[Federal Register: August 6, 2009 (Volume 74, Number 150)]
[Rules and Regulations]
[Page 39383-39433]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06au09-10]
[[Page 39383]]
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Part II
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; Hospice Wage Index for Fiscal Year 2010; Final Rule
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 405 and 418
[CMS-1420-F]
RIN 0938-AP45
Medicare Program; Hospice Wage Index for Fiscal Year 2010
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Final rule.
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SUMMARY: This final rule will set forth the hospice wage index for
fiscal year 2010. The final rule adopts a MedPAC recommendation
regarding a process for certification and recertification of terminal
illness. In addition, this final rule will also revise the phase-out of
the wage index budget neutrality adjustment factor (BNAF), with a 10
percent BNAF reduction in FY 2010. The BNAF phase-out will continue
with successive 15 percent reductions from FY 2011 through FY 2016.
DATES: Effective Date: These regulations are effective on October 1,
2009.
FOR FURTHER INFORMATION CONTACT: Randy Throndset, (410) 786-0131.
Katie Lucas, (410) 786-7723.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Background
A. General
1. Hospice Care
2. Medicare Payment for Hospice Care
B. Hospice Wage Index
1. Raw Wage Index Values (Pre-floor, Pre-reclassified Hospital
Wage Index)
2. Changes to Core-Based Statistical Area (CBSA) Designations
3. Definition of Urban and Rural Areas
4. Areas Without Hospital Wage Data
5. CBSA Nomenclature Changes
6. Wage Data for Multi-campus Hospitals
7. Hospice Payment Rates
II. Provisions of the Proposed Rule and Analysis of and Responses to
Public Comments
A. FY 2010 Hospice Wage Index
1. Background
2. Areas without Hospital Wage Data
3. FY 2010 Wage Index with Reduced Budget Neutrality Adjustment
Factor (BNAF)
4. Effects of Phasing out the BNAF
B. Change to the Physician Certification and Recertification
Process, Sec. 418.22
C. Update of Covered Services, Sec. 418.202(f)
D. Clarification of Payment Procedures for Hospice Care, Sec.
418.302
E. Clarification of Intermediary Determination and Notice of
Amount of Program Reimbursement, Sec. 405.1803
F. Technical and Clarifying Changes
III. Comments on Other Policy Issues
A. Recertification Visits, Sec. 418.22
B. Hospice Aggregate Calculation
C. Hospice Payment Reform
IV. Update on Additional Hospice Data Collection
V. Provisions of the Final Regulations
VI. Collection of Information Requirements
VII. Regulatory Impact Analysis
I. Background
A. General
1. 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. 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 professional and other caregivers, with the goal of making
the individual as physically and emotionally comfortable as possible.
Counseling services and inpatient respite services are available to the
family of the hospice patient. Hospice programs consider both the
patient and the family as a unit of care. Section 1861(dd) of the
Social Security Act (the Act) provides for coverage of hospice care for
terminally ill Medicare beneficiaries who elect to receive care from a
participating hospice. Section 1814(i) of the Act provides payment for
Medicare participating hospices.
2. 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 at 42 CFR part 418, establish eligibility
requirements, payment standards and procedures, define covered
services, and delineate the conditions a hospice must meet to be
approved for participation in the Medicare program. Part 418, subpart G
provides for payment in one of four prospectively-determined rate
categories (routine home care, continuous home care, inpatient respite
care, and general inpatient care) to hospices based on each day a
qualified Medicare beneficiary is under a hospice election.
B. Hospice Wage Index
Our regulations at Sec. 418.306(c) require that the wage index for
all labor markets in which Medicare-participating hospices do business
be established using the most current hospital wage data available,
including any changes by Office of Management and Budget (OMB) to the
Metropolitan Statistical Areas (MSAs) definitions. OMB revised the MSA
definitions beginning in 2003 with new designations called the Core
Based Statistical Areas (CBSAs). For the purposes of the hospice
benefit, the term ``MSA-based'' refers to wage index values and
designations based on the previous MSA designations before 2003.
Conversely, the term ``CBSA-based'' refers to wage index values and
designations based on the OMB revised MSA designations in 2003, which
now include CBSAs. In the August 11, 2004 IPPS final rule (69 FR
49026), the revised labor market area definitions were adopted at Sec.
412.64(b), which were effective October 1, 2004 for acute care
hospitals. We also revised the labor market areas for hospices using
the new OMB standards that included CBSAs. In the FY 2006 hospice wage
index final rule (70 FR 45130), we finalized 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, FY 2008, and FY 2009, we used
wage index values based on CBSA designations.
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. The original hospice wage index was based on the 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, a committee was formulated to negotiate a wage
index methodology that could be accepted by the industry and the
government. This committee, functioning under a process established by
the Negotiated Rulemaking Act of 1990, was comprised of national
hospice associations; rural, urban, large and small hospices; multi-
site hospices; consumer groups; and a government representative. On
April 13, 1995, the Hospice Wage Index Negotiated Rulemaking Committee
signed an agreement for the methodology to be used for updating the
hospice wage index.
In the August 8, 1997 Federal Register (62 FR 42860), we published
a final rule promulgating a new methodology for calculating the hospice
wage index based on the recommendations of the negotiated rulemaking
Committee, using a hospital wage index rather than continuing to use
the Bureau of Labor Statistics (BLS) data. The committee statement was
[[Page 39385]]
included in the appendix of that final rule (62 FR 42883). The
reduction in overall Medicare payments if a new wage index were adopted
was noted in the November 29, 1995 notice transmitting the
recommendations of the negotiated rulemaking committee (60 FR 61264).
Therefore, the Committee also decided that for each year in updating
the hospice wage index, aggregate Medicare payments to hospices would
remain budget neutral to payments as if the 1983 wage index had been
used.
As decided upon by the Committee, budget neutrality means that, in
a given year, estimated aggregate payments for Medicare hospice
services using the updated hospice wage index values will equal
estimated payments that would have been made for these services if the
1983 hospice wage index values had remained in effect. Although
payments to individual hospice programs may change each year, the total
payments each year to hospices would not be affected by using the
updated hospice wage index because total payments would be budget
neutral as if the 1983 wage index had been used. To implement this
policy, a BNAF would be computed and applied annually to the pre-floor,
pre-reclassified hospital wage index, when deriving the hospice wage
index.
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 this final rule, that means
estimating payments for FY 2010 using FY 2008 hospice claims data, and
applying the FY 2010 hospice payment rates (updating the FY 2009 rates
by the FY 2010 hospital market basket update factor). The FY 2010
hospice wage index values are then applied to the labor portion of the
payment rates only. The procedure is repeated using the same claims
data and payment rates, but using the 1983 BLS-based wage index instead
of the updated 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 hospice wage index is updated annually. Our most recent update,
published in the Federal Register (73 FR 46464) on August 8, 2008, set
forth updates to the hospice wage index for FY 2009. That update also
finalized a provision for a 3-year phase-out of the BNAF, which was
applied to the wage index values. As discussed in detail in section
I.B.1 below, the update was later revised with the February 17, 2009
passage of the American Recovery and Reinvestment Act (ARRA), which
eliminated the BNAF phase-out for FY 2009.
1. Raw Wage Index Values (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 BNAF or application of the
hospice floor calculation to compute the hospice wage index used to
determine payments to hospices.
Pre-floor, pre-reclassified hospital wage index values of 0.8 or
greater are adjusted by the BNAF. Pre-floor, pre-reclassified hospital
wage index values below 0.8 are adjusted by the greater of: (1) The
hospice BNAF; or (2) the hospice 15 percent floor adjustment, which is
a 15 percent increase subject to a maximum wage index value of 0.8. For
example, if County A has a pre-floor, pre-reclassified hospital wage
index (raw wage index) value of 0.4000, we would perform the following
calculations using the BNAF (which for this example is 0.060988; we
added 1 to simplify the calculation) and the hospice floor to determine
County A's hospice wage index:
Pre-floor, pre-reclassified hospital wage index value below 0.8
multiplied by the BNAF: (0.4000 x 1.060988 = 0.4244).
Pre-floor, pre-reclassified hospital wage index value below 0.8
multiplied by the hospice 15 percent floor adjustment: (0.4000 x 1.15 =
0.4600).
Based on these calculations, County A's hospice wage index would be
0.4600.
The BNAF has been computed and applied annually to the labor
portion of the hospice payment. Currently, the labor portion of the
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.
The August 8, 2008 FY 2009 Hospice Wage Index final rule (73 FR
46464) promulgated a phase-out of the hospice BNAF over 3 years,
beginning with a 25 percent reduction in the BNAF in FY 2009, an
additional 50 percent reduction for a total of 75 percent in FY 2010,
and complete phase-out of the BNAF in FY 2011. However, subsequent to
the publication of the FY 2009 rule, the American Recovery and
Reinvestment Act of 2009 (P.L. 111-5) (ARRA) eliminated the BNAF
reduction for FY 2009. Specifically, division B, section 4301(a) of
ARRA prohibited the Secretary from beginning the phasing-out or
eliminating of the BNAF in the Medicare hospice wage index before
October 1, 2009, and instructed the Secretary to recompute and apply
the final Medicare hospice wage index for FY 2009 as if there had been
no reduction in the BNAF. We did so in an administrative instruction to
our intermediaries, which was issued as Change Request (CR)
6418 (Transmittal 1701, dated 3/13/2009). CR 6418 is
available on the Web at http://www.cms.hhs.gov/Hospice/Transmittals/
itemdetail.asp?filterType=none&filterByDID=0&sortByDID=1&sortOrder=desce
nding&itemID=CMS1222448&intNumPerPage=10.
While ARRA eliminated the BNAF phase-out for FY 2009, it neither
changed the 75 percent reduction in the BNAF for FY 2010, nor
prohibited the elimination of the BNAF in FY 2011, as set out in the
August 8, 2008 Hospice Wage Index final rule. The provision in the ARRA
that eliminated the FY 2009 BNAF reduction provided the hospice
industry additional time to prepare for the FY 2010 75 percent BNAF
reduction and the FY 2011 BNAF elimination. Therefore, in accordance
with the August 8, 2008 FY 2009 Hospice Wage Index final rule, the
rationale presented in that final rule, and consistent with section
4301(a) of ARRA, in our proposed rule we said we planned to reduce the
BNAF by 75 percent in FY 2010 and ultimately eliminate the BNAF in
2011. We accepted comments on the BNAF reductions.
2. Changes to Core Based Statistical Area (CBSA) Designations
The annual update to the hospice wage index is published in the
Federal Register and is based on the most current available hospital
wage data, as well as any changes by OMB to the definitions of MSAs,
which now include CBSA designations. The August 4, 2005 hospice wage
index final rule (70 FR 45130) set forth the adoption of the changes
discussed in the OMB Bulletin No. 03-04 (June 6, 2003),
[[Page 39386]]
which announced revised definitions for Micropolitan Statistical Areas
and the creation of MSAs and Combined Statistical Areas. In adopting
the OMB CBSA geographic designations, we provided for a 1-year
transition with a blended hospice wage index for all hospices for FY
2006. Subsequent fiscal years have used the full CBSA-based hospice
wage index.
3. Definition of Rural and Urban Areas
Each hospice's labor market is determined based on definitions of
MSAs issued by OMB. In general, an urban area is defined as an MSA or
New England County Metropolitan Area (NECMA) as defined by OMB. Under
Sec. 412.64(b)(1)(ii)(C), a rural area is defined as any area outside
of the urban area. The urban and rural area geographic classifications
are defined in Sec. 412.64(b)(1)(ii)(A) through (C), and have been
used for the Medicare hospice benefit since implementation.
In the August 22, 2007 FY 2008 Inpatient Prospective Payment System
(IPPS) final rule with comment period (72 FR 47130), Sec.
412.64(b)(1)(ii)(B) was revised such that the two ``New England deemed
Counties'' that had been considered rural under the OMB definitions
(Litchfield County, CT and Merrimack County, NH) but deemed urban, were
no longer considered urban effective for discharges occurring on or
after October 1, 2007. Therefore, these two counties are considered
rural in accordance with Sec. 412.64(b)(1)(ii)(C). The recommendations
to adjust payments to reflect local differences in wages are codified
in Sec. 418.306(c) of our regulations; however there had been no
explicit reference to Sec. 412.64 in Sec. 418.306(c) before the
promulgation of the August 8, 2008 FY 2009 Hospice Wage Index final
rule. Although Sec. 412.64 had not been explicitly referred to, the
hospice program has used the definition of urban in Sec.
412.64(b)(1)(ii)(A) and (b)(1)(ii)(B), and the definition of rural as
any area outside of an urban area in Sec. 412.64(b)(1)(ii)(C). With
the promulgation of the August 8, 2008 FY 2009 Wage Index final rule,
we now explicitly refer to those provisions in Sec. 412.64 to make it
absolutely clear how we define urban and rural for purposes of the
hospice wage index. Litchfield County, CT and Merrimack County, NH are
considered rural areas for hospital IPPS purposes in accordance with
Sec. 412.64. Effective October 1, 2008, Litchfield County, CT was no
longer considered part of urban CBSA 25540 (Hartford-West Hartford-East
Hartford, CT), and Merrimack County, NH was no longer considered part
of urban CBSA 31700 (Manchester-Nashua, NH). Rather, these counties are
now considered to be rural areas within their respective States under
the hospice payment system. When the pre-floor, pre-reclassified
hospital wage index was adopted for use in deriving the hospice wage
index, it was decided not to take into account IPPS geographic
reclassifications. This policy of following OMB designations of rural
or urban, rather than considering some Counties to be ``deemed'' urban,
is consistent with our policy of not taking into account IPPS
geographic reclassifications in determining payments under the hospice
wage index.
4. Areas Without Hospital Wage Data
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 on which to base the calculation of
the hospice wage index. Beginning in FY 2006, we adopted a policy to
use the FY 2005 pre-floor, pre-reclassified hospital wage index value
for rural areas when no hospital wage data were available. 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. Consequently, in subsequent fiscal
years, we applied the average pre-floor, pre-reclassified hospital wage
index data from all urban areas in that state, to urban areas without a
hospital. The only affected CBSA is 25980, Hinesville-Fort Stewart,
Georgia.
Under the CBSA labor market areas, there are no hospitals in rural
locations in Massachusetts and Puerto Rico. Since there was no rural
proxy for more recent rural data within those areas, in the FY 2006
hospice wage index proposed rule (70 FR 22394, 22398), we proposed
applying the FY 2005 pre-floor, pre-reclassified hospital wage index
value to rural areas where no hospital wage data were available. In the
FY 2006 final rule and in the FY 2007 update notice, we applied the FY
2005 pre-floor, pre-reclassified hospital wage index data to areas
lacking hospital wage data in rural Massachusetts and rural Puerto
Rico.
In the FY 2008 hospice wage index final rule (72 FR 50217), we
considered alternatives to our methodology to update the pre-floor,
pre-reclassified hospital wage index for rural areas without hospital
wage data. We indicated that we believed that the best imputed proxy
for rural areas would--(1) use pre-floor, pre-reclassified hospital
data; (2) use the most local data available to impute a rural pre-
floor, pre-reclassified hospital wage index; (3) be easy to evaluate;
and (4) be easy to update from year-to-year.
Therefore, in FY 2008, and again in FY 2009, 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.
This approach does not use rural data; however, the approach uses pre-
floor, pre-reclassified hospital wage data, is easy to evaluate, is
easy to update from year-to-year, and uses the most local data
available. In the FY 2008 hospice wage index final rule (72 FR 50217),
we noted that in determining an imputed rural pre-floor, pre-
reclassified hospital wage index, we interpret the term ``contiguous''
to mean sharing a border. For example, in the case of Massachusetts,
the entire rural area consists of Dukes and Nantucket Counties. We
determined that the borders of Dukes and Nantucket Counties are
contiguous with Barnstable and Bristol Counties. Under the adopted
methodology, the pre-floor, pre-reclassified hospital wage index values
for the Counties of Barnstable (CBSA 12700, Barnstable Town, MA) and
Bristol (CBSA 39300, Providence-New Bedford-Fall River, RI-MA) would be
averaged resulting in an imputed pre-floor, pre-reclassified rural
hospital wage index for FY 2008. We noted in the FY 2008 final hospice
wage index rule that while we believe that this policy could be readily
applied to other rural areas that lack hospital wage data (possibly due
to hospitals converting to a different provider type, such as a
Critical Access Hospital, that does not submit the appropriate wage
data), if a similar situation arose in the future, we would re-examine
this policy.
We also noted that we do not believe that this policy would be
appropriate for Puerto Rico, as there are sufficient economic
differences between hospitals in the United States and those in Puerto
Rico, including the payment of hospitals in Puerto Rico using blended
Federal/Commonwealth-specific rates. Therefore, we believe that a
separate and distinct policy for Puerto Rico is necessary. Any
alternative methodology for imputing a pre-floor, pre-reclassified
hospital wage index for rural Puerto Rico would need to take into
account the economic differences between hospitals in the United States
and those in Puerto Rico. Our policy of imputing a rural pre-floor,
pre-reclassified
[[Page 39387]]
hospital wage index based on the pre-floor, pre-reclassified hospital
wage index(es) of CBSAs contiguous to the rural area in question does
not recognize the unique circumstances of Puerto Rico. While we have
not yet 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 and FY
2009, we used the most recent pre-floor, pre-reclassified hospital wage
index available for Puerto Rico, which is 0.4047.
5. CBSA Nomenclature Changes
The Office of Management and Budget (OMB) regularly publishes a
bulletin that updates the titles of certain CBSAs. In the FY 2008
hospice wage index final rule (72 FR 50218) we noted that the FY 2008
rule and all subsequent hospice wage index rules and notices would
incorporate CBSA changes from the most recent OMB bulletins. The OMB
bulletins may be accessed at http://www.whitehouse.gov/omb/bulletins/
index.html.
6. Wage Data From Multi-Campus Hospitals
Historically, under the Medicare hospice benefit, we have
established hospice wage index values calculated from the pre-floor,
pre-reclassified hospital wage data (also called the IPPS wage index)
without taking into account geographic reclassification under sections
1886(d)(8) and (d)(10) of the Act. The wage adjustment established
under the Medicare hospice benefit is based on the location where
services are furnished without any reclassification.
For FY 2010, the data collected from cost reports submitted by
hospitals for cost reporting periods beginning during FY 2005 were used
to compute the 2009 pre-floor, pre-reclassified hospital wage index
data without taking into account geographic reclassification under
sections 1886(d)(8) and (d)(10) of the Act. This 2009 pre-floor, pre-
reclassified hospital wage index was used to derive the applicable wage
index values for the hospice wage index because these data (FY 2005)
are the most recent complete cost data.
Beginning in FY 2008, the IPPS apportioned the wage data for multi-
campus hospitals located in different labor market areas (CBSAs) to
each CBSA where the campuses are located (see the FY 2008 IPPS final
rule with comment period (72 FR 47317 through 47320)). We are
continuing to use the pre-floor, pre-reclassified hospital wage data as
a basis to determine the hospice wage index values for FY 2010 because
hospitals and hospices both compete in the same labor markets, and
therefore, experience similar wage-related costs. We note that the use
of pre-floor, pre-reclassified hospital (IPPS) wage data, used to
derive the FY 2010 hospice wage index values, reflects the application
of our policy to use that data to establish the hospice wage index. The
FY 2010 hospice wage index values presented in this notice 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). As finalized in the August 8, 2008 FY 2009 Hospice Wage
Index final rule, for the FY 2009 Medicare hospice benefit, the hospice
wage index was computed from IPPS wage data (submitted by hospitals for
cost reporting periods beginning in FY 2004 (as was the FY 2008 IPPS
wage index)), which allocated salaries and hours to the campuses of two
multi-campus hospitals with campuses that are located in different
labor areas, one in Massachusetts and another in Illinois. Thus, the FY
2009 hospice wage index values for the following CBSAs were affected by
this policy: Boston-Quincy, MA (CBSA 14484), Providence-New Bedford-
Falls River, RI-MA (CBSA 39300), Chicago-Naperville-Joliet, IL (CBSA
16974), and Lake County-Kenosha County, IL-WI (CBSA 29404).
7. Hospice Payment Rates
Section 4441(a) of the Balanced Budget Act of 1997 (BBA) amended
section 1814(i)(1)(C)(ii) 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 percentage increase in the hospital market basket
index, minus 1 percentage point. However, neither the BBA nor
subsequent legislation specified alteration to the hospital market
basket adjustment to be used to compute hospice payments for fiscal
years beyond 2002. 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 fiscal years will
be the market basket percentage for the fiscal year. It has been
longstanding practice to use the inpatient hospital market basket as a
proxy for a hospice market basket. In the FY 2010 Inpatient Prospective
Payment System/Rate Year (RY) 2010 Long Term Care Hospital Prospective
Payment System proposed rule (74 FR 24154), we proposed to rebase and
revise the inpatient hospital operating market basket.
Historically, the rate update has been published through a separate
administrative instruction issued annually, in the summer, to provide
adequate time to implement system change requirements. Hospices
determine their payments by applying the hospice wage index in this
final rule to the labor portion of the published hospice rates.
