Vol. 79 Thursday, 

No. 89 May 8, 2014 

Part III 

Department of Health and Human Services 

Centers for Medicare & Medicaid Services 

42 CFR Parts 405 and 418 

Medicare Program; FY 2015 Hospice Wage Index and Payment Rate 

Update; Hospice Quality Reporting Requirements and Process and Appeals 

for Part D Payment for Drugs for Beneficiaries Enrolled in Hospice; 

Proposed Rule 


tkelley on DSK3SPTVN1PROD with PROPOSALS3
26538 Federal Register / Vol. 79, No. 89 / Thursday, May 8, 2014 / Proposed Rules 

Department of Health and Human 

Services 

Centers for Medicare & Medicaid 

Services 

42 CFR Parts 405 and 418 

[CMS–1609–P] 

RIN 0938–AS10 

Medicare Program; FY 2015 Hospice 

Wage Index and Payment Rate Update; 

Hospice Quality Reporting 

Requirements and Process and 

Appeals for Part D Payment for Drugs 

for Beneficiaries Enrolled in Hospice 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Proposed rule. 

SUMMARY: This proposed rule would 

update the hospice payment rates and 

the wage index for fiscal year (FY) 2015 

and continue the phase out of the wage 

index budget neutrality adjustment 

factor (BNAF). This rule provides an 

update on hospice payment reform 

analyses and solicits comments on 

‘‘terminal illness’’ and ‘‘related 

conditions’’ definitions, and on a 

process and appeals for Part D payment 

for drugs, while beneficiaries are under 

a hospice election. Also, this rule 

proposes timeframes for filing the notice 

of election and the notice of 

termination/revocation; adding the 

attending physician to the hospice 

election form; a requirement that 

hospices complete their hospice 

inpatient and aggregate cap 

determinations within 5 months after 

the cap year ends, and remit any 

overpayments; and updates for the 

hospice quality reporting program. 

In addition, this rule would provide 

guidance on determining hospice 

eligibility, information on the delay in 

the implementation of the International 

Classification of Diseases, 10th 

Revision, Clinical Modification (ICD– 

10–CM), and would further clarify how 

hospices are to report diagnoses on 

hospice claims. Finally, the rule 

proposes to make a technical regulatory 

text change. 

DATES: To be assured consideration, 

comments must be received at one of 

the addresses provided below, no later 

than 5 p.m. on July 1, 2014. 

ADDRESSES: In commenting, please refer 

to file code CMS–1609–P. Because of 

staff and resource limitations, we cannot 

accept comments by facsimile (FAX) 

transmission. 

You may submit comments in one of 

four ways (please choose only one of the 

ways listed): 

1. Electronically. You may submit 

electronic comments on this regulation 

to http://www.regulations.gov. Follow 

the ‘‘Submit a comment’’ instructions. 

2. By regular mail. You may mail 

written comments to the following 

address ONLY: Centers for Medicare & 

Medicaid Services, Department of 

Health and Human Services, Attention: 

CMS–1609–P, P.O. Box 8010, Baltimore, 

MD 21244–8010. 

Please allow sufficient time for mailed 

comments to be received before the 

close of the comment period. 

3. By express or overnight mail. You 

may send written comments to the 

following address ONLY: Centers for 

Medicare & Medicaid Services, 

Department of Health and Human 

Services, Attention: CMS–1609–P, Mail 

Stop C4–26–05, 7500 Security 

Boulevard, Baltimore, MD 21244–1850. 

4. By hand or courier. Alternatively, 

you may deliver (by hand or courier) 

your written comments ONLY to the 

following addresses prior to the close of 

the comment period: 

a. For delivery in Washington, DC— 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, Room 445–G, Hubert 

H. Humphrey Building, 200 

Independence Avenue SW., 

Washington, DC 20201. 

(Because access to the interior of the 

Hubert H. Humphrey Building is not 

readily available to persons without 

Federal government identification, 

commenters are encouraged to leave 

their comments in the CMS drop slots 

located in the main lobby of the 

building. A stamp-in clock is available 

for persons wishing to retain a proof of 

filing by stamping in and retaining an 

extra copy of the comments being filed.) 

b. For delivery in Baltimore, MD— 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, 7500 Security 

Boulevard, Baltimore, MD 21244–1850. 

If you intend to deliver your comments 

to the Baltimore address, call telephone 

number (410) 786–9994 in advance to 

schedule your arrival with one of our 

staff members. 

Comments erroneously mailed to the 

addresses indicated as appropriate for 

hand or courier delivery may be delayed 

and received after the comment period. 

For information on viewing public 

comments, see the beginning of the 

SUPPLEMENTARY INFORMATION section. 

FOR FURTHER INFORMATION CONTACT: 

Debra Dean-Whittaker, (410) 786–0848 

for questions regarding the CAHPS®

Hospice Survey. Robin Dowell, (410) 

786–0060 for questions regarding the 

hospice quality reporting program. 

Deborah Larwood, (410) 786–9500 for 

questions regarding process and appeals 

for Part D payment for drugs while 

beneficiaries are under a hospice 

election. Owen Osaghae, (410) 786–7550 

for questions regarding the hospice 

inpatient and aggregate cap 

determinations. 

For general questions about hospice 

payment policy please send your 

inquiry via email to: 

hospicepolicy@cms.hhs.gov. 

SUPPLEMENTARY INFORMATION: Wage 

index addenda will be available only 

through the internet on the CMS Web 

site at: (http://www.cms.gov/Medicare/

Medicare-Fee-for-Service-Payment/

Hospice/index.html.) Readers who 

experience any problems accessing any 

of the wage index addenda related to the 

hospice payment rules that are posted 

on the CMS Web site identified above 

should contact Hillary Loeffler at 410– 

786–0456. 

Inspection of Public Comments: All 

comments received before the close of 

the comment period are available for 

viewing by the public, including any 

personally identifiable or confidential 

business information that is included in 

a comment. We post all comments 

received before the close of the 

comment period on the following Web 

site as soon as possible after they have 

been received: http:// 

www.regulations.gov. Follow the search 

instructions on that Web site to view 

public comments. 

Comments received timely will also 

be available for public inspection as 

they are received, generally beginning 

approximately 3 weeks after publication 

of a document, at the headquarters of 

the Centers for Medicare & Medicaid 

Services, 7500 Security Boulevard, 

Baltimore, Maryland 21244, Monday 

through Friday of each week from 8:30 

a.m. to 4 p.m. To schedule an 

appointment to view public comments, 

phone 1–800–743–3951. 

Table of Contents 

I. Executive Summary 

A. Purpose 

B. Summary of the Major Provisions 

C. Summary of Costs, Benefits, and 

Transfers 

II. Background 

A. Hospice Care 

B. History of the Medicare Hospice Benefit 

C. Services Covered by the Medicare 

Hospice Benefit 

D. Medicare Payment for Hospice Care 

1. Omnibus Budget Reconciliation Act of 

1989 

2. Balanced Budget Act of 1997 

3. FY 1998 Hospice Wage Index Final Rule 

4. FY 2010 Hospice Wage Index Final Rule 


tkelley on DSK3SPTVN1PROD with PROPOSALS3
Federal Register / Vol. 79, No. 89 / Thursday, May 8, 2014 / Proposed Rules 26539 

5. The Affordable Care Act 

6. FY 2012 Hospice Wage Index Final Rule 

E. Trends in Medicare Hospice Utilization 

III. Provisions of the Proposed Rule 

A. Hospice Payment Reform: Research and 

Analyses 

1. Beneficiaries Dying Without Skilled 

Visits in the Last Days of Life 

2. General Inpatient Care, Continuous 

Home Care, and Inpatient Respite Care 

Utilization 

3. Hospice Live Discharges 

4. Non-hospice Spending for Hospice 

Beneficiaries During an Election 

B. Solicitation of Comments on Definitions 

of ‘‘Terminal Illness’’ and ‘‘Related 

Conditions’’ 

1. The Development of the Medicare 

Hospice Benefit 

2. Legislative History of the Medicare 

Hospice Benefit 

3. Hospice Care Today 

4. Definition of ‘‘Terminal Illness’’ 

5. Definition of ‘‘Related Conditions’’ 

C. Guidance on Determining Beneficiaries’ 

Eligibility 

D. Proposed Timeframe for Hospice Cap 

Determinations and Overpayment 

Remittances 

E. Proposed Timeframes for Filing the 

Notice of Election and Notice of 

Termination/Revocation 

1. Proposed Timeframe for Filing the 

Notice of Election 

2. Proposed Timeframe for Filing the 

Notice of Termination/Revocation 

F. Proposed Addition of the Attending 

Physician to the Hospice Election Form 

G. FY 2015 Hospice Wage Index and Rates 

Update 

1. FY 2015 Hospice Wage Index 

2. FY 2015 Wage Index with an Additional 

15 Percent Reduced Budget Neutrality 

Adjustment Factor (BNAF) 

3. Proposed Hospice Payment Update 

Percentage 

4. Proposed FY 2015 Hospice Payment 

Rates 

H. Proposed Updates to the Hospice 

Quality Reporting Program 

1. Background and Statutory Authority 

2. Measures for Hospice Quality Reporting 

Program and Data Submission 

Requirements for Payment Years FY 

2014 and FY 2015 

3. Quality Measures for Hospice Quality 

Reporting Program and Data Submission 

Requirements for Payment Year FY 2016 

and Beyond 

4. Future Measure Development 

5. Public Availability of Data Submitted 

6. Proposed Adoption of the CAHPS®

Hospice Survey for the FY 2017 Payment 

Determination 

a. Background and Description of the 

Survey 

b. Participation Requirements to Meet 

Quality Reporting Requirements for the 

FY 2017 APU 

c. Participation Requirements to Meet 

Quality Reporting Requirements for the 

FY 2018 APU 

d. Vendor Participation Requirements for 

the 2017 APU 

e. Annual Payment Update 

f. CAHPS® Hospice Survey Oversight 

Activities 

7. Procedures for Payment Year 2016 and 

Subsequent Years 

I. Solicitation of Comments on 

Coordination of Benefits Process and 

Appeals for Part D Payment for Drugs 

While Beneficiaries are Under a Hospice 

Election 

1. Part D Sponsor Coordination of Payment 

with Hospice Providers 

2. Hospice Coordination of Payment with 

Part D Sponsors and Other Payers 

3. Beneficiary Rights and Appeals 

J. Update on the International 

Classification of Diseases, 10th Revision, 

Clinical Modification (ICD–10–CM) and 

Coding Guidelines for Hospice Claims 

Reporting 

1. International Classification of Diseases, 

10th Revision, Clinical Modification 

(ICD–10–CM) 

2. Coding Guidelines for Hospice Claims 

Reporting 

K. Technical Regulatory Text Change 

IV. Collection of Information Requirements 

A. Proposed Changes Related to Hospice 

Payment Policy 

1. Proposed Changes to the Election 

Statement (§ 418.24) 

2. Proposed Changes to Inpatient and 

Aggregate Cap Determination Reporting 

(§ 418.308) 

B. CAHPS® Hospice Survey 

V. Regulatory Impact Analysis 

A. Statement of Need 

B. Introduction 

C. Overall Impact 

1. Detailed Economic Analysis 

a. Effects on Hospices 

b. Hospice Size 

c. Geographic Location 

d. Type of Ownership 

e. Hospice Base 

f. Effects on Other Providers 

g. Effects on the Medicare and Medicaid 

Programs 

h. Alternatives Considered 

i. Accounting Statement 

j. Conclusion 

2. Regulatory Flexibility Act Analysis 

3. Unfunded Mandates Reform Act 

Analysis 

VI. Federalism Analysis and Regulations Text 

Acronyms 

Because of the many terms to which 

we refer by acronym in this proposed 

rule, we are listing the acronyms used 

and their corresponding meanings in 

alphabetical order below: 

ACA Affordable Care Act 

APU Annual Payment Update 

BBA Balanced Budget Act of 1997 

BIPA Benefits Improvement and Protection 

Act of 2000 

BNAF Budget Neutrality Adjustment Factor 

BLS Bureau of Labor Statistics 

CAHPS® Consumer Assessment of 

Healthcare Providers and Systems 

CBSA Core-Based Statistical Area 

CCW Chronic Conditions Data Warehouse 

CFR Code of Federal Regulations 

CHC Continuous Home Care 

CMS Centers for Medicare & Medicaid 

Services 

COPD Chronic Obstructive Pulmonary 

Disease 

CoPs Conditions of Participation 

CR Change Request 

CVA Cerebral Vascular Accident 

CWF Common Working File 

CY Calendar Year 

DDE Direct Data Entry 

DME Durable Medical Equipment 

DRG Diagnostic Related Group 

DTRR Daily Transaction Reply Report 

ER Emergency Room 

FEHC Family Evaluation of Hospice Care 

FR Federal Register 

FY Fiscal Year 

GAO Government Accountability Office 

GIP General Inpatient Care 

HCFA Healthcare Financing Administration 

HHS Health and Human Services 

HIPPA Health Insurance Portability and 

Accountability Act 

HIS Hospice Item Set 

HQRP Hospice Quality Reporting Program 

IACS Individuals Authorized Access to 

CMS Computer Services 

ICD–9–CM International Classification of 

Diseases, Ninth Revision, Clinical 

Modification 

ICD–10–CM International Classification of 

Diseases, Tenth Revision, Clinical 

Modification 

ICR Information Collection Requirement 

IDG Interdisciplinary Group 

IPPS Inpatient Prospective Payment System 

IRC Inpatient Respite Care 

LCD Local Coverage Determination 

MAC Medicare Administrative Contractor 

MAP Measure Applications Partnership 

MedPAC Medicare Payment Advisory 

Commission 

MFP Multi-Factor Productivity 

MSA Metropolitan Statistical Area 

NCPDP National Council for Prescription 

Drug Programs 

NHPCO National Hospice and Palliative 

Care Organization 

NF Long Term Care Nursing Facility 

NOE Notice of Election 

NOTR Notice of Termination/Revocation 

NP Nurse Practitioner 

NPI National Provider Identifier 

NQF National Quality Forum 

OIG Office of the Inspector General 

OACT Office of the Actuary 

OIG Office of Inspector General 

OMB Office of Management and Budget 

ONC Office of the National Coordinator for 

Health Information Technology 

PA Prior Authorization 

PBM Pharmacy Benefit Manager 

PDE Prescription Drug Event 

PRA Paperwork Reduction Act 

PRRB Provider Reimbursement Review 

Board 

PS&R Provider Statistical and 

Reimbursement Report 

Pub. L. Public Law 

QAPI Quality Assessment and Performance 

Improvement 

QIO Quality Improvement Organization 

QRP Quality Reporting Program 

RFA Regulatory Flexibility Act 

RHC Routine Home Care 

SAF Standard Analytic File 

SBA Small Business Administration 

SNF Skilled Nursing Facility 


tkelley on DSK3SPTVN1PROD with PROPOSALS3
26540 Federal Register / Vol. 79, No. 89 / Thursday, May 8, 2014 / Proposed Rules 

TEFRA Tax Equity and Fiscal 

Responsibility Act of 1982 

TEP Technical Expert Panel 

TrOOP True Out-of-Pocket 

U.S.C. United States Code 

I. Executive Summary for This 

Proposed Rule 

A. Purpose 

This rule proposes updates to the 

payment rates for hospices for fiscal 

year (FY) 2015 as required under section 

1814(i) of the Social Security Act (the 

Act). The proposed updates incorporate 

the use of updated hospital wage index 

data, the 6th year of the 7-year Budget 

Neutrality Adjustment Factor (BNAF) 

phase-out, and an update to the hospice 

payment rates by the hospice payment 

update percentage. In addition, section 

3004(c) of the Patient Protection and 

Affordable Care Act (Pub. L. 111–148) as 

amended by the Health Care and 

Education Reconciliation Act (Pub. L. 

111–152) (the Affordable Care Act) 

established a quality reporting program 

for hospices. Starting in FY 2014, 

hospices that failed to meet quality 

reporting requirements received a two 

percentage point reduction to their 

market basket update. The Affordable 

Care Act also requires the Secretary to 

implement revisions to the hospice 

payment methodology no earlier than 

October 1, 2013. As such, this proposed 

rule provides an update of our hospice 

payment reform activities. This rule 

solicits comments on: Definitions of 

‘‘terminal illness’’ and ‘‘related 

conditions’’; and process and appeals 

for Part D payment for drugs while 

beneficiaries are under a hospice 

election. This rule proposes timeframes 

for filing the hospice notice of election 

and the notice of termination/ 

revocation; adding the attending 

physician to the hospice election form; 

expediting hospice inpatient and 

aggregate cap determinations; and 

updates to the hospice quality reporting 

program. Additionally, this proposed 

rule provides guidance on determining 

a patient’s eligibility for hospice, 

discusses the delay in the 

implementation of the International 

Classification of Diseases, 10th 

Revision, Clinical Modification (ICD– 

10–CM), clarifies how hospices would 

report diagnoses, in accordance with 

current ICD–9–CM guidelines, on 

hospice claims, and proposes a 

technical regulations text change. 

B. Summary of the Major Provisions 

In this rule we propose to update the 

hospice payment rates for FY 2015 by 

1.3 percent as described in section 

III.G.3. The hospice wage index would 

be updated with more current wage data 

and the BNAF would be reduced by an 

additional 15 percent for a total BNAF 

reduction of 85 percent as described in 

section III.G.2. The total BNAF phaseout would be complete by FY 2016. In 

2010, the Congress amended section 

1814(i)(6) of the Act with section 

3132(a) of the Affordable Care Act. The 

amendment authorized the Secretary to 

collect additional data and information 

determined appropriate to revise 

payments for hospice care (no earlier 

than October 1, 2013) and for other 

purposes. An initial step of hospice 

payment reform in this proposed rule is 

to clarify and enforce hospice payment 

policy, when necessary, in order to 

safeguard beneficiaries and the 

Medicare hospice benefit. In section 

III.A, we provide information on 

hospice behavior and trends that raise 

program integrity concerns; the impact 

of beneficiary access to quality end of 

life care; and the effect of hospice 

providers’ market driven goals rather 

than preserving the intent of the 

Medicare Hospice benefit. In response 

to the concerning trends and comments 

received in response to prior 

rulemaking, we are soliciting comments 

on definitions of ‘‘terminal illness’’ and 

‘‘related conditions’’ in section III.B, in 

order to strengthen and clarify the 

current concepts of holistic and 

comprehensive hospice care under the 

Medicare hospice benefit. In section 

III.I, we are soliciting comments on 

processes that Part D plan sponsors 

could use to coordinate with Medicare 

hospices in determining coverage of 

drugs for hospice beneficiaries and 

resolving disagreements between the 

parties. In section III.E, we propose to 

require hospices to file both the notice 

of election (NOE) and the notice of 

termination/revocation (NOTR) on 

behalf of beneficiaries within 3 calendar 

days of admission/discharge. If an NOE 

is not filed timely, the days from the 

effective date of election to the date of 

filing the NOE would be the financial 

responsibility of the hospice. In section 

III.F, we propose to require the hospice 

to identify the attending physician on 

the election form. In section III.D, we 

propose that hospices complete their 

cap determinations, using a pro-forma 

spreadsheet, within 150 days after the 

cap period, and remit any overpayments 

at that time. Given concerns about 

hospices increasingly exceeding their 

aggregate cap, along with the average 

overpayment per beneficiary, we believe 

that this procedural change is necessary 

in order to better safeguard the Medicare 

Trust Fund. 

This proposed rule, in section III.H, 

discusses updates to the hospice quality 

reporting program, including 

participation requirements for CY 2015 

regarding the CAHPS® Hospice Survey, 

and reminds the hospice industry that 

last year we set the July 1, 2014 

implementation date for the Hospice 

Item Set and the January 1, 2015 

implementation date for the CAHPS®

Hospice Survey. 

More than seven new quality 

measures would be derived from these 

tools; therefore, no new measures are 

proposed this year. Section III.H of this 

rule also proposes changes related to the 

reconsideration process, extraordinary 

circumstance extensions or exemptions, 

and hospice quality reporting program 

(HQRP) eligibility requirements for 

newly certified hospices. Finally, this 

proposed rule provides: guidance on 

determining the beneficiary’s eligibility 

for hospice in section III.C; discusses 

the delay in the implementation of the 

International Classification of Diseases, 

10th Revision, Clinical Modification 

(ICD–10–CM); clarifies appropriate 

diagnosis reporting on hospice claims. 

We propose that, effective October 1, 

2014, claims would be returned to the 

provider if the claim listed a nonspecific symptom diagnosis as the 

principal hospice diagnosis in section 

III. J. We also propose a technical 

regulations text change in section III.K 

pertaining to the definition of ‘‘social 

worker’’. 

C. Summary of Impacts 

TABLE 1—IMPACT SUMMARY TABLE

Provision 

description Transfers 

FY 2015 Hospice Wage 

Index and 

Payment 

Rate Update.

The overall economic impact 

of this proposed rule is estimated to be $230 million 

in increased payments to 

hospices during FY 2015. 

Provision 

description 

Total costs 

New Quality 

Reporting 

Requirements for 

Hospices 

(FY 2015).

$8.77 million. 

II. Background 

A. Hospice Care 

Hospice care is an approach to 

treatment that recognizes that the 

impending death of an individual 

warrants a change in the focus from 

curative care to palliative care for relief 

of pain and for symptom management. 


tkelley on DSK3SPTVN1PROD with PROPOSALS3
Federal Register / Vol. 79, No. 89 / Thursday, May 8, 2014 / Proposed Rules 26541 

1Connor, Stephen. (2007). Development of 

Hospice and Palliative Care in the United States. 

OMEGA. 56(1), p89–99. 

The goal of hospice care is to help 

terminally ill individuals continue life 

with minimal disruption to normal 

activities while remaining primarily in 

the home environment. A hospice uses 

an interdisciplinary approach to deliver 

medical, nursing, social, psychological, 

emotional, and spiritual services 

through use of a broad spectrum of 

professionals and other caregivers, with 

the goal of making the individual as 

physically and emotionally comfortable 

as possible. Hospice is compassionate 

patient and family-centered care for 

those who are terminally ill. It is a 

comprehensive, holistic approach to 

treatment that recognizes that the 

impending death of an individual 

necessitates a change from curative to 

palliative care. 

Medicare regulations define palliative 

care as ‘‘patient and family-centered 

care that optimizes quality of life by 

anticipating, preventing, and treating 

suffering.’’ Palliative care throughout 

the continuum of illness involves 

addressing physical, intellectual, 

emotional, social, and spiritual needs 

and to facilitate patient autonomy, 

access to information, and choice’’ (42 

CFR 418.3). Palliative care is at the core 

of hospice philosophy and care 

practices, and is a critical component of 

the Medicare hospice benefit. As stated 

in the June 5, 2008 Hospice Conditions 

of Participation final rule (73 FR 32088), 

palliative care is an approach that 

‘‘optimizes quality of life by 

anticipating, preventing, and treating 

suffering.’’ The goal of palliative care in 

hospice is to improve the quality of life 

of individuals, and their families, facing 

the issues associated with a lifethreatening illness through the 

prevention and relief of suffering by 

means of early identification, 

assessment and treatment of pain and 

other issues. This is achieved by the 

hospice interdisciplinary team working 

with the patient and family to develop 

a comprehensive care plan focused on 

coordinating care services, reduce 

unnecessary diagnostics or ineffective 

therapies, and offering ongoing 

conversations with individuals and 

their families about changes in the 

disease. It is expected that this 

comprehensive care plan would shift 

over time to meet the changing needs of 

the patient and family as the individual 

approaches the end-of-life. 

Medicare hospice care is palliative 

care for individuals with a prognosis of 

living 6 months or less if the terminal 

illness runs its normal course. As 

generally accepted by the medical 

community, the term ‘‘terminal illness’’ 

refers to an advanced and progressively 

deteriorating illness, and that the illness 

is diagnosed as incurable (please see 

section III.B for a discussion and 

solicitation of comments on a possible 

Medicare hospice definition of 

‘‘terminal illness’’). When an individual 

is terminally ill, many health problems 

are brought on by underlying 

condition(s), as bodily systems are 

interdependent. In the June 5, 2008 

Hospice Conditions of Participation 

final rule (73 FR 32088), we stated that 

‘‘the medical director must consider the 

primary terminal condition, related 

diagnoses, current subjective and 

objective medical findings, current 

medication and treatment orders, and 

information about unrelated conditions 

when considering the initial 

certification of the terminal illness.’’ As 

referenced in our regulations at 

§ 418.22(b)(1), to be eligible for 

Medicare hospice services, the patient’s 

attending physician (if any) and the 

hospice medical director must certify 

that the individual is terminally ill, that 

is, the individual’s prognosis is for a life 

expectancy of 6 months or less if the 

terminal illness runs its normal course 

as defined in section 1861(dd)(3)(A) of 

the Act and our regulations at § 418.3. 

The certification of terminal illness 

must include a brief narrative 

explanation of the clinical findings that 

supports a life expectancy of 6 months 

or less as part of the certification and 

recertification forms, as stated in 

§ 418.22(b)(3). 

The goal of hospice care is to make 

the hospice patient as physically and 

emotionally comfortable as possible, 

with minimal disruption to normal 

activities, while remaining primarily in 

the home environment. Hospice care 

uses an interdisciplinary approach to 

deliver medical, nursing, social, 

psychological, emotional, and spiritual 

services through the use of a broad 

spectrum of professional and other 

caregivers and volunteers. While the 

goal of hospice care is to allow for the 

individual to remain in his or her home 

environment, circumstances during the 

end-of-life may necessitate short-term 

inpatient admission to a hospital, 

skilled nursing facility (SNF), or hospice 

facility for procedures necessary for 

pain control or acute or chronic 

symptom management that cannot be 

managed in any other setting. These 

acute hospice care services are to ensure 

that any new or worsening symptoms 

are intensively addressed so that the 

individual can return to his or her home 

environment under a home level of care. 

Short-term, intermittent, inpatient 

respite services are also available to the 

family of the hospice patient when 

needed to relieve the family or other 

caregivers. Additionally, an individual 

can receive continuous home care 

during a period of crisis in which an 

individual requires primarily 

continuous nursing care to achieve 

palliation or management of acute 

medical symptoms so that the 

individual can remain at home. 

Continuous home care may be covered 

on a continuous basis for as much as 24 

hours a day, and these periods must be 

predominantly nursing care per our 

regulations at § 418.204. A minimum of 

8 hours of care must be furnished on a 

particular day to qualify for the 

continuous home care rate 

(§ 418.302(e)(4)). 

Hospices are expected to comply with 

all civil rights laws, including the 

provision of auxiliary aids and services 

to ensure effective communication with 

patients or patient care representatives 

with disabilities consistent with Section 

504 of the Rehabilitation Act of 1973 

and the Americans with Disabilities Act, 

and to provide language access for such 

persons who are limited in English 

proficiency, consistent with Title VI of 

the Civil Rights Act of 1964. Further 

information about these requirements 

may be found at http://www.hhs.gov/

ocr/civilrights. 

B. History of the Medicare Hospice 

Benefit 

Before the creation of the Medicare 

hospice benefit, hospice was originally 

run by volunteers who cared for the 

dying. During the early development 

stages of the Medicare hospice benefit, 

hospice advocates were clear that they 

wanted a Medicare benefit available that 

provided all-inclusive care for 

terminally-ill individuals, provided 

pain relief and symptom management, 

and offered the opportunity to die with 

dignity in the comfort of one’s home 

rather than in an institutional setting.1

As stated in the August 22, 1983 

proposed rule entitled ‘‘Medicare 

Program; Hospice Care’’ (48 FR 38146), 

‘‘the hospice experience in the United 

States has placed emphasis on home 

care. It offers physician services, 

specialized nursing services, and other 

forms of care in the home to enable the 

terminally ill individual to remain at 

home in the company of family and 

friends as long as possible.’’ The 

concept of a patient ‘‘electing’’ the 

hospice benefit and being certified as 

terminally ill were two key components 

in the legislation responsible for the 

creation of the Medicare Hospice 

Benefit (section 122 of the Tax Equity 


tkelley on DSK3SPTVN1PROD with PROPOSALS3
26542 Federal Register / Vol. 79, No. 89 / Thursday, May 8, 2014 / Proposed Rules 

2Harder, PharmD, CGP, Julia. (2012). To Cover or 

Not To Cover: Guidelines for Covered Medications 

in Hospice Patients. The Clinician. 7(2), p1–3. 

3Paolini, DO, Charlotte. (2001). Symptoms 

Management at End of Life. JAOA. 101(10). p609– 

615. 

and Fiscal Responsibility Act of 1982 

(TEFRA), (Pub. L. 97–248)). Section 122 

of TEFRA created the Medicare Hospice 

Benefit, which was implemented on 

November 1, 1983. Under sections 

1812(d) and 1861(dd) of the Social 

Security Act (the Act), codified at 42 

U.S.C. 1395d(d) and 1395x(dd), we 

provide coverage of hospice care for 

terminally ill Medicare beneficiaries 

who elect to receive care from a 

Medicare-certified hospice. Our 

regulations at § 418.54(c) stipulate that 

the comprehensive hospice assessment 

must identify the patient’s physical, 

psychosocial, emotional, and spiritual 

needs related to the terminal illness and 

related conditions, and address those 

needs in order to promote the hospice 

patient’s well-being, comfort, and 

dignity throughout the dying process. 

The comprehensive assessment must 

take into consideration the following 

factors: the nature and condition 

causing admission (including the 

presence or lack of objective data and 

subjective complaints); complications 

and risk factors that affect care 

planning; functional status; imminence 

of death; and severity of symptoms 

(§ 418.54(c)). The Medicare hospice 

benefit requires the hospice to cover all 

reasonable and necessary palliative care 

related to the terminal prognosis and 

related conditions, as described in the 

patient’s plan of care. The December 16, 

1983 Hospice final rule (48 FR 56008) 

requires hospices to cover care for 

interventions to manage pain and 

symptoms. Clinically, related conditions 

are any physical or mental conditions 

that are related to or caused by either 

the terminal illness or the medications 

used to manage the terminal illness.2

See section III.B of this proposed rule 

for a discussion and solicitation of 

comments on a possible Medicare 

hospice definition of ‘‘related 

conditions.’’ Additionally, the hospice 

Conditions of Participation at 

§ 418.56(c) require that the hospice must 

provide all services necessary for the 

palliation and management of the 

terminal illness, related conditions and 

interventions to manage pain and 

symptoms. Therapy and interventions 

must be assessed and managed in terms 

of providing palliation and comfort 

without undue symptom burden for the 

hospice patient or family.3 For example, 

a hospice patient with lung cancer (the 

principal terminal diagnosis) may 

receive inhalants for shortness of breath 

(related to the terminal condition). The 

patient may also suffer from metastatic 

bone pain (a related condition) and 

would be treated with opioid analgesics. 

As a result of the opioid therapy, the 

patient may suffer from constipation (a 

related condition) and require a laxative 

for symptom relief. It is often not a 

single diagnosis that represents the 

terminal prognosis of the patient, but 

the combined effect of several 

conditions that makes the patient’s 

condition terminal. In the December 16, 

1983 Hospice final rule (48 FR 56010 

through 56011), regarding what is 

related versus unrelated to the terminal 

illness, we stated: ‘‘. . . we believe that 

the unique physical condition of each 

terminally ill individual makes it 

necessary for these decisions to be made 

on a case-by-case basis. It is our general 

view that hospices are required to 

provide virtually all the care that is 

needed by terminally ill patients.’’ 

Therefore, unless there is clear evidence 

that a condition is unrelated to the 

terminal prognosis, all services would 

be considered related. It is also the 

responsibility of the hospice physician 

to document why a patient’s medical 

needs would be unrelated to the 

terminal prognosis. 

As stated in the December 16,1983 

Hospice final rule, the fundamental 

premise upon which the hospice benefit 

was designed was the ‘‘revocation’’ of 

traditional curative care and the 

‘‘election’’ of hospice care for end-of-life 

symptom management and 

maximization of quality of life (48 FR 

56008). After electing hospice care, the 

patient typically returns to the home 

from an institutionalized setting or 

remains in the home, to be surrounded 

by family and friends, and to prepare 

emotionally and spiritually for death 

while receiving expert symptom 

management and other supportive 

services. Election of hospice care also 

includes waiving the right to Medicare 

payment for curative treatment for the 

terminal prognosis, and instead 

receiving palliative care to manage pain 

or symptoms. 

The benefit was originally designed to 

cover hospice care for a finite period of 

time that roughly corresponded to a life 

expectancy of 6 months or less. Initially, 

beneficiaries could receive three 

election periods: Two 90-day periods 

and one 30-day period. Currently, 

Medicare beneficiaries can elect hospice 

care for two 90-day periods and an 

unlimited number of subsequent 60-day 

periods; however, the expectation 

remains that beneficiaries have a life 

expectancy of 6 months or less if the 

terminal illness runs its normal course. 

C. Services Covered by the Medicare 

Hospice Benefit 

One requirement for coverage under 

the Medicare Hospice Benefit is that 

hospice services must be reasonable and 

necessary for the palliation and 

management of the terminal illness and 

related conditions. Section 1861(dd)(1) 

of the Act establishes the services that 

are to be rendered by a Medicare 

certified hospice program. These 

covered services include: Nursing care; 

physical therapy; occupational therapy; 

speech-language pathology therapy; 

medical social services; home health 

aide services (now called hospice aide 

services); physician services; 

homemaker services; medical supplies 

(including drugs and biologics); medical 

appliances; counseling services 

(including dietary counseling); shortterm inpatient care (including both 

respite care and procedures necessary 

for pain control and acute or chronic 

symptom management) in a hospital, 

nursing facility, or hospice inpatient 

facility; continuous home care during 

periods of crisis and only as necessary 

to maintain the terminally ill individual 

at home; and any other item or service 

which is specified in the plan of care 

and for which payment may otherwise 

be made under Medicare, in accordance 

with Title XVIII of the Act. 

Section 1814(a)(7)(B) of the Act 

requires that a written plan for 

providing hospice care to a beneficiary 

who is a hospice patient be established 

before care is provided by, or under 

arrangements made by, that hospice 

program and that the written plan be 

periodically reviewed by the 

beneficiary’s attending physician (if 

any), the hospice medical director, and 

an interdisciplinary group (described in 

section 1861(dd)(2)(B) of the Act). The 

services offered under the Medicare 

hospice benefit must be available, as 

needed, to beneficiaries 24 hours a day, 

7 days a week (section 1861(dd)(2)(A)(i) 

of the Act). Upon the implementation of 

the hospice benefit, the Congress 

expected hospices to continue to use 

volunteer services, though these 

services are not reimbursed by Medicare 

(see Section 1861(dd)(2)(E) of the Act 

and (48 FR 38149)). As stated in the 

August 22, 1983 Hospice proposed rule, 

the hospice interdisciplinary group 

should be comprised of paid hospice 

employees as well as hospice volunteers 

(48 FR 38149). This expectation is in 

line with the history of hospice and 

philosophy of holistic, comprehensive, 

compassionate, end-of-life care. 

Before the Medicare hospice benefit 

was established, Congress requested a 

demonstration project to test the 


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feasibility of covering hospice care 

under Medicare. The National Hospice 

Study was initiated in 1980 through a 

grant sponsored by the Robert Wood 

Johnson and John A. Hartford 

Foundations and CMS (then, the Health 

Care Financing Administration (HCFA)). 

The demonstration project was 

conducted between October 1980 and 

March 1983. The project summarized 

the hospice care philosophy as the 

following: 

• Patient and family know of the 

terminal condition. 

• Further medical treatment and 

intervention are indicated only on a 

supportive basis. 

• Pain control should be available to 

patients as needed to prevent rather 

than to just ameliorate pain. 

• Interdisciplinary teamwork is 

essential in caring for patient and 

family. 

• Family members and friends should 

be active in providing support during 

the death and bereavement process. 

• Trained volunteers should provide 

additional support as needed. 

The cost data and the findings on what 

services hospices provided in the 

demonstration project were used to 

design the Medicare hospice benefit. 

The identified hospice services were 

incorporated into the service 

requirements under the Medicare 

hospice benefit. Importantly, in the 

August 22, 1983 hospice proposed rule, 

we stated ‘‘the hospice benefit and the 

resulting Medicare reimbursement is not 

intended to diminish the voluntary 

spirit of hospices’’ (48 FR 38149). 

D. Medicare Payment for Hospice Care 

Sections 1812(d), 1813(a)(4), 

1814(a)(7), 1814(i), and 1861(dd) of the 

Act, and our regulations in part 418, 

establish eligibility requirements, 

payment standards and procedures, 

define covered services, and delineate 

the conditions a hospice must meet to 

be approved for participation in the 

Medicare program. Part 418, subpart G, 

provides for a per diem payment in one 

of four prospectively-determined rate 

categories of hospice care (routine home 

care, continuous home care, inpatient 

respite care, and general inpatient care), 

based on each day a qualified Medicare 

beneficiary is under hospice care (once 

the individual has elected). This per 

diem payment is to include all of the 

hospice services needed to manage the 

beneficiaries’ care, as required by 

section 1861(dd)(1) of the Act. There 

has been little change in the hospice 

payment structure since the benefit’s 

inception. The per diem rate based on 

level of care was established in 1983, 

and this payment structure remains 

today with some adjustments, as noted 

below: 

1. Omnibus Budget Reconciliation Act 

of 1989 

Section 6005(a) of the Omnibus 

Budget Reconciliation Act of 1989 (Pub. 

L. 101–239) amended section 

1814(i)(1)(C) of the Act and provided for 

the following two changes in the 

methodology concerning updating the 

daily payment rates: (1) Effective 

January 1, 1990, the daily payment rates 

for routine home care and other services 

in included in hospice care were 

increased to equal 120 percent of the 

rates in effect on September 30, 1989; 

and (2) the daily payment rate for 

routine home care and other services 

included in hospice care for fiscal years 

beginning on or after October 1, 1990, 

were the payment rates in effect during 

the previous Federal fiscal year 

increased by the hospital market basket 

percentage increase. 

2. Balanced Budget Act of 1997 

Section 4441(a) of the Balanced 

Budget Act of 1997 (BBA) (Pub. L. 105– 

33) amended section 1814(i)(1)(C)(ii)(VI) 

of the Act to establish updates to 

hospice rates for FYs 1998 through 

2002. Hospice rates were updated by a 

factor equal to the hospital market 

basket percentage increase, minus 1 

percentage point. Payment rates for FYs 

from 2002 have been updated according 

to section 1814(i)(1)(C)(ii)(VII) of the 

Act, which states that the update to the 

payment rates for subsequent FYs will 

be the hospital market basket percentage 

increase for the FY. The Act requires us 

to use the inpatient hospital market 

basket to determine hospice payment 

rates. 

3. FY 1998 Hospice Wage Index Final 

Rule 

In the August 8, 1997 FY 1998 

Hospice Wage Index final rule (62 FR 

42860), we implemented a new 

methodology for calculating the hospice 

wage index based on the 

recommendations of a negotiated 

rulemaking committee. The original 

hospice wage index was based on 1981 

Bureau of Labor Statistics hospital data 

and had not been updated since 1983. 

In 1994, because of disparity in wages 

from one geographical location to 

another, the Hospice Wage Index 

Negotiated Rulemaking Committee was 

formed to negotiate a new wage index 

methodology that could be accepted by 

the industry and the government. This 

Committee was comprised of 

representatives from national hospice 

associations; rural, urban, large and 

small hospices, and multi-site hospices; 

consumer groups; and a government 

representative. The Committee decided 

that in updating the hospice wage 

index, aggregate Medicare payments to 

hospices would remain budget neutral 

to payments calculated using the 1983 

wage index, to cushion the impact of 

using a new wage index methodology. 

To implement this policy, a Budget 

Neutrality Adjustment Factor (BNAF) 

would be computed and applied 

annually to the pre-floor, prereclassified hospital wage index when 

deriving the hospice wage index, subject 

to a wage index floor. 

4. FY 2010 Hospice Wage Index Final 

Rule 

Inpatient hospital pre-floor and prereclassified wage index values, as 

described in the August 8, 1997 Hospice 

Wage Index final rule, are subject to 

either a budget neutrality adjustment or 

application of the wage index floor. 

