare hospice benefit has 
always been a risk-based clinical and economic model of care stating 
that the fixed reimbursement model means ``a fixed sum for all-
inclusive end of life care.'' \22\ Similar to the more recent medical 
home model for primary care, hospice has always been patient-centered, 
comprehensive, team-based, coordinated, accessible, focused on quality 
and safety, and extends throughout the continuum of care.
---------------------------------------------------------------------------

    \21\ Testimony by Dr. Daniel Hadlock, Hospice, Inc, before the 
Select Committee on Aging. House of Representatives, May 25, 1983.
    \22\ ``NHPCO Comments on Washington Post Article'', Retrieved on 
December 27, 2013. http://www.nhpco.org/press-room/press-releases/nhpco-responds-washington-post
---------------------------------------------------------------------------

    Throughout the development of the Medicare hospice benefit, experts 
in the hospice field believed that the success or failure of hospice, 
under Medicare, would depend on the hospice plan of care, appropriate 
implementation of the plan of care, and the hospice team sharing the 
same philosophy of patient-centered, comprehensive, and holistic 
care.\23\ A coordinated, collaborative approach to each and every 
hospice patient and his or her family was considered to be the most 
important component of the success of the Medicare hospice benefit.\24\ 
During the development of the Medicare hospice benefit, there were 
concerns by both the Congress and the hospice industry regarding the 
potential for fraud and abuse by some providers resulting from the 
enactment of a Medicare hospice benefit.\25\ One drafter of the 
legislation expressed that he wanted to maintain benefit flexibility by 
allowing hospices to render individualized care, promoting access to 
needed services, and providing high quality care while maintaining 
fiscal integrity of the Medicare Trust Funds.\26\ This was a benefit 
founded in trust--trust that hospices would provide the comprehensive 
care and services promised during the benefit development and trust 
that Medicare would be a partner in helping to share the costs.\27\ It 
was very clear throughout the development, and years after the 
implementation of the Medicare hospice benefit, that hospices were 
expected to make good on their promise to do a better job than 
conventional Medicare services for those who were at end-of-life.\28\ 
Deliberately, the law made no provision for discharging a hospice 
patient except under very limited circumstances and only after making 
attempts to rectify those circumstances.\29\ This meant that once a 
beneficiary elected hospice and was under one of the three 60-day 
election periods, a hospice could not just discharge a patient for the 
sake of cost or convenience. Currently, there are two 90-day election 
periods and unlimited 60-day election periods, as long as the 
beneficiary continues to meet eligibility criteria. However, hospices 
are still limited in the reasons for discharge, and still cannot 
discharge a hospice beneficiary for cost or convenience. Our 
regulations at section 418.26(a) state the reasons a hospice can 
discharge a beneficiary from hospice services.
---------------------------------------------------------------------------

    \23\ Cefalau, C., Ruiz, M. The Medicare Hospice Benefit: A 
Changing Philosophy of Care? Annals of Long-Term Care: Clinical Care 
and Aging. 2011; 19(1): 43-48.
    \24\ Cefalau, C., Ruiz, M. The Medicare Hospice Benefit: A 
Changing Philosophy of Care? Annals of Long-Term Care: Clinical Care 
and Aging. 2011; 19(1): 43-48.
    \25\ Comments by Congressman Bill Gradison, at the Hearing 
before the Subcommittee on Health of the Committee of Ways and 
Means, House of Representatives, March 25, 1982; Testimony by 
Rosemary Johnson-Hurzeler, CEO, The Connecticut Hospice, Testimony 
before the Subcommittee on Health of the Committee on Finance, 
United States Senate, September 15, 1983; Testimony by Margaret 
Cushman, MSN, RN, Chairman of Governmental Affairs, National 
Association of Home Health and Hospice Care (NAHC) before the 
Subcommittee on Health of the Committee on Finance, United States 
Senate, September 15, 1983.
    \26\ Comments by Congressman Bill Gradison, at the Hearing 
before the Subcommittee on Health of the Committee of Ways and 
Means, House of Representatives, March 25, 1982.
    \27\ Testimony by Congressman Leon Panetta, to the Subcommittee 
on Health of the Committee of Ways and Means, House of 
Representatives, March 25, 1982.
    \28\ Hoyer, T. (1998). A History of the Medicare Hospice 
Benefit. The Hospice Journal, 13(1-2), 61-69.
    \29\ Hoyer, T. (1998). A History of the Medicare Hospice 
Benefit. The Hospice Journal, 13(1-2), 61-69.
---------------------------------------------------------------------------

    Since the implementation of the Medicare hospice benefit, hospice 
utilization continues to grow. More Medicare beneficiaries are becoming 
aware and educated of the benefits of hospice care. In recent years, 
the percentage of Medicare deaths for patients under a hospice election 
has increased from 20 percent in 2000 to 44 percent in 2012. Total 
expenditures have increased from over $9.2 billion in 2006 to over 
$15.1 billion in 2013. This observed growth far outpaces the annual 
market basket increases and it not solely reflective of an increase in 
utilization. We note that average spending per

[[Page 26554]]

beneficiary has increased substantially between 2006 and 2013 from 
approximately $9,833 in 2006 to $11,458 in 2013.\30\
---------------------------------------------------------------------------

    \30\ Calendar year 2013 expenditures and average spending per 
beneficiary were calculated using hospice claims data from the 
Chronic Conditions Data Warehouse (CCW), accessed on February 27, 
2014.
---------------------------------------------------------------------------

    Section 3132(a) of the Affordable Care Act provides statutory 
authority for CMS to reform the hospice payment system no earlier than 
October 1, 2013. We presented data in the FY 2014 Hospice Wage Index 
and Payment Rate Update Final Rule, regarding diagnosis reporting on 
hospice claims and opioids paid under Part D for beneficiaries in a 
hospice election (78 FR 48234). Recent analysis of other Part A, Part B 
and Part D spending in 2012 (including beneficiary cost-sharing 
payments of $135.5 million for Parts A and B and $48.2 million for Part 
D) shows that there was an additional $1 billion in total Medicare 
spending during a hospice election (see section III.A.4). This includes 
Part A payments for inpatient hospitalizations and SNF stays, as well 
as Part B payments for outpatient and physician services, diagnostic 
tests and imagining, and ambulance transports, to name just a few. 
There is concern that many of these services should have been provided 
under the Medicare hospice benefit as they very likely were for 
services related to the terminal illness and related conditions. This 
strongly suggests that hospice services are being ``unbundled'', 
negating the hospice philosophy of comprehensive, holistic care and 
shifting the costs to other parts of Medicare, and creating additional 
cost-sharing burden to those vulnerable Medicare beneficiaries who are 
at end-of-life. Duplicative payments for hospice-covered services also 
threaten the program integrity and fiscal viability of the hospice 
benefit.
    Reports by both the Medicare Payment Advisory Committee (MedPAC) 
and the Office of the Inspector General (OIG) expressed similar 
concerns regarding the unbundling of services meant to be covered under 
the hospice per diem, capitated payment system. Similar to the analysis 
presented above, MedPAC also analyzed non-hospice utilization and 
spending patterns through Parts A, B and D for Medicare hospice 
beneficiaries. MedPAC also concluded that over $1 billion FFS spending 
was attributed to providing services reported as unrelated to the 
terminal conditions of hospice enrollees. MedPAC went on to state that 
58 percent of Medicare hospice enrollees received a service or drug 
outside of the hospice benefit over the course of a hospice episode. 
The highest shares of spending were on drugs and inpatient 
services.\31\ In addition, the OIG reported in June of 2012 that 
Medicare could be paying twice for prescription drugs for beneficiaries 
receiving services under the Medicare hospice benefit and recommended 
that CMS increase its oversight to make sure that Part D is not paying 
for medications already included in the Medicare hospice per diem 
payment rates.\32\ As a result of the OIG report, the CMS' Center for 
Program Integrity (CPI) began recoupment efforts for analgesics from 
Part D plan sponsors.
---------------------------------------------------------------------------

    \31\ MedPAC, ``Assessing payment adequacy and updating payments: 
hospice services'', December 13 2013. Available at: http://www.medpac.gov/transcripts/hospice_December2013_Public.pdf.
    \32\ Office of the Inspector General, Department of Health and 
Human Services. Medicare Could be Paying Twice for Prescription 
Drugs for Beneficiaries in Hospice. June, 2012. A-06-10-00059.
---------------------------------------------------------------------------

    Ongoing Part D memo guidance has also been issued to clarify 
existing coverage and payment policies. The most recent Part D guidance 
was provided in the March 10, 2014 memorandum entitled, `Part D Payment 
for Drugs for Beneficiaries Enrolled in Hospice--Final 2014 Guidance' 
(http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/Hospice/Downloads/Part-D-Payment-Hospice-Final-2014-Guidance.pdf) In addition, 
this rule solicits comments on processes that could be developed to 
address the inappropriate Part D reimbursement for medications that 
should be covered under the Medicare hospice per diem (see Section 
III.I). The purpose of these Part D guidance memos, in response to OIG 
reports of possible duplication of payment for drugs under the hospice 
per diem and Part D plans, was to outline the expectations regarding 
coordination of benefits and coverage responsibility between Part D 
plan sponsors and hospices. The ongoing concern is that hospices are 
not providing the broad range of medications required by hospice 
beneficiaries during a hospice election, especially for those drugs 
classified as analgesics, antianxiolytic, antiemetics and laxatives 
(generally considered essential medications for palliation in a hospice 
population).\33\ Comments received, regarding this memo guidance, 
highlighted that there are multiple interpretations as to the meaning 
of what are considered ``related conditions.'' Additionally, it was 
noted in these comments that the terms, ``terminal illness'', 
``terminal diagnosis'', ``qualifying terminal diagnosis'', and 
``terminal prognosis'' were used interchangeably and with varying 
interpretations as to their meanings.
---------------------------------------------------------------------------

    \33\ World Health Organization. (January, 2013). Essential 
Medications in Palliative Care.
---------------------------------------------------------------------------

    We believe summary of the ``Development of the Hospice Benefit'' 
and the ``Legislative history of the Medicare Hospice Benefit'' clearly 
captures the expectation that hospices are to provide holistic and 
comprehensive services under the Medicare hospice benefit. As stated in 
the 1983 proposed and final rules, and reiterated in the FY 2014 
Hospice Wage Index and Rate Update proposed and final rules: ``It is 
our general view that the waiver required by law is a broad one and 
that hospices are required to provide virtually all of the care that is 
needed by terminally ill patients'' (48 FR 56010). Our expectation 
continues to be that hospices offer and provide comprehensive, 
virtually all-inclusive care, and in a better, more humane way, than is 
available in other healthcare settings. In order to preserve the 
Medicare hospice benefit and ensure that Medicare beneficiaries 
continue to have access to comprehensive, high-quality and appropriate 
end-of-life hospice care, we will continue to examine program 
vulnerabilities and implement appropriate safeguards in the Medicare 
hospice benefit, when appropriate.
4. Definition of ``Terminal Illness''
    Since the implementation of the Medicare hospice benefit, we have 
defined a ``terminally ill'' individual to mean ``that the individual 
has a medical prognosis that his or her life expectancy is 6 months or 
less if the illness runs its normal course'' (Sec.  418.3). We have 
always interpreted ``terminally ill'' to mean a time frame of life 
expectancy and expect that the individual's whole condition plays a 
role in that prognosis. Comments received in response to prior years' 
proposed rules state that longstanding, preexisting conditions should 
not be considered related to a patient's terminal illness or related 
conditions and that chronic, stable conditions play little to no role 
in a patient's terminal illness or related conditions. Commenters also 
stated that controlled pain and symptoms are not considered to be 
related to a patient's terminal illness or related conditions, that not 
all pain is related to the terminal illness and related conditions, and 
that comorbidities and the maintenance of comorbidities are not related 
to a patient's terminal illness or related conditions. These commenters 
believed these types of conditions

[[Page 26555]]

should not be included in the bundle of services covered under the 
Medicare hospice benefit. As previously stated in response to those 
comments, we believe that these conditions are included in the bundle 
of covered hospice services. The original implementing regulations of 
the Medicare hospice benefit, beginning with the 1983 Hospice proposed 
and final rules (48 FR 38146 and 48 FR 56008), articulates a set of 
requirements that do not delineate between pre-existing, chronic, nor 
controlled conditions. In order to be eligible to receive hospice 
services under the Medicare hospice benefit, the individual must be 
entitled to Part A and must be certified as being terminally ill, 
meaning that his or her medical prognosis is a life expectancy of 6 
months or less if the illness runs its normal course. We have 
recognized throughout the federal regulations at Sec.  418 that the 
total person is to be assessed, including acute and chronic conditions, 
as well as controlled and uncontrolled conditions, in determining an 
individual's terminal prognosis. All body systems are interrelated; all 
conditions, active or not, have the potential to affect the total 
individual. The presence of comorbidities is recognized as potentially 
contributing to the overall status of an individual and should be 
considered when determining the terminal prognosis. NHPCO defines 
``comorbidity,'' as: ``known factors or pathological disease impacting 
on the primary health problem and generally attributed to increased 
risk for poor health status outcomes.'' \34\
---------------------------------------------------------------------------

    \34\ National Hospice and Palliative Care Organization: 
``Standards of Practices for Hospice Programs'', 2010. Retrieved on 
February 20, 2014 from: http://www.nhpco.org/nhpco-standards-practice.
---------------------------------------------------------------------------

    We have defined palliative care--the nature of the care provided 
under the hospice benefit--in our regulations at Sec.  418.3 to mean: 
``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.'' Note that, in 
this definition, palliative care is to anticipate and prevent, as well 
as treat, suffering. This means that hospices are to be proactive in 
their care approach and not just reactive to pain and symptoms after 
they arise.
    Because hospice care is unique in its comprehensive, holistic, and 
palliative philosophy and practice, we want to ensure that the hospice 
services under the Medicare hospice benefit are preserved and not 
diluted, or unbundled in any way. For context, the definition of 
illness means ``an abnormal process in which aspects of the social, 
physical, emotional, or intellectual condition and function of a person 
are diminished or impaired compared with that person's previous 
condition''.\35\ An intensive review of the history of hospice, hospice 
philosophy and legislative actions described above provided the basis 
for discussion among several CMS clinical leaders across several agency 
components as to the meaning of ``terminal illness'' within the context 
of the Medicare hospice benefit. After a review of all of the history 
listed above, the clinical collaborative effort across CMS solicits 
comments on defining ``terminal illness'' to mean: ``Abnormal and 
advancing physical, emotional, social and/or intellectual processes 
which diminish and/or impair the individual's condition such that there 
is an unfavorable prognosis and no reasonable expectation of a cure; 
not limited to any one diagnosis or multiple diagnoses, but rather it 
can be the collective state of diseases and/or injuries affecting 
multiple facets of the whole person, are causing progressive impairment 
of body systems, and there is a prognosis of a life expectancy of six 
months or less''.
---------------------------------------------------------------------------

    \35\ Mosby's Medical Dictionary, 8th edition, 2009, Elsevier.
---------------------------------------------------------------------------

    We are soliciting comments on this definition for further 
discussion and consideration for potential future rulemaking.
5. Definition of ``Related Conditions''
    Section 1812(d)(2) of the Act provides that an individual, upon 
making an election to receive hospice coverage, would be deemed to have 
waived payments for certain other benefits except in ``exceptional and 
unusual circumstances as the Secretary may provide.'' Comments received 
on the 1983 Hospice proposed rule specifically asked for further CMS 
clarification regarding the concept of ``related conditions.'' 
Specifically, the commenters suggested a more detailed definition of 
what constitutes care for a patient's terminal illness or related 
conditions (which is the responsibility of the hospice) and what 
constitutes care for unrelated conditions (for which out-of-hospice 
Medicare payment may be made) (48 FR 56010). Our response was: ``. . . 
we have not received any suggestions for identifying `exceptional or 
unusual' circumstances that warranted the inclusion of a specific 
provision in the regulations to accommodate them. Most of the comments 
that were made attempted to suggest this exception as a means of 
routinely providing non-hospice Medicare financing for the expense of 
costly services needed by hospice patients, and we do not view this as 
an appropriate interpretation of the law'' (48 FR 56011). The law 
allows for circumstances in which services needed by a hospice 
beneficiary would be completely unrelated to the terminal illness and 
related conditions, but we believe that this situation would be the 
rare exception rather than the norm. We reiterated this position in the 
FY 2014 Hospice Wage Index and Rate Update proposed rule (78 FR 27826) 
as a reminder of the expectation of the holistic nature of hospice 
services that shall be provided under the hospice benefit, as well as 
to remind hospices about diagnosis reporting on hospice claims.
    Therefore, in keeping with the tenets of hospice philosophy 
described in this section, the intent of the Medicare hospice benefit, 
expectations of comprehensive care, and in response to previous and 
ongoing stakeholder comments, the CMS clinical collaborative effort 
solicits comments on defining ``related conditions'' to mean: ``Those 
conditions that result directly from terminal illness; and/or result 
from the treatment or medication management of terminal illness; and/or 
which interact or potentially interact with terminal illness; and/or 
which are contributory to the symptom burden of the terminally ill 
individual; and/or are conditions which are contributory to the 
prognosis that the individual has a life expectancy of 6 months or 
less''.
    We solicit comments on this definition for further discussion and 
consideration for potential future rulemaking.

C. Guidance on Determining Beneficiaries' Eligibility for Hospice

    An individual must be certified by the hospice medical director and 
the individual's attending physician (if designated by the individual) 
as being terminally ill, meaning that the individual has a medical 
prognosis of a life expectancy of 6 months or less in order to receive 
the Medicare hospice benefit. However, we also have recognized the 
challenges in prognostication. It has always been our expectation that 
the certifying physicians will use their best clinical judgment, based 
on the initial and updated comprehensive assessments and collaboration 
with the hospice interdisciplinary group (IDG) to

[[Page 26556]]

determine if the individual has a life expectancy of six months or less 
with each certification and recertification. As stated in previous 
rules, in reaching a decision to certify that the patient is terminally 
ill, the hospice medical director must consider at least the following 
information per our regulations at Sec.  418.25 (b):
     Diagnosis of the terminal condition of the patient.
     Other health conditions, whether related or unrelated to 
the terminal condition.
     Current clinically relevant information supporting all 
diagnoses.
    We do recognize that making a prognosis is not an exact science. 
Section 322 of the Benefits Improvement and Protection Act of 2000 
(BIPA) (Pub. L. 106-554) amended section 1814(a) of the Act by 
clarifying that the certification of an individual who elects hospice 
``shall be based on the physician's or medical director's clinical 
judgment regarding the normal course of the individual's illness.'' The 
amendment clarified that the certification is based on a clinical 
judgment regarding the usual course of a terminal illness, and 
recognizes the fact that making medical prognostications regarding life 
expectancy are not exact. However, the amendment regarding the 
physician's clinical judgment does not negate the fact that there must 
be a clinical basis for a certification. A hospice is required to make 
certain that the physician's clinical judgment can be supported by 
clinical information and other documentation that provide a basis for 
the certification of 6 months or less if the illness runs its normal 
course.
    While the expectation remains that the hospice physician will 
determine a beneficiary's eligibility for hospice, this is not to say 
that this decision cannot be reviewed if there is a question as to 
whether the clinical documentation supports or does not support a 
patient's hospice eligibility as hospice services provided must be 
reasonable and necessary for the palliation and management of the 
terminal illness and related conditions. The goal of any review for 
eligibility is to ensure that hospices are thoughtful in their 
eligibility determinations so that hospice beneficiaries are able to 
access their benefits appropriately. CMS' right to review clinical 
documentation that supports physician certifications has been 
established in federal court and by the agency in an administrative 
ruling. (See, for example, HCFA Ruling, 93-1 Weight to be Given to a 
Treating Physician's Opinion in Determining Medicare Coverage of 
Inpatient Care in a Hospital or Skilled Nursing Facility (May 18, 
1993); Maximum Comfort, Inc v. Leavitt (512 F.3d 1081 (9th Cir. 2007); 
MacKenzie Medical Supply v. Leavitt (506 F.3d 341 (4th Cir. 2007))). In 
order to be covered under Medicare Part A, the care must also be 
reasonable and necessary. There has always been a statutory prohibition 
(section 1862 (a)(1)(C) of the Act) against payment under the Medicare 
program for services which are not reasonable and necessary for the 
palliation or management of terminal illness. Additionally, section 
1869(a)(1) of the Act makes clear that the Secretary makes 
determinations concerning entitlement, coverage and payment of benefits 
under part A and part B of Medicare.
    We are reminding providers that there are multiple public sources 
available to assist in determining whether a patient meets Medicare 
hospice eligibility criteria (that is, industry-specific clinical and 
functional assessment tools and information on MAC Web sites). 
Additionally, we expect that hospices will use their expert clinical 
judgment in determining eligibility for hospice services. We expect 
that documentation supporting a 6-month or less life expectancy is 
included in the beneficiary's medical record and available to the MACs 
when requested.
    If a beneficiary improves and/or stabilizes sufficiently over time 
while in hospice such that he/she no longer has a prognosis of 6 months 
or less from the most recent recertification evaluation or definitive 
interim evaluation, that beneficiary should be considered for discharge 
from the Medicare hospice benefit. Such beneficiaries can be re-
enrolled for a new benefit period when a decline in their clinical 
status is such that their life expectancy is again 6 months or less. On 
the other hand, beneficiaries in the terminal stage of their illness 
that originally qualify for the Medicare hospice benefit but stabilize 
or improve while receiving hospice care, yet have a reasonable 
expectation of continued decline for a life expectancy of less than 6 
months, remain eligible for hospice care. The hospice medical director 
must assess and evaluate the full clinical picture of the Medicare 
hospice beneficiary to make the determination whether the beneficiary 
still has a medical prognosis of 6 months or less, regardless of 
whether the beneficiary has stabilized or improved. There are 
prognostication tools available for hospices to assist in thoughtful 
evaluation of Medicare beneficiaries for terminally ill eligibility for 
the Medicare hospice benefit. We expect hospice providers to use the 
full range of tools available, including guidelines, comprehensive 
assessments, and the complete medical record, as necessary, to make 
responsible and thoughtful determinations regarding terminally ill 
eligibility. We have always acknowledged the uniqueness of every 
Medicare beneficiary and support thorough and thoughtful evaluation in 
determining whether beneficiaries meet the eligibility criteria of 
being certified as terminally ill. We continue to support the concept 
of shared decision-making, patient choice and the right care at the 
right time to allow Medicare beneficiaries full and appropriate access 
to their Medicare benefits, including hospice care. Furthermore, 
Medicare hospice beneficiaries have certain guaranteed rights. If the 
hospice or designated attending physician believes that the hospice 
beneficiary is no longer eligible for hospice care because his or her 
condition has improved, and the beneficiary does not agree with that 
determination, the hospice beneficiary has the right to ask for a 
review of his or her case. The hospice should provide the hospice 
beneficiary with a notice that explains his or her right to an 
expedited review by a contracted independent reviewer hired by 
Medicare, called a Quality Improvement Organization (QIO). If the 
hospice beneficiary asks for this appeal, the QIO will determine if 
hospice services should continue. The QIO will determine if the 
beneficiary still needs hospice services. The provider is expected to 
continue to provide services for the patient following a favorable 
decision by a QIO. In the QIO decision, the QIO should advise the 
provider as to why it disagrees with the hospice, which should help the 
provider to re-evaluate the discharge decision. If at another point in 
time following the resumption of covered services the hospice believes 
that the patient is no longer hospice eligible, the provider should 
timely deliver a CMS-10123 to notify the patent of its decision to 
discharge. The patient could again appeal to the QIO. Medicare 
beneficiaries have the right to be included in decisions about their 
care, the right to a fair process to appeal decisions about payment of 
services, and the right to privacy and confidentiality.

