[Federal Register: April 24, 2009 (Volume 74, Number 78)]
[Proposed Rules]
[Page 18911-18970]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr24ap09-23]
[[Page 18911]]
-----------------------------------------------------------------------
Part IV
Department of Health and Human Services
-----------------------------------------------------------------------
Centers for Medicare & Medicaid Services
-----------------------------------------------------------------------
42 CFR Parts 405 and 418
Medicare Program; Proposed Hospice Wage Index for Fiscal Year 2010;
Proposed Rule
[[Page 18912]]
-----------------------------------------------------------------------
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 405 and 418
[CMS-1420-P]
RIN 0938-AP45
Medicare Program; Proposed Hospice Wage Index for Fiscal Year
2010
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Proposed rule; request for comments.
-----------------------------------------------------------------------
SUMMARY: This proposed rule would set forth the hospice wage index for
fiscal year 2010. The proposed rule would adopt a MedPAC recommendation
regarding a process for certification and recertification of terminal
illness. This proposed rule would also continue the phase-out of the
wage index budget neutrality adjustment factor (BNAF), which will
conclude in 2011. In addition, we are requesting comments on a
suggestion to require recertification visits by physicians or advanced
practice nurses, and on issues of payment reform for use in possible
future policy development. Finally, the proposed rule would make
several technical and clarifying changes to the regulatory text.
DATES: To be assured consideration, comments must be received at one of
the addresses provided below, no later than 5 p.m. on June 22, 2009.
ADDRESSES: In commenting, please refer to file code CMS-1420-P. Because
of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
You may submit comments in one of four ways (please choose only one
of the ways listed):
1. Electronically. You may submit electronic comments on this
regulation to http://www.regulations.gov. Follow the instructions under
the ``More Search Options'' tab.
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-1420-P, P.O. Box 8012,
Baltimore, MD 21244-8012.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments (one
original and two copies) to the following address ONLY: Centers for
Medicare & Medicaid Services, Department of Health and Human Services,
Attention: CMS-1420-P, Mail Stop C4-26-05, 7500 Security Boulevard,
Baltimore, MD 21244-1850.
4. By hand or courier. If you prefer, you may deliver (by hand or
courier) your written comments before the close of the comment period
to either of the following addresses:
a. For delivery in Washington, DC--Centers for Medicare & Medicaid
Services, Department of Health and Human Services, Room 445-G, Hubert
H. Humphrey Building, 200 Independence Avenue, SW., Washington, DC
20201.
(Because access to the interior of the Hubert H. Humphrey Building
is not readily available to persons without Federal Government
identification, commenters are encouraged to leave their comments in
the CMS drop slots located in the main lobby of the building. A stamp
in clock is available for persons wishing to retain a proof of filing
by stamping in and retaining an extra copy of the comments being
filed.)
b. For delivery in Baltimore, MD--7500 Security Boulevard,
Baltimore, MD 21244-1850.
If you intend to deliver your comments to the Baltimore address,
please call telephone number (410) 786-9994 in advance to schedule your
arrival with one of our staff members.
Comments mailed to the addresses indicated as appropriate for hand
or courier delivery may be delayed and received after the comment
period.
Submission of comments on paperwork requirements. You may submit
comments on this document's paperwork requirements by following the
instructions at the end of the ``Collection of Information
Requirements'' section in this document.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT:
Randy Throndset (410) 786-0131. Katie Lucas (410) 786-7723.
SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following Web
site as soon as possible after they have been received: http://
www.regulations.gov. Follow the search instructions on that Web site to
view public comments.
Comments received timely will also be available for public
inspection as they are received, generally beginning approximately 3
weeks after publication of a document, at the headquarters of the
Centers for Medicare & Medicaid Services, 7500 Security Boulevard,
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30
a.m. to 4 p.m. To schedule an appointment to view public comments,
phone 1-800-743-3951.
Table of Contents
I. 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
A. FY 2010 Proposed Hospice Wage Index
1. Background
2. Areas Without Hospital Wage Data
3. FY 2010 Wage Index With 75% Reduced Budget Neutrality
Adjustment Factor (BNAF)
4. Effects of Phasing Out the BNAF
B. Proposed Change to the Physician Certification and
Recertification Process, Sec. 418.22
C. Proposed Update of Covered Services, Sec. 418.202(f)
D. Proposed Clarification of Payment Procedures for Hospice
Care, Sec. 418.302
E. Proposed Clarification of Intermediary Determination and
Notice of Amount of Program Reimbursement, Sec. 405.1803
F. Proposed Technical and Clarifying Changes
III. Requests for 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. Collection of Information Requirements
VI. 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
[[Page 18913]]
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
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 implemented a 1-year transition
policy using a 50/50 blend of the CBSA-based wage index values and the
MSA-based wage index values for FY 2006. The one-year transition policy
ended on September 30, 2006. For FY 2007, 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 implementing 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
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 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 proposed rule, that
means estimating payments for FY 2010 using FY 2007 hospice claims
data, and applying the estimated FY 2010 hospice payment rates
(updating the FY 2009 rates by the FY 2010 estimated hospital market
basket update). 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 raw pre-floor, pre-
reclassified hospital wage index (note that both wage indices include
their respective floor adjustments). The total payments are then
compared, and the adjustment required to make total payments equal is
computed; that adjustment factor is the BNAF.
