[Federal Register Volume 71, Number 170 (Friday, September 1, 2006)]
[Notices]
[Pages 52080-52123]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-7293]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-1535-N]
RIN 0938-AO26


Medicare Program; Hospice Wage Index for Fiscal Year 2007

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

ACTION: Notice.

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SUMMARY: This notice announces the annual update to the hospice wage 
index as required by statute. This fiscal year 2007 update is effective 
from October 1, 2006 through September 30, 2007. The wage index is used 
to reflect local differences in wage levels. The hospice wage index 
methodology and values are based on recommendations of a negotiated 
rulemaking advisory committee and were originally published in the 
August 8, 1997 Federal Register.

EFFECTIVE DATE: This notice is effective on October 1, 2006.

FOR FURTHER INFORMATION CONTACT: Terri Deutsch, (410) 786-9462.

SUPPLEMENTARY INFORMATION:

I. Background

A. General

1. Hospice Care
    Hospice care is an approach to treatment that recognizes that the 
impending death of an individual warrants a change in the focus from 
curative care to palliative care for relief of pain and for symptom 
management. The goal of hospice care is to help terminally ill 
individuals continue life with minimal disruption to normal activities 
while remaining primarily in the home environment. A hospice uses an 
interdisciplinary approach to deliver medical, 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

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provides payment for Medicare participating hospices.
2. Medicare Payment for Hospice Care
    Our regulations at 42 CFR part 418 establish eligibility 
requirements, payment standards and procedures, define covered 
services, and delineate the conditions a hospice must meet to be 
approved for participation in the Medicare program. Part 418 subpart G 
provides for payment in one of four prospectively determined rate 
categories (routine home care, continuous home care, inpatient respite 
care, and general inpatient care) to hospices based on each day a 
qualified Medicare beneficiary is under a hospice election.

