1 CMS-1609-F DEPARTMENT OF HEALTH AND HUMAN SERVICES Centers for Medicare & Medicaid Services 42 CFR Parts 405 and 418 [CMS-1609-F] RIN 0938-AS10 Medicare Program; FY 2015 Hospice Wage Index and Payment Rate Update; Hospice Quality Reporting Requirements and Process and Appeals for Part D Payment for Drugs for Beneficiaries Enrolled in Hospice AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS. ACTION: Final rule. SUMMARY: This final rule will update the hospice payment rates a nd the wage index for fiscal year (FY) 2015 and continue the phase-out of th e wage index budget neutra lity adjustment factor (BNAF). This rule provides an update on hospice payment reform analyses, potential definitions of “terminal illness” and “related conditions,” and information on potential processes and appeals for Part D payment for drugs while beneficiaries are under a hospice election. This rule will specify timeframes for filing the notice of el ection and the notice of termination/revocation; add the attending physician to the hospice election form, and require hospices to document changes to the attending physicia n; require hospices to complete their hospice aggregate cap determinations within 5 months after the cap year ends, and remit any overpayments; and update the hospice quality reporting program. In addition, this rule will provide guidance on determining hospice eligibility; information on the delay in the implementation of the International Classification of Diseases, 10th Revision, Clinical Modifi cation (ICD-10-CM); and2 CMS-1609-F will further clarify how hospices are to report diagnoses on hos pice claims. Finally, the rule will make a technical regulations text change. DATES: Effective Date : These regulations are effective on October 1, 2014. FOR FURTHER INFORMATION CONTACT: Debra Dean-Whittaker, (410) 786 -0848 for questions regarding the CAHPS® Hospice Survey. Roxanne Dupert-Frank, (410) 786-9667 for questions regarding the hospice quality reporting
program. Deborah Larwood, (410) 786-9500 for questions re garding process and appeals for Part D payment for drugs while benefici aries are under a hospice election. Owen Osaghae, (410) 786-7550 for questions regarding the hospice inpatient and aggregate cap determinations. For general questions about hospice payment policy, please send your inquiry via email to: hospicepolicy@cms.hhs.gov

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SUPPLEMENTARY INFORMATION: Wage index addenda will be available only th rough the internet on the CMS Web site at: ( http://www.cms.gov/Medicare /Medicare-Fee-for-Service -Payment/Hospice/index.html .) Readers who experience any problems accessing any of the wage index a ddenda related to the hospice payment rules that are posted on the CM S Web site identified above should contact Hillary Loeffler at 410-786-0456. Table of Contents I. Executive Summary A. Purpose B. Summary of the Major Provisions3 CMS-1609-F C. Summary of Impacts II. Background A. Hospice Care B. History of the Medi care Hospice Benefit C. Services Covered by the Medicare Hospice Benefit D. Medicare Payment for Hospice Care 1. Omnibus Budget Reconciliation Act of 1989 2. Balanced Budget Act of 1997 3. FY 1998 Hospice Wage Index Final Rule 4. FY 2010 Hospice Wage Index Final Rule 5. The Affordable Care Act 6. FY 2012 Hospice Wage Index Final Rule E. Trends in Medicare Hospice Utilization III. Provisions of the Proposed Rule and Responses to Comments A. Hospice Payment Reform: Research and Analyses 1. Beneficiaries Dying Without Skilled Visits in the Last Days of Life 2. General Inpatient Care, Con tinuous Home Care, and Inpatient Respite Care Utilization
3. Hospice Live Discharges 4. Non-hospice Spending for Hospice Beneficiaries During an Election B. Solicitation of Comments on De finitions of “Terminal Illness” and “Related Conditions” 1. The Development of the Medicare Hospice Benefit 2. Legislative History of th e Medicare Hospice Benefit 3. Hospice Care Today4 CMS-1609-F 4. Definition of “Terminal Illness” 5. Definition of “Related Conditions”
C. Guidance on Determining Beneficiaries’ Eligibility D. Timeframe for Hospice Cap Determ inations and Overpayment Remittances E. Timeframes for Filing the Notice of El ection and Notice of Termination/Revocation 1. Timeframe for Filing the Notice of Election 2. Timeframe for Filing the Notice of Termination/Revocation F. Addition of the Attending Phys ician to the Hospice Election Form G. FY 2015 Hospice Wage Index and Rates Update 1. FY 2015 Hospice Wage Index 2. FY 2015 Wage Index with an Additional 15 Pe rcent Reduced Budget Neutrality Adjustment Factor (BNAF) 3. Hospice Payment Update Percentage 4. FY 2015 Hospice Payment Rates H. Updates to the Hospice Quality Reporting Program 1. Background and Statutory Authority
2. Measures for Hospice Quality Reporting Program and Data Submission Requirements for Payment Years FY 2014 and FY 2015 3. Quality Measures for Hospice Quality Reporting Program and Data Submission Requirements for Payment Year FY 2016 and Beyond 4. Future Measure Development 5. Public Availability of Data Submitted 6. Adoption of the CAHPS® Hospice Survey for the FY 2017 Payment Determination5 CMS-1609-F a. Background and Description of the Survey b. Participation Requirements to Meet Quality Reporting Requirements for the FY 2017 APU c. Participation Requirements to Meet Qu ality Reporting Requirements for the FY 2018 APU d. Vendor Participation Requirements for the 2017 APU e. Annual Payment Update f. CAHPS® Hospice Survey Oversight Activities 7. Procedures for Payment Year 2016 and Subsequent Years I. Solicitation of Comments on Coordination of Benefits Process and Appeals for Part D Payment for Drugs While Beneficiar ies are Under a Ho spice Election 1. Part D Sponsor Coordination of Payment with Hospice Providers 2. Solicitation of Comments on Hospice Coordi nation of Payment with Part D Sponsors and Other Payers 3. Beneficiary Rights and Appeals J. Update on the International Classification of Diseases, 10th Revisi on, Clinical Modification (ICD-10-CM) and Coding Guidelines for Hospice Claims Reporting 1. International Classification of Diseases, 10t h Revision, Clinical M odification (ICD-10-CM) 2. Coding Guidelines for Hospice Claims Reporting K. Technical Regulatory Text Change IV. Collection of Information Requirements A. Changes Related to Hospice Payment Policy 1. Changes to the Election Statement (§418.24) 2. Changes to Aggregate Cap De termination Reporting (§418.308) B. CAHPS® Hospice Survey6 CMS-1609-F V. Regulatory Impact Analysi s A. Statement of Need B. Introduction C. Overall Impact 1. Detailed Economic Analysis a. Effects on Hospices b. Hospice Size c. Geographic Location d. Type of Ownership e. Hospice Base f. Effects on Other Providers g. Effects on the Medicare and Medicaid Programs h. Alternatives Considered i. Accounting Statement j. Conclusion 2. Regulatory Flexibility Act Analysis 3. Unfunded Mandates Reform Act Analysis VI. Federalism Analysis and Regulations Text Acronyms Because of the many terms to which we refer by acronym in this final rule, we are listing the acronyms used and their corresponding meanings in al phabetical order below: ACA Affordable Care Act APU Annual Payment Update7 CMS-1609-F BBA Balanced Budget Act of 1997 BIPA Benefits Improveme nt and Protection Act of 2000 BNAF Budget Neutrality Adjustment Factor BLS Bureau of Labor Statistics CAHPS® Consumer Assessment of H ealthcare Providers and Systems CBSA Core-Based Statistical Area CCW Chronic Conditions Data Warehouse CFR Code of Federal Regulations CHC Continuous Home Care CMS Centers for Medicare & Medicaid Services COPD Chronic Obstructive Pulmonary Disease CoPs Conditions of Participation CR Change Request CVA Cerebral Vasc ular Accident CWF Common Working File CY Calendar Year DDE Direct Data Entry DME Durable Medical Equipment DRG Diagnosis Related Group DTRR Daily Transaction Reply Report ED Emergency Department FEHC Family Evaluation of Hospice Care FR Federal Register8 CMS-1609-F FY Fiscal Year GAO Government Accountability Office GIP General Inpatient Care HCFA Healthcare Financing Administration HHS Health and Human Services HIPAA Health Insurance Portab ility and Accountability Act HIS Hospice Item Set HQRP Hospice Quality Reporting Program IACS Individuals Authorized A ccess to CMS Computer Services ICD-9-CM International Classification of Di seases, Ninth Revision, Clinical Modification ICD-10-CM International Classification of Di seases, Tenth Revision, Clinical Modification ICR Information Collection Requirement IDG Interdisciplinary Group IPPS Inpatient Prospective Payment System IRC Inpatient Respite Care LCD Local Coverage Determination MAC Medicare Administrative Contractor MAP Measure Applications Partnership MedPAC Medicare Payment Advisory Commission MFP Multi-factor Productivity MSA Metropolitan Statistical Area NCPDP National Council for Prescription Drug Programs NHPCO National Hospice and Palliative Care Organization9 CMS-1609-F NF Long Term Care Nursing Facility NOE Notice of Election NOTR Notice of Termination/Revocation NP Nurse Practitioner NPI National Provider Identifier NQF National Quality Forum OIG Office of the Inspector General OACT Office of the Actuary OIG Office of Inspector General OMB Office of Management and Budget ONC Office of the National Coordina tor for Health Information Technology PA Prior Authorization PBM Pharmacy Benefit Manager PDE Prescription Drug Event PRA Paperwork Reduction Act PRRB Provider Reimbursement Review Board PS&R Provider Statistical and Reimbursement Report Pub. L Public Law QAPI Quality Assessment and Performance Improvement QIO Quality Improvement Organization QRP Quality Reporting Program RFA Regulatory Flexibility Act RHC Routine Home Care10 CMS-1609-F SAF Standard Analytic File SBA Small Business Administration SNF Skilled Nursing Facility TEFRA Tax Equity and Fiscal Responsibility Act of 1982 TEP Technical Expert Panel TrOOP True Out-of-Pocket U.S.C. United States Code I. Executive Summary A. Purpose This final rule will update the payment rate s for hospices for fiscal year (FY) 2015 as required under section 1814(i) of the Social Security Act (the Ac t), based on the hospital market basket update, less reductions mandated for hospi ces by the Patient Protection and Affordable Care Act (Pub. L 111-148) as amended by the Hea lth Care and Education Reconciliation Act (Pub. L 111-152) (the Affordable Care Act). This final rule also will update the hospice wage index using updated hospital wage index data, and will apply the 6th year of the 7-year Budget Neutrality Adjustment Factor (B NAF) phase-out. In addition, s ection 3004(c) of the Affordable Care Act established a quality reporting progr am for hospices. Starting in FY 2014, hospices that failed to meet quality re porting requirements received a two percentage point reduction to their market basket update. The Affordable Care Act also requires the Secretary to implement revisions to the hospice payment methodology no earlier than Octobe r 1, 2013; as such, this final rule updates the public on our hospice payment reform activities. This fina l rule also discusses potential definitions of “terminal illness” and “r elated conditions,” and information on potential processes and appeals for Part D payment for drugs while beneficiaries are under a hospice11 CMS-1609-F election. This rule will specify the timeframes for filing the hospice no tice of election and the notice of termination/revocation; will require th at the attending physicia n be identified on the hospice election form and will require changes in the attending physician be documented; will require expedited hospice self-reporting of thei r aggregate cap determin ations; and will provide updates to the hospice quality reporting program. Additionally, this rule provides guidance on determining a patient’s eligibility for hospice; discusses the delay in the implementation of the International Classification of Diseases, 10t h Revision, Clinical M odification (ICD-10-CM); clarifies how hospices will report diagnoses, in accordance with current ICD-9-CM guidelines, on hospice claims; and will make a technical regulations text change. B. Summary of the Major Provisions In section III.A of this final rule, we provi de information on hospice behavior and trends that raises program integrity c oncerns, including reform analyses related to beneficiaries dying without skilled visits at the e nd of life; utilization of General Inpatient Care (GIP), Continuous Home Care (CHC), or Inpatient Respite Care (IRC); live discharges; and non-hospice spending for hospice beneficiaries during a hospice election. The findings di scussed raise questions about whether some hospices are operating within th e intent of the Medicare Hospice benefit established by the Congress. In 2010, section 3132(a) of the Affordable Care Act amended section 1814(i)(6) of the Act to authorize the Secretary of the De partment of Health and Human Services (the Secretary) to collect additional data and information determined appropriate to revise payments for hospice care (no earlier than October 1, 2013) and for other purposes. An initial step of hospice payment reform is to clarify hospice payment policy, and when necessary, to enforce policies to safeguard benefici aries and the Medicare hospice benefit. In response to the concerning trends and comments received in response to prior12 CMS-1609-F rulemaking, in section III.B, we solicited commen ts on the definitions of “terminal illness” and “related conditions” to strengthen and clarify the current concepts of ho listic and comprehensive hospice care under the Medicare hospice benefi t. In addition, we solicited comments on processes that Part D plan sponsors could us e to coordinate with Medicare hospices in determining coverage of drugs for hospice bene ficiaries and resolving disagreements between the parties. We provide guidance on determin ing the beneficiary’s eligib ility for hospice in section
III.C. In section III.D, we will require that hospices complete their aggregate cap determination using a pro-forma spreadsheet and payment data not earlier than 3 months after the cap year end, to determine their cap overpayment no later than 5 months after the cap year, and remit any overpayments at that time. Given concerns about hospices’ increas ingly exceeding their aggregate cap, along with the increases in the av erage overpayment per be neficiary, we believe that this procedural change is necessary to better safegua rd the Medicare Trust Fund. In section III.E, we will require hospices to f ile both the notice of election (NOE) and the notice of termination/revocation (NOTR) on behalf of beneficiaries w ithin 5 calenda r days after the effective date of election or of discharge/ revocation, respectively. If an NOE is not filed timely, the days from the effective date of election to the date of filing the NOE will be the financial responsibility of the hospice. We will al low a waiver of this consequence of late-filing an NOE in certain exceptional circumstances. In section III.F, we will require the hosp ice to identify the attending physician on the election form and to document cha nges to the attending physician. This final rule will update the hospice wage index with more current wage data, and the13 CMS-1609-F BNAF will be reduced by an additional 15 perc ent for a total cumulative BNAF reduction of 85 percent as described in section III.G.2. The total BNAF phase- out will be complete by FY 2016. This final rule will also update the hosp ice payment rates for FY 2015 by 2.1 percent as described in section III.G.3. In section III.H of this final rule, we di scuss updates to the hosp ice quality reporting program, including participation requirements for CY 2015 regarding the CAHPS® Hospice Survey, and remind the hospice industry that last year we set the July 1, 2014 implementation date for the Hospice Item Set and the Janua ry 1, 2015 implementation date for the CAHPS® Hospice Survey. More than seven new quality measures will be derived from these tools; therefore, no new measures were proposed this year. Section I II.H of this rule also will make changes related to the reconsideration process, extraordinary ci rcumstance extensions or exemptions, and hospice quality reporting program (HQRP) eligibility re quirements for newly certified hospices. In section III.I, we solicit comments on proce sses that Part D plan sponsors could use to coordinate with Medicare hospices in determinin g coverage of drugs for hospice beneficiaries and resolving disagreement s between the parties. In section III.J, we discuss the delay in the implementation of the International Classification of Diseases, 10th Revision, C linical Modification (IC D-10-CM) and clarify appropriate diagnosis reporting on hospice claims per ICD-9-CM Coding Guidelines. Claims will be returned to the provider if the claim listed a non-specific symptom diagnosis as the principal hospice diagnosis. Finally, we will make a technical regulations text change in section III.K pertaining to the definition of “social worker”.14 CMS-1609-F C. Summary of Impacts Table 1: Impact Summary Table Provision Description Transfers FY 2015 Hospice Wage Index and Payment Rate Update The overall economic impact of this final rule is estimated to be $230 million in increased payments to hospices during FY 2015. Provision Description Total Costs New Quality Reporting Requirements for Hospices (FY 2015) and Aggregate cap Filing Requirements $8.85 million

II. Background A. Hospice Care Hospice care is an approach to treatment th at recognizes that the impending death of an individual warrants a change in th e focus from curative care to pall iative 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 interdisciplinar y approach to deliver medical, nursing, social, psychological, emotional, and spiritual services through use of a broad spectrum of professionals and other caregivers, with the goal of making the individual as physically and emotionally comfortable as possible. Hospi ce is compassionate patient and family-centered care for those who are terminally ill. It is a comprehensive, ho listic approach to treatment that recognizes that the impending death of an individual necessitate s a change from curative to palliative care. Medicare regulations define palliative care as “patient and family-centered care that optimizes quality of life by an ticipating, preventing, and treati ng suffering.” Palliative care throughout the continuum of illness involves addre ssing physical, intellectual, emotional, social, and spiritual needs and to facilitate patient autonomy, access to information, and choice (42 CFR15 CMS-1609-F 418.3). Palliative care is at th e core of hospice philosophy and care practices, and is a critical component of the Medicare hospice benefit. As stated in the June 5, 2008 Hospice Conditions of Participation final rule (73 FR 32088), palliative ca re is an approach that “optimizes quality of life by anticipating, preventing, and tr eating suffering.” The goal of palliative care in hospice is to improve the quality of life of individuals, and th eir families, facing the issues associated with a life-threatening illne ss through the prevention and relief of suffering by means of early identification, assessment and treatment of pain and other issues. This is achieved by the hospice interdisciplinary team working with the patient and family to develop a comprehensive care plan focused on coordinating care servic es, reducing unnecessary diagnostics or ineffective therapies, and offering ongoing conversations with individu als and their families about changes in the disease. It is expected that this comprehens ive care plan will shif t over time to meet the changing needs of the patient and family as the individual approaches the end-of-life. Medicare hospice care is pa lliative care for individuals with a prognosis of living 6 months or less if the terminal illness runs its normal course. As generally accepted by the medical community, the term “terminal illness” refers to an advanced and progressively deteriorating illness, and that th e illness is diagnosed as incu rable (see section III.B for a discussion). When an individual is termina lly ill, many health problems are brought on by underlying condition(s), as bodily systems are interdependent. In the June 5, 2008 Hospice Conditions of Participation final rule (73 FR 32088), we stated that “the medical director must consider the primary terminal condition, relate d diagnoses, current subjective and objective medical findings, current medica tion and treatment orders, and information about unrelated conditions when considering the initial ce rtification of the terminal illness.” As referenced in our regulations at §418.22(b)(1), to be eligible for Medicare hospice services, the patient’s attending16 CMS-1609-F physician (if any) and the hospice medical director must certify that the in dividual is terminally ill, that is, the individual’s prognosis is for a life expectancy of 6 months or less if the terminal illness runs its normal course as defined in sec tion 1861(dd)(3)(A) of the Act and our regulations at §418.3. The certification of termin al illness must include a brie f narrative explanation of the clinical findings that supports a life expectancy of 6 months or less as part of the certification and recertification forms, as stated in §418.22(b)(3). The goal of hospice care is to make the hos pice patient as physically and emotionally comfortable as possible, with mi nimal disruption to normal activities, while remaining primarily in the home environment. Hospice care uses an interdisciplinary approa ch to deliver medical, nursing, social, psychological, emotional, and sp iritual services thr ough the use of a broad spectrum of professional and other caregivers an d volunteers. While the goal of hospice care is to allow for the individual to remain in his or her home environment, circumstances during the end-of-life may necessitate short- term inpatient admission to a hospi tal, skilled nursing facility (SNF), or hospice facility for procedures necessary for pain control or acute or chronic symptom management that cannot be managed in any other setting. These acute hospice care services are to ensure that any new or wors ening symptoms are intensively a ddressed so that the individual can return to his or her home environment under a home level of care. Short-term, intermittent, inpatient respite services are also available to the family of the hospice patient when needed to relieve the family or other caregivers. Add itionally, an individual can receive continuous home care during a period of crisis in which an indivi dual requires primarily continuous nursing care to achieve palliation or management of acute medical symptoms so that the individual can remain at home. Continuous home care may be covered on a continuous basis for as much as 24 hours a day, and these periods must be predominantly nursing care per our re gulations at §418.204. A17 CMS-1609-F minimum of 8 hours of nursing, or nursing and aide , care must be furnished on a particular day to qualify for the continuous home care rate (§418.302(e)(4)). Hospices are expected to comply with all civil rights laws, incl uding the provision of auxiliary aids and services to ensure effective communication w ith patients or patient care representatives with disabiliti es consistent with Section 504 of the Rehabilitation Act of 1973 and the Americans with Disabilities Act, and to provide language access for such persons who are limited in English proficiency, consistent with Title VI of the Civil Rights Act of 1964. Further information about these requirements may be found at http://www.hhs.gov/ocr/civilrights

. B. History of the Medicare Hospice Benefit Before the creation of the Medicare hospi ce benefit, hospice was originally run by volunteers who cared for the dying. During the early development stages of the Medicare hospice benefit, hospice advocates we re clear that they wanted a Medicare benefit available that provided all-inclusive care for terminally-ill individuals, provi ded pain relief and symptom management, and offered the opportunity to die with dignity in the comfort of one’s home rather than in an institutional setting. 1 As stated in the August 22, 1983 proposed rule entitled “Medicare Program; Hospice Care” (48 FR 38146), “the hospice experience in the United States has placed emphasis on home care. It offers physician services, specialized nursing services, and other forms of care in the home to enable the te rminally ill individual to remain at home in the

1 Connor, Stephen. (2007). Development of Hospice and Palliative Care in the United States. OMEGA. 56(1), p89-99.18 CMS-1609-F company of family and friends as long as possi ble.” The concept of a patient “electing” the hospice benefit and being certified as terminally ill were two key components in the legislation responsible for the creation of the Medicare Hosp ice Benefit (section 122 of the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA), (P ub. L. 97-248)). Section 122 of TEFRA created the Medicare Hospice Benefit, which was impl emented on November 1, 1983. Under sections 1812(d) and 1861(dd) of the Social Security Act (t he Act), codified at 42 U.S.C. 1395d(d) and 1395x(dd), we provide coverage of hospice care for terminally ill Medicare beneficiaries who elect to receive care from a Medicare-certified hospice. Our regulati ons at §418.54(c) stipulate that the comprehensive hospice assessment must identify the patient’s physical, psychosocial, emotional, and spiritual needs re lated to the terminal illness a nd related conditions, and address those needs in order to promote the hospice patie nt’s well-being, comfort, and dignity throughout the dying process. The comprehensive assessmen t must take into consideration the following factors: the nature and cond ition causing admission (including th e presence or lack of objective data and subjective complaints); complications and risk factors that affect care planning; functional status; imminence of death; and severity of sympto ms (§418.54(c)). The Medicare hospice benefit requires the hospi ce to cover all reasonable and n ecessary palliative care related to the terminal prognosis and related conditions, as described in the patient’s plan of care. The December 16, 1983 Hospice final rule (48 FR 56008) requires hospices to cover care for interventions to manage pain and symptoms. C linically, related conditions are any physical or mental conditions that are related to or caused by either the terminal illness or the medications used to manage the terminal illness. 2 See section III.B of this final rule for a discussion on a

2 Harder, PharmD, CGP, Julia. (2012). To Cover or Not To Cover: Guidelines for Covered Medications in Hospice Patients. The Clinician. 7(2), p1-3.19 CMS-1609-F possible Medicare hospice definition of “relat ed conditions.” Additionally, the hospice Conditions of Participation at §418. 56(c) require that the hospice must provide all reasonable and necessary services for the pallia tion and management of the term inal illness, related conditions and interventions to manage pain and symptoms . Therapy and interventions must be assessed and managed in terms of providing palliation and comfort without undue symptom burden for the hospice patient or family. 3 For example, a hospice patient with lung cancer (the principal terminal diagnosis) may receive inhalants for sh ortness of breath (related to the terminal condition). The patient may also suffer from metastatic bone pain (a related condition) and will be treated with opioid analgesics. As a result of the opioid therapy, the patient may suffer from constipation (a related condition) and require a laxative for symptom relief. It is often not a single diagnosis that represents th e terminal prognosis of the patie nt, but the combined effect of several conditions, which could include not only the physical, but the emotional, psychosocial and spiritual, that makes the patient’s condition terminal. In the December 16, 1983 Hospice final rule (48 FR 56010 through 560 11), regarding what is relate d versus unrelated to the terminal illness, we stated: “...we believe that the unique physical condition of each terminally ill individual makes it necessary for these decisions to be made on a case–by-case basis. It is our general view that hospices are required to prov ide virtually all the care that is needed by terminally ill patients.” Therefore, unless there is clear evidence that a condition is unrelated to the terminal prognosis, all services will be considered related. It is also the responsibility of the hospice physician to document why a patient’s medi cal needs will be unrelated to the terminal prognosis.

3 Paolini, DO, Charlotte. (2001). Symptoms Management at End of Life. JAOA. 101(10). p609-615.20 CMS-1609-F As stated in the December 16,1983 Hospice final rule, the fundamental premise upon which the hospice benefit was designed was the “revocation” of traditional curative care and the “election” of hospice care for end-of-life sympto m management and maximization of quality of life (48 FR 56008). After electing ho spice care, the patient typically returns to the home from an institutionalized setting or remains in the home, to be surrounded by family and friends, and to prepare emotionally and spiritually for death while receiving expert symptom management and other supportive services. Electi on of hospice care also includes waiving the right to Medicare payment for curative treatment for the terminal prognosis, and instead receiving palliative care to manage pain or symptoms. The benefit was originally designed to cover hospice care for a finite period of time that roughly corresponded to a life expectancy of 6 mont hs or less. Initiall y, beneficiaries could receive three election pe riods: two 90-day periods and one 30 -day period. Currently, Medicare beneficiaries can elect hospice care for tw o 90-day periods and an unlimited number of subsequent 60-day periods; howev er, the expectation remains that beneficiaries have a life expectancy of 6 months or less if the terminal illness runs its normal course. C. Services Covered by the Medicare Hospice Benefit One requirement for coverage under the Me dicare Hospice Benefit is that hospice services must be reasonable and necessary for the palliation and management of the terminal illness and related conditions. Section 1861(dd)(1) of the Act establishes the services that are to be rendered by a Medicare certified hospice prog ram. These covered services include: nursing care; physical therapy; occupati onal therapy; speech-language pa thology therapy; medical social services; home health aide serv ices (now called hospice aide services); physician services; homemaker services; medical supplies (includi ng drugs and biologics); medical appliances;21 CMS-1609-F counseling services (including dietary counselin g); short-term inpatient care (including both respite care and procedures necessary for pain control and acut e or chronic symptom management) in a hospital, nursing facility, or ho spice inpatient facility ; continuous home care during periods of crisis and only as necessary to maintain the terminally ill individual at home; and any other item or service which is specified in the plan of care and for which payment may otherwise be made under Medicare, in acco rdance with Title XVIII of the Act. Section 1814(a)(7)(B) of the Act requires that a written plan for pr oviding hospice care to a beneficiary who is a hospice patient be esta blished before care is provided by, or under arrangements made by, that hospice program and that the written plan be periodically reviewed by the beneficiary’s attending physician (if any), the hospice medical director, and an interdisciplinary group (described in section 1861 (dd)(2)(B) of the Act). The services offered under the Medicare hospice benefit must be availa ble, as needed, to be neficiaries 24 hours a day, 7 days a week (section 1861(dd)(2 )(A)(i) of the Act). Upon th e implementation of the hospice benefit, the Congress expected hospices to co ntinue to use volunteer services, though these services are not reimbursed by Medicare (see Section 1861(dd)(2)(E) of the Act and (48 FR 38149)). As stated in the August 22, 1983 Hospice proposed rule, the hosp ice interdisciplinary group should be comprised of paid hospice empl oyees as well as hospice volunteers (48 FR 38149). This expectation is in line with th e history of hospice and philosophy of holistic, comprehensive, compassionate, end-of-life care. Before the Medicare hospice benefit wa s established, the Congress requested a demonstration project to test the feasibility of covering hospice care under Medicare. The National Hospice Study was initiated in 1980 th rough a grant sponsored by the Robert Wood Johnson and John A. Hartford Foundations a nd CMS (then, the Health Care Financing22 CMS-1609-F Administration (HCFA)). The demonstration project was conducted between October 1980 and March 1983. The project summarized the hos pice care philosophy as the following:

• Patient and family know of the terminal condition.

• Further medical treatment and interventi on are indicated only on a supportive basis.

• Pain control should be available to patients as needed to prevent rather than to just ameliorate pain.

• Interdisciplinary teamwork is essential in caring for patient and family.

• Family members and friends should be act ive in providing support during the death and bereavement process.

• Trained volunteers should provide additional support as needed. The cost data and the findings on what services hospices provided in the demonstration project were used to design the Medica re hospice benefit. The identified hospice services were incorporated into the service requirements unde r the Medicare hospice benefit. Importantly, in the August 22, 1983 hospice proposed rule, we stated “the hospice benefit and the resulting Medicare reimbursement is not intended to di minish the voluntary sp irit of hospices” (48 FR 38149). D. Medicare Payment for Hospice Care Sections 1812(d), 1813(a)(4), 1814(a)(7), 1814 (i), and 1861(dd) of the Act, and our regulations in part 418, establish eligibility re quirements, payment standards and procedures, define covered services, and de lineate the conditions a hospice mu st meet to be approved for participation in the Medicare program. Part 418, subpart G, provides for a per diem payment in one of four prospectively-de termined rate categories of hospice care (routine home care, continuous home care, inpatient respite care, and general inpatie nt care), based on each day a23 CMS-1609-F qualified Medicare beneficiary is under hospice care (once the indi vidual has elected). This per diem payment is to include all of the hospice serv ices needed to manage the beneficiaries’ care, as required by section 1 861(dd)(1) of the Act. There has be en little change in the hospice payment structure since the benefit’s inception. The per diem rate based on level of care was established in 1983, and this payment structure re mains today with some adjustments, as noted below: 1. Omnibus Budget Reconc iliation Act of 1989 Section 6005(a) of the Omnibus Budget Reconciliation Act of 1989 (Pub. L. 101-239) amended section 1814(i)(1)(C) of the Act and pr ovided for the following two changes in the methodology concerning updating the daily paymen t rates: (1) effective January 1, 1990, the daily payment rates for routine home care and ot her services included in hospice care were increased to equal 120 percent of the rates in effect on September 30, 1989; and (2) the daily payment rate for routine home care and other serv ices included in hospice care for fiscal years beginning on or after October 1, 1990, were the payment rates in effect during the previous Federal fiscal year increased by the hospita l market basket percentage increase. 2. Balanced Budget Act of 1997 Section 4441(a) of the Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33) amended section 1814(i)(1)(C)(ii)(VI) of the Act to establish updates to hos pice rates for FYs 1998 through 2002. Hospice rates were updated by a f actor equal to the hospital market basket percentage increase, minus 1 percentage point . Payment rates for FYs from 2002 have been updated according to section 1814(i)(1)(C)(ii)(VII) of the Act, which states that the update to the payment rates for subsequent FYs will be the hospital market basket percentage increase for the FY. The Act requires us to use the inpatient hospital market basket to determine hospice24 CMS-1609-F payment rates. 3. FY 1998 Hospice Wage Index Final Rule In the August 8, 1997 FY 1998 Hospice Wage Index final rule (62 FR 42860), we implemented a new methodology for calculatin g the hospice wage index based on the recommendations of a negotiated rulemaking comm ittee. The original hospice wage index was based on 1981 Bureau of Labor Statistics hospital data and had not been updated since 1983. In 1994, because of disparity in wages from one ge ographical location to another, the Hospice Wage Index Negotiated Rulemaki ng Committee was formed to negotiate a new wage index methodology that could be accepted by the industry and the government. This Committee was comprised of representatives from national hospi ce associations; rural, urban, large and small hospices, and multi-site hospices; consumer groups; and a government representative. The Committee decided that in updati ng the hospice wage index, aggreg ate Medicare payments to hospices would remain budget neutral to paymen ts calculated using the 1983 wage index, to cushion the impact of using a new wage index methodology. To implement this policy, a Budget Neutrality Adjustment Factor (BNAF) will be co mputed and applied annually to the pre-floor, pre-reclassified hospital wage index when deri ving the hospice wage index, subject to a wage index floor. 4. FY 2010 Hospice Wage Index Final Rule Inpatient hospital pre-floor and pre-reclassifi ed wage index values, as described in the August 8, 1997 Hospice Wage Index final rule, ar e subject to either a budget neutrality adjustment or application of the wage index fl oor. Wage index values of 0.8 or greater are adjusted by the (BNAF). Starting in FY 2010, a 7-year phase-out of the BNAF began (August 6, 2009 FY 2010 Hospice Wage Index final rule, (74 FR 39384)), with a 10 percent25 CMS-1609-F reduction in FY 2010, an additional 15 percent re duction for a total of 25 percent in FY 2011, an additional 15 percent reduction for a total 40 percent reduction in FY 2012, an additional 15 percent reduction for a total of 55 percent in FY 2013, and an a dditional 15 percent reduction for a total 70 percent reducti on in FY 2014. The phase-out will c ontinue with an additional 15 percent reduction for a total reduction of 85 percent in FY 2015, and an additional 15 percent reduction for complete elimination in FY 2016. We note that the BNAF is an adjustment which increases the hospice wage index value. Theref ore, the BNAF reduction is a reduction in the amount of the BNAF increase applie d to the hospice wage index value. It is not a reduction in the hospice wage index value or in the hospice payment rates. 5. The Affordable Care Act Starting with FY 2013 (and in subsequent fisc al years), the market basket percentage update under the hospice payment system refere nced in sections 1814( i)(1)(C)(ii)(VII) and 1814(i)(1)(C)(iii) of the Act will be annually reduced by cha nges in economy-wide productivity, as specified in section 1886(b )(3)(B)(xi)(II) of the Act, as am ended by section 3132(a) of the Patient Protection and Affordable Care Act (P ub. L. 111-148) as amended by the Health Care and Education Reconciliation Act (Pub. L. 111-152) (the Affordable Care Act)). In FY 2013 through FY 2019, the market basket percentage u pdate under the hospice pa yment system will be reduced by an additional 0.3 percentage point (although for FY 2014 to FY 2019, the potential 0.3 percentage point reduction is subject to suspension under conditions as specified in section 1814(i)(1)(C)(v) of the Act). In addition, sections 1814(i)(5 )(A) through (C) of the Act, as amended by section 3132(a) of the Affordable Care Act, require hospices to begin submitting quality data, based on measures to be specified by the Secretar y, for FY 2014 and subsequent fis cal years. Beginning in26 CMS-1609-F FY 2014, hospices which fail to report quality data will have their market basket update reduced by 2 percentage points. Section 1814(a)(7)(D)(i) of the Act was amended by secti on 3132 (b)(2)(D)(i ) of the Affordable Care Act, and requires, effective January 1, 2011, that a hospice physician or nurse practitioner have a face-to -face encounter with the beneficiary to determine continued eligibility of the beneficiary’s hospice care prior to th e 180th-day recertification and each subsequent recertification, and to attest that such visit took place. When implementing this provision, we decided that the 180th-day recer tification and subsequent recer tifications corresponded to the recertification for a beneficiar y’s third or subsequent benef it periods (CY 2011 Home Health Prospective Payment System final rule (75 FR 70435)). Further, section 1814(i)(6) of the Act, as amended by section 3132(a)(1)(B ) of the Affordable Care Act, au thorizes the Secretary to collect additional data and information determined appr opriate to revise payments for hospice care and other purposes. The types of data and informa tion suggested in the Affordable Care Act would capture accurate resource utilization, which c ould be collected on claims, cost reports, and possibly other mechanisms, as the Secretary determ ines to be appropriate. The data collected may be used to revise the methodology for determ ining the payment rates for routine home care and other services included in hospice care, no earlier than October 1, 2013, as described in section 1814(i)(6)(D) of the Act. In addition, we are required to consult with hospice programs and the Medicare Payment Advisory Commission (MedPAC) regarding additional data collection and payment revision options. 6. FY 2012 Hospice Wage Index Final Rule When the Medicare Hospice Benefit wa s implemented, the Congress included an aggregate cap on hospice payments, which limits the total aggregate payments any individual27 CMS-1609-F hospice can receive in a year. The Congress stip ulated that a “cap amount” be computed each year. The cap amount was set at $6,500 per be neficiary when first enacted in 1983 and is adjusted annually by the change in the medical care expenditure category of the consumer price index for urban consumers from March 1984 to Ma rch of the cap year (section 1814(i)(2)(B) of the Act). The cap year is defined as the peri od from November 1st to October 31st. As we stated in the August 4, 2011 FY 2012 Hospice Wage Index final rule (76 FR 47308 through 47314), for the 2012 cap year and subsequent cap years, the hospice ag gregate cap will be calculated using the patient-by-patient proportiona l methodology, within certain limits. We will allow existing hospices the option of having thei r cap calculated via the original streamlined methodology, also within certain limits. New hospices will have their cap determinations calculated using the patient-by-patient pr oportional methodology. The patient-by-patient proportional methodology and the streamlined me thodology are two different methodologies for counting beneficiaries when calculating the hospi ce aggregate cap. A detailed explanation of these methods is found in the August 4, 2011 FY 2012 Hospice Wage Index final rule (76 FR 47308 through 47314). If a hospice's total Medicar e reimbursement for the cap year exceeded the hospice aggregate cap, then the hospice must repay the excess back to Medicare. E. Trends in Medica re Hospice Utilization Since the implementation of the hospice benefi t in 1983, and especially within the last decade, there has been substantial growth in hospice utilization. The number of Medicare beneficiaries receiving hospice se rvices has grown from 513,000 in FY 2000 to over 1.3 million in FY 2013. Similarly, Medicare hospice expend itures have risen from $2.9 billion in FY 2000 to an estimated $15.1 billion in FY 2013. Our O ffice of the Actuary ( OACT) projects that hospice expenditures are expected to continue to increase, by approximately 8 percent annually,28 CMS-1609-F reflecting an increase in the number of Medicare beneficiaries, more be neficiary awareness of the Medicare Hospice Benefit for end-of-life care , and a growing preferen ce for care provided in home and community-based settings. However, this increased spending is partly due to an increased average lifetime length of stay for bene ficiaries, from 54 days in 2000 to 86 days in 2011, an increase of 59 percent. There have also been noted changes in the diagnosis patterns among Medicare hospice enrollees. Specifically, there were notable increases between 2002 and 2007 in neurologicallybased diagnoses, including various dementia diagnoses. Additionally, there have been significant increases in the use of non-specific, sy mptom-classified diagnoses, such as “debility” and “adult failure to thrive.” In FY 2012, “debil ity” and “adult failu re to thrive” were the first and third most common hospice diagnoses, respectiv ely. “Debility” and “adult failure to thrive” continue to be among the most common hospice principal diagnos es (14 percent), and those, combined with “dementia” and Alzheimer’s diseas e constituted approximately 30 percent of all claims-reported principal diagnosis codes reported in FY 2013 (see Table 2 below). Table 2: The Top Twenty Principal Hospice Diagnoses, FY 2002, FY 2007, FY 2012, FY 2013

Rank ICD-9/Reported Principal Diagnosis Count Percentage Year: FY 2002 1 162.9 Lung Cancer 73,769 11% 2 428.0 Congestive Heart Failure 45,951 7% 3 799.3 Debility Unspecified 36,999 6% 4 496 COPD 35,197 5% 5 331.0 Alzheimer’s Disease 28,787 4% 6 436 CVA/Stroke 26,897 4% 7 185 Prostate Cancer 20,262 3% 8 783.7 Adult Failure To Thrive 18,304 3% 9 174.9 Breast Cancer 17,812 3% 10 290.0 Senile Dementia, Uncomp. 16,999 3% 11 153.0 Colon Cancer 16,379 2% 12 157.9 Pancreatic Cancer 15,427 2% 13 294.8 Organic Brain Synd Nec 10,394 2%29 CMS-1609-F

Rank ICD-9/Reported Principal Diagnosis Count Percentage 14 429.9 Heart Disease Unspecified 10,332 2% 15 154.0 Rectosigmoid Colon Cancer 8,956 1% 16 332.0 Parkinson's Disease 8,865 1% 17 586 Renal Failure Unspecified 8,764 1% 18 585 Chronic Renal Failure (End 2005) 8,599 1% 19 183.0 Ovarian Cancer 7,432 1% 20 188.9 Bladder Cancer 6,916 1% Year: FY 2007 1 799.3 Debility Unspecified 90,150 9% 2 162.9 Lung Cancer 86,954 8% 3 428.0 Congestive Heart Failure 77,836 7% 4 496 COPD 60,815 6% 5 783.7 Adult Failure To Thrive 58,303 6% 6 331.0 Alzheimer’s Disease 58,200 6% 7 290.0 Senile Dementia Uncomp. 37,667 4% 8 436 CVA/Stroke 31,800 3% 9 429.9 Heart Disease Unspecified 22,170 2% 10 185 Prostate Cancer 22,086 2% 11 174.9 Breast Cancer 20,378 2% 12 157.9 Pancreas Unspecified 19,082 2% 13 153.9 Colon Cancer 19,080 2% 14 294.8 Organic Brain Syndrome NEC 17,697 2% 15 332.0 Parkinson's Disease 16,524 2% 16 294.10 Dementia In Other Diseases w/o Behav. Dist. 15,777 2% 17 586 Renal Failure Unspecified 12,188 1% 18 585.6 End Stage Renal Disease 11,196 1% 19 188.9 Bladder Cancer 8,806 1% 20 183.0 Ovarian Cancer 8,434 1% Year: FY 2012 1 799.3 Debility Unspecified 161,163 12% 2 162.9 Lung Cancer 89,636 7% 3 783.7 Adult Failure To Thrive 86,467 7% 4 428.0 Congestive Heart Failure 84,333 6% 5 496 COPD 74,786 6% 6 331.0 Alzheimer’s Disease 64,199 5% 7 290.0 Senile Dementia, Uncomp. 56,234 4% 8 429.9 Heart Disease Unspecified 32,081 2% 9 436 CVA/Stroke 31,987 2% 10 294.10 Dementia In Other Di seases w/o Behavioral Dist. 27,417 2% 11 174.9 Breast Cancer 22,421 2% 12 153.9 Colon Cancer 22,197 2% 13 157.9 Pancreatic Cancer 22,007 2% 14 332.0 Parkinson’s Disease 21,183 2% 15 185 Prostate Cancer 21,042 2%30 CMS-1609-F

Rank ICD-9/Reported Principal Diagnosis Count Percentage 16 294.8 Other Persistent Me ntal Dis.-classified elsewhere 17,762 1% 17 585. 6 End Stage Renal Disease 17,545 1% 18 518.81 Respiratory Failure 12,962 1% 19 294.11 Dementia In Other Di seases w/ Behavioral Dist. 11,751 1% 20 188.9 Bladder Cancer 10,511 1%

Year: FY 2013 1 799.3 Debility Unspecified 127,415 9% 2 428.0 Congestive Heart Failure 96,171 7% 3 162.9 Lung Cancer 91,598 6% 4 496 COPD 82,184 6% 5 331.0 Alzheimer's Disease 79,626 6% 6 783.7 Adult Failure to Thrive 71,122 5% 7 290.0 Senile Dementia, Uncomp. 60,579 4% 8 429.9 Heart Disease Unspecified 36,914 3% 9 436 CVA/Stroke 34,459 2% 10 294.10 Dementia In Other Di seases w/o Behavioral Dist. 30,963 2% 11 332.0 Parkinson’s Disease 25,396 2% 12 153.9 Colon Cancer 23,228 2% 13 294.20 Dementia Unspecifi ed w/o Behavioral Dist. 23,224 2% 14 174.9 Breast Cancer 23,059 2% 15 157.9 Pancreatic Cancer 22,341 2% 16 185 Prostate Cancer 21,769 2% 17 585.6 End-Stage Renal Disease 19,309 1% 18 518.81 Acute Respiratory Failure 15,965 1% 19 294.8 Other Persistent Me ntal Dis.-classified elsewhere 14,372 1% 20 294.11 Dementia In Other Diseases w/Behavioral Dist. 13,687 1% Note(s): The frequencies shown represent be neficiaries that had a least one claim with the specific ICD-9-CM code reported as the principal diagnosis. Beneficiaries coul d be represented multiple times in the results if they have multiple claims during that time period with different principal diagnoses. Source: FY 2002, 2007, and 2012 hospice claims data from the Chronic Conditions Data Warehouse (CCW), accessed on February 14 and February 20, 2013. FY 2013 hospi ce claims data from the CCW, accessed on June 26, 2014.31 CMS-1609-F III. Provisions of the Proposed Regulations and Responses to Comments
On May 8, 2014, we published a proposed rule in the Federal Register (79 FR 26538-26587) entitled, FY 2015 Hospice Wa ge Index and Payment Rate Update; Hospice Quality Reporting Requirements and Proce ss and Appeals for Part D Payment for Drugs for Beneficiaries Enrolled in Hospice (herein referred to as the FY 2015 Hospice Wage Index proposed rule). The FY 2015 Hospice Wage Inde x proposed rule updated the public on several issues and set forth the following proposals:

• We discussed recent payment reform analyses related to beneficiaries dying without skilled visits at the end of life; utilization of General Inpatient Care (GIP), Continuous Home Care (CHC), or Inpatient Respite Care (IRC); live discharges; and non-hospice spending for hospice bene ficiaries during a hospice election.

