Vol. 78 Wednesday, 

No. 152 August 7, 2013 

Part II 

Department of Health and Human Services 

Center for Medicare & Medicaid Services 

42 CFR Part 418 

Medicare Program; FY 2014 Hospice Wage Index and Payment Rate 

Update; Hospice Quality Reporting Requirements; and Updates on 

Payment Reform; Final Rule 


emcdonald on DSK67QTVN1PROD with RULES_2
48234 Federal Register / Vol. 78, No. 152 / Wednesday, August 7, 2013 / Rules and Regulations 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Part 418 

[CMS–1449–F] 

RIN 0938–AR64 

Medicare Program; FY 2014 Hospice 

Wage Index and Payment Rate Update; 

Hospice Quality Reporting 

Requirements; and Updates on 

Payment Reform 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Final rule. 

SUMMARY: This final rule updates the 

hospice payment rates and the wage 

index for fiscal year (FY) 2014, and 

continues the phase out of the wage 

index budget neutrality adjustment 

factor (BNAF). Including the FY 2014 15 

percent BNAF reduction, the total 5 year 

cumulative BNAF reduction in FY 2014 

will be 70 percent. The BNAF phase-out 

will continue with successive 15 

percent reductions in FY 2015 and FY 

2016. This final rule also clarifies how 

hospices are to report diagnoses on 

hospice claims, and provides updates to 

the public on hospice payment reform. 

Additionally, this final rule changes the 

requirements for the hospice quality 

reporting program by discontinuing 

currently reported measures and 

implementing a Hospice Item Set with 

seven National Quality Forum (NFQ) 

endorsed measures beginning July 1, 

2014, as proposed. Finally, this final 

rule will implement the hospice 

Experience of Care Survey on January 1, 

2015, as proposed. 

DATES: Effective Date: These regulations 

are effective on October 1, 2013. 

FOR FURTHER INFORMATION CONTACT: 

Debra Dean-Whittaker, (410) 786–0848, 

for questions regarding the hospice 

experience of care survey. 

Robin Dowell, (410) 786–0060, for 

questions regarding quality reporting 

for hospices and collection of 

information requirements. 

Hillary Loeffler, (410) 786–0456, for 

general questions about hospice 

payment. 

Katherine Lucas, (410) 786–7723 for 

questions regarding payment reform. 

Anjana Patel, (410) 786–2120, for 

questions regarding the FY 2014 

hospice wage index and payment 

rates. 

Kelly Vontran, (410) 786–0332, for 

questions on diagnosis reporting on 

hospice claims. 

SUPPLEMENTARY INFORMATION: 

Wage Index Addenda: In the past, the 

wage index addenda referred to in the 

preamble of our proposed and final 

rules were available in the Federal 

Register. However, the wage index 

addenda of the annual proposed and 

final rules will no longer be available in 

the Federal Register. Instead, these 

addenda will be available only through 

the internet on the CMS Web site at: 

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

Medicare-Fee-for-Service-Payment/ 

Hospice/index.html.) Readers who 

experience any problems accessing any 

of the wage index addenda related to the 

hospice payment rules that are posted 

on the CMS Web site identified above 

should contact Anjana Patel at 410– 

786–2120. 