II. Provisions of the Proposed Rule and Analysis of and Responses to
Public Comments
On April 24, 2009 we published a proposed rule in the Federal
Register (74 FR 18912) that set forth the proposed hospice wage index
for FY 2010. We received 729 timely items of correspondence. In
general, those who commented strongly opposed the policy to reduce the
BNAF adjustment in hospice and were supportive of modifications to the
hospice certification and recertification of the terminal illness
process. An in-depth summary of the public comments and our responses
to those comments are set forth under the appropriate headings.
A. FY 2010 Hospice Wage Index
1. Background
The hospice final rule published in the Federal Register on
December 16, 1983 (48 FR 56008) provided for adjustment to hospice
payment rates to reflect differences in area wage levels. We apply the
appropriate hospice wage index value to the labor portion of the
hospice payment rates based on the geographic area where hospice care
was furnished. As noted earlier, each hospice's labor market area is
based on definitions of MSAs issued by the OMB. For this final rule, we
will use the pre-floor, pre-reclassified hospital wage index, based
solely on the CBSA designations, as the basis for determining wage
index values for the FY 2010 hospice wage index.
As noted above, our hospice payment rules utilize the wage
adjustment factors used by the Secretary for purposes of section
1886(d)(3)(E) of the Act for hospital wage adjustments. We will again
use the pre-floor and pre-reclassified hospital wage index data as the
basis to determine the hospice wage index, which is then used to adjust
the labor portion of the hospice payment rates based on the geographic
area where the beneficiary receives hospice care. 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
[[Page 39388]]
adjustment to the labor portion of the costs. For the FY 2010 update to
the hospice wage index, we will continue to use the most recent pre-
floor, pre-reclassified hospital wage index available at the time of
publication.
Comment: A commenter noted that the hospital-based wage index has
undergone multiple changes over the past 10 years and that providers
were not invited to provide comment for CMS to consider when
formalizing these changes. This commenter stated that CMS previously
cited the BNAF as a mitigating factor that offset some of the adverse
impacts on hospice of changes in the hospital wage index. A few
commenters wrote that the existence of exceptions to the hospital wage
index system in the form of reclassifications demonstrates the
unfairness and inadequacy of the hospital-based wage index system, and
one suggested it puts hospices at a disadvantage in attracting and
retaining employees. One commenter suggested that limits be established
on the allowable annual changes in index values from one year to the
next to achieve wage index stability. Several commenters mentioned that
a 2007 MedPAC report on the hospital wage index suggested that CMS
repeal the existing hospital wage index and develop a new one. The
commenter stated that MedPAC recommended that CMS evaluate the use of
the revised wage index in other Medicare payment systems, which
includes hospice.
Response: The pre-floor, pre-reclassified hospital wage index was
adopted in 1998 as the wage index from which the hospice wage index is
derived. The Negotiated Rulemaking Committee considered several wage
index options: (1) Continuing with Bureau of Labor Statistics data; (2)
using updated hospital wage data; (3) using hospice-specific data; and
(4) using data from the physician payment system. The Committee
determined that the pre-floor, pre-reclassified hospital wage index was
the best option for hospice. The pre-floor, pre-reclassified hospital
wage index is updated annually, and reflects the wages of highly
skilled hospital workers.
We agree that the hospital-based wage index has undergone some
changes in the past 10 years. Those changes were implemented through
rulemaking, which provided the public an opportunity to provide
comments. Therefore, we disagree that hospice providers have not had an
opportunity to comment on hospital wage index changes.
The reclassification provision provided at section 1886(d)(10) of
the Act is specific to hospitals. We believe the use of the most recent
available pre-floor and pre-reclassified hospital wage index results in
the most appropriate adjustment to the labor portion of hospice costs
as required in 42 CFR 418.306(c). Additionally, use of the pre-floor,
pre-reclassified hospital wage data avoids further reductions in
certain rural statewide wage index values that result from
reclassification. We also note that the wage index adjustment is based
on the geographic area where the beneficiary is located, and not where
the hospice is located.
We continue to believe that the pre-floor, pre-reclassified
hospital wage index, which is updated yearly and is used by many other
CMS payments systems including home health, appropriately accounts for
geographic variances in labor costs for hospices. Home health agencies
and hospices are Medicare's only home-based benefits, and home health
agencies and hospices share labor pools. Home health agencies
experience the same wage index fluctuations, but do not receive an
adjustment such as the BNAF. We believe that in the interest of parity,
both home-based benefits should use a hospital-based wage index without
a BNAF applied. In the future, when looking into reforming the hospice
payment system, we will consider wage index alternatives, to include
those recommended by MedPAC.
2. Areas Without Hospital Wage Data
In adopting the CBSA designations, we identified some geographic
areas where there are no hospitals, and no hospital wage data on which
to base the calculation of the hospice wage index. These areas are
described in section I.B.4 of this final rule. Beginning in FY 2006, we
adopted a policy that, for urban labor markets without an urban
hospital from which a pre-floor, pre-reclassified hospital wage index
can be derived, all of the urban CBSA pre-floor, pre-reclassified
hospital wage index values within the State would be used to calculate
a statewide urban average pre-floor, pre-reclassified hospital wage
index to use as a reasonable proxy for these areas. Currently, the only
CBSA that would be affected by this policy is CBSA 25980, Hinesville,
Georgia. We will to continue this policy for FY 2010.
Currently, the only rural areas where there are no hospitals from
which to calculate a pre-floor, pre-reclassified hospital wage index
are Massachusetts and Puerto Rico. In August 2007 (72 FR 50217) we
adopted a methodology for imputing rural pre-floor, pre-reclassified
hospital wage index values for areas where no hospital wage data are
available as an acceptable proxy; that methodology is also described in
section I.B.4 of this final rule. In FY 2010, Dukes and Nantucket
Counties are the only areas in rural Massachusetts which are affected.
We are again applying this methodology for imputing a rural pre-floor,
pre-reclassified hospital wage index for those rural areas without
rural hospital wage data in FY 2010.
However, as noted in section I.B.4 of this final rule, we do not
believe that this policy is appropriate for Puerto Rico. For FY 2010,
we are continuing to use the most recent pre-floor, pre-reclassified
hospital wage index value available for Puerto Rico, which is 0.4047.
This pre-floor, pre-reclassified hospital wage index value will then be
adjusted upward by the hospice 15 percent floor adjustment in the
computing of the FY 2010 hospice wage index.
We received no comments on this section of the proposed rule.
3. FY 2010 Wage Index With a Reduced Budget Neutrality Adjustment
Factor (BNAF)
The hospice wage index set forth in this final rule will be
effective October 1, 2009 through September 30, 2010. We are not
incorporating any modifications to the hospice wage index methodology.
In accordance with our regulations at 42 CFR 418.306(c) and the
agreement signed with other members of the Hospice Wage Index
Negotiated Rulemaking Committee, we are using the most current hospital
data available. For this final rule, the FY 2009 hospital wage index
was the most current hospital wage data available for calculating the
FY 2010 hospice wage index values. We used the FY 2009 pre-floor, pre-
reclassified hospital wage index data for this calculation.
As noted above, for FY 2010, the hospice wage index values will be
based solely on the adoption of the CBSA-based labor market definitions
and the hospital wage index. We continue to use the most recent pre-
floor and pre-reclassified hospital wage index data available (based on
FY 2005 hospital cost report wage data). A detailed description of the
methodology used to compute the hospice wage index is contained in the
September 4, 1996 hospice wage index proposed rule (61 FR 46579), the
August 8, 1997 hospice wage index final rule (62 FR 42860), and the
August 8, 2008 FY 2009 Hospice Wage Index final rule (73 FR 46464).
The August 8, 2008 FY 2009 Hospice Wage Index final rule finalized
a provision to phase out the BNAF over 3 years, starting with a 25
percent reduction in the BNAF in FY 2009, an
[[Page 39389]]
additional 50 percent reduction for a total of a 75 percent reduction
in FY 2010, and complete phase out in FY 2011. However, on February 17,
2009, the President signed ARRA (Pub. L. 111-5); Section 4301(a) of
ARRA eliminated the BNAF phase-out for FY 2009. Therefore, in an
administrative instruction (Change Request 6418, Transmittal 1701,
dated 3/13/2009) entitled ``Revision of the Hospice Wage Index and the
Hospice Pricer for FY 2009,'' we instructed CMS contractors to use the
revised FY 2009 hospice Pricer, which included a revised hospice wage
index to reflect a full (unreduced) BNAF rather than the 25 percent
reduced BNAF promulgated in the August 8, 2008 FY 2009 Hospice Wage
Index final rule.
While ARRA eliminated the BNAF phase-out for FY 2009, it did not
change the 75 percent reduction in the BNAF for FY 2010, or the
complete phase-out of the BNAF in FY 2011 that was previously
promulgated in the August 8, 2008 FY 2009 Hospice Wage Index final
rule.
The history of the BNAF and a detailed discussion of the events
which led to its application to the hospice wage index were included in
the August 8, 2008 FY 2009 Hospice Wage Index final rule. We proposed
and finalized the BNAF reduction in that final rule based on the
following rationale.
First, the original purpose of the BNAF was to prevent reductions
in payments to the majority of hospices whose wage index was based on
the original hospice wage index, which was artificially high due to
flaws in the 1981 BLS data. Additionally, the BNAF was adopted to
ensure that aggregate payments made to the hospice industry would not
be decreased or increased as a result of the wage index change. While
incorporating a BNAF into hospice wage indices could be rationalized in
1997 as a way to smooth the transition from an old wage index to a new
one, since hospices have had plenty of time to adjust to the then new
wage index, it is difficult to justify maintaining in perpetuity a BNAF
which was in part compensating for artificially high data to begin
with.
Second, the new wage index adopted in 1997 resulted in increases in
wage index values for hospices in certain areas. The BNAF applies to
hospices in all areas. Thus, hospices in areas that would have had
increases without the BNAF received an artificial boost in the wage
index for the past 11 years. We believe that continuation of this
excess payment can no longer be justified.
Third, an adjustment factor that is based on 24-year-old wage index
values is not in keeping with our goal of using a hospice wage index
that is as accurate, reliable, and equitable as possible in accounting
for geographic variation in wages. We believe that those goals can be
better achieved by using the pre-floor, pre-reclassified hospital wage
index, without the outdated BNAF, which would be consistent with other
providers. For instance, Medicare payments to home health agencies,
that utilize a similar labor mix, are adjusted by the pre-floor, pre-
reclassified hospital wage index without any budget neutrality
adjustment. We believe that using the pre-floor, pre-reclassified
hospital wage index provides a good measure of area wage differences
for both these home-based reimbursement systems.
Fourth, in the 13 years since concerns about the impact of
switching from an old to a new wage index were voiced, the hospice
industry and hospice payments have grown substantially. Hospice
expenditures in 2006 were $9.2 billion, compared to about $2.2 billion
in 1998. Aggregate hospice expenditures are increasing at a rate of
about $1 billion per year. MedPAC reports that expenditures are
expected to grow at a rate of 9 percent per year through 2015,
outpacing the growth rate of projected expenditures for hospitals,
skilled nursing facilities, and physician and home health services. We
believe that this growth in Medicare spending for hospice indicates
that the original rationale of the BNAF, to cushion the impact of using
the new wage index, is no longer justified. These spending growth
figures also indicate that any negative financial impact to the hospice
industry as a result of eliminating the BNAF is no longer present, and
thus the need for a transitional adjustment has passed.
Fifth, 13 years ago the industry also voiced concerns about the
negative financial impact on individual hospices that could occur by
adopting a new wage index. In August 1994 there were 1,602 hospices;
currently there are 3,328 hospices. Clearly any negative financial
impact from adopting a new wage index in 1997 is no longer present, or
we would not have seen this growth in the industry. The number of
Medicare-certified hospices has continued to increase, with a 26
percent increase in the number of hospice providers from 2001 to 2005.
This ongoing growth in the industry also suggests that phasing out the
BNAF would not have a negative impact on access to care. Therefore, for
these reasons, we believe that continuing to apply a BNAF for the
purpose of mitigating any adverse financial impact on hospices or
negative impact on access to care is no longer necessary. In the April
24, 2009 proposed rule, we stated that we intended to continue the
phase-out of the BNAF with a 75 percent reduction in FY 2010 and
complete elimination in FY 2011.
Comment: All but one of those who commented on the BNAF were
opposed to the BNAF phase-out. One commenter felt that any reductions
in payment, such as the BNAF, need to be in ``sync'' with overall
health care reform as it relates to hospice. Others felt that any
phase-out should be delayed to see if or how the BNAF fits into future
hospice payment reform. Another commenter noted inconsistent levels of
per-capita health care spending across states, particularly at the end
of life.
One commenter believed that CMS proposed to reduce the BNAF by 75
percent in the FY 2010 hospice wage index proposed rule, and believes
that this proposal is contrary to the intent of Congress. This
commenter believed that the provision in ARRA which eliminated the FY
2009 25 percent BNAF reduction, showed that Congress intended CMS to
delay the first year of the three-year BNAF phase-out to begin the 25
percent reduction of the BNAF in FY 2010 instead of FY 2009. While this
commenter strongly recommended that CMS withdraw its proposal to phase
out the BNAF, he also suggested that at a minimum we should spread the
phase out over a 3-year period, starting in FY 2010 with a 25 percent
reduction. A number of commenters also suggested different phase-out
options from the current policy that we described in the proposed rule.
One suggested a 7-year phase-out, with a 10 percent reduction in FY
2010, and an additional 15 percent reduction over each of the following
6 fiscal years. Another suggested a 4-year phase-out, at 25 percent per
year, starting in FY 2010. Another suggested that we phase out the BNAF
over 2 years, at 50 percent per year, starting in FY 2010. Another
commenter suggested an even phase-out over 3 years starting in FY 2010.
Several commenters noted that a more gradual phase-out would minimize
the impact on hospices given the economic downturn, and the increased
costs that hospices would incur in complying with the new CoPs, which
were published on June 5, 2008 (73 FR 32088) and effective December 2,
2008; and with the new data collection requirements.
Response: The FY 2010 hospice wage index proposed rule did not re-
propose the 75 percent BNAF reduction, though we did accept comments on
the BNAF reductions. Instead, we promulgated the
[[Page 39390]]
BNAF reductions in the FY 2009 hospice wage index final rule. At that
time, we announced a 25 percent reduction in FY 2009, an additional 50
percent reduction for a total of 75 percent in FY 2010, and complete
elimination of the BNAF in FY 2011. ARRA eliminated the BNAF reduction
in FY 2009, but the bill's language did not address the reduction in FY
2010 and the elimination of the BNAF in FY 2011 that were finalized in
the FY 2009 hospice wage index final rule. Though the BNAF phase-out
was finalized in the FY 2009 rule, we accepted comments on it in this
rule. While we explained in the FY 2010 hospice wage index proposed
rule that ARRA's delay allowed additional time to prepare for the BNAF
reduction, ARRA's delay was not our rationale for the 75 percent
reduction. Our rationale for the BNAF phase-out was presented in the FY
2009 hospice wage index proposed and final rules and was discussed
above.
We appreciate the commenters' concerns about how the BNAF phase-out
would fit into the larger scenario of health care reform. Health care
reform is a major agenda item for the Administration, and may affect
the Medicare hospice benefit. We are not clear what the commenter is
referring to regarding inconsistent health care spending by state, and
believe this comment is outside the scope of our rule. While we cannot
speak to the various health care reform measures under discussion in
Congress, we continue to believe that the BNAF is an outdated
adjustment, for the reasons previously mentioned in this section.
However, we concur with the commenter that we should evaluate the
impact of the BNAF reduction in the context of how this type of
adjustment will fit into our plans for future hospice payment reform.
A more gradual phase-out provides additional opportunity to
evaluate the impact of the BNAF reduction in the context of how this
type of adjustment will fit into hospice payment reform. As we describe
in section IV of this final rule, we are moving forward with our plans
to collect additional data from hospices to advance our goals for
increasing the accuracy of hospice payments. This longer BNAF phase-out
allows us the opportunity to more thoroughly assess the impact of
iterative BNAF reductions while we are performing our hospice payment
reform analyses. As such, we believe that a more gradual phase-out
would be appropriate at this time. Therefore, in response to public
comments recommending this course of action, we are finalizing a phase-
out of the BNAF over 7 years, with a 10 percent reduction in FY 2010,
and additional 15 percent reduction for a total of 25 percent in FY
2011, an additional 15 percent reduction for a total 40 percent in FY
2012, an additional 15 percent reduction for a total of 55 percent in
FY 2013, an additional 15 percent reduction for a total of 70 percent
in FY 2014, an additional 15 percent reduction for a total of 85
percent in FY 2015, and an additional 15 percent reduction for complete
elimination in FY 2016. We will continue to evaluate the impact of the
BNAF. To move reform forward, we look to the industry for their
participation (for example, in providing technical assistance and/or
offering to serve as pilot or demonstration sites in testing a new
payment system). We reserve the right to revisit the BNAF phase-out
should plans for hospice payment reform be delayed, or for other
reasons the Secretary deems appropriate.
Comment: One commenter wrote in support of the BNAF reduction,
citing possibly fraudulent behaviors by a specific hospice, and citing
what the commenter believed to be inappropriate spending by that
hospice, including trips to Las Vegas and dinners at five-star
restaurants.
Response: We appreciate the support for the BNAF phase-out, but
note that we proposed and finalized the phase-out based on the
rationale presented earlier in this section. We cannot comment on the
discretionary spending patterns of individual hospices. We have
forwarded the comment to our Program Integrity group for review and
possible action.
Comment: A commenter believes that the BNAF phase-out was advanced
to meet short-term budget goals, without collecting and analyzing data
to determine if substantive changes to the hospice payment system were
needed, and how any proposed changes would affect hospice programs and
beneficiaries. He added that MedPAC had made recommendations related to
reform of the hospice payment system, and that MedPAC had suggested
that those changes be undertaken in a budget neutral fashion, with a
transition period, and that the changes would require Congressional
action. The commenter wrote that MedPAC had pointed out the lack of
sufficient data to accurately model payment changes, and suggested that
those changes could not be implemented before 2013 at the earliest. The
commenter felt that the payment reduction resulting from the BNAF
reduction would disproportionately impact some segments of the hospice
community more than others and that CMS did not have the data to
determine whether improvements in the rate structure could be made, and
what such changes should look like. The commenter felt that
implementing an across-the-board cut is inappropriate and unfounded.
Some asked that no reduction in the BNAF occur until a full review of
the data related to the cost of providing services is completed.
Finally, one commenter suggested we do a full study of the utility and
efficacy of hospice.
Response: MedPAC's discussion of payment reform refers to an
evaluation of and possible change to the entire hospice payment system.
We agree with MedPAC's assessment that we do not have sufficient data
yet to reform the entire hospice payment system, which would require
legislative authority to do, and we are in the process of collecting
the data that MedPAC has recommended. The BNAF phase-out was not
included in MedPAC's discussion on reform of the entire hospice payment
system. We proposed and finalized the policy to phase out the BNAF to
remove an outdated adjustment from the wage index, to increase accuracy
of payments, and to bring about parity with the home health wage index,
since both home health agencies and hospices compete in the same labor
market.
The rationale for the BNAF phase-out in the FY 2009 proposed and
final rules is set out in section II.A.3 of this final rule. Discussion
of the regulatory and economic impacts of the BNAF phase-out were set
out in the FY 2009 proposed and final rules, in the FY 2010 proposed
rule, and are in this final rule.
Comment: Several commenters wrote that CMS should use negotiated
rulemaking to collaborate fully with hospice stakeholders before
reducing or eliminating the BNAF. Some commenters noted that there is
no requirement to phase out the BNAF, and that the negotiated
rulemaking was not intended to be temporary or transitional. Several
suggested that the BNAF should not be phased out without going through
a negotiated rulemaking process. One commenter noted that CMS never
suggested that the BNAF had ever been calculated inappropriately or
that it was not achieving its intended goal of keeping total hospice
payments under the new wage index the same as they would have been
under the old BLS wage index. This commenter wrote that since the BNAF
is achieving its intended purpose, CMS has no legal requirement or
policy reason to eliminate it. This commenter also wrote that CMS
insists on budget neutrality in all of its payment systems, and
therefore
[[Page 39391]]
the public expected the BNAF implemented by the Committee to continue.
Other commenters stated that while CMS asserted that the purpose of
the BNAF was to smooth the transition from an outdated BLS-based wage
index to the hospital-based wage index in 1998, the language in several
payment rules suggested that the BNAF was not a time limited adjustment
and was to be applied annually, during and after the transition to the
hospital-based wage index. A few commenters noted that hospices have
adjusted to the BNAF as an integral part of the wage index. A commenter
said CMS' rationale for phasing out the BNAF suggested that eliminating
the BNAF would restore fairness to the hospice wage index, when in
reality no wage index methodology is perfect.
Response: As we stated in the FY 2009 proposed and final rules, we
continue to believe that the hospice wage index negotiating committee
intended the BNAF to mitigate the negative financial impact of the 1998
hospice wage index change. We continue to believe that because of the
growth in the industry and the amount of time that has passed since the
wage index change, the rationale for maintaining the BNAF is no longer
justified and it is time for a policy change. In addition, from a
parity perspective, we believe that a pre-floor, pre-reclassified
hospital wage index is appropriate for use in adjusting rates for
geographic variances in both of our home-based benefits, hospice and
home health. Nothing in our data analysis has shown us that hospice
labor costs differ substantially from home health labor costs.
