50214 Federal Register / Vol. 72, No. 169 / Friday, August 31, 2007 / Rules and Regulations 

Commander, Coast Guard Sector 

Baltimore. 

(2) Official Patrol means any vessel 

assigned or approved by Commander, 

Coast Guard Sector Baltimore with a 

commissioned, warrant, or petty officer 

on board and displaying a Coast Guard 

ensign. 

(3) Participant includes all vessels 

participating in the 2007 Cambridge 

Offshore Challenge under the auspices 

of the Marine Event Permit issued to the 

event sponsor and approved by 

Commander, Coast Guard Sector 

Baltimore. 

(b) Regulated area includes all waters 

of the Choptank River, from shoreline to 

shoreline, bounded to the west by the 

Route 50 Bridge and bounded to the east 

by a line drawn along longitude 076° W, 

between Goose Point, MD and 

Oystershell Point, MD. All coordinates 

reference Datum: NAD 1983. 

(c) Special local regulations: (1) 

Except for event participants and 

persons or vessels authorized by the 

Coast Guard Patrol Commander, no 

person or vessel may enter or remain in 

the regulated area. 

(2) The operator of any vessel in the 

regulated area must: 

(i) Stop the vessel immediately when 

directed to do so by any Official Patrol. 

(ii) Proceed as directed by any Official 

Patrol. 

(iii) When authorized to transit the 

regulated area, all vessels shall proceed 

at the minimum speed necessary to 

maintain a safe course that minimizes 

wake near the race course. 

(d) Enforcement period. This section 

will be enforced from 10:30 a.m. on 

September 22, 2007 to 5:30 p.m. on 

September 23, 2007. 

Dated: August 23, 2007. 

Fred M. Rosa, Jr., 

Rear Admiral, U.S. Coast Guard Commander, 

Fifth Coast Guard District. 

[FR Doc. E7–17337 Filed 8–30–07; 8:45 am] 

BILLING CODE 4910–15–P 

DEPARTMENT OF HOMELAND 

SECURITY 

Coast Guard 

33 CFR Part 100 

[Docket No. COTP San Francisco Bay 07–

038] 

Special Local Regulations for Marine 

Events; San Francisco Bay Navy Fleet 

Week Parade of Ships and Blue Angels 

Demonstration, San Francisco Bay, CA 

AGENCY: Coast Guard, DHS. 

ACTION: Notice of enforcement of 

regulation. 

SUMMARY: The Coast Guard will enforce 

the special local regulations in the 

navigable waters of San Francisco Bay 

for the annual U.S. Navy and City of San 

Francisco sponsored Fleet Week Parade 

of Navy Ships and Blue Angels Flight 

Demonstration to be held on October 4, 

2007, through October 7, 2007. This 

action is necessary to ensure the safety 

of event participants and spectators. 

During the enforcement period, no 

persons or vessels may enter the 

regulated area without permission of the 

Captain of the Port (COTP) or his 

designated representative. 

DATES: The regulations in 33 CFR 

100.1105(b)(1), regulated area ‘‘Alpha’’

for Navy Parade of Ships, will be 

enforced from 11:30 a.m. to 1 p.m. on 

October 6, 2007. The regulations in 33 

CFR 100.1105(b)(2), regulated area 

‘‘Bravo’’ for the U.S. Navy Blue Angels 

Activities, will be enforced from 11:30 

a.m. to 5 p.m. on October 4, 2007, and 

12:30 p.m. to 5 p.m. on October 5, 2007, 

through October 7, 2007. If the U.S. 

Navy Blue Angels Activities are delayed 

by inclement weather, the regulation 

will also be enforced on October 8, 

2007, from 12:30 p.m. to 5 p.m. 

FOR FURTHER INFORMATION CONTACT: 

Lieutenant Eric Ramos, Waterways 

Safety Branch, U.S. Coast Guard Sector 

San Francisco, at (415) 556–2950 

extension 143, or the Sector San 

Francisco Command Center, at (415) 

399–3547. 

SUPPLEMENTARY INFORMATION: The Coast 

Guard will enforce the special local 

regulation for the annual San Francisco 

Bay Navy Fleet Week Parade of Ships 

and Blue Angels Demonstration in 33 

CFR 100.1105; the Navy Parade of Ships 

will be enforced from 11:30 a.m. to 1 

p.m. on October 6, 2007; and the U.S. 

Navy Blue Angels Activities will be 

enforced from 11:30 a.m. to 5 p.m. on 

October 4, 2007, and 12:30 p.m. to 5 

p.m. on October 5, 2007, through 

October 7, 2007. If the U.S. Navy Blue 

Angels Activities are delayed by 

inclement weather, the regulation will 

also be enforced on October 8, 2007, 

from 12:30 p.m. to 5 p.m. These 

regulations can also be found in the 

October 1, 1993, issue of the Federal 

Register 58 FR 51242. Under the 

provisions of 33 CFR 100.1105 a vessel 

may not enter the regulated area, unless 

it receives permission from the COTP. 

Additionally, no person or vessel may 

enter or remain within 500 yards ahead 

of the lead Navy parade vessel, within 

200 yards astern of the last parade 

vessel, and within 200 yards on either 

side of all parade vessels. No person or 

vessel shall anchor, block, loiter in, or 

impede the transit of ship parade 

participants or official patrol vessels. 

When hailed by U.S. Coast Guard patrol 

personnel by siren, radio, flashing light, 

or other means, a person or vessel shall 

come to an immediate stop. Persons or 

vessels shall comply with all directions 

given. 

The Coast Guard may be assisted by 

other Federal, State, or local law 

enforcement agencies in enforcing this 

regulation. 

This notice is issued under authority 

of 33 CFR 100.1105 and 5 U.S.C 552(a). 

In addition to this notice in the Federal 

Register, the Coast Guard will provide 

the maritime community with extensive 

advance notification of this enforcement 

period via the Local Notice to Mariners, 

and Broadcast Notice to Mariners. 

Dated: 20 August 2007. 

W.J. Uberti, 

Captain, U.S. Coast Guard, Captain of the 

Port, San Francisco. 

[FR Doc. E7–17340 Filed 8–30–07; 8:45 am] 

BILLING CODE 4910–15–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Part 418 

[CMS–1539–F] 

RIN 0938–AO72 

Medicare Program; Hospice Wage 

Index for Fiscal Year 2008 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Final rule. 

SUMMARY: This final rule sets forth the 

hospice wage index for fiscal year 2008. 

This final rule also revises the 

methodology for updating the wage 

index for rural areas without hospital 

wage data and provides clarification of 

selected existing Medicare hospice 

regulations and policies. 

EFFECTIVE DATES: These regulations are 

effective on October 1, 2007. 

FOR FURTHER INFORMATION CONTACT: 

Terri Deutsch, (410) 786–9462. 

SUPPLEMENTARY INFORMATION: 

I. Background 

A. General 

1. Hospice Care 

Hospice care is an approach to 

treatment that recognizes that the 


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impending death of an individual 

warrants a change in the focus from 

curative care to palliative care for relief 

of pain and for symptom management. 

The goal of hospice care is to help 

terminally ill individuals continue life 

with minimal disruption to normal 

activities while remaining primarily in 

the home environment. A hospice uses 

an interdisciplinary approach to deliver 

medical, social, psychological, 

emotional, and spiritual services 

through use of a broad spectrum of 

professional and other caregivers, with 

the goal of making the individual as 

physically and emotionally comfortable 

as possible. Counseling services and 

inpatient respite services are available 

to the family of the hospice patient. 

Hospice programs consider both the 

patient and the family as a unit of care. 

Section 1861(dd) of the Social 

Security Act (the Act) provides for 

coverage of hospice care for terminally 

ill Medicare beneficiaries who elect to 

receive care from a participating 

hospice. Section 1814(i) of the Act 

provides payment for Medicare 

participating hospices. 

2. Medicare Payment for Hospice Care 

Our regulations at 42 CFR part 418 

establish eligibility requirements, 

payment standards and procedures, 

define covered services, and delineate 

the conditions a hospice must meet to 

be approved for participation in the 

Medicare program. Part 418 subpart G 

provides for payment in one of four 

prospectively-determined rate categories 

(routine home care, continuous home 

care, inpatient respite care, and general 

inpatient care) to hospices, based on 

each day a qualified Medicare 

beneficiary is under a hospice election. 

B. Hospice Wage Index 

Our regulations at § 418.306(c) require 

each hospice’s labor market to be 

established using the most current 

hospital wage data available, including 

any changes to the Metropolitan 

Statistical Areas (MSAs) definitions, 

which have been superseded by CoreBased Statistical Areas (CBSAs). 

The hospice wage index is used to 

adjust payment rates for hospice 

agencies under the Medicare program to 

reflect local differences in area wage 

levels. The original hospice wage index 

was based on the 1981 Bureau of Labor 

Statistics hospital data and had not been 

updated since 1983. In 1994, because of 

disparity in wages from one 

geographical location to another, a 

committee was formulated to negotiate 

a wage index methodology that could be 

accepted by the industry and the 

government. This committee, 

functioning under a process established 

by the Negotiated Rulemaking Act of 

1990, was comprised of: National 

hospice associations; rural, urban, large 

and small hospices; multi-site hospices; 

consumer groups; and a government 

representative. On April 13, 1995, the 

Hospice Wage Index Negotiated 

Rulemaking Committee signed an 

agreement for the methodology to be 

used for updating the hospice wage 

index. 

In the August 8, 1997 Federal 

Register (62 FR 42860), we published a 

final rule implementing a new 

methodology for calculating the hospice 

wage index based on the 

recommendations of the negotiated 

rulemaking committee. The committee 

statement was included in the appendix 

of that final rule (62 FR 42883). 

The hospice wage index is updated 

annually. Our most recent annual 

update notice, published in the 

September 1, 2006 Federal Register (71 

FR 52080), set forth updates to the 

hospice wage index for FY 2007. On 

October 3, 2006, we published a 

correction notice in the Federal Register 

(71 FR 58415) and we published a 

subsequent correction notice on January 

26, 2007 (72 FR 3856), to correct 

technical errors that appeared in the 

September 1, 2006 notice. 

1. Changes to Core-Based Statistical 

Areas 

The annual update to the hospice 

wage index is published in the Federal 

Register and is based on the most 

current available hospital wage data, as 

well as any changes by the Office of 

Management and Budget (OMB) to the 

definitions of MSAs. The August 4, 

2005 final rule (70 FR 45130) adopted 

the changes discussed in the OMB 

Bulletin No. 03–04 (June 6, 2003), 

which announced revised definitions 

for Micropolitan Statistical Areas and 

the creation of MSAs and Combined 

Statistical Areas. In adopting the OMB 

Core-Based Statistical Area (CBSA) 

geographic designations, we provided 

for a 1-year transition with a blended 

wage index for all providers for FY 

2006. For FY 2006, the hospice wage 

index for each provider consisted of a 

blend of 50 percent of the FY 2006 

MSA-based wage index and 50 percent 

of the FY 2006 CBSA-based wage index. 

As discussed in the August 4, 2005 final 

rule and in the September 1, 2006 

notice, for FY 2007 and subsequent 

years we will use the full CBSA-based 

wage index values, as presented in 

Tables A and B of this final rule for FY 

2008. 