Table of Contents 

I. Executive Summary 

A. Purpose 

B. Summary of the Major Provisions 

C. Summary of Costs, Benefits, and 

Transfers 

II. Background 

A. Hospice Care 

B. History of the Medicare Hospice Benefit 

C. Services Covered by the Medicare 

Hospice Benefit 

D. Medicare Payment for Hospice Care 

1. Omnibus Budget Reconciliation Act of 

1989 

2. Balanced Budget Act of 1997 

3. FY 1998 Hospice Wage Index Final Rule 

4. FY 2010 Hospice Wage Index Final Rule 

5. The Affordable Care Act 

6. FY 2012 Hospice Wage Index Final Rule 

E. Trends in Medicare Hospice Utilization 

III. Summary of the Provisions of the 

Proposed Rule 

A. Diagnosis Reporting on Hospice Claims 

1. ICD–9–CM Coding Guidelines 

2. Use of Nonspecific, Symptom Diagnoses 

3. Use of ‘‘Mental, Behavioral and 

Neurodevelopmental Disorders’’ ICD–9– 

CM Codes 

4. Guidance on Coding of Principal and 

Other, Additional, and/or Co-Existing 

Diagnoses 

5. Transition to ICD–10–CM 

B. Hospice Quality Reporting Program 

C. FY 2014 Hospice Wage Index and Rates 

Update 

D. Update on Hospice Payment Reform and 

Data Collection 

E. Technical and Clarifying Regulatory 

Text Change 

IV. Analysis and Responses to Public 

Comments 

A. Diagnosis Reporting on Hospice Claims 

1. ICD–9–CM Coding Guidelines 

2. Use of Nonspecific, Symptom Diagnoses 

3. Use of ‘‘Mental, Behavioral and 

Neurodevelopmental Disorders’’ ICD–9– 

CM Codes 

4. Guidance on Coding of Principal and 

Other, Additional, and/or Co-Existing 

Diagnoses 

5. Transition to ICD–10–CM 

B. The Hospice Quality Reporting Program 

1. Background and Statutory Authority 

2. Quality Measures for Hospice Quality 

Reporting Program and Data Submission 

Requirements for Payment Year FY 2014 

3. Quality Measures for Hospice Quality 

Reporting Program and Data Submission 

Requirements for Payment Year FY 2015 

and Beyond 

4. Quality Measures for Hospice Quality 

Reporting Program for Payment Year FY 

2016 and Beyond 

5. Public Availability of Data Submitted 

6. The CMS Hospice Experience of Care 

Survey for the FY 2017 Payment 

Determination and That of Subsequent 

Fiscal Years 

7. Notice Pertaining to Reconsiderations 

Following APU Determinations 

C. FY 2014 Hospice Wage Index and Rates 

Update 

1. Hospice Wage Index 

2. FY 2014 Wage Index With an Additional 

15 Percent Reduced Budget Neutrality 

Adjustment Factor (BNAF) 

3. Hospice Payment Update Percentage 

4. Final FY 2014 Hospice Payment Rates 

D. Update on Hospice Payment Reform and 

Data Collection 

1. Update on Reform Options 

a. Rebasing the Routine Home Care (RHC) 

