Medicare Program; Hospice Wage Index for Fiscal Year 2012, 26806-26851 [2011-10689]
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Federal Register / Vol. 76, No. 89 / Monday, May 9, 2011 / Proposed Rules
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Centers for Medicare & Medicaid
Services
42 CFR Part 418
[CMS–1355–P]
RIN 0938–AQ31
Medicare Program; Hospice Wage
Index for Fiscal Year 2012
Centers for Medicare &
Medicaid Services (CMS), HHS.
ACTION: Proposed rule.
AGENCY:
This proposed rule would set
forth the hospice wage index for fiscal
year 2012 and continue the phase-out of
the wage index budget neutrality
adjustment factor (BNAF), with an
additional 15 percent BNAF reduction,
for a total BNAF reduction in FY 2012
of 40 percent. The BNAF phase-out will
continue with successive 15 percent
reductions from FY 2013 through FY
2016. This proposed rule would change
the hospice aggregate cap calculation
methodology. This proposed rule also
would revise the hospice requirement
for a face-to-face encounter for
recertification of a patient’s terminal
illness. Finally, this proposed rule
would begin implementation of a
hospice quality reporting program.
DATES: Comment Date: To be assured
consideration, comments must be
received at one of the addresses
provided below, no later than 5 p.m.
eastern time on July 8, 2011.
ADDRESSES: In commenting, please refer
to file code CMS–1355–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 https://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–1355–P, P.O. Box 8012, Baltimore,
MD 21244–1850.
Please allow sufficient time for mailed
comments to be received before the
close of the comment period.
3. By express or overnight mail. You
may send written comments to the
following address ONLY: Centers for
Medicare & Medicaid Services,
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SUMMARY:
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Department of Health and Human
Services, Attention: CMS–1355–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—
Centers for Medicare & Medicaid
Services, Department of Health and
Human Services, 7500 Security
Boulevard, Baltimore, MD 21244–1850.
If you intend to deliver your comments
to the Baltimore address, 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.
For information on viewing public
comments, see the beginning of the
SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT: For
information regarding ‘‘Quality
Reporting for Hospices’’ and ‘‘Collection
of Information Requirements’’ sections,
please contact Robin Dowell at (410)
786–0060. For information regarding
‘‘Hospice Wage Index’’ and ‘‘Hospice
Face-to-Face Requirement’’ sections,
please contact Anjana Patel at (410)
786–2120. For information regarding all
other sections, please contact Katie
Lucas at (410) 786–7723.
SUPPLEMENTARY INFORMATION:
Submitting Comments: We welcome
comments from the public on all issues
set forth in this rule to assist us in fully
considering issues and developing
policies. You can assist us by
referencing the file code CMS–1355–P
and the specific ‘‘issue identifier’’ that
precedes the section on which you
choose to comment.
Inspection of Public Comments: All
comments received before the close of
the comment period are available for
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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: https://
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, PreReclassified, Hospital Wage Index)
2. Changes to Core-Based Statistical Area
(CBSA) Designations
3. Definition of Rural and Urban Areas
4. Areas Without Hospital Wage Data
5. CBSA Nomenclature Changes
6. Wage Data for Multi-Campus Hospitals
7. Hospice Payment Rates
II. Summary of Cap Comments Solicited in
the FY 2011 Hospice Wage Index Notice
With Comment Period
III. Provisions of the Proposed Rule
A. FY 2012 Hospice Wage Index
1. Background
2. Areas Without Hospital Wage Data
3. FY 2012 Wage Index With an Additional
15 Percent Reduced Budget Neutrality
Adjustment Factor (BNAF)
4. Effects of Phasing Out the BNAF
B. Aggregate Cap Calculation Methodology
1. Cap Determinations for Cap Years
Ending On or Before October 31, 2011
2. Cap Determinations for Cap Years
Ending On or After October 31, 2012
3. Patient-by-Patient Proportional
Methodology
4. Streamlined Methodology
5. Changing Methodologies
6. Other Issues
7. Changes to Regulatory Text
C. Hospice Face-to-Face Requirement
D. Technical Proposals and Clarification
1. Hospice Local Coverage Determinations
2. Definition of Hospice Employee
3. Timeframe for Face-to-Face Encounters
4. Hospice Aide and Homemaker Services
E. Quality Reporting for Hospices
1. Background and Statutory Authority
2. Quality Measures for Hospice Quality
Reporting Program for Payment Year FY
2014
a. Considerations in the Selection of the
Proposed Quality Measures
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b. Proposed Quality Measures for the
Quality Reporting Program for Hospices
c. Proposed Timeline for Data Collection
Under the Quality Reporting Program for
Hospices
d. Data Submission Requirements
3. Public Availability of Data Submitted
4. Additional Measures Under
Consideration
IV. Updates on Issues Not Proposed for
Rulemaking for FY 2012 Rulemaking
A. Update on Hospice Payment Reform and
Value Based Purchasing
B. Update on the Redesigned Provider
Statistical & Reimbursement Report
(PS&R)
V. Collection of Information Requirements
A. Structural Measure: Participation in
Quality Assessment Performance
Improvement Program That Includes at
Least Three Indicators Related to Patient
Care
B. NQF Measure #0209: Percentage of
Patients Who Were Uncomfortable
Because of Pain on Admission to
Hospice Whose Pain Was Brought Under
Control Within 48 Hours
VI. Response to Comments
VII. Economic Analyses
A. Regulatory Impact Analysis
1. Introduction
2. Statement of Need
3. Overall Impact
4. Detailed Economic Analysis
a. Effects on Hospices
b. Hospice Size
c. Geographic Location
d. Type of Ownership
e. Hospice Base
f. Effects on Other Providers
g. Effects on the Medicare and Medicaid
Programs
h. Accounting Statement
i. Conclusion
B. Regulatory Flexibility Act Analysis
C. Unfunded Mandates Reform Act
Analysis
VIII. Federalism Analysis
Addendum A: FY 2012 Wage Index for Urban
Areas
Addendum B: FY 2012 Wage Index for Rural
Areas
I. Background
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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 to palliative care, for relief of
pain and for symptom management. The
goal of hospice care is to help terminally
ill individuals continue life with
minimal disruption to normal activities
while remaining primarily in the home
environment. A hospice uses an
interdisciplinary approach to deliver
medical, nursing, social, psychological,
emotional, and spiritual services
through use of a broad spectrum of
professional and other caregivers, with
the goal of making the individual as
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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
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. Our regulations at § 418.306(c)
require each hospice’s labor market to
be established using the most current
hospital wage data available, including
any changes by the Office of
Management and Budget (OMB) to the
Metropolitan Statistical Areas (MSAs)
definitions. 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
Inpatient Prospective Payment System
(IPPS) final rule (69 FR 48916, 49026),
revised labor market area definitions
were adopted at § 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 Metropolitan Statistical
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Area (MSA)-based wage index values for
FY 2006. The one-year transition policy
ended on September 30, 2006. For fiscal
years 2007 and beyond, we use CBSAs.
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, comprised representatives from
national hospice associations; rural,
urban, large and small hospices and
multi-site hospices; consumer groups;
and a government representative. On
April 13, 1995, the Hospice Wage Index
Negotiated Rulemaking Committee (the
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. The Committee’s
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 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 suggested by the Committee,
‘‘budget neutrality’’ would mean that, in
a given year, estimated aggregate
payments for Medicare hospice services
using the updated hospice values would
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 would
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 Budget
Neutrality Adjustment Factor (BNAF)
would be computed and applied
annually to the pre-floor, prereclassified hospital wage index when
deriving the hospice wage index.
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The BNAF is calculated by computing
estimated payments using the most
recent, completed year of hospice
claims data. The units (days or hours)
from those claims are multiplied by the
updated hospice payment rates to
calculate estimated payments. For the
FY 2011 Hospice Wage Index Notice
with Comment Period, that meant
estimating payments for FY 2011 using
FY 2009 hospice claims data, and
applying the FY 2011 hospice payment
rates (updating the FY 2010 rates by the
FY 2011 inpatient hospital market
basket update). The FY 2011 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 prefloor, 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 FY 2010 Hospice Wage Index
Final Rule (74 FR 39384) finalized a
provision for a 7-year phase-out of the
BNAF, which is applied to the wage
index values. The BNAF was reduced
by 10 percent in FY 2010, an additional
15 percent in FY 2011, and will be
reduced by an additional 15 percent in
each of the next 5 years, for complete
phase out in 2016.
The hospice wage index is updated
annually. Our most recent annual
hospice wage index Notice with
Comment Period, published in the
Federal Register (75 FR 42944) on July
22, 2010, set forth updates to the
hospice wage index for FY 2011. As
noted previously, that update included
the second year of a 7-year phase-out of
the BNAF, which was applied to the
wage index values. The BNAF was
reduced by 10 percent in FY 2010 and
by an additional 15 percent in 2011, for
a total FY 2011 reduction of 25 percent.
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 prereclassified hospital wage index is used
as the raw wage index for the hospice
benefit. These raw wage index values
are then subject to either a budget
neutrality adjustment or application of
the hospice floor to compute the
hospice wage index used to determine
payments to hospices.
Pre-floor, pre-reclassified hospital
wage index values of 0.8 or greater are
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currently adjusted by a reduced BNAF.
As noted above, for FY 2011, the BNAF
was reduced by a cumulative total of 25
percent. Pre-floor, pre-reclassified
hospital wage index values below 0.8
are adjusted by the greater of: (1) The
hospice BNAF, reduced by a total of 25
percent for FY 2011; or (2) the hospice
floor (which is a 15 percent increase)
subject to a maximum wage index value
of 0.8. For example, if in FY 2011,
County A had a pre-floor, prereclassified hospital wage index (raw
wage index) value of 0.3994, we would
perform the following calculations using
the budget neutrality factor (which for
this example is an unreduced BNAF of
0.060562, less 25 percent, or 0.045422)
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 25 percent reduced BNAF:
(0.3994 × 1.045422 = 0.4175).
Pre-floor, pre-reclassified hospital
wage index value below 0.8 multiplied
by the hospice floor: (0.3994 × 1.15 =
0.4593).
Based on these calculations, County
A’s hospice wage index would be
0.4593.
The BNAF has been computed and
applied annually, in full or in reduced
form, 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 nonlabor 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.
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 the OMB to the
definitions of MSAs, which now
include CBSA designations. The August
4, 2005 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
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index for all hospices for FY 2006. For
FY 2006, the hospice wage index
consisted of a blend of 50 percent of the
FY 2006 MSA-based hospice wage
index and 50 percent of the FY 2006
CBSA based hospice wage index.
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
§ 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
§ 412.64(b)(1)(ii)(A) through (C), and
have been used for the Medicare
hospice benefit since implementation.
When the raw pre-floor, prereclassified 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 prefloor, pre-reclassified hospital wage
index value for rural areas when no
hospital wage data were available. We
also adopted the policy that for urban
labor markets without a hospital from
which a 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, prereclassified hospital wage index value to
use as a reasonable proxy for these
areas. Consequently, in subsequent
fiscal years, we applied the average prefloor, pre-reclassified hospital wage
index data from all urban areas in that
state, to urban areas without a hospital.
This year the only such 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
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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, prereclassified 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, prereclassified hospital wage index data for
areas lacking hospital wage data in both
FY 2006 and FY 2007 for rural
Massachusetts and rural Puerto Rico.
In the FY 2008 final rule (72 FR
50214, 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 through FY
2011, in cases where there was a rural
area without rural hospital wage data,
we used the average pre-floor, prereclassified 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, which uses prefloor, 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
rule (72 FR at 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, prereclassified 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 prefloor, 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
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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 is necessary for
Puerto Rico. 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, prereclassified hospital wage index based
on the pre-floor, pre-reclassified
hospital wage index (or indices) 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
through FY 2011, we have used the
most recent pre-floor, pre-reclassified
hospital wage index available for Puerto
Rico, which is 0.4047.
5. CBSA Nomenclature Changes
The OMB regularly publishes a
bulletin that updates the titles of certain
CBSAs. In the FY 2008 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 https://
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
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26809
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, prereclassified hospital wage index was
used to derive the applicable wage
index values for the hospice wage index
because these data (FY 2005) were the
most recent complete cost data.
Beginning in FY 2008, the IPPS
apportioned the wage data for multicampus hospitals located in different
labor market areas (CBSAs) to each
CBSA where the campuses were 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 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 2012 hospice
wage index values, reflects the
application of our policy to use those
data to establish the hospice wage
index. The FY 2012 hospice wage index
values presented in this proposed rule
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 multicampus hospitals with campuses that
are located in different labor areas, one
in Massachusetts and another in Illinois.
Thus, in FY 2009 and subsequent fiscal
years, hospice wage index values for the
following CBSAs have been affected by
this policy: Boston-Quincy, MA (CBSA
14484), Providence-New Bedford-Falls
River, RI-MA (CBSA 39300), ChicagoNaperville-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 market basket index, minus 1
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percentage point. Payment rates for FYs
since 2002 have been updated according
to section 1814(i)(1)(C)(ii)(VII) of the
Act, which states that the update to the
payment rates for subsequent 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. Section 3401(g)
of the Affordable Care Act of 2010
requires that, in FY 2013 (and in
subsequent fiscal years), the market
basket percentage update under the
hospice payment system as described in
Section 1814(i)(1)(C)(ii)(VII) or Section
1814(i)(1)(C)(iii) be annually reduced by
changes in economy-wide productivity
as set out at section 1886(b)(3)(B)(xi)(II)
of the Act. Additionally, Section 3401(g)
of the Affordable Care Act requires that
in FY 2013 through FY 2019, the market
basket percentage update under the
hospice payment system be reduced by
an additional 0.3 percentage point
(although the potential reduction is
subject to suspension under conditions
set out under new section
1814(i)(1)(C)(v) of the Act). Congress
also required, in section 3004(c) of the
Affordable Care Act, that hospices begin
submitting quality data, based on
measures to be specified by the
Secretary, for FY 2014 and subsequent
fiscal years. Beginning in FY 2014,
hospices which fail to report quality
data will have their market basket
update reduced by 2 percentage points.
II. Summary of Cap Comments
Solicited in the FY 2011 Hospice Wage
Index Notice With Comment Period
Section 1814(i)(2)(A) through (C) of
the Act establishes a cap on aggregate
payments made to a Medicare hospice
provider and prescribes a basic
methodology for calculating the
aggregate cap. The aggregate cap limits
the total aggregate payment any
individual hospice can receive in a year.
A hospice’s ‘‘aggregate cap’’ is calculated
by multiplying the number of
beneficiaries who have elected hospice
care during an accounting year by a perbeneficiary ‘‘cap amount.’’ The Act
established the per-beneficiary cap
amount and provides an annual increase
to the cap amount based on the rate of
increase in the medical care
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expenditures category of the Consumer
Price Index. The 2010 per-beneficiary
cap amount was $23,874.98.
A hospice’s aggregate cap is compared
with the total Medicare payments made
to the hospice during the same
accounting year. Any Medicare
payments in excess of the aggregate cap
are considered overpayments and must
be returned to Medicare by the hospice.
CMS’ contractors calculate each
hospice’s aggregate cap every year, and
establish an overpayment for any
hospice that exceeds the aggregate cap.
For the aggregate cap calculation,
regulations at 42 CFR 418.309 define the
total number of beneficiaries as the
number of individuals who have elected
hospice and have not previously been
included in any cap calculation,
reduced to reflect the proportion of
hospice care that was provided in
another hospice. These regulations also
define the accounting year, or cap year,
as the period from November 1st to
October 31st.
In the FY 2011 Hospice Wage Index
Notice with Comment Period, we noted
that there have been some technological
advances in our data systems which we
believe might enable us to modernize
the aggregate cap calculation process
while providing information facilitating
the ability of hospices to better manage
their aggregate cap. We provided details
regarding policy options that we are
considering for modernizing the
aggregate cap calculation methodology
and solicited comments on those policy
options; we also solicited comments or
suggestions for other possible options/
alternatives to modernize the cap
calculation methodology, to be
considered in possible future
rulemaking.
In that Notice, we described a policy
option that would align the cap year
with the federal fiscal year and policy
options we were considering regarding
how to count beneficiaries when
computing the aggregate cap. We also
described our plans to redesign the
Provider Statistical and Reimbursement
Report (PS&R) to show a beneficiary’s
full utilization history, and discussed
having a uniform schedule for mailing
cap determination letters.
The policy options we described
regarding how to count beneficiaries
when computing the aggregate cap were:
• Option 1: In this option, we
described several approaches where we
would apply a patient-by-patient
proportional methodology to all
hospices’ aggregate cap calculations.
Under the patient-by-patient
proportional methodology, the number
of patients for a given cap year and
hospice would be the patient-by-patient
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proportional share of each patient’s days
in that hospice during the cap year,
when considering the patient’s total
days of Medicare hospice care in
multiple cap years and multiple
hospices. One approach we described
would apportion each patient across the
year of election and one additional year,
as our analysis showed that 99.98
percent of patients who died in hospice
were admitted to hospice either in the
year that they died, or in the previous
year. We also described an approach
where a hospice could request the
Medicare contractor recalculate the
hospice’s aggregate cap using longer
timeframes.
• Option 2: In this option, we
described an approach which would
defer across-the-board changes to the
aggregate cap calculation methodology
for all hospices until we implement
hospice payment reform, but it would
allow individual hospices to request the
Medicare contractor to apply a patientby-patient proportional methodology to
its aggregate cap calculations.
For more information on future
hospice payment reform, please see
section IV.A of this proposed rule. For
details on these options or issues, please
see the July 22, 2010 Hospice Wage
Index for Fiscal Year 2011 Notice with
Comment Period (75 FR 42944). We
received 27 public comments about the
aggregate cap, with commenters
expressing differing views on issues
surrounding the aggregate cap. We also
received several comments which were
outside the scope of the solicitation.
Comment: We received public
comments from 27 individuals or
groups, with 1 missing an attachment,
for a total of 26 comments.
Two commenters supported Option 1,
with apportioning of hospice
beneficiaries across 2 years; one noted
that this option covers more than two
180-day periods, while providing a
fixed end date. The other commenter
urged us to move forward with Option
1 while additional data collection and
payment reforms are pending.
More commenters suggested we
choose Option 2 than any other
approach. Ten commenters supported
Option 2, and suggested that we defer
major changes to the aggregate cap
methodology until payment reform
occurs, unless a hospice requests multiyear apportioning. These commenters
were concerned about the burden
associated with changing the aggregate
cap methodology now, and preferred
that we wait until broader payment
reform to make a change. They noted
that the majority of hospices don’t
exceed their aggregate cap, and therefore
don’t want to change. One commenter
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urged CMS to retain the existing
methodology, as creating a complicated,
open-ended apportioning approach
would disadvantage most hospices. This
commenter stated that very few
hospices have an aggregate cap liability,
and asked that we not create an
administrative burden for the vast
majority of hospices that do not exceed
the aggregate cap, but instead direct our
aggregate cap changes to the minority of
hospices that have some kind of
liability.
Some felt that Option 2 was simpler
and would provide flexibility for those
who wanted their aggregate cap
calculated using a multi-year
apportionment methodology. The major
hospice associations urged CMS to defer
any major across-the-board changes to
the cap calculation methodology until
the implementation of hospice payment
reform, because of concerns that any
changes to the current methodology
would result in additional cost and
burden to hospices. One association also
suggested we fully examine the cap and
whether other alternatives would better
address patient needs, suggesting that
we address alternatives in the context of
broader payment reform.
While these 10 commenters supported
allowing individual hospice programs
the option of requesting a recalculation
of their cap determination using a multiyear apportionment methodology, some
were concerned that this could have
implications for hospices that had not
requested a recalculation. A commenter
suggested that should CMS re-open cap
determinations for hospices that had not
requested a recalculation, we could
potentially harm hospices and
ultimately risk access for patients who
had been served by more than one
hospice. This commenter added that
CMS should ‘hold harmless’ hospice
programs that had not requested cap
recalculation against overpayments that
may occur as the result of another
hospice program requesting
recalculation of its cap. This commenter
also urged CMS to adopt policies
allowing greater flexibility with respect
to repayment plans for those with cap
overages.
In contrast to those supporting Option
2, 9 commenters supported an openended multi-year apportioning
approach. Many of these commenters
felt that changes to the methodology
should be applied to all hospices.
Several of the commenters cited the
lawsuits filed against the Secretary
which dispute the methodology for
counting beneficiaries in the aggregate
cap calculation. One of these
commenters supported allowing reopening of prior years’ cap reports in
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conjunction with a revised regulation
allowing a ‘‘true’’ patient-by-patient
proportional allocation of beneficiaries’
time across all years of service. One
commenter suggested we allow reopening of any cap demand which
occurred after February 13, 2008, noting
that this was the first date that a court
held our regulation to be unlawful.
Some of these commenters requested
that we suspend the use of the existing
regulation. Some commenters suggested
that the existing regulation
disadvantages patients with non-cancer
diagnoses or who are minorities.
Some of these commenters disputed
the statistic that 99.98 percent of
patients who died in 2007 were
admitted in 2006 or 2007, and argued
that increasing the time limit for a
patient-by-patient proportional
calculation to 2 years, as suggested in
our options, would not solve the
problem. These commenters, who
advocated an open-ended patient-bypatient proportional calculation,
suggested we focus on how many
hospice patients were still alive as of the
end of 2007; they stated that our statistic
was based on the percentage of patients
who died rather than on those who were
alive at the end of 2007. These
commenters suggested a larger
percentage of patients were alive, and
cited data for patients admitted between
2003 and 2007, who were still alive as
of December 31, 2007. They believe
these patients are harmed by our not
using an open-ended patient-by-patient
proportional allocation in computing
the aggregate cap. A commenter asked
that contractors perform the calculation
consistently, and be instructed on how
to handle its detailed mechanics when
adjustments occur.