The 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 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:
[[Page 18914]]
(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) implemented 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 above rule, the American Recovery and
Reinvestment Act of 2009 (Pub. L. 111-5) (ARRA) eliminated the BNAF
phase-out for FY 2009. Specifically, division B, section 4301(a) of
ARRA prohibited the Secretary from phasing out or eliminating 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 have done so in an administrative instruction to our
intermediaries, which was issued as Change Request (CR) 6418
(Transmittal 1701, dated 3/13/2009).
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 that were previously
implemented 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, CMS plans to reduce the BNAF
by 75 percent in FY 2010 and ultimately eliminate the BNAF in 2011. We
are accepting 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), 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 implementation 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 implementation 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 raw 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
[[Page 18915]]
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 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 raw 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 raw 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 raw 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 raw 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 raw 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 raw 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 implemented 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
[[Page 18916]]
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 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 payment 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.
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
proposed rule to the labor portion of the published hospice rates.
II. Provisions of the Proposed Rule
A. FY 2010 Proposed 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 proposed 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 proposed 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 are
proposing again to 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 adjustment to the labor portion of the costs. For the FY
2010 update to the hospice wage index, we propose to continue to use
the most recent pre-floor, pre-reclassified hospital wage index
available at the time of publication.
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 proposed 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 propose 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 proposed rule. In FY 2010, Dukes and Nantucket
Counties are the only areas in rural Massachusetts which are affected.
We are again proposing to apply 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 we noted in section I.B.4 of this proposed rule, we do
not believe that this policy is appropriate for Puerto Rico. For FY
2010, we again propose to continue 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 proposed FY 2010 hospice wage index.
3. FY 2010 Wage Index With 75 Percent Reduced Budget Neutrality
Adjustment Factor (BNAF)
The hospice wage index set forth in this proposed rule would be
effective October 1, 2009 through September 30, 2010. We are not
proposing any modifications to the hospice wage index methodology. In
accordance with our regulations 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 proposed
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, with a 25 percent
reduction in the BNAF in FY 2009, an 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 (P.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 set forth in
[[Page 18917]]
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
elimination of the BNAF in FY 2011 that was previously implemented in
the August 8, 2008 FY 2009 Hospice Wage Index final rule. The provision
in 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 (73 FR
46464), the rationale presented in that final rule, and consistent with
the section 4301(a) of ARRA, we plan to reduce the BNAF for FY 2010 by
75 percent, and ultimately eliminate the BNAF in FY 2011. We are
accepting comments on the BNAF reductions.
An unreduced BNAF for FY 2010 is computed to be 0.067845 (or 6.7845
percent). A 75 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 0.016961 (or 1.6961 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 proposed hospice wage index for FY 2010 is shown in Addenda A
and B. Specifically, Addendum A reflects the proposed FY 2010 wage
index values for urban areas under the CBSA designations. Addendum B
reflects the proposed FY 2010 wage index values for rural areas under
the CBSA designations.
4. Effects of Phasing Out the BNAF
The full (unreduced) BNAF calculated for FY 2010 is 6.7845 percent.
As implemented in the August 8, 2008 FY 2009 Hospice Wage Index final
rule (73 FR 46464), we are reducing the BNAF by 75 percent for FY 2010,
and eliminating it altogether for FY 2011 and beyond.
For FY 2010, this is mathematically equivalent to taking 25 percent
of the full BNAF value, or multiplying 0.067845 by 0.25, which equals
0.016961 (1.6961 percent). The BNAF of 1.6961 percent reflects a 75
percent reduction in the BNAF. The 75 percent reduced BNAF (1.6961
percent) would be applied to the pre-floor, pre-reclassified hospital
wage index values of 0.8 or greater in the proposed FY 2010 hospice
wage index.
The hospice floor calculation would 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 proposed 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 75 percent reduction in the BNAF
versus using the full BNAF of 6.7845 percent on the proposed FY 2010
hospice wage index. The FY 2010 BNAF reduction of 75 percent resulted
in approximately a 4.76 to 4.77 percent reduction in most hospice wage
index values. The elimination of the BNAF in FY 2011 would result in an
estimated final reduction of the FY 2011 hospice wage index values of
approximately 1.66 to 1.67 percent compared to FY 2010 hospice wage
index values.
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 proposed 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 17
CBSAs are already protected by the hospice 15 percent floor adjustment,
and are therefore completely unaffected by the BNAF reduction. There
are over 100 hospices in these 17 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 75 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 75 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 18 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 75
percent reduction in the BNAF. Because of the protection given by the
hospice 15 percent floor adjustment, these CBSAs will see smaller
percentage decreases in their hospice wage index values than those
CBSAs that are not eligible for the hospice 15 percent floor
adjustment. This will affect those hospices with lower hospice wage
index values, which are typically in rural areas. There are over 300
hospices located in these 18 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 proposed rule. Therefore the projected reduction in
payments due to the 75 percent reduction of the BNAF will be an
estimated 3.2 percent, as described in column 4 of Table 1 in section
VI of this proposed rule. In addition, the estimated effects of the
phase-out of the BNAF will be mitigated by any hospital market basket
updates in payments. We will not have the final market basket update
for FY 2010 until the summer. However, the current estimate of the
hospital market basket update for FY 2010 is 2.1 percent. The final
update will be communicated through an administrative instruction. The
combined effects of a 75 percent reduction of the BNAF and an estimated
hospital market basket update of 2.1 percent for FY 2010 is an overall
estimated decrease in payments to hospices in FY 2010 of 1.1 percent
(column 5 of Table 1 in section VI of this proposed rule).