Therefore, we believe we cannot justify the 6 percent increase in the
hospice wage index and the corresponding approximate 4 percent increase
in aggregate payments as a result of the BNAF. We believe that the BNAF
was originally put into place protect beneficiary access to hospice
care. We believe the Negotiated Rulemaking Committee was primarily
concerned about those areas of the country that would see their
payments dramatically reduced as a result of the wage index change. The
Committee was concerned that the payment reductions might affect the
viability of hospices in these areas, thus ultimately risking access to
care. The Committee also intended that aggregate payments to hospices
not be reduced as a result of the wage index change. While we agree
with the commenter that our 1998 regulation describes that the BNAF be
applied during and after the transition to the new wage index, we also
note that that same regulation describes that in the event that we
decide to change this methodology, we would propose to do so in
rulemaking. In the beginning of this section of the FY 2010 hospice
wage index final rule, we cited our rationale from the FY 2009 hospice
wage index final rule as to why we believe a policy change was
warranted. However, as noted previously, we are phasing out the BNAF
more gradually, over a 7 year period. We are reducing the BNAF in FY
2010 by 10 percent, and then reducing it further by an additional 15
percent for each of the next 6 years, so that it is fully phased-out by
FY 2016. We will evaluate the impact of the BNAF reduction in the
context of how this type of adjustment will fit into our plans for
future hospice payment reform. As such, we believe that a more gradual
phase-out is appropriate at this time.
As previously noted, the decision to transition from the BLS-based
wage index to the hospital-based wage index was a long process. In the
October 14, 1994 proposed rule (59 FR 52130), we noted that both CMS
(formally HCFA) and industry projections indicated that most hospices
would have their wage indices lowered if a new wage index were based on
unadjusted hospital data. The preamble of the final rule stated that,
``During the discussions preliminary to developing a new wage index,
the industry voiced concerns over the adverse financial impact of a new
wage index on individual hospices and a possible reduction in overall
Medicare hospice care payments'' (59 FR 52130). There were also
concerns that access to hospice care could be affected. We noted that
as a result of the impact of the lower payments to hospices in the
aggregate, the new wage index would have to be at least budget neutral
(59 FR 52131). The Committee Statement of April 13, 1995, which was
published in a notice on November 29, 1995 (60 FR 61265), said that we
would apply a factor to achieve budget neutrality, and noted that
budget neutrality meant that aggregate Medicare hospice payments using
the new hospital-based wage index would have to equal estimated
payments that would have been made under the original hospice wage
index.
We disagree with the commenter who wrote that Medicare insists on
budget neutrality in all of its payment systems, and therefore we
should keep the BNAF. The commenter is correct that in many (but not
all) of our other payment systems, we apply a budget neutrality
adjustment each year when a wage index change occurs to ensure that
aggregate payments made using the new wage index are the same as
payments made using the prior year's wage index. A wage index is
essentially an index of wage weights which are relative to 1,
reflecting relative geographic differences in labor costs. Because the
hospital wage data are updated each year, and these are the usual data
upon which our wage indices are built, the year-to-year change in total
Medicare benefit payments is minor. The yearly update enables the
relative weight values of the wage indices to reflect current
geographic wage fluctuations. The hospice budget neutrality adjustment
factor differs from these budget neutrality adjustments in a
significant way. Because the original, 1981 Bureau of Labor Statistics
based hospice wage index wasn't updated since it was first created, the
relative weights of the wage index values became inaccurate over the
years, ultimately resulting in inaccurate hospice payments in most
areas of the country, and erroneously low payments in other areas of
the country. By the mid-1990s the weights were so distorted and
inaccurate, that we were paying hospices more in the aggregate than we
would have paid had a wage index which was reflective of more current
geographic wage variances in labor costs been used, such as the yearly
updated hospital wage index. This inaccuracy resulted in an unintended
increase in payments. By continuing to apply the BNAF in perpetuity, we
are no longer simply adjusting hospice payments for differences in
geographic variances in labor costs; rather we are perpetrating
artificially-inflated payments associated with inaccurate wage weights.
As we described in the rationale provided at the beginning of this
section, we do not believe that the Committee foresaw the tremendous
growth in the hospice industry that has occurred in the past 12 years.
As a result of this growth, the surge of new entrants into the industry
over the past 12 years has benefited from this adjustment. We continue
to believe that the Committee adopted the BNAF to help existing
hospices transition to the 1998 wage index change. We note that in the
late 1990's almost all hospices were not-for-profit. Impact analysis
performed by participants in the negotiating process showed pockets of
the country where the migration to the new hospital wage index would
result in wage index values dramatically decreasing nearly 30 percent
during the 3-year transition. The Committee was clearly concerned about
hospice viability in those areas of the country, with a corresponding
concern about access to care. We continue to believe that the unique
BNAF
[[Page 39392]]
methodology, coupled with the 3-year transition period, served to
address those concerns. It also continues to be our belief that because
of the growth in the number of hospices, and the growth in the
beneficiaries served that has occurred during the last decade, the
Committee's goal to ensure that access to hospice care not be reduced
as a result of the wage index change has been achieved. Therefore, we
believe that this unique methodology for achieving budget neutrality
has served its purpose and is no longer necessary, and we are phasing
out this adjustment.
We agree with the commenter that the language in the August 8, 1997
final rule indicated that the BNAF would be applied during and after
the transition period (62 FR 42862), which we believe we have done;
however, this language did not imply that the BNAF could never be
changed or eliminated. That same final rule clearly stated that if it
became necessary to change the wage index methodology, we would do so
through notice and comment rulemaking (62 FR 42863).
Comment: A commenter wrote that CMS tried to diminish the size of
the BNAF reduction by noting that they will be ``mitigated'' by market
basket updates. The commenter said that market basket updates are
essentially cost of living increases intended to keep providers'
payments in line with increased costs. The commenter felt that by doing
away with the BNAF through a regulatory process, CMS is essentially
eliminating the hospice payment update, and then making a further cut,
and making an end-run around the congressionally-established payment
system for hospice services. He added that CMS had implemented the BNAF
phase-out without seeking input from knowledgeable stakeholders,
including Congress, and without relying on a deliberative and inclusive
process, over a short three-month timeframe.
Response: The commenter appears to suggest that, because Congress
has determined that hospice payment rates are to be increased each year
by the market basket update factor, it therefore follows that hospice
payments must increase each year by the same percentage. We disagree,
and believe that the commenter is looking at the market basket update
alone, when instead Medicare payments to hospices are affected by other
things--including the hospice wage index. Calculating the hospice
payment rates for the four types of hospice services is merely the
first step in determining how much hospices will be paid for services
in any particular year. Once those rates are determined (by taking the
prior year's rates and adjusting them by the market basket update
factor), we apply the hospice wage index to the labor component of the
payment rate. The values in that index change from year to year based
on data CMS collects regarding hospital wages in different labor
markets. Some hospices end up being paid at a rate lower than what they
would have received based solely on the market basket update factor,
while some end up being paid at a higher rate. These fluctuations occur
every year, and they would continue to occur regardless of whether or
not we phase out the BNAF. By requiring the hospice payment rates to be
adjusted annually using the market basket update factor, Congress was
not guaranteeing that hospices, individually or in the aggregate, would
always receive an identical adjustment in payments. On the contrary,
although Congress imposes a statutory cap on payments and sets the
payment rates for the four categories of hospice services (based on the
market basket update factor), it otherwise gives the Secretary the
exceedingly broad authority to develop (and revise as necessary) the
administrative tools used to calculate actual hospice payments under
Medicare. See Section 1814(i)(1)(A) of the Act (``[T]he amount paid to
a hospice program with respect to hospice care for which payment may be
made under this part shall be an amount equal to the costs which are
reasonable and related to the cost of providing hospice care or which
are based on such other tests of reasonableness as the Secretary may
prescribe in regulations * * * ''). Following the commenter's
reasoning, the Secretary would be prohibited from taking any action
that would result in hospices receiving less than what they would
receive if the adjusted rates (i.e., with the market basket update
factor applied) were applied with no further modification. Indeed, we
would be prohibited from using the wage index entirely, because using
that index necessarily means that some hospices will receive less in
payments than they would if the market basket update-adjusted rates
were applied without further alteration. While we have on occasion
sought industry input before proposing changes, we are not required to
seek stakeholder input beyond that of providing a comment period.
Comment: A commenter wrote that CMS justified phasing out the BNAF
in part because the combination of increases in the wage index in
certain areas with the BNAF led to an artificial boost in the wage
index for the past 11 years, which CMS concluded was an excess payment.
While this commenter disagrees that some hospices received an
``artificial boost'' in payments due to the BNAF, this commenter
suggested that CMS change the methodology for the limited number of
hospices that CMS believes benefited unduly from the ''artificial
boost'' given by the BNAF. This commenter felt that CMS has failed to
analyze the impact of the elimination of the BNAF on hospices and on
Medicare beneficiaries in need of hospice services. The analysis should
evaluate the current role and impacts of the BNAF phase-out in light of
the other elements of the hospice wage index, and how those elements
have changed over time, and the effects of those changes. As an
example, this commenter noted that hospitals are allowed geographic
reclassifications which hospices are not, and CMS has not shown whether
and to what extent hospices are disadvantaged by this.
Response: We continue to believe that applying the BNAF to the
hospital-based wage index does not accurately, account for geographic
variances in hospice labor costs. When the hospice industry changed
from the BLS-based wage index to the pre-floor, pre-reclassified
hospital wage index, it began using more accurate, more current data
which are updated annually. When that transition occurred, there were
hospices whose wage index value increased, but many hospices saw their
wage index value decrease. This is because the BLS-based wage index
values, which were applied to hospice payments, were artificially high
in some areas of the country. The Committee itself acknowledged that
the BLS data were ``inaccurate and outdated'' in its Committee
Statement (62 FR 42883). The hospital-based wage index was considered
more accurate by the Committee, even though its wage index values were
lower for many hospices. Therefore before the transition to the
hospital-based wage index, many hospices were receiving payments that
were inflated due to the artificially high BLS-based wage index.
In addition, the BNAF was put into place to mitigate the potential
adverse financial impact to hospice providers of changing wage indices,
since the change would lead to a reduction in payments, which could
threaten access to care. However, as we previously described in the
comment above, the BNAF has been applied not only to those hospices
that were in existence at the time of the wage index change, but also
to those new hospices that were established after 1998. We continue to
believe that these new entrants have received an artificial boost to
their payments as a result of the
[[Page 39393]]
BNAF, which was not the intent of the negotiating committee.
As noted above, because of the inaccurate and outdated nature of
the BLS-based wage data, those payments would also be inaccurate, and
CMS must do its best to ensure the accuracy of Medicare payments.
Therefore we believe that it is appropriate to phase-out the BNAF for
all hospices, and not just those who are new entrants, or whose wage
index values did not drop with the shift to the hospital-based wage
index.
The payment reduction which would occur as a result of a BNAF
phase-out applies equally to all hospices except for providers eligible
for the hospice floor calculation. That calculation lessens the effect
on those providers eligible for the floor, which are typically in rural
areas.
There are no statutory provisions that explicitly permit entities
other than hospitals to reclassify. We note that sections 1886(d)(8)(B)
& 1886 (d)(10) of the Social Security Act explicitly permit hospitals
to seek reclassification. By contrast, no language in Section
1814(i)(1)(A) of the Act provides any indication that Congress intended
hospices to reclassify. Our regulations at 42 CFR 418.306(c) state only
that CMS will issue annually, in the Federal Register, a hospice wage
index based on the most current available CMS hospital wage data,
including changes to the definitions of Metropolitan Statistical Areas.
As noted previously, we are assessing the impact of the BNAF phase-
out more slowly, due to the more gradual 7-year phase-out which is
being finalized in this rule.
Comment: A few commenters mentioned that CMS had said in 2008 that
since hospices and home health agencies use a similar labor pool, and
since the home health wage index does not include the BNAF, this
further supports phasing out the BNAF. The commenter wrote that there
are significant differences between hospice and home health, and said
that the issue is the difference in the payment systems. The commenter
wrote that it is inappropriate to assume, without any analysis, that
the absence of a BNAF in the home health wage index is evidence that
the BNAF can and should be eliminated from the hospice wage index, and
that do so would result in a more accurate and equitable payment
methodology.
Response: There are differences in the home health and hospice
payment systems. However, the purpose of a wage index is to account for
geographic variances in labor costs, regardless of the system used to
reimburse those costs, along with non-labor costs. As we described in
our FY 2009 proposed and final rules, we believe that there should be a
level playing field for recruiting and retaining staff for home-based
benefits such as hospice and home health. Because hospices and home
health agencies share labor pools, we believe that there should be
consistency in the wage index used by both these home-based benefits.
Nothing in our data analysis has shown us that hospice labor costs
differ substantially from home health labor costs, making it difficult
to justify the BNAF which provides a 6 percent increase in the hospice
wage index, which equals about 4 percent more in payments over the
payments otherwise applicable. We continue to believe that the pre-
floor, pre-reclassified hospital wage index provides a good measure to
account for geographic variances in labor costs for both these home-
based benefits. Home health agencies also experience annual
fluctuations in the hospital wage index values, however, they do not
receive a BNAF adjustment. Phasing-out the BNAF enables us to achieve
this consistency.
Comment: Several commenters stated that CMS has concluded that the
growth in the hospice benefit was due to the BNAF, in order to justify
its elimination. The commenters noted a number of factors that have
contributed to the hospice industry's growth, including an increased
number of beneficiaries using the benefit, longer lengths of stay,
increased acceptance of hospices for end-of-life care by the physician
and patient/family communities, changes in the mix of patients using
hospice, and educational efforts by providers and by CMS to
beneficiaries and health care providers. One commenter noted that the
number of Medicare certified hospices had decreased from the 3,255
reported by CMS in December 2008 to the 3,206 hospices reported as of
January 29, 2009. Another commenter stated that hospice is a small
portion of all Medicare spending.
Response: We disagree with the comment that we concluded that the
growth in the hospice industry was due to the BNAF or that the BNAF
reduction is a reaction to the growth in hospice reimbursements.
However, the commenters correctly noted several factors that have
contributed to industry growth. In our FY 2009 proposed and final
rules, we indicated that the BNAF phase-out was not a reaction to that
growth--in the proposed rule, rather we stated that the BNAF was put in
place to mitigate any adverse financial impact that then-existing
individual hospices might have experienced as a result of transitioning
to the new hospital-based wage index in 1998. We note that industries
do not typically expand and grow during times of financial adversity;
often there is industry contraction instead. We stated that the growth
in the industry is an indication that any adverse financial effects of
transitioning to a new wage index had ended.
We disagree with the commenter who believes that the numbers of
Medicare-certified hospices have decreased, and can explain the
differences in the figures which might lead to that conclusion. The
report from Data Compendium dated December 2008 showed Medicare-
certified hospices; these data are drawn from survey and certification
records. The data in the impact tables in our wage index proposed and
final rules are also originated from survey and certification data, but
those data are limited to those Medicare-certified hospices which have
filed claims. Because of the time allowed for claims to be submitted
and for the claims files to be finalized, the claims files used in
proposed and final rules typically lag. Therefore, the data presented
in the impact tables in our proposed and final rules show the numbers
of Medicare-certified hospices which have filed claims, and are
typically less than the numbers which the survey and certification
system reports, which simply show the number of Medicare-certified
hospices. That number often increases between the proposed and final
rules, since we receive updated claims information which we use for the
final rule. Additionally, with respect to newly-certified Medicare
hospices, there may be a lag between certification and submission of
Medicare claims. Thus, the total number of Medicare-certified hospices
may legitimately be greater in number than the number of Medicare-
certified hospices that submit Medicare hospice claims in a given year.
To make a proper comparison, one must either compare impact table
data for one year to impact table data for another year, or compare
survey and certification data without ties to claims filed for one year
to survey and certification data without ties to claims filed to
another year. For example, the Table 1 of this FY 2010 final rule shows
that there are 3,328 hospices. We used January 29, 2009 survey and
certification data, but tied it to FY 2008 claims as of March 2009. In
the FY 2009 final rule, there were 3,111 hospices; that rule tied
February 2008 survey and certification data to FY 2007 claims as of
March 2008. Based on these data, the number of hospices increased by
217,
[[Page 39394]]
which represents a 7 percent increase from 2008 to 2009.
We agree that hospice spending relative to all Medicare spending is
a small portion that will account for an estimated 2.3 percent of
Medicare spending overall in FY 2009. The growth in hospice spending
has outpaced the rate of growth for other Medicare provider types, and
the CMS Office of the Actuary projects that it will continue to do so
over the next decade. Furthermore, CMS has a responsibility to
safeguard trust fund dollars by paying accurately and appropriately for
all Medicare services.
Comment: Several comments suggested other ways that CMS could save
Medicare dollars without phasing out the BNAF. Many commenters said
that we should encourage more patients to elect hospice care, and cited
a Duke University study which found that hospice can save Medicare
money at the end of life; one suggested we focus on assisting
physicians and hospitals in providing more education about hospice.
Several suggested we target fraud and abuse. One commenter suggested we
target the for-profit hospices whose practices have inappropriately
raised Medicare costs, rather than making a payment reduction which
impacts non-profits and for-profits equally. A commenter also suggested
we focus payment reductions on hospices with aberrant lengths of stay.
Other commenters felt that phasing out the BNAF penalizes hospices that
do the right thing with a substantial rate cut because large for-profit
hospices have managed to ``game'' the system. Several commenters felt
that rather than addressing potential abuses, CMS is choosing to
implement across-the-board actions without regard to the impact on the
lowest and most efficient end of the provider spectrum, or on access. A
commenter wrote that instead of focusing on the root cause of
increasing hospice expenditures (an aging population, quality services,
increased understanding of the benefit, etc.), CMS is simply cutting
reimbursement. One wrote that the rationale for payment reduction seems
at odds with a careful and thoughtful consideration of changes in the
payment approach that will best serve hospice patients, agencies, and
the Federal budget.
Response: We encourage eligible Medicare beneficiaries who would
like to receive hospice care to consider electing the benefit. We also
support educational outreach to all provider types to increase
understanding of the benefits associated with hospice care. We believe
that hospice provides quality, compassionate care for those at the end
of life, and often does so in a cost-effective fashion. We agree that
hospice can save Medicare dollars, though it does not always do so.
The BNAF phase-out was not promulgated because of growing hospice
expenditures, although those expenditures did suggest a favorable
business climate for the hospice industry. We are aware that those
rising expenditures also indicated increasing numbers of eligible
beneficiaries and increasing understanding and use of the benefit which
we have encouraged. The BNAF phase-out was also not promulgated as a
means of limiting fraud or abuse or of recovering dollars due to
questionable or inappropriate practices by some hospices. Rather, our
rationale for promulgating the BNAF phase-out is the same as that
described in the FY 2009 proposed and final rules, and is included at
the beginning of this section of the FY 2010 hospice wage index final
rule. The rationale was carefully considered as part of a thoughtful
process. We determined that a special adjustment which was adopted to
mitigate the impact of wage index change in 1998, which results in a
greater than 4 percent annual aggregate increase in payments over what
would have been paid otherwise, could not continue to be justified. We
recognize that the BNAF reductions affect providers equally unless the
providers are eligible for the hospice floor calculation, in which case
the reductions may have less effect. The hospice floor calculation
limits the impact that the BNAF reduction can have on some smaller,
rural providers. As noted previously, we are phasing out the BNAF more
gradually, reducing it in FY 2010 by 10 percent instead of by 75
percent, as promulgated in the FY 2009 final rule and as presented in
the FY 2010 hospice wage index proposed rule. We will continue the
phase-out over the next 6 years, at an additional 15 percent each year.
We will evaluate the impact of the BNAF reduction in the context of how
this type of adjustment will fit into our goals for future hospice
payment reform. As such, we believe that a more gradual phase-out is
appropriate at this time.
The impact of the 10 percent BNAF reduction for FY 2010 is shown in
section VII of this final rule.
Regarding the comment about targeting some for-profit hospices for
a payment reduction, we typically do not adjust payments based on type
of ownership, and do not have the statutory authority to do so, nor do
we believe that such an approach is appropriate.
We believe that the vast majority of hospices provide care to their
patients in a legal and ethical fashion that is not fraudulent or
abusive of Medicare or its requirements. However, we realize that there
is a small minority of providers who engage in fraud or abuse, and we
remind commenters that they can report suspected fraud or abuse to the
Office of the Inspector General at 1-800-HHS-TIPS or to the Medicare
Customer Service Center at 1-800-MEDICARE.
After considering the comments received and alternate phase-out
scenarios provided by commenters, we are finalizing the FY 2010 hospice
wage index final rule with a BNAF which has been reduced by 10 percent,
rather than continuing with the 75 percent reduction which was
promulgated in the FY 2009 hospice wage index final rule, and planned
for FY 2010. We are finalizing a 7-year phase-out, 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
of 40 percent in FY 2012, an additional 15 percent reduction for a
total of 55 percent in FY 2013, an additional 15 percent reduction for
a total of 70 percent in FY 2014, an additional 15 percent reduction
for a total of 85 percent in FY 2015, and an additional 15 percent
reduction for complete phase-out in FY 2016. We will continue to
evaluate the impact of the BNAF reduction as we perform our hospice
payment reform analyses.
