Vol. 79 Friday, 

No. 163 August 22, 2014 

Part III 

Department of Health and Human Services 

Center for Medicare & Medicaid Services 

42 CFR Parts 405 and 418 

Medicare Program; FY 2015 Hospice Wage Index and Payment Rate 

Update; Hospice Quality Reporting Requirements and Process and Appeals 

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

Rule 


tkelley on DSK3SPTVN1PROD with RULES3
50452 Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations 

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 and the wage 

index for fiscal year (FY) 2015 and 

continue the phase-out of the wage 

index budget neutrality adjustment 

factor (BNAF). This rule provides an 

update on hospice payment reform 

analyses, 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 election and the notice of 

termination/revocation; add the 

attending physician to the hospice 

election form, and require hospices to 

document changes to the attending 

physician; 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 Modification (ICD– 

10–CM); and will further clarify how 

hospices are to report diagnoses on 

hospice 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 regarding process and appeals 

for Part D payment for drugs while 

beneficiaries are under a hospice 

election. 

Owen Osaghae, (410) 786–7550 for 

questions regarding the hospice 

inpatient and aggregate cap 

determinations. 

For general questions about hospice 

payment policy, please send your 

inquiry via email to: hospicepolicy@

cms.hhs.gov. 

SUPPLEMENTARY INFORMATION: 

Wage index addenda will be available 

only through the internet on the CMS 

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

Medicare/Medicare-Fee-for-ServicePayment/Hospice/index.html.) Readers 

who experience any problems accessing 

any of the wage index addenda related 

to the hospice payment rules that are 

posted on the CMS Web site identified 

above should contact Hillary Loeffler at 

410–786–0456. 

Table of Contents 

I. Executive Summary 

A. Purpose 

B. Summary of the Major Provisions 

C. Summary of Impacts 

II. Background 

A. Hospice Care 

B. History of the Medicare Hospice Benefit 

C. Services Covered by the Medicare 

Hospice Benefit 

D. Medicare Payment for Hospice Care 

1. Omnibus Budget Reconciliation Act of 

1989 

2. Balanced Budget Act of 1997 

3. FY 1998 Hospice Wage Index Final Rule 

4. FY 2010 Hospice Wage Index Final Rule 

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, Continuous 

Home Care, and Inpatient Respite Care 

Utilization 

3. Hospice Live Discharges 

4. Non-hospice Spending for Hospice 

Beneficiaries During an Election 

B. Solicitation of Comments on Definitions 

of ‘‘Terminal Illness’’ and ‘‘Related 

Conditions’’ 

1. The Development of the Medicare 

Hospice Benefit 

2. Legislative History of the Medicare 

Hospice Benefit 

3. Hospice Care Today 

4. Definition of ‘‘Terminal Illness’’ 

5. Definition of ‘‘Related Conditions’’ 

C. Guidance on Determining Beneficiaries’ 

Eligibility 

D. Timeframe for Hospice Cap 

Determinations and Overpayment 

Remittances 

E. Timeframes for Filing the Notice of 

Election 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 Physician to 

the Hospice Election Form 

G. FY 2015 Hospice Wage Index and Rates 

Update 

1. FY 2015 Hospice Wage Index 

2. FY 2015 Wage Index with an Additional 

15 Percent Reduced Budget Neutrality 

Adjustment Factor (BNAF) 

3. 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 

Determination 

a. Background and Description of the 

Survey 

b. Participation Requirements to Meet 

Quality Reporting Requirements for the 

FY 2017 APU 

c. Participation Requirements to Meet 

Quality Reporting Requirements for the 

FY 2018 APU 

d. Vendor Participation Requirements for 

the 2017 APU 

e. Annual Payment Update 

f. CAHPS® Hospice Survey Oversight 

Activities 

7. Procedures for Payment Year 2016 and 

Subsequent Years 

I. Solicitation of Comments on 

Coordination of Benefits Process and 

Appeals for Part D Payment for Drugs 

While Beneficiaries are Under a Hospice 

Election 

1. Part D Sponsor Coordination of Payment 

with Hospice Providers 

2. Solicitation of Comments on Hospice 

Coordination of Payment with Part D 

Sponsors and Other Payers 

3. Beneficiary Rights and Appeals 

J. Update on the International 

Classification of Diseases, 10th Revision, 

Clinical Modification (ICD–10–CM) and 

Coding Guidelines for Hospice Claims 

Reporting 

1. International Classification of Diseases, 

10th Revision, Clinical Modification 

(ICD–10–CM) 

2. Coding Guidelines for Hospice Claims 

Reporting 

K. Technical Regulatory Text Change 

IV. Collection of Information Requirements 

A. Changes Related to Hospice Payment 

Policy 

1. Changes to the Election Statement 

(§ 418.24) 

2. Changes to Aggregate Cap Determination 

Reporting (§ 418.308) 

B. CAHPS® Hospice Survey 

V. Regulatory Impact Analysis 


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Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations 50453 

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 

alphabetical order below: 

ACA—Affordable Care Act 

APU Annual Payment Update 

BBA Balanced Budget Act of 1997 

BIPA Benefits Improvement and Protection 

Act of 2000 

BNAF Budget Neutrality Adjustment Factor 

BLS Bureau of Labor Statistics 

CAHPS® Consumer Assessment of 

Healthcare Providers and Systems 

CBSA Core-Based Statistical Area 

CCW Chronic Conditions Data Warehouse 

CFR Code of Federal Regulations 

CHC Continuous Home Care 

CMS Centers for Medicare & Medicaid 

Services 

COPD Chronic Obstructive Pulmonary 

Disease 

CoPs Conditions of Participation 

CR Change Request 

CVA Cerebral Vascular Accident 

CWF Common Working File 

CY Calendar Year 

DDE Direct Data Entry 

DME Durable Medical Equipment 

DRG Diagnosis Related Group 

DTRR Daily Transaction Reply Report 

ED Emergency Department 

FEHC Family Evaluation of Hospice Care 

FR Federal Register 

FY Fiscal Year 

GAO Government Accountability Office 

GIP General Inpatient Care 

HCFA Healthcare Financing Administration 

HHS Health and Human Services 

HIPAA Health Insurance Portability and 

Accountability Act 

HIS Hospice Item Set 

HQRP Hospice Quality Reporting Program 

IACS Individuals Authorized Access to 

CMS Computer Services 

ICD–9–CM International Classification of 

Diseases, Ninth Revision, Clinical 

Modification 

ICD–10–CM International Classification of 

Diseases, Tenth Revision, Clinical 

Modification 

ICR Information Collection Requirement 

IDG Interdisciplinary Group 

IPPS Inpatient Prospective Payment System 

IRC Inpatient Respite Care 

LCD Local Coverage Determination 

MAC Medicare Administrative Contractor 

MAP Measure Applications Partnership 

MedPAC Medicare Payment Advisory 

Commission 

MFP Multi-factor Productivity 

MSA Metropolitan Statistical Area 

NCPDP National Council for Prescription 

Drug Programs 

NHPCO National Hospice and Palliative 

Care Organization 

NF Long Term Care Nursing Facility 

NOE Notice of Election 

NOTR Notice of Termination/Revocation 

NP Nurse Practitioner 

NPI National Provider Identifier 

NQF National Quality Forum 

OIG Office of the Inspector General 

OACT Office of the Actuary 

OIG Office of Inspector General 

OMB Office of Management and Budget 

ONC Office of the National Coordinator for 

Health Information Technology 

PA Prior Authorization 

PBM Pharmacy Benefit Manager 

PDE Prescription Drug Event 

PRA Paperwork Reduction Act 

PRRB Provider Reimbursement Review 

Board 

PS&R Provider Statistical and 

Reimbursement Report 

Pub. L Public Law 

QAPI Quality Assessment and Performance 

Improvement 

QIO Quality Improvement Organization 

QRP Quality Reporting Program 

RFA Regulatory Flexibility Act 

RHC Routine Home Care 

SAF Standard Analytic File 

SBA Small Business Administration 

SNF Skilled Nursing Facility 

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 rates for hospices for fiscal 

year (FY) 2015 as required under section 

1814(i) of the Social Security Act (the 

Act), based on the hospital market 

basket update, less reductions mandated 

for hospices by the Patient Protection 

and Affordable Care Act (Pub. L 111– 

148) as amended by the Health Care and 

Education Reconciliation Act (Pub. L 

111–152) (the Affordable Care Act). 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 (BNAF) phase-out. In 

addition, section 3004(c) of the 

Affordable Care Act established a 

quality reporting program for hospices. 

Starting in FY 2014, hospices that failed 

to meet quality reporting requirements 

received a two percentage point 

reduction to their market basket update. 

The Affordable Care Act also requires 

the Secretary to implement revisions to 

the hospice payment methodology no 

earlier than October 1, 2013; as such, 

this final rule updates the public on our 

hospice payment reform activities. This 

final rule also discusses 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 the 

timeframes for filing the hospice notice 

of election and the notice of 

termination/revocation; will require that 

the attending physician be identified on 

the hospice election form and will 

require changes in the attending 

physician be documented; will require 

expedited hospice self-reporting of their 

aggregate cap determinations; 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, 10th 

Revision, Clinical Modification (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 

provide information on hospice 

behavior and trends that raises program 

integrity concerns, including 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 beneficiaries during a 

hospice election. The findings discussed 

raise questions about whether some 

hospices are operating within the 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 

Department 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 

beneficiaries and the Medicare hospice 

benefit. 


tkelley on DSK3SPTVN1PROD with RULES3
50454 Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations 

In response to the concerning trends 

and comments received in response to 

prior rulemaking, in section III.B, we 

solicited comments on the definitions of 

‘‘terminal illness’’ and ‘‘related 

conditions’’ to strengthen and clarify the 

current concepts of holistic and 

comprehensive hospice care under the 

Medicare hospice benefit. In addition, 

we solicited comments on processes 

that Part D plan sponsors could use to 

coordinate with Medicare hospices in 

determining coverage of drugs for 

hospice beneficiaries and resolving 

disagreements between the parties. 

We provide guidance on determining 

the beneficiary’s eligibility 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’ increasingly 

exceeding their aggregate cap, along 

with the increases in the average 

overpayment per beneficiary, we believe 

that this procedural change is necessary 

to better safeguard the Medicare Trust 

Fund. 

In section III.E, we will require 

hospices to file both the notice of 

election (NOE) and the notice of 

termination/revocation (NOTR) on 

behalf of beneficiaries within 5 calendar 

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 allow a waiver of this 

consequence of late-filing an NOE in 

certain exceptional circumstances. 

In section III.F, we will require the 

hospice to identify the attending 

physician on the election form and to 

document changes to the attending 

physician. 

This final rule will update the hospice 

wage index with more current wage 

data, and the BNAF will be reduced by 

an additional 15 percent 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 hospice 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 

discuss updates to the hospice 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 January 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 III.H of this 

rule also will make changes related to 

the reconsideration process, 

extraordinary circumstance extensions 

or exemptions, and hospice quality 

reporting program (HQRP) eligibility 

requirements for newly certified 

hospices. 

In section III.I, we solicit comments 

on processes that Part D plan sponsors 

could use to coordinate with Medicare 

hospices in determining coverage of 

drugs for hospice beneficiaries and 

resolving disagreements between the 

parties. 

In section III.J, we discuss the delay 

in the implementation of the 

International Classification of Diseases, 

10th Revision, Clinical Modification 

(ICD–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’’. 

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. 

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 that recognizes that the 

impending death of an individual 

warrants a change in the focus from 

curative care to palliative care for relief 

of pain and for symptom management. 

The goal of hospice care is to help 

terminally ill individuals continue life 

with minimal disruption to normal 

activities while remaining primarily in 

the home environment. A hospice uses 

an interdisciplinary approach to deliver 

medical, nursing, social, psychological, 

emotional, and spiritual services 

through use of a broad spectrum of 

professionals and other caregivers, with 

the goal of making the individual as 

physically and emotionally comfortable 

as possible. Hospice is compassionate 

patient and family-centered care for 

those who are terminally ill. It is a 

comprehensive, holistic approach to 

treatment that recognizes that the 

impending death of an individual 

necessitates a change from curative to 

palliative care. 

Medicare regulations define palliative 

care as ‘‘patient and family-centered 

care that optimizes quality of life by 

anticipating, preventing, and treating 

suffering.’’ Palliative care throughout 

the continuum of illness involves 

addressing physical, intellectual, 

emotional, social, and spiritual needs 

and to facilitate patient autonomy, 

access to information, and choice (42 

CFR 418.3). Palliative care is at the core 

of hospice philosophy and care 

practices, and is a critical component of 

the Medicare hospice benefit. As stated 

in the June 5, 2008 Hospice Conditions 

of Participation final rule (73 FR 32088), 

palliative care is an approach that 

‘‘optimizes quality of life by 

anticipating, preventing, and treating 

suffering.’’ The goal of palliative care in 

hospice is to improve the quality of life 

of individuals, and their families, facing 

the issues associated with a lifethreatening illness through the 

prevention and relief of suffering by 

means of early identification, 

assessment and treatment of pain and 


tkelley on DSK3SPTVN1PROD with RULES3
Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations 50455 

1Connor, Stephen. (2007) Development of 

Hospice and Palliative Care in the United States. 

OMEGA. 56(1), p89–99. 

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

Not To Cover: Guidelines for Covered Medications 

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

other issues. This is achieved by the 

hospice interdisciplinary team working 

with the patient and family to develop 

a comprehensive care plan focused on 

coordinating care services, reducing 

unnecessary diagnostics or ineffective 

therapies, and offering ongoing 

conversations with individuals and 

their families about changes in the 

disease. It is expected that this 

comprehensive care plan will shift over 

time to meet the changing needs of the 

patient and family as the individual 

approaches the end-of-life. 

Medicare hospice care is palliative 

care for individuals with a prognosis of 

living 6 months or less if the terminal 

illness runs its normal course. As 

generally accepted by the medical 

community, the term ‘‘terminal illness’’ 

refers to an advanced and progressively 

deteriorating illness, and that the illness 

is diagnosed as incurable (see section 

III.B for a discussion). When an 

individual is terminally ill, many health 

problems are brought on by underlying 

condition(s), as bodily systems are 

interdependent. In the June 5, 2008 

Hospice Conditions of Participation 

final rule (73 FR 32088), we stated that 

‘‘the medical director must consider the 

primary terminal condition, related 

diagnoses, current subjective and 

objective medical findings, current 

medication and treatment orders, and 

information about unrelated conditions 

when considering the initial 

certification of the terminal illness.’’ As 

referenced in our regulations at 

§ 418.22(b)(1), to be eligible for 

Medicare hospice services, the patient’s 

attending physician (if any) and the 

hospice medical director must certify 

that the individual is terminally ill, that 

is, the individual’s prognosis is for a life 

expectancy of 6 months or less if the 

terminal illness runs its normal course 

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

the Act and our regulations at § 418.3. 

The certification of terminal illness 

must include a brief narrative 

explanation of the clinical findings that 

supports a life expectancy of 6 months 

or less as part of the certification and 

recertification forms, as stated in 

§ 418.22(b)(3). 

The goal of hospice care is to make 

the hospice patient as physically and 

emotionally comfortable as possible, 

with minimal disruption to normal 

activities, while remaining primarily in 

the home environment. Hospice care 

uses an interdisciplinary approach to 

deliver medical, nursing, social, 

psychological, emotional, and spiritual 

services through the use of a broad 

spectrum of professional and other 

caregivers and volunteers. While the 

goal of hospice care is to allow for the 

individual to remain in his or her home 

environment, circumstances during the 

end-of-life may necessitate short-term 

inpatient admission to a hospital, 

skilled nursing facility (SNF), or hospice 

facility for procedures necessary for 

pain control or acute or chronic 

symptom management that cannot be 

managed in any other setting. These 

acute hospice care services are to ensure 

that any new or worsening symptoms 

are intensively addressed so that the 

individual can return to his or her home 

environment under a home level of care. 

Short-term, intermittent, inpatient 

respite services are also available to the 

family of the hospice patient when 

needed to relieve the family or other 

caregivers. Additionally, an individual 

can receive continuous home care 

during a period of crisis in which an 

individual requires primarily 

continuous nursing care to achieve 

palliation or management of acute 

medical symptoms so that the 

individual can remain at home. 

Continuous home care may be covered 

on a continuous basis for as much as 24 

hours a day, and these periods must be 

predominantly nursing care per our 

regulations at § 418.204. A minimum of 

8 hours of 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, including the 

provision of auxiliary aids and services 

to ensure effective communication with 

patients or patient care representatives 

with disabilities consistent with Section 

504 of the Rehabilitation Act of 1973 

and the Americans with Disabilities Act, 

and to provide language access for such 

persons who are limited in English 

proficiency, consistent with Title VI of 

the Civil Rights Act of 1964. Further 

information about these requirements 

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

ocr/civilrights. 

B. History of the Medicare Hospice 

Benefit 

Before the creation of the Medicare 

hospice benefit, hospice was originally 

run by volunteers who cared for the 

dying. During the early development 

stages of the Medicare hospice benefit, 

hospice advocates were clear that they 

wanted a Medicare benefit available that 

provided all-inclusive care for 

terminally-ill individuals, provided 

pain relief and symptom management, 

and offered the opportunity to die with 

dignity in the comfort of one’s home 

rather than in an institutional setting.1

As stated in the August 22, 1983 

proposed rule entitled ‘‘Medicare 

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

‘‘the hospice experience in the United 

States has placed emphasis on home 

care. It offers physician services, 

specialized nursing services, and other 

forms of care in the home to enable the 

terminally ill individual to remain at 

home in the company of family and 

friends as long as possible.’’ The 

concept of a patient ‘‘electing’’ the 

hospice benefit and being certified as 

terminally ill were two key components 

in the legislation responsible for the 

creation of the Medicare Hospice 

Benefit (section 122 of the Tax Equity 

and Fiscal Responsibility Act of 1982 

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

of TEFRA created the Medicare Hospice 

Benefit, which was implemented on 

November 1, 1983. Under sections 

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

Security Act (the Act), codified at 42 

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

provide coverage of hospice care for 

terminally ill Medicare beneficiaries 

who elect to receive care from a 

Medicare-certified hospice. Our 

regulations at § 418.54(c) stipulate that 

the comprehensive hospice assessment 

must identify the patient’s physical, 

psychosocial, emotional, and spiritual 

needs related to the terminal illness and 

related conditions, and address those 

needs in order to promote the hospice 

patient’s well-being, comfort, and 

dignity throughout the dying process. 

The comprehensive assessment must 

take into consideration the following 

factors: the nature and condition 

causing admission (including the 

presence or lack of objective data and 

subjective complaints); complications 

and risk factors that affect care 

planning; functional status; imminence 

of death; and severity of symptoms 

(§ 418.54(c)). The Medicare hospice 

benefit requires the hospice to cover all 

reasonable and necessary palliative care 

related to the terminal prognosis and 

related conditions, as described in the 

patient’s plan of care. The December 16, 

1983 Hospice final rule (48 FR 56008) 

requires hospices to cover care for 

interventions to manage pain and 

symptoms. Clinically, related conditions 

are any physical or mental conditions 

that are related to or caused by either 

the terminal illness or the medications 

used to manage the terminal illness.2


tkelley on DSK3SPTVN1PROD with RULES3
50456 Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations 

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

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

615. 

See section III.B of this final rule for a 

discussion on a possible Medicare 

hospice definition of ‘‘related 

conditions.’’ Additionally, the hospice 

Conditions of Participation at 

§ 418.56(c) require that the hospice must 

provide all reasonable and necessary 

services for the palliation and 

management of the terminal illness, 

related conditions and interventions to 

manage pain and symptoms. Therapy 

and interventions must be assessed and 

managed in terms of providing 

palliation and comfort without undue 

symptom burden for the hospice patient 

or family.3 For example, a hospice 

patient with lung cancer (the principal 

terminal diagnosis) may receive 

inhalants for shortness of breath (related 

to the terminal condition). The patient 

may also suffer from metastatic bone 

pain (a related condition) and 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 the terminal 

prognosis of the patient, 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 56011), regarding 

what is related versus unrelated to the 

terminal illness, we stated: ‘‘. . . we 

believe that the unique physical 

condition of each terminally ill 

individual makes it necessary for these 

decisions to be made on a case-by-case 

basis. It is our general view that 

hospices are required to provide 

virtually all the care that is needed by 

terminally ill patients.’’ Therefore, 

unless there is clear evidence that a 

condition is unrelated to the terminal 

prognosis, all services will be 

considered related. It is also the 

responsibility of the hospice physician 

to document why a patient’s medical 

needs will be unrelated to the terminal 

prognosis. 

As stated in the December 16,1983 

Hospice final rule, the fundamental 

premise upon which the hospice benefit 

was designed was the ‘‘revocation’’ of 

traditional curative care and the 

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

symptom management and 

maximization of quality of life (48 FR 

56008). After electing hospice care, the 

patient typically returns to the home 

from an institutionalized setting or 

remains in the home, to be surrounded 

by family and friends, and to prepare 

emotionally and spiritually for death 

while receiving expert symptom 

management and other supportive 

services. Election of hospice care also 

includes waiving the right to Medicare 

payment for curative treatment for the 

terminal prognosis, and instead 

receiving palliative care to manage pain 

or symptoms. 

The benefit was originally designed to 

cover hospice care for a finite period of 

time that roughly corresponded to a life 

expectancy of 6 months or less. Initially, 

beneficiaries could receive three 

election periods: two 90-day periods 

and one 30-day period. Currently, 

Medicare beneficiaries can elect hospice 

care for two 90-day periods and an 

unlimited number of subsequent 60-day 

periods; however, the expectation 

remains that beneficiaries have a life 

expectancy of 6 months or less if the 

terminal illness runs its normal course. 

C. Services Covered by the Medicare 

Hospice Benefit 

One requirement for coverage under 

the Medicare Hospice Benefit is that 

hospice services must be reasonable and 

necessary for the palliation and 

management of the terminal illness and 

related conditions. Section 1861(dd)(1) 

of the Act establishes the services that 

are to be rendered by a Medicare 

certified hospice program. These 

covered services include: nursing care; 

physical therapy; occupational therapy; 

speech-language pathology therapy; 

medical social services; home health 

aide services (now called hospice aide 

services); physician services; 

homemaker services; medical supplies 

(including drugs and biologics); medical 

appliances; counseling services 

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

respite care and procedures necessary 

for pain control and acute or chronic 

symptom management) in a hospital, 

nursing facility, or hospice inpatient 

facility; continuous home care during 

periods of crisis and only as necessary 

to maintain the terminally ill individual 

at home; and any other item or service 

which is specified in the plan of care 

and for which payment may otherwise 

be made under Medicare, in accordance 

with Title XVIII of the Act. 

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

requires that a written plan for 

providing hospice care to a beneficiary 

who is a hospice patient be established 

before care is provided by, or under 

arrangements made by, that hospice 

program and that the written plan be 

periodically reviewed by the 

beneficiary’s attending physician (if 

any), the hospice medical director, and 

an interdisciplinary group (described in 

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

services offered under the Medicare 

hospice benefit must be available, as 

needed, to beneficiaries 24 hours a day, 

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

of the Act). Upon the implementation of 

the hospice benefit, the Congress 

expected hospices to continue to use 

volunteer services, though these 

services are not reimbursed by Medicare 

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

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

August 22, 1983 Hospice proposed rule, 

the hospice interdisciplinary group 

should be comprised of paid hospice 

employees as well as hospice volunteers 

(48 FR 38149). This expectation is in 

line with the history of hospice and 

philosophy of holistic, comprehensive, 

compassionate, end-of-life care. 

Before the Medicare hospice benefit 

was established, the Congress requested 

a demonstration project to test the 

feasibility of covering hospice care 

under Medicare. The National Hospice 

Study was initiated in 1980 through a 

grant sponsored by the Robert Wood 

Johnson and John A. Hartford 

Foundations and CMS (then, the Health 

Care Financing Administration (HCFA)). 

The demonstration project was 

conducted between October 1980 and 

March 1983. The project summarized 

the hospice care philosophy as the 

following: 

• Patient and family know of the 

terminal condition. 

• Further medical treatment and 

intervention are indicated only on a 

supportive basis. 

• Pain control should be available to 

patients as needed to prevent rather 

than to just ameliorate pain. 

• Interdisciplinary teamwork is 

essential in caring for patient and 

family. 

• Family members and friends should 

be active in providing support during 

the death and bereavement process. 

• Trained volunteers should provide 

additional support as needed. 

The cost data and the findings on what 

services hospices provided in the 

demonstration project were used to 

design the Medicare hospice benefit. 

The identified hospice services were 

incorporated into the service 

requirements under the Medicare 

hospice benefit. Importantly, in the 

August 22, 1983 hospice proposed rule, 

we stated ‘‘the hospice benefit and the 

resulting Medicare reimbursement is not 

intended to diminish the voluntary 

spirit of hospices’’ (48 FR 38149). 


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D. Medicare Payment for Hospice Care 

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

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

Act, and our regulations in part 418, 

establish eligibility requirements, 

payment standards and procedures, 

define covered services, and delineate 

the conditions a hospice must meet to 

be approved for participation in the 

Medicare program. Part 418, subpart G, 

provides for a per diem payment in one 

of four prospectively-determined rate 

categories of hospice care (routine home 

care, continuous home care, inpatient 

respite care, and general inpatient care), 

based on each day a qualified Medicare 

beneficiary is under hospice care (once 

the individual has elected). This per 

diem payment is to include all of the 

hospice services needed to manage the 

beneficiaries’ care, as required by 

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

has been little change in the hospice 

payment structure since the benefit’s 

inception. The per diem rate based on 

level of care was established in 1983, 

and this payment structure remains 

today with some adjustments, as noted 

below: 

1. Omnibus Budget Reconciliation Act 

of 1989 

Section 6005(a) of the Omnibus 

Budget Reconciliation Act of 1989 (Pub. 

L. 101–239) amended section 

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

the following two changes in the 

methodology concerning updating the 

daily payment rates: (1) effective 

January 1, 1990, the daily payment rates 

for routine home care and other services 

included in hospice care were increased 

to equal 120 percent of the rates in effect 

on September 30, 1989; and (2) the daily 

payment rate for routine home care and 

other services included in hospice care 

for fiscal years beginning on or after 

October 1, 1990, were the payment rates 

in effect during the previous Federal 

fiscal year increased by the hospital 

market basket percentage increase. 

2. Balanced Budget Act of 1997 

Section 4441(a) of the Balanced 

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

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

of the Act to establish updates to 

hospice rates for FYs 1998 through 

2002. Hospice rates were updated by a 

factor equal to the hospital market 

basket percentage increase, minus 1 

percentage point. Payment rates for FYs 

from 2002 have been updated according 

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

Act, which states that the update to the 

payment rates for subsequent FYs will 

be the hospital market basket percentage 

increase for the FY. The Act requires us 

to use the inpatient hospital market 

basket to determine hospice payment 

rates. 

3. FY 1998 Hospice Wage Index Final 

Rule 

In the August 8, 1997 FY 1998 

Hospice Wage Index final rule (62 FR 

42860), we implemented a new 

methodology for calculating the hospice 

wage index based on the 

recommendations of a negotiated 

rulemaking committee. The original 

hospice wage index was based on 1981 

Bureau of Labor Statistics hospital data 

and had not been updated since 1983. 

In 1994, because of disparity in wages 

from one geographical location to 

another, the Hospice Wage Index 

Negotiated Rulemaking Committee was 

formed to negotiate a new wage index 

methodology that could be accepted by 

the industry and the government. This 

Committee was comprised of 

representatives from national hospice 

associations; rural, urban, large and 

small hospices, and multi-site hospices; 

consumer groups; and a government 

representative. The Committee decided 

that in updating the hospice wage 

index, aggregate Medicare payments to 

hospices would remain budget neutral 

to payments calculated using the 1983 

wage index, to cushion the impact of 

using a new wage index methodology. 

To implement this policy, a Budget 

Neutrality Adjustment Factor (BNAF) 

will be computed and applied annually 

to the pre-floor, pre-reclassified hospital 

wage index when deriving the hospice 

wage index, subject to a wage index 

floor. 

4. FY 2010 Hospice Wage Index Final 

Rule 

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

described in the August 8, 1997 Hospice 

Wage Index final rule, are subject to 

either a budget neutrality adjustment or 

application of the wage index floor. 

Wage index values of 0.8 or greater are 

adjusted by the (BNAF). Starting in FY 

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

began (August 6, 2009 FY 2010 Hospice 

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

with a 10 percent reduction in FY 2010, 

an additional 15 percent reduction for a 

total of 25 percent in FY 2011, an 

additional 15 percent reduction for a 

total 40 percent reduction in FY 2012, 

an additional 15 percent reduction for a 

total of 55 percent in FY 2013, and an 

additional 15 percent reduction for a 

total 70 percent reduction in FY 2014. 

The phase-out will continue with an 

additional 15 percent reduction for a 

total reduction of 85 percent in FY 2015, 

and an additional 15 percent reduction 

for complete elimination in FY 2016. 

We note that the BNAF is an adjustment 

which increases the hospice wage index 

value. Therefore, the BNAF reduction is 

a reduction in the amount of the BNAF 

increase applied to the hospice wage 

index value. It is not a reduction in the 

hospice wage index value or in the 

hospice payment rates. 

5. The Affordable Care Act 

Starting with FY 2013 (and in 

subsequent fiscal years), the market 

basket percentage update under the 

hospice payment system referenced in 

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

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

annually reduced by changes in 

economy-wide productivity, as 

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

of the Act, as amended by section 

3132(a) of the Patient Protection and 

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

amended by the Health Care and 

Education Reconciliation Act (Pub. L. 

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

FY 2013 through FY 2019, the market 

basket percentage update under the 

hospice payment system will be 

reduced by an additional 0.3 percentage 

point (although for FY 2014 to FY 2019, 

the potential 0.3 percentage point 

reduction is subject to suspension under 

conditions as specified in section 

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

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

through (C) of the Act, as amended by 

section 3132(a) of the Affordable Care 

Act, require hospices to begin 

submitting quality data, based on 

measures to be specified by the 

Secretary, for FY 2014 and subsequent 

fiscal years. Beginning in FY 2014, 

hospices which fail to report quality 

data will have their market basket 

update reduced by 2 percentage points. 

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

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

the Affordable Care Act, and requires, 

effective January 1, 2011, that a hospice 

physician or nurse practitioner have a 

face-to-face encounter with the 

beneficiary to determine continued 

eligibility of the beneficiary’s hospice 

care prior to the 180th-day 

recertification and each subsequent 

recertification, and to attest that such 

visit took place. When implementing 

this provision, we decided that the 

180th-day recertification and 

subsequent recertifications 

corresponded to the recertification for a 

beneficiary’s third or subsequent benefit 

periods (CY 2011 Home Health 

Prospective Payment System final rule 

(75 FR 70435)). Further, section 

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

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

Care Act, authorizes the Secretary to 


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50458 Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations 

collect additional data and information 

determined appropriate to revise 

payments for hospice care and other 

purposes. The types of data and 

information suggested in the Affordable 

Care Act would capture accurate 

resource utilization, which could be 

collected on claims, cost reports, and 

possibly other mechanisms, as the 

Secretary determines to be appropriate. 

The data collected may be used to revise 

the methodology for determining the 

payment rates for routine home care and 

other services included in hospice care, 

no earlier than October 1, 2013, as 

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

Act. In addition, we are required to 

consult with hospice programs and the 

Medicare Payment Advisory 

Commission (MedPAC) regarding 

additional data collection and payment 

revision options. 

6. FY 2012 Hospice Wage Index Final 

Rule 

When the Medicare Hospice Benefit 

was implemented, the Congress 

included an aggregate cap on hospice 

payments, which limits the total 

aggregate payments any individual 

hospice can receive in a year. The 

Congress stipulated that a ‘‘cap amount’’ 

be computed each year. The cap amount 

was set at $6,500 per beneficiary when 

first enacted in 1983 and is adjusted 

annually by the change in the medical 

care expenditure category of the 

consumer price index for urban 

consumers from March 1984 to March of 

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

Act). The cap year is defined as the 

period from November 1st to October 

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

FY 2012 Hospice Wage Index final rule 

(76 FR 47308 through 47314), for the 

2012 cap year and subsequent cap years, 

the hospice aggregate cap will be 

calculated using the patient-by-patient 

proportional methodology, within 

certain limits. We will allow existing 

hospices the option of having their cap 

calculated via the original streamlined 

methodology, also within certain limits. 

New hospices will have their cap 

determinations calculated using the 

patient-by-patient proportional 

methodology. The patient-by-patient 

proportional methodology and the 

streamlined methodology are two 

different methodologies for counting 

beneficiaries when calculating the 

hospice aggregate cap. A detailed 

explanation of these methods is found 

in the August 4, 2011 FY 2012 Hospice 

Wage Index final rule (76 FR 47308 

through 47314). If a hospice’s total 

Medicare reimbursement for the cap 

year exceeded the hospice aggregate 

cap, then the hospice must repay the 

excess back to Medicare. 

E. Trends in Medicare Hospice 

Utilization 

Since the implementation of the 

hospice benefit in 1983, and especially 

within the last decade, there has been 

substantial growth in hospice 

utilization. The number of Medicare 

beneficiaries receiving hospice services 

has grown from 513,000 in FY 2000 to 

over 1.3 million in FY 2013. Similarly, 

Medicare hospice expenditures have 

risen from $2.9 billion in FY 2000 to an 

estimated $15.1 billion in FY 2013. Our 

Office of the Actuary (OACT) projects 

that hospice expenditures are expected 

to continue to increase, by 

approximately 8 percent annually, 

reflecting an increase in the number of 

Medicare beneficiaries, more beneficiary 

awareness of the Medicare Hospice 

Benefit for end-of-life care, and a 

growing preference for care provided in 

home and community-based settings. 