• We solicited comments on the definition of “terminal illness” and “related conditions.”

• We provided guidance on determin ing eligibility for hospice care.

• We proposed to require that hospice s determine their inpatient and/or aggregate cap overpayment within 5 months after the cap year, and proposed to further amend §418.308 and §405.371 to state that payments to a hospice would be suspended in whole or in part, for failure to file a self-determined inpatient and aggregate cap determination no later than 5 months after th e end of the cap year (that is, by March 31 st of each year).

• We proposed to amend §418.24(a) to requi re that a hospice must file the Notice of Election (NOE) with its Medicare Administrative Contractor (MAC) within 3 calendar days after the hospice effective date of election. We also proposed that for those32 CMS-1609-F hospices that do not file the NOE timely (that is, within 3 cale ndar days after the effective date of election), Medicare would not cover and pay for days of hospice care from the effective date of election to the date of f iling of the NOE. In addition, we proposed that these days be considered the financial respons ibility of the hospice; the hospice could not bill the beneficiary for them.

• We proposed to revise the regulations at §418.26 and §418.28 to require hospices to file a Notice of Termination or Revocation (NOTR) w ithin 3 calendar days after the effective date of a beneficiary’s disc harge or revocation, if they have not already filed a final claim.

• We proposed to amend the regulatio ns at §418.24(b)(1) to require the election statement to identify the a ttending physician, and to include an acknowledgement that the attending physician was chosen by the patient. We also proposed that if a patient (o r representative) wants to ch ange his or her designated attending physician, he or she must file a st atement with the hospice which identifies the new attending physician and includes the date the change is to be effective, the date that the statement is signed, and the patient’s (o r representative’s) si gnature, along with an acknowledgement that this change in th e attending physician is the patient’s (or representative’s) choice.

• We provided a preliminary update to the FY 2015 hospice wage index, continuing to use the hospital pre-floor, pre-re classified wage inde x as the source data, and provided a preliminary update to the FY 2015 hospice payment rates.

• We proposed in §418.312 that newly certifi ed hospices that receive notice
of their CMS certification number on or af ter November 1, 2014, for payments to be33 CMS-1609-F made in FY 2016, be excluded from the quali ty reporting requirements for the FY 2016 payment determination, as data submission and analysis would not be possible for a hospice receiving notification of their certification this late in the reporting time period. We also proposed that in future years, hospi ces that receive notific ation of certification on or after November 1 of the preceding year involved would continue to be excluded from any payment penalty for quality re porting purposes for the following FY.

• We proposed that approved survey vendors meet all of the minimum business requirements and follow the detaile d technical specifi cations for survey administration as published in the CAHPS® Ho spice Survey specifications manual. We proposed to codify the CAHPS® Hospice Surv ey vendor requirements to be effective with the FY 2017 Annual Payment Update (APU) (as proposed in §418.312). We also proposed that no organization, firm, or busines s that owns, operates , or provides staffing for a hospice be permitted to administer its own Hospice CAHPS® survey or administer the survey on behalf of any other hospice in the capacity as a Hospice CAHPS® survey vendor.

• We described a potential coordination of benefits and appeals process for Part D payment for drugs while beneficiarie s are under a hospice election, and solicited comments to guide us in making a possible pro posal in future rulemaking. We solicited comments on whether hospices need to dete rmine, in a specific amount of time, a beneficiary’s drug and biological needs and co mmunicate with the Part D plan sponsor or to the other payer and/or provider, verbally or in writing, to ensure that there is no lapse of reasonable and necessary drugs and biologi cals or other items or services for the palliation and management of the terminal illness and related conditions. We also34 CMS-1609-F solicited comments on steps a hospice could take to reconcile payment responsibility with Part D plans or with ot her payers or providers.

• We provided an update on the Interna tional Classification of Diseases, 10th Revision, Clinical M odification (ICD-10-CM) and co ding guidelines for hospice claims reporting.

• We proposed to make at technical correction in §418.3 to delete an obsolete definition for a “social worker.” We provided for a 60 day comment peri od on the FY 2015 Hospice Wage Index proposed rule. We received 114 public commen ts from the Medicare Payment Advisory Commission, Medicare beneficiary advocacy gr oups, hospice providers, state and national hospice associations, hospice and en d-of-life care organizations and experts, hospice financial experts and consultants, attorneys, Part D s ponsors, pharmacy associations, private insurance plans, and private individuals. In genera l, commenters provided thoughtful and diverse comments on the proposed policies. We also rece ived comments that are outside the scope of this rule. We will take these comments unde r consideration when evaluating current hospice policies. Summaries of the public comments received on the proposals and our responses to those comments are provided in the appropriate sectio ns in the preamble of this final rule. A. Hospice Payment Reform: Research and Analyses Section 3132(a) of the Affordable Care Ac t amended section 1814(i) (6) of the Act to authorize the Secretary to collect additional da ta and information determined appropriate to revise payments for hospice care and for other pu rposes. The data collected may be used to revise the methodology for determining the pa yment rates for routin e home care and other35 CMS-1609-F services included in hospice ca re, no earlier than October 1, 2013, as described in section 1814(i)(6)(D) of the Act. We are also required to consult with hospice programs and the Medicare Payment Advisory Commission (MedPA C) regarding additional data collection and payment revision options. Since 2010, we have been working with our hospice reform contractor, Abt Associates, to re view the most current peer-revie wed literature; conduct research and analyses; identify potential vulnerabilities in the current payment system; and research and develop hospice payment model options. We recently required additional information on hospice claims regarding drugs and certain durab le medical equipment, effective April 1, 2014; and are in the process of finaliz ing changes to the hospice cost re port to better collect data on the costs of providing hospice care. The additiona l information on hospice claims and the hospice cost report will be used in our hospice payment reform efforts, once the data are available for analysis. The research and analyses conducted thus fa r on available Medicare claims and cost report data have highlighted hospi ce utilization trends that raise concerns regarding the viability of the Medicare hospice program and the impact of beneficiary access to quality end of life care. In March 2009, the Medicare Payment Advisory Commission (MedPAC) recommended that Medicare improve its payment system for hospi ce services to address a misalignment between Medicare’s payments and hospice’s costs that created incentives for providers to enroll patients who are more likely to have long stays because those stays are more pr ofitable than short ones ( http://www.medpac .gov/chapters/Mar09_Ch06.pdf ). MedPAC ’s June 2013 Report To Congress on Medicare and the Hea lth Care Delivery System reitera ted concerns about utilization trends and suggested that such trends were driven by a misa lignment in the payment system ( http://www.medpac .gov/chapters/Jun13_Ch05.pdf ). MedPAC’s June 2013 report added that,36 CMS-1609-F while payment reform would better align payments with costs, additional administrative controls were necessary to balance incentives and strengthen provider compliance. As such, we believe that a critical goal of the Medi care hospice payment system is to strengthen and safeguard the current scope of the Medicare hospice benefit. This will provide a solid foundation on which to reform the methodology used to pay for Medicare hospice services. Program integrity is being addressed immediately while we deve lop further data and research to address paym ent reform in the near future. Abt Associates, with its s ubcontractor Brown Universit y, has developed a technical report entitled, “Medicare Hospice Payment Refo rm: Analyses to Support Payment Reform”, dated May 1, 2014 (hereafter, referred to as the May 2014 Technical Report) that thoroughly describes the analytic file and extensive work performed on analyzing curr ent hospice utilization data, of which many of the results of the analyses are presented in this final rule. Both the May 2014 Technical Report and an update d literature review are availa ble on our hospice center web page at: http://www.cms.gov/Center/Provide r-Type/Hospice-Center.html in the “Research and Analyses” section. We further examined hospice utilization data and developed a provider-level file to identify aberrant hospice behavior. The provider-level file contains information on beneficiaries who were discharged (alive or d eceased) in calendar year (CY) 2012 and includes claims data from January 1, 2010 through Decem ber 31, 2012. Some of the findings described in this section, are based on this provider-level file. 1. Beneficiaries Dying Without Skilled Visits in the Last Days of Life Hospice clinicians are experts in recognizing ch anges as a patient is approaching the last few days of life and helping to prepare and support the patient and family. Most individuals approaching end-of-life have noted declines over the several days prior to death. As such, the37 CMS-1609-F expectation is that there would be an increased need for hospice services in the days leading up to the hospice beneficiary’s death. Although we recognize that prognostica tion is not an exact science, there are hallmark physic al, functional, nutritional, an d cognitive changes that are typically present leading up the hospice patient’s death (see section III.C of this final rule). When looking at skilled visits provided in the last days of life, as reported on the hospice claim, our analysis found that a relatively hi gh percentage (28.9 percent) of hospice decedents who were receiving RHC on their la st day of life did not receive a skilled visit on that day (see Table 3 below). This could be explained, in part, by sudden or unexpected death. Expanding this analysis to skilled visits provided in the last two to four days of life, we found that 14.4 percent of hospice decedents did not receive skilled vi sits in the last 2 days of life and 6.2 percent of hospice decedents did not receive skilled visits in the last 4 days of life. While this could also be explained, in pa rt, by sudden or unexpected deat h, we are concerned with the possibility that those beneficiarie s and their families are not rece iving hospice care and support at the very end of life. If hospices are activel y engaging with the beneficiary and the family throughout the election period, we w ould expect to see skilled visi ts during those last days of life.

Table 3: Frequency and Percentage of Decedents Not Receiving Skilled Visits at the End of Life, Calendar Year 2012

Number of Decedents Percentage of Decedents with No Skilled Visits No skilled visits on last day (and last day was RHC) 656,355 28.9%
No skilled visits on last two days (and last two days were RHC) 622,334 14.4%38 CMS-1609-F No skilled visits on last three days (and last three days were RHC) 585,648 9.1%
No skilled visits on last four days (and last four days were RHC) 551,359 6.2% Note(s): Skilled visit was considered to be a vi sit from a social worker, therapist, or nurse. Source: Beneficiaries whose last days of hospice enrollme nt were billed to the RHC level of care using 100% of hospice days from the Hospice Standard Analytic File (SAF), Calendar Year (CY) 2012. Further analysis of skilled vi sits during the last two days of life found that 10.3 percent of very short stay decedents (5 days or less) did not receive skilled visits duri ng the last two days of life. In contrast, 15.9 percent of decedents wi th lengths of stay 181 days or longer did not receive visits in the last two days of life. Newer hospices (5 years or less since Medicare certification) were more likely to have decedents w ith no skilled visits duri ng the last two days of life (17.8 percent) compared to older hospices (6 years or more since Medicare certification; 14.0 percent). We also found geographic differences in this analysis. Th e five states with the lowest percentage of decedents with no skilled visits on the last two days of life included: Wisconsin (5.7 percent), North Dakota (7.3 percent), Verm ont (7.5 percent), Tennessee (7.5 percent), and Kansas (8.7 percent). The five states with the highest percentage of d ecedents with no skilled visits on the last two days of life included: New Jersey (23 percent), Massachusetts (22.9 percent), Oregon (21.2 percent), Washington ( 21 percent), and Minneso ta (19.4 percent). Using the provider-level file referenced above, we also found that, on average, hospices did not report any skilled visits in the last two days of life for 9.7 percent of their decedents who died receiving routine home care. 4 Nearly 5 percent of hospices did not provide any skilled visits in the last two days of life to more th an 50 percent of their de cedents receiving routine

4 The provider-level analysis conducted on whether skilled visits were provided in the last two days of life only examined instances where the decedent wa s receiving routine home care in the la st two days of life. We note that 21 providers did not have any decedents that died while on routine home care.39 CMS-1609-F home care on those last two days; the average lif etime length of stay among those decedents was 143 days. We note that the average lifetime leng th of stay in our provider-level file was 95.4 days (among beneficiaries who were discharged alive or deceased in CY 2012). Furthermore, we found that 34 hospices did not make any skilled visits in the last 48 ho urs of life to any of their decedents who died while receiving routine home care. 2. General Inpatient Care, Con tinuous Home Care, and Inpatien t Respite Care Utilization Medicare Conditions of Participation require hos pices to demonstrate that they are able to provide all four levels of care—Routine Home Care (RHC), General Inpatient Care (GIP), Continuous Home Care (CHC) a nd Inpatient Respite Care (IRC) to be a certified Medicare hospice provider. As stated in our regulations at §418.302 (b)(4), a GIP day is a day in which an individual who has elected hospice care, receives ge neral inpatient care in an inpatient facility for pain control or acute or chronic symptom management whic h cannot be managed in other settings. For FY 2014, the payment rate for GIP was $694.19 per day compared to $156.06 for a day of RHC.
While the goal of hospice care is to allow for th e individual to remain in his or her home environment, circumstances during the end-of -life may necessitate short-term inpatient admission to a hospital, skilled nursing facility (S NF), or hospice inpatient facility for procedures necessary for pain control or acu te or chronic symptom management that cannot be managed in any other setting. These acute hospice care servic es are to ensure that any new or worsening symptoms are intensively addressed so that th e individual can return to his or her home environment under a home level of care. As part of our reform work, we analyzed CY 2012 data to better understand GIP utilization. We found that 77.3 percent of beneficiaries did not have any GIP care in 2012.40 CMS-1609-F Using provider-level data for beneficiaries discha rged in 2012, we also found that 21.1 percent of hospices did not provide GIP care to any of their beneficiar ies. While there are appropriate circumstances where a hospice provides no GIP (for example, when a provider only has a few patients, none of whom needs GIP), we are conc erned that more than a fifth of hospices not providing any GIP may be an indication that hos pice beneficiaries do not have adequate access to a necessary level of care for acute or chroni c symptom management. We also found that there were site of service differences such that the longest GIP length of stay was in the inpatient hospice setting (6.1 days) and shortest at in the inpatient hospital setting (4.5 days). Over twothirds of GIP days were provide d in an inpatient hospice setting (68 percent), and about a quarter of GIP days were provided in an inpatient hospita l (24.9 percent). Only 5 .5 percent of GIP days were provided in a SNF. As stated in our regulations at §418.302(b)(2), a continuous home care day is a day on which an individual who has electe d to receive hospice care, is not in an inpatient facility, and receives hospice care consisting predominantly of nursing care on a continuous basis at home. Home health aide (also known as a hospice aide) or homemaker services, or both, may also be provided on a continuous basis. Continuous home care is only furnished during brief periods of crisis as described in §418.204(a), and only as necessa ry to maintain the terminally ill patient at home. Continuous home care may be covered on a continuous basis for as much as 24 hours a day, and these periods must be predominantly nursing care per our re gulations at §418.204. A minimum of 8 hours of care must be furnished on a particular day to qualify for the continuous home care rate (§418.302(e)(4)).
As part of our reform work, we analyzed CY 2012 data to better understand CHC utilization. Overall, approximate ly 0.4 percent of all hospice days in 2012 were billed as CHC,41 CMS-1609-F but that percentage decreases to 0.2 when a large chain provider with a la rge percentage of its hospice days billed as CHC days was excluded. Although 42.7 percent of hospices billed at least 1 day of CHC, we found considerable variati on in the share of CHC days among hospices that provided any CHC. Almost 90 percent of hospi ces that provided any CHC had less than 1 percent of their days billed as CHC, but four hospi ces billed more than 10 percent of their days as CHC. Forty hospices accounted for 46 perc ent of all CHC days and a single hospice accounted for over a quarter of all CHC days. Among hospices who billed for providing CHC, 9.4 percent provided over ha lf of their CHC days to beneficiar ies residing in a nursing home. For CHC, a hospice must provide a minimum of 8 hours of care during a 24-hour day, which begins and ends at midnight. Finally, we analyzed inpatient respite car e (IRC) utilization in CYs 2005 through 2012. IRC is provided in an approved facility, as neede d, on an occasional basis to relieve the family caregivers for up to 5 consecutive days. Payment for IRC is subject to the requirement that it may not be provided consecutively fo r more than 5 days at a time. As stated in our regulations at §418.302(e)(5), payment for the sixth and any subse quent day of respite care is made at the routine home care rate. Overall, while the percenta ge of beneficiaries receiving at least 1 day of IRC care increased from 1.44 percent in CY 2005 to 3.4 percent in CY 2012, only a small percentage of beneficiaries utiliz e IRC. We also found that 26 percent of hospices did not bill for any IRC days in CY 2012. IRC is a critical part of the Medicare hospice benefit, providing vital support and relief to the patient’s caregiv er and family. We will continue to monitor utilization of IRC level of care, over time, to ensure beneficiaries receiving hospice care have access to respite services for their caregivers.42 CMS-1609-F The variation in the provision of GIP, CHC, and IRC could suggest that the level of hospice care that a beneficiary receives may not al ways be driven by patient factors. Medicare Conditions of Participation require hospices to demonstrate that they are able to provide all four levels of care—RHC, GIP, CHC, and IRC—in orde r to be a certified Medicare hospice provider. We will continue to monitor GIP, CHC, and IRC use to identify hospices with aberrant utilization patterns, to identify hospices that ma y be in violation of the CoPs or of payment regulations, and to refer hospices identified through our analysis to Survey and Certification, to the Office of Financial Management, and to th e Center for Program Integrity for further investigation. 3. Hospice Live Discharges Currently, federal regulations allow a patie nt who has elected to receive Medicare hospice services to revoke that election at any time. That patient may re-elect hospice benefits at any time for any other election period that is st ill available. Howeve r, federal regulations provide limited opportunity for a Me dicare hospice provider to discharg e a patient from its care. In accordance with 418.26, discharge from hospice care is permissible when the patient moves out of the provider’s service area, is determined to be no longer terminally ill, or for cause. Hospices may not automatically or routinely disc harge the patient at its discretion, even if the care may be costly or inconvenient. Neither should the hospice request or demand that the patient revoke his/her election. Our regulations also state that if the hospice patient (or his/her representative) revokes the hospice election, Medicare coverage of hospice care for the remainder of that period is forfeited. The patient may, at any time, re-elect to recei ve hospice coverage for any other hospice election period that he or she is eligible to rece ive ((§418.28(c)(3) and §418.24(e)). During the time43 CMS-1609-F period between revocation/discharge and the re -election of the hospi ce benefit, Medicare coverage would resume for those Medi care benefits previously waived.
Prior to 2012, claims data provided limited information about the reason a hospice patient was discharged from a hospice’s care. Starting July 1, 2012, the discharge information collected on the Medicare claim was expanded to capture the r eason for all types of di scharge, that is, if the discharge was due to a death, revocation, tr ansfer to another hospice, moving out of the hospice’s service area, discharge for cause, or due to the pati ent no longer being considered terminally ill (that is, no longer qualifying for hospice services). Between 2000 and 2012, the overall rate of live discharges increased from 13.2 percent of hospice disc harges to 18.1 percent in 2012. In 2010, the rate of live discharges vari ed by state (from 12.8 percent in Connecticut to 40.5 percent in Mississippi) and by hospice provider (from a 25 th percentile of 9.5 percent to 75 th percentile of 26.4 percent). Furthermore, analysis of our provider-level file shows that of the 3,702 hospices in our file, 71 hospices had a live disc harge on 100 percent of their beneficiaries. The average lifetime length of stay for these ho spices was 193 days compared to the national average lifetime length of stay of 95.4 days (amo ng beneficiaries who were discharged alive or deceased in CY 2012). We have shared this information with the Office of Financial Management and with the Center for Program Integrity for their review and follow-up.
One study of hospice live discharges in cance r patients noted that smaller hospices and for-profit hospices had a higher rate of hospice live discharges. 5 Our subcontractors at Brown University studied 2010 hospice live discharges among all diagnoses, finding that not-for-profit

5 Carlson MD, Herrin J, Du Q, et al. Hospice character istics and the disenrollment of patients with cancer. Health Serv Res. Dec 2009;44(6):2004-202144 CMS-1609-F hospice programs had a lower rate of hospice liv e discharges than for-profit hospice programs (14.6 percent vs. 22.4 percent, p<=. 001). Small for-profit hospices in operation 5 years or less had a higher rate of hospice live discharges compar ed to older, for-profit hospices (31.5 percent vs. 12.8 percent, p<=.001). We are also concerne d over patterns of revocations and elections of the Medicare hospice benefit for the purpose of potentially avoiding costly hospitalizations, expensive procedures, drugs, or services. In 2010, 13,770 out of the 182,172 live discharges had a pattern of hospice discharge, hospital ad mission, and hospice readmission. These cases accounted for $126 million dollars in Medicare paym ents for the hospitalization between hospice election periods. Nearly half of these Medicare payments are accounted for in ten states with the highest rate of this pattern of discharges (that is, MS, OK, AL, SC, MD, VA, TX, NJ, GA, and LA accounted for $56.0 million dollars of the hospitalization costs). We understand that the rate of live discharg es should not be zero, given the uncertainties of prognostication and the ability of patients and their families to revoke the hospice election at any time. However, Medicare hospice care is a comprehensive patient and family focused care model designed to optimize qua lity of life by anti cipating, preventing, a nd treating pain and symptoms. We are concerned that patterns of discharge, hospita l admission, and hospice readmission do not provide a comprehensive, c oordinated care experience for terminally ill patients. 4. Non-hospice Spending for Hospice Beneficiaries During an Election When a beneficiary elects the Medicare hospice benefit, he or she waives the right to Medicare payment for services related to the te rminal illness and related conditions, except for services provided by the designated hospice and the attending physician. However, Medicare payment is allowed for covered Medicare items or services which are unrelated to the terminal45 CMS-1609-F illness and related conditions. When a hospice be neficiary receives items or services unrelated to the terminal illness and relate d conditions from a non-hospice Part A or Part B provider, that provider can bill Medicare for the items or services, but must include on the claim a GW modifier (if billed on a professional claim) or condition code 07 (if billed on an institutional claim). When a hospice beneficiar y with Part D coverage receive s medications unrelated to the terminal illness and related condi tions, Prescription Drug Events (P DEs) are billed to Part D and do not require a modifier or a condition code. In follow up to our initial analysis of hos pice drugs being paid through Part D (78 FR 48245-48246), we analyzed the magnitude of Medica re spending outside of the hospice benefit for items or services provided to hospice benefi ciaries during a hospice election from Parts A, B, and D. In CY 2012, we found that Medicare paid $710.1 million for Part A and Part B items or services while a beneficiary wa s receiving hospice care. We estimated that 76.5 percent of the $710.1 million included either a GW modifier or a condition code 07 on the claim, which indicated that the services identified by the provid er or supplier as unrelated to the terminal illness and related conditions. The remaining 23.5 percent of this $710.1 million was for claims without a GW modifier or condition code 07, some of which may have been processed due to late filing of the notice of election (NOE). The $710.1 million paid for Part A and Part B it ems or services was for durable medical equipment (7.0 percent), inpatien t care (care in long-term care hos pitals, inpatient rehabilitation facilities, acute care hos pitals; 28.6 percent), outpatient Part B services (16.9 percent), other Part B services (also known as physician, practitioner a nd supplier claims, such as labs and diagnostic tests, ambulance transports, and physician office vi sits; 37.4 percent), skille d nursing facility care (5.7 percent), and home health care (4.5 percent). Part A a nd Part B non-hospice spending46 CMS-1609-F occurred mostly for hospice beneficiaries who we re at home (43.3 percent). We also found that 28.3 percent of hospice beneficiaries were in a nurs ing facility, 14.1 percent were in an inpatient setting, 10.2 percent were in an assisted living f acility, and 4.1 percent were in other settings. Although the average daily rate of expenditures outside the ho spice benefit was $7.91, we found differences amongst states where be neficiaries receive care. The highest rates per day occurred for hospice beneficiaries residing in West Virginia ($13.91), or in the South (Florida ($13.17), Texas ($12.45), Mississippi ($11.91), and South Carolina ($10.16)). Another area of concern in high non-hos pice Medicare spending occurring during a hospice election is hospital emergency department (ED) visits and obser vation stays. Ninetyfive percent of these ED visits and observation stays were billed and paid outside of the hospice benefit with condition code 07 on the claim. Using data on CY 2010 hospice admissions, followed through discharge or December 31, 2011 (whichever came first), we found that 8.8 percent of hospice beneficiaries had a total of 87,720 ED visits/ observation stays billed to Medicare during their hospice election, at a cost of $268.4 million. The majority of these beneficiaries (77.6 percent) only experienced a single ED visit/obs ervation stay, but 20.9 percent had between 2 and 4 ED visits/observation stay s during their election, a nd 1.4 percent had more than 5 ED visits/observation stays during thei r hospice election. Although some beneficiaries may go directly to the ED rather than contactin g the hospice first, 22.3 percent had 2 or more ED visits; these results may indicate that the hospice is not aware of the beneficiary’s condition, the hospice is not being responsive to beneficiary needs, or related c onditions are being treated as if they were unrelated. Most ED visits/observatio n stays occurred in younger beneficiaries with non-cancer diagnoses, in beneficiar ies in newer hospices, and in be neficiaries receiving care in the South, with Mississippi and Oklahoma having the highest rates (21.1 and 20.5 ED47 CMS-1609-F visits/observation stays per 100 hospice admissi ons, respectively). The most frequently occurring Diagnosis Related Groups (DRGs) associ ated with these ED visits/observation stays were septicemia or severe sepsis, kidney and ur inary tract infections, hi p and femur procedures, simple pneumonia and pleurisy, a nd gastrointestinal hemorrhage. Some of these frequently occurring DRGs are conditions which are common at end-of-life, and could be attended to in the home or with a GIP level of care. This raises concerns about whether the ED visits/observation stays were actually related to the terminal illness and related conditions and should have been covered by the hospice. In addition to analyzing data from Parts A and B of Medicare, we analyzed CY 2012 Part D data which showed $ 417.9 million in total drug spending by Medicare, st ates, beneficiaries, and other payers, for hospice beneficiaries during a hospice election. Table 4 details the various components of Part D spending.

Table 4: Drug Cost Sources for Hospice Be neficiaries’ 2012 Drugs Received through Part D Component Description $ Total Expenditures Patient Pay Amount The dollar amount the beneficiary paid that is not reimbursed by a third party. $48,191,067 Low Income Cost-Sharing Subsidy Medicare payments to plans to subsidize the costsharing liability of qualifying low-income beneficiaries at the point of sale. $117,558,814

Other True Out-of-Pocket Amount Records all other third-party payments on behalf of beneficiary. Exam ples are state pharmacy assistance programs and charities. $2,366,896

Patient Liability Reduction due to Other Payer Amount Amount patient liability reduced due to other benefits. Examples are Veteran’s Administration and TRICARE. $3,120,834

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

Non-Covered Plan Paid Amount Contains the net amount the plan paid beyond standard benefits. Examples include supplemental drugs, supplemental cost-sharing, and OTC drugs paid under plan administrative costs. $16,985,982

Components’ Total $405,593,66048 CMS-1609-F

Unknown Unreconciled/Unreported Difference between total Gross Drug Costs and Reported payer sources (includes sales taxes, drug dispensing fees, and drugs’ ingredient costs) $12,307,603

Gross Total Drug Costs, Reported $417,901,263
Source: Abt Associates analysis of 100% 2012 Medicare Claim File s. For more information on the components above and on Part D data, go to the Research Data Assistance Center’s (ResDAC’s) website at http://www.resdac.org/

. The portion of the $417.9 million total Part D sp ending which was paid by Medicare is the sum of the Low Income Cost-Sharing Subsid y and the Covered Drug Plan Paid Amount, or $334.9 million. Medicare Spending: In total, actual non-hospice Medicare expenditures o ccurring during a hospice election in CY 2012 were $710.1 milli on for Parts A and B spending, plus $334.9 million for Part D spending, or approximately $1 billi on dollars. This figure is comparable to the estimated $1 billion MedPAC reported during its December 2013 public meeting. 6 Associated with this $1 billion in Medicare spending were cost sharing liab ilities such as co-payments and deductibles that beneficiaries incurred. Hospi ce beneficiaries had $135.5 million in cost-sharing for items and services that were billed to Medicare Parts A and B, and $48.2 million in costsharing for drugs that were billed to Medicare Part D, while they were in a hospice election. In total, this represents a 2012 beneficiary liability of $183.7 million for Parts A, B, and D items or services provided to hospice beneficiaries dur ing a hospice election. Therefore, the total nonhospice costs paid by Medicare or due from bene ficiaries for items or services provided to hospice beneficiaries during a hospice electi on were over $1.2 billion in CY 2012. All-Payer Spending: Under Part D, gross covered drug cost on a claim includes the amount paid by the Part D plan, the beneficiary’s cost sharing, and any amounts paid by others

6 MedPAC, “Assessing payment ad equacy and u pdating payments: hospice services ”, December 13 2013. Available at: http://www.medpac.gov/transcript s/hospice_December2013_Public.pdf

.49 CMS-1609-F on the beneficiary’s behalf. These latter amount s include the low-income subsidy amount paid by Medicare for beneficiaries who are subsidy- eligible, amounts paid by other payers whose payments can be counted toward the benefici ary’s true out-of-pocke t (TrOOP) costs, and amounts paid by others whose payments, though not TrOOP-eligible, reduce the amount of the beneficiary’s liability. Accu mulated gross covered drug costs are used to establish the beneficiary’s position in the benefit. That is, these costs determine when the beneficiary has met a plan’s deductible, if any, and moves into the in itial coverage period, and when his or her initial coverage period ends and the coverage gap begi ns. TrOOP, whether paid by the beneficiary or on the beneficiary’s behalf by a TrOOP-eligible pa yer, determines when the beneficiary has met the annual out-of-pocket threshold and moves into the catastrophic phase of the benefit. Thus, administration of the Medicare prescription drug benefit is dependent upon both gross covered drug costs and TrOOP. As such, we are also describing total non-hospice Part D spending, both Medicare and non-Medicare. Non-hospice Part D spending fo r hospice beneficiaries during a hospice election was incurred by Medicare, by St ates, by the Veterans Administration, by TRICARE, by charities, a nd by other payers, in addition to th e cost-sharing liabilities incurred by beneficiaries. Part D spending by all-payers that occurred for hospice beneficiaries during a hospice election, including beneficiary co st-sharing, totaled $417.9 million in CY 2012. If this is added to the $710.1 million in Medicare spending for Pa rts A and B, and $135.5 million in cost sharing for Parts A and B, total non-hospi ce costs are $1.3 billion. We do not have data on other payers’ spending for Part A or Part B services. Of not e, 51.6 percent of this $1.3 billion is associated with 373 hospices, with an average total per beneficiary of $1,289 innon-hospice costs.50 CMS-1609-F For the current guidance regarding the c oordination between Part D sponsors and hospices, we refer readers to vi sit the Hospice Center Webpage ’s Spotlight section or the Coordination of Benefit section at: http://www.cms.gov/Center/Provider-Type/HospiceCenter.html. The dollars spent by Part D and by beneficiar ies for drugs covered outside of the hospice benefit for hospice beneficiaries during a hospice election raise concerns about whether some of these drugs should have been paid for by the hospice. We examined drug costs incurred by hospices from 2004 to 2012, using hospice cost repor t data adjusted to constant 2010 dollars. We saw a declining trend in the drug costs per pa tient day, with costs declining from a mean of $20 per patient-day in 2004 to $11 per patient-da y in 2012 (see Table 5 below). We recognize that many hospices have become more efficient in their operations, but we are concerned that the decline in drug costs is of a magnitude that c ould suggest that some hospices are not providing, and thus are not incurring the costs for, all needed patient medications. Table 5: Costs per Patient- Day by Year, 2010 Dollars 2004 2005 2006 2007 2008 2009 2010 2011 2012 Number n = 1,047 n= 1,218 n = 1,490 n = 1,694 n = 1,834 n = 1,882 n = 1,929 n = 2,015 n = 2,054 Provider-level drug costs per patient-day Mean $20 $18 $17 $15 $14 $13 $12 $11 $11 Std dev (10) (11) (11) (9) (9) (9) (7) (6) (6) Median $20 $17 $16 $15 $14 $13 $12 $11 $10 Trimmed means 1%-99% $21 $19 $17 $16 $15 $14 $13 $12 $11 5%-95% $20 $18 $16 $15 $14 $13 $12 $11 $10 Source: Freestanding hospice cost reports w ith HCRIS release date of 1/23/2014. The cost s are averaged at the provider-level an d adjusted to constant 2010 dollars using the Produc er Price Index for prescription pharmaceuticals. Notes: We excluded cost reports with period less than 10 mont hs or greater than 14 months, missing information or negative reported values for total costs or payments, were in the top and bottom 1% of cost per day, were in the top and bottom 5% of provider margins, and where the aggregate of cost centers does not equal total costs as reported.
We will continue to monitor non-hospice Medica re spending for beneficiaries during hospice51 CMS-1609-F elections. B. Solicitation of Comments on Definitions of “Terminal Illness” and “Related Conditions” 1

. The Development of the Medicare Hospice Benefit
Dame Cicely Saunders introduced the idea of hospice care in the United States during a lecture at Yale University in 1963. During the same decade, the international best-seller, On Death and Dying , published in 1969, by Dr. Elisabeth Kuble r-Ross, helped to bring death out of secrecy and brought new public awareness a nd discussion about dying to health care policymakers. Her interviews with over 500 dying patients shed new light on the dying process, as well as the needs and treatment wishes of t hose who were at the e nd-of-life. Her hallmark work argued for end-of-life care provided in the ho me, rather than in an institution, and stressed the importance of patients’ being an integral part of their treatment decision-making. 7 In 1970, there were no formal hospice programs in the United States. However, healthcare providers started to recognize the need for a care delivery model to address the needs of t hose individuals who no longer wanted to seek out the aggressive, medical, cura tive model of healthcare for advancing illnesses and injuries. They also fo cused on a care delivery model that would provide pain and symptom relief that would offer an alte rnative to hospitalization and would focus on the “total person,” as he or she approached the end-of-life. The hospice model of care, which had been previously introduced to th e United States by Cicely Saunders, wa s viewed to be the type of care delivery model that coul d offer those services.
In 1972, Dr. Elisabeth Kubler-Ross testified at the first national hearings on the subject of death with dignity, conducted by the U.S. Se nate Special Committee on Aging, and the first

7 Story, P., Knight, C. ((2004). The Hospice/Palliative Medicine Approach to End-of-Life Care , 2 nd ed. UNIPAC One.52 CMS-1609-F hospice legislation was introduced in the Un ited States Senate, but was not enacted. 8 Florence Wald, the Dean of the Yale School of Nursi ng, who attended the 1963 l ecture given by Cicely Saunders, along with two pediatricians and a chap lain, founded the first United States hospice, Connecticut Hospice, in 1974. Ongoing meetings between hospice providers and hospice leaders evolved into the formation of the National Hospice Organization in 1978 (now called the National Hospice and Palliative Care Organiza tion, or NHPCO). The first “Standards of a Hospice Program of Care” were published by National Hospice Organization in 1979. Even during the early stages of hospice developmen t, hospice leaders were working with key legislative leaders to develop a system to reimburse hospice care in the United States. 9 However, it was evident that before governmental reimburseme nt could occur, data had to be collected and analyzed to demonstrate what hospices actually provided and what costs were involved in rendering hospice care. The H ealth Care Finance Administra tion (HCFA) – now known as the Centers for Medicare & Medica id Services (CMS) – conducted a national demonstration of 26 hospices throughout the country to study the effect of reimbursed hospice care. The results of this demonstration, as well as t hose sponsored by the private hea lth insurance sector and private foundations, and along with the te stimony of multiple hospice industr y leaders, legislators and hospice families, helped to form the struct ure of the Medicare Hospice Benefit.
During Congressional committee hearings re garding the development of a Medicare hospice benefit, testimony by Paul Willging, deputy administrator of HCFA, expressed caution about embracing benefit expansions that could lead to unexpected consequences and said that

8 Cefalu, C., Ruiz, M. (2011). The Medicare Hospice Benefit: A Changing Philosophy of Care? Annals of Long Term Care: Clinical Care and Aging. 19 (1); 43-48.

9 Connor, S. (2007). Development of Hospice and Palliative Care in the United States . OMEGA. 56 (1); 89-99.53 CMS-1609-F HCFA “must clearly define what we would pa y for and to whom, in order to meet our responsibilities to patients, providers and the taxpayers.” 10 Other stakeholders agreed that a Medicare hospice benefit needed to be structur ed to promote an optimum movement from a point of view of controlling costs and offering the most appropriate means of service without the development of a system that focused on just getting maximum reimburse ment from Medicare. Stakeholders also agreed that unique characteri stics of hospice care should be maintained. The goal was not to have the Federal government pr ovide total support to hos pice programs; rather, legislation would be enacted that would supplement the continued support of the local community, private sector and other resources wh ich allow hospices to maintain their unique identity, spirit of volunteerism and altruistic focus. 11 The National Hospice Organization president, Dr. Edwin Olsen, tes tified at the March 25, 1982 Congressi onal hearing that, at that time, most American hospices were community charities by design and intent, and that hospice offered an integrated service. Hospices func tioned not as an add-on, but as a comprehensive alternative to the typical ways of caring for th e terminally ill and their families. The hospice industry, as discussed in Dr. Olsen’s testimony, was ve ry clear that their goal was to maintain that alternative service for those w ho were approaching end-of-life.
Hospice industry leaders also expres sed the importance of hospice program accountability. Hospices would be accountable for and be able to co ntrol the quality and delivery of patients admitted for hospice care, instead of having to “broker” the patients out to

10 Testimony by Paul Willging, deputy administrator of HC FA, to the Subcommittee on Health of the Committee of Ways and Means, House of Representatives, March 25, 1982.

11 Testimony by Congressman Leon Panetta, to the Su bcommittee on Health of the Committee of Ways and Means, House of Representatives, March 25, 1982.54 CMS-1609-F other providers for reimbursement and convenience. 12 Hospice advocates stressed the importance of maintaining conti nuous clinical control over a ll aspects of care to ensure a successful hospice program and framers of the benefit rec ognized this fact by requiring professional management responsibility. 13 Although there were ongoing concerns by HCFA, the Congress, and the hospice industry about the potential misuse of a new hospice benefit, 14,15 Section 122 of the Tax Equity and Fiscal Re sponsibility Act (TEF RA) of 1982 (Pub. L. 97-248, enacted on September 3, 1982) expanded the scope of Medicare benefits by authorizing coverage for hospice care for terminally ill beneficiaries.
2. Legislative History of th e Medicare Hospice Benefit
After Medicare coverage of hospice care was authorized by the Congress, the General Accounting Office (now Government Account ability Office, or GAO) summarized the legislative intent of the Medicare hospice benefit in a July 13, 1983 letter. In this letter, the GAO acknowledged that there was no st andard definition of what a hospice was or what services an organization must provide to be considered a hospice. However, the GAO stated that it was generally agreed upon that the ho spice concept in the United Stat es is one program of care in which an organized interdisciplinary team systema tically provides palliative care (relief of pain

12 Written testimony by Dr. Edwin J. Olsen, director of the National Hospice Organization, to the Subcommittee on Health of the Committee of Ways and Means, House of Representatives, March 25, 1982.