Wage index values of 0.8 or greater are 

adjusted by the (BNAF). Starting in FY 

2010, a 7-year phase-out of the BNAF 

began (August 6, 2009 FY 2010 Hospice 

Wage Index final rule, (74 FR 39384)), 

with a 10 percent reduction in FY 2010, 

an additional 15 percent reduction for a 

total of 25 percent in FY 2011, an 

additional 15 percent reduction for a 

total 40 percent reduction in FY 2012, 

an additional 15 percent reduction for a 

total of 55 percent in FY 2013, and an 

additional 15 percent reduction for a 

total 70 percent reduction in FY 2014. 

The phase-out would continue with an 

additional 15 percent reduction for a 

total reduction of 85 percent in FY 2015, 

and an additional 15 percent reduction 

for complete elimination in FY 2016. 

Note that the BNAF is an adjustment 

which increases the hospice wage index 

value. Therefore, the BNAF reduction is 

a reduction in the amount of the BNAF 

increase applied to the hospice wage 

index value. It is not a reduction in the 

hospice wage index value, or in the 

hospice payment rates. 

5. The Affordable Care Act 

Starting with FY 2013 (and in 

subsequent fiscal years), the market 

basket percentage update under the 

hospice payment system referenced in 

sections 1814(i)(1)(C)(ii)(VII) and 

1814(i)(1)(C)(iii) of the Act will be 

annually reduced by changes in 

economy-wide productivity, as 

specified in section 1886(b)(3)(B)(xi)(II) 

of the Act, as amended by section 

3132(a) of the Patient Protection and 

Affordable Care Act (Pub. L. 111–148) as 

amended by the Health Care and 

Education Reconciliation Act (Pub. L. 

111–152) (the Affordable Care Act)). In 

FY 2013 through FY 2019, the market 


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basket percentage update under the 

hospice payment system will be 

reduced by an additional 0.3 percentage 

point (although for FY 2014 to FY 2019, 

the potential 0.3 percentage point 

reduction is subject to suspension under 

conditions as specified in section 

1814(i)(1)(C)(v) of the Act). 

In addition, sections 1814(i)(5)(A) 

through (C) of the Act, as amended by 

section 3132(a) of the Affordable Care 

Act, require hospices to begin 

submitting quality data, based on 

measures to be specified by the 

Secretary, for FY 2014 and subsequent 

fiscal years. Beginning in FY 2014, 

hospices which fail to report quality 

data will have their market basket 

update reduced by 2 percentage points. 

Section 1814(a)(7)(D)(i) of the Act was 

amended by section 3132 (b)(2)(D)(i) of 

the Affordable Care Act, and requires, 

effective January 1, 2011, that a hospice 

physician or nurse practitioner have a 

face-to-face encounter with an 

individual to determine continued 

eligibility of the individual for hospice 

care prior to the 180th-day 

recertification and each subsequent 

recertification, and to attest that such 

visit took place. When implementing 

this provision, we decided that the 

180th-day recertification and 

subsequent recertifications 

corresponded to the recertification for a 

beneficiary’s third or subsequent benefit 

periods (CY 2011 Home Health 

Prospective Payment System final rule 

(75 FR 70435)). Further, section 

1814(i)(6) of the Act, as amended by 

section 3132(a)(1)(B) of the Affordable 

Care Act, authorizes the Secretary to 

collect additional data and information 

determined appropriate to revise 

payments for hospice care and other 

purposes. The types of data and 

information suggested in the Affordable 

Care Act would capture accurate 

resource utilization, which could be 

collected on claims, cost reports, and 

possibly other mechanisms, as the 

Secretary determines to be appropriate. 

The data collected may be used to revise 

the methodology for determining the 

payment rates for routine home care and 

other services included in hospice care, 

no earlier than October 1, 2013, as 

described in section 1814(i)(6)(D) of the 

Act. In addition, we are required to 

consult with hospice programs and the 

Medicare Payment Advisory 

Commission (MedPAC) regarding 

additional data collection and payment 

revision options. 

6. FY 2012 Hospice Wage Index Final 

Rule 

When the Medicare Hospice Benefit 

was implemented, the Congress 

included an aggregate cap on hospice 

payments, which limits the total 

aggregate payments any individual 

hospice can receive in a year. The 

Congress stipulated that a ‘‘cap amount’’ 

be computed each year. The cap amount 

was set at $6,500 per beneficiary when 

first enacted in 1983 and is adjusted 

annually by the change in the medical 

care expenditure category of the 

consumer price index for urban 

consumers from March 1984 to March of 

the cap year (section 1814(i)(2)(B) of the 

Act). The cap year is defined as the 

period from November 1st to October 

31st. As we stated in the August 4, 2011 

FY 2012 Hospice Wage Index final rule 

(76 FR 47308 through 47314), for the 

2012 cap year and subsequent cap years, 

the hospice aggregate cap will be 

calculated using the patient-by-patient 

proportional methodology, within 

certain limits. We will allow existing 

hospices the option of having their cap 

calculated via the original streamlined 

methodology, also within certain limits. 

New hospices will have their cap 

determinations calculated using the 

patient-by-patient proportional 

methodology. The patient-by-patient 

proportional methodology and the 

streamlined methodology are two 

different methodologies for counting 

beneficiaries when calculating the 

hospice aggregate cap. A detailed 

explanation of these methods is found 

in the August 4, 2011 FY 2012 Hospice 

Wage Index final rule (76 FR 47308 

through 47314). If a hospice’s total 

Medicare reimbursement for the cap 

year exceeded the hospice aggregate 

cap, then the hospice would have to 

repay the excess back to Medicare. 

E. Trends in Medicare Hospice 

Utilization 

Since the implementation of the 

hospice benefit in 1983, and especially 

within the last decade, there has been 

substantial growth in hospice 

utilization. The number of Medicare 

beneficiaries receiving hospice services 

has grown from 513,000 in FY 2000 to 

over 1.3 million in FY 2013. Similarly, 

Medicare hospice expenditures have 

risen from $2.9 billion in FY 2000 to an 

estimated $15.1 billion in FY 2013. Our 

Office of the Actuary (OACT) projects 

that hospice expenditures are expected 

to continue to increase, by 

approximately 8 percent annually, 

reflecting an increase in the number of 

Medicare beneficiaries, more beneficiary 

awareness of the Medicare Hospice 

Benefit for end-of-life care, and a 

growing preference for care provided in 

home and community-based settings. 

However, this increased spending is 

partly due to an increased average 

lifetime length of stay for beneficiaries, 

from 54 days in 2000 to 86 days in 2011, 

an increase of 59 percent. 

There have also been noted changes 

in the diagnosis patterns among 

Medicare hospice enrollees. 

Specifically, there were notable 

increases between 2002 and 2007 in 

neurologically-based diagnoses, 

including various dementia diagnoses. 

Additionally, there have been 

significant increases in the use of nonspecific, symptom-classified diagnoses, 

such as ‘‘debility’’ and ‘‘adult failure to 

thrive.’’ In FY 2012, both ‘‘debility’’ and 

‘‘adult failure to thrive’’ were the first 

and third most common hospice 

diagnoses, respectively. ‘‘Debility’’ and 

‘‘adult failure to thrive’’ continue to be 

among the most common hospice 

principal diagnoses (14 percent), and 

those, combined with ‘‘dementia’’ and 

Alzheimer’s disease constituted 

approximately 30 percent of all claimsreported principal diagnosis codes 

reported in FY 2013 (see Table 2 below). 

TABLE 2—THE TOP TWENTY PRINCIPAL HOSPICE DIAGNOSES, FY 2002, FY 2007, FY 2012, FY 2013 

Rank ICD–9/Reported principal diagnosis Count Percentage 

Year: FY 2002 

1 ................... 162.9 Lung Cancer ..................................................................................................................... 73,769 11 

2 ................... 428.0 Congestive Heart Failure .................................................................................................. 45,951 7 

3 ................... 799.3 Debility Unspecified .......................................................................................................... 36,999 6 

4 ................... 496 COPD ................................................................................................................................... 35,197 5 

5 ................... 331.0 Alzheimer’s Disease ......................................................................................................... 28,787 4 

6 ................... 436 CVA/Stroke .......................................................................................................................... 26,897 4 

7 ................... 185 Prostate Cancer ................................................................................................................... 20,262 3 

8 ................... 783.7 Adult Failure To Thrive ..................................................................................................... 18,304 3 


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TABLE 2—THE TOP TWENTY PRINCIPAL HOSPICE DIAGNOSES, FY 2002, FY 2007, FY 2012, FY 2013—Continued 

Rank ICD–9/Reported principal diagnosis Count Percentage 

9 ................... 174.9 Breast Cancer ................................................................................................................... 17,812 3 

10 ................. 290.0 Senile Dementia, Uncomp. ............................................................................................... 16,999 3 

11 ................. 153.0 Colon Cancer .................................................................................................................... 16,379 2 

12 ................. 157.9 Pancreatic Cancer ............................................................................................................ 15,427 2 

13 ................. 294.8 Organic Brain Synd Nec ................................................................................................... 10,394 2 

14 ................. 429.9 Heart Disease Unspecified ............................................................................................... 10,332 2 

15 ................. 154.0 Rectosigmoid Colon Cancer ............................................................................................. 8,956 1 

16 ................. 332.0 Parkinson’s Disease ......................................................................................................... 8,865 1 

17 ................. 586 Renal Failure Unspecified ................................................................................................... 8,764 1 

18 ................. 585 Chronic Renal Failure (End 2005) ....................................................................................... 8,599 1 

19 ................. 183.0 Ovarian Cancer ................................................................................................................. 7,432 1 

20 ................. 188.9 Bladder Cancer ................................................................................................................. 6,916 1 

.

Year: FY 2007 

1 ................... 799.3 Debility Unspecified .......................................................................................................... 90,150 9 

2 ................... 162.9 Lung Cancer ..................................................................................................................... 86,954 8 

3 ................... 428.0 Congestive Heart Failure .................................................................................................. 77,836 7 

4 ................... 496 COPD ................................................................................................................................... 60,815 6 

5 ................... 783.7 Adult Failure To Thrive ..................................................................................................... 58,303 6 

6 ................... 331.0 Alzheimer’s Disease ......................................................................................................... 58,200 6 

7 ................... 290.0 Senile Dementia Uncomp. ................................................................................................ 37,667 4 

8 ................... 436 CVA/Stroke .......................................................................................................................... 31,800 3 

9 ................... 429.9 Heart Disease Unspecified ............................................................................................... 22,170 2 

10 ................. 185 Prostate Cancer ................................................................................................................... 22,086 2 

11 ................. 174.9 Breast Cancer ................................................................................................................... 20,378 2 

12 ................. 157.9 Pancreas Unspecified ....................................................................................................... 19,082 2 

13 ................. 153.9 Colon Cancer .................................................................................................................... 19,080 2 

14 ................. 294.8 Organic Brain Syndrome NEC ......................................................................................... 17,697 2 

15 ................. 332.0 Parkinson’s Disease ......................................................................................................... 16,524 2 

16 ................. 294.10 Dementia In Other Diseases w/o Behav. Dist ................................................................ 15,777 2 

17 ................. 586 Renal Failure Unspecified ................................................................................................... 12,188 1 

18 ................. 585.6 End Stage Renal Disease ................................................................................................ 11,196 1 

19 ................. 188.9 Bladder Cancer ................................................................................................................. 8,806 1 

20 ................. 183.0 Ovarian Cancer ................................................................................................................. 8,434 1 

.

Year: FY 2012 

1 ................... 799.3 Debility Unspecified .......................................................................................................... 161,163 12 

2 ................... 162.9 Lung Cancer ..................................................................................................................... 89,636 7 

3 ................... 783.7 Adult Failure To Thrive ..................................................................................................... 86,467 7 

4 ................... 428.0 Congestive Heart Failure .................................................................................................. 84,333 6 

5 ................... 496 COPD ................................................................................................................................... 74,786 6 

6 ................... 331.0 Alzheimer’s Disease ......................................................................................................... 64,199 5 

7 ................... 290.0 Senile Dementia, Uncomp. ............................................................................................... 56,234 4 

8 ................... 429.9 Heart Disease Unspecified ............................................................................................... 32,081 2 

9 ................... 436 CVA/Stroke .......................................................................................................................... 31,987 2 

10 ................. 294.10 Dementia In Other Diseases w/o Behavioral Dist .......................................................... 27,417 2 

11 ................. 174.9 Breast Cancer ................................................................................................................... 22,421 2 

12 ................. 153.9 Colon Cancer .................................................................................................................... 22,197 2 

13 ................. 157.9 Pancreatic Cancer ............................................................................................................ 22,007 2 

14 ................. 332.0 Parkinson’s Disease ......................................................................................................... 21,183 2 

15 ................. 185 Prostate Cancer ................................................................................................................... 21,042 2 

16 ................. 294.8 Other Persistent Mental Dis.—classified elsewhere ........................................................ 17,762 1 

17 ................. 585.6 End Stage Renal Disease ................................................................................................ 17,545 1 

18 ................. 518.81 Respiratory Failure ......................................................................................................... 12,962 1 

19 ................. 294.11 Dementia In Other Diseases w/Behavioral Dist ............................................................. 11,751 1 

20 ................. 188.9 Bladder Cancer ................................................................................................................. 10,511 1 

.

Year: FY 2013 

1 ................... 799.3 Debility Unspecified .......................................................................................................... 127,308 9 

2 ................... 428.0 Congestive Heart Failure .................................................................................................. 95,850 7 

3 ................... 162.9 Lung Cancer ..................................................................................................................... 91,263 6 

4 ................... 496 COPD ................................................................................................................................... 81,944 6 

5 ................... 331.0 Alzheimer’s Disease ......................................................................................................... 79,360 6 

6 ................... 783.7 Adult Failure to Thrive ...................................................................................................... 71,033 5 

7 ................... 290.0 Senile Dementia, Uncomp. ............................................................................................... 60,441 4 

8 ................... 429.9 Heart Disease Unspecified ............................................................................................... 36,817 3 


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TABLE 2—THE TOP TWENTY PRINCIPAL HOSPICE DIAGNOSES, FY 2002, FY 2007, FY 2012, FY 2013—Continued 

Rank ICD–9/Reported principal diagnosis Count Percentage 

9 ................... 436 CVA/Stroke .......................................................................................................................... 34,330 2 

10 ................. 294.10 Dementia In Other Diseases w/o Behavioral Dist .......................................................... 30,884 2 

11 ................. 332.0 Parkinson’s Disease ......................................................................................................... 25,308 2 

12 ................. 153.9 Colon Cancer .................................................................................................................... 23,133 2 

13 ................. 294.20 Dementia Unspecified w/o Behavioral Dist .................................................................... 23,108 2 

14 ................. 174.9 Breast Cancer ................................................................................................................... 22,986 2 

15 ................. 157.9 Pancreatic Cancer ............................................................................................................ 22,267 2 

16 ................. 185 Prostate Cancer ................................................................................................................... 21,701 2 

17 ................. 585.6 End-Stage Renal Disease ................................................................................................ 19,212 1 

18 ................. 518.81 Acute Respiratory Failure ............................................................................................... 15,900 1 

19 ................. 294.8 Other Persistent Mental Dis.—classified elsewhere ........................................................ 14,337 1 

20 ................. 294.11 Dementia In Other Diseases w/Behavioral Dist ............................................................. 13,648 1 

Note(s): The frequencies shown represent beneficiaries that had at least one claim with the specific ICD–9–CM code reported as the principal 

diagnosis. Beneficiaries could be represented multiple times in the results if they have multiple claims during that time period with different principal diagnoses. 

Source: FY 2002, 2007, and 2012 hospice claims data from the Chronic Conditions Data Warehouse (CCW), accessed on February 14 and 

February 20, 2013. FY 2013 hospice claims data from the CCW, accessed on February 27, 2014. 

III. Provisions of the Proposed Rule 

A. Hospice Payment Reform: Research 

and Analyses 

In 2010, the Congress amended 

section 1814(i)(6) of the Act with 

section 3132(a) of the Affordable Care 

Act. The amendment authorized the 

Secretary to collect additional data and 

information determined appropriate to 

revise payments for hospice care and for 

other purposes. The data collected may 

be used to revise the methodology for 

determining the payment rates for 

routine home care and other services 

included in hospice care, no earlier than 

October 1, 2013, as described in section 

1814(i)(6)(D) of the Act. We are also 

required to consult with hospice 

programs and the Medicare Payment 

Advisory Commission (MedPAC) 

regarding additional data collection and 

payment revision options. Since 2010, 

we have been working with our hospice 

reform contractor, Abt Associates, to 

review the most current peer-reviewed 

literature; conduct research and 

analyses; identify potential 

vulnerabilities in the current payment 

system; and research and develop 

hospice payment model options. We 

recently required additional information 

on hospice claims regarding drugs and 

certain durable medical equipment, 

effective April 1, 2014; and are in the 

process of finalizing changes to the 

hospice cost report to better collect data 

on the costs of providing hospice care. 

The additional information on hospice 

claims and the hospice cost report will 

be used in our hospice payment reform 

efforts, once the data are available for 

analysis. 

The research and analyses conducted 

thus far on available Medicare claims 

and cost report data have highlighted 

hospice utilization trends that could 

raise concerns regarding the viability of 

the Medicare hospice program and the 

impact of beneficiary access to quality 

end of life care. In March 2009, the 

Medicare Payment Advisory 

Commission (MedPAC) recommended 

that Medicare improve its payment 

system for hospice services to address a 

misalignment between Medicare’s 

payments and hospice’s costs that 

created incentives for providers to 

enroll patients who are more likely to 

have long stays because those stays are 

more profitable than short ones (http:// 

www.medpac.gov/chapters/Mar09_

Ch06.pdf). MedPAC ’s June 2013 Report 

To Congress on Medicare and the Health 

Care Delivery System reiterated 

concerns about utilization trends and 

suggested that such trends were driven 

by a misalignment in the payment 

system (http://www.medpac.gov/

chapters/Jun13_Ch05.pdf). MedPAC’s 

June 2013 report added that, while 

payment reform would better align 

payments with costs, additional 

administrative controls were necessary 

to balance incentives and strengthen 

provider compliance. As such, we 

believe that a critical goal of the 

Medicare hospice payment system is to 

strengthen and safeguard the current 

scope of the Medicare hospice benefit. 

This will provide a solid foundation on 

which to reform the methodology used 

to pay for Medicare hospice services. 

Program integrity is being addressed 

immediately while we fully develop our 

data and research to address payment 

reform in the near future. 

Abt Associates, with its subcontractor 

Brown University, has developed a 

technical report entitled, ‘‘Medicare 

Hospice Payment Reform: Analyses to 

Support Payment Reform’’, dated May 1, 

2014 (hereafter, referred to as the May 

2014 Technical Report) that thoroughly 

describes the analytic file and extensive 

work performed on analyzing current 

hospice utilization data, of which many 

of the results of the analyses are 

presented in this proposed rule. Both 

the May 2014 Technical Report and an 

updated literature review will be 

available on our hospice center Web 

page in May, 2014 at: http://

www.cms.gov/Center/Provider-Type/

Hospice-Center.html in the ‘‘Research 

and Analyses’’ section. We further 

examined hospice utilization data and 

developed a provider-level file to 

identify aberrant hospice behavior. The 

provider-level file contains information 

on beneficiaries who were discharged 

(alive or deceased) in Calendar Year 

(CY) 2012 and includes claims data 

from January 1, 2010 through December 

31, 2012. Some of the findings described 

in this section, are based on this 

provider-level file. 

1. Beneficiaries Dying Without Skilled 

Visits in the Last Days of Life 

Hospice clinicians are experts in 

recognizing changes as a patient is 

approaching the last few days of life and 

helping to prepare and support the 

patient and family. Most individuals 

approaching end-of-life have noted 

declines over the several days prior to 

death. As such, the expectation is that 

there would be an increased need for 

hospice services in the days leading up 

to the hospice beneficiary’s death. 

Although we recognize that 

prognostication is not an exact science, 

there are hallmark physical, functional, 

nutritional and cognitive changes that 

are typically present leading up the 

hospice patient’s death (see section III.C 

of this proposed rule). 

When looking at skilled visits 

provided in the last days of life, as 

reported on the hospice claim, our 


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4The provider-level analysis conducted on 

whether skilled visits were provided in the last two 

days of life only examined instances where the 

decedent was receiving routine home care in the 

last two days of life. We note that 21 providers did 

not have any decedents that died while on routine 

home care. 

analysis found that a relatively high 

percentage (28.9 percent) of hospice 

decedents who were receiving RHC on 

their last day of life did not receive a 

skilled visit on that day (see Table 3 

below). This could be explained, in part, 

by sudden or unexpected death. 

Expanding this analysis to skilled visits 

provided in the last two to four days of 

life, we found that 14.4 percent of 

hospice decedents did not receive 

skilled visits in the last 2 days of life 

and 6.2 percent of hospice decedents 

did not receive skilled visits in the last 

4 days of life. While this could also be 

explained, in part, by sudden or 

unexpected death, we are concerned 

with the possibility that those 

beneficiaries and their families are not 

receiving hospice care and support at 

the very end of life. If hospices are 

actively engaging with the beneficiary 

and the family throughout the election 

period, we would expect to see skilled 

visits during those last days of life. 

TABLE 3—FREQUENCY AND PERCENTAGE OF DECEDENTS NOT RECEIVING SKILLED VISITS AT THE END OF LIFE, 

CALENDAR YEAR 2012 

Number of 

decedents 

Percentage of 

decedents with 

no skilled 

visits 

No skilled visits on last day (and last day was RHC) ............................................................................................. 656,355 28.9 

No skilled visits on last two days (and last two days were RHC) .......................................................................... 622,334 14.4 

No skilled visits on last three days (and last three days were RHC) ..................................................................... 585,648 9.1 

No skilled visits on last four days (and last four days were RHC) ......................................................................... 551,359 6.2 

Note(s): Skilled visit was considered to be a visit from a social worker, therapist, or nurse. 

Source: Beneficiaries whose last days of hospice enrollment were billed to the RHC level of care using 100% of hospice days from the Hospice Standard Analytic File (SAF), Calendar Year (CY) 2012. 

Further analysis of skilled visits 

during the last two days of life found 

that 10.3 percent of very short stay 

decedents (5 days or less) did not 

receive skilled visits during the last two 

days of life. In contrast, 15.9 percent of 

decedents with lengths of stay 181 days 

or longer did not receive visits in the 

last two days of life. Newer hospices (5 

years or less since Medicare 

certification) were more likely to have 

decedents with no skilled visits during 

the last two days of life (17.8 percent) 

compared to older hospices (6 years or 

more since Medicare certification) (14.0 

percent). We also found geographic 

differences in this analysis. The five 

states with the lowest percentage of 

decedents with no skilled visits on the 

last two days of life included: 

Wisconsin (5.7 percent), North Dakota 

(7.3 percent), Vermont (7.5 percent), 

Tennessee (7.5 percent), and Kansas (8.7 

percent). The five states with the highest 

percentage of decedents with no skilled 

visits on the last two days of life 

included: New Jersey (23 percent), 

Massachusetts (22.9 percent), Oregon 

(21.2 percent), Washington (21 percent), 

and Minnesota (19.4 percent). 

Using the provider-level file 

referenced above, we also found that, on 

average, hospices did not report any 

skilled visits in the last two days of life 

for 9.7 percent of their decedents who 

died receiving routine home care.4

Nearly 5 percent of hospices did not 

provide any skilled visits in the last two 

days of life to more than 50 percent of 

their decedents receiving routine home 

care on those last two days; the average 

lifetime length of stay among those 

decedents was 143 days. We note that 

the average lifetime length of stay in our 

provider-level file was 95.4 days (among 

beneficiaries who were discharged alive 

or deceased in CY 2012). Furthermore, 

we found that 34 hospices did not make 

any skilled visits in the last 48 hours of 

life to any of their decedents who died 

while receiving routine home care. 

2. General Inpatient Care, Continuous 

Home Care, and Inpatient Respite Care 

Utilization 

Medicare Conditions of Participation 

require hospices to demonstrate that 

they are able to provide all four levels 

of care—Routine Home Care (RHC), 

General Inpatient Care (GIP), 

Continuous Home Care (CHC) and 

Inpatient Respite Care (IRC) to be a 

certified Medicare hospice provider. As 

stated in our regulations at 

§ 418.302(b)(4), a general inpatient care 

(GIP) day is a day in which an 

individual who has elected hospice 

care, receives general inpatient care in 

an inpatient facility for pain control or 

acute or chronic symptom management 

which cannot be managed in other 

settings. For FY 2014, the payment rate 

for GIP was $694.19 per day compared 

to $156.06 for a day of RHC. 

While the goal of hospice care is to 

allow for the individual to remain in his 

or her home environment, 

circumstances during the end-of-life 

may necessitate short-term inpatient 

admission to a hospital, skilled nursing 

facility (SNF), or hospice inpatient 

facility for procedures necessary for 

pain control or acute or chronic 

symptom management that cannot be 

managed in any other setting. These 

acute hospice care services are to ensure 

that any new or worsening symptoms 

are intensively addressed so that the 

individual can return to his or her home 

environment under a home level of care. 

As part of our reform work, we 

analyzed CY 2012 data to better 

understand GIP utilization. We found 

that 77.3 percent of beneficiaries did not 

have any GIP care in 2012. Using 

provider-level data for beneficiaries 

discharged in 2012, we also found that 

21.1 percent of hospices did not provide 

any GIP care to their beneficiaries. 

While there are appropriate 

circumstances where a hospice provides 

no GIP (for example, when a provider 

only has a few patients, none of whom 

needs GIP), we are concerned that more 

than a fifth of hospices not providing 

any GIP may be an indication that 

hospice beneficiaries do not have 

adequate access to a necessary level of 

care for acute or chronic symptom 

management. We also found that there 

were site of service differences such that 

the longest GIP length of stay was in the 

inpatient hospice setting (6.1 days) and 

shortest at in the inpatient hospital 

setting (4.5 days). Over two-thirds of 

GIP days were provided in an inpatient 

hospice setting (68 percent), and about 

a quarter of GIP days were provided in 

an inpatient hospital (24.9 percent). 

Only 5.5 percent of GIP days were 

provided in a SNF. 


tkelley on DSK3SPTVN1PROD with PROPOSALS3
26548 Federal Register / Vol. 79, No. 89 / Thursday, May 8, 2014 / Proposed Rules 

5Carlson MD, Herrin J, Du Q, et al. Hospice 

characteristics and the disenrollment of patients 

with cancer. Health Serv Res. Dec 2009;44(6):2004– 

2021 

As stated in our regulations at 

§ 418.302(b)(2), a continuous home care 

day is a day on which an individual 

who has elected to receive hospice care, 

is not in an inpatient facility, and 

receives hospice care consisting 

predominantly of nursing care on a 

continuous basis at home. Home health 

aide (also known as a hospice aide) or 

homemaker services, or both, may also 

be provided on a continuous basis. 

Continuous home care is only furnished 

during brief periods of crisis as 

described in § 418.204(a), and only as 

necessary to maintain the terminally ill 

patient at home. Continuous home care 

may be covered on a continuous basis 

for as much as 24 hours a day, and these 

periods must be predominantly nursing 

care per our regulations at § 418.204. A 

minimum of 8 hours of care must be 

furnished on a particular day to qualify 

for the continuous home care rate 

(§ 418.302(e)(4)). 

As part of our reform work, we 

analyzed CY 2012 data to better 

understand CHC utilization. Overall, 

approximately 0.4 percent of all hospice 

days in 2012 were billed as CHC, but 

that percentage decreases to 0.2 when a 

large chain provider with a large 

percentage of its hospice days billed as 

CHC days was excluded. Although 42.7 

percent of hospices billed at least 1 day 

of CHC, we found considerable variation 

in the share of CHC days among 

hospices that provided any CHC. 

Almost 90 percent of hospices that 

provided any CHC had less than 1 

percent of their days billed as CHC, but 

four hospices billed more than 10 

percent of their days as CHC. Forty 

hospices accounted for 46 percent of all 

CHC days and a single hospice 

accounted for over a quarter of all CHC 

days. Among hospices who billed for 

providing CHC, 9.4 percent provided 

over half of their CHC days to 

beneficiaries residing in a nursing 

home. For CHC, a hospice must provide 

a minimum of 8 hours of care during a 

24-hour day, which begins and ends at 

midnight. 

Finally, we analyzed inpatient respite 

care (IRC) utilization in CYs 2005 

through 2012. IRC is provided in an 

approved facility, as needed, on an 

occasional basis to relieve the family 

caregivers for up to 5 consecutive days. 

Payment for IRC is subject to the 

requirement that it may not be provided 

consecutively for more than 5 days at a 

time. As stated in our regulations at 

§ 418.302(e)(5), payment for the sixth 

and any subsequent day of respite care 

is made at the routine home care rate. 

Overall, while the percentage of 

beneficiaries receiving at least 1 day of 

IRC care is increasing from 1.44 percent 

in CY 2005 to 3.4 percent in CY 2012, 

only a small percentage of beneficiaries 

utilize IRC. We also found that 26 

percent of hospices did not bill for any 

IRC days in CY 2012. IRC is a critical 

part of the Medicare hospice benefit, 

providing vital support and relief to the 

patient’s caregiver and family. We will 

continue to monitor utilization of IRC 

level of care, over time, to ensure 

beneficiaries receiving hospice care 

have access to respite services for their 

caregivers. 

The variation in the provision of GIP, 

CHC, and IRC could suggest that the 

level of hospice care that a beneficiary 

receives may not always be driven by 

patient factors. Medicare Conditions of 

Participation require hospices to 

demonstrate that they are able to 

provide all four levels of care—RHC, 

GIP, CHC, and IRC—in order to be a 

certified Medicare hospice provider. We 

will continue to monitor GIP, CHC, and 

IRC use to identify hospices with 

aberrant utilization patterns, to identify 

hospices that may be in violation of the 

CoPs or of payment regulations, and to 

refer hospices identified through our 

analysis to Survey and Certification, to 

the Office of Financial Management, 

and to the Center for Program Integrity 

for further investigation. 

3. Hospice Live Discharges 

Currently, federal regulations allow a 

patient who has elected to receive 

Medicare hospice services to revoke that 

election at any time. That patient may 

re-elect hospice benefits at any time for 

any other election period that is still 

available. However, federal regulations 

provide limited opportunity for a 

Medicare hospice provider to discharge 

a patient from its care. Discharge from 

hospice care is permissible when the 

patient moves out of the provider’s 

service area, is determined to be no 

longer terminally ill, or for cause. 

Hospices may not automatically or 

routinely discharge the patient at its 

discretion, even if the care may be 

costly or inconvenient. Neither should 

the hospice request or demand that the 

patient revoke his/her election. 

Our regulations also describe that if 

the hospice patient (or his/her 

representative) revokes the hospice 

election, Medicare coverage of hospice 

care for the remainder of that period is 

forfeited. The patient may, at any time, 

re-elect to receive hospice coverage for 

any other hospice election period that 

he or she is eligible to receive 

(§ 418.28(c)(3) and § 418.24(e)). During 

the time period between revocation/ 

discharge and the re-election of the 

hospice benefit, Medicare coverage 

would resume for those Medicare 

benefits previously waived. 

Prior to 2012, claims data provided 

limited information about the reason a 

hospice patient was discharged from a 

hospice’s care. Starting July 1, 2012, the 

discharge information collected on the 

Medicare claim was expanded to 

capture the reason for all types of 

discharge, that is, if the discharge was 

due to a death, revocation, transfer to 

another hospice, moving out of the 

hospice’s service area, discharge for 

cause, or due to the patient no longer 

being considered terminally ill (that is, 

no longer qualifying for hospice 

services). Between 2000 and 2012, the 

overall rate of live discharges increased 

from 13.2 percent of hospice discharges 

to 18.1 percent in 2012. In 2010, the rate 

of live discharges varied by state (from 

12.8 percent in Connecticut to 40.5 

percent in Mississippi) and by hospice 

provider (from a 25th percentile 9.5 

percent to 75th percentile of 26.4 

percent). Furthermore, analysis of our 

provider-level file shows that of the 

3,702 hospices in our file, 71 hospices 

had a live discharge on 100 percent of 

their beneficiaries. The average lifetime 

length of stay for these hospices was 193 

days compared to the national average 

lifetime length of stay of 95.4 days 

(among beneficiaries who were 

discharged alive or deceased in CY 

2012). We have shared this information 

with the Office of Financial 

Management and with the Center for 

Program Integrity for their review and 

follow-up. 

One study of hospice live discharges 

in cancer patients noted that smaller 

hospices and for-profit hospices had a 

higher rate of hospice live discharges.5

Our subcontractors at Brown University 

studied 2010 hospice live discharges 

among all diagnoses, finding that notfor-profit hospice programs had a lower 

rate of hospice live discharges than forprofit hospice programs (14.6 percent 

vs. 22.4 percent, p<=.001). Small forprofit hospices in operations 5 years or 

less had a higher rate of hospice live 

discharges compared to older, for-profit 

hospices (31.5 percent vs. 12.8 percent, 

p<=.001). We are also concerned over 

patterns of revocations and elections of 

the Medicare hospice benefit for the 

purpose of potentially avoiding costly 

hospitalizations or expensive 

procedures. In 2010, 13,770 out of the 

182,172 live discharges had a pattern of 

hospice discharge, hospital admission, 

and hospice readmission. These cases 


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accounted for $126 million dollars in 

Medicare payments for the 

hospitalization between hospice 

election periods. Nearly half of these 

Medicare payments are accounted for in 

ten states with the highest rate of this 

pattern of discharges (that is, MS, OK, 

AL, SC, MD, VA, TX, NJ, GA, and LA 

accounted for $56.0 million dollars of 

the hospitalization costs). 

We understand that the rate of live 

discharges should not be zero, given the 

uncertainties of prognostication and the 

ability of patients and their families to 

revoke the hospice election at any time. 

However, Medicare hospice care is a 

comprehensive patient and family 

focused care model designed to 

optimize quality of life by anticipating, 

preventing, and treating pain and 

symptoms. We are concerned that 

patterns of discharge, hospital 

admission, and hospice readmission do 

not provide a comprehensive, 

coordinated care experience for 

terminally ill patients. 

4. Non-hospice Spending for Hospice 

Beneficiaries During an Election 

When a beneficiary elects the 

Medicare hospice benefit, he or she 

waives the right to Medicare payment 

for services related to the terminal 

illness and related conditions, except 

for services provided by the designated 

hospice and the attending physician. 

However, Medicare payment is allowed 

for covered Medicare items or services 

which are unrelated to the terminal 

illness and related conditions. When a 

hospice beneficiary receives items or 

services unrelated to the terminal illness 

and related conditions from a nonhospice provider, that provider can bill 

Medicare for the items or services, but 

must include on the claim a GW 

modifier (if billed on a professional 

claim) or condition code 07 (if billed on 

an institutional claim). Prescription 

Drug Events (PDEs) unrelated to the 

terminal illness and related conditions 

for which hospice beneficiaries are 

receiving hospice care are billed to Part 

D and do not require a modifier or a 

condition code. 

In follow up to our initial analysis of 

hospice drugs being paid through Part D 

(78 FR 48245–48246), we analyzed the 

magnitude of Medicare spending 

outside of the hospice benefit for items 

or services provided to hospice 

beneficiaries during a hospice election 

from Parts A, B, and D. In CY 2012, we 

found that Medicare paid $710.1 million 

for Part A and Part B items or services 

while a beneficiary was receiving 

hospice care. We estimated that 76.5 

percent of the $710.1 million included 

either a GW modifier or a condition 

code 07 on the claim, which indicated 

that the services identified by the 

provider or supplier as unrelated to the 

terminal illness and related conditions. 

The remaining 23.5 percent of this 

$710.1 million was for claims without a 

GW modifier or condition code 07, some 

of which may have processed due to late 

filing of the notice of election (NOE). 

The $710.1 million paid for Part A 

and Part B items or services was for 

durable medical equipment (7.0 

percent), inpatient care (care in longterm care hospitals, inpatient 

rehabilitation facilities, acute care 

hospitals; 28.6 percent), outpatient Part 

B services (16.9 percent), other Part B 

services (also known as physician, 

practitioner and supplier claims, such 

as labs and diagnostic tests, ambulance 

transports, and physician office visits; 

37.4 percent), skilled nursing facility 

care (5.7 percent), and home health care 

(4.5 percent). Part A and Part B nonhospice spending occurred mostly for 

hospice beneficiaries who were at home 

(43.3 percent). We also found that 28.3 

percent of hospice beneficiaries were in 

a nursing facility, 14.1 percent were in 

an inpatient setting, 10.2 percent were 

in an assisted living facility, and 4.1 

percent were in other settings. Although 

the average daily rate of expenditures 

outside the hospice benefit was $7.91, 

we found differences amongst states 

where beneficiaries receive care. The 

highest rates per day occurred for 

hospice beneficiaries residing in West 

Virginia ($13.91), or in the South 

(Florida ($13.17), Texas ($12.45), 

Mississippi ($11.91), and South 

Carolina ($10.16)). 

Another area of concern in high nonhospice Medicare spending occurring 

during a hospice election is hospital 

emergency room (ER) visits and 

observation stays. Ninety-five percent of 

these ER visits and observation stays 

were billed and paid outside of the 

hospice benefit with condition code 07 

on the claim. Using data on CY 2010 

hospice admissions, followed through 

discharge or December 31, 2011 

(whichever came first), we found that 

8.8 percent of hospice beneficiaries had 

a total of 87,720 ER visits/observation 

stays billed to Medicare during their 

hospice election, at a cost of $268.4 

million. The majority of these 

beneficiaries (77.6 percent) only 

experienced a single ER visit/ 

observation stay, but 20.9 percent had 

between 2 and 4 ER visits/observation 

stays during their election, and 1.4 

percent had more than 5 ER visits/ 

observation stays during their hospice 

election. Although some beneficiaries 

may go directly to the ER rather than 

contacting the hospice first, 22.3 percent 

had 2 or more ER visits; these results 

may indicate that the hospice is not 

aware of the beneficiary’s condition, the 

hospice is not being responsive to 

beneficiary needs, or related conditions 

are being treated as if they were 

unrelated. Most ER visits/observation 

stays occurred in younger beneficiaries 

with non-cancer diagnoses, in 

beneficiaries in newer hospices, and in 

beneficiaries receiving care in the 

South, with Mississippi and Oklahoma 

having the highest rates (21.1 and 20.5 

ER visits/observation stays per 100 

hospice admissions, respectively). The 

most frequently occurring Diagnostic 

Related Groups (DRGs) associated with 

these ER visits/observation stays were 

septicemia or severe sepsis, kidney and 

urinary tract infections, hip and femur 

procedures, simple pneumonia and 

pleurisy, and gastrointestinal 

hemorrhage. Some of these frequently 

occurring DRGs are conditions which 

are common at end-of-life, and could be 

attended to in the home or with a GIP 

level of care. This raises concerns about 

whether the ER visits/observation stays 

were actually related to the terminal 

illness and related conditions and 

should have been covered by the 

hospice. 

In addition to analyzing data from 

Parts A and B of Medicare, we analyzed 

CY 2012 Part D data which showed $ 

417.9 million in total drug spending by 

Medicare, states, beneficiaries, and 

other payers, for hospice beneficiaries 

during a hospice election. Table 4 

details the various components of Part 

D spending. 

TABLE 4—DRUG COST SOURCES FOR HOSPICE BENEFICIARIES’ 2012 DRUGS RECEIVED THROUGH PART D 

Component Description Total 

Expenditures 

Patient Pay Amount ................................. The dollar amount the beneficiary paid that is not reimbursed by a third party ....... $48,191,067 

Low Income Cost-Sharing Subsidy ......... Medicare payments to plans to subsidize the cost-sharing liability of qualifying 

low-income beneficiaries at the point of sale.

117,558,814 


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6MedPAC, ‘‘Assessing payment adequacy and 

updating payments: hospice services’’, December 13 

2013. Available at: http://www.medpac.gov/

transcripts/hospice_December2013_Public.pdf. 

TABLE 4—DRUG COST SOURCES FOR HOSPICE BENEFICIARIES’ 2012 DRUGS RECEIVED THROUGH PART D—Continued 

Component Description Total 

Expenditures 

Other True Out-of-Pocket Amount .......... Records all other third-party payments on behalf of beneficiary. Examples are 

state pharmacy assistance programs and charities.

2,366,896 

Patient Liability Reduction due to Other 

Payer Amount.

Amount patient liability reduced due to other benefits. Examples are Veteran’s 

Administration and TRICARE.