D. Proposed Timeframe for Hospice Cap Determinations and Overpayment 
Remittances

    As described in sections 1861(dd)(2)(A)(iii) and 1814(i)(2)(A) 
through (C) of the Act, when the Medicare hospice benefit was 
implemented, the Congress included 2 limits on payments to hospices: An

[[Page 26557]]

inpatient cap and an aggregate cap. The hospice inpatient cap limits 
the total number of Medicare inpatient days to no more than 20 percent 
of a hospice's total Medicare hospice days. The intent of the inpatient 
cap was to ensure that hospice remained a home-based benefit. The 
hospice aggregate cap limits the total aggregate payment any individual 
hospice can receive in a year. The intent of the hospice aggregate cap 
was to protect Medicare from spending more for hospice care than it 
would for conventional care at the end of life.
    The aggregate cap amount was set at $6,500 per beneficiary when 
first enacted in 1983; this was an amount hospice advocates agreed was 
well above the average cost of caring for a hospice patient.\36\ The 
$6,500 amount is adjusted annually by the change in the medical care 
expenditure category of the consumer price index for urban consumers 
from March 1984 to March of the cap year. For the 2013 cap year, the 
cap amount was $26,157.50 per beneficiary. The cap year is defined as 
the period from November 1st to October 31st, and was set in place in 
the December 16, 1983 hospice final rule (48 FR 56022).
---------------------------------------------------------------------------

    \36\ National Hospice and Palliative Care Organization (NHPCO), 
``A Short History of the Medicare Hospice Cap on Total 
Expenditures.'' Retrieved on February 19, 2014 at: http://www.nhpco.org/sites/default/files/public/regulatory/History_of_Hospice_Cap.pdf.
---------------------------------------------------------------------------

    The cap amount is multiplied by the number of Medicare 
beneficiaries who received hospice care from a particular hospice 
during the year, resulting in its hospice aggregate cap, which is the 
allowable amount of total Medicare payments that hospice can receive 
for that cap year. There are two different methods for counting a 
hospice's beneficiaries: The streamlined and the patient-by-patient 
proportional methods. Which method a hospice can use to count 
beneficiaries depends on a number of factors, as described in our 
regulations at Sec.  418.309 and in section 90.2.3 of the hospice 
Benefit Policy Manual (IOM 100-02, chapter 9, available at http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/bp102c09.pdf). A hospice's total Medicare payments for the cap year 
cannot exceed the hospice's aggregate cap. If its aggregate cap is 
exceeded, then the hospice must repay the excess back to Medicare.
    While hospices rarely exceed the inpatient cap, in its March 2012 
Report to the Congress, MedPAC reported that an increasing number of 
hospices are exceeding the aggregate cap. MedPAC also noted that above-
cap hospices were almost all for-profit with very long lengths of stay, 
high live discharge rates, and very high profit margins before the 
return of cap overpayments.\37\ The percentage of hospices exceeding 
the aggregate cap rose from 2.6 percent in 2002 to a peak of 12.5 
percent in 2009. In 2010, the percentage of hospices exceeding the 
aggregate cap decreased to 10.1 percent.\38\
---------------------------------------------------------------------------

    \37\ MedPAC, ``Report to Congress: Medicare Payment Policy'', 
March 2012, pp. 293-295, 302.
    \38\ MedPAC, ``Report to Congress: Medicare Payment Policy'', 
March 2013, p. 276.
---------------------------------------------------------------------------

    Abt Associates, our hospice reform contractor, also performed 
analysis on the number of hospices exceeding the aggregate cap with 
results similar to MedPAC's, where an increasing percentage of hospices 
exceeded their caps from 2006 (9.1 percent) to a peak in 2009 (12.8 
percent), followed by a decline through 2011 (10.5 percent). However, 
the analysis shows an increase in 2012, with 11.6 percent of hospices 
exceeding their aggregate caps. Additionally, analysis of above-cap 
hospices showed that the average overpayment per beneficiary has 
increased over time, up 35.2 percent from 2006 ($7,384) to 2012 
($9,983). Using above-cap hospices, we also found that the average 
overpayment amount went from $732,103 in 2006 to $440,727 in 2011, but 
that this downward trend is estimated to change in 2012, when the 
average overpayment amount is estimated to increase to $547,011.
    We also compared hospices' year-end percentage of their aggregate 
cap total that they had received in Medicare payments over time. 
Specifically, we examined where hospices ended their cap year in terms 
of Medicare reimbursements received, relative to that year's aggregate 
cap limit, by comparing the 2006 cap year to the 2012 cap year. 
Analysis revealed that more hospices ended the 2012 cap year ``just 
below'' their aggregate cap than in 2006. The cap analyses which are 
referenced in this section are available in the May 2014 Technical 
Report which will be posted in May, 2014 on our Hospice Center Web page 
at: http://www.cms.gov/Center/Provider-Type/Hospice-Center.html.
    The results from these recent analyses on the hospice aggregate cap 
highlight the importance of hospices monitoring their aggregate cap and 
ensuring that the beneficiaries under their care are truly eligible for 
hospice services. In the FY 2010 hospice wage index proposed rule we 
solicited comments on the aggregate hospice cap (74 FR 18920-18922). 
Many commenters wanted more timely notification of cap overpayments. 
Many also requested that hospices be given access to beneficiaries' 
full hospice utilization history, as having this information would 
enable hospices to better manage their aggregate cap. In response to 
concerns from hospices, we redesigned the Provider Statistical and 
Reimbursement (PS&R) system in 2011, so that hospices can now easily 
manage their inpatient and aggregate caps. The redesigned PS&R enables 
hospices to calculate estimated caps to monitor their cap status at 
different points during the cap year, and also enables them to 
calculate their caps after the cap year ends.
    Our current practice is for the Medicare Administrative Contractors 
(MACs) to complete the hospice cap determinations for both the 
inpatient and the aggregate caps 16 to 24 months after the cap year in 
order to demand any overpayment. We are concerned about this long 
timeframe, particularly given that the percentage of hospices exceeding 
the aggregate cap is increasing, along with the average overpayment per 
beneficiary. To better safeguard the Medicare Trust Fund, we believe 
that demands for cap overpayments should occur sooner. This is now 
possible due to the redesigned PS&R system.
    Therefore, for the 2014 cap year and subsequent cap years, we 
propose to amend Sec.  418.308 and require that hospices complete their 
inpatient and aggregate caps determination within 5 months after the 
cap year ends (that is, by March 31) and remit any overpayments at that 
time. We propose that the MACs would then reconcile all payments at the 
final cap determination. If a provider fails to file its inpatient and 
aggregate cap determination 150 days after the end of the cap year, we 
propose that payments to the provider would be suspended in whole or in 
part until the self-determined cap is filed with the Medicare 
contractor. We propose to further amend Sec.  418.308 and Sec.  405.371 
to state that payments to a hospice would be suspended in whole or in 
part, for failure to file a self-determined inpatient and aggregate cap 
determination. This is similar to the current practice followed by all 
other provider types that file cost reports with MACs.
    Hospices would be provided a pro-forma spreadsheet that they would 
use to calculate their caps to remit any overpayments. The redesigned 
PS&R system provides the inpatient days, total days, beneficiary 
counts, and Medicare payments that are needed to calculate any 
inpatient or aggregate cap overpayments. The redesigned system can 
provide needed data whether a

[[Page 26558]]

hospice uses the streamlined method or the patient-by-patient 
proportional method for its aggregate cap calculation. All hospices are 
required to register in Individuals Authorized Access to CMS Computer 
Services (IACS) and obtain their PS&R report from the PS&R system. 
Hospices experiencing difficulties can request a copy of their PS&R 
report from their MAC.
    We invite comment on this proposal and the associated change in the 
regulation at Sec.  418.308 in section VI.

E. Proposed Timeframes for Filing the Notice of Election and Notice of 
Termination/Revocation

1. Proposed Timeframe for Filing the Notice of Election
    A distinctive characteristic of the Medicare hospice benefit is 
that it requires patients (or their representative) to intentionally 
choose hospice care through an election. As part of that election, 
patients (or their representative) acknowledge that they fully 
understand the palliative, rather than curative, nature of hospice 
care. Another important aspect of the election is a waiver of 
beneficiary rights to Medicare payment for any Medicare services 
related to the terminal illness and related conditions during a hospice 
election except when provided by, or under arrangement by, the 
designated hospice, or by the individual's attending physician if he/
she is not employed by the designated hospice (Sec.  418.24(d)).
    Because of this waiver, providers other than the designated hospice 
or attending physician cannot receive payment for services to a hospice 
beneficiary unless those services are unrelated to the terminal illness 
and related conditions. For our claims processing system to properly 
enforce this waiver, it is necessary that the hospice election be 
recorded in the claims processing system as soon as possible after the 
election occurs. A survey of the four Medicare hospice Medicare 
Administrative Contractors (MACs) revealed that 16.2 percent of NOEs 
are filed within 2 days of the effective date of election, 39.2 percent 
of NOEs are filed within 5 days of the effective date of election, and 
62.1 percent of NOEs are filed within 10 days of the effective date of 
election. Prompt recording of the notice of election (NOE) prevents 
inappropriate payments, as claims filed by providers other than the 
hospice or the attending physician will be rejected by the system, 
unless those claims are for items or services unrelated to the hospice 
terminal illness. Prompt filing of the NOE also protects beneficiaries 
from financial liability from deductibles and copayments for items or 
services provided during a hospice election which are related to the 
terminal prognosis.
    Once an NOE is filed, the hospice election and benefit period are 
established in the Common Working File (CWF) and in the Daily 
Transaction Reply Report (DTRR). The CWF is used by Part A and Part B 
providers, and the DTRR is used by Part D plan sponsors, to determine 
whether a beneficiary is a hospice patient. This information is 
necessary for providers and suppliers to properly handle claims for 
beneficiaries under a hospice election.
    Our hospice reform contractor, Abt Associates, has performed 
analyses of Medicare expenditures for drugs and services provided to 
hospice beneficiaries during a hospice election. These analyses found 
that Medicare Part D was paying for many drugs which should have been 
provided by the hospice. We also found that Parts A and B were paying 
claims for items or services from non-hospice providers during a 
hospice election (See section III.A.4), though some of these claims may 
have been appropriate. Once a hospice election is established in the 
CWF, in order for claims from other providers to process, the claim 
must be from the attending physician and coded with a ``GV'' modifier, 
or for items or services unrelated to the terminal illness and related 
conditions and must be coded with either a condition code of ``07'' or 
a ``GW'' modifier. However, in calendar year 2012, 10,500 claims and 
2.4 million line items, totaling $159 million were processed without 
the condition code or modifier. Approximately $100 million was from 
physician/supplier Part B claims that include claims from, for example, 
physicians, laboratories, and ambulance companies, and approximately 
$46 million was billed as durable medical equipment. This suggests that 
these claims may have been processed in the time between when the 
beneficiary elected hospice and when the hospice filed its NOE. When 
Parts A, B, or D pay claims for items or services during a hospice 
election, there is typically an associated beneficiary liability (such 
as deductibles or copayments). For example, in 2012 hospice beneficiary 
liability was $135.5 million for Part A or B claims, and $48.2 million 
for Part D claims, for items or services provided to hospice 
beneficiaries during a hospice election. We want to safeguard hospice 
beneficiaries from inappropriate financial liability during a hospice 
election for items or services that should be provided by the hospice. 
Please see section III.A.4 of this proposed rule and the May 2014 
Technical Report, which will be posted on the CMS Hospice Center Web 
page in May, 2014 for more details on Medicare payments made to non-
hospice providers during a hospice election for hospice beneficiaries. 
The hospice center Web page can be accessed at http://www.cms.gov/Center/Provider-Type/Hospice-Center.html.
    In the April 1, 2013 CMS Part D Final Call Letter, it was noted 
that delays in the flow of hospice election information cause 
retroactive updates to the information sent to Part D plan sponsors on 
the DTRR, and plan sponsors requested that CMS improve the timeliness 
of the hospice data on the DTRR.\39\ More recently, CMS issued a 
memorandum on December 6, 2013 entitled ``Part D Payment for Drugs for 
Beneficiaries Enrolled in Hospice,'' which sought to clarify the 
criteria for determining payment responsibility for drugs for hospice 
beneficiaries.\40\ Industry commenters described the lag time in the 
notification of Part D plan sponsors that the beneficiary had elected 
hospice, revoked hospice, or been discharged alive from hospice as a 
key problem in determining payment responsibility. Commenters suggested 
that CMS require that the NOE be filed within a short timeframe of 
election (for example, within 48 hours).
---------------------------------------------------------------------------

    \39\ CMS, ``Calendar Year (CY) 2014 Medicare Advantage 
Capitation Rates and Medicare Advantage and Part D Payment Policies 
and Final Call Letter,'' issued April 1, 2013; available at http://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/downloads/Announcement2014.pdf.
    \40\ Tudor CG, Wilson L, and Majestic M. ``Part D Payment for 
Drugs for Beneficiaries Enrolled in Hospice--Request for Comments,'' 
memorandum issued December 6, 2013, available at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/Hospice/Downloads/Hospice-PartD-Payment.pdf.
---------------------------------------------------------------------------

    The CWF is also used by hospices to identify the current benefit 
period, which helps hospices determine when a face-to-face encounter is 
required. We have received requests for assistance from hospices where 
a beneficiary was previously admitted to and then discharged from 
another hospice, which had not yet filed the NOE, creating a problem 
for the current hospice in determining the correct benefit period. This 
can lead to the current hospice not meeting the face-to-face 
requirement. Additionally, because of sequential billing requirements, 
the current hospice would have to cancel its NOE and all its billing 
for that beneficiary, to allow the previous hospice to input its NOE 
and billing; once the previous hospice files its claims and records the 
beneficiary's discharge, the current

[[Page 26559]]

hospice could then resubmit its NOE and its claims. The failure of the 
first hospice to file its NOE promptly creates an administrative burden 
for the second hospice.
    In summary, prompt filing of the NOE avoids compliance problems 
with the statutorily mandated face-to-face requirement. It also avoids 
creating burdensome situations for hospices when sequential billing 
requirements are not met. Finally, because Medicare payments for 
services related to the terminal illness and related conditions are 
waived once a hospice election is in place, it is crucial that the NOE 
be filed promptly to safeguard the integrity of the Medicare Trust 
Fund, to enable smooth and efficient operation of other Medicare 
benefits (like Part D), and to safeguard hospice beneficiaries from 
inappropriate financial liability due to copayments and deductibles for 
services related to the terminal prognosis. For all of these reasons, 
we propose that a hospice must file the NOE with its MAC within 3 
calendar days after the hospice effective date of election, regardless 
of how the NOE is filed (by direct data entry, or sent by mail or 
messenger). Hospices operate 24 hours per day, 7 days per week, so 
meeting this proposed requirement should be a part of normal business 
operations. Additionally, we believe that this proposed requirement 
will relieve hospices of the burden created when some minority of 
hospices do not file their NOEs promptly, will avoid inappropriate 
payments to other Part A, Part B, or Part D providers, and will 
safeguard beneficiaries from inappropriate liability for copayments or 
deductibles.
    Currently, payment for hospice services begins on the effective 
date of the hospice election, regardless of when the NOE was filed. A 
commenter on the December 6, 2013 CMS memorandum clarifying drug 
payment responsibility between Part D, hospice, and beneficiaries 
suggested that without enforcement actions, hospices would not file 
NOEs within a short timeframe. We agree that providing a consequence 
for failing to file NOEs timely would encourage compliance. Therefore, 
we propose that for those hospices that do not file the NOE timely 
(that is, within 3 calendar days after the effective date of election), 
Medicare would not cover and pay for days of hospice care from the 
effective date of election to the date of filing of the NOE. We propose 
that these days be considered the financial responsibility of the 
hospice; the hospice could not bill the beneficiary for them. We 
believe that this is a reasonable step which would not be burdensome to 
hospices and would help us to safeguard the integrity of the Medicare 
Trust Fund, and help protect beneficiaries from inappropriate 
liability.
    Once filed, the process of posting an NOE to the CWF after direct 
data entry (DDE) takes 1 to 5 days, depending on the host site. If an 
NOE is not submitted by DDE, the current policy requires hospices to 
send it to the MAC by mail or messenger. This policy remains in place; 
however, hospices may need to use overnight mail or an overnight 
messenger to ensure that paper NOEs are received by the MAC within the 
proposed 3-calendar-day timeframe after the effective date of election. 
Given the extremely low volume of NOEs filed by mail or messenger (an 
average of 68 per year), we do not believe this proposed 3-calendar day 
filing of the NOE would be burdensome to hospices. Using a speedier 
form of delivery will ensure that a paper NOE's filing is not delayed 
by the transit time needed to get the document from the hospice to the 
MAC.
    We invite comment on this proposal and the associated change in the 
regulation at Sec.  418.24(a) in section VI.
2. Proposed Timeframe for Filing the Notice of Termination/Revocation
    Hospices may discharge patients for only three reasons: (1) Due to 
cause; (2) due to the patient's no longer being terminally ill; or (3) 
due to the patient's moving outside the hospice's service area. In 
contrast, hospice patients are free to revoke their election to hospice 
care at any time. Upon discharge or revocation, a beneficiary resumes 
the Medicare coverage that had previously been waived by the hospice 
election. It is important for hospices to record the beneficiary's 
discharge or revocation in the claims processing system in a timely 
manner. As previously noted, a number of those commenting on the 
December 6, 2013 CMS memorandum clarifying drug payment responsibility 
between Part D, hospices, and beneficiaries wrote that it was critical 
for beneficiary revocations and live discharges from hospice to be 
recorded as soon as possible within CMS claims processing systems. 
Commenters wrote that prompt recording of revocations or discharges is 
necessary to ensure that the beneficiary is able to access needed items 
or services, and to ensure that payment for the item or service is from 
the appropriate source. Providers are allowed 12 months to file a 
claim, so if a hospice is not prepared to file a final claim quickly, 
it should instead file a termination/revocation of election notice, so 
that the claims processing systems are updated to no longer show the 
beneficiary as being under a hospice election. Hereafter, we will refer 
to this as a Notice of Termination or Revocation, or NOTR.
    We propose to revise the regulations at Sec.  418.26 and Sec.  
418.28 to require hospices to file a NOTR within 3 calendar days after 
the effective date of a beneficiary's discharge or revocation, if they 
have not already filed a final claim. This would safeguard 
beneficiaries from any delays or difficulties in accessing needed 
drugs, items, or services that could occur if the CWF or DTRR continued 
to show a hospice election in place when in fact it was revoked or a 
discharge occurred. It would also avoid costs and administrative burden 
to non-hospice providers and to the claims processing system that would 
occur for claims for items or services provided after discharge or 
revocation, which would be rejected if the claims processing systems 
continued to show the beneficiary as being under a hospice election.
    We invite comment on this proposal and the associated changes in 
the regulations at Sec.  418.26 and Sec.  418.28 in section VI.

F. Proposed Addition of the Attending Physician to the Hospice Election 
Form

    The term ``attending physician'' is defined differently in 
different health care settings. For the Medicare hospice benefit, 
``attending physician'' has a specific definition found in the Social 
Security Act at 1861(dd)(3)(B):
    ``The term ``attending physician'' means, with respect to an 
individual, the physician (as defined in subsection (r)(1)) or nurse 
practitioner (as defined in subsection (aa)(5)), who may be employed by 
a hospice program, whom the individual identifies as having the most 
significant role in the determination and delivery of medical care to 
the individual at the time the individual makes an election to receive 
hospice care.''
    Our regulations at Sec.  418.3 include a definition for ``attending 
physician,'' based on the statutory language above. We define it as 
either (1) a doctor of medicine or osteopathy legally authorized to 
practice medicine and surgery by the State in which he or she performs 
that function or action; or (2) a nurse practitioner who meets the 
training, education, and experience requirements described elsewhere in 
our regulations. The definition also sets out the requirement that the 
patient identify the attending physician at the time he or she elects 
to receive hospice care, as having the most significant role in the 
determination and delivery of the individual's medical care.

[[Page 26560]]

    We require that the National Provider Identifier (NPI) of the 
attending physician be included on the NOE and on each claim. An 
attending physician can be a physician or a nurse practitioner, as long 
as he or she meets the requirements set out above. The hospice patient 
(or his or her representative) chooses the attending physician, not the 
hospice. This differs from some non-hospice settings, where an 
attending may be a clinician assigned to provide care to the patient. 
We stress that in hospice, the attending physician, who may be a nurse 
practitioner, is chosen by the patient (or his or her representative), 
and not by the hospice. This requirement is also included as part of 
the CoPs at Sec.  418.52(c)(4), which states that the patient has the 
right to choose his or her attending physician. The hospice CoPs at 
Sec.  418.64(a)(3) further require that if the attending physician is 
unavailable, the hospice medical director, hospice contracted 
physician, and/or hospice physician employee is responsible for meeting 
the medical needs of the patient. Therefore, the patient should receive 
all needed care, whether that care is provided by hospice doctors, 
hospice nurse practitioners (NPs), or by the designated attending 
physician. Hospices can bill Part A for reasonable and necessary 
physician services provided to hospice beneficiaries by its doctors, 
regardless of whether those doctors are the designated attending. 
However, our regulations at Sec.  418.304(e) do not permit Medicare to 
be billed for reasonable and necessary physician services provided by 
NPs unless the NP is the attending physician, as defined in Sec.  
418.3.
    We have recently heard anecdotal reports of hospices changing a 
patient's attending physician when the patient moves to an inpatient 
setting for inpatient care, often to a nurse practitioner. We have also 
heard reports of hospices assigning an attending physician based upon 
whoever is available. MACs noted that the NPI of the attending 
physician reported on claims was sometimes changing, and differed from 
that reported on the NOE. Additionally, using CY 2010 and CY 2011 data, 
we found that 35 percent of beneficiaries had Part B claims during 
their hospice election from more than one physician who claimed to be 
their designated attending physician. The reports of hospices changing 
a patient's attending physician are of great concern since the statute 
emphasizes that the attending physician must be chosen by the patient 
(or his or her representative). Finally, we have also received 
anecdotal reports that some hospices are not getting the signature of 
the attending physician on the initial certification. If a beneficiary 
has designated an attending physician, that physician must sign the 
initial certification for Medicare to cover and pay for hospice 
services, unless the attending is an NP.
    To ensure the attending physician of record is properly documented 
in the patient's medical record, we propose to amend the regulations at 
Sec.  418.24(b)(1) and require the election statement to include the 
patient's choice of attending physician. The proposed information 
identifying the attending physician should be recorded on the election 
statement in enough detail so that it is clear which physician or NP 
was designated as the attending physician. Hospices have the 
flexibility to include this information on their election statement in 
whatever format works best for them, provided the content requirements 
in Sec.  418.24(b) are met. The language on the election form should 
include an acknowledgement by the patient (or representative) that the 
designated attending physician was the patient's (or representative's) 
choice.
    In addition, we further propose that if a patient (or 
representative) wants to change his or her designated attending 
physician, he or she must follow a procedure similar to that which 
currently exists for changing the designated hospice. Specifically, the 
patient (or representative) must file a signed statement, with the 
hospice, that identifies the new attending physician in enough detail 
so that it is clear which physician or NP was designated as the new 
attending physician. Additionally, we propose that the statement 
include the date the change is to be effective, the date that the 
statement is signed, and the patient's (or representative's) signature, 
along with an acknowledgement that this change in the attending 
physician is the patient's (or representative's) choice. The effective 
date of the change in attending physician cannot be earlier than the 
date the statement is signed. We believe that such a change would help 
ensure that any changes in the identity of the attending physician 
would be the result of the patient's free choice.
    We invite comment on this proposal and the associated changes in 
the regulations at Sec.  418.24(b)(1) and Sec.  418.24(f) in section 
VI.