B. Hospice Wage Index

    Our regulations at Sec.  418.306(c) require each hospice's labor 
market to be established using the most current hospital wage data 
available, including any changes to the Metropolitan Statistical Areas 
(MSAs), definitions which are superceded by Core Based Statistical 
Areas (CBSAs). Section 1814(i)(2)(D) of the Act requires Medicare to 
pay for hospice care furnished in an individual's home on the basis of 
the geographic location where the service is furnished. We have 
interpreted this to mean that the wage index value used is based upon 
the location of the beneficiary's home for routine home care and 
continuous home care and the location of the hospice agency for general 
inpatient and respite care.
    The hospice wage index is used to adjust payment rates for hospice 
agencies under the Medicare program to reflect local differences in 
area wage levels. The original hospice wage index was based on the 1981 
Bureau of Labor Statistics hospital data and had not been updated since 
1983. In 1994, because of disparity in wages from one geographical 
location to another, a committee was formulated to negotiate a wage 
index methodology that could be accepted by the industry and the 
government. This committee, functioning under a process established by 
the Negotiated Rulemaking Act of 1990, was comprised of national 
hospice associations; rural, urban, large and small hospices; multisite 
hospices; consumer groups; and a government representative. On April 
13, 1995, the Hospice Wage Index Negotiated Rulemaking Committee signed 
an agreement for the methodology to be used for updating the hospice 
wage index.
    In the August 8, 1997 Federal Register (62 FR 42860), we published 
a final rule implementing a new methodology for calculating the hospice 
wage index based on the recommendations of the negotiated rulemaking 
committee. The committee statement was included in the appendix of that 
final rule (62 FR 42883). The hospice wage index is updated annually. 
Our most recent annual update occurred in the August 4, 2005 final rule 
(70 FR 45130), that set forth updates to the hospice wage index for FY 
2006. On September 30, 2005, we published a correction notice in the 
Federal Register (70 FR 57174) and a subsequent correction notice on 
December 23, 2005 (70 FR 76175), to correct technical errors that 
appeared in the August 4, 2005 final rule.
1. Changes to Core-Based Statistical Areas
    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 Office of Management and 
Budget (OMB) to the definitions of MSAs. The August 4, 2005 final rule 
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 Core-Based Statistical Area 
(CBSA) geographic designations, we provided for a 1-year transition 
with a blended wage index for all providers for FY 2006. For FY 2006, 
the hospice wage index for each provider consisted of a blend of 50 
percent of the FY 2006 MSA-based wage index and 50 percent of the FY 
2006 CBSA-based wage index. As discussed in the August 4, 2005 final 
rule, we will use the full CBSA-based wage index values as presented in 
Tables A and B of this notice for FY 2007.
    Furthermore, we continue to use the same methodology as discussed 
in the April 29, 2005 proposed rule (70 FR 22394) and finalized in the 
August 4, 2005 final rule to address those geographic areas where there 
were no hospitals and, thus, no hospital wage index data on which to 
base the calculation of the FY 2007 hospice wage index. For FY 2007, 
those areas consist of rural Massachusetts, rural Puerto Rico and urban 
Hinesville-Fort Stewart, Georgia. (CBSA-25980).
2. Raw Wage Index Values
    Raw wage index values (that is, inpatient hospital pre-floor and 
pre-reclassified wage index values) as described in the August 8, 1997 
hospice wage index final rule (62 FR 42860), are subject to either a 
budget neutrality adjustment or application of the wage index floor. 
Raw wage index values of 0.8 or greater are adjusted by the budget 
neutrality adjustment factor. Budget neutrality means that, in a given 
year, estimated aggregate payments for Medicare hospice services using 
the updated wage index values will equal estimated payments that would 
have been made for these services if the 1983 wage index values had 
remained in effect. To achieve this budget neutrality, the raw wage 
index is multiplied by a budget neutrality adjustment factor. The 
budget neutrality adjustment factor is calculated by comparing what we 
would have paid using current rates and the 1983 wage index to what 
would be paid using current rates and new wage index. The budget 
neutrality adjustment factor is computed and applied annually. For the 
FY 2007 hospice wage index, FY 2006 hospice payment rates were used in 
the budget neutrality adjustment factor calculation.
    Raw wage index values below 0.8 are adjusted by the greater of: (1) 
The hospice budget neutrality adjustment factor; or (2) the hospice 
wage index floor (a 15 percent increase) subject to a maximum wage 
index value of 0.8. For example, if County A has a pre-floor, pre-
reclassified hospital wage index (raw wage index value) of 0.4000 we 
would perform the following calculations using the budget neutrality 
factor (which for this example is 0.060988) and the hospice wage index 
floor to determine County A's hospice wage index:
    Raw wage index value below 0.8 multiplied by the budget neutrality 
adjustment factor:

(0.4000 x 1.060988 = 0.4244)

    Raw wage index value below 0.8 multiplied by the hospice wage index 
floor:

(0.400 x 1.15 = 0.4600)

    Based on these calculations, County A's hospice wage index would be 
0.4600.
3. 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 percentage point. 
However, neither the BBA nor subsequent legislation specified the 
market basket adjustment to be used to compute payment for FY 2007. 
Therefore, payment rates for FY 2007 will be updated according to 
section 1814(i)(1)(C)(ii)(VII) of the Act,

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which states that the update to the payment rates for subsequent FYs 
will be the market basket percentage for the fiscal year. Accordingly, 
the FY 2007 update to the payment rates will be the full market basket 
percentage increase for FY 2007. This rate update is implemented 
through a separate administrative instruction and is not part of this 
notice. Historically, the rate update has been published through a 
separate administrative instruction issued annually in July to provide 
adequate time to implement system change requirements. Providers 
determine their payment rates by applying the wage index in this notice 
to the labor portion of the published hospice rates.