However, this increased spending is 

partly due to an increased average 

lifetime length of stay for beneficiaries, 

from 54 days in 2000 to 86 days in 2011, 

an increase of 59 percent. 

There have also been noted changes 

in the diagnosis patterns among 

Medicare hospice enrollees. 

Specifically, there were notable 

increases between 2002 and 2007 in 

neurologically-based diagnoses, 

including various dementia diagnoses. 

Additionally, there have been 

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

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

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

‘‘adult failure to thrive’’ were the first 

and third most common hospice 

diagnoses, respectively. ‘‘Debility’’ and 

‘‘adult failure to thrive’’ continue to be 

among the most common hospice 

principal diagnoses (14 percent), and 

those, combined with ‘‘dementia’’ and 

Alzheimer’s disease constituted 

approximately 30 percent of all claimsreported principal diagnosis codes 

reported in FY 2013 (see Table 2 below). 

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

Rank ICD–9/Reported principal diagnosis Count Percentage 

Year: FY 2002 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Year: FY 2007 

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


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Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations 50459 

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

Rank ICD–9/Reported principal diagnosis Count Percentage 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Year: FY 2012 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Year: FY 2013 

1 ........................ 799.3 Debility Unspecified ............................................................................................ 127,415 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 Diseases 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 Unspecified 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 Mental 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 beneficiaries that had a least one claim with the specific ICD–9–CM code reported as the principal 

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

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

February 20, 2013. FY 2013 hospice claims data from the CCW, accessed on June 26, 2014. 


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50460 Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations 

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 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 

(herein referred to as the FY 2015 

Hospice Wage Index proposed rule). 

The FY 2015 Hospice Wage Index 

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 beneficiaries 

during a hospice election. 

• We solicited comments on the 

definition of ‘‘terminal illness’’ and 

‘‘related conditions.’’ 

• We provided guidance on 

determining eligibility for hospice care. 

• We proposed to require that 

hospices 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 selfdetermined inpatient and aggregate cap 

determination no later than 5 months 

after the end of the cap year (that is, by 

March 31st of each year). 

• We proposed to amend § 418.24(a) 

to require 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 those hospices 

that do not file the NOE timely (that is, 

within 3 calendar days after the 

effective date of election), Medicare 

would not cover and pay for days of 

hospice care from the effective date of 

election to the date of filing of the NOE. 

In addition, we proposed that these days 

be considered the financial 

responsibility 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) 

within 3 calendar days after the 

effective date of a beneficiary’s 

discharge or revocation, if they have not 

already filed a final claim. 

• We proposed to amend the 

regulations at § 418.24(b)(1) to require 

the election statement to identify the 

attending physician, and to include an 

acknowledgement that the attending 

physician was chosen by the patient. 

We also proposed that if a patient (or 

representative) wants to change his or 

her designated attending physician, he 

or she must file a statement 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 (or representative’s) 

signature, along with an 

acknowledgement that this change in 

the 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-reclassified wage index as the 

source data, and provided a preliminary 

update to the FY 2015 hospice payment 

rates. 

• We proposed in § 418.312 that 

newly certified hospices that receive 

notice of their CMS certification number 

on or after November 1, 2014, for 

payments to be made in FY 2016, be 

excluded from the quality reporting 

requirements for the FY 2016 payment 

determination, as data submission and 

analysis would not be possible for a 

hospice receiving notification of their 

certification this late in the reporting 

time period. We also proposed that in 

future years, hospices that receive 

notification of certification on or after 

November 1 of the preceding year 

involved would continue to be excluded 

from any payment penalty for quality 

reporting purposes for the following FY. 

• We proposed that approved survey 

vendors meet all of the minimum 

business requirements and follow the 

detailed technical specifications for 

survey administration as published in 

the CAHPS® Hospice Survey 

specifications manual. We proposed to 

codify the CAHPS® Hospice Survey 

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 business 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 beneficiaries are under a hospice 

election, and solicited comments to 

guide us in making a possible proposal 

in future rulemaking. We solicited 

comments on whether hospices need to 

determine, in a specific amount of time, 

a beneficiary’s drug and biological 

needs and communicate with the Part D 

plan sponsor or to the other payer and/ 

or provider, verbally or in writing, to 

ensure that there is no lapse of 

reasonable and necessary drugs and 

biologicals or other items or services for 

the palliation and management of the 

terminal illness and related conditions. 

We also solicited comments on steps a 

hospice could take to reconcile payment 

responsibility with Part D plans or with 

other payers or providers. 

• We provided an update on the 

International Classification of Diseases, 

10th Revision, Clinical Modification 

(ICD–10–CM) and coding 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 

period on the FY 2015 Hospice Wage 

Index proposed rule. We received 114 

public comments from the Medicare 

Payment Advisory Commission, 

Medicare beneficiary advocacy groups, 

hospice providers, state and national 

hospice associations, hospice and endof-life care organizations and experts, 

hospice financial experts and 

consultants, attorneys, Part D sponsors, 

pharmacy associations, private 

insurance plans, and private 

individuals. In general, commenters 

provided thoughtful and diverse 

comments on the proposed policies. We 

also received comments that are outside 

the scope of this rule. We will take these 

comments under 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 sections in 

the preamble of this final rule. 

A. Hospice Payment Reform: Research 

and Analyses 

Section 3132(a) of the Affordable Care 

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

Act to authorize the Secretary to collect 

additional data and information 

determined appropriate to revise 

payments for hospice care and for other 

purposes. The data collected may be 

used to revise the methodology for 

determining the payment rates for 

routine home care and other services 

included in hospice care, no earlier than 

October 1, 2013, as described in section 

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

required to consult with hospice 


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programs and the Medicare Payment 

Advisory Commission (MedPAC) 

regarding additional data collection and 

payment revision options. Since 2010, 

we have been working with our hospice 

reform contractor, Abt Associates, to 

review the most current peer-reviewed 

literature; conduct research and 

analyses; identify potential 

vulnerabilities in the current payment 

system; and research and develop 

hospice payment model options. We 

recently required additional information 

on hospice claims regarding drugs and 

certain durable medical equipment, 

effective April 1, 2014; and are in the 

process of finalizing changes to the 

hospice cost report to better collect data 

on the costs of providing hospice care. 

The additional information on hospice 

claims and the hospice cost report will 

be used in our hospice payment reform 

efforts, once the data are available for 

analysis. 

The research and analyses conducted 

thus far on available Medicare claims 

and cost report data have highlighted 

hospice utilization trends that raise 

concerns regarding the viability of the 

Medicare hospice program and the 

impact of beneficiary access to quality 

end of life care. In March 2009, the 

Medicare Payment Advisory 

Commission (MedPAC) recommended 

that Medicare improve its payment 

system for hospice services to address a 

misalignment between Medicare’s 

payments and hospice’s costs that 

created incentives for providers to 

enroll patients who are more likely to 

have long stays because those stays are 

more profitable than short ones (http:// 

www.medpac.gov/chapters/Mar09_

Ch06.pdf). MedPAC’s June 2013 Report 

to Congress on Medicare and the Health 

Care Delivery System reiterated 

concerns about utilization trends and 

suggested that such trends were driven 

by a misalignment in the payment 

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

chapters/Jun13_Ch05.pdf). MedPAC’s 

June 2013 report added that, while 

payment reform would better align 

payments with costs, additional 

administrative controls were necessary 

to balance incentives and strengthen 

provider compliance. As such, we 

believe that a critical goal of the 

Medicare hospice payment system is to 

strengthen and safeguard the current 

scope of the Medicare hospice benefit. 

This will provide a solid foundation on 

which to reform the methodology used 

to pay for Medicare hospice services. 

Program integrity is being addressed 

immediately while we develop further 

data and research to address payment 

reform in the near future. 

Abt Associates, with its subcontractor 

Brown University, has developed a 

technical report entitled, ‘‘Medicare 

Hospice Payment Reform: Analyses to 

Support Payment Reform,’’ dated May 1, 

2014 (hereafter, referred to as the May 

2014 Technical Report) that thoroughly 

describes the analytic file and extensive 

work performed on analyzing current 

hospice utilization data, of which many 

of the results of the analyses are 

presented in this final rule. Both the 

May 2014 Technical Report and an 

updated literature review are available 

on our hospice center Web page at: 

http://www.cms.gov/Center/ProviderType/Hospice-Center.html in the 

‘‘Research and Analyses’’ section. We 

further examined hospice utilization 

data and developed a provider-level file 

to identify aberrant hospice behavior. 

The provider-level file contains 

information on beneficiaries who were 

discharged (alive or deceased) in 

calendar year (CY) 2012 and includes 

claims data from January 1, 2010 

through December 31, 2012. Some of the 

findings described in this section, are 

based on this provider-level file. 

1. Beneficiaries Dying Without Skilled 

Visits in the Last Days of Life 

Hospice clinicians are experts in 

recognizing changes as a patient is 

approaching the last few days of life and 

helping to prepare and support the 

patient and family. Most individuals 

approaching end-of-life have noted 

declines over the several days prior to 

death. As such, the expectation is that 

there would be an increased need for 

hospice services in the days leading up 

to the hospice beneficiary’s death. 

Although we recognize that 

prognostication is not an exact science, 

there are hallmark physical, functional, 

nutritional, and cognitive changes that 

are typically present leading up the 

hospice patient’s death (see section III.C 

of this 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 high 

percentage (28.9 percent) of hospice 

decedents who were receiving RHC on 

their last day of life did not receive a 

skilled visit on that day (see Table 3 

below). This could be explained, in part, 

by sudden or unexpected death. 

Expanding this analysis to skilled visits 

provided in the last two to four days of 

life, we found that 14.4 percent of 

hospice decedents did not receive 

skilled visits in the last 2 days of life 

and 6.2 percent of hospice decedents 

did not receive skilled visits in the last 

4 days of life. While this could also be 

explained, in part, by sudden or 

unexpected death, we are concerned 

with the possibility that those 

beneficiaries and their families are not 

receiving hospice care and support at 

the very end of life. If hospices are 

actively engaging with the beneficiary 

and the family throughout the election 

period, we would expect to see skilled 

visits during those last days of life. 

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

CALENDAR YEAR 2012 

Number of decedents 

Percentage of 

decedents with 

no skilled visits 

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

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

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

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

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

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

Further analysis of skilled visits 

during the last two days of life found 

that 10.3 percent of very short stay 

decedents (5 days or less) did not 

receive skilled visits during the last two 

days of life. In contrast, 15.9 percent of 

decedents with lengths of stay 181 days 

or longer did not receive visits in the 

last two days of life. Newer hospices (5 


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4The provider-level analysis conducted on 

whether skilled visits were provided in the last two 

days of life only examined instances where the 

decedent was receiving routine home care in the 

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

not have any decedents that died while on routine 

home care. 

years or less since Medicare 

certification) were more likely to have 

decedents with no skilled visits during 

the last two days of life (17.8 percent) 

compared to older hospices (6 years or 

more since Medicare certification; 14.0 

percent). We also found geographic 

differences in this analysis. The five 

states with the lowest percentage of 

decedents with no skilled visits on the 

last two days of life included: 

Wisconsin (5.7 percent), North Dakota 

(7.3 percent), Vermont (7.5 percent), 

Tennessee (7.5 percent), and Kansas (8.7 

percent). The five states with the highest 

percentage of decedents with no skilled 

visits on the last two days of life 

included: New Jersey (23 percent), 

Massachusetts (22.9 percent), Oregon 

(21.2 percent), Washington (21 percent), 

and Minnesota (19.4 percent). 

Using the provider-level file 

referenced above, we also found that, on 

average, hospices did not report any 

skilled visits in the last two days of life 

for 9.7 percent of their decedents who 

died receiving routine home care.4

Nearly 5 percent of hospices did not 

provide any skilled visits in the last two 

days of life to more than 50 percent of 

their decedents receiving routine home 

care on those last two days; the average 

lifetime length of stay among those 

decedents was 143 days. We note that 

the average lifetime length of stay in our 

provider-level file was 95.4 days (among 

beneficiaries who were discharged alive 

or deceased in CY 2012). Furthermore, 

we found that 34 hospices did not make 

any skilled visits in the last 48 hours of 

life to any of their decedents who died 

while receiving routine home care. 

2. General Inpatient Care, Continuous 

Home Care, and Inpatient Respite Care 

Utilization 

Medicare Conditions of Participation 

require hospices to demonstrate that 

they are able to provide all four levels 

of care—Routine Home Care (RHC), 

General Inpatient Care (GIP), 

Continuous Home Care (CHC) and 

Inpatient Respite Care (IRC) to be a 

certified Medicare hospice provider. As 

stated in our regulations at 

§ 418.302(b)(4), a GIP day is a day in 

which an individual who has elected 

hospice care, receives general inpatient 

care in an inpatient facility for pain 

control or acute or chronic symptom 

management which cannot be managed 

in other settings. For FY 2014, the 

payment rate for GIP was $694.19 per 

day compared to $156.06 for a day of 

RHC. 

While the goal of hospice care is to 

allow for the individual to remain in his 

or her home environment, 

circumstances during the end-of-life 

may necessitate short-term inpatient 

admission to a hospital, skilled nursing 

facility (SNF), or hospice inpatient 

facility for procedures necessary for 

pain control or acute or chronic 

symptom management that cannot be 

managed in any other setting. These 

acute hospice care services are to ensure 

that any new or worsening symptoms 

are intensively addressed so that the 

individual can return to his or her home 

environment under a home level of care. 

As part of our reform work, we 

analyzed CY 2012 data to better 

understand GIP utilization. We found 

that 77.3 percent of beneficiaries did not 

have any GIP care in 2012. Using 

provider-level data for beneficiaries 

discharged in 2012, we also found that 

21.1 percent of hospices did not provide 

GIP care to any of their beneficiaries. 

While there are appropriate 

circumstances where a hospice provides 

no GIP (for example, when a provider 

only has a few patients, none of whom 

needs GIP), we are concerned that more 

than a fifth of hospices not providing 

any GIP may be an indication that 

hospice beneficiaries do not have 

adequate access to a necessary level of 

care for acute or chronic symptom 

management. We also found that there 

were site of service differences such that 

the longest GIP length of stay was in the 

inpatient hospice setting (6.1 days) and 

shortest at in the inpatient hospital 

setting (4.5 days). Over two-thirds of 

GIP days were provided in an inpatient 

hospice setting (68 percent), and about 

a quarter of GIP days were provided in 

an inpatient hospital (24.9 percent). 

Only 5.5 percent of GIP days were 

provided in a SNF. 

As stated in our regulations at 

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

day is a day on which an individual 

who has elected to receive hospice care, 

is not in an inpatient facility, and 

receives hospice care consisting 

predominantly of nursing care on a 

continuous basis at home. Home health 

aide (also known as a hospice aide) or 

homemaker services, or both, may also 

be provided on a continuous basis. 

Continuous home care is only furnished 

during brief periods of crisis as 

described in § 418.204(a), and only as 

necessary to maintain the terminally ill 

patient at home. Continuous home care 

may be covered on a continuous basis 

for as much as 24 hours a day, and these 

periods must be predominantly nursing 

care per our regulations at § 418.204. A 

minimum of 8 hours of care must be 

furnished on a particular day to qualify 

for the continuous home care rate 

(§ 418.302(e)(4)). 

As part of our reform work, we 

analyzed CY 2012 data to better 

understand CHC utilization. Overall, 

approximately 0.4 percent of all hospice 

days in 2012 were billed as CHC, but 

that percentage decreases to 0.2 when a 

large chain provider with a large 

percentage of its hospice days billed as 

CHC days was excluded. Although 42.7 

percent of hospices billed at least 1 day 

of CHC, we found considerable variation 

in the share of CHC days among 

hospices that provided any CHC. 

Almost 90 percent of hospices that 

provided any CHC had less than 1 

percent of their days billed as CHC, but 

four hospices billed more than 10 

percent of their days as CHC. Forty 

hospices accounted for 46 percent of all 

CHC days and a single hospice 

accounted for over a quarter of all CHC 

days. Among hospices who billed for 

providing CHC, 9.4 percent provided 

over half of their CHC days to 

beneficiaries residing in a nursing 

home. For CHC, a hospice must provide 

a minimum of 8 hours of care during a 

24-hour day, which begins and ends at 

midnight. 

Finally, we analyzed inpatient respite 

care (IRC) utilization in CYs 2005 

through 2012. IRC is provided in an 

approved facility, as needed, on an 

occasional basis to relieve the family 

caregivers for up to 5 consecutive days. 

Payment for IRC is subject to the 

requirement that it may not be provided 

consecutively for more than 5 days at a 

time. As stated in our regulations at 

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

and any subsequent day of respite care 

is made at the routine home care rate. 

Overall, while the percentage of 

beneficiaries receiving at least 1 day of 

IRC care increased from 1.44 percent in 

CY 2005 to 3.4 percent in CY 2012, only 

a small percentage of beneficiaries 

utilize IRC. We also found that 26 

percent of hospices did not bill for any 

IRC days in CY 2012. IRC is a critical 

part of the Medicare hospice benefit, 

providing vital support and relief to the 

patient’s caregiver and family. We will 

continue to monitor utilization of IRC 

level of care, over time, to ensure 

beneficiaries receiving hospice care 

have access to respite services for their 

caregivers. 

The variation in the provision of GIP, 

CHC, and IRC could suggest that the 

level of hospice care that a beneficiary 

receives may not always be driven by 

patient factors. Medicare Conditions of 

Participation require hospices to 


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Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations 50463 

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

characteristics and the disenrollment of patients 

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

2021. 

demonstrate that they are able to 

provide all four levels of care—RHC, 

GIP, CHC, and IRC—in order to be a 

certified Medicare hospice provider. We 

will continue to monitor GIP, CHC, and 

IRC use to identify hospices with 

aberrant utilization patterns, to identify 

hospices that may be in violation of the 

CoPs or of payment regulations, and to 

refer hospices identified through our 

analysis to Survey and Certification, to 

the Office of Financial Management, 

and to the Center for Program Integrity 

for further investigation. 

3. Hospice Live Discharges 

Currently, federal regulations allow a 

patient who has elected to receive 

Medicare hospice services to revoke that 

election at any time. That patient may 

re-elect hospice benefits at any time for 

any other election period that is still 

available. However, federal regulations 

provide limited opportunity for a 

Medicare hospice provider to discharge 

a patient from its care. 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 discharge the 

patient at its discretion, even if the care 

may be costly or inconvenient. Neither 

should the hospice request or demand 

that the patient revoke his/her election. 

Our regulations also 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 receive hospice coverage for 

any other hospice election period that 

he or she is eligible to receive 

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

the time period between revocation/

discharge and the re-election of the 

hospice benefit, Medicare coverage 

would resume for those Medicare 

benefits previously waived. 

Prior to 2012, claims data provided 

limited information about the reason a 

hospice patient was discharged from a 

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

discharge information collected on the 

Medicare claim was expanded to 

capture the reason for all types of 

discharge, that is, if the discharge was 

due to a death, revocation, transfer to 

another hospice, moving out of the 

hospice’s service area, discharge for 

cause, or due to the patient no longer 

being considered terminally ill (that is, 

no longer qualifying for hospice 

services). Between 2000 and 2012, the 

overall rate of live discharges increased 

from 13.2 percent of hospice discharges 

to 18.1 percent in 2012. In 2010, the rate 

of live discharges varied by state (from 

12.8 percent in Connecticut to 40.5 

percent in Mississippi) and by hospice 

provider (from a 25th percentile of 9.5 

percent to 75th percentile of 26.4 

percent). Furthermore, analysis of our 

provider-level file shows that of the 

3,702 hospices in our file, 71 hospices 

had a live discharge on 100 percent of 

their beneficiaries. The average lifetime 

length of stay for these hospices was 193 

days compared to the national average 

lifetime length of stay of 95.4 days 

(among beneficiaries who were 

discharged alive or deceased in CY 

2012). We have shared this information 

with the Office of Financial 

Management and with the Center for 

Program Integrity for their review and 

follow-up. 

One study of hospice live discharges 

in cancer patients noted that smaller 

hospices and for-profit hospices had a 

higher rate of hospice live discharges.5

Our subcontractors at Brown University 

studied 2010 hospice live discharges 

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

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

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

less had a higher rate of hospice live 

discharges compared to older, for-profit 

hospices (31.5 percent vs. 12.8 percent, 

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

patterns of revocations and elections of 

the Medicare hospice benefit for the 

purpose of potentially avoiding costly 

hospitalizations, expensive procedures, 

drugs, or services. In 2010, 13,770 out 

of the 182,172 live discharges had a 

pattern of hospice discharge, hospital 

admission, and hospice readmission. 

These cases accounted for $126 million 

dollars in Medicare payments for the 

hospitalization between hospice 

election periods. Nearly half of these 

Medicare payments are accounted for in 

ten states with the highest rate of this 

pattern of discharges (that is, MS, OK, 

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

accounted for $56.0 million dollars of 

the hospitalization costs). 

We understand that the rate of live 

discharges should not be zero, given the 

uncertainties of prognostication and the 

ability of patients and their families to 

revoke the hospice election at any time. 

However, Medicare hospice care is a 

comprehensive patient and family 

focused care model designed to 

optimize quality of life by anticipating, 

preventing, and treating pain and 

symptoms. We are concerned that 

patterns of discharge, hospital 

admission, and hospice readmission do 

not provide a comprehensive, 

coordinated care experience for 

terminally ill patients. 

4. Non-hospice Spending for Hospice 

Beneficiaries During an Election 

When a beneficiary elects the 

Medicare hospice benefit, he or she 

waives the right to Medicare payment 

for services related to the terminal 

illness and related conditions, except 

for services provided by the designated 

hospice and the attending physician. 

However, Medicare payment is allowed 

for covered Medicare items or services 

which are unrelated to the terminal 

illness and related conditions. When a 

hospice beneficiary receives items or 

services unrelated to the terminal illness 

and related conditions from a nonhospice 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 beneficiary with Part D 

coverage receives medications unrelated 

to the terminal illness and related 

conditions, Prescription Drug Events 

(PDEs) are billed to Part D and do not 

require a modifier or a condition code. 

In follow up to our initial analysis of 

hospice drugs being paid through Part D 

(78 FR 48245–48246), we analyzed the 

magnitude of Medicare spending 

outside of the hospice benefit for items 

or services provided to hospice 

beneficiaries during a hospice election 

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

found that Medicare paid $710.1 million 

for Part A and Part B items or services 

while a beneficiary was receiving 

hospice care. We estimated that 76.5 

percent of the $710.1 million included 

either a GW modifier or a condition 

code 07 on the claim, which indicated 

that the services identified by the 

provider or supplier as unrelated to the 

terminal illness and related conditions. 

The remaining 23.5 percent of this 

$710.1 million was for claims without a 

GW modifier or condition code 07, some 

of which may have been processed due 

to late filing of the notice of election 

(NOE). 

The $710.1 million paid for Part A 

and Part B items or services was for 

durable medical equipment (7.0 

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

rehabilitation facilities, acute care 

hospitals; 28.6 percent), outpatient Part 

B services (16.9 percent), other Part B 

services (also known as physician, 

practitioner and supplier claims, such 


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6MedPAC, ‘‘Assessing payment adequacy and 

updating payments: hospice services’’, December 13 

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

transcripts/hospice_December2013_Public.pdf. 

as labs and diagnostic tests, ambulance 

transports, and physician office visits; 

37.4 percent), skilled nursing facility 

care (5.7 percent), and home health care 

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

hospice beneficiaries who were at home 

(43.3 percent). We also found that 28.3 

percent of hospice beneficiaries were in 

a nursing facility, 14.1 percent were in 

an inpatient setting, 10.2 percent were 

in an assisted living facility, and 4.1 

percent were in other settings. Although 

the average daily rate of expenditures 

outside the hospice benefit was $7.91, 

we found differences amongst states 

where beneficiaries receive care. The 

highest rates per day occurred for 

hospice beneficiaries residing in West 

Virginia ($13.91), or in the South 

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

Mississippi ($11.91), and South 

Carolina ($10.16)). 

Another area of concern in high nonhospice Medicare spending occurring 

during a hospice election is hospital 

emergency department (ED) visits and 

observation stays. Ninety-five 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/

observation stay, but 20.9 percent had 

between 2 and 4 ED visits/observation 

stays during their election, and 1.4 

percent had more than 5 ED visits/

observation stays during their hospice 

election. Although some beneficiaries 

may go directly to the ED rather than 

contacting 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 conditions 

are being treated as if they were 

unrelated. Most ED visits/observation 

stays occurred in younger beneficiaries 

with non-cancer diagnoses, in 

beneficiaries in newer hospices, and in 

beneficiaries receiving care in the 

South, with Mississippi and Oklahoma 

having the highest rates (21.1 and 20.5 

ED visits/observation stays per 100 

hospice admissions, respectively). The 

most frequently occurring Diagnosis 

Related Groups (DRGs) associated with 

these ED visits/observation stays were 

septicemia or severe sepsis, kidney and 

urinary tract infections, hip and femur 

procedures, simple pneumonia and 

pleurisy, and gastrointestinal 

hemorrhage. Some of these frequently 

occurring DRGs are conditions which 

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

attended to in the home or with a GIP 

level of care. This raises concerns about 

whether the 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, states, beneficiaries, and 

other payers, for hospice beneficiaries 

during a hospice election. Table 4 

details the various components of Part 

D spending. 

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

Component Description $ Total 

expenditures 

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

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

low-income beneficiaries at the point of sale.

117,558,814 

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

state pharmacy assistance programs and charities.

2,366,896 

Patient Liability Reduction due to Other 

Payer Amount.

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

Administration and TRICARE.

3,120,834 

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

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

under plan administrative costs.

16,985,982 

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

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

ingredient costs).

12,307,603 

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

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

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

The portion of the $417.9 million total 

Part D spending which was paid by 

Medicare is the sum of the Low Income 

Cost-Sharing Subsidy and the Covered 

Drug Plan Paid Amount, or $334.9 

million. 

Medicare Spending: In total, actual 

non-hospice Medicare expenditures 

occurring during a hospice election in 

CY 2012 were $710.1 million for Parts 

A and B spending, plus $334.9 million 

for Part D spending, or approximately 

$1 billion dollars. This figure is 

comparable to the estimated $1 billion 

MedPAC reported during its December 

2013 public meeting.6 Associated with 

this $1 billion in Medicare spending 

were cost sharing liabilities such as copayments and deductibles that 

beneficiaries incurred. Hospice 

beneficiaries had $135.5 million in costsharing for items and services that were 

billed to Medicare Parts A and B, and 

$48.2 million in cost-sharing for drugs 

that were billed to Medicare Part D, 

while they were in a hospice election. 

In total, this represents a 2012 

beneficiary liability of $183.7 million 

for Parts A, B, and D items or services 

provided to hospice beneficiaries during 

a hospice election. Therefore, the total 

non-hospice costs paid by Medicare or 


tkelley on DSK3SPTVN1PROD with RULES3
Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations 50465 

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

Palliative Medicine Approach to End-of-Life Care, 

2nd ed. UNIPAC One. 

due from beneficiaries for items or 

services provided to hospice 

beneficiaries during a hospice election 

were over $1.2 billion in CY 2012. 

All-Payer Spending: Under Part D, 

gross covered drug cost on a claim 

includes the amount paid by the Part D 

plan, the beneficiary’s cost sharing, and 

any amounts paid by others on the 

beneficiary’s behalf. These latter 

amounts include the low-income 

subsidy amount paid by Medicare for 

beneficiaries who are subsidy-eligible, 

amounts paid by other payers whose 

payments can be counted toward the 

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

costs, and amounts paid by others 

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

beneficiary’s liability. Accumulated 

gross covered drug costs are used to 

establish the beneficiary’s position in 

the benefit. That is, these costs 

determine when the beneficiary has met 

a plan’s deductible, if any, and moves 

into the initial coverage period, and 

when his or her initial coverage period 

ends and the coverage gap begins. 

TrOOP, whether paid by the beneficiary 

or on the beneficiary’s behalf by a 

TrOOP-eligible payer, determines when 

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

catastrophic phase of the benefit. Thus, 

administration of the Medicare 

prescription drug benefit is dependent 

upon both gross covered drug costs and 

TrOOP. As such, we are also describing 

total non-hospice Part D spending, both 

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

beneficiaries during a hospice election 

was incurred by Medicare, by States, by 

the Veterans Administration, by 

TRICARE, by charities, and by other 

payers, in addition to the cost-sharing 

liabilities incurred by beneficiaries. 

Part D spending by all-payers that 

occurred for hospice beneficiaries 

during a hospice election, including 

beneficiary cost-sharing, totaled $417.9 

million in CY 2012. If this is added to 

the $710.1 million in Medicare 

spending for Parts A and B, and $135.5 

million in cost sharing for Parts A and 

B, total non-hospice costs are $1.3 

billion. We do not have data on other 

payers’ spending for Part A or Part B 

services. Of note, 51.6 percent of this 

$1.3 billion is associated with 373 

hospices, with an average total per 

beneficiary of $1,289 in non-hospice 

costs. 

For the current guidance regarding the 

coordination between Part D sponsors 

and hospices, we refer readers to visit 

the Hospice Center Web page’s Spotlight 

section or the Coordination of Benefit 

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

Provider-Type/Hospice-Center.html. 

The dollars spent by Part D and by 

beneficiaries for drugs covered outside 

of the hospice benefit for hospice 

beneficiaries during a hospice election 

raise concerns about whether some of 

these drugs should have been paid for 

by the hospice. We examined drug costs 

incurred by hospices from 2004 to 2012, 

using hospice cost report data adjusted 

to constant 2010 dollars. We saw a 

declining trend in the drug costs per 

patient day, with costs declining from a 

mean of $20 per patient-day in 2004 to 

$11 per patient-day 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 could suggest that some 

hospices are not providing, and thus are 

not incurring the costs for, all needed 

patient medications. 

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

2004 2005 2006 2007 2008 2009 2010 2011 2012 

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

Provider-level drug costs per patient-day 

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

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

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

Trimmed means 

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

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

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

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

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

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

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

We will continue to monitor nonhospice Medicare spending for 

beneficiaries during hospice elections. 

B. Solicitation of Comments on 

Definitions of ‘‘Terminal Illness’’ and 

‘‘Related Conditions’’ 

1. The Development of the Medicare 

Hospice Benefit 

Dame Cicely Saunders introduced the 

idea of hospice care in the United States 

during a lecture at Yale University in 

1963. During the same decade, the 

international best-seller, On Death and 

Dying, published in 1969, by Dr. 

Elisabeth Kubler-Ross, helped to bring 

death out of secrecy and brought new 

public awareness and discussion about 

dying 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 those who were at the end-of-life. Her 

hallmark work argued for end-of-life 

care provided in the home, rather than 

in an institution, and stressed the 

importance of patients’ being an integral 

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

hospice programs in the United States. 

However, healthcare providers started to 

recognize the need for a care delivery 

model to address the needs of those 

individuals who no longer wanted to 

seek out the aggressive, medical, 

curative model of healthcare for 

advancing illnesses and injuries. They 

also focused on a care delivery model 

that would provide pain and symptom 

relief that would offer an alternative to 


tkelley on DSK3SPTVN1PROD with RULES3
50466 Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations 

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

Hospice Benefit: A Changing Philosophy of Care? 

Annals of Long Term Care: Clinical Care and Aging. 

19 (1); 43–48. 

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

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

89–99. 

10Testimony by Paul Willging, deputy 

administrator of HCFA, to the Subcommittee on 

Health of the Committee of Ways and Means, House 

of Representatives, March 25, 1982. 

11Testimony by Congressman Leon Panetta, to 

the Subcommittee on Health of the Committee of 

Ways and Means, House of Representatives, March 

25, 1982. 

12Written testimony by Dr. Edwin J. Olsen, 

director of the National Hospice Organization, to 

the Subcommittee on Health of the Committee of 

Ways and Means, House of Representatives, March 

25, 1982. 

13Health Care Financing Administration, Office 

of Research and Demonstrations. September, 1987. 

‘‘Medicare Hospice Benefit Program Evaluation.’’ 

Health Care Financing Extramural Report. HCFA 

Pub. No. 03248. 

14Testimony by Paul Willging, deputy 

administrator of HCFA, to the Subcommittee on 

Health of the Committee of Ways and Means, House 

of Representatives, March 25, 1982. 

15Comments by Congressman Bill Gradison, at 

the Hearing before the Subcommittee on Health of 

the Committee of Ways and Means, House of 

Representatives, March 25, 1982. 

16 ‘‘Hospice Care-A Growing Concept in the 

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

hospitalization and would focus on the 

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

the end-of-life. The hospice model of 

care, which had been previously 

introduced to the United States by 

Cicely Saunders, was viewed to be the 

type of care delivery model that could 

offer those services. 