Some of these 9 commenters felt that
the current Local Coverage
Determinations (LCDs) were of little use
in predicting patient prognoses, with
one noting that the current LCDs led to
appropriate but sometimes long-stay
admissions, which often resulted in
reimbursements that exceeded the
aggregate cap. They argued that the
LCDs were not evidence-based. One
commenter asserted that every patient
reviewed for appropriateness of
admission met his contractor’s LCDs,
and yet these patients had long lengths
of stay.
Also, several of these 9 commenters
suggested we support H.R. 3454, the
Medicare Hospice Reform and Savings
Act of 2009, parts of which were
adopted into section 3132 of the
Affordable Care Act. Commenters stated
that the bill would have resulted in payas-you-go reductions in reimbursements
for patients with lengths of stay
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26811
exceeding 180 days. They stated that
H.R. 3454 would have abolished the cap
and eliminated unintended incentives
for long stays, reduced Medicare
hospice costs, and reduced our
administrative burden. Commenters
said that this legislation would have
increased hospice rates by
20 percent for the first and last five days
of hospice care that ends in the death of
the patient; these reductions would
have been offset by another 3 percent
reduction in the daily hospice rates for
those patients with lengths of stay
beyond 180 days. They stated that this
legislation would have updated LCDs or
created National Coverage
Determinations which would be
improved, evidence-based formulas for
determining eligibility. Commenters
also stated that this legislation would
have paid hospices more for the first
and last few days of care, and less for
the interim days.
Five other commenters chose no
option, or presented their own
alternative approaches. One stated that
the existing aggregate cap is supposed to
represent the ‘‘average’’ cost of caring for
a patient, not the maximum cost, where
hospices have a mix of patients with
different diagnoses and lengths of stay.
This commenter felt that the current
methodology forces hospices to focus on
individual patients rather than on the
average patient mix, and was concerned
that some hospices may refuse patients
with certain diagnoses to avoid
exceeding their aggregate cap. This
commenter also was concerned about
the use of new patient elections as the
methodology for counting the number of
beneficiaries served in computing the
aggregate cap.
Another commenter recommended
that each beneficiary be counted as 1
every calendar year, because over the
years, more non-cancer terminal
diagnoses have appeared, with
unpredictable end-of-life trajectories;
the commenter stated that these noncancer patients require higher
utilization of resources. The commenter
suggested that under this mentioned
scenario, each patient on service would
begin a new cap year every January 1
and be counted as a new patient for that
year.
A different commenter suggested that
we modify the aggregate cap to focus on
hospices instead of beneficiaries. He
suggested that we change the aggregate
cap calculation to a 180-day aggregate
limit per hospice, which mirrors the 6
month requirement for hospice benefits
to be elected. This commenter said that
by monitoring an average day limit, all
of the multi-year apportioning could be
discarded, and replaced with a simple
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calculation. Another commenter
suggested we allow hospices to carry
forward to the following year any ‘‘cap
cushion’’ remaining at the end of the
year.
Several commenters supported the
idea of our aligning the cap year with
the federal fiscal year, with some noting
that the change would be appropriate
for a multi-year apportioning approach.
Other commenters stated that we should
not change the cap year at this time, and
recommended that we wait for future
payment reform to do this. Many
commenters asked that cap
determination letters be mailed or sent
in a more timely fashion, and a few said
that contractors need to calculate caps
consistently.
Commenters applauded efforts by
CMS to address the concerns that arise
when hospices lack access to accurate
and timely histories of patient care.
They suggested that the new PS&R
include each patient’s total days of care,
benefit periods by hospice, indicate the
initial benefit period, and show all
benefit periods that have been used.
Commenters also urged that the systems
be as ‘‘real-time’’ as possible. Another
commenter stated that registration into
the IVACS [sic] system (which is used
to access the PS&R) was overly
cumbersome, and believed that if home
care is used as a marker of the success
of this new registration system, only
20 percent of home health agencies are
currently registered.
Those who commented on our
discussion about establishing a uniform
schedule for contractors’ mailing cap
determination letters were supportive of
such a process, and felt that this would
assist hospices in their planning and
budgeting. One commenter asked that
the cap determination letter be
considered a final determination.
A commenter suggested that we factor
a hospice’s wage index value when
computing a hospice’s aggregate cap.
The commenter stated that because
hospice payments are adjusted by the
wage index to account for geographic
variances in labor costs, a hospice in an
area of relatively high labor costs would
have higher aggregate payments in a
given cap year than a hospice in an area
with relatively low labor costs. Yet, the
yearly aggregate payments of both
hospices are compared to the same cap
amount. The commenter states that
high-wage index hospices are unfairly
disadvantaged by not factoring in the
wage index values to their yearly cap
amount, and hospices in low-wage
index areas are unfairly advantaged. The
commenter felt that our not wage
adjusting the cap amount was contrary
to the intent of Congress.
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Response: We thank the commenters
for their insights on these issues. We
have considered the comments in
developing our proposals related to
changing the aggregate cap calculation
methodology, which are described in
section III.B in this proposed rule. We
will consider other comments and
suggestions for improvements in the
future, as we undertake broader
payment reform.
Comment: Some commenters asked
for additional data collection on hospice
claims or through cost reports, so that
CMS will have full resource utilization
data related to providing hospice care
when it seeks to reform payments. Some
commenters stated that they were
opposed to the BNAF phase-out. Others
were concerned that rural hospices had
similar or greater costs than urban
hospices and yet were typically paid
less due to wage adjustment. A
commenter said that the hospital wage
index used to create the hospice wage
index was not accurate, as hospital wage
patterns do not mirror those of hospices;
this commenter suggested that we pilot
test a hospice-specific wage index.
Another commenter stated her concerns
regarding the wage index value for her
hospice’s CBSA, and said that a
neighboring CBSA was much higher.
The commenter asked to be included in
the neighboring CBSA.
Several commenters stated that the
Common Working File (CWF) is
burdensome and does not provide
complete data on a patient’s hospice
history. A commenter added that some
information in CWF was pulled from
hospice cost reports, and was
unreliable. She added that an industry
association had presented us with a
prototype cost report to more accurately
reflect hospice costs rather than trying
to force numbers from hospices into a
home care model cost report, but that
CMS has been slow in adopting this
software.
One commenter was concerned that
CMS waived notice and comment
rulemaking in our FY 2011 Hospice
Wage Index Notice.
Response: We thank the commenters,
but we note that these comments are
outside the scope of the solicitation.
III. Provisions of the Proposed Rule
A. FY 2012 Hospice Wage Index
1. Background
As previously noted, 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
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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 used 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 2012
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 2012 update to the
hospice wage index, we propose to
continue to use the most recent prefloor, 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, prereclassified 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-Fort Stewart,
Georgia. We propose to continue this
policy for FY 2012.
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
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methodology is also described in section
I.B.4 of this proposed rule. In FY 2012,
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 2012.
However, as we noted section I.B.4 of
this proposed rule, we do not believe
that this policy is appropriate for Puerto
Rico. For FY 2012, we again propose to
continue to use the most recent prefloor, pre-reclassified hospital wage
index value available for Puerto Rico,
which is 0.4047. This pre-floor, prereclassified hospital wage index value
will then be adjusted upward by the
hospice 15 percent floor adjustment in
the computing of the proposed FY 2012
hospice wage index.
3. FY 2012 Wage Index With an
Additional 15 Percent Reduced Budget
Neutrality Adjustment Factor (BNAF)
The hospice wage index set forth in
this proposed rule would be effective
October 1, 2012 through September 30,
2013. 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 continuing to use the
most current hospital data available. For
this proposed rule, the FY 2011 hospital
wage index was the most current
hospital wage data available for
calculating the FY 2012 hospice wage
index values. We used the FY 2011 prefloor, pre-reclassified hospital wage
index data for this calculation.
As noted above, for FY 2012, the
hospice wage index values will be based
solely on the adoption of the CBSAbased labor market definitions and the
hospital wage index. We continue to use
the most recent pre-floor and prereclassified hospital wage index data
available (based on FY 2007 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 6, 2009 FY 2010 Hospice
Wage Index final rule (74 FR 39384).
The August 6, 2009 FY 2010 Hospice
Wage Index final rule finalized a
provision to phase out the BNAF over
7 years, with a 10 percent reduction in
the BNAF in FY 2010, and an additional
15 percent reduction in FY 2011, over
each of the next 5 years, with complete
phase out in FY 2016. Therefore, in
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accordance with the August 6, 2009, FY
2010 Hospice Wage Index final rule, the
BNAF for FY 2012 was reduced by an
additional 15 percent for a total BNAF
reduction of 40 percent (10 percent from
FY 2010, additional 15 percent from FY
2011, and additional 15 percent for FY
2012).
An unreduced BNAF for FY 2012 is
computed to be 0.059061 (or 5.9061
percent). A 40 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 0.035437 (or 3.5437
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 2012 is shown in Addenda A and B.
Specifically, Addendum A reflects the
proposed FY 2012 wage index values for
urban areas under the CBSA
designations. Addendum B reflects the
proposed FY 2012 wage index values for
rural areas under the CBSA
designations.
4. Effects of Phasing Out the BNAF
The full (unreduced) BNAF calculated
for FY 2012 is 5.9061 percent. As
implemented in the August 6, 2009 FY
2010 Hospice Wage Index final rule (74
FR 39384), for FY 2012 we are reducing
the BNAF by an additional 15 percent,
for a total BNAF reduction of 40 percent
(a 10 percent reduction in FY 2010 plus
a 15 percent reduction in FY 2011 plus
a 15 percent reduction in FY 2012), with
additional reductions of 15 percent per
year in each of the next 4 years until the
BNAF is phased out in FY 2016.
For FY 2012, this is mathematically
equivalent to taking 60 percent of the
full BNAF value, or multiplying
0.059061 by 0.60, which equals
0.035437 (3.5437 percent). The BNAF of
3.5437 percent reflects a 40 percent
reduction in the BNAF. The 40 percent
reduced BNAF (3.5437 percent) was
applied to the pre-floor, pre-reclassified
hospital wage index values of 0.8 or
greater in the proposed FY 2012 hospice
wage index.
The hospice floor calculation would
still apply to any pre-floor, prereclassified hospital wage index values
less than 0.8. Currently, the hospice
floor calculation has 4 steps. First, prefloor, 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, prereclassified 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
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26813
as the hospice 15 percent floor
adjustment. Third, the pre-floor, prereclassified hospital wage index value is
multiplied by the BNAF. Fourth, the
greater result of either step 2 or step 3
is 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 an
additional 15 percent reduction in the
BNAF, for a total BNAF reduction of 40
percent, on the FY 2012 hospice wage
index compared to remaining with the
total 25 percent reduced BNAF which
was used for the FY 2011 hospice wage
index. The additional 15 percent BNAF
reduction applied to the FY 2012 wage
index resulted in a 0.9 percent
reduction in 84.4 percent of hospice
wage index values, a 0.8 percent
reduction in 8.6 percent of hospice wage
index values, a 0.7 percent reduction in
0.7 percent of wage index values, and
no reduction in 6.3 percent of wage
index values.
Those CBSAs whose pre-floor, prereclassified 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 29 CBSAs are already
protected by the hospice 15 percent
floor adjustment, and are therefore
completely unaffected by the BNAF
reduction. There are 323 hospices in
these 29 CBSAs.
Additionally, some CBSAs with prefloor, 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 additional
15 percent reduction in the BNAF
applied in FY 2012. Areas where the
hospice floor calculation would have
yielded a wage index value greater than
0.8 if the 25 percent reduction in BNAF
were maintained, but which will have a
final wage index value less than 0.8
after the additional 15 percent reduction
in the BNAF (for a total BNAF reduction
of 40 percent) is applied, will now be
eligible for the hospice 15 percent floor
adjustment. These CBSAs will see a
smaller reduction in their hospice wage
index values since the hospice
15 percent floor adjustment will apply.
We have estimated that 3 CBSAs will
have their pre-floor, pre-reclassified
hospital wage index value become
newly protected by the hospice 15
percent floor adjustment due to the
additional 15 percent reduction in the
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BNAF applied in FY 2012. 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 44
hospices located in these 3 CBSAs.
Finally, the hospice wage index
values only apply to the labor portion of
the payment rates; the labor portion is
described in section I.B.1 of this
proposed rule. Therefore, the projected
reduction in payments due solely to the
additional 15 percent reduction of the
BNAF applied in FY 2012 is estimated
to be 0.6 percent, as calculated from the
difference in column 3 and column 4 of
Table 1 in section VII of this proposed
rule. In addition, the estimated effects of
the phase-out of the BNAF will be
mitigated by any inpatient hospital
market basket updates in payments. The
estimated inpatient hospital market
basket update for FY 2012 is 2.8
percent; this 2.8 percent does not reflect
the provision in the Affordable Care Act
which reduces the inpatient hospital
market basket update for FY 2012 by
0.1 percentage point, since that
reduction does not apply to hospices.
The final update will be communicated
through an administrative instruction.
The combined effects of the updated
wage data, an additional 15 percent
reduction of the BNAF, and an
estimated inpatient hospital market
basket update of 2.8 percent for FY
2012, are an overall estimated increase
in payments to hospices in FY 2012 of
2.3 percent (column 5 of Table 1 in
section VII of this proposed rule).
B. Aggregate Cap Calculation
Methodology
The existing method for counting
Medicare beneficiaries in 42 CFR
418.309 has been the subject of
substantial litigation. Specifically, the
lawsuits challenge the way CMS
apportions hospice patients with care
spanning more than one year when
calculating the cap.
A number of district courts and two
appellate courts have concluded that
CMS’ current methodology used to
determine the number of Medicare
beneficiaries used in the aggregate cap
calculation is not consistent with the
statute. We continue to believe that the
methodology set forth in § 418.309(b)(1)
is consistent with the Medicare statute.
Nonetheless, we have determined that it
is in the best interest of CMS and the
Medicare program to take action to
prevent future litigation, and alleviate
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the litigation burden on providers, CMS,
and the courts. On April 15, 2011, we
issued a Ruling entitled ‘‘Medicare
Program; Hospice Appeals for Review of
an Overpayment Determination’’ (CMS–
1355–R), related to the aggregate cap
calculation for hospices which provided
for application of a patient-by-patient
proportional methodology, as defined in
the Ruling, to hospices that have
challenged the current methodology.
Specifically, the Ruling provides that,
for any hospice which has a timely-filed
administrative appeal of the
methodology set forth at § 418.309(b)(1)
used to determine the number of
Medicare beneficiaries used in the
aggregate cap calculation for a cap year
ending on or before October 31, 2011,
the Medicare contractors will
recalculate that year’s cap determination
using the patient-by-patient
proportional methodology as set forth in
the Ruling.
We are also making several proposals
in this Rule that affect cap
determinations from two time periods:
• Cap determinations for cap years
ending on or before October 31, 2011;
and
• Cap determinations for cap years
ending on or after October 31, 2012.
1. Cap Determinations for Cap Years
Ending on or Before October 31, 2011
By its terms, the relief provided in
Ruling 1355–R applies only to those cap
years for which a hospice has received
an overpayment determination and filed
a timely qualifying appeal. For any
hospice that receives relief pursuant to
Ruling 1355–R in the form of a
recalculation of one or more of its cap
determinations, or for any hospice that
receives relief from a court after
challenging the validity of the cap
regulation, we propose that the
hospice’s cap determination for any
subsequent cap year also be calculated
using a patient-by-patient proportional
methodology as opposed to the
methodology set forth in 42 CFR
418.309(b)(1). The patient-by-patient
proportional methodology is defined
below in section III.B.3.
Additionally, there are hospices that
have not filed an appeal of an
overpayment determination challenging
the validity of 42 CFR 418.309(b)(1) and
which are awaiting CMS to make a cap
determination in a cap year ending on
or before October 31, 2011. We propose
to allow any such hospice provider, as
of October 1, 2011, to elect to have its
final cap determination for such cap
year(s), and all subsequent cap years,
calculated using the patient-by-patient
proportional methodology.
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Finally, we recognize that most
hospices have not challenged the
methodology used for determining the
number of beneficiaries used in the cap
calculation. Therefore, we propose that
those hospices which would like to
continue to have the existing
methodology (hereafter called the
streamlined methodology) used to
determine the number of beneficiaries
in a given cap year would not need to
take any action, and would have their
cap calculated using the streamlined
methodology for cap years ending on or
before October 31, 2011. The
streamlined methodology is defined in
section III.B.4 below.
We do not see these provisions as
being impermissibly retroactive in
effect. To the extent that these
provisions could be considered a
retroactive application of a substantive
change to a regulation, section
1871(e)(1)(A) of the Act permits
retroactive application of a substantive
change to a regulation if the Secretary
determines that such retroactive
application is necessary to comply with
statutory requirements or that failure to
apply the change retroactively would be
contrary to the public interest. We
determine that for providers who have
successfully sought to have the existing
cap methodology set aside as invalid by
the courts, retroactive application of the
proposed Rule would be necessary to
continue to comply with the statutory
requirement in section 1814(i)(2) that
the Secretary apply an aggregate cap to
these hospices’ reimbursements. We
also determine that it would be in the
public interest to calculate the aggregate
hospice caps for subsequent years for
these providers and for other providers
that have filed appeals challenging the
validity of the current methodology
using the patient-by-patient
proportional methodology to prevent
the over-counting of beneficiaries for
those years and to prevent repetitive
litigation. We further determine that it
would be in the public interest to permit
providers that have not appealed their
aggregate cap determinations to elect to
have the patient-by-patient proportional
methodology applied to aggregate cap
determinations that have not been
issued as of October 1, 2011. Allowing
these hospices to elect to use the
patient-by-patient proportional
methodology would alleviate the burden
on the hospices and the agency of
continued appeals and litigation
regarding the validity of the aggregate
hospice cap calculation.
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2. Cap Determinations for Cap Years
Ending on or After October 31, 2012
We continue to believe that the
methodology set forth in § 418.309(b)(1)
is consistent with the Medicare statute.
We emphasize that nothing in our
proposals in section III.B.1 above
constitutes an admission as to any issue
of law or fact. In light of the court
decisions, however, we propose to
change the hospice aggregate cap
calculation methodology policy for cap
determinations ending on or after
October 31, 2012 (the 2012 cap year).
Specifically, for the cap year ending
October 31, 2012 (the 2012 cap year)
and subsequent cap years, we propose
to revise the methodology set forth at
§ 418.309(b)(1) to adopt a patient-bypatient proportional methodology when
computing hospices’ aggregate caps. We
also propose to ‘‘grandfather’’ in the
current streamlined methodology set
forth in § 418.309(b)(1) for those
hospices that elect to continue to have
the current streamlined methodology
used to determine the number of
Medicare beneficiaries in a given cap
year, for the following reasons.
As described in section II of this
proposed rule, we solicited comments
on modernizing the cap calculation in
our FY 2011 Hospice Wage Index Notice
with Comment Period. We summarized
those comments in section II of this
proposed rule, and noted that many
commenters, including the major
hospice associations, were concerned
about the burden to hospices of
changing the cap calculation
methodology, and urged us to defer
across-the-board changes to the cap
methodology until we analyze the cap
in the context of broader payment
reform. Specifically, commenters urged
CMS to retain the current methodology,
as it results in a more streamlined and
timely cap determination for providers
as compared to other options. Also,
commenters noted that once made, cap
determinations usually remain final.
Commenters were concerned that a
proportional methodology could result
in prior year cap determination
revisions to account for situations in
which the percentage of time a
beneficiary received services in a prior
cap year declines as his or her overall
hospice stay continues into subsequent
cap years, and these revisions may
result in new overpayments for some
providers. And, commenters noted that
the vast majority of providers don’t
exceed the cap, so burdening these
providers with an across-the-board
change isn’t justified. We also note that
on January 18, 2011, President Obama
issued an Executive Order entitled
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‘‘Improving Regulation and Regulatory
Review’’ (E.O. 13563), which instructs
federal agencies to consider regulatory
approaches that reduce burdens and
maintain flexibility and freedom of
choice for the public. We believe that
offering hospices the option to elect to
continue to have the streamlined
methodology used in calculating their
caps is in keeping with this Executive
Order.
For these reasons, for the cap year
ending October 31, 2012 (the 2012 cap
year) and subsequent cap years, we
propose that the hospice aggregate cap
be calculated using the patient-bypatient proportional methodology, but
propose to allow hospices the option of
having their cap calculated via the
current streamlined methodology, as
discussed below. We believe this twopronged approach is responsive to the
commenters who do not want to be
burdened with a change in the cap
calculation methodology at this time,
while also conforming with decisional
law and meeting the needs of hospices
that would prefer the patient-by-patient
proportional methodology of counting
beneficiaries. This grandfathering
proposal to allow hospices the option of
having their caps calculated based on
application of the current streamlined
methodology only applies to currently
existing hospices that have, or will
have, had a cap determination
calculated under the streamlined
methodology. New hospices that have
not had their cap determination
calculated using the streamlined
methodology do not fall under this
proposed ‘‘grandfather’’ policy.
We are in the early stages of the
analyses related to payment reform. As
such, the role of the aggregate cap in the
reformed payment system is unknown
at this time. If the reformed system and
statute continue to require a limitation
on hospice aggregate payments, we
would look to apply one aggregate cap
policy consistently to all hospices, and
will consider commenters’ suggestions
for improvements in the aggregate cap
as we analyze payment reform options.