G. FY 2015 Hospice Wage Index and Rates Update

1. FY 2015 Hospice Wage Index
    The hospice wage index is used to adjust payment rates for hospice 
agencies under the Medicare program to reflect local differences in 
area wage levels based on the location where services are furnished. 
The hospice wage index utilizes the wage adjustment factors used by the 
Secretary for purposes of section 1886(d)(3)(E) of the Act for hospital 
wage adjustments, and 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 by the Office of Management and 
Budget (OMB) to the Metropolitan Statistical Areas (MSAs) definitions. 
We have consistently used the pre-floor, pre-reclassified hospital wage 
index when deriving the hospice wage index. In our August 4, 2005 FY 
2006 Hospice Wage Index final rule (70 FR 45130), we began adopting the 
revised labor market area definitions as discussed in the OMB Bulletin 
No. 03-04 (June 6, 2003). This bulletin announced revised definitions 
for MSAs and the creation of Core-Based Statistical Areas (CBSAs). The 
bulletin is available online at http://www.whitehouse.gov/omb/bulletins/b03-04.html.
    In the FY 2006 Hospice Wage Index final rule, we implemented a 1-
year transition policy using a 50/50 blend of the CBSA-based wage index 
values and the MSA-based wage index values for FY 2006. The one-year 
transition policy ended on September 30, 2006. For FY 2007 and beyond, 
we have used CBSAs exclusively to calculate wage index values. OMB has 
published subsequent bulletins regarding CBSA changes. The most recent 
CBSA changes used for the FY 2015 hospice wage index are found in OMB 
Bulletin 10-02, available at: http://www.whitehouse.gov/sites/default/files/omb/assets/bulletins/b10-02.pdf.
    When adopting OMB's new labor market designations in FY 2006, we 
identified some geographic areas where there were no hospitals, and 
thus, no hospital wage index data, which to base the calculation of the 
hospice wage index. We also adopted the policy that for urban labor 
markets without a hospital from which hospital wage index data could be 
derived, all of the CBSAs within the state would be used to calculate a 
statewide urban average pre-floor, pre-reclassified hospital wage index 
value to use as a reasonable proxy for these areas in our August 6, 
2009 FY 2010 Hospice Wage Index final rule (74 FR 39386). In FY 2015, 
the only CBSA without a hospital from which hospital wage data could be 
derived is 25980, Hinesville-Fort Stewart, Georgia.
    In our August 31, 2007 FY 2008 Hospice Wage Index final rule (72 FR 
50214), we implemented a new methodology to update the hospice

[[Page 26561]]

wage index for rural areas without a hospital, and thus no hospital 
wage data. In cases where there was a rural area without rural hospital 
wage data, we used the average pre-floor, pre-reclassified hospital 
wage index data from all contiguous CBSAs to represent a reasonable 
proxy for the rural area. In our August 31, 2007 FY 2008 Hospice Wage 
Index final rule, we noted that we interpret the term ``contiguous'' to 
mean sharing a border (72 FR 50217). Currently, the only rural area 
without a hospital from which hospital wage data could be derived is 
Puerto Rico. However, our policy of imputing a rural pre-floor, pre-
reclassified hospital wage index based on the pre-floor, pre-
reclassified hospital wage index (or indices) of CBSAs contiguous to a 
rural area without a hospital from which hospital wage data could be 
derived does not recognize the unique circumstances of Puerto Rico. 
While we have not identified an alternative methodology for imputing a 
pre-floor, pre-reclassified hospital wage index for rural Puerto Rico, 
we will continue to evaluate the feasibility of using existing hospital 
wage data and, possibly, wage data from other sources. For FY 2008 
through FY 2013, we have used the most recent pre-floor, pre-
reclassified hospital wage index available for Puerto Rico, which is 
0.4047. In this proposed rule, for FY 2015, we continue to use the most 
recent pre-floor, pre-reclassified hospital wage index value available 
for Puerto Rico, which is 0.4047.
    For FY 2015, we would use the 2014 pre-floor, pre-reclassified 
hospital wage index to derive the applicable wage index values for the 
FY 2015 hospice wage index. We would continue to use the pre-floor, 
pre-reclassified hospital wage data as a basis to determine the hospice 
wage index values because hospitals and hospices both compete in the 
same labor markets, and therefore, experience similar wage-related 
costs. We believe the use of the pre-floor, pre-reclassified hospital 
wage index data, as a basis for the hospice wage index, results in the 
appropriate adjustment to the labor portion of the costs. The FY 2015 
hospice wage index values presented in this proposed rule were computed 
consistent with our pre-floor, pre-reclassified hospital (IPPS) wage 
index policy (that is, our historical policy of not taking into account 
IPPS geographic reclassifications in determining payments for hospice). 
The FY 2015 pre-floor, pre-reclassified hospital wage index does not 
reflect OMB's new area delineations, based on the 2010 Census, as 
outlined in OMB Bulletin 13-01, released on February 28, 2013. 
Moreover, the proposed FY 2015 pre-floor, pre-reclassified hospital 
wage index does not contain OMB's new area delineations. CMS intends to 
propose changes to the FY 2015 hospital wage index based on the newest 
CBSA changes in the FY 2015 IPPS proposed rule. Therefore, if CMS 
incorporates OMB's new area delineations, based on the 2010 Census, in 
the FY 2015 hospital wage index, those changes would also be reflected 
in the FY 2016 hospice wage index.
2. FY 2015 Hospice Wage Index With an Additional 15 Percent Reduced 
Budget Neutrality Adjustment Factor (BNAF)
    This proposed rule would update the hospice wage index values for 
FY 2015 using the FY 2014 pre-floor, pre-reclassified hospital wage 
index. 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 then subject to either a budget neutrality adjustment 
or application of the hospice floor to compute the hospice wage index 
used to determine payments to hospices. Pre-floor, pre-reclassified 
hospital wage index values below 0.8 are adjusted by either: (1) The 
hospice budget neutrality adjustment factor (BNAF); or (2) the hospice 
floor subject to a maximum wage index value of 0.8; whichever results 
in the greater value.
    The BNAF is calculated by computing estimated payments using the 
most recent, completed year of hospice claims data. The units (days or 
hours) from those claims are multiplied by the updated hospice payment 
rates to calculate estimated payments. For the FY 2015 Hospice Wage 
Index proposed rule, that means estimating payments for FY 2015 using 
units (days or hours) from FY 2013 hospice claims data, and applying 
the FY 2015 hospice payment rates. The FY 2015 hospice wage index 
values are then applied to the labor portion of the payments. The 
procedure is repeated using the same units from the claims data and the 
same payment rates, but using the 1983 Bureau of Labor Statistics 
(BLS)-based wage index instead of the updated raw pre-floor, pre-
reclassified hospital wage index (note that both wage indices include 
their respective floor adjustments). The total payments are then 
compared, and the adjustment required to make total payments equal is 
computed; that adjustment factor is the BNAF.
    The August 6, 2009 FY 2010 Hospice Wage Index final rule finalized 
a provision to phase out the BNAF over 7 years, with a 10 percent 
reduction in the BNAF in FY 2010, and an additional 15 percent 
reduction in each of the next 6 years, with complete phase out in FY 
2016 (74 FR 39384). Once the BNAF is completely phased out, the hospice 
floor adjustment would simply consist of increasing any wage index 
value less than 0.8 by 15 percent, subject to a maximum wage index 
value of 0.8. Therefore, in accordance with the FY 2010 Hospice Wage 
final rule, the BNAF for FY 2015 will be reduced by an additional 15 
percent for a total BNAF reduction of 85 percent (10 percent from FY 
2010, an additional 15 percent from FY 2011, an additional 15 percent 
for FY 2012, an additional 15 percent for FY 2013 an additional 15 
percent in FY 2014 and an additional 15 percent in FY 2015).
    The unreduced BNAF for FY 2015 is 0.062060 (or 6.2060 percent). An 
85 percent reduction to the BNAF is computed to be 0.009309 (or 0.9309 
percent). For FY 2015, this is mathematically equivalent to taking 15 
percent of the unreduced BNAF value, or multiplying 0.062060 by 0.15, 
which equals 0.009309 (0.9309 percent). The BNAF of 0.9309 percent 
reflects an 85 percent reduction in the BNAF. The 85 percent reduced 
BNAF (0.9309 percent) was applied to the pre-floor, pre-reclassified 
hospital wage index values of 0.8 or greater. The 10 percent reduced 
BNAF for FY 2010 was 0.055598, based on a full BNAF of 0.061775; the 
additional 15 percent reduced BNAF FY 2011 (for a cumulative reduction 
of 25 percent) was 0.045422, based on a full BNAF of 0.060562; the 
additional 15 percent reduced BNAF for FY 2012 (for a cumulative 
reduction of 40 percent) was 0.035156, based on a full BNAF of 
0.058593; the additional 15 percent reduced BNAF for FY 2013 (for a 
cumulative reduction of 55 percent) was 0.027197, based on a full BNAF 
of 0.060438; the additional 15 percent reduced BNAF for FY 2014 (for a 
cumulative reduction of 70 percent) was 0.018461, based on a full BNAF 
of 0.061538 and the additional 15 percent reduced BNAF for FY 2015 (for 
a cumulative reduction of 85 percent) is 0.009309, based on a full BNAF 
of 0.062060.
    Hospital wage index values which are less than 0.8 are subject to 
the hospice floor calculation. For example, if in FY 2014, County A had 
a pre-floor, pre-reclassified hospital wage index (raw wage index) 
value of 0.3994, we would perform the following calculations using the 
budget-neutrality factor (which for this example is an unreduced BNAF 
of 0.062060, less 85 percent, or 0.009309) and the hospice floor to 
determine

[[Page 26562]]

County A's hospice wage index: Pre-floor, pre-reclassified hospital 
wage index value below 0.8 multiplied by 1 + 85 percent reduced BNAF: 
(0.3994 x 1.009309 = 0.4031); Pre-floor, pre-reclassified hospital wage 
index value below 0.8 multiplied by 1 + hospice floor: (0.3994 x 1.15 = 
0.4593). Based on these calculations, County A's hospice wage index 
would be 0.4593. The BNAF may be updated for the final rule based on 
availability of more complete data.
    An addendum A and Addendum B with the FY 2015 wage index values for 
rural and urban areas will not be published in the Federal Register. 
The FY 2015 wage index values for rural areas and urban areas are 
available via the internet at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/Hospice/index.html. The hospice wage index for 
FY 2015 set forth in this proposed rule includes the BNAF reduction and 
would be effective October 1, 2014 through September 30, 2015.
3. Proposed Hospice Payment Update Percentage
    Section 4441(a) of the Balanced Budget Act of 1997 (BBA) 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 market basket index, minus 1 
percentage point. Payment rates for FYs since 2002 have been updated 
according to section 1814(i)(1)(C)(ii)(VII) of the Act, which states 
that the update to the payment rates for subsequent FYs must be the 
market basket percentage for that FY. The Act requires us to use the 
inpatient hospital market basket to determine the hospice payment rate 
update. In addition, section 3401(g) of the Affordable Care Act 
mandates that, starting with FY 2013 (and in subsequent FYs), 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. In addition, section 3401(g) of the 
Affordable Care Act also mandates that in FY 2013 through FY 2019, the 
hospice payment update percentage will be reduced by an additional 0.3 
percentage point (although for FY 2014 to FY 2019, the potential 0.3 
percentage point reduction is subject to suspension under conditions 
specified in section 1814(i)(1)(C)(v) of the Act). The proposed hospice 
payment update percentage for FY 2015 is based on the estimated 
inpatient hospital market basket update of 2.7 percent (based on IHS 
Global Insight, Inc.'s first quarter 2014 forecast with historical data 
through the fourth quarter of 2013). Due to the requirements at 
1886(b)(3)(B)(xi)(II) and 1814(i)(1)(C)(v) of the Act, the estimated 
inpatient hospital market basket update for FY 2015 of 2.7 percent must 
be reduced by a productivity adjustment as mandated by Affordable Care 
Act (currently estimated to be 0.4 percentage point for FY 2015). The 
estimated inpatient hospital market basket for FY 2015 is reduced 
further by a 0.3 percentage point, as mandated by the Affordable Care 
Act. In effect, the proposed hospice payment update percentage for FY 
2015 is 2.0 percent. We are also proposing that if more recent data are 
subsequently available (for example, a more recent estimate of the 
inpatient hospital market basket and productivity adjustment), we would 
use such data, if appropriate, to determine the FY 2015 market basket 
update and the multi-factor productivity MFP adjustment in the FY 2015 
Hospice PPS final rule.
    Currently, the labor portion of the hospice payment rates is as 
follows: for Routine Home Care, 68.71 percent; for Continuous Home 
Care, 68.71 percent; for General Inpatient Care, 64.01 percent; and for 
Respite Care, 54.13 percent. The non-labor portion is equal to 100 
percent minus the labor portion for each level of care. Therefore, the 
non-labor portion of the payment rates is as follows: for Routine Home 
Care, 31.29 percent; for Continuous Home Care, 31.29 percent; for 
General Inpatient Care, 35.99 percent; and for Respite Care, 45.87 
percent.
4. Proposed FY 2015 Hospice Payment Rates
    Historically, the hospice rate update has been published through a 
separate administrative instruction issued annually in the summer to 
provide adequate time to implement system change requirements; however, 
beginning in FY 2014 and for subsequent fiscal years, we are using 
rulemaking as the means to update payment rates. This change was 
proposed in the FY 2014 Hospice Wage Index and Payment Rate Update 
proposed rule and finalized in the FY 2014 Hospice Wage Index and 
Payment Rate Update final rule (78 FR 48270). It is consistent with the 
rate update process in other Medicare benefits, and provides rate 
information to hospices as quickly as, or earlier than, when rates are 
published in an administrative instruction.
    There are four payment categories that are distinguished by the 
location and intensity of the services provided. The base payments are 
adjusted for geographic differences in wages by multiplying the labor 
share, which varies by category, of each base rate by the applicable 
hospice wage index. A hospice is paid the routine home care rate for 
each day the beneficiary is enrolled in hospice, unless the hospice 
provides continuous home care, inpatient respite care, or general 
inpatient care. Continuous home care is provided during a period of 
patient crisis to maintain the patient at home; inpatient respite care 
is short-term care to allow the usual caregiver to rest; and general 
inpatient care is to treat symptoms that cannot be managed in another 
setting.
    The FY 2015 payment rates would be the FY 2014 payment rates, 
increased by 2.0 percent, which is the proposed hospice payment update 
percentage for FY 2015 as discussed in section III.G.3. The preliminary 
FY 2015 hospice payment rates would be effective for care and services 
furnished on or after October 1, 2014, through September 30, 2015 (see 
Table 6 below).

        Table 6--FY 2015 Hospice Payment Rates Updated by the Proposed Hospice Payment Update Percentage
----------------------------------------------------------------------------------------------------------------
                                                                               Multiply by the
                                                                              FY 2015 proposed       FY 2015
              Code                      Description         FY 2014  payment   hospice payment     preliminary
                                                                  rates         update of 2.0     payment rate
                                                                                   percent
----------------------------------------------------------------------------------------------------------------
651............................  Routine Home Care........           $156.06            x 1.02           $159.18
652............................  Continuous Home Care Full            910.78            x 1.02            929.00
                                  Rate = 24 hours of care
                                  $ = 38.71 hourly rate.
655............................  Inpatient Respite Care...            161.42            x 1.02            164.65
656............................  General Inpatient Care...            694.19            x 1.02            708.07
----------------------------------------------------------------------------------------------------------------


[[Page 26563]]

    We reiterate in this proposed rule, that the Congress required in 
sections 1814(i)(5)(A) through (C) of the Act that hospices begin 
submitting quality data, based on measures to be specified by the 
Secretary. In the FY 2012 Hospice Wage Index final rule (76 FR 47320 
through 47324), we implemented a Hospice Quality Reporting Program 
(HQRP) as required by section 3004 of the Affordable Care Act. Hospices 
were required to begin collecting quality data in October 2012, and 
submit that quality data in 2013. Section 1814(i)(5)(A)(i) of the Act 
requires that beginning with FY 2014 and each subsequent FY, the 
Secretary shall reduce the market basket update by 2 percentage points 
for any hospice that does not comply with the quality data submission 
requirements with respect to that FY.). We remind hospices that this 
applies to payments in FY 2015 (See Table 7 below). For more 
information on the HQRP requirements please see section III.H in this 
proposed rule.

  Table 7--FY 2015 Hospice Payment Rates Updated by the Proposed Hospice Payment Update Percentage for Hospices
                                  That DO NOT Submit the Required Quality Data
----------------------------------------------------------------------------------------------------------------
                                                                               Multiply by the
                                                                               FY 2015 hospice
                                                                               payment update
                                                            FY 2014  payment    percentage of        FY 2015
              Code                      Description               rates          2.0 percent       preliminary
                                                                                   minus 2        payment rate
                                                                                 percentage
                                                                                points (-0.2)
----------------------------------------------------------------------------------------------------------------
651............................  Routine Home care........           $156.06            x 1.00           $156.06
652............................  Continuous Home Care Full            910.78            x 1.00            910.78
                                  Rate = 24 hours of care
                                  $ = 37.95 hourly rate.
655............................  Inpatient Respite Care...            161.42            x 1.00            161.42
656............................  General Inpatient Care...            694.19            x 1.00            694.19
----------------------------------------------------------------------------------------------------------------

    A Change Request with the finalized hospice payment rates, a 
finalized hospice wage index, the Pricer for FY 2015, and the hospice 
cap amount for the cap year ending October 31, 2014 will be issued in 
the summer.
    To assist the hospice industry in planning and budgeting, CMS is 
informing the hospice industry of the aggregate cap amount for the 2014 
cap year in advance of the formal CMS administrative notice, which will 
be issued this summer. Additionally, we have included information about 
how we calculate the aggregate cap amount so that hospices can compute 
the amount themselves in the future if they so desire. This information 
is also in CMS' Internet-Only Manual 100-2, chapter 9, section 90.2.6. 
The manual can be accessed from the ``Manuals and Transmittals'' 
section of CMS' hospice Web site at http://www.cms.gov/Center/Provider-Type/Hospice-Center.html. Please refer to section III.D of this 
proposed rule on the proposal to expedite hospice cap determinations.
    The hospice aggregate cap amount for the 2014 cap year will be 
$26,725.79. The cap amount is calculated according to Sec.  
1814(i)(2)(B) of the Social Security Act. The cap amount for a given 
year is $6,500 multiplied by the change in the Consumer Price Index for 
All Urban Consumers (CPI-U) medical care expenditure category, from the 
fifth month of the 1984 accounting year (March 1984) to the fifth month 
the current accounting year (in this case, March 2014). The CPI-U for 
medical care expenditures for 1984 to present is available from the 
Bureau of Labor Statistics (BLS) Web site at: http://www.bls.gov/cpi/home.htm.
    (Step 1) From the BLS Web site given above, the March 2014 CPI-U 
for medical care expenditures is 433.369 and the 1984 CPI-U for medical 
care expenditures was 105.4.
    (Step 2) Divide the March 2014 CPI-U for medical care expenditures 
by the 1984 CPI-U for medical care expenditures to compute the change.

433.369/105.4 = 4.111660

(Step 3) Multiply the original cap base amount ($6,500) by the result 
from step 2) to get the updated aggregate cap amount for the 2014 cap 
year.

$6,500 x 4.111660= $26,725.79

H. Proposed Updates to the Hospice Quality Reporting Program

1. Background and Statutory Authority
    Section 3004 of the Affordable Care Act amended the Act to 
authorize a quality reporting program for hospices. Section 
1814(i)(5)(A)(i) of the Act requires that beginning with FY 2014 and 
each subsequent FY, the Secretary shall reduce the market basket update 
by 2 percentage points for any hospice that does not comply with the 
quality data submission requirements with respect to that FY. Depending 
on the amount of the annual update for a particular year, a reduction 
of 2 percentage points could result in the annual market basket update 
being less than 0.0 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 
particular FY involved. Any such reduction would not be cumulative or 
be taken into account in computing the payment amount for subsequent 
FYs.
    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, manner, and at a time specified 
by the Secretary. Any measures selected by the Secretary must have been 
endorsed by the consensus-based entity which holds a contract regarding 
performance measurement with the Secretary under section 1890(a) of the 
Act. This contract is currently held by the National Quality Forum 
(NQF). However, section 1814(i)(5)(D)(ii) of the Act provides that in 
the case of a specified area or medical topic determined appropriate by 
the Secretary for which a feasible and practical measure has not been 
endorsed by the consensus-based entity, the Secretary may specify 
measures that are not so endorsed as long as due consideration is given 
to measures that have been endorsed or adopted by a consensus-based 
organization identified by the Secretary.
    The successful development of a Hospice Quality Reporting Program 
(HQRP) that promotes the delivery of high quality healthcare services 
is our paramount concern. We seek to adopt measures for the HQRP that 
promote efficient and safer care. Our measure

[[Page 26564]]

selection activities for the HQRP takes into consideration input we 
receive from the Measure Applications Partnership (MAP), convened by 
the National Quality Forum (NQF), as part of a pre-rulemaking process 
that we have established and are required to follow under section 1890A 
of the Act. The MAP is a public-private partnership comprised of multi-
stakeholder groups convened by the NQF for the primary purpose of 
providing input to CMS on the selection of certain categories of 
quality and efficiency measures, as required by section 1890A(a)(3) of 
the Act. By February 1st of each year, the NQF must provide that input 
to CMS. Input from the MAP is located at: (http://www.qualityforum.org/Setting_Priorities/Partnership/Measure_Applications_Partnership.aspx). For more details about the pre-rulemaking process, 
see the FY 2013IPPS/LTCH PPS final rule (77 FR 53376).
    We also take into account national priorities, such as those 
established by the National Priorities Partnership at (http://www.qualityforum.org/npp/), the HHS Strategic Plan http://www.hhs.gov/secretary/about/priorities/priorities.html), the National Strategy for 
Quality Improvement in Healthcare located at (http://www.ahrq.gov/workingforquality/nqs/nqs2013annlrpt.htm) and the CMS Quality Strategy 
at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityInitiativesGenInfo/CMS-Quality-Strategy.html.
    To the extent practicable, we have sought to adopt measures that 
have been endorsed by the national consensus organization, recommended 
by multi-stakeholder organizations, and developed with the input of 
providers, purchasers/payers, and other stakeholders.
2. Measures for Hospice Quality Reporting Program and Data Submission 
Requirements for Payment Years FY 2014 and FY 2015
    As stated in the FY 2012 Hospice Wage Index final rule (76 FR 
47302, 47320), to meet the quality reporting requirements for hospices 
for the FY 2014 payment determination and in the CY 2013 Home Health 
Prospective Payment System (HH PPS) final rule (77 FR 67068, 67133), to 
meet the quality reporting requirements for hospices for the FY 2015 
payment determination, as set forth in section 1814(i)(5) of the Act, 
we finalized the requirement that hospices report two measures:
     An NQF-endorsed measure that is related to pain 
management, NQF 0209. The data for this measure are collected 
at the patient level, but are reported in the aggregate for all 
patients cared for within the reporting period, regardless of payer.
     A structural measure that is not endorsed by NQF: 
Participation in a Quality Assessment and Performance Improvement 
(QAPI) program that includes at least three quality indicators related 
to patient care.
3. Quality Measures for Hospice Quality Reporting Program and Data 
Submission Requirements for Payment Year FY 2016 and Beyond
    In the FY 2014 Hospice Wage Index and Payment Rate Update final 
rule (78 FR 48234, 48256), we finalized that the structural measure 
related to QAPI indicators and the NQF 0209 pain measure would 
not be required for the HQRP beyond data submission for the FY 2015 
payment determination. The data submission period for the FY2015 
payment determination closed on April 1, 2014.
    As stated in the CY 2013 HH PPS final rule (77 FR 67068, 67133), we 
considered an expansion of the required measures to include additional 
measures endorsed by NQF. We also stated that to support the 
standardized collection and calculation of quality measures by CMS, 
collection of the needed data elements would require a standardized 
data collection instrument. We developed and tested a hospice patient-
level item set, the Hospice Item Set (HIS) to be used by all hospices 
to collect and submit standardized data items about each patient 
admitted to hospice.
    In developing the standardized HIS, we considered comments offered 
in response to the CY 2013 HH PPS proposed rule (77 FR 41548, 41573). 
In the FY 2014 Hospice Wage Index final rule (78 FR 48257), and in 
compliance with section 1814(i)(5)(C) of the Act, we finalized the 
specific collection of data items that support the following six NQF 
endorsed measures and one modified measure for hospice:

 NQF 1617 Patients Treated with an Opioid who are 
Given a Bowel Regimen
 NQF 1634 Pain Screening
 NQF 1637 Pain Assessment
 NQF 1638 Dyspnea Treatment
 NQF 1639 Dyspnea Screening
 NQF 1641 Treatment Preferences
 NQF 1647 Beliefs/Values Addressed (if desired by the 
patient) (modified)

    To achieve a comprehensive set of hospice quality measures 
available for wide spread use for quality improvement and informed 
decision making, and to carry out our commitment to develop a quality 
reporting program for hospices that uses standardized methods to 
collect data needed to calculate quality measures, we finalized that 
the HIS will be implemented in July 2014 (78 FR 48257). To meet the 
quality reporting requirements for hospices for the FY 2016 payment 
determination and each subsequent year, we will require regular and 
ongoing electronic submission of the HIS data for each patient 
admission to hospice on or after July 1, 2014, regardless of payer or 
patient age (78 FR 48234, 48258). Collecting data on all patients will 
provide CMS with the most robust, accurate reflection of the quality of 
care delivered to Medicare beneficiaries as compared with non-Medicare 
patients. Therefore, to measure the quality of care that is delivered 
to Medicare beneficiaries in the hospice setting, we will collect 
quality data necessary to calculate the adopted measures on all 
patients. We are requiring in our regulation that hospices collect data 
on all patients in hospice in order to ensure that all patients, 
regardless of payer, are receiving the same care and that provider 
metrics measure performance across the spectrum of patients (78 FR 
48258).
    Hospices are required to complete and submit an admission HIS and a 
discharge HIS for each patient admission. Hospices failing to report 
quality data via the HIS in 2014 will have their market basket update 
reduced by 2 percentage points in FY 2016. Although this has been 
implemented thus far pursuant to instructions set out in our preamble 
statements, we are proposing to codify the HIS submission requirements 
at Sec.  418.312 in this proposed rule. The System of Record (SOR) 
Notice for the HIS, SOR number 09-07-0548, was published in the Federal 
Register on April 8, 2014 (79 FR 19341).
    Hospice programs will be evaluated for purposes of the quality 
reporting program based on whether or not they submit data, not on 
their performance level on required measures. We have provided hospices 
with information and details about use of the HIS through postings on 
the Hospice Quality Reporting Program Web page, Open Door Forums, 
announcements in the CMS MLN Connects Provider e-News (E-News), and 
provider training. Electronic data submission is required for HIS 
submission in CY 2014 and beyond; there are no other data submission 
methods available. CMS will make available submission software for the 
HIS to hospices at no cost. We will also provide reports to individual