II. Provisions of the Notice

A. Annual Update

    This annual update to the hospice wage index is effective October 
1, 2006 through September 30, 2007. In accordance with our regulations 
and the agreement signed with other members of the Hospice Wage Index 
Negotiated Rulemaking Committee, we are using the most current hospital 
data available to us. The FY 2006 hospital wage index was the most 
current hospital wage data available when the FY 2007 hospice wage 
index values were calculated. We used the FY 2006 pre-reclassified and 
pre-floor hospital area wage index data.
    As noted above, for FY 2007, the hospice wage index values will be 
based solely on the adoption of the CBSA-based labor market definitions 
and its wage index. We continue to use the most recent pre-floor and 
pre-reclassified hospital wage index data available (FY 2002 hospital 
wage data).
    Furthermore, we will continue to use the methodology described in 
the FY 2006 final rule in the event there are no hospital wage data 
available for urban or rural areas, consistent with the rationale 
outlined in the August 5, 2005 final rule (70 FR 45135). A detailed 
description of the methodology used to compute the hospice wage index 
is contained in both the September 4, 1996 proposed rule (61 FR 46579) 
and the August 8, 1997 final rule (62 FR 42860). All wage index values 
are adjusted by a budget-neutrality factor of 1.063448 and are subject 
to the wage index floor adjustment, if applicable. We have completed 
all of the calculations described in section 2.B below and have 
included them in the wage index values reflected in Tables A and B of 
the Addendum. Specifically, Table A reflects the FY 2007 wage index 
values for urban areas under the CBSA designations. Table B reflects 
the FY 2007 wage index values for rural areas under the CBSA 
designations.

B. Other Issues

1. Proxy for the hospital market basket
    As discussed above, the hospice payment rates are adjusted each 
year based upon the full hospital market basket. The market basket 
currently uses the Bureau of Labor Statistics' Employment Cost Indexes 
(ECIs) as proxies for wages, salaries and benefits for private industry 
workers classified in Standard Industrial Code (SIC) 806, Hospitals. 
The ECIs were consistently used as the data source for wages and 
salaries and other price proxies in the market basket.
    Beginning in April 2006, with the publication of March 2006 data, 
the BLS' ECI is using a different classification system, the North 
American Industrial Classification System (NAICS), instead of the 
Standard Industrial Classification System (SIC), which no longer 
exists. The ECIs have consistently been used as the data source for 
wages and salaries and other price proxies in the hospital market 
basket. We are not making any changes to the usage at this time. 
However, we welcome input on our continued use of the BLS ECI data in 
light of the BLS change to the NAICS-based ECI. Interested parties who 
would like to provide input on this issue are invited to do so by 
contacting Terri Deutsch (please refer to the section entitled FOR 
FURTHER INFORMATION CONTACT as the beginning of this document).
2. Nomenclature Changes
    As we described in the August 4, 2005 final rule, certain names of 
the CBSAs were changed based on OMB Bulletin No. 05-02 (November 2004). 
The name changes listed below do not result in substantive changes to 
the CBSA-based designations. Tables A and B of the addendum reflect the 
following name changes:
    <bullet> CBSA 36740--Orlando-Kissimmee, FL
    <bullet> CBSA 37620--Parkersburg-Marietta-Vienna, WV-OH
    <bullet> CBSA 42060--Santa Barbara-Santa Maria, CA
    <bullet> CBSA 13644--Bethesda-Gaithersburg-Frederick, MD
    <bullet> CBSA 32580--McAllen-Edinburg-Mission, TX
    <bullet> CBSA 26420--Houston-Sugar Land-Baytown, TX
    <bullet> CBSA 35644--New York-White Plains-Wayne, NY-NJ

III. Collection of Information Requirements

    This document does not impose information collection and record 
keeping requirements. Consequently, it need not be reviewed by the 
Office of Management and Budget under the authority of the Paperwork 
Reduction Act of 1995 (44 U.S.C. 35).

IV. Waiver of Proposed Rulemaking

    Under the Administrative Procedure Act (5 U.S.C. section 
(553(b)(B)), we may waive notice and comment rulemaking procedures if 
we find good cause to do so (that is, notice and comment procedures are 
impracticable, unnecessary, or contrary to the public interest) and the 
agency incorporates a statement of the finding and the reasons for 
waiver in the notice issued. We are waiving notice and comment 
rulemaking before the provisions of this notice take effect.
    We find it unnecessary to undertake notice and comment rulemaking 
because the methodologies used to determine the hospice wage index have 
been previously subjected to public comments, and this notice merely 
reflects the application of those previously established methodologies. 
In this notice, we are not changing the methodologies, but merely 
performing the ministerial function of applying methodologies 
previously subject to notice and public comment. Therefore, we believe 
it is unnecessary to engage in notice and comment rulemaking and, for 
good cause, we waive notice and comment procedures.