B. Proposed 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
[[Page 18918]]
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. See, http://
www.medpac.gov/transcripts/20081104_Hospice_final_public.pdf and
http://www.medpac.gov/transcripts/1106-1107MedPAC%20final.pdf.
We believe that those physicians that are certifying a hospice
patient's continued 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 proposing a change to Sec. 418.22.
Specifically, we propose to add 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.
This brief narrative should be written or typed on the certification
form itself. We do not believe that an attachment should be permissible
because an attachment could easily be prepared by someone other than
the physician. We seek comments on whether this proposed requirement
would increase physician engagement in the certification and
recertification process.
C. Proposed 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, 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. The hospice
is not responsible for providing care for the unrelated comorbidities.
Because these unrelated comorbidities must be included in the plan of
care, and the hospice is not responsible for providing the care for
these unrelated comorbidities, we propose 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.
D. Proposed 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
impatient care (GIP), or even though 5 days of respite have ended. In
computing the inpatient cap, the hospice should 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 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
propose to revise 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.
E. Proposed 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
[[Page 18919]]
reimbursement shall include language describing the hospice's appeal
rights. We are proposing to clarify the language at Sec. 405.1803(a)
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 are proposing to clarify
Sec. 405.1803(a)(1)(i) to note that in the case of hospice, the
reporting period covered by the determination of 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.
F. Proposed Technical and Clarifying Changes
In addition to the proposals and solicitation of comments discussed
above, we are proposing to make 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. Proposed 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. We
propose to clarify Sec. 418.1 by adding a sentence noting that section
1861(dd) of the Act limits coverage and payment for inpatient hospice
care.
2. Proposed 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 with the update of the hospice conditions of
participation (CoPs) in 2008. 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 is currently described as specifying reimbursement methods and
procedures, was removed and reserved with the update of the CoPs.
Subparts F and G relate to payment policy, including covered services
and hospice payment; currently subpart F is described in Sec. 418.2 as
specifying coinsurance amounts. Finally, subpart H specifies
coinsurance amounts applicable to hospice care, rather than subpart F
as the regulation currently reads. Accordingly, we propose to update
section Sec. 418.2 to reflect the current organization and scope of
Part 418.
3. Proposed Revision of Hospice Aide and Homemaker Services, Sec.
418.76
We are proposing 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.
4. Proposed Clarification of Hospice Multiple Location, Sec. 418.100
For the sake of clarity, we propose 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 issued the certification number.
5. Proposed Revision to Short Term Inpatient Care, Sec. 418.108
We propose 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 propose to correct it by
changing the reference to standard (e).
6. Proposed Clarification of the Requirements for Coverage, Sec.
418.200
Section 418.200 describes the requirements for coverage for
Medicare hospice services, and references Sec. 418.58 (``Conditions of
Participation plan of care''). This cross reference is no longer
accurate as Sec. 418.58 was updated with the publication of the new
CoPs in 2008. We propose to detail the requirements for coverage
related to the plan of care rather than cross refer to the CoPs
regulations. This revision would avoid the need to make updates to this
section each time the CoPs are changed.
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. We propose to clarify Sec. 418.200 to incorporate
these requirements for coverage, rather than cross reference CoP
requirements in CoP regulations.
7. Proposed 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 propose to revise Sec. 418.202(g), Sec.
418.204(a), and Sec. 418.302 to include the new terminology.
8. Proposed 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.
We propose 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 has instructed us to update the rates differently). To
ensure better understanding of what is not subject to
[[Page 18920]]
appeal, we propose 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.
III. Request for 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 are
enrolling and recertifying patients who are not eligible for hospice
care under the Medicare benefit, and consensus emerged that greater
accountability and oversight are 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 certification thereafter. MedPAC recommended that the physician
or advanced practice nurse be required to attest that the visit took
place. See, http://www.medpac.gov/transcripts/20081104_Hospice_
final_public.pdf and http://www.medpac.gov/transcripts/1106-
1107MedPAC%20final.pdf.
At this time, we are not proposing any policy change requiring
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 proposing a policy change regarding
recertification visits at this time, we are soliciting 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 are seeking 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.
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
hospice 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, hospices rarely 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
amount by multiplying the per-beneficiary cap amount by the number of
Medicare beneficiaries counted in
[[Page 18921]]
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 report
their own hospice aggregate cap would result in hospices being
proactive in managing their cap calculations. In
[[Page 18922]]
this approach, contractors would still verify the reported cap.
We are soliciting 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.
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 more than double in
the next 10 years 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 70 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 2008, there were over 3,200
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 November 6, 2008 public meeting, 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, http://www.medpac.gov/
transcripts/20081104_Hospice_final_public.pdf and http://
www.medpac.gov/transcripts/1106-1107MedPAC%20final.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 are soliciting 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.
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
proposed rule provides an update on the additional data collection
which is in process.
Based on the feedback received from our October 2008 web posting,
we have revised our plans for Phase 3 of the claims data collection.
Those plans are currently being developed and will be implemented
through an administrative instruction.