13 Health Care Financing Administration, Office of Re search and Demonstrations. September, 1987. “Medicare Hospice Benefit Program Evaluation.” Health Care Financing Extramural Report. HCFA Pub. No. 03248.

14 Testimony by Paul Willging, deputy administrator of HC FA, to the Subcommittee on Health of the Committee of Ways and Means, House of Representatives, March 25, 1982.

15 Comments by Congressman Bill Gradiso n, at the Hearing before the Subc ommittee on Health of the Committee of Ways and Means, House of Representatives, March 25, 1982.55 CMS-1609-F and other symptoms) and supportive services to patients with terminal illnesses. 16 This letter further stated that the hospice objective is to ma ke a patient’s remaining days as comfortable and meaningful as possible and to help the family cope with the stress by making the necessary adjustments to the changes in th e patient’s illness and death. Th e GAO letter also reiterated that hospices must directly provide certain core se rvices including nursing ca re, physician services and counseling services and must either direct ly, or through arrangement s, provide physical therapy, occupational therapy, speech-language pathology, home hospice aides, homemaker services, drugs, medical supplies and appliances and short-term inpatie nt care. The letter concluded by stating that the Congress would co ntinue to monitor the effectiveness of the hospice demonstration program, which was ongoing at the time of enactment, the equity of the reimbursement system, method and benefit struct ure put into effect under the hospice provision, including the feasibility and advisability of a prospective reimbursement system for hospice care and other aspects of the hospice program. 17
Further description of the Medi care hospice benefit design was pr ovided in a report prepared by the Congressional staff for the Senate Comm ittee on Finance on September 9, 1983. In this report, four basic principles were presented, which according to hospice advocates, distinguish hospice care from the traditional health care system:
1. The patient and his/her family are considered the unit of care.

16 “Hospice Care-A Growing Concept in the United States.” (HRD-79-50), March 6, 1979.

17 GAO Letter, “Comments on the Legislative Intent of Me dicare’s Hospice Care Benefit,” GAO-HRD-83-72, July 12, 1983.56 CMS-1609-F 2. A multidisciplinary team is used to assess the physical, psychological and spiritual needs of the patient and family to develop an overa ll plan of care and to provide coordinated

care. 3. Pain and collateral symptoms associated with the terminal illness and previous treatments are controlled, but no heroic efforts are made to cure the patient.
4. Bereavement follow-up is provided to help the family cope with their emotional suffering. 18
It was also noted that the statute provides that an individual, u pon making an election to receive hospice coverage, would be deemed to have waived payments for certain other benefits in addition to choosing a palliative mode of treatment, except in “exceptional and unusual circumstances” as the Secretary may provide (s ection 1812(d)(2)(A) of the Act). Furthermore, the hospice plan of care must include assessment of the individual’s needs and identification of the services to meet those needs including the ma nagement of discomfort and symptom relief.
Several Senators testified at a Septem ber 15, 1983 Hearing before the Subcommittee on Health of the Committee on Finance regarding o ngoing concerns with the new Medicare hospice benefit. These Senators made it clear that th e new healthcare delivery system—hospice—was to offer an alternative to institutio nalized care for the terminally ill. Concerns were expressed over the possibility that “store front” hospices would crop up as a result of Medicare reimbursement being made available for this service. The Se nators stated that they wanted to maintain

18 “Background Materials on Medicare Hospice Benefi t Including Description of Proposed Implementing Regulations,” September 9, 1983. Committee on Finance, United States Senate, S. Prt. 98-88, p. 1.57 CMS-1609-F flexibility within the benefit without creating incentives for fraud and abuse. 19 Similarly, industry advocates were also c oncerned that availability of Medicare reimbursement would attract interest from those simply interested in a new source of revenue . The hospice industry agreed that the Medicare hospice benefit was cr eated, not as a new reve nue source for providers, but as a benefit choice for patients and their families. 20 Terminally ill Medicare beneficiaries could decide not to elect hospice care, and they would continue to be able to receive all other Medicare services availa ble, such as home health services that include skilled nursing and home health aide care, inpatient hospital services, s upplies, medications, and DME. For example, in response to recent home health rulemaking, we received anecdotal comments that some home health agencies are providing palliative care to homebound termin ally ill individuals who have not elected the hospice benefit. In those instance s, the patient is receiving home health aide services, nursing care, and supp lies needed under the home health benefit, and the DME and medications that the patient need s are still covered under Medicare Parts B and D. However, we note that, with the exception of home health, th ese services typically have associated copayments and would be rendered through various di fferent providers or suppliers, perhaps with a lack of continuity and coordination that would be provided under the Medicare hospice benefit. Under the Medicare hospice benefit, the hospice-e ligible individual would receive all of those services, and more, w ith the hospice provider assuming the clinical and professional

19 Testimony by Senators George Mitchell and Roger W. Jepsen. Testimony before the Subcommittee on Health of the Committee on Finance, United States Senate, September 15, 1983.

20 Position paper submitted by Donald J. Gaetz, presiden t, National Hospice Organization. “Subcontracting for Nursing Services under the Medicare Hospice Benefit.” Testimony before the Subcommittee on Health of the Committee on Finance, United States Senate, September 15, 198358 CMS-1609-F responsibility of coordinating all of the necessa ry care and services with minimal beneficiary cost sharing required outside of the hospice benefit.
3. Hospice Care Today
The Medicare hospice benefit was a unique add ition to the U.S. health care system. Prior to the implementation of the Medicare hospice be nefit, the government reimbursed providers based on the cost of delivering care. Reimbur sement under the Medicare hospice benefit is a fixed, per day, per level of care pr ospective payment structure. By creating a fixed payment for hospice care, the provider is at risk for costs that exceed the payment amount; and, if the fixed payment exceeds the cost of care, the hospice is allowed to keep the gain. Under the Medicare hospice benefit, the provider has clinical flexibil ity in how hospices can render care to best meet the needs of the individual patien t and his or her family. This is viewed as a joint partnership between the providers of care and the federal gove rnment to provide services and the financial payment for those services for those who are dying. Hospice advocates, during the development of the benefit, welcomed this type of reimburseme nt structure for the flexibility it afforded in providing individuali zed hospice services 21 . The hospice industry conti nues to recognize that the Medicare hospice benefit has al ways been a risk-based clinical and economic model of care stating that the fixed reimbursement model me ans “a fixed sum for all- inclusive end of life
care.” 22 Similar to the more recent medical home model for primary care, hospice has always

21 Testimony by Dr. Daniel Hadlock, Hospice, Inc, before the Select Committee on Aging. House of Representatives, May 25, 1983.

22 “NHPCO Comments on Washington Post Article”, Retrieved on December 27, 2013. http://www.nhpco.org/press-room/press-re leases/nhpco-responds-washington-post59 CMS-1609-F been patient-centered, comprehensive, team-base d, coordinated, accessible, focused on quality and safety, and extends throughout the continuum of care.
Throughout the development of the Medicare ho spice benefit, experts in the hospice field believed that the success or failure of hospi ce, under Medicare, would depend on the hospice plan of care, appropriate implementation of the plan of care, and the hospice team sharing the same philosophy of patient-centered, comprehensive, and holistic care. 23 A coordinated, collaborative approach to each and every hospice pa tient and his or her family was considered to be the most important component of the success of the Medicare hospice benefit. 24 During the development of the Medicare hospice benefit, th ere were concerns by both the Congress and the hospice industry regarding the potential for fraud and abuse by some providers resulting from the enactment of a Medicare hospice benefit. 25 One drafter of the legi slation expressed that he wanted to maintain benefit flexibility by a llowing hospices to rende r individualized care, promoting access to needed services, and providing high quality care while maintaining fiscal integrity of the Medicare Trust Funds. 26 This was a benefit founded in trust—trust that hospices would provide the comprehensive care and serv ices promised during the benefit development

23 Cefalau, C., Ruiz, M. The Medicare Hospice Benefit: A Changing Philosophy of Care? Annals of Long-Term Care: Clinical Care and Aging. 2011; 19(1): 43-48.

24 Cefalau, C., Ruiz, M. The Medicare Hospice Benefit: A Changing Philosophy of Care? Annals of Long-Term Care: Clinical Care and Aging. 2011; 19(1): 43-48.

25 Comments by Congressman Bill Gradison, at the Hearing before the Subcommittee on Health of the Committee of Ways and Means, House of Represen tatives, March 25, 1982; Testimony by Rosemary Johnson-Hurze ler, CEO, The Connecticut Hospice, Testimony before the Subcommittee on Health of the Committe e on Finance, United States Senate, September 15, 1983; Testimony by Margaret Cushman, MSN, RN, Chairman of Govern mental Affairs, National Asso ciation of Home Health and Hospice Care (NAHC) before the Subcommittee on Health of the Committee on Finance, United States Senate, September 15, 1983.

26 Comments by Congressman Bill Gradison, at the Hearing before the Subcommittee on Health of the Committee of Ways and Means, House of Represen tatives, March 25, 1982.60 CMS-1609-F and trust that Medicare would be a pa rtner in helping to share the costs. 27 It was very clear throughout the development, and years after the im plementation of the Medicare hospice benefit, that hospices were expected to make good on thei r promise to do a better job than conventional Medicare services for thos e who were at end-of-life. 28 Deliberately, the law made no provision for discharging a hospice patient except under very limited circumstances and only after making attempts to rectify those circumstances. 29 This meant that once a beneficiary elected hospice and was under one of the three 60-day election periods, a hospice could not ju st discharge a patient for the sake of cost or convenience. Curre ntly, there are two 90-da y election periods and unlimited 60-day election periods, as long as the beneficiary continues to meet eligibility criteria. However, hospices are still limited in the reas ons for discharge, and still cannot discharge a hospice beneficiary for cost or convenience. Our regulations at §418.26(a) state the reasons a hospice can discharge a benefici ary from hospice services.
Since the implementation of the Medicare hospi ce benefit, hospice utilization continues to grow. More Medicare beneficiaries are beco ming aware and educated of the benefits of hospice care. In recent years, the percentage of Medicare deaths fo r patients under a hospice election has increased from 20 percent in 2000 to 44 percent in 2012. Total expenditures have increased from over $9.2 billion in 2006 to over $15.1 billion in 2013. This observed growth far outpaces the annual market basket increases and is not solely reflectiv e of an increase in

27 Testimony by Congressman Leon Panetta, to the Subcommittee on Health of the Committee of Ways and Means, House of Representatives, March 25, 1982.

28 Hoyer, T. (1998). A History of the Medicare Hospice Benefit. The Hospice Journal, 13(1-2), 61-69.

29 Hoyer, T. (1998). A History of the Medicare Hospice Benefit. The Hospice Journal, 13(1-2), 61-69.61 CMS-1609-F utilization. We note that aver age spending per beneficiary has increased substantially between 2006 and 2013 from approximately $9,833 in 2006 to $11,458 in 2013. 30
Section 3132(a) of the Affordable Care Act provides statutory authority for CMS to reform the hospice payment system no earlier th an October 1, 2013. We presented data in the FY 2014 Hospice Wage Index and Payment Rate Update Final Rule, regarding diagnosis reporting on hospice claims and opioids paid under Part D for beneficiaries in a hospice election (78 FR 48234). Recent analysis of other Part A, Part B and Part D spending in 2012 (including beneficiary cost-sharing payments of $135.5 m illion for Parts A and B and $48.2 million for Part D) shows that there was an additional $1 billi on in total Medicare spending during a hospice election (see section III. A.4). This includes Part A payments for inpatient hospitalizations and SNF stays, as well as Part B payments for outpa tient and physician servic es, diagnostic tests and imaging, and ambulance transports. There is con cern that many of these services should have been provided under the Medicare hospice benefit as they very likely were for services related to the terminal illness and related conditions. This strongly suggests that hospice services are being “unbundled”, negating the hospice philosophy of comp rehensive, holistic care and shifting the costs to other parts of Medicare, and creating additional cost-sharing burden to those vulnerable Medicare beneficiaries who are at end-of-life. Duplicative payments for hospice-covered services also threaten the program integrity and fiscal viability of the hospice benefit.
Reports by both the Medicare Payment Advi sory Committee (MedPAC) and the Office of the Inspector General (OIG) expressed simila r concerns regarding the unbundling of services

30 Calendar year 2013 expenditures and average spending per beneficiary were calculated using hospice claims data from the Chronic Conditions Data Warehouse (CCW), accessed on February 27, 2014.62 CMS-1609-F meant to be covered under the hospice per diem , capitated payment system. Similar to the analysis presented above, MedPAC also anal yzed non-hospice utilizatio n and spending patterns through Parts A, B and D for Medicare hospice benefi ciaries. MedPAC also concluded that over $1 billion FFS spending was attributed to providing services reported as unrelated to the terminal conditions of hospice enrollees. MedPAC went on to state that 58 percent of Medicare hospice enrollees received a service or drug outside of the hospice benefit over the course of a hospice episode. The highest shares of spending were on drugs and inpatient services. 31 In addition, the OIG reported in June of 2012 that Medicare c ould be paying twice for prescription drugs for beneficiaries receiving services under the Me dicare hospice benefit and recommended that CMS increase its oversight to make su re that Part D is not paying fo r medications already included in the Medicare hospice per diem payment rates. 32 As a result of the OIG report, the CMS’ Center for Program Integrity (CPI) began recoupment efforts for analgesics from Part D plan sponsors.
Ongoing Part D memo guidance has also been issued to clarify existing coverage and payment policies. All Part D memo guidan ce can be found on the Hospice Center webpage under “Coordination of Benefits” at http://www.cms.gov/Center/Provider-Type/HospiceCenter.html . In addition, the proposed rule solic ited comments on processes that could be developed to address the inappr opriate Part D reimbursement for medications that should be covered under the Medicare hospice per diem (see Section III.I). The purpose of these Part D guidance memos, in response to OIG reports of possible duplication of payment for drugs under

31 MedPAC, “Assessing payment ad equacy and u pdating payments: hospice services ”, December 13 2013. Available at: http://www.medpac.gov/transcript s/hospice_December2013_Public.pdf

.
32 Office of the Inspector General, Department of Health and Human Services. Medicare Could be Paying Twice for Prescription Drugs for Beneficiaries in Hospice. June, 2012. A-06-10-00059.63 CMS-1609-F the hospice per diem and Part D plans, was to ou tline the expectations regarding coordination of benefits and coverage responsibility between Part D plan sponsors and hospices. The ongoing concern is that hospices are not providing the broad range of medicati ons required by hospice beneficiaries during a hospice election, especially for those drugs classified as analgesics, antianxiolytic, antiemetics and laxatives (generally considered essential medications for palliation in a hospice population). 33 Comments received, regard ing this memo guidance, highlighted that there are multiple interpretations as to the meaning of what are considered “related conditions.” Additionally, it was noted in these comments that the terms, “terminal illness”, “terminal diagnosis”, “qualifying term inal diagnosis”, and “terminal prognosis” were used interchangeably and with varying in terpretations as to their meanings.
We believe the summary of the “Devel opment of the Hospice Benefit” and the “Legislative history of the Medicare Hospice Be nefit” clearly captures the expectation that hospices are to provide holistic and comprehensive services under the Medicare hospice benefit. As stated in the 1983 proposed and final rules, and reiterated in the FY 2014 Hospice Wage Index and Rate Update proposed and final rules: “It is our general view that the waiver required by law is a broad one and that hospices are require d to provide virtually al l of the care that is needed by terminally ill patients” (48 FR 56010). Our expectation continues to be that hospices offer and provide comprehensive, virtually al l-inclusive care, and with a patient-centered approach. In order to pres erve the Medicare hospice bene fit and ensure that Medicare beneficiaries continue to have access to comprehe nsive, high-quality and appropriate end-of-life

33 World Health Organization. (January, 2013). Essential Medications in Palliative Care.64 CMS-1609-F hospice care, we will continue to examine progr am vulnerabilities and implement appropriate safeguards in the Medicare hospi ce benefit, when appropriate.

4. Definition of “Terminal Illness”
Since the implementation of the Medicare hospi ce benefit, we have defined a “terminally ill” individual to mean “that the individual has a medical prognosis th at his or her life expectancy is 6 months or less if the illness runs its norma l course” (§418.3). We have always interpreted “terminally ill” to mean a time frame of life expectancy and exp ect that the individual’s whole condition plays a role in that prognosis. Comments received in response to prior years’ proposed rules state that longstanding, preexisting conditions should not be considered related to a patient’s terminal illness or related conditions and that chronic, stable conditions play little to no role in a patient’s terminal illness or relate d conditions. Commenters have also stated that controlled pain and symptoms are not considered to be related to a patient’s terminal illness or related conditions, that not all pain is related to the terminal illness a nd related conditions, and that comorbidities and the maintenance of comorb idities are not related to a patient’s terminal illness or related conditions. These commenters be lieved these types of conditions should not be included in the bundle of services covered under the Medicare hospi ce benefit. As previously stated in response to those comments, we belie ve these conditions are included in the bundle of covered hospice services. The original implem enting regulations of the Medicare hospice benefit, beginning with the 1983 Hospice propos ed and final rules (48 FR 38146 and 48 FR 56008), articulate a set of requirements that do no t delineate between pre-existing, chronic, or controlled conditions. To be eligible to rece ive hospice services unde r the Medicare hospice benefit, the individual must be en titled to Part A and must be certified as being terminally ill, meaning that his or her medical pr ognosis is a life expectancy of 6 months or less if the illness65 CMS-1609-F runs its normal course. We have recognized th roughout the federal regula tions at 42 CFR Part 418 that the total person is to be assessed, including acute and chronic conditions, as well as controlled and uncontrolled conditio ns, in determining an individual’s terminal prognosis. All body systems are interrelated; all conditions, active or not, have th e potential to affect the total individual. The presence of co morbidities is recognized as pote ntially contributing to the overall status of an individual and shoul d be considered when determining the terminal prognosis. The National Hospice and Palliative Care Organi zation (NHPCO) define s “comorbidity,” as: “known factors or pathological disease impactin g on the primary health problem and generally attributed to increased risk fo r poor health status outcomes.” 34
We have defined “palliative care”—the na ture of the care provided under the hospice benefit—in our regulations at §418.3 to mean patient and family -centered care that optimizes quality of life by anticipating, preventing and tr eating suffering. Pallia tive care throughout the continuum of illness involves addressing physical, intellectual, emotional, social and spiritual needs and to facilitate patient autonomy, access to information and choice. Note that, in this definition, palliative care is to an ticipate and prevent, as well as treat, suffering. This indicates that hospices are to be proactive in their care approach and not just reactive to pain and symptoms after they arise.
Because hospice care is unique in its compre hensive, holistic, and palliative philosophy and practice, we want to ensure that the hospi ce services under the Medicare hospice benefit are preserved and not diluted, or unbundled in any way. For context, the definition of illness means

34 National Hospice and Palliative Care Organization: “S tandards of Practices for Hospice Programs”, 2010. Retrieved on February 20, 2014 from: http://www.nhpco.org/nhp co-standards-practice66 CMS-1609-F “an abnormal process in which aspects of the so cial, physical, emotiona l, or intellectual condition and function of a person are diminished or impaired compared with that person’s previous condition”. 35 An intensive review of the hist ory of hospice, hospice philosophy and legislative actions described a bove provided the basis for discu ssion among several CMS clinical leaders across several agency components as to the meaning of “terminal illness” within the context of the Medicare hospice benefit. After a review of all of the history listed above, the clinical collaborative effort across CMS solicited comments on the following definition of “terminal illness”: “Abnormal and advancing phys ical, emotional, social and/or intellectual processes which diminish and/or impair the in dividual’s condition such that there is an unfavorable prognosis and no reasona ble expectation of a cure; not limited to any one diagnosis or multiple diagnoses, but rather it can be the collect ive state of diseases and/or injuries affecting multiple facets of the whole person, are causi ng progressive impairment of body systems, and there is a prognosis of a life expectancy of 6 mo nths or less”. We did not propose any definitions but asked for public input on this definition for possible future rulemaking.

5. Definition of “Related Conditions”
Section 1812(d)(2) of the Act provides that an individual, upon ma king an election to receive hospice coverage, would be deemed to have waived payments for certain other benefits except in "exceptional and unusual circum stances as the Secretary may provide.” Comments received on the 1983 Hospice proposed rule speci fically asked for further CMS clarification regarding the concept of “related conditions.” Specifically, the commen ters suggested a more detailed definition of what constitutes care for a patient’s terminal illness or related conditions

35 Mosby’s Medical Dictionary, 8th edition, 2009, Elsevier67 CMS-1609-F (which is the responsibility of the hospice) and what constitutes care for unrelated conditions (for which out-of-hospice Medicare payment may be made) (48 FR 56010). Our response was: “...we have not received any suggestions for id entifying ‘exceptional or unusual’ circumstances that warranted the inclusion of a specific provision in the regu lations to accommodate them. Most of the comments that were made attempte d to suggest this exception as a means of routinely providing non-hos pice Medicare financing for the expens e of costly services needed by hospice patients, and we do not view this as an appropriate interpretation of the law” (48 FR 56011). The law allows for circumstances in wh ich services needed by a hospice beneficiary would be completely unrelated to the terminal i llness and related conditions, but we believe that this situation would be the rare exception rather than the norm. We reiterated this position in the FY 2014 Hospice Wage Index and Rate Update proposed rule (78 FR 27826) as a reminder of the expectation of the holistic na ture of hospice services that sh all be provided under the hospice benefit, as well as to remind hospices about diagnosis reporting on hospice claims.
Therefore, in keeping with th e tenets of hospice philosophy de scribed in this section, the intent of the Medicare hospice benefit, expectations of comprehensive care, and in response to previous and ongoing stakeholder comments, the CMS clinical collabora tive effort solicited comments on the following definition of “related conditions”: “Those conditions that result directly from terminal illness; and/or result from the treatment or medication management of terminal illness; and/or which interact or potentia lly interact with terminal illness; and/or which are contributory to the symptom burden of the terminally ill individual; and/or are conditions which are contributory to the prognosis that the individual has a life expectancy of 6 months or less”. We did not propose any new regulations but as ked for public input on this definition for possible future rulemaking.68 CMS-1609-F We received a significant number of comment s representing diverse stakeholder groups on the definitions of “terminal illness” and “rel ated conditions” and the impact it may have on the stakeholder groups whom provided comments. We will consider these comments and the issues raised for possible future rulemaking. We also received several comments from End Stage Renal Disease (ESRD) stakeholder groups, noting that the solicitation of comments on the definition of “terminal illness” and “related conditions” would impede access to hosp ice services for ESRD beneficiaries with nonrenal terminal conditions. These commenters st ated that many hospices do not admit patients with ESRD because they do not want to bear the financial liability for covering dialysis. These commenters went on to say that if CMS proposes these definitions, that there should be an exception to allow those patients receiving dialysis to continue to do so under Part B while receiving hospice care under Part A. We would like to clarify that the solicitation of comments regarding the definitions of “terminal illness” and “related conditions” was not intended to address ESRD beneficiary access to hospice serv ices with non-renal terminal conditions. As such, the current policy at Chapter 11 of th e Medicare Benefit Policy Manual (Pub. 100-02), which states: “If the patient’s terminal condition is not related to ESRD, the patient may receive covered services under both the ESRD benefit an d the hospice benefit. Hospice agencies can provide hospice services to patients who wish to continue dialysis treatment”, remains in effect.69 CMS-1609-F C. Guidance on Determining Beneficiaries’ Eligibility for Hospice An individual must be certified by the hos pice medical director and the individual’s attending physician (if designated by the individu al) as being terminally ill, meaning that the individual has a medical prognosis of a life expectan cy of 6 months or less in order to receive the Medicare hospice benefit. However, we also ha ve recognized the challe nges in prognostication. It has always been our expectation that the certifying physicians will us e their best clinical judgment, based on the initial and updated comp rehensive assessments and collaboration with the hospice interdisciplinary group (IDG) to determine if the indi vidual has a life expectancy of six months or less with each certif ication and recertification. As stated in previous rules, in reaching a decision to certify that the patient is terminally ill, the hospi ce medical director must consider at least the following inform ation per our regulations at §418.25(b):

• Diagnosis of the terminal condition of the patient.

• Other health conditions, whether rela ted or unrelated to the terminal
condition.

• Current clinically relevant in formation supporting all diagnoses. We do recognize that making a prognosis is not an exact science. Section 322 of the Benefits Improvement and Protection Act of 2000 (BIPA) (Pub. L. 106-554) amended section 1814(a) of the Act by clarifying that the certification of an indi vidual who elects hospice "shall be based on the physician's or medical director's clinical judgment regarding the normal course of the individual's illness.'' The amendment clarif ied that the certification is based on a clinical judgment regarding the usual course of a terminal illness, and recognizes the fact that making medical prognostications regarding life expectan cy is not exact. However, the amendment regarding the physician's c linical judgment does not negate the fact that there must be a clinical70 CMS-1609-F basis for a certification. A hospice is required to make certain that the physician's clinical judgment can be supported by clinical informati on and other documentation that provide a basis for the certification of 6 months or less if the illness runs its normal course. While the expectation remains that the hospi ce physician will determine a beneficiary’s eligibility for hospice, this is not to say that this decision cannot be re viewed if there is a question as to whether or not th e clinical documentation supports a patient’s hospice eligibility as hospice services provided must be reasonable and necessary for the palliation and management of the terminal illness and related conditions. The goal of any review for eligibility is to ensure that hospices are thoughtful in th eir eligibility determin ations so that hospice beneficiaries are able to access their benefits appropriately. CMS’ right to review clinical documentation that supports physician certifications ha s been established in federal court and by the agency in an administrative ruling. (See, for example , HCFA Ruling, 93-1 Weight to be Given to a Treating Physician's Opinion in Determining Medicare Co verage of Inpatient Care in a Hospital or Skilled Nursing Facility (May 18, 1993); Maximum Comfort, Inc v. Leavitt (512 F.3d 1081 (9th Cir. 2007); MacKenzie Medical Supply v. Leavitt ( 506 F.3d 341 (4th Cir. 2007))). In order to be covered under Medicare Part A, the care must also be reasonable and necessary. There has always been a statutory prohibi tion (section 1862 (a)(1)( C) of the Act) against payment under the Medicare program for services which are not reasonable and necessary for the palliation or management of terminal illness. Additionally, se ction 1869(a)(1) of the Act makes clear that the Secretary makes determinations concerning entitlement, coverage and payment of benefits under part A and part B of Medicare. We are reminding providers that there are multip le public sources available to assist in determining whether a patient meets Medicare ho spice eligibility criter ia (that is, industry-71 CMS-1609-F specific clinical and functional assessment tools and information on MAC websites). Additionally, we expect that hospices will use th eir expert clinical judgment in determining eligibility for hospice services. We expect that documentati on supporting a 6-month or less life expectancy is included in the beneficiary’s me dical record and available to the MACs when requested. If a beneficiary improves and/or stabilizes sufficiently over time while in hospice such that he/she no longer has a prognosis of 6 months or less from the most recent recertification evaluation or definitive interim evaluation, that beneficiary shoul d be considered for discharge from the Medicare hospice benefit. Such benefi ciaries can be re-enrolled for a new benefit period when a decline in their clinic al status is such that their li fe expectancy is again 6 months or less. On the other hand, beneficiaries in the terminal stage of their illness that originally qualified for the Medicare hospice benefit but st abilize or improve while receiving hospice care, yet have a reasonable expectati on of continued decline for a li fe expectancy of less than 6 months, remain eligible for hospice care. The ho spice medical director must assess and evaluate the full clinical picture of the Medicare hospice beneficiary to make the determination whether the beneficiary still has a medi cal prognosis of 6 months or le ss, regardless of whether the beneficiary has stabilized or improved. There are prognostication tools av ailable for hospices to assist in thoughtful evaluation of Medicare benefi ciaries for determining terminally ill eligibility for the Medicare hospice benefit. We expect ho spice providers to use the full range of tools available, including guidelines, comprehensive assessments, and the complete medical record, as necessary, to make responsible a nd thoughtful determinations regardi ng terminally il l eligibility. We have always acknowledged the uniquene ss of every Medicare beneficiary and support thorough and thoughtful evaluation in dete rmining whether beneficiaries meet the72 CMS-1609-F eligibility criteria for be ing certified as terminally ill. We continue to support the concept of shared decision-making, patient choice and the ri ght care at the right time to allow Medicare beneficiaries full and appropriate access to thei r Medicare benefits, in cluding hospice care. Furthermore, Medicare hospice beneficiaries have certain guaranteed rights. If the hospice or designated attending physi cian believes that the hospice be neficiary is no longer eligible for hospice care because his or her condition has im proved, and the beneficiary does not agree with that determination, the hospice beneficiary has the right to ask for a review of his or her case. The hospice should provide the hospice beneficiary with a notice that explains his or her right to an expedited review by a contracted independent reviewer hired by Medicare, called a Quality Improvement Organization (QIO). If the hospice beneficiary asks for this appeal, the QIO will determine if the beneficiary continues to meet eligibility requirements for hospice services. The provider is expected to continue to provide services for the pa tient following a favorable decision by a QIO. In the QIO decision, the QIO should a dvise the provider as to why it disagrees with the hospice, which should help the provider to re-evaluate the disc harge decision. If at another point in time during a hospice elec tion, the hospice believes that the patient is no longer hospice eligible, the provider should timely deliver a CM S-10123 to notify the patient of its decision to discharge. The patient could agai n appeal to the QIO. Medicare beneficiaries have the right to be included in decisions about th eir care, the right to a fair pr ocess to appeal decisions about payment of services, and the right to privacy and confidentiality. No proposals were made regarding hospice eligibility nor were comments solicited. This discussion only provides background information regarding current procedures for determ ining eligibility for hospice services under the Medicare hospice be nefit and beneficiary appeal rights.73 CMS-1609-F D. Timeframe for Hospice Cap Determ inations and Overpayment Remittances When the Medicare hospice benefit was im plemented, the Congress included 2 limits on payments to hospices: an inpatient cap and an aggregate cap, as described in sections 1861(dd)(2)(A)(iii) and 1814(i)(2)(A) through (C) of the Act. The hospice inpatient cap limits the total number of Medicare i npatient days to no more than 20 percent of a hospice’s total Medicare hospice days. The intent of the inpa tient cap was to ensure that hospice remained a home-based benefit. The hospice aggregate cap limits the total aggregate payment any individual hospice can receive in a year. The in tent of the hospice aggregate cap was to protect Medicare from spending more for hospice care than it would for c onventional care at the end of life. The aggregate cap amount was set at $6,500 per beneficiary when firs t enacted in 1983; this was an amount hospice advocates agreed wa s well above the average cost of caring for a hospice patient. 36 The $6,500 amount is adjusted annually by the change in the medical care expenditure category of the consumer price index for urban consumers from March 1984 to March of the cap year. For the 2013 cap y ear, the cap amount was $26,157.50 per beneficiary. The cap year is defined as the period from November 1 st to October 31 st , and was set in place in the December 16, 1983 hospice final rule (48 FR 56022). The cap amount is multiplied by the number of Medicare benefi ciaries who received hospice care from a particular hospice during th e year, resulting in its hospice aggregate cap, which is the allowable amount of total Medicare payments that hospice can receive for that cap year. There are two different methods for countin g a hospice’s beneficiaries: the streamlined and

36 National Hospice and Palliative Care Organization (NHPCO ), “A Short History of the Medicare Hospice Cap on Total Expenditures.” Retrieved on February 19, 2014 at: http://www.nhpco.org/sites/default/files/pub lic/regulatory/History_of_Hospice_Cap.pdf74 CMS-1609-F the patient-by-patient proportional methods. Which method a hospice can use to count beneficiaries depends on a number of factors, as described in our regulations at §418.309 and in section 90.2.3 of the hospice Benefit Policy Ma nual (IOM 100-02, chapter 9, available at http://www.cms.gov/Regulations-and-Guida nce/Guidance/Manuals/Downloads/bp102c09.pdf ). A hospice's total Medicare payments for the cap y ear cannot exceed the hospice’s aggregate cap. If its aggregate cap is exceeded, then the hos pice must repay the excess back to Medicare. While hospices rarely exceed the inpatient ca p, in its March 2012 Report to the Congress, MedPAC reported that an incr easing number of hospices ar e exceeding the aggregate cap. MedPAC also noted that above-cap hospices were almost all for-profit with very long lengths of stay, high live discharge rate s, and very high profit margins before the return of cap overpayments. 37 The percentage of hosp ices exceeding the aggregate cap rose from 2.6 percent in 2002 to a peak of 12.5 percent in 2009. In 2010, the percentage of hospices exceeding the aggregate cap decreased to 10.1 percent. 38 Our hospice reform contractor also perfor med analysis on the number of hospices exceeding the aggregate cap with results similar to MedPAC’s, where an increasing percentage of hospices exceeded their caps from 2006 (9.1 percent) to a peak in 2009 (12.8 percent), followed by a decline through 2011 (10.5 percent). Ho wever, the analysis shows an increase in 2012, with 11.6 percent of hospices exceeding their aggregate caps. Additionally, analysis of above-cap hospices showed that the average overpayment per beneficiary has increased over time, up 35.2 percent from 2006 ($7,384) to 2012 ( $9,983). Using above-cap hospices, we also found that the average over payment amount went from $732,103 in 2006 to $440,727 in 2011,

37 MedPAC, “Report to Congress: Medicare Payment Policy”, March 2012, pp. 293-295, 302.

38 MedPAC, “Report to Congress: Medicare Payment Policy”, March 2013, p. 276.75 CMS-1609-F but that this downward trend is estimated to change in 2012, when th e average overpayment amount is estimated to increase to $547,011. We also compared hospices’ year-end percenta ge of their aggregate cap total that they had received in Medicare payments over time. Specifically, we examined where hospices ended their cap year in terms of Medicare reimburseme nts received, relative to that year’s aggregate cap limit, by comparing the 2006 cap year to the 2012 cap year. Analysis revealed that more hospices ended the 2012 cap year “just below” their aggregate cap than in 2006. The cap analyses which are referenced in this section are available in the May 2014 Technical Report was posted in May, 2014 on our Hospice Center webpage at: http://www.cms.gov/Center/ProviderType/Hospice-Center.html