2. Raw Wage Index Values 

Raw wage index values (that is, 

inpatient hospital pre-floor and prereclassified wage index values) as 

described in the August 8, 1997 hospice 

wage index final rule (62 FR 42860), are 

subject to either a budget neutrality 

adjustment or application of the wage 

index floor. Raw wage index values of 

0.8 or greater are adjusted by the budget 

neutrality adjustment factor. Budget 

neutrality means that, in a given year, 

estimated aggregate payments for 

Medicare hospice services using the 

updated wage index values will equal 

estimated payments that would have 

been made for these services if the 1983 

wage index values had remained in 

effect. To achieve this budget neutrality, 

the raw wage index is multiplied by a 

budget neutrality adjustment factor. The 

budget neutrality adjustment factor is 

calculated by comparing what we would 

have paid using current rates and the 

1983 wage index to what would be paid 

using current rates and the new wage 

index. The budget neutrality adjustment 

factor is computed and applied 

annually. For the FY 2008 hospice wage 

index in the final rule, FY 2007 hospice 

payment rates were used in the budget 

neutrality adjustment factor calculation. 

Raw wage index values below 0.8 are 

adjusted by the greater of: (1) The 

hospice budget neutrality adjustment 

factor; or (2) the hospice wage index 

floor (a 15 percent increase) subject to 

a maximum wage index value of 0.8. For 

example, if County A has a pre-floor, 

pre-reclassified hospital wage index 

(raw wage index value) of 0.4000, we 

would perform the following 

calculations using the budget neutrality 

factor (which for this example is 

1.060988) and the hospice wage index 

floor to determine County A’s hospice 

wage index: 

Raw wage index value below 0.8 

multiplied by the budget neutrality 

adjustment factor: 

(0.4000 × 1.060988 = 0.4244). 

Raw wage index value below 0.8 

multiplied by the hospice wage index 

floor: 

(0.4000 × 1.15 = 0.4600). 

Based on these calculations, County 

A’s hospice wage index would be 

0.4600. 

3. Hospice Payment Rates 

Section 4441(a) of the Balanced 

Budget Act of 1997 (BBA) amended 

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

establish updates to hospice rates for 

FYs 1998 through 2002. Hospice rates 

were to be updated by a factor equal to 

the market basket index, minus 1 

percentage point. Payment rates for FY 


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2008 will be 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 market basket percentage for the 

fiscal year. Accordingly, the FY 2008 

update to the payment rates for each of 

the four levels of care (routine home 

care, continuous home care, general 

inpatient care and inpatient respite care) 

will be the full market basket percentage 

increase for FY 2008. The rate update 

for FY 2008 is implemented through a 

separate administrative instruction and 

is not part of this rule. Historically, the 

rate update has been published through 

a separate administrative instruction 

issued annually in July to provide 

adequate time to implement necessary 

system changes and allow for provider 

notification. Providers determine their 

payment rates by applying the wage 

index in this rule to the labor portion of 

the published hospice rates. 

4. Proxy for the Hospital Market Basket 

As discussed above, the hospice 

payment rates for fiscal years after 2002 

are adjusted each year based upon the 

full hospital market basket percentage 

increase. In the FY 2007 update notice 

(72 FR 52082) published on September 

1, 2006, we indicated that beginning in 

April 2006, with the publication of 

March 2006 data, the Bureau of Labor 

Statistic’s (BLS’s) Employment Cost 

Index (ECI) began using a different 

classification system, the North 

American Industrial Classification 

System (NAICS), instead of the Standard 

Industrial Classification System (SIC), 

which no longer exists. The ECIs had 

been used as the data source for wages 

and salaries and other price proxies in 

the hospital market basket. In the FY 

2007 update notice we noted that no 

changes would be made to the usage of 

the NAICS-based ECI; however, input 

was solicited on this issue. We received 

no comments. As a result, in the 

proposed rule we did not propose any 

changes. 

II. Provisions of the Proposed 

Regulation and Analysis of and 

Responses to Public Comments 

On May 1, 2007, we published a 

proposed rule in the Federal Register 

(72 FR 24116) that set forth the 

proposed hospice wage index for FY 

2008. The following is a summary of 

each of the proposed provisions 

followed by our response to public 

comments. We received 19 timely items 

of correspondence, one from a 

physician, 6 from hospice providers, 

and 12 from associations. 

A. Annual Update to the Hospice Wage 

Index 

We did not propose any modifications 

to the hospice wage index methodology 

as described in the 1997 final rule (62 

FR 42860). In accordance with our 

regulations and the agreement signed 

with other members of the Hospice 

Wage Index Negotiated Rulemaking 

Committee, we use the most current 

hospital data available to adjust for area 

wage differences. As noted above, 

payment rates for each of the four levels 

of care (routine home care, continuous 

home care, general inpatient care and 

inpatient respite care) are adjusted 

annually based upon the hospital 

market basket for that year and are 

promulgated through administrative 

instructions issued annually in July in 

order to allow for sufficient time for 

system changes and provider 

notification. 

We use the previous fiscal year’s 

hospital wage index data to calculate 

the hospice wage index values. For the 

FY 2008 proposed and final hospice 

wage index values, we used the FY 2007 

hospital pre-floor and pre-reclassified 

hospital wage data. This means that the 

hospital wage data used for the hospice 

wage index is not adjusted to take into 

account any geographic reclassification 

of hospitals including those in 

accordance with sections 1886(d)(B) or 

1886(d)(10) of the Act. We also do not 

take into account reclassifications in 

accordance with section 508 of the 

MMA or the out-migration adjustment 

for hospitals (section 505 of the MMA). 

All hospice wage index values for FY 

2008 are adjusted by either the FY 2008 

budget neutrality adjustment factor or 

the wage index floor adjustment. For 

wage index values 0.8 or greater, the 

value is multiplied by the budget 

neutrality adjustment factor. Wage 

index values that are below 0.8, receive 

the greater of a 15 percent increase or 

the budget neutrality adjustment factor 

subject to a maximum wage index value 

of 0.8. In other words, the floor 

adjustment is the greater of the raw 

wage index value multiplied by the 

proposed budget neutrality adjustment 

factor or the raw wage index value for 

that area is multiplied by 15 percent 

subject to a maximum value of 0.8. 

Budget neutrality means that, in a given 

year, estimated aggregate payments for 

Medicare hospice services using the 

updated wage index will equal 

estimated payments that would have 

been made for the same services if the 

wage index adopted for hospices in 

1983 had remained in effect. For a 

detailed discussion of the methodology 

used to compute the hospice wage index 

see the September 4, 1996 proposed rule 

(61 FR 46579) and the August 8, 1997 

final rule (62 FR 42860). 

As indicated in the proposed rule, we 

did not propose any changes in the 

methodology used in calculating the 

hospice wage index values and we did 

not solicit comments. However, we 

received eight items of correspondence 

pertaining to future changes, the 

methodology for computing the wage 

index for Puerto Rico, the publication of 

the market basket update through 

administrative issuance, and the 

inadequacy of rural payment rates. 

Comment: We received two comments 

stating that any future changes proposed 

for hospice payments should follow the 

negotiated rulemaking process rather 

than notice and comment. The same 

commenters also expressed support for 

a more reasonable and consistent 

approach to constructing wage index 

adjustments for hospitals and post acute 

providers. The commenters also 

indicated that any changes in the wage 

index approach should require an 

extended transition period to prevent 

disruptive swings. 

Response: We thank the commenters 

for their suggestions and we will keep 

them under advisement as we analyze 

the need for future refinements. 

Comment: One commenter suggested 

that the hospice payment rates be 

published with the hospice wage index 

regulations as is done in other 

prospective payment systems. 

Response: As we discussed in the 

proposed rule, historically the payment 

rate updates have been promulgated 

through a separate administrative 

instruction or administrative issuance in 

July of each year to provide adequate 

time to implement necessary system 

changes. As the hospice wage index 

regulation is scheduled for publication 

at the end of August, inclusion of the 

hospice payment updates in this 

regulation would not allow sufficient 

time for system changes to be made to 

accommodate the October 1 

implementation date of the payment 

updates. 

Comment: Several commenters noted 

that there are challenges in furnishing 

hospice care in rural areas, citing 

underdevelopment, long distances for 

staff to travel, staff recruitment 

challenges and the need for rural 

hospices to be competitive in the wages 

and benefits that they provide. One 

commenter stated that rural areas 

adjacent to urban areas are at a greater 

disadvantage as they are competing for 

staff in urban areas with higher wages. 

Another commenter stated that rural 

home based salary adjustment based on 

the hospital wage index is inadequate 


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and should be reimbursed at a higher 

rate. The commenter also stated that 

there are extra costs for mileage 

expenses for rural staff and suggested 

that an ‘‘expansive geography index’’ be 

applied to the hospice wage index 

formula for rural counties. Another 

commenter indicated willingness to 

discuss this issue further to investigate 

ways to encourage hospice care in rural 

areas. 

Response: We thank the commenters 

for their comments and suggestions. We 

recognize that there are challenges in 

providing health care in urban as well 

as in rural areas. Recruitment 

challenges, competitiveness in wages 

and benefits and commuting difficulties 

are factors that are facing all health care 

providers. We believe that the hospital 

wage data reflects these factors and as 

a result, the hospice wage index values 

are also reflective of these challenges. In 

addition, the application of the hospice 

floor for raw values below 0.8 provides 

a higher wage index value to many rural 

areas. However, we will consider these 

comments and suggestions as we 

analyze the need for future refinements 

to the hospice payment methodology. 

Comment: One hospice provider from 

Puerto Rico provided us with a study 

that it had undertaken. It requested that 

this report be used by CMS to make the 

‘‘right’’ decision about the correct wage 

index for Puerto Rico. This study 

concluded that 34 hospices in Puerto 

Rico will see a decrease in their hospice 

payments by 2.6 percent in FY 2008. 

Several of the conclusions presented in 

this study compare a hospice in 

Arecebo, Puerto Rico to hospitals in 

New England and Albuquerque, New 

Mexico, list the economic challenges in 

Puerto Rico, and suggested the payment 

rate that it believes should be used for 

Puerto Rico. 

Response: We thank the commenter 

for sending its study to us. However, as 

the study concludes that payment rates 

and wage index values should be 

determined utilizing the same 

methodology used for the hospital wage 

index values, we believe the study is 

based on an erroneous and incorrect 

understanding of the content of the 

hospice wage index proposed rule as 

well as the methodology that had been 

developed and agreed upon through the 

negotiated rulemaking committee. 

As noted above, the methodology for 

the hospice wage index was developed, 

and an agreement on the methodology 

was signed, by members of the Hospice 

Wage Index Negotiated Rulemaking 

Committee. We note that Puerto Rico 

was represented by the hospice 

associations’ participants on the 

committee. Hospices in Puerto Rico had 

notice of the committee deliberations 

and they had an opportunity to apply to 

be on the committee, and were 

encouraged to attend and make a 

statement to the committee. A detailed 

description of the methodology is 

contained in both the September 4, 1996 

proposed rule (61 FR 46579) and the 

August 8, 1997 final rule (62 FR 42860). 

The commenter is incorrect in stating 

that the payment rates for Puerto Rico 

will decrease 2.6 percent in FY 2008. 