Phase 3 will involve collecting new data on hospice claims. In
addition to the existing visit reporting requirement, we anticipate
requiring visit time reporting in 15 minute increments for nurses,
social workers, and aides. We anticipate requiring visit and visit time
reporting in 15 minute increments from physical therapists,
occupational therapists, and speech language therapists. We also
anticipate requiring reporting of some social worker phone calls and
their associated time, within certain limits. Specifically, we
anticipate requiring the reporting of social worker calls that are
necessary for the palliation and management of the
[[Page 18923]]
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, we anticipate that
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, would be reported. We anticipate that 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, we anticipate that travel time, documentation
time, and interdisciplinary group time would not be included in the
time reporting. These changes would 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 had been required to provide this
information. This additional data collection would 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 previously approved by the OMB under control number
0938-0997.
As stated above, these changes will be forthcoming through an
administrative instruction, and are not to be considered as proposals
in this rule; that instruction will be issued some time this spring or
summer.
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. Collection of Information Requirements
Under the Paperwork Reduction Act of 1995, we are required to
provide 60-day notice in the Federal Register and solicit public
comment before a collection of information requirement is submitted to
the Office of Management and Budget (OMB) for review and approval. In
order to fairly evaluate whether an information collection should be
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act
of 1995 requires that we solicit comment on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our estimate of the information collection
burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
We are soliciting public comment on the issue for the following
section of this document that contains information collection
requirements.
Section 418.22 Certification of terminal illness.
Section 418.22 requires the physician to include on or with the
certification 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 support a life expectancy of 6 months or
less. We estimate it would take a physician 5 minutes to meet this
requirement. We also estimate that a narrative would be provided on
1,534,388 certifications or recertifications annually. Therefore, the
total annual burden associated with this requirement is 127,866 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 currently approved PRA package to reflect any changes in
burden.
If you comment on these information collection and recordkeeping
requirements, please do either of the following:
1. Submit your comments electronically as specified in the
ADDRESSES section of this proposed rule; or
2. Submit your comments to the Office of Information and Regulatory
Affairs, Office of Management and Budget,
Attention: CMS Desk Officer,
Fax: (202) 395-7245; or
E-mail: OIRA_submission@omb.eop.gov.
VI. 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
proposed FY 2010 hospice wage index and of reducing the BNAF by 75
percent.
As discussed previously, the methodology for computing the hospice
wage index was determined through a negotiated rulemaking committee and
implemented in the August 8, 1997 hospice wage index final rule (62 FR
42860). The BNAF, which was implemented in the August 8, 1997 rule, is
being phased out. This rule proposes updates to the hospice wage index
in accordance with the August 8, 2008 FY 2009 Hospice Wage Index final
rule (73 FR 46464), which originally implemented a 75 percent reduced
BNAF for FY 2010 as the second year of a 3-year phase-out of the BNAF.
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 proposed rule is an economically significant rule under this
Executive Order.
Column 4 of Table 1 shows the combined effects of the 75 percent
reduction in the BNAF and of the updated wage data, 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 proposed 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 $340 million as a result of the
application of the 75 percent reduction in the BNAF and the updated
wage data. This estimate does not take into account any hospital market
basket update, which is currently estimated to be about 2.1 percent for
FY 2010. The final hospital market basket update will not be available
until sometime later this year and will be communicated through an
administrative instruction. The effect of an estimated 2.1 percent
hospital market basket update on payments to hospices is approximately
[[Page 18924]]
$240 million. Taking into account an estimated 2.1 percent hospital
market basket update, in addition to the 75 percent reduction in the
BNAF and the updated wage data, it is estimated that hospice payments
would decrease by $100 million in FY 2010 ($340 million - $240 million
= $100 million). The percent change in payments to hospices due to the
combined effects of the 75 percent reduction in the BNAF, the updated
wage data, and the estimated 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 proposed rule, because
the hospice benefit is a home-based benefit, we are applying the SBA
definition of ``small'' for home health agencies to hospices; we will
use this definition of ``small'' in determining if this proposed rule
has a significant impact on a substantial number of small entities (for
example, hospices). Using 2007 claims data, we estimate that 96 percent
of hospices have revenues below $13.5 million.
As indicated in Table 1 below, there are 3,206 hospices as of
January 29, 2009. Approximately 49.8 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 mitigates 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 3.2
percent, reflecting the combined effects of the 75 percent reduction in
the BNAF and the updated wage data. However, when we consider the
combined effects of the 75 percent reduction to the BNAF and the
updated wage data on small or medium sized hospices, as defined by
routine home care days rather than by the SBA definition, the effect is
-2.9 percent. Furthermore, when including the estimated 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
decrease of approximately 1.1 percent. For small to medium hospices (as
defined by routine home care days), the effects on revenue when
accounting for the updated wage data, the 75 percent BNAF reduction,
and the estimated hospital market basket update are -0.8 percent and -
0.9 percent, respectively. Overall average hospice revenue effects will
be slightly less than these estimates since according the 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
75 percent reduced BNAF for all hospices (large and small) is 3.2
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 75 percent
reduced BNAF (3.2 percent) exceeds 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 75 percent
BNAF reduction, and the estimated 2.1 percent 2009 market basket
update, the overall impact is a decrease in hospice payments of 1.1
percent for FY 2010. Therefore, the Secretary has determined that this
proposed rule does not create a significant economic impact on a
substantial number of small entities.