. The results from these recent analyses on the hospice aggregate cap highlight the importance of hospices monitoring their aggregate cap and ensuring that th e beneficiaries under their care are truly eligible for hospice servi ces. In the FY 2010 hospi ce wage index proposed rule, we solicited comments on the aggr egate hospice cap (74 FR 18920–18922). Many commenters wanted more timely notification of cap overpayments. Many also requested that hospices be given access to be neficiaries’ full hospice utiliz ation history, as having this information would enable hospices to better manage their aggregate cap. In response to concerns from hospices, we redesigned the Provider Statis tical and Reimbursement (PS&R) system in 2011, so that hospices can now easily manage their inpatient and a ggregate caps. The redesigned PS&R enables hospices to calculate estimated caps to monitor their cap status at different points during the cap year, and also enables them to calcu late their caps after th e cap year ends. Our current practice is for the Medicare Admi nistrative Contractors (MACs) to complete the hospice cap determinations for both the inpa tient and the aggregate caps 16 to 24 months76 CMS-1609-F after the cap year in order to demand any ove rpayment. We are concerned about this long timeframe, particularly given that the percenta ge of hospices exceeding the aggregate cap is increasing, along with the average overpayment per beneficiary. To better safeguard the Medicare Trust Funds, we believe that demands for cap overpayments should occur sooner. This is now possible due to the redesigned PS&R system. Therefore, for the 2014 cap year and subse quent cap years, we proposed to amend §418.308 and require that hospices complete their inpatient and aggregate caps determination within 5 months after the cap year ends (that is, by March 31 ) and remit any overpayments at that time. We proposed that the MACs would then reconcile all payments at the final cap determination. If a provider fails to file its i npatient and aggregate cap determination 5 months after the end of the cap year, we proposed that payments to the provider would be suspended in whole or in part until the self-determined cap is filed with the Medicare contractor. We proposed to further amend §418.308 and §405.371 to state that payments to a hospice would be suspended in whole or in part, for failure to file a self-determined inpatient and aggregate cap determination. This is similar to the current prac tice followed by all other pr ovider types that file cost reports with MACs. We proposed that hospices woul d be provided a pro-forma spreadsheet that they would use to calculate their caps to remit any overpay ments. The redesigned PS&R system provides the inpatient days, total days, beneficiary counts, and Medicare payments that are needed to calculate any inpatient or aggregate cap overpay ments. The redesigned system can provide needed data whether a hospice uses the stream lined method or the patient-by-patient proportional method for its aggregate cap calcu lation. All hospices are required to register in Individuals Authorized Access to CMS Computer Services (IACS) and obtain their PS&R report from the77 CMS-1609-F PS&R system. Hospices experiencing difficulties can request a copy of their PS&R report from their MAC. Twenty six public comments and our re sponses are summarized below.
Comment : Several commenters suggested that the Medicare Administrative Contractors (MACs) should complete the initial cap determ ination instead of the hospices. Some of the concerns are that the proposal would increase the hospices admini strative costs, and this would be especially burdensome for small hospices. Ther e were suggestions that CMS establish criteria to target providers that are mo re likely to exceed the cap if the concern was about the MACs workload. Response : The reason for this proposal is for hospices to determine and remit any overpayment. We do not believe this proposal would be overly burdensome to the hospices; some hospices are already using the information n eeded to complete the self-determined cap to manage their cap. The net reimbursement and be neficiary count needed to calculate the cap overpayment are reported on the Provider Statis tical & Reimbursement (PS&R) report. A proforma spreadsheet for calculating the cap will be provided. The MACs are still required to issue the final cap determination and reco ncile any overpayments received.
Comment : Some commenters suggested that th e cap calculation should be integrated with the cost report that hospices are currently required to file in order to minimize the administrative burden on the hospices. Response : This suggestion is not practical at this time. The hospice cap period of November 1 – October 31 is not aligned with th e hospices’ various cost reporting fiscal years, and the hospice cap calculation is not based on the Medicare cost report.78 CMS-1609-F Comment : Commenters were concerned that th e proposal for hospices to file a selfdetermined cap calculation and remit any overpay ment within 5 months after the cap period would not achieve the stated goal of protecting the Medicare Trus t Funds. Early calculation of the hospice cap liability will underestimate the amount owed by hospices that are over the cap. The 5 months proposed for hospices to file thei r self-determined cap is vulnerable to gaming because a hospice could choose to perform its cap calculation immediately after the close of the cap year when its cap liability will be lowe st. Some commenters suggested that CMS should instruct providers not to request data to calculate their cap liability earlie r than 90 days after the end of the cap period in order to allow for most of the hospice clai ms to be processed before the completion of the cap calculation. Response : We agree that allowing up to 5 m onths to calculate the cap without a minimum time for allowing claims to process is vulnerable to “gaming” by hospices. The goal is to require the hospices to submit an accurate cap de termination within 5 mont hs of the end of the cap year. In order to increase th e reliability of the determinati on, we will require that hospices use payment data not earlier than 3 months after the cap year to determine their cap overpayment due 5 months after the cap year. This will improve the accuracy of the calculation by ensuring that most claims have been processed, while still allowing a reasonable period of time for the hospice to complete the calculation. For example, the cap year ending October 31, 2015 would result in th e hospice providing its cap determination and any associated ove rpayment to their MAC by March 31, 2016. In order to allow a reasonable number of claims to be processed, th e hospice shall wait at least 3 months after the end of the cap year, or January 31, 2016, before attempti ng to calculate the cap overpayment. Thus, the cap determination would be calculated after January 31, 2016 but before79 CMS-1609-F March 31, 2016 and the overpayment would be submitted at the same time as the cap determination. We plan to continue to monitor hospices th at may be “gaming” the system, and CMS has the option of performing a cap review at any time after the end of the cap year, if needed. In addition, MACs will review the hospices’ cap determin ations at a later time in order to ensure that they are accurate and to reconcil e them with updated claims data.
Comment : Several commenters suggested that CMS should not recoup any overpayment as a result of the self-determined cap calculation until the MACs issue the final cap determination. Response : While completing the self-determined calculation as proposed will inform hospices about whether or not they are over the ca p as early as possible, it will not protect the Medicare Trust Fund if the overpayments are not recouped. Other provider types that file Medicare cost reports 5 months after the cost reporting year end are required to remit any overpayments at the time the cost reports are f iled. Sometimes the final settlements of Medicare cost reports are issued 2 to 3 y ears after the cost reports were f iled. The same process is proposed for hospice providers, since the cap calculati ons are not reconciled on the cost reports themselves. MACs will reconcile the final payments when it issu es the final cap determination. The final cap determination includes th e appeal rights for the hospice.
Comment : Several commenters were concerned that the proposal did not address the availability of the Extended Repayment Sche dule (ERS) for providers that exceed the cap. Response : This proposal is not changing the curren t ERS availability. Providers that have overpayments as a result of the self-determined cap calculation will follow the same overpayment processes that were in effect prior to this requirement.80 CMS-1609-F Comment : A commenter suggested that CMS should consider eliminating the requirement that hospices determine the inpatie nt cap overpayment because the calculation involved is more complex than those required fo r determining the aggregate cap. Since most providers do not exceed the inpatient cap, they are not experienced in performing the calculation required. Response : We agree with the commenter that mo st providers do not exceed the inpatient cap limitation, and that calculation of the inpatie nt cap is more complex than the aggregate cap calculation. We are eliminating the requirement that hospices complete a self-determined inpatient cap liability in order to address stakeh olders concerns regarding the complexity of the calculation. The Medicare contractors will continue to calculate the inpatient cap limitation. We will continue to monitor the inpatient cap and co nsider implementing in the future if needed. However, the self-determined aggregate cap calcu lation proposal is being implemented in this final rule.
Comment : Some commenters suggested that th e MACs be required to review the providers’ submitted self-determined cap amounts a nd alert hospices of any discrepancies in the calculation or provide notice of acceptance of the hospices calculatio ns. Some commenters suggested that a formal adjudica tion process should be included in the proposal if there is discrepancy between the providers’ data and the Providers Statistical and Reimbursement (PS&R) system. Response : The MACs will review the submitted self-determined cap calculation for errors but not necessarily recalculate the submitte d cap in all cases for accuracy. The MACs will issue a final cap determination at a later date. Under the current proce ss, providers have the option of using their data to file the cap report if they disagree with the PS&R report. Providers81 CMS-1609-F using their data to file their cap calculation will need to provide documentation to support the calculations. The MAC will subsequently issue a final cap determination, which will include appeal rights for the hospice.
Comment : A commenter suggested that the MA Cs should provide advance notification to the hospices regarding the requirement to f ile a cap determination and the due date. Response : We are not requiring the MACs to se nd advance notification to the hospices at this time. We will work with the MACs in order to distribute educational material regarding the calculation of the cap, and access to the PS&R. While all providers have been instructed to obtain their own PS&R reports, some may not ha ve used such reports. Hospices will be informed of their requirements thr ough various educational materials.
Comment : A commenter that supported the pro posal suggested that CMS delay this requirement to allow providers time to prepare fo r the changes, and allow those that currently do not have access to the PS&R system to regist er. Another suggested that CMS phase-in the proposal over a three year period. Response : We do not believe phasing the requirem ent that hospices calculate their cap overpayment over a three year period will reduce the burden on hospices and will ensure hospices’ ability to calculate th e cap accurately. We appreciate the commenter’s concern about providers who are not currently regist ered to obtain their PS&R report. Providers have received instructions regarding access to the PS&R system on numerous occasions, and we will work with the MACs to remind providers how to access th e PS&R system, and explain how to access and utilize the hospice reports.
Comment : Some commenters raised concern abou t the ability of hos pices that are not registered in CMS’ authentica tion and authorization system (IA CS) to obtain a copy of their82 CMS-1609-F PS&R report. A commenter stated that since most providers only access the PS&R system once in a year, their accounts are deac tivated after six mont hs of inactivity and would be unable to obtain a copy of their PS&R report. The commenter suggested that CMS change the deactivation of account after six months of inactivity. Response : The security protocol of the CMS authentication and authorization system needed to access the PS&R system is beyond the scope of this proposal. It should be noted, however, that accounts are not deactivated afte r six months of inactivity. Accounts are only deactivated when a user fails to recertify its account, which is us ually once a year. The system sends out several notification ema ils 45 days prior to the recer tification date, and everyday 15 days prior to the due date. Provi ders that failed to change thei r password every 60 days need only to complete the specific password steps in order to reset their password. Since the PS&R reports will be a source of information for calculation of the caps, we do not expect problems with system inactivity subsequent to the issuance of this final rule.
Comment : A commenter suggested that the CMS employ electron ic delivery of important notices, like overpayment determinations. Response : This is outside the scope of this proposal.
Comment : A commenter was concerned that pr oviders are not able to obtain the beneficiary count for patients serv ed by more than one provider, and that this information is only available to the MACs. Response : This statement is not accurate. The PS&R report provides summary beneficiary count for patients served by more than one hospice, and the summary report is available for providers to request.83 CMS-1609-F Comment : Some commenters suggest ed that CMS should include in the proposal a time frame for the MACs to complete the final cap reviews Response : We are not proposing a re quirement at this time. We will continue to work with the MACs regarding this process.
Comment : A commenter noted that the proposed rulemaking under the Affordable Care Act required that Medicare provide rs and suppliers to report and return overpayments 60 days from the date the liability is identified. CMS s hould provide hospices 60 da ys from 150 days to refund any overpayment as a result of the self-cap determination. Response : We agree that the Affordable Care Act requires that providers and suppliers report and refund overpayments w ithin 60 days from when identif ied. The Overpayment rule resulting from the Affordable Care Act has not been finalized as of th e date this rule was finalized; and therefore, is outside of the scope of this proposal. As noted above, the requirement that hospices pay the overpayment when they f ile their cap determination is similar to the requirement for other provider types that final payment reconc iliation are completed on the Medicare cost report.
Comment : Some commenters applaude d the proposal stating th at it allows hospices to better manage their cap, and they will be aware of their cap situa tion soon after the cap year in order to implement changes to better manage thei r cash flow in light of hospices’ responsibility to reconcile their overpayment s with amounts allowed by CMS. Response : We agree with the commenters and thank them for their support. Final action: We are finalizing the proposal to require hospices to submit the aggregate cap determination 5 months afte r the end of the cap year and refund any overpayment with the filed cap determination. We are eliminating the proposal that hospices complete the self-84 CMS-1609-F determined inpatient cap limitation as part of this proposal, but will continue to monitor the inpatient cap and consider implem enting in the future if neede d. In addition, we are requiring hospices to wait at least 3 months after the end of the cap year to calculate the self-determined aggregate cap, in order to include a reasonable number of claims. Finally, we are finalizing the proposal that hospices which fail to file their self-determined cap determination will have their payments suspended.
E. Timeframes for Filing the Notice of Election and Notice of Termination/Revocation
1. Timeframe for Filing the Notice of Election A distinctive characteristic of the Medicare hospice benefit is that it requires patients (or their representative) to intent ionally choose hospice care through an election. As part of that election, patients (or thei r representative) acknowledge that th ey fully understand the palliative, rather than curative, nature of hospice care. A nother important aspect of the election is a waiver of beneficiary rights to Medicare payment for any Medicare services related to the terminal illness and related conditions during a hospice election except when provided by, or under arrangement by, the designated hospice, or by the i ndividual’s attending p hysician if he/she is not employed by the designated hospice (§418.24(d)). Because of this waiver, providers other than the designated hospice or attending physician cannot receive payment for services to a hospice beneficiary unless those services are unrelated to the terminal illness and related c onditions. For our claims processing system to properly enforce this waiver, it is necessary for the hospice election to be recorded in the claims processing system as soon as possible after the el ection occurs. A survey of the four Medicare Administrative Contractors (MAC s) revealed that 16.2 percent of NOEs are filed within 2 days of the effective date of electi on, 39.2 percent of NOEs are filed w ithin 5 days of the effective85 CMS-1609-F date of election, and 62.1 percent of NOEs are filed within 10 da ys of the effective date of election. Prompt recording of th e notice of election (NOE) preven ts inappropriate payments, as claims filed by providers other than the hospice or the attending physician will be rejected by the system, unless those claims are for items or services unrelated to the terminal illness and related conditions. Prompt filing of the NOE also protec ts beneficiaries from financial liability from deductibles and cost sharing for items or serv ices provided during a hos pice election which are related to the term inal prognosis. Once a NOE is filed, the hospice election a nd benefit period are established in the Common Working File (CWF) and in the Daily Transaction Repl y Report (DTRR). The CWF is used by Part A and Part B providers, and the DTRR is used by Part D plan sponsors, to determine whether a beneficiary is a hospice patient. This information is necessary for providers and suppliers to properly ha ndle claims for beneficiarie s under a hospice election. Our hospice reform contractor has performed analyses of Medicare expenditures for drugs and services provided to hospice benefici aries during a hospice election. These analyses found that Medicare Part D was paying for many drugs that should have been provided by the hospice during a hospice election. We also found that Parts A and B were paying claims for items or services from non- hospice providers during a hospice election (See section III.A.4), though some of these claims may have been appr opriate. Once a hospice election is established in the CWF, in order for claims from other prov iders to process, the claim must be from the attending physician and coded with a “GV” modifi er, or for items or services unrelated to the terminal illness and related conditions and must be coded with either a condition code of “07” or a “GW” modifier. However, in calendar year 2012, 10,500 claims and 2.4 million line items, totaling $159 million were proce ssed without the condition code or modifier. Of this $15986 CMS-1609-F million, approximately $100 million was from phys ician/supplier Part B claims that include claims from physicians, laboratories, and am bulance companies, and approximately $46 million was billed as durable medical equipment. Th is suggests that these claims may have been processed in the time between when the benefi ciary elected hospice and when the hospice filed its NOE. When Parts A, B, or D pay claims fo r items or services duri ng a hospice election, there is typically an associated beneficiary liability (s uch as deductibles or copayments). For example, in 2012 the hospice beneficiary liability for items or services provided to hospice beneficiaries during a hospice election was $135.5 million for Part A or B claims, and $48.2 million for Part D claims. We want to safeguard hospice beneficiar ies from inappropriate financial liability during a hospice election for items or services that should be provided by the hospice. Please see section III.A.4 of this final rule and the Ma y 2014 Technical Report, which was posted on the CMS Hospice Center webpage in May 2014, for mo re details on Medicare payments made to non-hospice providers during a hos pice election for hospice benefici aries. The hospice center webpage can be accessed at http://www.cms.gov /Center/Provider-Type/Hospice-Center.html. In the April 1, 2013 CMS Part D Final Call Letter , it was noted that delays in the flow of hospice election information cause retroactive updates to the info rmation sent to Part D plan sponsors on the DTRR, and plan sponsors reques ted that CMS improve the timeliness of the hospice data on the DTRR. 39 More recently, CMS issued a memorandum on December 6, 2013 entitled “Part D Payment for Drugs for Beneficiaries Enrolled in Hospice,” which sought to clarify the criteria for determin ing payment responsibility for drugs for hospice beneficiaries. 40

39 CMS, “Calendar Year (CY) 2014 Medicare Advantag e Capitation Rates and Medicare Advantage and Part D Payment Policies and Final Call Letter,” issued April 1, 2013; available at http://www.cms.gov/Medicare/HealthPlans/MedicareAdvtgSpecRateStats/downloads/Announcement2014.pdf

.
40 Tudor CG, Wilson L, and Majestic M. “Part D Paym ent for Drugs for Beneficiaries Enrolled in Hospice— Request for Comments,” memorandum issu ed December 6, 2013, available at87 CMS-1609-F Industry commenters described the la g time in the notification of Part D plan sponsors that the beneficiary had elected hospice, re voked hospice, or been discharg ed alive from hospice as a key problem in determining payment responsibility. Commenters suggested th at CMS require that the NOE be filed within a short timeframe of election (for example, within 48 hours). The CWF is also used by hospices to identi fy the current benefit period, which helps hospices determine when a face-to-face encounter is required. We have received requests for assistance from hospices where a beneficiary was previously admitted to and then discharged from another hospice, which had not yet file d the NOE, creating a problem for the current hospice in determining the correct benefit period . This can lead to the current hospice not meeting the face-to-face requirement. Additionall y, because of sequential billing requirements, the current hospice would have to cancel its NOE and all of its billing fo r that beneficiary to allow the previous hospice to input its NOE and b illing. Once the previous hospice had filed its claims and recorded the beneficiary’s discharge, the current hospice could then resubmit its NOE and its claims. The failure of th e first hospice to file its NOE prom ptly created an administrative burden for the second hospice. In summary, prompt filing of the NOE avoi ds compliance problems with the statutorily mandated face-to-face requirement. It also avoids creating burdensome situations for hospices when sequential billing requirements are not me t. Finally, because Medicare payments for services related to the terminal illness and rela ted conditions are waived once a hospice election is in place, it is crucia l that the NOE be filed promptly to sa feguard the integrity of the Medicare Trust Fund and enable smooth and efficient operati on of other Medicare benefits (like Part D),

http://www.cms.gov/Medicare/Medic are-Fee-for-Service-Payment/Hospice/Downloads/Hospice-PartDPayment.pdf

.88 CMS-1609-F and to safeguard hospice beneficiaries from inappr opriate financial liability due to cost sharing and deductibles for services related to the term inal prognosis. For all of these reasons, we proposed that a hospice must file the NOE with its Medicare contractor within 3 calendar days after the hospice effective date of election, regardless of how the NOE is filed (by direct data entry, or sent by mail or messenger). We believe that this proposed requirement would relieve hospices of the burden created when some minority of hospices do not file their NOEs promptly, would avoid inappropriate payments to other Part A, Part B, or Part D providers, and would safeguard beneficiaries from inappropriate liability for copayments or deductibles. Currently, payment for hospice services begi ns on the effective date of the hospice election, regardless of when the NOE was filed. A commenter on the December 6, 2013 CMS memorandum clarifying drug paymen t responsibility between Part D, hospice, and beneficiaries suggested that without enforcement actions, hospices would not file NOEs within a short timeframe. We agree that providing a consequence for failing to file NOEs timely would encourage compliance. Therefore, we proposed that for those hos pices that do not file the NOE timely (that is, within 3 calendar days after the effective date of electio n), Medicare would not cover and pay for days of hospice care from the eff ective date of election to the date of filing of the NOE. We proposed that these days be consid ered the financial respons ibility of the hospice; the hospice could not bill the bene ficiary for them. We believe th at this is a reasonable step, which would not be burdensome to hospices, would help us to safeguard the integrity of the Medicare Trust Fund, and help protect bene ficiaries from inappropriate liability. Once filed, the process of posting an NOE to th e CWF after direct data entry (DDE) takes 1 to 5 days, depending on the host site. If an NOE is not submitted by DDE, the current policy requires hospices to send it to the Medicare contractor by mail or messenger. This policy89 CMS-1609-F remains in place; however, hospices may need to use overnight mail or an overnight messenger to ensure that paper NOEs are received by the Me dicare contractor within the required timeframe after the effective date of election (On average, only 68 NOEs are filed by mail or messenger per year). Using a speedier form of delivery will en sure that a paper NOE’s filing is not delayed by the transit time needed to get the document fr om the hospice to the Medicare contractor. 2. Timeframe for Filing the Notice of Termination/Revocation In accordance with 42 CFR 418.26, hospices may discharge patients for only three reasons: (1) due to cause; (2) due to the patient’s no longer being te rminally ill; or (3) due to the patient’s moving outside the hospice’s service area . In contrast, hospice patients are free to revoke their election to hospice care at any time. Upon discha rge or revocation, a beneficiary resumes the Medicare coverage that had previous ly been waived by the hospice election. It is important for hospices to record the benefici ary’s discharge or revoc ation in the claims processing system in a timely manner. As pr eviously noted, a number of those commenting on the December 6, 2013 CMS memorandum clarifying dr ug payment responsibility between Part D, hospices, and beneficiaries wr ote that it was critical for be neficiary revocations and live discharges from hospice to be recorded as soon as possible within CMS claims processing systems. Commenters on this Part D memorandum wrote that prompt recording of revocations or discharges is necessary to ensure that the beneficiary is able to access needed items or services, and to ensure that payment for the item or service is from th e appropriate source. Providers are allowed 12 months to file a claim, so if a hospice is not prepared to file a final claim quickly, it should instead file a termination/re vocation of election notice, so that the claims processing systems are updated to no longer sh ow the beneficiary as being under a hospice election. Hereafter, we will re fer to this as a Notice of Te rmination or Revocation (NOTR).90 CMS-1609-F We proposed to revise the regulations at §418.26 and §418.28 to require hospices to file a NOTR within 3 calendar days after the effective date of a benefi ciary’s discharge or revocation, if they had not already filed a final claim. This would safeguard beneficiaries from any delays or difficulties in accessing needed drugs, items, or se rvices that could occur if the CWF or DTRR continued to show a hospice election in place when in fact it was revoked or a discharge occurred. It would also avoi d costs and administrative burden to non-hospice providers and to the claims processing system that would occur fo r claims for items or se rvices provided after discharge or revocation, which woul d be rejected if the claims pr ocessing systems continued to show the beneficiary as be ing under a hospice election. Comments we received with regard to the proposals to file the NOE and NOTR within 3 calendar days and the consequence for fili ng the NOE late are summarized below.
Comment: Nearly all commenters supporte d placing timeframes around the NOE and NOTR for the reasons noted in the proposed rule , but hospices cited circumstances that would make it difficult for them to comply within the proposed timeframe and some requested we phase-in the proposal. Hospice commenters suggest ed using business days instead of calendar days, or timeframes of 5 to 10 calendar days. Primarily beneficiary advocacy groups, pharmacy groups, and Part D plan sponsor s supported 3 calendar days, w ith one commenter supporting 2 calendar days for the NOE and the NOTR to be filed. These commenters also identified administrative burden issues and beneficiary imp act concerns if the NOE and NOTR are not filed as soon as possible. A few commenters asked us to clarify the timeframe for NOE filing and for when a revocation begins. Another suggested that the NOE filing statistics in the rule demonstrated that hospices could not file their NOEs within a short timeframe.91 CMS-1609-F Response: In response to comments receive d, we are finalizing the requirement for hospices to file the NOE within 5 calendar days after the effective da te of the election and to file the NOTR within 5 calendar days af ter the date of the discharge or revocation (unless the hospice has already submitted the final claim). A timel y-filed NOE is one that is submitted to, and accepted by, the Medicare contractor within 5 calenda r days after the effec tive date of election. A timely-filed NOTR is one that is submitted to, and accepted by, the Medicare contractor within 5 calendar days after the effectiv e date of discharge or revoca tion. While a timely-filed NOE or NOTR is one that is submitted to and accepted by the Medicare contractor within 5 calendar days after the hospice election or hos pice discharge / revocation, pos ting to the CWF may not occur within that same time frame. The date of posti ng to the CWF is not a re flection of whether the NOE or NOTR is considered timely-filed. We believe these timeframes provide an appropriate balance of concerns expressed by the diverse comments received on the proposal, and eliminates the need to phase-in the required timeframe implemen ted in this final rule. Prompt filing of the NOE and NOTR is essential to protecting the Medicare Trust Fund; minimizing the effect on beneficiaries’ cost-sharing; a nd preserving access to non-hospice se rvices. We considered the feasibility of using business days versus calen dar days; however, the Me dicare claims processing system cannot distinguish between calendar days a nd business days. Therefore, we are not able to consider counting business days for this poli cy. The NOE filing timeframe statistics included in the proposed rule only indi cate historical filing practices and do not indicate hospices’ inability to file NOEs in a more timely fashi on once a filing timeframe is implemented. As described in the existing CM S Claims Processing Manual (IOM 100-04, Chapter 11, Section 20.1.1), hospices are to submit the NOE “as soon as possible”. This final policy imposes an upper limit as to when the NOE is to be submitted without the imposition of provider liable days92 CMS-1609-F due to late filing of the NOE. We encourag e hospices to submit the NOE and NOTR (if a final claim has not been submitted) as soon as possibl e and not wait until the 5th calendar day after the effective date of the election or discharge/re vocation. For revocations, existing policy requires that the beneficiary must provide the hospice with a signed statem ent that he or she is revoking the benefit, including the effectiv e date of the revocation, which ca nnot be a date earlier than the date the revocation is made , as described at 42 CFR 418.28. Some hospice commenters identified various technical reasons as to why an NOE or NOTR may not be timely-filed. We encourage hosp ices to consider avai lable electronic means of transmitting data that nurses in the field ma y utilize to send the elect ion statement to their administrative office. For example, secure fax or secure email is an easily accessible means of secure data transmission. We believe that it is prudent for hospices, as a business, to establish contingency plans for situations where admini strative staff who normally file the NOEs or NOTRs are on vacation, unavailable due to illn ess, or are unexpectedly unavailable. We will continue to monitor the filing of NOEs and NOTRs, and will consider shortening the timeframe for what would be considered a timely-filed NOE or NOTR in future rulemaking. Comment: A few commenters opposed the pro posed consequence for late NOEs. Some commenters felt it would be unfair for hospices to experience financial consequences due to exceptional circumstances that are beyond the contro l of the hospice, which cause the NOE to be filed untimely. Several commenters suggested that the provider liable days resulting from failing to meet the 3 calendar day timeframe for NOE filing could cause unintended consequences, including delaying admissions. Response: We agree that there are some circumstances that may be beyond the control of the hospice where it may not be possible to timely -file the NOE within 5 calendar days after the93 CMS-1609-F effective date of election or timely-file the NOTR within 5 calendar days after the effective date of a beneficiary’s discharge or revocation, and a ppreciate the variety of examples to illustrate such exceptional circumstances. Therefore, we ar e finalizing an exception policy for the timely filing of the NOE, which would wa ive the consequences for failure to timely-file a NOE. The four circumstances that may qualify the hospice fo r an exception to the co nsequences of filing the NOE more than 5 calendar days after the effective date of election are as follows: 1. fires, floods, earthquakes, or other un usual events that inflict extensive damage to the hospice’s ability to operate; 2. an event that produces a data fili ng problem due to a CMS or Medicare contractor systems issue that is beyond the control of the hospice; 3. a newly Medicare-certified hospice that is notified of that certification after the Medicare cer tification date, or which is awaiti ng its user ID from its Medicare contractor; or, 4. other circumstances determined by CMS to be beyond the control of the hospice. If one of the four circumstances described above prevents a hospice from timely-filing its NOE, the hospice must document the circumstance to support a request for an exception, which would waive the consequences of f iling the NOE late. Using that documentation, the hospice’s Medicare contractor will determine if a circ umstance encountered by a hospice qualifies for an exception to the consequences for filing an NOE more than 5 calendar days after the effective date of election. If the request for an exception is denied, the Medicare contractor will retain the decision of the denial. Hospices retain their us ual appeal rights on the claim for payment. The Medicare contractors will provide hospices with information on how to request an exceptional94 CMS-1609-F circumstance and a waiver of the consequence of filing the NOE late after the publication of this final rule. Sub-regulatory guidance will detail the procedures a hospice would follow. Based on the exceptions described above, exampl es such as personnel issues; internal IT systems issues that the hospice may experien ce; the hospice not knowing the requirements; and failure of the hospice to have back-up staff to f ile the NOE are not acceptable circumstances that meet the exceptions. Therefore, late-filing cons equences would be applied. For those hospices which do not timely-file the NOE (that is, the NOE is submitted to, and accepted by, the Medicare contractor within 5 calendar days afte r the effective date of election), Medicare will not cover and pay for the days of hospice care from the effective date of election up to the date the NOE is submitted to, and accepted by, the Me dicare contractor. The date the NOE is submitted to, and accepted by, the Medicare contractor would be a covered day. Given the longer timeframe for timely-filing the NOE and the exceptional circumstances that we are implementing, we do not believe that hospices would delay ad mitting beneficiaries to avoid provider liable days. We will monitor for any unintended consequences of the policy. Under the Medicare hospice benefit, hospices are responsible for pr oviding all care and services to the beneficiary for the palliation and management of the termin al illness and related conditions from the effective date of election to the date of death, or effective date of discharge / revocation, even if some of those days are a pr ovider liability due to a late-filed NOE. The hospice remains responsible for covering all hos pice medical, nursing, counseling, social work, and aide services, as well as all hospice drugs, DM E, supplies, etc. as needed by the patient, in accordance with the plan of care, during provider liable days. Comment: Multiple commenters suggested a consequence for NOTRs filed late because they considered the filing of the NOTR as more critical from a beneficiary access to care95 CMS-1609-F standpoint. Late-filing of the NOTR could create problems for bene ficiaries in accessing Part D medications or critical Medi care services, with a few co mmenters recommending a shorter timeframe than that for the NOE. Response: We appreciate the comments reco mmending a consequence for late-filing of NOTRs in order to protect the beneficiary’s access to timely care and ensuring that the appropriate party is responsible for care and services. We are not implementing consequences for the late-filing of the NOTR at this time, but will consider doing so in future rulemaking. Comment: Many commenters described syst ems issues which make filing NOEs and NOTRs cumbersome, or which lead to delays in posting NOE or NOTR data to CMS systems such as the CWF or Part D’s DTRR. Some of these commenters noted concerns with the DDE filing system, the inability to batch and transmit da ta directly from electr onic health records, the inability of FISS to accept electronic files, seque ntial billing requirements, and also offered other recommendations. Several commenters suggest ed that CMS address its systems issues, suggesting that CMS systems be required to post NOE information to CWF within 1 to 3 days. Several comments requested various technical clarifications and/or shared concerns with CMS’s data systems to support the proposal to timely- file the NOE and NOTR. One commenter asked if NOTR filing procedures should be consistent with current instru ctions for reporting occurrence codes in claims submissions so that the reason for the discharge would be clear. Response: Before the implementation of the HIPAA transactions and code sets standards in 2003, CMS accepted hospice NOEs via Electronic Data Interchange (EDI) batch submission using the UB-92 flat file claim format. HIPAA implementation eliminated the UB-92 flat file format for claims processing, replacing it with the 837 Institutional (837I) claim transaction. The 837I format requires reporting at least one delivered service and ot her data elements that are not96 CMS-1609-F appropriate to an NOE, so an EDI claim transacti on could no longer be used for this purpose. At that time, a great majority of hospice NOEs were already being proc essed via Direct Data Entry (DDE) into Medicare claims processing sy stems. CMS determined that DDE submission of NOEs met the business need s of Medicare and most hospi ces. While many hospices have now adopted electronic health reco rd technology that could facili tate the creation and submission of electronic NOEs, no standard for such submissi on currently exists. There would be significant implementation challenges associated with creating an interface between any new non-claim format and Medicare claims processing system s. CMS plans to explore options to resume electronic batch submission of hospice NOEs in th e future and welcomes input from the hospice industry regarding how elec tronic submission of NOEs could be feasible. Commenters who stated that sequential billing requirements prevent timely filing of NOEs are in error. While sequent ial billing requirements continue to apply, if a previous hospice has not filed any or all of its claims for a be neficiary, the current hospice is not prevented by CMS’s claims processing systems from timely-filing its NOE (bill type 8xA). Similarly, there is no restriction within CMS claims processing systems on a current hospice’s ability to file its NOTR if a previous hospice has not filed any or a ll of its claims for that beneficiary. We are investigating possible improvements or process changes within CMS systems to increase the timeliness of updates. As part of that, we ar e open to discussions with the industry regarding sequential billing requirements or the Electronic Data Interchange (EDI). Finally, since the claims processing function of the NOTR is simply to post a revocation date for the beneficiary in the CWF, additional information identifying the reason for the discharge is not necessary. This information would duplicate what is provided when the claim is filed.97 CMS-1609-F Comment: One commenter asked if the propos als related to the NOE filing that we finalize would apply when Medi care is a secondary payer. Response: The timely-filing NOE requirement app lies whether Medicare is the primary or secondary payer. Comment: We received comments in the cont ext of coordinating Part D and hospice. These comments provided recommendations for vari ous processes for information flow to be considered. Response: We appreciate the comments receive d related to coordination between hospices and Part D sponsors. We will consider these in the overall development of a coordination process, which we solicite d comments on in Section III.I. Comments: A few hospice commenters stated that they may not know the principal diagnosis or the attending physician to include with the NOE within the proposed 3 calendar days after the effective date of election, and noted that the comprehensive assessment occurs over a 5 day period. Response: As noted previously, we are finalizing a timely-filing NOE policy that requires the NOE to be submitted to, and accepted by, the Medicare contract or within 5 calendar days after the effective date of hospice elec tion, which is 2 days longer than the proposed timeframe. Since beneficiaries must be certified as terminally ill by the hospice physician and the patient’s attending physician (if any) within 2 calendar days after the effective date of election, the principal diagnosis and attending physician chosen by the beneficiary are known to the hospice prior to the end of the timely-filing NOE timeframe. In addition, coding guidelines are very clear as to how to determine a prim ary diagnosis when multiple potential principle diagnoses may exist. These coding guidelines can be found at:98 CMS-1609-F http://www.cdc.gov/nchs/data/icd/icd9cm_guidelines_2011.pdf . We also disagree that the comprehensive assessment must be completed fo r the hospice to know which diagnosis is the principal diagnosis. The initial assessment w ould determine the patien t’s immediate care and support needs within 48 hours af ter the election of hospice care, as described in 418.54, and would be completed within the timely-filing NOE timeframe. The initial assessment should support the information documented by hospice and/ or attending physician (if any) during the patient certification of eligibility for hospi ce care. The hospice phys ician and/or attending physician should be able to provide that inform ation because they have had to review the beneficiary’s medical documentation to determine whet her or not to certify the patient as eligible for hospice care. While the comprehensive assessment may determine the breadth of specific needs of the patient, it would not be the primary driver in determ ining the beneficiary’s principal diagnosis to be included on the NOE. Final action: We are finalizing a timely-fil ing NOE policy that requires the NOE to be submitted to, and accepted by, the Medicare contractor within 5 calendar days after the effective date of election, and a timely-filing NOTR policy that requires the NOTR to be submitted to, and accepted by, the Medicare contractor within 5 ca lendar days after the effective date of the discharge /revocation (unless th e hospice has already filed a fina l claim). We are finalizing provider liable days for late filing of NOEs, as proposed. We are also finalizing specific exceptions that, if applicable, would allow for a waiver of the provider liable days for not filing NOEs within 5 days after the effective date of election. We emphasize that prompt filing of the NOE and the NOTR is essential to protecting the Medicare Trust Fund; minimizing the effect on beneficiaries’ cost-sharing; a nd preserving access to non-hospice se rvices. This finalized policy imposes an upper limit as to when the NOE is to be submitted without the imposition of provider99 CMS-1609-F liable days due to late filing of the NOE and an upper limit to when the NOTR is to be submitted after the discharge or revocation of the hospice beneficiary. As such, we strongly encourage hospices to submit the NOE and NOTR as soon as possible and not wa it until the 5th calendar day after the date of the election or discharge/re vocation. We will continue to monitor the filing of NOEs and NOTRs, and will consider shortening the timeframe for what would be considered a timely-filed NOE or NOTR in future rulemaki ng. We have changed the regulatory text shown at the end of this final rule to reflect the policies described above.
F. Addition of the Attending Phys ician to the Hospice Election Form The term “attending physician” is defined differen tly in different health care settings. For the Medicare hospice benefit, “attending physicia n” has a specific defini tion found in the Social Security Act at 1861(dd)(3)(B) that the term means, with respect to an individual, the physician (as defined in subsection (r)(1)) or nurse practi tioner (as defined in subsection (aa)(5)), who may be employed by a hospice program, whom the indivi dual identifies as having the most significant role in the determination and delivery of medical care to the individual at the time the individual makes an election to receive hospice care. Our regulations at §418.3 include a defin ition for “attending physician,” based on the above mentioned statutory language . We define it as either 1) a doctor of medicine or osteopathy legally authorized to practice medicine and surgery by the State in which he or she performs that function or action; or 2) a nurse practitioner who meets th e training, education, and experience requirements described elsewhere in our regulations. The definition also sets out the requirement that the patient identif y the attending physician at the time he or she elects to receive hospice care, as having the most significant role in the determination and delivery of the individual's medical care.100 CMS-1609-F We require that the National Provider Identi fier (NPI) of the a ttending physician be included on the NOE and on each claim. An a ttending physician can be a physician or a nurse practitioner, as long as he or she meets the re quirements outlined in our regulations discussed above. The hospice patient (or his or her represen tative), not the hospice, chooses the attending physician. This differs from so me non-hospice settings, where an attending may be a clinician assigned to provide care to the patient. This requirement is included as part of the CoPs at §418.52(c)(4), which state that the patient has the right to choose his or her attending physician. The hospice CoPs at §418.64(a)(3) further require th at if the attending physi cian is unavailable, the hospice medical director, hospi ce contracted physician, and/or hospice physician employee is responsible for meeting the medical needs of the patient. Therefore, the patient should receive all needed care, whether that care is provided by hospice doctors , hospice nurse practitioners (NPs), or by the designated attending physician. Hospices can bill Part A for reasonable and necessary physician services provided to hospi ce beneficiaries by its doctors, regardless of whether those doctors are the designated attend ing. However, our regulations at §418.304(e) do not permit Medicare to be billed for reasonabl e and necessary physician services provided by NPs unless the NP is the attending physician, as defined in §418.3. We have recently heard anecdotal reports of hospices changing a patient’s attending physician when the patient moves to an inpatien t setting for inpatient care, often to a nurse practitioner. We have also heard reports of hospices assigning an attending physician based upon whoever is available. Medica re contractors noted that the NPI of the attending physician reported on claims was sometimes changing, and differed from that reported on the NOE. Additionally, using CY 2010 and CY 2011 data, we found that 35 pe rcent of beneficiaries had Part B claims during their hospice election from more than one physician who claimed to be their101 CMS-1609-F designated attending physi cian. The reports of hospices ch anging a patient’s attending physician are of great concern since the statute emphasizes that the atte nding physician must be chosen by the patient (or his or her represen tative). Finally, we have also received anecdotal reports that some hospices are not getting the signature of the attending physician on the initial cer tification. If a beneficiary has designated an attending phys ician, that physician must sign the initial certification for Medicare to cover and pay for hospice services, unless the attending is a NP. To ensure the attending physician of record is properly documented in the patient’s medical record, we proposed to amend the regu lations at §418.24(b)(1) a nd require the election statement to include the patient ’s choice of attending physicia n. The proposed information identifying the attending physicia n should be recorded on the election statement in enough detail so that it is clear which phys ician or NP was designated as the attending physician. Hospices have the flexibility to include this informati on on their election statement in whatever format works best for them, provided the content requi rements in §418.24(b) are met. The language on the election form should include an acknowledgement by the patient (or representative) that the designated attending physici an was the patient’s (or representative’s) choice. In addition, we further proposed that if a patie nt (or representative) wants to change his or her designated attending physician, he or she mu st follow a procedure similar to that which currently exists for changing the designated hospi ce. Specifically, the pati ent (or representative) must file a signed statement w ith the hospice that identifies the new attending physician in enough detail so that it is clea r which physician or NP was de signated as the new attending physician. Additionally, we proposed that the stat ement include the date the change is to be effective, the date that the statement is signed, and the patient’s (or representative’s) signature, along with an acknowledgement that this change in the attending physician is the patient’s (or102 CMS-1609-F representative’s) choice. The effective date of the change in attending physician cannot be earlier than the date the statement is signed. We believe that such a change would help ensure that any changes in the identity of the attending physician would be the result of the patient’s free choice. Public comments and our response to comme nts regarding the ch anges to §418.24(b)(1) and 418.24(f) requiring the election statement to include the patient’s choice of attending physician and other requirements are summarized below.
Comments: Nearly all commenters wrote that they supported pr otecting beneficiary choice of the attending physician. The majority of commenters supported our proposal to identify the attending physician on the election form, with several affirming that they already follow this procedure. The main objection to identifying the attending physician on the election form was concern that the patient may not know whom he or she would like to serve as his or her attending physician at the time of election, and that th is requirement could delay admission. One commenter asked that the hospice physician or NP be allowed to act as the attending until the patient’s choice could be determ ined. One commenter suggested that we require the election form to state that the beneficiar y (or representative) has the right to choose his or her attending physician, and that the chosen physician does not need to be employed by the hospice. Another commenter asked that we use “provider neutral” language , and refer to the “attending clinician” rather than the atte nding physician, as the attending could be a physician (MD or DO) or an advanced practice nurse. Two commente rs suggested we determine patient and family satisfaction with the attending physician before implementing new requirements. Some commenters felt that the proposal would not change existing behavior and that the proposed requirements increase administrative burden on the hospice. A few commenters103 CMS-1609-F encouraged Medicare contractor and/or hospice survey oversight ra ther than a regulation change. Response: We appreciate the comments supporting our proposal and the protection of beneficiary choice, and are impl ementing the requirement to identify the attending physician on the election form as proposed. Regarding comm ents that the beneficiary might not know the attending at the time of election, the definition of “attending physician” in the Medicare statute requires that the beneficiary iden tify the attending physician “at the time of election”. Therefore, this timeframe for identifying the attending physic ian was not part of our proposal but is an existing statutory requirement at section 1861(dd)(3)( B) of the Act. Most beneficiaries have had encounters with physicians prior to their decision to elect hospi ce care and many typically have longstanding relationships with their healthcare providers. If a hospice beneficiary has had a physician actively involved in their care prior to a hospice election, it is reas onable to expect that the hospice beneficiary will not have difficulty identifying that physician who has the most significant role in the determination and deliv ery of medical care to them. And, for those individuals who do not have any established and/or longstanding relationships w ith a healthcare provider, he/she may choose not to identify an attending physician, or may choose to identify a hospice physician or NP as his or her attendi ng physician. We do not prohibit a patient (or representative) from choosing a hospitalist as the at tending physician, though we suggest that the hospice explain to the patient (or representative) that a hospitalist only follows patients who are hospitalized. As indicated in our regulations at 42 CFR 418.20, in order to be eligible to elect hospice care, the beneficiary must be certified as terminal ly ill. That certification process occurs before election, and involves the patie nt’s attending physician (if an y). We did not receive any comments raising concerns about identifying the attendi ng physician at the time of election when104 CMS-1609-F the definition of “attending physician” was first proposed in 1983 (48 FR 56009). The definition of “attending physician” was changed in secti on 408 of the Medicare Modernization Act of 2003, and the hospice regulations were updated in the August 4, 2005 FY 2006 Hospice Wage Index Final rule (70 FR 45139-45140). Ther e were no comments received about this longstanding timeframe in the discussion of the changes to the definition of “attending physician” in this final rule. The June 5, 2008 Ho spice Conditions of Participation final rule (73 FR 32089 through 32090) also discussed the defin ition of “attending physician”, and again, there were no comments that raised conc erns regarding this timeframe. Since identifying an attending physician at time of hospice election has been a re quirement in place for over 30 years, and has not appeared to cause any delay in admission, we do not believe that including the information that identifies the attending physician on the elect ion form would now begin to create delays in admission to hospice care. In the proposed rule, we gave hospices the flexibility to include this information identifying the attending physician on their electi on statement in whatever format works best for them, provided the content requirements in §418.24( b) are met. We wrote that the language on the election form should include an acknowledgement by the patient (or representative) that the designated attending physici an was the patient’s (or representa tive’s) choice. We believe that this language remains sufficient, and do not ag ree with the commenters that asked that the acknowledgement also include language indicating that the chosen attending physician need not be an employee of the hospice. The decision as to who is or is not the attending physician belongs solely to the patient (or representativ e) regardless of that attending physician’s employment relationship (or lack thereof) w ith the hospice. We do not prohibit attending physicians from being hospice employees as long as it is the patient’s choi ce to decide whether105 CMS-1609-F or not to have an attending physician and w ho that attending physician will be during the patient’s hospice care. Because “attending physician” is defined in the statute, we are also unable to use provider neutral language such as “attendi ng clinician” to describe this position. As articulated in this section, the statutory definition of the “attending physician” at se ction 1861(dd)(3)(B ) of the Act means either a physician or a nurse practitione r, and does not permit broadening the term to include other health ca re professionals. We do not agree that we should wait to consider patient or family satisfaction data before implementing any new requirements related to the attending physician. While a few commenters suggested that we not make this regulatory change to the elec tion statement, but instead allow Medicare contractors and survey enforcement to deal with any failure to comply with the regulations, we expect this pol icy to improve Medicare contract or enforcement and oversight activities as well as State survey activities. The hospice CoPs at §418.52 include regulations related to the choice of atte nding physician and are enforced by State surveys.
Comment: While some commenters supported havi ng changes in the attending physician documented by the hospice, many commenters felt that this would cause undue burden to the hospice and to patients or their families duri ng a period of crisis. A number of commenters asked that we clarify what constitutes a cha nge in the attending physician, and mentioned scenarios when changes frequently occur, such as when the patient receives GIP care. A number of commenters wrote that most changes come about because the attending is unwilling or unavailable to continue following the patient, pa rticularly as the patient’s care becomes more complex and the hospice physic ian’s role increases. Some commenters asked that we allow verbal changes, or changes from representatives106 CMS-1609-F by email or by fax. One wrote that it would be unfair for an NP to provide physician services, and for the hospice not to be able to bill for thos e services because that NP is not the designated attending physician. One commenter was concerne d that our proposal implied that changing the attending physician is not appropriate. Response: We recognize that there are many legitimat e reasons for a patient to change an attending physician. However, the choice of th e new attending physician belongs solely to the patient (or representative), and the intent of this proposal is to further sa feguard and protect that beneficiary choice. A patient ca nnot be required or coerced to change his or her attending physician. The hospice should document, in the medical record, situations where the attending physician is no longer willing or available to follow the patient. The hospice can then inform the patient or representative that he or she may choose someone else to serve in that role. In making such a choice, the patient or representative s hould be informed that he or she can choose a physician or a nurse practitioner as the attending physician, and th at this individual could be from the community or from the hospice. Becau se the attending physician is typically someone with whom the patient had a relationship before el ecting to receive hospice care, the role of the attending physician is to provide a long term perspective on the pati ent and family that takes into account their medical and persona l history. Ideally, this conv ersation with the patient (or representative) would occur when th e patient is stable, and the pati ent (or representative) is able to make a decision without the stre ss of a medical crisis or in the midst of a transition to inpatient care. The patient is not required to make a change, and if he or sh e chooses not to do so, then the hospice physician or NP would step in to provide all needed care. We are concerned that many commenters appear to believe that it is necessary to change107 CMS-1609-F the attending physician when a patient transitions to GIP or other inpatient care, and that changing the attending physician would cause undue burden to the hospice and to patients or their families during a period of crisis. A hospice patient is not required to change his or her attending physician in order to receive inpatient care, regardless of the setti ng. If the attending physician does not have privileges at the hospital(s) the hospice c ontracts with for inpatient care, or does not wish to care for the patient in an i npatient setting, then according to our CoPs at §418.64(a)(3), the hospice physician or NP must pr ovide any needed physician’s services. The patient does not need to designate the hospice ph ysician or NP as his or her attending physician for this to occur. However, while the hospice can bill Medicare Part A for its employed or contracted physicians providing need ed physician services to its patients, it can only do so for its NPs if the NP is the designated attending physicia n. This limitation on hosp ice NP billing is in the hospice regulations at §418.304(e) and is based on the statutor y language surrounding physician billing. The statutory definition of “physi cian services” at section 1861(q) of the Act requires that the individual perf orming the services be a physicia n. “Physicians” are defined at section 1861(r) of the Act, and do not include NPs. However the statute does permit attending physicians to bill for their serv ices at section 1812(d)(2)(A) of the Act, and defines attending physicians to include NPs at sec tion 1861(dd)(3)(B) of the Act. We noted in the preamble of the proposed rule that “attending physician” is defined differently in different settings. If the pati ent is in a hospital, the hospital may assign a hospitalist to the patient, and the hospital may consider that hospitalist to be the “attending physician.” However, that individual does not meet the hospice definition of “attending physician” unless the beneficiary chooses the hospital assigned at tending physician to be their hospice attending physician. The clinician who meets the hospice definition of “attending108 CMS-1609-F physician” should provide needed care to the hosp ice patient in the hospital. If that hospice attending physician is unavailabl e, then the hospice physician or NP would need to do so. The hospice should coordinate the patient’s care du ring the inpatient stay by communicating with the hospitalist. If the hospice atte nding physician is involved in the pa tient’s care during an inpatient stay, that hospice attending physician will need to coordinate with a ny hospitalists that the hospital may have assigned, and of course with the hospice. We believe that commenters’ concerns about stress on families during times of transition, and the burden of additional paperwork, resulted from hospices’ erroneously believing that the attending physician must be changed for each GIP stay. With the clarification provided in this rule, we do not believe that the procedures we proposed for documenting a change in attending physician need to be revised, and are implemen ting the proposal without changes. When an attending physician is changed by the beneficiar y (or representative), the required information documenting that change can be securely faxed or emailed to the hospice. We reiterate that if the at tending physician cannot provide needed physician services, then the hospice physician or NP is re quired by the hospice CoPs to do so. Comment: Several commenters felt that the proposals surrounding changes in the attending physician would still not address situations where di fferent non-hospice physicians are filing claims as the attending physician. A few suggested we educate community physicians as well as hospices about the attending physician. Some commenters stat ed, that given the hospices’ role as the beneficiarie s’ care coordinators, hospices s hould have a role in addressing the issue of patients seeing multip le community physicians and others suggested notifying the patients’ community physicians of the hospice election. However, one commenter expressed concern over whether this approach would comp licate referral relationships with community109 CMS-1609-F physicians. Suggestions for billing edits for claims processing were also made. Response: We agree that our proposals will not completely resolve the issues related to inappropriate physician billing. We expect that the hospice benefi ciary receives all needed items and services for the palliation and management of the terminal illness and related conditions from the hospice or the attendi ng physician. However, sometimes hospice beneficiaries decide to seek continued treatment without the knowledge of the hospice for their terminal illness and related conditions, utilizing items or services provided by or through entities other than the hospice or the designated attendi ng physician. The hospice may need to remind beneficiaries of the waiver of Medicare payment for services rela ted to the terminal illness and related conditions provided by non-hospice providers (o ther than the attending physic ian), which is part of their election, and of their liability for those related se rvices. Hospice beneficiaries also retain their right to use non-hospice providers for items or services unrelated to the terminal illness and related conditions, and Medica re will pay for those covered items or services. The hospice CoPs at §418.56(e) require that hos pices “ensure that the interdisciplinary group maintains responsibility for directing, coordinating, and superv ising the care and services provided” whether the care and services are provided directly or under arrangement and to “provide ongoing sharing of information with other non-hospice healthcare providers furnishing services unrelated to the terminal illness a nd related conditions.” Therefore, the care coordination role of hospices is one that is to be collabora tive with all providers of a beneficiary’s care, including non-ho spice providers. The expectation is that hospices would have established collaborative care coordination and communication relati onships with other providers to ensure the best interests of its patients. We also agree that more education is n eeded around this issue to hospices and to110 CMS-1609-F physicians, and will be issuing a MedLearn Ma tters article and possibly other Medicare education products on the topic. We also plan to address Part B billing by physicians inappropriately using the attending physician modifier on claims in the future. Finally, we will update informational materials on the hospice be nefit that Medicare makes available to beneficiaries to increase awareness of the choi ces available to them related to the attending physician. Comment: A commenter asked if a new electio n should be completed for each change in attending, or if the NOE should be updated in the claims proc essing system. One commenter was supportive that we are not limiting the numbe r of times a change in attending physician occurs, but others noted that more than one atte nding could be in place during a billing period. Another commenter asked if CM S expected the same attending to sign off on all services provided for the date range of the claim, aske d for clarification whet her the attending physician shown on claims should be based on the statutor y definition of attending physician or the 5010 TR3 manual definition of attending physician, and asked which definition would take precedence in an audit. Response: If the patient (or representative) chooses to make a change in the attending physician, then the patient (or representative) wo uld need to file a signed statement with the hospice that identifies the new attending physician in enough detail so that it is clear which physician or NP was designated as the new atte nding physician. For exam ple, “Dr. Smith” is likely not specific enough, as there could be more than one physician named “Dr. Smith” in the area. The hospice should include information such as the physician’s full name, office address, or NPI number on the election form when needed to correctly identify the attending physician chosen by the beneficiary. The statement should incl ude the date the change is to be effective,111 CMS-1609-F the date that the statement is signed, and the pa tient’s (or representative’ s) signature, along with an acknowledgement that this change in th e attending physician is the patient’s (or representative’s) choice. The effective date of the change in attending physician cannot be earlier than the date the statement is signed. The patient (or representa tive) does not need to complete a new election form. At this time, the hospice does not need to update the claims processing system with change s in the attending physician. When a change in attending physician occurs , Medicare could be billed for services provided by more than one attending physician du ring any given month. Hospices should follow the statutory definition of “attendi ng physician” given in this final rule when recording attending physicians or billing for attending physicians on hospice claims. That definition is already included in the hospice claims processing manua l (IOM 100-04, chapter 1 1, sections 40.1.2 and 40.1.3), and takes precedence in an audit. Comment: A commenter was concerned by an ecdotal reports indi cating that when services are being provided in a skilled nursing facility or ot her long term care facility, the hospices bypass the nursing faci lity medical directors or at tending physicians and write new medical orders. This commenter wrote that the long-term care facility’s attending physician or medical director should retain primary responsibility for the patient except in unusual circumstances. This commenter asked that hosp ices not be permitted to change medical orders without the involvement or permission of the long term care facility’s attending physician. Response: The hospice CoPs at 418.56 require that the hospice be responsible for coordinating provision of the patient’s care and se rvices in all settings. When a hospice patient resides in a nursing facility, th e CoPs at 418.112 require that the hospice assume responsibility for professional management of the resident's hospice services provided, in accordance with the112 CMS-1609-F hospice plan of care. There must be a writte n agreement in place between the hospice and the facility which addresses care co ordination with the facility st aff. The CoPs at §418.112(e) requires the hospice IDG to designat e one of its members to coordina te the patient’s hospice care with representatives of the SNF/NF or ICF/ MR. The designated IDG member must also communicate with representatives of the SNF/NF or ICF/MR and any other health care providers to ensure quality care for the patient. Additiona lly, the designated IDG member must ensure that the hospice IDG communicates with the SNF/NF or ICF/MR medi cal director, the patient’s attending physician, and any other physicians caring for the patient as needed to coordinate the patient’s hospice care with the care provided by other entities. Through these mechanisms, the hospice maintains responsibility for all of its care and services for all of its patients and ensures that the care that it is providing complements the care being provided by others. In addition, the establishment of the written agreements a nd communication systems with SNFs, NFs, and ICFs/MR when hospices are furnishing hospice car e to residents of those facilities promotes clear communication between the hospice and th e SNF/NF or ICF/MR and will help hospices ensure that they are meeting thei r responsibility to furnish the care necessary to meet the needs of its patients. We believe that this coordinate d process actively involves and engages all members of the patient’s care team, both within the hospice and the facil ity, in care planning, and delivery.