We indicated in the proposed rule that 

the impact analysis demonstrates the 

impact of the FY 2008 wage index 

values and is not a projection of the 

anticipated expenditures of hospice 

payments for FY 2008. The impact 

analysis compares hospice payments 

using the FY 2007 hospice wage index 

to the estimated payments using the FY 

2008 wage index. For urban Puerto Rico, 

the proposed rule indicated that, using 

the FY 2007 payment rates and the FY 

2008 wage index values, payments are 

anticipated to decrease 2.6 percent, 

which represents only the affects of the 

wage index and does not reflect the 

payment increase for FY 2008. As noted 

above, the FY 2008 hospice payment 

rates will reflect the market basket 

update. 

We do not understand the study’s 

comparison between Puerto Rico and 

Albuquerque, New Mexico or New 

England regions and as a result cannot 

respond. However, it is important to 

note that wage index values fluctuate 

from year to year for counties as well as 

regions and we do not believe that 

comparisons to other regions provide 

any substantive information. It is also 

important to note that the FY 2007 

hospital pre-floor, pre-reclassified 

hospital wage data reflects data from the 

FY 2003 hospital cost reports and the 

data provided in the Puerto Rico study 

reflect data from later years. We will 

share the information provided in this 

study with the organizational 

component within CMS that develops 

the inpatient hospital wage data, as it 

appears that the study relates to the 

development of the hospital wage index. 

B. Rural Areas Without Hospital Wage 

Data 

When adopting OMB’s new labor 

market designations, we identified some 

geographic areas where there were no 

hospitals, and thus, no hospital wage 

index data on which to base the 

calculation of the hospice wage index 

(70 FR 45135, August 4, 2005). For FY 

2006 and FY 2007, we adopted a policy 

to use the FY 2005 pre-floor, prereclassified hospital wage index value 

for rural areas where no rural hospital 

wage data were available. We also 

adopted the policy that for urban labor 

markets without an urban hospital from 

which a hospital wage index data could 

be derived, all of the CBSAs within the 

State would be used to calculate a 

statewide urban average wage index 

data to use as a reasonable proxy for 

these areas. In the August 2005 final 

rule and in the September 2006 update 

notice, we applied the average wage 

index data from all urban areas lacking 

hospital wage data in that state. 

Currently, the only CBSA that is 

affected by this policy is CBSA 25980, 

Hinesville-Fort Stewart, Georgia. We 

proposed to continue this approach for 

urban areas where there are no hospitals 

and, thus, no hospital wage index data 

on which to base the calculations for the 

FY 2008 and subsequent hospice wage 

indexes. 

In the proposed rule we noted that 

under the CBSA labor market areas, 

there are no rural hospitals in rural 

locations in Massachusetts and Puerto 

Rico. In the August 2005 final rule (70 

FR 45135) and in the September 2006 

update notice (71 FR 52081), we applied 

the FY 2005 pre-floor, pre-reclassified 

hospital wage data in both FY 2006 and 

FY 2007 for rural Massachusetts and 

rural Puerto Rico. In the proposed rule, 

we considered alternatives in our 

methodology to update the wage index 

for rural areas without hospital wage 

index data consistent with other 

prospective payment systems. We noted 

that we believe that the best imputed 

proxy for rural areas, would: (1) Use 

pre-floor, pre-reclassified hospital data; 

(2) use the most local data available to 

impute a rural wage index; (3) be easy 

to evaluate and; (4) be easy to update 

from year to year. Although our current 

methodology meets the first three 

criteria, it could not be easily updated 

from year to year because the FY 2005 

pre-floor, pre-reclassified hospital wage 

data would continue to be used. 

Therefore, in cases where there is a rural 

area without rural hospital wage data, 

we proposed using the average pre-floor, 

pre-reclassified wage index data from all 

contiguous CBSAs to represent a 

reasonable proxy for the rural area. This 

approach meets all of the stated criteria 

(72 FR 24118). 

We noted in the proposed rule that we 

interpret the term ‘‘contiguous’’ to mean 

‘‘sharing a border’’. We cited the 

example of Massachusetts, where the 

entire rural area consists of Dukes and 

Nantucket counties. We determined that 

the borders of Dukes and Nantucket 

counties are contiguous with Barnstable 

and Bristol counties. Therefore, the prefloor, pre-reclassified wage index values 

for the counties of Barnstable (CBSA 

12700, Barnstable Town, MA) and 


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Bristol (CBSA 39300, Providence-New 

Bedford-Fall River, RI-MA) would be 

averaged resulting in an imputed prefloor, pre-reclassified rural wage index 

for rural Massachusetts. 

While we believe that this policy 

could be readily applied to other rural 

areas that lack hospital wage data 

(possibly due to hospitals converting to 

a different provider type, such as a 

critical access hospital (CAH), that do 

not submit the appropriate wage data), 

should a similar situation arise in the 

future, we may re-examine this policy. 

In the proposed rule we noted that we 

do not believe that this policy would be 

appropriate for Puerto Rico. There are 

sufficient economic differences between 

hospitals in the United States and those 

in Puerto Rico, including the payment 

of hospitals in Puerto Rico using 

blended Federal/Commonwealthspecific rates that we believe necessitate 

a separate and distinct policy for Puerto 

Rico. Consequently, any alternative 

methodology for imputing a wage index 

for rural Puerto Rico would need to take 

into account those differences. Our 

policy of imputing a rural wage index 

based on the wage index(es) of CBSAs 

contiguous to the rural area in question 

does not recognize the unique 

circumstances of Puerto Rico. We also 

noted that while we have not yet 

identified an alternative methodology 

for imputing a 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. Accordingly, 

we propose to continue using the most 

recent pre-floor, pre-reclassified wage 

index previously available for Puerto 

Rico, which is 0.4047 (72 FR 24118–19). 

Comment: We received four items of 

correspondence in response to our 

proposal for rural areas without hospital 

wage data. Two commenters supported 

the proposal. Two commenters stated 

that the proposed methodology, while 

not ideal, comes closest to what the 

commenters believe is an equitable 

solution in resolving a perceived flaw in 

using hospital data to adjust payment to 

non-hospital providers. The 

commenters also assumed that a better 

alternative would emerge over the next 

few years in the course of revising the 

hospital wage index. One commenter 

agreed with the methodology but asked 

that we do not use this formula for other 

situations without review and 

reexamination of the policy. The same 

commenter commended us for 

demonstrating flexibility and good 

judgment in creating a different system 

for Massachusetts and Puerto Rico. 

We note that we received no 

comments on the methodology 

employed for urban areas without a 

hospital from which to derive hospital 

wage data. 

Response: We thank the commenters 

for their support. We continue to believe 

that our proposed methodology results 

in the most appropriate imputed proxy 

for rural areas in meeting the criteria we 

identified as follows: (1) Use pre-floor, 

pre-re-classified hospital data, (2) use 

the most local data available to impute 

a rural wage index, (3) be easy to 

evaluate; and (4) be easy to update from 

year to year. We will consider the 

suggestion for evaluating the policy if 

needed in other situations. 

C. Nomenclature Changes 

We proposed to clarify that all 

hospice rules and notices are considered 

to incorporate the CBSA changes 

published in the most recent OMB 

bulletin that applies to the hospital 

wage index data used to determine the 

current hospice wage index (72 FR 

24119). We received no comments on 

this proposal. 

D. Payment for Hospice Care Based on 

the Location Where Care Is Furnished 

Under the Medicare hospice program, 

hospice providers receive payment for 

four levels of care based upon the 

individual’s needs. The payment rates 

are adjusted to reflect the variation in 

geographic locations. Section 4442 of 

the BBA amended section 1814(i)(2) of 

the Act, effective for services furnished 

on or after October 1, 1997, required the 

application of the local wage index 

value of the geographic location at 

which the service is furnished for 

hospice care provided in the home. 

Prior to this provision, local wage index 

values were applied based on the 

geographic location of the hospice 

provider, regardless of where the 

hospice care was furnished. In the 

proposed rule, we noted that we believe 

that for the majority of hospice 

providers the office and the site for the 

provision of home and inpatient care 

occur in the same geographic area. 

However, with the substantial growth of 

hospice providers in multiple states and 

with multiple sites within a State, 

hospice providers have been able to 

inappropriately maximize 

reimbursement by locating their offices 

in high-wage areas and delivering 

services in a lower-wage area. We also 

believe that hospice providers are able 

to inappropriately maximize 

reimbursement by locating their 

inpatient services either directly or 

under contractual arrangements in 

lower wage areas than their offices. 

Section 4442 of the BBA applies the 

wage index value of a home’s 

geographic location for services 

provided there, but is silent as to what 

wage index value should be used for 

hospice services provided in an 

inpatient setting. We believe that the 

application of the wage index values 

should reflect the location of the 

services provided rather than the 

location of an office. We believe such 

application results in a reimbursement 

rate that is a more accurate reflection of 

the wages paid by the hospice for the 

staff used to furnish care. We proposed 

that effective January 1, 2008, all 

payment rates (routine home care, 

continuous home care, inpatient respite 

and general inpatient care) be adjusted 

by the geographic wage index value of 

the area where hospice services are 

provided. This would require hospice 

providers to include the geographic 

location of the inpatient facility for 

general inpatient and inpatient respite 

levels of care on claims submitted for 

payment. We proposed to modify 

§ 418.302 accordingly. 

In the proposed rule we also indicated 

that as hospice claims do not contain 

information identifying the location of 

the facility where general inpatient and 

respite care are provided, we are unable 

to predict the savings or costs associated 

with the changes associated with this 

proposed provision. However, we 

believe most hospice providers provide 

hospice care in the same geographic 

location as their offices. Therefore, we 

believe the impact of implementing this 

proposal will be negligible. 

Comment: We received eight items of 

correspondence, of which six supported 

the provision to base payment rates on 

the geographic wage index value of the 

area where inpatient hospice services 

are provided. 

Response: We thank the commenters 

for their support of this provision. 

Comment: One commenter suggested 

that we suspend the implementation of 

this provision until we have additional 

data from providers on the impact. 

Response: In the proposed rule we 

indicated that, as hospice claims do not 

contain information identifying the 

location of the facility where inpatient 

care is provided, we are unable to 

predict the savings or costs associated 

with changes in this provision. Effective 

January 1, 2007, hospice providers were 

required to indicate the type of location 

where care was provided (for example, 

nursing home, assisted living facility, 

hospital unit), but not the geographic 

location (which would be used to adjust 

payments). As we have indicated, we 

believe that for most providers, the 

location of the inpatient facility and the 

hospice provider are the same. We do 

not believe that postponing the 


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implementation of this provision would 

enable us to collect any additional 

information. 

Comment: One commenter indicated 

that this change will significantly 

increase the complexity of filing hospice 

claims and will increase hospice costs 

due to the need to include the CBSA for 

the geographic location, as well as the 

code of where the patient is receiving 

hospice services. 

Response: We appreciate the concern 

regarding the complexity of filing claims 

and the perceived increased costs to 

hospices. We are in the process of 

developing operational instructions that 

we believe will help simplify the billing 

process. Hospice providers currently are 

required to identify the geographic 

location of their patients for the routine 

home care and continuous home care 

levels of care, and the location of the 

hospice office for general inpatient care 

and inpatient respite care. We are now 

also requiring hospice providers to 

identify the geographic location where 

inpatient care is provided. We believe 

that for the majority of hospice 

providers, the location of the facility for 

the provision of both the general 

inpatient and inpatient respite levels of 

care will be the same as the location of 

the hospice office. For those majority of 

cases, this change will require the 

hospice provider to indicate the same 

CBSA location of the office on the 

claims as the location of the facility 

where inpatient levels of care are 

provided. As a result, we believe that 

the impact on hospices for 

implementing this provision should be 

negligible as most hospices currently 

provide this information on the claims. 