In 1972, Dr. Elisabeth Kubler-Ross 

testified at the first national hearings on 

the subject of death with dignity, 

conducted by the U.S. Senate Special 

Committee on Aging, and the first 

hospice legislation was introduced in 

the United States Senate, but was not 

enacted.8 Florence Wald, the Dean of 

the Yale School of Nursing, who 

attended the 1963 lecture given by 

Cicely Saunders, along with two 

pediatricians and a chaplain, founded 

the first United States hospice, 

Connecticut Hospice, in 1974. Ongoing 

meetings between hospice providers 

and hospice leaders evolved into the 

formation of the National Hospice 

Organization in 1978 (now called the 

National Hospice and Palliative Care 

Organization, or NHPCO). The first 

‘‘Standards of a Hospice Program of 

Care’’ were published by National 

Hospice Organization in 1979. Even 

during the early stages of hospice 

development, hospice leaders were 

working with key legislative leaders to 

develop a system to reimburse hospice 

care in the United States.9 However, it 

was evident that before governmental 

reimbursement could occur, data had to 

be collected and analyzed to 

demonstrate what hospices actually 

provided and what costs were involved 

in rendering hospice care. The Health 

Care Finance Administration (HCFA)— 

now known as the Centers for Medicare 

& Medicaid Services (CMS)—conducted 

a national demonstration of 26 hospices 

throughout the country to study the 

effect of reimbursed hospice care. The 

results of this demonstration, as well as 

those sponsored by the private health 

insurance sector and private 

foundations, and along with the 

testimony of multiple hospice industry 

leaders, legislators and hospice families, 

helped to form the structure of the 

Medicare Hospice Benefit. 

During Congressional committee 

hearings regarding the development of a 

Medicare hospice benefit, testimony by 

Paul Willging, deputy administrator of 

HCFA, expressed caution about 

embracing benefit expansions that could 

lead to unexpected consequences and 

said that HCFA ‘‘must clearly define 

what we would pay for and to whom, 

in order to meet our responsibilities to 

patients, providers and the 

taxpayers.’’ 10 Other stakeholders agreed 

that a Medicare hospice benefit needed 

to be structured to promote an optimum 

movement from a point of view of 

controlling costs and offering the most 

appropriate means of service without 

the development of a system that 

focused on just getting maximum 

reimbursement from Medicare. 

Stakeholders also agreed that unique 

characteristics of hospice care should be 

maintained. The goal was not to have 

the Federal government provide total 

support to hospice programs; rather, 

legislation would be enacted that would 

supplement the continued support of 

the local community, private sector and 

other resources which allow hospices to 

maintain their unique identity, spirit of 

volunteerism and altruistic focus.11 The 

National Hospice Organization 

president, Dr. Edwin Olsen, testified at 

the March 25, 1982 Congressional 

hearing that, at that time, most 

American hospices were community 

charities by design and intent, and that 

hospice offered an integrated service. 

Hospices functioned not as an add-on, 

but as a comprehensive alternative to 

the typical ways of caring for the 

terminally ill and their families. The 

hospice industry, as discussed in Dr. 

Olsen’s testimony, was very clear that 

their goal was to maintain that 

alternative service for those who were 

approaching end-of-life. 

Hospice industry leaders also 

expressed the importance of hospice 

program accountability. Hospices would 

be accountable for and be able to control 

the quality and delivery of patients 

admitted for hospice care, instead of 

having to ‘‘broker’’ the patients out to 

other providers for reimbursement and 

convenience.12 Hospice advocates 

stressed the importance of maintaining 

continuous clinical control over all 

aspects of care to ensure a successful 

hospice program and framers of the 

benefit recognized this fact by requiring 

professional management 

responsibility.13 Although there were 

ongoing concerns by HCFA, the 

Congress, and the hospice industry 

about the potential misuse of a new 

hospice benefit,14 15 Section 122 of the 

Tax Equity and Fiscal Responsibility 

Act (TEFRA) of 1982 (Pub. L. 97–248, 

enacted on September 3, 1982) 

expanded the scope of Medicare 

benefits by authorizing coverage for 

hospice care for terminally ill 

beneficiaries. 

2. Legislative History of the Medicare 

Hospice Benefit 

After Medicare coverage of hospice 

care was authorized by the Congress, the 

General Accounting Office (now 

Government Accountability Office, or 

GAO) summarized the legislative intent 

of the Medicare hospice benefit in a July 

13, 1983 letter. In this letter, the GAO 

acknowledged that there was no 

standard definition of what a hospice 

was or what services an organization 

must provide to be considered a 

hospice. However, the GAO stated that 

it was generally agreed upon that the 

hospice concept in the United States is 

one program of care in which an 

organized interdisciplinary team 

systematically provides palliative care 

(relief of pain and other symptoms) and 

supportive services to patients with 

terminal illnesses.16 This letter further 

stated that the hospice objective is to 

make a patient’s remaining days as 

comfortable and meaningful as possible 

and to help the family cope with the 

stress by making the necessary 

adjustments to the changes in the 

patient’s illness and death. The GAO 

letter also reiterated that hospices must 

directly provide certain core services 

including nursing care, physician 

services and counseling services and 

must either directly, or through 

arrangements, provide physical therapy, 

occupational therapy, speech-language 

pathology, home hospice aides, 

homemaker services, drugs, medical 

supplies and appliances and short-term 

inpatient care. The letter concluded by 

stating that the Congress would 

continue to monitor the effectiveness of 


tkelley on DSK3SPTVN1PROD with RULES3
Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations 50467 

17 GAO Letter, ‘‘Comments on the Legislative 

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

HRD–83–72, July 12, 1983. 

18 ‘‘Background Materials on Medicare Hospice 

Benefit Including Description of Proposed 

Implementing Regulations,’’ September 9, 1983. 

Committee on Finance, United States Senate, S. Prt. 

98–88, p. 1. 

19Testimony by Senators George Mitchell and 

Roger W. Jepsen. Testimony before the 

Subcommittee on Health of the Committee on 

Finance, United States Senate, September 15, 1983. 

20Position paper submitted by Donald J. Gaetz, 

president, National Hospice Organization. 

‘‘Subcontracting for Nursing Services under the 

Medicare Hospice Benefit.’’ Testimony before the 

Subcommittee on Health of the Committee on 

Finance, United States Senate, September 15, 1983. 

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

before the Select Committee on Aging. House of 

Representatives, May 25, 1983. 

22 ‘‘NHPCO Comments on Washington Post 

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

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

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

Benefit: A Changing Philosophy of Care? Annals of 

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

19(1): 43–48. 

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

Benefit: A Changing Philosophy of Care? Annals of 

Continued 

the hospice demonstration program, 

which was ongoing at the time of 

enactment, the equity of the 

reimbursement system, method and 

benefit structure put into effect under 

the hospice provision, including the 

feasibility and advisability of a 

prospective reimbursement system for 

hospice care and other aspects of the 

hospice program.17

Further description of the Medicare 

hospice benefit design was provided in 

a report prepared by the Congressional 

staff for the Senate Committee on 

Finance on September 9, 1983. In this 

report, four basic principles were 

presented, which according to hospice 

advocates, distinguish hospice care from 

the traditional health care system: 

1. The patient and his/her family are 

considered the unit of care. 

2. A multidisciplinary team is used to 

assess the physical, psychological and 

spiritual needs of the patient and family 

to develop an overall plan of care and 

to provide coordinated care. 

3. Pain and collateral symptoms 

associated with the terminal illness and 

previous treatments are controlled, but 

no heroic efforts are made to cure the 

patient. 

4. Bereavement follow-up is provided 

to help the family cope with their 

emotional suffering.18

It was also noted that the statute 

provides that an individual, upon 

making an election to receive hospice 

coverage, would be deemed to have 

waived payments for certain other 

benefits in addition to choosing a 

palliative mode of treatment, except in 

‘‘exceptional and unusual 

circumstances’’ as the Secretary may 

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

Act). Furthermore, the hospice plan of 

care must include assessment of the 

individual’s needs and identification of 

the services to meet those needs 

including the management of discomfort 

and symptom relief. 

Several Senators testified at a 

September 15, 1983 Hearing before the 

Subcommittee on Health of the 

Committee on Finance regarding 

ongoing concerns with the new 

Medicare hospice benefit. These 

Senators made it clear that the new 

healthcare delivery system—hospice— 

was to offer an alternative to 

institutionalized care for the terminally 

ill. Concerns were expressed over the 

possibility that ‘‘store front’’ hospices 

would crop up as a result of Medicare 

reimbursement being made available for 

this service. The Senators stated that 

they wanted to maintain flexibility 

within the benefit without creating 

incentives for fraud and abuse.19

Similarly, industry advocates were also 

concerned that availability of Medicare 

reimbursement would attract interest 

from those simply interested in a new 

source of revenue. The hospice industry 

agreed that the Medicare hospice benefit 

was created, not as a new revenue 

source for providers, but as a benefit 

choice for patients and their families.20

Terminally ill Medicare beneficiaries 

could decide not to elect hospice care, 

and they would continue to be able to 

receive all other Medicare services 

available, such as home health services 

that include skilled nursing and home 

health aide care, inpatient hospital 

services, supplies, medications, and 

DME. For example, in response to recent 

home health rulemaking, we received 

anecdotal comments that some home 

health agencies are providing palliative 

care to homebound terminally ill 

individuals who have not elected the 

hospice benefit. In those instances, the 

patient is receiving home health aide 

services, nursing care, and supplies 

needed under the home health benefit, 

and the DME and medications that the 

patient needs are still covered under 

Medicare Parts B and D. However, we 

note that, with the exception of home 

health, these services typically have 

associated co-payments and would be 

rendered through various different 

providers or suppliers, perhaps with a 

lack of continuity and coordination that 

would be provided under the Medicare 

hospice benefit. Under the Medicare 

hospice benefit, the hospice-eligible 

individual would receive all of those 

services, and more, with the hospice 

provider assuming the clinical and 

professional responsibility of 

coordinating all of the necessary care 

and services with minimal beneficiary 

cost sharing required outside of the 

hospice benefit. 

3. Hospice Care Today 

The Medicare hospice benefit was a 

unique addition to the U.S. health care 

system. Prior to the implementation of 

the Medicare hospice benefit, the 

government reimbursed providers based 

on the cost of delivering care. 

Reimbursement under the Medicare 

hospice benefit is a fixed, per day, per 

level of care prospective payment 

structure. By creating a fixed payment 

for hospice care, the provider is at risk 

for costs that exceed the payment 

amount; and, if the fixed payment 

exceeds the cost of care, the hospice is 

allowed to keep the gain. Under the 

Medicare hospice benefit, the provider 

has clinical flexibility in how hospices 

can render care to best meet the needs 

of the individual patient and his or her 

family. This is viewed as a joint 

partnership between the providers of 

care and the federal government to 

provide services and the financial 

payment for those services for those 

who are dying. Hospice advocates, 

during the development of the benefit, 

welcomed this type of reimbursement 

structure for the flexibility it afforded in 

providing individualized hospice 

services.21 The hospice industry 

continues to recognize that the Medicare 

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

care stating that the fixed 

reimbursement model means ‘‘a fixed 

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

Similar to the more recent medical 

home model for primary care, hospice 

has always been patient-centered, 

comprehensive, team-based, 

coordinated, accessible, focused on 

quality and safety, and extends 

throughout the continuum of care. 

Throughout the development of the 

Medicare hospice benefit, experts in the 

hospice field believed that the success 

or failure of hospice, under Medicare, 

would depend on the hospice plan of 

care, appropriate implementation of the 

plan of care, and the hospice team 

sharing the same philosophy of patientcentered, comprehensive, and holistic 

care.23 A coordinated, collaborative 

approach to each and every hospice 

patient and his or her family was 

considered to be the most important 

component of the success of the 

Medicare hospice benefit.24 During the 


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50468 Federal Register / Vol. 79, No. 163 / Friday, August 22, 2014 / Rules and Regulations 

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

19(1): 43–48. 

25Comments by Congressman Bill Gradison, at 

the Hearing before the Subcommittee on Health of 

the Committee of Ways and Means, House of 

Representatives, March 25, 1982; Testimony by 

Rosemary Johnson-Hurzeler, CEO, The Connecticut 

Hospice, Testimony before the Subcommittee on 

Health of the Committee on Finance, United States 

Senate, September 15, 1983; Testimony by Margaret 

Cushman, MSN, RN, Chairman of Governmental 

Affairs, National Association of Home Health and 

Hospice Care (NAHC) before the Subcommittee on 

Health of the Committee on Finance, United States 

Senate, September 15, 1983. 

26Comments by Congressman Bill Gradison, at 

the Hearing before the Subcommittee on Health of 

the Committee of Ways and Means, House of 

Representatives, March 25, 1982. 

27Testimony by Congressman Leon Panetta, to 

the Subcommittee on Health of the Committee of 

Ways and Means, House of Representatives, March 

25, 1982. 

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

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

69. 

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

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

69. 

30Calendar year 2013 expenditures and average 

spending per beneficiary were calculated using 

hospice claims data from the Chronic Conditions 

Data Warehouse (CCW), accessed on February 27, 

2014. 

31MedPAC, ‘‘Assessing payment adequacy and 

updating payments: hospice services’’, December 13 

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

transcripts/hospice_December2013_Public.pdf. 

32Office of the Inspector General, Department of 

Health and Human Services. Medicare Could be 

Paying Twice for Prescription Drugs for 

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

00059. 

development of the Medicare hospice 

benefit, there were concerns by both the 

Congress and the hospice industry 

regarding the potential for fraud and 

abuse by some providers resulting from 

the enactment of a Medicare hospice 

benefit.25 One drafter of the legislation 

expressed that he wanted to maintain 

benefit flexibility by allowing hospices 

to render individualized care, 

promoting access to needed services, 

and providing high quality care while 

maintaining fiscal integrity of the 

Medicare Trust Funds.26 This was a 

benefit founded in trust—trust that 

hospices would provide the 

comprehensive care and services 

promised during the benefit 

development and trust that Medicare 

would be a partner in helping to share 

the costs.27 It was very clear throughout 

the development, and years after the 

implementation of the Medicare hospice 

benefit, that hospices were expected to 

make good on their promise to do a 

better job than conventional Medicare 

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

provision for discharging a hospice 

patient except under very limited 

circumstances and only after making 

attempts to rectify those 

circumstances.29 This meant that once a 

beneficiary elected hospice and was 

under one of the three 60-day election 

periods, a hospice could not just 

discharge a patient for the sake of cost 

or convenience. Currently, there are two 

90-day election periods and unlimited 

60-day election periods, as long as the 

beneficiary continues to meet eligibility 

criteria. However, hospices are still 

limited in the reasons for discharge, and 

still cannot discharge a hospice 

beneficiary for cost or convenience. Our 

regulations at § 418.26(a) state the 

reasons a hospice can discharge a 

beneficiary from hospice services. 

Since the implementation of the 

Medicare hospice benefit, hospice 

utilization continues to grow. More 

Medicare beneficiaries are becoming 

aware and educated of the benefits of 

hospice care. In recent years, the 

percentage of Medicare deaths for 

patients under a hospice election has 

increased from 20 percent in 2000 to 44 

percent in 2012. Total expenditures 

have increased from over $9.2 billion in 

2006 to over $15.1 billion in 2013. This 

observed growth far outpaces the annual 

market basket increases and is not solely 

reflective of an increase in utilization. 

We note that average 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 than October 1, 2013. 

We presented data in the FY 2014 

Hospice Wage Index and Payment Rate 

Update Final Rule, regarding diagnosis 

reporting on hospice claims and opioids 

paid under Part D for beneficiaries in a 

hospice election (78 FR 48234). Recent 

analysis of other Part A, Part B and Part 

D spending in 2012 (including 

beneficiary cost-sharing payments of 

$135.5 million for Parts A and B and 

$48.2 million for Part D) shows that 

there was an additional $1 billion in 

total Medicare spending during a 

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

This includes Part A payments for 

inpatient hospitalizations and SNF 

stays, as well as Part B payments for 

outpatient and physician services, 

diagnostic tests and imaging, and 

ambulance transports. There is concern 

that many of these services should have 

been provided under the Medicare 

hospice benefit as they very likely were 

for services related to the terminal 

illness and related conditions. This 

strongly suggests that hospice services 

are being ‘‘unbundled’’, negating the 

hospice philosophy of comprehensive, 

holistic care and shifting the costs to 

other parts of Medicare, and creating 

additional 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 Advisory Committee 

(MedPAC) and the Office of the 

Inspector General (OIG) expressed 

similar concerns regarding the 

unbundling of services meant to be 

covered under the hospice per diem, 

capitated payment system. Similar to 

the analysis presented above, MedPAC 

also analyzed non-hospice utilization 

and spending patterns through Parts A, 

B and D for Medicare hospice 

beneficiaries. MedPAC also concluded 

that over $1 billion FFS spending was 

attributed to providing services reported 

as unrelated to the terminal conditions 

of hospice enrollees. MedPAC went on 

to state that 58 percent of Medicare 

hospice enrollees received a service or 

drug outside of the hospice benefit over 

the course of a hospice episode. The 

highest shares of spending were on 

drugs and inpatient services.31 In 

addition, the OIG reported in June of 

2012 that Medicare could be paying 

twice for prescription drugs for 

beneficiaries receiving services under 

the Medicare hospice benefit and 

recommended that CMS increase its 

oversight to make sure that Part D is not 

paying for medications already included 

in the Medicare hospice per diem 

payment rates.32 As a result of the OIG 

report, the CMS’ Center for Program 

Integrity (CPI) began recoupment efforts 

for analgesics from Part D plan 

sponsors. 

Ongoing Part D memo guidance has 

also been issued to clarify existing 

coverage and payment policies. All Part 

D memo guidance can be found on the 

Hospice Center Web page under 

‘‘Coordination of Benefits’’ at http://

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

Hospice-Center.html. In addition, the 

proposed rule solicited comments on 

processes that could be developed to 

address the inappropriate Part D 

reimbursement for medications that 

should be covered under the Medicare 

hospice per diem (see Section III.I). The 

purpose of these Part D guidance 

memos, in response to OIG reports of 

possible duplication of payment for 

drugs under the hospice per diem and 

Part D plans, was to outline the 

expectations regarding coordination of 

benefits and coverage responsibility 

between Part D plan sponsors and 

hospices. The ongoing concern is that 


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33World Health Organization. (January, 2013). 

Essential Medications in Palliative Care. 

34National Hospice and Palliative Care 

Organization: ‘‘Standards of Practices for Hospice 

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

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

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

Elsevier. 

hospices are not providing the broad 

range of medications required by 

hospice beneficiaries during a hospice 

election, especially for those drugs 

classified as analgesics, antianxiolytic, 

antiemetics and laxatives (generally 

considered essential medications for 

palliation in a hospice population).33

Comments received, regarding this 

memo guidance, highlighted that there 

are multiple interpretations as to the 

meaning of what are considered ‘‘related 

conditions.’’ Additionally, it was noted 

in these comments that the terms, 

‘‘terminal illness’’, ‘‘terminal 

diagnosis’’, ‘‘qualifying terminal 

diagnosis’’, and ‘‘terminal prognosis’’ 

were used interchangeably and with 

varying interpretations as to their 

meanings. 

We believe the summary of the 

‘‘Development of the Hospice Benefit’’ 

and the ‘‘Legislative history of the 

Medicare Hospice Benefit’’ clearly 

captures the expectation that hospices 

are to provide holistic and 

comprehensive services under the 

Medicare hospice benefit. As stated in 

the 1983 proposed and final rules, and 

reiterated in the FY 2014 Hospice Wage 

Index and Rate Update proposed and 

final rules: ‘‘It is our general view that 

the waiver required by law is a broad 

one and that hospices are required to 

provide virtually all of the care that is 

needed by terminally ill patients’’ (48 

FR 56010). Our expectation continues to 

be that hospices offer and provide 

comprehensive, virtually all-inclusive 

care, and with a patient-centered 

approach. In order to preserve the 

Medicare hospice benefit and ensure 

that Medicare beneficiaries continue to 

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

hospice care, we will continue to 

examine program vulnerabilities and 

implement appropriate safeguards in the 

Medicare hospice benefit, when 

appropriate. 

4. Definition of ‘‘Terminal Illness’’ 

Since the implementation of the 

Medicare hospice benefit, we have 

defined a ‘‘terminally ill’’ individual to 

mean ‘‘that the individual has a medical 

prognosis that his or her life expectancy 

is 6 months or less if the illness runs its 

normal course’’ (§ 418.3). We have 

always interpreted ‘‘terminally ill’’ to 

mean a time frame of life expectancy 

and expect that the individual’s whole 

condition plays a role in that prognosis. 

Comments received in response to prior 

years’ proposed rules state that 

longstanding, preexisting conditions 

should not be considered related to a 

patient’s terminal illness or related 

conditions and that chronic, stable 

conditions play little to no role in a 

patient’s terminal illness or related 

conditions. Commenters 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 and 

related conditions, and that 

comorbidities and the maintenance of 

comorbidities are not related to a 

patient’s terminal illness or related 

conditions. These commenters believed 

these types of conditions should not be 

included in the bundle of services 

covered under the Medicare hospice 

benefit. As previously stated in response 

to those comments, we believe these 

conditions are included in the bundle of 

covered hospice services. The original 

implementing regulations of the 

Medicare hospice benefit, beginning 

with the 1983 Hospice proposed and 

final rules (48 FR 38146 and 48 FR 

56008), articulate a set of requirements 

that do not delineate between preexisting, chronic, or controlled 

conditions. To be eligible to receive 

hospice services under the Medicare 

hospice benefit, the individual must be 

entitled to Part A and must be certified 

as being terminally ill, meaning that his 

or her medical prognosis is a life 

expectancy of 6 months or less if the 

illness runs its normal course. We have 

recognized throughout the federal 

regulations at 42 CFR Part 418 that the 

total person is to be assessed, including 

acute and chronic conditions, as well as 

controlled and uncontrolled conditions, 

in determining an individual’s terminal 

prognosis. All body systems are 

interrelated; all conditions, active or 

not, have the potential to affect the total 

individual. The presence of 

comorbidities is recognized as 

potentially contributing to the overall 

status of an individual and should be 

considered when determining the 

terminal prognosis. The National 

Hospice and Palliative Care 

Organization (NHPCO) defines 

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

pathological disease impacting on the 

primary health problem and generally 

attributed to increased risk for poor 

health status outcomes.’’ 34

We have defined ‘‘palliative care’’— 

the nature of the care provided under 

the hospice benefit—in our regulations 

at § 418.3 to mean patient and familycentered care that optimizes quality of 

life by anticipating, preventing and 

treating suffering. Palliative care 

throughout the continuum of illness 

involves addressing physical, 

intellectual, emotional, social and 

spiritual needs and to facilitate patient 

autonomy, access to information and 

choice. Note that, in this definition, 

palliative care is to anticipate and 

prevent, as well as treat, suffering. This 

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 

comprehensive, holistic, and palliative 

philosophy and practice, we want to 

ensure that the hospice services under 

the Medicare hospice benefit are 

preserved and not diluted, or 

unbundled in any way. For context, the 

definition of illness means ‘‘an 

abnormal process in which aspects of 

the social, physical, emotional, or 

intellectual condition and function of a 

person are diminished or impaired 

compared with that person’s previous 

condition’’.35 An intensive review of the 

history of hospice, hospice philosophy 

and legislative actions described above 

provided the basis for discussion among 

several CMS clinical leaders across 

several agency components as to the 

meaning of ‘‘terminal illness’’ within 

the context of the Medicare hospice 

benefit. After a review of all of the 

history listed above, the clinical 

collaborative effort across CMS solicited 

comments on the following definition of 

‘‘terminal illness’’: ‘‘Abnormal and 

advancing physical, emotional, social 

and/or intellectual processes which 

diminish and/or impair the individual’s 

condition such that there is an 

unfavorable prognosis and no 

reasonable expectation of a cure; not 

limited to any one diagnosis or multiple 

diagnoses, but rather it can be the 

collective state of diseases and/or 

injuries affecting multiple facets of the 

whole person, are causing progressive 

impairment of body systems, and there 

is a prognosis of a life expectancy of 6 

months 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 making an 

election to receive hospice coverage, 

would be deemed to have waived 

payments for certain other benefits 


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except in ‘‘exceptional and unusual 

circumstances as the Secretary may 

provide.’’ Comments received on the 

1983 Hospice proposed rule specifically 

asked for further CMS clarification 

regarding the concept of ‘‘related 

conditions.’’ Specifically, the 

commenters suggested a more detailed 

definition of what constitutes care for a 

patient’s terminal illness or related 

conditions (which is the responsibility 

of the hospice) and what constitutes 

care for unrelated conditions (for which 

out-of-hospice Medicare payment may 

be made) (48 FR 56010). Our response 

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

suggestions for identifying ‘exceptional 

or unusual’ circumstances that 

warranted the inclusion of a specific 

provision in the regulations to 

accommodate them. Most of the 

comments that were made attempted to 

suggest this exception as a means of 

routinely providing non-hospice 

Medicare financing for the expense of 

costly services needed by hospice 

patients, and we do not view this as an 

appropriate interpretation of the law’’ 

(48 FR 56011). The law allows for 

circumstances in which services needed 

by a hospice beneficiary would be 

completely unrelated to the terminal 

illness and related conditions, but we 

believe that this situation would be the 

rare exception rather than the norm. We 

reiterated this position in the FY 2014 

Hospice Wage Index and Rate Update 

proposed rule (78 FR 27826) as a 

reminder of the expectation of the 

holistic nature of hospice services that 

shall be provided under the hospice 

benefit, as well as to remind hospices 

about diagnosis reporting on hospice 

claims. 

Therefore, in keeping with the tenets 

of hospice philosophy described in this 

section, the intent of the Medicare 

hospice benefit, expectations of 

comprehensive care, and in response to 

previous and ongoing stakeholder 

comments, the CMS clinical 

collaborative effort 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 

potentially interact with terminal 

illness; and/or which are contributory to 

the symptom burden of the terminally 

ill individual; and/or are conditions 

which are contributory to the prognosis 

that the individual has a life expectancy 

of 6 months or less.’’ We did not 

propose any new regulations but asked 

for public input on this definition for 

possible future rulemaking. 

We received a significant number of 

comments representing diverse 

stakeholder groups on the definitions of 

‘‘terminal illness’’ and ‘‘related 

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 hospice services for ESRD 

beneficiaries with non-renal terminal 

conditions. These commenters stated 

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 services 

with non-renal terminal conditions. As 

such, the current policy at Chapter 11 of 

the 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 and the hospice benefit. Hospice 

agencies can provide hospice services to 

patients who wish to continue dialysis 

treatment’’, remains in effect. 

C. Guidance on Determining 

Beneficiaries’ Eligibility for Hospice 

An individual must be certified by the 

hospice medical director and the 

individual’s attending physician (if 

designated by the individual) as being 

terminally ill, meaning that the 

individual has a medical prognosis of a 

life expectancy of 6 months or less in 

order to receive the Medicare hospice 

benefit. However, we also have 

recognized the challenges in 

prognostication. It has always been our 

expectation that the certifying 

physicians will use their best clinical 

judgment, based on the initial and 

updated comprehensive assessments 

and collaboration with the hospice 

interdisciplinary group (IDG) to 

determine if the individual has a life 

expectancy of six months or less with 

each certification and recertification. As 

stated in previous rules, in reaching a 

decision to certify that the patient is 

terminally ill, the hospice medical 

director must consider at least the 

following information per our 

regulations at § 418.25(b): 

• Diagnosis of the terminal condition 

of the patient. 

• Other health conditions, whether 

related or unrelated to the terminal 

condition. 

• Current clinically relevant 

information supporting all diagnoses. 

We do recognize that making a 

prognosis is not an exact science. 

Section 322 of the Benefits 

Improvement and Protection Act of 

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

section 1814(a) of the Act by clarifying 

that the certification of an individual 

who elects hospice ‘‘shall be based on 

the physician’s or medical director’s 

clinical judgment regarding the normal 

course of the individual’s illness.’’ The 

amendment clarified that the 

certification is based on a clinical 

judgment regarding the usual course of 

a terminal illness, and recognizes the 

fact that making medical 

prognostications regarding life 

expectancy is not exact. However, the 

amendment regarding the physician’s 

clinical judgment does not negate the 

fact that there must be a clinical basis 

for a certification. A hospice is required 

to make certain that the physician’s 

clinical judgment can be supported by 

clinical information and other 

documentation that provide a basis for 

the certification of 6 months or less if 

the illness runs its normal course. 

While the expectation remains that 

the hospice physician will determine a 

beneficiary’s eligibility for hospice, this 

is not to say that this decision cannot be 

reviewed if there is a question as to 

whether or not the 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 their 

eligibility determinations so that 

hospice beneficiaries are able to access 

their benefits appropriately. CMS’ right 

to review clinical documentation that 

supports physician certifications has 

been established in federal court and by 

the agency in an administrative ruling. 

(See, for example, HCFA Ruling, 93–1 

Weight to be Given to a Treating 

Physician’s Opinion in Determining 

Medicare Coverage of Inpatient Care in 

a Hospital or Skilled Nursing Facility 

(May 18, 1993); Maximum Comfort, Inc 

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

MacKenzie Medical Supply v. Leavitt 

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


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36National Hospice and Palliative Care 

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

Medicare Hospice Cap on Total Expenditures.’’ 

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

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

regulatory/History_of_Hospice_Cap.pdf 

to be covered under Medicare Part A, 

the care must also be reasonable and 

necessary. There has always been a 

statutory prohibition (section 1862 

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

under the Medicare program for services 

which are not reasonable and necessary 

for the palliation or management of 

terminal illness. Additionally, section 

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

the Secretary makes determinations 

concerning entitlement, coverage and 

payment of benefits under part A and 

part B of Medicare. 

We are reminding providers that there 

are multiple public sources available to 

assist in determining whether a patient 

meets Medicare hospice eligibility 

criteria (that is, industry-specific 

clinical and functional assessment tools 

and information on MAC Web sites). 

Additionally, we expect that hospices 

will use their expert clinical judgment 

in determining eligibility for hospice 

services. We expect that documentation 

supporting a 6-month or less life 

expectancy is included in the 

beneficiary’s medical record and 

available to the MACs when requested. 

If a beneficiary improves and/or 

stabilizes sufficiently over time while in 

hospice such that he/she no longer has 

a prognosis of 6 months or less from the 

most recent recertification evaluation or 

definitive interim evaluation, that 

beneficiary should be considered for 

discharge from the Medicare hospice 

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

a decline in their clinical status is such 

that their life expectancy is again 6 

months or less. On the other hand, 

beneficiaries in the terminal stage of 

their illness that originally qualified for 

the Medicare hospice benefit but 

stabilize or improve while receiving 

hospice care, yet have a reasonable 

expectation of continued decline for a 

life expectancy of less than 6 months, 

remain eligible for hospice care. The 

hospice medical director must assess 

and evaluate the full clinical picture of 

the Medicare hospice beneficiary to 

make the determination whether the 

beneficiary still has a medical prognosis 

of 6 months or less, regardless of 

whether the beneficiary has stabilized or 

improved. There are prognostication 

tools available for hospices to assist in 

thoughtful evaluation of Medicare 

beneficiaries for determining terminally 

ill eligibility for the Medicare hospice 

benefit. We expect hospice providers to 

use the full range of tools available, 

including guidelines, comprehensive 

assessments, and the complete medical 

record, as necessary, to make 

responsible and thoughtful 

determinations regarding terminally ill 

eligibility. 

We have always acknowledged the 

uniqueness of every Medicare 

beneficiary and support thorough and 

thoughtful evaluation in determining 

whether beneficiaries meet the 

eligibility criteria for being certified as 

terminally ill. We continue to support 

the concept of shared decision-making, 

patient choice and the right care at the 

right time to allow Medicare 

beneficiaries full and appropriate access 

to their Medicare benefits, including 

hospice care. Furthermore, Medicare 

hospice beneficiaries have certain 

guaranteed rights. If the hospice or 

designated attending physician believes 

that the hospice beneficiary is no longer 

eligible for hospice care because his or 

her condition has improved, and the 

beneficiary does not agree with that 

determination, the hospice beneficiary 

has the right to ask for a review of his 

or her case. The hospice should provide 

the hospice beneficiary with a notice 

that explains his or her right to an 

expedited review by a contracted 

independent reviewer hired by 

Medicare, called a Quality Improvement 

Organization (QIO). If the hospice 

beneficiary asks for this appeal, the QIO 

will determine if the beneficiary 

continues to meet eligibility 

requirements for hospice services. The 

provider is expected to continue to 

provide services for the patient 

following a favorable decision by a QIO. 

In the QIO decision, the QIO should 

advise the provider as to why it 

disagrees with the hospice, which 

should help the provider to re-evaluate 

the discharge decision. If at another 

point in time during a hospice election, 

the hospice believes that the patient is 

no longer hospice eligible, the provider 

should timely deliver a CMS–10123 to 

notify the patient of its decision to 

discharge. The patient could again 

appeal to the QIO. Medicare 

beneficiaries have the right to be 

included in decisions about their care, 

the right to a fair process to appeal 

decisions about payment of services, 

and the right to privacy and 

confidentiality. No proposals were made 

regarding hospice eligibility nor were 

comments solicited. This discussion 

only provides background information 

regarding current procedures for 

determining eligibility for hospice 

services under the Medicare hospice 

benefit and beneficiary appeal rights. 

D. Timeframe for Hospice Cap 

Determinations and Overpayment 

Remittances 

When the Medicare hospice benefit 

was implemented, 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 inpatient days to no more than 

20 percent of a hospice’s total Medicare 

hospice days. The intent of the inpatient 

cap was to ensure that hospice remained 

a home-based benefit. The hospice 

aggregate cap limits the total aggregate 

payment any individual hospice can 

receive in a year. The intent of the 

hospice aggregate cap was to protect 

Medicare from spending more for 

hospice care than it would for 

conventional care at the end of life. 