3. Patient-by-Patient Proportional
Methodology
For the cap year ending October 31,
2012 (the 2012 cap year), and for all
subsequent cap years (unless changed
by future rulemaking), we propose that
the Medicare contractors would apply
the patient-by-patient proportional
methodology (defined below) to a
hospice’s aggregate cap calculations
unless the hospice elects to have its cap
determination for cap years 2012 and
beyond calculated using the current,
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streamlined methodology set forth in
§ 418.309(b)(1).
Under the proposed patient-by-patient
proportional methodology, a hospice
includes in its number of Medicare
beneficiaries only that fraction which
represents the portion of a patient’s total
days of care in all hospices and all years
that was spent in that hospice in that
cap year, using the best data available at
the time of the calculation. We propose
that the whole and fractional shares of
Medicare beneficiaries’ time in a given
cap year would then be summed to
compute the total number of Medicare
beneficiaries served by that hospice in
that cap year.
When a hospice’s cap is calculated
using the patient-by-patient
proportional methodology and a
beneficiary included in that calculation
survives into another cap year, the
contractor may need to make
adjustments to prior cap determinations,
subject to existing re-opening
regulations.
4. Streamlined Methodology
As we described above, comments
received from hospices and the major
hospice associations urged CMS to defer
across-the-board changes to the cap
calculation methodology until we
reform hospice payments. Several of
these commenters feared that an acrossthe-board change in methodology now
may disadvantage them by potentially
placing them at risk for incurring new
cap overpayments. Additionally,
approximately 90 percent of hospices do
not exceed the cap and have not
objected to the current methodology,
and commenters expressed concern that
adapting to a process change would be
costly and burdensome. In response to
these concerns, we propose that a
hospice may exercise a one-time
election to have its cap determination
for cap years 2012 and beyond
calculated using the current,
streamlined methodology set forth in
§ 418.309(b). We propose that the option
to elect the continued use of the
streamlined methodology for cap years
2012 and beyond would be available
only to hospices that have had their cap
determinations calculated using the
streamlined methodology for all years
prior to cap year 2012. In section III.B.5
(‘‘Changing Methodologies’’) below, we
describe our detailed rationale for
limiting the election. Allowing hospices
which, prior to cap year 2012, have their
cap determination(s) calculated
pursuant to a patient-by-patient
proportional methodology to elect the
streamlined methodology for cap years
2012 and beyond could result in over-
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5. Changing Methodologies
(4) Hospices which elect to have their
cap determination calculated using the
streamlined methodology may later
elect to have their cap determinations
calculated pursuant to the patient-bypatient proportional methodology by
either:
a. Electing to change to the patient-bypatient proportional methodology; or
b. Appealing a cap determination
calculated using the streamlined
methodology to determine the number
of Medicare beneficiaries.
(5) If a hospice elects the streamlined
methodology, and changes to the
patient-by-patient proportional
methodology for a subsequent cap year,
the hospice’s aggregate cap
determination for that cap year and all
subsequent cap years is to be calculated
using the patient-by-patient
proportional methodology. As such,
past cap year determinations may be
adjusted to prevent the over-counting of
beneficiaries, notwithstanding the
ordinary limitations on reopening.
We believe our proposed policies,
described above, provide hospices with
a reasonable amount of flexibility with
regard to their cap calculation.
However, we believe that if we allowed
hospices to switch back and forth
between methodologies, it would greatly
complicate the cap determination
calculation, would be difficult to
administer, and might lead to
inappropriate switching by hospices
seeking merely to maximize Medicare
payments. Additionally, in the year of a
change in the calculation methodology,
there is a potential for over-counting
some beneficiaries. Allowing hospices
to switch back and forth between
methodologies would perpetuate the
risk of over-counting beneficiaries.
Therefore, we propose that:
(1) Those hospices that have their cap
determination calculated using the
patient-by-patient proportional
methodology for any cap year prior to
the 2012 cap year would continue to
have their cap calculated using the
patient-by-patient proportional
methodology for the 2012 cap year and
all subsequent cap years; and,
(2) All other hospices would have
their cap determinations for the 2012
cap year and all subsequent cap years
calculated using the patient-by-patient
proportional methodology unless they
make a one-time election to have their
cap determinations for cap year 2012
and beyond calculated using the
streamlined methodology.
(3) A hospice can elect the
streamlined methodology no later than
60 days following the receipt of its 2012
cap determination.
6. Other Issues
Contractors will provide hospices
with instructions regarding the cap
determination methodology election
process. Regardless of which
methodology is used, the contractor will
continue to demand any additional
overpayment amounts due to CMS at
the time of the hospice cap
determination. The contractor will
continue to include the hospice cap
determination in a letter which serves as
a notice of program reimbursement
under 42 CFR 405.1803(a)(3). Cap
determinations are subject to the
existing CMS re-opening regulations.
In our FY 2011 Hospice Wage Index
Notice with Comment Period, we
discussed aligning the cap year
timeframe with that of the federal fiscal
year. Commenters suggested we not
make changes to the cap year timeframe
at this time, but defer changes until
broader payment reform occurs. We
agree with commenters, and our cap
year continues to be defined as
November 1st to October 31st.
In that FY 2011 Hospice Wage Index
Notice with Comment Period, we also
discussed the timeframe used for
counting beneficiaries under the
streamlined methodology, which is
September 28th to September 27th. This
timeframe for counting beneficiaries
was implemented because it allows
those beneficiaries who elected hospice
near the end of the cap year to be
counted in the year when most of the
services were provided. However, for
those hospices whose cap
determinations are calculated using a
patient-by-patient proportional
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counting patients and introduce a
program vulnerability.
Our current policy set forth in the
existing § 418.309(b)(2) describes that
when a beneficiary receives care from
more than one hospice during a cap year
or years, each hospice includes in its
number of Medicare beneficiaries only
that fraction which represents the
portion of a patient’s total stay in all
hospices that was spent in that hospice.
We propose to revise the regulatory text
at § 418.309(b)(2) to clarify that each
hospice includes in its number of
Medicare beneficiaries only that fraction
which represents the portion of a
patient’s total days of care in all
hospices and all years that was spent in
that hospice in that cap year, using the
best data available at the time of the
calculation. We also propose to add
language to make clear that cap
determinations are subject to reopening/
adjustment to account for updated data.
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methodology for counting the number of
beneficiaries, we propose to count
beneficiaries and their associated days
of care from November 1st through
October 31st, to match that of the cap
year. This ensures that the proportional
share of each beneficiary’s days in that
hospice during the cap year is
accurately computed.
Finally, we note that the existing
regulatory text at 418.308(b)(1) refers to
the timeframe for counting beneficiaries
as ‘‘(1) * * * the period beginning on
September 28 (35 days before the
beginning of the cap period) and ending
on September 27 (35 days before the end
of the cap period).’’ The period
beginning September 28 is actually 34
days before November 1 (the beginning
of the cap year), rather than 35 days. We
propose to correct this in the regulatory
text, and to change references to the
‘‘cap period’’ to that of the ‘‘cap year’’ to
correctly reference the time frame for
cap determinations.
7. Changes to Regulatory Text
As a result of the proposals made in
this section, we propose to change the
regulatory text at 42 CFR 418.309 as
follows:
• We propose to change the title of
418.309 from ‘‘Hospice Cap Amount’’ to
‘‘Hospice Aggregate Cap’’ to clarify what
this section covers. The ‘‘cap amount’’ is
defined as the per-beneficiary dollar
amount which is updated annually, and
is only one component of the aggregate
cap calculation. At the beginning of the
regulatory text for this section, we also
propose to revise the existing language
to refer to the methodologies given in (b)
and (c) which follow.
• In § 418.309(b), we propose to add
the title ‘‘Streamlined Methodology
Defined’’ at the beginning of the
regulatory text, and to replace ‘‘Each
hospice’s cap amount’’ with ‘‘A
hospice’s aggregate cap.’’ In
§ 418.309(b)(1), we propose to revise the
language to note that it applied to those
beneficiaries who have received care
from only one hospice. We also propose
to correct the existing regulatory text
which reads ‘‘* * * (35 days before the
beginning of the cap period) * * *’’ to
read ‘‘* * * (34 days before the
beginning of the cap year) * * *’’ and
change existing regulatory text which
reads ‘‘* * * and ending on September
27 (35 days before the end of the cap
period) * * *’’ to read ‘‘* * * and
ending September 27 (35 days before the
end of the cap year) * * *.’’
• We propose to revise § 418.309(b)(2)
to describe the streamlined
methodology for computing fractional
shares of a beneficiary when a
beneficiary has received care from more
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than one hospice, and to note that the
computation considers all cap years and
all hospices, using the best data
available at the time of the calculation.
We also propose to add language that
notes that the aggregate cap calculation
for a given cap year may be adjusted
after the calculation for that year based
on updated data.
• We propose to add § 418.309(c),
which would be entitled ‘‘Patient-byPatient Proportional Methodology
Defined.’’ We propose that a hospice’s
aggregate cap would be calculated by
multiplying the adjusted cap amount by
the number of Medicare beneficiaries.
For the purposes of the patient-bypatient proportional methodology, we
propose that a hospice would include in
its number of Medicare beneficiaries
only that fraction which represents the
portion of a patient’s total days of care
in all hospices and all years that was
spent in that hospice in that cap year,
using the best data available at the time
of the calculation. We propose that the
total number of Medicare beneficiaries
for a given hospice’s cap year would be
determined by summing the whole or
fractional share of each Medicare
beneficiary that received hospice care
during the cap year, from that hospice.
Finally, we also propose that the
aggregate cap calculation for a given cap
year could be adjusted after the
calculation for that year based on
updated data.
• We propose to add paragraph (d) to
section 418.309, which would be
entitled ‘‘Application of Methodologies.’’
We propose that for cap years ending
October 31, 2011 and for prior cap
years, a hospice’s aggregate cap would
be calculated using the streamlined
methodology. However, we propose that
a hospice that has not received a cap
determination for a cap year ending on
or before October 31, 2011 as of October
1, 2011, could elect to have its final cap
determination for such cap years
calculated using the patient-by-patient
proportional methodology.
Additionally, we propose that a hospice
that has filed a timely appeal regarding
the methodology used for determining
the number of Medicare beneficiaries in
its cap calculation for any cap year
would be deemed to have elected that
its cap determination for the challenged
year, and all subsequent cap years, be
calculated using the patient-by-patient
proportional methodology.
We also propose that for cap years
ending October 31, 2012, and all
subsequent cap years, a hospice’s
aggregate cap would be calculated using
the patient-by-patient proportional
methodology. We also propose that a
hospice that has had its cap calculated
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using the patient-by-patient
proportional methodology for any cap
year(s) prior to the 2012 cap year would
not be eligible to elect the streamlined
methodology, and would have to
continue to have the patient-by-patient
proportional methodology used to
determine the number of Medicare
beneficiaries in a given cap year. We
propose that a hospice that is eligible to
make a one-time election to have its cap
calculated using the streamlined
methodology would have to make that
election no later than 60 days after
receipt of its 2012 cap determination.
We also propose that a hospice’s
election to have its cap calculated using
the streamlined methodology would
remain in effect unless the hospice
subsequently would submit a written
election to change the methodology
used in its cap determination to the
patient-by-patient proportional
methodology; or the hospice would
appeal the streamlined methodology
used to determine the number of
Medicare beneficiaries used in the
aggregate cap calculation.
Finally, we propose that if a hospice
that elected to have its aggregate cap
calculated using the streamlined
methodology subsequently elected the
patient-by-patient proportional
methodology or appealed the
streamlined methodology, the hospice’s
aggregate cap determination for that cap
year and all subsequent cap years would
be calculated using the patient-bypatient proportional methodology. As
such, we propose that past cap year
determinations could be adjusted to
prevent the over-counting of
beneficiaries, notwithstanding the
ordinary limitations on reopening.
• Throughout § 418.309 we propose
to delete references to the intermediary,
as this terminology is now outdated.
C. Hospice Face-to-Face Requirement
Section 3132(b) of the Affordable Care
Act of 2010 (Pub. L. 111–148, enacted
March 23, 2010) amended section
1814(a)(7) of the Act by adding an
additional certification requirement that
beginning January 1, 2011, a hospice
physician or nurse practitioner (NP)
must have a face-to-face encounter with
every hospice patient prior to the 180day recertification of the patient’s
terminal illness to determine continued
eligibility. The statute also requires that
the hospice physician or NP who
performs the encounter attest that such
a visit took place in accordance with
procedures established by the Secretary.
Although the provision allows an NP to
perform the face-to-face encounter and
attest to it, section 1814(a)(7)(A) of the
Act continues to require that a hospice
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physician must certify and recertify the
terminal illness.
The requirement for a physician faceto-face encounter for long-stay hospice
patients’ was first suggested by
Medicare’s Payment Advisory
Commission (MedPAC) in their March
2009 Report to the Congress (MedPAC,
Report to the Congress: Medicare
Payment Policy, Chapter 6, March 2009,
pp. 365 through 371) (‘‘the MedPAC
Report’’). MedPAC recommended that a
hospice physician or advance practice
nurse visit hospice patients prior to the
180-day recertification of terminal
illness in order to increase physician
accountability in the recertification and
help ensure appropriate use of the
benefit.
We implemented section 1814(a)(7),
as amended by section 3132(b) of the
Affordable Care Act in the November
17, 2010 final rule (75 FR 70372),
published in the Federal Register,
entitled ‘‘Home Health Prospective
Payment System Rate Update for CY
2011; Changes in Certification
Requirements for Home Health Agencies
and Hospices’’, hereinafter referred to as
the CY 2011 HH PPS Final Rule. The
statute requires that for hospice
recertifications occurring on or after
January 1, 2011, a face-to-face encounter
take place before the 180th-day
recertification. We decided that the
180th-day recertification and
subsequent benefit periods
corresponded to the recertification for a
patient’s third or subsequent benefit
period.
In the CY 2011 HH PPS final rule, we
describe our rationale for defining the
180th-day recertification as the
recertification which occurs at the start
of the third benefit period (that is, the
benefit period after the second 90-day
benefit period). We considered the
existing language used in the statute and
in our regulations, all of which is
structured around the concept of benefit
periods which, by statute, cannot last
longer than a maximum number of days
(90 days for the first two and 60 days
for subsequent benefit periods). Our
regulatory language at § 418.22 requires
certifications at the beginning of the
benefit periods. For these reasons we
defined the 180th-day recertification to
be the recertification which occurs at
the start of the third benefit period (75
FR 70437).
These new provisions at § 418.22(a)
and (b), as set out in the CY 2011 HH
PPS final rule (75 FR 70463) include the
following requirements:
• The encounter must occur no more
than 30 calendar days prior to the start
of the third benefit period and no more
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than 30 calendar days prior to every
subsequent benefit period thereafter.
• The hospice physician or NP who
performs the encounter attests in
writing that he or she had a face-to-face
encounter with the patient, and
includes the date of the encounter. The
attestation, which includes the
physician’s signature and the date of the
signature, must be a separate and
distinct section of, or an addendum to,
the recertification form, and must be
clearly titled.
• The physician narrative associated
recertifications for the third and
subsequent benefit period
recertifications include an explanation
of why the clinical findings of the faceto-face encounter support a prognosis
that the patient has a life expectancy of
6 months or less.
• When an NP performs the
encounter, the NP’s attestation must
state that the clinical findings of that
visit were provided to the certifying
physician, for use in determining
whether the patient continues to have a
life expectancy of 6 months or less,
should the illness run its normal course.
• The hospice physician or the
hospice NP can perform the encounter.
We define a hospice physician as a
physician who is employed by the
hospice or working under contract with
the hospice, and a hospice NP must be
employed by the hospice.
• The hospice physician who
performs the face-to-face encounter and
attests to it must be the same physician
who certifies the patient’s terminal
illness and composes the recertification
narrative (75 FR 70445).
In this proposed rule, we would allow
any hospice physician to perform the
encounter and inform the certifying
physician for this last requirement for
the following reasons:
Since the publication of the CY 2011
HH PPS final rule, we were told of the
concerns of stakeholders, such as
individual hospices, major hospice
associations, physicians, and patient
advocacy groups regarding the hospice
physician performing both the face-toface encounter and the recertification.
Most of the concerns were that this
requirement could potentially result in
a substantial risk of harm to terminally
ill patients. We find many of these
concerns compelling. Specifically,
stakeholders describe the challenge
rural areas and medically underserved
areas have in employing hospice
physicians. Often, the physicians
employed are part-time, and sometimes
several part-time physicians are
employed by the hospice. These
physicians furnish medically necessary
physician services to hospice patients as
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a team or group practice would,
communicating with each other
regarding the patients’ conditions and
sharing responsibility for the patients’
care. In requiring the same physician to
perform both the face-to-face encounter
and the certification, stakeholders
argued that we were imposing an
unnecessary complexity to the face-toface encounter requirement which could
disadvantage those patients in areas of
the country whom they believed were at
the greatest risk and could negatively
affect access-to-care. Many hospices
stated that they would not find it
feasible to meet this strict
implementation requirement and they
would no longer be able to serve
patients in the third and later benefit
periods. In addition, stakeholders stated
that when MedPAC recommended a
face-to-face encounter for long-stay
hospice patients, it also expressed a
concern that the requirement could pose
an access risk in rural areas (MedPAC
Report at 366). To mitigate that risk,
MedPAC recommended that NPs also be
allowed to perform the encounter, and
the Congress adopted that
recommendation. Further, stakeholders
stated that because the Congress
allowed an NP to perform the encounter
and inform the recertifying physician, it
would be illogical for CMS to preclude
another hospice physician from
performing the encounter and informing
the recertifying physician. The
stakeholders stated that in having done
so, CMS inadvertently created an access
to care risk that MedPAC and the
Congress had tried to prevent.
Stakeholders stated that long-stay
patients in rural and medically
underserved areas would be denied
access during a time when many are in
the final stages of their disease trajectory
and needed hospice care the most.
Stakeholders suggested that such
patients would be denied the pain and
symptom management control that they
require as a result of CMS’s regulatory
limitation. In addition, they stated that
hospices in rural and medically
underserved areas need the flexibility of
allowing NPs and any of their hospice
physicians to perform the required
patient encounter in order to serve such
patients.
Many stakeholders also stated that
requiring the same hospice physician to
perform both the face-to-face encounter
and the recertification was contrary to
the intent of the statute. They pointed
out that the statutory language required
that a hospice physician or NP perform
the encounter, but the statute did not
mandate that the physician who
performs the encounter must be the
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same physician who recertifies the
patient. In addition, the stakeholders
observed that if the Congress had
intended to require the physician who
performed the encounter to be the same
physician who recertified the patient,
then the Congress could have included
that requirement in the law.
Stakeholders also stated that MedPAC
did not recommend that the physician
who performed the encounter be the
same physician that recertified the
patient. They referred us to discussions
in the MedPAC Report, which first
recommended the face-to-face
encounter. (MedPAC Report, 357
through 371.)
We note that some of these
stakeholders were part of the technical
expert panel which MedPAC convened
in 2008 to develop the
recommendations contained in the
MedPAC Report. The report described
the panel’s discussions surrounding the
need for more physician involvement in
hospice/palliative care, and concerns
regarding some hospices’ practices
being motivated by financial incentives
(MedPAC Report, 357 through 367). The
report also discussed the panel’s
concern that hospice medical directors
could at times be influenced by such
incentives and should be more
accountable for eligibility
determinations. However, we believe it
is possible that the scenario where the
hospice medical director was the
certifying physician and a different
hospice physician performed the
encounter and informed the medical
director about the patient’s condition
the result could be better physician
accountability than if the medical
director performed the encounter. The
physician who performed the encounter
would serve as an independent assessor
of the patient’s terminal condition, and
would provide a check and balance to
the medical director’s possible financial
incentive to recertify.
Stakeholders also asserted that any
hospice physician who saw the patient
could achieve the goals described in the
MedPAC report and the statute. The
report described the tension between
hospice physicians and non-physician
staff and how the emotional attachment
to patients of non-physician staff could
lead to inappropriate recertifications.
Stakeholders claim that this risk could
be mitigated by any hospice physician
seeing the patient and informing the
certifying physician. More importantly,
the stakeholders referred to the MedPAC
report discussion regarding concerns
that a physician face-to-face encounter
provision might not be feasible in rural
areas where there were physician
shortages. In recommending that non-
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physician practitioners be allowed to
perform the encounter, MedPAC
identified a need to allow flexibility
regarding the practitioner who performs
the encounter, especially in rural areas.
Commenters stated that MedPAC and
the Congress intended for long-stay
hospice patients to be seen by any
hospice physician or NP prior to the
180-day recertification.
In this proposed rule, we propose to
revise the policy finalized in the CY
2011 HH PPS final rule published on
November 17, 2010.
Specifically, in the CY 2011 HH PPS
final rule, we implemented section
3132(b) of the Affordable Care Act,
which requires that beginning January 1,
2011, a hospice physician or NP have a
face-to-face encounter with every
hospice patient prior to the 180-day
recertification of the patient’s terminal
illness to determine continued
eligibility. In implementing this
provision, in response to comments in
the final rule, we stated that the hospice
physician who performed the face-toface encounter must be the same
physician who recertifies the patient’s
terminal illness and composes the
recertification narrative.
As a result of stakeholders concerns
resulting from the final rule policy, we
propose to remove this limitation in this
proposed rule. We propose that any
hospice physician can perform the faceto-face encounter regardless of whether
that physician recertifies the patient’s
terminal illness and composes the
recertification narrative. In keeping with
this proposal, we also propose to change
the regulatory text at 418.22(b)(4) to
state that the attestation of the nurse
practitioner or a non-certifying hospice
physician shall state that the clinical
findings of that encounter were
provided to the certifying physician, for
use in determining continued eligibility
for hospice. This proposal reflects the
Centers for Medicare and Medicaid
Services’ commitment to the general
principles of the President’s Executive
Order released January 18, 2011 entitled
‘‘Improving Regulation and Regulatory
Review’’, as it would reduce burden to
hospices and hospice physicians and
increase flexibility in areas of physician
shortages. We are soliciting public
comments on this proposal.