Comment: A commenter suggested that the at tending physician be responsible for communicating with the beneficiary’s pharmacy regarding which of a hospice beneficiary’s drugs should be discontinued. Response: We appreciate this comment relate d to Part D coordination with pharmacies. We will consider this comment in the overall de velopment of a coordination process which we solicited comments on in Section III .I and will address this comment in future rulemaking.113 CMS-1609-F Final action: We are implementing all the proposals related to the attending physician as proposed. G. FY 2015 Hospice Wage Index and Rates Update 1. FY 2015 Hospice Wage Index The hospice wage index is used to adjust payment rates for hospice agencies under the Medicare program to reflect local differences in area wage levels based on the location where services are furnished. The hospi ce wage index utilizes the wage adjustment factors used by the Secretary for purposes of secti on 1886(d)(3)(E) of the Act for hospital wage adjustments, and our regulations at §418.306(c) require each labor mark et to be established using the most current hospital wage data available, including any changes by the Office of Management and Budget (OMB) to the Metropolitan Statistical Areas (MSAs) definitions. We have consistently used the pre-floor, pre-reclassified hospital wage index when deriving the hospice wage index. In our August 4, 2005 FY 2006 Hospice Wage Index fina l rule (70 FR 45130), we began adopting the revised labor market area definitions as disc ussed in the OMB Bulletin No. 03-04 (June 6, 2003). This bulletin announced revised definitions for MS As and the creation of Core-Based Statistical Areas (CBSAs). The bulletin is available online at http://www.whitehouse.gov/omb/bulletins/b03-04.html

. In the FY 2006 Hospice Wage Index final ru le, we implemented a 1-year transition policy using a 50/50 blend of the CBSA-based wa ge index values and the MSA-based wage index values for FY 2006. The one-year trans ition policy ended on September 30, 2006. For FY 2007 and beyond, we have used CBSAs exclusively to calculate wage in dex values. OMB has published subsequent bulletins regarding CBSA ch anges. The most recent CBSA changes used for the FY 2015 hospice wage index are f ound in OMB Bulletin 10-02, available at: http://www.whitehouse.gov/sites/default/ files/omb/assets/bulletins/b10-02.pdf

.114 CMS-1609-F When adopting OMB’s new labor market de signations in FY 2006, we identified some geographic areas where there were no hospitals, and thus, no hosp ital wage index data on which to base the calculation of the hospice wage inde x. We also adopted th e policy that for urban labor markets without a hospital from which hospita l wage index data could be derived, all of the CBSAs within the state would be used to calculate a statewid e urban average pre-floor, prereclassified hospital wage inde x value to use as a reasonabl e proxy for these areas in our August 6, 2009 FY 2010 Hospice Wage Index fina l rule (74 FR 39386). In FY 2015, the only CBSA without a hospital from wh ich hospital wage data could be derived is 25980, HinesvilleFort Stewart, Georgia. In our August 31, 2007 FY 2008 Hospice Wage Index final rule (72 FR 50214), we implemented a new methodology to update the hosp ice wage index for rural areas without a hospital, and thus no hospital wage data. In cas es where there was a rural area without rural hospital wage data, we used the average pre-floor, pre-reclassified hospital wage index data from all contiguous CBSAs to represent a reasonable proxy for the rural area. In our August 31, 2007 FY 2008 Hospice Wage Index final rule, we noted that we interp ret the term “contiguous” to mean sharing a border (72 FR 50217). Currentl y, the only rural area without a hospital from which hospital wage data could be derived is Pu erto Rico. However, our policy of imputing a rural pre-floor, pre-reclassified hospital wage index based on th e pre-floor, pre-reclassified hospital wage index (or indices) of CBSAs con tiguous to a rural area w ithout a hospital from which hospital wage data could be derived do es not recognize the uni que circumstances of Puerto Rico. While we have not identified an alternative methodology for imputing a pre-floor, pre-reclassified hospital wage index for rural Pu erto Rico, we will continue to evaluate the feasibility of using existing hospita l wage data and, possibly, wage data from other sources. For115 CMS-1609-F FY 2008 through FY 2013, we have used the most recent pre-floor, pre- reclassified hospital wage index available for Puerto Rico, which is 0.4047. In this final rule, for FY 2015, we continue to use the most recent pre-floor, pre-reclassified hospita l wage index value available for Puerto Rico, which is 0.4047. For FY 2015, we used the 2014 pre-floor, pre-recl assified hospital wage index to derive the applicable wage index valu es for the FY 2015 hospice wage index. We continue to use the pre-floor, pre-reclassified hosp ital wage data as a basis to determine the hospice wage index values because hospitals and hospices both compet e in the same labor markets, and therefore, experience similar wage-related costs. We belie ve the use of the pre-floor, pre-reclassified hospital wage index data, as a basis for the hos pice wage index, resu lts in the appropriate adjustment to the labor portion of the costs. The FY 2015 hospice wage index values presented in this final rule were computed consistent w ith our pre-floor, pre-r eclassified hospital (IPPS) wage index policy (that is, our historical policy of not ta king into account IPPS geographic reclassifications in determining payments for ho spice). The FY 2015 pre- floor, pre-reclassified hospital wage index does not reflect OMB’s ne w area delineations, based on the 2010 Census, as outlined in OMB Bulletin 13-01, released on Fe bruary 28, 2013. Moreover, the final FY 2015 pre-floor, pre-reclassified hospital wage index does not contain OMB’s new area delineations. CMS proposed changes to the FY 2015 hospital wa ge index based on the newest CBSA changes in the FY 2015 IPPS proposed rule. Therefor e, if CMS incorporates OMB’s new area delineations, based on the 2010 Census, in the FY 2015 hospital wage index, those changes would also be reflected in the FY 2016 hospice wage index. We received 3 comments regarding the wage index proposals.116 CMS-1609-F Comment: A commenter suggests that CMS implement a policy whereby the area wage index applicable to any hospice that is located in an urban area of a State may not be less than the area wage index applicable to hospices located in rural areas in that State. Response: The wage index is based on hos pital wage data from each urban CBSA and rural area. Therefore, the wage index for each geographic area (whether urban or rural) should be an accurate reflection of hospital wages in that area. We will continue to monitor the effects of the wage index, look into whet her or not we would have the authority to implement such a policy, and determine the appropriateness of such a policy before possibly considering this recommendation in future rulemaking. Comment: A commenter suggests placing Montgomery County, Maryland into CBSA 47894 “Washington-Arlington-Alexandria, DC-VA- MD-WV”. Montgomery County, along with Frederick County, Maryland, is in CBSA 13644 “B ethesda-Rockville-Frederick, MD”. The commenter states that the cost of living in M ontgomery County is no lower than the cost of living in the counties which comprise CBSA 47894. Response: The geographic area delineations are based on labor market definitions established by OMB. We proposed and finalized the adoption of the revised labor market area definitions as discussed in the OMB Bulleti n No. 03-04 (June 6, 2003) in our August 4, 2005 FY 2006 Hospice Wage Index final rule (70 FR 45130) . Any revisions to the labor market area definitions will reflect updates to the geogr aphic area delineations established by OMB.
Comment: One commenter requests that the new OM B delineations be considered when computing the FY 2015 wage index for hospices, just as they are for other provider types such as inpatient hospital, SNF and home health.117 CMS-1609-F Response: As in previous years, the hospice wage index will be based on the previous year’s IPPS hospital pre-floor, pre-reclassified wage index. For FY 2015, the hospice wage index will use the FY 2014 IPPS hospital pre-floor, pr e-reclassified wage index subject to either a budget neutrality adjustment or application of the hospice floor. The FY 2014 IPPS hospital wage index did not utilize the new OMB delinea tions. Therefore, the FY 2015 hospice wage index will not incorporate them in this rule. The new OMB delineations will be incorporated into the FY 2015 IPPS hospital wage index. We e xpect to propose to adop t those changes to the hospice wage index in future rulemaking. Final action: We are implementing the hospi ce wage index as disc ussed in the proposed rule. 2. FY 2015 Hospice Wage Index with an Add itional 15 Percent Reduced Budget Neutrality Adjustment Factor (BNAF) In the FY 2015 Hospice Wage Index proposed rule, we proposed to update the hospice wage index values for FY 2015 using the FY 2014 pre-floor, pre-recla ssified hospital wage index. As described in the August 8, 1997 Hosp ice Wage Index final rule (62 FR 42860), the pre-floor and pre-reclassified hos pital wage index is used as th e raw wage index for the hospice benefit. These raw wage index values are then su bject to either a budget ne utrality adjustment or application of the hospice floor to compute the hospice wage index used to determine payments to hospices. Pre-floor, pre-r eclassified hospital wage index values below 0.8 are adjusted by either: (1) the hospice budget neutrality adjust ment factor (BNAF); or (2) the hospice floor subject to a maximum wage index value of 0.8; whichever results in the greater value. The BNAF is calculated by computing estimated payments using the most recent, completed year of hospice claims data. The un its (days or hours) from those claims are118 CMS-1609-F multiplied by the updated hospice payment rates to calculate estimated payments. For the FY 2015 Hospice Wage Index final rule, that means estimating payments for FY 2015 using units (days or hours) from FY 2013 hospice clai ms data, and applying the final FY 2015 hospice payment rates. The FY 2015 hospice wage index va lues are then applied to the labor portion of the payments. The procedure is repeated using th e same units from the claims data and the same payment rates, but using the 1983 Bureau of Labor Statistics (BLS)-based wage index instead of the updated raw pre-floor, pre-re classified hospital wage index (note that both wage indices include their respective floor adjustments). Th e total payments are then compared, and the adjustment required to make total payments equa l is computed; that adjustment factor is the
BNAF. The August 6, 2009 FY 2010 Hospice Wage Inde x final rule finalized a provision to phase out the BNAF over 7 years, with a 10 perc ent reduction in the BNAF in FY 2010, and an additional 15 percent reduction in each of the next 6 years, with complete phase out in FY 2016 (74 FR 39384). Once the BNAF is completely ph ased out, the hospice floor adjustment would simply consist of increasing any wage index va lue less than 0.8 by 15 pe rcent, subject to a maximum wage index value of 0.8. Therefore, in accordance with the FY 2010 Hospice Wage final rule, the BNAF for FY 2015 will be reduced by an additional 15 percent for a total BNAF reduction of 85 percent (10 percent from FY 2010 , an additional 15 per cent from FY 2011, an additional 15 percent for FY 2012, an additi onal 15 percent for FY 2013, an additional 15 percent in FY 2014, and an additi onal 15 percent in FY 2015). The unreduced BNAF for FY 2015 is 0.062084 (or 6.2084 percent). An 85 percent reduction to the BNAF is computed to be 0.009313 (or 0.9313 percent). For FY 2015, this is mathematically equivalent to taking 15 percent of the unreduced BNAF value, or multiplying119 CMS-1609-F 0.062084 by 0.15, which equals 0.009313 (0.9313 per cent). The BNAF of 0.9313 percent reflects an 85 percent reduction in the BNAF. The 85 percent reduced BNAF (0.9313 percent) was applied to the pre-floor, pre-reclassified hos pital wage index values of 0.8 or greater. The 10 percent reduced BNAF for FY 2010 was 0.055598, based on a full BNAF of 0.061775; the additional 15 percent reduced BNAF FY 2011 (for a cumulative reduction of 25 percent) was 0.045422, based on a full BNAF of 0.060562; the addi tional 15 percent reduced BNAF for FY 2012 (for a cumulative reduction of 40 per cent) was 0.035156, based on a full BNAF of 0.058593; the additional 15 percent reduced BNAF for FY 2013 (for a cumulative reduction of 55 percent) was 0.027197, based on a full BNAF of 0.060438; the additional 15 percent reduced BNAF for FY 2014 (for a cumulative reduction of 70 percent) was 0.018461, based on a full BNAF of 0.061538 and the additional 15 percent reduced BNAF for FY 2015 (for a cumulative reduction of 85 percent) is 0.009313, based on a full BNAF of 0.062084. Hospital wage index values which are less than 0.8 are subject to the hospice floor calculation. For example, if in FY 2015, County A had a pre-floor, pre-reclassified hospital wage index (raw wage index) value of 0.3994, we would perform the following calculations using the budget-neutrality fact or (which for this example is an unreduced BNAF of 0.062084, less 85 percent, or 0.009313) and the hospice floor to determine County A's hospice wage index: Pre-floor, pre-reclassified hospital wage index value below 0.8 multiplied by 1+ 85 percent reduced BNAF: (0.3994 x 1.009313 = 0.4031); Pre-floor, pre-reclassified hospital wage index value below 0.8 multiplied by 1 + hospice floor: (0.3994 x 1.15 = 0.4593). Based on these calculations, County A’s hospice wage index would be 0.4593. An Addendum A and Addendum B with the fi nal FY 2015 wage index values for rural and urban areas will notbe published in the Federal Register . The final FY 2015 wage index120 CMS-1609-F values for rural areas and urban areas are available via the internet at: http://www.cms.gov/Medicare/Medicare-Fee- for-Service-Payment/Hospice/index.html . The hospice wage index for FY 2015 set forth in this final rule includes the BNAF reduction and would be effective October 1, 2014 through September 30, 2015. 3. Hospice Payment Update Percentage Section 4441(a) of the Balanced Budget Act of 1997 (BBA) amended section 1814(i)(1)(C)(ii)(VI) of the Act to establish upd ates to hospice rates for FYs 1998 through 2002. Hospice rates were to be updated by a factor equal to the market basket index, minus 1 percentage point. Payment rates for FYs sin ce 2002 have been updated according to section 1814(i)(1)(C)(ii)(VII) of the Act, which states that the update to the payment rates for subsequent FYs must be the market basket percentage for that FY. The Act requires us to use the inpatient hospital market basket to determine the hospi ce payment rate update. In addition, section 3401(g) of the Affordable Care Act mandates th at, starting with FY 2013 (and in subsequent FYs), the hospice payment update percentage wi ll be annually reduced by changes in economywide productivity as specified in section 1886(b)(3 )(B)(xi)(II) of the Act. In addition, section 3401(g) of the Affordable Care Act also manda tes that in FY 2013 through FY 2019, the hospice payment update percentage will be reduced by an additional 0.3 percentage point (although for FY 2014 to FY 2019, the potential 0.3 percentage point reduction is subj ect to suspension under conditions specified in section 1814(i)(1)(C)(v) of the Act). The final hospice payment update percentage for FY 2015 will be the inpatient hosp ital market basket update of 2.9 percent (based on IHS Global Insight, Inc.’s sec ond quarter 2014 forecast with hist orical data through the first quarter of 2014), less any mandated adjust ments. Due to the requirements at 1886(b)(3)(B)(xi)(II) an d 1814(i)(1)(C)(v) of the Act, the inpatient hospital market basket update121 CMS-1609-F for FY 2015 of 2.9 percent must be reduced by a productivity adjustment as mandated by Affordable Care Act (currently estimated to be 0.5 percentage point for FY 2015). The inpatient hospital market basket for FY 2015 is reduced fu rther by a 0.3 percentage point, as mandated by the Affordable Care Act. In effect, the fina l hospice payment update percentage for FY 2015 is 2.1 percent. We used the most recent data avai lable (for example, the most recent inpatient hospital market basket and produc tivity adjustment), to determine the FY 2015 market basket update and the multi-factor productivity MFP adju stment in this FY 2015 Hospice PPS final rule. Currently, the labor portion of the hospice paym ent rates is as follows: for Routine Home Care, 68.71 percent; for Continuous Home Care, 68.71 percent; for General Inpatient Care, 64.01 percent; and for Respite Care, 54.13 percent. The non-labor portion is equal to 100 percent minus the labor portion for each level of care. Therefore, the non-labor portion of the payment rates is as follows: for Routine Home Care , 31.29 percent; for Continuous Home Care, 31.29 percent; for General Inpatient Care, 35.99 pe rcent; and for Respite Care, 45.87 percent. We received 3 comments regarding the proposed payment update.
Comment: The commenters stated that the proposed update is misleading and inaccurate due to cuts through the BNAF phase-out and seque stration. Commenters cl aim that hospices are incurring significant, additional regulatory costs and are forced to take dollars for these costs out of patient care. Some examples of additional regulatory burdens cited by the commenters include: the costs of CR 8358 “Additional Data Reporting Requirements for Hospice Claims”, the Experience of Care Survey which will be required in 2015, the burden of Part D prior authorization or appeal, and th e proposed new cost report re quiring new financial reporting systems and additional staff.122 CMS-1609-F Response: The comments on seque stration are outside the scope of this rule. We note that the impact analysis does reflect estimated reductions in FY 2015 payments to hospice as a result of the 6th year of the 7-year BNAF phase-out. Final action: We are implementing the hospice payment update as discussed in the proposed rule and consistent with the updated da ta to the hospital mark et basket update and multi-factor productivity (MFP) adjustment.
4. FY 2015 Hospice Payment Rates Historically, the hospice rate update has been published th rough a separate administrative instruction issued annually in th e summer to provide adequate time to implement system change requirements; however, beginning in FY 2014 and for subsequent fiscal years, we are using rulemaking as the means to update payment rates. This change was pr oposed in the FY 2014 Hospice Wage Index and Payment Rate Update proposed rule and finalized in the FY 2014 Hospice Wage Index and Payment Rate Update fina l rule (78 FR 48270). It is consistent with the rate update process in other Medicare benefits, and provides ra te information to hospices as quickly as, or earlier than, when rates are publ ished in an administrative instruction. There are four payment categories that are distinguished by the loca tion and intensity of the services provided. The base payments are adjusted for geographic differences in wages by multiplying the labor share, which varies by catego ry, of each base rate by the applicable hospice wage index. A hospice is paid the routine home car e rate for each day the beneficiary is enrolled in hospice, unless the hospice provides continuous home care, inpatient re spite care, or general inpatient care. Continuous home care is provided during a period of patient crisis to maintain the patient at home; inpatient respite care is short-te rm care to allow the usual caregiver to rest; and general inpatient care is to tr eat symptoms that cannot be managed in another setting.123 CMS-1609-F The final FY 2015 payment rates will be th e FY 2014 payment rates, increased by 2.1 percent, which is the final hospice payment upd ate percentage for FY 2015 as discussed in section III.G.3. The final FY 2015 hospice payment ra tes will be effective for care and services furnished on or after October 1, 2014, th rough September 30, 2015 (see Table 6 below). Table 6: FY 2015 Hospice Payment Rates Updated by the Final Hospice Payment Update Percentage

Code Description FY 2014 Payment Rates Increase by the FY 2015 final hospice payment update of 2.1 percent FY 2015 Final Payment Rate

651 Routine Home Care $156.06 x1.021 $159.34

652 Continuous Home Care $910.78 x1.021
$929.91 Full Rate applies to 24 hours of care Hourly rate = $38.75
655 Inpatient Respite Care $161.42 x1.021 $164.81
656 General Inpatient Care $694.19 x1.021 $708.77 The Congress required in sections 1814(i)(5 )(A) through (C) of the Act that hospices begin submitting quality data, based on measures to be specified by the Secretary. In the FY 2012 Hospice Wage Index final rule (76 FR 47320 through 47324), we implemented a Hospice Quality Reporting Program (HQRP) as required by section 3004 of the Affordable Care Act. Hospices were required to begi n collecting quality data in Oc tober 2012, and submit that quality data in 2013. Section 1814(i)(5 )(A)(i) of the Act requires that beginning with FY 2014 and each subsequent FY, the Secretary sh all reduce the market basket update by 2 percentage points for any hospice that does not comply w ith the quality data submission requirements with respect to that FY.). We remind hospices th at this applies to payments in FY 2015 (See Table 7 below). For more information on the HQRP requirements pl ease see section III.H in this final rule.124 CMS-1609-F
Table 7: FY 2015 Hospice Payment Rates Upda ted by the Final Hospice Payment Update Percentage for Hospices That DO NO T Submit the Required Quality Data

To assist the hospice industry in planni ng and budgeting, CMS is informing the hospice industry of the aggregate cap amount for the 2014 cap year in advance of the formal CMS administrative notice, which will be issued th is summer. Additionally, we have included information about how we calculate the aggregat e cap amount so that hospices can compute the amount themselves in the future if they so desire . This information is also in CMS’ InternetOnly Manual 100-2, chapter 9, section 90.2.6. The manual can be accessed from the “Manuals and Transmittals” section of CMS’ hospice website at http://www.cms.gov/Center/ProviderType/Hospice-Center.html

. The hospice aggregate cap amount for th e 2014 cap year will be $26,725.79. The cap amount is calculated according to §1814(i)(2)(B) of the Act. The cap amount for a given year is $6,500 multiplied by the change in the Consumer Price Index for All Urban Consumers (CPI-U) Medical Care expenditure category, from the fifth month of the 1984 accounting year (March 1984) to the fifth month the current accounting y ear (in this case, March 2014). The CPI-U for Medical Care expenditures (BLS series code CUUR0000SAM) for 1984 to present is available from the Bureau of Labor Statistics (BLS) website at: http://www.bls.gov/cpi/home.htm

. Code Description FY 2014 Payment Rates Increase by the FY 2015 hospice payment update percentage of 2.1 percent minus 2 percentage points = 0.1 FY 2015 Final Payment Rate 651 Routine Home care $156.06 X1.001 $156.22 652 Continuous Home Care Full Rate applies to 24 hours of care Hourly rate = $37.99 $910.78 X1.001 $911.69

655 Inpatient Respite Care $161.42 X1.001 $161.58 656 General Inpatient Care $694.19 X1.001 $694.88125 CMS-1609-F Step 1) From the BLS website given abov e, the March 2014 CPI-U for Medical Care expenditures is 433.369 and the 1984 CPI-U fo r Medical Care expenditures was 105.4. Step 2) Divide the March 2014 CPI-U for Me dical Care expenditures by the 1984 CPI-U for medical care expenditures to compute the change. 433.369 / 105.4 = 4.111660 Step 3) Multiply the original cap base amount ($6,500) by the result from step 2) to get the updated aggregate cap amount for the 2014 cap year. $6,500 x 4.111660= $26,725.79 H. Updates to the Hospice Quality Reporting Program 1. Background and Statutory Authority Section 3004 of the Affordable Care Act amen ded the Act to authorize a quality reporting program for hospices. Section 1814 (i)(5)(A)(i) of the Act requir es that beginning with FY 2014 and each subsequent FY, the Secretary shall re duce the market basket update by 2 percentage points for any hospice that does no t comply with the quality data submission requirements with respect to that FY. Depending on the amount of the annual update for a particular year, a reduction of 2 percentage points could result in the annual market basket update being less than 0.0 percent for a FY and may result in payment ra tes that are less than payment rates for the preceding FY. Any reduction based on failure to comply with the reporting requirements, as required by section 1814(i)(5)(B) of the Act, would apply only for the particular FY involved. Any such reduction would not be cumulative or be taken into account in computing the payment amount for subsequent FYs. Section 1814(i)(5)(C) of the Act requires that each hospice submit da ta to the Secretary on quality measures specified by th e Secretary. The data must be submitted in a form, manner, and at a time specified by the S ecretary. Any measures selected by the Secretary must have been126 CMS-1609-F endorsed by the consensus-based entity whic h holds a contract regarding performance measurement with the Secr etary under section 1890(a) of the Act. This cont ract is currently held by the National Quality Forum (NQF). However, section 1814(i)(5)(D)(ii ) of the Act provides that in the case of a specified area or medica l topic determined appropriate by the Secretary for which a feasible and practical measure has not been endorsed by the consensus-based entity, the Secretary may specify measures that are not so endorsed as long as due c onsideration is given to measures that have been endorsed or adopted by a consensus-based organization identified by the Secretary. The successful development of a Hospice Quality Reporting Program (HQRP) that promotes the delivery of high qual ity healthcare services is our paramount concern. We seek to adopt measures for the HQRP that promote more efficient and safer care. Our measure selection activities for the HQRP take into consideration in put we receive from the Measure Applications Partnership (MAP), convened by the National Qualit y Forum (NQF), as part of a pre-rulemaking process that we have establishe d and are required to follow under se ction 1890A of the Act. The MAP is a public-private partnership comprise d of multi-stakeholder groups convened by the NQF for the primary purpose of providing input to CMS on the selection of certain categories of quality and efficiency measures, as required by section 1890A(a)(3) of the Act. By February 1st of each year, the NQF must provide that input to CMS. Input from the MAP is located at: ( http://www.qualityforum.org/Sett ing_Priorities/Partnership/Meas ure_Applications_Partnership.
aspx ). For more details about the pre-rule making process, see the FY 2013 IPPS/LTCH PPS final rule (77 FR 53376). We also take into account national pr iorities, such as those established by the National Priorities Partnership at ( http://www.qualityforum.org/npp/ ), the HHS Strategic Plan127 CMS-1609-F http://www.hhs.gov/secretary/abou t/priorities/priorities.html ), the National Strategy for Quality Improvement in Healthcare located at ( http://www.ahrq.gov/workingfor quality/nqs/nqs 2013annlrpt.htm ) and the CMS Quality Strategy

at http://www.cms.gov/Medicare/Quali ty-Initiatives-Patient-AssessmentInstruments/QualityInitiativesGenInfo/CMS-Quality-Strategy.html

. To the extent practicable, we have sought to adopt measures that have been endorsed by the national consensus organization, recommen ded by multi-stakeholder organizations, and developed with the input of providers, purchasers/payers, and other stakeholders. 2. Measures for Hospice Quality Reporting Program and Data Submission Requirements for Payment Years FY 2014 and FY 2015. As stated in the FY 2012 Hospice Wage I ndex final rule (76 FR 47302, 47320), to meet the quality reporting requirements for hospices for the FY 2014 payment determination and in the CY 2013 Home Health Prospective Paymen t System (HH PPS) final rule (77 FR 67068, 67133), the quality reporting requi rements for hospices for the FY 2015 payment determination, as set forth in section 1814(i)(5) of the Act, we finalized the requirement that hospices report two

measures:

• An NQF-endorsed measure related to pain management, NQF #0209. The data for this measure are collected at the patient le vel, but are reported in the aggregate for all patients cared for within the reporting period, regardless of payer.

• A structural measure that is not endors ed by NQF: Participation in a Quality Assessment and Performance Improvement (QAPI) pr ogram that includes at least three quality indicators related to patient care.128 CMS-1609-F 3. Quality Measures for Hospice Quality Reporting Program and Data Submission Requirements for Payment Year FY 2016 and Beyond In the FY 2014 Hospice Wage Index and Paym ent Rate Update final rule (78 FR 48234, 48256), we finalized that the structural meas ure related to QAPI indicators and the NQF #0209 pain measure would not be required for th e HQRP beyond data submission for the FY 2015 payment determination. The data submission period for the FY2015 payment determination closed on April 1, 2014. As stated in the CY 2013 HH PPS final ru le (77 FR 67068, 67133), we considered an expansion of the required measures to include additional measures endorsed by NQF. We also stated that to support the standardized collec tion and calculation of quality measures by CMS, collection of the needed data elements would requ ire a standardized data collection instrument. We developed and tested a hospice patient-level item set, the Hospice Item Set (HIS) to be used by all hospices to collect and submit standardi zed data items about each patient admitted to hospice. In developing the standardized HIS, we cons idered comments offered in response to the CY 2013 HH PPS proposed rule (77 FR 41548, 41573). In the FY 2014 Hospice Wage Index final rule (78 FR 48257), and in compliance with section 1814(i)(5)(C) of the Act, we finalized the specific collection of data items that s upport the following six NQF endorsed measures and one modified measure for hospice:

• NQF #1617 Patients Treated with an Opioid who are Given a Bowel Regimen

• NQF #1634 Pain Screening

• NQF #1637 Pain Assessment

• NQF #1638 Dyspnea Treatment129 CMS-1609-F

• NQF #1639 Dyspnea Screening

• NQF #1641 Treatment Preferences

• NQF #1647 Beliefs/Values Addressed (if desired by the patient) (modified) To achieve a comprehensive set of hospice quality measures ava ilable for widespread use for quality improvement and informed decision making, and to carry out our commitment to develop a quality reporting program for hospices that uses standard ized methods to collect data needed to calculate quality measures, we fina lized the HIS effective July 2014 (78 FR 48257). To meet the quality reporting requirements for hospices for the FY 2016 payment determination and each subsequent year, we will require regul ar and ongoing electronic submission of the HIS data for each patient admission to hospice on or af ter July 1, 2014, regardless of payer or patient age (78 FR 48234, 48258). Collecting data on all patients will provide CMS with the most robust, accurate reflectio n of the quality of care delivered to Medicare beneficiaries as compared with non-Medicare patients. Therefore, to meas ure the quality of care that is delivered to Medicare beneficiaries in the hos pice setting, we will collect quali ty data necessary to calculate the adopted measures on all patients. We are re quiring in our regulati on that hospices collect data on all patients in hospice in order to ensu re that all patients, regardless of payer, are receiving the same care and that provider metr ics measure performance across the spectrum of patients (78 FR 48258).
Hospices are required to complete and submit an admission HIS and a discharge HIS for each patient admission. Hospices failing to re port quality data via the HIS in 2014 will have their market basket update reduced by 2 percen tage points in FY 2016. Although this has been implemented thus far pursuant to instructions se t out in our preamble statements, we proposed to codify the HIS submission requireme nts at §418.312 in this final rule. The System of Record130 CMS-1609-F (SOR) Notice for the HIS, SOR numb er 09-07-0548, was published in the Federal Register on April 8, 2014 (79 FR 19341). Comment: Several commenters believed that hospices should not be subject to a reduction in the annual market basket update if they are unable to achieve 100 percent timely data submission during the FY 2015 submission period.
Response: We thank the commenters for thei r concern; however, we did not make any proposals regarding timely data s ubmission. We also recognize th at new hospices that receive their CCN after the yearly submission deadline ar e still required to submit the HIS for each patient, but those HIS submissions would fall after the submission deadline. If a hospice realizes that it will not meet the timeliness criteria fo r any given record, for whatever reason, it should still complete and submit that record. Late comp letion and submission of HIS records will result in a non-fatal warning error in the Quality Impr ovement and Evaluation System. However, the records can still be a ccepted by the system.

Comment: Several commenters asserted that the Quality Reporting Program should be restricted to Medicare patients and stated th at requiring data repor ting on patients covered by other payers is outside CM S’s regulatory authority.
Response: We respectfully disagree with the commenters’ assertions . We have proposed to codify the HIS submission requirements at §418.312. Section 3004 of the ACA requires quality reporting, and CMS has requ ired all facilities subject to qua lity reporting requirements to submit data on its entire patient population, incl uding hospitals and inpatient rehabilitation facilities. The delivery of high quality care in hospice is impera tive, regardless of payer. We believe that collecting quality data on all pa tients in the hospice setting supports CMS’ mission131 CMS-1609-F to ensure quality care for Medicare beneficiarie s and ensures that all patients, regardless of payer, are receiving the same care.

Comment: Several commenters noted that the cost of the mandated quality program must be reflected in hospice reimbursement rates.
Response: We thank the commenters for th eir concern; however, the cost of quality improvement programs should be reported on th e cost reports. Cost report data may be considered in future payment reform.
Comment: One commenter reported that more ti me is required to assure the quality of HIS information than the time it takes to collect it. While this situation may be the result of the newness of the tool and the learning curve required for implementation, the production of reliable and meaningful quality measures de pends on the quality of the data collected.
Response: We thank the commenters for taki ng the time to express their concerns regarding the HIS collection. Collection began on July 1st, 2014 and we understand the commenter’s perception that the newness of th e process may make the process feel more burdensome. We appreciate the commenters’ di ligence ensuring quality a nd accuracy of the data submitted.

Comment: A few commenters expressed disagreement with our estimate of the amount of regulatory burden on hospice agencies to carry out the HIS admission and discharge submissions.
Response: We thank the commenters for taki ng the time to express these views and suggestions. CMS attempts to reduce the regula tory burden of our quality reporting programs to132 CMS-1609-F the greatest extent possible. As required by OMB, the burden to complete the HIS is included in the actual HIS ( http://www.cms.gov/Medicare/Qualit y-Initiatives-Patient-AssessmentInstruments/Hospice-Quality-Reporting/ Downloads/HIS_Admission_Final_4-8-2014.pdf ). Specifically, CMS estimates 19 minutes per resp onse for the Admission HIS and 10 minutes per response for the Discharge HIS. Details regarding the estim ate can be found at:http://www.cms.gov/Regulations-andGuidance/Legislation/Paperwor kReductionActof1995/PRA-ListingItems/CMS1252151.html?DLPage=1&DLSort=1&DLSortDir=descending . Comments concerning the accuracy of the time estimate(s) or suggestions for improving the HIS can be directed to: CMS, 7500 Security Boulevard, A ttn: PRA Reports Clearance Officer, Mail Stop C4-26-05, Baltimore, Maryland 21244-1850.

Final action: After consideration of the comments, we are finalizing our proposal to codify the HIS submission requirements at §418. 312 in this final rule as proposed without change.
Hospice programs will be evaluated for pur poses of the quality reporting program based on whether or not they submit data, not on their s ubstantive performance level with respect to the required measures. We have provided hospices w ith information and details about use of the HIS through postings on the Hospice Quality Re porting Program webpage, Open Door Forums, announcements in the CMS MLN Connects Provider e-News (E -News), and provider training. Electronic data submission is required for HI S submission in CY 2014 and beyond; there are no other data submission methods available. CMS will make available submission software for the HIS to hospices at no cost. We intend to report to providers on the seven finalized measures on a schedule to be determined.133 CMS-1609-F We provided details on data colle ction and submission timing at http://www.cms.gov/Medicare/Quality-Initiative s-Patient-Assessment-Instruments/HospiceQuality-Reporting/Hospice-Item-Set-HIS.html

. Submission of the HIS on all patient admissions to hospice, regardless of payer or patient age, is required. The data submission system provides reports upon successful submission and successful processing of the HIS records. The fi nal validation report may serve as evidence of submission. This is the same data submi ssion system used by nursing homes, inpatient rehabilitation facilities and l ong-term care hospitals for the su bmission of Minimum Data Set Version 3.0 (MDS 3.0), Inpatient Rehabilitation Facil ity –Patient Assessment Instrument (IRFPAI), and Long-Term Care Hospital Continu ity Assessment Record & Evaluation Data Set (LTCH CARE), respectively. We also proposed that newly certified hos pices that receive notice of their CMS certification number on or afte r November 1, 2014 for payments to be made in FY 2016 be excluded from the quality reporting requirement s for the FY 2016 payment determination, as data submission and analysis would not be possi ble for a hospice receiving notification of their certification this late in the reporting time period. We proposed that in future years, hospices th at receive notification of certification on or after November 1 of the preceding year involv ed would continue to be excluded from any payment penalty for quality reporting purposes for th e following FY. We proposed to codify this requirement at §418.312.
Comment: Several commenters support the proposal that hospices that receive notification of certificat ion on or after Novemb er 1 of the preceding year involved would134 CMS-1609-F continue to be excluded from any payment penalty for quality reporting purposes for the following FY and to codify this requirement at §418.312.
Response: We thank commenters for taki ng the time to support our proposal.