The aggregate cap amount was set at 

$6,500 per beneficiary when first 

enacted in 1983; this was an amount 

hospice advocates agreed was well 

above the average cost of caring for a 

hospice patient.36 The $6,500 amount is 

adjusted annually by the change in the 

medical care expenditure category of the 

consumer price index for urban 

consumers from March 1984 to March of 

the cap year. For the 2013 cap year, the 

cap amount was $26,157.50 per 

beneficiary. The cap year is defined as 

the period from November 1st to 

October 31st, and was set in place in the 

December 16, 1983 hospice final rule 

(48 FR 56022). 

The cap amount is multiplied by the 

number of Medicare beneficiaries who 

received hospice care from a particular 

hospice during the year, resulting in its 

hospice aggregate cap, which is the 

allowable amount of total Medicare 

payments that hospice can receive for 

that cap year. There are two different 

methods for counting a hospice’s 

beneficiaries: the streamlined and the 

patient-by-patient proportional 

methods. Which method a hospice can 

use to count beneficiaries depends on a 

number of factors, as described in our 

regulations at § 418.309 and in section 

90.2.3 of the hospice Benefit Policy 

Manual (IOM 100–02, chapter 9, 

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

Regulations-and-Guidance/Guidance/

Manuals/Downloads/bp102c09.pdf). A 

hospice’s total Medicare payments for 

the cap year cannot exceed the hospice’s 

aggregate cap. If its aggregate cap is 

exceeded, then the hospice must repay 

the excess back to Medicare. 

While hospices rarely exceed the 

inpatient cap, in its March 2012 Report 

to the Congress, MedPAC reported that 


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37MedPAC, ‘‘Report to Congress: Medicare 

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

38MedPAC, ‘‘Report to Congress: Medicare 

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

an increasing number of hospices are 

exceeding the aggregate cap. MedPAC 

also noted that above-cap hospices were 

almost all for-profit with very long 

lengths of stay, high live discharge rates, 

and very high profit margins before the 

return of cap overpayments.37 The 

percentage of hospices exceeding the 

aggregate cap rose from 2.6 percent in 

2002 to a peak of 12.5 percent in 2009. 

In 2010, the percentage of hospices 

exceeding the aggregate cap decreased 

to 10.1 percent.38

Our hospice reform contractor also 

performed analysis on the number of 

hospices exceeding the aggregate cap 

with results similar to MedPAC’s, where 

an increasing percentage of hospices 

exceeded their caps from 2006 (9.1 

percent) to a peak in 2009 (12.8 

percent), followed by a decline through 

2011 (10.5 percent). However, the 

analysis shows an increase in 2012, 

with 11.6 percent of hospices exceeding 

their aggregate caps. Additionally, 

analysis of above-cap hospices showed 

that the average overpayment per 

beneficiary has increased over time, up 

35.2 percent from 2006 ($7,384) to 2012 

($9,983). Using above-cap hospices, we 

also found that the average overpayment 

amount went from $732,103 in 2006 to 

$440,727 in 2011, but that this 

downward trend is estimated to change 

in 2012, when the average overpayment 

amount is estimated to increase to 

$547,011. 

We also compared hospices’ year-end 

percentage of their aggregate cap total 

that they had received in Medicare 

payments over time. Specifically, we 

examined where hospices ended their 

cap year in terms of Medicare 

reimbursements received, relative to 

that year’s aggregate cap limit, by 

comparing the 2006 cap year to the 2012 

cap year. Analysis revealed that more 

hospices ended the 2012 cap year ‘‘just 

below’’ their aggregate cap than in 2006. 

The cap analyses which are referenced 

in this section are available in the May 

2014 Technical Report was posted in 

May, 2014 on our Hospice Center Web 

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

Provider-Type/Hospice-Center.html. 

The results from these recent analyses 

on the hospice aggregate cap highlight 

the importance of hospices monitoring 

their aggregate cap and ensuring that the 

beneficiaries under their care are truly 

eligible for hospice services. In the FY 

2010 hospice wage index proposed rule, 

we solicited comments on the aggregate 

hospice cap (74 FR 18920–18922). Many 

commenters wanted more timely 

notification of cap overpayments. Many 

also requested that hospices be given 

access to beneficiaries’ full hospice 

utilization history, as having this 

information would enable hospices to 

better manage their aggregate cap. In 

response to concerns from hospices, we 

redesigned the Provider Statistical and 

Reimbursement (PS&R) system in 2011, 

so that hospices can now easily manage 

their inpatient and aggregate caps. The 

redesigned PS&R enables hospices to 

calculate estimated caps to monitor 

their cap status at different points 

during the cap year, and also enables 

them to calculate their caps after the cap 

year ends. 

Our current practice is for the 

Medicare Administrative Contractors 

(MACs) to complete the hospice cap 

determinations for both the inpatient 

and the aggregate caps 16 to 24 months 

after the cap year in order to demand 

any overpayment. We are concerned 

about this long timeframe, particularly 

given that the percentage of hospices 

exceeding the aggregate cap is 

increasing, along with the average 

overpayment per beneficiary. To better 

safeguard the Medicare Trust 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 

subsequent 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 inpatient 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 selfdetermined inpatient and aggregate cap 

determination. This is similar to the 

current practice followed by all other 

provider types that file cost reports with 

MACs. 

We proposed that hospices would be 

provided a pro-forma spreadsheet that 

they would use to calculate their caps 

to remit any overpayments. The 

redesigned PS&R system provides the 

inpatient days, total days, beneficiary 

counts, and Medicare payments that are 

needed to calculate any inpatient or 

aggregate cap overpayments. The 

redesigned system can provide needed 

data whether a hospice uses the 

streamlined method or the patient-bypatient proportional method for its 

aggregate cap calculation. All hospices 

are required to register in Individuals 

Authorized Access to CMS Computer 

Services (IACS) and obtain their PS&R 

report from the PS&R system. Hospices 

experiencing difficulties can request a 

copy of their PS&R report from their 

MAC. 

Twenty six public comments and our 

responses are summarized below. 

Comment: Several commenters 

suggested that the Medicare 

Administrative Contractors (MACs) 

should complete the initial cap 

determination instead of the hospices. 

Some of the concerns are that the 

proposal would increase the hospices 

administrative costs, and this would be 

especially burdensome for small 

hospices. There were suggestions that 

CMS establish criteria to target 

providers that are more 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 needed to complete the selfdetermined cap to manage their cap. 

The net reimbursement and beneficiary 

count needed to calculate the cap 

overpayment are reported on the 

Provider Statistical & Reimbursement 

(PS&R) report. A pro-forma spreadsheet 

for calculating the cap will be provided. 

The MACs are still required to issue the 

final cap determination and reconcile 

any overpayments received. 

Comment: Some commenters 

suggested that the 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 the hospices’ various cost 

reporting fiscal years, and the hospice 

cap calculation is not based on the 

Medicare cost report. 

Comment: Commenters were 

concerned that the proposal for hospices 

to file a self-determined cap calculation 

and remit any overpayment within 5 

months after the cap period would not 

achieve the stated goal of protecting the 

Medicare Trust Funds. Early calculation 

of the hospice cap liability will 

underestimate the amount owed by 

hospices that are over the cap. The 5 


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months proposed for hospices to file 

their 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 

lowest. Some commenters suggested 

that CMS should instruct providers not 

to request data to calculate their cap 

liability earlier than 90 days after the 

end of the cap period in order to allow 

for most of the hospice claims to be 

processed before the completion of the 

cap calculation. 

Response: We agree that allowing up 

to 5 months 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 

determination within 5 months of the 

end of the cap year. In order to increase 

the reliability of the determination, 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 the 

hospice providing its cap determination 

and any associated overpayment to their 

MAC by March 31, 2016. In order to 

allow a reasonable number of claims to 

be processed, the hospice shall wait at 

least 3 months after the end of the cap 

year, or January 31, 2016, before 

attempting to calculate the cap 

overpayment. Thus, the cap 

determination would be calculated after 

January 31, 2016 but before March 31, 

2016 and the overpayment would be 

submitted at the same time as the cap 

determination. 

We plan to continue to monitor 

hospices that 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 determinations at a later 

time in order to ensure that they are 

accurate and to reconcile them with 

updated claims data. 

Comment: Several commenters 

suggested that CMS should not recoup 

any overpayment as a result of the selfdetermined cap calculation until the 

MACs issue the final cap determination. 

Response: While completing the selfdetermined calculation as proposed will 

inform hospices about whether or not 

they are over the cap 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 filed. Sometimes the 

final settlements of Medicare cost 

reports are issued 2 to 3 years after the 

cost reports were filed. The same 

process is proposed for hospice 

providers, since the cap calculations are 

not reconciled on the cost reports 

themselves. MACs will reconcile the 

final payments when it issues the final 

cap determination. The final cap 

determination includes the appeal rights 

for the hospice. 

Comment: Several commenters were 

concerned that the proposal did not 

address the availability of the Extended 

Repayment Schedule (ERS) for 

providers that exceed the cap. 

Response: This proposal is not 

changing the current 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. 

Comment: A commenter suggested 

that CMS should consider eliminating 

the requirement that hospices determine 

the inpatient cap overpayment because 

the calculation involved is more 

complex than those required for 

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 most providers do not 

exceed the inpatient cap limitation, and 

that calculation of the inpatient 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 stakeholders 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 consider 

implementing in the future if needed. 

However, the self-determined aggregate 

cap calculation proposal is being 

implemented in this final rule. 

Comment: Some commenters 

suggested that the MACs be required to 

review the providers’ submitted selfdetermined cap amounts and alert 

hospices of any discrepancies in the 

calculation or provide notice of 

acceptance of the hospices calculations. 

Some commenters suggested that a 

formal adjudication 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 submitted cap in all 

cases for accuracy. The MACs will issue 

a final cap determination at a later date. 

Under the current process, providers 

have the option of using their data to 

file the cap report if they disagree with 

the PS&R report. Providers 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 MACs should provide advance 

notification to the hospices regarding 

the requirement to file a cap 

determination and the due date. 

Response: We are not requiring the 

MACs to send 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 have used such 

reports. Hospices will be informed of 

their requirements through various 

educational materials. 

Comment: A commenter that 

supported the proposal suggested that 

CMS delay this requirement to allow 

providers time to prepare for the 

changes, and allow those that currently 

do not have access to the PS&R system 

to register. Another suggested that CMS 

phase-in the proposal over a three year 

period. 

Response: We do not believe phasing 

the requirement that hospices calculate 

their cap overpayment over a three year 

period will reduce the burden on 

hospices and will ensure hospices’ 

ability to calculate the cap accurately. 

We appreciate the commenter’s concern 

about providers who are not currently 

registered 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 the PS&R system, and explain 

how to access and utilize the hospice 

reports. 

Comment: Some commenters raised 

concern about the ability of hospices 

that are not registered in CMS’ 

authentication and authorization system 

(IACS) to obtain a copy of their PS&R 

report. A commenter stated that since 

most providers only access the PS&R 

system once in a year, their accounts are 

deactivated after six months of 

inactivity and would be unable to obtain 

a copy of their PS&R report. The 


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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 after 

six months of inactivity. Accounts are 

only deactivated when a user fails to 

recertify its account, which is usually 

once a year. The system sends out 

several notification emails 45 days prior 

to the recertification date, and everyday 

15 days prior to the due date. Providers 

that failed to change their 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 electronic delivery 

of important notices, like overpayment 

determinations. 

Response: This is outside the scope of 

this proposal. 

Comment: A commenter was 

concerned that providers are not able to 

obtain the beneficiary count for patients 

served 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. 

Comment: Some commenters 

suggested 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 

requirement 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 providers and suppliers to 

report and return overpayments 60 days 

from the date the liability is identified. 

CMS should provide hospices 60 days 

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 within 60 days 

from when identified. The Overpayment 

rule resulting from the Affordable Care 

Act has not been finalized as of the 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 file their cap determination is 

similar to the requirement for other 

provider types that final payment 

reconciliation are completed on the 

Medicare cost report. 

Comment: Some commenters 

applauded the proposal stating that it 

allows hospices to better manage their 

cap, and they will be aware of their cap 

situation soon after the cap year in order 

to implement changes to better manage 

their cash flow in light of hospices’ 

responsibility to reconcile their 

overpayments 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 after 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-determined inpatient cap limitation 

as part of this proposal, but will 

continue to monitor the inpatient cap 

and consider implementing in the future 

if needed. 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 intentionally choose 

hospice care through an election. As 

part of that election, patients (or their 

representative) acknowledge that they 

fully understand the palliative, rather 

than curative, nature of hospice care. 

Another important aspect of the election 

is a waiver of beneficiary rights to 

Medicare payment for any Medicare 

services related to the terminal illness 

and related conditions during a hospice 

election except when provided by, or 

under arrangement by, the designated 

hospice, or by the individual’s attending 

physician if he/she is not employed by 

the designated hospice (§ 418.24(d)). 

Because of this waiver, providers 

other than the designated hospice or 

attending physician cannot receive 

payment for services to a hospice 

beneficiary unless those services are 

unrelated to the terminal illness and 

related conditions. For our claims 

processing system to properly enforce 

this waiver, it is necessary for the 

hospice election to be recorded in the 

claims processing system as soon as 

possible after the election occurs. A 

survey of the four Medicare 

Administrative Contractors (MACs) 

revealed that 16.2 percent of NOEs are 

filed within 2 days of the effective date 

of election, 39.2 percent of NOEs are 

filed within 5 days of the effective date 

of election, and 62.1 percent of NOEs 

are filed within 10 days of the effective 

date of election. Prompt recording of the 

notice of election (NOE) prevents 

inappropriate payments, as claims filed 

by providers other than the hospice or 

the attending physician will be rejected 

by the system, unless those claims are 

for items or services unrelated to the 

terminal illness and related conditions. 

Prompt filing of the NOE also protects 

beneficiaries from financial liability 

from deductibles and cost sharing for 

items or services provided during a 

hospice election which are related to the 

terminal prognosis. 

Once a NOE is filed, the hospice 

election and benefit period are 

established in the Common Working 

File (CWF) and in the Daily Transaction 

Reply Report (DTRR). The CWF is used 

by Part A and Part B providers, and the 

DTRR is used by Part D plan sponsors, 

to determine whether a beneficiary is a 

hospice patient. This information is 

necessary for providers and suppliers to 

properly handle claims for beneficiaries 

under a hospice election. 

Our hospice reform contractor has 

performed analyses of Medicare 

expenditures for drugs and services 

provided to hospice beneficiaries during 

a hospice election. These analyses 

found that Medicare Part D was paying 

for many drugs 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 appropriate. Once 

a hospice election is established in the 

CWF, in order for claims from other 

providers to process, the claim must be 

from the attending physician and coded 

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

services unrelated to the terminal illness 

and related conditions and must be 

coded with either a condition code of 

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

calendar year 2012, 10,500 claims and 

2.4 million line items, totaling $159 


tkelley on DSK3SPTVN1PROD with RULES3
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39CMS, ‘‘Calendar Year (CY) 2014 Medicare 

Advantage Capitation Rates and Medicare 

Advantage and Part D Payment Policies and Final 

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

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

MedicareAdvtgSpecRateStats/downloads/

Announcement2014.pdf. 

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

Payment for Drugs for Beneficiaries Enrolled in 

Hospice—Request for Comments,’’ memorandum 

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

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

million were processed without the 

condition code or modifier. Of this $159 

million, approximately $100 million 

was from physician/supplier Part B 

claims that include claims from 

physicians, laboratories, and ambulance 

companies, and approximately $46 

million was billed as durable medical 

equipment. This suggests that these 

claims may have been processed in the 

time between when the beneficiary 

elected hospice and when the hospice 

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

claims for items or services during a 

hospice election, there is typically an 

associated beneficiary liability (such as 

deductibles or copayments). For 

example, in 2012 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 beneficiaries from inappropriate 

financial liability during a hospice 

election for items or services that should 

be provided by the hospice. Please see 

section III.A.4 of this final rule and the 

May 2014 Technical Report, which was 

posted on the CMS Hospice Center Web 

page in May 2014, for more details on 

Medicare payments made to nonhospice providers during a hospice 

election for hospice beneficiaries. The 

hospice center Web page can be 

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

Provider-Type/Hospice-Center.html. 

In the April 1, 2013 CMS Part D Final 

Call Letter, it was noted that delays in 

the flow of hospice election information 

cause retroactive updates to the 

information sent to Part D plan sponsors 

on the DTRR, and plan sponsors 

requested that CMS improve the 

timeliness of the hospice data on the 

DTRR.39 More recently, CMS issued a 

memorandum on December 6, 2013 

entitled ‘‘Part D Payment for Drugs for 

Beneficiaries Enrolled in Hospice,’’ 

which sought to clarify the criteria for 

determining payment responsibility for 

drugs for hospice beneficiaries.40

Industry commenters described the lag 

time in the notification of Part D plan 

sponsors that the beneficiary had 

elected hospice, revoked hospice, or 

been discharged alive from hospice as a 

key problem in determining payment 

responsibility. Commenters suggested 

that CMS require that the NOE be filed 

within a short timeframe of election (for 

example, within 48 hours). 

The CWF is also used by hospices to 

identify the current benefit period, 

which helps hospices determine when a 

face-to-face encounter is required. We 

have received requests for assistance 

from hospices where a beneficiary was 

previously admitted to and then 

discharged from another hospice, which 

had not yet filed the NOE, creating a 

problem for the current hospice in 

determining the correct benefit period. 

This can lead to the current hospice not 

meeting the face-to-face requirement. 

Additionally, because of sequential 

billing requirements, the current 

hospice would have to cancel its NOE 

and all of its billing for that beneficiary 

to allow the previous hospice to input 

its NOE and billing. 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 the 

first hospice to file its NOE promptly 

created an administrative burden for the 

second hospice. 

In summary, prompt filing of the NOE 

avoids compliance problems with the 

statutorily mandated face-to-face 

requirement. It also avoids creating 

burdensome situations for hospices 

when sequential billing requirements 

are not met. Finally, because Medicare 

payments for services related to the 

terminal illness and related conditions 

are waived once a hospice election is in 

place, it is crucial that the NOE be filed 

promptly to safeguard the integrity of 

the Medicare Trust Fund and enable 

smooth and efficient operation of other 

Medicare benefits (like Part D), and to 

safeguard hospice beneficiaries from 

inappropriate financial liability due to 

cost sharing and deductibles for services 

related to the terminal 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 begins on the effective date of 

the hospice election, regardless of when 

the NOE was filed. A commenter on the 

December 6, 2013 CMS memorandum 

clarifying drug payment responsibility 

between Part D, hospice, and 

beneficiaries suggested that without 

enforcement actions, hospices would 

not file NOEs within a short timeframe. 

We agree that providing a consequence 

for failing to file NOEs timely would 

encourage compliance. Therefore, we 

proposed that for those hospices that do 

not file the NOE timely (that is, within 

3 calendar days after the effective date 

of election), Medicare would not cover 

and pay for days of hospice care from 

the effective date of election to the date 

of filing of the NOE. We proposed that 

these days be considered the financial 

responsibility of the hospice; the 

hospice could not bill the beneficiary 

for them. We believe that this is a 

reasonable step, which would not be 

burdensome to hospices, would help us 

to safeguard the integrity of the 

Medicare Trust Fund, and help protect 

beneficiaries from inappropriate 

liability. 

Once filed, the process of posting an 

NOE to the CWF after direct data entry 

(DDE) takes 1 to 5 days, depending on 

the host site. If an NOE is not submitted 

by DDE, the current policy requires 

hospices to send it to the Medicare 

contractor by mail or messenger. This 

policy remains in place; however, 

hospices may need to use overnight 

mail or an overnight messenger to 

ensure that paper NOEs are received by 

the Medicare 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 ensure that a paper NOE’s filing is 

not delayed by the transit time needed 

to get the document from 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 

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

moving outside the hospice’s service 

area. In contrast, hospice patients are 

free to revoke their election to hospice 

care at any time. Upon discharge or 

revocation, a beneficiary resumes the 

Medicare coverage that had previously 

been waived by the hospice election. It 

is important for hospices to record the 

beneficiary’s discharge or revocation in 

the claims processing system in a timely 

manner. As previously noted, a number 

of those commenting on the December 

6, 2013 CMS memorandum clarifying 


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drug payment responsibility between 

Part D, hospices, and beneficiaries wrote 

that it was critical for beneficiary 

revocations and live discharges from 

hospice to be recorded as soon as 

possible within CMS claims processing 

systems. Commenters 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 the 

appropriate source. Providers are 

allowed 12 months to file a claim, so if 

a hospice is not prepared to file a final 

claim quickly, it should instead file a 

termination/revocation of election 

notice, so that the claims processing 

systems are updated to no longer show 

the beneficiary as being under a hospice 

election. Hereafter, we will refer to this 

as a Notice of Termination or 

Revocation (NOTR). 

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 beneficiary’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 services that could occur if the 

CWF or DTRR continued to show a 

hospice election in place when in fact 

it was revoked or a discharge occurred. 

It would also avoid costs and 

administrative burden to non-hospice 

providers and to the claims processing 

system that would occur for claims for 

items or services provided after 

discharge or revocation, which would 

be rejected if the claims processing 

systems continued to show the 

beneficiary as being under a hospice 

election. 

Comments we received with regard to 

the proposals to file the NOE and NOTR 

within 3 calendar days and the 

consequence for filing the NOE late are 

summarized below. 

Comment: Nearly all commenters 

supported 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 suggested 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 

sponsors supported 3 calendar days, 

with one commenter supporting 2 

calendar days for the NOE and the 

NOTR to be filed. These commenters 

also identified administrative burden 

issues and beneficiary impact 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. 

Response: In response to comments 

received, we are finalizing the 

requirement for hospices to file the NOE 

within 5 calendar days after the 

effective date of the election and to file 

the NOTR within 5 calendar days after 

the date of the discharge or revocation 

(unless the hospice has already 

submitted the final claim). A timelyfiled NOE is one that is submitted to, 

and accepted by, the Medicare 

contractor within 5 calendar days after 

the effective date of election. A timelyfiled NOTR is one that is submitted to, 

and accepted by, the Medicare 

contractor within 5 calendar days after 

the effective date of discharge or 

revocation. 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 hospice discharge/

revocation, posting to the CWF may not 

occur within that same time frame. The 

date of posting to the CWF is not a 

reflection 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 

implemented 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; and preserving access to 

non-hospice services. We considered 

the feasibility of using business days 

versus calendar days; however, the 

Medicare claims processing system 

cannot distinguish between calendar 

days and business days. Therefore, we 

are not able to consider counting 

business days for this policy. The NOE 

filing timeframe statistics included in 

the proposed rule only indicate 

historical filing practices and do not 

indicate hospices’ inability to file NOEs 

in a more timely fashion once a filing 

timeframe is implemented. As described 

in the existing CMS 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 days due to late filing of the NOE. 

We encourage hospices to submit the 

NOE and NOTR (if a final claim has not 

been submitted) as soon as possible and 

not wait until the 5th calendar day after 

the effective date of the election or 

discharge/revocation. For revocations, 

existing policy requires that the 

beneficiary must provide the hospice 

with a signed statement that he or she 

is revoking the benefit, including the 

effective date of the revocation, which 

cannot 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 hospices to consider 

available electronic means of 

transmitting data that nurses in the field 

may utilize to send the election 

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 administrative staff 

who normally file the NOEs or NOTRs 

are on vacation, unavailable due to 

illness, 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 proposed 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 control 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 the 

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 appreciate 

the variety of examples to illustrate such 

exceptional circumstances. Therefore, 

we are finalizing an exception policy for 

the timely filing of the NOE, which 

would waive the consequences for 

failure to timely-file a NOE. The four 

circumstances that may qualify the 

hospice for an exception to the 

consequences of filing the NOE more 


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than 5 calendar days after the effective 

date of election are as follows: 

1. Fires, floods, earthquakes, or other 

unusual events that inflict extensive 

damage to the hospice’s ability to 

operate; 

2. an event that produces a data filing 

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 certification date, or 

which is awaiting 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 filing the 

NOE late. Using that documentation, the 

hospice’s Medicare contractor will 

determine if a circumstance 

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 usual appeal rights on the claim 

for payment. The Medicare contractors 

will provide hospices with information 

on how to request an exceptional 

circumstance and a waiver of the 

consequence of filing the NOE late after 

the publication of this final rule. Subregulatory guidance will detail the 

procedures a hospice would follow. 

Based on the exceptions described 

above, examples such as personnel 

issues; internal IT systems issues that 

the hospice may experience; the hospice 

not knowing the requirements; and 

failure of the hospice to have back-up 

staff to file the NOE are not acceptable 

circumstances that meet the exceptions. 

Therefore, late-filing consequences 

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 after 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 

Medicare contractor. The date the NOE 

is submitted to, and accepted by, the 

Medicare contractor would be a covered 

day. 

Given the longer timeframe for timelyfiling the NOE and the exceptional 

circumstances that we are 

implementing, we do not believe that 

hospices would delay admitting 

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 providing 

all care and services to the beneficiary 

for the palliation and management of 

the terminal 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 provider 

liability due to a late-filed NOE. The 

hospice remains responsible for 

covering all hospice medical, nursing, 

counseling, social work, and aide 

services, as well as all hospice drugs, 

DME, 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 care standpoint. 

Late-filing of the NOTR could create 

problems for beneficiaries in accessing 

Part D medications or critical Medicare 

services, with a few commenters 

recommending a shorter timeframe than 

that for the NOE. 

Response: We appreciate the 

comments recommending 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 systems 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 data directly from 

electronic health records, the inability 

of FISS to accept electronic files, 

sequential billing requirements, and 

also offered other recommendations. 

Several commenters suggested 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 instructions 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 other 

data elements that are not appropriate to 

an NOE, so an EDI claim transaction 

could no longer be used for this 

purpose. At that time, a great majority 

of hospice NOEs were already being 

processed via Direct Data Entry (DDE) 

into Medicare claims processing 

systems. CMS determined that DDE 

submission of NOEs met the business 

needs of Medicare and most hospices. 

While many hospices have now adopted 

electronic health record technology that 

could facilitate the creation and 

submission of electronic NOEs, no 

standard for such submission currently 

exists. There would be significant 

implementation challenges associated 

with creating an interface between any 

new non-claim format and Medicare 

claims processing systems. CMS plans 

to explore options to resume electronic 

batch submission of hospice NOEs in 

the future and welcomes input from the 

hospice industry regarding how 

electronic submission of NOEs could be 

feasible. 

Commenters who stated that 

sequential billing requirements prevent 

timely filing of NOEs are in error. While 

sequential billing requirements continue 

to apply, if a previous hospice has not 

filed any or all of its claims for a 

beneficiary, 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 all 

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 are 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 


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duplicate what is provided when the 

claim is filed. 

Comment: One commenter asked if 

the proposals related to the NOE filing 

that we finalize would apply when 

Medicare is a secondary payer. 

Response: The timely-filing NOE 

requirement applies whether Medicare 

is the primary or secondary payer. 

Comment: We received comments in 

the context of coordinating Part D and 

hospice. These comments provided 

recommendations for various processes 

for information flow to be considered. 

Response: We appreciate the 

comments received related to 

coordination between hospices and Part 

D sponsors. We will consider these in 

the overall development of a 

coordination process, which we 

solicited 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 

contractor within 5 calendar days after 

the effective date of hospice election, 

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 primary diagnosis when 

multiple potential principle diagnoses 

may exist. These coding guidelines can 

be found at: http://www.cdc.gov/nchs/

data/icd/icd9cm_guidelines_2011.pdf. 

We also disagree that the 

comprehensive assessment must be 

completed for the hospice to know 

which diagnosis is the principal 

diagnosis. The initial assessment would 

determine the patient’s immediate care 

and support needs within 48 hours after 

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 

hospice care. The hospice physician 

and/or attending physician should be 

able to provide that information because 

they have had to review the 

beneficiary’s medical documentation to 

determine whether 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 determining the 

beneficiary’s principal diagnosis to be 

included on the NOE. 

Final action: We are finalizing a 

timely-filing 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 timelyfiling NOTR policy that requires the 

NOTR to be submitted to, and accepted 

by, the Medicare contractor within 5 

calendar days after the effective date of 

the discharge/revocation (unless the 

hospice has already filed a final 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; and 

preserving access to non-hospice 

services. This finalized policy imposes 

an upper limit as to when the NOE is 

to be submitted without the imposition 

of provider 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 

wait until the 5th calendar day after the 

date of the election or discharge/

revocation. 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. 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 Physician 

to the Hospice Election Form 

The term ‘‘attending physician’’ is 

defined differently in different health 

care settings. For the Medicare hospice 

benefit, ‘‘attending physician’’ has a 

specific definition found in the Social 

Security Act at 1861(dd)(3)(B) that the 

term means, with respect to an 

individual, the physician (as defined in 

subsection (r)(1)) or nurse practitioner 

(as defined in subsection (aa)(5)), who 

may be employed by a hospice program, 

whom the individual identifies as 

having the most significant role in the 

determination and delivery of medical 

care to the individual at the time the 

individual makes an election to receive 

hospice care. 

Our regulations at § 418.3 include a 

definition for ‘‘attending physician,’’ 

based on the 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 the 

training, education, and experience 

requirements described elsewhere in 

our regulations. The definition also sets 

out the requirement that the patient 

identify the attending physician at the 

time he or she elects to receive hospice 

care, as having the most significant role 

in the determination and delivery of the 

individual’s medical care. 

We require that the National Provider 

Identifier (NPI) of the attending 

physician be included on the NOE and 

on each claim. An attending physician 

can be a physician or a nurse 

practitioner, as long as he or she meets 

the requirements outlined in our 

regulations discussed above. The 

hospice patient (or his or her 

representative), not the hospice, chooses 

the attending physician. This differs 

from some 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 

that if the attending physician is 

unavailable, the hospice medical 

director, hospice contracted physician, 

and/or hospice physician employee is 

responsible for meeting the medical 

needs of the patient. Therefore, the 

patient should receive all needed care, 

whether that care is provided by 

hospice doctors, hospice nurse 

practitioners (NPs), or by the designated 

attending physician. Hospices can bill 

Part A for reasonable and necessary 

physician services provided to hospice 

beneficiaries by its doctors, regardless of 

whether those doctors are the 

designated attending. However, our 

regulations at § 418.304(e) do not permit 

Medicare to be billed for reasonable and 

necessary physician services provided 

by NPs unless the NP is the attending 

physician, as defined in § 418.3. 

We have recently heard anecdotal 

reports of hospices changing a patient’s 

attending physician when the patient 

moves to an inpatient setting for 

inpatient care, often to a nurse 


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practitioner. We have also heard reports 

of hospices assigning an attending 

physician based upon whoever is 

available. Medicare 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 percent of beneficiaries 

had Part B claims during their hospice 

election from more than one physician 

who claimed to be their designated 

attending physician. The reports of 

hospices changing a patient’s attending 

physician are of great concern since the 

statute emphasizes that the attending 

physician must be chosen by the patient 

(or his or her representative). Finally, 

we have also received anecdotal reports 

that some hospices are not getting the 

signature of the attending physician on 

the initial certification. If a beneficiary 

has designated an attending physician, 

that physician must sign the initial 

certification for Medicare to cover and 

pay for hospice services, unless the 

attending is a NP. 

To ensure the attending physician of 

record is properly documented in the 

patient’s medical record, we proposed 

to amend the regulations at 

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

statement to include the patient’s choice 

of attending physician. The proposed 

information identifying the attending 

physician should be recorded on the 

election statement in enough detail so 

that it is clear which physician or NP 

was designated as the attending 

physician. Hospices have the flexibility 

to include this information on their 

election statement in whatever format 

works best for them, provided the 

content requirements in § 418.24(b) are 

met. The language on the election form 

should include an acknowledgement by 

the patient (or representative) that the 

designated attending physician was the 

patient’s (or representative’s) choice. 

In addition, we further proposed that 

if a patient (or representative) wants to 

change his or her designated attending 

physician, he or she must follow a 

procedure similar to that which 

currently exists for changing the 

designated hospice. Specifically, the 

patient (or representative) must file a 

signed statement with the hospice that 

identifies the new attending physician 

in enough detail so that it is clear which 

physician or NP was designated as the 

new attending physician. Additionally, 

we proposed that the statement include 

the date the change is to be effective, the 

date that the statement is signed, and 

the patient’s (or representative’s) 

signature, along with an 

acknowledgement that this change in 

the attending physician is the patient’s 

(or representative’s) choice. The 

effective date of the change in attending 

physician cannot be earlier than the 

date the statement is signed. We believe 

that such a change would help ensure 

that any changes in the identity of the 

attending physician would be the result 

of the patient’s free choice. 

Public comments and our response to 

comments regarding the changes 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 protecting 

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 this 

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 determined. One commenter 

suggested that we require the election 

form to state that the beneficiary (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 

attending physician, as the attending 

could be a physician (MD or DO) or an 

advanced practice nurse. Two 

commenters 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 

commenters encouraged Medicare 

contractor and/or hospice survey 

oversight rather than a regulation 

change. 