We believe that a more gradual phase-out is appropriate given the
hospice payment reform analyses which are underway; however, we reserve
the right to change this phase-out timeframe through notice and comment
rulemaking should hospice payment reform be delayed or for other
reasons that the Secretary deems appropriate.
The unreduced BNAF for FY 2010 is computed to be 0.061775 (or
6.1755 percent). A 10 percent reduced BNAF, which is subsequently
applied to the pre-floor, pre-reclassified hospital wage index values
greater than or equal to 0.8, is computed to be 0.055598 (or 5.5598
percent). Pre-floor, pre-reclassified hospital wage index values which
are less than 0.8 are subject to the hospice floor calculation; that
calculation is described in section I.B.1.
The hospice wage index for FY 2010 is shown in Addenda A and B.
Specifically, Addendum A reflects the FY 2010 wage index values for
urban areas under the CBSA designations. Addendum B reflects the FY
2010 wage index values for rural areas under the CBSA designations.
[[Page 39395]]
4. Effects of Phasing Out the BNAF
The full (unreduced) BNAF calculated for FY 2010 is 6.1775 percent.
As noted in the previous subsection, we are phasing out the BNAF over a
total of 7 years. We are reducing the BNAF by 10 percent for FY 2010,
with additional 15 percent reductions for each of the next 6 years.
Therefore total phase-out will occur in FY 2016.
For FY 2010, this is mathematically equivalent to taking 90 percent
of the full BNAF value, or multiplying 0.061775 by 0.90, which equals
0.055598 (5.5598 percent). The BNAF of 5.5598 percent reflects a 10
percent reduction in the BNAF. The 10 percent reduced BNAF (5.5598
percent) will be applied to the pre-floor, pre-reclassified hospital
wage index values of 0.8 or greater in the FY 2010 hospice wage index.
The hospice floor calculation will still apply to any pre-floor,
pre-reclassified hospital wage index values less than 0.8. Currently,
the hospice floor calculation has 4 steps. First, pre-floor, pre-
reclassified hospital wage index values that are less than 0.8 are
multiplied by 1.15. Second, the minimum of 0.8 or the pre-floor, pre-
reclassified hospital wage index value times 1.15 is chosen as the
preliminary hospice wage index value. Steps 1 and 2 are referred to in
this final rule as the hospice 15 percent floor adjustment. Third, the
pre-floor, pre-reclassified hospital wage index value is multiplied by
the BNAF. Finally, the greater result of either step 2 or step 3 is
chosen as the final hospice wage index value. The hospice floor
calculation is unchanged by the BNAF reduction. We note that steps 3
and 4 will become unnecessary once the BNAF is eliminated.
We examined the effects of a 10 percent reduction in the BNAF
versus using the full BNAF of 6.1775 percent on the FY 2010 hospice
wage index. The FY 2010 BNAF reduction of 10 percent resulted in
approximately a 0.57 to 0.59 percent reduction in most hospice wage
index values. The phase-out of the BNAF over the following 6 fiscal
years at 15 percent per year will result in an additional estimated
annual reduction of the hospice wage index values of approximately 0.9
percent per year.
Those CBSAs whose pre-floor, pre-reclassified hospital wage index
values had the hospice 15 percent floor adjustment applied before the
BNAF reduction would not be affected by this phase-out of the BNAF.
These CBSAs, which typically include rural areas, are protected by the
hospice 15 percent floor adjustment. We have estimated that 18 CBSAs
are already protected by the hospice 15 percent floor adjustment, and
are therefore completely unaffected by the BNAF reduction. There are
over 120 hospices in these 18 CBSAs.
Additionally, some CBSAs with pre-floor, pre-reclassified wage
index values less than 0.8 will become newly eligible for the hospice
15 percent floor adjustment as a result of the 10 percent reduced BNAF.
Areas where the hospice floor calculation would have yielded a wage
index value greater than 0.8 if the full BNAF were applied, but which
will have a final wage index value less than 0.8 after the 10 percent
reduced BNAF is applied, will now be eligible for the hospice 15
percent floor adjustment. These CBSAs will see a smaller reduction in
their hospice wage index values since the hospice 15 percent floor
adjustment will apply. We have estimated that 3 CBSAs will have their
pre-floor, pre-reclassified hospital wage index value become newly
protected by the hospice 15 percent floor adjustment due to the 10
percent reduction in the BNAF. This will affect those hospices with
lower wage index values, which are typically in rural areas. There are
9 hospices located in these 3 CBSAs.
Finally, the hospice wage index values only apply to the labor
portion of the payment rates; the labor portion is described in section
I.B.1 of this final rule. Therefore the projected reduction in payments
due to the updated wage data and the 10 percent reduction of the BNAF
will be less than the projected reduction in the wage index value
itself. We estimated a projected reduction in payments of -0.7 percent,
as described in column 4 of Table 1 in section VII of this final rule.
In addition, the estimated effects of the phase-out of the BNAF will be
lessened by any hospital market basket updates to payments. The
hospital market basket update for FY 2010 is 2.1 percent and will be
officially communicated through an administrative instruction. The
combined effects of the updated wage data, the 10 percent reduction of
the BNAF and a hospital market basket update of 2.1 percent for FY 2010
is an overall estimated increase in payments to hospices in FY 2010 of
1.4 percent (column 5 of Table 1 in section VII of this final rule).
Comment: Many commenters wrote that they had already pared back
expenses, and that they could not absorb any cuts, particularly with
the present economic downturn; smaller providers and rural providers in
particular said that they may not be able to survive the payment
reduction. A number of commenters indicated that because of the
economy, their hospices had already implemented a variety of spending
reductions, including hiring or wage freezes, and a few said that they
had already laid off some personnel. Some indicated that they would
postpone hiring for vacant positions. Many also wrote that hiring and
wage freezes, layoffs, and wage reductions would lead to higher
caseloads, and likely lower the quality or quantity of services
provided, as well as reduce morale. Some were concerned that they would
lose nursing staff to hospitals if they could not pay nurses
competitively. One wrote that when the upswing finally comes, it will
be difficult to hire and train quality employees in a timely manner,
adding to staffing costs overall.
Many commenters, particularly in rural areas, said that a payment
reduction would force them to reduce their service area, leaving some
rural beneficiaries without access to any hospice care. One commenter
noted that smaller hospices generally provide better, more personal
care, but if they cannot survive, only large hospices will remain in
business; this commenter felt that patients and families will have
lower quality care as a result. Others noted that they would cut back
services provided, and mentioned that bereavement programs, outreach
programs, proven alternative therapies, staff training, and volunteer
training would be targeted. A number of commenters felt that the BNAF
reduction would ultimately increase Medicare costs, as patients in a
crisis would go to the hospital if hospice staffing was too low to
respond quickly, or if patients lost access to care and were forced
into other post-acute settings or into hospitals at the end of life.
One commenter reported that hospices had also postponed a planned
expansion of services or of facilities. This commenter mentioned the
closure of an inpatient unit or consolidation of offices as other cost
cutting measures taken due to the economic climate. Multiple commenters
wrote that a payment cut would force them to lay off workers, which is
contrary to the Obama Administration's stated goal of preserving jobs
and stimulating growth. A few stated that ARRA's delay of the FY 2009
BNAF reduction saved 3,000 jobs, and that these jobs will be at risk if
the BNAF reduction is implemented for FY 2010.
Several commenters also indicated that donations usually help them
to meet their expenses, but that with the recession and stock market
decline, their donors had less to give; they wrote that donations were
greatly reduced and fundraising was more difficult. As a
[[Page 39396]]
result, some said they were already operating with negative margins.
Several commenters said that small or medium hospices would be more
affected than larger hospices, and that their margins could not absorb
greater expenses or a payment reduction. Some cited MedPAC's margin
analysis, which showed average hospice margins at 3.4 percent, stating
that they could not survive the 3.2 percent payment reduction reported
in the FY 2010 proposed rule. A few noted that for some, the payment
reduction is far greater than 3.2 percent, citing 5 percent or 9
percent reductions overall for their CBSA.
Additionally, several commenters said that a payment reduction
would force them to reduce or eliminate care to indigent patients and
to the uninsured. They noted that they had previously accepted all
patients without regard to ability to pay, and that their revenues from
Medicare and from donations enabled them to absorb the costs of
providing care to the uninsured; one commenter wrote that her hospice
is ``mandated'' to accept all eligible patients, regardless of ability
to pay. Given the economic climate, particularly the current
unemployment rate, many felt that this was the wrong time to be
reducing payments.
Response: While we are sensitive to the issues raised by
commenters, and to the possible effects of the BNAF reduction, we
continue to believe that we cannot justify an adjustment factor which
was adopted to mitigate the impact of a 1998 wage index change, and
which results in what we believe to be an inappropriate increase in
overall hospice payments of approximately 4 percent annually over what
would have been paid in absence of the BNAF. Therefore, for the reasons
described in this FY 2010 hospice wage index final rule and in the FY
2009 hospice wage index final rule, we will phase out the BNAF.
However, as noted in the previous section, given the efforts to reform
the hospice payment system, we are finalizing a more gradual phase-out
of the BNAF over 7 years. We believe it would be prudent to take
additional time to evaluate the BNAF phase-out in the context of these
reforms, in order to allow for further consideration of any
consequences that might result from the phase-out.
Regarding MedPAC's margin analysis, we refer commenters to MedPAC's
2008 report entitled ``Report to the Congress: Reforming the Payment
System'' [http://www.medpac.gov/documents/Jun08_EntireReport.pdf],
which lists limitations of the analysis which could lead to an
underestimation of hospice margins. In response to the commenters who
believed that the impact of the BNAF reduction is greater in some
areas, we note that the reductions in payments which exceed the 3.2
percent reported in our FY 2010 proposed rule impact summary are not
due to the BNAF phase-out, but are due to the normal fluctuations in
the pre-floor, pre-reclassified hospital wage index. The BNAF affects
all hospices equally, except for those eligible for the hospice floor
calculation (i.e., hospices with pre-floor, pre-reclassified hospital
wage index values less than 0.8). Those hospices which are eligible for
the hospice floor calculation are either completely protected from the
effects of the BNAF reduction, or will experience lessened effects.
Most of these hospices are in rural areas.
We applaud hospices which provide care to the uninsured and to
indigent patients. We note that Medicare hospice patients have nearly
all of their hospice care paid for by Medicare; the co-payments for
prescription drugs and for respite care are very small. This benefits
all hospice patients, but particularly low income patients, as the out-
of-pocket costs are minimal. We also note that hospices develop their
own policies about taking eligible patients without insurance or the
means to pay; Medicare does not ``mandate'' that hospices take all
eligible patients regardless of ability to pay or insurance status.
Finally, the costs of complying with the new CoPs and with the data
collection requirements are normal costs of doing business, for which
hospices have had ample time to prepare.
Comment: One commenter wrote that the Negotiated Rulemaking
Committee was familiar with the serious disruptions that could occur in
the delivery of healthcare services through a change in the payment
distribution methodology. The commenter felt that stability in delivery
of hospice care is dependent on payment stability, which is lost if CMS
phases out the BNAF. A few commenters wrote that we did not have enough
data or data analysis to justify the elimination of the decade old
BNAF, and felt that our eliminating the BNAF was arbitrary and
capricious. One said that without a careful analysis of all the effects
of the phase-out, phasing out the BNAF would be arbitrary and
capricious and a violation of the Administrative Procedures Act. Some
wrote that we had not carefully analyzed the impact of this action. One
commenter wrote that historically, Congress has rejected the
Administration's requests to reduce hospice reimbursement rates,
understanding that any reduction in rate must necessarily reduce
quality of care or access to care. This commenter felt that the 2009
NPRM is inconsistent with the legislative intent to maintain and ensure
adequate hospice funding levels.
Response: We presented our rationale for the BNAF phase-out in the
FY 2009 proposed and final rules and in section II.A.3 of this final
rule. Commenters have argued that we have not considered the effects of
reducing the BNAF on hospices; we disagree, and refer the commenters to
the impact section of our rule, which set out detailed information on
the effects of reducing the BNAF.
More than adequate access to hospice care was reported by MedPAC
[see ``Report to the Congress: Reforming the Payment System'', chapter
8, available at http://www.medpac.gov/documents/Jun08_
EntireReport.pdf], and suggests that a BNAF phase-out will not impede
access to hospice care. Given this information, we continue to believe
that a BNAF phase-out will not impede access to hospice care. Congress
mandated the payment rates and the market basket updates. Congress did
not mandate that we apply in perpetuity a special adjustment to the
hospice wage index that has the effect of raising aggregate hospice
payments by about 4 percent annually over what CMS would have paid
absent the BNAF.
We appreciate the commenters' concerns regarding possible effects
of a payment reduction. The BNAF affects all hospices equally, except
for those eligible for the hospice floor calculation (i.e., hospices
with a pre-floor, pre-reclassified hospital wage index values less than
0.8). Those hospices which are eligible for the hospice floor
calculation are either completely protected from the effects of a BNAF
reduction, or experienced lessened effects. Most of these hospices are
in rural areas.
We also do not believe that our actions in phasing-out the BNAF
were arbitrary or capricious. We believe that the rationale and impacts
provided in the FY 2009 and FY 2010 proposed and final rules are clear,
and that we met all the requirements of the Administrative Procedures
Act.
Comment: Many commenters wrote that this is the wrong time for a
payment reduction due to rising costs, particularly gasoline. Rural
providers in particular cited the rising cost of gasoline combined with
service areas that cover thousands of square miles and generate
significant mileage costs. Additionally, others wrote that the 1983 per
diems were not designed to cover the costs of technology and of
expensive palliative treatments, and said hospices couldn't afford a
payment reduction on
[[Page 39397]]
top of that. Another wrote that hospices had had to spend more to
implement the new Conditions of Participation and data collection
requirements, but received no additional reimbursement to cover the
cost of these changes. They felt that if the BNAF were phased out as
described in the proposed rule, hospices would be subjected to multiple
significant changes over a short period of time, and that too many
reforms at once could have a negative impact on access to quality
hospice services and relations operations. Others cited rising wages,
benefit costs, and insurance costs.
Many commenters also felt that this was the wrong time to reduce
reimbursement given the nation's demographics. Some expressed concern
that access to hospice would be reduced if hospices could not survive
the BNAF reductions or if they had to reduce their service areas, at a
time when there are more baby boomers eligible for hospice. They noted
that the demand for hospice would be increasing as the geriatric
population increases, and one said she was disconcerted to hear of CMS'
concern over the growing utilization of hospice. One wrote that
demographers in his state projected more persons without caregivers in
the home; less money for hospices erodes hospices' capacity to provide
care, and may lead to an increase in costly nursing home stays.
A few noted that a payment reduction was inconsistent with the
health care reform being discussed in Washington, as hospice saves
Medicare money and should be supported and expanded. Many commenters
noted that a study done at Duke University has shown that hospice is
cost-effective, and saves Medicare dollars overall while providing
quality end-of-life care. A commenter also referred to the Dartmouth
Atlas Report (2008) which found that hospices were the only post-acute
provider to significantly reduce hospitalizations. Another commenter
wrote that if patients could not access hospice and end up in
hospitals, it would burden an already strained hospital healthcare
delivery system. Two commenters suggested we also consider the
``secondary savings'' that hospice brings by positively affecting
conditions unrelated to the patient's terminal diagnosis, by
benefitting the physical and emotional health of the caregivers, and of
the children of hospice patients.
Response: We appreciate the commenters' concerns about rising costs
and about access to hospice care. We understand that costs are rising
and that it is vital to preserve access to hospice care for Medicare
beneficiaries. The hospital market basket update which is used to
update payment rates for all hospices includes an energy component that
is sensitive to petroleum costs among other costs. It is reasonable to
expect that future market basket updates will continue to account for
any continuation of rising fuel costs.
In addition, we believe that the requirements associated with the
CoPs and data collection are part of the cost of doing business, and
that the industry has had ample time to plan and budget for these
changes. We do not believe that these requirements will have adverse
affects on admissions or services, but instead expect that the emphasis
on quality and the increased awareness of visits provided could enhance
services.
We believe that in a time of economic pressures, all businesses,
including hospices, will seek to operate more efficiently. However, we
plan to monitor the effect of the BNAF reduction to assess whether
unanticipated effects occur.
We agree that the Medicare hospice benefit has been of tremendous
benefit to those at the end of life and to their families, and applaud
those who serve the dying as hospice staff and volunteers. We also
agree that the hospice benefit often saves Medicare money, and
appreciate the studies which have highlighted the areas where it
provides costs savings to the Medicare program. However, hospice care
does not save money in every instance. In their June 2008 report,
MedPAC noted that ``hospice's net reduction in Medicare spending
decreases the longer the patient is enrolled and beneficiaries with
very long hospice stays may incur higher Medicare spending than those
who do not elect hospice.'' (MedPAC, Report to the Congress: Reforming
the Delivery System, chapter 8, ``Evaluating Medicare's Hospice
Benefit'', MedPAC: Washington, DC, p. 209).
We agree that we should evaluate the impact of the BNAF reduction
in the context of how this type of adjustment will fit into our goals
for future hospice payment reform that could affect payment to
hospices. As such, we believe that a more gradual phase-out would be
appropriate at this time. For the reasons described above, we do not
believe that hospice access will be impeded due to a 10 percent BNAF
reduction, and therefore, do not believe that Medicare costs would be
shifted from hospice to more expensive forms of care.
The hospice industry is growing and the demand for hospice services
is likely to grow in the future, particularly with an aging population.
CMS has encouraged hospice usage, and we expect the hospice benefit to
continue to grow. We will monitor the impact of the BNAF phase-out for
any unintended impact.
Comment: A few commenters wrote that any reductions in Medicare
reimbursement will trickle down to the private sector and to Medicaid,
affecting funding for care for all patients, not just those on
Medicare. One wrote that CMS had not considered the effects of the BNAF
reduction on Medicaid.
Response: Our Medicare payments are intended to be accurate and to
adequately pay for resource use in providing care to Medicare patients.
We do not develop Medicare payment policy to enable providers to offset
the costs of non-Medicare patients. Indeed, the Act at section
1861(v)(1) prohibits providers subject to reasonable-cost payment from
using Medicare funds to subsidize care for non-Medicare patients.
We received several comments which were outside the scope of this
rule, and which we are set out below.
Comment: A commenter wrote that in addition to payment reductions
that would result from the elimination of the BNAF, hospices may also
be faced with cuts imposed through the productivity adjustment factor
proposed in the draft health reform bill being circulated by the House
of Representatives.
Response: Because this comment concerns potential future
legislative changes, this comment is outside the scope of this rule.
Therefore we are unable to respond.
We received several other comments which were outside the scope of
this rule, and which are set out below. However because they are
related to hospice payments, we will briefly address them.
Comment: A few commenters requested that CMS conduct a study to
determine the appropriate hospice per diem for services to rural areas.
Response: This comment is outside the scope of this rule, however
we will address it briefly. Medicare pays one of four daily rates to
hospice providers, based on the intensity level of care the patient
requires. These per diem payment rates are the same, regardless of
whether the services are provided in an urban area or a rural area. The
hospice wage index, which includes a floor calculation which benefits
many rural providers, is the vehicle we use to adjust for geographic
variances in labor costs. In a time of high gasoline costs, we are
sensitive to concerns from rural hospices that the additional time and
distance required to visit a rural patient
[[Page 39398]]
adds significantly to their costs, and their assertion that payments
are not adequate. However, an additional payment for rural providers,
which is sometimes called a rural add-on payment, would have to be
legislated. We will consider the situation of rural providers once we
begin the process of hospice payment system reform.
Comment: One person suggested we rate all end-of-life care and fund
only those hospices which provide excellent services.
Response: While outside the scope of this rule, we will consider
this as we move forward hospice payment reform.
Comment: As alternative cost-cutting measures, a commenter
suggested we regulate the standards of care, and ensure that providers
follow the Conditions of Participation; another suggested more frequent
surveys. Another suggested that unnecessary medical tests and
procedures performed to avoid litigation and paid for by Medicare
should be the target of funding cuts. One commenter suggested we
eliminate the tax credit for not-for-profit nursing homes and hospices
that don't embody that not-for-profit spirit, and make them pay taxes
on their income. One suggested we focus on nursing home chains that
create hospice chains solely for additional billing opportunities.
Another suggested we go after providers who exploit the dying with
false hope that curative measures will lengthen their lives or improve
their quality of life. Two commenters felt that if the BNAF phase-out
occurs, politicians would have excellent health insurance and hospice
care, but that the average American would have bare-bones hospice
coverage. A commenter wrote that we should require all hospices to be
non-profits, so that more money goes to patient care.
Response: We appreciate these comments, but they are outside the
scope of this rule.
B. Change to the Physician Certification and Recertification Process,
Sec. 418.22
The Medicare Payment Advisory Commission (MedPAC) has noted an
increasing proportion of hospice patients with stays exceeding 180
days, and significant variation in hospice length of stay. MedPAC has
questioned whether there is sufficient accountability and enforcement
related to certification and recertification of Medicare hospice
patients. Currently, our policy requires the hospice medical director
or physician member of the interdisciplinary group and the patient's
attending physician (if any) to certify the patient as having a
terminal illness for the initial 90-day period of hospice care.