D. Technical Proposals and
Clarification
1. Hospice Local Coverage
Determinations
In the November 17, 2010 ‘‘CY 2011
Home Health Prospective Payment
System Rate Update for Calendar Year
2011; Changes in Certification
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Requirements for Home Health Agencies
and Hospices Final Rule’’, we
implemented new requirements for a
face-to-face encounter which were
mandated by the Affordable Care Act of
2010. A commenter asked how the faceto-face encounter related to Local
Coverage Determinations (LCDs), and if
the expectation was that the physician
would verify the patient’s condition
based on the LCDs. Other commenters
asked for guidance regarding what the
encounter should include (that is,
elements that make up an encounter) for
purposes of satisfying the requirement.
When describing how to assess patients
for recertification, our response cited
the LCDs of several contractors (see 75
FR 70447–70448). The response also
included common text from those LCDs
related to clinical findings to use in
making the assessment and determining
whether a patient was terminally ill. We
stated that the clinical findings should
include evidence from the three
following categories: (1) Decline in
clinical status guidelines (for example,
decline in systolic blood pressure to
below 90 or progressive postural
hypotension); (2) Non disease-specific
base guidelines (that is, decline in
functional status) as demonstrated by
Karnofsky Performance Status or
Palliative Performance Score and
dependence in two or more activities of
daily living; and (3) Co-morbidities. We
would note that because the language
was not mandatory, there was never any
intention that this response have a
legally binding effect on hospices. These
are suggestions as to elements of a
certification or recertification which
could be deemed to be indicative of a
terminal condition. However, this was
not meant to be an exhaustive or
exclusive list. Because there has been
some confusion about the extent to
which these items exclude other
possible scenarios, we propose to clarify
that the clinical findings included in the
comment response were provided as an
example of findings that can be used in
determining continued medical
eligibility for hospice care. The
illustrative clinical findings mentioned
above are not mandatory national
policy. We reiterate that certification or
recertification is based upon a
physician’s clinical judgment, and is not
an exact science. Congress made this
clear in section 322 of the Benefits
Improvement and Protection Act of
2000 (BIPA), which says that the
hospice certification of terminal illness
‘‘shall be based on the physician’s or
medical director’s clinical judgment
regarding the normal course of the
individual’s illness.’’
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2. Definition of Hospice Employee
As noted above, in the November 17,
2010 ‘‘CY 2011 Home Health
Prospective Payment System Rate
Update for Calendar Year 2011; Changes
in Certification Requirements for Home
Health Agencies and Hospices Final
Rule,’’ we implemented new
requirements for a face-to-face
encounter, which were mandated by the
Affordable Care Act. As part of that
implementation, we required that a
hospice physician or nurse practitioner
must perform the face-to-face
encounters. Several commenters asked
us to clarify who is considered a
‘‘hospice physician or nurse
practitioner’’ (see 75 FR 70443–70445).
We stated that a hospice physician or
nurse practitioner must be employed by
the hospice, and that hospice physicians
could also be working under
arrangement with the hospice (i.e.,
contracted). We added that Section
418.3 defines a hospice employee as
someone who is receiving a W–2 form
from the hospice or who is a volunteer.
The complete definition of a hospice
employee at 418.3 is as follows:
‘‘Employee means a person who: (1)
Works for the hospice and for whom the
hospice is required to issue a W–2 form
on his or her behalf; (2) if the hospice
is a subdivision of an agency or
organization, an employee of the agency
or organization who is assigned to the
hospice; or (3) is a volunteer under the
jurisdiction of the hospice.’’ We received
a number of questions from the industry
about the definition of an employee and
whether it included personnel who
were employed by an agency or
organization that has a hospice
subdivision and who were assigned to
that hospice. We are clarifying that
entire definition of employee given at
418.3 (shown above) applies. Therefore,
if the hospice is a subdivision of an
agency or organization, an employee of
the agency or organization who is
assigned to the hospice is a hospice
employee.
3. Timeframe for Face-to-Face
Encounters
In the November 17, 2010 ‘‘CY 2011
Home Health Prospective Payment
System Rate Update for Calendar Year
2011; Changes in Certification
Requirements for Home Health Agencies
and Hospices Final Rule,’’ we also
implemented policies related to the
timeframe for performing a face-to-face
encounter. We cited the statutory
language from section 3132 of the
Affordable Care Act, which says that on
and after January 1, 2011, a hospice
physician or nurse practitioner must
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have a face-to-face encounter with the
beneficiary to determine continued
eligibility of the beneficiary for hospice
care prior to the 180th-day
recertification and each subsequent
recertification (see 75 FR 70435). We
also defined the 180th-day
recertification to be the recertification
which occurs at the 3rd benefit period
(see 75 FR 70436–70437). We
implemented a requirement that the
face-to-face encounter occur no more
than 30 calendar days prior to the 3rd
or later benefit periods, to allow
hospices flexibility in scheduling the
encounter (see 75 FR 70437–70439). We
emphasized throughout the final rule
that the encounter must occur ‘‘prior to’’
the 3rd benefit period recertification,
and each subsequent recertification. The
regulatory text associated with these
changes is found at 42 CFR 418.22(a)(4),
and reads, ‘‘As of January 1, 2011, a
hospice physician or hospice nurse
practitioner must have a face-to-face
encounter with each hospice patient,
whose total stay across all hospices is
anticipated to reach the 3rd benefit
period, no more than 30 calendar days
prior to the 3rd benefit period
recertification, and must have a face-toface encounter with that patient no
more than 30 calendar days prior to
every recertification thereafter, to gather
clinical findings to determine continued
eligibility for hospice care.’’ We believe
our final policy states clearly that the
face-to-face encounter must occur prior
to, but no more than 30 calendar days
prior to, the 3rd benefit period
recertification and each subsequent
recertification. However, we are
concerned that our regulation text above
could lead a hospice to believe that the
face-to-face encounter could occur in an
open-ended fashion after the start of a
benefit period in which it is required,
and that the limitation on the timeframe was only on how far in advance
of the start of the benefit period that the
encounter could occur. Our policy, as
stated in the final rule, is that a face-toface encounter is required prior to the
3rd benefit period recertification and
each recertification thereafter (75 FR
70454). Therefore, we propose to revise
the regulation text to more clearly state
that the encounter is required ‘‘prior to’’
the 3rd benefit period recertification,
and each subsequent recertification. As
such, we propose to change the
regulatory text to read ‘‘(4) Face-to-face
encounter. As of January 1, 2011, a
hospice physician or hospice nurse
practitioner must have a face-to-face
encounter with each hospice patient
whose total stay across all hospices is
anticipated to reach the 3rd benefit
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period. The face-to-face encounter must
occur prior to but no more than 30
calendar days prior to the 3rd benefit
period recertification, and every benefit
period recertification thereafter, to
gather clinical findings to determine
continued eligibility for hospice care.’’
4. Hospice Aide and Homemaker
Services
The hospice Conditions of
Participation (CoPs) were updated in
2008, after being finalized on June 5,
2008 in the Hospice Conditions of
Participation Final Rule (73 FR 32088).
Those revised CoPs included changing
the term ‘‘home health aide’’ to ‘‘hospice
aide’’. In our FY 2010 Hospice Wage
Index Final Rule (74 FR 39384), we
updated language in several areas of our
regulatory text to use this new
terminology, including at 42 CFR
418.202(g). The regulatory text at
418.202(g) describes hospice aide and
homemaker services. The last sentence
of the regulatory text that was finalized
is about homemaker services, however
the word ‘‘homemaker’’ was
inadvertently replaced with ‘‘aide’’. The
revised regulatory text also
inadvertently deleted the sentence
which read ‘‘Aide services must be
provided under the supervision of a
registered nurse.’’ Finally, the title of
this section of the regulatory text
continues to refer to section 418.94 of
the CoPs. However, section 418.94 no
longer exists, and was updated in the
2008 Hospice CoP Final Rule to section
418.76. We propose to correct the
regulatory text at 418.202(g) to update
the CoP reference to show section
418.76, to add back the sentence about
supervision which was deleted, and to
correct the last sentence to refer to
‘‘homemakers’’ rather than ‘‘aides.’’
E. Quality Reporting for Hospices
1. Background and Statutory Authority
CMS seeks to promote higher quality
and more efficient health care for
Medicare beneficiaries. Our efforts are
furthered by the quality reporting
programs coupled with public reporting
of that information. Such quality
reporting programs exist for various
settings such as the Hospital Inpatient
Quality Reporting (Hospital IQR)
Program. In addition, CMS has
implemented quality reporting programs
for hospital outpatient services, the
Hospital Outpatient Quality Data
Reporting Program (HOP QDRP), and for
physicians and other eligible
professionals, the Physician Quality
Reporting System (PQRS). CMS has also
implemented quality reporting programs
for home health agencies and skilled
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nursing facilities that are based on
conditions of participation, and an endstage renal disease quality improvement
program that links payment to
performance based on requirements in
section 153(c) of the Medicare
Improvement for Patients and Providers
Act of 2008.
Section 3004 of the Affordable Care
Act amends the Social Security Act to
authorize additional quality reporting
programs, including one for hospices.
Section 1814(i)(5)(A)(i) of the Act
requires that beginning with FY 2014
and each subsequent fiscal year, the
Secretary shall reduce the market basket
update by 2 percentage points for any
hospice that does not comply with the
quality data submission requirements
with respect to that fiscal year.
Depending on the amount of annual
update for a particular year, a reduction
of 2 percentage points may result in the
annual market basket update being less
than 0.0 percent for a fiscal year and
may result in payment rates that are less
than payment rates for the preceding
fiscal year. Any reduction based on
failure to comply with the reporting
requirements, as required by section
1814(i)(5)(B) of the Act, would apply
only with respect to the particular fiscal
year involved. Any such reduction will
not be cumulative and will not be taken
into account in computing the payment
amount for subsequent fiscal years.
Section 1814(i)(5)(C) of the Act
requires that each hospice submit data
to the Secretary on quality measures
specified by the Secretary. Such data
must be submitted in a form and
manner, and at a time specified by the
Secretary. Any measures selected by the
Secretary must have been endorsed by
the consensus-based entity which holds
a contract regarding performance
measurement with the Secretary under
section 1890(a) of the Act. This contract
is currently held by the National Quality
Forum (NQF). However, Section
1814(i)(5)(D)(ii) provides that in the case
of a specified area or medical topic
determined appropriate by the Secretary
for which a feasible and practical
measure has not been endorsed by the
consensus-based entity the Secretary
may specify a measure(s) that is(are) not
so endorsed as long as due
consideration is given to measures that
have been endorsed or adopted by a
consensus-based organization identified
by the Secretary. Under section
1814(i)(5)(D)(iii) of the Act, the
Secretary must not later than October 1,
2012 publish selected measures that
will be applicable with respect to FY
2014.
Section 1814(i)(5)(E) of the Act
requires the Secretary to establish
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procedures for making data submitted
under the hospice quality reporting
program available to the public. The
Secretary must ensure that a hospice has
the opportunity to review the data that
is to be made public with respect to the
hospice program prior to such data
being made public. The Secretary must
report quality measures that relate to
hospice care provided by hospices on
the Internet Web site of CMS.
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2. Quality Measures for Hospice Quality
Reporting Program for Payment Year FY
2014
a. Considerations in the Selection of the
Proposed Quality Measures
In implementing these quality
reporting programs, CMS envisions the
comprehensive availability and
widespread use of health care quality
information for informed decision
making and quality improvement. We
seek to collect data in a manner that
balances the need for information
related to the full spectrum of quality
performance and the need to minimize
the burden of data collection and
reporting. Our purpose is to help
achieve better health care and improve
health through the widespread
dissemination and use of performance
information. We seek to efficiently
collect data using valid, reliable and
relevant measures of quality and to
share the information with
organizations that use such performance
information as well as with the public.
We also seek to align new Affordable
Care Act reporting requirements with
current HHS high priority conditions,
topics and National Quality Strategy
(NQS) goals and to ultimately provide a
comprehensive assessment of the
quality of health care delivered. The
hospice quality reporting program will
align with the HHS National Quality
Strategy, particularly with the goals of
ensuring person and family centered
care and promoting effective
communication and coordination of
care. One fundamental element of
hospice care is adherence to patient
choice regarding such issues as desired
level of treatment and location of care
provision. This closely aligns with the
HHS NQS goal of ensuring person and
family centered care. Another
fundamental element of hospice care is
the use of a closely coordinated
interdisciplinary team to provide the
desired care. This characteristic is
closely aligned with the goal of
promoting effective communication and
coordination of care. Patient/family
preferences and coordination of care
will be foci of future hospice quality
measure selection. Arriving at such a
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comprehensive set of quality measures
that reflect high priority conditions and
goals of the HHS NQS will be a multiyear effort.
Other considerations in selecting
measures include: Alignment with other
Medicare and Medicaid quality
reporting programs as well as other
private sector initiatives; suggestions
and input received on measures
including, for example, those received
during the Listening Session on the
Hospice Quality Reporting Program held
on November 15, 2010; seeking
measures that have a low probability of
causing unintended adverse
consequences; and considering
measures that are feasible (that is,
measures that can be technically
implemented within the capacity of the
CMS infrastructure for data collection,
analyses, and calculation of reporting
and performance rates as applicable).
We also considered the burden to
hospices when selecting measures to
propose. We considered the January 18,
2011 Executive Order entitled
‘‘Improving Regulation and Regulatory
Review’’ (E.O. 13563), which instructs
federal agencies to consider regulatory
approaches that reduce burdens and
maintain flexibility and freedom of
choice for the public.
In our search for measures
appropriate for the first year of the
Hospice Quality Reporting Program, we
considered the results of our
environmental scan, literature search,
technical expert panel and stakeholder
listening sessions that detailed measures
developed by multiple stewards. Of
particular interest were measures from
the National Hospice and Palliative Care
Organization (NHPCO), the PEACE
Project conducted by The Carolinas
Center for Medical Excellence 2006–
2008 and the AIM Project conducted by
the New York QIO, IPRO 2009–2010.
Measures from these three sources can
be viewed at the following Web sites:
https://ww.nhpco.org/files/public/
Statistics_Research/NHPCO_research_
flier.pdf, https://www.thecarolinascenter.
org/default.aspx?pageid=46 and https://
www.ipro.org/index/cms-filesystemaction/hospice/1_6.pdf.
We are investigating expanding our
proposed measures to adopt some of
these measures in the future. However,
evaluation of these measures revealed
unique measurement concerns for
hospice services generally. Two major
issues were identified. First, all of the
measures currently available for use in
measuring hospice quality of care are
retrospective and have to be collected
using a chart abstraction approach. This
creates a burden for hospice providers.
Secondly, there is no standardized
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vehicle for data collection or centralized
structure for hospice quality reporting.
We believe these issues limit our
options for measure reporting in the first
year of the Hospice Quality Reporting
Program. Our plans to require additional
measure reporting are described below
under section 4. Additional Measures
Under Consideration.
We considered measures currently
endorsed by NQF that are applicable to
hospice care. Of the nine measures
listed by NQF as applicable to end of
life care, seven address patients who
specifically died of cancer and various
situations experienced by those patients
in their last days of life regardless of
whether they were cared for by a
hospice. These seven measures do not
address the provision of hospice care or
the breadth of the hospice patient
population. The remaining two NQF
endorsed hospice-related measures
address measurement of the quality of
care actually provided by hospices. One
of the two hospice appropriate measures
relates to pain control and is discussed
below under section b. The other
hospice appropriate measure, #0208:
Percentage of family members of all
patients enrolled in a hospice program
who give satisfactory answers to the
survey instrument requires the hospice
to administer the Family Evaluation of
Hospice Care (FEHC) survey to families
of deceased hospice patients. The FEHC
survey itself contains 54 questions to be
returned to the hospice and analyzed/
scored in order to produce a rating for
the measure. Though the FEHC survey
is available to all hospices, we are
unable to determine the number of
hospices that currently use this survey
or the number that analyze the
responses to determine scoring for this
NQF endorsed measure. We believe that
the efforts required for hospices to set
up systems to utilize and analyze this
survey tool can be burdensome for some
hospices, and that the timeframe
required to put the survey
administration and evaluation process
in place is insufficient. Therefore, while
we do not propose to use this measure
as a requirement for the FY 2014
payment update, this measure may be
included in future quality reporting
requirements because, should the level
of burden prove to be acceptable, the
family evaluation of hospice care is an
important perspective on hospice
quality. We are not aware of any other
measures applicable to hospice care that
have been endorsed or adopted by a
consensus organization other than the
NQF.
The current hospice Conditions of
Participation (CoPs) at 42 CFR section
418.58 require that hospices develop,
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implement, and maintain an effective,
ongoing, hospice-wide data-driven
quality assessment and performance
improvement (QAPI) program and that
the hospice maintain documentary
evidence of its quality assessment and
performance improvement program and
be able to demonstrate its operation to
CMS. In addition, hospices must
measure, analyze, and track quality
indicators, including adverse patient
events, and other aspects of
performance that enable the hospice to
assess processes of care, hospice
services, and operations as part of their
QAPI Program.
Hospices have been required to have
QAPI programs in place since December
2008 in order to comply with the CoPs.
As a part of the QAPI regulations, since
February 2, 2009, hospices have been
required to develop, implement, and
evaluate performance improvement
projects. The regulations require that
(1) The number and scope of distinct
performance improvement projects
conducted annually, based on the needs
of the hospice’s population and internal
organizational needs, reflect the scope,
complexity, and past performance of the
hospice’s services and operations; and
(2) The hospice document what
performance improvement projects are
being conducted, the reasons for
conducting these projects, and the
measurable progress achieved on these
projects.
b. Proposed Quality Measures for the
Quality Reporting Program for Hospices
srobinson on DSKHWCL6B1PROD with PROPOSALS2
Proposed Quality Measures
To meet the quality reporting
requirements for hospices for the FY
2014 payment determination as set forth
in Section 1814(i)(5) of the Act, we
propose that hospices report the NQFendorsed measure that is related to pain
management, NQF #0209: The
percentage of patients who were
uncomfortable because of pain on
admission to hospice whose pain was
brought under control within 48 hours.
A primary goal of hospice care is to
enable patients to be comfortable and
free of pain, so that they may live each
day as fully as possible. The provision
of pain control to hospice patients is an
essential function, a fundamental
element of hospice care and therefore
we believe the pain control measure,
NQF #0209 is an important and
appropriate measure for the hospice
quality reporting program.
Additionally, to meet the quality
reporting requirements for hospices for
the FY 2014 payment determination as
set forth in Section 1814(i)(5) of the Act,
we propose that hospices also report
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one structural measure that is not
endorsed by NQF. Structural measures
assess the characteristics and capacity of
the provider to deliver quality health
care. The proposed structural measure
is: Participation in a Quality Assessment
and Performance Improvement (QAPI)
Program that Includes at Least Three
Quality Indicators Related to Patient
Care. We believe that participation in
QAPI programs that address at least
three indicators related to patient care
reflects a commitment not only to
assessing the quality of care provided to
patients but also to identifying
opportunities for improvement that
pertain to the care of patients. Examples
of domains of indicators related to
patient care include providing care in
accordance with documented patient
and family goals, effective and timely
symptom management, care
coordination, and patient safety.
Section 1814(i)(5)(D)(ii) provides that
‘‘[i]n the case of a specified area or
medical topic determined appropriate
by the Secretary for which a feasible
measure has not been endorsed by an
entity with a contract under section
1890(a), the Secretary may specify a
measure that is not so endorsed as long
as due consideration is given to
measures that have been endorsed or
adopted by a consensus organization
identified by the Secretary.’’ We have
proposed to adopt this structural
measure because we believe it is
appropriate for use in evaluating the
quality of care provided by hospices. As
discussed above, a majority of the NQFendorsed measures that relate to end of
life care are not hospice-specific or, in
the case of the FEHC survey instrument,
that measure is too burdensome for
hospices to implement for the FY 2014
payment determination. We are also not
aware of any other measures applicable
to the hospice setting that have been
adopted by another consensus
organization. Accordingly, we propose
to adopt the structural measure under
the authority in section 1814(i)(5)(D)(ii).
We propose that each hospice submit
data on the proposed structural
measure, including the description of
each of their patient-care focused
quality indicators (if applicable) to CMS
by January 31, 2013 on a spreadsheet
template to be prepared by CMS.
Specifically, hospice programs would be
required to report whether or not they
have a QAPI program that addresses at
least three indicators related to patient
care. In addition, hospices would be
required to list all of their patient care
indicators. Hospice programs will be
evaluated for purposes of the quality
reporting program based on whether or
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not they respond, not on how they
respond.
In addition, we propose a voluntary
submission of the proposed structural
measure (not for purposes of a payment
determination or public reporting),
including the description of each of
their patient-care focused quality
indicators to CMS by January 31, 2012
on a spreadsheet template to be
prepared by CMS. Voluntary reporting
of the structural measure data with
specific quality indicators related to
patient care to CMS will allow us to
learn what the important patient care
quality issues are for hospices and
serves to provide useful information in
the design and structure of the quality
reporting program. Our intent is to
require additional standardized and
specific quality measures to be reported
by hospices in subsequent years. We
solicit comment on the measures
proposed.