3,120,834 

Covered Drug Plan Paid Amount ............ Contains the net amount the plan paid for standard benefits .................................. 217,370,068 

Non-Covered Plan Paid Amount ............. Contains the net amount the plan paid beyond standard benefits. Examples include supplemental drugs, supplemental cost-sharing, and OTC drugs paid 

under plan administrative costs.

16,985,982 

Components’ Total .................................. .................................................................................................................................... 405,593,660 

Unknown .................................................. Unreconciled/Unreported Difference between total Gross Drug Costs and Reported payer sources (includes sales taxes, drug dispensing fees, and drugs’ 

ingredient costs).

12,307,603 

Gross Total Drug Costs, Reported .......... .................................................................................................................................... 417,901,263 

Source: Abt Associates analysis of 100% 2012 Medicare Claim Files. For more information on the components above and on Part D data, go 

to the Research Data Assistance Center’s (ResDAC’s) Web site at http://www.resdac.org/. 

The portion of the $417.9 million total 

Part D spending which was paid by 

Medicare is the sum of the Low Income 

Cost-Sharing Subsidy and the Covered 

Drug Plan Paid Amount, or $334.9 

million. 

Medicare Spending: In total, actual 

non-hospice Medicare expenditures 

occurring during a hospice election in 

CY 2012 were $710.1 million for Parts 

A and B spending, plus $334.9 million 

for Part D spending, or $1 billion 

dollars. This figure is comparable to the 

estimated $1 billion MedPAC reported 

during its December 2013 public 

meeting.6 Associated with this $1 

billion in Medicare spending were cost 

sharing liabilities such as co-payments 

and deductibles that beneficiaries 

incurred. Hospice beneficiaries had 

$135.5 million in cost-sharing for items 

and services that were billed to 

Medicare Parts A and B, and $48.2 

million in cost-sharing for drugs that 

were billed to Medicare Part D, while 

they were in a hospice election. In total, 

this represents a 2012 beneficiary 

liability of $183.7 million for Parts A, B, 

and D items or services provided to 

hospice beneficiaries during a hospice 

election. Therefore, the total nonhospice costs paid by Medicare or due 

from beneficiaries for items or services 

provided to hospice beneficiaries during 

a hospice election were over $1.2 billion 

in CY 2012. 

All-Payer Spending: Under Part D, 

gross covered drug cost on a claim 

includes the amount paid by the Part D 

plan, the beneficiary’s cost sharing, and 

any amounts paid by others on the 

beneficiary’s behalf. These latter 

amounts include the low-income 

subsidy amount paid by Medicare for 

beneficiaries who are subsidy-eligible, 

amounts paid by other payers whose 

payments can be counted toward the 

beneficiary’s true out-of-pocket (TrOOP) 

costs, and amounts paid by others 

whose payments, though not TrOOPeligible, reduce the amount of the 

beneficiary’s liability. Accumulated 

gross covered drug costs are used to 

establish the beneficiary’s position in 

the benefit. That is, these costs 

determine when the beneficiary has met 

plan’s deductible, if any, and moves 

into the initial coverage period, and 

when his or her initial coverage period 

ends and the coverage gap begins. 

TrOOP, whether paid by the beneficiary 

or on the beneficiary’s behalf by a 

TrOOP-eligible payer, determines when 

the beneficiary has met the annual outof-pocket threshold and moves into the 

catastrophic phase of the benefit. Thus, 

administration of the Medicare 

prescription drug benefit is dependent 

upon both gross covered drug costs and 

TrOOP. As such, we are also describing 

total non-hospice Part D spending, both 

Medicare and non-Medicare. Nonhospice Part D spending for hospice 

beneficiaries during a hospice election 

was incurred by Medicare, by States, by 

the Veterans Administration, by 

TRICARE, by charities, and by other 

payers, in addition to the cost-sharing 

liabilities incurred by beneficiaries. 

Part D spending by all-payers that 

occurs for hospice beneficiaries during 

a hospice election, including beneficiary 

cost-sharing, totaled $417.9 million in 

CY 2012. If this is added to the $710.1 

million in Medicare spending for Parts 

A and B, and $135.5 million in cost 

sharing for Parts A and B, total nonhospice costs are $1.3 billion. We do not 

have data on other payers’ spending for 

Part A or Part B services. Of note, 51.6 

percent of this $1.3 billion is associated 

with 373 hospices, with an average total 

per beneficiary of $1,289 in non-hospice 

costs. 

On December 6, 2013 and March 3, 

2014, we issued memoranda to all Part 

D plan sponsors and Medicare hospice 

providers (available at http:// 

www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/Hospice/ 

Downloads/Hospice-PartD-Payment.pdf 

and http://www.cms.gov/Medicare/ 

Medicare-Fee-for-Service-Payment/ 

Hospice/Downloads/Part-D-PaymentHospice-Final-2014-Guidance.pdf, 

respectively). These memoranda 

reiterated longstanding policy regarding 

the coverage of drugs in the Medicare 

hospice benefit, and Part D guidance 

regarding payment for drugs for hospice 

beneficiaries under Part D. These 

memoranda also contained new 

clarified guidance for addressing the 

determination of payment responsibility 

for Part D drugs for hospice 

beneficiaries in 2014 and the need for 

rulemaking to address the use of 

standardized processes for determining 

payment responsibility, recovering 

payment when the wrong party has 

paid, and resolving disputes regarding 

payment responsibility. We encourage 

providers to review these important 

memoranda at: http://www.cms.gov/ 

Center/Provider-Type/HospiceCenter.html, and in section III.I in this 

proposed rule. 

The dollars spent by Part D and by 

beneficiaries for drugs covered outside 

of the hospice benefit for hospice 

beneficiaries during a hospice election 

raise concerns about whether some of 

these drugs should have been paid for 

by the hospice. We examined drug costs 

incurred by hospices from 2004 to 2012, 

using hospice cost report data adjusted 

to constant 2010 dollars. We saw a 

declining trend in the drug costs per 

patient day, with costs declining from a 

mean of $20 per patient-day in 2004 to 


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7Story, P., Knight, C. (2004). The Hospice/ 

Palliative Medicine Approach to End-of-Life Care, 

2nd ed. UNIPAC One. 

8Cefalu, C., Ruiz, M. (2011). The Medicare 

Hospice Benefit: A Changing Philosophy of Care? 

Annals of Long Term Care: Clinical Care and Aging. 

19 (1); 43–48. 

9Connor, S. (2007). Development of Hospice and 

Palliative Care in the United States. OMEGA. 56 (1); 

89–99. 

10Testimony by Paul Willging, deputy 

administrator of HCFA, to the Subcommittee on 

Health of the Committee of Ways and Means, House 

of Representatives, March 25, 1982. 

$11 per patient-day in 2012 (see Table 

5 below). We recognize that many 

hospices have become more efficient in 

their operations, but are concerned that 

the decline in drug costs is of a 

magnitude that could suggest that some 

hospices are not providing, and thus are 

not incurring the costs for, all needed 

patient medications. 

TABLE 5—COSTS PER PATIENT-DAY BY YEAR, 2010 DOLLARS

2004 2005 2006 2007 2008 2009 2010 2011 2012 

Number .... n = 1,047 n = 1,218 n = 1,490 n = 1,694 n = 1,834 n = 1,882 n = 1,929 n = 2,015 n = 2,054 

Provider-level drug costs per patient-day 

Mean ........ $20 $18 $17 $15 $14 $13 $12 $11 $11 

Std dev ..... (10) (11) (11) (9) (9) (9) (7) (6) (6) 

Median ..... $20 $17 $16 $15 $14 $13 $12 $11 $10 

Trimmed means 

1%–99% ... $21 $19 $17 $16 $15 $14 $13 $12 $11 

5%–95% ... $20 $18 $16 $15 $14 $13 $12 $11 $10 

Source: Freestanding hospice cost reports with HCRIS release date of 1/23/2014. The costs are averaged at the provider-level and adjusted 

to constant 2010 dollars using the Producer Price Index for prescription pharmaceuticals. 

Notes: We excluded cost reports with period less than 10 months or greater than 14 months, missing information or negative reported values 

for total costs or payments, were in the top and bottom 1% of cost per day, were in the top and bottom 5% of provider margins, and where the 

aggregate of cost centers does not equal total costs as reported. 

We will continue to monitor nonhospice Medicare spending for 

beneficiaries in hospice elections. 

B. Solicitation of Comments on 

Definitions of ‘‘Terminal Illness’’ and 

‘‘Related Conditions’’ 

1. The Development of the Medicare 

Hospice Benefit 

Dame Cicely Saunders introduced the 

idea of hospice care in the United States 

during a lecture at Yale University in 

1963. During the same decade, the 

international best-seller, On Death and 

Dying, published in 1969, by Dr. 

Elisabeth Kubler-Ross, helped to bring 

death out of secrecy and brought new 

public awareness and discussion about 

dying for the first time. Her interviews 

with over 500 dying patients shed new 

light on the dying process, as well as the 

needs and treatment wishes of those 

who were at the end-of-life. Her 

hallmark work argued for end-of-life 

care provided in the home, rather than 

in an institution, and stressed the 

importance of patients’ being an integral 

part of their treatment decisionmaking.7 In 1970, there were no formal 

hospice programs in the United States. 

However, healthcare providers started to 

recognize the need for a care delivery 

model to address the needs of those 

individuals who no longer wanted to 

seek out the aggressive, medical, 

curative model of healthcare for 

advancing illnesses and injuries. They 

also focused on a care delivery model 

that would provide pain and symptom 

relief that would offer an alternative to 

hospitalization and would focus on the 

‘‘total person,’’ as he or she approached 

the end-of-life. The hospice model of 

care, which had been previously 

introduced to the United States by 

Cicely Saunders, was viewed to be the 

type of care delivery model that could 

offer those services. 

In 1972, Dr. Elisabeth Kubler-Ross 

testified at the first national hearings on 

the subject of death with dignity, 

conducted by the U.S. Senate Special 

Committee on Aging, and the first 

hospice legislation was introduced in 

the United States Senate, but was not 

enacted.8 Florence Wald, the Dean of 

the Yale School of Nursing, who 

attended the 1963 lecture given by 

Cicely Saunders, along with two 

pediatricians and a chaplain, founded 

the first United States hospice, 

Connecticut Hospice, in 1974. Ongoing 

meetings between hospice providers 

and hospice leaders evolved into the 

formation of the National Hospice 

Organization in 1978 (now called the 

National Hospice and Palliative Care 

Organization, or NHPCO). The first 

‘‘Standards of a Hospice Program of 

Care’’ were published by National 

Hospice Organization in 1979. Even 

during the early stages of hospice 

development, hospice leaders were 

working with key legislative leaders to 

develop a system to reimburse hospice 

care in the United States.9 However, it 

was evident that before governmental 

reimbursement could occur, data had to 

be collected and analyzed to 

demonstrate what hospices actually 

provided and what costs were involved 

in rendering hospice care. The Health 

Care Finance Administration (HCFA)— 

now known as the Centers for Medicare 

& Medicaid Services (CMS) conducted a 

national demonstration of 26 hospices 

throughout the country to study the 

effect of reimbursed hospice care. The 

results of this demonstration, as well as 

those sponsored by the private health 

insurance sector and private 

foundations, and along with the 

testimony of multiple hospice industry 

leaders, legislators and hospice families, 

helped to form the structure of the 

Medicare Hospice Benefit. 

During Congressional committee 

hearings regarding the development of a 

Medicare hospice benefit, testimony by 

Paul Willging, deputy administrator of 

HCFA, expressed caution about 

embracing benefit expansions that could 

lead to unexpected consequences and 

said that HCFA ‘‘must clearly define 

what we would pay for and to whom, 

in order to meet our responsibilities to 

patients, providers and the 

taxpayers.’’ 10 Other stakeholders agreed 

that a Medicare hospice benefit needed 

to be structured to promote an optimum 

movement from a point of view of 

controlling costs and offering the most 

appropriate means of service without 

the development of a system that 

focused on just getting maximum 

reimbursement from Medicare. 


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11Testimony by Congressman Leon Panetta, to 

the Subcommittee on Health of the Committee of 

Ways and Means, House of Representatives, March 

25, 1982. 12Written testimony by Dr. Edwin J. Olsen, 

director of the National Hospice Organization, to 

the Subcommittee on Health of the Committee of 

Ways and Means, House of Representatives, March 

25, 1982. 13Health Care Financing Administration, Office 

of Research and Demonstrations. September, 1987. 

‘‘Medicare Hospice Benefit Program Evaluation.’’ 

Health Care Financing Extramural Report. HCFA 

Pub. No. 03248. 14Testimony by Paul Willging, deputy 

administrator of HCFA, to the Subcommittee on 

Health of the Committee of Ways and Means, House 

of Representatives, March 25, 1982. 15Comments by Congressman Bill Gradison, at 

the Hearing before the Subcommittee on Health of 

the Committee of Ways and Means, House of 

Representatives, March 25, 1982. 

16 ‘‘Hospice Care-A Growing Concept in the 

United States.’’ (HRD–79–50), March 6, 1979. 

17 GAO Letter, ‘‘Comments on the Legislative 

Intent of Medicare’s Hospice Care Benefit,’’ GAO– 

HRD–83–72, July 12, 1983. 

18 ‘‘Background Materials on Medicare Hospice 

Benefit Including Description of Proposed 

Implementing Regulations,’’ September 9, 1983. 

Committee on Finance, United States Senate, 24– 

525 0. 

19Testimony by Senators George Mitchell and 

Roger W. Jepsen. Testimony before the 

Subcommittee on Health of the Committee on 

Finance, United States Senate, September 15, 1983. 

Stakeholders also agreed that unique 

characteristics of hospice care should be 

maintained. The goal was not to have 

the Federal government provide total 

support to hospice programs; rather, 

legislation would be enacted that would 

supplement the continued support of 

the local community, private sector and 

other resources which allow hospices to 

maintain their unique identity, spirit of 

volunteerism and altruistic focus.11 The 

National Hospice Organization 

president, Dr. Edwin Olsen, testified at 

the March 25, 1982 Congressional 

hearing that, at that time, most 

American hospices were community 

charities by design and intent, and that 

hospice offered an integrated service. 

Hospices functioned not as an add-on, 

but as a comprehensive alternative to 

the typical ways of caring for the 

terminally ill and their families. The 

hospice industry, as discussed in Dr. 

Olsen’s testimony, was very clear that 

their goal was to maintain that 

alternative service for those who were 

approaching end-of-life. 

Hospice industry leaders also 

expressed the importance of hospice 

program accountability. Hospices would 

be accountable for and be able to control 

the quality and delivery of patients 

admitted for hospice care, instead of 

having to ‘‘broker’’ the patients out to 

other providers for reimbursement and 

convenience.12 Hospice advocates 

stressed the importance of maintaining 

continuous clinical control over all 

aspects of care to ensure a successful 

hospice program and framers of the 

benefit recognized this fact by requiring 

professional management 

responsibility.13 Although there were 

ongoing concerns by HCFA, the 

Congress, and the hospice industry 

about the potential misuse of a new 

hospice benefit,14 15 Section 122 of the 

Tax Equity and Fiscal Responsibility 

Act (TEFRA) of 1982 (Pub. L. 97–248, 

enacted on September 3, 1982) 

expanded the scope of Medicare 

benefits by authorizing coverage for 

hospice care for terminally ill 

beneficiaries. 

2. Legislative History of the Medicare 

Hospice Benefit 

After Medicare coverage of hospice 

care was authorized by the Congress, the 

General Accounting Office (now 

Government Accountability Office, or 

GAO) summarized the legislative intent 

of the Medicare hospice benefit in a July 

13, 1983 letter. In this letter, the GAO 

acknowledged that there was no 

standard definition of what a hospice 

was or what services an organization 

must provide to be considered a 

hospice. However, the GAO stated that 

it was generally agreed that the hospice 

concept in the United States is a 

program of care in which an organized 

interdisciplinary team systematically 

provides palliative care (relief of pain 

and other symptoms) and supportive 

services to patients with terminal 

illnesses.16 This letter further states that 

the hospice objective is to make a 

patient’s remaining days as comfortable 

and meaningful as possible and to help 

the family cope with the stress by 

making the necessary adjustments to the 

changes in the patient’s illness and 

death. The GAO letter also reiterates 

that hospices must directly provide 

certain core services including nursing 

care, physician services and counseling 

services and must either directly, or 

through arrangements, provide physical 

therapy, occupational therapy, speechlanguage pathology, home hospice 

aides, homemaker services, drugs, 

medical supplies and appliances and 

short-term inpatient care. The letter 

concluded by stating that the Congress 

would continue to monitor the 

effectiveness of the hospice 

demonstration program, which was 

ongoing at the time of enactment, the 

equity of the reimbursement system, 

method and benefit structure put into 

effect under the hospice provision, 

including the feasibility and advisability 

of a prospective reimbursement system 

for hospice care and other aspects of the 

hospice program.17

Further description of the Medicare 

hospice benefit design was provided in 

a report prepared by the Congressional 

staff for the Senate Committee on 

Finance on September 9, 1983. In this 

report, four basic principles were 

presented, which according to hospice 

advocates, distinguish hospice care from 

the traditional health care system: 

1. The patient and his/her family are 

considered the unit of care. 

2. A multidisciplinary team is used to 

assess the physical, psychological and 

spiritual needs of the patient and family 

to develop an overall plan of care and 

to provide coordinated care. 

3. Pain and collateral symptoms 

associated with the terminal illness and 

previous treatments are controlled, but 

no heroic efforts are made to cure the 

patient. 

4. Bereavement follow-up is provided 

to help the family cope with their 

emotional suffering.18

It was also noted that the statute 

provides that an individual, upon 

making an election to receive hospice 

coverage, would be deemed to have 

waived payments for certain other 

benefits in addition to choosing a 

palliative mode of treatment, except in 

‘‘exceptional and unusual 

circumstances’’ as the Secretary may 

provide (section 1812(d)(2)(A) of the 

Act). Furthermore, the hospice plan of 

care must include assessment of the 

individual’s needs and identification of 

the services to meet those needs 

including the management of discomfort 

and symptom relief. 

Several Senators testified at a 

September 15, 1983 Hearing before the 

Subcommittee on Health of the 

Committee on Finance regarding 

ongoing concerns with the new 

Medicare hospice benefit. These 

Senators made it clear that the new 

healthcare delivery system—hospice— 

was to offer an alternative to 

institutionalized care for the terminally 

ill. Concerns were expressed over the 

possibility that ‘‘store front’’ hospices 

would crop up as a result of Medicare 

reimbursement being made available for 

this service. The Senators stated that 

they wanted to maintain flexibility 

within the benefit without creating 

incentives for fraud and abuse.19

Similarly, industry advocates were also 

concerned that availability of Medicare 

reimbursement would attract interest 

from those simply interested in a new 

source of revenue. The hospice industry 

agreed that the Medicare hospice benefit 

was created, not as a new revenue 

source for providers, but as a benefit 


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20Position paper submitted by Donald J. Gaetz, 

president, National Hospice Organization. 

‘‘Subcontracting for Nursing Services under the 

Medicare Hospice Benefit.’’ Testimony before the 

Subcommittee on Health of the Committee on 

Finance, United States Senate, September 15, 1983. 

21Testimony by Dr. Daniel Hadlock, Hospice, Inc, 

before the Select Committee on Aging. House of 

Representatives, May 25, 1983. 

22 ‘‘NHPCO Comments on Washington Post 

Article’’, Retrieved on December 27, 2013. http:// 

www.nhpco.org/press-room/press-releases/nhpcoresponds-washington-post 

23Cefalau, C., Ruiz, M. The Medicare Hospice 

Benefit: A Changing Philosophy of Care? Annals of 

Long-Term Care: Clinical Care and Aging. 2011; 

19(1): 43–48. 

24Cefalau, C., Ruiz, M. The Medicare Hospice 

Benefit: A Changing Philosophy of Care? Annals of 

Long-Term Care: Clinical Care and Aging. 2011; 

19(1): 43–48. 

25Comments by Congressman Bill Gradison, at 

the Hearing before the Subcommittee on Health of 

the Committee of Ways and Means, House of 

Representatives, March 25, 1982; Testimony by 

Rosemary Johnson-Hurzeler, CEO, The Connecticut 

Hospice, Testimony before the Subcommittee on 

Health of the Committee on Finance, United States 

Senate, September 15, 1983; Testimony by Margaret 

Cushman, MSN, RN, Chairman of Governmental 

Affairs, National Association of Home Health and 

Hospice Care (NAHC) before the Subcommittee on 

Health of the Committee on Finance, United States 

Senate, September 15, 1983. 

26Comments by Congressman Bill Gradison, at 

the Hearing before the Subcommittee on Health of 

the Committee of Ways and Means, House of 

Representatives, March 25, 1982. 

27Testimony by Congressman Leon Panetta, to 

the Subcommittee on Health of the Committee of 

Ways and Means, House of Representatives, March 

25, 1982. 

28Hoyer, T. (1998). A History of the Medicare 

Hospice Benefit. The Hospice Journal, 13(1–2), 61– 

69. 

29Hoyer, T. (1998). A History of the Medicare 

Hospice Benefit. The Hospice Journal, 13(1–2), 61– 

69. 

choice for patients and their families.20

Terminally ill Medicare beneficiaries 

could decide not to elect hospice care 

and they would continue to be able to 

receive all other Medicare services 

available, such as home health services 

that include skilled nursing and home 

health aide care, inpatient hospital 

services, supplies, medications, and 

DME. For example, in response to recent 

home health rulemaking we received 

anecdotal comments that some home 

health agencies commented that they 

are providing palliative care to 

homebound terminally ill individuals 

who have not elected the hospice 

benefit. In those instances, the patient is 

receiving home health aide services, 

nursing care, and supplies needed 

under the home health benefit and the 

DME and medications that the patient 

needs are still covered under Medicare 

Parts B and D. However, we note that, 

with the exception of home health, 

these services typically have associated 

co-payments and would be rendered 

through various different providers or 

suppliers, perhaps with a lack of 

continuity and coordination that would 

be provided under the Medicare hospice 

benefit. Under the Medicare hospice 

benefit, the hospice-eligible individual 

would receive all of those services, and 

more, with the hospice provider 

assuming the clinical and professional 

responsibility of coordinating all of the 

necessary care and services without the 

beneficiary assuming responsibility for 

the associated cost sharing required 

outside of the hospice benefit. 

3. Hospice Care Today 

The Medicare hospice benefit was a 

unique addition to the U.S. health care 

system. Prior to the implementation of 

the Medicare hospice benefit, the 

government reimbursed providers based 

on the cost of delivering care. 

Reimbursement under the Medicare 

hospice benefit is a fixed, per day, per 

level of care prospective payment 

structure. By creating a fixed payment 

for hospice care, the provider is at risk 

for costs that exceed the payment 

amount; and, if the fixed payment 

exceeds the cost of care, the hospice is 

allowed to keep the gain. Under the 

Medicare hospice benefit, the provider 

has clinical flexibility in how hospices 

can render care to best meet the needs 

of the individual patient and his or her 

family. This is viewed as a joint 

partnership between the providers of 

care and the federal government to 

provide services and the financial 

payment for those services for those 

who are dying. Hospice advocates, 

during the development of the benefit, 

welcomed this type of reimbursement 

structure for the flexibility it afforded in 

providing individualized hospice 

services 21. The hospice industry 

continues to recognize that the Medicare 

hospice benefit has always been a riskbased clinical and economic model of 

care stating that the fixed 

reimbursement model means ‘‘a fixed 

sum for all-inclusive end of life care.’’ 22

Similar to the more recent medical 

home model for primary care, hospice 

has always been patient-centered, 

comprehensive, team-based, 

coordinated, accessible, focused on 

quality and safety, and extends 

throughout the continuum of care. 

Throughout the development of the 

Medicare hospice benefit, experts in the 

hospice field believed that the success 

or failure of hospice, under Medicare, 

would depend on the hospice plan of 

care, appropriate implementation of the 

plan of care, and the hospice team 

sharing the same philosophy of patientcentered, comprehensive, and holistic 

care.23 A coordinated, collaborative 

approach to each and every hospice 

patient and his or her family was 

considered to be the most important 

component of the success of the 

Medicare hospice benefit.24 During the 

development of the Medicare hospice 

benefit, there were concerns by both the 

Congress and the hospice industry 

regarding the potential for fraud and 

abuse by some providers resulting from 

the enactment of a Medicare hospice 

benefit.25 One drafter of the legislation 

expressed that he wanted to maintain 

benefit flexibility by allowing hospices 

to render individualized care, 

promoting access to needed services, 

and providing high quality care while 

maintaining fiscal integrity of the 

Medicare Trust Funds.26 This was a 

benefit founded in trust—trust that 

hospices would provide the 

comprehensive care and services 

promised during the benefit 

development and trust that Medicare 

would be a partner in helping to share 

the costs.27 It was very clear throughout 

the development, and years after the 

implementation of the Medicare hospice 

benefit, that hospices were expected to 

make good on their promise to do a 

better job than conventional Medicare 

services for those who were at end-oflife.28 Deliberately, the law made no 

provision for discharging a hospice 

patient except under very limited 

circumstances and only after making 

attempts to rectify those 

circumstances.29 This meant that once a 

beneficiary elected hospice and was 

under one of the three 60-day election 

periods, a hospice could not just 

discharge a patient for the sake of cost 

or convenience. Currently, there are two 

90-day election periods and unlimited 

60-day election periods, as long as the 

beneficiary continues to meet eligibility 

criteria. However, hospices are still 

limited in the reasons for discharge, and 

still cannot discharge a hospice 

beneficiary for cost or convenience. Our 

regulations at section 418.26(a) state the 

reasons a hospice can discharge a 

beneficiary from hospice services. 

Since the implementation of the 

Medicare hospice benefit, hospice 

utilization continues to grow. More 

Medicare beneficiaries are becoming 

aware and educated of the benefits of 

hospice care. In recent years, the 

percentage of Medicare deaths for 

patients under a hospice election has 

increased from 20 percent in 2000 to 44 

percent in 2012. Total expenditures 

have increased from over $9.2 billion in 

2006 to over $15.1 billion in 2013. This 

observed growth far outpaces the annual 

market basket increases and it not solely 

reflective of an increase in utilization. 

We note that average spending per 


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30Calendar year 2013 expenditures and average 

spending per beneficiary were calculated using 

hospice claims data from the Chronic Conditions 

Data Warehouse (CCW), accessed on February 27, 

2014. 

31MedPAC, ‘‘Assessing payment adequacy and 

updating payments: hospice services’’, December 13 

2013. Available at: http://www.medpac.gov/

transcripts/hospice_December2013_Public.pdf. 32Office of the Inspector General, Department of 

Health and Human Services. Medicare Could be 

Paying Twice for Prescription Drugs for 

Beneficiaries in Hospice. June, 2012. A–06–10– 

00059. 33World Health Organization. (January, 2013). 

Essential Medications in Palliative Care. 

beneficiary has increased substantially 

between 2006 and 2013 from 

approximately $9,833 in 2006 to 

$11,458 in 2013.30

Section 3132(a) of the Affordable Care 

Act provides statutory authority for 

CMS to reform the hospice payment 

system no earlier than October 1, 2013. 

We presented data in the FY 2014 

Hospice Wage Index and Payment Rate 

Update Final Rule, regarding diagnosis 

reporting on hospice claims and opioids 

paid under Part D for beneficiaries in a 

hospice election (78 FR 48234). Recent 

analysis of other Part A, Part B and Part 

D spending in 2012 (including 

beneficiary cost-sharing payments of 

$135.5 million for Parts A and B and 

$48.2 million for Part D) shows that 

there was an additional $1 billion in 

total Medicare spending during a 

hospice election (see section III.A.4). 

This includes Part A payments for 

inpatient hospitalizations and SNF 

stays, as well as Part B payments for 

outpatient and physician services, 

diagnostic tests and imagining, and 

ambulance transports, to name just a 

few. There is concern that many of these 

services should have been provided 

under the Medicare hospice benefit as 

they very likely were for services related 

to the terminal illness and related 

conditions. This strongly suggests that 

hospice services are being ‘‘unbundled’’, 

negating the hospice philosophy of 

comprehensive, holistic care and 

shifting the costs to other parts of 

Medicare, and creating additional costsharing burden to those vulnerable 

Medicare beneficiaries who are at endof-life. Duplicative payments for 

hospice-covered services also threaten 

the program integrity and fiscal viability 

of the hospice benefit. 

Reports by both the Medicare 

Payment Advisory Committee 

(MedPAC) and the Office of the 

Inspector General (OIG) expressed 

similar concerns regarding the 

unbundling of services meant to be 

covered under the hospice per diem, 

capitated payment system. Similar to 

the analysis presented above, MedPAC 

also analyzed non-hospice utilization 

and spending patterns through Parts A, 

B and D for Medicare hospice 

beneficiaries. MedPAC also concluded 

that over $1 billion FFS spending was 

attributed to providing services reported 

as unrelated to the terminal conditions 

of hospice enrollees. MedPAC went on 

to state that 58 percent of Medicare 

hospice enrollees received a service or 

drug outside of the hospice benefit over 

the course of a hospice episode. The 

highest shares of spending were on 

drugs and inpatient services.31 In 

addition, the OIG reported in June of 

2012 that Medicare could be paying 

twice for prescription drugs for 

beneficiaries receiving services under 

the Medicare hospice benefit and 

recommended that CMS increase its 

oversight to make sure that Part D is not 

paying for medications already included 

in the Medicare hospice per diem 

payment rates.32 As a result of the OIG 

report, the CMS’ Center for Program 

Integrity (CPI) began recoupment efforts 

for analgesics from Part D plan 

sponsors. 

Ongoing Part D memo guidance has 

also been issued to clarify existing 

coverage and payment policies. The 

most recent Part D guidance was 

provided in the March 10, 2014 

memorandum entitled, ‘Part D Payment 

for Drugs for Beneficiaries Enrolled in 

Hospice—Final 2014 Guidance’ (http:// 

www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/Hospice/

Downloads/Part-D-Payment-HospiceFinal-2014-Guidance.pdf) In addition, 

this rule solicits comments on processes 

that could be developed to address the 

inappropriate Part D reimbursement for 

medications that should be covered 

under the Medicare hospice per diem 

(see Section III.I). The purpose of these 

Part D guidance memos, in response to 

OIG reports of possible duplication of 

payment for drugs under the hospice 

per diem and Part D plans, was to 

outline the expectations regarding 

coordination of benefits and coverage 

responsibility between Part D plan 

sponsors and hospices. The ongoing 

concern is that hospices are not 

providing the broad range of 

medications required by hospice 

beneficiaries during a hospice election, 

especially for those drugs classified as 

analgesics, antianxiolytic, antiemetics 

and laxatives (generally considered 

essential medications for palliation in a 

hospice population).33 Comments 

received, regarding this memo guidance, 

highlighted that there are multiple 

interpretations as to the meaning of 

what are considered ‘‘related 

conditions.’’ Additionally, it was noted 

in these comments that the terms, 

‘‘terminal illness’’, ‘‘terminal 

diagnosis’’, ‘‘qualifying terminal 

diagnosis’’, and ‘‘terminal prognosis’’ 

were used interchangeably and with 

varying interpretations as to their 

meanings. 

We believe summary of the 

‘‘Development of the Hospice Benefit’’ 

and the ‘‘Legislative history of the 

Medicare Hospice Benefit’’ clearly 

captures the expectation that hospices 

are to provide holistic and 

comprehensive services under the 

Medicare hospice benefit. As stated in 

the 1983 proposed and final rules, and 

reiterated in the FY 2014 Hospice Wage 

Index and Rate Update proposed and 

final rules: ‘‘It is our general view that 

the waiver required by law is a broad 

one and that hospices are required to 

provide virtually all of the care that is 

needed by terminally ill patients’’ (48 

FR 56010). Our expectation continues to 

be that hospices offer and provide 

comprehensive, virtually all-inclusive 

care, and in a better, more humane way, 

than is available in other healthcare 

settings. In order to preserve the 

Medicare hospice benefit and ensure 

that Medicare beneficiaries continue to 

have access to comprehensive, highquality and appropriate end-of-life 

hospice care, we will continue to 

examine program vulnerabilities and 

implement appropriate safeguards in the 

Medicare hospice benefit, when 

appropriate. 

4. Definition of ‘‘Terminal Illness’’ 

Since the implementation of the 

Medicare hospice benefit, we have 

defined a ‘‘terminally ill’’ individual to 

mean ‘‘that the individual has a medical 

prognosis that his or her life expectancy 

is 6 months or less if the illness runs its 

normal course’’ (§ 418.3). We have 

always interpreted ‘‘terminally ill’’ to 

mean a time frame of life expectancy 

and expect that the individual’s whole 

condition plays a role in that prognosis. 

Comments received in response to prior 

years’ proposed rules state that 

longstanding, preexisting conditions 

should not be considered related to a 

patient’s terminal illness or related 

conditions and that chronic, stable 

conditions play little to no role in a 

patient’s terminal illness or related 

conditions. Commenters also stated that 

controlled pain and symptoms are not 

considered to be related to a patient’s 

terminal illness or related conditions, 

that not all pain is related to the 

terminal illness and related conditions, 

and that comorbidities and the 

maintenance of comorbidities are not 

related to a patient’s terminal illness or 

related conditions. These commenters 

believed these types of conditions 


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34National Hospice and Palliative Care 

Organization: ‘‘Standards of Practices for Hospice 

Programs’’, 2010. Retrieved on February 20, 2014 

from: http://www.nhpco.org/nhpco-standardspractice. 

35Mosby’s Medical Dictionary, 8th edition, 2009, 

Elsevier. 

should not be included in the bundle of 

services covered under the Medicare 

hospice benefit. As previously stated in 

response to those comments, we believe 

that these conditions are included in the 

bundle of covered hospice services. The 

original implementing regulations of the 

Medicare hospice benefit, beginning 

with the 1983 Hospice proposed and 

final rules (48 FR 38146 and 48 FR 

56008), articulates a set of requirements 

that do not delineate between preexisting, chronic, nor controlled 

conditions. In order to be eligible to 

receive hospice services under the 

Medicare hospice benefit, the individual 

must be entitled to Part A and must be 

certified as being terminally ill, meaning 

that his or her medical prognosis is a 

life expectancy of 6 months or less if the 

illness runs its normal course. We have 

recognized throughout the federal 

regulations at § 418 that the total person 

is to be assessed, including acute and 

chronic conditions, as well as controlled 

and uncontrolled conditions, in 

determining an individual’s terminal 

prognosis. All body systems are 

interrelated; all conditions, active or 

not, have the potential to affect the total 

individual. The presence of 

comorbidities is recognized as 

potentially contributing to the overall 

status of an individual and should be 

considered when determining the 

terminal prognosis. NHPCO defines 

‘‘comorbidity,’’ as: ‘‘known factors or 

pathological disease impacting on the 

primary health problem and generally 

attributed to increased risk for poor 

health status outcomes.’’ 34

We have defined palliative care—the 

nature of the care provided under the 

hospice benefit—in our regulations at 

§ 418.3 to mean: ‘‘Patient and familycentered care that optimizes quality of 

life by anticipating, preventing and 

treating suffering. Palliative care 

throughout the continuum of illness 

involves addressing physical, 

intellectual, emotional, social and 

spiritual needs and to facilitate patient 

autonomy, access to information and 

choice.’’ Note that, in this definition, 

palliative care is to anticipate and 

prevent, as well as treat, suffering. This 

means that hospices are to be proactive 

in their care approach and not just 

reactive to pain and symptoms after 

they arise. 

Because hospice care is unique in its 

comprehensive, holistic, and palliative 

philosophy and practice, we want to 

ensure that the hospice services under 

the Medicare hospice benefit are 

preserved and not diluted, or 

unbundled in any way. For context, the 

definition of illness means ‘‘an 

abnormal process in which aspects of 

the social, physical, emotional, or 

intellectual condition and function of a 

person are diminished or impaired 

compared with that person’s previous 

condition’’.35 An intensive review of the 

history of hospice, hospice philosophy 

and legislative actions described above 

provided the basis for discussion among 

several CMS clinical leaders across 

several agency components as to the 

meaning of ‘‘terminal illness’’ within 

the context of the Medicare hospice 

benefit. After a review of all of the 

history listed above, the clinical 

collaborative effort across CMS solicits 

comments on defining ‘‘terminal 

illness’’ to mean: ‘‘Abnormal and 

advancing physical, emotional, social 

and/or intellectual processes which 

diminish and/or impair the individual’s 

condition such that there is an 

unfavorable prognosis and no 

reasonable expectation of a cure; not 

limited to any one diagnosis or multiple 

diagnoses, but rather it can be the 

collective state of diseases and/or 

injuries affecting multiple facets of the 

whole person, are causing progressive 

impairment of body systems, and there 

is a prognosis of a life expectancy of six 

months or less’’. 

We are soliciting comments on this 

definition for further discussion and 

consideration for potential future 

rulemaking. 

5. Definition of ‘‘Related Conditions’’ 

Section 1812(d)(2) of the Act provides 

that an individual, upon making an 

election to receive hospice coverage, 

would be deemed to have waived 

payments for certain other benefits 

except in ‘‘exceptional and unusual 

circumstances as the Secretary may 

provide.’’ Comments received on the 

1983 Hospice proposed rule specifically 

asked for further CMS clarification 

regarding the concept of ‘‘related 

conditions.’’ Specifically, the 

commenters suggested a more detailed 

definition of what constitutes care for a 

patient’s terminal illness or related 

conditions (which is the responsibility 

of the hospice) and what constitutes 

care for unrelated conditions (for which 

out-of-hospice Medicare payment may 

be made) (48 FR 56010). Our response 

was: ‘‘. . . we have not received any 

suggestions for identifying ‘exceptional 

or unusual’ circumstances that 

warranted the inclusion of a specific 

provision in the regulations to 

accommodate them. Most of the 

comments that were made attempted to 

suggest this exception as a means of 

routinely providing non-hospice 

Medicare financing for the expense of 

costly services needed by hospice 

patients, and we do not view this as an 

appropriate interpretation of the law’’ 

(48 FR 56011). The law allows for 

circumstances in which services needed 

by a hospice beneficiary would be 

completely unrelated to the terminal 

illness and related conditions, but we 

believe that this situation would be the 

rare exception rather than the norm. We 

reiterated this position in the FY 2014 

Hospice Wage Index and Rate Update 

proposed rule (78 FR 27826) as a 

reminder of the expectation of the 

holistic nature of hospice services that 

shall be provided under the hospice 

benefit, as well as to remind hospices 

about diagnosis reporting on hospice 

claims. 

Therefore, in keeping with the tenets 

of hospice philosophy described in this 

section, the intent of the Medicare 

hospice benefit, expectations of 

comprehensive care, and in response to 

previous and ongoing stakeholder 

comments, the CMS clinical 

collaborative effort solicits comments on 

defining ‘‘related conditions’’ to mean: 

‘‘Those conditions that result directly 

from terminal illness; and/or result from 

the treatment or medication 

management of terminal illness; and/or 

which interact or potentially interact 

with terminal illness; and/or which are 

contributory to the symptom burden of 

the terminally ill individual; and/or are 

conditions which are contributory to the 

prognosis that the individual has a life 

expectancy of 6 months or less’’. 

We solicit comments on this 

definition for further discussion and 

consideration for potential future 

rulemaking. 

C. Guidance on Determining 

Beneficiaries’ Eligibility for Hospice 

An individual must be certified by the 

hospice medical director and the 

individual’s attending physician (if 

designated by the individual) as being 

terminally ill, meaning that the 

individual has a medical prognosis of a 

life expectancy of 6 months or less in 

order to receive the Medicare hospice 

benefit. However, we also have 

recognized the challenges in 

prognostication. It has always been our 

expectation that the certifying 

physicians will use their best clinical 

judgment, based on the initial and 

updated comprehensive assessments 

and collaboration with the hospice 

interdisciplinary group (IDG) to 


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determine if the individual has a life 

expectancy of six months or less with 

each certification and recertification. As 

stated in previous rules, in reaching a 

decision to certify that the patient is 

terminally ill, the hospice medical 

director must consider at least the 

following information per our 

regulations at § 418.25 (b): 

• Diagnosis of the terminal condition 

of the patient. 

• Other health conditions, whether 

related or unrelated to the terminal 

condition. 

• Current clinically relevant 

information supporting all diagnoses. 

We do recognize that making a 

prognosis is not an exact science. 