Subsequent benefit periods only require recertification by the hospice
medical director or by the physician member of the hospice
interdisciplinary group. These certifications must indicate that the
patient's life expectancy is 6 months or less if the illness runs its
normal course, and must be signed by the physician. The medical record
must include documentation that supports the terminal prognosis.
At their November 6, 2008 public meeting, MedPAC presented the
findings of an expert panel of hospice providers convened in October
2008; that panel noted that while many hospices comply with the
Medicare eligibility criteria, some are enrolling and recertifying
patients who are not eligible.
The expert panel noted that there were several reasons for the
variation in compliance. First, they noted that in some cases there was
limited medical director engagement in the certification or
recertification process. Physicians had delegated this responsibility
to the staff involved with patients' day-to-day care, and simply signed
off on the paperwork. Second, inadequate charting of the patient's
condition or a lack of staff training had led some physicians to
certify patients who were not truly eligible for Medicare's hospice
benefit. Finally, some panelists cited financial incentives associated
with long-stay patients. The panelists mentioned anecdotal reports of
hospices using questionable marketing strategies to recruit patients
without mentioning the terminal illness requirement, and of hospices
failing to discharge patients who had improved or enrolling patients
who had already been discharged or turned away from other hospices.
Consensus emerged among the panelists that more accountability and
oversight of certification and recertification are needed. MedPAC used
the panel's input in making recommendations related to the
certification process, which can be found in chapter 6 (``Reforming
Medicare's Hospice Benefit'') of MedPAC's March 2009 report entitled
``Report to the Congress: Medicare Payment Policy'' which is available
at http://www.medpac.gov/chapters/Mar09_Ch06.pdf.
We believe that those physicians that are certifying a hospice
patient's eligibility can reasonably be expected to synthesize in a few
sentences the clinical aspects of the patient's condition that support
the prognosis. We believe that such a requirement, as suggested by the
expert panel and by MedPAC, would encourage greater physician
engagement in the certification and recertification process by focusing
attention on the physician's responsibility to set out the clinical
basis for the terminal prognosis indicated in the patient's medical
record.
To increase accountability related to the physician certification
and recertification process, we are making a change to Sec. 418.22.
Specifically, we are adding a new paragraph (b)(3) to Sec. 418.22, to
require that physicians that certify or recertify hospice patients as
being terminally ill include a brief narrative explanation of the
clinical findings that support a life expectancy of 6 months or less.
We originally proposed that the narrative should be written or typed on
the certification form itself.
In our proposed rule, we wrote that we do not believe that an
attachment should be permissible because an attachment could easily be
prepared by someone other than the physician. We solicited comments on
whether this requirement would increase physician engagement in the
certification and recertification process.
Comment: Many commenters stated that this requirement would be a
burden to hospices. Commenters referred to our regulations at Sec.
418.22 which require that the clinical information and other
documentation supporting the terminal prognosis must be included in the
medical record, stating that the narrative would duplicate information
in the medical record. Several commenters further stated that many
hospice doctors have no clinical contact with the hospice patients, and
that doctors currently base the certification of terminal illness on
the medical record information alone. Therefore, they believe that this
requirement would result in physicians simply rephrasing what was
already in the medical record. Several commenters suggested CMS
determine whether this requirement is feasible for small hospices with
only a part-time medical director. Other commenters suggested that CMS
require the narrative only on recertifications, stating that MedPAC's
suggestion was intended to ensure that long-stay hospice patients
continue to be hospice-eligible. Additionally, they said given that two
physicians determine initial eligibility, a narrative at initial
certification is unnecessary and burdensome. One commenter suggested an
alternative to the narrative, suggesting that an attestation statement
be included on the certification and recertification form stating that
the pertinent medical record information has been reviewed by the
physician.
Many commenters supported this requirement as a way to ensure more
[[Page 39399]]
physician involvement with the patient and increase engagement in the
certification of terminal illness. Some cautioned CMS to not allow a
typed narrative, fearing that the hospice nurse would type it, and the
physician would simply sign off without performing the sort of
physician review and involvement that CMS intended.
Some commenters supported the requirement, but encouraged CMS to
reconsider that the narrative must be present on the certification and
recertification form, asking CMS to consider accepting an attachment. A
few commenters believed that hospices which have electronic medical
records may incur costly software modifications if the narrative must
be included on the certification and recertification. The commenters
believed that as long as the physician's written or electronic
signature was included on the narrative, it would make no difference if
the narrative was an addendum.
Several commenters stated that CMS should provide illustrative
examples to help hospices and physicians understand the scope of
acceptable responses.
Many commenters were supportive of the proposal, but cautioned CMS
that not all patients show measurable indications of decline at the
time of every recertification. These commenters cautioned CMS to not
regulate the process such that hospices will be encouraged to discharge
patients inappropriately.
Another commenter encouraged that CMS be clear that neither check
boxes nor standard language should be permitted to satisfy the
requirement, that we clarify that this narrative must be composed by
the physician performing the certification or recertification, and that
the certification and recertification forms containing the narrative
should include under the physician's signature a statement indicating
that by signing, the physician confirms that he/she composed the
narrative based on his/her review.
Response: We thank the writers for their comments. We concur with
the commenter who states that 42 CFR 418.22(b) requires clinical
information and other documentation supporting the terminal prognosis
to be included in the medical record. However, we disagree that the
inclusion of the clinical narrative duplicates the medical record
information, or that the narrative should be completed only at the time
of recertification. Rather, as we stated in the proposed rule, we
believe that the physician must synthesize the patient's comprehensive
medical information in order to compose this brief clinical
justification narrative, which we believe will increase physician
accountability associated with the terminal prognosis. This synthesis
should not be a simple restatement of the medical record facts, but
instead sets out the physician's rationale as to how the facts justify
the prognosis. We also disagree that a statement on the certification
and recertification form that the physician attests he has reviewed the
medical record accomplishes the increased physician accountability
goal. Our intent is for the physician to justify his prognosis, rather
than simply sign a form. While our regulations have always required the
physician to perform this sort of review, we believe often the
physician relies too heavily on the hospice staff for the prognosis
determination in both the certification and recertification of terminal
illness.
Because the physician has always been required to perform the
review needed to make a terminal illness prognosis, we disagree that
the corresponding short narrative which describes the physician's
clinical justification associated with the prognosis is overly
burdensome. However, we do understand that many physicians prefer to
dictate rather than hand-write their clinical findings. And we agree
with commenters who stated that some electronic health record systems
may more easily produce an addendum containing the clinical
justification. Therefore, we have decided that a typed addendum
containing the narrative which is electronically or hand signed by the
physician will be acceptable. We also agree with the commenters who
suggested that the narrative include an attestation, and that we
clarify some criteria associated with the narrative requirement.
Therefore, we clarify that: (1) The narrative must be composed by the
physician performing the certification or recertification and not by
other hospice personnel; (2) the narrative should include, under the
physician signature, a statement indicating that by signing, the
physician confirms that he/she composed the narrative based on his/her
review of the patient's medical record or, if applicable, examination
of the patient; (3) the narrative reflects the patient's individual
clinical circumstances, and should not contain checked boxes or
standard language used for all patients; and (4) in the case of the
initial certification, we require either the attending physician or the
hospice medical director to compose and sign the clinical narrative.
We believe that the narrative will curtail the practice described
by one commenter who stated that the physician relies solely on hospice
staff and hospice staff entries in the medical record for the prognosis
determination, and has little interaction with the patient.
While we agree with the commenter who stated that this requirement
helps address MedPAC concerns associated with long stays in hospice, we
also believe that this requirement on the initial certification helps
ensure that only hospice- eligible patients are admitted to hospice. We
disagree with the commenter who suggested CMS include an illustrative
example of narrative language, since the intent of the narrative is to
capture the physician's synthesis of each patient's unique conditions.
In response to the commenter who cautioned CMS that not all
patients show measurable indications of decline at the time of every
recertification, we believe this commenter was concerned that CMS may
regulate the process such that hospices will be encouraged to discharge
patients inappropriately. This comment appears to suggest that the
physician narrative may risk patients being discharged inappropriately
at recertification time. We disagree that this is a risk. CMS
regulations at 42 CFR 418.22, certification of terminal illness,
describe in detail the requirements that are necessary to certify and
recertify patients that are terminally ill. We also acknowledge that at
recertification, not all patients may show measurable decline. We
believe that the physician may choose to include facts such as that as
part of his narrative, if he or she believes it to be pertinent in his
or her justification.
We are finalizing our proposal to require that physicians who
certify or recertify hospice patients as terminally ill include a brief
narrative explanation of the clinical findings that support a life
expectancy of six months or less. We are modifying our original
proposal in that we will allow the narrative to either be part of the
certification and recertification forms, or it may be on an addendum to
the certification and recertification forms which is electronically or
hand signed by the physician. If the narrative is part of the
certification or recertification form, then the narrative must be
located immediately prior to the physician's signature. If the
narrative exists as an addendum to the certification or recertification
form, in addition to the physician's signature on the certification or
recertification form, the physician must also sign immediately
following the narrative in the addendum. The narrative must reflect
[[Page 39400]]
the patient's individual clinical circumstances. The narrative must not
contain check boxes or standard language used for all patients. In the
case of the initial certification, we require either the attending
physician or the hospice medical director to compose and sign the
narrative. We also require that the narrative include under the
physician signature, a statement indicating that by signing, the
physician confirms that he/she composed the narrative based on his/her
review of the patient's medical record or, if applicable, examination
of the patient.
C. Update of Covered Services, Sec. 418.202
In Part 418, subpart F, we describe covered hospice services. In
Sec. 418.200, Requirements for Coverage, we note that covered services
must be reasonable and necessary for the palliation or management of
the terminal illness as well as related conditions. We also note that
services provided must be consistent with the plan of care. The
language at Sec. 418.202, ``Covered services'', describes specific
types of hospices services that are covered. Section 418.202(f)
describes the coverage of medical appliances and supplies, including
drugs and biologicals. The last sentence of Sec. 418.202(f) states
that covered medical supplies ``include those that are part of the
written plan of care.''
The updated CoPs, which were effective as of December 2008, now
require that hospices include all comorbidities in the plan of care,
even if those comorbidities are not related to the terminal diagnosis.
In Sec. 418.54(c)(2) we refer to assessing the patient for
complications and risk factors that affect care planning. Comorbidities
that are unrelated to the terminal illness need to be addressed in the
comprehensive assessment and should be on the plan of care, clearly
marked as comorbidities unrelated to the terminal illness. However, the
hospice is not responsible for providing care for the unrelated
comorbidities. Because the hospice is not responsible for providing the
care for these unrelated comorbidities, we are revising Sec.
418.202(f) to state that medical supplies covered by the Medicare
hospice benefit include only those that are part of the plan of care
and that are for the palliation or management of the terminal illness
or related conditions.
Comment: Commenters supported the proposed clarification in Sec.
418.202 which currently states that medical supplies covered by the
hospice benefit include those that are part of the plan of care and
that are related to the palliation and management of the terminal
illness or related conditions. One commenter stated that because it is
difficult for hospices to determine which conditions are related to the
terminal illness, that CMS should also require hospices to have written
policies describing their processes for determining whether care is
related to the terminal illness or related conditions. One commenter
wrote that in the absence of companion rules in SNFs, this rule as
written has the potential to cause confusion and conflict within the
facilities as the facility providers seek resolution on the integration
of the care plan and the related cost and responsible party.
Response: We appreciate the support received for the clarification
at 42 CFR section 418.202. The comments regarding written policies
describing the processes for determining what is related to the
terminal illness, and about companion rules in SNFs, are outside the
scope of this payment rule, and therefore we are unable to respond.
However, we have forwarded these comments to the group within CMS which
handles facility Conditions of Participation, for their consideration
in future rulemaking.
We are finalizing the change to Sec. 418.202 as proposed.
D. Clarification of Payment Procedures for Hospice Care, Sec. 418.302
Section 1861(dd) of the Act limits coverage of and payment for
inpatient days for hospice patients. There are sometimes situations
when a hospice patient receives inpatient care but is unable to return
home, even though the medical situation no longer warrants general
inpatient care (GIP), or even though 5 days of respite have ended. In
computing the inpatient cap, the hospice can only count inpatient days
in which GIP or respite care is provided and billed as GIP or respite
days. For example, assume a patient received 5 days of respite care
while a caregiver was out of town, but the caregiver's return was
delayed for a day due to circumstances beyond her control. The patient
had to remain as an inpatient for a 6th day, but was no longer eligible
for respite care. According to Sec. 418.302(e)(5), the hospice should
switch from billing for respite care to billing for routine home care
on the 6th day. The hospice should only count 5 days toward the
inpatient cap, not 6 days, since only 5 inpatient days were provided
and billed to Medicare as respite days.
Because we have received several inquiries about how to count
inpatient days that are provided and billed as routine home care, we
are revising Sec. 418.302(f)(2) to clarify that only inpatient days in
which GIP or respite care is provided and billed are counted as
inpatient days when computing the inpatient cap.
Comment: Commenters supported the proposal to clarify that
inpatient care provided and billed as GIP or respite should be the only
inpatient care included in the inpatient cap calculation. However one
commenter wrote that her hospice does not agree that inpatient respite
services should be charged against the inpatient cap, given the changes
in the CoP regulations with respect to 24-hour RN coverage.
Response: We appreciate commenters' support for this proposal. The
Social Security Act requires the inclusion of respite services in the
inpatient cap calculation (see section 1861(dd)(2)(A)(iii) of the Act).
Therefore, we cannot make a change to this requirement. We are
finalizing the change to 42 CFR Sec. 418.302 as proposed.
E. Clarification of Intermediary Determination and Notice of Amount of
Program Reimbursement, Sec. 405.1803
Currently, hospices that exceed either the inpatient cap or the
aggregate cap are sent a letter by their contractor (regional home
health and hospice intermediary (RHHI) or fiscal intermediary (FI)),
detailing the cap results, along with a demand for repayment. As
described in an administrative instruction (CR 6400, Transmittal 1708,
issued April 3, 2009) effective July 1, 2009, this letter of
determination of program reimbursement will be sent to every hospice
provider, regardless of whether or not the hospice has exceeded the
cap. A demand for repayment will be included for those hospices which
have exceeded either cap. If a hospice disagrees with the contractor's
cap calculations, the hospice has appeal rights which are set out at 42
CFR Sec. 418.311 and Part 405, subpart R. The letter of determination
of program reimbursement shall include language describing the
hospice's appeal rights. We proposed clarifying the language at Sec.
405.1803 to note that for the purposes of hospice, the determination of
program reimbursement letter sent by the contractors serves as the
written notice reflecting the intermediary's determination of the total
amount of reimbursement due the hospice, which is commonly called a
Notice of Program Reimbursement or NPR. Additionally, we proposed
clarifying Sec. 405.1803(a)(1)(i) to note that in the case of hospice,
the reporting period covered by the determination of
[[Page 39401]]
program reimbursement letter is the hospice cap year and the bases for
the letter are the cap calculations rather than reasonable cost from
cost report data.
Comment: Commenters supported the proposed clarification, but asked
that CMS also clarify that the time period for filing cap appeals does
not begin until the hospice receives the letter of determination of
program reimbursement. Additionally, they asked CMS to clarify that
hospices should not be required to wait until they receive these
letters to appeal issues unrelated to the caps. Many commenters also
were dissatisfied with the amount of time between the end of a cap year
and the hospice receiving the determination letter.
Response: We thank commenters for their support of this
clarification, and for their questions, which point out an addition to
regulatory text which would be helpful. Several commenters had
questions related to the timing of appeals because of the location of
the proposed changes to the regulatory text. To avoid confusion, we
have established a separate subsection at Sec. 405.1803(a)(3) entitled
``Hospice Caps''. This section includes the language originally
proposed for Sec. 405.1803(a) and Sec. 405.1803(a)(1)(i).
Additionally, we are adding a sentence to the regulatory text at Sec.
405.1803(a)(3) which notes that the timeframe for hospice cap appeals
begins with receipt of the determination of program reimbursement
letter.
Commenters also asked about the timing when appealing issues
unrelated to the caps. The timing of all other claims appeals is
unrelated to the determination of program reimbursement letters, and
those appeals are governed under 42 CFR 418.311. When appealing claims
decisions, providers should continue to follow the procedures and
timeframes outlined in the CMS Claims Processing Manual (IOM 100-04),
Chapter 29 (``Appeals of Claims Decisions''), which can be accessed
through the CMS Hospice Center Web page at http://www.cms.hhs.gov/
center/hospice.asp.
Finally, we have taken note of the long timeframe some commenters
currently report in receiving the results of their cap calculations,
and will consider this information in any changes to the cap
calculation methodology that might be made in the future.
For this final rule, we are revising the proposed changes to Sec.
405.1803. Specifically, we are creating a separate section at Sec.
405.1803(a)(3) subtitled ``Hospice Caps'', providing the same
information that we had proposed be in Sec. 405.1803(a) and Sec.
405.1803(a)(1)(i). The regulatory text at Sec. 405.1803(a) and Sec.
405.1803(a)(1)(i)is to be unchanged. Additionally, we will add a
sentence to the new section at Sec. 405.1803(a)(3) to note that the
timeframe for appeals of cap calculation results begins with receipt of
the determination of program reimbursement letter.
F. Technical and Clarifying Changes
We are incorporating the following technical changes to clarify
existing regulations text, correct errors that we have identified in
the regulations, remove obsolete cross references, or to ensure
consistent use of terminology in our regulations.
1. Clarification of the Statutory Basis for Hospice Regulation, Sec.
418.1
Currently, the statutory basis for the hospice regulations is
described at Sec. 418.1, and notes that Part 418 implements section
1861(dd) of the Act. The regulation describes section 1861(dd) of the
Act as specifying covered hospice services and the conditions that a
hospice program must meet to participate in the Medicare program. While
that is correct, section 1861(dd) of the Act also specifies some
limitations on coverage and payment for inpatient hospice care. In the
proposed rule we proposed clarifying Sec. 418.1 by adding a sentence
noting that section 1861(dd) of the Act limits coverage and payment for
inpatient hospice care.
We received no comments on this proposal, and are finalizing the
changes as proposed.
2. Update of the Scope of Part, Sec. 418.2
The current regulations at Sec. 418.2 (``Scope of part.'')
describe each of the subparts in Part 418. Some of these subparts have
been revised or removed due to the update of the hospice conditions of
participation (CoPs) in 2008 (73 FR 32088). Specifically, subpart B
specifies the eligibility and election requirements, along with the
duration of benefits. Subparts C and D specify the Conditions of
Participation, with subpart C now entitled ``Patient Care'' rather than
``General Provisions and Administration'', and subpart D now entitled
``Organizational Environment'' rather than ``Core Services''. Subpart
E, which was previously described as specifying reimbursement methods
and procedures, was removed and reserved for future use with the update
of the CoPs. Subparts F and G now relate to payment policy, to include
covered services and hospice payment; currently subpart F is
incorrectly described in Sec. 418.2 as specifying coinsurance amounts.
Finally, subpart H should be referred to as specifying coinsurance
amounts applicable to hospice care, rather than subpart F as the
regulation currently reads. Accordingly, we proposed to update section
Sec. 418.2 to reflect the current organization and scope of Part 418.
We received no comments on this proposal, and are finalizing the
changes as proposed.
3. Revision of Hospice Aide and Homemaker Services, Sec. 418.76
In the proposed rule, we proposed to incorporate a technical
correction at Sec. 418.76(f)(1) to clarify that home health agencies
that have been found out of compliance with paragraphs (a) or (b) of
Sec. 484.36, regarding home health aide qualifications, are prohibited
from providing hospice aide training. The word ``out'' was
inadvertently omitted from the regulation text in the June 5, 2008
hospice final rule.
We received no comments on this proposal, and are finalizing the
changes as proposed.
4. Clarification of Hospice Multiple Location, Sec. 418.100
For the sake of clarity, in the proposed rule we proposed to delete
the word ``that'' from Sec. 418.100(f)(1)(iii), regarding multiple
locations. The revised element would require that the lines of
authority and professional and administrative control must be clearly
delineated in the hospice's organizational structure and in practice,
and must be traced to the location which was issued the certification
number.
We received no comments on this proposal, and are finalizing the
changes as proposed.
5. Revision to Short Term Inpatient Care, Sec. 418.108
In the proposed rule, we proposed to correct in Sec.
418.108(b)(1)(ii) an erroneous reference to Sec. 418.110(f), ``Patient
rooms''. This section, which addresses facilities that are considered
acceptable for the provision of respite care to hospice patients, was
intended to reference the standard at Sec. 418.110(e), ``Patient
areas''. The published reference to standard (f) was a typographic
error, and we are correcting it by changing the reference to standard
(e).
We received no comments on this proposal, and are finalizing the
changes as proposed.
6. Clarification of the Requirements for Coverage, Sec. 418.200
Section 418.200 describes the requirements for coverage for
Medicare
[[Page 39402]]
hospice services, and references Sec. 418.58 (``Conditions of
Participation--Plan of care''). This cross reference is no longer
accurate; section Sec. 418.58 was updated with the publication of the
new CoPs in 2008, and is now Sec. 418.56. In the proposed rule we
proposed to detail the requirements for coverage related to the plan of
care rather than cross refer to the CoPs regulations. This revision
would make clearer that the statute requires review of the plan of care
as a condition for coverage of hospice services. However, we are
continuing to include a reference to the updated CoP section (418.56)
for a comprehensive description of our expectations associated with the
plan of care.