Rate 

b. Site of Service Adjustment for Hospice 

Patients in Nursing Facilities 

2. Reform Research Findings 

3. Additional Data Collection 

E. Technical and Clarifying Regulatory 

Text Change 

V. Collection of Information Requirements 

VI. Regulatory Impact Analysis 

A. Statement of Need 

B. Overall Impact 

1. Introduction 

2. Detailed Economic Analysis 

3. Cost Allocation of Quality Reporting 

4. Alternatives Considered 

C. Accounting Statement 

D. Conclusion 

1. Regulatory Flexibility Act Analysis 

2. Unfunded Mandates Reform Act 

Analysis 

VII. 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: 

APU Annual Payment Update 

BBA Balanced Budget Act of 1997 

BLS Bureau of Labor Statistics 

BMI Body Mass Index 

BNAF Budget Neutrality Adjustment Factor 

CAD Coronary Artery Disease 

CAHPS® Consumer Assessment of 

Healthcare Providers and Systems 

CBSA Core-Based Statistical Area 

CCW Chronic Conditions 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 


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CR Change Request 

CVA Cerebrovascular Accident 

CY Calendar Year 

DME Durable Medical Equipment 

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 

HIS Hospice Item Set 

HQRP Hospice Quality Reporting Program 

ICD–9–CM International Classification of 

Diseases, Ninth Revision, Clinical 

Modification 

ICD–10–CM International Classification of 

Diseases, Tenth Revision, Clinical 

Modification 

IDG Interdisciplinary Group 

IPPS Inpatient Prospective Payment System 

IRC Inpatient Respite Care 

LCD Local Coverage Determination 

LUPA Low Utilization Payment Amount 

MAP Measure Applications Partnership 

MedPAC Medicare Payment Advisory 

Commission 

MFP Multi-factor Productivity 

MSA Metropolitan Statistical Area 

NEC Not Elsewhere Classified 

NF Long Term Care Nursing Facility 

NPI National Provider Identifier 

NQF National Quality Forum 

OACT Office of the Actuary 

OIG Office of Inspector General 

OMB Office of Management and Budget 

PEACE Prepare, Embrace, Attend, 

Communicate, and Empower 

PRA Paperwork Reduction Act 

PRRB Provider Reimbursement Review 

Board 

QAPI Quality Assessment and Performance 

Improvement 

RFA Regulatory Flexibility Act 

RHC Routine Home Care 

SBA Small Business Administration 

SNF Skilled Nursing Facility 

TEFRA Tax Equity and Fiscal 

Responsibility Act of 1982 

TEP Technical Expert Panel 

I. Executive Summary 

A. Purpose 

This final rule updates the payment 

rates for hospice providers for fiscal 

year (FY) 2014 as required under section 

1814 (i) of the Social Security Act (the 

Act). The updates incorporate the use of 

updated hospital wage index data, the 

5th year of the 7-year Budget Neutrality 

Adjustment Factor (BNAF) phase-out, 

and an update to the hospice payment 

rates by the hospice payment update 

percentage. Additionally, this final rule 

clarifies diagnosis reporting on hospice 

claims, provides an update on hospice 

payment reform and additional data 

collection requirements, and makes 

changes to the quality reporting 

requirements for hospice providers. 

B. Summary of the Major Provisions 

In this final rule we update the 

hospice payment rates for FY 2014 by 

1.7 percent as described in section 

IV.C.3. We also update the FY 2014 

hospice wage index with more current 

wage data, and the BNAF will be 

reduced by an additional 15 percent for 

a total BNAF reduction of 70 percent as 

described in section IV.C.3. The August 

6, 2009 FY 2010 Hospice Wage Index 

final rule (74 FR 39384) finalized a 10 

percent reduced BNAF for FY 2010 as 

the first year of a 7-year phase-out of the 

BNAF, to be followed by an additional 

15 percent per year reduction in the 

BNAF in each of the next 6 years. The 

total BNAF phase-out will be complete 

by FY 2016. This final rule also clarifies 

diagnosis reporting on hospice claims, 

especially regarding the use of nonspecific symptom diagnoses; provides 

an update on hospice payment reform 

and additional data collection 

requirements; and finalizes a technical 

regulations text change. Additionally, 

this final rule changes the requirements 

for the hospice quality reporting 

program by discontinuing currently 

reported measures and implementing a 

Hospice Item Set with seven National 

Quality Forum (NQF) endorsed 

measures beginning July 1, 2014, as 

proposed. Finally, this final rule will 

implement the hospice Experience of 

Care Survey on January 1, 2015, as 

proposed. 

C. Summary of Costs, Benefits, and 

Transfers 

Provision description Total 

FY 2014 Hospice Payment Rate Update ........... The overall economic impact of this final rule is an estimated $160 million in increased payments to hospices. 

Costs for Hospices to Submit Data .................... The total cost to hospice providers, for submitting data to the Hospice Item Set starting in July 

2014, is $14.3 million. 

II. Background 

A. Hospice Care 

Coping with a life-limiting illness can 

be an overwhelming experience, 

physically, emotionally and spiritually, 

for both the person and his or her 

family. Recognition that the care needs 

at end-of-life are different from other 

health care needs is a foundation of the 

Medicare Hospice Benefit. Hospice is a 

compassionate care philosophy and 

practice for those who are terminally ill. 