The proposed collection and
submission of data on the proposed
NQF-endorsed measure will be a new
requirement for hospices. However,
since the development, implementation
and maintenance of an effective,
ongoing, hospice-wide data driven
quality assessment and performance
improvement program have been
requirements in the Medicare CoPs
since 2008, we do not believe that the
collection of the proposed structural
measure on QAPI indicators would be
considered new work. There are
numerous data collection tools and
quality indicators that are available to
hospices through hospice industry
associations and private companies. In
addition to these options, hospices may
choose to use the CMS-sponsored
Hospice Assessment Intervention and
Measurement (AIM) Project data
elements, data dictionary, data
collection tool, and quality indicator
formulas that are freely available to all
hospices, found at https://www.ipro.org/
index/hospice-aim.
We invite comment on the proposed
quality measurement approach
including whether there are other
quality measures currently available
which may be appropriate and advisable
for the hospice quality reporting
program starting in FY2014. We will
review and carefully consider the
comments that we receive on the
proposed measures for the first hospice
quality reporting cycle as we prepare
the final rule. We propose that hospices
report the structural measure by January
2013 and the NQF measure #0209 by
April 2013 in order to be used in the
fiscal year 2014 payment determination.
In addition, we propose that hospices
voluntarily report the structural
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measure by January 2012 for purposes of
program development and design. It is
important to note that the Affordable
Care Act allows the Secretary until
October 1, 2012 to publish the measures
required to meet the FY 2014 reporting
requirement. As such, we have the
opportunity to also consider
commenters’ suggestions associated
with this proposed rule in FY 2013
hospice rulemaking.
srobinson on DSKHWCL6B1PROD with PROPOSALS2
c. Proposed Timeline for Data Collection
Under the Quality Reporting Program
for Hospices
To meet the quality reporting
requirements for hospices for the FY
2014 payment determination as set forth
in Section 1814(i)(5) of the Act, we
propose that the first hospice quality
reporting cycle for the proposed NQFendorsed measure and the proposed
structural measure will consist of data
collected from October 1, 2012 through
December 31, 2012. This timeframe will
permit us to determine whether each
hospice is eligible to receive the full
market basket update for FY 2014 based
on a full quarter of data. This also
provides sufficient time after the end of
the data collection period to accurately
determine each hospice’s market basket
update for FY 2014. We propose that all
subsequent hospice quality reporting
cycles would be based on the calendaryear basis (e.g., January 1, 2013 through
December 31, 2013 for determination of
the hospice market basket update for
each hospice in FY 2015, etc.). We
welcome comments on the proposed
reporting cycle for the hospice quality
reporting program.
To voluntarily submit the structural
measure, we propose that the hospice
voluntary quality reporting cycle will
consist of data collected from October 1,
2011 through December 31, 2011. This
timeframe will permit us to analyze the
data to learn what the important patient
care quality issues are for hospices as
we enhance the quality reporting
program design to require more
standardized and specific quality
measures to be reported by hospices in
subsequent years.
d. Data Submission Requirements
We generally propose that hospices
submit data in the fiscal year prior to
the payment determination. For the
fiscal year 2014 payment determination,
we propose that hospices submit data
for the proposed NQF-endorsed measure
based on the measure specifications for
that measure, which can be found at
https://www.qualityforum.org, no later
than April 1, 2013. Data submission for
the structural measure would include
the hospices’ report of whether they
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have a QAPI program that addresses at
least three indicators related to patient
care, and, if so, the subject matter of all
of their patient care indicators for the
period October 1, 2012 through
December 31, 2012. Submission of these
reports would be required by January
31, 2013.
We propose that both measures’ data
be submitted to CMS on a spreadsheet
template to be prepared by CMS. We
will announce operational details with
respect to the data submission methods
and format for the hospice quality data
reporting program using this CMS Web
site https://www.cms.gov/LTCH-IRFHospice-Quality-Reporting by no later
than December 31, 2011 should these
measures be finalized.
For the voluntary submission, we
propose that hospices submit data for
the proposed structural measure based
on the spreadsheet template to be
prepared by CMS, no later than January
31, 2012. Voluntary data submission for
the structural measure would include
the hospices’ report of whether they
have a QAPI program that addresses at
least three indicators related to patient
care, and, if so, the subject matter of all
of their patient care indicators for the
period October 1, 2011 through
December 31, 2011. Submission of these
reports would be required by January
31, 2012.
3. Public Availability of Data Submitted
Under section 1814(i)(5)(E) of the Act,
the Secretary is required to establish
procedures for making any quality data
submitted by hospices available to the
public. Such procedures will ensure
that a hospice will have the opportunity
to review the data regarding the
hospice’s respective program before it is
made public. Also, under section
1814(i)(5)(E) of the Act, the Secretary is
authorized to report quality measures
that relate to services furnished by a
hospice on the CMS Internet Web site.
At the time of the publication of this
proposed rule, no date has been set for
public reporting of data. We recognize
that public reporting of quality data is
a vital component of a robust quality
reporting program and are fully
committed to developing the necessary
systems for public reporting of hospice
quality data.
4. Additional Measures Under
Consideration
As described above, we are
considering expanding the proposed
measures to include measures from the
National Hospice and Palliative Care
Organization (NHPCO), the PEACE
Project and the AIM Project. While in
this first year, we propose to build a
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foundation for quality reporting by
requiring hospices to report one NQF
endorsed measure and one structural
measure, we seek to achieve a
comprehensive set of quality measures
to be available for widespread use for
informed decision making and quality
improvement. We expect to explore and
expand the measures in various ways.
Future topics under consideration for
quality data reporting include patient
safety, effective symptom management,
patient and family experience of care,
and alignment of care with patient
preferences. For quality data reporting
in FY2014 or FY2015, we are also
particularly interested in the
development of new measures related to
these topics and in the further
development of existing measures that
can be found on the following Web
sites: https://www.nhpco.org/files/
public/Statistics_Research/
NHPCO_research_flier.pdf https://
www.thecarolinascenter.org/
default.aspx?pageid=46 and https://
www.ipro.org/index/cms-filesystemaction/hospice/1_6.pdf.
We welcome comments on whether
all, some, any, or none of these
measures should be considered for
future rulemaking. We also solicit
comments on ways which CMS can
adopt these measures in a standardized
way that is not overly burdensome to
hospice providers and reflects hospice
patient input.
To support the standardized
collection and calculation of quality
measures specifically focused on
hospice services, we believe the
required data elements would
potentially require a standardized
assessment instrument.
CMS has developed an assessment
instrument for the ‘‘Post-Acute Care
Payment Reform Demonstration
Program,’’ as required by section 5008 of
the 2005 Deficit Reduction Act (DRA).
This is a standardized assessment
instrument that could be used across all
post-acute care sites to measure
functional status and other factors
during treatment and at discharge from
each provider and to test the usefulness
of this standardized assessment
instrument (now referred to as the
Continuity Assessment Record &
Evaluation, CARE). We believe such an
assessment instrument would be
beneficial in supporting the submission
of data on quality measures by requiring
standardized data with regard to
hospice patients, similar to the current
MDS 3.0 and OASIS–C that support a
variety of quality measures for nursing
homes and home health agencies,
respectively. The CARE data set used by
hospices would require editing to
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address the unique and specific
assessment needs of the hospice patient
population. We invite comments on the
implementation of a standardized
assessment instrument for hospices that
would similarly support the calculation
of quality measures.
We invite public comment on
considering modifications to the CARE
data set to capture information
specifically relevant to measuring the
quality of care and services delivered by
hospices such as patient/family
preferences and the degree to which
those preferences were met for care
delivery, symptom management,
spiritual needs and other aspects of care
pertinent to the hospice patient
population. The current version of the
CARE data set can be found at
www.pacdemo.rti.org.
Finally, we are also soliciting
comments on ways which CMS can
expand the structural reporting measure
to also include hospice performance on
each QAPI indicator reported in the
performance period.
srobinson on DSKHWCL6B1PROD with PROPOSALS2
IV. Updates on Issues Not Proposed for
Rulemaking for FY 2012 Rulemaking
A. Update on Hospice Payment Reform
and Value Based Purchasing
Section 3132 of the Affordable Care
Act of 2010 (Pub. L. 111–148)
authorized the Secretary to collect
additional data and information
determined appropriate to revise
payments for hospice care and for other
purposes. The types of data and
information described in the Affordable
Care Act attempt to capture resource
utilization, which can be collected on
claims, cost reports, and possibly other
mechanisms as we determine to be
appropriate. The data collected would
be used to revise hospice payment
methodology or routine home care rates
in a budget-neutral manner no earlier
than October 1, 2013. In order to
determine the revised hospice payment
methodology and types of data to be
collected, we will consult with hospice
programs and the Medicare Payment
Advisory Commission (MedPAC).
According to MedPAC’s March 2011
‘‘Report to Congress: Medicare Payment
Policy’’ (available at https://
www.medpac.gov/chapters/
Mar10_Ch02E.pdf), Medicare
expenditures for hospice services
exceeded $12 billion in 2009 and the
aggregate Medicare margin in 2008 was
5.1 percent. In addition, MedPAC found
a 50 percent growth in the number of
hospices from 2000 to 2009, of which a
majority were for-profit hospices. The
growth in Medicare expenditures,
margins, and number of new hospices
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raises concern that the current hospice
payment methodology may have created
unintended incentives. Over the past
several years, MedPAC, the Government
Accountability Office (GAO), and the
Office of Inspector General (OIG) all
recommended that CMS collect more
comprehensive data in order to better
assess the utilization of the Medicare
hospice benefit. MedPAC has also
suggested an alternative payment model
that they believe will address the
vulnerabilities in the current payment
system.
We are in the early stages of reform
analysis. We have conducted a literature
review, are in the process of conducting
initial data analysis, and our contractor
will convene a technical advisory panel
in the spring of 2011. We are also
working in collaboration with the
Assistant Secretary of Planning and
Evaluation to develop analysis that may
be used to inform the technical advisory
panel discussions. We hope to share the
study design in future rulemaking to
solicit public comments on the hospice
payment reform methodology.
Section 10326 of the Affordable Care
Act directs the Secretary to conduct a
pilot program to test a value-based
purchasing program for hospices no
later than January 1, 2016. As described
in Section III E. Quality Reporting for
Hospices above, in this rule we have
proposed two measures for hospices to
report to CMS no later than January 31,
2013. We believe that these measures
are a quality reporting foundation upon
which CMS will expand. Over the
course of the next few years, no later
than beginning in FY 2015, CMS will
require hospices to report an expanded
and comprehensive set of quality
measures from which CMS can select
for pilot testing a value-based
purchasing program. During the FY
2013, FY 2014 and FY 2015 hospice
rulemaking, CMS plans to iteratively
implement the expanded measures, and
solicit industry comments regarding
analysis and design options for a
hospice value-based purchasing pilot
which would improve the quality of
care while reducing spending. We will
also consult with stakeholders in
developing the implementation plan, as
well as considering the outcomes of any
recent demonstration projects related to
value-based purchasing which we
believe might be relevant to the hospice
setting. We will provide further
information on the progress of our
efforts in future rulemaking.
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B. Update on the Redesigned Provider
Statistical & Reimbursement Report
(PS&R)
In our FY 2011 Hospice Wage Index
Notice with Comment Period, we
solicited comments on a redesigned
PS&R system, which would allow
hospices easy access to national hospice
utilization data on their Medicare
hospice beneficiaries. As described in
section II of this proposed rule, some
commenters were supportive of the
idea, and said they needed access to
each beneficiary’s full utilization history
to better manage their caps and to meet
the new face-to-face requirements.
We are moving forward with this
project, and expect the redesigned PS&R
system to be able to provide complete
utilization data needed for calculating
hospice caps. We believe that the
redesigned PS&R system will provide
hospices with a greater ability to
monitor their caps by providing readily
accessible information on beneficiary
utilization. We expect it to be available
to hospices before year’s end. We
encourage all hospices to become
familiar with the redesigned PS&R and
to use the information it will make
available in managing their respective
caps. In the future, we may consider
requiring hospices to self-report their
caps, using PS&R data.
V. Collection of Information
Requirements
Under the Paperwork Reduction Act
of 1995, we are required to provide 60day 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
each of these issues in this proposed
rule.
Proposed Quality Measures for the
Quality Reporting Program for Hospices
Section 1814(i)(5)(C) of the Social
Security Act requires that each hospice
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must submit data to the Secretary on
quality measures specified by the
Secretary. Such data must be submitted
in a form and manner, and at a time
specified by the Secretary. Under
section 1814(i)(5)(D)(iii) of the Act, the
Secretary must not later than October 1,
2012 publish selected measures that
will be applicable with respect to FY
2014.
In implementing the Hospice quality
reporting program, CMS seeks to collect
measure information with as little
burden to the providers as possible and
which reflects the full spectrum of
quality performance. Our purpose in
collecting this data is to help achieve
better health care and improve health
through the widespread dissemination
and use of performance information.
srobinson on DSKHWCL6B1PROD with PROPOSALS2
A. Structural Measure: Participation in
a Quality Assessment Performance
Improvement Program That Includes at
Least Three Indicators Related to Patient
Care
Consistent with this proposed rule,
hospices will voluntarily report to CMS
by January 31, 2012 their participation
in a QAPI program that includes the
hospices’ report of whether they have a
QAPI program that addresses at least
three indicators related to patient care,
and if so, the subject matter of all of
their patient care indicators during the
time frame October 1 through December
31, 2011. Data submitted for the last
quarter of calendar year 2011 shall be
voluntary on the part of hospice
providers and shall not impact their
fiscal year 2014 payment determination.
The information that hospices will be
required to report, in both the voluntary
and mandatory phases of reporting,
consists of stating whether or not they
participate in a QAPI program that
includes at least three indicators related
to patient care and if so, the subject
matter of all of their patient care
indicators. Expectations of the QAPI
programs are set forth in the Hospice
Conditions of Participation (CoPs) at 42
CFR 418.58(a) through 418.58(e). These
conditions of participation require that
hospices must develop, implement, and
maintain an effective, ongoing, hospicewide, data-driven QAPI program and
that the hospice must maintain
documentary evidence of its QAPI
programs. Hospices have been required
to meet all of the standards set forth in
42 CFR 418.58(a) through 418.58(e) as a
condition of participation in the
Medicare and Medicaid programs since
2008. Therefore, the identification of
quality indicators related to patient care,
will not be considered new or
additional work.
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Under the proposed quality reporting
program, hospices will voluntarily
report to CMS by no later than January
31, 2012, data that would include
whether they have a QAPI program that
addresses at least three indicators
related to patient care, and if so, the
subject matter of all of their patient care
indicators during the time frame via a
CMS-prepared spreadsheet template.
CMS anticipates that this reporting will
take no more than 15 minutes of time
to prepare the structural measure report.
Thereafter, each of the 3,531 hospices
in the United States will be required to
submit this structural measure
information to CMS one time per year.
CMS estimates that it will take
approximately 15 minutes to prepare
and complete the submission of this
structural measure report. Therefore, the
estimated number of hours spent by all
hospices in the U.S. preparing and
submitting such data totals 883 hours.
CMS believes that the compilation and
transmission of the data can be
completed by data entry personnel. We
have estimated a total cost impact of
$18,163 to all hospices for the
implementation of the hospice
structural measure quality reporting
program, based on 883 total hours for a
billing clerk at $20.57/hour (which
includes 30 percent overhead and fringe
benefits, using most recent BLS wage
data). We have developed an
information collection request for OMB
review and approval.
B. NQF Measure #0209: Percentage of
Patients Who Were Uncomfortable
Because of Pain on Admission to
Hospice Whose Pain Was Brought
Under Control Within 48 Hours
At this time, CMS has not completed
development of the information
collection instrument that Hospices
would have to submit in order to
comply with the NQF measure #0209
reporting requirements as discussed
earlier in this proposed rule. Because
the instrument for the reporting of this
measure is still under development, we
cannot assign a complete burden
estimate at this time. Once the
instrument is available, we will publish
the required 60-day and 30-day Federal
Register notices to solicit public
comments on the data submission form
and to announce the submission of the
information collection request to OMB
for its review and approval. The data
collection of the NQF measure #0209 for
the fiscal year 2014 payment
determination is for the time period
from October 1, 2012 to December 31,
2012.
If you comment on these information
collection and recordkeeping
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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,
CMS–1355–P, Fax: (202) 395–6974; or
E-mail: OIRA_submission@omb.eop.gov.
VI. Response to Comments
Because of the large number of public
comments we normally receive on
Federal Register documents, we are not
able to acknowledge or respond to them
individually. We will consider all
comments we receive by the date and
time specified in the DATES section of
this preamble, and, when we proceed
with a subsequent document, we will
respond to the comments in the
preamble to that document.
VII. Economic Analyses
A. Regulatory Impact Analysis
1. Introduction
We have examined the impacts of this
proposed rule as required by Executive
Order 12866 (September 30, 1993,
Regulatory Planning and Review),
Executive Order 13563 on Improving
Regulation and Regulatory Review
(January 18, 2011), the Regulatory
Flexibility Act (September 19, 1980;
Pub. L. 96–354) (RFA), section 1102(b)
of the Social Security Act, section 202
of the Unfunded Mandates Reform Act
of 1995 (March 22, 1995; Pub. L. 104–
4), Executive Order 13132 on
Federalism (August 4, 1999), and the
Congressional Review Act (5 U.S.C.
804(2)).
Executive Orders 12866 and 13563
direct agencies to assess all costs and
benefits of available regulatory
alternatives and, if regulation is
necessary, to select regulatory
approaches that maximize net benefits
(including potential economic,
environmental, public health and safety
effects, distributive impacts, and
equity). Executive Order 13563
emphasizes the importance of
quantifying both costs and benefits, of
reducing costs, of harmonizing rules,
and of promoting flexibility. This rule
has not been designated an
‘‘economically’’ significant rule, under
section 3(f)(1) of Executive Order 12866.
However, we have voluntarily prepared
a Regulatory Impact Analysis that to the
best of our ability presents the costs and
benefits of this proposed rule.
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2. Statement of Need
This proposed rule follows
§ 418.306(c) which requires annual
publication, in the Federal Register, of
the hospice wage index based on the
most current available CMS hospital
wage data, including any changes to the
definitions of Metropolitan Statistical
Areas (MSAs). Also, it implements
Section 3004 of the Affordable Care Act
of 2010, which directs the Secretary to
specify quality measures for the hospice
program. Lastly, this proposed rule
includes proposed changes to the
aggregate cap calculation, to
requirements related to physicians who
perform face-to-face encounters, and
offers several clarifying technical
corrections.
srobinson on DSKHWCL6B1PROD with PROPOSALS2
3. Overall Impacts
The overall impact of this proposed
rule is an estimated net decrease in
Federal payments to hospices of $80
million for fiscal year 2012. We
estimated the impact on hospices, as a
result of the changes to the FY 2012
hospice wage index and of reducing the
BNAF by an additional 15 percent, for
a total BNAF reduction of 40 percent
(10 percent in FY 2010, 15 percent in
FY 2011, and 15 percent in FY 2012).
The BNAF reduction is part of a 7-year
BNAF phase-out that was finalized in
previous rulemaking (74 FR 39384
(August 6, 2009)), and is not a policy
change.
As discussed previously, the
methodology for computing the hospice
wage index was determined through a
negotiated rulemaking committee and
promulgated in the August 8, 1997
hospice wage index final rule (62 FR
42860). The BNAF, which was
promulgated in the August 8, 1997 rule,
is being phased out. This rule updates
the hospice wage index in accordance
with the 2010 Hospice Wage Index final
rule, which finalized a 10 percent
reduced BNAF for FY 2010 as the first
year of a 7-year phase-out of the BNAF,
to be followed by an additional 15
percent per year reduction in the BNAF
in each of the next 6 years. Total phaseout will be complete by FY 2016.
4. Detailed Economic Analysis
Column 4 of Table 1 shows the
combined effects of the updated wage
data (the 2011 pre-floor, pre-reclassified
hospital wage index) and of the
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additional 15 percent reduction in the
BNAF (for a total BNAF reduction of 40
percent), comparing estimated payments
for FY 2012 to estimated payments for
FY 2011. The FY 2011 payments used
for comparison have a 25 percent
reduced BNAF applied. We estimate
that the total hospice payments for FY
2012 will decrease by $80 million as a
result of the application of the updated
wage data ($+10 million) and the total
40 percent reduction in the BNAF
($¥90 million). This estimate does not
take into account any inpatient hospital
market basket update, which is
estimated to be 2.8 percent for FY 2012.
This estimated 2.8 percent does not
reflect the provision in the Affordable
Care Act which reduces the inpatient
hospital market basket update for FY
2012 by 0.1 percentage point, since that
reduction does not apply to hospices.
The final inpatient hospital market
basket update and associated payment
rates will be communicated through an
administrative instruction in the
summer. The effect of an estimated 2.8
percent inpatient hospital market basket
update on payments to hospices is
approximately $390 million. Taking into
account an estimated 2.8 percent
inpatient hospital market basket update
(+$390 million), in addition to the
updated wage data ($+10 million) and
the total 40 percent reduction in the
BNAF ($¥90 million), it is estimated
that hospice payments would increase
by $310 million in FY 2012 ($390
million + $10 million ¥$90 million =
$310 million). The percent change in
payments to hospices due to the
combined effects of the updated wage
data, the additional 15 percent
reduction in the BNAF (for a total BNAF
reduction of 40 percent), and the
inpatient hospital market basket update
of 2.8 percent is reflected in column 5
of the impact table (Table 1).
a. Effects on Hospices
This section discusses the impact of
the projected effects of the hospice wage
index, including the effects of an
estimated 2.8 percent inpatient hospital
market basket update for FY 2012 that
will be communicated separately
through an administrative instruction.