The statute specifies requirements for hospice coverage in section
1814(a)(7)(A) through (C) of the Act. The Act requires that the hospice
medical director and the patient's attending physician certify the
terminal illness for the initial period of hospice care and that the
medical director recertify the terminal illness for each subsequent
benefit period. Additionally, the Act requires that a plan of care
exist before care is provided; that the plan of care be reviewed
periodically by the attending physician, the medical director, and the
interdisciplinary group; and that care be provided in accordance with
the plan of care. In the proposed rule, we proposed to clarify Sec.
418.200 to incorporate each of these requirements for coverage, rather
than cross referencing other CoPs.
We received no comments on this proposal, and are finalizing the
changes as proposed, except that we are continuing to include the CoP
cross-reference.
7. Incorporation of the Term ``Hospice Aide,'' Sec. 418.202, Sec.
418.204, and Sec. 418.302
Over the last several years, we have worked with the industry to
update the hospice CoPs. These efforts culminated in publication of a
final rule in 2008, which was effective December 2, 2008. The revised
CoPs redesignated the ``home health aide'' who works in hospice as a
``hospice aide''. We are revising Sec. 418.202(g), Sec. 418.204(a),
and Sec. 418.302 to include the new terminology.
Comment: One commenter suggested we remove the language ``home
health aide'' and just use the term ``hospice aide''.
Response: We appreciate this comment. However, we are keeping the
reference to a ``home health aide'' in the regulations, because that is
how the Social Security Act refers to aides in hospice. Consequently,
we are finalizing the change as proposed.
8. Clarification of Administrative Appeals Sec. 418.311
A hospice that does not believe its payments have been properly
determined may request a review from the intermediary or from the
Provider Reimbursement Review Board (PRRB), depending on the amount in
controversy. Section 418.311 details the procedures for appealing a
payment decision and also refers to Part 405, Subpart R.
In the proposed rule, we proposed to clarify the last sentence of
this section, which currently notes that ``the methods and standards
for the calculation of the payment rates by CMS are not subject to
appeal.'' The payment rates referred to are the national rates which
are set by statute, and updated according to the statute using the
hospital market basket (unless Congress instructs us to update the
rates differently). To ensure better understanding of what is not
subject to appeal, we proposed to revise Sec. 418.311 to provide that
methods and standards for the calculation of the statutorily defined
payment rates by CMS are not subject to appeal.
We received no comments on this proposal, and are finalizing the
changes as proposed.
III. Comments on Other Policy Issues
A. Recertification Visits, Sec. 418.22
As noted earlier, MedPAC convened an expert panel from the hospice
industry in late 2008. That panel noted that some hospices were
enrolling and recertifying patients who they determined were not
eligible for hospice care under the Medicare benefit, and a consensus
emerged that greater accountability and oversight were needed in the
certification and recertification process. To further increase
accountability in the recertification process, several of the panelists
suggested to MedPAC that an additional policy change be made to the
recertification process. Several panelists supported a requirement that
a hospice physician or advanced practice nurse visit the patient at the
time of the 180-day recertification to assess continued eligibility,
and at every recertification thereafter to assess the patient's
continued eligibility. MedPAC recommended that the physician or
advanced practice nurse be required to attest that the visit took
place. MedPAC used the panel's input in making recommendations related
to the certification process, which can be found in chapter 6
(``Reforming Medicare's Hospice Benefit'') of MedPAC's March 2009
report entitled ``Report to the Congress: Medicare Payment Policy''
which is available at http://www.medpac.gov/chapters/Mar09_Ch06.pdf.
At this time, we are not making any policy change to require visits
by physicians or advanced practice nurses in order to recertify
patients. We note that the statute requires a physician to certify and
recertify terminal illness for hospice patients, and specifically
precludes nurse practitioners from doing so at 1814(a)(7)(A) of the
Act. A recertification visit to a hospice patient by a nurse
practitioner would not relieve the physician of his or her legal
responsibility to recertify the terminal illness of such hospice
patient. The physician is ultimately responsible for the
recertification determination. However, the visit, if performed by a
nurse practitioner, could potentially serve as an additional, objective
source of information for the physician in the recertification of
terminal illness decision. We are also considering other options
related to a nurse practitioner making recertification visits. For
example, a nurse practitioner who is involved in a patient's day-to-day
care may not be as objective in assessing eligibility for
recertification as a nurse practitioner who is not caring for that
patient regularly. One option to better ensure that a nurse
practitioner visit results in additional, objective clinical assessment
of the patient's condition might be to require that such nurse
practitioner not be involved in the hospice patient's day-to-day care.
Also, there are different possible approaches regarding the timeframe
for making visits. Visits by a physician or nurse practitioner could be
made within a timeframe close to the recertification deadline, such as
the 2 week period centered around the recertification date, thereby
allowing a window of time surrounding the recertification timeframe for
a visit to occur.
While we are not making a policy change regarding recertification
visits at this time, we did solicit comments on the suggestion to
require physician or nurse practitioner visits for hospice
recertifications at or around 180 days and for every benefit period
thereafter. We solicited comments on all aspects of this suggestion,
including practical issues of implementation. We will analyze and
consider the comments received in possible future policy development.
Comment: Many commenters supported this requirement, but only if
the visits were adequately reimbursed, stating that current payments
are not sufficient to cover the costs of these visits, especially where
patients reside in remote areas. Some commenters
[[Page 39403]]
urged the visits be performed by a physician experienced in end-of-life
care. Others stated that the visit be thorough and comprehensive, and
include patient and family counseling about alternate care arrangements
if appropriate. Many commenters stated that advanced practice nurses
should not perform the visits, stating that the goal of increased
physician accountability would be achieved with a physician visit.
Other commenters suggested that the visits occur only at the 180 day
recertification. Similarly, many commenters suggested that the visits
occur at 180 days and at every other recertification after that. Many
commenters suggested the visit could occur within two or three week
window around the recertification timeframe. One commenter suggested an
alternative process to review non-cancer patients at 90 and 180 days.
Commenters encouraged CMS to work with the industry to identify all
issues which may be associated with such a requirement.
In the April 24, 2009 hospice wage index proposed rule, we
suggested that if it were determined appropriate for a nurse
practitioner to render such a visit, that an option to better ensure
that an objective clinical assessment of the patient's condition
occurred might be to require that the nurse practitioner not be
involved in the day-to-day care for that hospice patient. One commenter
suggested that, due to shortages in nurse practitioners, we consider
allowing the nurse practitioner who was involved in the patient's day-
to-day care to perform some but not all of the recertification visits.
The commenter further suggested that the nurse practitioner who was
involved in the patient's day-to-day care not be allowed to render the
first recertification visit and not be allowed to render such visits
for consecutive recertifications. Additionally, this same commenter
stated that the recertification visits should occur over a reasonable
timeframe before the recertification date. This commenter believes that
if the ``visit were to occur after the recertification date, it could
create a disincentive for hospices to discharge a patient since it
would result in a lack of payment for days of care already provided
beyond the recertification date.'' One commenter suggested that nurse
training be developed to certify nurses in hospice eligibility
evaluations. Another commenter stated that the visit must be performed
by someone familiar with the patient so that changes in the patient's
condition are identified.
Many commenters opposed this requirement. Commenters were concerned
that this recertification requirement would be burdensome to providers
and would result in decreased access to care. These same commenters
were concerned that the lack of physician resources in small and rural
hospices that only have a part-time medical director would make it
impossible to perform these visits. Some commenters indicated that
nurse practitioners are just as scarce in rural areas as physicians.
Some commenters stated that there would be no increased quality
associated with these visits, and that visits should be used to improve
care, not monitor eligibility. Similarly, other commenters suggested we
target for contractor review hospices with long-stay patients rather
than penalize all hospices with this costly requirement. A commenter
stated that these visits would upset the families, and are not an
efficient use of resources. One commenter stated that it would be
difficult for hospices to hire medical directors if this requirement
were adopted.
Response: We appreciate the comments received from the public
concerning this matter and will continue to analyze and consider those
comments and suggestions in future rulemaking.
B. Hospice Aggregate Cap Calculation
As described in section 1814(i)(2)(A) through (C) of the Act, when
the Medicare hospice benefit was implemented, the Congress included an
aggregate cap on hospice payments. The hospice aggregate cap limits the
total aggregate payment 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. 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). This timeframe
was chosen as the cap year since the Medicare hospice program began on
November 1, 1983 (48 FR 56022). For the 2008 cap year, the cap amount
was $22,386.15 per beneficiary. This cap amount is multiplied by the
number of Medicare beneficiaries who received hospice care in 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. A hospice's total reimbursement
for the cap year cannot exceed the hospice aggregate cap. If its
aggregate cap is exceeded, then the hospice must repay the excess back
to Medicare.
Using the most recent (2008) payment rates before wage adjustment,
the 2008 cap amount ($22,386.15) is roughly equal to the cost of
providing routine home care for 166 days. Because the hospice aggregate
cap is computed in the aggregate for the entire hospice, rather than on
a per beneficiary basis, hospices that admit a mix of short-stay and
long stay Medicare beneficiaries will rarely exceed the cap. On
average, lower expenditures made on behalf of Medicare beneficiaries
with shorter hospice stays offset the expenditures made on behalf of
Medicare beneficiaries with longer stays such that in the aggregate,
the majority of hospices do not exceed the calculated aggregate cap.
Until recently, very few hospices ever exceeded the aggregate cap.
The Government Accountability Office (GAO) found that between 1999 and
2002, less than 2 percent of hospices exceeded the aggregate cap
(United States Government Accountability Office, ``Medicare Hospice
Care. Modifications to Payment Methodology May Be Warranted''. October
2004, Washington, DC. p. 18). MedPAC reported that the number of
hospices that exceeded the aggregate cap has grown steadily between
2002 and 2005, but remains just under 8 percent as of 2005 (Medicare
Payment Advisory Commission, ``Report to the Congress: Reforming the
Delivery System''. June 2008. Washington, DC. p. 212). We do not
believe that hospices are exceeding the aggregate cap due to our
intermediaries' method of calculating the aggregate cap. Rather,
MedPAC's analyses suggest that certain hospices exceed the aggregate
cap due to ``significantly longer lengths of stay'' than hospices that
do not exceed the cap [MedPAC, p. 214-15]. MedPAC suggests that longer
average lengths of stay at certain hospices could be due, in part, to a
change in their patient case-mix that has brought in more patients with
less predictable disease trajectories [MedPAC, p. 213-14]. However,
patient case-mix was not found to account for all of the discrepancy in
length of stay [MedPAC, p. 214-15]. MedPAC also found that for-profit
ownership, smaller patient loads, and being a freestanding facility
were correlated with longer lengths of stay and the consequent
likelihood of exceeding the aggregate cap [MedPAC, p. 212-215].
As stated above, in our current hospice aggregate cap calculation
methodology, the intermediary calculates each hospice's aggregate cap
[[Page 39404]]
amount by multiplying the per-beneficiary cap amount by the number of
Medicare beneficiaries counted in each cap year. Patients who receive
hospice care in more than one cap year are counted so that, in the
aggregate, the ``number of Medicare beneficiaries'' for each year is
reduced to reflect the proportion of time patients receive in other
years. Hospices are currently required to submit a report of their
Medicare beneficiary unduplicated census to their intermediary within
30 days of the end of the cap year. Our current methodology also
apportions the beneficiary across multiple hospices if the beneficiary
receives care from more than one hospice during the cap year, with the
proportional shares summing to 1. The intermediary reduces each
hospice's Medicare beneficiary count by that fraction which represents
proportional days of care the beneficiary received in another hospice
during the year, with all the proportional shares summing to 1.
In counting the Medicare beneficiaries for the unduplicated census
report, we instruct hospices to use a slightly different timeframe from
the cap year used to count payments. When determining a hospice's
expenditures during a cap year, the intermediary sums all claims
submitted by the hospice for services performed during the cap year,
which begins on November 1st of each year and ends on the October 31st
of the following year. However, we instruct hospices to include those
beneficiaries who elect the benefit between September 28th of each year
and September 27th of the following year, rather than following the
November 1st to October 31st cap year. CMS (then HCFA) used mean length
of stay from demonstration project data to determine the point at which
to include a beneficiary in calculating the hospice cap. Using half of
the mean length of stay, or 70 days/2 = 35 days, CMS implemented a
timeframe for counting beneficiaries that began less than 35 days from
the end of the cap year. Therefore, the timeframe for counting
beneficiaries was set as September 28th through September 27th (48 FR
56022). This method of reducing the number of Medicare beneficiaries
counted in a cap year to reflect time spent in other years was
implemented because it allows for counting the beneficiary in the
reporting period where he or she used most of the days of covered
hospice care (48 FR 38158). We believe that the regulation complies
with the statutory requirements without being unduly burdensome. This
approach has the major advantage of allowing each hospice to estimate
its aggregate cap calculation within a short period of time after the
close of a cap year. While we believe that the current hospice
aggregate cap methodology equitably meets the statutory requirements
for calculating the hospice aggregate cap set out at section 1814(i)(2)
of the Act, the availability of more sophisticated databases and data
systems provides us with an opportunity to incorporate efficiencies in
the cap calculation process. The lack of sophisticated data systems in
place in the 1980's limited our options for how to efficiently compute
the hospice aggregate cap. In the 1980's access to claims data was very
slow, and searchable claims databases were virtually non-existent.
While the current system still has limitations, the advancement of
technology has brought with it provider access to benefit period
information in the Common Working File (CWF), which was created in the
1990's, and faster processing speeds, which allow contractors and
hospices easier access to claims information for hospice aggregate cap
calculation purposes. Therefore, we are now able to consider more
efficient approaches to calculating the aggregate cap.
The time required for intermediaries to compute each hospice's
aggregate cap and send demand letters when overpayments exist delays
our recovery of those overpayments and may also contribute to some
hospices exceeding the cap in subsequent years. Hospices have described
receiving demands for cap overpayments more than a year after the end
of the cap year, and have expressed concern that they are not timely
notified about their cap overpayments. Hospices which don't closely
monitor compliance with their aggregate cap may not have anticipated an
overpayment, and the lag in notification may contribute to the risk of
a hospice exceeding its aggregate cap in the subsequent year. More
timely notification of overpayments would enable hospices to more
quickly review their admissions practices, and make necessary changes
to ensure that all their patients meet the eligibility requirements for
hospice care.
We are exploring a number of different hospice aggregate cap
implementation methodology changes to address these issues, and to take
advantage of the technological efficiencies available. Specifically, we
are exploring enhancements to our current methodology which will
improve the timeliness of hospices' notification of cap overpayments,
will enable such overpayments to be collected more quickly, and which
will encourage hospices to be more proactively involved in managing
their admissions practices such that they do not exceed their hospice
aggregate cap. We are considering several changes to the annual hospice
aggregate cap calculation implementation methodology which could help
hospices avoid exceeding the aggregate cap.
If a beneficiary receives hospice care for an extended period of
time, or elects hospice toward the end of a cap year, he or she is more
likely to cross into more than 1 cap year, or to receive care from more
than 1 hospice. If we made a mathematically precise determination of
the proportion of time each patient spent in each cap year at each
hospice from which they received care, in order for a given cap year
report to be final, adjustments to that cap year report would have to
continue until the beneficiary actually died. Only then could a final
determination of the aggregate cap be made for a given year for each
hospice that had treated the beneficiary. Such an approach could be
viewed as particularly burdensome to the hospice as a hospice's
financial system would likely need to be able to continually react to
subsequent hospice aggregate cap calculations, readjusting payments to
Medicare to account for an overpayment amount that is ever-changing,
that is, until the beneficiary dies.
A variation of this approach would allow apportioning of
beneficiaries who receive care in more than 1 cap period over 2
consecutive years. This approach would minimize, but not completely
eliminate, the adjustments required to prior year cap calculations.
This method still has the effect of delaying the final cap
determination. However, it raises questions about scenarios where a
beneficiary received hospice care in his first and second cap year,
either revoked or was discharged from the benefit, and returned to a
different hospice at a much later date, such as in the third cap year.
We would like public input from hospices, patient groups, other
provider types, academics, and members of the general public on how to
best handle this or similar scenarios.
Besides considering different approaches to counting beneficiaries,
another option is to require hospices to compute their own hospice
aggregate cap and submit a certified cap report to their contractors,
along with any overpayment, 7 months after the end of the cap year. The
information used for the hospice aggregate cap calculation originates
with hospices, and is available to them through the CWF or through
their own accounting records. Requiring hospices to compute and
[[Page 39405]]
report their own hospice aggregate cap would result in hospices being
proactive in managing their cap calculations. In this approach,
contractors would still verify the reported cap.
We solicited comments on these and other policy options in an
effort to gather more information on this issue, and any other possible
underlying issues that may exist.
Comment: Most commenters encouraged CMS to more timely notify
providers of their cap overpayments, stating that the current delay in
notification is burdensome, results in overpayments generated for prior
years, and does not allow providers to make timely corrections. Many
commenters suggested CMS apportion the cap over consecutive years if
the patient received service over more than 1 year. Some hospices were
agreeable to CMS' suggestion that hospices should calculate and report
their own certified cap report, with the caveat that patients' full
utilization history be made available to hospices in order for them to
accurately compute the report. Others expressed concern that there
should be penalties imposed for erroneous reporting. Other commenters
opposed submission of a cap report, for burden reasons, and because
patients' full utilization is not currently available to them. Several
commenters suggested that cap amount be adjusted for geographic
variances in costs. Commenters also requested that CMS allow a new cap
amount for readmitted beneficiaries who experience a break in hospice
utilization. Some commenters suggested we consider common ownership as
a factor in the cap calculation. Many commenters stated that the cap
needs to be modernized. Others stated that the suggestions CMS
described in the solicitation for comments will only exacerbate the cap
problems, suggesting CMS instead should consider methods that will
ensure admissions and discharge decisions are not based on fears of
financial liability associated with a cap. One commenter expressed
concerns about how we would transition to a new calculation
methodology. Another commenter stated that all hospices should receive
cap feedback from the fiscal intermediary to enable them to monitor
their cap better.
Many submitted comments that were beyond the scope of the
solicitation for suggestions associated with cap calculation
methodology improvements. Some stated that the cap currently encourages
hospice providers to focus on their financial bottom line instead of
patient needs, and incentivizes hospices to inappropriately discharge
patients, and not admit patients with less predictable trajectories.
Others suggested that CMS suspend the aggregate cap until hospice
payment reform occurs, and suggesting CMS improve national coverage
determination processes. One commenter stated that the cap doesn't
account for geographic factors that may affect a hospice's patient
population, which may increase their risk of exceeding the cap. Many
commenters expressed support for the aggregate cap, with one stating
that CMS should generate alerts to physicians and hospice medical
directors with a high percentage of long-stay patients, and ultimately
revoke their billing privileges.
Response: We appreciate the comments received from the public
concerning this matter and will continue to analyze and consider those
comments and suggestions in future rulemaking.
C. Hospice Payment Reform
Since the inception of the hospice benefit in 1983, the amount that
the Medicare program has spent on this benefit has grown considerably.
The number of unduplicated hospice Medicare beneficiaries has increased
from 401,140 in FY 1998 to 986,435 in FY 2007, which represents a 146
percent increase. Additionally, at the inception of the benefit, most
hospice patients elected hospice care due to terminal cancer. The
profile of the hospice patient has changed in recent years such that
hospices now provide care to beneficiaries with a wide range of
terminal conditions. In calendar year (CY) 1998, 54 percent of hospice
patients had terminal cancer diagnoses. In CY 2007, only 28 percent of
hospice patients had terminal cancer diagnoses. With the diversity of
diagnoses, hospice stays began to increase. The national average length
of stay for patients in hospice has risen from 48 days per patient in
CY 1998 to 73 days per patient in CY 2006. Additionally, long hospice
stays have grown even longer by about 50 percent. Between 2000 and
2005, hospices in the 90th percentile for average length of stay
increased their average length of stay from 144 to 212 days.
MedPAC has performed extensive analysis of the hospice benefit over
the past few years, and has recommended that CMS reform the hospice
payment structure to ensure greater accountability in the hospice
benefit. MedPAC believes that the current hospice payment system
contains incentives that make long hospice stays more profitable, which
may result in misuse of the benefit.
Medicare spending for hospice is rapidly growing, more than
tripling between 2000 and 2007. In fiscal year (FY) 1998, expenditures
for the Medicare hospice benefit were $2.2 billion, while in FY 2007,
expenditures for the Medicare hospice benefit were $10.6 billion, more
than the Medicare program spends on inpatient rehabilitation hospitals,
critical access hospitals, long term care hospitals, or psychiatric
hospitals. Medicare hospice spending is expected to continue to grow,
and will account for roughly 2.3 percent of overall Medicare spending
in FY 2009.
The number of hospice agencies has also grown by over 80 percent
since 1997. The growth is overwhelmingly in the for-profit category. In
1997, there were 1,834 hospices, about 20 percent of which were for-
profit and 80 percent were non-profit. In 2009, there were 3,328
hospices, and 51 percent of these are for-profit entities. Since 2000,
nearly all hospices newly participating in Medicare are for-profit
entities. MedPAC reports that the newly participating hospices have
margins five to six times higher than more established hospices. MedPAC
estimates that, on average, hospice Medicare margins were approximately
3.4 percent in 2005. However, the for-profit hospices are estimated to
have margins ranging from 15.9 percent in 2003 to 11.8 percent in 2005.