Comment: Several commenters 

concurred with the provision but 

objected to the statement that hospice 

providers are able to inappropriately 

maximize reimbursement by having 

their offices located in a higher wage 

area. One commenter indicated that the 

statement was misleading and 

unnecessarily harsh. Another 

commenter suggested removing the 

statement. One commenter interpreted 

this statement as being demeaning and 

inflammatory. The same commenter 

stated that most hospices would not 

benefit from manipulating the location 

of an inpatient facility. Several 

commenters indicated that there is 

nothing prohibiting a hospice from 

having their inpatient facilities in a 

higher wage area, though the 

commenters stated it was doubtful that 

a hospice would do this or arrange 

contracts in order to manipulate 

reimbursement. Some commenters 

stated that urban areas have higher rates 

and that hospices generally have 

contracts with all hospitals in an area. 

Some commenters indicated patients 

have choices about where to receive 

care and would complain if they were 

forced to receive inpatient care out of 

their area. 

Response: While we appreciate the 

commenters objection to the statement 

that we made about hospice providers 

being able to inappropriately maximize 

reimbursement by locating their offices 

in a higher age area, we concur with the 

commenter that nothing prohibits a 

hospice from locating its inpatient 

services, either directly or under 

contractual arrangements, in a higher 

wage area, as well. In fact, we have 

received anecdotal information that 

leads us to believe that there are hospice 

offices that have been intentionally 

located in higher wage areas than those 

of their patients in order to maximize 

their reimbursement. We supported our 

proposal by noting the potential for 

maximizing reimbursement based on 

the location of the main office, which 

was the same rationale used by the 

congressional committee when the BBA 

1997 provision requiring the application 

of the local wage index of the 

geographic location where the service is 

furnished for hospice care provided in 

the home was enacted. We believe that 

the same rationale applies to the 

inpatient facility locations as well. Our 

intent for this provision is to have all 

levels of payment adjusted by the wage 

index that applies to the site where the 

service is being provided. 

Comment: One commenter 

interpreted the proposed provision as 

reducing reimbursement to a lesser 

amount based on distance from the 

main office. The same commenter stated 

that staff were paid at the home office 

area rate and suggested that payment be 

based on the costs at the main office. 

Response: We believe that the 

suggestion that using distance from the 

main office determines payment rates is 

a misinterpretation of the intent of this 

provision as well as the statement 

concerning maximizing reimbursement 

based upon the location of the hospice 

main office. As we have discussed in 

the proposed rule, we were not 

proposing to modify the methodology 

used for computing the hospice wage 

index values. The intent of the proposal 

is to employ the same methodology for 

applying the wage index value for 

geographic variations regardless of 

where hospice care is provided. 

E. Educational Requirements for Nurse 

Practitioners 

On December 8, 2003, the Congress 

enacted the Medicare Prescription Drug, 

Improvement, and Modernization Act 

(MMA) of 2003 (Pub. L. 108–173). 

Section 408 of the MMA, Recognition of 

Attending Nurse Practitioners as 

Attending Physicians to Serve Hospice 

Patients, amended sections 

1861(dd)(3)(B) and 1814(a)(7) of the Act 

to add nurse practitioners (NPs) to the 

definition of an attending physician for 

beneficiaries who have elected the 

hospice benefit. Section 408 of the 

MMA was implemented through an 

administrative issuance (Change 

Request (CR) 3226, Transmittals 22 and 

304, September 24, 2004). In the August 

4, 2005 FY 2006 final rule (70 FR 

45139), we revised § 418.3 to reflect that 

an attending physician can be a nurse 

practitioner who meets the training, 

education and experience requirements 

as the Secretary may prescribe. 

We indicated in the proposed rule 

that we believe that the definition of 

attending physician, which includes 

nurse practitioners under the Medicare 

hospice benefit, should be consistent 

with the provisions of section 410.75 

that provide for Medicare Part B 

coverage of nurse practitioner services. 

Therefore, to ensure consistency, we 

proposed to revise the definition of 

‘‘attending physician’’ at § 418.3(1)(ii) to 

cross reference the training, education, 

and experience requirements as 

described in § 410.75(b). 

Comment: We received six items of 

correspondence regarding our proposal 

to conform the educational 

requirements for nurse practitioners 

serving as the attending physician to the 

requirements described in § 410.75. All 

commenters supported this provision. 

One commenter requested that the 

hospice physician definition be revised 

to include nurse practitioners, although 

the commenter recognized that any such 

revision could not allow nurse 

practitioners to certify the terminal 

illness of a patient. Another commenter 

suggested that the definition of 

attending physician be clarified by 

using the term ‘‘attending nurse 

practitioner’’ instead of referring to 

nurse practitioners as ‘‘attending 

physicians.’’ One commenter requested 

that the nurse practitioner qualifications 

provisions at § 410.75 be amended to 

reflect current and evolving educational 

requirements for advanced practice 

registered nurses. The commenter 

requested that the term ‘‘master’s 

degree’’ in § 410.75(b)(ii)(4) be replaced 

with ‘‘graduate degree’’ to reflect nurse 

practitioners with doctoral degrees. 

Response: We thank the commenters 

for their support of this provision. As 

noted in the proposed rule and earlier 

in this rule, the implementation of 

section 408 of the MMA, which 

amended sections 1861(dd)(3)(B) and 


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1814(a)(7) of the Act to add nurse 

practitioners to the definition of an 

attending physician, was discussed in 

the August 4, 2005 final rule (70 FR 

45130). Section 418.304(e)(2)(iv) 

specifies that nurse practitioners may 

bill and receive payment for services 

provided as the attending physician, 

only if the services are not related to the 

certification of the terminal illness in 

§ 418.22(c)(1)(ii). Section 418.22(c) 

specifies that certification of the 

terminal illness is obtained from ‘‘the 

medical director of the hospice or the 

physician member of the hospice 

interdisciplinary group’’. Therefore, we 

believe it would be inconsistent with 

statute and regulations to allow nurse 

practitioners to bill and receive payment 

for certifying an individual’s terminal 

illness. As the role of the nurse 

practitioner is explicit in statute, nurse 

practitioners are not included as a 

hospice physician and may not serve in 

that role. 

We concur with the commenter that 

the definition of attending physician 

should use the term ‘‘attending nurse 

practitioner’’. However, as the statute at 

sections 1861(dd)(3)(B) and § 1814(a)(7) 

explicitly uses the term ‘‘attending 

physician’’ for a nurse practitioner 

serving as the attending physician, we 

do not accept this recommendation. 

We did not propose to replace the 

term master’s degree in 410.75(b)(ii)(4) 

with ‘‘graduate degree’’. Therefore, we 

will not make the change in this final 

rule. However, we will provide your 

suggestion to the area within CMS 

responsible for advanced practitioner 

educational requirements. 

F. Caregiver Breakdown and General 

Inpatient Care 

In the proposed rule, we discussed a 

concern that some hospice providers are 

requesting payment for the general 

inpatient level of care for circumstances 

that do not qualify under the statute at 

section 1861(dd)(1)(G) of the Act, our 

regulations at § 418.202(e), or Medicare 

hospice policy in Chapter 9 of the 

Medicare Benefit Policy Manual. We 

provided clarification of existing statute, 

regulation and policy in the proposed 

rule and did not propose any changes 

(72 FR 24120). 

As discussed in the proposed rule, the 

Medicare hospice benefit places 

emphasis on the provision of items and 

services to enable an individual to 

remain at home in the company of 

family and friends. Section 

1861(dd)(1)(G) of the Act provides for 

short-term inpatient hospice care to be 

available when an individual’s pain and 

symptoms must be closely monitored or 

the intensity of interventions that are 

required cannot be provided in any 

other settings. Inpatient respite care is 

available for family members, who serve 

as the primary caregivers, to obtain rest 

for a period of no more than 5 days at 

a time. Hospice providers should submit 

claims for inpatient respite care in 

situations where there is an unexpected 

loss of the individual’s support 

structure that results in an inability to 

maintain the individual in his or her 

home, but the individual does not 

require an inpatient level of care. 

Medicare policy states that skilled 

nursing care may be required by a 

patient whose home support has broken 

down, if this breakdown makes it no 

longer feasible to furnish needed care in 

the home setting. If the hospice and the 

caregiver, working together, are no 

longer able to provide the necessary 

skilled nursing care in the individual’s 

home, and if the individual’s pain and 

symptom management can no longer be 

provided at home, then the individual 

may be eligible for a short term general 

inpatient level of care. To receive 

payment for general inpatient care 

under the Medicare hospice benefit, 

beneficiaries must require an intensity 

of care directed towards pain control 

and symptom management that cannot 

be managed in any other setting. It is the 

level of care provided to meet the 

individual’s needs and not the location 

of where the individual resides, or 

caregiver breakdown, that determine 

payment rates for Medicare services. 

Caregiver breakdown is the loss of the 

individual’s support structure and 

should not be confused with the 

coverage requirements for medically 

reasonable and necessary care for pain 

and symptom management that cannot 

be managed in any other setting. 

Therefore, caregiver breakdown should 

not be billed as general inpatient care 

unless the coverage requirements for 

this level of care are met. As discussed 

above, for the general inpatient level of 

care, the intensity of interventions 

required for pain and symptom 

management is such that it cannot be 

provided in any setting other than an 

inpatient setting. 

As explained in the proposed rule, 

this is a clarification of current 

Medicare policy and as such does not 

create new limitations on access to 

hospice care. As noted in the proposed 

rule, we intend to monitor the usage of 

general inpatient care. Additionally, the 

circumstances addressed by this policy, 

and the clarification discussed above, 

should not be construed as similar to 

situations where an individual does not 

have family, friends or other individuals 

who are able to take on the role of a 

caregiver when a hospice election is 

made. In the proposed rule, we 

indicated that inpatient respite care 

could be used in situations where there 

is caregiver breakdown. However, in 

situations where there is a lack of a 

caregiver at the time of the election, the 

inpatient respite level of care does not 

apply. Inpatient respite care is 

unavailable when there is no caregiver 

to whom relief must be provided. The 

established policy that the level of care 

required to provide pain and symptom 

management determines payment and 

not the location of where the individual 

resides or receives hospice services, also 

applies in situations where there is not 

an appropriate caregiver. We recognize 

the difficulties surrounding the 

provision of hospice care to an 

individual who is terminally ill and 

who does not have caregivers at home. 

This may be particularly challenging in 

rural areas. Section 409 of the MMA 

(Pub. L. 108–173) established the Rural 

Hospice Demonstration which hopes to 

test alternative mechanisms for 

providing hospice services for 

beneficiaries who lack an appropriate 

caregiver and who reside in rural areas. 

In this demonstration, a hospice 

organization may provide all services in 

an inpatient facility which serves as a 

beneficiary’s home; however, payment 

for inpatient care must meet the usual 

level of care requirements. In this 

demonstration, inpatient respite care is 

not possible since there is no caregiver. 