It is a holistic approach to treatment that 

recognizes that the impending death of 

an individual warrants a change from 

curative to palliative care. Palliative 

care means ‘‘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. The person beginning hospice 

care, or his or her representative, needs 

to understand that his or her illness is 

no longer responding to medical 

interventions to cure or slow the 

progression of disease and then must 

choose to stop further curative attempts 

while palliative care continues and 

intensifies, as needed, for continued 

symptom management. As we 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 lifethreatening illness through the 

prevention and relief of suffering by 

means of early identification, 

assessment and treatment of pain and 

other issues. In addition, palliative care 

in hospice includes coordinating care 

services, reducing unnecessary 

diagnostics or ineffective therapies, and 

offering ongoing conversations with 

individuals and their families about 

changes in the disease and shifts in the 

plan of care to meet the changing needs 

with disease progression 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 the illness is 

diagnosed as incurable. When an 

individual is terminally ill, many health 

problems are brought on by underlying 


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48236 Federal Register / Vol. 78, No. 152 / Wednesday, August 7, 2013 / Rules and Regulations 

1Connor, Stephen (2007). Development of 

Hospice and Palliative Care in the United States. 

OMEGA. 561(1), p. 89–99. 

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

Not To Cover: Guidelines for Covered Medications 

in Hospice Patients. The Clinician. 7(2), p. 1–3. 

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

Management at End of Life. JAOA. 101(10). p. 609– 

615. 

condition(s), as bodily systems are 

interdependent. In the June 5, 2008 

Hospice Conditions of Participation 

final rule (73 FR 32088), we stated ‘‘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 42 CFR 

418.22(b)(1), to be eligible for Medicare 

hospice services, the beneficiary’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 routine hospice 

care. Short-term, intermittent, inpatient 

respite services are also available to the 

family of the hospice patient when 

needed to relieve the family or other 

caregivers. Additionally, an individual 

can receive continuous home care 

during a period of crisis in which an 

individual requires primarily 

continuous nursing care to achieve 

palliation or management of acute 

medical symptoms so that the 

individual can remain at home. 

Continuous home care may be covered 

on a continuous basis for as much as 24 

hours a day, and these periods must be 

predominantly nursing care per our 

regulations at § 418.204. A minimum of 

8 hours of care must be furnished on a 

particular day to qualify for the 

continuous home care rate 

(§ 418.302(e)(4)). 

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, working with 

legislators, 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 beneficiary ‘‘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 section 

1861(dd) of the Social Security Act (the 

Act), codified at 42 U.S.C. 1395x(dd), 

we provide coverage of hospice care for 

terminally ill Medicare beneficiaries 

who elected 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. 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

Additionally, the hospice Conditions of 

Participation at § 418.56(b), hospice 

must provide all services necessary for 

the palliation and management of the 

terminal illness, related conditions and 

interventions to manage pain and 

symptoms. Therapy and interventions 

must be assessed and managed in terms 

of providing palliation and comfort 

without undue symptom burden for the 

hospice patient or family.3 For example, 

a hospice patient with lung cancer (the 

terminal illness) may receive inhalants 

for shortness of breath (related to the 

terminal condition). The patient may 

also suffer from metastatic bone pain (a 

related condition) and would be treated 

with opioid analgesics. As a result of the 

opioid therapy, the patient may suffer 

from constipation (an associated 

symptom) and require a laxative for 

symptom relief. It is often not a single 

diagnosis that represents the terminal 

prognosis of the patient, but the 

combined effect of several conditions 

that makes the patient’s condition 

terminal. We are restating what we 

communicated in the December 16, 

1983 Hospice final rule (48 FR 56010), 

regarding what is related versus 

unrelated to the terminal illness: ‘‘. . . 

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 


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condition is unrelated to the terminal 

prognosis, all services would be 

considered related. It is also the 

responsibility of the hospice physician 

to document why a patient’s medical 

needs would be unrelated to the 

terminal prognosis. 

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, as 

stated in the December 16,1983 Hospice 

final rule (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 

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 to be reimbursed (see 

Section 1861(dd)(2)(E) of the Act and 48 

FR 38149). The hospice 

interdisciplinary group should be 

comprised of paid hospice employees as 

well as hospice volunteers, as stated in 

the August 22, 1983 Hospice proposed 

rule (48 FR 38149). This expectation is 

in line with the history of hospice and 

philosophy of holistic, comprehensive, 

compassionate, end-of-life care. 