Section 322 of the Benefits 

Improvement and Protection Act of 

2000 (BIPA) (Pub. L. 106–554) amended 

section 1814(a) of the Act by clarifying 

that the certification of an individual 

who elects hospice ‘‘shall be based on 

the physician’s or medical director’s 

clinical judgment regarding the normal 

course of the individual’s illness.’’ The 

amendment clarified that the 

certification is based on a clinical 

judgment regarding the usual course of 

a terminal illness, and recognizes the 

fact that making medical 

prognostications regarding life 

expectancy are not exact. However, the 

amendment regarding the physician’s 

clinical judgment does not negate the 

fact that there must be a clinical basis 

for a certification. A hospice is required 

to make certain that the physician’s 

clinical judgment can be supported by 

clinical information and other 

documentation that provide a basis for 

the certification of 6 months or less if 

the illness runs its normal course. 

While the expectation remains that 

the hospice physician will determine a 

beneficiary’s eligibility for hospice, this 

is not to say that this decision cannot be 

reviewed if there is a question as to 

whether the clinical documentation 

supports or does not support a patient’s 

hospice eligibility as hospice services 

provided must be reasonable and 

necessary for the palliation and 

management of the terminal illness and 

related conditions. The goal of any 

review for eligibility is to ensure that 

hospices are thoughtful in their 

eligibility determinations so that 

hospice beneficiaries are able to access 

their benefits appropriately. CMS’ right 

to review clinical documentation that 

supports physician certifications has 

been established in federal court and by 

the agency in an administrative ruling. 

(See, for example, HCFA Ruling, 93–1 

Weight to be Given to a Treating 

Physician’s Opinion in Determining 

Medicare Coverage of Inpatient Care in 

a Hospital or Skilled Nursing Facility 

(May 18, 1993); Maximum Comfort, Inc 

v. Leavitt (512 F.3d 1081 (9th Cir. 2007); 

MacKenzie Medical Supply v. Leavitt 

(506 F.3d 341 (4th Cir. 2007))). In order 

to be covered under Medicare Part A, 

the care must also be reasonable and 

necessary. There has always been a 

statutory prohibition (section 1862 

(a)(1)(C) of the Act) against payment 

under the Medicare program for services 

which are not reasonable and necessary 

for the palliation or management of 

terminal illness. Additionally, section 

1869(a)(1) of the Act makes clear that 

the Secretary makes determinations 

concerning entitlement, coverage and 

payment of benefits under part A and 

part B of Medicare. 

We are reminding providers that there 

are multiple public sources available to 

assist in determining whether a patient 

meets Medicare hospice eligibility 

criteria (that is, industry-specific 

clinical and functional assessment tools 

and information on MAC Web sites). 

Additionally, we expect that hospices 

will use their expert clinical judgment 

in determining eligibility for hospice 

services. We expect that documentation 

supporting a 6-month or less life 

expectancy is included in the 

beneficiary’s medical record and 

available to the MACs when requested. 

If a beneficiary improves and/or 

stabilizes sufficiently over time while in 

hospice such that he/she no longer has 

a prognosis of 6 months or less from the 

most recent recertification evaluation or 

definitive interim evaluation, that 

beneficiary should be considered for 

discharge from the Medicare hospice 

benefit. Such beneficiaries can be reenrolled for a new benefit period when 

a decline in their clinical status is such 

that their life expectancy is again 6 

months or less. On the other hand, 

beneficiaries in the terminal stage of 

their illness that originally qualify for 

the Medicare hospice benefit but 

stabilize or improve while receiving 

hospice care, yet have a reasonable 

expectation of continued decline for a 

life expectancy of less than 6 months, 

remain eligible for hospice care. The 

hospice medical director must assess 

and evaluate the full clinical picture of 

the Medicare hospice beneficiary to 

make the determination whether the 

beneficiary still has a medical prognosis 

of 6 months or less, regardless of 

whether the beneficiary has stabilized or 

improved. There are prognostication 

tools available for hospices to assist in 

thoughtful evaluation of Medicare 

beneficiaries for terminally ill eligibility 

for the Medicare hospice benefit. We 

expect hospice providers to use the full 

range of tools available, including 

guidelines, comprehensive assessments, 

and the complete medical record, as 

necessary, to make responsible and 

thoughtful determinations regarding 

terminally ill eligibility. We have 

always acknowledged the uniqueness of 

every Medicare beneficiary and support 

thorough and thoughtful evaluation in 

determining whether beneficiaries meet 

the eligibility criteria of being certified 

as terminally ill. We continue to support 

the concept of shared decision-making, 

patient choice and the right care at the 

right time to allow Medicare 

beneficiaries full and appropriate access 

to their Medicare benefits, including 

hospice care. Furthermore, Medicare 

hospice beneficiaries have certain 

guaranteed rights. If the hospice or 

designated attending physician believes 

that the hospice beneficiary is no longer 

eligible for hospice care because his or 

her condition has improved, and the 

beneficiary does not agree with that 

determination, the hospice beneficiary 

has the right to ask for a review of his 

or her case. The hospice should provide 

the hospice beneficiary with a notice 

that explains his or her right to an 

expedited review by a contracted 

independent reviewer hired by 

Medicare, called a Quality Improvement 

Organization (QIO). If the hospice 

beneficiary asks for this appeal, the QIO 

will determine if hospice services 

should continue. The QIO will 

determine if the beneficiary still needs 

hospice services. The provider is 

expected to continue to provide services 

for the patient following a favorable 

decision by a QIO. In the QIO decision, 

the QIO should advise the provider as 

to why it disagrees with the hospice, 

which should help the provider to reevaluate the discharge decision. If at 

another point in time following the 

resumption of covered services the 

hospice believes that the patient is no 

longer hospice eligible, the provider 

should timely deliver a CMS–10123 to 

notify the patent of its decision to 

discharge. The patient could again 

appeal to the QIO. Medicare 

beneficiaries have the right to be 

included in decisions about their care, 

the right to a fair process to appeal 

decisions about payment of services, 

and the right to privacy and 

confidentiality. 

D. Proposed Timeframe for Hospice Cap 

Determinations and Overpayment 

Remittances 

As described in sections 

1861(dd)(2)(A)(iii) and 1814(i)(2)(A) 

through (C) of the Act, when the 

Medicare hospice benefit was 

implemented, the Congress included 2 

limits on payments to hospices: An 


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36National Hospice and Palliative Care 

Organization (NHPCO), ‘‘A Short History of the 

Medicare Hospice Cap on Total Expenditures.’’ 

Retrieved on February 19, 2014 at: http://

www.nhpco.org/sites/default/files/public/

regulatory/History_of_Hospice_Cap.pdf. 

37MedPAC, ‘‘Report to Congress: Medicare 

Payment Policy’’, March 2012, pp. 293–295, 302. 

38MedPAC, ‘‘Report to Congress: Medicare 

Payment Policy’’, March 2013, p. 276. 

inpatient cap and an aggregate cap. The 

hospice inpatient cap limits the total 

number of Medicare inpatient days to 

no more than 20 percent of a hospice’s 

total Medicare hospice days. The intent 

of the inpatient cap was to ensure that 

hospice remained a home-based benefit. 

The hospice aggregate cap limits the 

total aggregate payment any individual 

hospice can receive in a year. The intent 

of the hospice aggregate cap was to 

protect Medicare from spending more 

for hospice care than it would for 

conventional care at the end of life. 

The aggregate cap amount was set at 

$6,500 per beneficiary when first 

enacted in 1983; this was an amount 

hospice advocates agreed was well 

above the average cost of caring for a 

hospice patient.36 The $6,500 amount is 

adjusted annually by the change in the 

medical care expenditure category of the 

consumer price index for urban 

consumers from March 1984 to March of 

the cap year. For the 2013 cap year, the 

cap amount was $26,157.50 per 

beneficiary. The cap year is defined as 

the period from November 1st to 

October 31st, and was set in place in the 

December 16, 1983 hospice final rule 

(48 FR 56022). 

The cap amount is multiplied by the 

number of Medicare beneficiaries who 

received hospice care from a particular 

hospice during the year, resulting in its 

hospice aggregate cap, which is the 

allowable amount of total Medicare 

payments that hospice can receive for 

that cap year. There are two different 

methods for counting a hospice’s 

beneficiaries: The streamlined and the 

patient-by-patient proportional 

methods. Which method a hospice can 

use to count beneficiaries depends on a 

number of factors, as described in our 

regulations at § 418.309 and in section 

90.2.3 of the hospice Benefit Policy 

Manual (IOM 100–02, chapter 9, 

available at http://www.cms.gov/

Regulations-and-Guidance/Guidance/

Manuals/Downloads/bp102c09.pdf). A 

hospice’s total Medicare payments for 

the cap year cannot exceed the hospice’s 

aggregate cap. If its aggregate cap is 

exceeded, then the hospice must repay 

the excess back to Medicare. 

While hospices rarely exceed the 

inpatient cap, in its March 2012 Report 

to the Congress, MedPAC reported that 

an increasing number of hospices are 

exceeding the aggregate cap. MedPAC 

also noted that above-cap hospices were 

almost all for-profit with very long 

lengths of stay, high live discharge rates, 

and very high profit margins before the 

return of cap overpayments.37 The 

percentage of hospices exceeding the 

aggregate cap rose from 2.6 percent in 

2002 to a peak of 12.5 percent in 2009. 

In 2010, the percentage of hospices 

exceeding the aggregate cap decreased 

to 10.1 percent.38

Abt Associates, our hospice reform 

contractor, also performed analysis on 

the number of hospices exceeding the 

aggregate cap with results similar to 

MedPAC’s, where an increasing 

percentage of hospices exceeded their 

caps from 2006 (9.1 percent) to a peak 

in 2009 (12.8 percent), followed by a 

decline through 2011 (10.5 percent). 

However, the analysis shows an 

increase in 2012, with 11.6 percent of 

hospices exceeding their aggregate caps. 

Additionally, analysis of above-cap 

hospices showed that the average 

overpayment per beneficiary has 

increased over time, up 35.2 percent 

from 2006 ($7,384) to 2012 ($9,983). 

Using above-cap hospices, we also 

found that the average overpayment 

amount went from $732,103 in 2006 to 

$440,727 in 2011, but that this 

downward trend is estimated to change 

in 2012, when the average overpayment 

amount is estimated to increase to 

$547,011. 

We also compared hospices’ year-end 

percentage of their aggregate cap total 

that they had received in Medicare 

payments over time. Specifically, we 

examined where hospices ended their 

cap year in terms of Medicare 

reimbursements received, relative to 

that year’s aggregate cap limit, by 

comparing the 2006 cap year to the 2012 

cap year. Analysis revealed that more 

hospices ended the 2012 cap year ‘‘just 

below’’ their aggregate cap than in 2006. 

The cap analyses which are referenced 

in this section are available in the May 

2014 Technical Report which will be 

posted in May, 2014 on our Hospice 

Center Web page at: http://

www.cms.gov/Center/Provider-Type/

Hospice-Center.html. 

The results from these recent analyses 

on the hospice aggregate cap highlight 

the importance of hospices monitoring 

their aggregate cap and ensuring that the 

beneficiaries under their care are truly 

eligible for hospice services. In the FY 

2010 hospice wage index proposed rule 

we solicited comments on the aggregate 

hospice cap (74 FR 18920–18922). Many 

commenters wanted more timely 

notification of cap overpayments. Many 

also requested that hospices be given 

access to beneficiaries’ full hospice 

utilization history, as having this 

information would enable hospices to 

better manage their aggregate cap. In 

response to concerns from hospices, we 

redesigned the Provider Statistical and 

Reimbursement (PS&R) system in 2011, 

so that hospices can now easily manage 

their inpatient and aggregate caps. The 

redesigned PS&R enables hospices to 

calculate estimated caps to monitor 

their cap status at different points 

during the cap year, and also enables 

them to calculate their caps after the cap 

year ends. 

Our current practice is for the 

Medicare Administrative Contractors 

(MACs) to complete the hospice cap 

determinations for both the inpatient 

and the aggregate caps 16 to 24 months 

after the cap year in order to demand 

any overpayment. We are concerned 

about this long timeframe, particularly 

given that the percentage of hospices 

exceeding the aggregate cap is 

increasing, along with the average 

overpayment per beneficiary. To better 

safeguard the Medicare Trust Fund, we 

believe that demands for cap 

overpayments should occur sooner. This 

is now possible due to the redesigned 

PS&R system. 

Therefore, for the 2014 cap year and 

subsequent cap years, we propose to 

amend § 418.308 and require that 

hospices complete their inpatient and 

aggregate caps determination within 5 

months after the cap year ends (that is, 

by March 31) and remit any 

overpayments at that time. We propose 

that the MACs would then reconcile all 

payments at the final cap determination. 

If a provider fails to file its inpatient and 

aggregate cap determination 150 days 

after the end of the cap year, we propose 

that payments to the provider would be 

suspended in whole or in part until the 

self-determined cap is filed with the 

Medicare contractor. We propose to 

further amend § 418.308 and § 405.371 

to state that payments to a hospice 

would be suspended in whole or in part, 

for failure to file a self-determined 

inpatient and aggregate cap 

determination. This is similar to the 

current practice followed by all other 

provider types that file cost reports with 

MACs. 

Hospices would be provided a proforma spreadsheet that they would use 

to calculate their caps to remit any 

overpayments. The redesigned PS&R 

system provides the inpatient days, total 

days, beneficiary counts, and Medicare 

payments that are needed to calculate 

any inpatient or aggregate cap 

overpayments. The redesigned system 

can provide needed data whether a 


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39CMS, ‘‘Calendar Year (CY) 2014 Medicare 

Advantage Capitation Rates and Medicare 

Advantage and Part D Payment Policies and Final 

Call Letter,’’ issued April 1, 2013; available at 

http://www.cms.gov/Medicare/Health-Plans/

MedicareAdvtgSpecRateStats/downloads/

Announcement2014.pdf. 

40Tudor CG, Wilson L, and Majestic M. ‘‘Part D 

Payment for Drugs for Beneficiaries Enrolled in 

Hospice—Request for Comments,’’ memorandum 

issued December 6, 2013, available at http://

www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/Hospice/Downloads/Hospice-PartDPayment.pdf. 

hospice uses the streamlined method or 

the patient-by-patient proportional 

method for its aggregate cap calculation. 

All hospices are required to register in 

Individuals Authorized Access to CMS 

Computer Services (IACS) and obtain 

their PS&R report from the PS&R 

system. Hospices experiencing 

difficulties can request a copy of their 

PS&R report from their MAC. 

We invite comment on this proposal 

and the associated change in the 

regulation at § 418.308 in section VI. 

E. Proposed Timeframes for Filing the 

Notice of Election and Notice of 

Termination/Revocation 

1. Proposed Timeframe for Filing the 

Notice of Election 

A distinctive characteristic of the 

Medicare hospice benefit is that it 

requires patients (or their 

representative) to intentionally choose 

hospice care through an election. As 

part of that election, patients (or their 

representative) acknowledge that they 

fully understand the palliative, rather 

than curative, nature of hospice care. 

Another important aspect of the election 

is a waiver of beneficiary rights to 

Medicare payment for any Medicare 

services related to the terminal illness 

and related conditions during a hospice 

election except when provided by, or 

under arrangement by, the designated 

hospice, or by the individual’s attending 

physician if he/she is not employed by 

the designated hospice (§ 418.24(d)). 

Because of this waiver, providers 

other than the designated hospice or 

attending physician cannot receive 

payment for services to a hospice 

beneficiary unless those services are 

unrelated to the terminal illness and 

related conditions. For our claims 

processing system to properly enforce 

this waiver, it is necessary that the 

hospice election be recorded in the 

claims processing system as soon as 

possible after the election occurs. A 

survey of the four Medicare hospice 

Medicare Administrative Contractors 

(MACs) revealed that 16.2 percent of 

NOEs are filed within 2 days of the 

effective date of election, 39.2 percent of 

NOEs are filed within 5 days of the 

effective date of election, and 62.1 

percent of NOEs are filed within 10 days 

of the effective date of election. Prompt 

recording of the notice of election (NOE) 

prevents inappropriate payments, as 

claims filed by providers other than the 

hospice or the attending physician will 

be rejected by the system, unless those 

claims are for items or services 

unrelated to the hospice terminal 

illness. Prompt filing of the NOE also 

protects beneficiaries from financial 

liability from deductibles and 

copayments for items or services 

provided during a hospice election 

which are related to the terminal 

prognosis. 

Once an NOE is filed, the hospice 

election and benefit period are 

established in the Common Working 

File (CWF) and in the Daily Transaction 

Reply Report (DTRR). The CWF is used 

by Part A and Part B providers, and the 

DTRR is used by Part D plan sponsors, 

to determine whether a beneficiary is a 

hospice patient. This information is 

necessary for providers and suppliers to 

properly handle claims for beneficiaries 

under a hospice election. 

Our hospice reform contractor, Abt 

Associates, has performed analyses of 

Medicare expenditures for drugs and 

services provided to hospice 

beneficiaries during a hospice election. 

These analyses found that Medicare Part 

D was paying for many drugs which 

should have been provided by the 

hospice. We also found that Parts A and 

B were paying claims for items or 

services from non-hospice providers 

during a hospice election (See section 

III.A.4), though some of these claims 

may have been appropriate. Once a 

hospice election is established in the 

CWF, in order for claims from other 

providers to process, the claim must be 

from the attending physician and coded 

with a ‘‘GV’’ modifier, or for items or 

services unrelated to the terminal illness 

and related conditions and must be 

coded with either a condition code of 

‘‘07’’ or a ‘‘GW’’ modifier. However, in 

calendar year 2012, 10,500 claims and 

2.4 million line items, totaling $159 

million were processed without the 

condition code or modifier. 

Approximately $100 million was from 

physician/supplier Part B claims that 

include claims from, for example, 

physicians, laboratories, and ambulance 

companies, and approximately $46 

million was billed as durable medical 

equipment. This suggests that these 

claims may have been processed in the 

time between when the beneficiary 

elected hospice and when the hospice 

filed its NOE. When Parts A, B, or D pay 

claims for items or services during a 

hospice election, there is typically an 

associated beneficiary liability (such as 

deductibles or copayments). For 

example, in 2012 hospice beneficiary 

liability was $135.5 million for Part A 

or B claims, and $48.2 million for Part 

D claims, for items or services provided 

to hospice beneficiaries during a 

hospice election. We want to safeguard 

hospice beneficiaries from inappropriate 

financial liability during a hospice 

election for items or services that should 

be provided by the hospice. Please see 

section III.A.4 of this proposed rule and 

the May 2014 Technical Report, which 

will be posted on the CMS Hospice 

Center Web page in May, 2014 for more 

details on Medicare payments made to 

non-hospice providers during a hospice 

election for hospice beneficiaries. The 

hospice center Web page can be 

accessed at http://www.cms.gov/Center/ 

Provider-Type/Hospice-Center.html. 

In the April 1, 2013 CMS Part D Final 

Call Letter, it was noted that delays in 

the flow of hospice election information 

cause retroactive updates to the 

information sent to Part D plan sponsors 

on the DTRR, and plan sponsors 

requested that CMS improve the 

timeliness of the hospice data on the 

DTRR.39 More recently, CMS issued a 

memorandum on December 6, 2013 

entitled ‘‘Part D Payment for Drugs for 

Beneficiaries Enrolled in Hospice,’’ 

which sought to clarify the criteria for 

determining payment responsibility for 

drugs for hospice beneficiaries.40

Industry commenters described the lag 

time in the notification of Part D plan 

sponsors that the beneficiary had 

elected hospice, revoked hospice, or 

been discharged alive from hospice as a 

key problem in determining payment 

responsibility. Commenters suggested 

that CMS require that the NOE be filed 

within a short timeframe of election (for 

example, within 48 hours). 

The CWF is also used by hospices to 

identify the current benefit period, 

which helps hospices determine when a 

face-to-face encounter is required. We 

have received requests for assistance 

from hospices where a beneficiary was 

previously admitted to and then 

discharged from another hospice, which 

had not yet filed the NOE, creating a 

problem for the current hospice in 

determining the correct benefit period. 

This can lead to the current hospice not 

meeting the face-to-face requirement. 

Additionally, because of sequential 

billing requirements, the current 

hospice would have to cancel its NOE 

and all its billing for that beneficiary, to 

allow the previous hospice to input its 

NOE and billing; once the previous 

hospice files its claims and records the 

beneficiary’s discharge, the current 


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hospice could then resubmit its NOE 

and its claims. The failure of the first 

hospice to file its NOE promptly creates 

an administrative burden for the second 

hospice. 

In summary, prompt filing of the NOE 

avoids compliance problems with the 

statutorily mandated face-to-face 

requirement. It also avoids creating 

burdensome situations for hospices 

when sequential billing requirements 

are not met. Finally, because Medicare 

payments for services related to the 

terminal illness and related conditions 

are waived once a hospice election is in 

place, it is crucial that the NOE be filed 

promptly to safeguard the integrity of 

the Medicare Trust Fund, to enable 

smooth and efficient operation of other 

Medicare benefits (like Part D), and to 

safeguard hospice beneficiaries from 

inappropriate financial liability due to 

copayments and deductibles for services 

related to the terminal prognosis. For all 

of these reasons, we propose that a 

hospice must file the NOE with its MAC 

within 3 calendar days after the hospice 

effective date of election, regardless of 

how the NOE is filed (by direct data 

entry, or sent by mail or messenger). 

Hospices operate 24 hours per day, 7 

days per week, so meeting this proposed 

requirement should be a part of normal 

business operations. Additionally, we 

believe that this proposed requirement 

will relieve hospices of the burden 

created when some minority of hospices 

do not file their NOEs promptly, will 

avoid inappropriate payments to other 

Part A, Part B, or Part D providers, and 

will safeguard beneficiaries from 

inappropriate liability for copayments 

or deductibles. 

Currently, payment for hospice 

services begins on the effective date of 

the hospice election, regardless of when 

the NOE was filed. A commenter on the 

December 6, 2013 CMS memorandum 

clarifying drug payment responsibility 

between Part D, hospice, and 

beneficiaries suggested that without 

enforcement actions, hospices would 

not file NOEs within a short timeframe. 

We agree that providing a consequence 

for failing to file NOEs timely would 

encourage compliance. Therefore, we 

propose that for those hospices that do 

not file the NOE timely (that is, within 

3 calendar days after the effective date 

of election), Medicare would not cover 

and pay for days of hospice care from 

the effective date of election to the date 

of filing of the NOE. We propose that 

these days be considered the financial 

responsibility of the hospice; the 

hospice could not bill the beneficiary 

for them. We believe that this is a 

reasonable step which would not be 

burdensome to hospices and would help 

us to safeguard the integrity of the 

Medicare Trust Fund, and help protect 

beneficiaries from inappropriate 

liability. 

Once filed, the process of posting an 

NOE to the CWF after direct data entry 

(DDE) takes 1 to 5 days, depending on 

the host site. If an NOE is not submitted 

by DDE, the current policy requires 

hospices to send it to the MAC by mail 

or messenger. This policy remains in 

place; however, hospices may need to 

use overnight mail or an overnight 

messenger to ensure that paper NOEs 

are received by the MAC within the 

proposed 3-calendar-day timeframe after 

the effective date of election. Given the 

extremely low volume of NOEs filed by 

mail or messenger (an average of 68 per 

year), we do not believe this proposed 

3-calendar day filing of the NOE would 

be burdensome to hospices. Using a 

speedier form of delivery will ensure 

that a paper NOE’s filing is not delayed 

by the transit time needed to get the 

document from the hospice to the MAC. 

We invite comment on this proposal 

and the associated change in the 

regulation at § 418.24(a) in section VI. 

2. Proposed Timeframe for Filing the 

Notice of Termination/Revocation 

Hospices may discharge patients for 

only three reasons: (1) Due to cause; (2) 

due to the patient’s no longer being 

terminally ill; or (3) due to the patient’s 

moving outside the hospice’s service 

area. In contrast, hospice patients are 

free to revoke their election to hospice 

care at any time. Upon discharge or 

revocation, a beneficiary resumes the 

Medicare coverage that had previously 

been waived by the hospice election. It 

is important for hospices to record the 

beneficiary’s discharge or revocation in 

the claims processing system in a timely 

manner. As previously noted, a number 

of those commenting on the December 

6, 2013 CMS memorandum clarifying 

drug payment responsibility between 

Part D, hospices, and beneficiaries wrote 

that it was critical for beneficiary 

revocations and live discharges from 

hospice to be recorded as soon as 

possible within CMS claims processing 

systems. Commenters wrote that prompt 

recording of revocations or discharges is 

necessary to ensure that the beneficiary 

is able to access needed items or 

services, and to ensure that payment for 

the item or service is from the 

appropriate source. Providers are 

allowed 12 months to file a claim, so if 

a hospice is not prepared to file a final 

claim quickly, it should instead file a 

termination/revocation of election 

notice, so that the claims processing 

systems are updated to no longer show 

the beneficiary as being under a hospice 

election. Hereafter, we will refer to this 

as a Notice of Termination or 

Revocation, or NOTR. 

We propose to revise the regulations 

at § 418.26 and § 418.28 to require 

hospices to file a NOTR within 3 

calendar days after the effective date of 

a beneficiary’s discharge or revocation, 

if they have not already filed a final 

claim. This would safeguard 

beneficiaries from any delays or 

difficulties in accessing needed drugs, 

items, or services that could occur if the 

CWF or DTRR continued to show a 

hospice election in place when in fact 

it was revoked or a discharge occurred. 

It would also avoid costs and 

administrative burden to non-hospice 

providers and to the claims processing 

system that would occur for claims for 

items or services provided after 

discharge or revocation, which would 

be rejected if the claims processing 

systems continued to show the 

beneficiary as being under a hospice 

election. 

We invite comment on this proposal 

and the associated changes in the 

regulations at § 418.26 and § 418.28 in 

section VI. 

F. Proposed Addition of the Attending 

Physician to the Hospice Election Form 

The term ‘‘attending physician’’ is 

defined differently in different health 

care settings. For the Medicare hospice 

benefit, ‘‘attending physician’’ has a 

specific definition found in the Social 

Security Act at 1861(dd)(3)(B): 

‘‘The term ‘‘attending physician’’ 

means, with respect to an individual, 

the physician (as defined in subsection 

(r)(1)) or nurse practitioner (as defined 

in subsection (aa)(5)), who may be 

employed by a hospice program, whom 

the individual identifies as having the 

most significant role in the 

determination and delivery of medical 

care to the individual at the time the 

individual makes an election to receive 

hospice care.’’ 

Our regulations at § 418.3 include a 

definition for ‘‘attending physician,’’ 

based on the statutory language above. 

We define it as either (1) a doctor of 

medicine or osteopathy legally 

authorized to practice medicine and 

surgery by the State in which he or she 

performs that function or action; or (2) 

a nurse practitioner who meets the 

training, education, and experience 

requirements described elsewhere in 

our regulations. The definition also sets 

out the requirement that the patient 

identify the attending physician at the 

time he or she elects to receive hospice 

care, as having the most significant role 

in the determination and delivery of the 

individual’s medical care. 


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We require that the National Provider 

Identifier (NPI) of the attending 

physician be included on the NOE and 

on each claim. An attending physician 

can be a physician or a nurse 

practitioner, as long as he or she meets 

the requirements set out above. The 

hospice patient (or his or her 

representative) chooses the attending 

physician, not the hospice. This differs 

from some non-hospice settings, where 

an attending may be a clinician assigned 

to provide care to the patient. We stress 

that in hospice, the attending physician, 

who may be a nurse practitioner, is 

chosen by the patient (or his or her 

representative), and not by the hospice. 

This requirement is also included as 

part of the CoPs at § 418.52(c)(4), which 

states that the patient has the right to 

choose his or her attending physician. 

The hospice CoPs at § 418.64(a)(3) 

further require that if the attending 

physician is unavailable, the hospice 

medical director, hospice contracted 

physician, and/or hospice physician 

employee is responsible for meeting the 

medical needs of the patient. Therefore, 

the patient should receive all needed 

care, whether that care is provided by 

hospice doctors, hospice nurse 

practitioners (NPs), or by the designated 

attending physician. Hospices can bill 

Part A for reasonable and necessary 

physician services provided to hospice 

beneficiaries by its doctors, regardless of 

whether those doctors are the 

designated attending. However, our 

regulations at § 418.304(e) do not permit 

Medicare to be billed for reasonable and 

necessary physician services provided 

by NPs unless the NP is the attending 

physician, as defined in § 418.3. 

We have recently heard anecdotal 

reports of hospices changing a patient’s 

attending physician when the patient 

moves to an inpatient setting for 

inpatient care, often to a nurse 

practitioner. We have also heard reports 

of hospices assigning an attending 

physician based upon whoever is 

available. MACs noted that the NPI of 

the attending physician reported on 

claims was sometimes changing, and 

differed from that reported on the NOE. 

Additionally, using CY 2010 and CY 

2011 data, we found that 35 percent of 

beneficiaries had Part B claims during 

their hospice election from more than 

one physician who claimed to be their 

designated attending physician. The 

reports of hospices changing a patient’s 

attending physician are of great concern 

since the statute emphasizes that the 

attending physician must be chosen by 

the patient (or his or her representative). 

Finally, we have also received anecdotal 

reports that some hospices are not 

getting the signature of the attending 

physician on the initial certification. If 

a beneficiary has designated an 

attending physician, that physician 

must sign the initial certification for 

Medicare to cover and pay for hospice 

services, unless the attending is an NP. 

To ensure the attending physician of 

record is properly documented in the 

patient’s medical record, we propose to 

amend the regulations at § 418.24(b)(1) 

and require the election statement to 

include the patient’s choice of attending 

physician. The proposed information 

identifying the attending physician 

should be recorded on the election 

statement in enough detail so that it is 

clear which physician or NP was 

designated as the attending physician. 

Hospices have the flexibility to include 

this information on their election 

statement in whatever format works best 

for them, provided the content 

requirements in § 418.24(b) are met. The 

language on the election form should 

include an acknowledgement by the 

patient (or representative) that the 

designated attending physician was the 

patient’s (or representative’s) choice. 

In addition, we further propose that if 

a patient (or representative) wants to 

change his or her designated attending 

physician, he or she must follow a 

procedure similar to that which 

currently exists for changing the 

designated hospice. Specifically, the 

patient (or representative) must file a 

signed statement, with the hospice, that 

identifies the new attending physician 

in enough detail so that it is clear which 

physician or NP was designated as the 

new attending physician. Additionally, 

we propose that the statement include 

the date the change is to be effective, the 

date that the statement is signed, and 

the patient’s (or representative’s) 

signature, along with an 

acknowledgement that this change in 

the attending physician is the patient’s 

(or representative’s) choice. The 

effective date of the change in attending 

physician cannot be earlier than the 

date the statement is signed. We believe 

that such a change would help ensure 

that any changes in the identity of the 

attending physician would be the result 

of the patient’s free choice. 

We invite comment on this proposal 

and the associated changes in the 

regulations at § 418.24(b)(1) and 

§ 418.24(f) in section VI. 

G. FY 2015 Hospice Wage Index and 

Rates Update 

1. FY 2015 Hospice Wage Index 

The hospice wage index is used to 

adjust payment rates for hospice 

agencies under the Medicare program to 

reflect local differences in area wage 

levels based on the location where 

services are furnished. The hospice 

wage index utilizes the wage adjustment 

factors used by the Secretary for 

purposes of section 1886(d)(3)(E) of the 

Act for hospital wage adjustments, and 

our regulations at § 418.306(c) require 

each labor market to be established 

using the most current hospital wage 

data available, including any changes by 

the Office of Management and Budget 

(OMB) to the Metropolitan Statistical 

Areas (MSAs) definitions. We have 

consistently used the pre-floor, prereclassified hospital wage index when 

deriving the hospice wage index. In our 

August 4, 2005 FY 2006 Hospice Wage 

Index final rule (70 FR 45130), we began 

adopting the revised labor market area 

definitions as discussed in the OMB 

Bulletin No. 03–04 (June 6, 2003). This 

bulletin announced revised definitions 

for MSAs and the creation of Core-Based 

Statistical Areas (CBSAs). The bulletin 

is available online at http://

www.whitehouse.gov/omb/bulletins/

b03–04.html. 

In the FY 2006 Hospice Wage Index 

final rule, we implemented a 1-year 

transition policy using a 50/50 blend of 

the CBSA-based wage index values and 

the MSA-based wage index values for 

FY 2006. The one-year transition policy 

ended on September 30, 2006. For FY 

2007 and beyond, we have used CBSAs 

exclusively to calculate wage index 

values. OMB has published subsequent 

bulletins regarding CBSA changes. The 

most recent CBSA changes used for the 

FY 2015 hospice wage index are found 

in OMB Bulletin 10–02, available at: 

http://www.whitehouse.gov/sites/

default/files/omb/assets/bulletins/b10- 

02.pdf. 

When adopting OMB’s new labor 

market designations in FY 2006, we 

identified some geographic areas where 

there were no hospitals, and thus, no 

hospital wage index data, which to base 

the calculation of the hospice wage 

index. We also adopted the policy that 

for urban labor markets without a 

hospital from which hospital wage 

index data could be derived, all of the 

CBSAs within the state would be used 

to calculate a statewide urban average 

pre-floor, pre-reclassified hospital wage 

index value to use as a reasonable proxy 

for these areas in our August 6, 2009 FY 

2010 Hospice Wage Index final rule (74 

FR 39386). In FY 2015, the only CBSA 

without a hospital from which hospital 

wage data could be derived is 25980, 

Hinesville-Fort Stewart, Georgia. 

In our August 31, 2007 FY 2008 

Hospice Wage Index final rule (72 FR 

50214), we implemented a new 

methodology to update the hospice 


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wage index for rural areas without a 

hospital, and thus no hospital wage 

data. In cases where there was a rural 

area without rural hospital wage data, 

we used the average pre-floor, prereclassified hospital wage index data 

from all contiguous CBSAs to represent 

a reasonable proxy for the rural area. In 

our August 31, 2007 FY 2008 Hospice 

Wage Index final rule, we noted that we 

interpret the term ‘‘contiguous’’ to mean 

sharing a border (72 FR 50217). 

Currently, the only rural area without a 

hospital from which hospital wage data 

could be derived is Puerto Rico. 

However, our policy of imputing a rural 

pre-floor, pre-reclassified hospital wage 

index based on the pre-floor, prereclassified hospital wage index (or 

indices) of CBSAs contiguous to a rural 

area without a hospital from which 

hospital wage data could be derived 

does not recognize the unique 

circumstances of Puerto Rico. While we 

have not identified an alternative 

methodology for imputing a pre-floor, 

pre-reclassified hospital wage index for 

rural Puerto Rico, we will continue to 

evaluate the feasibility of using existing 

hospital wage data and, possibly, wage 

data from other sources. For FY 2008 

through FY 2013, we have used the 

most recent pre-floor, pre-reclassified 

hospital wage index available for Puerto 

Rico, which is 0.4047. In this proposed 

rule, for FY 2015, we continue to use 

the most recent pre-floor, prereclassified hospital wage index value 

available for Puerto Rico, which is 

0.4047. 

For FY 2015, we would use the 2014 

pre-floor, pre-reclassified hospital wage 

index to derive the applicable wage 

index values for the FY 2015 hospice 

wage index. We would continue to use 

the pre-floor, pre-reclassified hospital 

wage data as a basis to determine the 

hospice wage index values because 

hospitals and hospices both compete in 

the same labor markets, and therefore, 

experience similar wage-related costs. 

We believe the use of the pre-floor, prereclassified hospital wage index data, as 

a basis for the hospice wage index, 

results in the appropriate adjustment to 

the labor portion of the costs. The FY 

2015 hospice wage index values 

presented in this proposed rule were 

computed consistent with our pre-floor, 

pre-reclassified hospital (IPPS) wage 

index policy (that is, our historical 

policy of not taking into account IPPS 

geographic reclassifications in 

determining payments for hospice). The 

FY 2015 pre-floor, pre-reclassified 

hospital wage index does not reflect 

OMB’s new area delineations, based on 

the 2010 Census, as outlined in OMB 

Bulletin 13–01, released on February 28, 

2013. Moreover, the proposed FY 2015 

pre-floor, pre-reclassified hospital wage 

index does not contain OMB’s new area 

delineations. CMS intends to propose 

changes to the FY 2015 hospital wage 

index based on the newest CBSA 

changes in the FY 2015 IPPS proposed 

rule. Therefore, if CMS incorporates 

OMB’s new area delineations, based on 

the 2010 Census, in the FY 2015 

hospital wage index, those changes 

would also be reflected in the FY 2016 

hospice wage index. 

2. FY 2015 Hospice Wage Index With an 

Additional 15 Percent Reduced Budget 

Neutrality Adjustment Factor (BNAF) 

This proposed rule would update the 

hospice wage index values for FY 2015 

using the FY 2014 pre-floor, prereclassified 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. Prefloor, pre-reclassified hospital wage 

index values below 0.8 are adjusted by 

either: (1) The hospice budget neutrality 

adjustment factor (BNAF); or (2) the 

hospice floor subject to a maximum 

wage index value of 0.8; whichever 

results in the greater value. 

The BNAF is calculated by computing 

estimated payments using the most 

recent, completed year of hospice 

claims data. The units (days or hours) 

from those claims are multiplied by the 

updated hospice payment rates to 

calculate estimated payments. For the 

FY 2015 Hospice Wage Index proposed 

rule, that means estimating payments 

for FY 2015 using units (days or hours) 

from FY 2013 hospice claims data, and 

applying the FY 2015 hospice payment 

rates. The FY 2015 hospice wage index 

values are then applied to the labor 

portion of the payments. The procedure 

is repeated using the same units from 

the claims data and the same payment 

rates, but using the 1983 Bureau of 

Labor Statistics (BLS)-based wage index 

instead of the updated raw pre-floor, 

pre-reclassified hospital wage index 

(note that both wage indices include 

their respective floor adjustments). The 

total payments are then compared, and 

the adjustment required to make total 

payments equal is computed; that 

adjustment factor is the BNAF. 

The August 6, 2009 FY 2010 Hospice 

Wage Index final rule finalized a 

provision to phase out the BNAF over 

7 years, with a 10 percent reduction in 

the BNAF in FY 2010, and an additional 

15 percent reduction in each of the next 

6 years, with complete phase out in FY 

2016 (74 FR 39384). Once the BNAF is 

completely phased out, the hospice 

floor adjustment would simply consist 

of increasing any wage index value less 

than 0.8 by 15 percent, subject to a 

maximum wage index value of 0.8. 

Therefore, in accordance with the FY 

2010 Hospice Wage final rule, the BNAF 

for FY 2015 will be reduced by an 

additional 15 percent for a total BNAF 

reduction of 85 percent (10 percent from 

FY 2010, an additional 15 percent from 

FY 2011, an additional 15 percent for 

FY 2012, an additional 15 percent for 

FY 2013 an additional 15 percent in FY 

2014 and an additional 15 percent in FY 

2015). 

The unreduced BNAF for FY 2015 is 

0.062060 (or 6.2060 percent). An 85 

percent reduction to the BNAF is 

computed to be 0.009309 (or 0.9309 

percent). For FY 2015, this is 

mathematically equivalent to taking 15 

percent of the unreduced BNAF value, 

or multiplying 0.062060 by 0.15, which 

equals 0.009309 (0.9309 percent). The 

BNAF of 0.9309 percent reflects an 85 

percent reduction in the BNAF. The 85 

percent reduced BNAF (0.9309 percent) 

was applied to the pre-floor, prereclassified hospital wage index values 

of 0.8 or greater. The 10 percent reduced 

BNAF for FY 2010 was 0.055598, based 

on a full BNAF of 0.061775; the 

additional 15 percent reduced BNAF FY 

2011 (for a cumulative reduction of 25 

percent) was 0.045422, based on a full 

BNAF of 0.060562; the additional 15 

percent reduced BNAF for FY 2012 (for 

a cumulative reduction of 40 percent) 

was 0.035156, based on a full BNAF of 

0.058593; the additional 15 percent 

reduced BNAF for FY 2013 (for a 

cumulative reduction of 55 percent) was 

0.027197, based on a full BNAF of 

0.060438; the additional 15 percent 

reduced BNAF for FY 2014 (for a 

cumulative reduction of 70 percent) was 

0.018461, based on a full BNAF of 

0.061538 and the additional 15 percent 

reduced BNAF for FY 2015 (for a 

cumulative reduction of 85 percent) is 

0.009309, based on a full BNAF of 

0.062060. 