Response: We appreciate the 

comments supporting our proposal and 

the protection of beneficiary choice, and 

are implementing the requirement to 

identify the attending physician on the 

election form as proposed. Regarding 

comments 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 identify the 

attending physician ‘‘at the time of 

election’’. Therefore, this timeframe for 

identifying the attending physician 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 hospice 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 reasonable to expect that 

the hospice beneficiary will not have 

difficulty identifying that physician 

who has the most significant role in the 

determination and delivery of medical 

care to them. And, for those individuals 

who do not have any established and/ 

or longstanding relationships with 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 attending 

physician. We do not prohibit a patient 

(or representative) from choosing a 

hospitalist as the attending 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 terminally ill. That 

certification process occurs before 

election, and involves the patient’s 

attending physician (if any). We did not 

receive any comments raising concerns 

about identifying the attending 

physician at the time of election when 

the definition of ‘‘attending physician’’ 

was first proposed in 1983 (48 FR 

56009). The definition of ‘‘attending 

physician’’ was changed in section 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). There 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 Hospice Conditions of 

Participation final rule (73 FR 32089 

through 32090) also discussed the 

definition of ‘‘attending physician’’, and 

again, there were no comments that 

raised concerns regarding this 

timeframe. Since identifying an 

attending physician at time of hospice 

election has been a requirement in place 

for over 30 years, and has not appeared 

to cause any delay in admission, we do 


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not believe that including the 

information that identifies the attending 

physician on the election 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 election 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 physician was the 

patient’s (or representative’s) choice. We 

believe that this language remains 

sufficient, and do not agree 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 representative) 

regardless of that attending physician’s 

employment relationship (or lack 

thereof) with the hospice. We do not 

prohibit attending physicians from 

being hospice employees as long as it is 

the patient’s choice to decide whether 

or not to have an attending physician 

and who 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 ‘‘attending clinician’’ to 

describe this position. As articulated in 

this section, the statutory definition of 

the ‘‘attending physician’’ at section 

1861(dd)(3)(B) of the Act means either 

a physician or a nurse practitioner, and 

does not permit broadening the term to 

include other health care 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 election 

statement, but instead allow Medicare 

contractors and survey enforcement to 

deal with any failure to comply with the 

regulations, we expect this policy to 

improve Medicare contractor 

enforcement and oversight activities as 

well as State survey activities. The 

hospice CoPs at § 418.52 include 

regulations related to the choice of 

attending physician and are enforced by 

State surveys. 

Comment: While some commenters 

supported having 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 

during a period of crisis. A number of 

commenters asked that we clarify what 

constitutes a change 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, 

particularly as the patient’s care 

becomes more complex and the hospice 

physician’s role increases. 

Some commenters asked that we 

allow verbal changes, or changes from 

representatives 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 

those services because that NP is not the 

designated attending physician. One 

commenter was concerned that our 

proposal implied that changing the 

attending physician is not appropriate. 

Response: We recognize that there are 

many legitimate reasons for a patient to 

change an attending physician. 

However, the choice of the new 

attending physician belongs solely to 

the patient (or representative), and the 

intent of this proposal is to further 

safeguard and protect that beneficiary 

choice. A patient cannot 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 should be informed that 

he or she can choose a physician or a 

nurse practitioner as the attending 

physician, and that this individual 

could be from the community or from 

the hospice. Because the attending 

physician is typically someone with 

whom the patient had a relationship 

before electing to receive hospice care, 

the role of the attending physician is to 

provide a long term perspective on the 

patient and family that takes into 

account their medical and personal 

history. Ideally, this conversation with 

the patient (or representative) would 

occur when the patient is stable, and the 

patient (or representative) is able to 

make a decision without the stress 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 she 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 change 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 setting. If the 

attending physician does not have 

privileges at the hospital(s) the hospice 

contracts with for inpatient care, or does 

not wish to care for the patient in an 

inpatient setting, then according to our 

CoPs at § 418.64(a)(3), the hospice 

physician or NP must provide any 

needed physician’s services. The patient 

does not need to designate the hospice 

physician 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 needed physician 

services to its patients, it can only do so 

for its NPs if the NP is the designated 

attending physician. This limitation on 

hospice NP billing is in the hospice 

regulations at § 418.304(e) and is based 

on the statutory language surrounding 

physician billing. The statutory 

definition of ‘‘physician services’’ at 

section 1861(q) of the Act requires that 

the individual performing the services 

be a physician. ‘‘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 services at section 1812(d)(2)(A) of 

the Act, and defines attending 

physicians to include NPs at section 

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 patient 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 attending 

physician to be their hospice attending 

physician. The clinician who meets the 

hospice definition of ‘‘attending 

physician’’ should provide needed care 

to the hospice patient in the hospital. If 

that hospice attending physician is 

unavailable, then the hospice physician 

or NP would need to do so. The hospice 

should coordinate the patient’s care 

during the inpatient stay by 

communicating with the hospitalist. If 

the hospice attending physician is 


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involved in the patient’s care during an 

inpatient stay, that hospice attending 

physician will need to coordinate with 

any 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 

implementing the proposal without 

changes. When an attending physician 

is changed by the beneficiary (or 

representative), the required 

information documenting that change 

can be securely faxed or emailed to the 

hospice. 

We reiterate that if the attending 

physician cannot provide needed 

physician services, then the hospice 

physician or NP is required 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 different 

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 

stated, that given the hospices’ role as 

the beneficiaries’ care coordinators, 

hospices should have a role in 

addressing the issue of patients seeing 

multiple community physicians and 

others suggested notifying the patients’ 

community physicians of the hospice 

election. However, one commenter 

expressed concern over whether this 

approach would complicate referral 

relationships with community 

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 

beneficiary receives all needed items 

and services for the palliation and 

management of the terminal illness and 

related conditions from the hospice or 

the attending 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 attending 

physician. The hospice may need to 

remind beneficiaries of the waiver of 

Medicare payment for services related to 

the terminal illness and related 

conditions provided by non-hospice 

providers (other than the attending 

physician), which is part of their 

election, and of their liability for those 

related services. Hospice beneficiaries 

also retain their right to use non-hospice 

providers for items or services unrelated 

to the terminal illness and related 

conditions, and Medicare will pay for 

those covered items or services. 

The hospice CoPs at § 418.56(e) 

require that hospices ‘‘ensure that the 

interdisciplinary group maintains 

responsibility for directing, 

coordinating, and supervising 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 and related conditions.’’ 

Therefore, the care coordination role of 

hospices is one that is to be 

collaborative with all providers of a 

beneficiary’s care, including nonhospice providers. The expectation is 

that hospices would have established 

collaborative care coordination and 

communication relationships with other 

providers to ensure the best interests of 

its patients. 

We also agree that more education is 

needed around this issue to hospices 

and to physicians, and will be issuing 

a MedLearn Matters 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 benefit that Medicare makes 

available to beneficiaries to increase 

awareness of the choices available to 

them related to the attending physician. 

Comment: A commenter asked if a 

new election should be completed for 

each change in attending, or if the NOE 

should be updated in the claims 

processing system. One commenter was 

supportive that we are not limiting the 

number of times a change in attending 

physician occurs, but others noted that 

more than one attending could be in 

place during a billing period. Another 

commenter asked if CMS expected the 

same attending to sign off on all services 

provided for the date range of the claim, 

asked for clarification whether the 

attending physician shown on claims 

should be based on the statutory 

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) would 

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 attending 

physician. For example, ‘‘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 

include the date the change is to be 

effective, the date that the statement is 

signed, and the patient’s (or 

representative’s) signature, along with 

an acknowledgement that this change in 

the attending physician is the patient’s 

(or representative’s) choice. The 

effective date of the change in attending 

physician cannot be earlier than the 

date the statement is signed. The patient 

(or representative) does not need to 

complete a new election form. At this 

time, the hospice does not need to 

update the claims processing system 

with changes in the attending physician. 

When a change in attending physician 

occurs, Medicare could be billed for 

services provided by more than one 

attending physician during any given 

month. Hospices should follow the 

statutory definition of ‘‘attending 

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 manual (IOM 100–04, 

chapter 11, sections 40.1.2 and 40.1.3), 

and takes precedence in an audit. 

Comment: A commenter was 

concerned by anecdotal reports 

indicating that when services are being 

provided in a skilled nursing facility or 

other long term care facility, the 

hospices bypass the nursing facility 

medical directors or attending 

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 hospices 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 


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patient’s care and services in all 

settings. When a hospice patient resides 

in a nursing facility, the CoPs at 418.112 

require that the hospice assume 

responsibility for professional 

management of the resident’s hospice 

services provided, in accordance with 

the hospice plan of care. There must be 

a written agreement in place between 

the hospice and the facility which 

addresses care coordination with the 

facility staff. The CoPs at § 418.112(e) 

requires the hospice IDG to designate 

one of its members to coordinate 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. Additionally, the 

designated IDG member must ensure 

that the hospice IDG communicates 

with the SNF/NF or ICF/MR medical 

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 

and communication systems with SNFs, 

NFs, and ICFs/MR when hospices are 

furnishing hospice care to residents of 

those facilities promotes clear 

communication between the hospice 

and the SNF/NF or ICF/MR and will 

help hospices ensure that they are 

meeting their responsibility to furnish 

the care necessary to meet the needs of 

its patients. We believe that this 

coordinated process actively involves 

and engages all members of the patient’s 

care team, both within the hospice and 

the facility, in care planning, and 

delivery. 

Comment: A commenter suggested 

that the attending 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 related to Part D coordination 

with pharmacies. We will consider this 

comment in the overall development of 

a coordination process which we 

solicited comments on in Section III.I 

and will address this comment in future 

rulemaking. 

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 hospice 

wage index utilizes the wage adjustment 

factors used by the Secretary for 

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

Act for hospital wage adjustments, and 

our regulations at § 418.306(c) require 

each labor market to be established 

using the most current hospital wage 

data available, including any changes by 

the Office of Management and Budget 

(OMB) to the Metropolitan Statistical 

Areas (MSAs) definitions. We have 

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

deriving the hospice wage index. In our 

August 4, 2005 FY 2006 Hospice Wage 

Index final rule (70 FR 45130), we began 

adopting the revised labor market area 

definitions as discussed in the OMB 

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

bulletin announced revised definitions 

for MSAs and the creation of Core-Based 

Statistical Areas (CBSAs). The bulletin 

is available online at http://

www.whitehouse.gov/omb/bulletins/

b03–04.html. 

In the FY 2006 Hospice Wage Index 

final rule, we implemented a 1-year 

transition policy using a 50/50 blend of 

the CBSA-based wage index values and 

the MSA-based wage index values for 

FY 2006. The one-year transition policy 

ended on September 30, 2006. For FY 

2007 and beyond, we have used CBSAs 

exclusively to calculate wage index 

values. OMB has published subsequent 

bulletins regarding CBSA changes. The 

most recent CBSA changes used for the 

FY 2015 hospice wage index are found 

in OMB Bulletin 10–02, available at: 

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

default/files/omb/assets/bulletins/b10– 

02.pdf. 

When adopting OMB’s new labor 

market designations in FY 2006, we 

identified some geographic areas where 

there were no hospitals, and thus, no 

hospital wage index data on which to 

base the calculation of the hospice wage 

index. We also adopted the policy that 

for urban labor markets without a 

hospital from which hospital wage 

index data could be derived, all of the 

CBSAs within the state would be used 

to calculate a statewide urban average 

pre-floor, pre-reclassified hospital wage 

index value to use as a reasonable proxy 

for these areas in our August 6, 2009 FY 

2010 Hospice Wage Index final rule (74 

FR 39386). In FY 2015, the only CBSA 

without a hospital from which hospital 

wage data could be derived is 25980, 

Hinesville-Fort Stewart, Georgia. 

In our August 31, 2007 FY 2008 

Hospice Wage Index final rule (72 FR 

50214), we implemented a new 

methodology to update the hospice 

wage index for rural areas without a 

hospital, and thus no hospital wage 

data. In cases where there was a rural 

area without rural hospital wage data, 

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

from all contiguous CBSAs to represent 

a reasonable proxy for the rural area. In 

our August 31, 2007 FY 2008 Hospice 

Wage Index final rule, we noted that we 

interpret the term ‘‘contiguous’’ to mean 

sharing a border (72 FR 50217). 

Currently, the only rural area without a 

hospital from which hospital wage data 

could be derived is Puerto Rico. 

However, our policy of imputing a rural 

pre-floor, pre-reclassified hospital wage 

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

indices) of CBSAs contiguous to a rural 

area without a hospital from which 

hospital wage data could be derived 

does not recognize the unique 

circumstances of Puerto Rico. While we 

have not identified an alternative 

methodology for imputing a pre-floor, 

pre-reclassified hospital wage index for 

rural Puerto Rico, we will continue to 

evaluate the feasibility of using existing 

hospital wage data and, possibly, wage 

data from other sources. For FY 2008 

through FY 2013, we have used the 

most recent pre-floor, pre-reclassified 

hospital wage index available for Puerto 

Rico, which is 0.4047. In this final rule, 

for FY 2015, we continue to use the 

most recent pre-floor, pre-reclassified 

hospital wage index value available for 

Puerto Rico, which is 0.4047. 

For FY 2015, we used the 2014 prefloor, pre-reclassified hospital wage 

index to derive the applicable wage 

index values for the FY 2015 hospice 

wage index. We continue to use the prefloor, pre-reclassified hospital wage data 

as a basis to determine the hospice wage 

index values because hospitals and 

hospices both compete in the same labor 

markets, and therefore, experience 

similar wage-related costs. We believe 

the use of the pre-floor, pre-reclassified 

hospital wage index data, as a basis for 

the hospice wage index, results in the 

appropriate adjustment to the labor 

portion of the costs. The FY 2015 

hospice wage index values presented in 

this final rule were computed consistent 

with our pre-floor, pre-reclassified 

hospital (IPPS) wage index policy (that 

is, our historical policy of not taking 

into account IPPS geographic 

reclassifications in determining 


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payments for hospice). The FY 2015 

pre-floor, pre-reclassified hospital wage 

index does not reflect OMB’s new area 

delineations, based on the 2010 Census, 

as outlined in OMB Bulletin 13–01, 

released on February 28, 2013. 

Moreover, the 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 wage index based 

on the newest CBSA changes in the FY 

2015 IPPS proposed rule. Therefore, if 

CMS incorporates OMB’s new area 

delineations, based on the 2010 Census, 

in the FY 2015 hospital wage index, 

those changes would also be reflected in 

the FY 2016 hospice wage index. 

We received 3 comments regarding 

the wage index proposals. 

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 

hospital 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 

whether 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 ‘‘WashingtonArlington-Alexandria, DC–VA–MD– 

WV’’. Montgomery County, along with 

Frederick County, Maryland, is in CBSA 

13644 ‘‘Bethesda-Rockville-Frederick, 

MD’’. The commenter states that the 

cost of living in Montgomery 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 Bulletin 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 geographic area 

delineations established by OMB. 

Comment: One commenter requests 

that the new OMB 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. 

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, prereclassified 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 delineations. 

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 expect to 

propose to adopt those changes to the 

hospice wage index in future 

rulemaking. 

Final action: We are implementing 

the hospice wage index as discussed in 

the proposed rule. 

2. FY 2015 Hospice Wage Index With an 

Additional 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, prereclassified hospital wage index. As 

described in the August 8, 1997 Hospice 

Wage Index final rule (62 FR 42860), the 

pre-floor and pre-reclassified hospital 

wage index is used as the raw wage 

index for the hospice benefit. These raw 

wage index values are then subject to 

either a budget neutrality adjustment or 

application of the hospice floor to 

compute the hospice wage index used to 

determine payments to hospices. Prefloor, pre-reclassified hospital wage 

index values below 0.8 are adjusted by 

either: (1) the hospice budget neutrality 

adjustment factor (BNAF); or (2) the 

hospice floor subject to a maximum 

wage index value of 0.8; whichever 

results in the greater value. 

The BNAF is calculated by computing 

estimated payments using the most 

recent, completed year of hospice 

claims data. The units (days or hours) 

from those claims are multiplied by the 

updated hospice payment rates to 

calculate estimated payments. For the 

FY 2015 Hospice Wage Index final rule, 

that means estimating payments for FY 

2015 using units (days or hours) from 

FY 2013 hospice claims data, and 

applying the final FY 2015 hospice 

payment rates. The FY 2015 hospice 

wage index values are then applied to 

the labor portion of the payments. The 

procedure is repeated using the same 

units from the claims data and the same 

payment rates, but using the 1983 

Bureau of Labor Statistics (BLS)-based 

wage index instead of the updated raw 

pre-floor, pre-reclassified hospital wage 

index (note that both wage indices 

include their respective floor 

adjustments). The total payments are 

then compared, and the adjustment 

required to make total payments equal 

is computed; that adjustment factor is 

the BNAF. 

The August 6, 2009 FY 2010 Hospice 

Wage Index final rule finalized a 

provision to phase out the BNAF over 

7 years, with a 10 percent reduction in 

the BNAF in FY 2010, and an additional 

15 percent reduction in each of the next 

6 years, with complete phase out in FY 

2016 (74 FR 39384). Once the BNAF is 

completely phased out, the hospice 

floor adjustment would simply consist 

of increasing any wage index value less 

than 0.8 by 15 percent, subject to a 

maximum wage index value of 0.8. 

Therefore, in accordance with the FY 

2010 Hospice Wage final rule, the BNAF 

for FY 2015 will be reduced by an 

additional 15 percent for a total BNAF 

reduction of 85 percent (10 percent from 

FY 2010, an additional 15 percent from 

FY 2011, an additional 15 percent for 

FY 2012, an additional 15 percent for 

FY 2013, an additional 15 percent in FY 

2014, and an additional 15 percent in 

FY 2015). 

The unreduced BNAF for FY 2015 is 

0.062084 (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 multiplying 0.062084 by 0.15, which 

equals 0.009313 (0.9313 percent). 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, prereclassified hospital wage index values 

of 0.8 or greater. The 10 percent reduced 

BNAF for FY 2010 was 0.055598, based 

on a full BNAF of 0.061775; the 

additional 15 percent reduced BNAF FY 

2011 (for a cumulative reduction of 25 

percent) was 0.045422, based on a full 

BNAF of 0.060562; the additional 15 

percent reduced BNAF for FY 2012 (for 

a cumulative reduction of 40 percent) 

was 0.035156, based on a full BNAF of 

0.058593; the additional 15 percent 

reduced BNAF for FY 2013 (for a 

cumulative reduction of 55 percent) was 

0.027197, based on a full BNAF of 

0.060438; the additional 15 percent 

reduced BNAF for FY 2014 (for a 

cumulative reduction of 70 percent) was 

0.018461, based on a full BNAF of 

0.061538 and the additional 15 percent 

reduced BNAF for FY 2015 (for a 

cumulative reduction of 85 percent) is 


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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, prereclassified hospital wage index (raw 

wage index) value of 0.3994, we would 

perform the following calculations using 

the budget-neutrality factor (which for 

this example is an unreduced BNAF of 

0.062084, less 85 percent, or 0.009313) 

and the hospice floor to determine 

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

index value below 0.8 multiplied by 1+ 

85 percent reduced BNAF: (0.3994 × 

1.009313 = 0.4031); Pre-floor, prereclassified hospital wage index value 

below 0.8 multiplied by 1 + hospice 

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

these calculations, County A’s hospice 

wage index would be 0.4593. 

An Addendum A and Addendum B 

with the final FY 2015 wage index 

values for rural and urban areas will not 

be published in the Federal Register. 

The final FY 2015 wage index values for 

rural areas and urban areas are available 

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

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

hospice wage index for FY 2015 set 

forth in this 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 updates to hospice rates for 

FYs 1998 through 2002. Hospice rates 

were to be updated by a factor equal to 

the market basket index, minus 1 

percentage point. Payment rates for FYs 

since 2002 have been updated according 

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

Act, which states that the update to the 

payment rates for subsequent FYs must 

be the market basket percentage for that 

FY. The Act requires us to use the 

inpatient hospital market basket to 

determine the hospice payment rate 

update. In addition, section 3401(g) of 

the Affordable Care Act mandates that, 

starting with FY 2013 (and in 

subsequent FYs), the hospice payment 

update percentage will be annually 

reduced by changes in economy-wide 

productivity as specified in section 

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

addition, section 3401(g) of the 

Affordable Care Act also mandates that 

in FY 2013 through FY 2019, the 

hospice payment update percentage will 

be reduced by an additional 0.3 

percentage point (although for FY 2014 

to FY 2019, the potential 0.3 percentage 

point reduction is subject to suspension 

under conditions specified in section 

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

hospice payment update percentage for 

FY 2015 will be the inpatient hospital 

market basket update of 2.9 percent 

(based on IHS Global Insight, Inc.’s 

second quarter 2014 forecast with 

historical data through the first quarter 

of 2014), less any mandated 

adjustments. Due to the requirements at 

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

of the Act, the inpatient hospital market 

basket update 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 further by a 0.3 

percentage point, as mandated by the 

Affordable Care Act. In effect, the final 

hospice payment update percentage for 

FY 2015 is 2.1 percent. We used the 

most recent data available (for example, 

the most recent inpatient hospital 

market basket and productivity 

adjustment), to determine the FY 2015 

market basket update and the multifactor productivity MFP adjustment in 

this FY 2015 Hospice PPS final rule. 

Currently, the labor portion of the 

hospice payment rates is as follows: for 

Routine Home Care, 68.71 percent; for 

Continuous Home Care, 68.71 percent; 

for General Inpatient Care, 64.01 

percent; and for Respite Care, 54.13 

percent. The non-labor portion is equal 

to 100 percent minus the labor portion 

for each level of care. Therefore, the 

non-labor portion of the payment rates 

is as follows: for Routine Home Care, 

31.29 percent; for Continuous Home 

Care, 31.29 percent; for General 

Inpatient Care, 35.99 percent; and for 

Respite Care, 45.87 percent. 

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 sequestration. 

Commenters claim 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 the 

proposed new cost report requiring new 

financial reporting systems and 

additional staff. 

Response: The comments on 

sequestration 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 data to the 

hospital market basket update and 

multi-factor productivity (MFP) 

adjustment. 

4. FY 2015 Hospice Payment Rates 

Historically, the hospice rate update 

has been published through a separate 

administrative instruction issued 

annually in the summer to provide 

adequate time to implement system 

change requirements; however, 

beginning in FY 2014 and for 

subsequent fiscal years, we are using 

rulemaking as the means to update 

payment rates. This change was 

proposed in the FY 2014 Hospice Wage 

Index and Payment Rate Update 

proposed rule and finalized in the FY 

2014 Hospice Wage Index and Payment 

Rate Update final rule (78 FR 48270). It 

is consistent with the rate update 

process in other Medicare benefits, and 

provides rate information to hospices as 

quickly as, or earlier than, when rates 

are published in an administrative 

instruction. 

There are four payment categories that 

are distinguished by the location and 

intensity of the services provided. The 

base payments are adjusted for 

geographic differences in wages by 

multiplying the labor share, which 

varies by category, of each base rate by 

the applicable hospice wage index. A 

hospice is paid the routine home care 

rate for each day the beneficiary is 

enrolled in hospice, unless the hospice 

provides continuous home care, 

inpatient respite care, or general 

inpatient care. Continuous home care is 

provided during a period of patient 

crisis to maintain the patient at home; 

inpatient respite care is short-term care 

to allow the usual caregiver to rest; and 

general inpatient care is to treat 

symptoms that cannot be managed in 

another setting. 

The final FY 2015 payment rates will 

be the FY 2014 payment rates, increased 

by 2.1 percent, which is the final 

hospice payment update percentage for 

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

The final FY 2015 hospice payment 

rates will be effective for care and 

services furnished on or after October 1, 

2014, through September 30, 2015 (see 

Table 6 below). 


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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 ×1.021 $159.34 

652 .................... Continuous Home Care .................................................................... 910.78 ×1.021 

Full Rate applies to 24 hours of care ............................................... 929.91 

Hourly rate = $38.75 .........................................................................

655 .................... Inpatient Respite Care ...................................................................... 161.42 ×1.021 164.81 

656 .................... General Inpatient Care ..................................................................... 694.19 ×1.021 708.77 

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 begin collecting quality data 

in October 2012, and submit that quality 

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

the Act requires that beginning with FY 

2014 and each subsequent FY, the 

Secretary shall reduce the market basket 

update by 2 percentage points for any 

hospice that does not comply with the 

quality data submission requirements 

with respect to that FY.). We remind 

hospices that this applies to payments 

in FY 2015 (See Table 7 below). For 

more information on the HQRP 

requirements please see section III.H in 

this final rule. 

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

HOSPICES THAT DO NOT SUBMIT THE REQUIRED QUALITY DATA

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 ×1.001 $156.22 

652 .................... Continuous Home Care.

Full Rate applies to 24 hours of care ............................................... 910.78 ×1.001 911.69 

Hourly rate = $37.99.

655 .................... Inpatient Respite Care ...................................................................... 161.42 ×1.001 161.58 

656 .................... General Inpatient Care ..................................................................... 694.19 ×1.001 694.88 

To assist the hospice industry in 

planning and budgeting, CMS is 

informing the hospice industry of the 

aggregate cap amount for the 2014 cap 

year in advance of the formal CMS 

administrative notice, which will be 

issued this summer. Additionally, we 

have included information about how 

we calculate the aggregate cap amount 

so that hospices can compute the 

amount themselves in the future if they 

so desire. This information is also in 

CMS’ Internet-Only Manual 100–2, 

chapter 9, section 90.2.6. The manual 

can be accessed from the ‘‘Manuals and 

Transmittals’’ section of CMS’ hospice 

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

Provider-Type/Hospice-Center.html. 

The hospice aggregate cap amount for 

the 2014 cap year will be $26,725.79. 

The cap amount is calculated according 

to § 1814(i)(2)(B) of the 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 of the 

current accounting year (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) Web site at: http://

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

(Step 1) From the BLS Web site given 

above, the March 2014 CPI–U for 

Medical Care expenditures is 

433.369 and the 1984 CPI–U for 

Medical Care expenditures was 

105.4. 

(Step 2) Divide the March 2014 CPI–U 

for Medical Care expenditures by 

the 1984 CPI–U for medical care 

expenditures to compute the 

change. 

433.369/105.4 = 4.111660 

(Step 3) Multiply the original cap base 

amount ($6,500) by the result from 

step 2) to get the updated aggregate 

cap amount for the 2014 cap year. 

$6,500 × 4.111660= $26,725.79 

H. Updates to the Hospice Quality 

Reporting Program 

1. Background and Statutory Authority 

Section 3004 of the Affordable Care 

Act amended the Act to authorize a 

quality reporting program for hospices. 

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

requires that beginning with FY 2014 

and each subsequent FY, the Secretary 

shall reduce the market basket update 

by 2 percentage points for any hospice 

that does not comply with the quality 

data submission requirements with 

respect to that FY. Depending on the 

amount of the annual update for a 

particular year, a reduction of 2 

percentage points could result in the 

annual market basket update being less 

than 0.0 percent for a FY and may result 

in payment rates that are less than 

payment rates for the preceding FY. Any 

reduction based on failure to comply 

with the reporting requirements, as 

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


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Act, would apply only for the particular 

FY involved. Any such reduction would 

not be cumulative or be taken into 

account in computing the payment 

amount for subsequent FYs. 

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

requires that each hospice submit data 

to the Secretary on quality measures 

specified by the Secretary. The data 

must be submitted in a form, manner, 

and at a time specified by the Secretary. 

Any measures selected by the Secretary 

must have been endorsed by the 

consensus-based entity which holds a 

contract regarding performance 

measurement with the Secretary under 

section 1890(a) of the Act. This contract 

is currently held by the National Quality 

Forum (NQF). However, section 

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

in the case of a specified area or medical 

topic determined appropriate by the 

Secretary for which a feasible and 

practical measure has not been endorsed 

by the consensus-based entity, the 

Secretary may specify measures that are 

not so endorsed as long as due 

consideration is given to measures that 

have been endorsed or adopted by a 

consensus-based organization identified 

by the Secretary. 

The successful development of a 

Hospice Quality Reporting Program 

(HQRP) that promotes the delivery of 

high quality healthcare services is our 

paramount concern. We seek to adopt 

measures for the HQRP that promote 

more efficient and safer care. Our 

measure selection activities for the 

HQRP take into consideration input we 

receive from the Measure Applications 

Partnership (MAP), convened by the 

National Quality Forum (NQF), as part 

of a pre-rulemaking process that we 

have established and are required to 

follow under section 1890A of the Act. 

The MAP is a public-private partnership 

comprised of multi-stakeholder groups 

convened by the NQF for the primary 

purpose of providing input to CMS on 

the selection of certain categories of 

quality and efficiency measures, as 

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

Act. By February 1st of each year, the 

NQF must provide that input to CMS. 

Input from the MAP is located at: 

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

Priorities/Partnership/Measure_

Applications_Partnership.aspx). For 

more details about the pre-rulemaking 

process, see the FY 2013 IPPS/LTCH 

PPS final rule (77 FR 53376). 

We also take into account national 

priorities, such as those established by 

the National Priorities Partnership at 

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

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

secretary/about/priorities/

priorities.html), the National Strategy 

for Quality Improvement in Healthcare 

located at 

(http://www.ahrq.gov/

workingforquality/nqs/

nqs2013annlrpt.htm) and the CMS 

Quality Strategy at http://www.cms.gov/ 

Medicare/Quality-Initiatives-PatientAssessment-Instruments/

QualityInitiativesGenInfo/CMS-QualityStrategy.html. 

To the extent practicable, we have 

sought to adopt measures that have been 

endorsed by the national consensus 

organization, recommended by multistakeholder organizations, and 

developed with the input of providers, 

purchasers/payers, and other 

stakeholders. 

2. Measures for Hospice Quality 

Reporting Program and Data Submission 

Requirements for Payment Years FY 

2014 and FY 2015. 

As stated in the FY 2012 Hospice 

Wage Index final rule (76 FR 47302, 

47320), to meet the quality reporting 

requirements for hospices for the FY 

2014 payment determination and in the 

CY 2013 Home Health Prospective 

Payment System (HH PPS) final rule (77 

FR 67068, 67133), the quality reporting 

requirements for hospices for the FY 

2015 payment determination, as set 

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

finalized the requirement that hospices 

report two measures: 

• An NQF-endorsed measure related 

to pain management, NQF #0209. The 

data for this measure are collected at the 

patient level, but are reported in the 

aggregate for all patients cared for 

within the reporting period, regardless 

of payer. 

• A structural measure that is not 

endorsed by NQF: Participation in a 

Quality Assessment and Performance 

Improvement (QAPI) program that 

includes at least three quality indicators 

related to patient care. 

3. Quality Measures for Hospice Quality 

Reporting Program and Data Submission 

Requirements for Payment Year FY 2016 

and Beyond 

In the FY 2014 Hospice Wage Index 

and Payment Rate Update final rule (78 

FR 48234, 48256), we finalized that the 

structural measure related to QAPI 

indicators and the NQF #0209 pain 

measure would not be required for the 

HQRP beyond data submission for the 

FY 2015 payment determination. The 

data submission period for the FY2015 

payment determination closed on April 

1, 2014. 

As stated in the CY 2013 HH PPS final 

rule (77 FR 67068, 67133), we 

considered an expansion of the required 

measures to include additional 

measures endorsed by NQF. We also 

stated that to support the standardized 

collection and calculation of quality 

measures by CMS, collection of the 

needed data elements would require a 

standardized data collection instrument. 

We developed and tested a hospice 

patient-level item set, the Hospice Item 

Set (HIS) to be used by all hospices to 

collect and submit standardized data 

items about each patient admitted to 

hospice. 

In developing the standardized HIS, 

we considered comments offered in 

response to the CY 2013 HH PPS 

proposed rule (77 FR 41548, 41573). In 

the FY 2014 Hospice Wage Index final 

rule (78 FR 48257), and in compliance 

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

finalized the specific collection of data 

items that support the following six 

NQF endorsed measures and one 

modified measure for hospice: 

• NQF #1617 Patients Treated with 

an Opioid who are Given a Bowel 

Regimen 

• NQF #1634 Pain Screening 

• NQF #1637 Pain Assessment 

• NQF #1638 Dyspnea Treatment 

• NQF #1639 Dyspnea Screening 

• NQF #1641 Treatment Preferences 

• NQF #1647 Beliefs/Values 

Addressed (if desired by the patient) 

(modified) 

To achieve a comprehensive set of 

hospice quality measures available for 

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 standardized methods to 

collect data needed to calculate quality 

measures, we finalized 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 regular and 

ongoing electronic submission of the 

HIS data for each patient admission to 

hospice on or after July 1, 2014, 

regardless of payer or patient age (78 FR 

48234, 48258). Collecting data on all 

patients will provide CMS with the 

most robust, accurate reflection of the 

quality of care delivered to Medicare 

beneficiaries as compared with nonMedicare patients. Therefore, to 

measure the quality of care that is 

delivered to Medicare beneficiaries in 

the hospice setting, we will collect 

quality data necessary to calculate the 

adopted measures on all patients. We 

are requiring in our regulation that 

hospices collect data on all patients in 

hospice in order to ensure that all 

patients, regardless of payer, are 

receiving the same care and that 

provider metrics measure performance 


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across the spectrum of patients (78 FR 

48258). 

Hospices are required to complete and 

submit an admission HIS and a 

discharge HIS for each patient 

admission. Hospices failing to report 

quality data via the HIS in 2014 will 

have their market basket update reduced 

by 2 percentage points in FY 2016. 

Although this has been implemented 

thus far pursuant to instructions set out 

in our preamble statements, we 

proposed to codify the HIS submission 

requirements at § 418.312 in this final 

rule. The System of Record (SOR) 

Notice for the HIS, SOR number 09–07– 

0548, was published in the Federal 

Register on April 8, 2014 (79 FR 19341). 

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 their concern; however, we did not 

make any proposals regarding timely 

data submission. We also recognize that 

new hospices that receive their CCN 

after the yearly submission deadline are 

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 for 

any given record, for whatever reason, it 

should still complete and submit that 

record. Late completion and submission 

of HIS records will result in a non-fatal 

warning error in the Quality 

Improvement and Evaluation System. 

However, the records can still be 

accepted by the system. 

Comment: Several commenters 

asserted that the Quality Reporting 

Program should be restricted to 

Medicare patients and stated that 

requiring data reporting on patients 

covered by other payers is outside 

CMS’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 required 

all facilities subject to quality reporting 

requirements to submit data on its entire 

patient population, including hospitals 

and inpatient rehabilitation facilities. 