In the August 8, 2008 FY 2009 Hospice Wage Index final rule, we
implemented a 3-year phase-out of the BNAF. The BNAF was to be reduced
by 25 percent in FY 2009, by an additional 50 percent for a total of 75
percent in FY 2010, and by a final 25 percent, for complete elimination
in FY 2011. This phased approach to eliminating the BNAF was estimated
to reduce payments by 1.1 percent in FY 2009, an additional 2 percent
in FY 2010, and an additional 1 percent in FY 2011. As originally
implemented, the phase out of the BNAF would not have a significant
economic impact on small entities because in any of the 3 fiscal years,
the estimated reduction in payments was less than 3 percent. However,
on February 17, 2009, ARRA eliminated the phase-out for FY 2009, but
left intact the BNAF reductions implemented in the August 8, 2008 FY
2009 Hospice Wage Index final rule for FY 2010 and FY 2011. While we
are still using a phased approach to eliminating the BNAF, the phase-
out is now occurring over 2 years rather than over 3 years. There is a
greater impact on hospices in FY 2010 since hospices move from having a
full (unreduced) BNAF in FY 2009 to a 75 percent reduced BNAF in FY
2010.
The hospice floor calculation gives some relief to hospices with
pre-floor, pre-reclassified wage index values less than 0.8. Hospices
which are eligible for the hospice floor calculation will either be
totally unaffected by the BNAF phase-out, or will be less affected by
the phase-out. As noted in section II.A.4 of this proposed rule, there
are just over 100 hospices that will be totally unaffected by the BNAF
phase-out and just over 300 hospices which will be less affected by the
BNAF phase-out, due to the hospice floor calculation.
Hospices do not need to take any action for the BNAF phase-out to
be effective. The FY 2010 wage index includes the 75 percent reduced
BNAF, and that wage index is applied to hospice payments automatically
by the claims processing contractors, thereby relieving hospices of the
responsibility of having to implement the change.
We are taking a number of actions to provide information to
hospices to help them prepare for the BNAF phase-out. First, this
phase-out was originally
[[Page 18925]]
implemented in the August 8, 2008 FY 2009 Hospice Wage Index final
rule. With the passage of ARRA, hospices have been given additional
time to prepare for the FY 2010 BNAF reduction, and the ultimate
elimination of the BNAF in FY 2011. Second, we continue to publicize
information about the BNAF phase-out on our hospice Web site. The
hospice center page at http://www.cms.hhs.gov/center/hospice.asp
provides information about the BNAF phase-out and links to related
documents. Third, we are publicizing the information about the BNAF
phase-out through other avenues (for example, through Open Door
Forums). All of these efforts should provide information to hospices to
help them prepare for the BNAF phase-out.
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 603 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 proposed 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
proposed 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 proposed rule (and subsequent
final rule) that imposes substantial direct requirement costs on State
and local governments, preempts State law, or otherwise has Federalism
implications. We have reviewed this proposed rule under the threshold
criteria of Executive Order 13132, Federalism, and have determined that
it will not have 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
proposed hospice wage index, including the effects of an estimated 2.1
percent hospital market basket update that will be communicated
separately through an administrative instruction. The proposed
provisions include continuing to use the CBSA-based pre-floor, pre-
reclassified hospital wage index as a basis for the hospice wage index
and continuing to use the same policies for treatment of areas (rural
and urban) without hospital wage data. In FY 2010, we are continuing
with the 75 percent reduction of the BNAF which, in the August 8, 2008
FY 2009 Hospice Wage Index final rule (73 FR 46464), was originally
implemented as the second year of a 3-year phase-out of the BNAF. The
proposed 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 2007) with a 75 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 pre-floor,
pre-reclassified hospital wage index data combined with the 75 percent
reduction in the BNAF are illustrated in column 4 of Table 1.
We have included a comparison of the combined effects of the 75
percent BNAF reduction, the updated pre-floor, pre-reclassified
hospital wage index, and an estimated 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 proposed hospice wage index discussed in
this rule, the BNAF phase-out, and the estimated 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 75 Percent and Applying an Estimated 2.1 Percent Hospital Market Basket
Update for the FY 2010 Proposed Hospice Wage Index, Compared to the FY 2009 Hospice Wage Index With No BNAF
Reduction
----------------------------------------------------------------------------------------------------------------
Percent
change in
Percent hospice
Percent change in payments
change in hospice due to wage
Number of hospice payments index
Number of routine payments due to wage change, 75%
hospices * home care due to FY index reduction
days in 2010 wage change and in BNAF and
thousands index 75% estimated
change reduction hospital
in BNAF market
basket
update
(1) (2) (3) (4) (5)
----------------------------------------------------------------------------------------------------------------
ALL HOSPICES................................... 3,206 67,763 (0.0) (3.2) (1.1)
URBAN HOSPICES............................. 2,184 58,428 (0.1) (3.3) (1.2)
RURAL HOSPICES............................. 1,022 9,336 0.1 (2.3) (0.3)
BY REGION--URBAN:
[[Page 18926]]