Hospital wage index values which are 

less than 0.8 are subject to the hospice 

floor calculation. For example, if in FY 

2014, County A had a pre-floor, 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 

0.062060, less 85 percent, or 0.009309) 

and the hospice floor to determine 


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County A’s hospice wage index: Prefloor, pre-reclassified hospital wage 

index value below 0.8 multiplied by 1 

+ 85 percent reduced BNAF: (0.3994 × 

1.009309 = 0.4031); Pre-floor, prereclassified hospital wage index value 

below 0.8 multiplied by 1 + hospice 

floor: (0.3994 × 1.15 = 0.4593). Based on 

these calculations, County A’s hospice 

wage index would be 0.4593. The BNAF 

may be updated for the final rule based 

on availability of more complete data. 

An addendum A and Addendum B 

with the FY 2015 wage index values for 

rural and urban areas will not be 

published in the Federal Register. The 

FY 2015 wage index values for rural 

areas and urban areas are available via 

the internet at: http://www.cms.gov/

Medicare/Medicare-Fee-for-ServicePayment/Hospice/index.html. The 

hospice wage index for FY 2015 set 

forth in this proposed rule includes the 

BNAF reduction and would be effective 

October 1, 2014 through September 30, 

2015. 

3. Proposed Hospice Payment Update 

Percentage 

Section 4441(a) of the Balanced 

Budget Act of 1997 (BBA) amended 

section 1814(i)(1)(C)(ii)(VI) of the Act to 

establish updates to hospice rates for 

FYs 1998 through 2002. Hospice rates 

were to be updated by a factor equal to 

the market basket index, minus 1 

percentage point. Payment rates for FYs 

since 2002 have been updated according 

to section 1814(i)(1)(C)(ii)(VII) of the 

Act, which states that the update to the 

payment rates for subsequent FYs must 

be the market basket percentage for that 

FY. The Act requires us to use the 

inpatient hospital market basket to 

determine the hospice payment rate 

update. In addition, section 3401(g) of 

the Affordable Care Act mandates that, 

starting with FY 2013 (and in 

subsequent FYs), the hospice payment 

update percentage will be annually 

reduced by changes in economy-wide 

productivity as specified in section 

1886(b)(3)(B)(xi)(II) of the Act. In 

addition, section 3401(g) of the 

Affordable Care Act also mandates that 

in FY 2013 through FY 2019, the 

hospice payment update percentage will 

be reduced by an additional 0.3 

percentage point (although for FY 2014 

to FY 2019, the potential 0.3 percentage 

point reduction is subject to suspension 

under conditions specified in section 

1814(i)(1)(C)(v) of the Act). The 

proposed hospice payment update 

percentage for FY 2015 is based on the 

estimated inpatient hospital market 

basket update of 2.7 percent (based on 

IHS Global Insight, Inc.’s first quarter 

2014 forecast with historical data 

through the fourth quarter of 2013). Due 

to the requirements at 

1886(b)(3)(B)(xi)(II) and 1814(i)(1)(C)(v) 

of the Act, the estimated inpatient 

hospital market basket update for FY 

2015 of 2.7 percent must be reduced by 

a productivity adjustment as mandated 

by Affordable Care Act (currently 

estimated to be 0.4 percentage point for 

FY 2015). The estimated inpatient 

hospital market basket for FY 2015 is 

reduced further by a 0.3 percentage 

point, as mandated by the Affordable 

Care Act. In effect, the proposed hospice 

payment update percentage for FY 2015 

is 2.0 percent. We are also proposing 

that if more recent data are subsequently 

available (for example, a more recent 

estimate of the inpatient hospital market 

basket and productivity adjustment), we 

would use such data, if appropriate, to 

determine the FY 2015 market basket 

update and the multi-factor productivity 

MFP adjustment in the FY 2015 Hospice 

PPS final rule. 

Currently, the labor portion of the 

hospice payment rates is as follows: for 

Routine Home Care, 68.71 percent; for 

Continuous Home Care, 68.71 percent; 

for General Inpatient Care, 64.01 

percent; and for Respite Care, 54.13 

percent. The non-labor portion is equal 

to 100 percent minus the labor portion 

for each level of care. Therefore, the 

non-labor portion of the payment rates 

is as follows: for Routine Home Care, 

31.29 percent; for Continuous Home 

Care, 31.29 percent; for General 

Inpatient Care, 35.99 percent; and for 

Respite Care, 45.87 percent. 

4. Proposed FY 2015 Hospice Payment 

Rates 

Historically, the hospice rate update 

has been published through a separate 

administrative instruction issued 

annually in the summer to provide 

adequate time to implement system 

change requirements; however, 

beginning in FY 2014 and for 

subsequent fiscal years, we are using 

rulemaking as the means to update 

payment rates. This change was 

proposed in the FY 2014 Hospice Wage 

Index and Payment Rate Update 

proposed rule and finalized in the FY 

2014 Hospice Wage Index and Payment 

Rate Update final rule (78 FR 48270). It 

is consistent with the rate update 

process in other Medicare benefits, and 

provides rate information to hospices as 

quickly as, or earlier than, when rates 

are published in an administrative 

instruction. 

There are four payment categories that 

are distinguished by the location and 

intensity of the services provided. The 

base payments are adjusted for 

geographic differences in wages by 

multiplying the labor share, which 

varies by category, of each base rate by 

the applicable hospice wage index. A 

hospice is paid the routine home care 

rate for each day the beneficiary is 

enrolled in hospice, unless the hospice 

provides continuous home care, 

inpatient respite care, or general 

inpatient care. Continuous home care is 

provided during a period of patient 

crisis to maintain the patient at home; 

inpatient respite care is short-term care 

to allow the usual caregiver to rest; and 

general inpatient care is to treat 

symptoms that cannot be managed in 

another setting. 

The FY 2015 payment rates would be 

the FY 2014 payment rates, increased by 

2.0 percent, which is the proposed 

hospice payment update percentage for 

FY 2015 as discussed in section III.G.3. 

The preliminary FY 2015 hospice 

payment rates would be effective for 

care and services furnished on or after 

October 1, 2014, through September 30, 

2015 (see Table 6 below). 

TABLE 6—FY 2015 HOSPICE PAYMENT RATES UPDATED BY THE PROPOSED HOSPICE PAYMENT UPDATE PERCENTAGE

Code Description FY 2014 

payment rates 

Multiply by the 

FY 2015 proposed hospice 

payment update 

of 2.0 percent 

FY 2015 

preliminary 

payment rate 

651 .................... Routine Home Care .......................................................................... $156.06 × 1.02 $159.18 

652 .................... Continuous Home Care Full Rate = 24 hours of care $ = 38.71 

hourly rate.

910.78 × 1.02 929.00 

655 .................... Inpatient Respite Care ...................................................................... 161.42 × 1.02 164.65 

656 .................... General Inpatient Care ..................................................................... 694.19 × 1.02 708.07 


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We reiterate in this proposed rule, 

that the Congress required in sections 

1814(i)(5)(A) through (C) of the Act that 

hospices begin submitting quality data, 

based on measures to be specified by the 

Secretary. In the FY 2012 Hospice Wage 

Index final rule (76 FR 47320 through 

47324), we implemented a Hospice 

Quality Reporting Program (HQRP) as 

required by section 3004 of the 

Affordable Care Act. Hospices were 

required to begin collecting quality data 

in October 2012, and submit that quality 

data in 2013. Section 1814(i)(5)(A)(i) of 

the Act requires that beginning with FY 

2014 and each subsequent FY, the 

Secretary shall reduce the market basket 

update by 2 percentage points for any 

hospice that does not comply with the 

quality data submission requirements 

with respect to that FY.). We remind 

hospices that this applies to payments 

in FY 2015 (See Table 7 below). For 

more information on the HQRP 

requirements please see section III.H in 

this proposed rule. 

TABLE 7—FY 2015 HOSPICE PAYMENT RATES UPDATED BY THE PROPOSED HOSPICE PAYMENT UPDATE PERCENTAGE

FOR HOSPICES THAT DO NOT SUBMIT THE REQUIRED QUALITY DATA

Code Description FY 2014 

payment rates 

Multiply by the 

FY 2015 hospice 

payment update 

percentage of 

2.0 percent 

minus 2 percentage points 

(¥0.2) 

FY 2015 

preliminary 

payment rate 

651 .................... Routine Home care ........................................................................... $156.06 × 1.00 $156.06 

652 .................... Continuous Home Care Full Rate = 24 hours of care $ = 37.95 

hourly rate.

910.78 × 1.00 910.78 

655 .................... Inpatient Respite Care ...................................................................... 161.42 × 1.00 161.42 

656 .................... General Inpatient Care ..................................................................... 694.19 × 1.00 694.19 

A Change Request with the finalized 

hospice payment rates, a finalized 

hospice wage index, the Pricer for FY 

2015, and the hospice cap amount for 

the cap year ending October 31, 2014 

will be issued in the summer. 

To assist the hospice industry in 

planning and budgeting, CMS is 

informing the hospice industry of the 

aggregate cap amount for the 2014 cap 

year in advance of the formal CMS 

administrative notice, which will be 

issued this summer. Additionally, we 

have included information about how 

we calculate the aggregate cap amount 

so that hospices can compute the 

amount themselves in the future if they 

so desire. This information is also in 

CMS’ Internet-Only Manual 100–2, 

chapter 9, section 90.2.6. The manual 

can be accessed from the ‘‘Manuals and 

Transmittals’’ section of CMS’ hospice 

Web site at http://www.cms.gov/Center/ 

Provider-Type/Hospice-Center.html. 

Please refer to section III.D of this 

proposed rule on the proposal to 

expedite hospice cap determinations. 

The hospice aggregate cap amount for 

the 2014 cap year will be $26,725.79. 

The cap amount is calculated according 

to § 1814(i)(2)(B) of the Social Security 

Act. The cap amount for a given year is 

$6,500 multiplied by the change in the 

Consumer Price Index for All Urban 

Consumers (CPI–U) medical care 

expenditure category, from the fifth 

month of the 1984 accounting year 

(March 1984) to the fifth month the 

current accounting year (in this case, 

March 2014). The CPI–U for medical 

care expenditures for 1984 to present is 

available from the Bureau of Labor 

Statistics (BLS) Web site at: http://

www.bls.gov/cpi/home.htm. 

(Step 1) From the BLS Web site given 

above, the March 2014 CPI–U for 

medical care expenditures is 433.369 

and the 1984 CPI–U for medical care 

expenditures was 105.4. 

(Step 2) Divide the March 2014 CPI– 

U for medical care expenditures by the 

1984 CPI–U for medical care 

expenditures to compute the change. 

433.369/105.4 = 4.111660 

(Step 3) Multiply the original cap base 

amount ($6,500) by the result from step 

2) to get the updated aggregate cap 

amount for the 2014 cap year. 

$6,500 × 4.111660= $26,725.79 

H. Proposed Updates to the Hospice 

Quality Reporting Program 

1. Background and Statutory Authority 

Section 3004 of the Affordable Care 

Act amended the Act to authorize a 

quality reporting program for hospices. 

Section 1814(i)(5)(A)(i) of the Act 

requires that beginning with FY 2014 

and each subsequent FY, the Secretary 

shall reduce the market basket update 

by 2 percentage points for any hospice 

that does not comply with the quality 

data submission requirements with 

respect to that FY. Depending on the 

amount of the annual update for a 

particular year, a reduction of 2 

percentage points could result in the 

annual market basket update being less 

than 0.0 percent for a FY and may result 

in payment rates that are less than 

payment rates for the preceding FY. Any 

reduction based on failure to comply 

with the reporting requirements, as 

required by section 1814(i)(5)(B) of the 

Act, would apply only for the particular 

FY involved. Any such reduction would 

not be cumulative or be taken into 

account in computing the payment 

amount for subsequent FYs. 

Section 1814(i)(5)(C) of the Act 

requires that each hospice submit data 

to the Secretary on quality measures 

specified by the Secretary. The data 

must be submitted in a form, manner, 

and at a time specified by the Secretary. 

Any measures selected by the Secretary 

must have been endorsed by the 

consensus-based entity which holds a 

contract regarding performance 

measurement with the Secretary under 

section 1890(a) of the Act. This contract 

is currently held by the National Quality 

Forum (NQF). However, section 

1814(i)(5)(D)(ii) of the Act provides that 

in the case of a specified area or medical 

topic determined appropriate by the 

Secretary for which a feasible and 

practical measure has not been endorsed 

by the consensus-based entity, the 

Secretary may specify measures that are 

not so endorsed as long as due 

consideration is given to measures that 

have been endorsed or adopted by a 

consensus-based organization identified 

by the Secretary. 

The successful development of a 

Hospice Quality Reporting Program 

(HQRP) that promotes the delivery of 

high quality healthcare services is our 

paramount concern. We seek to adopt 

measures for the HQRP that promote 

efficient and safer care. Our measure 


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selection activities for the HQRP takes 

into consideration input we receive 

from the Measure Applications 

Partnership (MAP), convened by the 

National Quality Forum (NQF), as part 

of a pre-rulemaking process that we 

have established and are required to 

follow under section 1890A of the Act. 

The MAP is a public-private partnership 

comprised of multi-stakeholder groups 

convened by the NQF for the primary 

purpose of providing input to CMS on 

the selection of certain categories of 

quality and efficiency measures, as 

required by section 1890A(a)(3) of the 

Act. By February 1st of each year, the 

NQF must provide that input to CMS. 

Input from the MAP is located at: 

(http://www.qualityforum.org/Setting_

Priorities/Partnership/Measure_

Applications_Partnership.aspx). For 

more details about the pre-rulemaking 

process, see the FY 2013IPPS/LTCH PPS 

final rule (77 FR 53376). 

We also take into account national 

priorities, such as those established by 

the National Priorities Partnership at 

(http://www.qualityforum.org/npp/), the 

HHS Strategic Plan http://www.hhs.gov/ 

secretary/about/priorities/ 

priorities.html), the National Strategy 

for Quality Improvement in Healthcare 

located at (http://www.ahrq.gov/working

forquality/nqs/nqs2013annlrpt.htm) and 

the CMS Quality Strategy at http:// 

www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/QualityInitiativesGenInfo/ 

CMS-Quality-Strategy.html. 

To the extent practicable, we have 

sought to adopt measures that have been 

endorsed by the national consensus 

organization, recommended by multistakeholder organizations, and 

developed with the input of providers, 

purchasers/payers, and other 

stakeholders. 

2. Measures for Hospice Quality 

Reporting Program and Data Submission 

Requirements for Payment Years FY 

2014 and FY 2015 

As stated in the FY 2012 Hospice 

Wage Index final rule (76 FR 47302, 

47320), to meet the quality reporting 

requirements for hospices for the FY 

2014 payment determination and in the 

CY 2013 Home Health Prospective 

Payment System (HH PPS) final rule (77 

FR 67068, 67133), to meet the quality 

reporting requirements for hospices for 

the FY 2015 payment determination, as 

set forth in section 1814(i)(5) of the Act, 

we finalized the requirement that 

hospices report two measures: 

• An NQF-endorsed measure that is 

related to pain management, NQF 

#0209. The data for this measure are 

collected at the patient level, but are 

reported in the aggregate for all patients 

cared for within the reporting period, 

regardless of payer. 

• A structural measure that is not 

endorsed by NQF: Participation in a 

Quality Assessment and Performance 

Improvement (QAPI) program that 

includes at least three quality indicators 

related to patient care. 

3. Quality Measures for Hospice Quality 

Reporting Program and Data Submission 

Requirements for Payment Year FY 2016 

and Beyond 

In the FY 2014 Hospice Wage Index 

and Payment Rate Update final rule (78 

FR 48234, 48256), we finalized that the 

structural measure related to QAPI 

indicators and the NQF #0209 pain 

measure would not be required for the 

HQRP beyond data submission for the 

FY 2015 payment determination. The 

data submission period for the FY2015 

payment determination closed on April 

1, 2014. 

As stated in the CY 2013 HH PPS final 

rule (77 FR 67068, 67133), we 

considered an expansion of the required 

measures to include additional 

measures endorsed by NQF. We also 

stated that to support the standardized 

collection and calculation of quality 

measures by CMS, collection of the 

needed data elements would require a 

standardized data collection instrument. 

We developed and tested a hospice 

patient-level item set, the Hospice Item 

Set (HIS) to be used by all hospices to 

collect and submit standardized data 

items about each patient admitted to 

hospice. 

In developing the standardized HIS, 

we considered comments offered in 

response to the CY 2013 HH PPS 

proposed rule (77 FR 41548, 41573). In 

the FY 2014 Hospice Wage Index final 

rule (78 FR 48257), and in compliance 

with section 1814(i)(5)(C) of the Act, we 

finalized the specific collection of data 

items that support the following six 

NQF endorsed measures and one 

modified measure for hospice: 

• NQF #1617 Patients Treated with an 

Opioid who are Given a Bowel 

Regimen 

• NQF #1634 Pain Screening 

• NQF #1637 Pain Assessment 

• NQF #1638 Dyspnea Treatment 

• NQF #1639 Dyspnea Screening 

• NQF #1641 Treatment Preferences 

• NQF #1647 Beliefs/Values 

Addressed (if desired by the patient) 

(modified) 

To achieve a comprehensive set of 

hospice quality measures available for 

wide spread use for quality 

improvement and informed decision 

making, and to carry out our 

commitment to develop a quality 

reporting program for hospices that uses 

standardized methods to collect data 

needed to calculate quality measures, 

we finalized that the HIS will be 

implemented in July 2014 (78 FR 

48257). To meet the quality reporting 

requirements for hospices for the FY 

2016 payment determination and each 

subsequent year, we will require regular 

and ongoing electronic submission of 

the HIS data for each patient admission 

to hospice on or after July 1, 2014, 

regardless of payer or patient age (78 FR 

48234, 48258). Collecting data on all 

patients will provide CMS with the 

most robust, accurate reflection of the 

quality of care delivered to Medicare 

beneficiaries as compared with nonMedicare patients. Therefore, to 

measure the quality of care that is 

delivered to Medicare beneficiaries in 

the hospice setting, we will collect 

quality data necessary to calculate the 

adopted measures on all patients. We 

are requiring in our regulation that 

hospices collect data on all patients in 

hospice in order to ensure that all 

patients, regardless of payer, are 

receiving the same care and that 

provider metrics measure performance 

across the spectrum of patients (78 FR 

48258). 

Hospices are required to complete and 

submit an admission HIS and a 

discharge HIS for each patient 

admission. Hospices failing to report 

quality data via the HIS in 2014 will 

have their market basket update reduced 

by 2 percentage points in FY 2016. 

Although this has been implemented 

thus far pursuant to instructions set out 

in our preamble statements, we are 

proposing to codify the HIS submission 

requirements at § 418.312 in this 

proposed rule. The System of Record 

(SOR) Notice for the HIS, SOR number 

09–07–0548, was published in the 

Federal Register on April 8, 2014 (79 FR 

19341). 

Hospice programs will be evaluated 

for purposes of the quality reporting 

program based on whether or not they 

submit data, not on their performance 

level on required measures. We have 

provided hospices with information and 

details about use of the HIS through 

postings on the Hospice Quality 

Reporting Program Web page, Open 

Door Forums, announcements in the 

CMS MLN Connects Provider e-News 

(E-News), and provider training. 

Electronic data submission is required 

for HIS submission in CY 2014 and 

beyond; there are no other data 

submission methods available. CMS 

will make available submission software 

for the HIS to hospices at no cost. We 

will also provide reports to individual 


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hospices on their performance on the 

measures calculated from data 

submitted via the HIS. The specifics of 

the reporting system and precisely when 

specific measures will be made 

available have not yet been determined. 

We intend to report to providers on the 

seven finalized measures on a schedule 

to be determined. 

We provided details on data 

collection and submission timing at 

http://www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/Hospice-Quality-Reporting/

Hospice-Item-Set-HIS.html. 

Submission of the HIS on all patient 

admissions to hospice, regardless of 

payer or patient age, is required. The 

data submission system provides reports 

upon successful submission and 

successful processing of the HIS 

records. The final validation report may 

serve as evidence of submission. This is 

the same data submission system used 

by nursing homes, inpatient 

rehabilitation facilities and long-term 

care hospitals for the submission of 

Minimum Data Set Version 3.0 (MDS 

3.0), Inpatient Rehabilitation Facility— 

Patient Assessment Instrument (IRF– 

PAI), and Long-Term Care Hospital 

Continuity Assessment Record & 

Evaluation Data Set (LTCH CARE), 

respectively. 

We also propose that newly certified 

hospices that receive notice of their 

CMS certification number on or after 

November 1, 2014 for payments to be 

made in FY 2016 be excluded from the 

quality reporting requirements for the 

FY 2016 payment determination as data 

submission and analysis would not be 

possible for a hospice receiving 

notification of their certification this 

late in the reporting time period. 

We propose that in future years, 

hospices that receive notification of 

certification on or after November 1 of 

the preceding year involved would 

continue to be excluded from any 

payment penalty for quality reporting 

purposes for the following FY. We 

propose to codify this requirement at 

§ 418.312. 

As is common in other quality 

reporting programs, we propose to make 

accommodations in the case of natural 

disaster or other extenuating 

circumstances. Our experience with 

other quality reporting programs has 

shown that there are times when 

providers are unable to submit quality 

data due to extraordinary circumstances 

beyond their control (for example, 

natural or man-made disasters). A 

disaster may be widespread or impact 

multiple structures or be isolated and 

impact a single site only. We do not 

wish to penalize providers in these 

circumstances or to unduly increase 

their burden during these times. 

Therefore, we propose a process, for the 

FY 2016 payment determination and 

subsequent payment determinations, for 

hospices to request and for CMS to grant 

extensions/exceptions with respect to 

the reporting of required quality data 

when there are extraordinary 

circumstances beyond the control of the 

provider. When an extension/exception 

is granted, a hospice will not incur 

payment reduction penalties for failure 

to comply with the requirements of the 

HQRP. 

Under the proposed process for the 

FY 2016 payment determination and 

subsequent payment determinations, a 

hospice may request an extension/

exception of the requirement to submit 

quality data for a specified time period. 

We propose a process that, in the event 

that a hospice requests an extension/

exception for quality reporting purposes 

for the FY 2016 payment determination 

and subsequent payment 

determinations, the hospice would 

submit a written request to CMS. 

Requirements for requesting an 

extension/exception will be available on 

the Hospice Quality Reporting Web site 

at http://www.cms.gov/Medicare/

Quality-Initiatives-Patient-AssessmentInstruments/Hospice-Quality-Reporting/

index.html. 

This proposal does not preclude us 

from granting extensions/exceptions to 

hospices that have not requested them 

when we determine that an 

extraordinary circumstance, such as an 

act of nature, affects an entire region or 

locale. We also propose that we may 

grant an extension/exception to a 

hospice if we determine that a systemic 

problem with our data collection 

systems directly affected the ability of 

the hospice to submit data. If we make 

the determination to grant an extension/ 

exception to hospices in a region or 

locale, we are proposing to 

communicate this decision through 

routine communication channels to 

hospices and vendors, including, but 

not limited to, Open Door Forums, ENews and notices on https://

www.cms.gov/Medicare/QualityInitiatives-Patient-AssessmentInstruments/HospiceQuality-Reporting/. 

4. Future Measure Development 

We are not proposing any new 

measures for the HQRP at this time. 

However, we believe future 

development of the HQRP should 

address existing measure gaps by 

focusing on two primary opportunities: 

to expand measures already in use in 

other quality reporting programs that 

could apply to the HQRP and to develop 

new measures if no suitable measures 

are ready for implementation or 

expansion. We are particularly 

interested in outcome measures for 

symptom management, particularly 

pain. We are also interested in measures 

of patient reported outcomes. We 

welcome comments and input on future 

measure development. 

CMS is also interested in 

understanding the current state of 

electronic health record (EHR) adoption 

and usage and Health Information 

Exchange (HIE) in the hospice 

community. Therefore, we are soliciting 

feedback and input from providers on 

topics such as decision support, 

whether hospices have adopted an EHR, 

if so, what functional aspects of the EHR 

do hospices find most important (for 

example, the ability to send or receive 

transfer of care information, ability to 

support medication orders/medication 

reconciliation); does the EHR used in 

the hospice setting support 

interoperable document exchange with 

other healthcare providers (for example, 

acute care hospitals, physician 

practices, and skilled nursing facilities? 

In addition to seeking public input on 

the feasibility and desirability of 

electronic health record adoption and 

use of HIE in hospices, we are also 

interested in public comment on the 

need to develop and the benefits and 

limitations of implementing electronic 

clinical quality measures for hospice 

providers. 

HHS believes all patients, their 

families, and their healthcare providers 

should have consistent and timely 

access to their health information in a 

standardized format that can be securely 

exchanged between the patient, 

providers, and others involved in the 

patient’s care. (HHS August 2013 

Statement, Principles and Strategies for 

Accelerating Health Information 

Exchange.) The Department is 

committed to accelerating health 

information exchange (HIE) through the 

use of electronic health records (EHRs) 

and other types of health information 

technology (HIT) across the broader care 

continuum through a number of 

initiatives including: (1) Alignment of 

incentives and payment adjustments to 

encourage provider adoption and 

optimization of HIT and HIE services 

through Medicare and Medicaid 

payment policies; (2) adoption of 

common standards and certification 

requirements for interoperable HIT; (3) 

support for privacy and security of 

patient information across all HIEfocused initiatives; and (4) governance 

of health information networks. These 

initiatives are designed to encourage 


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HIE among all health care providers, 

including professionals and hospitals 

eligible for the Medicare and Medicaid 

EHR Incentive Programs and those who 

are not eligible for the EHR Incentive 

Programs, and are designed to improve 

care delivery and coordination across 

the entire care continuum. To increase 

flexibility in the Office of the National 

Coordinator for Health Information 

Technology’s (ONC) HIT Certification 

Program and expand HIT certification, 

ONC has issued a proposed rule 

concerning a voluntary 2015 Edition 

EHR certification criteria which would 

more easily accommodate certification 

of HIT used in other types of health care 

settings where individual or 

institutional health care providers are 

not typically eligible for incentive 

payments under the Medicare and 

Medicaid EHR Incentive Programs, such 

as long-term and post-acute care and 

behavioral health settings. 

We believe that HIE and the use of 

certified EHRs by Hospice (and other 

types of providers that are ineligible for 

the Medicare and Medicaid EHR 

Incentive Programs) can effectively and 

efficiently help providers improve 

internal care delivery practices, support 

management of patient care across the 

continuum, and enable the reporting of 

electronically specified clinical quality 

measures (eCQMs). More information on 

the identification of EHR certification 

criteria and development of standards 

applicable to Hospice can be found at: 

http://healthit.gov/policy-researchersimplementers/standards-andcertification-regulations 

http://www.healthit.gov/facas/FACAS/

health-it-policy-committee/hitpcworkgroups/certificationadoption 

http://wiki.siframework.org/

LCC+LTPAC+Care+Transition+SWG 

http://wiki.siframework.org/

Longitudinal+Coordination+of+Care 

5. Public Availability of Data Submitted 

Under section 1814(i)(5)(E) of the Act, 

the Secretary is required to establish 

procedures for making any quality data 

submitted by hospices available to the 

public. Measures reported publicly will 

not display patient identifiable 

information. The procedures ensure that 

a hospice would have the opportunity to 

review the data regarding the hospice’s 

respective program before it is made 

public. In addition, under section 

1814(i)(5)(E) of the Act, the Secretary is 

authorized to report quality measures 

that relate to services furnished by a 

hospice on the CMS Web site. We 

recognize that public reporting of 

quality data is a vital component of a 

robust quality reporting program and are 

fully committed to developing the 

necessary systems for public reporting 

of hospice quality data. We also 

recognize that it is essential that the 

data made available to the public be 

meaningful and that comparing 

performance between hospices requires 

that measures be constructed from data 

collected in a standardized and uniform 

manner. The development and 

implementation of a standardized data 

set for hospices must precede public 

reporting of hospice quality measures. 

Once hospices have implemented the 

standardized data collection approach, 

we will have the data needed to 

establish the scientific soundness of the 

quality measures that can be calculated 

using the standardized data collection. 

It is critical to establish the reliability 

and validity of the measures prior to 

public reporting in order to demonstrate 

the ability of the measures to 

distinguish between the quality of 

services provided. To establish 

reliability and validity of the quality 

measures, at least four quarters of data 

will need to be analyzed. Typically the 

first two quarters of data reflect the 

learning curve of the providers as they 

adopt a standardized data collection; 

these data are not used to establish 

reliability and validity. This means that, 

since we will begin data collection in 

CY 2014 (Q3), the data from CY 2014 

(Q3, Q4) will not be used for assessing 

validity and reliability of the quality 

measures. Data collected by hospices 

during Q1–3 CY 2015 will be analyzed 

starting in CY 2015. Decisions about 

whether to report some or all of the 

quality measures publicly will be based 

on the findings of analysis of the CY 

2015 data. In addition, as noted, the 

Affordable Care Act requires that 

reporting be made public on a CMS Web 

site and that providers have an 

opportunity to review their data prior to 

public reporting. CMS will develop the 

infrastructure for public reporting, and 

provide hospices an opportunity to 

review their data. In light of all the steps 

required prior to data being publicly 

reported, we anticipate that public 

reporting will not be implemented in FY 

2016. Public reporting may occur during 

FY 2017, allowing ample time for data 

analysis, review of measures’ 

appropriateness for use for public 

reporting, and allowing hospices the 

required time to review their own data 

prior to public reporting. We will 

announce the timeline for public 

reporting of data in future rulemaking. 

We welcome public comment on what 

we should consider when developing 

future proposals related to public 

reporting. 

6. Proposed Adoption of the CAHPS®

Hospice Survey for the FY 2017 

Payment Determination 

In the FY 2014 Hospice Wage Index 

and Payment Rate Update final rule (78 

FR 48234), we stated that CMS would 

start national implementation of the 

CAHPS® Hospice Survey as of January 

1, 2015. (Previously known as the 

Hospice Experience of Care Survey, 

HECS.) We are maintaining our existing 

policy and are moving forward with 

national implementation of this survey. 

The CAHPS® Hospice Survey is a 

component of CMS’ quality reporting 

program that emphasizes the 

experiences of hospice patients and 

their primary caregivers listed in the 

hospice patients’ records. Measures 

from the survey will be submitted to the 

National Quality Forum (NQF) for 

approval as hospice quality measures. 

Please refer to our extensive discussion 

of the Hospice Experience of Care 

Survey in the Hospice Wage Index FY 

2014 final rule for a description of the 

measurements involved and their 

relationship to the statutory requirement 

for hospice quality reporting (78 FR 

48261–482–66). 

a. Background and Description of the 

Survey 

Before the development of the 

CAHPS® Hospice Survey, there was no 

official national standard hospice 

experience of care survey that included 

standard survey administration 

protocols. The CAHPS® Hospice Survey 

will include detailed survey 

administration protocols which will 

allow for fair comparisons across 

hospices. 

CMS developed the CAHPS® Hospice 

Survey with input from many 

stakeholders, including other 

government agencies, industry 

stakeholders, consumer groups and 

other key individuals and organizations 

involved in hospice care. The Survey 

was designed to measure and assess the 

experiences of patients who died while 

receiving hospice care as well as the 

experiences of their informal caregivers. 

The goals of the survey are to— 

• Produce comparable data on 

patients’ and caregivers’ perspectives of 

care that allow objective and meaningful 

comparisons between hospices on 

domains that are important to 

consumers; 

• Create incentives for hospices to 

improve their quality of care through 

public reporting of survey results; and 

• Hold hospice care providers 

accountable by informing the public 

about the providers’ quality of care. 

The development process for the 

survey began in 2012 and included a 


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public request for information about 

publically available measures and 

important topics to measure (78 FR 

5458); a review of the existing literature 

on tools that measure experiences with 

end-of-life care; exploratory interviews 

with caregivers of hospice patients; a 

technical expert panel attended by 

survey development and hospice care 

quality experts; cognitive interviews to 

test draft survey content; incorporation 

of public responses to Federal Register 

notices (78 FR 48234) and a field test 

conducted by CMS in November and 

December 2013. 

Thirty-three hospice programs from 

29 hospice organizations participated in 

the field test, which was designed to 

assess survey administration procedures 

among hospices of varying size, 

geographic region, chain status, 

ownership, and urbanicity. Respondents 

were primary caregivers of patients who 

died while receiving hospice care in the 

prior 2 to 5 months. In all, 1,136 

respondents, representing the three 

main settings of hospice care (home, 

nursing home, and inpatient, including 

freestanding hospice inpatient unit, and 

acute care hospitals), completed the 

field test survey. Field test survey data 

were analyzed to identify for removal 

survey questions which exhibited little 

variation between hospices or for which 

there was little room for hospice 

improvement. Field test survey data 

were further analyzed to identify 

composite measures of hospice 

performance, including 

Communication, Care Coordination, 

Getting Timely Care, Treating Your 

Family Member with Respect, Providing 

Emotional Support, and Getting Help for 

Symptoms. 

The CAHPS® Hospice Survey treats 

the dying patient and his or her 

informal caregivers (family members or 

friends) as the unit of care. The Survey 

seeks information from the informal 

caregivers of patients who died while 

enrolled in hospices. Caregivers will be 

identified using hospice records. 

Fielding timelines give the respondent 

some recovery time (two to three 

months), while simultaneously not 

delaying so long that the respondent is 

likely to forget details of the hospice 

experience. The survey focuses on 

topics that are important to hospice 

users and for which informal caregivers 

are the best source for gathering this 

information. These include 

communications with hospice staff, 

treatment of symptoms, pain 

medication, cooperation among 

caregivers, treating patients with dignity 

and respect, and spiritual support 

offered by the hospice. Caregivers will 

be presented with a set of standardized 

questions about their own experiences 

and the experiences of the patient in 

hospice care. During national 

implementation of this survey, hospices 

are required to conduct the survey to 

meet the hospice quality reporting 

requirements, but individual caregivers 

will respond only if they voluntarily 

choose to do so. As part of national 

implementation we will launch a Web 

site intended as the primary information 

resource for hospices and vendors 

(www.hospicecahpssurvey.org). The 

Web site is expected to launch in the 

summer of 2014. The launch date will 

be announced at the Home Health, 

Hospice, and Durable Medical 

Equipment Open Door forum conducted 

by CMS (http://www.cms.gov/Outreachand-Education/Outreach/

OpenDoorForums/ODF_

HHHDME.html). 

The CAHPS® Hospice Survey will 

initially be available in English and 

Spanish. CMS will provide additional 

translations of the survey over time in 

response to suggestions for any 

additional language translations. 

Requests for additional language 

translations should be made to the CMS 

Hospice CAHPS® Project Team at 

hospicesurvey@cms.hhs.gov. 

In general, hospice patients and their 

caregivers are eligible for inclusion in 

the survey sample with the exception of 

the following ineligible groups: primary 

caregivers of patients under the age of 

18 at the time of death; primary 

caregivers of patients who died within 

48 hours of admission to hospice care; 

patients for whom no caregiver is listed 

or available, or for whom caregiver 

contact information is not known; 

patients whose primary caregiver is a 

legal guardian unlikely to be familiar 

with care experiences; patients for 

whom the primary caregiver has a 

foreign (Non-US or US Territory 

address) home address; patients or 

caregivers of patients who request that 

they not be contacted (those who sign 

‘‘no publicity’’ requests while under the 

care of hospice or otherwise directly 

request not to be contacted) . 

Identification of patients and caregivers 

for exclusion will be based on hospice 

administrative data. 

Hospices with fewer than 50 

decedents during the prior calendar year 

are exempt from the CAHPS® Hospice 

Survey data collection and reporting 

requirements for payment 

determination. Hospices with 50 to 699 

decedents in the prior year (n = 2,326 

in 2012) will be required to survey all 

cases. For large hospices with 700 or 

more decedents in the prior year (n = 

274 in 2012), a sample of 700 will be 

drawn under an equal-probability 

design. 

For national implementation, we have 

assumed an eligibility rate of 85% and 

a response rate of 50%, based on 

experience in the 2013 field test of the 

CAHPS® Hospice Survey instrument. 

These rates will result in an estimated 

300 completed questionnaires for each 

large hospice (700 or more decedents in 

the calendar year) and between 21 and 

300 completed questionnaires for 

hospices with between 50 and 699 

decedents during the calendar year. 

Assuming a total of 300 completes 

within each hospice and an intraclass 

correlation coefficient (ICC) of 0.01, 

which measures the amount of 

variability between hospices, we would 

achieve an interunit reliability of 0.75. 

Note that in Medicare CAHPS® a 

reliability of 0.75 is regarded as a 

minimal acceptable standard. 

We will move forward with a model 

of national survey implementation 

which is similar to that of other CMS 

patient experience of care surveys. 

Medicare-certified hospices will 

contract with a third-party vendor that 

is CMS-trained and approved to 

administer the survey on their behalf. 

Hospices are required to contract with 

independent survey vendors to ensure 

that the data are unbiased and collected 

by an organization that is trained to 

collect this type of data. It is important 

that survey respondents feel comfortable 

sharing their experiences with an 

interviewer not directly involved in 

providing the care. We have 

successfully used this mode of data 

collection in other settings, including 

for Medicare-certified home health 

agencies. The goal is to ensure that we 

have comparable data across all 

hospices. 

Hospices will be required to provide 

their vendor with the sampling frame on 

a monthly basis. Participation 

requirements for the survey begin 

January 1, 2015 for the FY 2017 Annual 

Payment Update. For hospices, this 

means they will have to start conducting 

the survey as of January 1, 2015 and will 

incur the costs of hiring a survey 

vendor. The survey vendor would be the 

business associate of the hospice. 

A list of approved vendors will be 

provided on the CAHPS® Hospice 

Survey Web site closer to the launch of 

national implementation. Beginning 

summer 2014 interested vendors may 

apply to become approved CAHPS®

Hospice Survey vendors. The 

application process will be online at 

www.hospicecahpssurvey.org. In this 

rule we propose to codify the 

requirements for being an approved 


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CAHPS® Hospice Survey vendor for the 

FY 2017 APU. 

Consistent with many other CMS 

CAHPS® surveys that are publicly 

reported on CMS Web sites, CMS will 

publicly report hospice data when at 

least 12 months of data are available, so 

that valid comparisons can be made 

across hospice providers in the United 

States, to help patients, family and 

friends choose a hospice program for 

themselves or their loved ones. 

b. Participation Requirements To Meet 

Quality Reporting Requirements for the 

FY 2017 APU 

In section 3004 of the Affordable Care 

Act, the Secretary is directed to 

establish quality reporting requirements 

for Hospice Programs. The CAHPS®

Hospice Survey is a component of the 

CMS Quality Reporting Requirements 

for the FY 2017 APU and subsequent 

years. 

The CAHPS® Hospice Survey is the 

only nationally implemented survey of 

civilian patient and caregiver 

experiences with hospice that includes 

both a standard questionnaire and 

standard survey administration 

protocols. Such standardization is 

needed in order to establish that the 

resulting survey data is comparable 

across hospices and is suitable for 

public reporting. 

The CAHPS® Hospice Survey 

includes the measures detailed below. 

The measures map directly to the 

CAHPS® Hospice Survey. The 

individual survey questions that 

comprise each measure are listed under 

the measure. These measures are in the 

process of being submitted to the 

National Quality Forum (NQF). 

TABLE 9—HOSPICE EXPERIENCE OF CARE SURVEY QUALITY MEASURES AND THEIR ITEMS

Hospice Team Communication 

How often did the hospice team listen carefully to you when you talked with them about problems with your family member’s hospice care? 

While your family member was in hospice care, how often did the hospice team listen carefully to you? 

While your family member was in hospice care, how often did the hospice team explain things in a way that was easy to understand? 

While your family member was in hospice care, how often did the hospice team keep you informed about your family’s condition? 

While your family member was in hospice care, how often did the hospice team keep you informed about when they would arrive to care 

for your family member? 

Getting Timely Care 

While your family member was in hospice care, when you or your family member asked for help from the hospice team, how often did you 

get help as soon as you needed it? 

How often did you get the help you needed from the hospice team during evenings, weekends, or holidays? 

Treating Family Member with Respect 

While your family member was in hospice care, how often did the hospice team treat your family member with dignity and respect?

While your family member was in hospice care, how often did you feel that the hospice team really cared about your family member? 

Providing Emotional Support 

In the weeks after your family member died, how much emotional support did you get from the hospice team? 

While your family member was in hospice care, how much emotional support did you get from the hospice team? 