[[Page 26565]]

hospices on their performance on the measures calculated from data 
submitted via the HIS. The specifics of the reporting system and 
precisely when specific measures will be made available have not yet 
been determined. We intend to report to providers on the seven 
finalized measures on a schedule to be determined.
    We provided details on data collection and submission timing at 
http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Hospice-Quality-Reporting/Hospice-Item-Set-HIS.html.
    Submission of the HIS on all patient admissions to hospice, 
regardless of payer or patient age, is required. The data submission 
system provides reports upon successful submission and successful 
processing of the HIS records. The final validation report may serve as 
evidence of submission. This is the same data submission system used by 
nursing homes, inpatient rehabilitation facilities and long-term care 
hospitals for the submission of Minimum Data Set Version 3.0 (MDS 3.0), 
Inpatient Rehabilitation Facility--Patient Assessment Instrument (IRF-
PAI), and Long-Term Care Hospital Continuity Assessment Record & 
Evaluation Data Set (LTCH CARE), respectively.
    We also propose that newly certified hospices that receive notice 
of their CMS certification number on or after November 1, 2014 for 
payments to be made in FY 2016 be excluded from the quality reporting 
requirements for the FY 2016 payment determination as data submission 
and analysis would not be possible for a hospice receiving notification 
of their certification this late in the reporting time period.
    We propose that in future years, hospices that receive notification 
of certification on or after November 1 of the preceding year involved 
would continue to be excluded from any payment penalty for quality 
reporting purposes for the following FY. We propose to codify this 
requirement at Sec.  418.312.
    As is common in other quality reporting programs, we propose to 
make accommodations in the case of natural disaster or other 
extenuating circumstances. Our experience with other quality reporting 
programs has shown that there are times when providers are unable to 
submit quality data due to extraordinary circumstances beyond their 
control (for example, natural or man-made disasters). A disaster may be 
widespread or impact multiple structures or be isolated and impact a 
single site only. We do not wish to penalize providers in these 
circumstances or to unduly increase their burden during these times. 
Therefore, we propose a process, for the FY 2016 payment determination 
and subsequent payment determinations, for hospices to request and for 
CMS to grant extensions/exceptions with respect to the reporting of 
required quality data when there are extraordinary circumstances beyond 
the control of the provider. When an extension/exception is granted, a 
hospice will not incur payment reduction penalties for failure to 
comply with the requirements of the HQRP.
    Under the proposed process for the FY 2016 payment determination 
and subsequent payment determinations, a hospice may request an 
extension/exception of the requirement to submit quality data for a 
specified time period. We propose a process that, in the event that a 
hospice requests an extension/exception for quality reporting purposes 
for the FY 2016 payment determination and subsequent payment 
determinations, the hospice would submit a written request to CMS. 
Requirements for requesting an extension/exception will be available on 
the Hospice Quality Reporting Web site at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Hospice-Quality-Reporting/index.html.
    This proposal does not preclude us from granting extensions/
exceptions to hospices that have not requested them when we determine 
that an extraordinary circumstance, such as an act of nature, affects 
an entire region or locale. We also propose that we may grant an 
extension/exception to a hospice if we determine that a systemic 
problem with our data collection systems directly affected the ability 
of the hospice to submit data. If we make the determination to grant an 
extension/exception to hospices in a region or locale, we are proposing 
to communicate this decision through routine communication channels to 
hospices and vendors, including, but not limited to, Open Door Forums, 
E-News and notices on https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Hospice-Quality-Reporting/.
4. Future Measure Development
    We are not proposing any new measures for the HQRP at this time. 
However, we believe future development of the HQRP should address 
existing measure gaps by focusing on two primary opportunities: to 
expand measures already in use in other quality reporting programs that 
could apply to the HQRP and to develop new measures if no suitable 
measures are ready for implementation or expansion. We are particularly 
interested in outcome measures for symptom management, particularly 
pain. We are also interested in measures of patient reported outcomes. 
We welcome comments and input on future measure development.
    CMS is also interested in understanding the current state of 
electronic health record (EHR) adoption and usage and Health 
Information Exchange (HIE) in the hospice community. Therefore, we are 
soliciting feedback and input from providers on topics such as decision 
support, whether hospices have adopted an EHR, if so, what functional 
aspects of the EHR do hospices find most important (for example, the 
ability to send or receive transfer of care information, ability to 
support medication orders/medication reconciliation); does the EHR used 
in the hospice setting support interoperable document exchange with 
other healthcare providers (for example, acute care hospitals, 
physician practices, and skilled nursing facilities? In addition to 
seeking public input on the feasibility and desirability of electronic 
health record adoption and use of HIE in hospices, we are also 
interested in public comment on the need to develop and the benefits 
and limitations of implementing electronic clinical quality measures 
for hospice providers.
    HHS believes all patients, their families, and their healthcare 
providers should have consistent and timely access to their health 
information in a standardized format that can be securely exchanged 
between the patient, providers, and others involved in the patient's 
care. (HHS August 2013 Statement, Principles and Strategies for 
Accelerating Health Information Exchange.) The Department is committed 
to accelerating health information exchange (HIE) through the use of 
electronic health records (EHRs) and other types of health information 
technology (HIT) across the broader care continuum through a number of 
initiatives including: (1) Alignment of incentives and payment 
adjustments to encourage provider adoption and optimization of HIT and 
HIE services through Medicare and Medicaid payment policies; (2) 
adoption of common standards and certification requirements for 
interoperable HIT; (3) support for privacy and security of patient 
information across all HIE-focused initiatives; and (4) governance of 
health information networks. These initiatives are designed to 
encourage

[[Page 26566]]

HIE among all health care providers, including professionals and 
hospitals eligible for the Medicare and Medicaid EHR Incentive Programs 
and those who are not eligible for the EHR Incentive Programs, and are 
designed to improve care delivery and coordination across the entire 
care continuum. To increase flexibility in the Office of the National 
Coordinator for Health Information Technology's (ONC) HIT Certification 
Program and expand HIT certification, ONC has issued a proposed rule 
concerning a voluntary 2015 Edition EHR certification criteria which 
would more easily accommodate certification of HIT used in other types 
of health care settings where individual or institutional health care 
providers are not typically eligible for incentive payments under the 
Medicare and Medicaid EHR Incentive Programs, such as long-term and 
post-acute care and behavioral health settings.
    We believe that HIE and the use of certified EHRs by Hospice (and 
other types of providers that are ineligible for the Medicare and 
Medicaid EHR Incentive Programs) can effectively and efficiently help 
providers improve internal care delivery practices, support management 
of patient care across the continuum, and enable the reporting of 
electronically specified clinical quality measures (eCQMs). More 
information on the identification of EHR certification criteria and 
development of standards applicable to Hospice can be found at:
http://healthit.gov/policy-researchers-implementers/standards-and-certification-regulations
http://www.healthit.gov/facas/FACAS/health-it-policy-committee/hitpc-workgroups/certificationadoption
http://wiki.siframework.org/LCC+LTPAC+Care+Transition+SWG
http://wiki.siframework.org/Longitudinal+Coordination+of+Care
5. Public Availability of Data Submitted
    Under section 1814(i)(5)(E) of the Act, the Secretary is required 
to establish procedures for making any quality data submitted by 
hospices available to the public. Measures reported publicly will not 
display patient identifiable information. The procedures ensure that a 
hospice would have the opportunity to review the data regarding the 
hospice's respective program before it is made public. In addition, 
under section 1814(i)(5)(E) of the Act, the Secretary is authorized to 
report quality measures that relate to services furnished by a hospice 
on the CMS Web site. We recognize that public reporting of quality data 
is a vital component of a robust quality reporting program and are 
fully committed to developing the necessary systems for public 
reporting of hospice quality data. We also recognize that it is 
essential that the data made available to the public be meaningful and 
that comparing performance between hospices requires that measures be 
constructed from data collected in a standardized and uniform manner. 
The development and implementation of a standardized data set for 
hospices must precede public reporting of hospice quality measures. 
Once hospices have implemented the standardized data collection 
approach, we will have the data needed to establish the scientific 
soundness of the quality measures that can be calculated using the 
standardized data collection. It is critical to establish the 
reliability and validity of the measures prior to public reporting in 
order to demonstrate the ability of the measures to distinguish between 
the quality of services provided. To establish reliability and validity 
of the quality measures, at least four quarters of data will need to be 
analyzed. Typically the first two quarters of data reflect the learning 
curve of the providers as they adopt a standardized data collection; 
these data are not used to establish reliability and validity. This 
means that, since we will begin data collection in CY 2014 (Q3), the 
data from CY 2014 (Q3, Q4) will not be used for assessing validity and 
reliability of the quality measures. Data collected by hospices during 
Q1-3 CY 2015 will be analyzed starting in CY 2015. Decisions about 
whether to report some or all of the quality measures publicly will be 
based on the findings of analysis of the CY 2015 data. In addition, as 
noted, the Affordable Care Act requires that reporting be made public 
on a CMS Web site and that providers have an opportunity to review 
their data prior to public reporting. CMS will develop the 
infrastructure for public reporting, and provide hospices an 
opportunity to review their data. In light of all the steps required 
prior to data being publicly reported, we anticipate that public 
reporting will not be implemented in FY 2016. Public reporting may 
occur during FY 2017, allowing ample time for data analysis, review of 
measures' appropriateness for use for public reporting, and allowing 
hospices the required time to review their own data prior to public 
reporting. We will announce the timeline for public reporting of data 
in future rulemaking. We welcome public comment on what we should 
consider when developing future proposals related to public reporting.
6. Proposed Adoption of the CAHPS[supreg] Hospice Survey for the FY 
2017 Payment Determination
    In the FY 2014 Hospice Wage Index and Payment Rate Update final 
rule (78 FR 48234), we stated that CMS would start national 
implementation of the CAHPS[supreg] Hospice Survey as of January 1, 
2015. (Previously known as the Hospice Experience of Care Survey, 
HECS.) We are maintaining our existing policy and are moving forward 
with national implementation of this survey. The CAHPS[supreg] Hospice 
Survey is a component of CMS' quality reporting program that emphasizes 
the experiences of hospice patients and their primary caregivers listed 
in the hospice patients' records. Measures from the survey will be 
submitted to the National Quality Forum (NQF) for approval as hospice 
quality measures. Please refer to our extensive discussion of the 
Hospice Experience of Care Survey in the Hospice Wage Index FY 2014 
final rule for a description of the measurements involved and their 
relationship to the statutory requirement for hospice quality reporting 
(78 FR 48261-482-66).
a. Background and Description of the Survey
    Before the development of the CAHPS[supreg] Hospice Survey, there 
was no official national standard hospice experience of care survey 
that included standard survey administration protocols. The 
CAHPS[supreg] Hospice Survey will include detailed survey 
administration protocols which will allow for fair comparisons across 
hospices.
    CMS developed the CAHPS[supreg] Hospice Survey with input from many 
stakeholders, including other government agencies, industry 
stakeholders, consumer groups and other key individuals and 
organizations involved in hospice care. The Survey was designed to 
measure and assess the experiences of patients who died while receiving 
hospice care as well as the experiences of their informal caregivers. 
The goals of the survey are to--
     Produce comparable data on patients' and caregivers' 
perspectives of care that allow objective and meaningful comparisons 
between hospices on domains that are important to consumers;
     Create incentives for hospices to improve their quality of 
care through public reporting of survey results; and
     Hold hospice care providers accountable by informing the 
public about the providers' quality of care.
    The development process for the survey began in 2012 and included a

[[Page 26567]]

public request for information about publically available measures and 
important topics to measure (78 FR 5458); a review of the existing 
literature on tools that measure experiences with end-of-life care; 
exploratory interviews with caregivers of hospice patients; a technical 
expert panel attended by survey development and hospice care quality 
experts; cognitive interviews to test draft survey content; 
incorporation of public responses to Federal Register notices (78 FR 
48234) and a field test conducted by CMS in November and December 2013.
    Thirty-three hospice programs from 29 hospice organizations 
participated in the field test, which was designed to assess survey 
administration procedures among hospices of varying size, geographic 
region, chain status, ownership, and urbanicity. Respondents were 
primary caregivers of patients who died while receiving hospice care in 
the prior 2 to 5 months. In all, 1,136 respondents, representing the 
three main settings of hospice care (home, nursing home, and inpatient, 
including freestanding hospice inpatient unit, and acute care 
hospitals), completed the field test survey. Field test survey data 
were analyzed to identify for removal survey questions which exhibited 
little variation between hospices or for which there was little room 
for hospice improvement. Field test survey data were further analyzed 
to identify composite measures of hospice performance, including 
Communication, Care Coordination, Getting Timely Care, Treating Your 
Family Member with Respect, Providing Emotional Support, and Getting 
Help for Symptoms.
    The CAHPS[supreg] Hospice Survey treats the dying patient and his 
or her informal caregivers (family members or friends) as the unit of 
care. The Survey seeks information from the informal caregivers of 
patients who died while enrolled in hospices. Caregivers will be 
identified using hospice records. Fielding timelines give the 
respondent some recovery time (two to three months), while 
simultaneously not delaying so long that the respondent is likely to 
forget details of the hospice experience. The survey focuses on topics 
that are important to hospice users and for which informal caregivers 
are the best source for gathering this information. These include 
communications with hospice staff, treatment of symptoms, pain 
medication, cooperation among caregivers, treating patients with 
dignity and respect, and spiritual support offered by the hospice. 
Caregivers will be presented with a set of standardized questions about 
their own experiences and the experiences of the patient in hospice 
care. During national implementation of this survey, hospices are 
required to conduct the survey to meet the hospice quality reporting 
requirements, but individual caregivers will respond only if they 
voluntarily choose to do so. As part of national implementation we will 
launch a Web site intended as the primary information resource for 
hospices and vendors (www.hospicecahpssurvey.org). The Web site is 
expected to launch in the summer of 2014. The launch date will be 
announced at the Home Health, Hospice, and Durable Medical Equipment 
Open Door forum conducted by CMS (http://www.cms.gov/Outreach-and-Education/Outreach/OpenDoorForums/ODF_HHHDME.html).
    The CAHPS[supreg] Hospice Survey will initially be available in 
English and Spanish. CMS will provide additional translations of the 
survey over time in response to suggestions for any additional language 
translations. Requests for additional language translations should be 
made to the CMS Hospice CAHPS[supreg] Project Team at 
hospicesurvey@cms.hhs.gov.
    In general, hospice patients and their caregivers are eligible for 
inclusion in the survey sample with the exception of the following 
ineligible groups: primary caregivers of patients under the age of 18 
at the time of death; primary caregivers of patients who died within 48 
hours of admission to hospice care; patients for whom no caregiver is 
listed or available, or for whom caregiver contact information is not 
known; patients whose primary caregiver is a legal guardian unlikely to 
be familiar with care experiences; patients for whom the primary 
caregiver has a foreign (Non-US or US Territory address) home address; 
patients or caregivers of patients who request that they not be 
contacted (those who sign ``no publicity'' requests while under the 
care of hospice or otherwise directly request not to be contacted) . 
Identification of patients and caregivers for exclusion will be based 
on hospice administrative data.
    Hospices with fewer than 50 decedents during the prior calendar 
year are exempt from the CAHPS[supreg] Hospice Survey data collection 
and reporting requirements for payment determination. Hospices with 50 
to 699 decedents in the prior year (n = 2,326 in 2012) will be required 
to survey all cases. For large hospices with 700 or more decedents in 
the prior year (n = 274 in 2012), a sample of 700 will be drawn under 
an equal-probability design.
    For national implementation, we have assumed an eligibility rate of 
85% and a response rate of 50%, based on experience in the 2013 field 
test of the CAHPS[supreg] Hospice Survey instrument. These rates will 
result in an estimated 300 completed questionnaires for each large 
hospice (700 or more decedents in the calendar year) and between 21 and 
300 completed questionnaires for hospices with between 50 and 699 
decedents during the calendar year. Assuming a total of 300 completes 
within each hospice and an intraclass correlation coefficient (ICC) of 
0.01, which measures the amount of variability between hospices, we 
would achieve an interunit reliability of 0.75. Note that in Medicare 
CAHPS[supreg] a reliability of 0.75 is regarded as a minimal acceptable 
standard.
    We will move forward with a model of national survey implementation 
which is similar to that of other CMS patient experience of care 
surveys. Medicare-certified hospices will contract with a third-party 
vendor that is CMS-trained and approved to administer the survey on 
their behalf. Hospices are required to contract with independent survey 
vendors to ensure that the data are unbiased and collected by an 
organization that is trained to collect this type of data. It is 
important that survey respondents feel comfortable sharing their 
experiences with an interviewer not directly involved in providing the 
care. We have successfully used this mode of data collection in other 
settings, including for Medicare-certified home health agencies. The 
goal is to ensure that we have comparable data across all hospices.
    Hospices will be required to provide their vendor with the sampling 
frame on a monthly basis. Participation requirements for the survey 
begin January 1, 2015 for the FY 2017 Annual Payment Update. For 
hospices, this means they will have to start conducting the survey as 
of January 1, 2015 and will incur the costs of hiring a survey vendor. 
The survey vendor would be the business associate of the hospice.
    A list of approved vendors will be provided on the CAHPS[supreg] 
Hospice Survey Web site closer to the launch of national 
implementation. Beginning summer 2014 interested vendors may apply to 
become approved CAHPS[supreg] Hospice Survey vendors. The application 
process will be online at www.hospicecahpssurvey.org. In this rule we 
propose to codify the requirements for being an approved

[[Page 26568]]

CAHPS[supreg] Hospice Survey vendor for the FY 2017 APU.
    Consistent with many other CMS CAHPS[supreg] surveys that are 
publicly reported on CMS Web sites, CMS will publicly report hospice 
data when at least 12 months of data are available, so that valid 
comparisons can be made across hospice providers in the United States, 
to help patients, family and friends choose a hospice program for 
themselves or their loved ones.
b. Participation Requirements To Meet Quality Reporting Requirements 
for the FY 2017 APU
    In section 3004 of the Affordable Care Act, the Secretary is 
directed to establish quality reporting requirements for Hospice 
Programs. The CAHPS[supreg] Hospice Survey is a component of the CMS 
Quality Reporting Requirements for the FY 2017 APU and subsequent 
years.
    The CAHPS[supreg] Hospice Survey is the only nationally implemented 
survey of civilian patient and caregiver experiences with hospice that 
includes both a standard questionnaire and standard survey 
administration protocols. Such standardization is needed in order to 
establish that the resulting survey data is comparable across hospices 
and is suitable for public reporting.
    The CAHPS[supreg] Hospice Survey includes the measures detailed 
below. The measures map directly to the CAHPS[supreg] Hospice Survey. 
The individual survey questions that comprise each measure are listed 
under the measure. These measures are in the process of being submitted 
to the National Quality Forum (NQF).

  Table 9--Hospice Experience of Care Survey Quality Measures and Their
                                  Items
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
Hospice Team Communication
    How often did the hospice team listen carefully to you when you
     talked with them about problems with your family member's hospice
     care?
    While your family member was in hospice care, how often did the
     hospice team listen carefully to you?
    While your family member was in hospice care, how often did the
     hospice team explain things in a way that was easy to understand?
    While your family member was in hospice care, how often did the
     hospice team keep you informed about your family's condition?
    While your family member was in hospice care, how often did the
     hospice team keep you informed about when they would arrive to care
     for your family member?
Getting Timely Care
    While your family member was in hospice care, when you or your
     family member asked for help from the hospice team, how often did
     you get help as soon as you needed it?
    How often did you get the help you needed from the hospice team
     during evenings, weekends, or holidays?
Treating Family Member with Respect
    While your family member was in hospice care, how often did the
     hospice team treat your family member with dignity and respect?
    While your family member was in hospice care, how often did you feel
     that the hospice team really cared about your family member?
Providing Emotional Support
    In the weeks after your family member died, how much emotional
     support did you get from the hospice team?
    While your family member was in hospice care, how much emotional
     support did you get from the hospice team?
Getting Help for Symptoms
    How often did your family member receive the help he or she needed
     from the hospice team for feelings of anxiety or sadness?
    Did your family member get as much help with pain as he or she
     needed?
    How often did your family member get the help he or she needed for
     constipation?
    How often did your family member get the help he or she needed for
     trouble breathing?
Information Continuity
    While your family member was in hospice care, how often did anyone
     from the hospice team give you confusing or contradictory
     information about your family member's condition or care?
Understanding the Side Effects of Pain Medication
    Side effects of pain medicine include things like sleepiness. Did
     any member of the hospice team discuss side effects of pain
     medicine with you or your family member?
Getting Hospice Care Training (Home Setting of Care Only)
    Did the hospice team give you enough training about what to do if
     your family member became restless or agitated?
    Did the hospice team give you enough training about if and when to
     give more pain medicine to your family member?
    Did the hospice team give you enough training about how to help your
     family member if he or she had trouble breathing?
    Did the hospice team give you enough training about what side
     effects to watch for from pain medicine?
------------------------------------------------------------------------

    In order to comply with CMS's quality reporting requirements, 
hospices will be required to collect data using the Consumer Assessment 
of Healthcare Providers and Systems (CAHPS[supreg]) Hospice Survey. 
Hospices would be able to comply by utilizing only CMS-approved third 
party vendors that are in compliance with the provisions of proposed 
Sec.  418.312(e).
    In the FY Hospice Wage Index and Rate Update final rule (78 FR 
48234), we stated that national implementation of the CAHPS[supreg] 
Hospice Survey will begin with a ``dry run'' in the first quarter of CY 
2015. Hospices will be required to contract with an approved survey 
vendor to conduct a dry run of the survey for at least one month during 
January 2015, February 2015, or March 2015. During this period the 
survey vendor will follow all the national implementation procedures, 
but the data will not be publicly reported. The dry run will provide 
hospices and their vendors with the opportunity to work together under 
test circumstances.
    Beginning April 1, 2015, all hospices would be required to 
participate in the survey on an ongoing monthly basis. This means 
hospices need to contract with a survey vendor to conduct the survey 
monthly on their behalf. Participation for at least 1 month during the 
dry run, plus monthly participation for the 9 months between April 2015 
and December 2015 (inclusive) will be required to meet the pay for 
reporting requirement of the HQRP for the FY 2017 APU.
    Approved CAHPS[supreg] Hospice Survey vendors will submit data on 
the hospice's behalf to the CAHPS[supreg] Hospice Survey Data Center. 
The proposed deadlines for data submission occur quarterly and are 
shown in Table 9 below. Deadlines are final. No late submissions will 
be accepted. Hospice providers are responsible for making sure that 
their vendors are submitting data in a timely manner.

[[Page 26569]]



   Table 10--Data Submission Dates 2015-2016 for CAHPS[supreg] Hospice
                                 Survey
------------------------------------------------------------------------
                                           Quarterly data submission
            Sample months                          deadlines
------------------------------------------------------------------------
Dry Run (January-March 2015).........  August 12, 2015.
Monthly data collection April-June     November 1, 2015.
 2015 (Q2).
Monthly data collection July-          February 10, 2016.
 September 2015 (Q3).
Monthly data collection October-       May 11, 2016.
 December 2015 (Q4).
------------------------------------------------------------------------

    In the FY 2014 Hospice Wage Index and Rate Update final rule, we 
exempted very small hospices from CAHPS[supreg] Hospice Survey 
requirements. Hospices that have fewer than 50 survey-eligible deceased 
patients in the period from January 1, 2014 through December 31, 2014 
will be exempt from CAHPS[supreg] Hospice Survey data collection and 
reporting requirements for the 2017 APU. To qualify for the survey 
exemption for FY 2017, hospices must submit an exemption request form. 
This form will be available on the CAHPS[supreg] Hospice Survey Web 
site (www.hospicecahpssurvey.org). Hospices are required to submit to 
CMS their total unique patient count for the period of January 1, 2014 
through December 31, 2014. The due date for submitting the exemption 
request form is August 12, 2015.
c. Participation Requirements To Meet Quality Reporting Requirements 
for the FY 2018 APU
    To meet participation requirements for the FY 2018 APU, we propose 
that hospices collect data on an ongoing monthly basis from January 
2016 through December 2016 (inclusive). Data submission deadlines for 
the 2018 APU will be announced in future rulemaking.
    We propose to exempt very small hospices. Hospices that have fewer 
than 50 deceased patients in the period from January 1, 2015 through 
December 31, 2015 will be exempt from CAHPS[supreg] Hospice Survey data 
collection and reporting requirements for the FY 2018 payment 
determination. To qualify, hospices must submit an exemption request 
form. This form will be available on the CAHPS[supreg] Hospice Survey 
Web site (www.hospicecahpssurvey.org). Hospices are required to submit 
to CMS their total unique patient count for the period of January 1, 
2015 through December 31, 2015. The due date for submitting the 
exemption request form is August 10, 2016.
d. Vendor Participation Requirements for the 2017 APU
    We have previously stated that CMS will train and approve vendors 
to administer CAHPS[supreg] Hospice Survey on behalf of hospices (78 FR 
48233). In addition we stated that hospices will be required to 
contract with an approved survey vendor and to provide the sampling 
frame to the approved vendor on a monthly basis.
    We propose that approved survey vendors must meet all of the 
minimum business requirements and follow the detailed technical 
specifications for survey administration as published in the 
CAHPS[supreg] Hospice Survey specifications manual, which will be 
posted on the Survey Web site. In addition, to the specifications 
manual, the Web site will include information and updates regarding 
survey implementation and technical assistance.
    We propose to codify the CAHPS[supreg] Hospice Survey vendor 
requirements to be effective with the FY 2017 APU (as proposed in Sec.  
418.312). We propose that applicants that wish to become approved 
CAHPS[supreg] Hospice Survey vendors must have been in business for a 
minimum of 4 years and have conducted surveys for a minimum of 3 years 
using each the modes of survey administration for which they are 
applying. In addition the organization must have been conducting 
``surveys with patients'' for at least 2 years immediately preceding 
the application to become a survey vendor for the CAHPS[supreg] Hospice 
Survey. For purposes of the approval process for CAHPS[supreg] Hospice 
Survey vendors, a ``survey of individual patients'' is defined as the 
collection of data from at least 600 individual patients selected by 
statistical sampling methods and the data collected are used for 
statistical purposes.
    Vendors may not use home-based or virtual interviewers to conduct 
the CAHPS[supreg] Hospice Survey, nor may they conduct any survey 
administration processes (e.g. mailings) from a residence in order to 
ensure the confidentiality of data.
    The following are examples of data collection activities would not 
satisfy the requirement of valid survey experience for approved vendors 
as defined for the CAHPS[supreg] Hospice Survey, and these would not be 
considered as part of the experience required of an approved vendor for 
CAHPS[supreg] Hospice Survey.
     Focus groups, cognitive interviews, or any other 
qualitative data collection activities;
     Surveys of fewer than 600 individuals;
     Surveys conducted that did not involve using statistical 
sampling methods;
     Internet or Web-based surveys; and
     Interactive Voice Recognition Surveys.
    We also propose that no organization, firm, or business that owns, 
operates, or provides staffing for a hospice is permitted to administer 
its own Hospice CAHPS[supreg] survey or administer the survey on behalf 
of any other hospice in the capacity as a Hospice CAHPS[supreg] survey 
vendor. Such organizations will not be approved by CMS as CAHPS[supreg] 
Hospice Survey vendors.
e. Annual Payment Update
    The Affordable Care Act requires that beginning with FY 2014 and 
each subsequent FY, the Secretary shall reduce the market basket update 
by 2 percentage points for any hospice that does not comply with the 
quality data submission requirements with respect to the FY, unless 
covered by specific exemptions. Any such reduction would not be 
cumulative and would not be taken into account in computing the payment 
amount for subsequent FYs. We propose to add the CAHPS[supreg] Hospice 
Survey to the Hospice Quality Reporting Program requirements for the FY 
2017 payment determination and determinations for subsequent years.
     To meet the FY 2017 requirements, hospices will 
participate in a dry run for at least 1 month of the first quarter of 
CY 2015 (January 2015, February 2015, March 2015) and hospices must 
collect the survey data on a monthly basis for the months of April 1, 
2015 through December 31, 2015 in order to qualify for the full APU.
     To meet the HQRP requirements for the FY 2018 payment 
determination, hospices would collect survey data on a monthly basis 
for the months of January 1, 2016 through December 31, 2016 in order to 
qualify for the full APU.