For specific information on this 

demonstration, refer to: http:// 

www.cms.hhs.gov/ 

DemoProjectsEvalRpts/MD/ 

itemdetail.aspitemID=CMS1183983. 

Comment: We received nine items of 

correspondence regarding the 

clarification of the general inpatient 

level of care and its use when there is 

a breakdown in caregiver support. 

Several commenters supported the 

clarification, however the majority did 

not, as we describe below. Several 

commenters stated that they shared our 

concern that the general inpatient level 

of care not become a source of abuse 

and the need to focus on hospice 

providers who use the general inpatient 

level of care inappropriately. Two 

commenters stated that they supported 

steps to eliminate any potential 

collusion or inducements in this area. 

Response: We appreciate the 

comments and thank those who were in 

support of this provision. The intent of 

this clarification was to ensure that the 

general inpatient level of care be 

utilized appropriately and in 

accordance with statute, regulations and 

policy. Our focus was not on fraudulent 

or abusive use of the general inpatient 

level of care, but rather on ensuring that 


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the general inpatient level of care is 

properly utilized in accordance with 

established criteria. 

Comment: Some commenters 

believed that the clarification was 

overly prescriptive while others 

believed that this was not a clarification 

of existing policy, but was a new 

interpretation. Some commenters 

expressed that the intent of the general 

inpatient level of care, at the inception 

of the benefit, was to address the need 

for pain control and symptom 

management as well as care for patients 

whose caregiver or home support has 

broken down, making it no longer 

feasible to furnish care in the home. One 

commenter indicated that use of the 

general inpatient level of care in the 

event of caregiver breakdown met the 

requirements in 418.302 as a condition 

of participation. The same commenter 

added that the proposed interpretation 

shifts the focus from caring for patients 

in the appropriate setting to a billing 

and reimbursement issue. Some 

commenters stated that this provision 

was designed to reduce expenditures 

without regard to patient safety and 

hospice expenses. 

Other commenters also strongly 

disagreed with the clarification. They 

indicated that Medicare policy has been 

interpreted for more than twenty years 

to mean that general inpatient level of 

care can be used for caregiver 

breakdown and the practice of billing at 

the higher level of care in those 

circumstances is consistent with written 

CMS and fiscal intermediary guidance. 

Some commenters stated that the 

definition of general inpatient care in 

the hospice regulations supported the 

use of general inpatient level of care for 

caregiver breakdown. One commenter 

stated that it was inappropriate to 

punish patients by removing a long 

established benefit for the hospice 

program because of the perception that 

some hospices are using the general 

inpatient level of care inappropriately. 

Response: We disagree with the 

commenter who believes that this 

clarification is a new interpretation. 

Rather, we seek to clarify here our 

established policy by providing what we 

believe is a helpful explanation of how 

our policies should be interpreted and 

applied. We are not making any policy 

changes with this clarification. We 

believe that this clarification is needed 

because, as some commenters recognize, 

the general inpatient level of care has 

been used for situations where caregiver 

breakdown has occurred. 

The level of care needed to manage 

pain and symptoms is the basis for the 

general inpatient level of care in the 

statute, regulations and policy, none of 

which recognizes caregiver breakdown 

as an indication for the general inpatient 

level of care. The Medicare Benefit 

Policy Manual, Chapter 9—Coverage of 

Hospice Services, section 40.1.5—ShortTerm Inpatient Care, indicates that 

skilled nursing care may be needed by 

a patient whose home support has 

broken down. In the proposed rule we 

acknowledged this and indicated that if 

the hospice and the caregiver, working 

together, are no longer able to provide 

the necessary skilled nursing care in the 

individual’s home, and if the 

individual’s pain and symptom 

management can no longer be provided 

at home, then the individual may be 

eligible for a short term general 

inpatient level of care. Section 

1861(dd)(1) of the Act defines hospice 

care as the items and services to be 

provided to a terminally ill individual 

by a hospice directly or under 

arrangement. The statute goes on to 

specify the items and services, but does 

not include caregiver services. This 

means that Medicare does not pay for 

caregiver services under the hospice 

benefit. In further support, § 418.98 sets 

forth the hospice conditions of 

participation requiring hospices to make 

available ‘‘inpatient care* * * for pain 

control, symptom management and 

respite purposes * * *.’’ Section 

418.202 lists the covered hospice 

services and includes short-term 

inpatient care at § 418.202(e), stating 

‘‘inpatient care may be required for 

procedures necessary for pain control or 

acute or chronic symptom management. 

Inpatient care may also be furnished as 

a means of providing respite for the 

individual’s family or other persons 

caring for the individual at home.’’

Further, § 418.302(b)(4) provides that ‘‘a 

general inpatient care day is a day on 

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.’’

We believe that there is no support for 

the comments that suggest that the 

intent of the general inpatient level of 

care was to include care for patients 

whose home support has broken down. 

We also disagree with the comment that 

this clarification shifts the focus from 

caring for patients to a purely billing 

and reimbursement issue and that there 

needs to be a humane and practical 

alternative. Our discussions in the 

proposed rule and in this final rule have 

focused on the provision of care and the 

level of care needed by the patient. 

However, certain billing requirements 

and payment amounts are associated 

with each level of care. In cases where 

a particular level of care is provided 

because of circumstances that are 

inappropriate to warrant that particular 

level of care (here, general inpatient 

provided because of caregiver 

breakdown), it is inappropriate for the 

hospice to bill and receive payment for 

the general inpatient level of care. 

Comment: Several commenters 

indicated that the general inpatient level 

of care was appropriate in rare 

circumstances where the patient’s care 

network breakdown is not recoverable 

after a short period of inpatient respite 

care. Other commenters expressed the 

need to provide inpatient care 

immediately for caregiver breakdown. 

The same commenters believe that the 

immediate need would prohibit the use 

of inpatient respite care, which they 

indicated was a planned admission. One 

commenter strongly objected to the 

statement in the proposed rule that 

specified the requirement for the 

provision of an intensity of care to 

support the general inpatient level of 

care. However, some commenters stated 

that more frequent use of general 

inpatient level of care is appropriate as 

hospices are experiencing difficulty 

finding adequate caregivers. 

Some commenters stated that general 

inpatient level of care provided the only 

option other than discharging patients 

from the hospice benefit to long term 

care facilities. Others stated that the 

proposed clarification implied that 

hospice care must be terminated when 

there is a situation of caregiver 

breakdown, as there was no Medicare 

hospice benefit category to care for 

patients without caregiver support. 

Some commenters stated that we did 

not address how caregiver breakdown 

situations should be addressed while 

others implied that unless hospices 

could bill for general inpatient level of 

care for caregiver breakdown, patients’

symptoms could be uncontrolled 

necessitating the general inpatient level 

of care. 

Response: We disagree with the 

comment that we did not indicate how 

caregiver breakdown situations should 

be addressed. We indicated in the 

proposed rule that there is nothing 

prohibiting a Medicare approved facility 

from serving as the individual’s home. 

However, Medicare daily per-diem 

payments are based on medically 

reasonable and necessary levels of care 

as described in the Medicare regulations 

at § 418.302: A routine home care day is 

a day on which an individual is at home 

and is not receiving continuous care; a 

continuous home care day is a day on 

which an individual is not in an 

inpatient facility and receives hospice 


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care consisting predominantly of 

nursing care on a continuous basis at 

home during brief periods of crisis as 

described in § 418.204(a), to maintain 

the terminally ill patient at home; an 

inpatient respite care day is a day on 

which the individual receives care in an 

approved facility on a short-term basis 

for respite; and a general inpatient care 

day is a day on which an individual 

receives general inpatient care in an 

inpatient facility for pain control or 

acute or chronic symptom management 

which cannot be managed in other 

setting. Medicare payment is made 

based on the medically reasonable and 

necessary level of care provided, and 

not simply where that care is provided. 

As discussed above, it is not appropriate 

to bill Medicare for the general inpatient 

care day for situations where the 

individual’s caregiver support has 

broken down unless the coverage 

requirements for the general inpatient 

level of care are otherwise met. 

We disagree with the comments that 

patients will need to be discharged from 

the hospice benefit to long term care 

facilities because discharge for caregiver 

breakdown does not meet the discharge 

requirements in the regulations at 

§ 418.26. The requirements for discharge 

at § 418.26 state that a hospice may 

discharge a patient if the patient moves 

out of the hospice service area or 

transfers to another hospice; the hospice 

determines that the patient is no longer 

terminally ill; or the hospice discharges 

the patient for cause. We also disagree 

with the comment that patients will be 

forced to revoke the hospice benefit if 

there is caregiver breakdown. 

Revocation of the hospice benefit as 

described in § 418.28 is an action 

initiated by the individual (patient) and 

not by the hospice provider. Finally, we 

disagree with the comment that denying 

the use of the general inpatient level of 

care for caregiver breakdown will result 

in limitation of access. We have 

discussed various ways of providing 

care in this situation, such as the use of 

inpatient respite or use of alternative 

sources of payment for room and board, 

that we believe are appropriate 

alternatives to meeting the needs of the 

individual. 

Comment: One commenter stated that 

hospices have seen an erosion of the use 

of the inpatient benefit and many offer 

very little inpatient care. This 

commenter concluded that the 

clarification represents a reduction in 

the benefit and will create a new 

limitation on access to hospice care and 

patients will seek inpatient hospital 

admissions instead of receiving hospice 

services at the general inpatient level of 

care. Several commenters stated that 

fiscal intermediaries have allowed the 

use of general inpatient care for 

caregiver breakdown. 

Response: We disagree that our 

clarification on the use of the general 

inpatient level of care represents a 

reduction in the Medicare hospice 

benefit and that it will result in a 

limitation on access to hospice care. As 

we noted above, we are not making any 

policy changes concerning general 

inpatient care, rather, we are clarifying 

our established policy. We also disagree 

that there has been an erosion of the use 

of general inpatient level of care. Our 

data, which is available on the hospice 

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

center/hospice.asp demonstrates that 

use and payment for the general 

inpatient level of care has been 

increasing each year. We also do not 

agree that better compliance with 

statute, regulations and policy will limit 

access to hospice care nor do we see our 

clarification as an inducement to 

increase hospital admissions. 

Comment: One commenter questioned 

why this clarification was being made 

when we were unable to quantify the 

extent of the use of general inpatient in 

the event of caregiver breakdown and 

suggested that further analysis be done. 

The same commenter indicated that the 

cost savings were inaccurate as our 

assumption of potential savings is based 

on current reimbursement rates for 

inpatient respite services. The same 

commenter believes that the inpatient 

respite care payment rate is inadequate. 

Several other commenters indicated that 

the reimbursement rate for inpatient 

respite care was inadequate. 

Several commenters suggested the 

following: Extending the current 5-day 

limitation on inpatient respite care; 

revising policy to allow for the use of 

the general inpatient level of care when 

documentation indicates that a 

sufficient caregiver network cannot be 

restored in a few days; or establishing 

an alternative payment mechanism in 

the hospice benefit for situations where 

there is caregiver breakdown. 

One commenter suggested that 

Medicare work with hospice providers 

to increase the average length of stay to 

that which was originally intended in 

legislation and in regulation. The same 

commenter stated that studies show that 

hospice care saves Medicare dollars. 

Several offered to work with CMS to 

find an alternative policy to meet 

patient needs while protecting the 

Medicare trust fund. 