The National Hospice Study was 

initiated in 1980 through a grant 

sponsored by the Robert Wood Johnson 

and John A. Hartford Foundations and 

CMS (formerly, the Health Care 

Financing Administration (HCFA)). The 

study was conducted between October 

1980 and March 1983. The study 

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. 

In the August 22, 1983 Hospice 

proposed rule (48 FR 38149), we stated 

‘‘the hospice benefit and the resulting 

Medicare reimbursement is not 

intended to diminish the voluntary 

spirit of hospices’’. 

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 it). This per 

diem payment is to include all of the 

hospice services needed to manage the 

beneficiaries’ care, as required by 

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

has been little change in the hospice 

payment structure since the benefit’s 

inception. The per diem rate based on 

level of care was established in 1983, 

and this payment structure remains 

today with some adjustments, as noted 

below: 

1. Omnibus Budget Reconciliation Act 

of 1989 

Section 6005(a) of the Omnibus 

Budget Reconciliation Act of 1989 (Pub. 

L 101–239) amended section 

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

the following two changes in the 

methodology concerning updating the 

daily payment rates: (1) Effective 

January 1, 1990, the daily payment rates 

for routine home care and other services 

in included in hospice care were 

increased to equal 120 percent of the 

rates in effect on September 30, 1989; 

and (2) the daily payment rate for 

routine home care and other services 

included in hospice care for fiscal years 

beginning on or after October 1, 1990, 

were the payment rates in effect during 

the previous Federal fiscal year 

increased by the hospital market basket 

percentage increase. 

2. Balanced Budget Act of 1997 

Section 4441(a) of the Balanced 

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

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

of the Act to establish updates to 

hospice rates for FYs 1998 through 

2002. Hospice rates were updated by a 

factor equal to the hospital market 

basket percentage increase, minus 1 

percentage point. Payment rates for FYs 

from 2002 have been updated according 

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

Act, which states that the update to the 


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payment rates for subsequent FYs will 

be the hospital market basket percentage 

increase for the FY. The Social Security 

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 BNAF 

would be computed and applied 

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

deriving the hospice wage index, subject 

to a wage index floor. 

4. FY 2010 Hospice Wage Index Final 

Rule 

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

described in the August 8, 1997 Hospice 

Wage Index final rule are subject to 

either a budget neutrality adjustment or 

application of the wage index floor. 

Wage index values of 0.8 or greater are 

adjusted by the budget neutrality 

adjustment factor (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, and additional 15 percent 

reduction for a total of 25 percent in FY 

2011, an additional 15 percent 

reduction for a total 40 percent in FY 

2012, and an additional 15 percent 

reduction for a total of 55 percent in FY 

2013. The phase-out will continue with 

an additional 15 percent reduction for a 

total reduction of 70 percent in FY 2014, 

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 FYs), 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 of 2010 (Pub. L. 

111–148) as amended by the Health 

Care and Education Reconciliation Act 

of 2010 (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 an 

individual to determine continued 

eligibility of the individual for hospice 

care prior to the 180th-day 

recertification and each subsequent 

recertification and attest that such visit 

took place. When implementing this 

provision, we decided that the 180thday recertification and subsequent 

recertifications corresponded to the 

recertification for a beneficiary’s third or 

subsequent benefit periods (August 4, 

2011 FY 2012 Hospice Wage Index final 

rule (76 FR 47314)). 

Further, section 1814(i)(6) of the Act, 

as amended by section 3132(a)(1)(B) of 

the Affordable Care Act, authorizes the 

Secretary to collect additional data and 

information determined appropriate to 

revise payments for hospice care and 

other purposes. The types of data and 

information suggested in the Affordable 

Care Act would capture accurate 

resource utilization, which could be 

collected on claims, cost reports, and 

possibly other mechanisms, as the 

Secretary determines to be appropriate. 