[[Page 26570]]

f. CAHPS[supreg] Hospice Survey Oversight Activities
    We propose that vendors and hospice providers be required to 
participate in CAHPS[supreg] Hospice Survey oversight activities to 
ensure compliance with Hospice CAHPS[supreg] technical specifications 
and survey requirements. The purpose of the oversight activities is to 
ensure that hospices and approved survey vendors follow the 
CAHPS[supreg] Hospice Survey technical specifications and thereby 
ensure the comparability of CAHPS[supreg] Hospice Survey data across 
hospices.
    We propose that the reconsiderations and appeals process for 
hospices that fail to meet the Hospice CAHPS[supreg] data collection 
requirements will be part of the Reconsideration and Appeals process 
already developed for the Hospice Quality Reporting program.
    We encourage hospices interested in learning more about the 
CAHPS[supreg] Hospice Survey to visit the CAHPS[supreg] Hospice Survey 
Web site: www.hospicecahpssurvey.org. The launch date for this Web site 
will be announced at the Home Health, Hospice & Durable Medical 
Equipment Open Door Forum. We expect the Web site to be launched during 
the summer of 2014. You can contact CMS hospice team at 
hospicesurvey@cms.hhs.gov.
7. Procedures for Payment Year 2016 and Subsequent Years
    In the FY 2014 Hospice Wage Index and Payment Rate Update final 
rule (78 FR 48267), we notified hospice providers of the opportunity to 
seek reconsideration of our initial non-compliance decision for the FY 
2014 and FY 2015 payment determinations. We stated that we will notify 
hospices found to be non-compliant with the HQRP reporting requirements 
that they may be subject to the two percentage point reduction in their 
annual payment update. The process for filing a request for 
reconsideration is described on the CMS Web site at: http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Hospice-Quality-Reporting/Reconsideration-Requests.html. We 
propose to codify this process at Sec.  418.312.
    Finally, we also propose to codify at Sec.  418.306 that beginning 
with FY 2014 and each subsequent FY, the Secretary shall reduce the 
market basket update by 2 percentage points for any hospice that does 
not comply with the quality data submission requirements with respect 
to that FY.
    We invite public comment on all of the proposals in this section 
and the associated regulations text at Sec.  418.312 and in Sec.  
418.306 in section VI.

I. Coordination of Benefits Process and Appeals for Part D Payment for 
Drugs While Beneficiaries Are Under a Hospice Election

    The statutory definition of the term ``covered Part D drug'', as 
specified in section 1860D-2(e)(2)(B) of the Social Security Act, 
excludes a drug if payment for such a drug, as so prescribed and 
dispensed or administered with respect to a Part D eligible individual, 
is available (or would be available but for the application of a 
deductible) under Part A or B for that individual. Therefore, drugs and 
biologicals for which coverage is available under the Medicare Part A 
per-diem payment to a hospice program are excluded from coverage under 
Part D. Our previous understanding was that hospice coverage of drugs 
was very broad and very inclusive. Therefore, Part D payment for drugs 
furnished to hospice beneficiaries would be rare and the need for 
controls was not critical.
    Section 1861(dd) of the Act states the hospice is responsible for 
covering all drugs or biologicals for the palliation and management of 
the terminal illness and related conditions. Our stated intention in 
the 1983 Hospice final rule (48 FR 56010) was that the hospice benefit 
provides virtually all care for the terminally ill individual. Despite 
our intention for a comprehensive and holistic benefit, claims data 
presented in section III.A.4 in this proposed rule shows that in 2012 
there was over $1 billion in additional Medicare spending for 
beneficiaries during a hospice election. Gross covered drug costs under 
Part D for beneficiaries during a hospice election totaled $417.9 
million. Of this total, Medicare reimbursed approximately $334.9 
million, and beneficiaries contributed $48.2 million in possibly 
unnecessary cost-sharing. This suggests that hospice services are 
possibly being ``unbundled,'' resulting in duplicate costs to the 
Medicare program. To ensure that only costs for drugs that are 
unrelated to the terminal illness and related conditions are covered 
under Part D, we are considering defining ``terminal illness'' and 
``related conditions'' in the regulations at Sec.  418.3 (see section 
III.B for more information on the definitions we are considering).
    CMS has previously issued a number of policy documents addressing 
our expectations concerning how Part D sponsors are to ensure that Part 
D drugs are provided only when those drugs are not covered under Part A 
or B as so prescribed and dispensed or administered for that 
individual. Since the hospice benefit was created with the expectation 
that virtually all care that is needed by the terminally ill patient 
and all drug needs at end of life would be covered by the hospice 
benefit, we believed that Part D coverage would be rare, and that 
hospices would make appropriate determinations consistent with the 1983 
Hospice final rule (48 FR 56010 through 56011). Prior to the 2014 Final 
Call Letter, our guidance included an October 22, 2010 memorandum 
(titled, ``Preventing Part D Payment for Hospice Drugs) and a 2012 Call 
Letter (dated April 4, 2011 and available at http://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/Downloads/Announcement2012final.pdf) instructing Part D sponsors that 
they should pay for drugs that may be covered under the hospice per-
diem payment, and retrospectively determine payment responsibility 
(``pay and chase''). On June 28, 2012, the HHS Office of Inspector 
General (OIG) issued a final report documenting the findings of its 
review of Medicare payments for prescription drugs for beneficiaries 
who had elected hospice.\41\ The OIG's review focused on four 
categories of drugs typically used to treat symptoms generally 
experienced by beneficiaries in hospice at end of life and concluded 
the Medicare program could be paying twice for prescription drugs for 
hospice beneficiaries. The OIG recommended that CMS require Part D 
sponsors to develop controls to prevent Part D payment for drugs 
included in the hospice per diem payments. Therefore, in the 2014 Call 
Letter, we stated that when a sponsor receives a Daily Transaction 
Reply Report (DTRR) from CMS showing a beneficiary has elected hospice, 
the sponsor must have controls in place to comply with the requirement 
that Part D does not pay for drugs and biologicals that can be covered 
under the Medicare Part A per-diem payment to a hospice. Although we 
strongly encouraged sponsors to place beneficiary-level prior 
authorization (PA) requirements on the four categories of prescription 
drugs identified by the OIG, including: analgesics, antinauseants 
(antiemetics), laxatives, and antianxiety drugs, we permitted sponsors 
to use other approaches, such as pay-and-chase, to resolve payment 
responsibility in these scenarios.
---------------------------------------------------------------------------

    \41\ Office of the Inspector General, Department of Health and 
Human Services. Medicare Could be Paying Twice for Prescription 
Drugs for Beneficiaries in Hospice. June, 2012. A-06-10-00059.
---------------------------------------------------------------------------

    Following the issuance of this guidance, we received questions

[[Page 26571]]

indicating our policy statements were being misinterpreted by some 
parties. The hospice industry expressed uncertainty with the 
definitions of ``terminal condition'' and ``related conditions,'' and 
Part D sponsors were thus uncertain about whether payment should be the 
responsibility of either the hospice (Part A) or the plan (Part D). 
Therefore, on December 6, 2013, we issued a memorandum (titled, ``Part 
D Payment for Drugs for Beneficiaries Enrolled in Hospice'') providing 
clarified guidance for review and requesting comment on whether the 
industry's questions had been addressed. We received 130 comments, with 
many requesting that CMS undertake rulemaking to clarify for all 
parties what is, and is not, related to the terminal illness and 
related conditions, thereby providing the basis for clear criteria for 
determining payment responsibility between the hospice benefit and Part 
D. Therefore, we are considering defining ``terminal illness'' and 
``related conditions'' (see section III.B of this proposed rule).
1. Part D Sponsor Coordination of Payment With Hospice Providers
    Many commenters on the December 6, 2013 guidance also requested 
that CMS establish and require the use of standardized processes for 
determining payment responsibility, recovering payment when the wrong 
party has paid, and resolving disputes regarding payment 
responsibility. We agree with these commenters as well as those who 
suggested we seek stakeholder input. Thus, we are not proposing any 
requirements at this time, but are only soliciting comments on 
processes we are considering to facilitate the coordination of payment 
between Part D sponsors and hospices.
    Specifically, we are considering amending Sec.  423.464 by adding a 
new paragraph (i): ``Coordination with Medicare hospices,'' which would 
require that a Part D sponsor communicate and coordinate with Medicare 
hospices in determining coverage for drugs whenever a coverage 
determination process is initiated or a hospice furnishes information 
regarding a beneficiary's hospice election and/or drug profile. We are 
not considering establishing a requirement that the Part D sponsor 
initiate such communication and coordination. Rather, we are 
considering requiring that the Part D sponsor communicate and 
coordinate once the hospice initiates communication with the Part D 
sponsor to report information concerning a hospice election and/or drug 
profile, or the beneficiary or the beneficiary's appointed 
representative or the prescriber initiates a coverage determination 
request. In other words, a hospice may initiate the communication by 
reporting a beneficiary's hospice status, which would include the 
notice of election (NOE) or the notice of termination/revocation 
(NOTR). The hospice may also provide drug profile information, meaning 
identification of any drug that the hospice has determined is unrelated 
to the terminal illness or related conditions and an explanation of why 
the drug is unrelated. Hospices may identify a beneficiary's Part D 
plan by asking the beneficiary for the plan information on his or her 
member identification card or by requesting the hospice pharmacy submit 
a standard electronic eligibility transaction (that is, an E1) to the 
CMS Part D Transaction Facilitation contractor. The Facilitator will 
seek to match the beneficiary's identifying information on the E1 
request to the contractor's Medicare Part D enrollment data. If a match 
is found, the transaction response will identify the Part D plan and 
provide on-line billing information and the sponsor's help desk 
telephone number.
    To facilitate the communication and coordination, CMS reports 
hospice election information to Part D plan sponsors on the Daily 
Transaction Reply Report (DTRR). This information includes a hospice 
indicator, a hospice start date and a hospice termination date. Updated 
data are reported to reflect a new benefit period or a termination/
revocation date. Because communication and coordination between the 
Part D sponsor and the hospice are necessary to determine coverage for 
drugs for beneficiaries who elect hospice, we expect that sponsors will 
promptly upload the DTRR data into their systems. As noted previously 
in CMS-issued Part D guidance, only a single hospice benefit period can 
be reported on the DTRR. As a result, sponsors need to store the 
hospice data in their systems so historical data are available when 
needed for claims adjudication and adjustments. Sponsors also can 
access additional hospice data via the Medicare Advantage and 
Prescription Drug system (MARx) User Interface, including the hospice 
provider number, prior benefit period start and end dates, and the 
hospice termination/revocation indicator.
    Although we are proposing changes in this rule at section III.E 
that are expected to result in improvement to the timeliness of the 
CMS' reporting of the hospice election information, some time lag will 
remain in hospices filing their election information and plan sponsors' 
ability to access that information. One approach, recommended by 
hospice organizations, to address the time lag is to permit hospices to 
initiate communication with the beneficiary's Part D sponsor prior to a 
claim submission, such as at hospice election, to provide early notice 
of the election. When hospices provide this information, we are 
considering requiring Part D sponsors to accept it and use it to 
adjudicate requests for coverage until the official notice via the DTTR 
is received from CMS. We would expect sponsors to have processes in 
place to monitor receipt of the information from CMS and communicate 
with the hospice to resolve discrepancies between hospice-reported 
information and CMS-reported data.
    We also are considering requiring that a Part D sponsor determine 
Part A versus Part D coverage at point-of-sale for any drugs for 
beneficiaries who have elected the hospice benefit as of the date the 
prescription is presented to be filled. By this we mean Part D sponsors 
would use HIPAA standard transactions to effectuate the Part D prior 
authorization requirement. The point of sale transaction related to 
Part A versus Part D coverage begins when a Part D sponsor receives a 
pharmacy claim for a beneficiary who has elected hospice, and rejects 
the claim with the following National Council for Prescription Drug 
Programs (NCPDP)-approved reject coding. Currently, this consists of: 
(1) reject code A3 ``This Product May Be Covered Under Hospice--
Medicare A''; (2) reject code 75 ``Prior Authorization Required''; and 
(3) reject code 569 ``Provide Notice: Medicare Prescription Drug 
Coverage and Your Rights.'' In addition to the reject coding, sponsors 
would employ point-of-sale messaging that indicates a hospice is 
involved and that an explanation is needed that the drug is unrelated 
to the terminal illness and related conditions. The point-of-sale 
messaging must also include the 24-hour pharmacy help desk phone number 
to call with questions.
    The beneficiary, the beneficiary's appointed representative, or the 
prescriber must contact the sponsor to initiate a coverage 
determination request which would require the plan sponsor to obtain 
information from the hospice provider that the drug is unrelated to the 
terminal illness and related conditions. The standardized pharmacy 
notice instructs the enrollee on how to contact his or her plan and 
explains an enrollee's right to receive, upon request, a coverage 
determination (including a detailed written decision) from the Part D 
sponsor regarding his or

[[Page 26572]]

her Part D prescription drug benefits. Part D sponsors must arrange 
with their network pharmacies (including mail-order and specialty 
pharmacies) to distribute the standardized notice.
    After the Part D sponsor receives the coverage determination 
request and the PA process is initiated, the Part D sponsor would 
expect to receive either a verbal explanation or a completed PA form 
from the hospice within the timeframes proposed in this rule in Sec.  
418.305. Upon receiving either a verbal explanation of why the 
prescribed drug is unrelated to the beneficiary's terminal illness and 
related conditions or the completed PA form from the hospice, the Part 
D sponsor would be required to use the criteria described in the 
definitions of ``terminal illness'' and ``related conditions'', as we 
indicate we are considering in in this rule in section III.B, to 
determine whether the documentation establishes that the drug as 
prescribed and dispensed or administered is unrelated to the terminal 
illness and related conditions and, thus, satisfies the beneficiary-
level hospice PA. If it does, the Part D sponsor would instruct the 
pharmacy on how to override the edit or provide coding to the pharmacy 
that would permit the claim transaction to process. Whenever an 
explanation of why the prescribed drug is unrelated to the 
beneficiary's terminal illness and related conditions is provided 
verbally, CMS is considering requiring the Part D sponsor to accurately 
document the date and content of the notice and explanation and to 
retain that documentation.
    If the sponsor disagrees with the hospice's determination that the 
drug is unrelated to the terminal illness and related conditions, or 
determines that the documentation is insufficient to satisfy the 
beneficiary-level hospice PA, the Part D sponsor would initiate 
communication with the hospice and attempt to resolve the dispute. If 
the Part D sponsor and the hospice are unable to reach a resolution, 
the Part D sponsor may request a review by the independent review 
entity (IRE) we indicate in this rule we are considering.
    Since the plan sponsor's decision about whether the PA is satisfied 
is a coverage determination, the Part D sponsor must notify the 
enrollee (and, if applicable, the prescriber) of its decision in 
accordance with the applicable adjudication timeframes and notice rules 
in Part 423, Subpart M. For example, if an enrollee, the enrollee's 
representative, or the prescriber's request is processed as an 
expedited coverage determination, the plan sponsor must provide notice 
of its decision as expeditiously as the enrollee's health condition 
requires, but no later than 24 hours after receiving the request or, 
for an exceptions request, the prescriber's supporting statement. If an 
appeal is requested following an adverse coverage determination 
decision, an expedited redetermination (plan level appeal) requires the 
plan to notify the enrollee (and prescriber, if appropriate) of the 
decision as expeditiously as the enrollee's health condition requires, 
but no later than 72 hours from receiving the request. The 72 hour 
expedited timeframe also applies to the IRE reconsideration level of 
review.
    In those instances in which the Part D sponsor disagrees with the 
hospice's determination that the prescribed drug is unrelated to the 
terminal illness and related conditions, the denial notice would 
explain the Part D sponsor's intention to seek independent review of 
the hospice's determination, if applicable. Since Part D coverage of a 
drug depends on whether the drug is covered under the hospice benefit, 
if the hospice does not respond or refuses to provide the required 
explanation regarding why the drug is unrelated to the terminal illness 
and related conditions, Part A coverage cannot be ruled out and the PA 
would be unfulfilled.
    In addition to providing early notice of a hospice election or 
termination/revocation, the hospice may identify any drugs determined 
to be coverable under Part D for a beneficiary and provide an 
explanation of why the drugs are unrelated to the terminal illness and 
related conditions. When the hospice furnishes the documentation to 
satisfy the PA, prior to a claim submission, we are considering 
requiring Part D sponsors to accept the information from the hospice 
either verbally or on the PA form. Once the information is received 
from the hospice provider, the Part D sponsor would determine whether 
it is sufficient to establish that the drug as prescribed and dispensed 
or administered is unrelated to the terminal illness and related 
conditions. If it does, the Part D sponsor would reflect that the PA is 
satisfied for this drug in their system. If the Part D sponsor 
determines that the explanation provided is unsatisfactory, the Part D 
sponsor would communicate this to the hospice. The Part D sponsor and 
hospice may attempt to resolve the coverage issue, but should they be 
unable to do so, the plan sponsor would be able to seek review by the 
IRE.
    We also are considering requiring that a Part D sponsor process 
retrospective claims adjustments and issue requests for repayment and 
or refunds for drugs that are excluded from Part D by virtue of their 
being covered under the hospice benefit in accordance with the 
timeframes in Sec.  423.466(a). The amount requested for repayment and 
subsequently repaid would be the total amount paid to the pharmacy, 
including the negotiated price for the drug paid by the Part D sponsor, 
the beneficiary cost sharing and any other payments made on the claim 
as reported by the sponsor on the prescription drug event record to 
CMS, such as the low-income subsidy and payments made by supplemental 
insurers. Under the process we are considering, the Part D sponsor 
would be responsible for refunding beneficiary cost-sharing as well as 
the amounts paid by supplemental payers on claims for which the sponsor 
received an NCPDP reporting (that is, NX) transaction. The 
Part D sponsor would also be responsible for refunding amounts the 
hospice has paid to the pharmacy for drugs that should have been 
covered under Part D, including any beneficiary cost-sharing.
    We believe that the definitions of ``terminal illness'' and 
``related conditions'' in section III.B of this proposed rule would 
guide hospices, prescribers, and Part D sponsors by clarifying and 
strengthening the concepts of holistic and comprehensive hospice care. 
Thus, through a good faith effort, Part D sponsors and hospices would 
be able to resolve issues of payment responsibility for prescription 
drugs using the processes under consideration and outlined in this 
proposed rule.
    While we expect the overwhelming preponderance of cases involving 
payment coverage responsibility to be resolved using the communication 
and coordination of benefits processes we are considering, we recognize 
that there may be some instances where the Part D sponsor and the 
hospice will be unable to agree on which entity is responsible for 
covering a prescription drug. Therefore, we are considering enabling 
the Part D sponsor to request review from the IRE that has contracted 
with CMS. As noted above, drugs available under Part A as prescribed 
and dispensed or administered are excluded by statute from coverage 
under Part D. We believe that the coverage exclusion set forth at 
section 1860D-2(e)(2)(B) of the Act provides CMS with the authority to 
implement a process whereby the Part D sponsor can request an 
independent review of a disagreement over payment responsibility with a 
Part A hospice. In addition, section 1860D-24 of the Act requires Part 
D sponsors to coordinate

[[Page 26573]]

with other drug plans, including with other health benefit plans or 
programs that provide coverage or financial assistance for the purchase 
or provision of prescription drug coverage on behalf of Part D eligible 
individuals. We believe these statutory provisions support the 
coordination and independent review processes being considered, as 
these processes would help ensure that payment responsibility is 
properly determined and that drugs are not being inappropriately 
covered and paid for by the Part D program.
    The independent review process considered would be made part of the 
regulations at 42 CFR Part 423, Subpart J, given the nexus between the 
coordination of benefits processes considered for inclusion at Sec.  
423.464(i) and the right to request an independent review if the Part D 
sponsor disagrees with the information provided by the hospice or 
prescriber. Under the provisions being considered, the Part D sponsor 
would have to communicate and coordinate with Medicare hospices in 
determining coverage for prescription drugs. As part of this process, 
the hospice would be required to furnish information regarding why the 
drug is unrelated to the terminal illness and related conditions to 
satisfy the beneficiary-level hospice prior authorization (PA) 
requirements. The independent review process we are considering would 
be separate and distinct from the enrollee appeals process and would 
not affect the rights of an enrollee, the enrollee's representative or 
the enrollee's prescriber to request an appeal under the administrative 
appeal provisions set forth in 42 CFR Part 423, subpart M and subpart 
U.
    The changes we are considering at Sec.  423.464(i)(4) would enable 
the Part D sponsor to request an independent review if the hospice has 
furnished information as part of the coordination of benefits and PA 
process indicating that the drug is not a covered drug under the Part A 
hospice benefit, and the Part D sponsor disagrees with that 
determination. To satisfy the beneficiary-level hospice PA requirement, 
the hospice would be required to notify the Part D sponsor, verbally or 
in writing, of the determination as to whether the need for the 
prescription drug is related to the beneficiary's terminal illness and 
related conditions and provide a clinical explanation to support that 
determination. If the need for the drug is unrelated to the 
beneficiary's terminal illness and related conditions, the drug may be 
covered under Part D. If the Part D sponsor disagrees with the hospice 
or prescriber's explanation, the Part D sponsor would have the right to 
file a written request for review with the IRE within 5 calendar days 
of the date of notice provided by the hospice or prescriber. If the 
hospice or prescriber provides verbal notice of its determination, we 
are considering requiring the Part D sponsor to accurately document the 
date and content of the notice and explanation and retain that 
documentation. We believe that 5 calendar days (from the date the 
hospice provider furnishes notice to the plan sponsor that the drug is 
unrelated to the beneficiary's terminal illness and related conditions) 
would be a reasonable period of time for the hospice provider and plan 
sponsor to attempt to resolve any disagreement over payment 
responsibility via the coordination processes being considered. In the 
interest of promptly resolving disputes over payment responsibility, we 
do not believe a longer timeframe for requesting IRE review would be 
appropriate, but solicit comments on this 5 calendar day timeframe.
    We are considering requiring that the written request for 
independent review include relevant clinical documentation and the 
explanation provided by the hospice. The IRE would be responsible for 
obtaining any additional information it believes is necessary to 
determine whether the disputed drug is the payment responsibility of 
the hospice or the Part D sponsor. The IRE would notify the hospice 
(and prescriber, as appropriate), the Part D sponsor, and the enrollee 
of its decision in writing. The IRE's decision would be binding on the 
Part D sponsor and the hospice. Decisions made through this review 
would not be subject to appeal, but could be reviewed and revised at 
the discretion of CMS. We are considering a corresponding change at 
418.305(b) specifying the hospice would be bound by the decision made 
by the IRE under the change being considered at 423.464(i). If the IRE 
review process we are considering were to be proposed and finalized 
through future rulemaking, additional guidance related to the IRE's 
review, such as adjudication timeframes and specific notice 
requirements, would be established in manual guidance or rulemaking.
    The following chart summarizes the existing and new requirements 
under consideration for Part D sponsor coordination with hospices:

------------------------------------------------------------------------
                Process                             Timeframes
------------------------------------------------------------------------
Communication/Coordination:
    Part D sponsors would be required    A hospice would be able to
     to communicate and coordinate with   furnish information to the
     a hospice when:                      Part D sponsor at any time.
     The hospice furnishes       This communication/coordination
     information regarding a              process would begin when the
     beneficiary's hospice election or    beneficiary, the beneficiary's
     plan of care; and.                   appointed representative or
     The Part D coverage          the prescriber requests a
     determination process is             coverage determination.
     initiated..
Prior Authorization:
    Part D sponsors would implement      When a coverage determination
     beneficiary-level hospice PAs and    is requested, sponsors would
     NCPDP reject coding at point-of-     be required to comply with the
     sale (POS) for drugs for             existing timeframes of 72
     beneficiaries who have elected       hours for standard requests
     hospice.                             and 24 hours for expedited
    When a claim rejects at POS, the      requests, as specified in
     beneficiary would be provided with   Federal regulation at Sec.
     a notice explaining the right to     423.568 and Sec.   423.572
     request a coverage determination     respectively.
     from the plan.
Payment Recovery:
    When a Part D sponsor has paid for   Once payment responsibility is
     drugs prior to receiving             determined, the sponsor would
     notification of the beneficiary's    be required to process any
     hospice election, the sponsor        adjustments and issue refunds
     would be required to determine       or recovery notices within 45
     payment responsibility for the       days, as specified in Federal
     drugs, process retrospective         regulations at Sec.
     claims adjustments, and issue        423.466(a).
     refunds or recovery requests.
Independent Review:

[[Page 26574]]

 
    If a sponsor disagrees with a        Sponsors would be required to
     hospice determination that a drug    request an IRE review within 5
     is unrelated, the sponsor would be   business days of receiving the
     able to request an IRE review. IRE   hospice's explanation of why a
     decisions would be binding on the    drug is unrelated and not
     sponsor and hospice.                 covered under the hospice
                                          benefit.
------------------------------------------------------------------------