NEW ENGLAND................................ 121 2,092 0.0 (3.4) (1.4)
MIDDLE ATLANTIC............................ 209 5,971 (0.1) (3.4) (1.4)
SOUTH ATLANTIC............................. 314 12,988 (0.8) (4.0) (1.9)
EAST NORTH CENTRAL......................... 307 8,318 (0.5) (3.7) (1.7)
EAST SOUTH CENTRAL......................... 171 4,512 (0.0) (2.9) (0.9)
WEST NORTH CENTRAL......................... 169 3,860 0.4 (2.9) (0.8)
WEST SOUTH CENTRAL......................... 410 7,949 0.0 (3.1) (1.1)
MOUNTAIN................................... 203 5,065 0.1 (3.2) (1.2)
PACIFIC.................................... 245 6,702 1.6 (2.0) 0.1
OUTLYING **................................ 35 972 (1.2) (1.2) 0.9
BY REGION--RURAL:
NEW ENGLAND................................ 26 175 0.6 (2.7) (0.7)
MIDDLE ATLANTIC............................ 44 462 (0.4) (3.5) (1.5)
SOUTH ATLANTIC............................. 128 1,915 (0.1) (2.7) (0.7)
EAST NORTH CENTRAL......................... 145 1,354 (0.6) (3.8) (1.8)
EAST SOUTH CENTRAL......................... 152 2,051 (0.1) (1.3) 0.8
WEST NORTH CENTRAL......................... 192 965 0.7 (2.4) (0.4)
WEST SOUTH CENTRAL......................... 176 1,406 0.9 (0.9) 1.2
MOUNTAIN................................... 106 601 (0.4) (3.2) (1.2)
PACIFIC.................................... 52 397 1.7 (1.7) 0.3
OUTLYING................................... 1 9 0.0 0.0 2.1
ROUTINE HOME CARE DAYS:
0-3499 DAYS (small)........................ 663 1,103 0.1 (2.9) (0.8)
3500-19,999 DAYS (medium).................. 1,537 15,311 0.1 (2.9) (0.9)
20,000+ DAYS (large)....................... 1,006 51,350 (0.1) (3.2) (1.2)
TYPE OF OWNERSHIP: [dagger]
VOLUNTARY (Non-Profit)..................... 1,187 29,043 (0.1) (3.3) (1.3)
PROPRIETARY (For Profit)................... 1,608 33,275 0.1 (3.0) (1.0)
GOVERNMENT................................. 411 5,446 (0.1) (3.3) (1.3)
HOSPICE BASE:
FREESTANDING............................... 2,028 51,413 (0.1) (3.2) (1.2)
HOME HEALTH AGENCY......................... 601 9,509 0.2 (3.1) (1.1)
HOSPITAL................................... 561 6,627 0.2 (3.0) (0.9)
SKILLED NURSING FACILITY................... 16 214 (0.1) (3.5) (1.5)
----------------------------------------------------------------------------------------------------------------
BNAF = Budget Neutrality Adjustment Factor.
* As of January 29, 2009; Source: OSCAR database.
** Guam, Puerto Rico, Virgin Islands.
[dagger] 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.
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.
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 2009 pre-floor, pre-reclassified hospital wage index and
reducing the BNAF by 75 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 75 percent BNAF
[[Page 18927]]
reduction, and a 2.1 percent estimated 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 2,184
hospices located in urban areas and 1,022 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 2007. 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 3,206 hospices. Approximately
49.8 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 2007) 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. Currently the FY 2010 hospital market basket update is
estimated to be 2.1 percent; however this figure is subject to change.
Since the inclusion of the effect of an estimated 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 index, the 75 percent BNAF
reduction, and an estimated 2.1 percent hospital market basket update
factor.
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 proposed 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 1,598
designated as non-profit and 1,608 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 updated FY 2010 wage index values without any BNAF reduction
are anticipated to increase payments to small and medium hospices by
0.1 percent, and to decrease payments to large hospices by 0.1 percent
(column 3); the FY 2010 wage index values using the updated wage data
and the 75 percent BNAF reduction that was finalized in the FY 2009
final rule, published August 2008 (73 FR 46464), are anticipated to
decrease estimated payments to small and to medium hospices by 2.9
percent each, and to large hospices by 3.2 percent (column 4); and
finally, the FY 2010 wage index values with the updated wage data, the
75 percent BNAF reduction which was finalized in the FY 2009 final
rule, published in August 2008 (73 FR 46464), and the estimated 2.1
percent hospital market basket update are projected to decrease
estimated payments by 0.8 percent for small hospices, by 0.9 percent
for medium hospices, and to decrease estimated payments by 1.2 percent
for large hospices (column 5).
2. Geographic Location
Column 3 of Table 1 shows that FY 2010 wage index values without
the BNAF reduction would result in little change in estimated payments.
Urban hospices are anticipated to experience a slight decrease of 0.1
percent while rural hospices are anticipated to have a slight increase
of 0.1 percent. For urban hospices, the greatest increase of 1.6
percent is anticipated to be experienced by the Pacific regions,
followed by an increase for West North Central regions of 0.4 percent,
an increase for Mountain regions of 0.1 percent, and no change for the
West South Central or New England regions. The remaining urban regions
are anticipated to experience a decrease ranging from 0.1 percent in
the Middle Atlantic region to a 1.2 percent decrease for Outlying
regions. East South Central is anticipated to see a slight decrease
which rounds to a 0.0 percent change.
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 0.1 percent for the South Atlantic
and East South Central regions to 0.6 percent for the East North
Central region. The remaining regions are anticipated to experience an
increase ranging from 0.6 percent for the New England region to 1.7
percent for the Pacific region.