Getting Help for Symptoms 

How often did your family member receive the help he or she needed from the hospice team for feelings of anxiety or sadness? 

Did your family member get as much help with pain as he or she needed? 

How often did your family member get the help he or she needed for constipation? 

How often did your family member get the help he or she needed for trouble breathing? 

Information Continuity 

While your family member was in hospice care, how often did anyone from the hospice team give you confusing or contradictory information about your family member’s condition or care? 

Understanding the Side Effects of Pain Medication 

Side effects of pain medicine include things like sleepiness. Did any member of the hospice team discuss side effects of pain medicine with 

you or your family member? 

Getting Hospice Care Training (Home Setting of Care Only) 

Did the hospice team give you enough training about what to do if your family member became restless or agitated? 

Did the hospice team give you enough training about if and when to give more pain medicine to your family member? 

Did the hospice team give you enough training about how to help your family member if he or she had trouble breathing? 

Did the hospice team give you enough training about what side effects to watch for from pain medicine? 

In order to comply with CMS’s quality 

reporting requirements, hospices will be 

required to collect data using the 

Consumer Assessment of Healthcare 

Providers and Systems (CAHPS®) 

Hospice Survey. Hospices would be able 

to comply by utilizing only CMSapproved third party vendors that are in 

compliance with the provisions of 

proposed § 418.312(e). 

In the FY Hospice Wage Index and 

Rate Update final rule (78 FR 48234), we 

stated that national implementation of 

the CAHPS® Hospice Survey will begin 

with a ‘‘dry run’’ in the first quarter of 

CY 2015. Hospices will be required to 

contract with an approved survey 

vendor to conduct a dry run of the 

survey for at least one month during 

January 2015, February 2015, or March 

2015. During this period the survey 

vendor will follow all the national 

implementation procedures, but the 

data will not be publicly reported. The 

dry run will provide hospices and their 

vendors with the opportunity to work 

together under test circumstances. 

Beginning April 1, 2015, all hospices 

would be required to participate in the 

survey on an ongoing monthly basis. 

This means hospices need to contract 

with a survey vendor to conduct the 

survey monthly on their behalf. 

Participation for at least 1 month during 

the dry run, plus monthly participation 

for the 9 months between April 2015 

and December 2015 (inclusive) will be 

required to meet the pay for reporting 

requirement of the HQRP for the FY 

2017 APU. 

Approved CAHPS® Hospice Survey 

vendors will submit data on the 

hospice’s behalf to the CAHPS® Hospice 

Survey Data Center. The proposed 

deadlines for data submission occur 

quarterly and are shown in Table 9 

below. Deadlines are final. No late 

submissions will be accepted. Hospice 

providers are responsible for making 

sure that their vendors are submitting 

data in a timely manner. 


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TABLE 10—DATA SUBMISSION DATES 2015–2016 FOR CAHPS® HOSPICE SURVEY

Sample months Quarterly data submission deadlines 

Dry Run (January–March 2015) .................................................................................................................................................. August 12, 2015. 

Monthly data collection April–June 2015 (Q2) ............................................................................................................................ November 1, 2015. 

Monthly data collection July–September 2015 (Q3) ................................................................................................................... February 10, 2016. 

Monthly data collection October–December 2015 (Q4) ............................................................................................................. May 11, 2016. 

In the FY 2014 Hospice Wage Index 

and Rate Update final rule, we 

exempted very small hospices from 

CAHPS® Hospice Survey requirements. 

Hospices that have fewer than 50 

survey-eligible deceased patients in the 

period from January 1, 2014 through 

December 31, 2014 will be exempt from 

CAHPS® Hospice Survey data collection 

and reporting requirements for the 2017 

APU. To qualify for the survey 

exemption for FY 2017, hospices must 

submit an exemption request form. This 

form will be available on the CAHPS®

Hospice Survey Web site 

(www.hospicecahpssurvey.org). 

Hospices are required to submit to CMS 

their total unique patient count for the 

period of January 1, 2014 through 

December 31, 2014. The due date for 

submitting the exemption request form 

is August 12, 2015. 

c. Participation Requirements To Meet 

Quality Reporting Requirements for the 

FY 2018 APU 

To meet participation requirements 

for the FY 2018 APU, we propose that 

hospices collect data on an ongoing 

monthly basis from January 2016 

through December 2016 (inclusive). 

Data submission deadlines for the 2018 

APU will be announced in future 

rulemaking. 

We propose to exempt very small 

hospices. Hospices that have fewer than 

50 deceased patients in the period from 

January 1, 2015 through December 31, 

2015 will be exempt from CAHPS®

Hospice Survey data collection and 

reporting requirements for the FY 2018 

payment determination. To qualify, 

hospices must submit an exemption 

request form. This form will be available 

on the CAHPS® Hospice Survey Web 

site (www.hospicecahpssurvey.org). 

Hospices are required to submit to CMS 

their total unique patient count for the 

period of January 1, 2015 through 

December 31, 2015. The due date for 

submitting the exemption request form 

is August 10, 2016. 

d. Vendor Participation Requirements 

for the 2017 APU 

We have previously stated that CMS 

will train and approve vendors to 

administer CAHPS® Hospice Survey on 

behalf of hospices (78 FR 48233). In 

addition we stated that hospices will be 

required to contract with an approved 

survey vendor and to provide the 

sampling frame to the approved vendor 

on a monthly basis. 

We propose that approved survey 

vendors must meet all of the minimum 

business requirements and follow the 

detailed technical specifications for 

survey administration as published in 

the CAHPS® Hospice Survey 

specifications manual, which will be 

posted on the Survey Web site. In 

addition, to the specifications manual, 

the Web site will include information 

and updates regarding survey 

implementation and technical 

assistance. 

We propose to codify the CAHPS®

Hospice Survey vendor requirements to 

be effective with the FY 2017 APU (as 

proposed in § 418.312). We propose that 

applicants that wish to become 

approved CAHPS® Hospice Survey 

vendors must have been in business for 

a minimum of 4 years and have 

conducted surveys for a minimum of 3 

years using each the modes of survey 

administration for which they are 

applying. In addition the organization 

must have been conducting ‘‘surveys 

with patients’’ for at least 2 years 

immediately preceding the application 

to become a survey vendor for the 

CAHPS® Hospice Survey. For purposes 

of the approval process for CAHPS®

Hospice Survey vendors, a ‘‘survey of 

individual patients’’ is defined as the 

collection of data from at least 600 

individual patients selected by 

statistical sampling methods and the 

data collected are used for statistical 

purposes. 

Vendors may not use home-based or 

virtual interviewers to conduct the 

CAHPS® Hospice Survey, nor may they 

conduct any survey administration 

processes (e.g. mailings) from a 

residence in order to ensure the 

confidentiality of data. 

The following are examples of data 

collection activities would not satisfy 

the requirement of valid survey 

experience for approved vendors as 

defined for the CAHPS® Hospice 

Survey, and these would not be 

considered as part of the experience 

required of an approved vendor for 

CAHPS® Hospice Survey. 

• Focus groups, cognitive interviews, 

or any other qualitative data collection 

activities; 

• Surveys of fewer than 600 

individuals; 

• Surveys conducted that did not 

involve using statistical sampling 

methods; 

• Internet or Web-based surveys; and 

• Interactive Voice Recognition 

Surveys. 

We also propose that no organization, 

firm, or business that owns, operates, or 

provides staffing for a hospice is 

permitted to administer its own Hospice 

CAHPS® survey or administer the 

survey on behalf of any other hospice in 

the capacity as a Hospice CAHPS®

survey vendor. Such organizations will 

not be approved by CMS as CAHPS®

Hospice Survey vendors. 

e. Annual Payment Update 

The Affordable Care Act requires that 

beginning with FY 2014 and each 

subsequent FY, the Secretary shall 

reduce the market basket update by 2 

percentage points for any hospice that 

does not comply with the quality data 

submission requirements with respect to 

the FY, unless covered by specific 

exemptions. Any such reduction would 

not be cumulative and would not be 

taken into account in computing the 

payment amount for subsequent FYs. 

We propose to add the CAHPS® Hospice 

Survey to the Hospice Quality Reporting 

Program requirements for the FY 2017 

payment determination and 

determinations for subsequent years. 

• To meet the FY 2017 requirements, 

hospices will participate in a dry run for 

at least 1 month of the first quarter of 

CY 2015 (January 2015, February 2015, 

March 2015) and hospices must collect 

the survey data on a monthly basis for 

the months of April 1, 2015 through 

December 31, 2015 in order to qualify 

for the full APU. 

• To meet the HQRP requirements for 

the FY 2018 payment determination, 

hospices would collect survey data on a 

monthly basis for the months of January 

1, 2016 through December 31, 2016 in 

order to qualify for the full APU. 


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41Office of the Inspector General, Department of 

Health and Human Services. Medicare Could be 

Paying Twice for Prescription Drugs for 

Beneficiaries in Hospice. June, 2012. A–06–10– 

00059. 

f. CAHPS® Hospice Survey Oversight 

Activities 

We propose that vendors and hospice 

providers be required to participate in 

CAHPS® Hospice Survey oversight 

activities to ensure compliance with 

Hospice CAHPS® technical 

specifications and survey requirements. 

The purpose of the oversight activities 

is to ensure that hospices and approved 

survey vendors follow the CAHPS®

Hospice Survey technical specifications 

and thereby ensure the comparability of 

CAHPS® Hospice Survey data across 

hospices. 

We propose that the reconsiderations 

and appeals process for hospices that 

fail to meet the Hospice CAHPS® data 

collection requirements will be part of 

the Reconsideration and Appeals 

process already developed for the 

Hospice Quality Reporting program. 

We encourage hospices interested in 

learning more about the CAHPS®

Hospice Survey to visit the CAHPS®

Hospice Survey Web site: 

www.hospicecahpssurvey.org. The 

launch date for this Web site will be 

announced at the Home Health, Hospice 

& Durable Medical Equipment Open 

Door Forum. We expect the Web site to 

be launched during the summer of 2014. 

You can contact CMS hospice team at 

hospicesurvey@cms.hhs.gov. 

7. Procedures for Payment Year 2016 

and Subsequent Years 

In the FY 2014 Hospice Wage Index 

and Payment Rate Update final rule (78 

FR 48267), we notified hospice 

providers of the opportunity to seek 

reconsideration of our initial noncompliance decision for the FY 2014 

and FY 2015 payment determinations. 

We stated that we will notify hospices 

found to be non-compliant with the 

HQRP reporting requirements that they 

may be subject to the two percentage 

point reduction in their annual payment 

update. The process for filing a request 

for reconsideration is described on the 

CMS Web site at: http://www.cms.gov/

Medicare/Quality-Initiatives-PatientAssessment-Instruments/HospiceQuality-Reporting/ReconsiderationRequests.html. We propose to codify 

this process at § 418.312. 

Finally, we also propose to codify at 

§ 418.306 that beginning with FY 2014 

and each subsequent FY, the Secretary 

shall reduce the market basket update 

by 2 percentage points for any hospice 

that does not comply with the quality 

data submission requirements with 

respect to that FY. 

We invite public comment on all of 

the proposals in this section and the 

associated regulations text at § 418.312 

and in § 418.306 in section VI. 

I. Coordination of Benefits Process and 

Appeals for Part D Payment for Drugs 

While Beneficiaries Are Under a 

Hospice Election 

The statutory definition of the term 

‘‘covered Part D drug’’, as specified in 

section 1860D–2(e)(2)(B) of the Social 

Security Act, excludes a drug if 

payment for such a drug, as so 

prescribed and dispensed or 

administered with respect to a Part D 

eligible individual, is available (or 

would be available but for the 

application of a deductible) under Part 

A or B for that individual. Therefore, 

drugs and biologicals for which 

coverage is available under the 

Medicare Part A per-diem payment to a 

hospice program are excluded from 

coverage under Part D. Our previous 

understanding was that hospice 

coverage of drugs was very broad and 

very inclusive. Therefore, Part D 

payment for drugs furnished to hospice 

beneficiaries would be rare and the need 

for controls was not critical. 

Section 1861(dd) of the Act states the 

hospice is responsible for covering all 

drugs or biologicals for the palliation 

and management of the terminal illness 

and related conditions. Our stated 

intention in the 1983 Hospice final rule 

(48 FR 56010) was that the hospice 

benefit provides virtually all care for the 

terminally ill individual. Despite our 

intention for a comprehensive and 

holistic benefit, claims data presented in 

section III.A.4 in this proposed rule 

shows that in 2012 there was over $1 

billion in additional Medicare spending 

for beneficiaries during a hospice 

election. Gross covered drug costs under 

Part D for beneficiaries during a hospice 

election totaled $417.9 million. Of this 

total, Medicare reimbursed 

approximately $334.9 million, and 

beneficiaries contributed $48.2 million 

in possibly unnecessary cost-sharing. 

This suggests that hospice services are 

possibly being ‘‘unbundled,’’ resulting 

in duplicate costs to the Medicare 

program. To ensure that only costs for 

drugs that are unrelated to the terminal 

illness and related conditions are 

covered under Part D, we are 

considering defining ‘‘terminal illness’’ 

and ‘‘related conditions’’ in the 

regulations at § 418.3 (see section III.B 

for more information on the definitions 

we are considering). 

CMS has previously issued a number 

of policy documents addressing our 

expectations concerning how Part D 

sponsors are to ensure that Part D drugs 

are provided only when those drugs are 

not covered under Part A or B as so 

prescribed and dispensed or 

administered for that individual. Since 

the hospice benefit was created with the 

expectation that virtually all care that is 

needed by the terminally ill patient and 

all drug needs at end of life would be 

covered by the hospice benefit, we 

believed that Part D coverage would be 

rare, and that hospices would make 

appropriate determinations consistent 

with the 1983 Hospice final rule (48 FR 

56010 through 56011). Prior to the 2014 

Final Call Letter, our guidance included 

an October 22, 2010 memorandum 

(titled, ‘‘Preventing Part D Payment for 

Hospice Drugs) and a 2012 Call Letter 

(dated April 4, 2011 and available at 

http://www.cms.gov/Medicare/

Prescription-Drug-Coverage/

PrescriptionDrugCovContra/Downloads/

Announcement2012final.pdf) 

instructing Part D sponsors that they 

should pay for drugs that may be 

covered under the hospice per-diem 

payment, and retrospectively determine 

payment responsibility (‘‘pay and 

chase’’). On June 28, 2012, the HHS 

Office of Inspector General (OIG) issued 

a final report documenting the findings 

of its review of Medicare payments for 

prescription drugs for beneficiaries who 

had elected hospice.41 The OIG’s review 

focused on four categories of drugs 

typically used to treat symptoms 

generally experienced by beneficiaries 

in hospice at end of life and concluded 

the Medicare program could be paying 

twice for prescription drugs for hospice 

beneficiaries. The OIG recommended 

that CMS require Part D sponsors to 

develop controls to prevent Part D 

payment for drugs included in the 

hospice per diem payments. Therefore, 

in the 2014 Call Letter, we stated that 

when a sponsor receives a Daily 

Transaction Reply Report (DTRR) from 

CMS showing a beneficiary has elected 

hospice, the sponsor must have controls 

in place to comply with the requirement 

that Part D does not pay for drugs and 

biologicals that can be covered under 

the Medicare Part A per-diem payment 

to a hospice. Although we strongly 

encouraged sponsors to place 

beneficiary-level prior authorization 

(PA) requirements on the four categories 

of prescription drugs identified by the 

OIG, including: analgesics, 

antinauseants (antiemetics), laxatives, 

and antianxiety drugs, we permitted 

sponsors to use other approaches, such 

as pay-and-chase, to resolve payment 

responsibility in these scenarios. 

Following the issuance of this 

guidance, we received questions 


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indicating our policy statements were 

being misinterpreted by some parties. 

The hospice industry expressed 

uncertainty with the definitions of 

‘‘terminal condition’’ and ‘‘related 

conditions,’’ and Part D sponsors were 

thus uncertain about whether payment 

should be the responsibility of either the 

hospice (Part A) or the plan (Part D). 

Therefore, on December 6, 2013, we 

issued a memorandum (titled, ‘‘Part D 

Payment for Drugs for Beneficiaries 

Enrolled in Hospice’’) providing 

clarified guidance for review and 

requesting comment on whether the 

industry’s questions had been 

addressed. We received 130 comments, 

with many requesting that CMS 

undertake rulemaking to clarify for all 

parties what is, and is not, related to the 

terminal illness and related conditions, 

thereby providing the basis for clear 

criteria for determining payment 

responsibility between the hospice 

benefit and Part D. Therefore, we are 

considering defining ‘‘terminal illness’’ 

and ‘‘related conditions’’ (see section 

III.B of this proposed rule). 

1. Part D Sponsor Coordination of 

Payment With Hospice Providers 

Many commenters on the December 6, 

2013 guidance also requested that CMS 

establish and require the use of 

standardized processes for determining 

payment responsibility, recovering 

payment when the wrong party has 

paid, and resolving disputes regarding 

payment responsibility. We agree with 

these commenters as well as those who 

suggested we seek stakeholder input. 

Thus, we are not proposing any 

requirements at this time, but are only 

soliciting comments on processes we are 

considering to facilitate the 

coordination of payment between Part D 

sponsors and hospices. 

Specifically, we are considering 

amending § 423.464 by adding a new 

paragraph (i): ‘‘Coordination with 

Medicare hospices,’’ which would 

require that a Part D sponsor 

communicate and coordinate with 

Medicare hospices in determining 

coverage for drugs whenever a coverage 

determination process is initiated or a 

hospice furnishes information regarding 

a beneficiary’s hospice election and/or 

drug profile. We are not considering 

establishing a requirement that the Part 

D sponsor initiate such communication 

and coordination. Rather, we are 

considering requiring that the Part D 

sponsor communicate and coordinate 

once the hospice initiates 

communication with the Part D sponsor 

to report information concerning a 

hospice election and/or drug profile, or 

the beneficiary or the beneficiary’s 

appointed representative or the 

prescriber initiates a coverage 

determination request. In other words, a 

hospice may initiate the communication 

by reporting a beneficiary’s hospice 

status, which would include the notice 

of election (NOE) or the notice of 

termination/revocation (NOTR). The 

hospice may also provide drug profile 

information, meaning identification of 

any drug that the hospice has 

determined is unrelated to the terminal 

illness or related conditions and an 

explanation of why the drug is 

unrelated. Hospices may identify a 

beneficiary’s Part D plan by asking the 

beneficiary for the plan information on 

his or her member identification card or 

by requesting the hospice pharmacy 

submit a standard electronic eligibility 

transaction (that is, an E1) to the CMS 

Part D Transaction Facilitation 

contractor. The Facilitator will seek to 

match the beneficiary’s identifying 

information on the E1 request to the 

contractor’s Medicare Part D enrollment 

data. If a match is found, the transaction 

response will identify the Part D plan 

and provide on-line billing information 

and the sponsor’s help desk telephone 

number. 

To facilitate the communication and 

coordination, CMS reports hospice 

election information to Part D plan 

sponsors on the Daily Transaction Reply 

Report (DTRR). This information 

includes a hospice indicator, a hospice 

start date and a hospice termination 

date. Updated data are reported to 

reflect a new benefit period or a 

termination/revocation date. Because 

communication and coordination 

between the Part D sponsor and the 

hospice are necessary to determine 

coverage for drugs for beneficiaries who 

elect hospice, we expect that sponsors 

will promptly upload the DTRR data 

into their systems. As noted previously 

in CMS-issued Part D guidance, only a 

single hospice benefit period can be 

reported on the DTRR. As a result, 

sponsors need to store the hospice data 

in their systems so historical data are 

available when needed for claims 

adjudication and adjustments. Sponsors 

also can access additional hospice data 

via the Medicare Advantage and 

Prescription Drug system (MARx) User 

Interface, including the hospice 

provider number, prior benefit period 

start and end dates, and the hospice 

termination/revocation indicator. 

Although we are proposing changes in 

this rule at section III.E that are 

expected to result in improvement to 

the timeliness of the CMS’ reporting of 

the hospice election information, some 

time lag will remain in hospices filing 

their election information and plan 

sponsors’ ability to access that 

information. One approach, 

recommended by hospice organizations, 

to address the time lag is to permit 

hospices to initiate communication with 

the beneficiary’s Part D sponsor prior to 

a claim submission, such as at hospice 

election, to provide early notice of the 

election. When hospices provide this 

information, we are considering 

requiring Part D sponsors to accept it 

and use it to adjudicate requests for 

coverage until the official notice via the 

DTTR is received from CMS. We would 

expect sponsors to have processes in 

place to monitor receipt of the 

information from CMS and 

communicate with the hospice to 

resolve discrepancies between hospicereported information and CMS-reported 

data. 

We also are considering requiring that 

a Part D sponsor determine Part A 

versus Part D coverage at point-of-sale 

for any drugs for beneficiaries who have 

elected the hospice benefit as of the date 

the prescription is presented to be filled. 

By this we mean Part D sponsors would 

use HIPAA standard transactions to 

effectuate the Part D prior authorization 

requirement. The point of sale 

transaction related to Part A versus Part 

D coverage begins when a Part D 

sponsor receives a pharmacy claim for 

a beneficiary who has elected hospice, 

and rejects the claim with the following 

National Council for Prescription Drug 

Programs (NCPDP)-approved reject 

coding. Currently, this consists of: (1) 

reject code A3 ‘‘This Product May Be 

Covered Under Hospice—Medicare A’’; 

(2) reject code 75 ‘‘Prior Authorization 

Required’’; and (3) reject code 569 

‘‘Provide Notice: Medicare Prescription 

Drug Coverage and Your Rights.’’ In 

addition to the reject coding, sponsors 

would employ point-of-sale messaging 

that indicates a hospice is involved and 

that an explanation is needed that the 

drug is unrelated to the terminal illness 

and related conditions. The point-ofsale messaging must also include the 24- 

hour pharmacy help desk phone 

number to call with questions. 

The beneficiary, the beneficiary’s 

appointed representative, or the 

prescriber must contact the sponsor to 

initiate a coverage determination 

request which would require the plan 

sponsor to obtain information from the 

hospice provider that the drug is 

unrelated to the terminal illness and 

related conditions. The standardized 

pharmacy notice instructs the enrollee 

on how to contact his or her plan and 

explains an enrollee’s right to receive, 

upon request, a coverage determination 

(including a detailed written decision) 

from the Part D sponsor regarding his or 


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her Part D prescription drug benefits. 

Part D sponsors must arrange with their 

network pharmacies (including mailorder and specialty pharmacies) to 

distribute the standardized notice. 

After the Part D sponsor receives the 

coverage determination request and the 

PA process is initiated, the Part D 

sponsor would expect to receive either 

a verbal explanation or a completed PA 

form from the hospice within the 

timeframes proposed in this rule in 

§ 418.305. Upon receiving either a 

verbal explanation of why the 

prescribed drug is unrelated to the 

beneficiary’s terminal illness and 

related conditions or the completed PA 

form from the hospice, the Part D 

sponsor would be required to use the 

criteria described in the definitions of 

‘‘terminal illness’’ and ‘‘related 

conditions’’, as we indicate we are 

considering in in this rule in section 

III.B, to determine whether the 

documentation establishes that the drug 

as prescribed and dispensed or 

administered is unrelated to the 

terminal illness and related conditions 

and, thus, satisfies the beneficiary-level 

hospice PA. If it does, the Part D 

sponsor would instruct the pharmacy on 

how to override the edit or provide 

coding to the pharmacy that would 

permit the claim transaction to process. 

Whenever an explanation of why the 

prescribed drug is unrelated to the 

beneficiary’s terminal illness and 

related conditions is provided verbally, 

CMS is considering requiring the Part D 

sponsor to accurately document the date 

and content of the notice and 

explanation and to retain that 

documentation. 

If the sponsor disagrees with the 

hospice’s determination that the drug is 

unrelated to the terminal illness and 

related conditions, or determines that 

the documentation is insufficient to 

satisfy the beneficiary-level hospice PA, 

the Part D sponsor would initiate 

communication with the hospice and 

attempt to resolve the dispute. If the 

Part D sponsor and the hospice are 

unable to reach a resolution, the Part D 

sponsor may request a review by the 

independent review entity (IRE) we 

indicate in this rule we are considering. 

Since the plan sponsor’s decision 

about whether the PA is satisfied is a 

coverage determination, the Part D 

sponsor must notify the enrollee (and, if 

applicable, the prescriber) of its 

decision in accordance with the 

applicable adjudication timeframes and 

notice rules in Part 423, Subpart M. For 

example, if an enrollee, the enrollee’s 

representative, or the prescriber’s 

request is processed as an expedited 

coverage determination, the plan 

sponsor must provide notice of its 

decision as expeditiously as the 

enrollee’s health condition requires, but 

no later than 24 hours after receiving the 

request or, for an exceptions request, the 

prescriber’s supporting statement. If an 

appeal is requested following an adverse 

coverage determination decision, an 

expedited redetermination (plan level 

appeal) requires the plan to notify the 

enrollee (and prescriber, if appropriate) 

of the decision as expeditiously as the 

enrollee’s health condition requires, but 

no later than 72 hours from receiving 

the request. The 72 hour expedited 

timeframe also applies to the IRE 

reconsideration level of review. 

In those instances in which the Part 

D sponsor disagrees with the hospice’s 

determination that the prescribed drug 

is unrelated to the terminal illness and 

related conditions, the denial notice 

would explain the Part D sponsor’s 

intention to seek independent review of 

the hospice’s determination, if 

applicable. Since Part D coverage of a 

drug depends on whether the drug is 

covered under the hospice benefit, if the 

hospice does not respond or refuses to 

provide the required explanation 

regarding why the drug is unrelated to 

the terminal illness and related 

conditions, Part A coverage cannot be 

ruled out and the PA would be 

unfulfilled. 

In addition to providing early notice 

of a hospice election or termination/

revocation, the hospice may identify 

any drugs determined to be coverable 

under Part D for a beneficiary and 

provide an explanation of why the drugs 

are unrelated to the terminal illness and 

related conditions. When the hospice 

furnishes the documentation to satisfy 

the PA, prior to a claim submission, we 

are considering requiring Part D 

sponsors to accept the information from 

the hospice either verbally or on the PA 

form. Once the information is received 

from the hospice provider, the Part D 

sponsor would determine whether it is 

sufficient to establish that the drug as 

prescribed and dispensed or 

administered is unrelated to the 

terminal illness and related conditions. 

If it does, the Part D sponsor would 

reflect that the PA is satisfied for this 

drug in their system. If the Part D 

sponsor determines that the explanation 

provided is unsatisfactory, the Part D 

sponsor would communicate this to the 

hospice. The Part D sponsor and 

hospice may attempt to resolve the 

coverage issue, but should they be 

unable to do so, the plan sponsor would 

be able to seek review by the IRE. 

We also are considering requiring that 

a Part D sponsor process retrospective 

claims adjustments and issue requests 

for repayment and or refunds for drugs 

that are excluded from Part D by virtue 

of their being covered under the hospice 

benefit in accordance with the 

timeframes in § 423.466(a). The amount 

requested for repayment and 

subsequently repaid would be the total 

amount paid to the pharmacy, including 

the negotiated price for the drug paid by 

the Part D sponsor, the beneficiary cost 

sharing and any other payments made 

on the claim as reported by the sponsor 

on the prescription drug event record to 

CMS, such as the low-income subsidy 

and payments made by supplemental 

insurers. Under the process we are 

considering, the Part D sponsor would 

be responsible for refunding beneficiary 

cost-sharing as well as the amounts paid 

by supplemental payers on claims for 

which the sponsor received an NCPDP 

reporting (that is, NX) transaction. The 

Part D sponsor would also be 

responsible for refunding amounts the 

hospice has paid to the pharmacy for 

drugs that should have been covered 

under Part D, including any beneficiary 

cost-sharing. 

We believe that the definitions of 

‘‘terminal illness’’ and ‘‘related 

conditions’’ in section III.B of this 

proposed rule would guide hospices, 

prescribers, and Part D sponsors by 

clarifying and strengthening the 

concepts of holistic and comprehensive 

hospice care. Thus, through a good faith 

effort, Part D sponsors and hospices 

would be able to resolve issues of 

payment responsibility for prescription 

drugs using the processes under 

consideration and outlined in this 

proposed rule. 

While we expect the overwhelming 

preponderance of cases involving 

payment coverage responsibility to be 

resolved using the communication and 

coordination of benefits processes we 

are considering, we recognize that there 

may be some instances where the Part 

D sponsor and the hospice will be 

unable to agree on which entity is 

responsible for covering a prescription 

drug. Therefore, we are considering 

enabling the Part D sponsor to request 

review from the IRE that has contracted 

with CMS. As noted above, drugs 

available under Part A as prescribed and 

dispensed or administered are excluded 

by statute from coverage under Part D. 

We believe that the coverage exclusion 

set forth at section 1860D–2(e)(2)(B) of 

the Act provides CMS with the 

authority to implement a process 

whereby the Part D sponsor can request 

an independent review of a 

disagreement over payment 

responsibility with a Part A hospice. In 

addition, section 1860D–24 of the Act 

requires Part D sponsors to coordinate 


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with other drug plans, including with 

other health benefit plans or programs 

that provide coverage or financial 

assistance for the purchase or provision 

of prescription drug coverage on behalf 

of Part D eligible individuals. We 

believe these statutory provisions 

support the coordination and 

independent review processes being 

considered, as these processes would 

help ensure that payment responsibility 

is properly determined and that drugs 

are not being inappropriately covered 

and paid for by the Part D program. 

The independent review process 

considered would be made part of the 

regulations at 42 CFR Part 423, Subpart 

J, given the nexus between the 

coordination of benefits processes 

considered for inclusion at § 423.464(i) 

and the right to request an independent 

review if the Part D sponsor disagrees 

with the information provided by the 

hospice or prescriber. Under the 

provisions being considered, the Part D 

sponsor would have to communicate 

and coordinate with Medicare hospices 

in determining coverage for prescription 

drugs. As part of this process, the 

hospice would be required to furnish 

information regarding why the drug is 

unrelated to the terminal illness and 

related conditions to satisfy the 

beneficiary-level hospice prior 

authorization (PA) requirements. The 

independent review process we are 

considering would be separate and 

distinct from the enrollee appeals 

process and would not affect the rights 

of an enrollee, the enrollee’s 

representative or the enrollee’s 

prescriber to request an appeal under 

the administrative appeal provisions set 

forth in 42 CFR Part 423, subpart M and 

subpart U. 

The changes we are considering at 

§ 423.464(i)(4) would enable the Part D 

sponsor to request an independent 

review if the hospice has furnished 

information as part of the coordination 

of benefits and PA process indicating 

that the drug is not a covered drug 

under the Part A hospice benefit, and 

the Part D sponsor disagrees with that 

determination. To satisfy the 

beneficiary-level hospice PA 

requirement, the hospice would be 

required to notify the Part D sponsor, 

verbally or in writing, of the 

determination as to whether the need 

for the prescription drug is related to the 

beneficiary’s terminal illness and 

related conditions and provide a clinical 

explanation to support that 

determination. If the need for the drug 

is unrelated to the beneficiary’s terminal 

illness and related conditions, the drug 

may be covered under Part D. If the Part 

D sponsor disagrees with the hospice or 

prescriber’s explanation, the Part D 

sponsor would have the right to file a 

written request for review with the IRE 

within 5 calendar days of the date of 

notice provided by the hospice or 

prescriber. If the hospice or prescriber 

provides verbal notice of its 

determination, we are considering 

requiring the Part D sponsor to 

accurately document the date and 

content of the notice and explanation 

and retain that documentation. We 

believe that 5 calendar days (from the 

date the hospice provider furnishes 

notice to the plan sponsor that the drug 

is unrelated to the beneficiary’s terminal 

illness and related conditions) would be 

a reasonable period of time for the 

hospice provider and plan sponsor to 

attempt to resolve any disagreement 

over payment responsibility via the 

coordination processes being 

considered. In the interest of promptly 

resolving disputes over payment 

responsibility, we do not believe a 

longer timeframe for requesting IRE 

review would be appropriate, but solicit 

comments on this 5 calendar day 

timeframe. 

We are considering requiring that the 

written request for independent review 

include relevant clinical documentation 

and the explanation provided by the 

hospice. The IRE would be responsible 

for obtaining any additional information 

it believes is necessary to determine 

whether the disputed drug is the 

payment responsibility of the hospice or 

the Part D sponsor. The IRE would 

notify the hospice (and prescriber, as 

appropriate), the Part D sponsor, and the 

enrollee of its decision in writing. The 

IRE’s decision would be binding on the 

Part D sponsor and the hospice. 

Decisions made through this review 

would not be subject to appeal, but 

could be reviewed and revised at the 

discretion of CMS. We are considering 

a corresponding change at 418.305(b) 

specifying the hospice would be bound 

by the decision made by the IRE under 

the change being considered at 

423.464(i). If the IRE review process we 

are considering were to be proposed and 

finalized through future rulemaking, 

additional guidance related to the IRE’s 

review, such as adjudication timeframes 

and specific notice requirements, would 

be established in manual guidance or 

rulemaking. 

The following chart summarizes the 

existing and new requirements under 

consideration for Part D sponsor 

coordination with hospices: 

Process Timeframes 

Communication/Coordination: 

Part D sponsors would be required to communicate and coordinate 

with a hospice when: 

• The hospice furnishes information regarding a beneficiary’s 

hospice election or plan of care; and 

• The Part D coverage determination process is initiated. 

A hospice would be able to furnish information to the Part D sponsor at 

any time. 

This communication/coordination process would begin when the beneficiary, the beneficiary’s appointed representative or the prescriber 

requests a coverage determination. 

Prior Authorization: 

Part D sponsors would implement beneficiary-level hospice PAs 

and NCPDP reject coding at point-of-sale (POS) for drugs for 

beneficiaries who have elected hospice.

When a claim rejects at POS, the beneficiary would be provided 

with a notice explaining the right to request a coverage determination from the plan.

When a coverage determination is requested, sponsors would be required to comply with the existing timeframes of 72 hours for standard requests and 24 hours for expedited requests, as specified in 

Federal regulation at § 423.568 and § 423.572 respectively. 

Payment Recovery: 

When a Part D sponsor has paid for drugs prior to receiving notification of the beneficiary’s hospice election, the sponsor would 

be required to determine payment responsibility for the drugs, 

process retrospective claims adjustments, and issue refunds or 

recovery requests.

Once payment responsibility is determined, the sponsor would be required to process any adjustments and issue refunds or recovery notices within 45 days, as specified in Federal regulations at 

§ 423.466(a). 

Independent Review: 


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42MedPAC ‘‘Report to the Congress: Medicare 

Payment Policy’’, March 2013, pp.278. 

Process Timeframes 

If a sponsor disagrees with a hospice determination that a drug is 

unrelated, the sponsor would be able to request an IRE review. 

IRE decisions would be binding on the sponsor and hospice.

Sponsors would be required to request an IRE review within 5 business days of receiving the hospice’s explanation of why a drug is unrelated and not covered under the hospice benefit. 

In formulating the requirements under 

consideration, we have become aware 

that the regulatory requirement for a 

Part D sponsor to coordinate with other 

health benefit plans or programs at 

§ 423.464 (f)(1)(ix) is narrower than the 

requirement specified in statute. Section 

1860D–24 of the Act requires Part D 

sponsors to coordinate with other drug 

plans, including, as specified in 

paragraph § 423.464 (b)(5), with other 

health benefit plans or programs that 

provide coverage or financial assistance 

for the purchase or provision of 

prescription drug coverage on behalf of 

Part D eligible individuals. However, in 

codifying this requirement in the 

regulations at § 423.464(f)(1)(ix), we 

specified that the other plans or 

programs are those that provide 

coverage or financial assistance for the 

purchase of or provision of Part D 

(emphasis added) prescription drugs. As 

a result, the regulation does not include 

the requirement for Part D sponsors to 

coordinate with providers of drugs 

covered under Part A, such as hospices, 

since as noted above, drugs covered as 

so prescribed and dispensed or 

administered under Part A are excluded 

from the definition of a covered Part D 

drug. Since coordination between Part D 

sponsors and the Medicare hospices is 

essential to ensure Part D statutory 

coverage requirements are met, to 

reduce the potential for erroneous 

payment under Part D, and to facilitate 

the recovery of erroneous payments 

when they do occur, we also are 

considering amending the Part D 

regulations at § 423.464(f) to align the 

definition of other prescription drug 

coverage in paragraph § 423.464(f)(1)(ix) 

with the statute by removing the phrase 

‘‘Part D.’’ 

We solicit comments on the changes 

under consideration regarding the 

coordination of benefits process and 

appeals for Part D payment for drugs 

while beneficiaries are under a hospice 

election. 

2. Hospice Coordination of Payment 

With Part D Sponsors and Other Payers 

As specified in section 1861(dd) of 

the Act, and in regulation at 42 CFR Part 

418, the hospice is responsible for 

covering all drugs and biologicals for 

the palliation and management of the 

terminal illness and related conditions. 

As noted in 418.202(f), drugs and 

biologicals for palliation of pain and 

symptom management are included in 

the Medicare Part A per-diem payment 

to a hospice. Therefore, such drugs and 

biologicals are excluded from coverage 

under Part D (see section III.I.1). 

Additionally, our payment regulations 

at § 418.200 require that, to be covered, 

hospice services must be consistent 

with the plan of care, which must 

include the drugs and treatment 

necessary to meet the needs of the 

patient (§ 418.56(c)(2)). 

We have received anecdotal reports 

from Medicare hospice beneficiaries 

that they are not receiving medications 

related to their terminal illness and 

related conditions from their hospice 

because, among other stated reasons, 

those medications are not on the 

hospice’s formulary. These reports also 

have stated that hospice beneficiaries 

were advised to obtain drugs related to 

the terminal illness and related 

conditions from their Part D 

prescription drug plans. Per the 

regulations at § 418.202(f), hospices 

must provide all drugs which are 

reasonable and necessary to meet the 

needs of the patient in order to provide 

palliation and symptom management of 

the terminal illness and related 

conditions. If the drugs on the hospice 

formulary are not providing the relief 

needed, then the hospice must provide 

alternatives in order to relieve pain and 

symptoms, even if it means providing 

drugs that are not on their formularies. 

In addition, several hospices have 

stated that pre-existing, chronic and/or 

controlled conditions are not related to 

the prognosis of the hospice beneficiary 

and should not be the responsibility of 

the hospice—a concept which is 

contrary to the hospice philosophy of 

providing comprehensive coordinated 

care to patients at end of life as 

described in sections II and III.B of this 

proposed rule. One hospice illustrated 

the issue with an example, a patient that 

was admitted with a primary terminal 

diagnosis of COPD. In the example, the 

patient also has diabetes which predates the COPD; the patient uses 

corticosteroids to manage the COPD. 

The diabetes is well managed with an 

oral hypoglycemic agent and the patient 

needs to continue the medication to 

manage the diabetes. The hospice argues 

that since the diabetes is unrelated to 

the COPD, the oral hypoglycemic agent 

medication should not be covered by 

hospice. However, increased glucose 

levels are a common manifestation of 

corticosteroid use. While the hospice 

states that the admission to hospice is 

a result of COPD, treatment for the 

COPD has the potential to affect glucose 

levels, and hence the hypoglycemic 

agent would be covered by the hospice 

and not through Part D. As we stated 

above, and as required by § 418.202(f), 

hospices are to cover all drugs which 

are reasonable and necessary to meet the 

needs of the patient in order to provide 

palliation and symptom management of 

the individual’s terminal illness and 

related conditions. Treatment decisions 

should not be driven by costs, as 

opposed to clinical appropriateness. 

Hospices should use thoughtful clinical 

judgment, with a patient-centered focus, 

when developing the hospice plan of 

care, including the recommendations for 

medication management. 

As outlined in section III.A.4, $1.2 

billion in non-hospice Medicare 

spending and beneficiary cost-sharing 

occurred in CY 2012 for beneficiaries in 

hospice elections. In addition, we 

examined drug costs incurred by 

hospices from 2004 to 2012 using 

hospice cost report data adjusted to 

constant 2010 dollars. That analysis 

revealed a declining trend in the drug 

costs per patient-day, with costs 

declining from a mean of $20 per 

patient-day in 2004 to $11 per patientday in 2012. As of 2010, MedPAC 

reports that the aggregate hospice 

Medicare margin was 7.5 percent, up 

from 7.4 percent in 2009. Margins 

varied widely across the sector. For 

example, MedPAC reports that the 

Medicare margins were 19.9 percent at 

the 75th percentile.42 This may suggest 

that some hospices could be unbundling 

items, services, and drugs included in 

the per-diem hospice payments they are 

receiving, and other parts of the 

Medicare program are being billed for 

services that the hospice should have 

provided. For example, during a hospice 

election hospice beneficiaries have 

received care and/or services from 

hospitals, laboratories, DME suppliers, 

non-hospice clinicians, which were 

billed to Medicare as being unrelated to 

the terminal illness and related 

conditions. We believe that most of 

these claims were likely related to the 


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hospice terminal illness and related 

conditions. 