V. Regulatory Impact Analysis

A. Overall Impact

    We have examined the impacts of this notice as required by 
Executive Order 12866 (September 1993, Regulatory Planning and Review), 
the Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-
354), section 1102(b) of the Act, the Unfunded Mandates Reform Act of 
1995 (Pub. L. 104-4), and Executive Order 13132. We estimated the 
impact on hospices, as a result of the changes to the FY 2007 hospice 
wage index. As discussed previously, the methodology for computing the 
wage index was determined through a negotiated rulemaking committee and 
implemented in the August 8, 1997 final rule (62 FR 42860). This notice 
only updates the hospice wage index in accordance with our regulation 
and that methodology, incorporating the adoption of the CBSA 
designations used in the FY 2006 hospital wage index data.

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    <bullet> Table 1 categorizes the impact on hospices by various 
geographic and provider characteristics. We estimate that the total 
hospice payments will increase $2,194,000 as a result of the FY 2007 
wage index values.
    <bullet> Table A reflects the FY 2007 wage index values for urban 
areas under the CBSA designations.
    <bullet> Table B reflects the FY 2007 wage index values for rural 
areas under the CBSA designations.
    Executive Order 12866 (as amended by Executive Order 13258, which 
merely reassigns responsibility of duties) directs agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). A 
regulatory impact analysis (RIA) must be prepared for major rules with 
economically significant effects ($100 million or more in any 1 year). 
We have determined that this notice is not an economically significant 
rule under this Executive Order.
    The RFA requires agencies to analyze options for regulatory relief 
of small businesses. For purposes of the RFA, small entities include 
small businesses, nonprofit organizations, and small governmental 
jurisdictions. Most hospices and most other providers and suppliers are 
small entities, either by nonprofit status or by having revenues of $6 
million to $29 million in any 1 year (for details, see the Small 
Business Administration's regulation at 65 FR 69432, that sets forth 
size standards for health care industries). For purposes of the RFA, 
most hospices are small entities. As indicated in Table 1 below, there 
are 2,810 hospices. Approximately 70 percent of Medicare certified 
hospices are identified as voluntary, government, or other agencies 
and, therefore, are considered small entities. Because the National 
Hospice and Palliative Care Organization estimates that approximately 
79 percent of hospice patients are Medicare beneficiaries, we have not 
considered other sources of revenue in this analysis. Furthermore, the 
wage index methodology was previously determined by consensus, through 
a negotiated rulemaking committee that included representatives of 
national hospice associations; rural, urban, large and small hospices; 
multisite hospices; and consumer groups. Based on all of the options 
considered, the committee agreed on the methodology described in the 
committee statement, and it was adopted into regulation in the August 
8, 1997 final rule. In developing the process for updating the wage 
index in the 1997 final rule, we considered the impact of this 
methodology on small entities and attempted to mitigate any potential 
negative effects.
    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 an MSA and has fewer 
than 100 beds. We have determined that this notice would not have a 
significant impact on the operations of a substantial number of small 
rural hospitals.
    Section 202 of the Unfunded Mandates Reform Act of 1995 also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule that may result in expenditure in any 1 year by State, 
local, and tribal governments, in the aggregate, or by the private 
sector, of $110 million or more. This notice is not anticipated to have 
an effect on State, local, or tribal governments or on the private 
sector of $110 million or more.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a proposed rule (and subsequent 
final rule) that imposes substantial direct requirement costs on State 
and local governments, preempts State law, or otherwise has Federalism 
implications. We have reviewed this notice 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.
    In accordance with the provisions of Executive Order 12866, this 
regulation was reviewed by the Office of Management and Budget.