Final action: We are finalizi ng our proposal that hospices that receive notification of certification on or after Novemb er 1 of the preceding year in volved would continue to be excluded from any payment penalty for quality reporting purposes for th e following FY and to codify this requirement at §418.312.
As is common in other quality reporting programs, we proposed to make accommodations in the case of natural disaster or other extenuating circumstances. Our experience with other quality re porting programs has shown that there are times when providers are unable to submit quality data due to extrao rdinary circumstances be yond their control (for example, natural or man-made disasters). A di saster may be widespread or impact multiple structures or be isolated and im pact a single site only. We do notwish to penalize providers in these circumstances or to unduly increase their burden during these times. Therefore, we proposed a process, for the FY 2016 payment determination and subsequent payment determinations, for hospices to request and for CM S to grant extensions/exceptions with respect to the reporting of required quality data when there are extraordinary circumstances beyond the control of the provider. When an extension/exception is granted, a hospice will not incur payment reduction penalties for failure to co mply with the requirements of the HQRP.
Under the proposed process for the FY 2016 payment determination and subsequent payment determinations, a hospice may request an extension/exception of the requirement to submit quality data for a specified time period. We proposed a process that, in the event that a135 CMS-1609-F hospice requested an extension/exception fo r quality reporting purposes for the FY 2016 payment determination and subsequent paymen t determinations, the hospice would submit a written request to CMS. Requirements for requesting an extension/exception will be available on the Hospice Quality Reporting Website at ht tp://www.cms.gov/Medicare/ Quality-InitiativesPatient-Assessment-Instruments/Hosp ice-Quality-Reporting/index.html. This proposal does not preclude us from granting extensions/exceptio ns to hospices that have not requested them when we determine that an extrao rdinary circumstance, such as an act of nature, affects an entire region or locale. We also pr oposed that we could grant an extension/exception to a hospice if we determine that a systemic problem with our da ta collection systems directly affected the ability of the hospice to submit data . If we make the dete rmination to grant an extension/exception to hospices in a region or locale, we propos ed to communicate this decision through routine communication channels to hospi ces and vendors, including, but not limited to, Open Door Forums, E-News and notices on https://www.cms.gov/Medicar e/Quality-InitiativesPatient-Assessment-Instruments/Hospice-Quality-Reporting/

.136 CMS-1609-F Public comments and our response to comment s are summarized below. All comments received were supportive of the pr oposed extension/ exception policy.

Comment: Several commenters supported the proposal to allow hospices to request and for CMS to grant extensions/ex ceptions with respect to the re porting of required quality data when there are extraordinary circumstances beyond the control of the provider.
Response: We thank the commenters for taking the time to express their support for this proposal.
Final action: After consideration of the public comments, we are fi nalizing our proposal without change to allow hospices to request and for CMS to gr ant extensions/exceptions with respect to the reporting of requi red quality data when there are extraordinary circumstances beyond the control of the provider.
4. Future Measure Development We did not propose any new measures fo r the HQRP in the FY 2015 Hospice Wage Index and Payment Rate Update proposed rule. However, we believe future development of the HQRP should address existing measure gaps by focusing on two primary opportunities: to expand measures already in use in other quali ty reporting programs that could apply to the HQRP and to develop new measures if no suitabl e measures are ready for implementation or expansion. We are particularly interested in outcome meas ures for symptom management, particularly pain. We are also interested in measures of pa tient reported outcomes. In the proposed rule, we solicited comments and input on future measure development. Comment: Many comments were generally supp ortive of the Hospice Quality Reporting Program (HQRP), and quality measurement in gene ral. Commenters indicated they were pleased137 CMS-1609-F that CMS was not proposing additional new meas ures for implementation at this time, and cautioned against implementing additional measures be fore the end of at least one full year of data collection using the current Hospice Item Set (HIS), allowing hospices time to focus on HIS implementation and the proposed CAHPS ® Hospice Survey implementation. Commenters supported the addition of measures in the future, and agreed th at pain outcome and patient reported measures are an important area of focu s for measure development. Several commenters highlighted the need for additional measures to capture a more comprehensive picture of hospice quality of care. One commenter underscored the importance of developing and implementing quality measures that address the biopsychosocial m odel of distress, addres sing depression, anxiety, personality and behavioral symptoms. In pr ioritizing future measure development areas,commenters recommended that CMS consider measure recommendations made by the NQFconvened Measures Application Pa rtnership and developments in other initiatives including the “Measuring What Matters” cons ensus project. In additi on, commenters emphasized that measures should address matters that are impor tant to patients and caregivers and meet the information needs of Medicare beneficiaries. Commenters specifically recommended measures that captured the following aspects of quality hospice care for patients with a variety of symptoms and diagnos es including: dementia; symptom management to comfor table or acceptable level; medi cation reconciliation; shared decision making and person and family-centered care; use of the interdisciplinary team; avoidance of unwanted CPR; avoidance of hos pitalization and Emergency Department use; access and availability of hospice se rvices, particularly time between initial referral and start of hospice care; appropriate staff training, degrees , or certifications; asse ssment of behavioral138 CMS-1609-F symptoms; assessment and management of caregiv er burden; and assess ment and management of caregiver and patien t quality of life. Another commenter suggested th at CMS, along with other st akeholders, develop outcome measures to address areas such as pain, dyspnea, bowel management, and/or caregiver satisfaction. A few commenters indicated concer ns that quality measures based on symptoms (for example, measures related to pain, and dyspn ea) only represent a subset of hospice patients (those with that particular symptom) and due to this smaller sample size may limit usefulness of the measures, particularly for public reporting. In addition, one commenter suggested that CMS reconsider the removal of the NQF #0209 measure from the HQRP, stating that it sh ould be retained while CMS works with the measure steward to revise the measure to address the concerns CMS raised in last year’s rule. Other commenters reiterated th eir support of CMS’s decisi on to remove the NQF #0209 from the HQRP. Another commenter encourag ed CMS to implement a patient assessment instrument in the future to collect qualit y measure data at defined time points. Finally, one commenter indicated that quality of care should be measured across settings. Response: CMS appreciates commenters’ input and recommendations for future measure development areas for the HQRP. We plan to co ntinue developing the HQRP to respond to the measure gaps identified by the Measures Appli cation Partnership and ot hers, and align measure development with the National Quality Strate gy and the CMS Quality Strategy. We will take these comments into consideration in devel oping and implementing measures for future inclusion in the HQRP. We are also interested in unde rstanding the current state of electronic health record (EHR) adoption and usage and Health Informati on Exchange (HIE) in the hospice community.139 CMS-1609-F Therefore, we solicited feedback and input from providers on topi cs such as decision support, whether hospices have adopted an EHR, if so, what functional aspects of the EHR do hospices find most important (for example, the ability to send or receive transf er of care information, ability to support medication orders/medicati on reconciliation); does the EHR used in the hospice setting support interoperable document exch ange with other healthcare providers (for example, acute care hospitals, physician practices, and skilled nursing faciliti es)? In addition to seeking public input on the feasibi lity and desirability of electr onic health record adoption and use of HIE in hospices, we solicited comments on the need to develop and the benefits and limitations of implementing electronic clinic al quality measures for hospice providers.

The Department of Health and Human Serv ices (HHS) believes all patients, their families, and their healthcare providers should have consistent and timely access to their health information in a standardized format that can be securely exchange d between the patient, providers, and others involved in the patient’s care. (HHS A ugust 2013 Statement, Principles and Strategies for Accelerating Health Info rmation Exchange.) HHS is committed to accelerating health information exchange (HIE) through the use of electronic health records (EHRs) and other types of health informa tion technology (HIT) acro ss the broader care continuum through a number of initiatives includ ing: (1) alignment of incentives and payment adjustments to encourage provi der adoption and optimization of HIT and HIE services through Medicare and Medicaid payment policies; (2) adopti on of common standards and certification requirements for interoperable HIT; (3) support fo r privacy and security of patient information across all HIE-focused in itiatives; and (4) governan ce of health information networks. These initiatives are designed to encourage HIE among all health care providers, including professionals and hospitals eligible for the Me dicare and Medicaid EHR Incentive Programs and140 CMS-1609-F those who are not eligible for the EHR Incentiv e Programs, and are designed to improve care delivery and coordination across the entire care continuum. To incr ease flexibility in the Office of the National Coordinator for Health Info rmation Technology’s (ONC) HIT Certification Program and expand HIT certification, ONC has i ssued a proposed rule concerning a voluntary 2015 Edition EHR certification criter ia which would more easily ac commodate certification of HIT used in other types of hea lth care settings where individual or institutional health care providers are not typically eligible for incen tive payments under the Medicare and Medicaid EHR Incentive Programs, such as long-term and pos t-acute care and behavior al health settings.

We believe that HIE and the use of cer tified EHRs by Hospice (and other types of providers that are ineligible for the Medicare and Medicaid EHR Incentive Programs) can effectively and efficiently help providers impr ove internal care deli very practices, support management of patient care across the continuum , and enable the report ing of electronically specified clinical quality meas ures (eCQMs). More informati on on the identific ation of EHR certification criteria and devel opment of standards applicable to Hospice can be found at:
http://healthit.gov/policy-re searchers-implementers/sta ndards-and-certificationregulations http://www.healthit.gov/facas/FACAS/h ealth-it-policy-committee/hitpcworkgroups/certificationadoption http://wiki.siframework.org/L CC+LTPAC+Care+Transition+SWG http://wiki.siframework.org/Longi tudinal+Coordination+of+Care Summaries of the public comments and our responses to comments on the current state of electronic health record (EHR) adoption and usage and Health Information Exchange (HIE) in the hospice community ar e provided below: Comment: Commenters expressed support of the adoption and use of EHRs in the141 CMS-1609-F hospice setting, noting that it may lead to more c onsistent care and better symptom management. Response: We thank the comm enters for their support. Comment Summary: CMS received several comm ents in response to its solicitation for input related to Electronic Health Record (E HR) adoption and usage and Health Information Exchange (HIE) in the hospice community. Most co mmenters noted that EHRs are important to aid in quality outcomes, and in general supported the use of certified EHRs if given sufficient time and resources for implementation. A comment er expressed that EHR adoption exists among hospices, however they lack st andardization. Some commenter s conveyed the importance of EHR and HIE adoption and use for patient coordi nation, and that information exchange should be required and available across pr oviders; noting that it may lead to more consistent care and better symptom management. A comme nter noted continued use of fax and mail services for the delivery of patient information. Several commenters supported EHR use, but suggested that there are current limitations related to the lack of decision support software and adequate health information exchange amongst the providers. In addition, they expressed concerns related to barriers to EHR and HIE adoption, as well as electronic quality measures. Commenters suggested that specific barrier s and limitations pertained to funding, feasibility, and adequate interoperability. Commenters suggested that a major barrier to the adoption of EHR technology in the hospice setting is that hospice EHRs are not always interoperable wi th the technology used by hospitals and/or physicians. The commenters recommended that government officials review and adjust regulations that inhibit the exchange of electronic health in formation and that CMS mandate the development and use of uniform standards to govern the Health Information Exchange. All commenters suggested that fundi ng incentives/levers could enable adoption of EHR technology. Some commenters recommended th at CMS consider the establishment of142 CMS-1609-F financial incentives, (for exampl e, funding tied to quality impr ovement/cost savings for hospices to implement EHR technology), noting that small and/or rural hospices have lower financial margins and lack of capital to implement EHR technology. One commenter suggested lowinterest loans programs to aid in the fundi ng of EHR technology. Additional commenters expressed that all EHR/HIE sy stems should include adequate e ducation and system testing to ensure data integrity and th e protection of confidential in formation, and that CMS should facilitate health informati on technology that includes tele-h ealth technology. One commenter stated that CMS should not devel op electronic clinical quality measures for the hospice setting until a framework is developed that includes the certification of electronic medical records for post-acute care providers and the financial as sistance to support system implementation. Response: We thank the commenters for thei r support of EHR and HI E utilization and for their recommendations. We are encouraged to l earn about hospice adoption of EHRs and their efforts related to interoperability. We believe that the recommendations provided (for example, testing, education, use of uniform standards, exchange of appropriate information across providers), as well as the concer ns that were conveyed relate d to barriers in EHR and HIE adoption (for example, adequate information exch ange and interoperabil ity, feasibility, testing and financial barriers), are important considera tions related to EHR adoption and HIE usage in the hospice setting. 5. Public Availability of Data Submitted Under section 1814(i)(5)(E) of the Act, the Se cretary is required to establish procedures for making any quality data submitted by hospices available to the public. Measures reported publicly will not display patient identifiable information. The pr ocedures ensure that a hospice would have the opportunity to revi ew the data regarding the hosp ice’s respective program before143 CMS-1609-F it is made public. In addition, und er section 1814(i)(5)(E) of the Ac t, the Secretary is authorized to report quality measures that relate to services furnished by a hospice on the CMS website. We recognize that public reporting of quality data is a vital compone nt of a robust quality reporting program and are fully committed to developing the necessary systems for public reporting of hospice quality data. We also re cognize that it is essential that the data made available to the public be meaningful and that comparing perfor mance between hospices requires that measures be constructed from data collected in a standa rdized and uniform manner. The development and implementation of a standardized data set for hospices must precede public reporting of hospice quality measures. Once hospices have implemente d the standardized data collection approach, we will have the data needed to establish the sc ientific soundness of the quality measures that can be calculated using the standardized data collec tion. It is critical to establish the reliability and validity of the measures prio r to public reporting in order to demonstrate the ability of the measures to distinguish between the quality of services provided. To establish reliability and validity of the quality measures, at least four quarters of data will need to be analyzed. Typically the first two quarters of data reflect the learning curve of th e providers as they adopt a standardized data collection; these data are not used to establish reliability and validity. This means that, since we will begin data collecti on in CY 2014 (Q3), the data from CY 2014 (Q3, Q4) will not be used for assessing validity and reliability of the quality measures. Data collected by hospices during Q1-3 CY 2015 will be analyz ed starting in CY 2015. Decisions about whether to report some or all of the quality measures publicly w ill be based on the findings of analysis of the CY 2015 data. In addition, the A ffordable Care Act requires that reporting be made public on a CMS website and that providers ha ve an opportunity to re view their data prior to public reporting. CMS will develop the in frastructure for public reporting, and provide144 CMS-1609-F hospices an opportunity to review th eir data. In light of all the steps required prior to data being publicly reported, public reporting will not be implemented in FY 2016. Public reporting may occur during FY 2017, allowing ample time for data analysis, review of measures’ appropriateness for use for public reporting, and allowing hospices the required time to review their own data prior to public reporting. We will announce the tim eline for public reporting of data in future rulemaking. We solicited commen ts on what we should consider when developing future proposals related to public reporting. Summaries of the public comments and our re sponses to comments are provided below: Comment: One commenter suggested that CMS delay public reporting until a full year of the HIS submission so that data can better reflect the totality of hospice, and another stated that reporting in 2017 may be too soon. They believe that the HIS needs to be more fully developed to include additional outcome measures in order to provide a more complete picture of the care provided by hospices. The data from the CAHPS® Hospice Survey should be included in public reporting. Response: We recognize the importance of pr oviding patients and fa milies/caregivers and other stakeholders accurate, scie ntifically sound, usable, and releva nt information to support their decision-making regarding hospice care. Comment: Several commenters recommended th at CMS continue to ask for stakeholder input concerning the reliability and validity of the measures and maintain frequent communication with the hospice provider co mmunity prior to public reporting. Response: We thank the commenters for this recommendation. CMS encourages stakeholder involvement throughout the measure development process. CMS considers input from the NQF Measure Applications Partnership (MAP) as part of the measure selection and145 CMS-1609-F maintenance process. The MAP is composed of multi-stakeholder groups convened by NQF for the primary purpose of providing input to CMS on the selection of certain categories of quality and efficiency measures, as required by section 1890(a)(3) of the Act. The MAP was created to provide input to the Department of Health and Human Services (HHS) on the selection of performance measures for public reporting a nd performance-based payment programs, and will continue to provide input to CMS as the HQR P moves toward public reporting. Additional information about the MAP can be found at: http://www.qualityforum.org/Sett ing_Priorities/Partnership/Meas ure_Applications_Partnership.a
spx Comment: One commenter supported public reporting of hospice quality data, but strongly believes that public reporting must be preceded by valid benchmarking to ensure data are collected in a standardized way to be more meaningful to the public. Response: We thank the commenter for this suggestion and will consider these comments as we begin planning for public reporting. 6. Adoption of the CAHPS ® Hospice Survey for the FY 2017 Payment Determination In the FY 2014 Hospice Wage Index and Paymen t Rate Update final rule (78 FR 48234), we stated that CMS would start na tional implementation of the CAHPS ® Hospice Survey as of January 1, 2015. (Previously, known as the Hospi ce Experience of Care Survey, HECS) We are maintaining our existing policy and are moving fo rward with national implementation of this survey. The CAHPS ® Hospice Survey is a component of CMS’ quality reporting program that emphasizes the experiences of hospi ce patients and their primary car egivers listed in the hospice patients’ records. Measures from the survey will be submitted to the National Quality Forum (NQF) for approval as hospice quality measures. We refer readers to our extensive discussion146 CMS-1609-F of the Hospice Experience of Care Survey in the Hospice Wage Index FY 2014 final rule for a description of the measurements involved and their relationship to the statutory requirement for hospice quality reporting (78 FR 48261-48266).
a. Background and Descri ption of the Survey Before the development of the CAHPS ® Hospice Survey, there was no official national standard hospice experience of care survey th at included standard survey administration protocols. The CAHPS ® Hospice Survey includes detailed survey administration protocols which will allow for fair comparisons across hospices.
CMS developed the CAHPS ® Hospice Survey with inpu t from many stakeholders, including other government agencies, industry stakeholders, consumer groups and other key individuals and organizations i nvolved in hospice care. The Survey was designed to measure and assess the experiences of patients who died while receiving hospice care as well as the experiences of their informal caregiver s. The goals of the survey are to--

• Produce comparable data on patients’ and care givers’ perspectives of care that allow objective and meaningful comp arisons between hospices on do mains that are important to consumers;

• Create incentives for hospices to improve thei r quality of care thr ough public reporting of survey results; and

• Hold hospice care providers accountable by informing the public about the providers' quality of care. The development process for the survey be gan in 2012 and included a public request for information about publically available measures and important topics to measure (78 FR 5458); a147 CMS-1609-F review of the existing literatu re on tools that measure experi ences with end-of-life care; exploratory interviews with careg ivers of hospice pati ents; a technical expe rt panel attended by survey development and hospice care quality expert s; cognitive interviews to test draft survey content; incorporation of public responses to Fe deral Register notices (78 FR 48234 ) and a field test conducted by CMS in November and December 2013.

The CAHPS ® Hospice Survey treats the dying patient and his or her informal caregivers (family members or friends) as the unit of care. The Survey seeks information from the informal caregivers of patients who died while enrolled in hospices. Caregivers will be identified using hospice records. Fielding timelines give the re spondent some recovery ti me (2 to 3 months), while simultaneously not delaying so long that th e respondent is likely to forget details of the hospice experience. The survey focuses on topics that are important to hospice users and for which informal caregivers are the best source for ga thering this information. Caregivers will be presented with a set of standardized questions about their own experiences and the experiences of the patient in hospice care. During nationa l implementation of this survey, hospices are required to conduct the survey to meet the hospic e quality reporting require ments, but individual caregivers will respond only if they voluntarily ch oose to do so. We have launched a web site as part of national implementation which is inte nded as the primary information resource for hospices and vendors (www.hospi cecahpssurvey.org). The CAHPS ® Hospice Survey will initially be available in English and Spanish. CMS will provide additional translations of the survey over time in response to suggestions for any additional language tr anslations. Requests for additional language translations should be made to the CMS Hospice CAHPS ® Project Team at hospicesurvey@cms.hhs.gov.148 CMS-1609-F In general, hospice patients and their caregiver s are eligible for inclusion in the survey sample with the exception of the following inel igible groups: primary caregivers of patients under the age of 18 at the time of death; primary caregivers of patients who died within 48 hours of admission to hospice care; pati ents for whom no caregiver is listed or available, or for whom caregiver contact information is not known; patients whose primar y caregiver is a legal guardian unlikely to be familiar with care experiences; patients for whom the primary caregiver has a foreign (Non-US or US Territory address) home a ddress; patients or care givers of patients who request that they not be cont acted (those who sign “no publicity” requests while under the care of hospice or otherwise directly request not to be contacted) . Identific ation of patients and caregivers for exclusion will be based on hospice administrative data.
Hospices with fewer than 50 survey-eligib le decedents/caregivers during the prior calendar year are exempt from the CAHPS ® Hospice Survey data collection and reporting requirements for payment determination. Hospices with 50 to 699 survey-eligible decedents/caregivers in the prior year will be requ ired to survey all cases. For hospices with 700 or more survey-eligible decedents/caregivers in the prior year, a sample of 700 will be drawn under an equal-probability design.
Survey-eligible decedents/caregivers are define d as that group of decedent and caregiver pairs that meet all the criteria for inclusion in the survey sample.
For national implementation, we have assumed an eligibility rate of 85 percent and a response rate of 50 percent based on expe rience in the 2013 field test of the CAHPS ® Hospice Survey instrument. These rates will result in an estimated 300 completed questionnaires for each hospice with 700 or more survey-eligible decedents /caregivers in the cale ndar year and between149 CMS-1609-F 21 and 300 completed questionnaires for hospice s with between 50 and 699 survey-eligible decedents/caregivers during the calendar year. Assuming a total of 300 completes within each hospice and an intraclass correlation coefficient (ICC) of 0.01, which measures the amount of variability between hospices, we would achieve an interunit reliability of 0.75. Note that in Medicare CAHPS ® a reliability of 0.75 is regarded as a minimal acceptable standard.

We will move forward with a model of nati onal survey implementation which is similar to that of other CMS patient experience of care surveys. Medicare-certified hospices will contract with a third-party vendor that is CMS-trained and approve d to administer the survey on their behalf. Hospices are requi red to contract with independent survey vendors to ensure that the data are unbiased and collected by an organization that is trained to collect this type of data. It is important that survey respondents feel comfortable sharing their experiences with an interviewer not directly involved in providing the care. We have successfully used this mode of data collection in other settings, including for Medicare-certified home h ealth agencies. The goal is to ensure that we have comp arable data across all hospices.
Hospices will be required to provide their vendor with the sampling frame on a monthly basis. Participation requirements for the survey begin January 1, 2015 for the FY 2017 Annual Payment Update. For hospices, this means they will have to start conduc ting the survey as of January 1, 2015 and will incur the costs of hiring a survey vendor . The survey vendor would be the business associate of the hospice.
A list of approved vendors will be provided on http://www.hospicecahpssurvey.org closer to the launch of national implementation. Be ginning summer 2014, interested vendors may apply to become approved CAHPS ® Hospice Survey vendors. The application process will be150 CMS-1609-F online at http://www.hospicecahpssurvey.org . Vendors conducting the survey are required to offer a toll free assistance line which respondents can call for help. This help could include reading the survey to a respondent. The toll free line must have staff that can respond to questions in any language in which the ve ndor is offering the survey. Vendors must accommodate alternate telephone communications, including TTY.
In the FY 2015 Hospice Wage Index propos ed rule we proposed to codify the requirements for being an approved CAHPS ® Hospice Survey vendor for the FY 2017 APU.
Consistent with many other CMS CAHPS ® surveys that are publicly reported on CMS web sites, CMS will publicly report hospice data wh en at least 12 months of data are available, so that valid comparisons can be made across ho spice providers in the United States, to help patients, family and friends choose a hospice pr ogram for themselves or their loved ones.
b. Participation Requirements to Meet Quality Repor ting Requirements for the FY 2017 APU In section 3004 of the Affordable Care Act, th e Secretary is directed to establish quality reporting requirements for Hosp ice Programs. The CAHPS ® Hospice Survey is a component of the CMS Quality Reporting Requirements for th e FY 2017 APU and subsequent years.

The CAHPS ® Hospice Survey is the only nationally implemented survey of civilian patient and caregiver experiences with hospice th at includes both a standard questionnaire and standard survey administration prot ocols. Such standardization is needed in order to establish that the resulting survey data is comparable acr oss hospices and is suitab le for public reporting.

The CAHPS ® Hospice Survey includes the measures detailed in Table 8. The measures map directly to the CAHPS ® Hospice Survey. The individual survey questions that comprise151 CMS-1609-F each measure are listed under the measure. These measures are in the process of being submitted to the National Quality Forum (NQF).
Table 8: Hospice Experience of Care Sur vey Quality Measures and their Items Hospice Team Communication How often did the hospice team listen caref ully to you when you talked with them about problems with your fa mily member’s hospice care? While your family member was in hospice ca re, how often did the hospice team listen carefully to you? While your family member was in hospice care, how often did the hospice team explain things in a way that was easy to understand? While your family member was in hospice care, how often did the hospice team keep you informed about your family’s condition? While your family member was in hospice care, how often did the hospice team keep you informed about when they would arrive to care for your family member? Getting Timely Care While your family member was in hospi ce care, when you or your family member asked for help from the hospice team, how often did you get help as soon as you needed it? How often did you get the help you needed from the hospice team during evenings, weekends, or holidays? Treating Family Member with Respect While your family member was in hospice ca re, how often did the hospice team treat your family member with dignity and respect? While your family member was in hospi ce care, how often did you feel that the hospice team really cared a bout your family member? Providing Emotional Support In the weeks after your family member died, how much emotional support did you get from the hospice team? While your family member was in hospice care, how much emotional support did you get from the hospice team? Getting Help for Symptoms How often did your family member receive the help he or she needed from the hospice team for feelings of anxiety or sadness? Did your family member get as much help with pain as he or she needed?152 CMS-1609-F How often did your family member get the help he or she needed for constipation? How often did your family member get the help he or she needed for trouble breathing? Information Continuity While your family member was in hospi ce care, how often did anyone from the hospice team give you confusing or contra dictory information about your family member’s condition or care? Understanding the Side Effect s of Pain Medication Side effects of pain medicine include things like sleepiness. Did any member of the hospice team discuss side effects of pain medicine with you or your family member? Getting Hospice Care Training (H ome Setting of Care Only) Did the hospice team give you enough traini ng about what to do if your family member became restless or agitated? Did the hospice team give you enough training ab out if and when to give more pain medicine to your family member? Did the hospice team give you enough training about how to help your family member if he or she had trouble breathing? Did the hospice team give you enough training about what side effects to watch for from pain medicine? To comply with CMS’s quality reporting re quirements, hospices will be required to collect data using the Consumer Assessment of Healthcare Provide rs and Systems (CAHPS ® ) Hospice Survey. Hospices would be able to comply by utilizing only CMS-approved third party vendors that are in compliance with the provisions at §418.312(e).
In the FY 2014 Hospice Wage Index and Rate Update final rule (78 FR 48234), we stated that national implementation of the CAHPS ® Hospice Survey will begin with a ‘‘dry run” in the first quarter of CY 2015. Hospices are required to contract with an approved survey vendor to conduct a dry run of the survey for at least one month during January 2015, February 2015, or March 2015. During this period the survey vendo r will follow all the national implementation153 CMS-1609-F procedures, but the data will not be publicly reported. The dry run will provide hospices and their vendors with the opportunity to wo rk together under test circumstances.
Beginning April 1, 2015, all hospi ces are required to participate in the survey on an ongoing monthly basis. This means hospices need to contract with a su rvey vendor to conduct the survey monthly on their behalf. Participatio n for at least 1 month during the dry run, plus monthly participation for the 9 months betw een April 2015 and December 2015 (inclusive) is required to meet the pay for reporting require ment of the Hospice Quality Reporting Program (HQRP) for the FY 2017 APU.
Approved CAHPS ® Hospice Survey vendors will submit data on the hospice’s behalf to the CAHPS ® Hospice Survey Data Center. The dead lines for data submission occur quarterly and are shown in Table 9 below. Deadlines are final; no late submissions will be accepted. However in the event of extraordinary circumst ances beyond the control of the provider, the provider will be able to request an exemption as previously noted in the Quality Measures for Hospice Quality Reporting Program and Data Su bmission Requirements for Payment Year FY 2016 and Beyond section. Hospice providers are re sponsible for making sure that their vendors are submitting data in a timely manner.

Table 9: Data Submission Dates 2015-2016 for CAHPS ® Hospice Survey Sample Months Quarterly Data Submission Deadlines Dry Run (January-March 2015) August 12, 2015 Monthly data collection April – June 2015 (Q2) November 1, 2015 Monthly data collection Ju ly – September 2015 (Q3) February 10, 2016 Monthly data collection October – December 2015 (Q4) May 11, 2016154 CMS-1609-F In the FY 2014 Hospice Wage Index and Rate U pdate final rule, we stated that we would exempt very small hospices from CAHPS ® Hospice Survey requirements. Hospices that have fewer than 50 survey-eligible decedents/careg ivers in the period from January 1, 2014 through December 31, 2014 are exempt from CAHPS ® Hospice Survey data collection and reporting requirements for the 2017 APU. To qualify fo r the survey exemption for FY 2017, hospices must submit an exemption request form. This form will be available on the CAHPS ® Hospice Survey web site http://www.hospicecahpssurvey.org . Hospices are required to submit to CMS their total unique patient count for the pe riod of January 1, 2014 through December 31, 2014. The due date for submitting the exemption request form for the FY 2017 APU is August 12,
2015. c. Participation Requirements to Meet Qu ality Reporting Requirements for the FY 2018 APU To meet participation requirements for the FY 2018 APU, we proposed that hospices collect data on an ongoing monthly basis from January 2016 through December 2016 (inclusive). Data submission deadlines for the 2018 APU will be announced in future rulemaking.
Hospices that have fewer than 50 survey-eli gible decedents/caregivers in the period from January 1, 2015 through December 3 1, 2015 are exempt from CAHPS ® Hospice Survey data collection and reporting requirements for th e FY 2018 payment determination. To qualify, hospices must submit an exemption request form. This form will be available in first quarter 2016 on the CAHPS ® Hospice Survey web site http://www.hospicecahpssurvey.org

. Hospices are required to submit to CMS their total unique patient count for the period of January 1, 2015 through December 31, 2015. The due date for submitting the exemption request form for the FY 2018 APU is August 10, 2016.155 CMS-1609-F Summaries of the public comments and our responses to comments are summarized below: Comment: For the CAHPS ® Hospice Survey we received multiple comments concerning CMS’ proposed exclusion of respondents who we re family caregivers of patients who died within 48 hours or less of their admission to hos pice care. Commenters were concerned that we were excluding this group’s experience. Response: We appreciate these comments b ecause they show a concern for evaluating the hospice care experience for all patients, rega rdless of the time spent in hospice care. CMS used the 48 hours or less exclusion because of the history of the Family Evaluation of Care Survey (FEHC) which has been in use in the industry for several year s. The FEHC also recommended exclusion of patients with less than two days of hospice care. We set similar timeframe exclusions for other CAHPS ® surveys such as the Medicare CAHPS ® Health Plans Survey, where respondents need to be in the pl ans for at least six months, and the ICH CAHPS ® survey where the respondents need to have at le ast three months of dialysis experience at the facility before they are eligib le. If caregiver respondents do no t have enough expe rience with the hospice, they will not be able to easily or reliab ly answer the questions on the current survey. Our technical expert panel also stated that shorter-stay patients would have difficulty answering the current questions on the survey and recomm ended developing a shorter questionnaire for shorter-stay respondents. In national implementati on, we will move forward with the 48-hour or less exclusion, but we will closely track the number of patients being excluded. We will consider developing and implem enting an abbreviated CAHPS ® Hospice Survey, depending upon the number of people affected. Comment: One commenter stated that it is important that the CAHPS ® Hospice Survey156 CMS-1609-F document the length of stay, and its relationship to the profit/non-profit status of the hospice, in order to provide an accurate picture of the car egiver’s perception of the quality of care the hospice provided and to publicly re port the data by length of stay. Response: We have not determined how the su rvey results will be publicly reported for hospices. However, we are aware that both lengt h of stay and for-profit/non-profit status may have an impact on patient/careg iver experiences. We would not control for for-profit or nonprofit status when we publicly repo rt the data since that is under the control of the facility. If length of stay is a function of for-profit or non-prof it status, it also should not be controlled for. During national implementation we will document the length of stay for sampled patients as part of the administrative data we obtain for all sa mpled patients. CMS will conduct analyses of the impact of length of stay and profit/non-profit status on the survey results to see if any adjustments are needed for length of stay. Comment: A small number of commenters said there should be no participation exemptions for hospices reporting fewer than 50 deaths per year. Response: We proposed to exempt hospi ces with fewer than 50 survey-eligible decedents/caregivers annually because very small hospices will not have a sufficient number of survey responses to produce reliable measures. Survey data collected for very small samples tends to be unstable and can be influenced by re latively small changes in responses. This could result in the smallest hospices experiencing substa ntial variations in scores each year, not due to changes in care, but because only a small numb er of caregivers are answering the questions.

Comment: One commenter said that the CAHPS ® Hospice Survey should include a method for finding the respondent who is the mo st knowledgeable about the patient experience157 CMS-1609-F and noted that this person may not be the patient’s closest relative. Response: The family caregiver listed in hos pice administrative reco rds is the individual who will be contacted to respond to the CAHPS ® Hospice Survey. We agree this person may or may not be the most knowledgeable about the pa tient’s care. However, for sampling purposes we must be able to objectively and clearly define our target population an d we must have contact information to reach them by mail or telephone. Comment: One commenter stated that very few hospices experience fewer than 50 deaths a year. Conversely, 700 deaths are not necessarily indicative of a large hospice requiring only a sample survey. The commenter also stated th at CMS may wish to analyze the sampling ranges in the year following initial implementation to determine if these ranges are appropriate, particularly for sampling. Response: We are excluding hospices with fewer than 50 survey-eligible decedents/caregivers annually because small samp les will not produce reliable results. The choice of 700 survey-eligible de cedents/caregivers annually is not intended to define a large hospice, but only to allow hospices with this many deaths (or mo re) to conduct a sample rather than require them to survey a census of all el igible caregivers. CMS will continuously monitor survey responses and vendor activities. We will revisit these ranges if we find evidence that we need to do so. Comment: One commenter stated that the CAHPS ® Hospice Survey is too long and is not written in health literacy terms. Response: The CAHPS ® Hospice Survey includes 47 items, not all of which apply to all respondents. This does make the survey slightly longer than the Hospital CAHPS ® Survey (32 items) and the Home Health CAHPS ® Survey (34 items). Howeve r, the hospice survey had to158 CMS-1609-F ask demographic questions for both the patient an d the family caregiver, which partially accounts for its longer length. In addition, some items ar e only for patients in pa rticular settings (for example, home care). The CAHPS ® Hospice Survey was cognitively tested to learn how well respondents understood the items. The questionnaire was revised based up on the results of the cognitive testing.. The text of th e current instrument and the fina l reports on the testing of the instrument can be found at: http://www.hospicecahpssurvey.org

. Comment: One commenter was concerned that the survey is missing specific references to mental/behavior health, psychosocia l concerns and related occupations. Response: The CAHPS ® Hospice Survey does not seek to address experiences with specific professional occupations, but rather asks about the entire hospice team. Items on the survey concern communication with the hospice team, as well as the pa tients’ experience of anxiety and agitation. The survey also asks a bout spiritual and emoti onal support provided by the hospice. The survey was designed to capture topic areas that are most important from the perspective of family members/caregivers of the patients. Comment: One commenter said they understood that the proposal re quired that three different CAHPS surveys be distributed, based on the patient’s location at the time of death. The commenter strongly disagreed with impl ementing the survey in this manner. Response: The CAHPS ® Hospice survey consists of a single survey instrument for all settings in which hospice care is provided. The questionnaire will include a few items applicable only to certain settings of care (for example, ho me-based hospice) along with clear directions for the respondent. We do not limit our questi ons only to the final setting of care. Comment: One commenter said that for some questions in the survey, the use of choices such as never, sometimes, usually or always coul d affect the results. The commenter noted that159 CMS-1609-F some respondents may believe there is room fo r improvement and may be reluctant to choose “always” as an answer. The co mmenter stated that a five-poi nt rating scale may be a better choice. Response: The “never to always” scale has been tested extensively and used in CAHPS ® surveys for many years. We are unaware of a ny evidence indicating resp ondents are reluctant to choose “always” as a response. In addition, we do not believe a 5-point rating scale would offer a significant improvement over the existing CAHPS ® survey response methodology. Comment: One commenter stated that the CAHPS ® Hospice Survey should include patients as respondents rather than excl usively interview informal caregivers. Response: CMS is aware of the value of colle cting survey data on patients’ experiences. During the survey development process we caref ully considered the l ogistics of conducting surveys with two different populations: hospice patients and their inform al caregivers. CMS concluded that attempting to survey two populat ions would pose additiona l logistical problems and burdens because it was not clear the same ques tionnaire could be used for both groups. It is also not clear how the two groups should be public ly reported. Other c onsiderations include -- (1) the difficulty of determining which hospice patie nts are capable of partic ipating in the survey and; (2) the risk of upsetting fa milies if a survey addressed to a patient were to arrive soon after the patient died. In addition, hos pice patients cannot provi de information about the totality of the hospice care provided. For these reasons, CMS d ecided to survey only primary caregivers of deceased hospice patients. Comment: One commenter said that the hospi ce survey questionnair e should not be sent more than two months after the de ath of the patient, as the family member(s) may have difficulty recalling the experience. The commenter also not ed that a prolonged delay in completion of the160 CMS-1609-F survey questionnaire could result in dimini shed recall by the patient’s clinicians. Response: CMS is aware that a significan t delay in the completion of the survey questionnaire following the death of a patient can diminish the abil ity of survey respondents to accurately recall events. Howeve r, sending the survey shortly af ter a patient’s death has the potential to generate grief and pain for the respondent. Based on discussions with our technical expert panel and stakeholders, CM S has chosen to include what we believe is an appropriate period of delay following the death of the pati ent and survey administration procedures to provide a time for family members to grieve, but still respond regard ing the particulars of hospice care. CMS has built in a two-month lag after the death before any contact is made with the potential respondent. Currently, the CAHPS ® Hospice Survey does not consider clinicians as survey respondents, thus the commenter’s concerns regarding their ability to recall patient care for the survey is outside the scope of the comment. Comment: Approximately one-third of commenters supported the CAHPS ® Hospice Survey. Response: We thank the co mmenters for their support. Comment: One commenter recommended that the definition of criteria for exclusion be clarified for consistent inte rpretation and implementation. Response: Details of the groups that are inel igible for survey part icipation can be found under subsection a. Background and Description of the Survey in this rule. Final Action: As a result of these commen ts, we are finalizing the requirements as proposed. Hospices must participate in and report data from the Dry Run for at least 1 month in the first quarter of CY 2015 (January 2015, Fe bruary 2015, or March 2015). Continuous monthly data collection begins in Apr il 1, 2015, continues thr ough December 31, 2015, and161 CMS-1609-F continues in subsequent years. d. Vendor Participation Requirements for the 2017 APU CMS will train and approve vendors to administer CAHPS ® Hospice Survey on behalf of hospices (78 FR 48233). In addition we stated that hospices will be required to contract with an approved survey vendor and to provide the samp ling frame to the approved vendor on a monthly basis.
We proposed that approved survey vendors must meet all of the minimum business requirements and follow the detailed technical specifications for surv ey administration as published in the CAHPS ® Hospice Survey specifications manual, which will be posted on the Survey website: http://hospicecahpssurvey.org . In addition, to the sp ecifications manual, the website will include information and updates re garding survey implem entation and technical assistance, and a copy of the questionnaire
We proposed to codify the CAHPS ® Hospice Survey vendor requirements to be effective with the FY 2017 APU (as proposed in §418.312). We proposed that applicants wishing to become approved CAHPS ® Hospice Survey vendors must have been in business for a minimum of 4 years and have conducted surveys for a mini mum of 3 years using each the modes of survey administration for which they are applying. In addition the organization must have been conducting ‘‘surveys with patients’’ for at least 2 years immediately prece ding the application to become a survey vendor for the CAHPS ® Hospice Survey. For purposes of the approval process for CAHPS ® Hospice Survey vendors, a ‘‘survey of i ndividual patients’’ is defined as the collection of data from at least 600 individual patients selected by statistical sampling methods and the data collected are used for statistical purposes.162 CMS-1609-F Vendors may not use home-based or virt ual interviewers to conduct the CAHPS ® Hospice Survey, nor may they conduct any surv ey administration processes (for example, mailings) from a residence to ensure the confidentiality of data.
The following are examples of data collecti on activities will not satisfy the requirement of valid survey experience for approved vendors as defined for the CAHPS ® Hospice Survey, and these will not be considered as part of th e experience required of an approved vendor for
CAHPS ® Hospice Survey.
• Focus groups, cognitive interviews, or any ot her qualitative data collection ac tivities;
• Surveys of fewer than 600 individuals;
• Surveys conducted that did not involv e using statistical sampling methods;

• Internet or Web-ba sed surveys; and
• Interactive Voice Recognition Surveys.
We also proposed that no organization, firm, or business that owns, operates, or provides staffing for a hospice is permitted to administer its own Hospice CAHPS ® survey or administer the survey on behalf of any other hospi ce in the capacity as a Hospice CAHPS ® survey vendor. Such organizations will not be approved by CMS as CAHPS ® Hospice Survey vendors. Summaries of the public comments and our re sponses to those comments are summarized below: Comment: CMS received no comments regard ing Vendor Participation Requirements for the 2014 APU. Final Action: We are finalizing the requirements as proposed without change.163 CMS-1609-F e. Annual Payment Update The Affordable Care Act requires that be ginning with FY 2014 and each subsequent fiscal year, the Secretary shall reduce the mark et basket update by 2 percentage points for any hospice that does not comply with the quality data submission re quirements with respect to the fiscal year, unless covered by specific exemptions. Any such reduction will not be cumulative and will not be taken into account in computing th e payment amount for subsequent fiscal years. In the FY 2015 Hospice Wage Index proposed rule, we proposed to add the CAHPS ® Hospice Survey to the Hospice Quality Reporting Program requirements for the FY 2017 payment determination and determinations for subsequent years.

• To meet the FY 2017 requirements, hospices will participate in the Dry Run for at least 1 month of the first quarter of CY 2015 (January 2015, February 2015, March 2015). Hospices must collect the survey data on a monthly basis for the months of April 1, 2015 through December 31, 2015 in order to qualify for the full APU.