The data collected may be used to revise 

the methodology for determining the 

payment rates for routine home care and 

other services included in hospice care, 

no earlier than October 1, 2013, as 

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

Act. In addition, we are required to 

consult with hospice programs and the 

Medicare Payment Advisory 

Commission (MedPAC) regarding 

additional data collection and payment 

revision options. 

6. FY 2012 Hospice Wage Index Final 

Rule 

When the Medicare Hospice Benefit 

was implemented, the Congress 

included an aggregate cap on hospice 

payments, which limits the total 

aggregate payments any individual 

hospice provider 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 patientby-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 


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Medicare reimbursement for the cap 

year exceeded the hospice aggregate 

cap, then the hospice would have to 

repay the excess back to Medicare. 

E. Trends in Medicare Hospice 

Utilization 

Since the implementation of the 

hospice benefit in 1983, and especially 

within the last decade, there has been 

substantial growth in hospice 

utilization. The number of Medicare 

beneficiaries receiving hospice services 

has grown from 513,000 in FY 2000 to 

over 1.3 million in FY 2012. Similarly, 

Medicare hospice expenditures have 

risen from $2.9 billion in FY 2000 to 

$14.7 billion in FY 2012. 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 communitybased 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 FY 2010, an increase of 59 

percent. 

There have also been noted changes 

in the diagnosis patterns among 

Medicare hospice enrollees, with a 

growing percentage of beneficiaries with 

non-cancer diagnoses. 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 

non-specific, symptom-classified 

diagnoses, such as ‘‘debility’’ and ‘‘adult 

failure to thrive.’’ In FY 2012, both 

‘‘debility’’ and ‘‘adult failure to thrive’’ 

were in the top five claims-reported 

hospice diagnoses and were the first and 

third most common hospice diagnoses, 

respectively (see Table 2 below). 

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

Rank ICD–9/Reported principal diagnosis Total patients Percentage 

Year: 2002 Total Patients = 663,406 

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: 2007 Total Patients = 1,039,099 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Year: 2012 Total Patients = 1,328,651 

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 


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

Rank ICD–9/Reported principal diagnosis Total patients Percentage 

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 

Source: FY 2002, 2007, and 2012 hospice claims data from the Chronic Conditions Warehouse (CCW), accessed on February 14 and February 20, 2013. 

Note(s): The frequencies shown represent beneficiaries that had a least one claim with the specific ICD–9 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. 

III. Summary of the Provisions of the 

Proposed Rule 

The May 10, 2013 FY 2014 hospice 

proposed rule (78 FR 27823) included 

the following clarifications, proposals, 

and updates: 

• Diagnosis reporting on claims; 

• Proposed update to the Hospice 

Quality Reporting Program; 

• FY 2014 Rate Update; 

• Update on Hospice Payment Reform 

and Data Collection; and 

• Technical and Clarifying 

Regulations Text Change. 

A. Diagnosis Reporting on Claims 

The FY 2014 Hospice Wage Index and 

Payment Rate Update proposed rule 

clarified appropriate diagnosis reporting 

on hospice claims. No proposals were 

made regarding diagnosis coding. These 

clarifications are not to preclude any 

clinical judgment in determining a 

beneficiary’s eligibility for hospice 

services. Eligibility for hospice services 

is based on meeting the eligibility 

requirements as stated in § 418.20 of our 

regulations: ‘‘an individual must be— 

(a) Entitled to Part A of Medicare; and 

(b) Certified as being terminally ill in 

accordance with § 418.22.’’ 

1. ICD–9–CM Coding Guidelines 

The hospice benefit covers all care for 

the terminal illness, related conditions, 

and for the management of pain and 

symptoms. HIPAA, federal regulations, 

and the Medicare hospice claims 

processing manual all require that ICD– 

9–CM Coding Guidelines be applied to 

the coding and reporting of diagnoses 

on hospice claims. Regarding diagnosis 

reporting on hospice claims, we 

clarified in our July 27, 2012 FY 2013 

Hospice Wage Index notice (77 FR 

44247 through 44248) that all providers 

are required to code and report the 

principal diagnosis as well as all 

coexisting and additional diagnoses 

related to the terminal condition or 

related conditions to more fully describe 

the Medicare patients they are treating. 