B. Anticipated Effects

    The impact analysis of this notice represents the projected effects 
of the changes in the hospice wage index from FY 2006 to FY 2007. We 
estimate the effects by estimating payments for FY 2007 utilizing the 
FY 2007 wage index values and the full implementation of the CBSA 
designations while holding all other payment variables constant.
    We note that certain events may combine to limit the scope or 
accuracy of our impact analysis, because such an analysis is future 
oriented and, thus, 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.
    For the purposes of this notice, we compared estimated payments 
using the FY 1983 hospice wage index to estimated payments using the FY 
2007 wage index and determined the hospice wage index to be budget 
neutral. Budget neutrality means that, in a given year, estimated 
aggregate payments for Medicare hospice services using the FY 2007 wage 
index would equal estimated aggregate payments that would have been 
made for the same services if the 1983 wage index had remained in 
effect. Budget neutrality to 1983 does not imply that estimated 
payments would not increase since the budget neutrality applies only to 
the wage index portion and not the total payment rate, which 
accommodates inflation.
    As discussed above, we use the latest claims file available to us 
to develop the impact table when we issue the annual yearly wage index 
update. For the purposes of this notice, we used data obtained from the 
National Claims History file of all FY 2005 claims processed through 
March 2006 since this was the latest file available. We deleted bills 
from hospices that have since closed. This impact analysis compares 
hospice payments using the FY 2006 hospice wage index to the estimated 
payments using the FY 2007 wage index. We note that estimated payments 
for FY 2007 are determined by using the wage index for FY 2007 and 
payment rates for FY 2006. As noted in previous sections, payment rates 
for FY 2007 are published through administrative issuance.
    Table 1 demonstrates the results of our analysis. In column 1 we 
indicate the number of hospices included in our analysis. In column 2 
of Table 1, we indicate the number of routine home care days that were 
included in our analysis, although the analysis was performed on all 
types of hospice care. Column 3 estimates payments using the FY 2006 
transitional wage index values and the FY 2006 payment rates. Column 4 
estimates payments using FY 2007 CBSA based wage index values as well 
as the FY 2006 payment rates. Column 5, which compares columns 3 and 4, 
shows the percent change in estimated hospice payments made based on 
the category of the hospice.
    Table 1 also categorizes hospices by various geographic and 
provider characteristics. The first row displays the aggregate result 
of the impact for all Medicare-certified hospices. The second

[[Page 52084]]