Response: We appreciate these 

suggestions and will keep them in mind 

as we continue to evaluate Medicare 

hospice payment policy. We noted in 

the proposed rule that we are unable to 

quantify the use of the general inpatient 

level of care for caregiver breakdown. In 

the proposed rule we provided an 

example of the potential impact, as we 

did not have empirical data to suggest 

the actual usage. This example 

demonstrated the cost savings to 

Medicare by using as an example, what 

we believe could be a cost saving if we 

assumed that 5 percent of the days and 

expenditures for general inpatient level 

of care were attributable to caregiver 

breakdown. However, the unavailability 

of exact utilization rates does not 

preclude us from ensuring that the 

general inpatient level of care is being 

billed as we intended. Based upon the 

comments we received, we believe that 

the use of the general inpatient level of 

care for caregiver breakdown may be 

more pervasive than we had envisioned 

at the time of the proposed rule. 

We disagree with the commenter who 

suggested that the original legislation 

and regulation intended for the average 

length of stay to be at a specified level. 

While the statute defines the terminal 

diagnosis as having a prognosis of six 

months or less if the disease runs its 

normal course, this does not imply that 

there is, or ever was, a targeted length 

of stay that is required. The regulations 

require that an individualized plan of 

care be developed and updated to 

identify patient and family needs and 

the medically reasonable and necessary 

items and services that are required to 

meet these needs. In addition, as 

individuals vary in their responses to 

illness and care, we expect to see some 

variability in lengths of stay. We do not 

believe that it is feasible or prudent to 

specify or predetermine what lengths of 

stay should or must be achieved to 

measure or evaluate the effectiveness of 

care provided. 

Regarding the comment that the 

reimbursement rate for inpatient respite 

care is inadequate, in the proposed rule, 

we did not propose to make any 

adjustments on the payment rates and 

merely indicated that the hospice 

payment rates are adjusted annually 

based upon the full market basket 

percentage increase. We are aware of 

studies which suggest that the inpatient 

respite care payment rate may not 

reflect the costs for providing this level 

of care. We will consider the comments 

made concerning the inpatient respite 

care rate as we continue to examine 

Medicare hospice payment policy. 

G. Certification of the Terminal Illness 

Section 1814(a)(7)(A)(i) of the Act 

stipulates that the individual’s attending 

physician and the hospice medical 

director initially certify the individual’s 

terminal diagnosis with a prognosis of 


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six months or less if the disease runs its 

normal course. Our regulations at 

§ 418.22 discuss the requirements of the 

certification, including documentation 

requirements. As discussed in the 

proposed rule, we are aware that some 

providers permit the hospice admission 

nurse to determine eligibility for 

hospice services and to certify the 

individual’s terminal diagnosis. In the 

proposed rule, we explained that the 

statute is explicit in the requirement 

that the attending physician and the 

hospice medical director determine the 

terminal diagnosis, and his or her 

signature on the certification attests to 

that fact. 

Comment: We received three items of 

correspondence regarding this 

clarification. One commenter supported 

the clarification of the responsibility of 

the hospice medical director and the 

attending physician to certify the 

terminal illness. One commenter asked 

if a hospice medical director visit is 

required at the time of admission to a 

hospice and what is the time frame for 

the visit. Another commenter stated that 

concurrence of the hospice medical 

director and the attending physician 

may be tacit and no communication is 

required between them. 

Response: As discussed above, section 

1814(a)(7)(A)(i) of the Act stipulates that 

the individual’s attending physician and 

the hospice medical director each 

initially certify that the individual is 

terminally ill with a medical life 

expectancy of six months or less if the 

disease runs its normal course. Our 

regulations at § 418.25(a) of hospice 

regulations indicate, that the hospice 

admits a patient only on the 

recommendation of the medical director 

in consultation with, or with input, 

from the patient’s attending physician 

(if any). As noted in the proposed rule, 

the requirements of the physician 

certification, including supportive 

documentation, were discussed in the 

Medicare Program; Hospice Care 

Amendments proposed rule (67 CFR 

70363) and final rule (70 CFR 70548). 

Current regulations do not address a 

time frame for a physician or hospice 

medical director visit. 

III. Provisions of the Final Regulations 

In this final rule, we are adopting the 

following provisions, as set forth in the 

proposed rule, without change. We are 

also publishing the FY 2008 urban and 

rural wage index values for hospices in 

the addendum as well as the table that 

reflects the impact of the FY 2008 wage 

index values. 

A. Annual Update to the Hospice Wage 

Index 

The FY 2008 hospice wage index 

values have been computed utilizing 

OMB’s geographic location definitions 

(CBSA). The budget neutrality 

adjustment factor was computed 

utilizing data from the FY 2006 claims 

processed through June 2007. The FY 

2008 budget neutrality adjustment factor 

of 1.066671 was applied to hospital 

wage data above 0.8. The budget 

neutrality adjustment factor or the 

hospice floor was applied to the 

hospital wage data below 0.8, not to 

exceed 0.8. The wage index values are 

reflected in Table A and Table B of the 

Addendum. Specifically, Table A 

reflects the FY 2008 wage index values 

for urban areas under the CBSA 

designations. Table B reflects the FY 

2008 wage index values for rural areas 

under the CBSA designations. 

B. Rural Areas Without Hospital Wage 

Data 

For FY 2008 and subsequent hospice 

wage index values, for urban labor 

markets without an urban hospital from 

which hospital wage index data could 

be derived, all of the CBSAs within the 

State will be used to calculate a 

statewide urban average wage index to 

use as a reasonable proxy for these 

areas. Currently, the only CBSA that is 

affected by this is CBSA 25980, 

Hinesville-Fort Stewart, Georgia. 

For FY 2008 and subsequent hospice 

wage index values, in cases where there 

is a rural area without rural hospital 

wage data, we will use the average prefloor, pre-reclassified wage index data 

from all contiguous CBSAs to represent 

a reasonable proxy for the rural area. 

This approach meets the criteria that we 

believe would be the best imputed 

proxy for rural areas, which (1) uses prefloor, pre-reclassified hospital data; (2) 

uses the most local data available to 

impute a rural wage index; (3) is easy to 

evaluate; and (4) is easy to update from 

year-to-year. Currently there are no 

hospitals in rural locations in 

Massachusetts and Puerto Rico. 

We interpret the term ‘‘contiguous’’ to 

mean sharing a border. For example, we 

have determined that the borders of 

Dukes and Nantucket counties are 

contiguous with Barnstable and Bristol 

Counties. Therefore, the pre-floor, prereclassified wage index values for the 

counties of Barnstable (CBSA 12700, 

Barnstable Town, MA) and Bristol 

(CBSA 39300, Providence-New BedfordFall River, RI–MA) would be averaged 

resulting in an imputed pre-floor, prereclassified rural wage index for rural 

Massachusetts. Should a similar 

situation arise in the future, we may reexamine this policy. 

As discussed in the proposed rule, as 

there are sufficient economic differences 

between hospitals in the United States 

and those in Puerto Rico, we do not 

believe that this policy would be 

appropriate for Puerto Rico. We also 

noted that as we have not yet identified 

an alternative methodology for imputing 

a wage index for rural Puerto Rico, we 

will continue to evaluate the use of 

other sources. Accordingly, we will 

continue to use the most recent prefloor, pre-reclassified wage index 

previously available for Puerto Rico. 

C. Nomenclature Changes 

This final rule and all subsequent 

hospice rules and notices are considered 

to incorporate the CBSA changes 

published in the most recent OMB 

bulletin that applies to the hospital 

wage data used to determine the current 

hospice wage index. The tables in this 

final rule reflect changes made by these 

bulletins. The OMB bulletins may be 

accessed at http://www.whitehouse.gov/ 

omb/bulletins/index.html. 

D. Payment for Hospice Care Based on 

the Location Where Care Is Furnished 

Effective January 1, 2008, all payment 

rates (routine home care, continuous 

home care, inpatient respite and general 

inpatient care) will be adjusted by the 

geographic wage index value of the area 

where hospice services are provided. In 

other words, the wage component of 

each payment rate is multiplied by the 

wage index value applicable to the 

location in which the hospice services 

are provided. Section 418.302 is 

amended to reflect this change. Hospice 

providers will be required to indicate on 

hospice claims, the CBSA for the 

location where hospice care is provided. 

E. Educational Requirements for Nurse 

Practitioners 

In order to align the hospice 

qualifications for nurse practitioners 

under § 418.3 and Part B nurse 

practitioners under § 410.75, the 

definition of ‘‘attending physician’’ at 

§ 418.3 is revised to cross reference the 

training, education and experience 

requirements described in § 410.75(b). 

F. Caregiver Breakdown and General 

Inpatient Care 

We are not implementing any changes 

regarding the general inpatient level of 

care and caregiver breakdown, but are 

providing clarification of existing 

policy, statute, and hospice regulations. 

The Medicare hospice benefit provides 

for care that is medically reasonable and 

necessary for the palliation and 


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management of terminal and related 

conditions, and is structured in such a 

way to enable the individual with a 

terminal condition to remain at home, 

in the company of family and friends. 

The statute, our regulations at 

§ 418.202(e), and Medicare hospice 

policy require that in order to receive 

payment for general inpatient care 

under the Medicare hospice benefit, 

beneficiaries must require an intensity 

of care directed towards pain control 

and symptom management that cannot 

be managed in any other setting. It is the 

level of care provided to meet the 

individual’s needs that determines 

payment rates for Medicare services. In 

other words, caregiver breakdown 

should not be billed as general inpatient 

care regardless where the services are 

provided, unless the intensity-of-care 

requirement is met. If an individual no 

longer is able to remain at home or if the 

individual’s caregiver is no longer able 

to provide care, and the required care 

does not meet the requirements for 

general inpatient care, the hospice may 

not bill this care at the general inpatient 

level of care. This situation is 

considered to be caregiver breakdown. 

This does not imply or suggest that the 

individual must be discharged from the 

hospice if caregiver breakdown occurs. 

It does mean that the hospice must find 

alternative means for the provision of 

caregiver services, which may include 

payment for room and board, as 

Medicare does not pay for caregiver 

services, nor does it pay for room and 

board. 

G. Certification of Terminal Illness 

We are not making any changes to the 

certification of terminal illness 

requirements. We are clarifying that the 

statute requires that the attending 

physician and the hospice medical 

director, not the admission nurse, 

initially certify the terminal diagnosis 

with a prognosis of six months or less 

if the disease runs its normal course. 

The regulations require that there be 

documentation in the medical record to 

support the initial as well as any 

subsequent certifications. The 

admission nurse may obtain information 

supporting the terminal illness in order 

to allow the attending physician and the 

medical director to have the necessary 

information to make the terminal illness 

determination. But, the determination of 

the terminal illness cannot be delegated 

to an admission nurse or any other 

employee. 

IV. Collection of Information 

Requirements 

This document does not impose any 

information collection and 

recordkeeping requirements. 

Consequently, it need not be reviewed 

by the Office of Management and 

Budget under the authority of the 

Paperwork Reduction Act of 1995 (44 

U.S.C. 35). 