In their analyses of the hospice benefit in their June 2008
``Report to the Congress,'' MedPAC found that hospice care is more
costly at the beginning and end of an episode of hospice care, because
of the intensity of services provided during those times. Hospices
provide more visits to a patient right after a patient elects hospice
and in the time shortly before death, than they provide during the
middle of the episode. In its March, 2009 report entitled ``Report to
the Congress: Medicare Payment Policy'', MedPAC suggested that payments
to hospices should decline as the beneficiary's length of stay
increases, thus better reflecting intensity and frequency of the
hospice services provided over the course of treatment. MedPAC also
suggested that payment to hospices should increase during the period
just prior to the patient's death to reflect the higher resource usage
during this time [see, chapter 6 (``Reforming Medicare's Hospice
Benefit'') of MedPAC's March 2009 report entitled ``Report to the
Congress: Medicare Payment Policy'' which is available at http://
[[Page 39406]]
www.medpac.gov/chapters/Mar09_Ch06.pdf].
MedPAC believes this payment structure would better reflect hospice
patient resource usage and hospice costs, and would encourage hospices
to admit patients at the time in their illness which provides the most
benefit to the patient.
We solicited comments regarding MedPAC's suggestions on reforming
the hospice payment system, as well as broader comments and suggestions
regarding hospice payment reform. We note that MedPAC's suggested
payment reforms would require Congressional action to change the
statute.
Comment: Many commenters supported MedPAC's payment model. Some
made specific recommendations regarding which time periods in the stay
should warrant a higher payment. Some commenters suggested that a
hospice payment system that is a case-mix adjusted would be
appropriate. One commenter suggested a site of care adjustment, to
reflect more adequate compensation for hospices in rural versus urban
areas, and for care provided to patients in congregate living
arrangements. The commenter suggested that CMS also require Medicaid to
pay room and board charges directly to the nursing home in the case of
dually eligible routine home care patients who reside in nursing homes.
This commenter also suggested CMS analyze the appropriateness of
payments for respite and continuous home care. Commenters feared that
the MedPAC payment model would result in decreased access to hospice
care, especially for patients with non-cancer diagnoses, with one
commenter suggesting that CMS shouldn't change the payment structure
simply because a small number of providers are abusing the system.
Rather, this commenter suggested that CMS deal with inappropriate use
of hospice via increased surveying.
Other commenters feared that MedPAC's suggestion would create
incentives for inappropriate hospice provider behavior such as
incentivizing admission late in a patient's disease trajectory. One
commenter suggested instead of reforming hospice payments, CMS should
consider the role of hospice and costs in the total health care
picture. Other commenters encouraged CMS to consider the impact payment
changes would have on quality of care. Some commenters expressed
concern about the administrative burden associated with a payment
system change, with one suggesting that CMS consider an approach that
would blend rates. One commenter encouraged CMS to consider other
possible payment models. Commenters urged CMS to carefully analyze all
data including cost data before reforming the hospice payment
structure, to avoid unintended consequences. A few commenters suggested
that CMS consider a pilot or demonstration to test a revised payment
model prior to national implementation. Commenters also suggested that
CMS involve the industry by holding technical expert panel (TEP)
sessions in order to more fully identify, address, and consider the
issues surrounding hospice payment reform. Many commenters urged CMS to
ensure that payment reform would be effectuated in a budget neutral
way.
Response: We appreciate the comments received from the public
concerning possible hospice payment reform. We will continue to review
and consider those comments received as we analyze hospice data (to
include recent expansions of the hospice data collected on the claim)
in our work towards ensuring the accuracy and appropriateness of
payments to hospices.
IV. Update on Additional Hospice Data Collection
Over the past several years MedPAC, the GAO, and the Office of the
Inspector General have all recommended that CMS collect more
comprehensive data in order to better evaluate trends in utilization of
the Medicare hospice benefit. We have been phasing in this process to
collect more comprehensive data on hospice claims. We also began
collecting additional data on hospice claims beginning in January 2007
through an administrative instruction (CR 5245, Transmittal 1011,
issued July 28, 2006), when we started required reporting of a HCPCS
code on the claim to describe the location where services were provided
(Phase 1). In addition, we issued an administrative instruction (CR
5567, Transmittal 1494, issued April 29, 2008) requiring Medicare
hospices to provide detail on their claims about the number of
physician, nurse, aide, and social worker visits provided to
beneficiaries. The start date of this mandatory CR 5567 reporting
requirement was July 2008 (Phase 2). On several occasions, industry
representatives have communicated to CMS that the newly required claims
information was not comprehensive enough to accurately reflect hospice
care. A major concern was that CMS was not requiring reporting of the
visit intensity. As a result of these concerns, we committed to working
with the industry to expand the data collection requirements. In
October 2008, we solicited comments via a posting on CMS' hospice
center Web site (http://www.cms.hhs.gov/center/hospice.asp) on an
approach to collecting additional data about hospice resource use. We
asked about data collection using hospice claims, along with data
collection using hospice cost reports. This final rule provides an
update on the additional data collection.
Based on the feedback received from our October 2008 Web posting,
we revised our plans for Phase 3 of the claims data collection. Those
plans were described in CR 6440 (Transmittal 1738), which was issued on
May 15, 2009, and will have a mandatory effective date of January 1,
2010.
Phase 3 will involve collecting new data on hospice claims. In
addition to the existing visit reporting requirement, we are requiring
visit time reporting in 15 minute increments for nurses, social
workers, and aides. We are requiring visit and visit time reporting in
15 minute increments from physical therapists, occupational therapists,
and speech language therapists. We are also requiring reporting of some
social worker phone calls and their associated time, within certain
limits. Specifically, we are requiring the reporting of social worker
calls that are necessary for the palliation and management of the
terminal illness and related conditions as described in the patient's
plan of care (for example, counseling, speaking with a patient's
family, or arranging for a placement). Furthermore, only social worker
phone calls related to providing and or coordinating care to the
patient and family, and documented as such in the clinical records, are
to be reported. Visit and time data collection for respite and general
inpatient care provided by non-hospice staff in contract facilities
would be exempt from the reporting requirement. Finally, travel time,
documentation time, and interdisciplinary group time are not to be
included in the time reporting. These changes necessitate line-item
billing on hospice claims.
While other Medicare provider types (for example, home health
agencies) have had to provide similar information on their claims,
hospices have historically not been required to provide this
information. This additional data collection will bring the
requirements for hospice claims more in line with the claim
requirements of other Medicare benefits, and provide valuable
information about services provided to Medicare beneficiaries.
We also note that this additional data collection uses existing
revenue codes and existing UB-04 and 837I claim forms. Those claims
forms were
[[Page 39407]]
previously approved by the OMB under control number 0938-0997.
As stated above, these changes were issued through an administrative
instruction (CR 6440, Transmittal 1738) issued on May 15, 2009.
Additionally, we are developing plans to revise the hospice cost
reports to include additional sources of revenue, and to gather more
detailed data on services provided by volunteers, by chaplains, by
counselors, and by pharmacists. We will continue to work with the
industry to seek out the best approach to these and any other changes
we may make in order to collect useful information on hospice services.
V. Provisions of the Final Regulations
This final rule incorporates many of the provisions of the proposed
rule. Those provisions of this final rule that differ from the proposed
rule are as follows:
In section II.A.3, instead of reducing the BNAF by 75 percent in FY
2010 and eliminating it in FY 2011, we are finalizing the BNAF phase-
out over 7 years, with a 10 percent BNAF 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 of 40 percent in FY
2012, an additional 15 percent reduction for a total of 55 percent in
FY 2013, an additional 15 percent reduction for a total of 70 percent
in FY 2014, an additional 15 percent reduction for a total of 85
percent in FY 2015, and an additional 15 percent reduction for complete
phase-out in FY 2016.
In section II.B, we are finalizing our proposal to require that
physicians who certify or recertify hospice patients as terminally ill
include a brief narrative explanation of the clinical findings that
support a life expectancy of six months or less. We are revising our
original proposal to allow the narrative to either be part of the
certification and recertification forms, or an addendum to the
certification and recertification forms which is electronically or hand
signed by the physician. If the narrative is part of the certification
or recertification form, then the narrative must be located immediately
prior to the physician's signature. If the narrative exists as an
addendum to the certification or recertification form, in addition to
the physician's signature on the certification or recertification form,
the physician must also sign immediately following the narrative in the
addendum. The narrative must reflect the patient's individual clinical
circumstances. The narrative must not contain checked boxes or standard
language used for all patients. In the case of the initial
certification, we require either the attending physician or the hospice
medical director compose and sign the narrative. We also require that
the narrative include under the physician signature, a statement
indicating that by signing, the physician confirms that he/she composed
the narrative based on his/her review of the patient's medical record
or, if applicable, examination of the patient.
In section II.E, we are modifying our proposal to change regulatory
text in 42 CFR 405.1803. We are creating a separate section at Sec.
405.1803(a)(3) which will be subtitled ``Hospice Caps'' and which will
provide the same information that we had proposed be in Sec.
405.1803(a) and Sec. 405.1803(a)(1)(i). We are leaving the regulatory
text at Sec. 405.1803(a) and Sec. 405.1803(a)(1)(i) unchanged.
Additionally, we are adding a sentence to the new section at Sec.
405.1803(a)(3) to note that the timeframe for appeals of cap
calculation results begins with receipt of the determination of program
reimbursement letter.
In section II.F, we are modifying our proposal to change the
regulatory text in 42 CFR Sec. 418.200. We are continuing to include a
reference to the updated CoP section (418.56) for a comprehensive
description of our expectations associated with the plan of care,
rather than the removing the reference as proposed.
VI. Collection of Information Requirements
Under the Paperwork Reduction Act of 1995, we are required to
provide 30-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.
We are soliciting public comment on the issue for the following
section of this document that contains information collection
requirements (ICRs):
Section 418.22 Certification of terminal illness.
Section 418.22 requires the physician to include on or with the
certification or recertification a brief narrative explanation of the
clinical findings that support a life expectancy of 6 months or less.
The burden associated with this requirement is the time and effort
put forth by the physician to include a brief narrative explanation of
the clinical findings that supports a life expectancy of 6 months or
less. We received the following comment during the 60-day comment
period for the proposed stage of this rule:
Comment: One commenter felt that the burden on hospices would be
more than 5 minutes, suggesting that it would take physicians 30
minutes per certification to comply with the narrative requirements.
Response: We disagree that requiring a narrative on the
certification would take 30 minutes of the physician's time. As we
stated in the proposed rule, physicians are already supposed to be
reviewing the patient's clinical record when certifying or recertifying
a patient. If hospices are complying with the current certification
requirements, then the additional time to add a narrative would only be
the time to synthesize the medical information. After reviewing the
data, we still believe that composing the narrative should take a
physician approximately 5 minutes. However, in re-examining the data
and our previous assumptions and estimates from the proposed rule, we
have re-estimated our burden estimate, which is now consistent with
those assumptions used in the associated PRA package.
We estimate that a narrative would be provided on 1,138,653
certifications and recertifications annually. At 5 minutes per
narrative, the total annual burden associated with this requirement is
5 minutes x 1,138,653/60 minutes per hour = 94,888 hours. The current
requirements for Sec. 418.22 are approved under OMB 0938-0302
with an expiration date of 8/31/2009. We will revise the PRA package to
reflect this change in burden.
If you would like to comment on this information collection and
recordkeeping requirement, please submit your comments to the Office of
Information and Regulatory Affairs, Office of Management and Budget,
Attention: CMS Desk Officer, [1420-F]
Fax: (202) 395 6974; or E-mail: OIRA_submission@omb.eop.gov.
[[Page 39408]]
VII. Regulatory Impact Analysis
A. Overall Impact
We have examined the impacts of this rule as required by Executive
Order 12866 (September 1993, Regulatory Planning and Review), the
Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354),
section 1102(b) of the Social Security Act, the Unfunded Mandates
Reform Act of 1995 (Pub. L. 104-4), Executive Order 13132 on
Federalism, and the Congressional Review Act (5 U.S.C. 804(2)). We
estimated the impact on hospices, as a result of the changes to the FY
2010 hospice wage index and of reducing the BNAF by 10 percent.
As discussed previously, the methodology for computing the hospice
wage index was determined through a negotiated rulemaking committee and
promulgated in the August 8, 1997 hospice wage index final rule (62 FR
42860). The BNAF, which was promulgated in the August 8, 1997 rule, is
being phased out. This rule updates the hospice wage index in
accordance with the August 8, 2008 FY 2009 Hospice Wage Index final
rule (73 FR 46464), which originally finalized a 75 percent reduced
BNAF for FY 2010 as the second year of a 3-year phase-out of the BNAF.
However, as noted previously, we believe that a more gradual phase-out
provides additional opportunity to evaluate the impact of the BNAF
reduction in the context of how this type of adjustment will fit into
our goals for hospice payment reform. We are finalizing a 10 percent
BNAF reduction in FY 2010 as the first year of a 7-year phase-out, with
an additional 15 percent BNAF reduction to occur in each of the next 6
years. Total phase-out will be complete by FY 2016.
Executive Order 12866 directs 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. A regulatory impact analysis
(RIA) must be prepared for major rules with economically significant
effects ($100 million or more in any 1 year). We have determined that
this final rule is not an economically significant rule under this
Executive Order.
Column 4 of Table 1 shows the combined effects of the updated wage
data (the 2009 pre-floor, pre-reclassified hospital wage index) and of
the 10 percent reduction in the BNAF, comparing estimated payments for
FY 2010 to estimated payments for FY 2009. In keeping with the American
Recovery and Reinvestment Act (ARRA) mentioned earlier in this final
rule, the FY 2009 payments used for comparison have a full (unreduced)
BNAF applied. We estimate that the total hospice payments for FY 2010
will decrease by $90 million as a result of the application of the
updated wage data (-$40 million) and the 10 percent reduction in the
BNAF (-$50 million). This estimate does not take into account any
hospital market basket update, which is 2.1 percent for FY 2010. The
final hospital market basket update and associated payment rates will
be communicated through an administrative instruction. The effect of a
2.1 percent hospital market basket update on payments to hospices is
approximately $260 million. Taking into account a 2.1 percent hospital
market basket update (+$260 million), in addition to the updated wage
data (-$40 million) and the 10 percent reduction in the BNAF (-$50
million), it is estimated that hospice payments would increase by $170
million in FY 2010 ($260 million -$90 million = $170 million). The
percent change in payments to hospices due to the combined effects of
the updated wage data, the 10 percent reduction in the BNAF, and the
hospital market basket update of 2.1 percent is reflected in column 5
of the impact table (Table 1).
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. The majority of hospices and most other
providers and suppliers are small entities, either by nonprofit status
or by having revenues of less than $7 million to $34.5 million in any 1
year (for details, see http://www.sba.gov/contractingopportunities/
officials/size/index.html). While the Small Business Administration
(SBA) does not define a size threshold in terms of annual revenues for
hospices, they do define one for home health agencies ($13.5 million;
see http://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_
sstd_tablepdf.pdf). For the purposes of this final 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 final rule has
a significant impact on a substantial number of small entities (for
example, hospices). Using 2007 Medicare hospice claims data, we
estimate that 96 percent of hospices have Medicare revenues below $13.5
million. Additionally, using available 2007 Medicare cost report data,
we estimate that roughly 94 percent of hospices have total patient
revenues below $13.5 million.
As indicated in Table 1 below, there are 3,328 hospices as of
January 29, 2009. Approximately 48.5 percent of Medicare certified
hospices are identified as voluntary or government agencies and,
therefore, are considered small entities. Most of these and most of the
remainder are also small hospice entities because, as noted above,
their revenues fall below the SBA size thresholds.
We note that the hospice wage index methodology was previously
guided by consensus, through a negotiated rulemaking committee that
included representatives of national hospice associations, rural,
urban, large and small hospices, multi-site hospices, and consumer
groups. Based on all of the options considered, the committee agreed on
the methodology described in the committee statement, and after notice
and comment, it was adopted into regulation in the August 8, 1997 final
rule. In developing the process for updating the hospice wage index in
the 1997 final rule, we considered the impact of this methodology on
small hospice entities and attempted to mitigate any potential negative
effects. Small hospice entities are more likely to be in rural areas,
which are less affected by the BNAF reduction than entities in urban
areas. Generally, hospices in rural areas are protected by the hospice
floor adjustment, which lessens the effect of the BNAF reduction.
The effects of this rule on hospices are shown in Table 1. Overall,
Medicare payments to all hospices will decrease by an estimated 0.7
percent, reflecting the combined effects of the updated wage data and
the 10 percent reduction in the BNAF. The combined effects of the
updated wage data and the 10 percent reduction to the BNAF on small or
medium sized hospices (as defined by routine home care days rather than
by the SBA definition), is -0.6 or -0.7 percent, respectively.
Furthermore, when including the hospital market basket update of 2.1
percent into these estimates, the combined effects on Medicare payment
to all hospices would result in an estimated increase of approximately
1.4 percent. 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 10 percent BNAF reduction, and the hospital
market basket update are increases in payments of 1.5 percent and 1.4
percent, respectively. Overall average hospice revenue effects will be
slightly less than these estimates since according the
[[Page 39409]]
National Hospice and Palliative Care Organization, about 16 percent of
hospice patients are non-Medicare. HHS' 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 only the updated wage
data and the 10 percent reduced BNAF for all hospices is -0.7 percent.
Since, by SBA's definition of ``small'' (when applied to hospices),
nearly all hospices are considered to be small entities, the combined
effect of only the updated wage data and the 10 percent reduced BNAF (-
0.7 percent) does not exceed HHS' 3.0 percent minimum threshold.
However, HHS' practice in determining ``significant economic impact''
has considered either total revenue or total costs. Total hospice
revenues include the effect of the market basket update. When we
consider the combined effect of the updated wage data, the 10 percent
BNAF reduction, and the 2.1 percent 2009 market basket update, the
overall impact is an increase in hospice payments of 1.4 percent for FY
2010. Therefore, the Secretary has determined that this final rule does
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 a metropolitan
statistical area and has fewer than 100 beds. Therefore, the Secretary
has determined that this final rule will not have a significant impact
on the operations of a substantial number of small rural hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any 1 year of about
$100 million or more in 1995 dollars, updated for inflation. That
threshold is currently approximately $133 million in 2009. This final
rule is not anticipated to have an effect on State, local, or Tribal
governments or on the private sector of $133 million or more.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a 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 final rule under the threshold criteria of Executive
Order 13132, Federalism, and have determined that it will not have an
impact on the rights, roles, and responsibilities of State, local, or
Tribal governments.
B. Anticipated Effects
This section discusses the impact of the projected effects of the
hospice wage index, including the effects of a 2.1 percent hospital
market basket update that will be communicated separately through an
administrative instruction. This final 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
final FY 2010 hospice wage index is based upon the 2009 pre-floor, pre-
reclassified hospital wage index and the most complete claims data
available (FY 2008) with a 10 percent reduction in the BNAF.
For the purposes of our impacts, our baseline is estimated FY 2009
payments (without any BNAF reduction) using the 2008 pre-floor, pre-
reclassified hospital wage index. Our first comparison (column 3, Table
1) compares our baseline to estimated FY 2010 payments (holding payment
rates constant) using the updated wage data (2009 pre-floor, pre-
reclassified hospital wage index). Consequently, the estimated effects
illustrated in column 3 of Table 1 show the distributional effects of
the updated wage data only. The effects of using the updated wage data
combined with the 10 percent reduction in the BNAF are illustrated in
column 4 of Table 1.
We have included a comparison of the combined effects of the 10
percent BNAF reduction, the updated wage data, and a 2.1 percent
hospital market basket increase for FY 2010 (Table 1, column 5).