To safeguard the integrity of the 

Medicare Trust Funds and encourage 

hospices to coordinate with other 

providers and payers, and to ensure that 

beneficiaries have access to needed 

services and medications, we are 

considering how hospices can 

coordinate with Part D plan sponsors 

and comply with a standardized process 

for determining payment responsibility 

(prior authorization (PA) process), for 

recovering payment when the wrong 

party has paid, and for resolving 

disputes regarding payment 

responsibility. We are not proposing any 

requirements at this time, but are 

soliciting comments on approaches to 

these issues. 

Currently, the CoPs at § 418.56(e)(5) 

require hospices to share information 

with other non-hospice healthcare 

providers furnishing services unrelated 

to the terminal illness and related 

conditions. As described in 

§ 418.100(c)(2), hospices must be 

available 24 hours a day and 7 days a 

week to address beneficiary and family 

needs. We expect that any PA process 

would result in minimal disruption to 

access to the drugs presumed to be 

unrelated to the terminal illness or 

related conditions. It would be vital for 

the hospice to provide information to 

respond to a PA as soon as possible to 

minimize any potential disruption to 

the medication needs of the beneficiary. 

We believe the information necessary to 

satisfy a request from any payer or nonhospice provider would be readily 

available, since hospices are required to 

maintain clinical records per the 

regulations at § 418.104. We expect the 

beneficiary’s needs for drugs and 

biologicals at the end of life would be 

addressed as soon as possible to 

maximize quality of care and access to 

critical drugs and biologicals. We are 

soliciting comments on whether 

hospices need to determine, in a 

specific amount of time, a beneficiary’s 

drug and biological needs and 

communicate with the Part D plan 

sponsor or to the other payer and/or 

provider, verbally or in writing, to 

ensure there is no lapse of reasonable 

and necessary drugs and biologicals or 

other items or services for the 

beneficiary. We are particularly 

interested in the experiences of Part D 

sponsors and hospices that successfully 

communicate with each other and how 

both parties ensured that the beneficiary 

did not experience any delay in drug 

coverage. While the solicitation of 

comments is focused on coordination 

between the hospice and Part D sponsor, 

the solicitation would apply broadly to 

any payer or non-hospice provider. 

The PA process described in Section 

III.I.1 would be a mechanism that would 

emphasize the recognition of the 

hospice and hospice physician as the 

clinical point of contact and enable the 

hospice and hospice physician to better 

maintain the professional and clinical 

responsibility for hospice patients. 

Hospices are health care leaders in 

coordinating care for beneficiaries at the 

end of life, and thus we believe this 

solicitation fits well within a hospice’s 

usual care paradigm. The solicitations 

outlined, above in section III.I.1, could 

ensure that hospices and hospice 

physicians are notified of any 

beneficiary medications prescribed by a 

non-hospice provider, as well as nonhospice care the beneficiary has 

initiated without the hospice’s 

knowledge. 

We are also soliciting comments on 

the steps hospices should take to 

reconcile payment responsibility within 

a specified timeframe that could be 

similar to an established timeframe set 

forth in Part 423, Subpart M, which also 

requires that payment responsibility be 

resolved within 45 days. We are 

soliciting comments on whether the 

determination of payment responsibility 

should be resolved within 45 days from 

the date of receipt of a repayment 

request from either the Part D plan 

sponsor or the hospice. We are soliciting 

comments on whether the hospice 

would issue a request for a refund from 

the other payer or provider for the total 

amount paid for the item or service 

within a specific timeframe and refund 

to the beneficiary any associated costsharing. 

As described in section III.I.1, we 

believe a majority of cases involving 

payment coverage responsibility could 

be resolved under the communication 

and coordination of benefits process. 

However, we recognize that there may 

be instances where the hospice and the 

Part D sponsor will be unable to agree 

on which entity is responsible for the 

prescription drug. We are soliciting 

comments on the impact to hospices 

regarding the potential independent 

review process described in section 

III.I.1. 

3. Beneficiary Rights and Appeals 

Sometimes a beneficiary requests a 

certain medication that a hospice cannot 

or will not provide because the hospice 

has deemed that the specific medication 

is not reasonable and necessary for the 

palliation and management of the 

terminal illness and related conditions. 

Coverage of such medication would not 

be permissible under Part D coverage 

since the medication is not for any 

condition completely separate and 

distinct from the terminal illness and 

related conditions, nor is it covered 

under Part A since it is not reasonable 

and necessary for the palliation and 

management of the terminal illness and 

related conditions. If the hospice does 

not provide the medication, the hospice 

is not obligated to provide any notice of 

non-coverage (including the Advance 

Beneficiary Notice of Non-coverage or 

ABN). If the hospice provides 

medication it believes is not reasonable 

and necessary for the palliation and 

management of the terminal illness and 

related conditions, the hospice must 

first issue an ABN in order to charge the 

beneficiary for the cost of such 

medication. Regardless of whether or 

not the hospice furnishes the drug, if the 

beneficiary independently obtains the 

drug, but believes that the Medicare 

hospice should have furnished or 

covered the cost of the drug as part of 

the hospice benefit, the beneficiary may 

submit a claim for the medication 

directly to Medicare on Form CMS– 

1490S (http://www.cms.gov/Medicare/

CMS-Forms/CMS-Forms/CMS-FormsItems/CMS012949.html). If the claim is 

denied, the beneficiary may file an 

appeal of that determination under the 

appeals process set forth in part 405, 

subpart I. 

Beneficiaries who disagree with such 

medication coverage determinations 

may use the Medicare fee-for-service 

appeals process if the determination 

relates to Part A or B coverage, and the 

Part D appeals process if the 

determination relates to Part D coverage. 

There may also be instances where a 

beneficiary prefers a non-formulary drug 

because, for example, he or she believes 

it to be more efficacious than the 

formulary drug prescribed by the 

hospice. In such instances, the hospice 

may have determined that the formulary 

drug prescribed is reasonable and 

necessary for the palliation and 

management of the terminal illness and 

related conditions; however, the 

beneficiary may prefer another brand of 

such drug that is off formulary, which 

the hospice believes is not reasonable 

and necessary, or more expensive but no 

more effective than the drug in the 

formulary. In those cases, the 

beneficiary may submit quality of care 

complaints to a Quality Improvement 

Organization. We plan to increase our 

beneficiary outreach efforts to advise 

beneficiaries and their families/

caregivers of their rights and the 

available appeals process described in 

this section. 


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J. Update on the International 

Classification of Diseases, 10th 

Revision, Clinical Modification (ICD– 

10–CM) and Coding Guidelines for 

Hospice Claims Reporting 

3. International Classification of 

Diseases, 10th Revision, Clinical 

Modification (ICD–10–CM) 

On April 1, 2014, the Protecting 

Access to Medicare Act of 2014 (PAMA) 

(Pub. L. 113–93), was enacted. Section 

212 of PAMA, titled ‘‘Delay in 

Transition from ICD–9 to ICD–10 Code 

Sets,’’ provides that ‘‘[t]he Secretary of 

Health and Human Services may not, 

prior to October 1, 2015, adopt ICD–10 

code sets as the standard for code sets 

under section 1173(c) of the Social 

Security Act (42 U.S.C. 1320d–2(c)) and 

section 162.1002 of title 45, Code of 

Federal Regulations.’’ As of now, the 

Secretary has not implemented this 

provision under HIPAA. This means 

that ICD–9–CM diagnosis codes will 

continue to be used for hospice claims 

reporting until an implementation date 

for ICD–10–CM is announced. Diagnosis 

reporting on hospice claims must 

adhere to ICD–9–CM coding 

conventions and guidelines regarding 

the selection of principal diagnosis and 

the reporting of additional diagnoses. 

Additionally, the CMS’ Hospice Claims 

Processing manual (Pub 100–04, chapter 

11) requires that hospice claims include 

the reporting of additional/other 

diagnoses as required by ICD–9–CM 

coding guidelines. 

In the HIPAA regulations at 45 CFR 

162.1002, the Secretary adopted the 

ICD–9–CM code set, including the 

Official ICD–9–CM Guidelines for 

Coding and Reporting. The current ICD– 

9–CM Coding Guidelines use the 

International Classification of Diseases, 

9th Revision, Clinical Modification 

(ICD–9–CM) and are available through 

the CMS Web site at: http://

www.cms.gov/Medicare/Coding/

ICD9ProviderDiagnosticCodes/

index.html or on the CDC’s Web site at 

http://www.cdc.gov/nchs/icd/

icd9cm.htm. 

4. Coding Guidelines for Hospice Claims 

Reporting 

In the FY 2014 Hospice Wage Index 

and Payment Rate Update, we reiterated 

that diagnosis reporting on hospice 

claims should include the appropriate 

selection of principal diagnoses as well 

as the other, additional and coexisting 

diagnoses related to the terminal illness 

and related conditions (78 FR 48254). 

Additionally, in the July 27, 2012, FY 

2013 Hospice Wage Index notice (77 FR 

44247), we provided in-depth 

information regarding longstanding, 

existing ICD–9–CM Coding Guidelines. 

We also discussed related versus 

unrelated diagnosis reporting on claims 

and clarified that ‘‘all of a patient’s 

coexisting or additional diagnoses’’ 

related to the terminal illness and 

related conditions should be reported 

on the hospice claim. The expectation 

was that hospices would report all 

diagnoses related to the terminal illness 

and related conditions on hospice 

claims to provide accurate information 

regarding the hospice beneficiaries for 

which they are providing hospice 

services. 

In the FY 2014 Hospice Wage Index 

and Payment Rate Update final rule, we 

stated that beginning on October 1, 

2014, any claims with ‘‘debility’’ or 

‘‘adult failure to thrive’’ in the principal 

diagnosis field will be returned to the 

provider for more definitive coding (78 

FR48252). ‘‘Debility’’ and ‘‘adult failure 

to thrive’’ do not provide enough 

information to accurately describe 

Medicare hospice beneficiaries and the 

conditions that hospices are managing. 

Once these claims are resubmitted with 

more appropriate diagnosis codes, 

following the ICD–9–CM Coding 

Guidelines, these claims will be 

processed accordingly. This is a 

reminder that claims with ‘‘debility’’ 

and ‘‘adult failure to thrive’’ coded in 

the principal diagnosis field will be 

returned to providers for more definitive 

coding effective October 1, 2014 (for 

those claims submitted on and after 

October 1, 2014). 

Also in the FY 2014 Hospice Wage 

Index and Payment Rate Update final 

rule, we advised hospice providers to 

pay particular attention to dementia 

diagnoses which are found under two 

separate ICD–9–CM classifications: 

‘‘Mental, Behavioral, and 

Neurodevelopmental Disorders’’ and 

‘‘Diseases of the Nervous System and 

Sense Organs’’(78 FR48252–48253). 

Many of the codes relating to dementia 

manifestations found under the ICD–9– 

CM classification, ‘‘Mental, Behavioral, 

and Neurodevelopmental Disorders’’, 

are not appropriate as principal 

diagnoses because of etiology/

manifestation guidelines or sequencing 

conventions under the ICD–9–CM 

Coding Guidelines. ICD–9–CM Coding 

Guidelines for this classification state 

that dementia is most commonly a 

secondary manifestation of an 

underlying causal condition. Codes 

found under this classification identify 

the common behavioral disturbances of 

dementia manifestations. Many of the 

dementia codes under the ICD–9–CM 

classification, ‘‘Mental, Behavioral and 

Neurodevelopmental Disorders’’ have 

coding conventions that require to code 

first the associated neurological 

condition. Many of the associated 

neurological conditions can be found 

under the classification, ‘‘Diseases of the 

Nervous System’’, including such 

conditions as ‘‘Alzheimer’s disease’’ and 

‘‘Senile Degeneration of the Brain’’. We 

advise hospices to pay close attention to 

the various coding and sequencing 

conventions found within The Official 

ICD–9–CM Guidelines for Coding and 

Reporting when reporting diagnoses on 

hospice claims. 

To ensure additional compliance with 

ICD–9–CM Coding Guidelines we will 

implement certain edits from Medicare 

Code Editor (MCE), which detect and 

report errors in the coding of claims 

data, for all hospice claims effective 

October 1, 2014 (for those claims 

submitted on or after October 1, 2014). 

Hospice claims containing 

inappropriate principal or secondary 

diagnosis codes, per ICD–9–CM coding 

conventions and guidelines, will be 

returned to the provider and will have 

to be corrected and resubmitted to be 

processed and paid. 

We will implement edits related to 

etiology/manifestation code pairs from 

the MCE; therefore, it is important for 

hospice providers to follow the ICD–9– 

CM Coding Guidelines regarding codes 

that fall under this coding convention. 

The etiology/manifestation coding 

convention states that there are certain 

conditions which have both an 

underlying cause (etiology) and 

subsequent multiple body system 

manifestations. For such conditions, 

ICD–9–CM coding convention requires 

the underlying condition be sequenced 

first, followed by the manifestation. 

Whenever such a combination exists, 

there is a ‘‘use additional code’’ note at 

the etiology code and a ‘‘code first’’ note 

at the manifestation code. These 

instructional notes indicate the proper 

sequencing order of the codes. In most 

cases, the manifestation codes will have 

in the code title, ‘‘in diseases classified 

elsewhere.’’ ‘‘In diseases classified 

elsewhere’’ codes are never permitted to 

be used as first-listed or principal 

diagnosis codes. They must be used in 

conjunction with an underlying 

condition code and they must be listed 

following the underlying condition. An 

example of this can be found under the 

category 294, ‘‘Persistent mental 

disorders due to conditions classified 

elsewhere.’’ However, there are 

manifestation codes that do not have ‘‘in 

diseases classified elsewhere’’ in the 

title. For such codes, there is ‘‘use an 

additional code’’ note at the etiology 

code and a ‘‘code first’’ note at the 

manifestation code and the rules for 

sequencing apply. 


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43FY 2013 hospice claims data from the Chronic 

Conditions Data Warehouse (CCW) accessed on 

February 26, 2014. 

There are sequencing conventions 

under ICD–9–CM coding guidelines that 

are not accounted for in the MCE edits. 

There are several dementia codes under 

the classification, ‘‘Mental Behavioral 

and Neurodevelopmental Disorders’’ 

that have a sequencing convention that 

require the underlying physiological 

condition to be coded first, but for 

which there is no edit in the MCE. We 

will be issuing technical guidance 

through a Change Request to include 

these codes for edits in the MCE to be 

consistent for claims processing under 

ICD–9–CM Coding Guidelines. We are 

reminding providers to utilize the ICD– 

9–CM coding guidelines when 

submitting hospice claims to ensure 

they are following the appropriate 

guidelines for coding so that claims are 

not returned to providers as a result of 

MCE edits. Following the ICD–9–CM 

coding guidelines will help hospice 

providers with appropriate code 

selection for hospice claims processing. 

This is not to say that hospice 

beneficiaries with various dementia 

conditions are not appropriate for 

hospice services, rather, this is merely a 

clarification regarding the ICD–9–CM 

coding guidelines for claims processing. 

We expect hospice providers to follow 

ICD–9–CM coding guidelines to ensure 

that the most accurate information is 

provided regarding the patients for 

whom hospices are providing services. 

Additional details describing the 

specific MCE edits that will be applied 

will be announced through a change 

request, an accompanying Medicare 

Learning Network article, and other 

CMS communication channels, such as 

the Home Health, Hospice, and DME 

Open Door Forum. 

We have clarified in previous rules 

that hospice providers are expected to 

report on hospice claims all ICD–9–CM 

codes to provide an accurate description 

of the patients’ conditions. In the 

Hospice Wage Index for Fiscal Year 

2013 (77FR 44247) and again in the 

Hospice Wage Index for Fiscal Year 

2014 (78 FR 48240), we reminded 

providers to follow ICD–9–CM Coding 

Guidelines for reporting diagnoses on 

hospice claims. HIPAA, federal 

regulations, and the Medicare claims 

processing manual all require that ICD– 

9–CM Coding Guidelines be applied to 

the coding and reporting of diagnoses 

on hospice claims. In the FY 2013 

hospice notice, we reported that our 

analyses showed that 77.2 percent of 

hospice claims from 2010 only reported 

a single, principal diagnosis. We 

provided in-depth information 

regarding longstanding, existing ICD–9– 

CM Coding Guidelines that require the 

reporting of all additional or co-existing 

diagnoses on hospice claims. We went 

on to state that coexisting or additional 

diagnoses could be related or unrelated 

to the hospice patient’s terminal illness. 

As the Medicare hospice benefit covers 

hospice services for the palliation and 

management of the terminal illness and 

related conditions, we said, at that time, 

that hospice providers ‘‘should report 

on hospice claims all coexisting or 

additional diagnoses that are related to 

the terminal illness; they should not 

report coexisting or additional 

diagnoses that are unrelated to the 

terminal illness’’ (77FR 44248). We also 

stated that we do not believe that 

requiring reporting of coexisting or 

additional diagnoses that are related to 

the terminal illness would create a 

burden for hospice and that some 

providers already report these diagnoses 

on their claims. 

In the FY 2014 Hospice Wage Index 

and Payment Rate Update final rule, we 

reported that for the first quarter of FY 

2013 (October 1, 2012 through 

December 31, 2012) 72 percent of 

hospice claims only reported a single, 

principal diagnosis (78 FR 48240). We 

also discussed related versus unrelated 

diagnosis reporting on claims and 

clarified that ‘‘all of a patient’s 

coexisting or additional diagnoses’’ 

related to the terminal illness or related 

conditions should be reported on the 

hospice claim. Information on a 

patient’s related and unrelated 

diagnoses should already be included as 

part of the hospice comprehensive 

assessment and appropriate 

interventions should be incorporated 

into the patient’s plan of care, as 

determined by the hospice IDG. 

Analysis conducted on FY 2013 

hospice claims shows that 67 percent of 

hospice claims still only report a single, 

principal hospice diagnosis.43 Though 

this is a trend in the right direction, 

there still appears to be some confusion 

by the majority of hospice providers as 

to the requirements for diagnosis 

reporting on hospice claims. We are 

reminding providers to follow the ICD– 

9–CM Coding Guidelines, per 

longstanding policy, in regard to 

diagnosis reporting on claims. 

The ICD–9–CM Official Guidelines for 

Coding and Reporting state that for 

accurate reporting of ICD–9–CM 

diagnosis codes, ‘‘The documentation 

should describe the patient’s condition, 

using terminology which includes 

specific diagnoses, as well as symptoms, 

problems, and reasons for the 

encounter. List first the ICD–9–CM code 

for the diagnosis, condition, problem, or 

other reason for the encounter/visit 

shown in the medical record to be 

chiefly responsible for services 

provided.’’ The coding guidelines also 

state to code all documented conditions 

that coexist at the time of the encounter/ 

visit and require or affect patient care 

treatment or management. Therefore, 

this is a reminder that all diagnoses 

should be reported on the hospice claim 

for the terminal illness and related 

conditions, including those that can 

affect the care and management of the 

beneficiary. We will condition to 

monitor hospice claims to see if all 

conditions are being reported as 

required by ICD–9–CM Coding 

Guidelines. 

K. Technical Regulatory Text Change 

We propose to make at technical 

correction in § 418.3 to delete the 

definition for ‘‘social worker.’’ This 

definition is no longer accurate, and we 

intended to remove it as part of the June 

5, 2008 final rule that amended the 

conditions of participation (CoPs) for 

hospices (73 FR 32088). The 2008 final 

rule established new requirements for 

social workers at § 418.114(b)(3), 

making the definition of ‘‘social worker’’ 

at § 418.3 obsolete. However, the 

technical amendatory language included 

in the 2008 final rule did not instruct 

the Federal Register to delete the 

‘‘social worker’’ definition. We propose 

this technical correction in order to 

remedy this oversight. 

We invite comments on this technical 

correction and associated change in the 

regulations at § 418.3 in section VI. 

IV. Collection of Information 

Requirements 

Under the Paperwork Reduction Act 

of 1995, we are required to provide 60- 

day notice in the Federal Register and 

solicit public comment before a 

collection of information requirement is 

submitted to the Office of Management 

and Budget (OMB) for review and 

approval. In order to fairly evaluate 

whether an information collection 

should be approved by OMB, section 

3506(c)(2)(A) of the Paperwork 

Reduction Act of 1995 requires that we 

solicit comment on the following issues: 

• The need for the information 

collection and its usefulness in carrying 

out the proper functions of our agency. 

• The accuracy of our estimate of the 

information collection burden. 

• The quality, utility, and clarity of 

the information to be collected. 

• Recommendations to minimize the 

information collection burden on the 

affected public, including automated 

collection techniques. 


tkelley on DSK3SPTVN1PROD with PROPOSALS3
26578 Federal Register / Vol. 79, No. 89 / Thursday, May 8, 2014 / Proposed Rules 

We are soliciting public comment on 

each of these issues for this section of 

this document that contains information 

collection requirements (ICRs). This 

section includes ICR information on 

data collection A) related to hospice 

payment policy, including proposed 

changes to the election statement and 

proposed changes to inpatient and 

aggregate cap determination reporting; 

and B) related to the CAHPS® Hospice 

Survey. 

A. Proposed Changes Related to Hospice 

Payment Policy 

Sections A.1, A.2, and A.3 are 

associated with the information 

collection request (ICR) previously 

approved under OMB control number as 

0938–1067. We are currently seeking to 

have the ICR reinstated under notice 

and comment periods separate from 

those associated with this notice of 

proposed rulemaking. The following 

assumptions were used in estimating 

the burden for the proposed changes 

related to hospice payment policy: 

TABLE 10—HOSPICE PAYMENT POLICY BURDEN ESTIMATE ASSUMPTIONS

# of Medicare-participating hospices nationwide, CY 2012 ................................................................................................................ 3,897 

# of Medicare-billing hospices, from CY 2012 claims ......................................................................................................................... 3,727 

# of Part D prescriptions per hospice, from CY 2012 claims ............................................................................................................. 481 

Hourly rate of registered nurse ............................................................................................................................................................ $41 

Hourly rate of accountant .................................................................................................................................................................... $40 

Hourly rate of office employee ............................................................................................................................................................ $17 

Hourly rate of administrator ................................................................................................................................................................. $63 

Note: CY = Calendar year. 

All salary information is from the 

Bureau of Labor Statistics (BLS) Web 

site at http://www.bls.gov/oes/current/

naics4_621600.htm and includes a 

fringe benefits package worth 30 percent 

of the base salary. Hourly rates are based 

on May 2012 BLS data for each 

discipline, for those providing ‘‘home 

health care services.’’ 

1. Proposed Changes to the Election 

Statement (§ 418.24) 

Section 1812(d) of the Act requires 

that patients elect hospice care in order 

for Medicare to cover and pay for 

hospice services. Section 1861(dd)(3)(B) 

of the Act defines an attending 

physician and requires that the patient, 

not the hospice, designate an attending 

physician at the time of election. Our 

regulations at § 418.24 outline current 

requirements for completion of a 

hospice election statement, but do not 

require that the attending physician 

designated by the patient be identified. 

To safeguard the patient’s right to 

choose his or her attending physician, 

we proposed to change our regulations 

at § 418.24(b) to require that the election 

statement be modified to identify the 

attending physician chosen by the 

patient and to include language that the 

patient acknowledges that the attending 

physician was his or her choice. Note 

that all hospices, including those that 

are not Medicare-participating, are 

required by the Conditions of 

Participation to have patients elect 

hospice care. 

We estimated that the burden for this 

requirement is the one-time burden to 

modify the election statement to include 

a place for identifying the attending 

physician and acknowledging that he or 

she was chosen by the patient or 

representative. Hospices are currently 

required to explain these processes to 

patients, so we do not believe there is 

any additional burden for discussing 

that part of the election statement with 

patients or their representatives. We 

estimate that it would take a hospice 

clerical staff person 20 minutes (20/60 

= 0.33333 hours) to modify the election 

form, and the hospice administrator 15 

minutes (15/60 = 0.25 hours) to review 

the revised form. The clerical time plus 

administrator time equals a one-time 

burden of 35 minutes or (35/60) = 

0.58333 hours per hospice; for all 3,897 

hospices, the total time required would 

be (0.58333 × 3,897) = 2,273 hours. At 

$17 per hour for an office employee, the 

cost per hospice would be (0.33333 × 

$17) = $5.66. At $63 per hour for the 

administrator’s time, the cost per 

hospice would be (0.25 × $63) = $15.75. 

Therefore, the total one-time cost per 

hospice would be $21.41, and the total 

one-time cost for all hospices would be 

($21.41 × 3,897) = $83,435. 

Because of concerns related to the 

potential inappropriate changing of 

attending physicians by hospices, we 

also proposed to add paragraph (f) to 

our regulations at § 418.24, to require 

that the patient (or representative) 

provide a statement identifying the new 

attending physician and the date the 

change is to be effective, and that the 

patient (or representative) sign and date 

the form. The form should also include 

an acknowledgement that this change is 

the patient’s choice. The one-time 

burden to hospices is the time to 

develop a form for the patient to use. 

We estimate that it would take a hospice 

clerical staff person 20 minutes (20/60 

= 0.33333 hours) to develop this form, 

and the hospice administrator 15 

minutes (15/60 = 0.25 hours) to review 

the new form. The clerical time plus 

administrator time equals a one-time 

burden of 35 minutes or (35/60) = 

0.58333 hours per hospice; for all 3,897 

hospices, the total time required would 

be (0.58333 × 3,897) = 2,273 hours. At 

$17 per hour for an office employee, the 

cost per hospice would be (0.33333 × 

$17) = $5.66. At $63 per hour for the 

administrator’s time, the cost per 

hospice would be (0.25 × $63) = $15.75. 

Therefore, the total one-time cost per 

hospice to develop this new form for 

changing attending physicians would be 

$21.41, and the total one-time cost for 

all hospices would be ($21.41 × 3,897) 

= $83,435. 

2. Proposed Changes to Inpatient and 

Aggregate Cap Determination Reporting 

(§ 418.308) 

Congress mandated two caps on 

hospice payments: an inpatient cap and 

an aggregate cap. The hospice cap year 

is November 1 through October 31. 

Medicare contractors complete the 

hospice cap determination 

approximately twelve to eighteen 

months after the cap year in order to 

demand any overpayments from the 

hospices. A cap determination consists 

in determining whether a hospice 

exceeds the inpatient cap and the 

aggregate hospice cap. Medicare hospice 

inpatient stays in excess of twenty 

percent of total Medicare hospice days 

are to be reimbursed at the routine 

homecare rate; the hospice must be 

repay any excess due to receiving 

payments at the higher inpatient rates 

for the excess inpatient days. 

Additionally, Medicare hospice 

payments are limited by an aggregate 

cap, which is computed by multiplying 

the ‘‘cap amount’’ by the number of 

beneficiaries. If the actual Medicare 

payments exceed the aggregate cap, the 

hospice must repay the difference. We 

are proposing to change our regulations 

as § 418.308(c) to require hospices to 


tkelley on DSK3SPTVN1PROD with PROPOSALS3
Federal Register / Vol. 79, No. 89 / Thursday, May 8, 2014 / Proposed Rules 26579 

calculate their inpatient and aggregate 

caps five months after the cap year and 

remit any overpayment. This is similar 

to the process in § 413.24(f), which 

requires other provider types that file a 

Medicare cost report to file their cost 

reports five months after the end of their 

cost reporting year. The regulation at 

§ 413.24(f) also requires other provider 

types that file a Medicare cost report to 

remit any amount due the program at 

the time of the cost report filing. 

Although hospices file cost reports, the 

cap determination is not based on the 

cost report; the hospice caps serve to 

limit total Medicare payments similar to 

the way cost reports limit those 

payments for other provider types that 

file a Medicare cost report. Requiring 

hospices to complete a cap 

determination and remit any 

overpayment is consistent with what is 

currently required of all other provider 

types that file a Medicare cost report. 

We expect that it would take a 

hospice about 1.5 hours to complete its 

cap determination. All information 

needed to file the cap determination is 

available in the Provider Statistical and 

Reimbursement (PS&R) system. For all 

3,727 hospices that bill Medicare, this 

would be (1.5 × 3,727) = 5,591 hours. 

We estimate that it would take one hour 

for an accountant to complete the cap 

determination worksheet provided by 

CMS for the cap year. At $40 per hour 

for an accountant, the cost would be (1 

× $40) = $40 per hospice, and (3,727 × 

$40) = $149,080 for all hospices. We 

estimate that it would take a half hour 

for the administrator to review the 

worksheet prepared by the accountant. 

At $63 per hour for the administrator’s 

time, the cost per hospice would be (0.5 

× $63) = $31.50, and for all hospices 

would be (3,727 × $31.50) = $117,401. 

Therefore the total estimated cost per 

hospice would be ($40 + $31.50) = 

$71.50, and the total cost for all 

hospices would be (3,727 × $71.50) = 

$266,481. 

C. CAHPS® Hospice Survey 

This section is associated with a new 

information collection request that is 

required to start in January 2015. The 

Hospice Survey data collected in 2015 

is required for the FY 2017 HQRP 

quality reporting requirements along 

with the submission of the clinical 

structural measures for the same 

payment period. This is a new 

information collection request seeking 

approval to assess experiences of care 

with hospice reported by primary 

caregivers (i.e., bereaved family 

members of friends) of patients who 

died while receiving hospice care. This 

information data collection request are 

required to (1) assess experience of care 

at the respondent (caregiver) level, and 

(2) provide sufficient response to 

generate hospice experience reports. 

Here are the estimates for the 

approximate annual cost of the CAHPS®

Survey (Table 11). 

TABLE 11—ASSUMPTIONS AND ESTIMATES FOR CAHPS® HOSPICE SURVEY

Approximate # of hospices required to do the CAHPS® Survey annually ...................................................................................... 2,600. 

Approximate Cost to each hospice annually for the CAHPS® Survey ............................................................................................ $3,300. 

Approximate Cost for all CAHPS® Hospices annually for the CAHPS® Survey ............................................................................. $8.5 million. 

Respondent Cost burden .................................................................................................................................................................. $3.8 million. 

Approximate Total Cost of CAHPS® Survey annually ..................................................................................................................... $12.3 million. 

In implementing the HQRP, we seek 

to collect measure information with as 

little burden to the providers as 

possible, but which reflects the full 

spectrum of quality performance. As 

such, we are moving forward toward the 

implementation of the CAHPS® Hospice 

Survey to provide data to the public 

about the patients’ families’ and friends’ 

perspectives of care of their loved ones 

who passed way while in hospices. 

The CAHPS® Hospice Survey data 

will provide the peoples’ voices to 

hospice care in the United States. Based 

on the criteria outlined in the Preamble, 

some hospices that are too new and very 

small will be exempt from the HQRP. 

We estimate that 2,600 hospices will 

qualify to participate in the survey. 

From CMS experiences with surveys, 

we estimate an annual cost of $3,300 per 

hospice to participate in the CAHPS®

Hospice Survey. The cost of $3,300 

includes the preparation of a monthly 

sampling frame for their approved 

vendor, as well as estimated vendor 

costs to conduct the data collection. The 

estimated annual cost for all hospices to 

do the survey is $8.5 million. As part of 

the survey requirement, all participating 

hospices will contract with an approved 

hospice survey vendor, and each 

hospice will be required to submit a 

monthly list of deceased patients’ 

caregivers contact information, for 

patients that passed away in the hospice 

care two months prior to the date of the 

list. This list (essentially the sampling 

frame) for most hospices can be 

generated from existing databases with 

minimal effort. For some small 

hospices, preparation of a monthly 

sample frame may require more time. 

However, data elements needed on the 

sample frame will be kept at a minimum 

to reduce the burden on the hospices. 

The survey contains 47 items and is 

estimated to require an average 

administration time of 10.4 minutes in 

English, and 12.5 minutes in Spanish, 

for an average response time of 10.505 

minutes or 0.175 hours, assuming that 5 

percent of the survey respondents 

complete the survey in Spanish. These 

burden estimates are based on CMS’ 

experiences with surveys of similar 

lengths that were fielded with Medicare 

beneficiaries. We estimate that 

approximately six surveys can be done 

an hour, at an hourly wage of $22.77. 

With a total estimate of 550,000 

respondents, we estimate a total 

respondent burden at $3.8 million. This 

cost is not an additional cost to the 

hospices; the cost to the participating 

hospices is $8.5 million. 

Table 12 below provides a summary 

of the burden and cost estimates 

associated with both the hospice 

payment policy changes and the 

CAHPS® Hospice Survey requirements. 

TABLE 12—BURDEN AND COST ESTIMATES ASSOCIATED WITH ALL INFORMATION COLLECTION REQUIREMENTS

Regulation section(s) OMB 

Control No. 

Number of 

respondents 

Number of 

responses 

Burden per 

response 

(hours) 

Total annual 

burden 

(hours) 

Hourly labor 

cost of 

reporting 

($) 

Total labor 

cost of 

reporting 

($) 

Total cost 

($) 

418.24(b) .......................... 0938–1067 3,897 3,897 0.583333 2,273 $21.41 $83,435 $83,435 

418.24(f) ........................... 0938–1067 3,897 3,897 0.583333 2,273 21.41 83,435 83,435 


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TABLE 12—BURDEN AND COST ESTIMATES ASSOCIATED WITH ALL INFORMATION COLLECTION REQUIREMENTS— 

Continued 

Regulation section(s) OMB 

Control No. 

Number of 

respondents 

Number of 

responses 

Burden per 

response 

(hours) 

Total annual 

burden 

(hours) 

Hourly labor 

cost of 

reporting 

($) 

Total labor 

cost of 

reporting 

($) 

Total cost 

($) 

418.308(c) ........................ 0938–1067 3,727 3,727 1.500000 5,591 71.50 266,481 266,481 

418.312 ............................ 0938—New 1,100,000 550,000 0.175 95,029.55 22.77 2,163,823 2,163,823 

Totals ........................ .................... 1,107,624 561,521 .................... 105,167 .................... 2,597,174 2,597,174 

There are no capital/maintenance costs 

associated with the information 

collection requirements contained in 

this rule; therefore, we have removed 

the associated column from Table 13. 

If you comment on these information 

collection and recordkeeping 

requirements, please submit your 

comments electronically as specified in 

the ADDRESSES section of this proposed 

rule. 

Please identify which Collection of 

Information requirement you are 

commenting on by indicating whether it 

is from subsection: 

• A.1. Proposed Changes to the 

Election Statement (§ 418.24); 

• A.2. Proposed Changes to Inpatient 

and Aggregate Cap Determination 

Reporting (§ 418.308); or 

• B. CAHPS® Hospice Survey 

(§ 418.312). 

V. Regulatory Impact Analysis 

A. Statement of Need 

This proposed rule follows 

§ 418.306(c) which requires annual 

issuance, in the Federal Register, of the 

hospice wage index based on the most 

current available CMS hospital wage 

data, including any changes to the 

definitions of Core-Based Statistical 

Areas (CBSAs), or previously used 

Metropolitan Statistical Areas (MSAs). 

This proposed rule also updates 

payment rates for each of the categories 

of hospice care described in § 418.302(b) 

for FY 2015as required under section 

1814(i)(1)(C)(ii)(VII) of the Act. The 

payment rate updates are subject to 

changes in economy-wide productivity 

as specified in section 

1886(b)(3)(B)(xi)(II) of the Act. In 

addition, the payment rate updates may 

be reduced by an additional 0.3 

percentage point (although for FY 2014 

to FY 2019, the potential 0.3 percentage 

point reduction is subject to suspension 

under conditions specified in section 

1814(i)(1)(C)(v) of the Act). In 2010, the 

Congress amended section 1814(i)(6) of 

the Act with section 3132(a) of the 

Affordable Care Act. The amendment 

authorized the Secretary to collect 

additional data and information 

determined appropriate to revise 

payments for hospice care and for other 

purposes. The data collected may be 

used to revise the methodology for 

determining the payment rates for 

routine home care and other services 

included in hospice care, no earlier than 

October 1, 2013, as described in section 

1814(i)(6)(D) of the Act. In accordance 

with section 1814(i)(6)(D) of the Act, 

this proposed rule provides an update 

on hospice payment reform analysis. 

This proposed rule also proposes that, 

in accordance with section 1814(i)(2)(A) 

through (C), that providers complete 

their hospice aggregate cap 

determination within 5 months after the 

cap year ends and remit any 

overpayments at that time. Furthermore, 

in accordance with section 1860D–24 of 

the Act, drugs and biologicals that may 

be covered under the Medicare Part A 

per-diem payment to a hospice program 

are excluded from coverage under Part 

D. Section 1861(dd) of the Act states the 

hospice is responsible for covering all 

drugs or biologicals for the palliation 

and management of the terminal illness 

and related conditions. This proposed 

rule, in accordance with sections 

1860D–24 and 1861(dd) of the Act, 

solicits comments on a coordination of 

benefits process and appeals for Part D 

payment for drugs and biologicals while 

beneficiaries are under a hospice 

election. At this time, we are not making 

any proposals on the coordination of 

benefits process and appeals for Part D 

payment for drugs and biologicals while 

beneficiaries are under a hospice 

election. 

Finally, section 3004 of the Affordable 

Care Act amended the Act to authorize 

a quality reporting program for hospices 

and this rule discusses changes in the 

requirements for the hospice quality 

reporting program in accordance with 

section 1814(i)(5) of the Act. 

B. Introduction 

We have examined the impacts of this 

rule as required by Executive Order 

12866 on Regulatory Planning and 

Review (September 30, 1993), Executive 

Order 13563 on Improving Regulation 

and Regulatory Review (January 18, 

2011), the Regulatory Flexibility Act 

(RFA) (September 19, 1980, Pub. L. 96– 

354), section 1102(b) of the Act, section 

202 of the Unfunded Mandates Reform 

Act of 1995 (UMRA, March 22, 1995; 

Pub. L. 104–4), and the Congressional 

Review Act (5 U.S.C. 804(2)). 

Executive Orders 12866 and 13563 

direct agencies to assess all costs and 

benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). Executive Order 13563 

emphasizes the importance of 

quantifying both costs and benefits, of 

reducing costs, of harmonizing rules, 

and of promoting flexibility. A 

regulatory impact analysis (RIA) must 

be prepared for major rules with 

economically significant effects ($100 

million or more in any 1 year). This 

proposed rule has been designated as 

economically significant under section 

3(f)(1) of Executive Order 12866 and 

thus a major rule under the 

Congressional Review Act. Accordingly, 

we have prepared a regulatory impact 

analysis (RIA), that to the best of our 

ability, presents the costs and benefits of 

the rulemaking. Finally, this rule has 

been reviewed by OMB. 

C. Overall Impact 

The overall impact of this proposed 

rule is an estimated net increase in 

Federal payments to hospices of $230 

million, or 1.3 percent, for FY 2015. 

This estimated impact on hospices is a 

result of the proposed hospice payment 

update percentage for FY 2015 of 2.0 

percent and changes to the FY 2015 

hospice wage index, including a 

reduction to the BNAF by an additional 

15 percent, for a total BNAF reduction 

of 85 percent (10 percent in FY 2010, 

and 15 percent per year for FY 2011 

through FY 2015). An 85 percent 

reduced BNAF is computed to be 

0.009309 (or 0.9309 percent). The BNAF 

reduction is part of a 7-year BNAF 


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phase-out that was finalized in the FY 

2010 Hospice Wage Index final rule (74 

FR 39384), and is not a policy change. 

1. Detailed Economic Analysis 

Column 4 of Table 13 shows the 

combined effects of the updated wage 

data (the 2013 pre-floor, pre-reclassified 

hospital wage index) and of the 

additional 15 percent reduction in the 

BNAF (for a total BNAF reduction of 85 

percent), comparing estimated payments 

for FY 2014 to estimated payments for 

FY 2015. The FY 2014 payments used 

for comparison have a 70 percent 

reduced BNAF applied. We estimate 

that the total hospice payments for FY 

2015 would decrease by 0.7 percent. 