    In formulating the requirements under consideration, we have become 
aware that the regulatory requirement for a Part D sponsor to 
coordinate with other health benefit plans or programs at Sec.  423.464 
(f)(1)(ix) is narrower than the requirement specified in statute. 
Section 1860D-24 of the Act requires Part D sponsors to coordinate with 
other drug plans, including, as specified in paragraph Sec.  423.464 
(b)(5), with other health benefit plans or programs that provide 
coverage or financial assistance for the purchase or provision of 
prescription drug coverage on behalf of Part D eligible individuals. 
However, in codifying this requirement in the regulations at Sec.  
423.464(f)(1)(ix), we specified that the other plans or programs are 
those that provide coverage or financial assistance for the purchase of 
or provision of Part D (emphasis added) prescription drugs. As a 
result, the regulation does not include the requirement for Part D 
sponsors to coordinate with providers of drugs covered under Part A, 
such as hospices, since as noted above, drugs covered as so prescribed 
and dispensed or administered under Part A are excluded from the 
definition of a covered Part D drug. Since coordination between Part D 
sponsors and the Medicare hospices is essential to ensure Part D 
statutory coverage requirements are met, to reduce the potential for 
erroneous payment under Part D, and to facilitate the recovery of 
erroneous payments when they do occur, we also are considering amending 
the Part D regulations at Sec.  423.464(f) to align the definition of 
other prescription drug coverage in paragraph Sec.  423.464(f)(1)(ix) 
with the statute by removing the phrase ``Part D.''
    We solicit comments on the changes under consideration regarding 
the coordination of benefits process and appeals for Part D payment for 
drugs while beneficiaries are under a hospice election.
2. Hospice Coordination of Payment With Part D Sponsors and Other 
Payers
    As specified in section 1861(dd) of the Act, and in regulation at 
42 CFR Part 418, the hospice is responsible for covering all drugs and 
biologicals for the palliation and management of the terminal illness 
and related conditions. As noted in 418.202(f), drugs and biologicals 
for palliation of pain and symptom management are included in the 
Medicare Part A per-diem payment to a hospice. Therefore, such drugs 
and biologicals are excluded from coverage under Part D (see section 
III.I.1). Additionally, our payment regulations at Sec.  418.200 
require that, to be covered, hospice services must be consistent with 
the plan of care, which must include the drugs and treatment necessary 
to meet the needs of the patient (Sec.  418.56(c)(2)).
    We have received anecdotal reports from Medicare hospice 
beneficiaries that they are not receiving medications related to their 
terminal illness and related conditions from their hospice because, 
among other stated reasons, those medications are not on the hospice's 
formulary. These reports also have stated that hospice beneficiaries 
were advised to obtain drugs related to the terminal illness and 
related conditions from their Part D prescription drug plans. Per the 
regulations at Sec.  418.202(f), hospices must provide all drugs which 
are reasonable and necessary to meet the needs of the patient in order 
to provide palliation and symptom management of the terminal illness 
and related conditions. If the drugs on the hospice formulary are not 
providing the relief needed, then the hospice must provide alternatives 
in order to relieve pain and symptoms, even if it means providing drugs 
that are not on their formularies.
    In addition, several hospices have stated that pre-existing, 
chronic and/or controlled conditions are not related to the prognosis 
of the hospice beneficiary and should not be the responsibility of the 
hospice--a concept which is contrary to the hospice philosophy of 
providing comprehensive coordinated care to patients at end of life as 
described in sections II and III.B of this proposed rule. One hospice 
illustrated the issue with an example, a patient that was admitted with 
a primary terminal diagnosis of COPD. In the example, the patient also 
has diabetes which pre-dates the COPD; the patient uses corticosteroids 
to manage the COPD. The diabetes is well managed with an oral 
hypoglycemic agent and the patient needs to continue the medication to 
manage the diabetes. The hospice argues that since the diabetes is 
unrelated to the COPD, the oral hypoglycemic agent medication should 
not be covered by hospice. However, increased glucose levels are a 
common manifestation of corticosteroid use. While the hospice states 
that the admission to hospice is a result of COPD, treatment for the 
COPD has the potential to affect glucose levels, and hence the 
hypoglycemic agent would be covered by the hospice and not through Part 
D. As we stated above, and as required by Sec.  418.202(f), hospices 
are to cover all drugs which are reasonable and necessary to meet the 
needs of the patient in order to provide palliation and symptom 
management of the individual's terminal illness and related conditions. 
Treatment decisions should not be driven by costs, as opposed to 
clinical appropriateness. Hospices should use thoughtful clinical 
judgment, with a patient-centered focus, when developing the hospice 
plan of care, including the recommendations for medication management.
    As outlined in section III.A.4, $1.2 billion in non-hospice 
Medicare spending and beneficiary cost-sharing occurred in CY 2012 for 
beneficiaries in hospice elections. In addition, we examined drug costs 
incurred by hospices from 2004 to 2012 using hospice cost report data 
adjusted to constant 2010 dollars. That analysis revealed a declining 
trend in the drug costs per patient-day, with costs declining from a 
mean of $20 per patient-day in 2004 to $11 per patient-day in 2012. As 
of 2010, MedPAC reports that the aggregate hospice Medicare margin was 
7.5 percent, up from 7.4 percent in 2009. Margins varied widely across 
the sector. For example, MedPAC reports that the Medicare margins were 
19.9 percent at the 75th percentile.\42\ This may suggest that some 
hospices could be unbundling items, services, and drugs included in the 
per-diem hospice payments they are receiving, and other parts of the 
Medicare program are being billed for services that the hospice should 
have provided. For example, during a hospice election hospice 
beneficiaries have received care and/or services from hospitals, 
laboratories, DME suppliers, non-hospice clinicians, which were billed 
to Medicare as being unrelated to the terminal illness and related 
conditions. We believe that most of these claims were likely related to 
the

[[Page 26575]]

hospice terminal illness and related conditions.
---------------------------------------------------------------------------

    \42\ MedPAC ``Report to the Congress: Medicare Payment Policy'', 
March 2013, pp.278.
---------------------------------------------------------------------------

    To safeguard the integrity of the Medicare Trust Funds and 
encourage hospices to coordinate with other providers and payers, and 
to ensure that beneficiaries have access to needed services and 
medications, we are considering how hospices can coordinate with Part D 
plan sponsors and comply with a standardized process for determining 
payment responsibility (prior authorization (PA) process), for 
recovering payment when the wrong party has paid, and for resolving 
disputes regarding payment responsibility. We are not proposing any 
requirements at this time, but are soliciting comments on approaches to 
these issues.
    Currently, the CoPs at Sec.  418.56(e)(5) require hospices to share 
information with other non-hospice healthcare providers furnishing 
services unrelated to the terminal illness and related conditions. As 
described in Sec.  418.100(c)(2), hospices must be available 24 hours a 
day and 7 days a week to address beneficiary and family needs. We 
expect that any PA process would result in minimal disruption to access 
to the drugs presumed to be unrelated to the terminal illness or 
related conditions. It would be vital for the hospice to provide 
information to respond to a PA as soon as possible to minimize any 
potential disruption to the medication needs of the beneficiary. We 
believe the information necessary to satisfy a request from any payer 
or non-hospice provider would be readily available, since hospices are 
required to maintain clinical records per the regulations at Sec.  
418.104. We expect the beneficiary's needs for drugs and biologicals at 
the end of life would be addressed as soon as possible to maximize 
quality of care and access to critical drugs and biologicals. We are 
soliciting comments on whether hospices need to determine, in a 
specific amount of time, a beneficiary's drug and biological needs and 
communicate with the Part D plan sponsor or to the other payer and/or 
provider, verbally or in writing, to ensure there is no lapse of 
reasonable and necessary drugs and biologicals or other items or 
services for the beneficiary. We are particularly interested in the 
experiences of Part D sponsors and hospices that successfully 
communicate with each other and how both parties ensured that the 
beneficiary did not experience any delay in drug coverage. While the 
solicitation of comments is focused on coordination between the hospice 
and Part D sponsor, the solicitation would apply broadly to any payer 
or non-hospice provider.
    The PA process described in Section III.I.1 would be a mechanism 
that would emphasize the recognition of the hospice and hospice 
physician as the clinical point of contact and enable the hospice and 
hospice physician to better maintain the professional and clinical 
responsibility for hospice patients. Hospices are health care leaders 
in coordinating care for beneficiaries at the end of life, and thus we 
believe this solicitation fits well within a hospice's usual care 
paradigm. The solicitations outlined, above in section III.I.1, could 
ensure that hospices and hospice physicians are notified of any 
beneficiary medications prescribed by a non-hospice provider, as well 
as non-hospice care the beneficiary has initiated without the hospice's 
knowledge.
    We are also soliciting comments on the steps hospices should take 
to reconcile payment responsibility within a specified timeframe that 
could be similar to an established timeframe set forth in Part 423, 
Subpart M, which also requires that payment responsibility be resolved 
within 45 days. We are soliciting comments on whether the determination 
of payment responsibility should be resolved within 45 days from the 
date of receipt of a repayment request from either the Part D plan 
sponsor or the hospice. We are soliciting comments on whether the 
hospice would issue a request for a refund from the other payer or 
provider for the total amount paid for the item or service within a 
specific timeframe and refund to the beneficiary any associated cost-
sharing.
    As described in section III.I.1, we believe a majority of cases 
involving payment coverage responsibility could be resolved under the 
communication and coordination of benefits process. However, we 
recognize that there may be instances where the hospice and the Part D 
sponsor will be unable to agree on which entity is responsible for the 
prescription drug. We are soliciting comments on the impact to hospices 
regarding the potential independent review process described in section 
III.I.1.
3. Beneficiary Rights and Appeals
    Sometimes a beneficiary requests a certain medication that a 
hospice cannot or will not provide because the hospice has deemed that 
the specific medication is not reasonable and necessary for the 
palliation and management of the terminal illness and related 
conditions. Coverage of such medication would not be permissible under 
Part D coverage since the medication is not for any condition 
completely separate and distinct from the terminal illness and related 
conditions, nor is it covered under Part A since it is not reasonable 
and necessary for the palliation and management of the terminal illness 
and related conditions. If the hospice does not provide the medication, 
the hospice is not obligated to provide any notice of non-coverage 
(including the Advance Beneficiary Notice of Non-coverage or ABN). If 
the hospice provides medication it believes is not reasonable and 
necessary for the palliation and management of the terminal illness and 
related conditions, the hospice must first issue an ABN in order to 
charge the beneficiary for the cost of such medication. Regardless of 
whether or not the hospice furnishes the drug, if the beneficiary 
independently obtains the drug, but believes that the Medicare hospice 
should have furnished or covered the cost of the drug as part of the 
hospice benefit, the beneficiary may submit a claim for the medication 
directly to Medicare on Form CMS-1490S (http://www.cms.gov/Medicare/CMS-Forms/CMS-Forms/CMS-Forms-Items/CMS012949.html). If the claim is 
denied, the beneficiary may file an appeal of that determination under 
the appeals process set forth in part 405, subpart I.
    Beneficiaries who disagree with such medication coverage 
determinations may use the Medicare fee-for-service appeals process if 
the determination relates to Part A or B coverage, and the Part D 
appeals process if the determination relates to Part D coverage.
    There may also be instances where a beneficiary prefers a non-
formulary drug because, for example, he or she believes it to be more 
efficacious than the formulary drug prescribed by the hospice. In such 
instances, the hospice may have determined that the formulary drug 
prescribed is reasonable and necessary for the palliation and 
management of the terminal illness and related conditions; however, the 
beneficiary may prefer another brand of such drug that is off 
formulary, which the hospice believes is not reasonable and necessary, 
or more expensive but no more effective than the drug in the formulary. 
In those cases, the beneficiary may submit quality of care complaints 
to a Quality Improvement Organization. We plan to increase our 
beneficiary outreach efforts to advise beneficiaries and their 
families/caregivers of their rights and the available appeals process 
described in this section.

[[Page 26576]]

J. Update on the International Classification of Diseases, 10th 
Revision, Clinical Modification (ICD-10-CM) and Coding Guidelines for 
Hospice Claims Reporting

3. International Classification of Diseases, 10th Revision, Clinical 
Modification (ICD-10-CM)
    On April 1, 2014, the Protecting Access to Medicare Act of 2014 
(PAMA) (Pub. L. 113-93), was enacted. Section 212 of PAMA, titled 
``Delay in Transition from ICD-9 to ICD-10 Code Sets,'' provides that 
``[t]he Secretary of Health and Human Services may not, prior to 
October 1, 2015, adopt ICD-10 code sets as the standard for code sets 
under section 1173(c) of the Social Security Act (42 U.S.C. 1320d-2(c)) 
and section 162.1002 of title 45, Code of Federal Regulations.'' As of 
now, the Secretary has not implemented this provision under HIPAA. This 
means that ICD-9-CM diagnosis codes will continue to be used for 
hospice claims reporting until an implementation date for ICD-10-CM is 
announced. Diagnosis reporting on hospice claims must adhere to ICD-9-
CM coding conventions and guidelines regarding the selection of 
principal diagnosis and the reporting of additional diagnoses. 
Additionally, the CMS' Hospice Claims Processing manual (Pub 100-04, 
chapter 11) requires that hospice claims include the reporting of 
additional/other diagnoses as required by ICD-9-CM coding guidelines.
    In the HIPAA regulations at 45 CFR 162.1002, the Secretary adopted 
the ICD-9-CM code set, including the Official ICD-9-CM Guidelines for 
Coding and Reporting. The current ICD-9-CM Coding Guidelines use the 
International Classification of Diseases, 9th Revision, Clinical 
Modification (ICD-9-CM) and are available through the CMS Web site at: 
http://www.cms.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/index.html or on the CDC's Web site at http://www.cdc.gov/nchs/icd/icd9cm.htm.
4. Coding Guidelines for Hospice Claims Reporting
    In the FY 2014 Hospice Wage Index and Payment Rate Update, we 
reiterated that diagnosis reporting on hospice claims should include 
the appropriate selection of principal diagnoses as well as the other, 
additional and coexisting diagnoses related to the terminal illness and 
related conditions (78 FR 48254). Additionally, in the July 27, 2012, 
FY 2013 Hospice Wage Index notice (77 FR 44247), we provided in-depth 
information regarding longstanding, existing ICD-9-CM Coding 
Guidelines. We also discussed related versus unrelated diagnosis 
reporting on claims and clarified that ``all of a patient's coexisting 
or additional diagnoses'' related to the terminal illness and related 
conditions should be reported on the hospice claim. The expectation was 
that hospices would report all diagnoses related to the terminal 
illness and related conditions on hospice claims to provide accurate 
information regarding the hospice beneficiaries for which they are 
providing hospice services.
    In the FY 2014 Hospice Wage Index and Payment Rate Update final 
rule, we stated that beginning on October 1, 2014, any claims with 
``debility'' or ``adult failure to thrive'' in the principal diagnosis 
field will be returned to the provider for more definitive coding (78 
FR48252). ``Debility'' and ``adult failure to thrive'' do not provide 
enough information to accurately describe Medicare hospice 
beneficiaries and the conditions that hospices are managing. Once these 
claims are resubmitted with more appropriate diagnosis codes, following 
the ICD-9-CM Coding Guidelines, these claims will be processed 
accordingly. This is a reminder that claims with ``debility'' and 
``adult failure to thrive'' coded in the principal diagnosis field will 
be returned to providers for more definitive coding effective October 
1, 2014 (for those claims submitted on and after October 1, 2014).
    Also in the FY 2014 Hospice Wage Index and Payment Rate Update 
final rule, we advised hospice providers to pay particular attention to 
dementia diagnoses which are found under two separate ICD-9-CM 
classifications: ``Mental, Behavioral, and Neurodevelopmental 
Disorders'' and ``Diseases of the Nervous System and Sense Organs''(78 
FR48252-48253). Many of the codes relating to dementia manifestations 
found under the ICD-9-CM classification, ``Mental, Behavioral, and 
Neurodevelopmental Disorders'', are not appropriate as principal 
diagnoses because of etiology/manifestation guidelines or sequencing 
conventions under the ICD-9-CM Coding Guidelines. ICD-9-CM Coding 
Guidelines for this classification state that dementia is most commonly 
a secondary manifestation of an underlying causal condition. Codes 
found under this classification identify the common behavioral 
disturbances of dementia manifestations. Many of the dementia codes 
under the ICD-9-CM classification, ``Mental, Behavioral and 
Neurodevelopmental Disorders'' have coding conventions that require to 
code first the associated neurological condition. Many of the 
associated neurological conditions can be found under the 
classification, ``Diseases of the Nervous System'', including such 
conditions as ``Alzheimer's disease'' and ``Senile Degeneration of the 
Brain''. We advise hospices to pay close attention to the various 
coding and sequencing conventions found within The Official ICD-9-CM 
Guidelines for Coding and Reporting when reporting diagnoses on hospice 
claims.
    To ensure additional compliance with ICD-9-CM Coding Guidelines we 
will implement certain edits from Medicare Code Editor (MCE), which 
detect and report errors in the coding of claims data, for all hospice 
claims effective October 1, 2014 (for those claims submitted on or 
after October 1, 2014). Hospice claims containing inappropriate 
principal or secondary diagnosis codes, per ICD-9-CM coding conventions 
and guidelines, will be returned to the provider and will have to be 
corrected and resubmitted to be processed and paid.
    We will implement edits related to etiology/manifestation code 
pairs from the MCE; therefore, it is important for hospice providers to 
follow the ICD-9-CM Coding Guidelines regarding codes that fall under 
this coding convention. The etiology/manifestation coding convention 
states that there are certain conditions which have both an underlying 
cause (etiology) and subsequent multiple body system manifestations. 
For such conditions, ICD-9-CM coding convention requires the underlying 
condition be sequenced first, followed by the manifestation. Whenever 
such a combination exists, there is a ``use additional code'' note at 
the etiology code and a ``code first'' note at the manifestation code. 
These instructional notes indicate the proper sequencing order of the 
codes. In most cases, the manifestation codes will have in the code 
title, ``in diseases classified elsewhere.'' ``In diseases classified 
elsewhere'' codes are never permitted to be used as first-listed or 
principal diagnosis codes. They must be used in conjunction with an 
underlying condition code and they must be listed following the 
underlying condition. An example of this can be found under the 
category 294, ``Persistent mental disorders due to conditions 
classified elsewhere.'' However, there are manifestation codes that do 
not have ``in diseases classified elsewhere'' in the title. For such 
codes, there is ``use an additional code'' note at the etiology code 
and a ``code first'' note at the manifestation code and the rules for 
sequencing apply.

[[Page 26577]]

    There are sequencing conventions under ICD-9-CM coding guidelines 
that are not accounted for in the MCE edits. There are several dementia 
codes under the classification, ``Mental Behavioral and 
Neurodevelopmental Disorders'' that have a sequencing convention that 
require the underlying physiological condition to be coded first, but 
for which there is no edit in the MCE. We will be issuing technical 
guidance through a Change Request to include these codes for edits in 
the MCE to be consistent for claims processing under ICD-9-CM Coding 
Guidelines. We are reminding providers to utilize the ICD-9-CM coding 
guidelines when submitting hospice claims to ensure they are following 
the appropriate guidelines for coding so that claims are not returned 
to providers as a result of MCE edits. Following the ICD-9-CM coding 
guidelines will help hospice providers with appropriate code selection 
for hospice claims processing. This is not to say that hospice 
beneficiaries with various dementia conditions are not appropriate for 
hospice services, rather, this is merely a clarification regarding the 
ICD-9-CM coding guidelines for claims processing. We expect hospice 
providers to follow ICD-9-CM coding guidelines to ensure that the most 
accurate information is provided regarding the patients for whom 
hospices are providing services.
    Additional details describing the specific MCE edits that will be 
applied will be announced through a change request, an accompanying 
Medicare Learning Network article, and other CMS communication 
channels, such as the Home Health, Hospice, and DME Open Door Forum.
    We have clarified in previous rules that hospice providers are 
expected to report on hospice claims all ICD-9-CM codes to provide an 
accurate description of the patients' conditions. In the Hospice Wage 
Index for Fiscal Year 2013 (77FR 44247) and again in the Hospice Wage 
Index for Fiscal Year 2014 (78 FR 48240), we reminded providers to 
follow ICD-9-CM Coding Guidelines for reporting diagnoses on hospice 
claims. HIPAA, federal regulations, and the Medicare claims processing 
manual all require that ICD-9-CM Coding Guidelines be applied to the 
coding and reporting of diagnoses on hospice claims. In the FY 2013 
hospice notice, we reported that our analyses showed that 77.2 percent 
of hospice claims from 2010 only reported a single, principal 
diagnosis. We provided in-depth information regarding longstanding, 
existing ICD-9-CM Coding Guidelines that require the reporting of all 
additional or co-existing diagnoses on hospice claims. We went on to 
state that coexisting or additional diagnoses could be related or 
unrelated to the hospice patient's terminal illness. As the Medicare 
hospice benefit covers hospice services for the palliation and 
management of the terminal illness and related conditions, we said, at 
that time, that hospice providers ``should report on hospice claims all 
coexisting or additional diagnoses that are related to the terminal 
illness; they should not report coexisting or additional diagnoses that 
are unrelated to the terminal illness'' (77FR 44248). We also stated 
that we do not believe that requiring reporting of coexisting or 
additional diagnoses that are related to the terminal illness would 
create a burden for hospice and that some providers already report 
these diagnoses on their claims.
    In the FY 2014 Hospice Wage Index and Payment Rate Update final 
rule, we reported that for the first quarter of FY 2013 (October 1, 
2012 through December 31, 2012) 72 percent of hospice claims only 
reported a single, principal diagnosis (78 FR 48240). We also discussed 
related versus unrelated diagnosis reporting on claims and clarified 
that ``all of a patient's coexisting or additional diagnoses'' related 
to the terminal illness or related conditions should be reported on the 
hospice claim. Information on a patient's related and unrelated 
diagnoses should already be included as part of the hospice 
comprehensive assessment and appropriate interventions should be 
incorporated into the patient's plan of care, as determined by the 
hospice IDG.
    Analysis conducted on FY 2013 hospice claims shows that 67 percent 
of hospice claims still only report a single, principal hospice 
diagnosis.\43\ Though this is a trend in the right direction, there 
still appears to be some confusion by the majority of hospice providers 
as to the requirements for diagnosis reporting on hospice claims. We 
are reminding providers to follow the ICD-9-CM Coding Guidelines, per 
longstanding policy, in regard to diagnosis reporting on claims.
---------------------------------------------------------------------------

    \43\ FY 2013 hospice claims data from the Chronic Conditions 
Data Warehouse (CCW) accessed on February 26, 2014.
---------------------------------------------------------------------------

    The ICD-9-CM Official Guidelines for Coding and Reporting state 
that for accurate reporting of ICD-9-CM diagnosis codes, ``The 
documentation should describe the patient's condition, using 
terminology which includes specific diagnoses, as well as symptoms, 
problems, and reasons for the encounter. List first the ICD-9-CM code 
for the diagnosis, condition, problem, or other reason for the 
encounter/visit shown in the medical record to be chiefly responsible 
for services provided.'' The coding guidelines also state to code all 
documented conditions that coexist at the time of the encounter/visit 
and require or affect patient care treatment or management. Therefore, 
this is a reminder that all diagnoses should be reported on the hospice 
claim for the terminal illness and related conditions, including those 
that can affect the care and management of the beneficiary. We will 
condition to monitor hospice claims to see if all conditions are being 
reported as required by ICD-9-CM Coding Guidelines.

K. Technical Regulatory Text Change

    We propose to make at technical correction in Sec.  418.3 to delete 
the definition for ``social worker.'' This definition is no longer 
accurate, and we intended to remove it as part of the June 5, 2008 
final rule that amended the conditions of participation (CoPs) for 
hospices (73 FR 32088). The 2008 final rule established new 
requirements for social workers at Sec.  418.114(b)(3), making the 
definition of ``social worker'' at Sec.  418.3 obsolete. However, the 
technical amendatory language included in the 2008 final rule did not 
instruct the Federal Register to delete the ``social worker'' 
definition. We propose this technical correction in order to remedy 
this oversight.
    We invite comments on this technical correction and associated 
change in the regulations at Sec.  418.3 in section VI.

IV. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995, we are required to 
provide 60-day 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. In 
order to fairly evaluate whether an information collection should be 
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act 
of 1995 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.

[[Page 26578]]

    We are soliciting public comment on each of these issues for this 
section of this document that contains information collection 
requirements (ICRs). This section includes ICR information on data 
collection A) related to hospice payment policy, including proposed 
changes to the election statement and proposed changes to inpatient and 
aggregate cap determination reporting; and B) related to the 
CAHPS[supreg] Hospice Survey.

A. Proposed Changes Related to Hospice Payment Policy

    Sections A.1, A.2, and A.3 are associated with the information 
collection request (ICR) previously approved under OMB control number 
as 0938-1067. We are currently seeking to have the ICR reinstated under 
notice and comment periods separate from those associated with this 
notice of proposed rulemaking. The following assumptions were used in 
estimating the burden for the proposed changes related to hospice 
payment policy:

      Table 10--Hospice Payment Policy Burden Estimate Assumptions
------------------------------------------------------------------------
 
------------------------------------------------------------------------
 of Medicare-participating hospices nationwide,           3,897
 CY 2012................................................
 of Medicare-billing hospices, from CY 2012               3,727
 claims.................................................
 of Part D prescriptions per hospice, from CY               481
 2012 claims............................................
Hourly rate of registered nurse.........................             $41
Hourly rate of accountant...............................             $40
Hourly rate of office employee..........................             $17
Hourly rate of administrator............................             $63
------------------------------------------------------------------------
Note: CY = Calendar year.