V. Regulatory Impact Analysis 

A. Overall Impact 

We have examined the impacts of this 

final rule as required by Executive 

Order 12866 (September 1993, 

Regulatory Planning and Review), the 

Regulatory Flexibility Act (RFA) 

(September 19, 1980, Pub. L. 96–354), 

section 1102(b) of the Act, the 

Unfunded Mandates Reform Act of 1995 

(Pub. L. 104–4), and Executive Order 

13132. We estimated the impact on 

hospices, as a result of the changes to 

the FY 2008 hospice wage index. As 

discussed previously, the methodology 

for computing the wage index was 

determined through a negotiated 

rulemaking committee and 

implemented in the August 8, 1997 final 

rule (62 FR 42860). This final rule 

updates the hospice wage index in 

accordance with our regulation and that 

methodology, incorporating the CBSA 

designations used in the FY 2007 

hospital wage index data. 

• Table 1 categorizes the impact of 

the FY 2008 wage index values on 

hospices by various geographic and 

provider characteristics. We estimate 

that the total hospice payments will 

increase $2,860,000 as a result of the 

application of the FY 2008 wage index 

values. As discussed in the proposed 

rule as well as in this final rule, the 

impact analysis only reflects the FY 

2008 wage index values. The FY 2008 

hospice payment rates are promulgated 

through administrative issuance and are 

not included in the impact analysis. 

• Table A reflects the FY 2008 wage 

index values for urban areas 

designations. 

• Table B reflects the FY 2008 wage 

index values for rural areas 

designations. 

Executive Order 12866 (as amended 

by Executive Order 13258, which 

merely reassigns responsibility of 

duties) directs agencies to assess all 

costs and benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). A regulatory impact analysis 

(RIA) must be prepared for major rules 

with economically significant effects 

($100 million or more in any one year). 

We have determined that this final rule 

is not an economically significant rule 

under this Executive Order. 

The RFA requires agencies to analyze 

options for regulatory relief of small 

businesses. For purposes of the RFA, 

small entities include small businesses, 

nonprofit organizations, and small 

governmental jurisdictions. Most 

hospices and most other providers and 

suppliers are small entities, either by 

nonprofit status or by having revenues 

of $6.5 million to $31.5 million in any 

one year (for details, see the Small 

Business Administration’s regulation at 

65 FR 69432, that sets forth size 

standards for health care industries). For 

purposes of the RFA, most hospices are 

small entities. As indicated in Table 1 

below, there are 2,956 hospices. 

Approximately 53 percent of Medicare 

certified hospices are identified as 

voluntary, government, or other 

agencies and, therefore, are considered 

small entities. Because the National 

Hospice and Palliative Care 

Organization estimates that 

approximately 79 percent of hospice 

patients are Medicare beneficiaries, we 

have not considered other sources of 

revenue in this analysis. Furthermore, 

the wage index methodology was 

previously determined by consensus, 

through a negotiated rulemaking 

committee that included representatives 

of national hospice associations, rural, 

urban, large and small hospices, multisite hospices, and consumer groups. 

Based on all of the options considered, 

the committee agreed on the 

methodology described in the 

committee statement, and it was 

adopted into regulation in the August 8, 

1997 final rule. In developing the 

process for updating the wage index in 

the 1997 final rule, we considered the 

impact of this methodology on small 

entities and attempted to mitigate any 

potential negative effects. 

In addition, section 1102(b) of the Act 

requires us to prepare a regulatory 

impact analysis if a rule may have a 

significant impact on the operations of 

a substantial number of small rural 

hospitals. This analysis must conform to 

the provisions of section 604 of the 

RFA. For purposes of section 1102(b) of 

the Act, we define a small rural hospital 

as a hospital that is located outside a 

CBSA and has fewer than 100 beds. We 

have determined that this final rule will 

not have a significant impact on the 

operations of a substantial number of 

small rural hospitals. We are not 

preparing an analysis for the RFA 

because we have determined that this 

rule will not have a significant 

economic impact on a substantial 

number of small entities. 


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Section 202 of the Unfunded 

Mandates Reform Act of 1995 also 

requires that agencies assess anticipated 

costs and benefits before issuing any 

rule that may result in expenditures in 

any one year by State, local, and tribal 

governments, in the aggregate, or by the 

private sector, of $120 million or more. 

This final rule is not anticipated to have 

an effect on State, local, or tribal 

governments or on the private sector of 

$120 million or more. 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it promulgates a 

proposed rule (and subsequent final 

rule) that imposes substantial direct 

requirement costs on State and local 

governments, preempts State law, or 

otherwise has Federalism implications. 

We have reviewed this final rule under 

the threshold criteria of Executive Order 

13132, Federalism, and have 

determined that it will not have an 

impact on the rights, roles, and 

responsibilities of State, local, or tribal 

governments. 

In accordance with the provisions of 

Executive Order 12866, this regulation 

was reviewed by the Office of 

Management and Budget. 

B. Anticipated Effects 

As discussed in the proposed rule, we 

are unable to quantify the extent of the 

usage of the general inpatient level of 

care in the event of caregiver 

breakdown. Therefore, we are unable to 

definitively anticipate the impact of our 

clarification of the general inpatient 

level of care policy in the event of 

caregiver breakdown. For this reason, 

we solicited comment on what the 

impact of our clarification might be. We 

did not receive any substantive 

comments on the impact. Based on 

anecdotal evidence as well as 

substantial increases in the number of 

claims submitted for general inpatient 

care, however, we believe a small 

proportion of patient days attributed to 

general inpatient care would be 

appropriately allocated to inpatient 

respite care with this clarification. 

Significant savings could be realized 

even if only a small proportion of 

patient days attributed to general 

inpatient care were allocated to 

inpatient respite care. 

In the proposed rule we cited an 

example to determine the impact. In 

that example, we allocated 5.0 percent 

of general inpatient care days to 

inpatient respite care, using the FY 2005 

patient days, expenditures and number 

of beneficiaries electing the hospice 

benefit to estimate the impact of the 

clarification of existing policy in this 

final rule. The number of inpatient days 

was adjusted from 1,250,678 to 

1,188,144. The number of inpatient 

respite days was adjusted from 96,646 to 

159,180. While inpatient respite 

expenditures increased from 

$14,000,000 to $23,058,570, general 

inpatient care expenditures decreased 

from $737,300,000 to $700,435,000. In 

total, if 5.0 percent of patient days that 

were attributed to general inpatient care 

in FY 2005 were allocated to the 

inpatient respite level of care, it would 

have resulted in net savings of 

$27,806,430. 

The impact analysis of this final rule 

represents the projected effects of the 

changes in the hospice wage index from 

FY 2007 to FY 2008. We estimate the 

effects by estimating payments for FY 

2008 using the FY 2007 wage index 

values while holding all other payment 

variables constant. 

We note that certain events may 

combine to limit the scope or accuracy 

of our impact analysis because such an 

analysis is future oriented and, thus, 

susceptible to forecasting errors due to 

other changes in the forecasted impact 

time period. The nature of the Medicare 

program is such that the changes may 

interact, and the complexity of the 

interaction of these changes could make 

it difficult to predict accurately the full 

scope of the impact upon hospices. 

For the purposes of this final rule, we 

compared estimated payments using the 

FY 1983 hospice wage index to 

estimated payments using the FY 2008 

wage index and determined the hospice 

wage index to be budget neutral. Budget 

neutrality means that, in a given year, 

estimated aggregate payments for 

Medicare hospice services using the FY 

2008 wage index would equal estimated 

aggregate payments that would have 

been made for the same services if the 

1983 wage index had remained in effect. 

Budget neutrality to 1983 does not 

imply that estimated payments would 

not increase since the budget neutrality 

applies only to the wage index portion 

and not the total payment rate, which 

accommodates inflation. 

As discussed above, we use the latest 

claims file available to us to develop the 

impact table when we issue the annual 

yearly wage index update. For the 

purposes of this final rule, data were 

obtained from the National Claims 

History file using FY 2006 claims 

processed through June 2007, which 

was the most recent available data. We 

deleted bills from hospice providers that 

have since closed. For the purposes of 

this final rule, this file is adequate to 

demonstrate the impact of the FY 2008 

wage index values and is not intended 

to project the anticipated expenditures 

for FY 2008. This impact analysis 

compares hospice payments using the 

FY 2007 hospice wage index to the 

estimated payments using the FY 2008 

wage index. We note that estimated 

payments for FY 2008 are determined 

by using the wage index for FY 2008 

and payment rates for FY 2007. We also 

note that the results in the impact 

analysis table (Table 1) in this final rule 

differ from the proposed rule, because 

we have incorporated the most recent 

data to determine the budget neutrality 

adjustment factor. As noted in previous 

sections, payment rates for FY 2008 are 

published through administrative 

issuance. 

Table 1 demonstrates the results of 

our analysis. In column 1 we indicate 

the number of hospices included in our 

analysis. In column 2, we indicate the 

number of routine home care days that 

were included in our analysis, although 

the analysis was performed on all types 

of hospice care. Column 3 estimates 

payments using the FY 2007 wage index 

values and the FY 2007 payment rates. 

Column 4 estimates payments using FY 

2008 wage index values as well as the 

FY 2007 payment rates. Column 5 

compares columns 3 and 4 and shows 

the percentage change in estimated 

hospice payments based on the hospice 

category. 

Table 1 also categorizes hospices by 

various geographic and provider 

characteristics. The first row displays 

the aggregate result of the impact for all 

Medicare-certified hospices. The second 

and third rows of the table categorize 

hospices according to their geographic 

location (urban and rural). Our analysis 

indicated that there are 1,974 hospices 

located in urban areas and 982 hospices 

located in rural areas. The next two 

groupings in the table indicate the 

number of hospices by census region, 

also broken down by urban and rural 

hospices. The sixth grouping shows the 

impact on hospices based on the size of 

the hospice’s program. We determined 

that the majority of hospice payments 

are made at the routine home care rate. 

Therefore, we based the size of each 

individual hospice’s program on the 

number of routine home care days 

provided in FY 2006. The next grouping 

shows the impact on hospices by type 

of ownership. The final grouping shows 

the impact on hospices defined by 

whether they are provider-based or 

freestanding. As indicated in Table 1 

below, there are 2,956 hospices. 

Approximately 53 percent of Medicarecertified hospices are identified as 

voluntary, government, or other 

agencies and, therefore, are considered 

small entities. Because the National 

Hospice and Palliative Care 

Organization estimates that 


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approximately 79 percent of hospice 

patients are Medicare beneficiaries, we 

have not considered other sources of 

revenue in this analysis. Furthermore, 

the wage index methodology was 

previously determined by consensus, 

through a negotiated rulemaking 

committee that included representatives 

of national hospice associations; rural, 

urban, large, and small hospices; multisite hospices; and consumer groups. 

Based on all of the options considered, 

the committee agreed on the 

methodology described in the 

committee statement, and it was 

adopted into regulation in the August 8, 

1997 final rule. In developing the 

process for updating the wage index in 

the 1997 final rule, we considered the 

impact of this methodology on small 

entities and attempted to mitigate any 

potential negative effects. 

As stated previously, the following 

discussions are limited to demonstrating 

trends rather than projected dollars. We 

used the CBSA designations and wage 

indices as well as the data from FY 2006 

claims processed through June 2007 in 

developing the impact analysis. For FY 

2008, the wage index is the variable that 

differs between the FY 2007 payments 

and the FY 2008 estimated payments. 

FY 2007, payment rates are used for 

both FY 2007 actual payments and the 

FY 2008 estimated payments. The FY 

2008 payment rates will be adjusted to 

reflect the full FY 2008 hospital market 

basket, as required by section 

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

previously noted, we publish these rates 

through administrative issuances. 