Presenting these data gives the hospice industry a more complete
picture of the effects on their total revenue of the hospice wage index
discussed in this rule, the BNAF phase-out, and the FY 2010 hospital
market basket update. 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 1--Anticipated Impact on Medicare Hospice Payments of Updating the Pre-Floor, Pre-Reclassified Hospital
Wage Index Data, Reducing the BNAF by 10 Percent and Applying a 2.1 Percent Hospital Market Basket Update for
the FY 2010 Hospice Wage Index, Compared to the FY 2009 Hospice Wage Index With No BNAF Reduction
----------------------------------------------------------------------------------------------------------------
Percent change
Percent change in hospice
Percent change in hospice payments due
Number of in hospice payments due to wage index
Number of routine home payments due to wage index change, 10%
hospices* care days in to FY2010 wage change and 10% reduction in
thousands index change reduction in BNAF and
BNAF market basket
update
(1) (2) (3) (4) (5)
----------------------------------------------------------------------------------------------------------------
ALL HOSPICES.................... 3,328 71,440 -0.3 -0.7 1.4
URBAN HOSPICES.............. 2,291 61,856 -0.3 -0.7 1.4
RURAL HOSPICES.............. 1,037 9,584 -0.3 -0.6 1.4
BY REGION--URBAN:
NEW ENGLAND................. 128 2,286 -0.3 -0.8 1.3
MIDDLE ATLANTIC............. 226 6,479 -0.5 -0.9 1.2
[[Page 39410]]
SOUTH ATLANTIC.............. 331 13,701 -0.7 -1.1 1.0
EAST NORTH CENTRAL.......... 318 8,796 -0.8 -1.2 0.8
EAST SOUTH CENTRAL.......... 176 4,459 -0.5 -0.9 1.2
WEST NORTH CENTRAL.......... 178 4,098 0.0 -0.4 1.7
WEST SOUTH CENTRAL.......... 431 8,181 -0.3 -0.7 1.4
MOUNTAIN.................... 214 5,372 -0.3 -0.7 1.4
PACIFIC..................... 253 7,315 1.1 0.7 2.8
OUTLYING.................... 36 1,170 -1.2 -1.2 0.9
BY REGION--RURAL:
NEW ENGLAND................. 26 184 0.1 -0.3 1.8
MIDDLE ATLANTIC............. 45 496 -0.8 -1.2 0.9
SOUTH ATLANTIC.............. 131 1,893 -0.5 -0.9 1.2
EAST NORTH CENTRAL.......... 146 1,592 -1.0 -1.4 0.7
EAST SOUTH CENTRAL.......... 152 1,957 -0.5 -0.9 1.2
WEST NORTH CENTRAL.......... 192 1,029 0.3 -0.1 2.0
WEST SOUTH CENTRAL.......... 184 1,386 0.5 0.2 2.3
MOUNTAIN.................... 108 610 -0.8 -1.1 0.9
PACIFIC..................... 52 426 1.3 0.9 3.0
OUTLYING.................... 1 11 0.0 0.0 2.1
ROUTINE HOME CARE DAYS:
0-3499 DAYS (small)......... 647 1,128 -0.2 -0.6 1.5
3500-19,999 DAYS (medium)... 1,616 16,297 -0.3 -0.7 1.4
20,000+ DAYS (large)........ 1,065 54,016 -0.3 -0.7 1.4
TYPE OF OWNERSHIP:**
VOLUNTARY................... 1,190 30,071 -0.3 -0.7 1.4
PROPRIETARY................. 1,713 35,548 -0.3 -0.7 1.4
GOVERNMENT.................. 425 5,822 -0.6 -0.9 1.1
HOSPICE BASE:
FREESTANDING................ 2,156 54,293 -0.3 -0.7 1.4
HOME HEALTH AGENCY.......... 595 10,195 -0.2 -0.6 1.5
HOSPITAL.................... 559 6,714 -0.2 -0.6 1.5
SKILLED NURSING FACILITY.... 18 238 -0.5 -1.0 1.1
----------------------------------------------------------------------------------------------------------------
BNAF = Budget Neutrality Adjustment Factor
*OSCAR data as of January 29, 2009, for hospices with claims filed in FY 2008
**In previous years, there was also a category labeled ``Other''; these were Other Government hospices, and have
been combined with the ``Government'' category.
Note: Comparison is to FY 2009 estimated payments from the August 8, 2008 FY 2009 Hospice Wage Index final rule
(73 FR 46464), but with no BNAF reduction.
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 1 shows the results of our analysis. In column 1, we indicate
the number of hospices included in our analysis as of January 29, 2009
which had also filed claims in FY 2008. 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 2010 estimated payments with those
estimated for FY 2009. The estimated FY 2009 payments incorporate a
BNAF which has not been reduced. Column 3 shows the percentage change
in estimated Medicare payments from FY 2009 to FY 2010 due to the
effects of the updated wage data only, with estimated FY 2009 payments.
Column 4 shows the percentage change in estimated hospice payments from
FY 2009 to FY 2010 due to the combined effects of using the updated
wage data and reducing the BNAF by 10 percent. Column 5 shows the
percentage change in estimated hospice payments from FY 2009 to FY 2010
due to the combined effects of using updated wage data, a 10 percent
[[Page 39411]]
BNAF reduction, and a 2.1 percent hospital market basket update.
Table 1 also 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 2,291
hospices located in urban areas and 1,037 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 2008. 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 Table 1, there are 3,328 hospices. Approximately
48.5 percent of Medicare-certified hospices are identified as voluntary
(non-profit) or government agencies. Because the National Hospice and
Palliative Care Organization estimates that approximately 83.6 percent
of hospice patients in 2007 were Medicare beneficiaries, we have not
considered other sources of revenue in this analysis.
As stated previously, the following discussions are limited to
demonstrating trends rather than projected dollars. We used the pre-
floor, pre-reclassified hospital wage indexes as well as the most
complete claims data available (FY 2008) in developing the impact
analysis. The FY 2010 payment rates will be adjusted to reflect the
full hospital market basket, as required by section
1814(i)(1)(C)(ii)(VII) of the Act. As previously noted, we publish
these rates through administrative instructions rather than in a
proposed rule. The FY 2010 hospital market basket update is 2.1
percent. Since the inclusion of the effect of a hospital market basket
increase provides a more complete picture of projected total hospice
payments for FY 2010, the last column of Table 1 shows the combined
impacts of the updated wage data, the 10 percent BNAF reduction, and
the 2.1 percent hospital market basket update. As discussed in the FY
2006 hospice wage index final rule (70 FR 45129), hospice agencies may
use multiple hospice wage index values to compute their payments based
on potentially different geographic locations. Before January 1, 2008,
the location of the beneficiary was used to determine the CBSA for
routine and continuous home care and the location of the hospice agency
was used to determine the CBSA for respite and general inpatient care.
Beginning January 1, 2008, the hospice wage index utilized is based on
the location of the site of service. As the location of the
beneficiary's home and the location of the facility may vary, there
will still be variability in geographic location for an individual
hospice. We anticipate that the location of the various sites will
usually correspond with the geographic location of the hospice, and
thus we will continue to use the location of the hospice for our
analyses of the impact of the changes to the hospice wage index in this
rule. For this analysis, we use payments to the hospice in the
aggregate based on the location of the hospice.
The impact of hospice wage index changes has been analyzed
according to the type of hospice, geographic location, type of
ownership, hospice base, and size. 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 followed by large
hospices. Hospices are almost equal in numbers by ownership with 1,615
designated as non-profit or government hospices and 1,713 as
proprietary. The vast majority of hospices are freestanding.
1. Hospice Size
Under the Medicare hospice benefit, hospices can provide four
different levels of care days. 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. As discussed in the
August 4, 2005 final rule, 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 2010 updated wage data without any BNAF reduction are
anticipated to decrease payments to small hospices by 0.2 percent, and
to decrease payments to medium and large hospices by 0.3 percent
(column 3); the updated wage data and the 10 percent BNAF reduction are
anticipated to decrease estimated payments to small hospices by 0.6
percent, and to medium and large hospices by 0.7 percent (column 4);
and finally, the updated wage data, the 10 percent BNAF reduction, and
the 2.1 percent hospital market basket update are projected to increase
estimated payments by 1.5 percent for small hospices, and by 1.4
percent for medium and large hospices (column 5).
2. Geographic Location
Column 3 of Table 1 shows that the updated wage data without the
BNAF reduction would result in a small reduction in estimated payments.
Urban and rural hospices are both anticipated to experience a decrease
of 0.3 percent. For urban hospices, an increase of 1.1 percent is
anticipated to be experienced in the Pacific regions. No change in
payments is anticipated for hospices in the West North Central region.
The remaining urban regions are anticipated to experience a decrease
ranging from 0.3 percent in the New England, West South Central, and
Mountain regions to a 1.2 percent decrease in Outlying regions.
Column 3 shows that for rural hospices, Outlying regions are
anticipated to experience no change. Five regions are anticipated to
experience a decrease ranging from 0.5 percent in the South Atlantic
and East South Central regions, to 1.0 percent in the East North
Central region. The remaining regions are anticipated to experience an
increase ranging from 0.1 percent in the New England region to 1.3
percent in the Pacific region.
Column 4 shows the combined effect of the updated wage data and the
10 percent BNAF reduction on estimated payments, as compared to the FY
2009 estimated payments using a BNAF with no reduction. Overall urban
hospices are anticipated to experience a 0.7 percent decrease in
payments, while rural hospices expect a 0.6 percent decrease. Pacific
urban hospices are anticipated to see a payment increase of 0.7
percent. All other urban hospices are anticipated to experience a
decrease in payment ranging from -0.4 percent in the West North Central
region to 1.2 percent in the East North Central and Outlying regions.
Rural hospices are estimated to experience an increase in payments
of 0.2 percent in the West South Central region and 0.9 percent in the
Pacific region, while Outlying regions are estimated to experience no
change in payments. The remaining rural hospices are anticipated to
experience estimated decreases in payment ranging from 0.1 percent in
the West North Central region
[[Page 39412]]
to 1.4 percent in the East North Central region.
Column 5 shows the combined effects of the updated wage data, the
10 percent BNAF reduction, and the 2.1 percent hospital market basket
update on estimated payments as compared to the estimated FY 2009
payments. Note that the FY 2009 payments had no BNAF reduction applied
to them. Overall, urban and rural hospices are anticipated to
experience a 1.4 percent increase in payments. Urban hospices are
anticipated to experience an increase in estimated payments in every
region, ranging from a 0.8 percent increase in the East North Central
region to a 2.8 percent increase in the Pacific region. Rural hospices
in every region are estimated to see an increase in payments ranging
from 0.7 percent in the East North Central region to 3.0 percent in the
Pacific region.
3. Type of Ownership
Column 3 demonstrates the effect of the updated wage data on FY
2010 estimated payments versus FY 2009 estimated payments with no BNAF
reduction applied to them. We anticipate that using the updated wage
data would decrease estimated payments to voluntary (non-profit) and
proprietary (for-profit) hospices by 0.3 percent. We estimate a
decrease in payments for government hospices of 0.6 percent.
Column 4 demonstrates the combined effects of the updated wage data
and of the 10 percent BNAF reduction. Estimated payments to voluntary
(non-profit) and proprietary (for-profit) hospices are anticipated to
decrease by 0.7 percent, while government hospices are anticipated to
experience decreases of 0.9 percent.
Column 5 shows the combined effects of the updated wage data, the
10 percent BNAF reduction, and the 2.1 percent hospital market basket
update on estimated payments, comparing FY 2010 to FY 2009 (using a
BNAF with no reduction). Estimated FY 2010 payments are anticipated to
increase by 1.4 percent for voluntary (non-profit) and proprietary
(for-profit) hospices, and by 1.1 percent for government hospices.
4. Hospice Base
Column 3 demonstrates the effect of using the updated wage data,
comparing estimated payments for FY 2010 to FY 2009 (using a BNAF with
no reduction). Estimated payments are anticipated to decrease by 0.3
percent for freestanding facilities. Home health and hospital based
facilities are anticipated to experience a 0.2 percent decrease in
estimated payments. Hospices based out of skilled nursing facilities
are anticipated to experience a decrease in estimated payments of 0.5
percent.
Column 4 shows the combined effects of the updated wage data and
reducing the BNAF by 10 percent, comparing FY 2010 to FY 2009 (using a
BNAF with no reduction) estimated payments. Skilled nursing facility
based hospices are estimated to see a 1.0 percent decrease,
freestanding hospices are estimated to see a 0.7 percent decrease, and
hospital and home health agency based hospices are each anticipated to
experience a 0.6 percent decrease in payments.
Column 5 shows the combined effects of the updated wage data, the
10 percent BNAF reduction, and the 2.1 percent hospital market basket
update on estimated payments, comparing FY 2010 to FY 2009 (using a
BNAF with no reduction). Estimated payments are anticipated to increase
by 1.1 percent for skilled nursing based facilities, to increase by 1.4
percent for freestanding facilities, and to increase by 1.5 percent for
home health agency and hospital based facilities.
C. Accounting Statement
As required by OMB Circular A-4 (available at http://
www.whitehouse.gov/omb/circulars/a004/a-4.pdf), in Table 2 below, we
have prepared an accounting statement showing the classification of the
expenditures associated with the provisions of this rule. This table
provides our best estimate of the decrease in Medicare payments under
the hospice benefit as a result of the changes presented in this final
rule on data for 3,328 hospices in our database. All expenditures are
classified as transfers to Medicare providers (that is, hospices).
Table 2-- Accounting Statement: Classification of Estimated
Expenditures, From FY 2009 to FY 2010
[in millions]
------------------------------------------------------------------------
Category Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers....... $-90
From Whom to Whom.................... Federal Government to Hospices.
------------------------------------------------------------------------
*The $90 million reduction in transfers includes the 10 percent
reduction in the BNAF and the updated wage data. It does not include
the hospital market basket update, which is 2.1 percent.
In accordance with the provisions of Executive Order 12866, this
regulation was reviewed by the Office of Management and Budget.
List of Subjects
42 CFR Part 405
Administrative practice and procedure, Health facilities, Health
professions, Kidney diseases, Medical devices, Medicare, Reporting and
recordkeeping requirements, Rural areas, X-rays.
42 CFR Part 418
Health Facilities, Hospice care, Medicare, Reporting and
recordkeeping requirements.
0
For the reasons set forth in the preamble, the Centers for Medicare &
Medicaid Services amends 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 R continues to read as
follows:
Authority: Secs. 205, 1102, 1814(b), 1815(a), 1833, 1861(v),
1871, 1872, 1878, and 1886 of the Social Security Act (42 U.S.C.
405, 1302, 1395f(b), 1395g(a), 1395l, 1395x(v), 1395hh, 1395ii,
1395oo, and 1395ww).
Subpart R--Provider Reimbursement Determinations and Appeals
0
2. Section 405.1803 is amended by adding paragraph (a)(3) as follows:
Sec. 405.1803 Intermediary determination and notice of amount of
program reimbursement.
* * * * *
(a) * * *
(3) Hospice caps. With respect to a hospice, the reporting period
for the cap calculation is the cap year; and the intermediaries'
determination of program reimbursement letter, which provides the
results of the inpatient and aggregate cap calculations, shall serve as
a notice of program reimbursement. The time period for filing cap
appeals begins with receipt of the determination of program
reimbursement letter.
* * * * *
PART 418--HOSPICE CARE
0
3. The authority citation for part 418 continues to read as follows:
Authority: Secs 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh).
[[Page 39413]]
Subpart A--General Provision and Definitions
0
4. Section 418.1 is amended by revising the introductory text to read
as follows:
Sec. 418.1 Statutory basis.
This part implements section 1861(dd) of the Social Security Act
(the Act). Section 1861(dd) of the Act specifies services covered as
hospice care and the conditions that a hospice program must meet in
order to participate in the Medicare program. Section 1861(dd) also
specifies limitations on coverage of, and payment for, inpatient
hospice care. The following sections of the Act are also pertinent:
* * * * *
0
5. Section 418.2 is revised to read as follows:
Sec. 418.2 Scope of part.
Subpart A of this part sets forth the statutory basis and scope and
defines terms used in this Part. Subpart B specifies the eligibility
and election requirements and the benefit periods. Subparts C and D
specify the conditions of participation for hospices. Subpart E is
reserved for future use. Subparts F and G specify coverage and payment
policy. Subpart H specifies coinsurance amounts applicable to hospice
care.
Subpart B--Eligibility, Election and Duration of Benefits
0
6. Section 418.22 is amended by adding a new paragraph (b)(3) to read
as follows:
Sec. 418.22 Certification of terminal illness.
* * * * *
(b) * * *
(3) The physician must include a brief narrative explanation of the
clinical findings that supports a life expectancy of 6 months or less
as part of the certification and recertification forms, or as an
addendum to the certification and recertification forms.
(i) If the narrative is part of the certification or
recertification form, then the narrative must be located immediately
prior to the physician's signature.
(ii) If the narrative exists as an addendum to the certification or
recertification form, in addition to the physician's signature on the
certification or recertification form, the physician must also sign
immediately following the narrative in the addendum.
(iii) The narrative shall include a statement under the physician
signature attesting that by signing, the physician confirms that he/she
composed the narrative based on his/her review of the patient's medical
record or, if applicable, his or her examination of the patient.
(iv) The narrative must reflect the patient's individual clinical
circumstances and cannot contain check boxes or standard language used
for all patients.
* * * * *
Subpart C--Conditions of Participation: Patient Care Non-Core
Services
0
7. Section 418.76 is amended by revising paragraph (f)(1) to read as
follows:
Sec. 418.76 Condition of participation: Hospice aide and homemaker
services.
(f) Standard: Eligible competency organizations.
* * * * *
(1) Had been out of compliance with the requirements of Sec.
484.36(a) and Sec. 484.36 (b) of this chapter.
* * * * *
Subpart D--Conditions of Participation: Organizational Environment
0
8. Section 418.100 is amended by revising paragraph (f)(1)(iii) to read
as follows:
Sec. 418.100 Condition of participation: Organization and
administration of service.
* * * * *
(f) * * *
(1) * * *
(iii) The lines of authority and professional and administrative
control must be clearly delineated in the hospice's organizational
structure and in practice, and must be traced to the location which was
issued the certification number.
* * * * *
Sec. 418.108 [Amended]
0
9. In paragraph (b)(1)(ii), the cross reference to ``Sec. 418.110(f)''
is revised to read ``Sec. 418.110(e)''.
Subpart F--Covered Services
0
10. Section 418.200 is revised to read as follows:
Sec. 418.200 Requirements for coverage.
To be covered, hospice services must meet the following
requirements. They must be reasonable and necessary for the palliation
and management of the terminal illness as well as related conditions.
The individual must elect hospice care in accordance with Sec. 418.24.
A plan of care must be established and periodically reviewed by the
attending physician, the medical director, and the interdisciplinary
group of the hospice program as set forth in Sec. 418.56. That plan of
care must be established before hospice care is provided. The services
provided must be consistent with the plan of care. A certification that
the individual is terminally ill must be completed as set forth in
section Sec. 418.22.
0
11. Section Sec. 418.202 is amended by revising paragraphs (f) and (g)
to read as follows:
Sec. 418.202 Covered services.
* * * * *
(f) Medical appliances and supplies, including drugs and
biologicals. Only drugs as defined in section 1861(t) of the Act and
which are used primarily for the relief of pain and symptom control
related to the individual's terminal illness are covered. Appliances
may include covered durable medical equipment as described in Sec.
410.38 of this chapter as well as other self-help and personal comfort
items related to the palliation or management of the patient's terminal
illness. Equipment is provided by the hospice for use in the patient's
home while he or she is under hospice care. Medical supplies include
those that are part of the written plan of care and that are for
palliation and management of the terminal or related conditions.
(g) Home health or hospice aide services furnished by qualified
aides as designated in Sec. 418.94 and homemaker services. Home health
aides (also known as hospice aides) may provide personal care services
as defined in Sec. 409.45(b) of this chapter. Aides may perform
household services to maintain a safe and sanitary environment in areas
of the home used by the patients, such as changing bed linens or light
cleaning and laundering essential to the comfort and cleanliness of the
patient. Aide services may include assistance in maintenance of a safe
and healthy environment and services to enable the individual to carry
out the treatment plan.
* * * * *
0
12. Section Sec. 418.204 is amended by revising paragraph (a) to read
as follows:
Sec. 418.204 Special coverage requirements.
(a) Periods of crisis. Nursing care may be covered on a continuous
basis for as much as 24 hours a day during periods of crisis as
necessary to maintain an individual at home. Either homemaker or home
health aide (also known as
[[Page 39414]]
hospice aide) services or both may be covered on a 24-hour continuous
basis during periods of crisis but care during these periods must be
predominantly nursing care. A period of crisis is a period in which the
individual requires continuous care to achieve palliation and
management of acute medical symptoms.
* * * * *
Subpart G--Payment for Hospice Care
0
13. Section 418.302 is amended by revising paragraphs (b)(2) and (f)(2)
to read as follows:
Sec. 418.302 Payment procedures for hospice care.
* * * * *
(b) * * *
(2) Continuous home care day. 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.
* * * * *
(f) * * *
(2) At the end of a cap period, the intermediary calculates a
limitation on payment for inpatient care to ensure that Medicare
payment is not made for days of inpatient care in excess of 20 percent
of the total number of days of hospice care furnished to Medicare
patients. Only inpatient days that were provided and billed as general
inpatient or respite days are counted as inpatient days when computing
the inpatient cap.
* * * * *
0
14. Section 418.311 is revised to read as follows:
Sec. 418.311 Administrative appeals.
A hospice that believes its payments have not been properly
determined in accordance with these regulations may request a review
from the intermediary or the Provider Reimbursement Review Board (PRRB)
if the amount in controversy is at least $1,000 or $10,000,
respectively. In such a case, the procedure in 42 CFR part 405, subpart
R, will be followed to the extent that it is applicable. The PRRB,
subject to review by the Secretary under Sec. 405.1874 of this
chapter, shall have the authority to determine the issues raised. The
methods and standards for the calculation of the statutorily defined
payment rates by CMS are not subject to appeal.
(Catalog of Federal Domestic Assistance Program No. 93.778,
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)
Dated: July 20, 2009.
Charlene Frizzera,
Acting Administrator, Centers for Medicare & Medicaid Services.
Approved: July 29, 2009.
Kathleen Sebelius,
Secretary.
Editor's note: The following addenda will not appear in the Code
of Federal Regulations.
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[FR Doc. E9-18553 Filed 7-30-09; 4:15 pm]
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