• To meet the HQRP requirements for the FY 2018 payment determination, hospices would collect survey data on a monthl y basis for the months of January 1, 2016 through December 31, 2016 to qualify for the full APU.

Summaries of the public comments and our responses to comments are summarized below: Comment: A few commenters stated that the timeframe for implementing the CAHPS ® Hospice Survey may not be sufficient to adequate ly finalize the survey questions, approve, train and hire vendors, complete the Dry Run and corr ect any concerns that may arise from the Dry
Run.164 CMS-1609-F Response: We are aware that the timeframe for implementing the CAHPS ® Hospice Survey is shorter th an for other CAHPS ® surveys. However, we have taken steps to mitigate the impact on hospices. The survey can be found on the CAHPS ® Hospice Survey web site, www.hospicecahpssurvey.org . We will post the Quality Assurance Guidelines technical manual in August 2014. We will also open the vendor a pplication and approval process on the web site in August 2014. This should provide hospice progr ams with ample time to contact and select a vendor. Hospices may contact vendors prior to this time if they wish to do so. The Dry Run will occur over the first quarter of 2015 (January-March 2015). We enc ourage hospices to participate in the Dry Run as early as possible and collabora te with their vendors to resolve any potential issues. Comment: A few commenters noted the cost of conducting the CAHPS ® Hospice Survey imposes regulatory burden on hospice providers requiring the allocation of resources from patient care and potentially result in higher costs to the Medicare program due to patients being shifted to higher levels of care due to limited hospice staffing. Response: We respectfully disagree with th e commenter’s assertions . Similar to other
CAHPS ® surveys, the CAHPS ® Hospice Survey will allow three modes of data collection, with each mode of data collection va rying in price. The modes are: mail-only, telephone-only, and mixed mode (mail with telephone follow-up. We urge hospices to call multiple vendors to discuss prices and services since the cost does va ry by vendor and the extr a services that they provide. It is unacceptable to change a patient’ s level of care due to staffing issues; such a change should be based on the patient’s and family’s needs, should meet the regulatory requirements for that level of care, and shoul d be documented in the plan of care. Comment: One commenter noted that CMS s hould refrain from using data for public165 CMS-1609-F reporting until 2016. Response: We have not finalized plans for public reporting of CAHPS ® Hospice Survey data. However, we will not publicly report data until we have accumulated a baseline data set of at least four quarters of data. Comment: One commenter said that CMS shoul d ensure that public reporting will meet the needs of Medicare benefi ciaries and their family care givers. Among other things, the information should be beneficiary friendly and address matters of particular concern to beneficiaries and their families. Response: We agree that public reporting of data obtained from surveys should meet the needs of Medicare beneficiaries and their families. Prior to publicly reporting the data, the displays will be tested with potential users of the information. We thank the commenter for the reminder of the importance of public reporting to beneficiaries and their families. Comment: One commenter said that CMS shoul d delay public reporting until the HIS is more fully developed and the data fr om the Hospice CAHPS is available. Response: CMS has not stated when public reporting of hospice survey results will commence. We will provide details on the sc hedule for public reporting in subsequent rulemaking. Comment: CMS should also consider instit uting a hospice star rating system where hospice providers will be measured based on these quality metrics so family members/care givers are able to shop for hospice benefits based on quality rating. Response: We appreciate the comment and will take it under consideration as public displays are developed. Final Action: We are finalizing the requirements as proposed without change.166 CMS-1609-F f. CAHPS ® Hospice Survey Oversight Activities We proposed a requirement that vendors a nd hospice providers pa rticipate in CAHPS ® Hospice Survey oversight activities to ensure compliance with Hospice CAHPS ® technical specifications and survey requirements. The purpose of the oversight activities is to ensure that hospices and approved survey vendors follow the CAHPS ® Hospice Survey technical specifications and thereby ensure the comparability of CAHPS ® Hospice Survey data across hospices.
We proposed that the reconsiderations and appeals process for hospices failing to meet the Hospice CAHPS ® data collection requirements will be part of the Reconsideration and Appeals process already developed for th e Hospice Quality Reporting program.
We encourage hospices interested in learning mo re about the CAHPS® Ho spice Survey to visit the CAHPS ® Hospice Survey web site: http://www.hospicecahpssurvey.org

. Summaries of the public comments and responses to comments regarding the reconsiderations and appeals process for hospices that fail to meet the Hospice CAHPS ® data collection requirements regard ing are summarized below: Comment: CMS received no comments regarding CAHPS ® Hospice Survey Oversight Activities Final Action: We are finalizing the requirements as proposed without change. 7. Procedures for Payment Y ear 2016 and Subsequent Years In the FY 2014 Hospice Wage Index and Paymen t Rate Update final rule (78 FR 48267), we notified hospice providers of the opportunity to seek reconsidera tion of our initial noncompliance decision for the FY 2014 and FY 2015 paym ent determinations. We stated that we will notify hospices found to be non-compliant w ith the HQRP reporting requirements that they167 CMS-1609-F may be subject to the 2 percentage point reducti on in their annual payment update. The process for filing a request for reconsideratio n is described on the CMS website at: http://www.cms.gov/Medicare/Quality-Initiative s-Patient-Assessment-Instruments/HospiceQuality-Reporting/Reconsideration-Requests.html. We proposed to codify this process at §418.312.
Finally, we proposed to codify at §4 18.306 that beginning with FY 2014 and each subsequent FY, the Secretary sh all reduce the market basket update by 2 percentage points for any hospice that does not comply w ith the quality data submission requirements with respect to that FY and solicited comments on all of the proposals in this section and the associated regulations text at §418.312 a nd in §418.306 in section VI.
Summaries of the public comments and our responses to comments are summarized below: Comment: CMS received no comments regarding Procedures for Payment Year 2016 and Subsequent Years. Final Action: We are finalizing the requirement s as proposed without change. I. Solicitation of Comments on C oordination of Benefits Pro cess and Appeals for Part D Payment for Drugs While Beneficiar ies are Under a Ho spice Election The statutory definition of the term “covered Part D drug”, as speci fied in section 1860D2(e)(2)(B) of the Social Securi ty Act, excludes a drug if payment for such a drug, as so prescribed and dispensed or admini stered with respect to a Part D eligible individual, is available (or would be available but for the application of a deductible) under Part A or B for that individual. Therefore, drugs a nd biologicals for which coverage is available under the Medicare Part A per-diem payment to a hospice program ar e excluded from coverage under Part D. Our168 CMS-1609-F previous understanding was that hospice coverage of drugs was very broad and very inclusive. Therefore, Part D payment for drugs furnished to hospice beneficiaries would be rare and the need for controls was not critical. Section 1861(dd) of the Act states the hospi ce is responsible for c overing all drugs or biologicals for the palliation and management of th e terminal illness and related conditions. Our stated intention in the 1983 Ho spice final rule (48 FR 56010) was that the hospice benefit provides virtually all care for the terminally ill individual. Despite our intention for a comprehensive and holistic benefit, gross covered drug costs in 2012 under Part D for beneficiaries during a hospice election totale d $417.9 million. Of this total, Medicare reimbursed approximately $334.9 million, and be neficiaries contributed $48.2 million in possibly unnecessary cost-sharing. 1. Part D Sponsor Coordination of Payment with Hospice Providers In the proposed rule, we described various requi rements we were consid ering to facilitate the coordination of payment between Part D sponsors and hospices and solicited comments on them. We refer you to the proposed rule (79 FR 26570 through 26575) for the discussion of the requirements we were considering and sought co mment on. Prior to the proposed rule, we had issued interim guidance on March 10, 2014 ( http://www.cms.gov/Medi care/Medicare-Fee-forService-Payment/Hospice/Downloads/Part-D -Payment-Hospice-Final-2014-Guidance.pdf ) and, as a result of feedback from stakeholders, we amended the guidance on July 18, 2014. In the interim guidance, we encourage Part D sponsors and Medicare hospices to take several of the actions that we stated in th e proposed rule we are considering requiring. Our July 18, 2014 guidance can be accessed at ( http://www.cms.gov/Medicar e/Medicare-Fee-for-ServicePayment/Hospice/Downloads/2014-Part D-Hospice-Guidance-Revised-Memo.pdf ); we plan that169 CMS-1609-F this guidance will remain in effect until requi rements are finalized. The revised guidance expects Part D sponsors to use hos pice prior authorization only on the four categories of drugs that the Office of Inspector General ( http://oig.hhs.gov/oas/ reports/region6/61000059.pdf ), in consultation with hospice provide rs, identified as nearly al ways covered under the hospice benefit. These categories of drugs will require hospice prior authorizations analgesics, antinauseants, laxatives, and antianxi ety drugs. Hospices may use the “ Hospice Information for Medicare Part D ” ( http://www.cms.gov/Medicar e/Medicare-Fee-for-ServicePayment/Hospice/Downloa ds/Hospice-Info-PartD.pdf ) form to provide the necessary information generally requested by Medicare Part D sponsors.
We appreciate the comments we received on the processes we were considering to facilitate the coordination of payment between Part D sponsors and hospices and will consider those comments in future rulemaking. In formulating the changes we were consid ering, we became aware that the regulatory requirement for a Part D sponsor to coordinate wi th other health benefit plans or programs at §423.464 (f)(1)(ix) is narrower than the requirement specified in statute. Section 1860D-24 of the Act requires Part D sponsors to coordinate with other drug plans, including, as specified in paragraph §423.464 (b)(5), with other health benef it plans or programs that provide coverage or financial assistance for the purchas e or provision of prescription dr ug coverage on behalf of Part D eligible individuals. However, in codify ing this requirement in the regulations at §423.464(f)(1)(ix), we specified that the other plans or programs are those that provide coverage or financial assistance for th e purchase of or provision of Part D (emphasis added) prescription drugs. The regulation does not include the require ment for Part D sponsors to coordinate with providers of drugs covered under Part A, such as hospices, since t hose drugs prescribed,170 CMS-1609-F dispensed, or administered under Part A are excl uded from the definition of a covered Part D drug. Because coordination between Part D sponsor s and the Medicare hospices is essential to ensure Part D statutory covera ge requirements are met, to re duce the potential for erroneous payment under Part D, and to faci litate the recovery of erroneous payments when they do occur, we also were considering amending the Part D regulations at §423.464(f) to align the definition of other prescription drug cove rage in paragraph §423.464(f)(1)(ix) with the statute by removing the phrase “Part D.” We did not propose to amend the Part D regul ations at §423.464(f), but rather solicited comments on this change. We appreciate the co mments received in response to our solicitation and will consider those comments in future rulemaking. 2. Solicitation of Comments on Hospice Coor dination of Payment with Part D Sponsors and Other Payers As specified in section 1861(dd) of the Ac t, and in regulation at 42 CFR Part 418, the hospice is responsible for covering all drugs a nd biologicals for the palliation and management of the terminal illness and re lated conditions. As noted in 418.202(f), drugs and biologicals for palliation of pain and symptom management ar e included in the Medicare Part A per-diem payment to a hospice. Therefore, such drugs and biologicals are exclude d from coverage under Part D (see section III.I.1). Our payment regulations at §418.200 require that, to be covered, hospice services must be consistent with the pl an of care, which must include the drugs and treatment necessary to meet the needs of the patient (§418.56(c)(2)). Additionally, the CoPs at §418.56(e)(5) require hospices to share informati on with other non-hospice healthcare providers furnishing services unrelated to the terminal illness and related conditions. As described in171 CMS-1609-F §418.100(c)(2), hospices must be available 24 ho urs a day and 7 days a week to address beneficiary and family needs. We have received anecdotal reports from Medi care hospice beneficiaries that they are not receiving medications related to their terminal illness and related conditions from their hospice because, among other stated reasons, those medi cations are not on the hospice’s formulary. These reports also have stated that hospice benefi ciaries were advised to obtain drugs related to the terminal illness and related conditions from their Part D prescription drug plans. Per the regulations at §418.202(f), hospices must provide all drugs which are reasonable and necessary to meet the needs of the patient in order to pr ovide palliation and symptom management of the terminal illness and related condi tions. If the drugs on the hospice formulary are not providing the relief needed, then the hospice must provide alternatives in order to relieve pain and symptoms, even if it means providing drugs th at are not on their formularies. Treatment decisions should not be driven by costs, as opposed to clinical appropriateness. Hospices should use thoughtful clinical judgment, with a patient- centered focus, when developing the hospice plan of care, including the recommen dations for medication management.
We did not propose any requirements, but we described various requirements we are considering to facilitate coor dination of payment responsibilit y between hospices and other payers and operational considerations. We refer you to the May 8, 2014 FY 2015 Hospice proposed rule (79 FR 26570 – 26575) for the di scussion of the requirements we sought comments on. As articulated above in sect ion I.1, the July 18, 2014 interim guidance ( http://www.cms.gov/Medicare/M edicare-Fee-for-Service-Pay ment/Hospice/Downloads/2014- PartD-Hospice-Guidance-Revised-Memo.pdf ) has been issued, and we plan that this guidance172 CMS-1609-F will remain in effect until requirements are finalized. We appreciate the comments on these issues and will consider the comments in future rulemaking. 3. Beneficiary Rights and Appeals Sometimes a beneficiary requests a certain me dication that a hospice cannot or will not provide because the hospice has deemed that th e specific medication is not reasonable and necessary for the palliation and management of the terminal illness and related conditions. Coverage of such medication would not be pe rmissible under Part D coverage since the medication is not for any condition completely sepa rate and distinct from the terminal illness and related conditions, nor is it covered under Part A, since it is not reasonable and necessary for the palliation and management of the terminal illness and related conditions. If the hospice does not provide the medication, the hospice is not oblig ated to provide any notice of non-coverage (including the Advance Beneficiar y Notice of Non-coverage or AB N). If the hospice provides medication it believes is not r easonable and necessary for the pa lliation and management of the terminal illness and related conditi ons, the hospice must first issue an ABN in order to charge the beneficiary for the cost of such medication. Re gardless of whether or not the hospice furnishes the drug, if the beneficiary independently obta ins the drug, but believes that the Medicare hospice should have furnished or covered the cost of the drug as part of the hospice benefit, the beneficiary may submit a claim for the medicat ion directly to Medi care on Form CMS-1490S ( http://www.cms.gov/Medicare/CMS -Forms/CMS-Forms/CMS-FormsItems/CMS012949.html ). If the claim is denied, the bene ficiary may file an appeal of that determination under the appeals proce ss set forth in part 405, subpart I. There may also be instances where a benefi ciary prefers a non-formulary drug because, for example, he or she believes it to be more efficacious than the formulary drug prescribed by173 CMS-1609-F the hospice. In such instances, the hospice may have determined that the formulary drug prescribed is reasonable and necessary for the pa lliation and management of the terminal illness and related conditions; however, th e beneficiary may prefer another brand of such drug that is off formulary, which the hospice believes is not reas onable and necessary, or more expensive but no more effective than the drug in the formulary. In those cases, th e beneficiary may submit quality of care complaints to a Quality Improvement Orga nization. We plan to increase our beneficiary outreach efforts to advise beneficiaries and their families/caregivers of their rights and the available appeals process described in this section. J. Update on the International Classifica tion of Diseases, 10th Revision, Clinical Modification (ICD-10-CM) and Coding Guid elines for Hospice Claims Reporting 3. International Classification of Diseases, 10t h Revision, Clinical M odification (ICD-10-CM) On April 1, 2014, the Protecting Access to Medicare Act of 2014 (PAMA) (Pub. L. 113- 93), was enacted. Section 212 of PAMA, titled “Delay in Transition from ICD-9 to ICD-10 Code Sets,” provides that “[t] he Secretary of Health and Hu man Services may not, prior to October 1, 2015, adopt ICD-10 code sets as the sta ndard for code sets und er section 1173(c) of the Social Security Act (42 U.S.C. 1320d-2(c) ) and section 162.1002 of title 45, Code of Federal Regulations.” On May 1, 2014, the Secretary announced plans to release an interim final rule in the near future that will include a new comp liance date to require the use of ICD-10-CM beginning October 1, 2015. The interim final rule will also require HIPAA covered entities to continue to use ICD-9-CM through Septembe r 30, 2015. Although the Department has not yet published the rule, we are proceeding in accordan ce with the announcement. This means that ICD-9-CM diagnosis codes will continue to be used for hospice claims reporting until October 1, 2015, the new implementation date fo r ICD-10-CM. Diagnosis reporting on hospice174 CMS-1609-F claims must adhere to ICD-9-CM coding conventi ons and guidelines rega rding the selection of principal diagnosis and the reporting of additi onal diagnoses. Additionally, the CMS’ Hospice Claims Processing manual (Pub 100-04, chapter 11) requires that hospice claims include the reporting of additional/ othe r diagnoses as required by ICD-9-CM coding guidelines. In the HIPAA regulations at 45 CFR 162.1002, the Secretary adopted the ICD-9-CM code set, including the Official ICD-9-CM Guidelines for Co ding and Reporting. The current ICD-9-CM Coding Guidelines use the Inte rnational Classification of Diseases, 9 th Edition, Clinical Modification (ICD-9-CM) and are available through the CMS web site at: http://www.cms.gov/Medicare/Coding/IC D9ProviderDiagnosticCodes/index.html or on the CDC’s web site at http://www.cdc.gov/nchs/icd/icd9cm.htm

. 4. Coding Guidelines for Hospice Claims Reporting In the FY 2014 Hospice Wage Index and Pa yment Rate Update, we reiterated that diagnosis reporting on hospice cl aims should include the appropr iate selection of principal diagnoses as well as the other, additional and co existing diagnoses related to the terminal illness and related conditions (78 FR 48254). Add itionally, in the July 27, 2012, FY 2013 Hospice Wage Index notice (77 FR 44247), we provided in-depth information regarding longstanding, existing ICD-9-CM Coding Guidelines. We also discussed related versus unrelated diagnosis reporting on claims and clarified that ‘‘all of a patient’s coexisting or additional diagnoses’’ related to the terminal illness and related cond itions should be reported on the hospice claim. The expectation was that hospices would report all diagnoses relate d to the terminal illness and related conditions on hospice claims to provide accurate information regarding the hospice beneficiaries for which they ar e providing hospice services.175 CMS-1609-F In the FY 2014 Hospice Wage Index and Paymen t Rate Update final ru le, we stated that beginning on October 1, 2014, any claims with “d ebility” or “adult failur e to thrive” in the principal diagnosis field will be returned to the provider for more definitive coding (78 FR48252). “Debility” and “adult failure to th rive” do not provide enough information to accurately describe Medicare hospice benefici aries and the conditions that hospices are managing. Once these claims are resubmitted with more appropriate diagnosis codes, following the ICD-9-CM Coding Guidelines, these claims will be processed accordingly. This is a reminder that claims with “debility” and “adult failu re to thrive” coded in the principal diagnosis field will be returned to providers for more defi nitive coding effective October 1, 2014 (for those claims submitted on and after October 1, 2014). Also in the FY 2014 Hospice Wage Index and Payment Rate Update final rule, we advised hospice providers to pay particular at tention to dementia diagnoses which are found under two separate ICD-9-CM classifications: ‘‘Mental, Behavioral, and Neurodevelopmental Disorders’’ and ‘‘Diseases of the Nervous System and Sense Organs’’(78 FR48252-48253). Many of the codes relating to dementia manifest ations found under the IC D-9-CM classification, “Mental, Behavioral, and Neurodevelopmental Di sorders”, are not appr opriate as principal diagnoses because of etiology/manifestation gui delines or sequencing conventions under the ICD–9–CM Coding Guidelines. ICD-9-CM Coding Gu idelines for this classification state that dementia is most commonly a secondary manife station of an underlying causal condition. Codes found under this classification identify the co mmon behavioral disturbances of dementia manifestations. Many of the dementia codes under the ICD-9-CM classification, “Mental, Behavioral and Neurodevelopmenta l Disorders” have coding conven tions that require to code first the associated neurological condition. Many of the associated neurological conditions can be176 CMS-1609-F found under the classification, “Diseases of the Ne rvous System”, including such conditions as “Alzheimer’s disease” and “Senile Degeneration of the Brain”. We advise hospices to pay close attention to the various coding and sequencing conventions found w ithin The Official ICD-9-CM Guidelines for Coding and Reporting when reporting diagnoses on hospice claims. To ensure additional compliance with ICD- 9-CM Coding Guidelines we will implement certain edits from Medicare Code Editor (MCE), wh ich detect and report e rrors in the coding of claims data, for all hospice claims effective October 1, 2014 (for those claims submitted on or after October 1, 2014). Hospice claims contai ning inappropriate principal or secondary diagnosis codes, per ICD-9-CM coding conventi ons and guidelines, will be returned to the provider and will have to be corrected and resubmitted to be processed and paid. We will implement edits related to etiology /manifestation code pairs from the MCE; therefore, it is important for hospice providers to follow the ICD-9-CM Coding Guidelines regarding codes that fall under this coding convention. The etiology/manifestation coding convention states that there are certain c onditions which have bot h an underlying cause (etiology) and subsequent multiple body system ma nifestations. For such conditions, ICD-9-CM coding convention requires the underlying condition be sequen ced first, followed by the manifestation. Whenever such a combination exists , there is a “use additi onal code” note at the etiology code and a “code first” note at the manifestation code. These instructional notes indicate the proper sequencing order of the codes. In most cases, the manifestation codes will have in the code title, “in diseases classified elsewhere.” “In diseases classified elsewhere” codes are never permitted to be used as first-listed or principal diagnosis codes. They must be used in conjunction with an underlying condition code and they must be listed following the underlying condition. An example of this can be found under the category 294, “Persistent177 CMS-1609-F mental disorders due to conditi ons classified elsewhere.” Ho wever, there are manifestation codes that do not have “in diseases classified el sewhere” in the title. For such codes, there is “use an additional code” note at the etiology code and a “code firs t” note at the manifestation code and the rules for sequencing apply. There are sequencing conventions under ICD-9-CM coding guidelines that are not accounted for in the MCE edits. There are seve ral dementia codes under the classification, “Mental Behavioral and Neurodevelopmental Disord ers” that have a sequencing convention that require the underlying physiological condition to be coded first, but for which there is no edit in the MCE. We will be issuing technical guidan ce through a Change Request to include these codes for edits in the MCE to be consistent for claims processi ng under ICD-9-CM Coding Guidelines. We are reminding providers to utilize the ICD-9-CM coding guidelines when submitting hospice claims to ensure they are following the appropriate guidelines for coding so that claims are not returned to providers as a result of MCE edits. Following the ICD-9-CM coding guidelines will help hospice providers with appropriate code selection for hospice claims processing. This is not to say that hospice bene ficiaries with various de mentia conditions are not appropriate for hospice services, ra ther, this is merely a clarification regarding the ICD-9-CM coding guidelines for claims processing. We ex pect hospice providers to follow ICD-9-CM coding guidelines to ensure that the most accurate information is provided regarding the patients for whom hospices are providing services. Additional details describing the specific MCE edits that will be applied will be announced through a change request, an accompanyi ng Medicare Learning Network article, and other CMS communication channels, such as the Home Health, Hospice, and DME Open Door
Forum.178 CMS-1609-F We have clarified in previous rules that hospice providers are expected to report on hospice claims all ICD-9-CM codes to provide an accurate description of the patients’ conditions. In the Hospice Wage Index for Fi scal Year 2013 (77 FR 44247) and again in the Hospice Wage Index for Fiscal Year 2014 (78 FR 48240), we remi nded providers to follow ICD9-CM Coding Guidelines for reporting dia gnoses on hospice claims. HIPAA, federal regulations, and the Medicare claims processi ng manual all require th at ICD-9-CM Coding Guidelines be applied to the c oding and reporting of diagnoses on hospice claims. In the FY 2013 hospice notice, we reported that our analys es showed that 77.2 percent of hospice claims from 2010 only reported a single, principal diag nosis. We provided in-depth information regarding longstanding, existing ICD- 9-CM Coding Guidelines that require the repo rting of all additional or co-existing diagnoses on hospice claims. We went on to state that coexisting or additional diagnoses could be related or unrelated to the hospice patient’s terminal illness. As the Medicare hospice benefit covers hospice services for the pall iation and management of the terminal illness and related c onditions, we said, at that tim e, that hospice providers “should report on hospice claims all coexisting or additional diagnoses that are related to the terminal illness; they should not report coexisting or a dditional diagnoses that are unrelated to the terminal illness” (77FR 44248). We also stated that we do not be lieve that requir ing reporting of coexisting or additional diagnoses that are related to the termin al illness would create a burden for hospice and that some provi ders already report these diagnoses on their claims. In the FY 2014 Hospice Wage Index and Paym ent Rate Update final rule, we reported that for the first quarter of FY 2013 (October 1, 2012 through December 31, 2012) 72 percent of hospice claims only reported a single, principal diagnosis (78 FR 48240). We also discussed related versus unrelated diagnos is reporting on claims and clarif ied that “all of a patient’s179 CMS-1609-F coexisting or additional diagnoses” related to the terminal illness or related conditions should be reported on the hospice claim. Information on a pa tient’s related and unre lated diagnoses should already be included as part of the hospi ce comprehensive assessment and appropriate interventions should be incorporated into the patie nt’s plan of care, as determined by the hospice
IDG. Analysis conducted on FY 2013 hospice claims shows that 67 percent of hospice claims still only report a single, principal hospice diagnosis. 41 Though this is a trend in the right direction, there still appe ars to be some confusion by the majo rity of hospice providers as to the requirements for diagnosis reporting on hospice cl aims. We are reminding providers to follow the ICD-9-CM Coding Guidelines, per longstanding policy, in regard to diagnosis reporting on claims. The ICD-9-CM Official Guidelines for Coding and Reporting state that for accurate reporting of ICD-9-CM diagnosis codes, “The documentation should describe the patient’s condition, using terminology which includes specifi c diagnoses, as well as symptoms, problems, and reasons for the encounter. List first th e ICD-9-CM code for the diagnosis, condition, problem, or other reason for th e encounter/visit shown in the me dical record to be chiefly responsible for services provide d.” The coding guidelines also state to code all documented conditions that coexist at the time of the encoun ter/visit and require or affect patient care treatment or management. Therefore, this is a reminder that all diagnoses should be reported on the hospice claim for the terminal illness and rela ted conditions, including those that can affect the care and management of the beneficiary. We will condition to monitor hospice claims to see if all conditions ar e being reported as required by ICD-9-CM Coding Guidelines. While we did

41 FY 2013 hospice claims data from the Chronic Conditions Data Warehouse (CCW) accessed on February 26, 2014.180 CMS-1609-F not make any proposals regarding ICD-9-CM C oding Guidelines in the proposed rule, we received two comments requesting rapid dissemin ation of the ICD-9-CM diagnostic codes that will prompt an edit to return to the provider for more definitive coding

. As mentioned above, more specific information will be provided, incl uding the diagnostic codes, in sub-regulatory guidance after the publication of this final rule. We will also issue provider education describing the specific MCE edits. K. Technical Regulatory Text Change In the FY 2015 Hospice Wage Index proposed rule, we proposed to make a technical correction in §418.3 to delete the definition for a “s ocial worker.” This definition is no longer accurate, and we intended to remove it as part of the June 5, 2008 final rule that amended the conditions of participation (CoPs) for hospice s (73 FR 32088). The 2008 final rule established new requirements for social workers at §418.114(b)(3 ), making the definition of “social worker” at §418.3 obsolete. However, the technical amen datory language included in the 2008 final rule did not instruct the Federal Register to delete the “social worker” definition.
Public comments and our response to comment s regarding the tech nical correction to delete the definition of social work er from §418.3 are summarized below.
Comment: Three commenters acknowledged and agreed with this technical correction. Response: We appreciate the commenters support.
Final action: We will implement th e technical correction as proposed.CMS-1609-F
IV. Collection of Information Requirements Under the Paperwork Reduction Act of 1995, we are required to provi de 30-day notice in the Federal Register and solicit public comment before a co llection of information requirement is submitted to the Office of Management and Budget (OMB) for review and approval. In order to fairly evaluate whether an information collection should be approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act of 1995 requires that we solicit comment on the following issues:

● The need for the information collection and its usefulness in carrying out the proper functions of our agency.

● The accuracy of our estimate of the information collection burden.

● The quality, utility, and clarity of the information to be collected.

● Recommendations to minimize the inform ation collection burden on the affected public, including automate d collection techniques. We are soliciting public comment on each of these issues for this section of this document that contains information collection re quirements (ICRs). This section includes ICR information on data collection A) related to hos pice payment policy, including changes to the election statement and changes to aggregate cap determination reporting; and B) related to the CAHPS® Hospice Survey. A. Changes Related to Hospice Payment Policy Sections A.1 and A.2 are associated with the information collection request (ICR) previously approved under OMB control number as 0938-1067. We are currently seeking to have the ICR reinstated under notice and comment periods separate from those associated withCMS-1609-F the FY 2015 Hospice Wage Index proposed rule. The following assumptions were used in estimating the burden for the proposed cha nges related to hospice payment policy: Table 10. Hospice Payment Policy Burden Estimate Assumptions # of Medicare-participating hospices nationwide, CY 2012 3,897 # of Medicare-billing hospices, from CY 2012 claims 3,727 # of Part D prescriptions per hospice, from CY 2012 claims 481 Hourly rate of registered nurse $41 Hourly rate of accountant $40 Hourly rate of office employee $17 Hourly rate of administrator $63 Note: CY = Calendar year All salary information is from the Bureau of Labor Statistics (BLS) website at http://www.bls.gov/oes/current/naics4_621600.htm and includes a fringe benefits package worth 30 percent of the base salary. Hourly rates are based on May 2012 BLS data for each discipline, for those providing “home health care services.” 1. Changes to the Election Statement (§418.24) Section 1812(d) of the Act re quires that patients elect hospice care in order for Medicare to cover and pay for hospice services. Section 1 861(dd)(3)(B) of the Act defines an attending physician and requires that the pati ent, not the hospice, designat e an attending physician at the time of election. Our regulations at §418.24 outli ne current requirements for completion of a hospice election statement, but do not require that the attending physician designated by the patient be identified. To safegua rd the patient’s right to choose his or her attending physician, we proposed and have now finalized a change to our regulations at §418.24(b) to require that the election statement be modified to identify the attending physician chosen by the patient and to include language that the patie nt acknowledges that the atte nding physician was his or her choice. All Medicare and Medica id hospice patients are required to elect the benefit. Since election requirement is particular to the Medi care and Medicaid hospice benefits, hospices areCMS-1609-F free to establish a similar starting point for non- Medicare and Medicaid patients in their own policies, based on the needs of the hospice, its community, and any applicable State and local laws and regulations. We estimated that the burden for this requi rement is the one-time burden to modify the election statement to include a place for iden tifying the attending physician and acknowledging that he or she was chosen by the patient or repr esentative. Hospices are currently required to explain these processes to patients, so we do not believe there is any additional burden for discussing that part of the electi on statement with patients or their representatives. We estimate that it will take a hospice cler ical staff person 20 minutes ( 20/60 = 0.33333 hours) to modify the election form, and the hospice administrator 15 minutes (15/60 = 0.25 hours) to review the revised form. The clerical time plus administ rator time equals a one-time burden of 35 minutes or (35 / 60) = 0.58333 hours per hospice; for all 3,897 hospices, the total time required is (0.58333 x 3,897) = 2,273 hours. At $17 per hour for an office employee, the cost per hospice is (0.33333 x $17) = $5.66. At $63 per hour for the admini strator’s time, the cost per hospice will be (0.25 x $63) = $15.75. Therefor e, the total one-time cost pe r hospice is $21.41, and the total one-time cost for all hospi ces is ($21.41 x 3,897) = $83,435. Because of concerns related to the pote ntial inappropriate changing of attending physicians by hospices, we also proposed and have now finalized a policy to add paragraph (f) to our regulations at §418.24, to requ ire that the patient (or repres entative) provide a statement identifying the new attending physician and the date the change is to be e ffective, and that the patient (or representative) sign and date th e form. The form should also include an acknowledgement that this change is the patient’s choice. The one-time burden to hospices is the time to develop a form for the patient to use. We estimate that it will take a hospice clerical staffCMS-1609-F person 20 minutes (20/60 = 0.33333 hours) to devel op this form, and the hospice administrator 15 minutes (15/60 = 0.25 hours) to review the new form. The cler ical time plus administrator time equals a one-time burden of 35 minutes or (35 / 60) = 0.58333 hours per hospice; for all 3,897 hospices, the total time required is ( 0.58333 x 3,897) = 2,273 hours. At $17 per hour for an office employee, the cost per hospice is (0.33333 x $17) = $5.66. At $63 per hour for the administrator’s time, the cost per hospice is ( 0.25 x $63) = $15.75. Theref ore, the total one-time cost per hospice to develop this new form fo r changing attending physic ians is $21.41, and the total one-time cost for all hospices is ($21.41 x 3,897) = $83,435.
Comment : Two commenters asked CMS to clarif y the sentence from the proposed rule which read, “Note that all hospices, including those that are not Medicare-participating, are required by the Conditions of Participation to have patients elect hospice care.” Response : All Medicare and Medicaid hospice patients are required to elect the benefit. Since the election requirement is particular to the Medicare and Medicaid hospice benefits, hospices are free to establish a similar starting point for non-Medicare an d Medicaid patients in their own policies, based on the needs of the hos pice, its community, and any applicable State and local laws and regulations. We have rephrase d the sentence in this final rule to read as written in this response. 2. Changes to Aggregate Cap De termination Reporting (§418.308) Congress mandated two caps on hospice payments : an inpatient cap and an aggregate cap. The hospice cap year is November 1 throug h October 31. Medicare contractors complete the hospice cap determination approximately twelve to eighteen months after the cap year in order to demand any overpayments from the hos pices. A cap determination consists in determining whether a hospice exceeds the in patient cap and the aggregate hospice cap.CMS-1609-F Medicare hospice inpatient stays in excess of twenty percent of total Medicare hospice days are to be reimbursed at the rou tine homecare rate; the hospice must be repay any excess due to receiving payments at the higher inpatient rate s for the excess inpatient days. Additionally, Medicare hospice payments are limited by an aggregate cap, which is computed by multiplying the “cap amount” by the number of beneficiaries. If the actual Medicare payments exceed the aggregate cap, the hospice must repay the difference. We proposed to change our regulations at §418.308(c) to require hospices to ca lculate their inpatient and aggr egate caps five months after the cap year and remit any overpayment. We fi nalized a policy that on ly requires hospices to calculate their aggregate cap five months after the cap year and remit any overpayment (please see section III.D of this final rule for more specifics). This is similar to the process in §413.24(f), which requires other provider types that file a Medicare co st report to file their cost reports five months after the e nd of their cost reporting year. The regulation at §413.24(f) also requires other provider types th at file a Medicare cost report to remit any amount due the program at the time of the cost report filing. Although hospices file cost reports, the cap determination is not based on the cost report; the hospice caps serve to limit total Medicare payments similar to the way cost reports limit th ose payments for other provider types that file a Medicare cost report. Requi ring hospices to complete a cap determination and remit any overpayment is consistent with what is currently required of all other prov ider types that file a Medicare cost report. We expect that it will take a hospice about 1.5 hours to complete its cap determination. All information needed to file the cap determinat ion is available in the Provider Statistical and Reimbursement (PS&R) system. For all 3,727 hospi ces that bill Medicare, this is (1.5 x 3,727) = 5,591 hours. We estimate that it will take one hour for an accountant to complete the capCMS-1609-F determination worksheet provided by CMS for the cap year. At $40 per hour for an accountant, the cost is (1 x $40) = $40 per hospice, a nd (3,727 x $40) = $149,080 for all hospices. We estimate that it will take a half hour for the admi nistrator to review the worksheet prepared by the accountant. At $63 per hour for the administrator’s time, the co st per hospice is (0.5 x $63) = $31.50, and for all hospices is (3,727 x $31.50) = $117,401. Therefore the to tal estimated cost per hospice is ($40 + $31.50) = $71.50, and the to tal cost for all hospi ces is (3,727 x $71.50) = $266,481. B. CAHPS® Hospice Survey This section is associated with a new info rmation collection request that is required to start in January 2015. The Hospice Survey data collected in 2015 is re quired for the FY 2017 HQRP quality reporting requirements along with th e submission of the clinical structural measures for the same payment period. This is a new information collection request seeking approval to assess experiences of care with hospice reported by primar y caregivers (that is, bereaved family members of friends) of patient s who died while receiv ing hospice care. This information data collection request is required to (1) assess experience of care at the respondent (caregiver) level, and (2) provide sufficient response to genera te hospice experience reports. Here are the estimates for the approximate annual cost of the CAHPS® Survey (Table 11).
T ABLE 11. A SSUMPTIONS AND E STIMATES FOR CAHPS® H OSPICE S URVEY Approximate # of hospices required to do the CAHPS® Survey annually 2,600 Approximate Cost to each hospice annually for the CAHPS® Survey $3,300 Approximate Cost for all CAHPS® Hospices annually for the CAHPS® Survey $8.58 million Respondent Cost burden $2.19 million Approximate Total Cost of CAHPS® Survey annually $10.77 millionCMS-1609-F In implementing the HQRP, we seek to collect measure information with as little burden to the providers as possible, but which reflects the full spectrum of quality performance. As such, we are moving forward toward the implem entation of the CAHPS® Hospice Survey to provide data to the public about the patients’ families’ and friends ’ perspectives of care of their loved ones who passed way while in hospices. The CAHPS® Hospice Survey data will provid e the peoples’ voices to hospice care in the United States. Based on the criteria outlined in the Preamble, some hospices that are too new and very small will be exempt from the HQRP. We estimate that 2,600 hospices will qualify to participate in the survey. From CMS experiences with surveys, we estimate an annual cost of $3,300 per hospice to participate in the CAHPS® Hospice Surve y. The cost of $3,300 includes the preparation of a monthly sampling frame fo r their approved vendor, as well as estimated vendor costs to conduct the data collection. The es timated annual cost for all hospices to do the survey is $8.58 million. As part of the survey requirement, all participating hospices will contract with an approved hospice survey vendor, and each hospice will be required to submit a monthly list of deceased patients’ caregivers contact information, for patients that passed away in the hospice care two months prior to the date of the list. This list (essentially the sampling frame) for most hospices can be generated from existing databases with minimal effort. For some small hospices, preparation of a monthly sa mple frame may require more time. However, data elements needed on the sample frame will be kept at a minimum to reduce the burden on the hospices. The survey contains 47 items and is estimated to require an average administration time of 10.4 minutes in English, and 12.5 minutes in Spanish, for an average response time of 10.505 minutes or 0.175 hours, assuming that 5 percent of the survey respondents complete the surveyCMS-1609-F in Spanish. These burden estimates are based on CMS’ experiences with surveys of similar lengths that were fielded with Medicare beneficiaries. We estimate that approximately six surveys can be done an hour, at an hourly wage of $22.77. (We used the mean hourly wage from the “National Compensation Su rvey: All United States December 2009 – January 2011,” U.S. Department of Labor, Bureau of Labor Statistics. This was the most recent survey available at the time of OMB submission). With a total es timate of 550,000 respondents, we estimate a total respondent burden by multiplying 550,000 responde nts by an estimated hourly burden per respondent of 0.175 hours to produce the total estimated number of burden hours (96,250). We then multiplied the number of hours (96,250) by $22.77 which equals at $2.19 million. The respondent burden does not represent an additional co st to the hospices, but instead refers to the time burden borne by respondents; the cost to the participating hospices is $8.58 million. Table 12 below provides a summary of the burden a nd cost estimates associated with both the hospice payment policy changes and the CAHPS® Hospice Survey requirements.