As discussed in the FY 2006 final rule 

(70 FR 45129), hospice agencies may 

use multiple wage indices to compute 

their payments based on potentially 

different geographic locations. For the 

purposes of this final rule, the location 

of the beneficiary is used for routine and 

continuous home care or the CBSA for 

the location of the hospice agency for 

respite and general inpatient care. As 

noted above, beginning January 1, 2008, 

the wage index utilized will be based on 

the location of the site of service. As the 

location of the beneficiary’s home and 

the location of the facility may vary, 

there will still be variability in 

geographic location. We anticipate that 

the location of the various sites will 

correspond with the geographic location 

of the hospice and thus we will 

continue to use the location of the 

hospice for our analyses. For this 

analysis, we use payments to the 

hospice in the aggregate based on the 

location of the hospice. The impact of 

hospice wage index changes has been 

analyzed according to the type of 

hospice, geographic location, type of 

ownership, hospice base, and size. 

Our analysis shows that most 

hospices are in urban areas and provide 

the vast majority of routine home care 

days. Most hospices are medium-sized 

followed by large hospices. Hospices are 

almost equal in numbers by ownership 

with 1,578 designated as non-profit and 

1,378 as proprietary. The vast majority 

of hospices are freestanding. 

1. Hospice Size 

Under the Medicare hospice benefit, 

hospices can provide four different 

levels of care days. The majority of the 

days provided by a hospice are routine 

home care (RHC) days representing over 

70 percent of the services provided by 

a hospice. Therefore, the number of 

RHC days can be used as a proxy for the 

size of the hospice, that is, the more 

days of care provided, the larger the 

hospice. As discussed in the August 4, 

2005 final rule, we currently use three 

size designations to present the impact 

analyses. The three categories are: small 

agencies having 0 to 3,499 RHC days; 

medium agencies having 3,500 to 19,999 

RHC days; and large agencies having 

20,000 or more RHC days. Using RHC 

days as a proxy for size, our analysis 

indicates that the proposed FY 2008 

wage index values are anticipated to 

have virtually no impact on hospice 

providers, with a slight increase of 0.1 

percent anticipated for medium 

hospices while no change is anticipated 

for small or large hospices. 

2. Geographic Location 

Our analysis demonstrates that the 

proposed FY 2008 wage index values 

will result in little change in estimated 

payments with urban hospices 

anticipated to experience no change 

while rural hospices are anticipated to 

experience a slight increase of 0.3 

percent. For urban hospices, the greatest 

increase of 0.9 percent is anticipated to 

be experienced by the Mountain 

regions, followed by an increase for East 

North Central of 0.7 percent and Pacific 

regions of 0.6 percent. The remaining 

urban regions are anticipated to 

experience a decrease ranging from 0.1 

percent in the West North Central and 

Middle Atlantic regions to 0.6 percent 

in the East South Central region. The 

greatest decrease of 2.4 percent is 

anticipated for Puerto Rico. 

For rural hospices, Puerto Rico is 

anticipated to experience no change. 

Two regions are anticipated to 

experience a decrease of 1.1 percent for 

New England and 0.3 percent for the 

mountain regions. The remaining 

regions are anticipated to experience an 

increase ranging from 0.1 percent for the 

South Atlantic region to 0.6 percent for 

the Middle Atlantic, East South Central 

and West North Central regions. 

3. Type of Ownership 

By type of ownership, non-profit 

hospices are anticipated to experience a 

slight increase of 0.1 percent in payment 

while government hospices are 

anticipated to experience a slight 

increase of 0.2 percent. No change is 

anticipated for proprietary hospices. Not 

specified hospices in the ‘‘other’’

category are anticipated to experience a 

slight decrease of 0.2 percent. 

4. Hospice Base 

No change in payment is anticipated 

for freestanding facilities. Home health, 

hospital, and skilled nursing facilities 

are anticipated to experience an 

increase of 0.1, 0.3, and 0.7 percent, 

respectively. 

TABLE 1.—IMPACT OF HOSPICE WAGE INDEX CHANGE

Number of 

Hospices 

Number of 

Routine Home 

Care Days in 

Thousands 

Payments 

using FY 2007 

Wage Index in 

Thousands 

Estimated 

Payments 

using FY 2008 

CBSA Wage 

Index in Thousands 

Percent 

Change in 

Hospice Payments 

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

ALL HOSPICES: .................................................................. 2956 61,125 9,148,694 9,151,554 0.0 

URBAN HOSPICES ...................................................... 1974 52,426 8,048,410 8,048,224 0.0 

RURAL HOSPICES ...................................................... 982 8,699 1,100,284 1,103,330 0.3 

BY REGION—URBAN: 

NEW ENGLAND ........................................................... 112 1,772 313,059 311,816 ¥0.4 


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TABLE 1.—IMPACT OF HOSPICE WAGE INDEX CHANGE—Continued 

Number of 

Hospices 

Number of 

Routine Home 

Care Days in 

Thousands 

Payments 

using FY 2007 

Wage Index in 

Thousands 

Estimated 

Payments 

using FY 2008 

CBSA Wage 

Index in Thousands 

Percent 

Change in 

Hospice Payments 

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

MIDDLE ATLANTIC ...................................................... 198 5,211 843,068 842,000 ¥0.1 

SOUTH ATLANTIC ....................................................... 285 11,385 1,839,567 1,831,476 ¥0.4 

EAST NORTH CENTRAL ............................................. 294 7,568 1,158,628 1,166,376 0.7 

EAST SOUTH CENTRAL ............................................. 157 4,333 586,642 583,333 ¥0.6 

WEST NORTH CENTRAL ............................................ 151 3,413 471,129 470,666 ¥0.1 

WEST SOUTH CENTRAL ............................................ 336 7,113 1,007,361 1,002,636 ¥0.5 

MOUNTAIN ................................................................... 182 4,531 702,881 709,230 0.9 

PACIFIC ........................................................................ 225 6,302 1,054,910 1,061,223 0.6 

PUERTO RICO ............................................................. 34 797 71,165 69,468 ¥2.4 

BY REGION—RURAL: 

NEW ENGLAND ........................................................... 26 144 21,134 20,910 ¥1.1 

MIDDLE ATLANTIC ...................................................... 43 408 52,441 52,765 0.6 

SOUTH ATLANTIC ....................................................... 124 1,840 238,972 239,136 0.1 

EAST NORTH CENTRAL ............................................. 140 1,125 146,434 146,747 0.2 

EAST SOUTH CENTRAL ............................................. 142 1,982 240,058 241,528 0.6 

WEST NORTH CENTRAL ............................................ 188 944 120,343 121,061 0.6 

WEST SOUTH CENTRAL ............................................ 163 1,307 153,527 153,934 0.3 

MOUNTAIN ................................................................... 103 576 74,972 74,718 ¥0.3 

PACIFIC ........................................................................ 52 365 51,809 51,936 0.2 

PUERTO RICO ............................................................. 1 7 595 595 0.0 

ROUTINE HOME CARE DAYS: 

0–3499 DAYS (small) ................................................... 617 1,060 142,491 142,458 0.0 

3500–19,999 DAYS (medium) ...................................... 1429 14,208 1,994,694 1,996,162 0.1 

20,000+ DAYS (large) .................................................. 910 45,856 7,011,509 7,012,935 0.0 

TYPE OF OWNERSHIP: 

VOLUNTARY ................................................................ 1220 27,555 4,270,787 4,274,723 0.1 

PROPRIETARY ............................................................ 1378 30,166 4,380,444 4,379,751 0.0 

GOVERNMENT ............................................................ 193 986 133,503 133,745 0.2 

OTHER ......................................................................... 165 2,417 363,960 363,335 ¥0.2 

HOSPICE BASE: 

FREESTANDING .......................................................... 1767 45,209 6,752,227 6,750,239 0.0 

HOME HEALTH AGENCY ........................................... 620 9,105 1,369,110 1,370,605 0.1 

HOSPITAL .................................................................... 555 6,606 994,451 997,560 0.3 

SKILLED NURSING FACILITY .................................... 14 205 32,906 33,149 0.7 

Note: FY 2007 payment rates were used for estimated payments for FY 2008. FY 2008 payment rates will be adjusted to reflect the full hospital market basket and will be promulgated through administrative issuance. 

C. Conclusion 

Our impact analysis compared the FY 

2007 wage index to the estimated 

payments using the FY 2008 wage 

index. Through the analysis, we 

estimate that total hospice payments, 

based on the FY 2008 wage index 

values, will effectively be budget neutral 

with an estimated increase from FY 

2007 of $2,860,000. As discussed, the 

budget neutrality adjustment factor is 

determined by using the pre-floor, prereclassified hospital wage data. The 

impact analysis compares the wage 

index values, which have had either the 

budget neutrality adjustment factor or 

the hospice floor applied. Additionally, 

we compared estimated payments using 

the FY 1983 hospice wage index to 

estimated payments using the FY 2008 

wage index and determined the current 

hospice wage index to be budget 

neutral, as required by the negotiated 

rulemaking committee. As noted above, 

the payment rates used reflect the FY 

2007 rates. The FY 2008 payment rates 

will be adjusted to reflect the full FY 

2008 hospital market basket, as required 

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

Act. We publish these rates through 

administrative issuances. 

In accordance with the provisions of 

Executive Order 12866, this regulation 

was reviewed by the Office of 

Management and Budget. 

List of Subjects for 42 CFR Part 418 

Health facilities, Hospice care, 

Medicare, Reporting and recordkeeping 

requirements. 

■ For the reasons set forth in the 

preamble, the Centers for Medicare & 

Medicaid Services amends 42 CFR 

Chapter IV as set forth below: 

PART 418—HOSPICE CARE 

■ 1. The authority citation for part 418 

continues to read as follows: 

Authority: Secs. 1102 and 1871 of the 

Social Security Act (42 U.S.C. 1302 and 

1395hh). 

Subpart A—General Provision and 

Definitions 

■ 2. Section 418.3 is amended by 

revising paragraph (1)(ii) in the 

definition of ‘‘attending physician’’ to 

read as follows: 

§ 418.3 Definitions. 

* * * * * 

(1) * * * 

(ii) Nurse practitioner who meets the 

training, education, and experience 

requirements as described in § 410.75 

(b) of this chapter. 

* * * * * 


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Subpart G—Payment for Hospice Care 

■ 3. Section 418.302 is amended by 

revising paragraph (g) to read as follows: 

§ 418.302 Payment procedures for hospice 

care. 

* * * * * 

(g) Payment for routine home care, 

continuous home care, general inpatient 

care and inpatient respite care is made 

on the basis of the geographic location 

where the services are provided. 

(Catalog of Federal Domestic Assistance 

Program No. 93.773, Medicare—Hospital 

Insurance; and Program No. 93.774, 

Medicare—Supplementary Medical 

Insurance Program) 

(Catalog of Federal Domestic Assistance 

Program No. 93.778, Medical Assistance 

Program) 

Dated: July 19, 2007. 

Leslie V. Norwalk, 

Acting Administrator, Centers for Medicare 

& Medicaid Services. 

Approved: August 17, 2007. 

Michael O. Leavitt, 

Secretary. 

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[FR Doc. 07–4292 Filed 8–30–07; 8:45 am] 

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