The delivery of high quality care in 

hospice is imperative, regardless of 

payer. We believe that collecting quality 

data on all patients in the hospice 

setting supports CMS’ mission to ensure 

quality care for Medicare beneficiaries 

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 their concern; however, the cost of 

quality improvement programs should 

be reported on the cost reports. Cost 

report data may be considered in future 

payment reform. 

Comment: One commenter reported 

that more time 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 depends on the quality of the 

data collected. 

Response: We thank the commenters 

for taking 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 the 

process may make the process feel more 

burdensome. We appreciate the 

commenters’ diligence ensuring quality 

and 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 taking the time to express these 

views and suggestions. CMS attempts to 

reduce the regulatory burden of our 

quality reporting programs to 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/QualityInitiatives-Patient-AssessmentInstruments/Hospice-Quality-Reporting/

Downloads/HIS_Admission_Final_4-8- 

2014.pdf). Specifically, CMS estimates 

19 minutes per response for the 

Admission HIS and 10 minutes per 

response for the Discharge HIS. Details 

regarding the estimate can be found at: 

http://www.cms.gov/Regulations-andGuidance/Legislation/Paperwork

ReductionActof1995/PRA-Listing-Items/

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, Attn: 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 purposes of the quality reporting 

program based on whether or not they 

submit data, not on their substantive 

performance level with respect to the 

required measures. We have provided 

hospices with information and details 

about use of the HIS through postings 

on the Hospice Quality Reporting 

Program Web page, Open Door Forums, 

announcements in the CMS MLN 

Connects Provider e-News (E-News), 

and provider training. Electronic data 

submission is required for HIS 

submission in CY 2014 and beyond; 

there are no other data submission 

methods available. CMS will make 

available submission software for the 

HIS to hospices at no cost. We intend to 

report to providers on the seven 

finalized measures on a schedule to be 

determined. 

We provided details on data 

collection and submission timing at 

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

Hospice-Item-Set-HIS.html. 

Submission of the HIS on all patient 

admissions to hospice, regardless of 

payer or patient age, is required. The 

data submission system provides reports 

upon successful submission and 

successful processing of the HIS 

records. The final validation report may 

serve as evidence of submission. This is 

the same data submission system used 

by nursing homes, inpatient 

rehabilitation facilities and long-term 

care hospitals for the submission of 

Minimum Data Set Version 3.0 (MDS 

3.0), Inpatient Rehabilitation Facility— 

Patient Assessment Instrument (IRF– 

PAI), and Long-Term Care Hospital 

Continuity Assessment Record & 

Evaluation Data Set (LTCH CARE), 

respectively. 

We also proposed that newly certified 

hospices that receive notice of their 

CMS certification number on or after 

November 1, 2014 for payments to be 

made in FY 2016 be excluded from the 

quality reporting requirements for the 

FY 2016 payment determination, as data 

submission and analysis would not be 

possible for a hospice receiving 

notification of their certification this 

late in the reporting time period. 

We proposed that in future years, 

hospices that receive notification of 

certification on or after November 1 of 

the preceding year involved would 

continue to be excluded from any 

payment penalty for quality reporting 

purposes for the following FY. We 

proposed to codify this requirement at 

§ 418.312. 

Comment: Several commenters 

support the proposal that hospices that 


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receive notification of certification on or 

after November 1 of the preceding year 

involved would continue to be excluded 

from any payment penalty for quality 

reporting purposes for the following FY 

and to codify this requirement at 

§ 418.312. 

Response: We thank commenters for 

taking the time to support our proposal. 

Final action: We are finalizing our 

proposal that hospices that receive 

notification of certification on or after 

November 1 of the preceding year 

involved would continue to be excluded 

from any payment penalty for quality 

reporting purposes for the following FY 

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 reporting programs has 

shown that there are times when 

providers are unable to submit quality 

data due to extraordinary circumstances 

beyond their control (for example, 

natural or man-made disasters). A 

disaster may be widespread or impact 

multiple structures or be isolated and 

impact a single site only. We do not 

wish to penalize providers in these 

circumstances or to unduly increase 

their burden during these times. 

Therefore, we proposed a process, for 

the FY 2016 payment determination and 

subsequent payment determinations, for 

hospices to request and for CMS to grant 

extensions/exceptions with respect to 

the reporting of required quality data 

when there are extraordinary 

circumstances beyond the control of the 

provider. When an extension/exception 

is granted, a hospice will not incur 

payment reduction penalties for failure 

to comply with the requirements of the 

HQRP. 

Under the proposed process for the 

FY 2016 payment determination and 

subsequent payment determinations, a 

hospice may request an extension/

exception of the requirement to submit 

quality data for a specified time period. 

We proposed a process that, in the event 

that a hospice requested an extension/ 

exception for quality reporting purposes 

for the FY 2016 payment determination 

and subsequent payment 

determinations, the hospice would 

submit a written request to CMS. 

Requirements for requesting an 

extension/exception will be available on 

the Hospice Quality Reporting Web site 

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

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

index.html. 

This proposal does not preclude us 

from granting extensions/exceptions to 

hospices that have not requested them 

when we determine that an 

extraordinary circumstance, such as an 

act of nature, affects an entire region or 

locale. We also proposed that we could 

grant an extension/exception to a 

hospice if we determine that a systemic 

problem with our data collection 

systems directly affected the ability of 

the hospice to submit data. If we make 

the determination to grant an extension/ 

exception to hospices in a region or 

locale, we proposed to communicate 

this decision through routine 

communication channels to hospices 

and vendors, including, but not limited 

to, Open Door Forums, E-News and 

notices on https://www.cms.gov/

Medicare/Quality-Initiatives-PatientAssessment-Instruments/HospiceQuality-Reporting/. 

Public comments and our response to 

comments are summarized below. All 

comments received were supportive of 

the proposed extension/exception 

policy. 

Comment: Several commenters 

supported the proposal to allow 

hospices to request and for CMS to grant 

extensions/exceptions with respect to 

the reporting of required quality data 

when there are extraordinary 

circumstances beyond the control of the 

provider. 

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 finalizing 

our proposal without change to allow 

hospices to request and for CMS to grant 

extensions/exceptions with respect to 

the reporting of required quality data 

when there are extraordinary 

circumstances beyond the control of the 

provider. 

4. Future Measure Development 

We did not propose any new 

measures for 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 quality reporting programs that 

could apply to the HQRP and to develop 

new measures if no suitable measures 

are ready for implementation or 

expansion. We are particularly 

interested in outcome measures for 

symptom management, particularly 

pain. We are also interested in measures 

of patient reported outcomes. In the 

proposed rule, we solicited comments 

and input on future measure 

development. 

Comment: Many comments were 

generally supportive of the Hospice 

Quality Reporting Program (HQRP), and 

quality measurement in general. 

Commenters indicated they were 

pleased that CMS was not proposing 

additional new measures for 

implementation at this time, and 

cautioned against implementing 

additional measures before 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 that pain outcome and 

patient reported measures are an 

important area of focus 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 model of 

distress, addressing depression, anxiety, 

personality and behavioral symptoms. 

In prioritizing future measure 

development areas, commenters 

recommended that CMS consider 

measure recommendations made by the 

NQF-convened Measures Application 

Partnership and developments in other 

initiatives including the ‘‘Measuring 

What Matters’’ consensus project. In 

addition, commenters emphasized that 

measures should address matters that 

are important 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 diagnoses including: 

dementia; symptom management to 

comfortable or acceptable level; 

medication reconciliation; shared 

decision making and person and familycentered care; use of the 

interdisciplinary team; avoidance of 

unwanted CPR; avoidance of 

hospitalization and Emergency 

Department use; access and availability 

of hospice services, particularly time 

between initial referral and start of 

hospice care; appropriate staff training, 

degrees, or certifications; assessment of 

behavioral symptoms; assessment and 

management of caregiver burden; and 

assessment and management of 

caregiver and patient quality of life. 


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Another commenter suggested that 

CMS, along with other stakeholders, 

develop outcome measures to address 

areas such as pain, dyspnea, bowel 

management, and/or caregiver 

satisfaction. A few commenters 

indicated concerns that quality 

measures based on symptoms (for 

example, measures related to pain, and 

dyspnea) 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 should 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 their 

support of CMS’s decision to remove the 

NQF #0209 from the HQRP. Another 

commenter encouraged CMS to 

implement a patient assessment 

instrument in the future to collect 

quality 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 continue developing the HQRP 

to respond to the measure gaps 

identified by the Measures Application 

Partnership and others, and align 

measure development with the National 

Quality Strategy and the CMS Quality 

Strategy. We will take these comments 

into consideration in developing and 

implementing measures for future 

inclusion in the HQRP. 

We are also interested in 

understanding the current state of 

electronic health record (EHR) adoption 

and usage and Health Information 

Exchange (HIE) in the hospice 

community. Therefore, we solicited 

feedback and input from providers on 

topics such as decision support, 

whether hospices have adopted an EHR, 

if so, what functional aspects of the EHR 

do hospices find most important (for 

example, the ability to send or receive 

transfer of care information, ability to 

support medication orders/medication 

reconciliation); does the EHR used in 

the hospice setting support 

interoperable document exchange with 

other healthcare providers (for example, 

acute care hospitals, physician 

practices, and skilled nursing facilities)? 

In addition to seeking public input on 

the feasibility and desirability of 

electronic health record adoption and 

use of HIE in hospices, we solicited 

comments on the need to develop and 

the benefits and limitations of 

implementing electronic clinical quality 

measures for hospice providers. 

The Department of Health and Human 

Services (HHS) believes all patients, 

their families, and their healthcare 

providers should have consistent and 

timely access to their health information 

in a standardized format that can be 

securely exchanged between the patient, 

providers, and others involved in the 

patient’s care. (HHS August 2013 

Statement, Principles and Strategies for 

Accelerating Health Information 

Exchange.) HHS is committed to 

accelerating health information 

exchange (HIE) through the use of 

electronic health records (EHRs) and 

other types of health information 

technology (HIT) across the broader care 

continuum through a number of 

initiatives including: (1) alignment of 

incentives and payment adjustments to 

encourage provider adoption and 

optimization of HIT and HIE services 

through Medicare and Medicaid 

payment policies; (2) adoption of 

common standards and certification 

requirements for interoperable HIT; (3) 

support for privacy and security of 

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

of health information networks. These 

initiatives are designed to encourage 

HIE among all health care providers, 

including professionals and hospitals 

eligible for the Medicare and Medicaid 

EHR Incentive Programs and those who 

are not eligible for the EHR Incentive 

Programs, and are designed to improve 

care delivery and coordination across 

the entire care continuum. To increase 

flexibility in the Office of the National 

Coordinator for Health Information 

Technology’s (ONC) HIT Certification 

Program and expand HIT certification, 

ONC has issued a proposed rule 

concerning a voluntary 2015 Edition 

EHR certification criteria which would 

more easily accommodate certification 

of HIT used in other types of health care 

settings where individual or 

institutional health care providers are 

not typically eligible for incentive 

payments under the Medicare and 

Medicaid EHR Incentive Programs, such 

as long-term and post-acute care and 

behavioral health settings. 

We believe that HIE and the use of 

certified EHRs by Hospice (and other 

types of providers that are ineligible for 

the Medicare and Medicaid EHR 

Incentive Programs) can effectively and 

efficiently help providers improve 

internal care delivery practices, support 

management of patient care across the 

continuum, and enable the reporting of 

electronically specified clinical quality 

measures (eCQMs). More information on 

the identification of EHR certification 

criteria and development of standards 

applicable to Hospice can be found at: 

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

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

FACAS/health-it-policy-committee/

hitpc-workgroups/certificationadoption 

http://wiki.siframework.org/

LCC+LTPAC+Care+Transition+SWG 

http://wiki.siframework.org/

Longitudinal+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 are provided below: 

Comment: Commenters expressed 

support of the adoption and use of EHRs 

in the hospice setting, noting that it may 

lead to more consistent care and better 

symptom management. 

Response: We thank the commenters 

for their support. 

Comment Summary: CMS received 

several comments in response to its 

solicitation for input related to 

Electronic Health Record (EHR) 

adoption and usage and Health 

Information Exchange (HIE) in the 

hospice community. Most commenters 

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 commenter 

expressed that EHR adoption exists 

among hospices, however they lack 

standardization. Some commenters 

conveyed the importance of EHR and 

HIE adoption and use for patient 

coordination, and that information 

exchange should be required and 

available across providers; noting that it 

may lead to more consistent care and 

better symptom management. A 

commenter 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 

barriers 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 


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that hospice EHRs are not always 

interoperable with 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 information and that 

CMS mandate the development and use 

of uniform standards to govern the 

Health Information Exchange. All 

commenters suggested that funding 

incentives/levers could enable adoption 

of EHR technology. Some commenters 

recommended that CMS consider the 

establishment of financial incentives, 

(for example, funding tied to quality 

improvement/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 low-interest 

loans programs to aid in the funding of 

EHR technology. Additional 

commenters expressed that all EHR/HIE 

systems should include adequate 

education and system testing to ensure 

data integrity and the protection of 

confidential information, and that CMS 

should facilitate health information 

technology that includes tele-health 

technology. One commenter stated that 

CMS should not develop electronic 

clinical quality measures for the hospice 

setting until a framework is developed 

that includes the certification of 

electronic medical records for postacute care providers and the financial 

assistance to support system 

implementation. 

Response: We thank the commenters 

for their support of EHR and HIE 

utilization and for their 

recommendations. We are encouraged to 

learn 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 concerns that 

were conveyed related to barriers in 

EHR and HIE adoption (for example, 

adequate information exchange and 

interoperability, feasibility, testing and 

financial barriers), are important 

considerations 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 Secretary is required to establish 

procedures for making any quality data 

submitted by hospices available to the 

public. Measures reported publicly will 

not display patient identifiable 

information. The procedures ensure that 

a hospice would have the opportunity to 

review the data regarding the hospice’s 

respective program before it is made 

public. In addition, under section 

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

authorized to report quality measures 

that relate to services furnished by a 

hospice on the CMS Web site. We 

recognize that public reporting of 

quality data is a vital component of a 

robust quality reporting program and are 

fully committed to developing the 

necessary systems for public reporting 

of hospice quality data. We also 

recognize that it is essential that the 

data made available to the public be 

meaningful and that comparing 

performance between hospices requires 

that measures be constructed from data 

collected in a standardized and uniform 

manner. The development and 

implementation of a standardized data 

set for hospices must precede public 

reporting of hospice quality measures. 

Once hospices have implemented the 

standardized data collection approach, 

we will have the data needed to 

establish the scientific soundness of the 

quality measures that can be calculated 

using the standardized data collection. 

It is critical to establish the reliability 

and validity of the measures prior to 

public reporting in order to demonstrate 

the ability of the measures to 

distinguish between the quality of 

services provided. To establish 

reliability and validity of the quality 

measures, at least four quarters of data 

will need to be analyzed. Typically the 

first two quarters of data reflect the 

learning curve of the providers as they 

adopt a standardized data collection; 

these data are not used to establish 

reliability and validity. This means that, 

since we will begin data collection in 

CY 2014 (Q3), the data from CY 2014 

(Q3, Q4) will not be used for assessing 

validity and reliability of the quality 

measures. Data collected by hospices 

during Q1–3 CY 2015 will be analyzed 

starting in CY 2015. Decisions about 

whether to report some or all of the 

quality measures publicly will be based 

on the findings of analysis of the CY 

2015 data. In addition, the Affordable 

Care Act requires that reporting be made 

public on a CMS Web site and that 

providers have an opportunity to review 

their data prior to public reporting. CMS 

will develop the infrastructure for 

public reporting, and provide hospices 

an opportunity to review their data. In 

light of all the steps required prior to 

data being publicly reported, public 

reporting will not be implemented in FY 

2016. Public reporting may occur during 

FY 2017, allowing ample time for data 

analysis, review of measures’ 

appropriateness for use for public 

reporting, and allowing hospices the 

required time to review their own data 

prior to public reporting. We will 

announce the timeline for public 

reporting of data in future rulemaking. 

We solicited comments on what we 

should consider when developing future 

proposals related to public reporting. 

Summaries of the public comments 

and our responses 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 providing patients and 

families/caregivers and other 

stakeholders accurate, scientifically 

sound, usable, and relevant information 

to support their decision-making 

regarding hospice care. 

Comment: Several commenters 

recommended that CMS continue to ask 

for stakeholder input concerning the 

reliability and validity of the measures 

and maintain frequent communication 

with the hospice provider community 

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 

and 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 and performance-based 

payment programs, and will continue to 

provide input to CMS as the HQRP 

moves toward public reporting. 

Additional information about the MAP 

can be found at: http://

www.qualityforum.org/Setting_

Priorities/Partnership/Measure_

Applications_Partnership.aspx 

Comment: One commenter supported 

public reporting of hospice quality data, 

but strongly believes that public 

reporting must be preceded by valid 


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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 Payment Rate Update final rule (78 

FR 48234), we stated that CMS would 

start national implementation of the 

CAHPS® Hospice Survey as of January 

1, 2015. (Previously, known as the 

Hospice Experience of Care Survey, 

HECS) We are maintaining our existing 

policy and are moving forward with 

national implementation of this survey. 

The CAHPS® Hospice Survey is a 

component of CMS’ quality reporting 

program that emphasizes the 

experiences of hospice patients and 

their primary caregivers listed in the 

hospice patients’ records. Measures 

from the survey will be submitted to the 

National Quality Forum (NQF) for 

approval as hospice quality measures. 

We refer readers to our extensive 

discussion of the Hospice Experience of 

Care Survey in the Hospice Wage Index 

FY 2014 final rule for a description of 

the measurements involved and their 

relationship to the statutory requirement 

for hospice quality reporting (78 FR 

48261–48266). 

a. Background and Description of the 

Survey 

Before the development of the 

CAHPS® Hospice Survey, there was no 

official national standard hospice 

experience of care survey that included 

standard survey administration 

protocols. The CAHPS® Hospice Survey 

includes detailed survey administration 

protocols which will allow for fair 

comparisons across hospices. 

CMS developed the CAHPS® Hospice 

Survey with input from many 

stakeholders, including other 

government agencies, industry 

stakeholders, consumer groups and 

other key individuals and organizations 

involved in hospice care. The Survey 

was designed to measure and assess the 

experiences of patients who died while 

receiving hospice care as well as the 

experiences of their informal caregivers. 

The goals of the survey are to— 

• Produce comparable data on 

patients’ and caregivers’ perspectives of 

care that allow objective and meaningful 

comparisons between hospices on 

domains that are important to 

consumers; 

• Create incentives for hospices to 

improve their quality of care through 

public reporting of survey results; and 

• Hold hospice care providers 

accountable by informing the public 

about the providers’ quality of care. 

The development process for the 

survey began in 2012 and included a 

public request for information about 

publically available measures and 

important topics to measure (78 FR 

5458); a review of the existing literature 

on tools that measure experiences with 

end-of-life care; exploratory interviews 

with caregivers of hospice patients; a 

technical expert panel attended by 

survey development and hospice care 

quality experts; cognitive interviews to 

test draft survey content; incorporation 

of public responses to Federal Register 

notices (78 FR 48234) and a field test 

conducted by CMS in November and 

December 2013. 

The CAHPS® Hospice Survey treats 

the dying patient and his or her 

informal caregivers (family members or 

friends) as the unit of care. The Survey 

seeks information from the informal 

caregivers of patients who died while 

enrolled in hospices. Caregivers will be 

identified using hospice records. 

Fielding timelines give the respondent 

some recovery time (2 to 3 months), 

while simultaneously not delaying so 

long that the respondent is likely to 

forget details of the hospice experience. 

The survey focuses on topics that are 

important to hospice users and for 

which informal caregivers are the best 

source for gathering this information. 

Caregivers will be presented with a set 

of standardized questions about their 

own experiences and the experiences of 

the patient in hospice care. During 

national implementation of this survey, 

hospices are required to conduct the 

survey to meet the hospice quality 

reporting requirements, but individual 

caregivers will respond only if they 

voluntarily choose to do so. We have 

launched a Web site as part of national 

implementation which is intended as 

the primary information resource for 

hospices and vendors 

(www.hospicecahpssurvey.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 translations. 

Requests for additional language 

translations should be made to the CMS 

Hospice CAHPS® Project Team at 

hospicesurvey@cms.hhs.gov. 

In general, hospice patients and their 

caregivers are eligible for inclusion in 

the survey sample with the exception of 

the following ineligible groups: primary 

caregivers of patients under the age of 

18 at the time of death; primary 

caregivers of patients who died within 

48 hours of admission to hospice care; 

patients for whom no caregiver is listed 

or available, or for whom caregiver 

contact information is not known; 

patients whose primary caregiver is a 

legal guardian unlikely to be familiar 

with care experiences; patients for 

whom the primary caregiver has a 

foreign (Non-US or US Territory 

address) home address; patients or 

caregivers of patients who request that 

they not be contacted (those who sign 

‘‘no publicity’’ requests while under the 

care of hospice or otherwise directly 

request not to be contacted) . 

Identification of patients and caregivers 

for exclusion will be based on hospice 

administrative data. 

Hospices with fewer than 50 surveyeligible 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 required 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 defined 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 experience 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 calendar year and between 21 and 

300 completed questionnaires for 

hospices 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 national survey implementation 

which is similar to that of other CMS 

patient experience of care surveys. 

Medicare-certified hospices will 

contract with a third-party vendor that 

is CMS-trained and approved to 


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administer the survey on their behalf. 

Hospices are required to contract with 

independent survey vendors to ensure 

that the data are unbiased and collected 

by an organization that is trained to 

collect this type of data. It is important 

that survey respondents feel comfortable 

sharing their experiences with an 

interviewer not directly involved in 

providing the care. We have 

successfully used this mode of data 

collection in other settings, including 

for Medicare-certified home health 

agencies. The goal is to ensure that we 

have comparable data across all 

hospices. 

Hospices will be required to provide 

their vendor with the sampling frame on 

a monthly basis. Participation 

requirements for the survey begin 

January 1, 2015 for the FY 2017 Annual 

Payment Update. For hospices, this 

means they will have to start conducting 

the survey as of January 1, 2015 and will 

incur the costs of hiring a survey 

vendor. The survey vendor would be the 

business associate of the hospice. 

A list of approved vendors will be 

provided on http://

www.hospicecahpssurvey.org closer to 

the launch of national implementation. 

Beginning summer 2014, interested 

vendors may apply to become approved 

CAHPS® Hospice Survey vendors. The 

application process will be online at 

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 

vendor is offering the survey. Vendors 

must accommodate alternate telephone 

communications, including TTY. 

In the FY 2015 Hospice Wage Index 

proposed 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 when at 

least 12 months of data are available, so 

that valid comparisons can be made 

across hospice providers in the United 

States, to help patients, family and 

friends choose a hospice program for 

themselves or their loved ones. 

b. Participation Requirements To Meet 

Quality Reporting Requirements for the 

FY 2017 APU 

In section 3004 of the Affordable Care 

Act, the Secretary is directed to 

establish quality reporting requirements 

for Hospice Programs. The CAHPS®

Hospice Survey is a component of the 

CMS Quality Reporting Requirements 

for the FY 2017 APU and subsequent 

years. 

The CAHPS® Hospice Survey is the 

only nationally implemented survey of 

civilian patient and caregiver 

experiences with hospice that includes 

both a standard questionnaire and 

standard survey administration 

protocols. Such standardization is 

needed in order to establish that the 

resulting survey data is comparable 

across hospices and is suitable for 

public reporting. 

The CAHPS® Hospice Survey 

includes the measures detailed in Table 

8. The measures map directly to the 

CAHPS® Hospice Survey. The 

individual survey questions that 

comprise each measure are listed under 

the measure. These measures are in the 

process of being submitted to the 

National Quality Forum (NQF). 

TABLE 8—HOSPICE EXPERIENCE OF CARE SURVEY QUALITY MEASURES AND THEIR ITEMS

Hospice Team Communication 

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

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

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

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

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

for your family member? 

Getting Timely Care 

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

get help as soon as you needed it? 

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

Treating Family Member with Respect 

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

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

Providing Emotional Support 

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

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

Getting Help for Symptoms 

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

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

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

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

Information Continuity 

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

Understanding the Side Effects of Pain Medication 

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

you or your family member? 

Getting Hospice Care Training (Home Setting of Care Only) 

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

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

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

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


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To comply with CMS’s quality 

reporting requirements, hospices will be 

required to collect data using the 

Consumer Assessment of Healthcare 

Providers and Systems (CAHPS®) 

Hospice Survey. Hospices would be able 

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

compliance with the provisions 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 vendor will follow all the 

national implementation procedures, 

but the data will not be publicly 

reported. The dry run will provide 

hospices and their vendors with the 

opportunity to work together under test 

circumstances. 

Beginning April 1, 2015, all hospices 

are required to participate in the survey 

on an ongoing monthly basis. This 

means hospices need to contract with a 

survey vendor to conduct the survey 

monthly on their behalf. Participation 

for at least 1 month during the dry run, 

plus monthly participation for the 9 

months between April 2015 and 

December 2015 (inclusive) is required to 

meet the pay for reporting requirement 

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 deadlines 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 circumstances 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 Submission 

Requirements for Payment Year FY 2016 

and Beyond section. Hospice providers 

are responsible 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 July–September 2015 (Q3) ............................................................. February 10, 2016 

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

In the FY 2014 Hospice Wage Index 

and Rate Update final rule, we stated 

that we would exempt very small 

hospices from CAHPS® Hospice Survey 

requirements. Hospices that have fewer 

than 50 survey-eligible decedents/

caregivers 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 for the survey exemption for FY 

2017, hospices must submit an 

exemption request form. This form will 

be available on the CAHPS® Hospice 

Survey Web site http://

www.hospicecahpssurvey.org. Hospices 

are required to submit to CMS their total 

unique patient count for the period of 

January 1, 2014 through December 31, 

2014. The due date for submitting the 

exemption request form for the FY 2017 

APU is August 12, 2015. 

c. Participation Requirements To Meet 

Quality Reporting Requirements for the 

FY 2018 APU 

To meet participation requirements 

for the FY 2018 APU, we 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-eligible decedents/caregivers in 

the period from January 1, 2015 through 

December 31, 2015 are exempt from 

CAHPS® Hospice Survey data collection 

and reporting requirements for the FY 

2018 payment determination. To 

qualify, hospices must submit an 

exemption request form. This form will 

be available 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. 

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 were family caregivers 

of patients who died within 48 hours or 

less of their admission to hospice care. 

Commenters were concerned that we 

were excluding this group’s experience. 

Response: We appreciate these 

comments because they show a concern 

for evaluating the hospice care 

experience for all patients, regardless 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 years. 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 

plans for at least six months, and the 

ICH CAHPS® survey where the 

respondents need to have at least three 

months of dialysis experience at the 

facility before they are eligible. If 

caregiver respondents do not have 

enough experience with the hospice, 

they will not be able to easily or reliably 

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 

recommended developing a shorter 

questionnaire for shorter-stay 

respondents. In national 

implementation, 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 implementing 

an abbreviated CAHPS® Hospice 

Survey, depending upon the number of 

people affected. 

Comment: One commenter stated that 

it is important that the CAHPS® Hospice 

Survey document the length of stay, and 


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its relationship to the profit/non-profit 

status of the hospice, in order to provide 

an accurate picture of the caregiver’s 

perception of the quality of care the 

hospice provided and to publicly report 

the data by length of stay. 

Response: We have not determined 

how the survey results will be publicly 

reported for hospices. However, we are 

aware that both length of stay and forprofit/non-profit status may have an 

impact on patient/caregiver experiences. 

We would not control for for-profit or 

non-profit status when we publicly 

report the data since that is under the 

control of the facility. If length of stay 

is a function of for-profit or non-profit 

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 

sampled 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 

hospices with fewer than 50 surveyeligible 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 relatively small changes 

in responses. This could result in the 

smallest hospices experiencing 

substantial variations in scores each 

year, not due to changes in care, but 

because only a small number 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 most 

knowledgeable about the patient 

experience and noted that this person 

may not be the patient’s closest relative. 

Response: The family caregiver listed 

in hospice administrative records 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 patient’s care. However, for 

sampling purposes we must be able to 

objectively and clearly define our target 

population and 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 that 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 samples will not produce reliable 

results. The choice of 700 surveyeligible decedents/caregivers annually is 

not intended to define a large hospice, 

but only to allow hospices with this 

many deaths (or more) to conduct a 

sample rather than require them to 

survey a census of all eligible 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). However, the hospice 

survey had to ask demographic 

questions for both the patient and the 

family caregiver, which partially 

accounts for its longer length. In 

addition, some items are only for 

patients in particular 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 upon the results of 

the cognitive testing. The text of the 

current instrument and the final 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, psychosocial 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 patients’ 

experience of anxiety and agitation. The 

survey also asks about spiritual and 

emotional 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 required 

that three different CAHPS surveys be 

distributed, based on the patient’s 

location at the time of death. The 

commenter strongly disagreed with 

implementing 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, home-based hospice) 

along with clear directions for the 

respondent. We do not limit our 

questions 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 could affect the 

results. The commenter noted that some 

respondents may believe there is room 

for improvement and may be reluctant 

to choose ‘‘always’’ as an answer. The 

commenter stated that a five-point 

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 any evidence 

indicating respondents 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 exclusively interview informal 

caregivers. 

Response: CMS is aware of the value 

of collecting survey data on patients’ 

experiences. During the survey 

development process we carefully 

considered the logistics of conducting 

surveys with two different populations: 

hospice patients and their informal 

caregivers. CMS concluded that 

attempting to survey two populations 

would pose additional logistical 

problems and burdens because it was 

not clear the same questionnaire could 

be used for both groups. It is also not 

clear how the two groups should be 

publicly reported. Other considerations 

include —(1) the difficulty of 

determining which hospice patients are 

capable of participating in the survey 

and; (2) the risk of upsetting families if 

a survey addressed to a patient were to 

arrive soon after the patient died. In 

addition, hospice patients cannot 

provide information about the totality of 

the hospice care provided. For these 

reasons, CMS decided to survey only 


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primary caregivers of deceased hospice 

patients. 

Comment: One commenter said that 

the hospice survey questionnaire should 

not be sent more than two months after 

the death of the patient, as the family 

member(s) may have difficulty recalling 

the experience. The commenter also 

noted that a prolonged delay in 

completion of the survey questionnaire 

could result in diminished recall by the 

patient’s clinicians. 

Response: CMS is aware that a 

significant delay in the completion of 

the survey questionnaire following the 

death of a patient can diminish the 

ability of survey respondents to 

accurately recall events. However, 

sending the survey shortly after 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, CMS has chosen to 

include what we believe is an 

appropriate period of delay following 

the death of the patient and survey 

administration procedures to provide a 

time for family members to grieve, but 

still respond regarding the particulars of 

hospice care. CMS has built in a twomonth 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 commenters 

for their support. 

Comment: One commenter 

recommended that the definition of 

criteria for exclusion be clarified for 

consistent interpretation and 

implementation. 

Response: Details of the groups that 

are ineligible for survey participation 

can be found under subsection a. 

Background and Description of the 

Survey in this rule. 

Final Action: As a result of these 

comments, 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, 

February 2015, or March 2015). 

Continuous monthly data collection 

begins in April 1, 2015, continues 

through December 31, 2015, and 

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 

sampling 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 

survey administration as published in 

the CAHPS® Hospice Survey 

specifications manual, which will be 

posted on the Survey Web site: http:// 

hospicecahpssurvey.org. In addition, to 

the specifications manual, the Web site 

will include information and updates 

regarding survey implementation 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 minimum of 3 

years using each the modes of survey 

administration for which they are 

applying. In addition the organization 

must have been conducting ‘‘surveys 

with patients’’ for at least 2 years 

immediately preceding the application 

to become a survey vendor for the 

CAHPS® Hospice Survey. For purposes 

of the approval process for CAHPS®

Hospice Survey vendors, a ‘‘survey of 

individual patients’’ is defined as the 

collection of data from at least 600 

individual patients selected by 

statistical sampling methods and the 

data collected are used for statistical 

purposes. 

Vendors may not use home-based or 

virtual interviewers to conduct the 

CAHPS® Hospice Survey, nor may they 

conduct any survey administration 

processes (for example, mailings) from a 

residence to ensure the confidentiality 

of data. 

The following are examples of data 

collection 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 the 

experience required of an approved 

vendor for CAHPS® Hospice Survey. 

• Focus groups, cognitive interviews, 

or any other qualitative data collection 

activities; 

• Surveys of fewer than 600 

individuals; 

• Surveys conducted that did not 

involve using statistical sampling 

methods; 

• Internet or Web-based surveys; and 

• Interactive Voice Recognition 

Surveys. 

We also 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 hospice 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 responses to those comments 

are summarized below: 

Comment: CMS received no 

comments regarding Vendor 

Participation Requirements for the 2014 

APU. 

Final Action: We are finalizing the 

requirements as proposed without 

change. 

e. Annual Payment Update 

The Affordable Care Act requires that 

beginning with FY 2014 and each 

subsequent fiscal year, the Secretary 

shall reduce the market basket update 

by 2 percentage points for any hospice 

that does not comply with the quality 

data submission requirements with 

respect to the fiscal year, unless covered 

by specific exemptions. Any such 

reduction will not be cumulative and 

will not be taken into account in 

computing the 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 

monthly 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: 


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Comment: A few commenters stated 

that the timeframe for implementing the 

CAHPS® Hospice Survey may not be 

sufficient to adequately finalize the 

survey questions, approve, train and 

hire vendors, complete the Dry Run and 

correct any concerns that may arise from 

the Dry Run. 