    All salary information is from the Bureau of Labor Statistics (BLS) 
Web site at http://www.bls.gov/oes/current/naics4_621600.htm and 
includes a fringe benefits package worth 30 percent of the base salary. 
Hourly rates are based on May 2012 BLS data for each discipline, for 
those providing ``home health care services.''
1. Proposed Changes to the Election Statement (Sec.  418.24)
    Section 1812(d) of the Act requires that patients elect hospice 
care in order for Medicare to cover and pay for hospice services. 
Section 1861(dd)(3)(B) of the Act defines an attending physician and 
requires that the patient, not the hospice, designate an attending 
physician at the time of election. Our regulations at Sec.  418.24 
outline current requirements for completion of a hospice election 
statement, but do not require that the attending physician designated 
by the patient be identified. To safeguard the patient's right to 
choose his or her attending physician, we proposed to change our 
regulations at Sec.  418.24(b) to require that the election statement 
be modified to identify the attending physician chosen by the patient 
and to include language that the patient acknowledges that the 
attending physician was his or her choice. Note that all hospices, 
including those that are not Medicare-participating, are required by 
the Conditions of Participation to have patients elect hospice care.
    We estimated that the burden for this requirement is the one-time 
burden to modify the election statement to include a place for 
identifying the attending physician and acknowledging that he or she 
was chosen by the patient or representative. Hospices are currently 
required to explain these processes to patients, so we do not believe 
there is any additional burden for discussing that part of the election 
statement with patients or their representatives. We estimate that it 
would take a hospice clerical staff person 20 minutes (20/60 = 0.33333 
hours) to modify the election form, and the hospice administrator 15 
minutes (15/60 = 0.25 hours) to review the revised form. The clerical 
time plus administrator time equals a one-time burden of 35 minutes or 
(35/60) = 0.58333 hours per hospice; for all 3,897 hospices, the total 
time required would be (0.58333 x 3,897) = 2,273 hours. At $17 per hour 
for an office employee, the cost per hospice would be (0.33333 x $17) = 
$5.66. At $63 per hour for the administrator's time, the cost per 
hospice would be (0.25 x $63) = $15.75. Therefore, the total one-time 
cost per hospice would be $21.41, and the total one-time cost for all 
hospices would be ($21.41 x 3,897) = $83,435.
    Because of concerns related to the potential inappropriate changing 
of attending physicians by hospices, we also proposed to add paragraph 
(f) to our regulations at Sec.  418.24, to require that the patient (or 
representative) provide a statement identifying the new attending 
physician and the date the change is to be effective, and that the 
patient (or representative) sign and date the form. The form should 
also include an acknowledgement that this change is the patient's 
choice. The one-time burden to hospices is the time to develop a form 
for the patient to use. We estimate that it would take a hospice 
clerical staff person 20 minutes (20/60 = 0.33333 hours) to develop 
this form, and the hospice administrator 15 minutes (15/60 = 0.25 
hours) to review the new form. The clerical time plus administrator 
time equals a one-time burden of 35 minutes or (35/60) = 0.58333 hours 
per hospice; for all 3,897 hospices, the total time required would be 
(0.58333 x 3,897) = 2,273 hours. At $17 per hour for an office 
employee, the cost per hospice would be (0.33333 x $17) = $5.66. At $63 
per hour for the administrator's time, the cost per hospice would be 
(0.25 x $63) = $15.75. Therefore, the total one-time cost per hospice 
to develop this new form for changing attending physicians would be 
$21.41, and the total one-time cost for all hospices would be ($21.41 x 
3,897) = $83,435.
2. Proposed Changes to Inpatient and Aggregate Cap Determination 
Reporting (Sec.  418.308)
    Congress mandated two caps on hospice payments: an inpatient cap 
and an aggregate cap. The hospice cap year is November 1 through 
October 31. Medicare contractors complete the hospice cap determination 
approximately twelve to eighteen months after the cap year in order to 
demand any overpayments from the hospices. A cap determination consists 
in determining whether a hospice exceeds the inpatient cap and the 
aggregate hospice cap. Medicare hospice inpatient stays in excess of 
twenty percent of total Medicare hospice days are to be reimbursed at 
the routine homecare rate; the hospice must be repay any excess due to 
receiving payments at the higher inpatient rates for the excess 
inpatient days. Additionally, Medicare hospice payments are limited by 
an aggregate cap, which is computed by multiplying the ``cap amount'' 
by the number of beneficiaries. If the actual Medicare payments exceed 
the aggregate cap, the hospice must repay the difference. We are 
proposing to change our regulations as Sec.  418.308(c) to require 
hospices to

[[Page 26579]]

calculate their inpatient and aggregate caps five months after the cap 
year and remit any overpayment. This is similar to the process in Sec.  
413.24(f), which requires other provider types that file a Medicare 
cost report to file their cost reports five months after the end of 
their cost reporting year. The regulation at Sec.  413.24(f) also 
requires other provider types that file a Medicare cost report to remit 
any amount due the program at the time of the cost report filing. 
Although hospices file cost reports, the cap determination is not based 
on the cost report; the hospice caps serve to limit total Medicare 
payments similar to the way cost reports limit those payments for other 
provider types that file a Medicare cost report. Requiring hospices to 
complete a cap determination and remit any overpayment is consistent 
with what is currently required of all other provider types that file a 
Medicare cost report.
    We expect that it would take a hospice about 1.5 hours to complete 
its cap determination. All information needed to file the cap 
determination is available in the Provider Statistical and 
Reimbursement (PS&R) system. For all 3,727 hospices that bill Medicare, 
this would be (1.5 x 3,727) = 5,591 hours. We estimate that it would 
take one hour for an accountant to complete the cap determination 
worksheet provided by CMS for the cap year. At $40 per hour for an 
accountant, the cost would be (1 x $40) = $40 per hospice, and (3,727 x 
$40) = $149,080 for all hospices. We estimate that it would take a half 
hour for the administrator to review the worksheet prepared by the 
accountant. At $63 per hour for the administrator's time, the cost per 
hospice would be (0.5 x $63) = $31.50, and for all hospices would be 
(3,727 x $31.50) = $117,401. Therefore the total estimated cost per 
hospice would be ($40 + $31.50) = $71.50, and the total cost for all 
hospices would be (3,727 x $71.50) = $266,481.

C. CAHPS[supreg] Hospice Survey

    This section is associated with a new information collection 
request that is required to start in January 2015. The Hospice Survey 
data collected in 2015 is required for the FY 2017 HQRP quality 
reporting requirements along with the submission of the clinical 
structural measures for the same payment period. This is a new 
information collection request seeking approval to assess experiences 
of care with hospice reported by primary caregivers (i.e., bereaved 
family members of friends) of patients who died while receiving hospice 
care. This information data collection request are required to (1) 
assess experience of care at the respondent (caregiver) level, and (2) 
provide sufficient response to generate hospice experience reports.
    Here are the estimates for the approximate annual cost of the 
CAHPS[supreg] Survey (Table 11).

  Table 11--Assumptions and Estimates for CAHPS[supreg] Hospice Survey
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Approximate  of hospices         2,600.
 required to do the CAHPS[supreg] Survey
 annually.
Approximate Cost to each hospice          $3,300.
 annually for the CAHPS[supreg] Survey.
Approximate Cost for all CAHPS[supreg]    $8.5 million.
 Hospices annually for the CAHPS[supreg]
 Survey.
Respondent Cost burden..................  $3.8 million.
Approximate Total Cost of CAHPS[supreg]   $12.3 million.
 Survey annually.
------------------------------------------------------------------------

    In implementing the HQRP, we seek to collect measure information 
with as little burden to the providers as possible, but which reflects 
the full spectrum of quality performance. As such, we are moving 
forward toward the implementation of the CAHPS[supreg] Hospice Survey 
to provide data to the public about the patients' families' and 
friends' perspectives of care of their loved ones who passed way while 
in hospices.
    The CAHPS[supreg] Hospice Survey data will provide the peoples' 
voices to hospice care in the United States. Based on the criteria 
outlined in the Preamble, some hospices that are too new and very small 
will be exempt from the HQRP. We estimate that 2,600 hospices will 
qualify to participate in the survey. From CMS experiences with 
surveys, we estimate an annual cost of $3,300 per hospice to 
participate in the CAHPS[supreg] Hospice Survey. The cost of $3,300 
includes the preparation of a monthly sampling frame for their approved 
vendor, as well as estimated vendor costs to conduct the data 
collection. The estimated annual cost for all hospices to do the survey 
is $8.5 million. As part of the survey requirement, all participating 
hospices will contract with an approved hospice survey vendor, and each 
hospice will be required to submit a monthly list of deceased patients' 
caregivers contact information, for patients that passed away in the 
hospice care two months prior to the date of the list. This list 
(essentially the sampling frame) for most hospices can be generated 
from existing databases with minimal effort. For some small hospices, 
preparation of a monthly sample frame may require more time. However, 
data elements needed on the sample frame will be kept at a minimum to 
reduce the burden on the hospices.
    The survey contains 47 items and is estimated to require an average 
administration time of 10.4 minutes in English, and 12.5 minutes in 
Spanish, for an average response time of 10.505 minutes or 0.175 hours, 
assuming that 5 percent of the survey respondents complete the survey 
in Spanish. These burden estimates are based on CMS' experiences with 
surveys of similar lengths that were fielded with Medicare 
beneficiaries. We estimate that approximately six surveys can be done 
an hour, at an hourly wage of $22.77. With a total estimate of 550,000 
respondents, we estimate a total respondent burden at $3.8 million. 
This cost is not an additional cost to the hospices; the cost to the 
participating hospices is $8.5 million.
    Table 12 below provides a summary of the burden and cost estimates 
associated with both the hospice payment policy changes and the 
CAHPS[supreg] Hospice Survey requirements.

                               Table 12--Burden and Cost Estimates Associated With All Information Collection Requirements
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                      Hourly
                                                                                          Burden per     Total      labor cost  Total labor
              Regulation section(s)               OMB Control   Number of    Number of     response      annual         of        cost of     Total cost
                                                      No.      respondents   responses     (hours)       burden     reporting    reporting       ($)
                                                                                                        (hours)        ($)          ($)
--------------------------------------------------------------------------------------------------------------------------------------------------------
418.24(b).......................................    0938-1067        3,897        3,897     0.583333        2,273       $21.41      $83,435      $83,435
418.24(f).......................................    0938-1067        3,897        3,897     0.583333        2,273        21.41       83,435       83,435

[[Page 26580]]

 
418.308(c)......................................    0938-1067        3,727        3,727     1.500000        5,591        71.50      266,481      266,481
418.312.........................................    0938--New    1,100,000      550,000        0.175    95,029.55        22.77    2,163,823    2,163,823
                                                              ------------------------------------------------------------------------------------------
    Totals......................................  ...........    1,107,624      561,521  ...........      105,167  ...........    2,597,174    2,597,174
--------------------------------------------------------------------------------------------------------------------------------------------------------

There are no capital/maintenance costs associated with the information 
collection requirements contained in this rule; therefore, we have 
removed the associated column from Table 13.
    If you comment on these information collection and recordkeeping 
requirements, please submit your comments electronically as specified 
in the ADDRESSES section of this proposed rule.
    Please identify which Collection of Information requirement you are 
commenting on by indicating whether it is from subsection:
     A.1. Proposed Changes to the Election Statement (Sec.  
418.24);
     A.2. Proposed Changes to Inpatient and Aggregate Cap 
Determination Reporting (Sec.  418.308); or
     B. CAHPS[supreg] Hospice Survey (Sec.  418.312).

V. Regulatory Impact Analysis

A. Statement of Need

    This proposed rule follows Sec.  418.306(c) which requires 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). This proposed 
rule also updates payment rates for each of the categories of hospice 
care described in Sec.  418.302(b) for FY 2015as 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. In addition, the payment rate updates 
may be reduced by an additional 0.3 percentage point (although for FY 
2014 to FY 2019, the potential 0.3 percentage point reduction is 
subject to suspension under conditions specified in section 
1814(i)(1)(C)(v) of the Act). In 2010, the Congress amended section 
1814(i)(6) of the Act with section 3132(a) of the Affordable Care Act. 
The amendment authorized the Secretary to collect additional data and 
information determined appropriate to revise payments for hospice care 
and for other purposes. The data collected may be used to revise the 
methodology for determining the payment rates for routine home care and 
other services included in hospice care, no earlier than October 1, 
2013, as described in section 1814(i)(6)(D) of the Act. In accordance 
with section 1814(i)(6)(D) of the Act, this proposed rule provides an 
update on hospice payment reform analysis.
    This proposed rule also proposes that, in accordance with section 
1814(i)(2)(A) through (C), that providers complete their hospice 
aggregate cap determination within 5 months after the cap year ends and 
remit any overpayments at that time. Furthermore, in accordance with 
section 1860D-24 of the Act, drugs and biologicals that may be covered 
under the Medicare Part A per-diem payment to a hospice program are 
excluded from coverage under Part D. Section 1861(dd) of the Act states 
the hospice is responsible for covering all drugs or biologicals for 
the palliation and management of the terminal illness and related 
conditions. This proposed rule, in accordance with sections 1860D-24 
and 1861(dd) of the Act, solicits comments on a coordination of 
benefits process and appeals for Part D payment for drugs and 
biologicals while beneficiaries are under a hospice election. At this 
time, we are not making any proposals on the coordination of benefits 
process and appeals for Part D payment for drugs and biologicals while 
beneficiaries are under a hospice election.
    Finally, section 3004 of the Affordable Care Act amended the Act to 
authorize a quality reporting program for hospices and this rule 
discusses changes in the requirements for the hospice quality reporting 
program in accordance with section 1814(i)(5) of the Act.

B. Introduction

    We have examined the impacts of this rule as required by Executive 
Order 12866 on Regulatory Planning and Review (September 30, 1993), 
Executive Order 13563 on Improving Regulation and Regulatory Review 
(January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19, 
1980, Pub. L. 96-354), section 1102(b) of the Act, section 202 of the 
Unfunded Mandates Reform Act of 1995 (UMRA, March 22, 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 regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility. A regulatory impact analysis (RIA) must be prepared for 
major rules with economically significant effects ($100 million or more 
in any 1 year). This proposed rule has been designated as economically 
significant under section 3(f)(1) of Executive Order 12866 and thus a 
major rule under the Congressional Review Act. Accordingly, we have 
prepared a regulatory impact analysis (RIA), that to the best of our 
ability, presents the costs and benefits of the rulemaking. Finally, 
this rule has been reviewed by OMB.

C. Overall Impact

    The overall impact of this proposed rule is an estimated net 
increase in Federal payments to hospices of $230 million, or 1.3 
percent, for FY 2015. This estimated impact on hospices is a result of 
the proposed hospice payment update percentage for FY 2015 of 2.0 
percent and changes to the FY 2015 hospice wage index, including a 
reduction to the BNAF by an additional 15 percent, for a total BNAF 
reduction of 85 percent (10 percent in FY 2010, and 15 percent per year 
for FY 2011 through FY 2015). An 85 percent reduced BNAF is computed to 
be 0.009309 (or 0.9309 percent). The BNAF reduction is part of a 7-year 
BNAF

[[Page 26581]]

phase-out that was finalized in the FY 2010 Hospice Wage Index final 
rule (74 FR 39384), and is not a policy change.
1. Detailed Economic Analysis
    Column 4 of Table 13 shows the combined effects of the updated wage 
data (the 2013 pre-floor, pre-reclassified hospital wage index) and of 
the additional 15 percent reduction in the BNAF (for a total BNAF 
reduction of 85 percent), comparing estimated payments for FY 2014 to 
estimated payments for FY 2015. The FY 2014 payments used for 
comparison have a 70 percent reduced BNAF applied. We estimate that the 
total hospice payments for FY 2015 would decrease by 0.7 percent. This 
0.7 percent is the result of a 0.1 percent reduction due to the use of 
updated wage data ($-20 million), and a 0.6 percent reduction due to 
the additional 15 percent reduction in the BNAF ($-110 million). This 
estimate does not take into account the proposed hospice payment update 
percentage of 2.0 percent (+$360 million) for FY 2015.
    Column 5 of Table 13 shows the combined effects of the updated wage 
data (the 2013 pre-floor, pre-reclassified hospital wage index), the 
additional 15 percent reduction in the BNAF (for a total BNAF reduction 
of 85 percent), and the proposed hospice payment update percentage of 
2.0 percent. The proposed 2.0 percent hospice payment update percentage 
is based on a 2.7 percent estimated inpatient hospital market basket 
update for FY 2015 reduced by a 0.4 percentage point productivity 
adjustment and by 0.3 percentage point as mandated by the Affordable 
Care Act. The estimated effect of the 2.0 percent proposed hospice 
payment update percentage is an increase in payments to hospices of 
approximately $360 million. Taking into account the 2.0 percent 
proposed hospice payment update percentage (+$360 million), the use of 
updated wage data ($-20 million), and the additional 15 percent 
reduction in the BNAF ($-110 million), it is estimated that hospice 
payments would increase by $230 million in FY 2015 ($360 million - $20 
million - $110 million = $230 million) or 1.3 percent in FY 2015.
a. Effects on Hospices
    This section discusses the impact of the projected effects of the 
hospice wage index and the effects of a proposed 2.0 percent hospice 
payment update percentage for FY 2015. This proposed rule continues to 
use the CBSA-based pre-floor, pre-reclassified hospital wage index as a 
basis for the hospice wage index and continues to use the same policies 
for treatment of areas (rural and urban) without hospital wage data. 
The proposed FY 2015 hospice wage index is based upon the FY 2013 pre-
floor, pre-reclassified hospital wage index and the most complete 
hospice claims data available (FY 2013 hospice claims submitted as of 
December 31, 2013) with an additional 15 percent reduction in the BNAF 
(for a total BNAF reduction of 85 percent).
    For the purposes of our impacts, our baseline is estimated FY 2014 
payments with a 70 percent BNAF reduction, using the FY 2012 pre-floor, 
pre-reclassified hospital wage index. Our first comparison (column 3 of 
Table 13) compares our baseline to estimated FY 2015 payments (holding 
payment rates constant) using the updated wage data (FY 2013 pre-floor, 
pre-reclassified hospital wage index). Consequently, the estimated 
effects illustrated in column 3 of Table 13 show the distributional 
effects of the updated wage data only. The effects of using the updated 
wage data combined with the additional 15 percent reduction in the BNAF 
are illustrated in column 4 of Table 13.
    We have included a comparison of the combined effects of the 
additional 15 percent BNAF reduction, the updated wage data, and the 
proposed 2.0 percent hospice payment update percentage for FY 2015 
(Table 13, column 5). Presenting these data gives the hospice industry 
a more complete picture of the effects on their total revenue based on 
changes to the hospice wage index and the BNAF phase-out as discussed 
in this proposed rule and the proposed FY 2015 hospice payment update 
percentage. 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.

 Table 13--Anticipated Impact on Medicare Hospice Payments of Updating the Pre-Floor, Pre-Reclassified Hospital
   Wage Index Data, Reducing the Budget Neutrality Adjustment Factor (BNAF) by an Additional 15 Percent (for a
  Total BNAF Reduction of 85 Percent) and Applying a 2.0 Percent Hospice Payment Update Percentage, Compared to
                         the FY 2014 Hospice Wage Index With a 70 Percent BNAF Reduction
----------------------------------------------------------------------------------------------------------------
                                                                                                  Percent change
                                                                                  Percent change    in hospice
                                                                                    in hospice     payments due
                                                                                   payments due    to wage index
                                                     Number of    Percent change   to wage index      change,
                                     Number of     routine home     in hospice        change,      additional 15
                                     hospices      care days in    payments due    additional 15   reduction in
                                                     thousands    to FY2014 wage   reduction in       budget
                                                                   index change       budget        neutrality
                                                                                    neutrality    adjustment and
                                                                                    adjustment     market basket
                                                                                                      update
                                             (1)             (2)             (3)             (4)             (5)
----------------------------------------------------------------------------------------------------------------
ALL HOSPICES....................           3,702          87,456            -0.1            -0.7             1.3
URBAN HOSPICES..................           2,736          76,784            -0.1            -0.7             1.3
RURAL HOSPICES..................             966          10,672            -0.2            -0.5             1.5
BY REGION--URBAN:
    NEW ENGLAND.................             128           2,771             0.0            -0.7             1.3
    MIDDLE ATLANTIC.............             252           7,880             0.5            -0.1             1.9
    SOUTH ATLANTIC..............             388          16,778            -0.6            -1.2             0.8
    EAST NORTH CENTRAL..........             358          11,949            -0.1            -0.8             1.2
    EAST SOUTH CENTRAL..........             156           4,467            -0.3            -0.7             1.2

[[Page 26582]]

 
    WEST NORTH CENTRAL..........             209           4,775            -0.8            -1.4             0.5
    WEST SOUTH CENTRAL..........             545          10,402            -0.2            -0.8             1.2
    MOUNTAIN....................             276           6,596            -0.3            -0.9             1.1
    PACIFIC.....................             389           9,964             0.9             0.2             2.2
    OUTLYING....................              35           1,201             0.7             0.7             2.7
BY REGION--RURAL:
    NEW ENGLAND.................              24             236            -0.1            -0.7             1.3
    MIDDLE ATLANTIC.............              44             567             0.3            -0.3             1.7
    SOUTH ATLANTIC..............             136           2,308            -0.6            -1.0             1.0
    EAST NORTH CENTRAL..........             137           1,763            -0.7            -1.3             0.7
    EAST SOUTH CENTRAL..........             131           1,888             0.0             0.0             2.0
    WEST NORTH CENTRAL..........             180           1,190             0.4            -0.1             1.9
    WEST SOUTH CENTRAL..........             172           1,526            -0.3            -0.3             1.7
    MOUNTAIN....................              94             681             0.5             0.1             2.1
    PACIFIC.....................              47             500             0.8             0.1             2.1
    OUTLYING....................               1              13             0.0             0.0             2.0
BY SIZE/DAYS:
    0-3499 DAYS (small).........             631           1,113             0.1            -0.4             1.6
    3500-19,999 DAYS (medium)...            1795          18,345             0.0            -0.5             1.5
    20,000+ DAYS (large)........            1276          67,998            -0.1            -0.7             1.3
TYPE OF OWNERSHIP:
    VOLUNTARY...................            1042          29,537             0.0            -0.6             1.4
    PROPRIETARY.................            2142          48,415            -0.1            -0.7             1.3
    GOVERNMENT..................             518           9,505            -0.2            -0.7             1.3
HOSPICE BASE:
    FREESTANDING................            2734          72,437            -0.1            -0.7             1.3
    HOME HEALTH AGENCY..........             502           9,435             0.1            -0.5             1.5
    HOSPITAL....................             445           5,345             0.2            -0.4             1.6
    SKILLED NURSING FACILITY....              21             238             0.2            -0.4             1.6
----------------------------------------------------------------------------------------------------------------
Source: FY 2013 Hospice claims data from the Standard Analytic Files for CY 2012 (as of June 30, 2013) and CY
  2013 (as of December 31, 2013).
Note: The proposed 2.0 percent hospice payment update percentage for FY 2015 is based on an estimated 2.7
  percent inpatient hospital market basket update, reduced by a 0.4 percentage point productivity adjustment and
  by 0.3 percentage point. Starting with FY 2013 (and in subsequent fiscal years), the market basket percentage
  update under the hospice payment system as described in section 1814(i)(1)(C)(ii)(VII) or section
  1814(i)(1)(C)(iii) of the Act will be annually reduced by changes in economy-wide productivity as set out at
  section 1886(b)(3)(B)(xi)(II) of the Act. In FY 2013 through FY 2019, the market basket percentage update
  under the hospice payment system will be reduced by an additional 0.3 percentage point (although for FY 2014
  to FY 2019, the potential 0.3 percentage point reduction is subject to suspension under conditions set out
  under section 1814(i)(1)(C)(v) of the Act).
REGION KEY:
New England=Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont; Middle
  Atlantic=Pennsylvania, New Jersey, New York; South Atlantic=Delaware, District of Columbia, Florida, Georgia,
  Maryland, North Carolina, South Carolina, Virginia, West Virginia; East North Central=Illinois, Indiana,
  Michigan, Ohio, Wisconsin; East South Central=Alabama, Kentucky, Mississippi, Tennessee; West North
  Central=Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota; West South Central=Arkansas,
  Louisiana, Oklahoma, Texas; Mountain=Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah, Wyoming;
  Pacific=Alaska, California, Hawaii, Oregon, Washington; Outlying=Guam, Puerto Rico, Virgin Islands.