Table 12: Burden and Cost Estimates Associat ed with All Information Collection Requirements

Regulation Section(s) OMB Control

No. Number of Respondents Number of Responses Burden per Response

(hours) Total Annual Burden (hours) Hourly Labor Cost of Reporting ($) Total Labor Cost of Reporting ($) Total Cost ($) 418.24(b) 0938- 1067 3,897 3,897 0.583333 2,273 21.41 83,435 83,435 418.24(f) 0938- 1067 3,897 3,897 0.583333 2,273 21.41 83,435 83,435 418.308(c) 0938- 1067 3,727 3,727 1.500000 5,591 71.50 266,481 266,481
418.312 0938- New 1,100,000 550,000 0. 175 96,250 22.77 2,191,612 2,191,612 Totals 1,107,624 561,521 106,387 2,624,963
There are no capital/maintenance costs associated with the information collection requirements contained in this rule ; therefore, we have removed the associated column from Table 12.CMS-1609-F If you comment on these information collecti on and recordkeeping requirements, please submit your comments electronically as specified in the ADDRESSES section of this final rule. Please identify which Collection of Info rmation requirement you are commenting on by indicating whether it is from subsection:

• A.1. Changes to the Election Statement (§418.24);

• A.2. Changes to Aggregate Cap De termination Reporting (§418.308); or

• B. CAHPS ® Hospice Survey (§418.312). Comment: A commenter said the rates used in Table 10 do not reflec t salary information in all regional areas, and therefore underestimat e the administrative burden. This commenter felt that the time estimates were unde r-reported but did not suggest spec ific changes to the estimates. Response: We use salary data from the Bu reau of Labor Statistics that is a national average, which reflects the variation in wages across the country. Our time estimates are based on the time an efficient hospice would requ ire to complete a particular activity. V. Regulatory Impact Analysis A. Statement of Need This final rule follows §418.306(c) wh ich requires annual issuance, in the Federal Register , of the hospice wage index based on the mo st current available CMS hospital wage data, including any changes to th e definitions of Core-Based St atistical Areas (CBSAs), or previously used Metropolitan St atistical Areas (MSAs). This final rule also updates payment rates for each of the categories of hospice care described in §418.302(b) for FY 2015 as required under section 1814(i)(1)(C)(i i)(VII) of the Act. The payment rate updates are subject to changes in economy-wide productivity as specified in section 1886(b)(3)(B)(xi)(II) of the Act. In addition, the payment rate updates may be re duced by an additional 0.3 percentage pointCMS-1609-F (although for FY 2014 to FY 2019, the potential 0.3 pe rcentage point reduc tion is subject to suspension under conditions specif ied in section 1814(i)(1)(C)(v) of the Act). In 2010, the Congress amended section 1814(i)(6) of the Act w ith section 3132(a) of the Affordable Care Act. The amendment authorized the Secretar y to collect additional data and information determined appropriate to revise payments for hospice care and for other purposes. The data collected may be used to revise the methodology for determining the paym ent rates for routine home care and other services included in hos pice care, no earlier th an October 1, 2013, as described in section 1814(i)(6)(D) of the Act. In accordance with sec tion 1814(i)(6)(D) of the Act, this final rule provides an update on hospice payment reform analysis. Section 1814(i)(2)(A) th rough (C) limits total Medicare payments a hospice can receive through the aggregate cap. This final rule al so requires that providers submit their hospice aggregate cap determination to their Medicare Administrativ e Contractor (MAC) within 5 months after the cap year ends, but not sooner than 3 months afte r the cap year ends, and remit any overpayments at that time. Hospices that fail to comply will be subject to suspension of payments. Section 1812(d) of the Act requires that hos pice beneficiaries wa ive their right to Medicare payments for services related to the terminal illness and provided during a hospice election, except when provided by the hospice or by the attending physician. To properly enforce that requirement, it is necessary that a be neficiary’s hospice status be up-to-date in the claims processing systems. Therefore, this fina l rule requires that hos pice Notice of Elections (NOEs) and Notice of Terminations/Revocations ( NOTRs) be filed with the Medicare contractor within 5 days after the effective date of election or the effectiv e date of discharge / revocation. Hospices will be subject to provider-liable da ys when they file an NOE late, though we willCMS-1609-F allow for a waiver of these provider-liable days when late-filing is due to certain circumstances beyond the control of the hospice. Furthermore, in accordance with section 1860D- 24 of the Act, drugs and biologicals that may be covered under the Medicare Part A per-d iem payment to a hospice program are excluded from coverage under Part D. Section 1861(dd) of the Act states the hospice is responsible for covering all drugs or biologicals for the palliati on and management of the terminal illness and related conditions. Th e FY 2015 Hospice Wage Index propo sed rule, in accordance with sections 1860D-24 and 1861(dd) of the Act, soli cited comments on a coordination of benefits process and appeals for Part D payment for drugs and biologicals while beneficiaries are under a hospice election. We did not make any proposals on the coordination of benefits process and appeals for Part D payment for drugs and biol ogicals while benefici aries are under a hospice election. Finally, section 3004 of the Affordable Care Act amended the Act to authorize a quality reporting program for hospices, and this rule di scusses changes in the requirements for the hospice quality reporting program in accordan ce with section 1814(i)(5 ) of the Act. B. Introduction We have examined the impacts of this rule as required by Executive Order 12866 on Regulatory Planning and Review (Septemb er 30, 1993), Executive Order 13563 on Improving Regulation and Regulatory Review (January 18, 2011), the Regul atory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354), section 1102(b) of the Act, secti on 202 of the Unfunded Mandates Reform Act of 1995 (UMRA, March 22, 1995; Pub. L. 104-4), and the Congressional Review Act (5 U.S.C. 804(2)).CMS-1609-F Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. A regulatory impact an alysis (RIA) must be prepared for major rules with economically significant effects ($100 million or more in any 1 year). This final rule has been designated as economically significant under section 3(f)(1)o f Executive Order 12866 and thus a major rule under the Congressional Review Act. Accordingly, we have prepared a regulatory impact analysis (RIA) that to the best of our ability, pres ents the costs and benefits of the rulemaking. Finally, this ru le has been reviewed by OMB. C. Overall Impact The overall impact of this final rule is an estimated net increase in Federal payments to hospices of $230 million, or 1.4 percent for FY 2015. This estimated impact on hospices is a result of the final hospice payment update per centage for FY 2015 of 2.1 percent and changes to the FY 2015 hospice wage index, in cluding a reduction to the BNAF by an additional 15 percent, for a total BNAF reduction of 85 percent (10 per cent in FY 2010, and 15 pe rcent per year for FY 2011 through FY 2015). An 85 percent reduced BNAF is computed to be 0.009313 (or 0.9313 percent). The BNAF reduction is part of a 7-year BNAF phase-out that was finalized in the FY 2010 Hospice Wage Index final rule (74 FR 39384), and is not a policy change. 1. Detailed Economic Analysis Column 4 of Table 13 shows the combined effects of the updated wage data (the 2013 pre-floor, pre-reclassified hospital wage index) and of the additional 15 percent reduction in theCMS-1609-F BNAF (for a total BNAF reduction of 85 percen t), comparing estimated payments for FY 2014 to estimated payments for FY 2015. The FY 2014 payments used for comparison have a 70 percent reduced BNAF applied. We estimate that the total hospice payments for FY 2015 will decrease by 0.7 percent. This 0.7 percent is the result of a 0.1 perc ent reduction due to the use of updated wage data (-$20 million), and a 0.6 percen t reduction due to the additional 15 percent reduction in the BNAF (-$100 million). This es timate does not take into account the final hospice payment update percentage of 2.1 percent (+$350 million) for FY 2015. Column 5 of Table 13 shows the combined effects of the updated wage data (the 2013 pre-floor, pre-reclassified hosp ital wage index), the additional 15 percent reduction in the BNAF (for a total BNAF reduction of 85 percent), and the final hospice payment update percentage of 2.1 percent. The final 2.1 per cent hospice payment update percen tage is based on a 2.9 percent inpatient hospital market basket update fo r FY 2015 reduced by a 0.5 percentage point productivity adjustment and by 0.3 percentage point as mandated by the Affordable Care Act. The estimated effect of the 2.1 percent final hospice payment update percentage is an increase in payments to hospices of approximately $350 milli on. Taking into account the 2.1 percent final hospice payment update percentage (+$350 milli on), the use of updated wage data (-$20 million), and the additional 15 percent reduction in the BNAF (-$100 million), it is estimated that hospice payments will increase by $230 million in FY 2015 ($350 million - $20 million -$100 million = $230 million) or 1.4 percent in FY 2015. a. Effects on Hospices This section discusses the im pact of the projected effects of the hospice wage index and the effects of a final 2.1 percent hospice payment update percentage for FY 2015. This final rule continues to use the CBSA-based pre-floor, pre-reclassified hosp ital wage index as a basis forCMS-1609-F the hospice wage index and continues to use the same policies for treatment of areas (rural and urban) without hospital wage da ta. The final FY 2015 hospice wage index is based upon the FY 2013 pre-floor, pre-reclassified hospital wage index and the most complete hospice claims data available (FY 2013 hospice claims submitted as of March 31, 2014) with an additional 15 percent reduction in the B NAF (for a total BNAF reduction of 85 percent). For the purposes of our impacts, our baseline is estimated FY 2014 payments with a 70 percent BNAF reduction, using the FY 2012 pre-floor, pre-reclassifi ed hospital wage index. Our first comparison (column 3 of Table 13) compar es our baseline to estimated FY 2015 payments (holding payment rates constant) using th e updated wage data (FY 2013 pre-floor, prereclassified hospital wage index). Consequently, the estimated effects illustrated in column 3 of Table 13 show the distributional e ffects of the updated wage data only. The effects of using the updated wage data combined with the additional 15 percent reduction in the BNAF are illustrated in column 4 of Table 13. We have included a comparison of the comb ined effects of the additional 15 percent BNAF reduction, the updated wa ge data, and the final 2.1 per cent hospice payment update percentage for FY 2015 (Table 13, column 5). Pr esenting these data gives the hospice industry a more complete picture of the effects on their to tal revenue based on changes to the hospice wage index and the BNAF phase-out as discussed in this final rule and the final FY 2015 hospice payment update percentage. Certain events may limit the scope or accuracy of our impact analysis, because such an analysis is susceptible to forecasting errors due to other changes in the forecasted impact time period. The nature of the Me dicare 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.CMS-1609-F

TABLE 13: Anticipated Impact on Medicare Hospice Paymen ts of Updating the Pre -floor, Pre-Reclassified Hospital Wage Index Data, Reducing the Budget Neutra lity Adjustment Factor (BNAF) by an Additional 15 Percent (for a Total BNAF Reduction of 85 Percent) and Applying a 2.1 Percent Hospice Payment Update Percentage, Compared to the FY 2014 Hospice Wage Index with a 70 Percent BNAF Reduction

Number of Hospices (1) Number of Routine Home Care

Days in Thousands (2) Percent Change in Hospice Payments due

to FY2014 Wage Index

Change

(3) Percent Change in Hospice Payments due to Wage Index Change, additional 15%

Reduction in Budget Neutrality Adjustment (4) Percent Change in Hospice Payments due to Wage Index Change, additional 15%

Reduction in Budget Neutrality Adjustment and Market Basket Update (5) ALL HOSPICES 3,752 88,006 -0.1% -0.7% 1.4% URBAN HOSPICES 2,779 77,199 -0.1% -0.7% 1.4% RURAL HOSPICES 973 10,808 -0.2% -0.5% 1.6% BY REGION

– URBAN: NEW ENGLAND 128 2,783 0.0% -0.7% 1.4% MIDDLE ATLANTIC 252 7,920 0.5% -0.1% 2.0% SOUTH ATLANTIC 391 16,855 -0.6% -1.2% 0.9% EAST NORTH CENTRAL 363 12,012 -0.1% -0.8% 1.3% EAST SOUTH CENTRAL 156 4,494 -0.3% -0.7% 1.4% WEST NORTH CENTRAL 210 4,775 -0.8% -1.4% 0.7% WEST SOUTH CENTRAL 558 10,459 -0.2% -0.8% 1.3% MOUNTAIN 278 6,639 -0.3% -0.9% 1.2% PACIFIC 408 10,039 0.9% 0.2% 2.3% OUTLYING 35 1,222 0.7% 0.7% 2.8% BY REGION

– RURAL: NEW ENGLAND 24 238 -0.1% -0.7% 1.4% MIDDLE ATLANTIC 44 571 0.3% -0.3% 1.8% SOUTH ATLANTIC 137 2,330 -0.6% -1.0% 1.1% EAST NORTH CENTRAL 137 1,783 -0.7% -1.3% 0.8% EAST SOUTH CENTRAL 132 1,916 0.0% 0.0% 2.1% WEST NORTH CENTRAL 181 1,228 0.4% -0.1% 2.0% WEST SOUTH CENTRAL 174 1,530 -0.3% -0.3% 1.8% MOUNTAIN 96 693 0.5% 0.1% 2.2% PACIFIC 47 504 0.8% 0.1% 2.2% OUTLYING 1 13 0.0% 0.0% 2.1% BY SIZE/DAYS: 0- 3499 DAYS (small) 668 1,135 0.1% -0.4% 1.7% 3500

– 19,999 DAYS (medium) 1,797 18,352 0.0% -0.5% 1.6% 20,000+ DAYS (large) 1,287 68,519 -0.1% -0.7% 1.4%CMS-1609-F

TYPE OF OWNERSHIP: VOLUNTARY 1,032 29,283 -0.1% -0.6% 1.5% PROPRIETARY 2,195 48,857 -0.1% -0.7% 1.4% GOVERNMEN T 525 9,866 -0.1% -0.7% 1.4% HOSPICE BASE: FREESTANDING 2797 73,257 -0.1% -0.7% 1.4% HOME HEALTH AGENCY 489 9,129 0.1% -0.5% 1.6% HOSPITAL 444 5,380 0.2% -0.4% 1.7% SKILLED NURSING FACILITY 22 241 0.2% -0.4% 1.7% Source: FY 2013 Hospice claims data from the Standard Analytic Files for CY 2012 (as of June 30, 2013) and CY 2013 (as of March 31, 2014) and the Provider of Service (POS) file (as of March 2014). Note: The final 2.1 percent hospice payment update percenta ge for FY 2015 is based on a 2.9 percent inpatient hospital market basket update, reduced by a 0.5 percentage point productivity adjustment and by 0.3 percentage point. Starting with FY 2013 (and in subsequent fiscal years), the market basket percentage update under the hospice payment system as described in section 1814(i)(1)(C )(ii)(VII) or section 1814(i)( 1)(C)(iii) of the Act will be annually reduced by changes in economy-wide productivity as set out at section 1886(b)(3)(B)(xi)(II) of the Act. In FY 2013 through FY 2019, the market basket percentage update under the hospice payment system will be reduced by an additional 0.3 percentage point (although for FY 2014 to FY 2019, the potential 0.3 percentage point reduction is subject to suspension under conditions set out under section 1814(i)(1)(C)(v) of the Act). REGION KEY: New England= Connecticut, Maine, Massachusetts, Ne w Hampshire, Rhode Island, Vermont; Middle Atlantic= Pennsylvania, New Jersey, New York; South Atlantic= Delaware, District of Columbia, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia, West Virginia; East North Central= Illinois, Indiana, Michigan, Ohio, Wisconsin; East South Central= Alabama, Kentucky, Mississippi, Tennessee; West North Central= Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota; West South Central= Arkansas, Louisiana, Oklahoma, Texas; Mountain= Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah, Wyoming; Pacific= Alaska, California, Hawaii, Oregon, Washington; Outlying= Guam, Puerto Rico, Virgin Islands

Table 13 shows the results of our analysis. In column 1, we indicate the number of hospices included in our analysis as of March 31, 2014, which had also filed claims in FY 2013. In column 2, we indicate the number of routine home care days that were included in our analysis, although the analysis was pe rformed on all types of hospice care . Columns 3, 4, and 5 compare FY 2014 estimated payments with those estimated for FY 2015. The estimated FY 2014 payments incorporate a BNAF, which has b een reduced by 70 percent. Column 3 shows the percentage change in estim ated Medicare payments for FY 2015 due to the effects of the updated wage data only, compared with estimated FY 2014 payments. The effect of the updated wage data can vary from region to region depending on the fluctuati ons in the wage index valuesCMS-1609-F of the pre-floor, pre-reclassified hospital wage index. Column 4 shows the percentage change in estimated hospice payments from FY 2014 to FY 2015 due to the combined effects of using the updated wage data and reducing the BNAF by an additional 15 percent. Column 5 shows the percentage change in estimated hospice paym ents from FY 2014 to FY 2015 due to the combined effects of using updated wage data, an additional 15 percent BNAF reduction, and the final 2.1 percent hospice payment update percentage. The impact of changes in this final rule has been analyzed acco rding to the type of hospice, geographic location, type of ownership, hospice base, and size. Table 13 categorizes hospices by various geographic and hospice characteristics. The firs t row of data displays the aggregate result of the impact for all Medicare-certified hospices. The second and third rows of the table categorize hospices according to thei r geographic location (urban and rural). Our analysis indicated that there are 2,779 hospices located in urba n areas and 973 hospices located in rural areas. The next two row groupings in the table indicate th e number of hospices by census region, also broken down by urban and rural hospices. The next grouping shows the impact on hospices based on the size of the hospice’s program. We determined that the majority of hospice payments are made at the routine hom e care rate. Therefore, we based the size of each individual hospice’s program on the number of routine home care days provided in FY 2013. The next grouping shows the impact on hospices by type of ownership. The final grouping shows the impact on hospices defined by whether they are provider-based or freestanding. As indicated in column 1 of Table 13, there are 3,752 hospices included in the regulatory impact analysis (the number of hospices in Ta ble 13 differs from the number of hospices shown in Table 10 because the data were obtained from different sources). Approximately 41.5 percentCMS-1609-F of Medicare-certified hospices are identified as voluntary (non-pro fit) or government agencies; a majority (58.5 percent) are pr oprietary (for-profit), with 1,557 designated as non-profit or government hospices, and 2,195 as proprietary. In addition, our analysis shows that most hospices are in urban areas and provide the va st majority of routine home care days, most hospices are medium-sized, and the vast majority of hospices are freestanding. b. Hospice Size Under the Medicare hospice benefit, hospices ca n provide four different levels of care. The majority of the days provided by a hospice are routine home care (RHC) days, representing about 97 percent of the services provided by a hospice. Therefor e, the number of RHC days can be used as a proxy for the size of the hospice, that is, the more days of care provided, the larger the hospice. We currently use three size designati ons to present the impact analyses. The three categories are-- (1) small agencies having 0 to 3,499 RHC days; (2) medium agencies having 3,500 to 19,999 RHC days; and (3) large agencies having 20,000 or more RHC days. The FY 2015 updated wage data before any BNAF reduction are anticipate d to decrease payments to large hospices by 0.1 percent, and increase 0.1 fo r small hospices. Medium hospices’ payments are anticipated to stay stable (column 3). The updated wage data and the additional 15 percent BNAF reduction (for a total BNAF reduction of 85 percen t) are anticipated to decrease estimated payments to small hospices by 0.4 percent, to medium hospices by 0.5 percent, and to large hospices by 0.7 percent (column 4). Finally, th e updated wage data, the additional 15 percent BNAF reduction (for a total BNAF reduction of 85 percent), and the fi nal 2.1 percent hospice payment update percentage are projected to in crease estimated payments by 1.7 percent for small hospices, by 1.6 percent for medi um hospices, and by 1.4 percent fo r large hospices (column 5). c. Geographic LocationCMS-1609-F

Column 3 of Table 13 shows the estimated im pact of using updated wage data without the BNAF reduction. Urban hospices are anticipated to experience a decrease of 0.1 percent and rural hospices are anti cipated to experience a decrease of 0.2 percent in payments. Urban hospices can anticipate an increase in payments in Middle Atlantic of 0.5 pe rcent, in the Pacific of 0.9 percent and in the Outlying area of 0.7 per cent. Urban hospices can anticipate a decrease in payments ranging from 0.8 percent in the West North Central region to 0.1 percent in the East North Central region. Urban hospices in New Engl and are not anticipated to be affected by the updated wage data. Rural hospices are estimated to see a decrease in payments in four regions, ranging from 0.7 percent in the East North Central region to 0.1 percent in the New England region. Rural hospices can anticipate an increase in payments in four regions ranging from 0.3 percent in the Middle Atlantic region to 0.8 per cent in the Pacific region. Ther e is no anticipated change in payments for the East South Central and Outlyin g regions due to the use of updated wage data. Column 4 shows the combined effect of the updated wage data and the additional 15 percent BNAF reduction on estimated payments , as compared to the FY 2014 estimated payments using a BNAF with a 70 percent reduc tion. Overall, hospices are anticipated to experience a 0.7 percent decrease in payments, with urban hospi ces experiencing an estimated decrease of 0.7 percent a nd rural hospices experiencing an estim ated decrease of 0.5 percent. All urban areas other than Outlying and Pacific are estimated to see decreases in payments, ranging from 1.4 percent in the West North Central regi on to 0.7 percent in the New England and East South Central regions. The urban Pacific and Outly ing regions are anticipated to see increases in payments of 0.2 percent and 0.7 percent, respectively.CMS-1609-F Rural hospices are estimated to experience a decrease in payments in six regions, ranging from 1.3 percent in the East North Central re gion to 0.1 percent in the West North Central region. Payments in the rural Mountain and Paci fic regions are anticipa ted to increase by 0.1 percent, while payments in the rural Outlying an d East South Central regi ons are anticipated to stay relatively stable. Column 5 shows the combined effects of th e updated wage data, the additional 15 percent BNAF reduction, and the final 2.1 percent hospi ce payment update percentage on estimated FY 2015 payments as compared to estimated FY 2014 payments. Overall, hospices are anticipated to experience a 1.4 percent increase in payments, w ith urban hospices antici pated to experience a 1.4 percent increase in payments, and rural hosp ices anticipated to experience a 1.6 percent increase in payments. Urban hospices are anticip ated to experience an increase in estimated payments in every region, ranging from 0.7 perc ent in the West North Central region to 2.8 percent in Outlying area. Rural hospices in ever y region are estimated to see an increase in payments ranging from 0.8 percent in East Nort h Central to 2.2 percen t in the Mountain and Pacific regions. d. Type of Ownership Column 3 demonstrates the effect of th e updated wage data on FY 2015 estimated payments, versus FY 2014 estimated payments. We anticipate that using the updated wage data will decrease estimated payments to proprietary (for-profit), voluntary (non-profit), and Government hospices by 0.1 percent. Column 4 demonstrates the combined effects of the updated wage data and of the additional 15 pe rcent BNAF reduction. Estimated payments to voluntary (non-profit), proprietary (for-profit) , and government hospices are anticipated to decrease by 0.6 percent, 0.7 pe rcent and 0.7 percent, respec tively. Column 5 shows theCMS-1609-F combined effects of the updated wage data, the additional 15 percent BNAF reduction (for a total BNAF reduction of 85 percent) , and the final 2.1 percent hospi ce payment update percentage on estimated payments, comparing FY 2015 to FY 2014. Estimated FY 2015 payments are anticipated to increase for voluntary (non-profit) hospices by 1.5 percent, for proprietary (forprofit) hospices by 1.4 percent, and gove rnment hospices by 1.4 percent. e. Hospice Base Column 3 demonstrates the effect of usi ng the updated wage data, comparing estimated payments for FY 2015 to FY 2014. Estimated pa yments are anticipated to decrease for freestanding hospices by 0.1 percen t. Estimated payments are an ticipated to increase for home health agency, hospital, and skilled nursing f acility based hospices by 0.1 percent, 0.2 percent, and by 0.2 percent, respectively. Column 4 show s the combined effects of the updated wage data and reducing the BNAF by an additional 15 percent, comparing estimated payments for FY 2015 to FY 2014. All hospice facili ties are anticipated to experience decrease in payments ranging from 0.7 percent for freestanding hospices to 0.4 percent for hospita l and skilled nursing facility based hospices. Column 5 shows the co mbined effects of the updated wage data, the additional 15 percent BNAF reduction, and th e final 2.1 percent hospice payment update percentage on estimated payments, compari ng FY 2015 to FY 2014. Estimated payments are anticipated to increase for all hospices, rangi ng from 1.4 percent for fr eestanding hospices to 1.7 percent for hospital and skilled nursing facility based hospices. f. Effects on Other Providers This final rule will only affect Medicare hospices, and therefore has no effect on other provider types. We note that our suggested appro aches with respect to Pa rt D coordination withCMS-1609-F hospice payments may ultimately have an effect on Part D spending, if subsequently proposed and adopted. g. Effects on the Medicare and Medicaid Programs This final rule only affects Medicare hospi ces, and therefore has no effect on Medicaid programs. As described previously, estimated Medicare payments to hospices in FY 2015 are anticipated to decrease by $20 million due to the update in the wage index data, and to decrease by $100 million due to the additi onal 15 percent reduction in the BNAF (for a total 85 percent reduction in the BNAF). However, the final hospi ce payment update percentage of 2.1 percent is anticipated to increase Medica re payments by $350 million. Therefore, the total effect on Medicare hospice payments is estimated to be a $230 million increase (1.4 percent). h. Alternatives Considered In continuing the reduction to the BNAF by an additional 15 percent, for a total BNAF reduction of 85 percent (10 percent in FY 2010, and 15 percent per year for FY 2011 through FY 2015), and implementing the hospice payment upda te percentage and the updated wage index, the aggregate impact will be a net increase of $230 million in payments to hospices. In the proposed rule for FY 2015, we did not consider discontinuing the additional 15 percent reduction to the BNAF as the 7-year phase-out of the BNAF was finalized in the FY 2010 Hospice Wage Index final rule (74 FR 39384). However, if we were to discontinue the reduction to the BNAF by an additional 15 percent, Medicare will pay an estimated $100 million more to hospices in FY
2015. Since the hospice payment update percentage is determined based on statutory requirements, we did not consider updating the hospice payment rates by a percentage less than the payment update percentage. The final 2.1 per cent hospice payment update percentage for FYCMS-1609-F 2015 is based on a final 2.9 percent inpatient hospital market bask et update for FY 2015, reduced by a 0.5 percentage point productivity adjustment and by an additional 0.3 percentage point. Payment rates for FYs since 2002 have been updat ed according to sectio n 1814(i)(1)(C)(ii)(VII) of the Act, which states that the update to th e payment rates for subse quent FYs must be the market basket percentage for that FY. The Act requires us to use the inpatient hospital market basket to determine the hospice payment rate update. In addition, section 3401(g) of the Affordable Care Act mandates that, starting wi th FY 2013 (and in subsequent FYs), the hospice payment update percentage will be annually reduced by changes in economy-wide productivity as specified in section 1886(b )(3)(B)(xi)(II) of the Act. In addition, section 3401(g) of the Affordable Care Act also mandates that in FY 2013 through FY 2019, the hospice payment update percentage will be reduced by an a dditional 0.3 percentage point (although for FY 2014 to FY 2019, the potential 0.3 percentage point reduction is subject to suspension under conditions specified in secti on 1814(i)(1)(C)(v) of the Act). Regarding alternative timeframes for timely-f iling of the Notice of Election (NOE) and of the Notice of Termination / Revocation (NOTR), we considered using 4 days after the effective date of election or of discharge / revocation, but decided to allow 5 days. We will continue to monitor the filing of NOEs and NOTRs, and will consider shortening the timeframe for what would be considered a timely-file d NOE or NOTR in future rulemaking. To ensure the attending physician of record is properly documented in th e patient’s medical record, we finalized, in section III.F, changes to the regulations at §418.24(b)(1) requiring the election statement to include the patient’s choice of attending physician. We considered limiting the number of times that a beneficiary can change hi s/her attending to once per electi on period (similar to the current regulations at §418.30(a) that only allows a beneficiary to change a hospice provider once duringCMS-1609-F an election period). However, we first want to conduct additional analyses of hospice Part A billing for physician services provided by nurse practitioners and Part B attending physician billing to determine how frequently bene ficiaries change attending physicians. i. Accounting Statement As required by OMB Circul ar A-4 (available at http://www.whitehouse.gov/om b/circulars/a004/a-4.pdf ), in Table 14 below, we have prepared an accounting statement showing the classification of the expenditure s associated with this final rule. Table 14 provides our be st estimate of the increase in Medicare payments under the hospice benefit as a result of the changes presented in this fina l rule for 3,752 hospices in our impact analysis file construc ted using FY 2013 claims as of March 31, 2014. Table 14 also includes the costs associated w ith (1) a hospice account ant to complete the cap determination worksheet, and for a hospice administrator to re view the final worksheet, for a total annual burden of $266,481 as noted in sectio n IV.A; and (2) the cost to hos pices to participate in the CAHPS® survey, including the preparation of a monthly sampling frame for their approved vendor, as well as estimated survey vendor cost s, for an estimated to tal annual cost of $8.58 million to all hospices in the survey. Table 14 below does not reflect a one-time cost of modifying the current hospice election statemen t to record the patien t’s choice of attending physician ($83,435) and the one-time cost of crea ting a new hospice form for changing the attending physician ($83,435), fo r a total one-time burden of $166,870 as noted in section IV.B.

TABLE 14-- Accounting Statement: Classifica tion of Estimated Transfers, From FY 2014 to FY 2015 [in $Millions] Category Transfers FY 2015 Final Rule Hospice Wage Index and Payment Rate Update Annualized Monetized Transfers $ 230CMS-1609-F

From Whom to Whom? Federal Government to Hospices Category Costs Annualized Monetized Costs for Hospice Providers 1 $8.85

1 Costs associated with hospice aggregate cap reporting and with the CAHPS® Hospice Survey j. Conclusion In conclusion, the overall effect of this fi nal rule is an estimated $230 million increase in Medicare payments to hospices due to the wa ge index changes (including the additional 15 percent reduction in the BNAF) and the final hospice payment upda te percentage of 2.1 percent. Also, starting in FY 2015, hospices are estimated to incur an nual burden costs of $266,481 for a hospice accountant to complete the cap determina tion worksheet, and for a hospice administrator to review the final worksheet. Finally, starti ng in FY 2015 hospices are estimated to incur annual burden costs of $8.58 million for partic ipation in the CAHPS® hospice survey. 2. Regulatory Flexibility Act Analysis The RFA requires agencies to analyze options for regulatory relief of small businesses if a rule has a significant impact on a substantial nu mber of small entities. For purposes of the RFA, we estimate that almost all hospices are small entities as that term is used in the RFA. The great majority of hospitals and most other hea lth care providers and suppliers are small entities by meeting the Small Business Administration (S BA) definition of a small business (in the service sector, having revenues of less than $7.0 million to $35.5 millio n in any 1 year), or being nonprofit organizations. While the SBA does not de fine a size threshold in terms of annual revenues for hospices, it does define one for home health agencies ($14 million; see http://www.sba.gov/sites/default/file s/files/Size_Standards_Table(1).pdf ). For the purposes of this final rule, because the hospice benefit is a home-based benefit, we are applying the SBA definition of “small” for home health agencies to hospices; we will use this definition of “small”CMS-1609-F in determining if this final rule has a significant impact on a substantial number of small entities (for example, hospices). We estimate that 95 pe rcent of hospices have Medicare revenues below $14 million or are nonprofit organi zations and therefore are cons idered small entities. HHS’s practice in interpreting the RFA is to consider effects economically “significant” only if they reach a threshold of 3 to 5 percent or more of total re venue or total costs. As noted above, the combined effect of the updated wage data, the additional 15 percent BNAF reduction, and the final FY 2015 hospice payment update percen tage of 2.1 percent results in an increase in estimated hospice payments of 1.4 percent for FY 2015. For small and medium hospices (as defined by routine home care days), the estimated effects on revenue when accounting for the updated wage data, the additional 15 percent B NAF reduction, and the final FY 2015 hospice payment update percentage reflect increases in payments of 1.7 percent and 1.6 percent, respectively. Therefore, the Secretary has dete rmined that this final rule will not create a significant economic impact on a substa ntial number of small entities. In addition, section 1102(b) of the Act requires us to prepar e a regulatory impact analysis if a rule may have a significant impact on the ope rations of a substantial number of small rural hospitals. This analysis must conform to the pr ovisions of section 604 of the RFA. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of a metropolitan statis tical area and has fewer than 100 beds. This final rule only affects hospices. Therefore, the Secretary has determined that this final rule wi ll not have a significant impact on the operations of a substant ial number of small rural hospitals. 3. Unfunded Mandates Reform Act Analysis Section 202 of the Unfunded Mandates Reform Act of 1995 also requires that agencies assess anticipated costs and benef its before issuing any rule w hose mandates require spending inCMS-1609-F any 1 year of $100 million in 1995 dollars, updated annually for inflation. In 2014, that threshold is approximately $141 million. This final rule is not anticipated to have an effect on State, local, or tribal governments, in the aggr egate, or on the private sector of $141 million or

more. VI. Federalism Analysis Executive Order 13132 on Federalism (August 4, 1999) establishes certa in requirements that an agency must meet when it promulgates a proposed rule (and subseq uent final rule) that imposes substantial direct requirement costs on State and local governments, preempts State law, or otherwise has Federalism implications. We ha ve reviewed this final rule under the threshold criteria of Executive Order 13132, Federalism, a nd have determined that it will not have substantial direct effects on the rights, roles, and responsibilities of St ates, local or tribal governments. VII. Waiver of 60-Day Delay in the Effective Date

We ordinarily provide a 60-day delay in the effe ctive date of the provisions of a rule in accordance with the Administrative Procedure Act (APA) (5 U.S.C. 553 (d), which requires a 30-day delayed effective date, and the Congressional Review Act (5 U.S.C. 801 (a)(3), which requires a 60-day delayed effective date for major rules. However, we can waive the delay in the effective date if the Secretary finds, for good cause, that the delay is im practicable, unnecessary, or contrary to the public interest, and incorporates a statement of th e finding and the reasons in the rule issued. 5 U.S.C.
553 (d)(3); 5 U.S.C. 808 (2). The hospice payment system is a fiscal year paym ent system, and we typically issue the final rule by August 1 of each year to both comply with the requirement to annually review and update these payment systems and ensure that the payment polici es for these systems are effective, following theCMS-1609-F
required 60-day delay in the effective date, on October 1, the first day of the fiscal year to which the policies are intended to apply. If the agency finds, for good cause, that a 60-day delay is impracticable, unnecessary, or contrary to the public interest, and th e agency incorporates a statement of the findings and its reasons in the rule issued, the agency may sp ecify an earlier effective date. The timeframes for developing annual rules are extremely compressed and processing issues complicated this year’s rule. We believe it would be contrary to the public interest to delay the effective date of the hospice payment system. We therefore specify that those po rtions of the rule will be effective October 1.
List of Subjects 42 CFR Part 405 Administrative practice and pro cedure, Health facilities, Medi care, Reporting and recordkeeping requirements. 42 CFR Part 418 Health facilities, Hospice car e, Medicare, Reporting and re cordkeeping requirements. For the reasons set forth in the preamble, th e Centers for Medicare a nd Medicaid Services amends 42 CFR chapter IV as set forth below: PART 405 ––FEDERAL HEALTH INSURA NCE FOR THE AGED AND DISABLED Subpart C—Suspension of Payment, Recovery of Overpayments, and Repayment of Scholarships and Loans 1. The authority citation for part 405, subpart C continues to read: Authority : Secs. 1102, 1815, 1833, 1842, 1862, 1866, 1870, 1871, 1879 and 1892 of the Social Security Act (42 U.S. C. 1302, 1395g, 1395l, 1395u, 1395y, 1395cc, 1395gg, 1395hh, 1395pp and 1395ccc) and 31 U.S.C. 3711.CMS-1609-F 2. Section 405.371 is amended by revising para graph (c)(1) and adding paragraph (e) to read as follows:

§405.371 Suspension, offset, and recoupment of Medicare payments to providers and suppliers of services.
* * * * * (c) * * * (1) Except as provided in paragra phs (d) and (e) of this section, CMS or the Medicare contractor suspends payments only after it has complied with the procedural requirements set forth at §405.372.
* * * * * (e) Suspension of payment in the case of unfiled hospice cap de termination reports. (1) If a provider has failed to timely file an acceptabl e hospice cap determination report, payment to the provider is immediately suspended in whole or in part until a cap determination report is filed and determined by the Medicare co ntractor to be acceptable. (2) In the case of an unf iled hospice cap determination report, the provisions of §405.372 do not apply. (See §405.372(a)(2) concerning failure to furnish other information.) PART 418 – HOSPICE CARE 3. The authority citation for part 418 continues to read as follows: Authority: Secs. 1102 and 1871 of the Social Secu rity Act (42 U.S.C. 1302 and 1395hh). §418.3 [Amended] 4. Section 418.3 is amended by removing the definition of “Social worker”. 5. Section 418.24 is amended by revising paragr aphs (a) and (b)(1) and adding paragraph (f) to read as follows: §418.24 Election of hospice care.CMS-1609-F (a) Filing an election statement

. (1) General. An individu al who meets the eligibility requirement of § 418.20 may file an election stat ement with a particular hospice. If the individual is physically or me ntally incapacitated, his or her representative (as defined in § 418.3) may file the election statement. (2) Notice of election. The hospice chosen by the eligible indivi dual (or his or her representative) must file the Notice of Electi on (NOE) with its Medicar e contractor within 5 calendar days after the effective da te of the election statement. (3) Consequences of failure to submit a timely no tice of election

. When a hospice does not file the required Notice of El ection for its Medicare patients w ithin 5 calendar days after the effective date of election, Medicare will not cover and pay for days of hospice care from the effective date of election to the date of filing of the notice of election. Thes e days are a provider liability, and the provid er may not bill the beneficiary for them. (4) Exception to the consequences for filing the NOE late

. CMS may waive the consequences of failure to submit a timely-filed NOE specified in paragraph (a)(2) of this section. CMS will determine if a circumstance encountered by a hospice is exceptional and qualifies for waiver of the cons equence specified in paragraph (a)(3) of this section. A hospice must fully document and furnish any requested documentation to CMS for a determination of exception. An exceptional circumstance may be due to, but is not limited to the following: (i) Fires, floods, earthquakes, or similar unus ual events that inflic t extensive damage to the hospice’s ability to operate. (ii) A CMS or Medicare cont ractor systems issue that is beyond the control of the hospice.CMS-1609-F (iii) A newly Medicare-certified hospice that is notified of that certification after the Medicare certification date, or which is awaiting its user ID from its Medicare contractor. (iv) Other situations determined by CMS to be beyond the contro l of the hospice. (b) * * * (1) Identification of th e particular hospice and of the at tending physician that will provide care to the individual. The indi vidual or representative must acknowledge that the identified attending physician wa s his or her choice.
* * * * * (f) Changing the attending physician

. To change the designate d attending physician, the individual (or representative) must file a signed statement with the hospice that stat es that he or she is changing his or her attending physician. (1) The statement must identify the new attending physician, and include the date the change is to be effective and the date si gned by the individual (or representative). (2) The individual (or representative) must acknowledge that the cha nge in the attending physician is due to his or her choice. (3) The effective date of the change in at tending physician cannot be before the date the statement is signed. 6. Section 418.26 is amended by adding a new paragraph (e) to read as follows: §418.26 Discharge from hospice care.
* * * * * (e) Filing a notice of termination of election

. When the hospice election is ended due to discharge, the hospice must file a notice of termination/revocation of election with its MedicareCMS-1609-F contractor within 5 calendar days after the effective date of the discharge, unless it has already filed a final claim for that beneficiary. 7. Section 418.28 is amended by adding a new paragraph (d) to read as follows: §418.28 Revoking the election of hospice care.
* * * * * (d) When the hospice election is ended due to revocation, the hospice must file a notice of termination/revocation of election with its Me dicare contractor within 5 calendar days after the effective date of the revocation, unless it has already filed a final clai m for that beneficiary. 8. Section 418.306 is amended by adding paragraph (b)(6) to read as follows: §418.306 Determination of payment rates.
* * * * * (b) * * * (6) For FY 2014 and subsequent fiscal years, in the case of a Medica re-certified hospice that does not submit hospice quality data, as specified by the Secretary, the payment rates are equal to the rates for the previous fiscal ye ar increased by the applicable market basket percentage increase, minus 2 percentage points. Any reduction of the percentage change will apply only to the fiscal year involved and w ill not be taken into account in computing the payment amounts for a subsequent fiscal year.
* * * * * 9. Section 418.308 is amended by revising pa ragraph (c) to read as follows: §418.308 Limitation on the amount of hospice payments.
* * * * *CMS-1609-F (c) The hospice must file its aggregate cap determination notice with its Medicare contractor no later than 5 months after th e end of the cap year (that is, by March 31 st ) and remit any overpayment due at that time. Hospices sh all file the aggregate cap using data no earlier than 3 months after the end of the cap period. Th e Medicare contractor w ill notify the hospice of the final determination of program reimbursement in accordance with procedures similar to those described in §405.1803 of this chapter. If a pr ovider fails to file its self-determined cap determination with its Medicare contractor within 5 months after the cap year, payments to the hospice will be suspended in whole or in part, unt il a self-determined cap determination is filed with the Medicare contract or, in accordance with§405.371( e) of this chapter.
* * * * * 10. Subpart G is amended by adding a new §418.312 to read as follows: §418.312 Data submission requirements und er the hospice quality reporting program. (a) General rule. Except as provided in paragr aph (g) of this section, Medicar e-certified hospices must submit to CMS data on measures selected under section 18 14(i)(5)(C) of the Act in a form and manner, and at a time, specified by the Secretary. (b) Submission of Hospice Quality Reporting Program data. Hospices are required to complete and submit an admission Hospice Item Set (HIS) and a discharge HIS for each patient admission to hospice, regardless of payer or patient age. The HIS is a standardized set of items intended to capture patient-level data. (c) A hospice that receives notice of its CM S certification number before November 1 of the calendar year before the fiscal year for which a payment determination will be made must submit data for the calendar year.CMS-1609-F (d) Medicare-certified hospices must contract with CMS-approved ve ndors to collect the CAHPS® Hospice Survey data on their behalf and submit the data to the Hospice CAHPS®
Data Center. (e) If the hospice’s to tal, annual, unique, survey-eligible, deceased patient count for the prior calendar year is less than 50 patients, th e hospice is eligible to be exempt from the CAHPS® Hospice Survey reporting requirements in the current calendar year. In order to qualify for this exemption the hospice must subm it to CMS its total, annual, unique, surveyeligible, deceased patient count for the prior calendar year. (f) Vendors that want to become CMS-appr oved CAHPS® Hospice Survey vendors must meet the minimum business requirements. Surv ey vendors must have b een in business for a minimum of 4 years, have conducted surveys in the approved survey mode for a minimum of 3 years, and have conducted surveys of individual pa tients for a minimum of 2 years. For Hospice CAHPS®, a ‘‘survey of individual patients’’ is defined as the colle ction of data from at least 600 individual patients selected by st atistical sampling methods, and th e data collected are used for statistical purposes. Vendors may not use home- based or virtual interv iewers to conduct the CAHPS® Hospice Survey, nor may they conduct any survey administration processes (for example, mailings) from a residence.
(g) No organization, firm, or business that owns, operates, or provides staffing for a hospice is permitted to administer its own Hospi ce CAHPS® survey or administer the survey on behalf of any other hospice in the capacity as a Hospice CAHPS® survey vendor. Such organizations will not be approved by CM S as CAHPS® Hospice Survey vendors. (h) Reconsiderations and appeals of Hosp ice Quality Reporting Pr ogram decisions. (1) A hospice may request reconsidera tion of a decision by CMS that the hospice has not met theCMS-1609-F requirements of the Hospice Quality Reporting Program for a particular reporting period. A hospice must submit a reconsider ation request to CMS no later than 30 days from the date identified on the annual payment update notification provid ed to the hospice. (2) Reconsideration request submission requirements are available on the CMS Hospice Quality Reporting website on CMS.gov. (3) A hospice that is dissatisfied with a decision made by CMS on its reconsideration request may file an appeal with the Provide r Reimbursement Review Board under part 405, subpart R of this chapter.

Dated: July 24, 2014

_______________________________ Marilyn Tavenner, Administrator, Centers for Medi care & Medicaid Services.

Approved: July 30, 2014

__________________________________ Sylvia M. Burwell Secretary,CMS-1609-F Department of Health and Human Services.

BILLING CODE 4120-01-P

[FR Doc. 2014-18506 Filed 08/04/2014 at 4:15 pm; Publication Date: 08/22/2014]