Response: We are aware that the 

timeframe for implementing the 

CAHPS® Hospice Survey is shorter than 

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 

application and approval process on the 

Web site in August 2014. This should 

provide hospice programs 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 

encourage hospices to participate in the 

Dry Run as early as possible and 

collaborate 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 the 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 varying 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 vary by vendor and the extra 

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 should be documented in the 

plan of care. 

Comment: One commenter noted that 

CMS should refrain from using data for 

public 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 should ensure that public 

reporting will meet the needs of 

Medicare beneficiaries and their family 

caregivers. 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 should delay public reporting until 

the HIS is more fully developed and the 

data from 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 schedule for public 

reporting in subsequent rulemaking. 

Comment: CMS should also consider 

instituting 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. 

f. CAHPS® Hospice Survey Oversight 

Activities 

We proposed a requirement that 

vendors and hospice providers 

participate in CAHPS® Hospice Survey 

oversight activities to ensure 

compliance with Hospice CAHPS®

technical specifications and survey 

requirements. The purpose of the 

oversight activities is to ensure that 

hospices and approved survey vendors 

follow the CAHPS® Hospice Survey 

technical specifications and thereby 

ensure the comparability of CAHPS®

Hospice Survey data across hospices. 

We 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 

the Hospice Quality Reporting program. 

We encourage hospices interested in 

learning more about the CAHPS®

Hospice Survey to visit the CAHPS®

Hospice Survey Web site: 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 regarding 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 Year 2016 

and Subsequent Years 

In the FY 2014 Hospice Wage Index 

and Payment Rate Update final rule (78 

FR 48267), we notified hospice 

providers of the opportunity to seek 

reconsideration of our initial noncompliance decision for the FY 2014 

and FY 2015 payment determinations. 

We stated that we will notify hospices 

found to be non-compliant with the 

HQRP reporting requirements that they 

may be subject to the 2 percentage point 

reduction in their annual payment 

update. The process for filing a request 

for reconsideration is described on the 

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

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

this process at § 418.312. 

Finally, we proposed to codify at 

§ 418.306 that beginning with FY 2014 

and each subsequent FY, the Secretary 

shall reduce the market basket update 

by 2 percentage points for any hospice 

that does not comply with the quality 

data submission requirements with 

respect to that FY and solicited 

comments on all of the proposals in this 

section and the associated regulations 

text at § 418.312 and 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 

requirements as proposed without 

change. 

I. Solicitation of Comments on 

Coordination of Benefits Process and 

Appeals for Part D Payment for Drugs 

While Beneficiaries are Under a Hospice 

Election 

The statutory definition of the term 

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

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


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Security Act, excludes a drug if 

payment for such a drug, as so 

prescribed and dispensed or 

administered with respect to a Part D 

eligible individual, is available (or 

would be available but for the 

application of a deductible) under Part 

A or B for that individual. Therefore, 

drugs and biologicals for which 

coverage is available under the 

Medicare Part A per-diem payment to a 

hospice program are excluded from 

coverage under Part D. Our previous 

understanding was that hospice 

coverage of drugs was very broad and 

very inclusive. Therefore, Part D 

payment for drugs furnished to hospice 

beneficiaries would be rare and the need 

for controls was not critical. 

Section 1861(dd) of the Act states the 

hospice is responsible for covering all 

drugs or biologicals for the palliation 

and management of the terminal illness 

and related conditions. Our stated 

intention in the 1983 Hospice final rule 

(48 FR 56010) was that the hospice 

benefit provides virtually all care for the 

terminally ill individual. Despite our 

intention for a comprehensive and 

holistic benefit, gross covered drug costs 

in 2012 under Part D for beneficiaries 

during a hospice election totaled $417.9 

million. Of this total, Medicare 

reimbursed approximately $334.9 

million, and beneficiaries contributed 

$48.2 million in possibly unnecessary 

cost-sharing. 

1. Part D Sponsor Coordination of 

Payment with Hospice Providers 

In the proposed rule, we described 

various requirements we were 

considering 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 comment on. Prior to the 

proposed rule, we had issued interim 

guidance on March 10, 2014 (http://

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

Downloads/Part-D-Payment-HospiceFinal-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 the proposed rule we are 

considering requiring. Our July 18, 2014 

guidance can be accessed at (http://

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

Downloads/2014-PartD-HospiceGuidance-Revised-Memo.pdf); we plan 

that this guidance will remain in effect 

until requirements are finalized. The 

revised guidance expects Part D 

sponsors to use hospice 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 providers, identified as 

nearly always covered under the 

hospice benefit. These categories of 

drugs will require hospice prior 

authorizations analgesics, 

antinauseants, laxatives, and antianxiety 

drugs. Hospices may use the ‘‘Hospice 

Information for Medicare Part D’’ 

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

Medicare-Fee-for-Service-Payment/

Hospice/Downloads/Hospice-InfoPartD.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 

considering, we became aware that the 

regulatory requirement for a Part D 

sponsor to coordinate with other health 

benefit plans or programs at § 423.464 

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

requirement specified in statute. Section 

1860D–24 of the Act requires Part D 

sponsors to coordinate with other drug 

plans, including, as specified in 

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

health benefit plans or programs that 

provide coverage or financial assistance 

for the purchase or provision of 

prescription drug coverage on behalf of 

Part D eligible individuals. However, in 

codifying this requirement in the 

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

specified that the other plans or 

programs are those that provide 

coverage or financial assistance for the 

purchase of or provision of Part D 

(emphasis added) prescription drugs. 

The regulation does not include the 

requirement for Part D sponsors to 

coordinate with providers of drugs 

covered under Part A, such as hospices, 

since those drugs prescribed, dispensed, 

or administered under Part A are 

excluded from the definition of a 

covered Part D drug. Because 

coordination between Part D sponsors 

and the Medicare hospices is essential 

to ensure Part D statutory coverage 

requirements are met, to reduce the 

potential for erroneous payment under 

Part D, and to facilitate the recovery of 

erroneous payments when they do 

occur, we also were considering 

amending the Part D regulations at 

§ 423.464(f) to align the definition of 

other prescription drug coverage in 

paragraph § 423.464(f)(1)(ix) with the 

statute by removing the phrase ‘‘Part D.’’ 

We did not propose to amend the Part 

D regulations at § 423.464(f), but rather 

solicited comments on this change. We 

appreciate the comments received in 

response to our solicitation and will 

consider those comments in future 

rulemaking. 

2. Solicitation of Comments on Hospice 

Coordination of Payment with Part D 

Sponsors and Other Payers 

As specified in section 1861(dd) of 

the Act, and in regulation at 42 CFR Part 

418, the hospice is responsible for 

covering all drugs and biologicals for 

the palliation and management of the 

terminal illness and related conditions. 

As noted in 418.202(f), drugs and 

biologicals for palliation of pain and 

symptom management are included in 

the Medicare Part A per-diem payment 

to a hospice. Therefore, such drugs and 

biologicals are excluded from coverage 

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

payment regulations at § 418.200 require 

that, to be covered, hospice services 

must be consistent with the plan of care, 

which must include the drugs and 

treatment necessary to meet the needs of 

the patient (§ 418.56(c)(2)). 

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

require hospices to share information 

with other non-hospice healthcare 

providers furnishing services unrelated 

to the terminal illness and related 

conditions. As described in 

§ 418.100(c)(2), hospices must be 

available 24 hours a day and 7 days a 

week to address beneficiary and family 

needs. 

We have received anecdotal reports 

from Medicare hospice beneficiaries 

that they are not receiving medications 

related to their terminal illness and 

related conditions from their hospice 

because, among other stated reasons, 

those medications are not on the 

hospice’s formulary. These reports also 

have stated that hospice beneficiaries 

were advised to obtain drugs related to 

the terminal illness and related 

conditions from their Part D 

prescription drug plans. Per the 

regulations at § 418.202(f), hospices 

must provide all drugs which are 

reasonable and necessary to meet the 

needs of the patient in order to provide 

palliation and symptom management of 

the terminal illness and related 

conditions. If the drugs on the hospice 

formulary are not providing the relief 

needed, then the hospice must provide 

alternatives in order to relieve pain and 

symptoms, even if it means providing 

drugs that are not on their formularies. 

Treatment decisions should not be 

driven by costs, as opposed to clinical 


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appropriateness. Hospices should use 

thoughtful clinical judgment, with a 

patient-centered focus, when 

developing the hospice plan of care, 

including the recommendations for 

medication management. 

We did not propose any requirements, 

but we described various requirements 

we are considering to facilitate 

coordination of payment responsibility 

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 discussion of the requirements we 

sought comments on. As articulated 

above in section I.1, the July 18, 2014 

interim guidance (http://www.cms.gov/

Medicare/Medicare-Fee-for-ServicePayment/Hospice/Downloads/2014- 

PartD-Hospice-Guidance-RevisedMemo.pdf) has been issued, and we 

plan that this guidance 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 medication that a hospice cannot 

or will not provide because the hospice 

has deemed that the specific medication 

is not reasonable and necessary for the 

palliation and management of the 

terminal illness and related conditions. 

Coverage of such medication would not 

be permissible under Part D coverage 

since the medication is not for any 

condition completely separate and 

distinct from the terminal illness and 

related conditions, nor is it covered 

under Part A, since it is not reasonable 

and necessary for the palliation and 

management of the terminal illness and 

related conditions. If the hospice does 

not provide the medication, the hospice 

is not obligated to provide any notice of 

non-coverage (including the Advance 

Beneficiary Notice of Non-coverage or 

ABN). If the hospice provides 

medication it believes is not reasonable 

and necessary for the palliation and 

management of the terminal illness and 

related conditions, the hospice must 

first issue an ABN in order to charge the 

beneficiary for the cost of such 

medication. Regardless of whether or 

not the hospice furnishes the drug, if the 

beneficiary independently obtains the 

drug, but believes that the Medicare 

hospice should have furnished or 

covered the cost of the drug as part of 

the hospice benefit, the beneficiary may 

submit a claim for the medication 

directly to Medicare on Form CMS– 

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

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

denied, the beneficiary may file an 

appeal of that determination under the 

appeals process set forth in part 405, 

subpart I. 

There may also be instances where a 

beneficiary prefers a non-formulary drug 

because, for example, he or she believes 

it to be more efficacious than the 

formulary drug prescribed by the 

hospice. In such instances, the hospice 

may have determined that the formulary 

drug prescribed is reasonable and 

necessary for the palliation and 

management of the terminal illness and 

related conditions; however, the 

beneficiary may prefer another brand of 

such drug that is off formulary, which 

the hospice believes is not reasonable 

and necessary, or more expensive but no 

more effective than the drug in the 

formulary. In those cases, the 

beneficiary may submit quality of care 

complaints to a Quality Improvement 

Organization. We plan to increase our 

beneficiary outreach efforts to advise 

beneficiaries and their families/

caregivers of their rights and the 

available appeals process described in 

this section. 

J. Update on the International 

Classification of Diseases, 10th 

Revision, Clinical Modification (ICD– 

10–CM) and Coding Guidelines for 

Hospice Claims Reporting 

3. International Classification of 

Diseases, 10th Revision, Clinical 

Modification (ICD–10–CM) 

On April 1, 2014, the Protecting 

Access to Medicare Act of 2014 (PAMA) 

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

212 of PAMA, titled ‘‘Delay in 

Transition from ICD–9 to ICD–10 Code 

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

Health and Human Services may not, 

prior to October 1, 2015, adopt ICD–10 

code sets as the standard for code sets 

under section 1173(c) of the Social 

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

section 162.1002 of title 45, Code of 

Federal Regulations.’’ On May 1, 2014, 

the Secretary announced plans to 

release an interim final rule in the near 

future that will include a new 

compliance 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 September 30, 

2015. Although the Department has not 

yet published the rule, we are 

proceeding in accordance 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 for ICD–10–CM. 

Diagnosis reporting on hospice claims 

must adhere to ICD–9–CM coding 

conventions and guidelines regarding 

the selection of principal diagnosis and 

the reporting of additional diagnoses. 

Additionally, the CMS’ Hospice Claims 

Processing manual (Pub 100–04, chapter 

11) requires that hospice claims include 

the reporting of additional/other 

diagnoses as required by ICD–9–CM 

coding guidelines. 

In the HIPAA regulations at 45 CFR 

162.1002, the Secretary adopted the 

ICD–9–CM code set, including the 

Official ICD–9–CM Guidelines for 

Coding and Reporting. The current ICD– 

9–CM Coding Guidelines use the 

International Classification of Diseases, 

9th Edition, Clinical Modification (ICD– 

9–CM) and are available through the 

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

Medicare/Coding/

ICD9ProviderDiagnosticCodes/

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

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

icd9cm.htm. 

4. Coding Guidelines for Hospice Claims 

Reporting 

In the FY 2014 Hospice Wage Index 

and Payment Rate Update, we reiterated 

that diagnosis reporting on hospice 

claims should include the appropriate 

selection of principal diagnoses as well 

as the other, additional and coexisting 

diagnoses related to the terminal illness 

and related conditions (78 FR 48254). 

Additionally, in the July 27, 2012, FY 

2013 Hospice Wage Index notice (77 FR 

44247), we provided in-depth 

information regarding longstanding, 

existing ICD–9–CM Coding Guidelines. 

We also discussed related versus 

unrelated diagnosis reporting on claims 

and clarified that ‘‘all of a patient’s 

coexisting or additional diagnoses’’ 

related to the terminal illness and 

related conditions should be reported 

on the hospice claim. The expectation 

was that hospices would report all 

diagnoses related to the terminal illness 

and related conditions on hospice 

claims to provide accurate information 

regarding the hospice beneficiaries for 

which they are providing hospice 

services. 

In the FY 2014 Hospice Wage Index 

and Payment Rate Update final rule, we 

stated that beginning on October 1, 

2014, any claims with ‘‘debility’’ or 

‘‘adult failure to thrive’’ in the principal 

diagnosis field will be returned to the 

provider for more definitive coding (78 

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

to thrive’’ do not provide enough 

information to accurately describe 

Medicare hospice beneficiaries and the 

conditions that hospices are managing. 

Once these claims are resubmitted with 

more appropriate diagnosis codes, 


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following the ICD–9–CM Coding 

Guidelines, these claims will be 

processed accordingly. This is a 

reminder that claims with ‘‘debility’’ 

and ‘‘adult failure to thrive’’ coded in 

the principal diagnosis field will be 

returned to providers for more definitive 

coding effective October 1, 2014 (for 

those claims submitted on and after 

October 1, 2014). 

Also in the FY 2014 Hospice Wage 

Index and Payment Rate Update final 

rule, we advised hospice providers to 

pay particular attention to dementia 

diagnoses which are found under two 

separate ICD–9–CM classifications: 

‘‘Mental, Behavioral, and 

Neurodevelopmental Disorders’’ and 

‘‘Diseases of the Nervous System and 

Sense Organs’’(78 FR 48252–48253). 

Many of the codes relating to dementia 

manifestations found under the ICD–9– 

CM classification, ‘‘Mental, Behavioral, 

and Neurodevelopmental Disorders’’, 

are not appropriate as principal 

diagnoses because of etiology/

manifestation guidelines or sequencing 

conventions under the ICD–9–CM 

Coding Guidelines. ICD–9–CM Coding 

Guidelines for this classification state 

that dementia is most commonly a 

secondary manifestation of an 

underlying causal condition. Codes 

found under this classification identify 

the common behavioral disturbances of 

dementia manifestations. Many of the 

dementia codes under the ICD–9–CM 

classification, ‘‘Mental, Behavioral and 

Neurodevelopmental Disorders’’ have 

coding conventions that require to code 

first the associated neurological 

condition. Many of the associated 

neurological conditions can be found 

under the classification, ‘‘Diseases of the 

Nervous System’’, including such 

conditions as ‘‘Alzheimer’s disease’’ and 

‘‘Senile Degeneration of the Brain’’. We 

advise hospices to pay close attention to 

the various coding and sequencing 

conventions found within The Official 

ICD–9–CM Guidelines for Coding and 

Reporting when reporting diagnoses on 

hospice claims. 

To ensure additional compliance with 

ICD–9–CM Coding Guidelines we will 

implement certain edits from Medicare 

Code Editor (MCE), which detect and 

report errors in the coding of claims 

data, for all hospice claims effective 

October 1, 2014 (for those claims 

submitted on or after October 1, 2014). 

Hospice claims containing 

inappropriate principal or secondary 

diagnosis codes, per ICD–9–CM coding 

conventions and guidelines, will be 

returned to the provider and will have 

to be corrected and resubmitted to be 

processed and paid. 

We will implement edits related to 

etiology/manifestation code pairs from 

the MCE; therefore, it is important for 

hospice providers to follow the ICD–9– 

CM Coding Guidelines regarding codes 

that fall under this coding convention. 

The etiology/manifestation coding 

convention states that there are certain 

conditions which have both an 

underlying cause (etiology) and 

subsequent multiple body system 

manifestations. For such conditions, 

ICD–9–CM coding convention requires 

the underlying condition be sequenced 

first, followed by the manifestation. 

Whenever such a combination exists, 

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

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

at the manifestation code. These 

instructional notes indicate the proper 

sequencing order of the codes. In most 

cases, the manifestation codes will have 

in the code title, ‘‘in diseases classified 

elsewhere.’’ ‘‘In diseases classified 

elsewhere’’ codes are never permitted to 

be used as first-listed or principal 

diagnosis codes. They must be used in 

conjunction with an underlying 

condition code and they must be listed 

following the underlying condition. An 

example of this can be found under the 

category 294, ‘‘Persistent mental 

disorders due to conditions classified 

elsewhere.’’ However, there are 

manifestation codes that do not have ‘‘in 

diseases classified elsewhere’’ in the 

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

additional code’’ note at the etiology 

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

manifestation code and the rules for 

sequencing apply. 

There are sequencing conventions 

under ICD–9–CM coding guidelines that 

are not accounted for in the MCE edits. 

There are several dementia codes under 

the classification, ‘‘Mental Behavioral 

and Neurodevelopmental Disorders’’ 

that have a sequencing convention that 

require the underlying physiological 

condition to be coded first, but for 

which there is no edit in the MCE. We 

will be issuing technical guidance 

through a Change Request to include 

these codes for edits in the MCE to be 

consistent for claims processing under 

ICD–9–CM Coding Guidelines. We are 

reminding providers to utilize the ICD– 

9–CM coding guidelines when 

submitting hospice claims to ensure 

they are following the appropriate 

guidelines for coding so that claims are 

not returned to providers as a result of 

MCE edits. Following the ICD–9–CM 

coding guidelines will help hospice 

providers with appropriate code 

selection for hospice claims processing. 

This is not to say that hospice 

beneficiaries with various dementia 

conditions are not appropriate for 

hospice services, rather, this is merely a 

clarification regarding the ICD–9–CM 

coding guidelines for claims processing. 

We expect hospice providers to follow 

ICD–9–CM coding guidelines to ensure 

that the most accurate information is 

provided regarding the patients for 

whom hospices are providing services. 

Additional details describing the 

specific MCE edits that will be applied 

will be announced through a change 

request, an accompanying Medicare 

Learning Network article, and other 

CMS communication channels, such as 

the Home Health, Hospice, and DME 

Open Door Forum. 

We have clarified in previous rules 

that hospice providers are expected to 

report on hospice claims all ICD–9–CM 

codes to provide an accurate description 

of the patients’ conditions. In the 

Hospice Wage Index for Fiscal Year 

2013 (77 FR 44247) and again in the 

Hospice Wage Index for Fiscal Year 

2014 (78 FR 48240), we reminded 

providers to follow ICD–9–CM Coding 

Guidelines for reporting diagnoses on 

hospice claims. HIPAA, federal 

regulations, and the Medicare claims 

processing manual all require that ICD– 

9–CM Coding Guidelines be applied to 

the coding and reporting of diagnoses 

on hospice claims. In the FY 2013 

hospice notice, we reported that our 

analyses showed that 77.2 percent of 

hospice claims from 2010 only reported 

a single, principal diagnosis. We 

provided in-depth information 

regarding longstanding, existing ICD–9– 

CM Coding Guidelines that require the 

reporting of all additional or co-existing 

diagnoses on hospice claims. We went 

on to state that coexisting or additional 

diagnoses could be related or unrelated 

to the hospice patient’s terminal illness. 

As the Medicare hospice benefit covers 

hospice services for the palliation and 

management of the terminal illness and 

related conditions, we said, at that time, 

that hospice providers ‘‘should report 

on hospice claims all coexisting or 

additional diagnoses that are related to 

the terminal illness; they should not 

report coexisting or additional 

diagnoses that are unrelated to the 

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

stated that we do not believe that 

requiring reporting of coexisting or 

additional diagnoses that are related to 

the terminal illness would create a 

burden for hospice and that some 

providers already report these diagnoses 

on their claims. 

In the FY 2014 Hospice Wage Index 

and Payment Rate Update final rule, we 

reported that for the first quarter of FY 

2013 (October 1, 2012 through 

December 31, 2012) 72 percent of 


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41FY 2013 hospice claims data from the Chronic 

Conditions Data Warehouse (CCW) accessed on 

February 26, 2014. 

hospice claims only reported a single, 

principal diagnosis (78 FR 48240). We 

also discussed related versus unrelated 

diagnosis reporting on claims and 

clarified that ‘‘all of a patient’s 

coexisting or additional diagnoses’’ 

related to the terminal illness or related 

conditions should be reported on the 

hospice claim. Information on a 

patient’s related and unrelated 

diagnoses should already be included as 

part of the hospice comprehensive 

assessment and appropriate 

interventions should be incorporated 

into the patient’s plan of care, as 

determined by the hospice IDG. 

Analysis conducted on FY 2013 

hospice claims shows that 67 percent of 

hospice claims still only report a single, 

principal hospice diagnosis.41 Though 

this is a trend in the right direction, 

there still appears to be some confusion 

by the majority of hospice providers as 

to the requirements for diagnosis 

reporting on hospice claims. We are 

reminding providers to follow the ICD– 

9–CM Coding Guidelines, per 

longstanding policy, in regard to 

diagnosis reporting on claims. 

The ICD–9–CM Official Guidelines for 

Coding and Reporting state that for 

accurate reporting of ICD–9–CM 

diagnosis codes, ‘‘The documentation 

should describe the patient’s condition, 

using terminology which includes 

specific diagnoses, as well as symptoms, 

problems, and reasons for the 

encounter. List first the ICD–9–CM code 

for the diagnosis, condition, problem, or 

other reason for the encounter/visit 

shown in the medical record to be 

chiefly responsible for services 

provided.’’ The coding guidelines also 

state to code all documented conditions 

that coexist at the time of the encounter/ 

visit and require or affect patient care 

treatment or management. Therefore, 

this is a reminder that all diagnoses 

should be reported on the hospice claim 

for the terminal illness and related 

conditions, including those that can 

affect the care and management of the 

beneficiary. We will condition to 

monitor hospice claims to see if all 

conditions are being reported as 

required by ICD–9–CM Coding 

Guidelines. While we did not make any 

proposals regarding ICD–9–CM Coding 

Guidelines in the proposed rule, we 

received two comments requesting rapid 

dissemination 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, including 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 ‘‘social worker.’’ 

This definition is no longer accurate, 

and we intended to remove it as part of 

the June 5, 2008 final rule that amended 

the conditions of participation (CoPs) 

for hospices (73 FR 32088). The 2008 

final rule established new requirements 

for social workers at § 418.114(b)(3), 

making the definition of ‘‘social worker’’ 

at § 418.3 obsolete. However, the 

technical amendatory language included 

in the 2008 final rule did not instruct 

the Federal Register to delete the 

‘‘social worker’’ definition. 

Public comments and our response to 

comments regarding the technical 

correction to delete the definition of 

social worker 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 the 

technical correction as proposed. 

IV. Collection of Information 

Requirements 

Under the Paperwork Reduction Act 

of 1995, we are required to provide 30- 

day notice in the Federal Register and 

solicit public comment before a 

collection of information requirement is 

submitted to the Office of Management 

and Budget (OMB) for review and 

approval. In order to fairly evaluate 

whether an information collection 

should be approved by OMB, section 

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

Reduction Act of 1995 requires that we 

solicit comment on the following issues: 

• The need for the information 

collection and its usefulness in carrying 

out the proper functions of our agency. 

• The accuracy of our estimate of the 

information collection burden. 

• The quality, utility, and clarity of 

the information to be collected. 

• Recommendations to minimize the 

information collection burden on the 

affected public, including automated 

collection techniques. 

We are soliciting public comment on 

each of these issues for this section of 

this document that contains information 

collection requirements (ICRs). This 

section includes ICR information on 

data collection (A) related to hospice 

payment policy, including 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 

with the FY 2015 Hospice Wage Index 

proposed rule. The following 

assumptions were used in estimating 

the burden for the proposed changes 

related to hospice payment policy: 

TABLE 10—HOSPICE PAYMENT POLICY

BURDEN ESTIMATE ASSUMPTIONS

Number of Medicare-participating 

hospices nationwide, CY 2012 ..... 3,897 

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

Number of Part D prescriptions per 

hospice, from CY 2012 claims ...... 481 

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

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

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

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

Note: CY = Calendar year. 

All salary information is from the 

Bureau of Labor Statistics (BLS) Web 

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

naics4_621600.htm and includes a 

fringe benefits package worth 30 percent 

of the base salary. Hourly rates are based 

on May 2012 BLS data for each 

discipline, for those providing ‘‘home 

health care services.’’ 

1. Changes to the Election Statement 

(§ 418.24) 

Section 1812(d) of the Act requires 

that patients elect hospice care in order 

for Medicare to cover and pay for 

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

of the Act defines an attending 

physician and requires that the patient, 

not the hospice, designate an attending 

physician at the time of election. Our 

regulations at § 418.24 outline current 

requirements for completion of a 

hospice election statement, but do not 

require that the attending physician 

designated by the patient be identified. 

To safeguard the patient’s right to 

choose his or her attending physician, 

we proposed 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 patient 

acknowledges that the attending 


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physician was his or her choice. All 

Medicare and Medicaid hospice patients 

are required to elect the benefit. Since 

election requirement is particular to the 

Medicare and Medicaid hospice 

benefits, hospices are 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 

requirement is the one-time burden to 

modify the election statement to include 

a place for identifying the attending 

physician and acknowledging that he or 

she was chosen by the patient or 

representative. Hospices are currently 

required to explain these processes to 

patients, so we do not believe there is 

any additional burden for discussing 

that part of the election statement with 

patients or their representatives. We 

estimate that it will take a hospice 

clerical staff person 20 minutes (20/60 

= 0.33333 hours) to modify the election 

form, and the hospice administrator 15 

minutes (15/60 = 0.25 hours) to review 

the revised form. The clerical time plus 

administrator time equals a one-time 

burden of 35 minutes or (35/60) = 

0.58333 hours per hospice; for all 3,897 

hospices, the total time required is 

(0.58333 × 3,897) = 2,273 hours. At $17 

per hour for an office employee, the cost 

per hospice is (0.33333 × $17) = $5.66. 

At $63 per hour for the administrator’s 

time, the cost per hospice will be (0.25 

× $63) = $15.75. Therefore, the total onetime cost per hospice is $21.41, and the 

total one-time cost for all hospices is 

($21.41 × 3,897) = $83,435. 

Because of concerns related to the 

potential 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 require that 

the patient (or representative) provide a 

statement identifying the new attending 

physician and the date the change is to 

be effective, and that the patient (or 

representative) sign and date the form. 

The form should also include an 

acknowledgement that this change is the 

patient’s choice. The one-time burden to 

hospices is the time to develop a form 

for the patient to use. We estimate that 

it will take a hospice clerical staff 

person 20 minutes (20/60 = 0.33333 

hours) to develop this form, and the 

hospice administrator 15 minutes (15/60 

= 0.25 hours) to review the new form. 

The clerical time plus administrator 

time equals a one-time burden of 35 

minutes or (35/60) = 0.58333 hours per 

hospice; for all 3,897 hospices, the total 

time required is (0.58333 × 3,897) = 

2,273 hours. At $17 per hour for an 

office employee, the cost per hospice is 

(0.33333 × $17) = $5.66. At $63 per hour 

for the administrator’s time, the cost per 

hospice is (0.25 × $63) = $15.75. 

Therefore, the total one-time cost per 

hospice to develop this new form for 

changing attending physicians is $21.41, 

and the total one-time cost for all 

hospices is ($21.41 × 3,897) = $83,435. 

Comment: Two commenters asked 

CMS to clarify 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 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 have rephrased the 

sentence in this final rule to read as 

written in this response. 

2. Changes to Aggregate Cap 

Determination Reporting (§ 418.308) 

Congress mandated two caps on 

hospice payments: an inpatient cap and 

an aggregate cap. The hospice cap year 

is November 1 through October 31. 

Medicare contractors complete the 

hospice cap determination 

approximately twelve to eighteen 

months after the cap year in order to 

demand any overpayments from the 

hospices. A cap determination consists 

in determining whether a hospice 

exceeds the inpatient cap and the 

aggregate hospice cap. Medicare hospice 

inpatient stays in excess of twenty 

percent of total Medicare hospice days 

are to be reimbursed at the routine 

homecare rate; the hospice must be 

repay any excess due to receiving 

payments at the higher inpatient rates 

for the excess inpatient days. 

Additionally, Medicare hospice 

payments are limited by an aggregate 

cap, which is computed by multiplying 

the ‘‘cap amount’’ by the number of 

beneficiaries. If the actual Medicare 

payments exceed the aggregate cap, the 

hospice must repay the difference. We 

proposed to change our regulations at 

§ 418.308(c) to require hospices to 

calculate their inpatient and aggregate 

caps five months after the cap year and 

remit any overpayment. We finalized a 

policy that only 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 cost report to file their 

cost reports five months after the end of 

their cost reporting year. The regulation 

at § 413.24(f) also requires other 

provider types that file a Medicare cost 

report to remit any amount due the 

program at the time of the cost report 

filing. Although hospices file cost 

reports, the cap determination is not 

based on the cost report; the hospice 

caps serve to limit total Medicare 

payments similar to the way cost reports 

limit those payments for other provider 

types that file a Medicare cost report. 

Requiring hospices to complete a cap 

determination and remit any 

overpayment is consistent with what is 

currently required of all other provider 

types that file a Medicare cost report. 

We expect that it will take a hospice 

about 1.5 hours to complete its cap 

determination. All information needed 

to file the cap determination is available 

in the Provider Statistical and 

Reimbursement (PS&R) system. For all 

3,727 hospices that bill Medicare, this is 

(1.5 × 3,727) = 5,591 hours. We estimate 

that it will take one hour for an 

accountant to complete the cap 

determination worksheet provided by 

CMS for the cap year. At $40 per hour 

for an accountant, the cost is (1 × $40) 

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

$149,080 for all hospices. We estimate 

that it will take a half hour for the 

administrator to review the worksheet 

prepared by the accountant. At $63 per 

hour for the administrator’s time, the 

cost per hospice is (0.5 × $63) = $31.50, 

and for all hospices is (3,727 × $31.50) 

= $117,401. Therefore the total 

estimated cost per hospice is ($40 + 

$31.50) = $71.50, and the total cost for 

all hospices is (3,727 × $71.50) = 

$266,481. 

B. CAHPS® Hospice Survey 

This section is associated with a new 

information collection request that is 

required to start in January 2015. The 

Hospice Survey data collected in 2015 

is required for the FY 2017 HQRP 

quality reporting requirements along 

with the submission of the clinical 

structural measures for the same 

payment period. This is a new 

information collection request seeking 

approval to assess experiences of care 

with hospice reported by primary 

caregivers (that is, bereaved family 

members of friends) of patients who 

died while receiving 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 


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generate hospice experience reports. 

Here are the estimates for the 

approximate annual cost of the CAHPS®

Survey (Table 11). 

TABLE 11—ASSUMPTIONS AND ESTIMATES FOR CAHPS® HOSPICE SURVEY

Approximate Number 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 million 

In implementing the HQRP, we seek 

to collect measure information with as 

little burden to the providers as 

possible, but which reflects the full 

spectrum of quality performance. As 

such, we are moving forward toward the 

implementation of the CAHPS® Hospice 

Survey to provide data to the public 

about the patients’ families’ and friends’ 

perspectives of care of their loved ones 

who passed way while in hospices. 

The CAHPS® Hospice Survey data 

will provide the peoples’ voices to 

hospice care in the United States. Based 

on the criteria outlined in the Preamble, 

some hospices that are too new and very 

small will be exempt from the HQRP. 

We estimate that 2,600 hospices will 

qualify to participate in the survey. 

From CMS experiences with surveys, 

we estimate an annual cost of $3,300 per 

hospice to participate in the CAHPS®

Hospice Survey. The cost of $3,300 

includes the preparation of a monthly 

sampling frame for their approved 

vendor, as well as estimated vendor 

costs to conduct the data collection. The 

estimated annual cost for all hospices to 

do the survey is $8.58 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 

sample frame may require more time. 

However, data elements needed on the 

sample frame will be kept at a minimum 

to reduce the burden on the hospices. 

The survey contains 47 items and is 

estimated to require an average 

administration time of 10.4 minutes in 

English, and 12.5 minutes in Spanish, 

for an average response time of 10.505 

minutes or 0.175 hours, assuming that 5 

percent of the survey respondents 

complete the survey in Spanish. These 

burden estimates are based on CMS’ 

experiences with surveys of similar 

lengths that were fielded with Medicare 

beneficiaries. We estimate that 

approximately six surveys can be done 

an hour, at an hourly wage of $22.77. 