    Table 13 shows the results of our analysis. In column 1, we 
indicate the number of hospices included in our analysis as of December 
31, 2013, which had also filed claims in FY 2013. In column 2, we 
indicate the number of routine home care days that were included in our 
analysis, although the analysis was performed on all types of hospice 
care. Columns 3, 4, and 5 compare FY 2014 estimated payments with those 
estimated for FY 2015. The estimated FY 2014 payments incorporate a 
BNAF, which has been reduced by 70 percent. Column 3 shows the 
percentage change in estimated Medicare payments for FY 2015 due to the 
effects of the updated wage data only, compared with estimated FY 2014 
payments. The effect of the updated wage data can vary from region to 
region

[[Page 26583]]

depending on the fluctuations in the wage index values of the pre-
floor, pre-reclassified hospital wage index. Column 4 shows the 
percentage change in estimated hospice payments from FY 2014 to FY 2015 
due to the combined effects of using the updated wage data and reducing 
the BNAF by an additional 15 percent. Column 5 shows the percentage 
change in estimated hospice payments from FY 2014 to FY 2015 due to the 
combined effects of using updated wage data, an additional 15 percent 
BNAF reduction, and the proposed 2.0 percent hospice payment update 
percentage.
    The impact of changes in this proposed rule has been analyzed 
according to the type of hospice, geographic location, type of 
ownership, hospice base, and size. Table 13 categorizes hospices by 
various geographic and hospice characteristics. The first row of data 
displays the aggregate result of the impact for all Medicare-certified 
hospices. The second and third rows of the table categorize hospices 
according to their geographic location (urban and rural). Our analysis 
indicated that there are 2,736 hospices located in urban areas and 966 
hospices located in rural areas. The next two row groupings in the 
table indicate the number of hospices by census region, also broken 
down by urban and rural hospices. The next grouping shows the impact on 
hospices based on the size of the hospice's program. We determined that 
the majority of hospice payments are made at the routine home care 
rate. Therefore, we based the size of each individual hospice's program 
on the number of routine home care days provided in FY 2013. The next 
grouping shows the impact on hospices by type of ownership. The final 
grouping shows the impact on hospices defined by whether they are 
provider-based or freestanding.
    As indicated in column 1 of Table 13, there are 3,702 hospices 
included in the regulatory impact analysis. Approximately 42.1 percent 
of Medicare-certified hospices are identified as voluntary (non-profit) 
or government agencies; a majority (57.9 percent) are proprietary (for-
profit), with 1,560 designated as non-profit or government hospices, 
and 2,142 as proprietary. In addition, our analysis shows that most 
hospices are in urban areas and provide the vast majority of routine 
home care days, most hospices are medium-sized, and the vast majority 
of hospices are freestanding.
b. Hospice Size
    Under the Medicare hospice benefit, hospices can provide four 
different levels of care. The majority of the days provided by a 
hospice are routine home care (RHC) days, representing about 97 percent 
of the services provided by a hospice. Therefore, the number of RHC 
days can be used as a proxy for the size of the hospice, that is, the 
more days of care provided, the larger the hospice. We currently use 
three size designations to present the impact analyses. The three 
categories are--(1) small agencies having 0 to 3,499 RHC days; (2) 
medium agencies having 3,500 to 19,999 RHC days; and (3) large agencies 
having 20,000 or more RHC days. The FY 2015 updated wage data before 
any BNAF reduction are anticipated to decrease payments to large 
hospices by 0.1 percent, and increase 0.1 for small hospices. Medium 
hospices payment would stay stable (column 3). The updated wage data 
and the additional 15 percent BNAF reduction (for a total BNAF 
reduction of 85 percent) are anticipated to decrease estimated payments 
to small hospices by 0.4 percent, to medium hospices by 0.5 percent, 
and to large hospices by 0.7 percent (column 4). Finally, the updated 
wage data, the additional 15 percent BNAF reduction (for a total BNAF 
reduction of 85 percent), and the proposed 2.0 percent hospice payment 
update percentage are projected to increase estimated payments by 1.6 
percent for small hospices, by 1.5 percent for medium hospices, and by 
1.3 percent for large hospices (column 5).
c. Geographic Location
    Column 3 of Table 13 shows the estimated impact of using updated 
wage data without the BNAF reduction. Urban hospices are anticipated to 
experience a decrease of 0.1 percent and rural hospices are anticipated 
to experience a decrease of 0.2 percent in payments. Urban hospices can 
anticipate an increase in payments in Middle Atlantic of 0.5 percent, 
in the Pacific of 0.9 percent and in the Outlying area of 0.7 percent. 
Urban hospices can anticipate a decrease in payments ranging from 0.8 
percent in the West North Central region to 0.1 percent in the East 
North Central region. Urban hospices in New England are not anticipated 
to be affected by the updated wage data.
    Rural hospices are estimated to see a decrease in payments in four 
regions, ranging from 0.7 percent in the East North Central region to 
0.1 percent in the New England region. Rural hospices can anticipate an 
increase in payments in four regions ranging from 0.3 percent in the 
Middle Atlantic region to 0.8 percent in the Pacific region. There is 
no anticipated change in payments for Outlying regions due to the use 
of updated wage data.
    Column 4 shows the combined effect of the updated wage data and the 
additional 15 percent BNAF reduction on estimated payments, as compared 
to the FY 2014 estimated payments using a BNAF with a 70 percent 
reduction. Overall, hospices are anticipated to experience a 0.7 
percent decrease in payments, with urban hospices experiencing an 
estimated decrease of 0.7 percent and rural hospices experiencing an 
estimated decrease of 0.5 percent. All urban areas other than Outlying 
and Pacific are estimated to see decreases in payments, ranging from 
1.4 percent in the West North Central region to 0.7 percent in the New 
England and East South Central region. Rural hospices are estimated to 
experience a decrease in payments in six regions, ranging from 1.3 
percent in the East North Central region to 0.1 percent in the West 
North Central region. Payments in the Outlying and East South Central 
regions are anticipated to stay relatively stable.
    Column 5 shows the combined effects of the updated wage data, the 
additional 15 percent BNAF reduction, and the proposed 2.0 percent 
hospice payment update percentage on estimated FY 2015 payments as 
compared to estimated FY 2014 payments. Overall, hospices are 
anticipated to experience a 1.3 percent increase in payments, with 
urban hospices anticipated to experience a 1.3 percent increase in 
payments, and rural hospices anticipated to experience a 1.5 percent 
increase in payments. Urban hospices are anticipated to experience an 
increase in estimated payments in every region, ranging from 0.5 
percent in the West North Central region to 2.2 percent in Outlying 
area. Rural hospices in every region are estimated to see an increase 
in payments ranging from 0.7 percent in East North Central to 2.1 
percent in the Mountain and Pacific regions.
d. Type of Ownership
    Column 3 demonstrates the effect of the updated wage data on FY 
2015 estimated payments, versus FY 2014 estimated payments. We 
anticipate that using the updated wage data would decrease estimated 
payments to proprietary (for-profit) and Government hospices by 0.1 
percent and 0.2 percent, respectively. Voluntary (non-profit) hospices 
are expected to have no change in payments. Column 4 demonstrates the 
combined effects of the updated wage data and of the additional 15 
percent BNAF reduction. Estimated payments to voluntary (non-profit),

[[Page 26584]]

proprietary (for-profit) and government hospices are anticipated to 
decrease by 0.6 percent, 0.7 percent and 0.7 percent, respectively. 
Column 5 shows the combined effects of the updated wage data, the 
additional 15 percent BNAF reduction (for a total BNAF reduction of 85 
percent), and the proposed 2.0 percent hospice payment update 
percentage on estimated payments, comparing FY 2015 to FY 2014. 
Estimated FY 2015 payments are anticipated to increase for voluntary 
(non-profit) hospices by 1.4 percent, for proprietary (for-profit) 
hospices by 1.3 percent, and government hospices by 1.3 percent.
e. Hospice Base
    Column 3 demonstrates the effect of using the updated wage data, 
comparing estimated payments for FY 2015 to FY 2014. Estimated payments 
are anticipated to decrease for freestanding hospices by 0.1 percent. 
Estimated payments are anticipated to increase for Home Health Agency, 
hospital and Skilled Nursing Facility based hospices by 0.1 percent, 
0.2 percent, and by 0.2 percent, respectively. Column 4 shows the 
combined effects of the updated wage data and reducing the BNAF by an 
additional 15 percent, comparing estimated payments for FY 2015 to FY 
2014. All hospice facilities are anticipated to experience decrease in 
payments ranging from 0.7 percent for freestanding hospices to 0.4 
percent for hospital and skilled nursing facility based hospices. 
Column 5 shows the combined effects of the updated wage data, the 
additional 15 percent BNAF reduction, and the proposed 2.0 percent 
hospice payment update percentage on estimated payments, comparing FY 
2015 to FY 2014. Estimated payments are anticipated to increase for all 
hospices, ranging from 1.3 percent for freestanding hospices to 1.6 
percent for hospital and skilled nursing facility based hospices.
f. Effects on Other Providers
    This proposed rule would only affect Medicare hospices, and 
therefore has no effect on other provider types. We note that our 
suggested approaches with respect to Part D coordination with hospice 
payments may ultimately have an effect on Part D spending, if proposed 
and adopted.
g. Effects on the Medicare and Medicaid Programs
    This proposed rule only affects Medicare hospices, and therefore 
has no effect on Medicaid programs. As described previously, estimated 
Medicare payments to hospices in FY 2015 are anticipated to decrease by 
$20 million due to the update in the wage index data, and to decrease 
by $110 million due to the additional 15 percent reduction in the BNAF 
(for a total 85 percent reduction in the BNAF). However, the proposed 
hospice payment update percentage of 2.0 percent is anticipated to 
increase Medicare payments by $360 million. Therefore, the total effect 
on Medicare hospice payments is estimated to be a $230 million increase 
(1.3 percent).
h. Alternatives Considered
    In continuing the reduction to the BNAF by an additional 15 
percent, for a total BNAF reduction of 85 percent (10 percent in FY 
2010, and 15 percent per year for FY 2011 through FY 2015), and 
implementing the hospice payment update percentage and the updated wage 
index, the aggregate impact will be a net increase of $230 million in 
payments to hospices. In the proposed rule for FY 2015, we did not 
consider discontinuing the additional 15 percent reduction to the BNAF 
as the 7-year phase-out of the BNAF was finalized in the FY 2010 
Hospice Wage Index final rule (74 FR 39384). However, if we were to 
discontinue the reduction to the BNAF by an additional 15 percent, 
Medicare would pay an estimated $110 million more to hospices in FY 
2015.
    Since the hospice payment update percentage is determined based on 
statutory requirements, we did not consider not updating hospice 
payment rates by the payment update percentage. The proposed 2.0 
percent hospice payment update percentage for FY 2015 is based on a 
proposed 2.7 percent inpatient hospital market basket update for FY 
2015, reduced by a 0.4 percentage point productivity adjustment and by 
an additional 0.3 percentage point. Payment rates for FYs since 2002 
have been updated according to section 1814(i)(1)(C)(ii)(VII) of the 
Act, which states that the update to the payment rates for subsequent 
FYs must be the market basket percentage for that FY. The Act requires 
us to use the inpatient hospital market basket to determine the hospice 
payment rate update. In addition, section 3401(g) of the Affordable 
Care Act mandates that, starting with FY 2013 (and in subsequent FYs), 
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. In addition, section 3401(g) of the 
Affordable Care Act also mandates that in FY 2013 through FY 2019, the 
hospice payment update percentage will be reduced by an additional 0.3 
percentage point (although for FY 2014 to FY 2019, the potential 0.3 
percentage point reduction is subject to suspension under conditions 
specified in section 1814(i)(1)(C)(v) of the Act).
    We also considered proposing a waiver of the consequences for not 
filing the NOE within 3 calendar days after the effective date of 
election, to account for exceptional circumstances. However, since 
hospices are to operate 24 hours a day, 7 days a week, and should have 
back-up systems in place so that they can care for their patients 
without interruption, we did not believe that this would be necessary.
    To ensure the attending physician of record is properly documented 
in the patient's medical record, we proposed, in section III.F, to 
amend the regulations at Sec.  418.24(b)(1) and require the election 
statement to include the patient's choice of attending physician. We 
considered limiting the number of times that a beneficiary can change 
his/her attending to once per election period (similar to the current 
regulations at Sec.  418.30(a) that only allows a beneficiary to change 
a hospice provider once during an election period). However, we first 
want to conduct additional analyses of hospice Part A billing for 
physician services provided by nurse practitioners and Part B attending 
physician billing to determine how frequently beneficiaries change 
attending physicians.
i. Accounting Statement
    As required by OMB Circular A-4 (available at http://www.whitehouse.gov/omb/circulars/a004/a-4.pdf), in Table 14 below, we 
have prepared an accounting statement showing the classification of the 
expenditures associated with this proposed rule. Table 14 provides our 
best estimate of the increase in Medicare payments under the hospice 
benefit as a result of the changes presented in this proposed rule for 
3,702 hospices in our impact analysis file constructed using FY 2013 
claims as of December 31, 2013. Table 14 also includes the costs 
associated with (1) a hospice accountant to complete the cap 
determination worksheet, and for a hospice administrator to review the 
final worksheet, for a total annual burden of $266,481 as proposed in 
section III.D; and (2) the cost to hospices to participate in the 
CAHPS[supreg] survey, including the preparation of a monthly sampling 
frame for their approved vendor, as well as estimated survey vendor 
costs, for an estimated total annual cost of $8.5 million to all 
hospices in the survey. Table 14 below does not reflect a one-time cost 
of modifying the current hospice election

[[Page 26585]]

statement to record the patient's choice of attending physician 
($83,435) and the one-time cost of creating a new hospice form for 
changing the attending physician ($83,435), for a total one-time burden 
of $166,870 as proposed in section III.E.

 Table 14--Accounting Statement: Classification of Estimated Transfers,
                         From FY 2014 to FY 2015
                             [In $millions]
------------------------------------------------------------------------
                 Category                             Transfers
------------------------------------------------------------------------
           FY 2015 Hospice Wage Index and Payment Rate Update
------------------------------------------------------------------------
Annualized Monetized Transfers............  $230.
From Whom to Whom?                          Federal Government to
                                             Hospices.
------------------------------------------------------------------------
                 Category                   Costs
------------------------------------------------------------------------
Annualized Monetized Costs for Hospice      $8.77.
 Providers\1\
------------------------------------------------------------------------
\1\ Costs associated with hospice cap reporting and with the
  CAHPS[supreg] Hospice Survey.

j. Conclusion
    In conclusion, the overall effect of this proposed rule is an 
estimated $230 million increase in Medicare payments to hospices due to 
the wage index changes (including the additional 15 percent reduction 
in the BNAF) and the proposed hospice payment update percentage of 2.0 
percent. Also, starting in FY 2015, hospices are estimated to incur 
annual burden costs of $266,481 for a hospice accountant to complete 
the cap determination worksheet, and for a hospice administrator to 
review the final worksheet. Finally, starting in FY 2015 hospices are 
estimated to incur annual burden costs of $8.5 million for 
participation in the CAHPS[supreg] hospice survey.
2. Regulatory Flexibility Act Analysis
    The RFA requires agencies to analyze options for regulatory relief 
of small businesses if a rule has a significant impact on a substantial 
number of small entities. For purposes of the RFA, we estimate that 
almost all hospices are small entities as that term is used in the RFA. 
The great majority of hospitals and most other health care providers 
and suppliers are small entities by meeting the Small Business 
Administration (SBA) definition of a small business (in the service 
sector, having revenues of less than $7.0 million to $35.5 million in 
any 1 year), or being nonprofit organizations. While the SBA does not 
define a size threshold in terms of annual revenues for hospices, it 
does define one for home health agencies ($14 million; see http://www.sba.gov/sites/default/files/files/Size_Standards_Table(1).pdf). 
For the purposes of this proposed rule, because the hospice benefit is 
a home-based benefit, we are applying the SBA definition of ``small'' 
for home health agencies to hospices; we will use this definition of 
``small'' in determining if this proposed rule has a significant impact 
on a substantial number of small entities (for example, hospices). We 
estimate that 95 percent of hospices have Medicare revenues below $14 
million or are nonprofit organizations and therefore are considered 
small entities.
    HHS's practice in interpreting the RFA is to consider effects 
economically ``significant'' only if they reach a threshold of 3 to 5 
percent or more of total revenue or total costs. As noted above, the 
combined effect of the updated wage data, the additional 15 percent 
BNAF reduction, and the proposed FY 2015 hospice payment update 
percentage of 2.0 percent results in an increase in estimated hospice 
payments of 1.3 percent for FY 2015. For small and medium hospices (as 
defined by routine home care days), the estimated effects on revenue 
when accounting for the updated wage data, the additional 15 percent 
BNAF reduction, and the proposed FY 2015 hospice payment update 
percentage reflect increases in payments of 1.6 percent and 1.5 
percent, respectively. Therefore, the Secretary has determined that 
this proposed rule will not create a significant economic impact on a 
substantial number of small entities.
    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 a metropolitan 
statistical area and has fewer than 100 beds. This proposed rule only 
affects hospices. Therefore, the Secretary has determined that this 
proposed rule would not have a significant impact on the operations of 
a substantial number of small rural hospitals.
3. Unfunded Mandates Reform Act Analysis
    Section 202 of the Unfunded Mandates Reform Act of 1995 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 2014, that 
threshold is approximately $141 million. This proposed rule is not 
anticipated to have an effect on State, local, or tribal governments, 
in the aggregate, or on the private sector of $141 million or more.

VI. Federalism Analysis and Regulations Text

    Executive Order 13132 on Federalism (August 4, 1999) 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 
proposed rule under the threshold criteria of Executive Order 13132, 
Federalism, and have determined that it will not have substantial 
direct effects on the rights, roles, and responsibilities of States, 
local or tribal governments.

List of Subjects

42 CFR Part 405

    Administrative practice and procedure, Health facilities, Medicare, 
Reporting and recordkeeping requirements.

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 
and Medicaid Services proposes to amend 42 CFR chapter IV as set forth 
below:

PART 405--FEDERAL HEALTH INSURANCE FOR THE AGED AND DISABLED

0
1. The authority citation for part 405, subpart C continues to read:

    Authority: Secs. 1102, 1815, 1833, 1842, 1862, 1866, 1870, 1871, 
1879 and 1892 of the Social Security Act (42 U.S.C. 1302, 1395g, 
1395l, 1395u, 1395y, 1395cc, 1395gg, 1395hh, 1395pp and 1395ccc) and 
31 U.S.C. 3711.

0
2. Section 405.371 is amended by revising paragraph (c)(1) and adding 
paragraph (e) to read as follows:


Sec.  405.371  Suspension, offset, and recoupment of Medicare payments 
to providers and suppliers of services.

* * * * *
    (c) * * *
    (1) Except as provided in paragraphs (d) and (e) of this section, 
CMS or the Medicare contractor suspends payments only after it has 
complied with the

[[Page 26586]]

procedural requirements set forth at Sec.  405.372.
* * * * *
    (e) Suspension of payment in the case of unfiled hospice cap 
determination reports.
    (1) If a provider has failed to timely file an acceptable hospice 
cap determination report, payment to the provider is immediately 
suspended in whole or in part until a cap determination report is filed 
and determined by the Medicare contractor to be acceptable.
    (2) In the case of an unfiled hospice cap determination report, the 
provisions of Sec.  405.372 do not apply. (See Sec.  405.372(a)(2) 
concerning failure to furnish other information.)

PART 418--HOSPICE CARE

0
3. The authority citation for part 418 is revised to read as follows:

    Authority:  Secs. 1102, 1812(a)(5), 1812(d), 1813(a)(4), 
1814(a)(7), 1814(i), and 1861(dd) of the Social Security Act (42 
U.S.C. 1302 and 1395hh).


Sec.  418.3  [Amended]

0
4. Section 418.3 is amended by removing the definition of ``social 
worker.''
0
5. Section 418.24 is amended by--
0
A. Revising paragraph (a).
0
B. Revising paragraph (b)(1).
0
C. Adding a new paragraph (f).
    The addition and revisions read as follows:


Sec.  418.24  Election of hospice care.

    (a) Filing an election statement. (1) An individual who meets the 
eligibility requirement of Sec.  418.20 may file an election statement 
with a particular hospice. If the individual is physically or mentally 
incapacitated, his or her representative (as defined in Sec.  418.3) 
may file the election statement.
    (2) The hospice chosen by the eligible individual (or his or her 
representative) must file the Notice of Election with its Medicare 
claims processing contractor within 3 calendar days after the effective 
date of the election statement.
    (3) Consequences of failure to submit a timely Notice of Election. 
When a hospice does not file the required Notice of Election for its 
Medicare patients within 3 calendar days after the effective date of 
election, Medicare will not cover and pay for days of hospice care from 
the effective date of election to the date of filing of the NOE. These 
days are a provider liability, and the provider may not bill the 
beneficiary for them.
    (b) * * *
    (1) 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.
* * * * *
    (f) Changing the attending physician. To change the designated 
attending physician, the individual (or representative) must file a 
signed statement with the hospice that states that he or she is 
changing his or her attending physician.
    (1) The statement must identify the new attending physician, and 
include the date the change is to be effective and the date signed by 
the individual (or representative).
    (2) The individual (or representative) must acknowledge that the 
change in the attending physician is due to his or her choice.
    (3) The effective date of the change in attending physician cannot 
be prior to the date the statement is signed.
0
6. Section 418.26 is amended by adding a new paragraph (e) to read as 
follows:


Sec.  418.26  Discharge from hospice care.

* * * * *
    (e) Filing a Notice of Termination of Election. When the hospice 
election is ended due to discharge, the hospice must file a notice of 
termination/revocation of election with its Medicare claims processing 
contractor within 3 calendar days after the effective date of the 
discharge, unless it has already filed a final claim for that 
beneficiary.
0
7. Section 418.28 is amended by adding a new paragraph (d) to read as 
follows:


Sec.  418.28  Revoking the election of hospice care.

* * * * *
    (d) Filing a Notice of Revocation of Election. When the hospice 
election is ended due to revocation, the hospice must file a notice of 
termination/revocation of election with its Medicare claims processing 
contractor within 3 calendar days after the effective date of the 
revocation, unless it has already filed a final claim for that 
beneficiary.
0
8. Section 418.306 is amended by adding paragraph (b)(6) to read as 
follows:


Sec.  418.306  Determination of payment rates.

* * * * *
    (b) * * *
    (6) For FY 2014 and subsequent fiscal years, in the case of a 
Medicare-certified hospice that does not submit hospice quality data, 
as specified by the Secretary, the payment rates are equal to the rates 
for the previous fiscal year increased by the applicable market basket 
percentage increase, minus 2 percentage points. Any reduction of the 
percentage change will apply only to the fiscal year involved and will 
not be taken into account in computing the payment amounts for a 
subsequent fiscal year.
* * * * *
0
9. Section 418.308 is amended by revising paragraph (c) to read as 
follows:


Sec.  418.308  Limitation on the amount of hospice payments.

* * * * *
    (c) The hospice must file its cap determination notice with its 
Medicare contractor no later than 5 months after the end of the cap 
year (that is, by March 31st) and remit any overpayment due at that 
time. The Medicare contractor will notify the hospice of the final 
determination of program reimbursement in accordance with procedures 
similar to those described in Sec.  405.1803 of this chapter. If a 
provider fails to file its self-determined cap determination with its 
Medicare contractor within 150 days after the cap year, payments to the 
hospice would be suspended in whole or in part, until a self-determined 
cap determination is filed with the Medicare contractor, in accordance 
withSec.  405.371(e).
* * * * *
0
10. Subpart G is amended by adding a new Sec.  418.312 to read as 
follows:


Sec.  418.312  Data Submission Requirements Under the Hospice Quality 
Reporting Program.

    General rule. Except as provided in paragraph (f) of this section, 
Medicare-certified hospices must submit to CMS data on measures 
selected under section 1814(i)(5)(C)of the Act in a form and manner, 
and at a time, specified by the Secretary.
    (a) Submission of Hospice Quality Reporting Program data. Hospices 
are required to complete and submit an admission Hospice Item Set (HIS) 
and a discharge HIS for each patient admission to hospice, regardless 
of payer or patient age. The HIS is a standardized set of items 
intended to capture patient-level data.
    (b) A hospice that receives notice of its CMS certification number 
before November 1 of the calendar year before the fiscal year for which 
a payment determination will be made must submit data for the calendar 
year.
    (c) Medicare-certified hospices must contract with CMS-approved 
vendors to collect the CAHPS[supreg] Hospice Survey data on their 
behalf and submit the data to the Hospice CAHPS[supreg] Data Center.

[[Page 26587]]

    (d) If the hospice's total, annual, unique, survey-eligible, 
deceased patient count for the prior calendar year is less than 50 
patients, the hospice is eligible to be exempt from the CAHPS[supreg] 
Hospice Survey reporting requirements in the current calendar year. In 
order to qualify for this exemption the hospice must submit to CMS its 
total, annual, unique, survey-eligible, deceased patient count for the 
prior calendar year.
    (e) Vendors that want to become CMS-approved CAHPS[supreg] Hospice 
Survey vendors must meet the minimum business requirements. Survey 
vendors must have been in business for a minimum of 4 years, have 
conducted surveys in the approved survey mode for a minimum of 3 years, 
and have conducted surveys of individual patients for a minimum of 2 
years. For Hospice CAHPS[supreg], a ``survey of individual patients'' 
is defined as the collection of data from at least 600 individual 
patients selected by statistical sampling methods, and the data 
collected are used for statistical purposes. Vendors may not use home-
based or virtual interviewers to conduct the CAHPS[supreg] Hospice 
Survey, nor may they conduct any survey administration processes (e.g. 
mailings) from a residence.
    (f) No organization, firm, or business that owns, operates, or 
provides staffing for a hospice is permitted to administer its own 
Hospice CAHPS[supreg] survey or administer the survey on behalf of any 
other hospice in the capacity as a Hospice CAHPS[supreg] survey vendor. 
Such organizations will not be approved by CMS as CAHPS[supreg] Hospice 
Survey vendors.
    (g) Reconsiderations and appeals of Hospice Quality Reporting 
Program decisions.
    (1) A hospice may request reconsideration of a decision by CMS that 
the hospice has not met the requirements of the Hospice Quality 
Reporting Program for a particular reporting period. A hospice must 
submit a reconsideration request to CMS no later than 30 days from the 
date identified on the annual payment update notification provided to 
the hospice.
    (2) Reconsideration request submission requirements are available 
on the CMS Hospice Quality Reporting Web site on CMS.gov.
    (3) A hospice that is dissatisfied with a decision made by CMS on 
its reconsideration request may file an appeal with the Provider 
Reimbursement Review Board under part 405, subpart R of this chapter.

    Dated: April 18, 2014.
Marilyn Tavenner,
Administrator, Centers for Medicare & Medicaid Services.
    Approved: April 22, 2014.
Kathleen Sebelius,
Secretary, Department of Health and Human Services.
[FR Doc. 2014-10505 Filed 5-2-14; 4:15 pm]
BILLING CODE 4120-01-P