This 0.7 percent is the result of a 0.1 

percent reduction due to the use of 

updated wage data ($¥20 million), and 

a 0.6 percent reduction due to the 

additional 15 percent reduction in the 

BNAF ($¥110 million). This estimate 

does not take into account the proposed 

hospice payment update percentage of 

2.0 percent (+$360 million) for FY 2015. 

Column 5 of Table 13 shows the 

combined effects of the updated wage 

data (the 2013 pre-floor, pre-reclassified 

hospital wage index), the additional 15 

percent reduction in the BNAF (for a 

total BNAF reduction of 85 percent), 

and the proposed hospice payment 

update percentage of 2.0 percent. The 

proposed 2.0 percent hospice payment 

update percentage is based on a 2.7 

percent estimated inpatient hospital 

market basket update for FY 2015 

reduced by a 0.4 percentage point 

productivity adjustment and by 0.3 

percentage point as mandated by the 

Affordable Care Act. The estimated 

effect of the 2.0 percent proposed 

hospice payment update percentage is 

an increase in payments to hospices of 

approximately $360 million. Taking into 

account the 2.0 percent proposed 

hospice payment update percentage 

(+$360 million), the use of updated 

wage data ($¥20 million), and the 

additional 15 percent reduction in the 

BNAF ($¥110 million), it is estimated 

that hospice payments would increase 

by $230 million in FY 2015 ($360 

million ¥ $20 million ¥ $110 million 

= $230 million) or 1.3 percent in FY 

2015. 

a. Effects on Hospices 

This section discusses the impact of 

the projected effects of the hospice wage 

index and the effects of a proposed 2.0 

percent hospice payment update 

percentage for FY 2015. This proposed 

rule continues to use the CBSA-based 

pre-floor, pre-reclassified hospital wage 

index as a basis for the hospice wage 

index and continues to use the same 

policies for treatment of areas (rural and 

urban) without hospital wage data. The 

proposed FY 2015 hospice wage index 

is based upon the FY 2013 pre-floor, 

pre-reclassified hospital wage index and 

the most complete hospice claims data 

available (FY 2013 hospice claims 

submitted as of December 31, 2013) 

with an additional 15 percent reduction 

in the BNAF (for a total BNAF reduction 

of 85 percent). 

For the purposes of our impacts, our 

baseline is estimated FY 2014 payments 

with a 70 percent BNAF reduction, 

using the FY 2012 pre-floor, prereclassified hospital wage index. Our 

first comparison (column 3 of Table 13) 

compares our baseline to estimated FY 

2015 payments (holding payment rates 

constant) using the updated wage data 

(FY 2013 pre-floor, pre-reclassified 

hospital wage index). Consequently, the 

estimated effects illustrated in column 3 

of Table 13 show the distributional 

effects of the updated wage data only. 

The effects of using the updated wage 

data combined with the additional 15 

percent reduction in the BNAF are 

illustrated in column 4 of Table 13. 

We have included a comparison of the 

combined effects of the additional 15 

percent BNAF reduction, the updated 

wage data, and the proposed 2.0 percent 

hospice payment update percentage for 

FY 2015 (Table 13, column 5). 

Presenting these data gives the hospice 

industry a more complete picture of the 

effects on their total revenue based on 

changes to the hospice wage index and 

the BNAF phase-out as discussed in this 

proposed rule and the proposed FY 

2015 hospice payment update 

percentage. Certain events may limit the 

scope or accuracy of our impact 

analysis, because such an analysis is 

susceptible to forecasting errors due to 

other changes in the forecasted impact 

time period. The nature of the Medicare 

program is such that the changes may 

interact, and the complexity of the 

interaction of these changes could make 

it difficult to predict accurately the full 

scope of the impact upon hospices. 

TABLE 13—ANTICIPATED IMPACT ON MEDICARE HOSPICE PAYMENTS OF UPDATING THE PRE-FLOOR, PRE-RECLASSIFIED

HOSPITAL WAGE INDEX DATA, REDUCING THE BUDGET NEUTRALITY ADJUSTMENT FACTOR (BNAF) BY AN ADDITIONAL

15 PERCENT (FOR A TOTAL BNAF REDUCTION OF 85 PERCENT) AND APPLYING A 2.0 PERCENT HOSPICE PAYMENT

UPDATE PERCENTAGE, COMPARED TO THE FY 2014 HOSPICE WAGE INDEX WITH A 70 PERCENT BNAF REDUCTION

Number of 

hospices 

Number of 

routine home 

care days in 

thousands 

Percent 

change in 

hospice 

payments 

due to FY2014 

wage index 

change 

Percent 

change in 

hospice 

payments 

due to wage 

index change, 

additional 15 

reduction in 

budget 

neutrality 

adjustment 

Percent 

change in 

hospice 

payments 

due to wage 

index change, 

additional 15 

reduction in 

budget 

neutrality 

adjustment 

and market 

basket update 

(1) (2) (3) (4) (5) 

ALL HOSPICES ................................................................... 3,702 87,456 ¥0.1 ¥0.7 1.3 

URBAN HOSPICES ............................................................. 2,736 76,784 ¥0.1 ¥0.7 1.3 

RURAL HOSPICES ............................................................. 966 10,672 ¥0.2 ¥0.5 1.5 

BY REGION—URBAN: 

NEW ENGLAND ........................................................... 128 2,771 0.0 ¥0.7 1.3 

MIDDLE ATLANTIC ...................................................... 252 7,880 0.5 ¥0.1 1.9 

SOUTH ATLANTIC ....................................................... 388 16,778 ¥0.6 ¥1.2 0.8 

EAST NORTH CENTRAL ............................................. 358 11,949 ¥0.1 ¥0.8 1.2 

EAST SOUTH CENTRAL ............................................. 156 4,467 ¥0.3 ¥0.7 1.2 


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TABLE 13—ANTICIPATED IMPACT ON MEDICARE HOSPICE PAYMENTS OF UPDATING THE PRE-FLOOR, PRE-RECLASSIFIED

HOSPITAL WAGE INDEX DATA, REDUCING THE BUDGET NEUTRALITY ADJUSTMENT FACTOR (BNAF) BY AN ADDITIONAL

15 PERCENT (FOR A TOTAL BNAF REDUCTION OF 85 PERCENT) AND APPLYING A 2.0 PERCENT HOSPICE PAYMENT

UPDATE PERCENTAGE, COMPARED TO THE FY 2014 HOSPICE WAGE INDEX WITH A 70 PERCENT BNAF REDUCTION—Continued 

Number of 

hospices 

Number of 

routine home 

care days in 

thousands 

Percent 

change in 

hospice 

payments 

due to FY2014 

wage index 

change 

Percent 

change in 

hospice 

payments 

due to wage 

index change, 

additional 15 

reduction in 

budget 

neutrality 

adjustment 

Percent 

change in 

hospice 

payments 

due to wage 

index change, 

additional 15 

reduction in 

budget 

neutrality 

adjustment 

and market 

basket update 

(1) (2) (3) (4) (5) 

WEST NORTH CENTRAL ............................................ 209 4,775 ¥0.8 ¥1.4 0.5 

WEST SOUTH CENTRAL ............................................ 545 10,402 ¥0.2 ¥0.8 1.2 

MOUNTAIN ................................................................... 276 6,596 ¥0.3 ¥0.9 1.1 

PACIFIC ........................................................................ 389 9,964 0.9 0.2 2.2 

OUTLYING .................................................................... 35 1,201 0.7 0.7 2.7 

BY REGION—RURAL: 

NEW ENGLAND ........................................................... 24 236 ¥0.1 ¥0.7 1.3 

MIDDLE ATLANTIC ...................................................... 44 567 0.3 ¥0.3 1.7 

SOUTH ATLANTIC ....................................................... 136 2,308 ¥0.6 ¥1.0 1.0 

EAST NORTH CENTRAL ............................................. 137 1,763 ¥0.7 ¥1.3 0.7 

EAST SOUTH CENTRAL ............................................. 131 1,888 0.0 0.0 2.0 

WEST NORTH CENTRAL ............................................ 180 1,190 0.4 ¥0.1 1.9 

WEST SOUTH CENTRAL ............................................ 172 1,526 ¥0.3 ¥0.3 1.7 

MOUNTAIN ................................................................... 94 681 0.5 0.1 2.1 

PACIFIC ........................................................................ 47 500 0.8 0.1 2.1 

OUTLYING .................................................................... 1 13 0.0 0.0 2.0 

BY SIZE/DAYS: 

0–3499 DAYS (small) ................................................... 631 1,113 0.1 ¥0.4 1.6 

3500–19,999 DAYS (medium) ...................................... 1795 18,345 0.0 ¥0.5 1.5 

20,000+ DAYS (large) .................................................. 1276 67,998 ¥0.1 ¥0.7 1.3 

TYPE OF OWNERSHIP: 

VOLUNTARY ................................................................ 1042 29,537 0.0 ¥0.6 1.4 

PROPRIETARY ............................................................ 2142 48,415 ¥0.1 ¥0.7 1.3 

GOVERNMENT ............................................................ 518 9,505 ¥0.2 ¥0.7 1.3 

HOSPICE BASE: 

FREESTANDING .......................................................... 2734 72,437 ¥0.1 ¥0.7 1.3 

HOME HEALTH AGENCY ........................................... 502 9,435 0.1 ¥0.5 1.5 

HOSPITAL .................................................................... 445 5,345 0.2 ¥0.4 1.6 

SKILLED NURSING FACILITY .................................... 21 238 0.2 ¥0.4 1.6 

Source: FY 2013 Hospice claims data from the Standard Analytic Files for CY 2012 (as of June 30, 2013) and CY 2013 (as of December 31, 

2013). 

Note: The proposed 2.0 percent hospice payment update percentage for FY 2015 is based on an estimated 2.7 percent inpatient hospital market basket update, reduced by a 0.4 percentage point productivity adjustment and by 0.3 percentage point. Starting with FY 2013 (and in subsequent fiscal years), the market basket percentage update under the hospice payment system as described in section 1814(i)(1)(C)(ii)(VII) or section 1814(i)(1)(C)(iii) of the Act will be annually reduced by changes in economy-wide productivity as set out at section 1886(b)(3)(B)(xi)(II) of the 

Act. In FY 2013 through FY 2019, the market basket percentage update under the hospice payment system will be reduced by an additional 0.3 

percentage point (although for FY 2014 to FY 2019, the potential 0.3 percentage point reduction is subject to suspension under conditions set 

out under section 1814(i)(1)(C)(v) of the Act). 

REGION KEY: 

New England=Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont; Middle Atlantic=Pennsylvania, New Jersey, New 

York; South Atlantic=Delaware, District of Columbia, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia, West Virginia; East 

North Central=Illinois, Indiana, Michigan, Ohio, Wisconsin; East South Central=Alabama, Kentucky, Mississippi, Tennessee; West North 

Central=Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota; West South Central=Arkansas, Louisiana, Oklahoma, 

Texas; Mountain=Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah, Wyoming; Pacific=Alaska, California, Hawaii, Oregon, Washington; Outlying=Guam, Puerto Rico, Virgin Islands. 

Table 13 shows the results of our 

analysis. In column 1, we indicate the 

number of hospices included in our 

analysis as of December 31, 2013, which 

had also filed claims in FY 2013. In 

column 2, we indicate the number of 

routine home care days that were 

included in our analysis, although the 

analysis was performed on all types of 

hospice care. Columns 3, 4, and 5 

compare FY 2014 estimated payments 

with those estimated for FY 2015. The 

estimated FY 2014 payments 

incorporate a BNAF, which has been 

reduced by 70 percent. Column 3 shows 

the percentage change in estimated 

Medicare payments for FY 2015 due to 

the effects of the updated wage data 

only, compared with estimated FY 2014 

payments. The effect of the updated 

wage data can vary from region to region 


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depending on the fluctuations in the 

wage index values of the pre-floor, prereclassified hospital wage index. 

Column 4 shows the percentage change 

in estimated hospice payments from FY 

2014 to FY 2015 due to the combined 

effects of using the updated wage data 

and reducing the BNAF by an additional 

15 percent. Column 5 shows the 

percentage change in estimated hospice 

payments from FY 2014 to FY 2015 due 

to the combined effects of using updated 

wage data, an additional 15 percent 

BNAF reduction, and the proposed 2.0 

percent hospice payment update 

percentage. 

The impact of changes in this 

proposed rule has been analyzed 

according to the type of hospice, 

geographic location, type of ownership, 

hospice base, and size. Table 13 

categorizes hospices by various 

geographic and hospice characteristics. 

The first row of data displays the 

aggregate result of the impact for all 

Medicare-certified hospices. The second 

and third rows of the table categorize 

hospices according to their geographic 

location (urban and rural). Our analysis 

indicated that there are 2,736 hospices 

located in urban areas and 966 hospices 

located in rural areas. The next two row 

groupings in the table indicate the 

number of hospices by census region, 

also broken down by urban and rural 

hospices. The next grouping shows the 

impact on hospices based on the size of 

the hospice’s program. We determined 

that the majority of hospice payments 

are made at the routine home care rate. 

Therefore, we based the size of each 

individual hospice’s program on the 

number of routine home care days 

provided in FY 2013. The next grouping 

shows the impact on hospices by type 

of ownership. The final grouping shows 

the impact on hospices defined by 

whether they are provider-based or 

freestanding. 

As indicated in column 1 of Table 13, 

there are 3,702 hospices included in the 

regulatory impact analysis. 

Approximately 42.1 percent of 

Medicare-certified hospices are 

identified as voluntary (non-profit) or 

government agencies; a majority (57.9 

percent) are proprietary (for-profit), with 

1,560 designated as non-profit or 

government hospices, and 2,142 as 

proprietary. In addition, our analysis 

shows that most hospices are in urban 

areas and provide the vast majority of 

routine home care days, most hospices 

are medium-sized, and the vast majority 

of hospices are freestanding. 

b. Hospice Size 

Under the Medicare hospice benefit, 

hospices can provide four different 

levels of care. The majority of the days 

provided by a hospice are routine home 

care (RHC) days, representing about 97 

percent of the services provided by a 

hospice. Therefore, the number of RHC 

days can be used as a proxy for the size 

of the hospice, that is, the more days of 

care provided, the larger the hospice. 

We currently use three size designations 

to present the impact analyses. The 

three categories are—(1) small agencies 

having 0 to 3,499 RHC days; (2) medium 

agencies having 3,500 to 19,999 RHC 

days; and (3) large agencies having 

20,000 or more RHC days. The FY 2015 

updated wage data before any BNAF 

reduction are anticipated to decrease 

payments to large hospices by 0.1 

percent, and increase 0.1 for small 

hospices. Medium hospices payment 

would stay stable (column 3). The 

updated wage data and the additional 

15 percent BNAF reduction (for a total 

BNAF reduction of 85 percent) are 

anticipated to decrease estimated 

payments to small hospices by 0.4 

percent, to medium hospices by 0.5 

percent, and to large hospices by 0.7 

percent (column 4). Finally, the updated 

wage data, the additional 15 percent 

BNAF reduction (for a total BNAF 

reduction of 85 percent), and the 

proposed 2.0 percent hospice payment 

update percentage are projected to 

increase estimated payments by 1.6 

percent for small hospices, by 1.5 

percent for medium hospices, and by 

1.3 percent for large hospices (column 

5). 

c. Geographic Location 

Column 3 of Table 13 shows the 

estimated impact of using updated wage 

data without the BNAF reduction. 

Urban hospices are anticipated to 

experience a decrease of 0.1 percent and 

rural hospices are anticipated to 

experience a decrease of 0.2 percent in 

payments. Urban hospices can 

anticipate an increase in payments in 

Middle Atlantic of 0.5 percent, in the 

Pacific of 0.9 percent and in the 

Outlying area of 0.7 percent. Urban 

hospices can anticipate a decrease in 

payments ranging from 0.8 percent in 

the West North Central region to 0.1 

percent in the East North Central region. 

Urban hospices in New England are not 

anticipated to be affected by the 

updated wage data. 

Rural hospices are estimated to see a 

decrease in payments in four regions, 

ranging from 0.7 percent in the East 

North Central region to 0.1 percent in 

the New England region. Rural hospices 

can anticipate an increase in payments 

in four regions ranging from 0.3 percent 

in the Middle Atlantic region to 0.8 

percent in the Pacific region. There is no 

anticipated change in payments for 

Outlying regions due to the use of 

updated wage data. 

Column 4 shows the combined effect 

of the updated wage data and the 

additional 15 percent BNAF reduction 

on estimated payments, as compared to 

the FY 2014 estimated payments using 

a BNAF with a 70 percent reduction. 

Overall, hospices are anticipated to 

experience a 0.7 percent decrease in 

payments, with urban hospices 

experiencing an estimated decrease of 

0.7 percent and rural hospices 

experiencing an estimated decrease of 

0.5 percent. All urban areas other than 

Outlying and Pacific are estimated to 

see decreases in payments, ranging from 

1.4 percent in the West North Central 

region to 0.7 percent in the New 

England and East South Central region. 

Rural hospices are estimated to 

experience a decrease in payments in 

six regions, ranging from 1.3 percent in 

the East North Central region to 0.1 

percent in the West North Central 

region. Payments in the Outlying and 

East South Central regions are 

anticipated to stay relatively stable. 

Column 5 shows the combined effects 

of the updated wage data, the additional 

15 percent BNAF reduction, and the 

proposed 2.0 percent hospice payment 

update percentage on estimated FY 2015 

payments as compared to estimated FY 

2014 payments. Overall, hospices are 

anticipated to experience a 1.3 percent 

increase in payments, with urban 

hospices anticipated to experience a 1.3 

percent increase in payments, and rural 

hospices anticipated to experience a 1.5 

percent increase in payments. Urban 

hospices are anticipated to experience 

an increase in estimated payments in 

every region, ranging from 0.5 percent 

in the West North Central region to 2.2 

percent in Outlying area. Rural hospices 

in every region are estimated to see an 

increase in payments ranging from 0.7 

percent in East North Central to 2.1 

percent in the Mountain and Pacific 

regions. 

d. Type of Ownership 

Column 3 demonstrates the effect of 

the updated wage data on FY 2015 

estimated payments, versus FY 2014 

estimated payments. We anticipate that 

using the updated wage data would 

decrease estimated payments to 

proprietary (for-profit) and Government 

hospices by 0.1 percent and 0.2 percent, 

respectively. Voluntary (non-profit) 

hospices are expected to have no change 

in payments. Column 4 demonstrates 

the combined effects of the updated 

wage data and of the additional 15 

percent BNAF reduction. Estimated 

payments to voluntary (non-profit), 


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proprietary (for-profit) and government 

hospices are anticipated to decrease by 

0.6 percent, 0.7 percent and 0.7 percent, 

respectively. Column 5 shows the 

combined effects of the updated wage 

data, the additional 15 percent BNAF 

reduction (for a total BNAF reduction of 

85 percent), and the proposed 2.0 

percent hospice payment update 

percentage on estimated payments, 

comparing FY 2015 to FY 2014. 

Estimated FY 2015 payments are 

anticipated to increase for voluntary 

(non-profit) hospices by 1.4 percent, for 

proprietary (for-profit) hospices by 1.3 

percent, and government hospices by 

1.3 percent. 

e. Hospice Base 

Column 3 demonstrates the effect of 

using the updated wage data, comparing 

estimated payments for FY 2015 to FY 

2014. Estimated payments are 

anticipated to decrease for freestanding 

hospices by 0.1 percent. Estimated 

payments are anticipated to increase for 

Home Health Agency, hospital and 

Skilled Nursing Facility based hospices 

by 0.1 percent, 0.2 percent, and by 0.2 

percent, respectively. Column 4 shows 

the combined effects of the updated 

wage data and reducing the BNAF by an 

additional 15 percent, comparing 

estimated payments for FY 2015 to FY 

2014. All hospice facilities are 

anticipated to experience decrease in 

payments ranging from 0.7 percent for 

freestanding hospices to 0.4 percent for 

hospital and skilled nursing facility 

based hospices. Column 5 shows the 

combined effects of the updated wage 

data, the additional 15 percent BNAF 

reduction, and the proposed 2.0 percent 

hospice payment update percentage on 

estimated payments, comparing FY 

2015 to FY 2014. Estimated payments 

are anticipated to increase for all 

hospices, ranging from 1.3 percent for 

freestanding hospices to 1.6 percent for 

hospital and skilled nursing facility 

based hospices. 

f. Effects on Other Providers 

This proposed rule would only affect 

Medicare hospices, and therefore has no 

effect on other provider types. We note 

that our suggested approaches with 

respect to Part D coordination with 

hospice payments may ultimately have 

an effect on Part D spending, if 

proposed and adopted. 

g. Effects on the Medicare and Medicaid 

Programs 

This proposed rule only affects 

Medicare hospices, and therefore has no 

effect on Medicaid programs. As 

described previously, estimated 

Medicare payments to hospices in FY 

2015 are anticipated to decrease by $20 

million due to the update in the wage 

index data, and to decrease by $110 

million due to the additional 15 percent 

reduction in the BNAF (for a total 85 

percent reduction in the BNAF). 

However, the proposed hospice 

payment update percentage of 2.0 

percent is anticipated to increase 

Medicare payments by $360 million. 

Therefore, the total effect on Medicare 

hospice payments is estimated to be a 

$230 million increase (1.3 percent). 

h. Alternatives Considered 

In continuing the reduction to the 

BNAF by an additional 15 percent, for 

a total BNAF reduction of 85 percent (10 

percent in FY 2010, and 15 percent per 

year for FY 2011 through FY 2015), and 

implementing the hospice payment 

update percentage and the updated 

wage index, the aggregate impact will be 

a net increase of $230 million in 

payments to hospices. In the proposed 

rule for FY 2015, we did not consider 

discontinuing the additional 15 percent 

reduction to the BNAF as the 7-year 

phase-out of the BNAF was finalized in 

the FY 2010 Hospice Wage Index final 

rule (74 FR 39384). However, if we were 

to discontinue the reduction to the 

BNAF by an additional 15 percent, 

Medicare would pay an estimated $110 

million more to hospices in FY 2015. 

Since the hospice payment update 

percentage is determined based on 

statutory requirements, we did not 

consider not updating hospice payment 

rates by the payment update percentage. 

The proposed 2.0 percent hospice 

payment update percentage for FY 2015 

is based on a proposed 2.7 percent 

inpatient hospital market basket update 

for FY 2015, reduced by a 0.4 

percentage point productivity 

adjustment and by an additional 0.3 

percentage point. Payment rates for FYs 

since 2002 have been updated according 

to section 1814(i)(1)(C)(ii)(VII) of the 

Act, which states that the update to the 

payment rates for subsequent FYs must 

be the market basket percentage for that 

FY. The Act requires us to use the 

inpatient hospital market basket to 

determine the hospice payment rate 

update. In addition, section 3401(g) of 

the Affordable Care Act mandates that, 

starting with FY 2013 (and in 

subsequent FYs), the hospice payment 

update percentage will be annually 

reduced by changes in economy-wide 

productivity as specified in section 

1886(b)(3)(B)(xi)(II) of the Act. In 

addition, section 3401(g) of the 

Affordable Care Act also mandates that 

in FY 2013 through FY 2019, the 

hospice payment update percentage will 

be reduced by an additional 0.3 

percentage point (although for FY 2014 

to FY 2019, the potential 0.3 percentage 

point reduction is subject to suspension 

under conditions specified in section 

1814(i)(1)(C)(v) of the Act). 

We also considered proposing a 

waiver of the consequences for not filing 

the NOE within 3 calendar days after 

the effective date of election, to account 

for exceptional circumstances. However, 

since hospices are to operate 24 hours 

a day, 7 days a week, and should have 

back-up systems in place so that they 

can care for their patients without 

interruption, we did not believe that 

this would be necessary. 

To ensure the attending physician of 

record is properly documented in the 

patient’s medical record, we proposed, 

in section III.F, to amend the regulations 

at § 418.24(b)(1) and require the election 

statement to include the patient’s choice 

of attending physician. We considered 

limiting the number of times that a 

beneficiary can change his/her attending 

to once per election period (similar to 

the current regulations at § 418.30(a) 

that only allows a beneficiary to change 

a hospice provider once during an 

election period). However, we first want 

to conduct additional analyses of 

hospice Part A billing for physician 

services provided by nurse practitioners 

and Part B attending physician billing to 

determine how frequently beneficiaries 

change attending physicians. 

i. Accounting Statement 

As required by OMB Circular A–4 

(available at http://

www.whitehouse.gov/omb/circulars/

a004/a-4.pdf), in Table 14 below, we 

have prepared an accounting statement 

showing the classification of the 

expenditures associated with this 

proposed rule. Table 14 provides our 

best estimate of the increase in Medicare 

payments under the hospice benefit as 

a result of the changes presented in this 

proposed rule for 3,702 hospices in our 

impact analysis file constructed using 

FY 2013 claims as of December 31, 

2013. Table 14 also includes the costs 

associated with (1) a hospice accountant 

to complete the cap determination 

worksheet, and for a hospice 

administrator to review the final 

worksheet, for a total annual burden of 

$266,481 as proposed in section III.D; 

and (2) the cost to hospices to 

participate in the CAHPS® survey, 

including the preparation of a monthly 

sampling frame for their approved 

vendor, as well as estimated survey 

vendor costs, for an estimated total 

annual cost of $8.5 million to all 

hospices in the survey. Table 14 below 

does not reflect a one-time cost of 

modifying the current hospice election 


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statement to record the patient’s choice 

of attending physician ($83,435) and the 

one-time cost of creating a new hospice 

form for changing the attending 

physician ($83,435), for a total one-time 

burden of $166,870 as proposed in 

section III.E. 

TABLE 14—ACCOUNTING STATEMENT: 

CLASSIFICATION OF ESTIMATED

TRANSFERS, FROM FY 2014 TO FY 

2015 

[In $millions] 

Category Transfers 

FY 2015 Hospice Wage Index and Payment 

Rate Update 

Annualized Monetized 

Transfers.

$230. 

From Whom to 

Whom? 

Federal Government 

to Hospices. 

Category Costs 

Annualized Monetized 

Costs for Hospice 

Providers1

$8.77. 

1 Costs associated with hospice cap reporting and with the CAHPS® Hospice Survey. 

j. Conclusion 

In conclusion, the overall effect of this 

proposed rule is an estimated $230 

million increase in Medicare payments 

to hospices due to the wage index 

changes (including the additional 15 

percent reduction in the BNAF) and the 

proposed hospice payment update 

percentage of 2.0 percent. Also, starting 

in FY 2015, hospices are estimated to 

incur annual burden costs of $266,481 

for a hospice accountant to complete the 

cap determination worksheet, and for a 

hospice administrator to review the 

final worksheet. Finally, starting in FY 

2015 hospices are estimated to incur 

annual burden costs of $8.5 million for 

participation in the CAHPS® hospice 

survey. 

2. Regulatory Flexibility Act Analysis 

The RFA requires agencies to analyze 

options for regulatory relief of small 

businesses if a rule has a significant 

impact on a substantial number of small 

entities. For purposes of the RFA, we 

estimate that almost all hospices are 

small entities as that term is used in the 

RFA. The great majority of hospitals and 

most other health care providers and 

suppliers are small entities by meeting 

the Small Business Administration 

(SBA) definition of a small business (in 

the service sector, having revenues of 

less than $7.0 million to $35.5 million 

in any 1 year), or being nonprofit 

organizations. While the SBA does not 

define a size threshold in terms of 

annual revenues for hospices, it does 

define one for home health agencies 

($14 million; see http://www.sba.gov/

sites/default/files/files/Size_Standards_

Table(1).pdf). For the purposes of this 

proposed rule, because the hospice 

benefit is a home-based benefit, we are 

applying the SBA definition of ‘‘small’’ 

for home health agencies to hospices; 

we will use this definition of ‘‘small’’ in 

determining if this proposed rule has a 

significant impact on a substantial 

number of small entities (for example, 

hospices). We estimate that 95 percent 

of hospices have Medicare revenues 

below $14 million or are nonprofit 

organizations and therefore are 

considered small entities. 

HHS’s practice in interpreting the 

RFA is to consider effects economically 

‘‘significant’’ only if they reach a 

threshold of 3 to 5 percent or more of 

total revenue or total costs. As noted 

above, the combined effect of the 

updated wage data, the additional 15 

percent BNAF reduction, and the 

proposed FY 2015 hospice payment 

update percentage of 2.0 percent results 

in an increase in estimated hospice 

payments of 1.3 percent for FY 2015. 

For small and medium hospices (as 

defined by routine home care days), the 

estimated effects on revenue when 

accounting for the updated wage data, 

the additional 15 percent BNAF 

reduction, and the proposed FY 2015 

hospice payment update percentage 

reflect increases in payments of 1.6 

percent and 1.5 percent, respectively. 

Therefore, the Secretary has determined 

that this proposed rule will not create a 

significant economic impact on a 

substantial number of small entities. 

In addition, section 1102(b) of the Act 

requires us to prepare a regulatory 

impact analysis if a rule may have a 

significant impact on the operations of 

a substantial number of small rural 

hospitals. This analysis must conform to 

the provisions of section 604 of the 

RFA. For purposes of section 1102(b) of 

the Act, we define a small rural hospital 

as a hospital that is located outside of 

a metropolitan statistical area and has 

fewer than 100 beds. This proposed rule 

only affects hospices. Therefore, the 

Secretary has determined that this 

proposed rule would not have a 

significant impact on the operations of 

a substantial number of small rural 

hospitals. 

3. Unfunded Mandates Reform Act 

Analysis 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 also 

requires that agencies assess anticipated 

costs and benefits before issuing any 

rule whose mandates require spending 

in any 1 year of $100 million in 1995 

dollars, updated annually for inflation. 

In 2014, that threshold is approximately 

$141 million. This proposed rule is not 

anticipated to have an effect on State, 

local, or tribal governments, in the 

aggregate, or on the private sector of 

$141 million or more. 

VI. Federalism Analysis and 

Regulations Text 

Executive Order 13132 on Federalism 

(August 4, 1999) establishes certain 

requirements that an agency must meet 

when it promulgates a proposed rule 

(and subsequent final rule) that imposes 

substantial direct requirement costs on 

State and local governments, preempts 

State law, or otherwise has Federalism 

implications. We have reviewed this 

proposed rule under the threshold 

criteria of Executive Order 13132, 

Federalism, and have determined that it 

will not have substantial direct effects 

on the rights, roles, and responsibilities 

of States, local or tribal governments. 

List of Subjects 

42 CFR Part 405 

Administrative practice and 

procedure, Health facilities, Medicare, 

Reporting and recordkeeping 

requirements. 

42 CFR Part 418 

Health facilities, Hospice care, 

Medicare, Reporting and recordkeeping 

requirements. 

For the reasons set forth in the 

preamble, the Centers for Medicare and 

Medicaid Services proposes to amend 

42 CFR chapter IV as set forth below: 

PART 405—FEDERAL HEALTH 

INSURANCE FOR THE AGED AND 

DISABLED 

■ 1. The authority citation for part 405, 

subpart C continues to read: 

Authority: Secs. 1102, 1815, 1833, 1842, 

1862, 1866, 1870, 1871, 1879 and 1892 of the 

Social Security Act (42 U.S.C. 1302, 1395g, 

1395l, 1395u, 1395y, 1395cc, 1395gg, 

1395hh, 1395pp and 1395ccc) and 31 U.S.C. 

3711. 

■ 2. Section 405.371 is amended by 

revising paragraph (c)(1) and adding 

paragraph (e) to read as follows: 

§ 405.371 Suspension, offset, and 

recoupment of Medicare payments to 

providers and suppliers of services. 

* * * * * 

(c) * * * 

(1) Except as provided in paragraphs 

(d) and (e) of this section, CMS or the 

Medicare contractor suspends payments 

only after it has complied with the 


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procedural requirements set forth at 

§ 405.372. 

* * * * * 

(e) Suspension of payment in the case 

of unfiled hospice cap determination 

reports. 

(1) If a provider has failed to timely 

file an acceptable hospice cap 

determination report, payment to the 

provider is immediately suspended in 

whole or in part until a cap 

determination report is filed and 

determined by the Medicare contractor 

to be acceptable. 

(2) In the case of an unfiled hospice 

cap determination report, the provisions 

of § 405.372 do not apply. (See 

§ 405.372(a)(2) concerning failure to 

furnish other information.) 

PART 418—HOSPICE CARE 

■ 3. The authority citation for part 418 

is revised to read as follows: 

Authority: Secs. 1102, 1812(a)(5), 1812(d), 

1813(a)(4), 1814(a)(7), 1814(i), and 1861(dd) 

of the Social Security Act (42 U.S.C. 1302 

and 1395hh). 

§ 418.3 [Amended] 

■ 4. Section 418.3 is amended by 

removing the definition of ‘‘social 

worker.’’ 

■ 5. Section 418.24 is amended by— 

■ A. Revising paragraph (a). 

■ B. Revising paragraph (b)(1). 

■ C. Adding a new paragraph (f). 

The addition and revisions read as 

follows: 

§ 418.24 Election of hospice care. 

(a) Filing an election statement. (1) An 

individual who meets the eligibility 

requirement of § 418.20 may file an 

election statement with a particular 

hospice. If the individual is physically 

or mentally incapacitated, his or her 

representative (as defined in § 418.3) 

may file the election statement. 

(2) The hospice chosen by the eligible 

individual (or his or her representative) 

must file the Notice of Election with its 

Medicare claims processing contractor 

within 3 calendar days after the 

effective date of the election statement. 

(3) Consequences of failure to submit 

a timely Notice of Election. When a 

hospice does not file the required Notice 

of Election for its Medicare patients 

within 3 calendar days after the 

effective date of election, Medicare will 

not cover and pay for days of hospice 

care from the effective date of election 

to the date of filing of the NOE. These 

days are a provider liability, and the 

provider may not bill the beneficiary for 

them. 

(b) * * * 

(1) Identification of the particular 

hospice and of the attending physician 

that will provide care to the individual. 

The individual or representative must 

acknowledge that the identified 

attending physician was his or her 

choice. 

* * * * * 

(f) Changing the attending physician. 

To change the designated attending 

physician, the individual (or 

representative) must file a signed 

statement with the hospice that states 

that he or she is changing his or her 

attending physician. 

(1) The statement must identify the 

new attending physician, and include 

the date the change is to be effective and 

the date signed by the individual (or 

representative). 

(2) The individual (or representative) 

must acknowledge that the change in 

the attending physician is due to his or 

her choice. 

(3) The effective date of the change in 

attending physician cannot be prior to 

the date the statement is signed. 

■ 6. Section 418.26 is amended by 

adding a new paragraph (e) to read as 

follows: 

§ 418.26 Discharge from hospice care. 

* * * * * 

(e) Filing a Notice of Termination of 

Election. When the hospice election is 

ended due to discharge, the hospice 

must file a notice of termination/

revocation of election with its Medicare 

claims processing contractor within 3 

calendar days after the effective date of 

the discharge, unless it has already filed 

a final claim for that beneficiary. 

■ 7. Section 418.28 is amended by 

adding a new paragraph (d) to read as 

follows: 

§ 418.28 Revoking the election of hospice 

care. 

* * * * * 

(d) Filing a Notice of Revocation of 

Election. When the hospice election is 

ended due to revocation, the hospice 

must file a notice of termination/

revocation of election with its Medicare 

claims processing contractor within 3 

calendar days after the effective date of 

the revocation, unless it has already 

filed a final claim for that beneficiary. 

■ 8. Section 418.306 is amended by 

adding paragraph (b)(6) to read as 

follows: 

§ 418.306 Determination of payment rates. 

* * * * * 

(b) * * * 

(6) For FY 2014 and subsequent fiscal 

years, in the case of a Medicare-certified 

hospice that does not submit hospice 

quality data, as specified by the 

Secretary, the payment rates are equal to 

the rates for the previous fiscal year 

increased by the applicable market 

basket percentage increase, minus 2 

percentage points. Any reduction of the 

percentage change will apply only to the 

fiscal year involved and will not be 

taken into account in computing the 

payment amounts for a subsequent 

fiscal year. 

* * * * * 

■ 9. Section 418.308 is amended by 

revising paragraph (c) to read as follows: 

§ 418.308 Limitation on the amount of 

hospice payments. 

* * * * * 

(c) The hospice must file its cap 

determination notice with its Medicare 

contractor no later than 5 months after 

the end of the cap year (that is, by 

March 31st) and remit any overpayment 

due at that time. The Medicare 

contractor will notify the hospice of the 

final determination of program 

reimbursement in accordance with 

procedures similar to those described in 

§ 405.1803 of this chapter. If a provider 

fails to file its self-determined cap 

determination with its Medicare 

contractor within 150 days after the cap 

year, payments to the hospice would be 

suspended in whole or in part, until a 

self-determined cap determination is 

filed with the Medicare contractor, in 

accordance with§ 405.371(e). 

* * * * * 

■ 10. Subpart G is amended by adding 

a new § 418.312 to read as follows: 

§ 418.312 Data Submission Requirements 

Under the Hospice Quality Reporting 

Program. 

General rule. Except as provided in 

paragraph (f) of this section, Medicarecertified hospices must submit to CMS 

data on measures selected under section 

1814(i)(5)(C)of the Act in a form and 

manner, and at a time, specified by the 

Secretary. 

(a) Submission of Hospice Quality 

Reporting Program data. Hospices are 

required to complete and submit an 

admission Hospice Item Set (HIS) and a 

discharge HIS for each patient 

admission to hospice, regardless of 

payer or patient age. The HIS is a 

standardized set of items intended to 

capture patient-level data. 

(b) A hospice that receives notice of 

its CMS certification number before 

November 1 of the calendar year before 

the fiscal year for which a payment 

determination will be made must 

submit data for the calendar year. 

(c) Medicare-certified hospices must 

contract with CMS-approved vendors to 

collect the CAHPS® Hospice Survey 

data on their behalf and submit the data 

to the Hospice CAHPS® Data Center. 


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(d) If the hospice’s total, annual, 

unique, survey-eligible, deceased 

patient count for the prior calendar year 

is less than 50 patients, the hospice is 

eligible to be exempt from the CAHPS®

Hospice Survey reporting requirements 

in the current calendar year. In order to 

qualify for this exemption the hospice 

must submit to CMS its total, annual, 

unique, survey-eligible, deceased 

patient count for the prior calendar year. 

(e) Vendors that want to become CMSapproved CAHPS® Hospice Survey 

vendors must meet the minimum 

business requirements. Survey vendors 

must have been in business for a 

minimum of 4 years, have conducted 

surveys in the approved survey mode 

for a minimum of 3 years, and have 

conducted surveys of individual 

patients for a minimum of 2 years. For 

Hospice CAHPS®, a ‘‘survey of 

individual patients’’ is defined as the 

collection of data from at least 600 

individual patients selected by 

statistical sampling methods, and the 

data collected are used for statistical 

purposes. Vendors may not use homebased or virtual interviewers to conduct 

the CAHPS® Hospice Survey, nor may 

they conduct any survey administration 

processes (e.g. mailings) from a 

residence. 

(f) No organization, firm, or business 

that owns, operates, or provides staffing 

for a hospice is permitted to administer 

its own Hospice CAHPS® survey or 

administer the survey on behalf of any 

other hospice in the capacity as a 

Hospice CAHPS® survey vendor. Such 

organizations will not be approved by 

CMS as CAHPS® Hospice Survey 

vendors. 

(g) Reconsiderations and appeals of 

Hospice Quality Reporting Program 

decisions. 

(1) A hospice may request 

reconsideration of a decision by CMS 

that the hospice has not met the 

requirements of the Hospice Quality 

Reporting Program for a particular 

reporting period. A hospice must submit 

a reconsideration request to CMS no 

later than 30 days from the date 

identified on the annual payment 

update notification provided to the 

hospice. 

(2) Reconsideration request 

submission requirements are available 

on the CMS Hospice Quality Reporting 

Web site on CMS.gov. 

(3) A hospice that is dissatisfied with 

a decision made by CMS on its 

reconsideration request may file an 

appeal with the Provider 

Reimbursement Review Board under 

part 405, subpart R of this chapter. 

Dated: April 18, 2014. 

Marilyn Tavenner, 

Administrator, Centers for Medicare & 

Medicaid Services. 

Approved: April 22, 2014. 

Kathleen Sebelius, 

Secretary, Department of Health and Human 

Services. 

[FR Doc. 2014–10505 Filed 5–2–14; 4:15 pm] 

BILLING CODE 4120–01–P 


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