Column 4 shows the combined effect of the 75 percent BNAF reduction
and the updated pre-floor, pre-reclassified hospital wage index values
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 3.3 percent decrease in payments, while
[[Page 18928]]
rural hospices expect a 2.3 percent decrease. The estimated percent
decrease in payment for urban hospices ranged from 1.2 percent for
Outlying hospices to 4.0 percent for South Atlantic hospices.
The estimated percent decrease in payment for rural hospices ranged
from 0.9 percent for West South Central hospices to 3.8 percent for
East North Central hospices. Rural Outlying estimated payments were
unaffected.
Column 5 shows the combined effects of the proposed FY 2010 wage
index values with the updated wage data, the 75 percent BNAF reduction
which was finalized in the FY 2009 final rule, published in August 2008
(73 FR 46464), and the estimated 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 hospices are anticipated to experience a 1.2
percent decrease in payments while rural hospices should experience a
0.3 percent decrease in payments. Urban hospices are anticipated to
experience a decrease in estimated payments in 8 regions, ranging from
a 0.8 percent decrease for the West North Central region to a 1.9
percent decrease for South Atlantic hospices. Urban hospices in 2
regions are anticipated to see an increase in estimated payments of 0.1
percent for the Pacific region and 0.9 percent for Outlying regions.
Rural hospices in 6 regions are estimated to see a decrease in payments
ranging from 0.4 percent for the West North Central region to 1.8
percent for the East North Central region. Rural hospices in 4 regions
are anticipated to see an increase in payments ranging from 0.3 percent
for the Pacific region to 2.1 percent for the Outlying regions.
3. Type of Ownership
Column 3 demonstrates the effect of the updated pre-floor, pre-
reclassified hospital wage index on FY 2010 estimated payments versus
FY 2009 estimated payments with no BNAF reduction applied to them. We
anticipate that using the updated pre-floor, pre-reclassified hospital
wage index data would increase estimated payments to proprietary (for-
profit) hospices by 0.1 percent. We estimate a slight decrease in
payments for voluntary (non-profit) and government hospices of 0.1
percent each.
Column 4 demonstrates the combined effects of using updated pre-
floor, pre-reclassified hospital wage index data and of incorporating a
75 percent BNAF reduction. Estimated payments to proprietary (for-
profit) hospices are anticipated to decrease by 3.0 percent, while
voluntary (non-profit) and government hospices are each anticipated to
experience decreases of 3.3 percent.
Column 5 shows the combined effects of the updated pre-floor, pre-
reclassified hospital wage index values with the updated wage data, the
75 percent BNAF reduction, and the estimated 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 decrease by 1.0 percent for proprietary (for-profit)
hospices, and by 1.3 percent for both voluntary (non-profit) and
government hospices.
4. Hospice Base
Column 3 demonstrates the effect of using the updated pre-floor,
pre-reclassified hospital wage index values, comparing estimated
payments for FY 2010 to FY 2009 (using a BNAF with no reduction).
Estimated payments are anticipated to decrease by 0.1 percent each for
freestanding facilities and for hospices based out of skilled nursing
facilities. Home health and hospital based facilities are anticipated
to experience a 0.2 percent increase in estimated payments.
Column 4 shows the combined effects of updating the pre-floor, pre-
reclassified hospital wage index values and reducing the BNAF by 75
percent (as finalized in the FY 2009 final rule, published August 2008,
73 FR 46464), comparing FY 2010 to FY 2009 (using a BNAF with no
reduction) estimated payments. Skilled nursing facility based hospices
are estimated to see a 3.5 percent decrease, freestanding hospices are
estimated to see a 3.2 percent decrease, home health agency based
hospices are anticipated to experience a 3.1 percent decrease in
payments, and hospital-based hospices are anticipated to experience a
3.0 percent decrease in payments.
Column 5 shows the combined effects of the updated pre-floor, pre-
reclassified hospital wage index, the 75 percent BNAF reduction which
was finalized in FY 2009 hospice wage index final rule (73 FR 46464),
and the estimated 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 decrease by 0.9
percent for hospital based hospices, by 1.1 percent for home health
agency based hospices, and by 1.2 percent and by 1.5 percent for
freestanding hospices and skilled nursing facility based hospices,
respectively.
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 proposed 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
proposed rule on data for 3,206 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............ $-340.
From Whom to Whom......................... Federal Government to
Hospices.
------------------------------------------------------------------------
Note: The $340 million reduction in transfers includes the 75
percent reduction in the BNAF and the updated wage data. It does not
include the estimated hospital market basket update, which is
currently forecast to be about 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.
For the reasons set forth in the preamble, the Centers for Medicare
and Medicare Services propose to amend 42 CFR chapter IV as set forth
below:
PART 405--FEDERAL HEALTH INSURANCE FOR THE AGED AND DISABLED
1. The authority citation for part 405 subpart R continues to read
as follows:
[[Page 18929]]
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
2. Section 405.1803 is amended by revising paragraph (a)
introductory text and paragraph (a)(1) to read as follows:
Sec. 405.1803 Intermediary determination and notice of amount of
program reimbursement.
(a) General requirement. Upon receipt of a provider's cost report,
or amended cost report where permitted or required, the intermediary
must within a reasonable period of time (as described in Sec.