This proposed rule continues to use the
CBSA-based pre-floor, pre-reclassified
hospital wage index as a basis for the
hospice wage index and continues to
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use the same policies for treatment of
areas (rural and urban) without hospital
wage data. The proposed FY 2012
hospice wage index is based upon the
2011 pre-floor, pre-reclassified hospital
wage index and the most complete
claims data available (FY 2009) with an
additional 15 percent reduction in the
BNAF (combined with the 10 percent
reduction in the BNAF taken in FY
2010, and the additional 15 percent
taken in 2011, for a total BNAF
reduction of 40 percent in FY 2012).
The BNAF reduction is part of a 7-year
BNAF phase-out that was finalized in
previous rulemaking, and would not be
a policy change.
For the purposes of our impacts, our
baseline is estimated FY 2011 payments
with a 25 percent BNAF reduction,
using the 2010 pre-floor, pre-reclassified
hospital wage index. Our first
comparison (column 3, Table 1)
compares our baseline to estimated FY
2012 payments (holding payment rates
constant) using the updated wage data
(2011 pre-floor, pre-reclassified hospital
wage index). Consequently, the
estimated effects illustrated in column 3
of Table 1 show the distributional
effects of the updated wage data only.
The effects of using the updated wage
data combined with the additional 15
percent reduction in the BNAF are
illustrated in column 4 of Table 1.
We have included a comparison of the
combined effects of the additional 15
percent BNAF reduction, the updated
wage data, and an estimated 2.8 percent
inpatient hospital market basket update
for FY 2012 (Table 1, column 5).
Presenting these data gives the hospice
industry a more complete picture of the
effects on their total revenue of the
hospice wage index discussed in this
proposed rule, the BNAF phase-out, and
the estimated FY 2012 inpatient
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.
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TABLE 1—ANTICIPATED IMPACT ON MEDICARE HOSPICE PAYMENTS OF UPDATING THE PRE-FLOOR, PRE-RECLASSIFIED
HOSPITAL WAGE INDEX DATA, REDUCING THE BUDGET NEUTRALITY ADJUSTMENT FACTOR (BNAF) BY AN ADDITIONAL
15 PERCENT (FOR A TOTAL BNAF REDUCTION OF 40 PERCENT) AND APPLYING AN ESTIMATED 2.8 PERCENT † INPATIENT HOSPITAL MARKET BASKET UPDATE TO THE FY 2012 HOSPICE WAGE INDEX, COMPARED TO THE FY 2011
HOSPICE WAGE INDEX WITH A 25 PERCENT BNAF REDUCTION
Percent
change in
hospice payments due to
FY2012
wage index
change
(1)
(2)
(3)
(4)
srobinson on DSKHWCL6B1PROD with PROPOSALS2
ALL HOSPICES ...................................................................................
URBAN HOSPICES ......................................................................
RURAL HOSPICES ......................................................................
BY REGION—URBAN:
NEW ENGLAND ...........................................................................
MIDDLE ATLANTIC ......................................................................
SOUTH ATLANTIC .......................................................................
EAST NORTH CENTRAL .............................................................
EAST SOUTH CENTRAL .............................................................
WEST NORTH CENTRAL ............................................................
WEST SOUTH CENTRAL ............................................................
MOUNTAIN ...................................................................................
PACIFIC ........................................................................................
OUTLYING ....................................................................................
BY REGION—RURAL:
NEW ENGLAND ...........................................................................
MIDDLE ATLANTIC ......................................................................
SOUTH ATLANTIC .......................................................................
EAST NORTH CENTRAL .............................................................
EAST SOUTH CENTRAL .............................................................
WEST NORTH CENTRAL ............................................................
WEST SOUTH CENTRAL ............................................................
MOUNTAIN ...................................................................................
PACIFIC ........................................................................................
OUTLYING ....................................................................................
ROUTINE HOME CARE DAYS:
0–3499 DAYS (small) ...................................................................
3500–19,999 DAYS (medium) ......................................................
20,000+ DAYS (large) ..................................................................
TYPE OF OWNERSHIP:
VOLUNTARY ................................................................................
PROPRIETARY ............................................................................
GOVERNMENT ............................................................................
HOSPICE BASE:
FREESTANDING ..........................................................................
HOME HEALTH AGENCY ...........................................................
HOSPITAL ....................................................................................
SKILLED NURSING FACILITY ....................................................
Percent
change in
hospice
payments
due to wage
index
change, additional 15%
reduction in
BNAF, and
market basket update
(5)
Number of
hospices
Number of
routine
home care
days in
thousands
Percent
change in
hospice
payments
due to wage
index
change, and
additional
15% reduction in BNAF
3,440
2,388
1,052
74,900
64,816
10,084
0.1
0.1
(0.2)
(0.5)
(0.5)
(0.6)
2.3
2.3
2.2
133
239
347
328
177
180
461
222
264
37
2,425
7,131
14,247
9,191
4,420
4,280
8,657
5,633
7,606
1,227
(0.7)
(0.3)
0.3
0.2
(0.1)
(0.3)
0.1
(0.0)
0.6
(0.4)
(1.3)
(0.9)
(0.3)
(0.4)
(0.6)
(0.8)
(0.4)
(0.6)
(0.0)
(0.4)
1.5
1.9
2.5
2.4
2.2
1.9
2.4
2.2
2.8
2.4
26
45
136
147
153
194
189
109
52
1
193
517
2,106
1,706
1,958
1,085
1,498
585
428
10
(0.1)
0.4
(0.7)
(0.6)
0.1
(0.5)
0.8
0.3
(0.7)
0.0
(0.6)
(0.2)
(1.1)
(1.1)
(0.1)
(0.9)
0.4
(0.1)
(1.3)
0.0
2.1
2.6
1.6
1.6
2.7
1.9
3.2
2.7
1.5
2.8
621
1716
1103
1,077
17,231
56,591
(0.1)
(0.1)
0.1
(0.6)
(0.6)
(0.5)
2.2
2.2
2.3
1172
1796
472
29,742
38,047
7,111
0.0
0.1
(0.1)
(0.5)
(0.4)
(0.7)
2.3
2.4
2.1
2340
555
526
19
58,510
9,922
6,272
196
0.1
0.1
(0.0)
0.2
(0.5)
(0.5)
(0.6)
(0.4)
2.3
2.3
2.2
2.4
BNAF = Budget Neutrality Adjustment Factor.
Comparison is to FY 2011 data with a 25 percent BNAF reduction.
* OSCAR data as of January 6, 2011 for hospices with claims filed in FY 2009.
** In previous years, there was also a category labeled ‘‘Other’’; these were Other Government hospices, and have been combined with the
‘‘Government’’ category.
† The estimated 2.8 percent inpatient hospital market basket update for FY 2012 does not reflect the provision in the Affordable Care Act which
reduces the inpatient hospital market basket update by 0.1 percentage point since that reduction does not apply to hospices.
REGION KEY: New England = Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont; Middle Atlantic = Pennsylvania,
New Jersey, New York; South Atlantic = Delaware, District of Columbia, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia,
West Virginia; East North Central = Illinois, Indiana, Michigan, Ohio, Wisconsin; East South Central = Alabama, Kentucky, Mississippi, Tennessee; West North Central = Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota; West South Central = Arkansas, Louisiana, Oklahoma, Texas; Mountain = Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah, Wyoming; Pacific = Alaska, California,
Hawaii, Oregon, Washington; Outlying = Guam, Puerto Rico, Virgin Islands.
Table 1 shows the results of our
analysis. In column 1, we indicate the
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number of hospices included in our
analysis as of January 6, 2011 which had
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also filed claims in FY 2009. In column
2, we indicate the number of routine
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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 2012
estimated payments with those
estimated for FY 2011. The estimated
FY 2011 payments incorporate a BNAF
which has been reduced by 25 percent.
Column 3 shows the percentage change
in estimated Medicare payments for FY
2012 due to the effects of the updated
wage data only, compared with
estimated FY 2011 payments. The effect
of the updated wage data can vary from
region to region depending on the
fluctuations in the wage index values of
the pre-floor, pre-reclassified hospital
wage index. Column 4 shows the
percentage change in estimated hospice
payments from FY 2011 to FY 2012 due
to the combined effects of using the
updated wage data and reducing the
BNAF by an additional 15 percent.
Column 5 shows the percentage change
in estimated hospice payments from FY
2011 to FY 2012 due to the combined
effects of using updated wage data, an
additional 15 percent BNAF reduction,
and an estimated 2.8 percent inpatient
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 2,388 hospices located in urban
areas and 1,052 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 2009. 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
3,440 hospices. Approximately 48
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 percent of hospice
patients in 2009 were Medicare
beneficiaries, we have not considered
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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
2009) in developing the impact analysis.
The FY 2012 payment rates will be
adjusted to reflect the full inpatient
hospital market basket update, as
required by section 1814(i)(1)(C)(ii)(VII)
of the Act. As previously noted, we
publish these rates through
administrative instructions rather than
in a proposed rule. The FY 2012
estimated inpatient hospital market
basket update is 2.8 percent. This 2.8
percent does not reflect the provision in
the Affordable Care Act which reduces
the inpatient hospital market basket
update by 0.1 percentage point since
that reduction does not apply to
hospices. Since the inclusion of the
effect of an inpatient hospital market
basket increase provides a more
complete picture of projected total
hospice payments for FY 2012, the last
column of Table 1 shows the combined
impacts of the updated wage data, the
additional 15 percent BNAF reduction,
and the estimated 2.8 percent inpatient
hospital market basket update. As
discussed in the FY 2006 hospice wage
index final rule (70 FR 45129), hospice
agencies may use multiple hospice wage
index values to compute their payments
based on potentially different
geographic locations. Before January 1,
2008, the location of the beneficiary was
used to determine the CBSA for routine
and continuous home care and the
location of the hospice agency was used
to determine the CBSA for respite and
general inpatient care. Beginning
January 1, 2008, the hospice wage index
CBSA 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 CBSA of the various sites of
service will usually correspond with the
CBSA of the geographic location of the
hospice, and thus we will continue to
use the location of the hospice for our
analyses of the impact of the changes to
the hospice wage index in this rule. For
this analysis, we use payments to the
hospice in the aggregate based on the
location of the hospice.
The impact of hospice wage index
changes has been analyzed according to
the type of hospice, geographic location,
type of ownership, hospice base, and
size. Our analysis shows that most
hospices are in urban areas and provide
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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 1,644 designated as non-profit or
government hospices and 1,796 as
proprietary. The vast majority of
hospices are freestanding.
b. Hospice Size
Under the Medicare hospice benefit,
hospices can provide four different
levels of care days. The majority of the
days provided by a hospice are routine
home care (RHC) days, representing
about 97 percent of the services
provided by a hospice. Therefore, the
number of RHC days can be used as a
proxy for the size of the hospice, that is,
the more days of care provided, the
larger the hospice. As discussed in the
August 4, 2005 final rule, we currently
use three size designations to present
the impact analyses. The three
categories are: (1) Small agencies having
0 to 3,499 RHC days; (2) medium
agencies having 3,500 to 19,999 RHC
days; and (3) large agencies having
20,000 or more RHC days. The FY 2012
updated wage data without any BNAF
reduction are anticipated to decrease
payments to small and medium
hospices by 0.1 percent and increase
payments to large hospices by 0.1
percent (column 3); the updated wage
data and the additional 15 percent
BNAF reduction (for a total BNAF
reduction of 40 percent) are anticipated
to decrease estimated payments to small
and medium hospices by 0.6 percent,
and to large hospices by 0.5 percent
(column 4); and finally, the updated
wage data, the additional 15 percent
BNAF reduction (for a total BNAF
reduction of 40 percent), and the
estimated 2.8 percent inpatient hospital
market basket update are projected to
increase estimated payments by 2.2
percent for small and medium hospices,
and by 2.3 percent for large hospices
(column 5).
c. Geographic Location
Column 3 of Table 1 shows updated
wage data without the BNAF reduction.
Urban hospices are anticipated to
experience an increase of 0.1 percent,
while rural hospices will experience a
decrease of 0.2 percent. Urban hospices
can anticipate a decrease in payments in
five regions; ranging from 0.7 percent in
the New England region to 0.1 percent
in the East South Central region.
Payments in the Mountain region are
estimated to stay stable. Urban hospices
are anticipated to see an increase in
payments in four regions; ranging from
0.1 percent in the West South Central
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region to 0.6 percent in the Pacific
region.
Column 3 shows estimated
percentages for rural hospices. Rural
hospices are estimated to see a decrease
in payments in five regions, ranging
from 0.7 percent in the South Atlantic
and Pacific regions to 0.1 percent in the
New England region. Rural hospices can
anticipate an increase in payments in
four regions, ranging from 0.1 percent in
the East South Central region to 0.8
percent in the West South Central
region. There is no change in payments
for Outlying regions due to FY 2012
Wage Index change.
Column 4 shows the combined effect
of the updated wage data and the
additional 15 percent BNAF reduction
on estimated payments, as compared to
the FY 2011 estimated payments using
a BNAF with a 25 percent reduction.
Overall urban are anticipated to
experience a 0.5 percent decrease in
payments while rural hospices are
anticipated to experience a 0.6 percent
decrease in payments. Nine regions in
urban areas are estimated to see
decreases in payments, ranging from 1.3
percent in the New England region to
0.3 percent in the South Atlantic region.
Payments for the Pacific region are
estimated to be relatively stable.
Rural hospices are estimated to
experience a decrease in payments in
eight regions, ranging from 1.3 percent
in the Pacific region to 0.1 percent in
the East South Central and Mountain
regions. While the estimated effect of
the additional 15 percent BNAF
reduction decreased payments to rural
hospices in the West South Central
region, hospices in this region are still
anticipated to experience an estimated
increase in payments of 0.4 percent due
to the net effect of the reduced BNAF
and the updated wage index data.
Payments to rural outlying regions are
anticipated to remain relatively stable.
Column 5 shows the combined effects
of the updated wage data, the additional
15 percent BNAF reduction, and the
estimated 2.8 percent inpatient hospital
market basket update on estimated
payments as compared to the estimated
FY 2011 payments. Note that the FY
2011 payments had a 25 percent BNAF
reduction applied to them. Overall,
urban hospices are anticipated to
experience a 2.3 percent increase in
payments and rural hospices are
anticipated to experience a 2.2 percent
increase in payments. Urban hospices
are anticipated to experience an
increase in estimated payments in every
region, ranging from 1.5 percent in the
New England region to 2.8 percent in
the Pacific region. Rural hospices in
every region are estimated to see an
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increase in payments, ranging from 1.5
percent in the Pacific region to 3.2
percent in the West South Central
region.
d. Type of Ownership
Column 3 demonstrates the effect of
the updated wage data on FY 2012
estimated payments, versus FY 2011
estimated payments. We anticipate that
using the updated wage data would
decrease estimated payments to
government hospices by 0.1 percent and
payments to voluntary (non-profit)
hospices would remain relatively
unchanged. We estimate an increase in
payments for proprietary (for-profit)
hospices of 0.1 percent.
Column 4 demonstrates the combined
effects of the updated wage data and of
the additional 15 percent BNAF
reduction. Estimated payments to
voluntary (non-profit) hospices are
anticipated to decrease by 0.5 percent,
while government hospices are
anticipated to experience a decrease of
0.7 percent. Estimated payments to
proprietary (for-profit) hospices are
anticipated to decrease by 0.4 percent.
Column 5 shows the combined effects
of the updated wage data, the additional
15 percent BNAF reduction (for a total
BNAF reduction of 40 percent), and an
estimated 2.8 percent inpatient hospital
market basket update on estimated
payments, comparing FY 2012 to FY
2011 (using a BNAF with a 25 percent
reduction). Estimated FY 2012
payments are anticipated to increase 2.3
percent for voluntary (non-profit), 2.1
percent for government hospices, and
2.4 percent for proprietary (for-profit)
hospices.
e. Hospice Base
Column 3 demonstrates the effect of
using the updated wage data, comparing
estimated payments for FY 2012 to FY
2011. Estimated payments are
anticipated to increase by 0.1 percent
for freestanding hospices and home
health agency based hospices, and 0.2
percent for hospices based out of a
skilled nursing facility. Payments to
hospital based hospices are estimated to
remain relatively unchanged.
Column 4 shows the combined effects
of the updated wage data and reducing
the BNAF by an additional 15 percent,
comparing estimated payments for FY
2012 to FY 2011. All hospice facilities
are anticipated to experience decrease
in payments ranging from 0.4 percent
for skilled nursing facility based
hospices, to 0.6 percent for hospital
based hospices.
Column 5 shows the combined effects
of the updated wage data, the additional
15 percent BNAF reduction, and an
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estimated 2.8 percent inpatient hospital
market basket update on estimated
payments, comparing FY 2012 to FY
2011. Estimated payments are
anticipated to increase for all hospices,
ranging from 2.2 percent for hospital
based hospices to 2.4 percent for skilled
nursing facility based hospices.
f. Effects on Other Providers
This proposed rule only affects
Medicare hospices, and therefore has no
effect on other provider types.
g. Effects on the Medicare and Medicaid
Programs
This proposed rule only affects
Medicare hospices, and therefore has no
effect on Medicaid programs. As
described previously, estimated
Medicare payments to hospices in FY
2012 are anticipated to increase by $10
million due to the update in the wage
index data, and to decrease by $90
million due to the total 40 percent
reduction in the BNAF. However, the
estimated market basket update of 2.8
percent is anticipated to increase
Medicare payments by $390 million.
Therefore, the total effect on Medicare
hospice payments is estimated to be a
$310 million increase. Note that the
final market basket update and
associated FY 2012 payment rates will
be officially communicated this summer
through an administrative instruction.
h. Accounting Statement
As required by OMB Circular A–4
(available at https://www.whitehouse.
gov/omb/circulars/a004/a-4.pdf), in
Table 2 below, we have prepared an
accounting statement showing the
classification of the expenditures
associated with the provisions of this
proposed 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 using
data for 3,440 hospices in our database.
TABLE 2—ACCOUNTING STATEMENT:
CLASSIFICATION OF ESTIMATED EXPENDITURES, FROM FY 2011 TO FY
2012
[In $millions]
Category
Annualized Monetized
Transfers.
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Transfers
$¥80. *
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TABLE 2—ACCOUNTING STATEMENT:
CLASSIFICATION OF ESTIMATED EXPENDITURES, FROM FY 2011 TO FY
2012—Continued
[In $millions]
Category
From Whom to Whom ..
Transfers
Federal Government to Hospices.
* The $80 million reduction in transfers includes the additional 15 percent reduction in
the BNAF and the updated wage data. It does
not include the hospital market basket update,
which is estimated at 2.8 percent for FY 2012.
This estimated 2.8 percent does not reflect the
provision in the Affordable Care Act (ACA)
which reduced the hospital market basket update by 0.1 percentage point since that reduction does not apply to hospices.
srobinson on DSKHWCL6B1PROD with PROPOSALS2
i. Conclusion
In conclusion, the overall effect of this
proposed rule is estimated to be the $80
million reduction in Federal payments
due to the wage index changes
(including the additional 15 percent
reduction in the BNAF). Furthermore,
the Secretary has determined that this
will not have a significant impact on a
substantial number of small entities, or
have a significant effect relative to
section 1102(b) of the Act.
B. Regulatory Flexibility Act Analysis
The RFA requires agencies to analyze
options for regulatory relief of small
businesses if a rule has a significant
impact on a substantial number of small
entities. For purposes of the RFA, we
estimate that almost all hospices are
small entities as that term is used in the
RFA. The great majority of hospitals and
most other health care providers and
suppliers are small entities, either by
being nonprofit organizations or by
meeting the Small Business
Administration (SBA) definition of a
small business (having revenues of less
than $7.0 million to $34.5 million in
any 1 year). While the SBA does not
define a size threshold in terms of
annual revenues for hospices, it does
define one for home health agencies
($13.5 million; seehttps://
ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=
ecfr&sid=2465b064ba6965cc1fbd2
eae60854b11&rgn=div8&view=text&
node=13:1.0.1.1.16.1.266.9&idno=13).
For the purposes of this proposed rule,
because the hospice benefit is a homebased 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
2009 Medicare hospice claims data, we
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estimate that 96 percent of hospices
have Medicare revenues below $13.5
million and are considered small
entities. As indicated in Table 1 below,
there are 3,440 hospices with 2009
claims data as of January 6, 2011.
Approximately 48 percent of those
3,440 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.
The effects of this rule on hospices are
shown in Table 1. Overall, Medicare
payments to all hospices would
decrease by an estimated 0.5 percent
over last year’s payments in response to
the policies that we are proposing in
this NPRM, reflecting the combined
effects of the updated wage data and the
additional 15 percent reduction in the
BNAF. The combined effects of the
updated wage data and additional 15
percent reduction in the BNAF on small
or medium sized hospices (as defined
by routine home care days rather than
by the SBA definition), is ¥0.6 percent.
However, when including the estimated
inpatient hospital market basket update
of 2.8 percent into these estimates, the
combined effects on Medicare payment
to all hospices would result in an
estimated increase of approximately 2.3
percent. For small and medium
hospices (as defined by routine home
care days), the estimated effects on
revenue when accounting for the
updated wage data, the additional 15
percent BNAF reduction, and the
estimated inpatient hospital market
basket update are increases in payments
of 2.2 percent. Overall average hospice
revenue effects will be slightly less than
these estimates since according the
National Hospice and Palliative Care
Organization, about 17 percent of
hospice patients are non-Medicare.