(We used the mean hourly wage from 

the ‘‘National Compensation Survey: 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 

estimate of 550,000 respondents, we 

estimate a total respondent burden by 

multiplying 550,000 respondents 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 cost 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 and cost estimates associated 

with both the hospice payment policy 

changes and the CAHPS® Hospice 

Survey requirements. 

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

Regulation 

section(s) 

OMB 

control 

No. 

Number 

of respondents 

Number 

of responses 

Burden per 

response 

(hours) 

Total annual 

burden 

(hours) 

Hourly labor 

cost of 

reporting 

($) 

Total 

labor 

cost of 

reporting 

($) 

Total cost 

($) 

418.24(b) 0938– 

1067.

3,897 3,897 0.583333 2,273 21.41 83,435 83,435 

418.24(f) .. 0938– 

1067.

3,897 3,897 0.583333 2,273 21.41 83,435 83,435 

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. 

If you comment on these information 

collection and recordkeeping 

requirements, please submit your 

comments electronically as specified in 

the ADDRESSES section of this final rule. 

Please identify which Collection of 

Information 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 

Determination Reporting (§ 418.308); or 

• B. CAHPS® Hospice Survey 

(§ 418.312). 

Comment: A commenter said the rates 

used in Table 10 do not reflect salary 

information in all regional areas, and 

therefore underestimate the 

administrative burden. This commenter 

felt that the time estimates were underreported but did not suggest specific 

changes to the estimates. 

Response: We use salary data from the 

Bureau 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 require 

to complete a particular activity. 

V. Regulatory Impact Analysis 

A. Statement of Need 

This final rule follows § 418.306(c) 

which requires annual issuance, in the 

Federal Register, of the hospice wage 


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index based on the most current 

available CMS hospital wage data, 

including any changes to the definitions 

of Core-Based Statistical Areas (CBSAs), 

or previously used Metropolitan 

Statistical Areas (MSAs). This 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)(ii)(VII) of the 

Act. The payment rate updates are 

subject to changes in economy-wide 

productivity as specified in section 

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

addition, the payment rate updates may 

be reduced by an additional 0.3 

percentage point (although for FY 2014 

to FY 2019, the potential 0.3 percentage 

point reduction is subject to suspension 

under conditions specified in section 

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

Congress amended section 1814(i)(6) of 

the Act with section 3132(a) of the 

Affordable Care Act. The amendment 

authorized the Secretary to collect 

additional data and information 

determined appropriate to revise 

payments for hospice care and for other 

purposes. The data collected may be 

used to revise the methodology for 

determining the payment rates for 

routine home care and other services 

included in hospice care, no earlier than 

October 1, 2013, as described in section 

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

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

this final rule provides an update on 

hospice payment reform analysis. 

Section 1814(i)(2)(A) through (C) 

limits total Medicare payments a 

hospice can receive through the 

aggregate cap. This final rule also 

requires that providers submit their 

hospice aggregate cap determination to 

their Medicare Administrative 

Contractor (MAC) within 5 months after 

the cap year ends, but not sooner than 

3 months after 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 hospice beneficiaries waive 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 beneficiary’s hospice status be upto-date in the claims processing 

systems. Therefore, this final rule 

requires that hospice 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 

effective date of discharge/revocation. 

Hospices will be subject to providerliable days when they file an NOE late, 

though we will allow for a waiver of 

these provider-liable days when latefiling 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-diem payment 

to a hospice program are excluded from 

coverage under Part D. Section 1861(dd) 

of the Act states the hospice is 

responsible for covering all drugs or 

biologicals for the palliation and 

management of the terminal illness and 

related conditions. The FY 2015 

Hospice Wage Index proposed rule, in 

accordance with sections 1860D–24 and 

1861(dd) of the Act, solicited 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 biologicals while 

beneficiaries are under a hospice 

election. 

Finally, section 3004 of the Affordable 

Care Act amended the Act to authorize 

a quality reporting program for 

hospices, and this rule discusses 

changes in the requirements for the 

hospice quality reporting program in 

accordance with section 1814(i)(5) of 

the Act. 

B. Introduction 

We have examined the impacts of this 

rule as required by Executive Order 

12866 on Regulatory Planning and 

Review (September 30, 1993), Executive 

Order 13563 on Improving Regulation 

and Regulatory Review (January 18, 

2011), the Regulatory Flexibility Act 

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

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

202 of the Unfunded Mandates Reform 

Act of 1995 (UMRA, March 22, 1995; 

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

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

Executive Orders 12866 and 13563 

direct agencies to assess all costs and 

benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). Executive Order 13563 

emphasizes the importance of 

quantifying both costs and benefits, of 

reducing costs, of harmonizing rules, 

and of promoting flexibility. A 

regulatory impact analysis (RIA) must 

be prepared for major rules with 

economically significant effects ($100 

million or more in any 1 year). This 

final rule has been designated as 

economically significant under section 

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

thus a major rule under the 

Congressional Review Act. Accordingly, 

we have prepared a regulatory impact 

analysis (RIA) that to the best of our 

ability, presents the costs and benefits of 

the rulemaking. Finally, this rule has 

been reviewed by OMB. 

C. Overall Impact 

The overall impact of this 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 

percentage for FY 2015 of 2.1 percent 

and changes to the FY 2015 hospice 

wage index, including a reduction to the 

BNAF by an additional 15 percent, for 

a total BNAF reduction of 85 percent (10 

percent in FY 2010, and 15 percent per 

year for FY 2011 through FY 2015). An 

85 percent reduced BNAF is computed 

to be 0.009313 (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 the 

BNAF (for a total BNAF reduction of 85 

percent), comparing estimated payments 

for FY 2014 to estimated payments for 

FY 2015. The FY 2014 payments used 

for comparison have a 70 percent 

reduced BNAF applied. We estimate 

that the total hospice payments for FY 

2015 will decrease by 0.7 percent. This 

0.7 percent is the result of a 0.1 percent 

reduction due to the use of updated 

wage data (¥$20 million), and a 0.6 

percent reduction due to the additional 

15 percent reduction in the BNAF 

(¥$100 million). This estimate 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 

hospital 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 

percent hospice payment update 

percentage is based on a 2.9 percent 

inpatient hospital market basket update 

for FY 2015 reduced by a 0.5 percentage 


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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 million. Taking into 

account the 2.1 percent final hospice 

payment update percentage (+$350 

million), 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 impact 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 prefloor, pre-reclassified hospital wage 

index as a basis for the hospice wage 

index and continues to use the same 

policies for treatment of areas (rural and 

urban) without hospital wage data. The 

final FY 2015 hospice wage index is 

based upon the FY 2013 pre-floor, prereclassified 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 

BNAF (for a total BNAF reduction of 85 

percent). 

For the purposes of our impacts, our 

baseline is estimated FY 2014 payments 

with a 70 percent BNAF reduction, 

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

first comparison (column 3 of Table 13) 

compares our baseline to estimated FY 

2015 payments (holding payment rates 

constant) using the updated wage data 

(FY 2013 pre-floor, pre-reclassified 

hospital wage index). Consequently, the 

estimated effects illustrated in column 3 

of Table 13 show the distributional 

effects of the updated wage data only. 

The effects of using the updated wage 

data combined with the additional 15 

percent reduction in the BNAF are 

illustrated in column 4 of Table 13. 

We have included a comparison of the 

combined effects of the additional 15 

percent BNAF reduction, the updated 

wage data, and the final 2.1 percent 

hospice payment update percentage for 

FY 2015 (Table 13, column 5). 

Presenting these data gives the hospice 

industry a more complete picture of the 

effects on their total revenue based on 

changes to the hospice wage index and 

the BNAF phase-out as discussed in this 

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 Medicare program is such 

that the changes may interact, and the 

complexity of the interaction of these 

changes could make it difficult to 

predict accurately the full scope of the 

impact upon hospices. 

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

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

15 PERCENT (FOR A TOTAL BNAF REDUCTION OF 85 PERCENT) AND APPLYING A 2.1 PERCENT HOSPICE PAYMENT

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

Number of 

hospices 

Number of 

routine home 

care days in 

thousands 

Percent 

change in 

hospice payments due to 

FY2014 wage 

index change 

Percent 

change in 

hospice payments due to 

wage index 

change, additional 15% reduction in 

budget 

neutrality 

adjustment 

Percent 

change in 

hospice payments due to 

wage index 

change, additional 15% reduction in 

budget 

neutrality adjustment and 

market basket 

update 

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

ALL HOSPICES ................................................................... 3,752 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 


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

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

15 PERCENT (FOR A TOTAL BNAF REDUCTION OF 85 PERCENT) AND APPLYING A 2.1 PERCENT HOSPICE PAYMENT

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

Number of 

hospices 

Number of 

routine home 

care days in 

thousands 

Percent 

change in 

hospice payments due to 

FY2014 wage 

index change 

Percent 

change in 

hospice payments due to 

wage index 

change, additional 15% reduction in 

budget 

neutrality 

adjustment 

Percent 

change in 

hospice payments due to 

wage index 

change, additional 15% reduction in 

budget 

neutrality adjustment and 

market basket 

update 

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

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 

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 

GOVERNMENT ............................................................ 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 percentage 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, New Hampshire, Rhode Island, Vermont; Middle Atlantic=Pennsylvania, New Jersey, 

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

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

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

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

Table 13 shows the results of our 

analysis. In column 1, we indicate the 

number of hospices included in our 

analysis as of 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 performed on all types of 

hospice care. Columns 3, 4, and 5 

compare FY 2014 estimated payments 

with those estimated for FY 2015. The 

estimated FY 2014 payments 

incorporate a BNAF, which has been 

reduced by 70 percent. Column 3 shows 

the percentage change in estimated 

Medicare payments for FY 2015 due to 

the effects of the updated wage data 

only, compared with estimated FY 2014 

payments. The effect of the updated 

wage data can vary from region to region 

depending on the fluctuations in the 

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

Column 4 shows the percentage change 

in estimated hospice payments from FY 

2014 to FY 2015 due to the combined 

effects of using the updated wage data 

and reducing the BNAF by an additional 

15 percent. Column 5 shows the 

percentage change in estimated hospice 

payments from FY 2014 to FY 2015 due 

to the combined effects of using updated 

wage data, an additional 15 percent 

BNAF reduction, and the final 2.1 

percent hospice payment update 

percentage. 

The impact of changes in this final 

rule has been analyzed according to the 

type of hospice, geographic location, 

type of ownership, hospice base, and 

size. Table 13 categorizes hospices by 

various geographic and hospice 

characteristics. The first row of data 

displays the aggregate result of the 

impact for all Medicare-certified 

hospices. The second and third rows of 

the table categorize hospices according 

to their geographic location (urban and 

rural). Our analysis indicated that there 

are 2,779 hospices located in urban 

areas and 973 hospices located in rural 

areas. The next two row groupings in 

the table indicate the number of 

hospices by census region, also broken 

down by urban and rural hospices. The 

next grouping shows the impact on 

hospices based on the size of the 

hospice’s program. We determined that 

the majority of hospice payments are 

made at the routine home care rate. 

Therefore, we based the size of each 

individual hospice’s program on the 


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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 Table 13 differs from the 

number of hospices shown in Table 10 

because the data were obtained from 

different sources). Approximately 41.5 

percent of Medicare-certified hospices 

are identified as voluntary (non-profit) 

or government agencies; a majority (58.5 

percent) are proprietary (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 vast majority of 

routine home care days, most hospices 

are medium-sized, and the vast majority 

of hospices are freestanding. 

b. Hospice Size 

Under the Medicare hospice benefit, 

hospices can provide four different 

levels of care. The majority of the days 

provided by a hospice are routine home 

care (RHC) days, representing about 97 

percent of the services provided by a 

hospice. Therefore, the number of RHC 

days can be used as a proxy for the size 

of the hospice, that is, the more days of 

care provided, the larger the hospice. 

We currently use three size designations 

to present the impact analyses. The 

three categories are—(1) small agencies 

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

agencies having 3,500 to 19,999 RHC 

days; and (3) large agencies having 

20,000 or more RHC days. The FY 2015 

updated wage data before any BNAF 

reduction are anticipated to decrease 

payments to large hospices by 0.1 

percent, and increase 0.1 for small 

hospices. Medium hospices’ 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 

percent) are anticipated to decrease 

estimated payments to small hospices 

by 0.4 percent, to medium hospices by 

0.5 percent, and to large hospices by 0.7 

percent (column 4). Finally, the updated 

wage data, the additional 15 percent 

BNAF reduction (for a total BNAF 

reduction of 85 percent), and the final 

2.1 percent hospice payment update 

percentage are projected to increase 

estimated payments by 1.7 percent for 

small hospices, by 1.6 percent for 

medium hospices, and by 1.4 percent 

for large hospices (column 5). 

c. Geographic Location 

Column 3 of Table 13 shows the 

estimated impact of using updated wage 

data without the BNAF reduction. 

Urban hospices are anticipated to 

experience a decrease of 0.1 percent and 

rural hospices are anticipated to 

experience a decrease of 0.2 percent in 

payments. Urban hospices can 

anticipate an increase in payments in 

Middle Atlantic of 0.5 percent, in the 

Pacific of 0.9 percent and in the 

Outlying area of 0.7 percent. Urban 

hospices can anticipate a decrease in 

payments ranging from 0.8 percent in 

the West North Central region to 0.1 

percent in the East North Central region. 

Urban hospices in New England are not 

anticipated to be affected by the 

updated wage data. 

Rural hospices are estimated to see a 

decrease in payments in four regions, 

ranging from 0.7 percent in the East 

North Central region to 0.1 percent in 

the New England region. Rural hospices 

can anticipate an increase in payments 

in four regions ranging from 0.3 percent 

in the Middle Atlantic region to 0.8 

percent in the Pacific region. There is no 

anticipated change in payments for the 

East South Central and Outlying regions 

due to the use of updated wage data. 

Column 4 shows the combined effect 

of the updated wage data and the 

additional 15 percent BNAF reduction 

on estimated payments, as compared to 

the FY 2014 estimated payments using 

a BNAF with a 70 percent reduction. 

Overall, hospices are anticipated to 

experience a 0.7 percent decrease in 

payments, with urban hospices 

experiencing an estimated decrease of 

0.7 percent and rural hospices 

experiencing an estimated decrease of 

0.5 percent. All urban areas other than 

Outlying and Pacific are estimated to 

see decreases in payments, ranging from 

1.4 percent in the West North Central 

region to 0.7 percent in the New 

England and East South Central regions. 

The urban Pacific and Outlying regions 

are anticipated to see increases in 

payments of 0.2 percent and 0.7 percent, 

respectively. 

Rural hospices are estimated to 

experience a decrease in payments in 

six regions, ranging from 1.3 percent in 

the East North Central region to 0.1 

percent in the West North Central 

region. Payments in the rural Mountain 

and Pacific regions are anticipated to 

increase by 0.1 percent, while payments 

in the rural Outlying and East South 

Central regions are anticipated to stay 

relatively stable. 

Column 5 shows the combined effects 

of the updated wage data, the additional 

15 percent BNAF reduction, and the 

final 2.1 percent hospice payment 

update percentage on estimated FY 2015 

payments as compared to estimated FY 

2014 payments. Overall, hospices are 

anticipated to experience a 1.4 percent 

increase in payments, with urban 

hospices anticipated to experience a 1.4 

percent increase in payments, and rural 

hospices anticipated to experience a 1.6 

percent increase in payments. Urban 

hospices are anticipated to experience 

an increase in estimated payments in 

every region, ranging from 0.7 percent 

in the West North Central region to 2.8 

percent in Outlying area. Rural hospices 

in every region are estimated to see an 

increase in payments ranging from 0.8 

percent in East North Central to 2.2 

percent in the Mountain and Pacific 

regions. 

d. Type of Ownership 

Column 3 demonstrates the effect of 

the updated wage data on FY 2015 

estimated payments, versus FY 2014 

estimated payments. We anticipate that 

using the updated wage data will 

decrease estimated payments to 

proprietary (for-profit), voluntary (nonprofit), and Government hospices by 0.1 

percent. Column 4 demonstrates the 

combined effects of the updated wage 

data and of the additional 15 percent 

BNAF reduction. Estimated payments to 

voluntary (non-profit), proprietary (forprofit), and government hospices are 

anticipated to decrease by 0.6 percent, 

0.7 percent and 0.7 percent, 

respectively. Column 5 shows the 

combined effects of the updated wage 

data, the additional 15 percent BNAF 

reduction (for a total BNAF reduction of 

85 percent), and the final 2.1 percent 

hospice payment update percentage on 

estimated payments, comparing FY 

2015 to FY 2014. Estimated FY 2015 

payments are anticipated to increase for 

voluntary (non-profit) hospices by 1.5 

percent, for proprietary (for-profit) 

hospices by 1.4 percent, and 

government hospices by 1.4 percent. 

e. Hospice Base 

Column 3 demonstrates the effect of 

using the updated wage data, comparing 

estimated payments for FY 2015 to FY 

2014. Estimated payments are 

anticipated to decrease for freestanding 

hospices by 0.1 percent. Estimated 

payments are anticipated to increase for 

home health agency, hospital, and 

skilled nursing facility based hospices 

by 0.1 percent, 0.2 percent, and by 0.2 

percent, respectively. Column 4 shows 

the combined effects of the updated 

wage data and reducing the BNAF by an 

additional 15 percent, comparing 

estimated payments for FY 2015 to FY 

2014. All hospice facilities are 


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anticipated to experience decrease in 

payments ranging from 0.7 percent for 

freestanding hospices to 0.4 percent for 

hospital and skilled nursing facility 

based hospices. Column 5 shows the 

combined effects of the updated wage 

data, the additional 15 percent BNAF 

reduction, and the final 2.1 percent 

hospice payment update percentage on 

estimated payments, comparing FY 

2015 to FY 2014. Estimated payments 

are anticipated to increase for all 

hospices, ranging from 1.4 percent for 

freestanding 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 approaches with 

respect to Part D coordination with 

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 

hospices, and therefore has no effect on 

Medicaid programs. As described 

previously, estimated Medicare 

payments to hospices in FY 2015 are 

anticipated to decrease by $20 million 

due to the update in the wage index 

data, and to decrease by $100 million 

due to the additional 15 percent 

reduction in the BNAF (for a total 85 

percent reduction in the BNAF). 

However, the final hospice payment 

update percentage of 2.1 percent is 

anticipated to increase Medicare 

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 

update percentage and the updated 

wage index, the aggregate impact will be 

a net increase of $230 million in 

payments to hospices. In the proposed 

rule for FY 2015, we did not consider 

discontinuing the additional 15 percent 

reduction to the BNAF as the 7-year 

phase-out of the BNAF was finalized in 

the FY 2010 Hospice Wage Index final 

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

to discontinue the reduction to the 

BNAF by an additional 15 percent, 

Medicare 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 percent hospice payment update 

percentage for FY 2015 is based on a 

final 2.9 percent inpatient hospital 

market basket 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 updated according to section 

1814(i)(1)(C)(ii)(VII) of the Act, which 

states that the update to the payment 

rates for subsequent FYs must be the 

market basket percentage for that FY. 

The Act requires us to use the inpatient 

hospital market basket to determine the 

hospice payment rate update. In 

addition, section 3401(g) of the 

Affordable Care Act mandates that, 

starting with FY 2013 (and in 

subsequent FYs), the hospice payment 

update percentage will be annually 

reduced by changes in economy-wide 

productivity as specified in section 

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

addition, section 3401(g) of the 

Affordable Care Act also mandates that 

in FY 2013 through FY 2019, the 

hospice payment update percentage will 

be reduced by an additional 0.3 

percentage point (although for FY 2014 

to FY 2019, the potential 0.3 percentage 

point reduction is subject to suspension 

under conditions specified in section 

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

Regarding alternative timeframes for 

timely-filing 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-filed NOE 

or NOTR in future rulemaking. To 

ensure the attending physician of record 

is properly documented in the 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 his/her attending 

to once per election period (similar to 

the current regulations at § 418.30(a) 

that only allows a beneficiary to change 

a hospice provider once during an 

election period). However, we first want 

to conduct additional analyses of 

hospice Part A billing for physician 

services provided by nurse practitioners 

and Part B attending physician billing to 

determine how frequently beneficiaries 

change attending physicians. 

i. Accounting Statement 

As required by OMB Circular A–4 

(available at http://

www.whitehouse.gov/omb/circulars/

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

have prepared an accounting statement 

showing the classification of the 

expenditures associated with this final 

rule. Table 14 provides our best estimate 

of the increase in Medicare payments 

under the hospice benefit as a result of 

the changes presented in this final rule 

for 3,752 hospices in our impact 

analysis file constructed using FY 2013 

claims as of March 31, 2014. Table 14 

also includes the costs associated with 

(1) a hospice accountant to complete the 

cap determination worksheet, and for a 

hospice administrator to review the 

final worksheet, for a total annual 

burden of $266,481 as noted in section 

IV.A; and (2) the cost to hospices to 

participate in the CAHPS® survey, 

including the preparation of a monthly 

sampling frame for their approved 

vendor, as well as estimated survey 

vendor costs, for an estimated total 

annual cost of $8.58 million to all 

hospices in the survey. Table 14 below 

does not reflect a one-time cost of 

modifying the current hospice election 

statement to record the patient’s choice 

of attending physician ($83,435) and the 

one-time cost of creating a new hospice 

form for changing the attending 

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

burden of $166,870 as noted in section 

IV.B. 

TABLE 14—ACCOUNTING STATEMENT: 

CLASSIFICATION 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.

$230 

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. 


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j. Conclusion 

In conclusion, the overall effect of this 

final rule is an estimated $230 million 

increase in Medicare payments to 

hospices due to the wage index changes 

(including the additional 15 percent 

reduction in the BNAF) and the final 

hospice payment update percentage of 

2.1 percent. Also, starting in FY 2015, 

hospices are estimated to incur annual 

burden costs of $266,481 for a hospice 

accountant to complete the cap 

determination worksheet, and for a 

hospice administrator to review the 

final worksheet. Finally, starting in FY 

2015 hospices are estimated to incur 

annual burden costs of $8.58 million for 

participation in the CAHPS® hospice 

survey. 

2. Regulatory Flexibility Act Analysis 

The RFA requires agencies to analyze 

options for regulatory relief of small 

businesses if a rule has a significant 

impact on a substantial number of small 

entities. For purposes of the RFA, we 

estimate that almost all hospices are 

small entities as that term is used in the 

RFA. The great majority of hospitals and 

most other health care providers and 

suppliers are small entities by meeting 

the Small Business Administration 

(SBA) definition of a small business (in 

the service sector, having revenues of 

less than $7.0 million to $35.5 million 

in any 1 year), or being nonprofit 

organizations. While the SBA does not 

define a size threshold in terms of 

annual revenues for hospices, it does 

define one for home health agencies 

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

sites/default/files/files/Size_Standards_

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

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’’ in 

determining if this final rule has a 

significant impact on a substantial 

number of small entities (for example, 

hospices). We estimate that 95 percent 

of hospices have Medicare revenues 

below $14 million or are nonprofit 

organizations and therefore are 

considered small entities. 

HHS’s practice in interpreting the 

RFA is to consider effects economically 

‘‘significant’’ only if they reach a 

threshold of 3 to 5 percent or more of 

total revenue or total costs. As noted 

above, the combined effect of the 

updated wage data, the additional 15 

percent BNAF reduction, and the final 

FY 2015 hospice payment update 

percentage 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 BNAF 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 determined that this final rule will 

not create a significant economic impact 

on a substantial number of small 

entities. 

In addition, section 1102(b) of the Act 

requires us to prepare a regulatory 

impact analysis if a rule may have a 

significant impact on the operations of 

a substantial number of small rural 

hospitals. This analysis must conform to 

the provisions of section 604 of the 

RFA. For purposes of section 1102(b) of 

the Act, we define a small rural hospital 

as a hospital that is located outside of 

a metropolitan statistical area and has 

fewer than 100 beds. This final rule only 

affects hospices. Therefore, the 

Secretary has determined that this final 

rule will not have a significant impact 

on the operations of a substantial 

number of small rural hospitals. 

3. Unfunded Mandates Reform Act 

Analysis 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 also 

requires that agencies assess anticipated 

costs and benefits before issuing any 

rule whose mandates require spending 

in any 1 year of $100 million in 1995 

dollars, updated annually for inflation. 

In 2014, that threshold is approximately 

$141 million. This final rule is not 

anticipated to have an effect on State, 

local, or tribal governments, in the 

aggregate, or on the private sector of 

$141 million or more. 

VI. Federalism Analysis 

Executive Order 13132 on Federalism 

(August 4, 1999) establishes certain 

requirements that an agency must meet 

when it promulgates a proposed rule 

(and subsequent final rule) that imposes 

substantial direct requirement costs on 

State and local governments, preempts 

State law, or otherwise has Federalism 

implications. We have reviewed this 

final rule under the threshold criteria of 

Executive Order 13132, Federalism, and 

have determined that it will not have 

substantial direct effects on the rights, 

roles, and responsibilities of States, 

local or tribal governments. 

VII. Waiver of 60-Day Delay in the 

Effective Date 

We ordinarily provide a 60-day delay 

in the effective 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 

impracticable, unnecessary, or contrary 

to the public interest, and incorporates 

a statement of the 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 payment 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 policies for 

these systems are effective, following 

the 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 the 

agency incorporates a statement of the 

findings and its reasons in the rule 

issued, the agency may specify 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 portions of the rule 

will be effective October 1. 

List of Subjects 

42 CFR Part 405 

Administrative practice and 

procedure, Health facilities, Medicare, 

Reporting and recordkeeping 

requirements. 

42 CFR Part 418 

Health facilities, Hospice care, 

Medicare, Reporting and recordkeeping 

requirements. 

For the reasons set forth in the 

preamble, the Centers for Medicare and 

Medicaid Services amends 42 CFR 

chapter IV as set forth below: 

PART 405—FEDERAL HEALTH 

INSURANCE 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: 


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

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

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

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

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

3711. 

■ 2. Section 405.371 is amended by 

revising paragraph (c)(1) and adding 

paragraph (e) to read as follows: 

§ 405.371 Suspension, offset, and 

recoupment of Medicare payments to 

providers and suppliers of services. 

* * * * * 

(c) * * * (1) Except as provided in 

paragraphs (d) and (e) of this section, 

CMS or the Medicare contractor 

suspends payments only after it has 

complied with the procedural 

requirements set forth at § 405.372. 

* * * * * 

(e) Suspension of payment in the case 

of unfiled hospice cap determination 

reports. (1) If a provider has failed to 

timely file an acceptable hospice cap 

determination report, payment to the 

provider is immediately suspended in 

whole or in part until a cap 

determination report is filed and 

determined by the Medicare contractor 

to be acceptable. 

(2) In the case of an unfiled hospice 

cap determination report, the provisions 

of § 405.372 do not apply. (See 

§ 405.372(a)(2) concerning failure to 

furnish other information.) 

PART 418—HOSPICE CARE 

■ 3. The authority citation for part 418 

continues to read as follows: 

Authority: Secs. 1102 and 1871 of the 

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

1395hh). 

§ 418.3 [Amended] 

■ 4. Section 418.3 is amended by 

removing the definition of ‘‘Social 

worker’’. 

■ 5. Section 418.24 is amended by 

revising paragraphs (a) and (b)(1) and 

adding paragraph (f) to read as follows: 

§ 418.24 Election of hospice care. 

(a) Filing an election statement. (1) 

General. An individual who meets the 

eligibility requirement of § 418.20 may 

file an election statement with a 

particular hospice. If the individual is 

physically or mentally incapacitated, 

his or her representative (as defined in 

§ 418.3) may file the election statement. 

(2) Notice of election. The hospice 

chosen by the eligible individual (or his 

or her representative) must file the 

Notice of Election (NOE) with its 

Medicare contractor within 5 calendar 

days after the effective date of the 

election statement. 

(3) Consequences of failure to submit 

a timely notice of election. When a 

hospice does not file the required Notice 

of Election for its Medicare patients 

within 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. These days are a provider 

liability, and the provider 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 

consequence 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 unusual events that inflict 

extensive damage to the hospice’s 

ability to operate. 

(ii) A CMS or Medicare contractor 

systems issue that is beyond the control 

of the hospice. 

(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 control of the 

hospice. 

(b) * * * 

(1) Identification of the particular 

hospice and of the attending physician 

that will provide care to the individual. 

The individual or representative must 

acknowledge that the identified 

attending physician was his or her 

choice. 

* * * * * 

(f) Changing the attending physician. 

To change the designated attending 

physician, the individual (or 

representative) must file a signed 

statement with the hospice that states 

that he or she is changing his or her 

attending physician. 

(1) The statement must identify the 

new attending physician, and include 

the date the change is to be effective and 

the date signed by the individual (or 

representative). 

(2) The individual (or representative) 

must acknowledge that the change in 

the attending physician is due to his or 

her choice. 

(3) The effective date of the change in 

attending physician cannot be 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 Medicare 

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 Medicare 

contractor within 5 calendar days after 

the effective date of the revocation, 

unless it has already filed a final claim 

for that beneficiary. 

■ 8. Section 418.306 is amended by 

adding paragraph (b)(6) to read as 

follows: 

§ 418.306 Determination of payment rates. 

* * * * * 

(b) * * * 

(6) For FY 2014 and subsequent fiscal 

years, in the case of a Medicare-certified 

hospice that does not submit hospice 

quality data, as specified by the 

Secretary, the payment rates are equal to 

the rates for the previous fiscal year 

increased by the applicable market 

basket percentage increase, minus 2 

percentage points. Any reduction of the 

percentage change will apply only to the 

fiscal year involved and will not be 

taken into account in computing the 

payment amounts for a subsequent 

fiscal year. 

* * * * * 

■ 9. Section 418.308 is amended by 

revising paragraph (c) to read as follows: 

§ 418.308 Limitation on the amount of 

hospice payments. 

* * * * * 

(c) The hospice must file its aggregate 

cap determination notice with its 

Medicare contractor no later than 5 

months after the end of the cap year 

(that is, by March 31st) and remit any 

overpayment due at that time. Hospices 

shall file the aggregate cap using data no 

earlier than 3 months after the end of 


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the cap period. The Medicare contractor 

will notify the hospice of the final 

determination of program 

reimbursement in accordance with 

procedures similar to those described in 

§ 405.1803 of this chapter. If a provider 

fails to file its self-determined cap 

determination with its Medicare 

contractor within 5 months after the cap 

year, payments to the hospice will be 

suspended in whole or in part, until a 

self-determined cap determination is 

filed with the Medicare contractor, in 

accordance with§ 405.371(e) of this 

chapter. 

* * * * * 

■ 10. Subpart G is amended by adding 

a new § 418.312 to read as follows: 

§ 418.312 Data submission requirements 

under the hospice quality reporting 

program. 

(a) General rule. Except as provided in 

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

data on measures selected under section 

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

manner, and at a time, specified by the 

Secretary. 

(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 CMS certification number before 

November 1 of the calendar year before 

the fiscal year for which a payment 

determination will be made must 

submit data for the calendar year. 

(d) Medicare-certified hospices must 

contract with CMS-approved vendors to 

collect the CAHPS® Hospice Survey 

data on their behalf and submit the data 

to the Hospice CAHPS® Data Center. 

(e) If the hospice’s total, annual, 

unique, survey-eligible, deceased 

patient count for the prior calendar year 

is less than 50 patients, the hospice is 

eligible to be exempt from the CAHPS®

Hospice Survey reporting requirements 

in the current calendar year. In order to 

qualify for this exemption the hospice 

must submit to CMS its total, annual, 

unique, survey-eligible, deceased 

patient count for the prior calendar year. 

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

vendors must meet the minimum 

business requirements. Survey vendors 

must have been in business for a 

minimum of 4 years, have conducted 

surveys in the approved survey mode 

for a minimum of 3 years, and have 

conducted surveys of individual 

patients for a minimum of 2 years. For 

Hospice CAHPS®, a ‘‘survey of 

individual patients’’ is defined as the 

collection of data from at least 600 

individual patients selected by 

statistical sampling methods, and the 

data collected are used for statistical 

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

the CAHPS® Hospice Survey, nor may 

they conduct any survey administration 

processes (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 Hospice CAHPS® survey or 

administer the survey on behalf of any 

other hospice in the capacity as a 

Hospice CAHPS® survey vendor. Such 

organizations will not be approved by 

CMS as CAHPS® Hospice Survey 

vendors. 

(h) Reconsiderations and appeals of 

Hospice Quality Reporting Program 

decisions. (1) A hospice may request 

reconsideration of a decision by CMS 

that the hospice has not met the 

requirements of the Hospice Quality 

Reporting Program for a particular 

reporting period. A hospice must submit 

a reconsideration request to CMS no 

later than 30 days from the date 

identified on the annual payment 

update notification provided to the 

hospice. 

(2) Reconsideration request 

submission requirements are available 

on the CMS Hospice Quality Reporting 

Web site on CMS.gov. 

(3) A hospice that is dissatisfied with 

a decision made by CMS on its 

reconsideration request may file an 

appeal with the Provider 

Reimbursement Review Board under 

part 405, subpart R of this chapter. 

Dated: July 24, 2014. 

Marilyn Tavenner, 

Administrator, Centers for Medicare & 

Medicaid Services. 

Approved: July 30, 2014. 

Sylvia M. Burwell 

Secretary, Department of Health and Human 

Services. 

[FR Doc. 2014–18506 Filed 8–4–14; 4:15 pm] 

BILLING CODE 4120–01–P 


tkelley on DSK3SPTVN1PROD with RULES3