and third rows of the table categorize hospices according to their 
geographic location (urban and rural). Our analysis indicated that 
there are 1,849 hospices located in urban areas and 961 hospices 
located in rural areas. The next two groupings in the table indicate 
the number of hospices by census region, also broken down by urban and 
rural hospices. The sixth 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 2006. 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 below, there are 2,810 hospices. 
Approximately 78 percent of Medicare-certified hospices are identified 
as voluntary, government, or other agencies and, therefore, are 
considered small entities. Because the National Hospice and Palliative 
Care Organization estimates that approximately 79 percent of hospice 
patients are Medicare beneficiaries, we have not considered other 
sources of revenue in this analysis. Furthermore, the wage index 
methodology was previously determined by consensus, through a 
negotiated rulemaking committee that included representatives of 
national hospice associations; rural, urban, large, and small hospices; 
multisite hospices; and consumer groups. Based on all of the options 
considered, the committee agreed on the methodology described in the 
committee statement, and it was adopted into regulation in the August 
8, 1997 final rule. In developing the process for updating the wage 
index in the 1997 final rule, we considered the impact of this 
methodology on small entities and attempted to mitigate any potential 
negative effects.
    As stated previously, the following discussions are limited to 
demonstrating trends rather than projected dollars. We used the CBSA 
designations and wage indices as well as the data from FY 2005 claims 
processed through March 2006 in developing the impact analysis. For FY 
2007 the wage index and the implementation of the CBSA designations for 
geographical variations are the variables that differ between the FY 
2006 payments and the FY 2007 estimated payments. FY 2006 payment rates 
are used for both FY 2006 actual payments and the FY 2007 estimated 
payments. The FY 2007 payment rates will be adjusted to reflect the 
full FY 2007 hospital market basket, as required by section 
1814(i)(1)(C)(ii)(VII) of the Act. As previously noted, we publish 
these rates through administrative issuances. As discussed in the FY 
2006 final rule (70 FR 45129), hospice agencies may utilize various 
wage indices to compute their payments based on the geographic location 
of the beneficiary for routine and continuous home care or the CBSA for 
the location of the hospice agency for respite and general inpatient 
care. 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 have been analyzed according to type of hospice, 
geographic location, type of ownership, hospice base, and hospice size.
    Our analysis shows that most hospices are in urban areas and 
provide the vast majority of routine home care days. Most hospices are 
medium sized followed by large hospices. Hospices are almost equal in 
numbers by ownership with 1,276 designated as voluntary and 1,231 as 
proprietary. The vast majority of hospices are freestanding.
1. Hospice Size
    Under the Medicare hospice benefit, hospices can provide four 
different levels of care days. The majority of the days provided by a 
hospice are routine home care days (RHC) representing over 70 percent 
of the services provided by a hospice. Therefore, the number of routine 
home care 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: 
small agencies having 0 to 3,499 RHC days; medium agencies having 3,500 
to 19,999 RHC days; and large agencies having 20,000 or more RHC days.
    Using RHC days as a proxy for size, our analysis indicates that the 
wage index update on all hospice agencies by size is anticipated to 
have virtually no impact with a slight increase of 0.1 percent 
anticipated for medium sized hospices while no change is anticipated 
for small or large hospices.
2. Geographic Location
    Our analysis demonstrates that the FY 2007 CBSA-based wage index 
will result in little change in estimated payments with urban hospices 
anticipated to experience a slight increase of 0.1 percent while rural 
hospices are anticipated to experience a slight decrease of 0.4 
percent. The greatest increase of 1.0 percent in urban hospices is 
anticipated to be experienced by the Pacific region while the West 
North Central is anticipated to experience the greatest urban decrease 
of 0.6 percent. Slight decreases are anticipated in urban New England, 
South Atlantic, East North Central and Mountain regions while increases 
are anticipated in urban Middle Atlantic, East South Central, West 
South Central and Puerto Rico.
    For rural hospices, the New England region is anticipated to 
receive the highest increase of 2.1 percent followed by the Pacific 
region with a 1.0 percent increase in estimated payments. Conversely, 
the mountain region is anticipated to receive the greatest decrease of 
1.8 percent followed by the South Atlantic region of 1.0 percent. 
Decreases are also anticipated for rural Middle Atlantic, East South 
Central, West North Central and West South Central regions. Rural East 
North Central and Puerto Rico are anticipated to remain unchanged.
3. Type of Ownership
    By type of ownership, government and proprietary hospices are 
anticipated to experience an increase in anticipated payments of 0.4 
and 0.1 percent respectively. Voluntary hospices are anticipated to 
remain unchanged.
4. Hospice Base
    For hospice-based facilities, decreases in payment are anticipated 
for skilled nursing facility and hospital based hospices of 0.7 and 0.1 
percent respectively. Freestanding and home health agency based 
hospices are anticipated to remain unchanged.
BILLING CODE 4120-01-P

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C. Conclusion

    Our impact analysis compared hospice payments by using the FY 2006 
wage index to the estimated payments using the FY 2007 wage index. 
Through the analysis, we estimate that total hospice payments will 
increase from FY 2006 by $2,194,000. Additionally, we compared 
estimated payments using the FY 1983 hospice wage index to estimated 
payments using the FY 2007 wage index and determined the current 
hospice wage index to be budget neutral, as required by the negotiated 
rulemaking committee. As noted above, the payment rates used reflect 
the FY 2006 rates. The FY 2007 payment rates will be adjusted to 
reflect the full FY 2007 hospital market basket, as required by section 
1814(i)(1)(C)(ii)(VII) of the Act. We publish these rates through 
administrative issuances.
    In accordance with the provisions of Executive Order 12866, this 
regulation was reviewed by the Office of Management and Budget.

(Catalog of Federal Domestic Assistance Program No. 93.773, 
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)

    Dated: July 25, 2006.
Mark B. McClellan,
Administrator, Centers for Medicare & Medicaid Services.
    Approved: August 21, 2006.
Michael O. Leavitt,
Secretary.
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[FR Doc. 06-7293 Filed 8-30-06; 4:00 pm]
BILLING CODE 4120-01-C