405.1835(a)(3)(ii)), furnish the provider and other parties as
appropriate (see Sec. 405.1805) a written notice reflecting the
intermediary's determination of the total amount of reimbursement due
the provider. For the purposes of hospice, 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 intermediary must include the
following information in the notice, as appropriate:
(1) Reasonable cost. The notice must--(i) Explain the
intermediary's determination of total program reimbursement due the
provider on the basis of reasonable cost for the reporting period
covered by the cost report or amended cost report, or in the case of
hospice, on the basis of the cap calculations for the reporting period
that is the cap year; and
(ii) Relate this determination to the provider's claimed total
program reimbursement due the provider for this period.
* * * * *
PART 418--HOSPICE CARE
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).
Subpart A--General Provision and Definitions
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:
* * * * *
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
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 on the certification a brief
narrative explanation of the clinical findings that supports a life
expectancy of 6 months or less.
* * * * *
Subpart C--Conditions of Participation: Patient Care
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) * * *
(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
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 that
issued the certification number.
* * * * *
Sec. 418.108 [Amended]
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
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. 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.
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
[[Page 18930]]
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.
* * * * *
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 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
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.
* * * * *
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. 93.773,
Medicare--Hospital Insurance; and Program No. 93.774, Medicare-
Supplementary Medical Insurance Program)
Dated: March 30, 2009.
Charlene Frizzera,
Acting Administrator, Centers for Medicare & Medicaid Services.
Approved: April 15, 2009.
Charles E. Johnson,
Acting Secretary.
BILLING CODE 4120-01-P
[[Page 18931]]
[GRAPHIC] [TIFF OMITTED] TP24AP09.054
[[Page 18932]]
[GRAPHIC] [TIFF OMITTED] TP24AP09.055
[[Page 18933]]
[GRAPHIC] [TIFF OMITTED] TP24AP09.056
[[Page 18934]]
[GRAPHIC] [TIFF OMITTED] TP24AP09.057
[[Page 18935]]
[GRAPHIC] [TIFF OMITTED] TP24AP09.058
[[Page 18936]]
[GRAPHIC] [TIFF OMITTED] TP24AP09.059
[[Page 18937]]
[GRAPHIC] [TIFF OMITTED] TP24AP09.060
[[Page 18938]]
[GRAPHIC] [TIFF OMITTED] TP24AP09.061
[[Page 18939]]
[GRAPHIC] [TIFF OMITTED] TP24AP09.062
[[Page 18940]]
[GRAPHIC] [TIFF OMITTED] TP24AP09.063
[[Page 18941]]
[GRAPHIC] [TIFF OMITTED] TP24AP09.064
[[Page 18942]]
[GRAPHIC] [TIFF OMITTED] TP24AP09.065
[[Page 18943]]
[GRAPHIC] [TIFF OMITTED] TP24AP09.066
[[Page 18944]]
[GRAPHIC] [TIFF OMITTED] TP24AP09.067
[[Page 18945]]
[GRAPHIC] [TIFF OMITTED] TP24AP09.068
[[Page 18946]]
[GRAPHIC] [TIFF OMITTED] TP24AP09.069
[[Page 18947]]
[GRAPHIC] [TIFF OMITTED] TP24AP09.070
[[Page 18948]]
[GRAPHIC] [TIFF OMITTED] TP24AP09.071
[[Page 18949]]
[GRAPHIC] [TIFF OMITTED] TP24AP09.072
[[Page 18950]]
[GRAPHIC] [TIFF OMITTED] TP24AP09.073
[[Page 18951]]
[GRAPHIC] [TIFF OMITTED] TP24AP09.074
[[Page 18952]]
[GRAPHIC] [TIFF OMITTED] TP24AP09.075
[[Page 18953]]
[GRAPHIC] [TIFF OMITTED] TP24AP09.076
[[Page 18954]]
[GRAPHIC] [TIFF OMITTED] TP24AP09.077
[[Page 18955]]
[GRAPHIC] [TIFF OMITTED] TP24AP09.078
[[Page 18956]]
[GRAPHIC] [TIFF OMITTED] TP24AP09.079
[[Page 18957]]
[GRAPHIC] [TIFF OMITTED] TP24AP09.080
[[Page 18958]]
[GRAPHIC] [TIFF OMITTED] TP24AP09.081
[[Page 18959]]
[GRAPHIC] [TIFF OMITTED] TP24AP09.082
[[Page 18960]]
[GRAPHIC] [TIFF OMITTED] TP24AP09.083
[[Page 18961]]
[GRAPHIC] [TIFF OMITTED] TP24AP09.084
[[Page 18962]]
[GRAPHIC] [TIFF OMITTED] TP24AP09.085
[[Page 18963]]
[GRAPHIC] [TIFF OMITTED] TP24AP09.086
[[Page 18964]]
[GRAPHIC] [TIFF OMITTED] TP24AP09.087
[[Page 18965]]
[GRAPHIC] [TIFF OMITTED] TP24AP09.088
[[Page 18966]]
[GRAPHIC] [TIFF OMITTED] TP24AP09.089
[[Page 18967]]
[GRAPHIC] [TIFF OMITTED] TP24AP09.090
[[Page 18968]]
[GRAPHIC] [TIFF OMITTED] TP24AP09.091
[[Page 18969]]
[GRAPHIC] [TIFF OMITTED] TP24AP09.092
[[Page 18970]]
[GRAPHIC] [TIFF OMITTED] TP24AP09.093
[FR Doc. E9-9417 Filed 4-21-09; 4:15 pm]
BILLING CODE 4120-01-C