HHS’s practice in interpreting the
RFA is to consider effects economically
‘‘significant’’ only if they reach a
threshold of 3 to 5 percent or more of
total revenue or total costs. As noted
above, the combined effect of only the
updated wage data and the additional
15 percent reduced BNAF (for a total
BNAF reduction of 40 percent) for all
hospices is ¥0.5 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 additional 15 percent
reduced BNAF (¥0.5 percent) does not
exceed HHS’s 3.0 percent minimum
threshold. However, HHS’s practice in
determining ‘‘significant economic
PO 00000
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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 additional 15
percent BNAF reduction, and the
estimated 2.8 percent FY 2012 inpatient
hospital market basket update, the
overall impact is an increase in
estimated hospice payments of 2.3
percent for FY 2012. Therefore, the
Secretary has determined that this
proposed rule would not create a
significant economic impact on a
substantial number of small entities.
In addition, section 1102(b) of the Act
requires us to prepare a regulatory
impact analysis if a rule may have a
significant impact on the operations of
a substantial number of small rural
hospitals. This analysis must conform to
the provisions of section 604 of the
RFA. For purposes of section 1102(b) of
the Act, we define a small rural hospital
as a hospital that is located outside of
a metropolitan statistical area and has
fewer than 100 beds. This proposed rule
only affects hospices. Therefore, the
Secretary has determined that this
proposed rule would not have a
significant impact on the operations of
a substantial number of small rural
hospitals.
C. Unfunded Mandates Reform Act
Analysis
Section 202 of the Unfunded
Mandates Reform Act of 1995 (UMRA)
also requires that agencies assess
anticipated costs and benefits before
issuing any rule whose mandates
require spending in any 1 year of $100
million in 1995 dollars, updated
annually for inflation. In 2011, that
threshold is approximately $136
million. This proposed rule with
comment period is not anticipated to
have an effect on State, local, or tribal
governments, in the aggregate, or on the
private sector of $136 million or more.
VIII. Federalism Analysis
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 would not have an
impact on the rights, roles, and
responsibilities of State, local, or tribal
governments.
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Federal Register / Vol. 76, No. 89 / Monday, May 9, 2011 / Proposed Rules
List of Subjects in 42 CFR Part 418
Health facilities, Hospice care,
Medicare, Reporting and recordkeeping
requirements.
For the reasons set forth in the
preamble, the Centers for Medicare &
Medicaid Services proposes to amend
42 CFR chapter IV as set forth below:
1. 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).
§ 418.309
Subpart G—Payment for Hospice Care
2. In § 418.22, paragraphs (a)(4) and
(b)(4) are revised to read as follows:
§ 418.22
Certification of terminal illness.
(a) * * *
(4) Face-to-face encounter. As of
January 1, 2011, a hospice physician or
hospice nurse practitioner must have a
face-to-face encounter with each
hospice patient whose total stay across
all hospices is anticipated to reach the
3rd benefit period. The face-to-face
encounter must occur prior to but no
more than 30 calendar days prior to the
3rd benefit period recertification, and
every benefit period recertification
thereafter, to gather clinical findings to
determine continued eligibility for
hospice care.
(b) * * *
(4) The physician or nurse
practitioner who performs the face-toface encounter with the patient
described in paragraph (a)(4) of this
section must attest in writing that he or
she had a face-to-face encounter with
the patient, including the date of that
visit. The attestation of the nurse
practitioner or a non-certifying hospice
physician shall state that the clinical
findings of that visit were provided to
the certifying physician for use in
determining continued eligibility for
hospice care.
*
*
*
*
*
3. Section 418.202 (g) is revised to
read:
§ 418.202
Covered services.
srobinson on DSKHWCL6B1PROD with PROPOSALS2
*
*
*
*
*
(g) Home health or hospice aide
services furnished by qualified aides as
designated in § 418.76 and homemaker
services. Home health aides (also known
as hospice aides) may provide personal
care services as defined in § 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 patient, such as
changing bed linens or light cleaning
and laundering essential to the comfort
and cleanliness of the patient. Aide
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services must be provided under the
general supervision of a registered
nurse. Homemaker services may include
assistance in maintenance of a safe and
healthy environment and services to
enable the individual to carry out the
treatment plan.
*
*
*
*
*
4. In § 418.309, the introductory text
and paragraph (b) are revised, and new
paragraphs (c) and (d) are added, to
read:
Hospice Aggregate Cap.
A hospice’s aggregate cap is
calculated by multiplying the adjusted
cap amount (determined in paragraph
(a) of this section) by the number of
Medicare beneficiaries, as determined
by one of two methodologies for
determining the number of Medicare
beneficiaries for a given cap year
described in paragraphs (b) and (c) of
this section:
*
*
*
*
*
(b) Streamlined Methodology Defined.
A hospice’s aggregate cap is calculated
by multiplying the adjusted cap amount
determined in paragraph (a) of this
section by the number of Medicare
beneficiaries as determined in
paragraphs (b)(1) and (2) of this section.
For purposes of the streamlined
methodology calculation—
(1) In the case in which a beneficiary
received care from only one hospice, the
hospice includes in its number of
Medicare beneficiaries those Medicare
beneficiaries who have not previously
been included in the calculation of any
hospice cap, and who have filed an
election to receive hospice care in
accordance with § 418.24 during the
period beginning on September 28 (34
days before the beginning of the cap
year) and ending on September 27 (35
days before the end of the cap year),
using the best data available at the time
of the calculation.
(2) In the case in which a beneficiary
received care from more than one
hospice, each hospice includes in its
number of Medicare beneficiaries only
that fraction which represents the
portion of a patient’s total days of care
in all hospices and all years that was
spent in that hospice in that cap year,
using the best data available at the time
of the calculation. The aggregate cap
calculation for a given cap year may be
adjusted after the calculation for that
year based on updated data.
(c) Patient-by-Patient Proportional
Methodology Defined. A hospice’s
aggregate cap is calculated by
multiplying the adjusted cap amount
determined in paragraph (a) of this
section by the number of Medicare
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26831
beneficiaries as described in paragraphs
(c)(1) and (2) of this section. For the
purposes of the patient-by-patient
proportional methodology—
(1) A hospice includes in its number
of Medicare beneficiaries only that
fraction which represents the portion of
a patient’s total days of care in all
hospices and all years that was spent in
that hospice in that cap year, using the
best data available at the time of the
calculation. The total number of
Medicare beneficiaries for a given
hospice’s cap year is determined by
summing the whole or fractional share
of each Medicare beneficiary that
received hospice care during the cap
year, from that hospice.
(2) The aggregate cap calculation for
a given cap year may be adjusted after
the calculation for that year based on
updated data.
(d) Application of Methodologies. (1)
For cap years ending October 31, 2011
and for prior cap years, a hospice’s
aggregate cap is calculated using the
streamlined methodology described in
paragraph (b) of this section, subject to
the following:
(i) A hospice that has not received a
cap determination for a cap year ending
on or before October 31, 2011 as of
October 1, 2011, may elect to have its
final cap determination for such cap
years calculated using the patient-bypatient proportional methodology
described in paragraph (c) of this
section; or
(ii) A hospice that has filed a timely
appeal regarding the methodology used
for determining the number of Medicare
beneficiaries in its cap calculation for
any cap year is deemed to have elected
that its cap determination for the
challenged year, and all subsequent cap
years, be calculated using the patientby-patient proportional methodology
described in paragraph (c) of this
section.
(2) For cap years ending October 31,
2012, and all subsequent cap years, a
hospice’s aggregate cap is calculated
using the patient-by-patient
proportional methodology described in
paragraph (c) of this section, subject to
the following:
(i) A hospice that has had its cap
calculated using the patient-by-patient
proportional methodology for any cap
year(s) prior to the 2012 cap year is not
eligible to elect the streamlined
methodology, and must continue to
have the patient-by-patient proportional
methodology used to determine the
number of Medicare beneficiaries in a
given cap year.
(ii) A hospice that is eligible to make
a one-time election to have its cap
calculated using the streamlined
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methodology must make that election
no later than 60 days after receipt of its
2012 cap determination. A hospice’s
election to have its cap calculated using
the streamlined methodology would
remain in effect unless:
(A) The hospice subsequently submits
a written election to change the
methodology used in its cap
determination to the patient-by-patient
proportional methodology; or
(B) The hospice appeals the
streamlined methodology used to
determine the number of Medicare
beneficiaries used in the aggregate cap
calculation.
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(3) If a hospice that elected to have its
aggregate cap calculated using the
streamlined methodology under
paragraph (d)(2)(ii) of this section
subsequently elects the patient-bypatient proportional methodology or
appeals the streamlined methodology,
under paragraph (d)(2)(ii)(A) or (B) of
this section, the hospice’s aggregate cap
determination for that cap year and all
subsequent cap years is to be calculated
using the patient-by-patient
proportional methodology. As such,
past cap year determinations may be
adjusted to prevent the over-counting of
beneficiaries, notwithstanding the
ordinary limitations on reopening.
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(Catalog of Federal Domestic Assistance
Program No. 93.773, Medicare—Hospital
Insurance; and Program No. 93.774,
Medicare—Supplementary Medical
Insurance Program)
Dated: April 14, 2011.
Donald M. Berwick,
Administrator, Centers for Medicare &
Medicaid Services.
Approved: April 19, 2011.
Kathleen Sebelius,
Secretary.
Note: The following Addendums will not
be published in the Code of Federal
Regulations.
BILLING CODE 4120–01–P
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[FR Doc. 2011–10689 Filed 4–28–11; 4:15 pm]
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Agencies
[Federal Register Volume 76, Number 89 (Monday, May 9, 2011)]
[Proposed Rules]
[Pages 26806-26851]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-10689]
[[Page 26805]]
Vol. 76
Monday,
No. 89
May 9, 2011
Part II
Department of Health and Human Services
-----------------------------------------------------------------------
Centers for Medicare & Medicaid Services
-----------------------------------------------------------------------
42 CFR Part 418
Medicare Program; Hospice Wage Index for Fiscal Year 2012; Proposed
Rule
Federal Register / Vol. 76 , No. 89 / Monday, May 9, 2011 / Proposed
Rules
[[Page 26806]]
-----------------------------------------------------------------------
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 418
[CMS-1355-P]
RIN 0938-AQ31
Medicare Program; Hospice Wage Index for Fiscal Year 2012
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: This proposed rule would set forth the hospice wage index for
fiscal year 2012 and continue the phase-out of the wage index budget
neutrality adjustment factor (BNAF), with an additional 15 percent BNAF
reduction, for a total BNAF reduction in FY 2012 of 40 percent. The
BNAF phase-out will continue with successive 15 percent reductions from
FY 2013 through FY 2016. This proposed rule would change the hospice
aggregate cap calculation methodology. This proposed rule also would
revise the hospice requirement for a face-to-face encounter for
recertification of a patient's terminal illness. Finally, this proposed
rule would begin implementation of a hospice quality reporting program.
DATES: Comment Date: To be assured consideration, comments must be
received at one of the addresses provided below, no later than 5 p.m.
eastern time on July 8, 2011.
ADDRESSES: In commenting, please refer to file code CMS-1355-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 https://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-1355-P, P.O. Box 8012,
Baltimore, MD 21244-1850.
Please allow sufficient time for mailed comments to be received before
the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address ONLY: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-1355-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--Centers for Medicare & Medicaid
Services, Department of Health and Human Services, 7500 Security
Boulevard, Baltimore, MD 21244-1850.
If you intend to deliver your comments to the Baltimore address, 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.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT: For information regarding ``Quality
Reporting for Hospices'' and ``Collection of Information Requirements''
sections, please contact Robin Dowell at (410) 786-0060. For
information regarding ``Hospice Wage Index'' and ``Hospice Face-to-Face
Requirement'' sections, please contact Anjana Patel at (410) 786-2120.
For information regarding all other sections, please contact Katie
Lucas at (410) 786-7723.
SUPPLEMENTARY INFORMATION: Submitting Comments: We welcome comments
from the public on all issues set forth in this rule to assist us in
fully considering issues and developing policies. You can assist us by
referencing the file code CMS-1355-P and the specific ``issue
identifier'' that precedes the section on which you choose to comment.
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: https://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 Rural and Urban Areas
4. Areas Without Hospital Wage Data
5. CBSA Nomenclature Changes
6. Wage Data for Multi-Campus Hospitals
7. Hospice Payment Rates
II. Summary of Cap Comments Solicited in the FY 2011 Hospice Wage
Index Notice With Comment Period
III. Provisions of the Proposed Rule
A. FY 2012 Hospice Wage Index
1. Background
2. Areas Without Hospital Wage Data
3. FY 2012 Wage Index With an Additional 15 Percent Reduced
Budget Neutrality Adjustment Factor (BNAF)
4. Effects of Phasing Out the BNAF
B. Aggregate Cap Calculation Methodology
1. Cap Determinations for Cap Years Ending On or Before October
31, 2011
2. Cap Determinations for Cap Years Ending On or After October
31, 2012
3. Patient-by-Patient Proportional Methodology
4. Streamlined Methodology
5. Changing Methodologies
6. Other Issues
7. Changes to Regulatory Text
C. Hospice Face-to-Face Requirement
D. Technical Proposals and Clarification
1. Hospice Local Coverage Determinations
2. Definition of Hospice Employee
3. Timeframe for Face-to-Face Encounters
4. Hospice Aide and Homemaker Services
E. Quality Reporting for Hospices
1. Background and Statutory Authority
2. Quality Measures for Hospice Quality Reporting Program for
Payment Year FY 2014
a. Considerations in the Selection of the Proposed Quality
Measures
[[Page 26807]]
b. Proposed Quality Measures for the Quality Reporting Program
for Hospices
c. Proposed Timeline for Data Collection Under the Quality
Reporting Program for Hospices
d. Data Submission Requirements
3. Public Availability of Data Submitted
4. Additional Measures Under Consideration
IV. Updates on Issues Not Proposed for Rulemaking for FY 2012
Rulemaking
A. Update on Hospice Payment Reform and Value Based Purchasing
B. Update on the Redesigned Provider Statistical & Reimbursement
Report
(PS&R)
V. Collection of Information Requirements
A. Structural Measure: Participation in Quality Assessment
Performance Improvement Program That Includes at Least Three
Indicators Related to Patient Care
B. NQF Measure 0209: Percentage of Patients Who Were
Uncomfortable Because of Pain on Admission to Hospice Whose Pain Was
Brought Under Control Within 48 Hours
VI. Response to Comments
VII. Economic Analyses
A. Regulatory Impact Analysis
1. Introduction
2. Statement of Need
3. Overall Impact
4. Detailed Economic Analysis
a. Effects on Hospices
b. Hospice Size
c. Geographic Location
d. Type of Ownership
e. Hospice Base
f. Effects on Other Providers
g. Effects on the Medicare and Medicaid Programs
h. Accounting Statement
i. Conclusion
B. Regulatory Flexibility Act Analysis
C. Unfunded Mandates Reform Act Analysis
VIII. Federalism Analysis
Addendum A: FY 2012 Wage Index for Urban Areas
Addendum B: FY 2012 Wage Index for Rural Areas
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 to palliative care, for relief of pain and for symptom
management. The goal of hospice care is to help terminally ill
individuals continue life with minimal disruption to normal activities
while remaining primarily in the home environment. A hospice uses an
interdisciplinary approach to deliver medical, nursing, social,
psychological, emotional, and spiritual services through use of a broad
spectrum of professional and other caregivers, with the goal of making
the individual as physically and emotionally comfortable as possible.
Counseling services and inpatient respite services are available to the
family of the hospice patient. Hospice programs consider both the
patient and the family as a unit of care.
Section 1861(dd) of the Social Security Act (the Act) provides for
coverage of hospice care for terminally ill Medicare beneficiaries who
elect to receive care from a participating hospice. Section 1814(i) of
the Act provides payment for Medicare participating hospices.
2. Medicare Payment for Hospice Care
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
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. Our regulations at Sec. 418.306(c) require each
hospice's labor market to be established using the most current
hospital wage data available, including any changes by the Office of
Management and Budget (OMB) to the Metropolitan Statistical Areas
(MSAs) definitions. 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
Inpatient Prospective Payment System (IPPS) final rule (69 FR 48916,
49026), 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
Metropolitan Statistical Area (MSA)-based wage index values for FY
2006. The one-year transition policy ended on September 30, 2006. For
fiscal years 2007 and beyond, we use CBSAs.
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, comprised representatives from
national hospice associations; rural, urban, large and small hospices
and multi-site hospices; consumer groups; and a government
representative. On April 13, 1995, the Hospice Wage Index Negotiated
Rulemaking Committee (the 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. The Committee's 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 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 suggested by the Committee, ``budget neutrality'' would mean
that, in a given year, estimated aggregate payments for Medicare
hospice services using the updated hospice values would 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 would 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 Budget
Neutrality Adjustment Factor (BNAF) would be computed and applied
annually to the pre-floor, pre-reclassified hospital wage index when
deriving the hospice wage index.
[[Page 26808]]
The BNAF is calculated by computing estimated payments using the
most recent, completed year of hospice claims data. The units (days or
hours) from those claims are multiplied by the updated hospice payment
rates to calculate estimated payments. For the FY 2011 Hospice Wage
Index Notice with Comment Period, that meant estimating payments for FY
2011 using FY 2009 hospice claims data, and applying the FY 2011
hospice payment rates (updating the FY 2010 rates by the FY 2011
inpatient hospital market basket update). The FY 2011 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 FY 2010 Hospice Wage Index Final Rule (74 FR 39384) finalized a
provision for a 7-year phase-out of the BNAF, which is applied to the
wage index values. The BNAF was reduced by 10 percent in FY 2010, an
additional 15 percent in FY 2011, and will be reduced by an additional
15 percent in each of the next 5 years, for complete phase out in 2016.
The hospice wage index is updated annually. Our most recent annual
hospice wage index Notice with Comment Period, published in the Federal
Register (75 FR 42944) on July 22, 2010, set forth updates to the
hospice wage index for FY 2011. As noted previously, that update
included the second year of a 7-year phase-out of the BNAF, which was
applied to the wage index values. The BNAF was reduced by 10 percent in
FY 2010 and by an additional 15 percent in 2011, for a total FY 2011
reduction of 25 percent.
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 budget neutrality adjustment
or application of the hospice floor to compute the hospice wage index
used to determine payments to hospices.
Pre-floor, pre-reclassified hospital wage index values of 0.8 or
greater are currently adjusted by a reduced BNAF. As noted above, for
FY 2011, the BNAF was reduced by a cumulative total of 25 percent. Pre-
floor, pre-reclassified hospital wage index values below 0.8 are
adjusted by the greater of: (1) The hospice BNAF, reduced by a total of
25 percent for FY 2011; or (2) the hospice floor (which is a 15 percent
increase) subject to a maximum wage index value of 0.8. For example, if
in FY 2011, County A had a pre-floor, pre-reclassified hospital wage
index (raw wage index) value of 0.3994, we would perform the following
calculations using the budget neutrality factor (which for this example
is an unreduced BNAF of 0.060562, less 25 percent, or 0.045422) 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 25 percent reduced BNAF: (0.3994 x 1.045422 =
0.4175).
Pre-floor, pre-reclassified hospital wage index value below 0.8
multiplied by the hospice floor: (0.3994 x 1.15 = 0.4593).
Based on these calculations, County A's hospice wage index would be
0.4593.
The BNAF has been computed and applied annually, in full or in
reduced form, 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.
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 the OMB to the definitions of
MSAs, which now include CBSA designations. The August 4, 2005 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. For FY 2006, the
hospice wage index consisted of a blend of 50 percent of the FY 2006
MSA-based hospice wage index and 50 percent of the FY 2006 CBSA based
hospice wage index. 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.
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
which a 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. This year the only such 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
[[Page 26809]]
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 for areas lacking hospital
wage data in both FY 2006 and FY 2007 for rural Massachusetts and rural
Puerto Rico.
In the FY 2008 final rule (72 FR 50214, 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 through FY 2011, 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, which 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 rule (72 FR at 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 is necessary for Puerto Rico. 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 (or indices) 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 through FY 2011, we have used the
most recent pre-floor, pre-reclassified hospital wage index available
for Puerto Rico, which is 0.4047.
5. CBSA Nomenclature Changes
The OMB regularly publishes a bulletin that updates the titles of
certain CBSAs. In the FY 2008 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 https://www.whitehouse.gov/omb/bulletins/.
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) were 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 were 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 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 2012 hospice wage index values, reflects the application
of our policy to use those data to establish the hospice wage index.
The FY 2012 hospice wage index values presented in this proposed rule
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 Massachusetts and another
in Illinois. Thus, in FY 2009 and subsequent fiscal years, hospice wage
index values for the following CBSAs have been 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 market basket index, minus 1
[[Page 26810]]
percentage point. Payment rates for FYs since 2002 have been updated
according to section 1814(i)(1)(C)(ii)(VII) of the Act, which states
that the update to the payment rates for subsequent 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.
Section 3401(g) of the Affordable Care Act of 2010 requires that, in FY
2013 (and in subsequent fiscal years), the market basket percentage
update under the hospice payment system as described in Section
1814(i)(1)(C)(ii)(VII) or Section 1814(i)(1)(C)(iii) be annually
reduced by changes in economy-wide productivity as set out at section
1886(b)(3)(B)(xi)(II) of the Act. Additionally, Section 3401(g) of the
Affordable Care Act requires that in FY 2013 through FY 2019, the
market basket percentage update under the hospice payment system be
reduced by an additional 0.3 percentage point (although the potential
reduction is subject to suspension under conditions set out under new
section 1814(i)(1)(C)(v) of the Act). Congress also required, in
section 3004(c) of the Affordable Care Act, that hospices begin
submitting quality data, based on measures to be specified by the
Secretary, for FY 2014 and subsequent fiscal years. Beginning in FY
2014, hospices which fail to report quality data will have their market
basket update reduced by 2 percentage points.
II. Summary of Cap Comments Solicited in the FY 2011 Hospice Wage Index
Notice With Comment Period
Section 1814(i)(2)(A) through (C) of the Act establishes a cap on
aggregate payments made to a Medicare hospice provider and prescribes a
basic methodology for calculating the aggregate cap. The aggregate cap
limits the total aggregate payment any individual hospice can receive
in a year. A hospice's ``aggregate cap'' is calculated by multiplying
the number of beneficiaries who have elected hospice care during an
accounting year by a per-beneficiary ``cap amount.'' The Act
established the per-beneficiary cap amount and provides an annual
increase to the cap amount based on the rate of increase in the medical
care expenditures category of the Consumer Price Index. The 2010 per-
beneficiary cap amount was $23,874.98.
A hospice's aggregate cap is compared with the total Medicare
payments made to the hospice during the same accounting year. Any
Medicare payments in excess of the aggregate cap are considered
overpayments and must be returned to Medicare by the hospice.
CMS' contractors calculate each hospice's aggregate cap every year,
and establish an overpayment for any hospice that exceeds the aggregate
cap. For the aggregate cap calculation, regulations at 42 CFR 418.309
define the total number of beneficiaries as the number of individuals
who have elected hospice and have not previously been included in any
cap calculation, reduced to reflect the proportion of hospice care that
was provided in another hospice. These regulations also define the
accounting year, or cap year, as the period from November 1st to
October 31st.
In the FY 2011 Hospice Wage Index Notice with Comment Period, we
noted that there have been some technological advances in our data
systems which we believe might enable us to modernize the aggregate cap
calculation process while providing information facilitating the
ability of hospices to better manage their aggregate cap. We provided
details regarding policy options that we are considering for
modernizing the aggregate cap calculation methodology and solicited
comments on those policy options; we also solicited comments or
suggestions for other possible options/alternatives to modernize the
cap calculation methodology, to be considered in possible future
rulemaking.
In that Notice, we described a policy option that would align the
cap year with the federal fiscal year and policy options we were
considering regarding how to count beneficiaries when computing the
aggregate cap. We also described our plans to redesign the Provider
Statistical and Reimbursement Report (PS&R) to show a beneficiary's
full utilization history, and discussed having a uniform schedule for
mailing cap determination letters.
The policy options we described regarding how to count
beneficiaries when computing the aggregate cap were:
Option 1: In this option, we described several approaches
where we would apply a patient-by-patient proportional methodology to
all hospices' aggregate cap calculations. Under the patient-by-patient
proportional methodology, the number of patients for a given cap year
and hospice would be the patient-by-patient proportional share of each
patient's days in that hospice during the cap year, when considering
the patient's total days of Medicare hospice care in multiple cap years
and multiple hospices. One approach we described would apportion each
patient across the year of election and one additional year, as our
analysis showed that 99.98 percent of patients who died in hospice were
admitted to hospice either in the year that they died, or in the
previous year. We also described an approach where a hospice could
request the Medicare contractor recalculate the hospice's aggregate cap
using longer timeframes.
Option 2: In this option, we described an approach which
would defer across-the-board changes to the aggregate cap calculation
methodology for all hospices until we implement hospice payment reform,
but it would allow individual hospices to request the Medicare
contractor to apply a patient-by-patient proportional methodology to
its aggregate cap calculations.
For more information on future hospice payment reform, please see
section IV.A of this proposed rule. For details on these options or
issues, please see the July 22, 2010 Hospice Wage Index for Fiscal Year
2011 Notice with Comment Period (75 FR 42944). We received 27 public
comments about the aggregate cap, with commenters expressing differing
views on issues surrounding the aggregate cap. We also received several
comments which were outside the scope of the solicitation.
Comment: We received public comments from 27 individuals or groups,
with 1 missing an attachment, for a total of 26 comments.
Two commenters supported Option 1, with apportioning of hospice
beneficiaries across 2 years; one noted that this option covers more
than two 180-day periods, while providing a fixed end date. The other
commenter urged us to move forward with Option 1 while additional data
collection and payment reforms are pending.
More commenters suggested we choose Option 2 than any other
approach. Ten commenters supported Option 2, and suggested that we
defer major changes to the aggregate cap methodology until payment
reform occurs, unless a hospice requests multi-year apportioning. These
commenters were concerned about the burden associated with changing the
aggregate cap methodology now, and preferred that we wait until broader
payment reform to make a change. They noted that the majority of
hospices don't exceed their aggregate cap, and therefore don't want to
change. One commenter
[[Page 26811]]
urged CMS to retain the existing methodology, as creating a
complicated, open-ended apportioning approach would disadvantage most
hospices. This commenter stated that very few hospices have an
aggregate cap liability, and asked that we not create an administrative
burden for the vast majority of hospices that do not exceed the
aggregate cap, but instead direct our aggregate cap changes to the
minority of hospices that have some kind of liability.
Some felt that Option 2 was simpler and would provide flexibility
for those who wanted their aggregate cap calculated using a multi-year
apportionment methodology. The major hospice associations urged CMS to
defer any major across-the-board changes to the cap calculation
methodology until the implementation of hospice payment reform, because
of concerns that any changes to the current methodology would result in
additional cost and burden to hospices. One association also suggested
we fully examine the cap and whether other alternatives would better
address patient needs, suggesting that we address alternatives in the
context of broader payment reform.
While these 10 commenters supported allowing individual hospice
programs the option of requesting a recalculation of their cap
determination using a multi-year apportionment methodology, some were
concerned that this could have implications for hospices that had not
requested a recalculation. A commenter suggested that should CMS re-
open cap determinations for hospices that had not requested a
recalculation, we could potentially harm hospices and ultimately risk
access for patients who had been served by more than one hospice. This
commenter added that CMS should `hold harmless' hospice programs that
had not requested cap recalculation against overpayments that may occur
as the result of another hospice program requesting recalculation of
its cap. This commenter also urged CMS to adopt policies allowing
greater flexibility with respect to repayment plans for those with cap
overages.
In contrast to those supporting Option 2, 9 commenters supported an
open-ended multi-year apportioning approach. Many of these commenters
felt that changes to the methodology should be applied to all hospices.
Several of the commenters cited the lawsuits filed against the
Secretary which dispute the methodology for counting beneficiaries in
the aggregate cap calculation. One of these commenters supported
allowing re-opening of prior years' cap reports in conjunction with a
revised regulation allowing a ``true'' patient-by-patient proportional
allocation of beneficiaries' time across all years of service. One
commenter suggested we allow re-opening of any cap demand which
occurred after February 13, 2008, noting that this was the first date
that a court held our regulation to be unlawful. Some of these
commenters requested that we suspend the use of the existing
regulation. Some commenters suggested that the existing regulation
disadvantages patients with non-cancer diagnoses or who are minorities.
Some of these commenters disputed the statistic that 99.98 percent
of patients who died in 2007 were admitted in 2006 or 2007, and argued
that increasing the time limit for a patient-by-patient proportional
calculation to 2 years, as suggested in our options, would not solve
the problem. These commenters, who advocated an open-ended patient-by-
patient proportional calculation, suggested we focus on how many
hospice patients were still alive as of the end of 2007; they stated
that our statistic was based on the percentage of patients who died
rather than on those who were alive at the end of 2007. These
commenters suggested a larger percentage of patients were alive, and
cited data for patients admitted between 2003 and 2007, who were still
alive as of December 31, 2007. They believe these patients are harmed
by our not using an open-ended patient-by-patient proportional
allocation in computing the aggregate cap. A commenter asked that
contractors perform the calculation consistently, and be instructed on
how to handle its detailed mechanics when adjustments occur.
Some of these 9 commenters felt that the current Local Coverage
Determinations (LCDs) were of little use in predicting patient
prognoses, with one noting that the current LCDs led to appropriate but
sometimes long-stay admissions, which often resulted in reimbursements
that exceeded the aggregate cap. They argued that the LCDs were not
evidence-based. One commenter asserted that every patient reviewed for
appropriateness of admission met his contractor's LCDs, and yet these
patients had long lengths of stay.
Also, several of these 9 commenters suggested we support H.R. 3454,
the Medicare Hospice Reform and Savings Act of 2009, parts of which
were adopted into section 3132 of the Affordable Care Act. Commenters
stated that the bill would have resulted in pay-as-you-go reductions in
reimbursements for patients with lengths of stay exceeding 180 days.
They stated that H.R. 3454 would have abolished the cap and eliminated
unintended incentives for long stays, reduced Medicare hospice costs,
and reduced our administrative burden. Commenters said that this
legislation would have increased hospice rates by 20 percent for the
first and last five days of hospice care that ends in the death of the
patient; these reductions would have been offset by another 3 percent
reduction in the daily hospice rates for those patients with lengths of
stay beyond 180 days. They stated that this legislation would have
updated LCDs or created National Coverage Determinations which would be
improved, evidence-based formulas for determining eligibility.
Commenters also stated that this legislation would have paid hospices
more for the first and last few days of care, and less for the interim
days.
Five other commenters chose no option, or presented their own
alternative approaches. One stated that the existing aggregate cap is
supposed to represent the ``average'' cost of caring for a patient, not
the maximum cost, where hospices have a mix of patients with different
diagnoses and lengths of stay. This commenter felt that the current
methodology forces hospices to focus on individual patients rather than
on the average patient mix, and was concerned that some hospices may
refuse patients with certain diagnoses to avoid exceeding their
aggregate cap. This commenter also was concerned about the use of new
patient elections as the methodology for counting the number of
beneficiaries served in computing the aggregate cap.
Another commenter recommended that each beneficiary be counted as 1
every calendar year, because over the years, more non-cancer terminal
diagnoses have appeared, with unpredictable end-of-life trajectories;
the commenter stated that these non-cancer patients require higher
utilization of resources. The commenter suggested that under this
mentioned scenario, each patient on service would begin a new cap year
every January 1 and be counted as a new patient for that year.
A different commenter suggested that we modify the aggregate cap to
focus on hospices instead of beneficiaries. He suggested that we change
the aggregate cap calculation to a 180-day aggregate limit per hospice,
which mirrors the 6 month requirement for hospice benefits to be
elected. This commenter said that by monitoring an average day limit,
all of the multi-year apportioning could be discarded, and replaced
with a simple
[[Page 26812]]
calculation. Another commenter suggested we allow hospices to carry
forward to the following year any ``cap cushion'' remaining at the end
of the year.
Several commenters supported the idea of our aligning the cap year
with the federal fiscal year, with some noting that the change would be
appropriate for a multi-year apportioning approach. Other commenters
stated that we should not change the cap year at this time, and
recommended that we wait for future payment reform to do this. Many
commenters asked that cap determination letters be mailed or sent in a
more timely fashion, and a few said that contractors need to calculate
caps consistently.
Commenters applauded efforts by CMS to address the concerns that
arise when hospices lack access to accurate and timely histories of
patient care. They suggested that the new PS&R include each patient's
total days of care, benefit periods by hospice, indicate the initial
benefit period, and show all benefit periods that have been used.
Commenters also urged that the systems be as ``real-time'' as possible.
Another commenter stated that registration into the IVACS [sic] system
(which is used to access the PS&R) was overly cumbersome, and believed
that if home care is used as a marker of the success of this new
registration system, only 20 percent of home health agencies are
currently registered.
Those who commented on our discussion about establishing a uniform
schedule for contractors' mailing cap determination letters were
supportive of such a process, and felt that this would assist hospices
in their planning and budgeting. One commenter asked that the cap
determination letter be considered a final determination.
A commenter suggested that we factor a hospice's wage index value
when computing a hospice's aggregate cap. The commenter stated that
because hospice payments are adjusted by the wage index to account for
geographic variances in labor costs, a hospice in an area of relatively
high labor costs would have higher aggregate payments in a given cap
year than a hospice in an area with relatively low labor costs. Yet,
the yearly aggregate payments of both hospices are compared to the same
cap amount. The commenter states that high-wage index hospices are
unfairly disadvantaged by not factoring in the wage index values to
their yearly cap amount, and hospices in low-wage index areas are
unfairly advantaged. The commenter felt that our not wage adjusting the
cap amount was contrary to the intent of Congress.
Response: We thank the commenters for their insights on these
issues. We have considered the comments in developing our proposals
related to changing the aggregate cap calculation methodology, which
are described in section III.B in this proposed rule. We will consider
other comments and suggestions for improvements in the future, as we
undertake broader payment reform.
Comment: Some commenters asked for additional data collection on
hospice claims or through cost reports, so that CMS will have full
resource utilization data related to providing hospice care when it
seeks to reform payments. Some commenters stated that they were opposed
to the BNAF phase-out. Others were concerned that rural hospices had
similar or greater costs than urban hospices and yet were typically
paid less due to wage adjustment. A commenter said that the hospital
wage index used to create the hospice wage index was not accurate, as
hospital wage patterns do not mirror those of hospices; this commenter
suggested that we pilot test a hospice-specific wage index. Another
commenter stated her concerns regarding the wage index value for her
hospice's CBSA, and said that a neighboring CBSA was much higher. The
commenter asked to be included in the neighboring CBSA.
Several commenters stated that the Common Working File (CWF) is
burdensome and does not provide complete data on a patient's hospice
history. A commenter added that some information in CWF was pulled from
hospice cost reports, and was unreliable. She added that an industry
association had presented us with a prototype cost report to more
accurately reflect hospice costs rather than trying to force numbers
from hospices into a home care model cost report, but that CMS has been
slow in adopting this software.
One commenter was concerned that CMS waived notice and comment
rulemaking in our FY 2011 Hospice Wage Index Notice.
Response: We thank the commenters, but we note that these comments
are outside the scope of the solicitation.
III. Provisions of the Proposed Rule
A. FY 2012 Hospice Wage Index
1. Background
As previously noted, 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 used 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 2012 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
2012 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-
Fort Stewart, Georgia. We propose to continue this policy for FY 2012.
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
[[Page 26813]]
methodology is also described in section I.B.4 of this proposed rule.
In FY 2012, 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
2012.
However, as we noted section I.B.4 of this proposed rule, we do not
believe that this policy is appropriate for Puerto Rico. For FY 2012,
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 2012 hospice wage index.
3. FY 2012 Wage Index With an Additional 15 Percent Reduced Budget
Neutrality Adjustment Factor (BNAF)
The hospice wage index set forth in this proposed rule would be
effective October 1, 2012 through September 30, 2013. 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 continuing to use the most current hospital data available. For
this proposed rule, the FY 2011 hospital wage index was the most
current hospital wage data available for calculating the FY 2012
hospice wage index values. We used the FY 2011 pre-floor, pre-
reclassified hospital wage index data for this calculation.
As noted above, for FY 2012, 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 2007 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 6, 2009 FY 2010 Hospice Wage Index final rule (74 FR 39384).
The August 6, 2009 FY 2010 Hospice Wage Index final rule finalized
a provision to phase out the BNAF over 7 years, with a 10 percent
reduction in the BNAF in FY 2010, and an additional 15 percent
reduction in FY 2011, over each of the next 5 years, with complete
phase out in FY 2016. Therefore, in accordance with the August 6, 2009,
FY 2010 Hospice Wage Index final rule, the BNAF for FY 2012 was reduced
by an additional 15 percent for a total BNAF reduction of 40 percent
(10 percent from FY 2010, additional 15 percent from FY 2011, and
additional 15 percent for FY 2012).
An unreduced BNAF for FY 2012 is computed to be 0.059061 (or 5.9061
percent). A 40 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 0.035437 (or 3.5437 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 2012 is shown in Addenda A
and B. Specifically, Addendum A reflects the proposed FY 2012 wage
index values for urban areas under the CBSA designations. Addendum B
reflects the proposed FY 2012 wage index values for rural areas under
the CBSA designations.
4. Effects of Phasing Out the BNAF
The full (unreduced) BNAF calculated for FY 2012 is 5.9061 percent.
As implemented in the August 6, 2009 FY 2010 Hospice Wage Index final
rule (74 FR 39384), for FY 2012 we are reducing the BNAF by an
additional 15 percent, for a total BNAF reduction of 40 percent (a 10
percent reduction in FY 2010 plus a 15 percent reduction in FY 2011
plus a 15 percent reduction in FY 2012), with additional reductions of
15 percent per year in each of the next 4 years until the BNAF is
phased out in FY 2016.
For FY 2012, this is mathematically equivalent to taking 60 percent
of the full BNAF value, or multiplying 0.059061 by 0.60, which equals
0.035437 (3.5437 percent). The BNAF of 3.5437 percent reflects a 40
percent reduction in the BNAF. The 40 percent reduced BNAF (3.5437
percent) was applied to the pre-floor, pre-reclassified hospital wage
index values of 0.8 or greater in the proposed FY 2012 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. Fourth, the greater result of either step 2 or step 3 is
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 an additional 15 percent reduction in
the BNAF, for a total BNAF reduction of 40 percent, on the FY 2012
hospice wage index compared to remaining with the total 25 percent
reduced BNAF which was used for the FY 2011 hospice wage index. The
additional 15 percent BNAF reduction applied to the FY 2012 wage index
resulted in a 0.9 percent reduction in 84.4 percent of hospice wage
index values, a 0.8 percent reduction in 8.6 percent of hospice wage
index values, a 0.7 percent reduction in 0.7 percent of wage index
values, and no reduction in 6.3 percent of 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 29
CBSAs are already protected by the hospice 15 percent floor adjustment,
and are therefore completely unaffected by the BNAF reduction. There
are 323 hospices in these 29 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 additional 15 percent
reduction in the BNAF applied in FY 2012. Areas where the hospice floor
calculation would have yielded a wage index value greater than 0.8 if
the 25 percent reduction in BNAF were maintained, but which will have a
final wage index value less than 0.8 after the additional 15 percent
reduction in the BNAF (for a total BNAF reduction of 40 percent) is
applied, will now be eligible for the hospice 15 percent floor
adjustment. These CBSAs will see a smaller reduction in their hospice
wage index values since the hospice 15 percent floor adjustment will
apply. We have estimated that 3 CBSAs will have their pre-floor, pre-
reclassified hospital wage index value become newly protected by the
hospice 15 percent floor adjustment due to the additional 15 percent
reduction in the
[[Page 26814]]
BNAF applied in FY 2012. 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 44 hospices located in these 3
CBSAs.
Finally, the hospice wage index values only apply to the labor
portion of the payment rates; the labor portion is described in section
I.B.1 of this proposed rule. Therefore, the projected reduction in
payments due solely to the additional 15 percent reduction of the BNAF
applied in FY 2012 is estimated to be 0.6 percent, as calculated from
the difference in column 3 and column 4 of Table 1 in section VII of
this proposed rule. In addition, the estimated effects of the phase-out
of the BNAF will be mitigated by any inpatient hospital market basket
updates in payments. The estimated inpatient hospital market basket
update for FY 2012 is 2.8 percent; this 2.8 percent does not reflect
the provision in the Affordable Care Act which reduces the inpatient
hospital market basket update for FY 2012 by 0.1 percentage point,
since that reduction does not apply to hospices. The final update will
be communicated through an administrative instruction. The combined
effects of the updated wage data, an additional 15 percent reduction of
the BNAF, and an estimated inpatient hospital market basket update of
2.8 percent for FY 2012, are an overall estimated increase in payments
to hospices in FY 2012 of 2.3 percent (column 5 of Table 1 in section
VII of this proposed rule).
B. Aggregate Cap Calculation Methodology
The existing method for counting Medicare beneficiaries in 42 CFR
418.309 has been the subject of substantial litigation. Specifically,
the lawsuits challenge the way CMS apportions hospice patients with
care spanning more than one year when calculating the cap.
A number of district courts and two appellate courts have concluded
that CMS' current methodology used to determine the number of Medicare
beneficiaries used in the aggregate cap calculation is not consistent
with the statute. We continue to believe that the methodology set forth
in Sec. 418.309(b)(1) is consistent with the Medicare statute.
Nonetheless, we have determined that it is in the best interest of CMS
and the Medicare program to take action to prevent future litigation,
and alleviate the litigation burden on providers, CMS, and the courts.
On April 15, 2011, we issued a Ruling entitled ``Medicare Program;
Hospice Appeals for Review of an Overpayment Determination'' (CMS-1355-
R), related to the aggregate cap calculation for hospices which
provided for application of a patient-by-patient proportional
methodology, as defined in the Ruling, to hospices that have challenged
the current methodology. Specifically, the Ruling provides that, for
any hospice which has a timely-filed administrative appeal of the
methodology set forth at Sec. 418.309(b)(1) used to determine the
number of Medicare beneficiaries used in the aggregate cap calculation
for a cap year ending on or before October 31, 2011, the Medicare
contractors will recalculate that year's cap determination using the
patient-by-patient proportional methodology as set forth in the Ruling.
We are also making several proposals in this Rule that affect cap
determinations from two time periods:
Cap determinations for cap years ending on or before
October 31, 2011; and
Cap determinations for cap years ending on or after
October 31, 2012.
1. Cap Determinations for Cap Years Ending on or Before October 31,
2011
By its terms, the relief provided in Ruling 1355-R applies only to
those cap years for which a hospice has received an overpayment
determination and filed a timely qualifying appeal. For any hospice
that receives relief pursuant to Ruling 1355-R in the form of a
recalculation of one or more of its cap determinations, or for any
hospice that receives relief from a court after challenging the
validity of the cap regulation, we propose that the hospice's cap
determination for any subsequent cap year also be calculated using a
patient-by-patient proportional methodology as opposed to the
methodology set forth in 42 CFR 418.309(b)(1). The patient-by-patient
proportional methodology is defined below in section III.B.3.
Additionally, there are hospices that have not filed an appeal of
an