2. Use of Nonspecific Symptom 

Diagnoses 

The proposed rule included 

additional diagnosis clarifications to 

address current and ongoing diagnosis 

reporting patterns noted on hospice 

claims, more specifically the use of 

nonspecific, symptom diagnoses and 

certain dementia diagnoses. In the 

proposed rule, we clarified that the 

ICD–9–CM codes of ‘‘debility’’ and 

‘‘adult failure to thrive’’ listed in the 

ICD–9–CM Coding Guidelines under the 

classification, ‘‘Symptoms, Signs, and 

Ill-defined Conditions’’, are not to be 

used as principal diagnoses when a 

related definitive diagnosis has been 

established or confirmed by the 

provider. Therefore, in the proposed 

rule, we clarified that ‘‘debility’’ and 

‘‘adult failure to thrive’’ should not be 

used as principal hospice diagnoses on 

the hospice claim form. When reported 

as a principal diagnosis, these would be 

considered questionable encounters for 

hospice care, and the claim would be 

returned to the provider for a more 

definitive principal diagnosis. 

‘‘Debility’’ and ‘‘adult failure to thrive’’ 

could be reported on the hospice claim 

as other, additional, or coexisting 

diagnoses. The principal diagnosis 

reported should be the condition 

determined by the certifying hospice 

physician(s) as the diagnosis most 

contributory to the terminal decline. 

3. Use of ‘‘Mental, Behavioral and 

Neurodevelopmental Disorders’’ ICD–9– 

CM Codes 

The proposed rule also clarified the 

ICD–9–CM Coding Guidelines for 

certain dementia codes that are reported 

on hospice claims. There are several, 

but not all, codes that fall under the 

classification, ‘‘Mental, Behavioral and 

Neurodevelopmental Disorders,’’ that 

encompass multiple dementia diagnoses 

that are frequently reported principal 

hospice diagnoses on hospice claims, 

but are not appropriate principal 

diagnoses per ICD–9–CM Coding 

Guidelines. 

4. Guidance on Coding of Principal and 

Other, Additional, and/or Co-Existing 

Diagnoses 

In the proposed rule, we reiterated 

that diagnosis reporting on the hospice 

claims should include the appropriate 

selection of principal diagnoses as well 

as the other, additional and coexisting 

diagnoses related to the terminal illness. 

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 or related 

conditions should be reported on the 

hospice claim. Based on analysis of 

preliminary claims data from the first 

quarter of FY 2013 (October 1, 2012 

through December 31, 2012), 72 percent 


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of providers still only report one 

diagnosis on the hospice claim. This 

hospice diagnosis data is comparable to 

the hospice diagnosis data reported in 

the July 27, 2012 FY 2013 Hospice Wage 

Index notice (77 FR 44242), in which we 

stated that over 77 percent of the 

hospice claims reported only a principal 

diagnosis. 

Information on a patient’s related and 

unrelated diagnoses should already be 

included as part of the hospice 

comprehensive assessment and 

appropriate interventions for the 

palliation and management of the 

terminal illness and related conditions 

should be incorporated into the 

patient’s plan of care, as determined by 

the hospice interdisciplinary group 

(IDG). 

5. Transition to ICD–10–CM 

The proposed rule reminded the 

hospice industry that ICD–10–CM will 

replace the ICD–9–CM on October 1, 

2014. A critical issue associated with 

the transition to ICD–10–CM involves 

the matter of crosswalking between the 

ICD–9–CM and ICD–10–CM code sets. 

The term ‘‘crosswalking’’ is generally 

defined as the act of mapping or 

translating a code in one code set to a 

code or codes in another code set. (The 

terms ‘‘crosswalking’’ and ‘‘mapping’’ 

are sometimes used interchangeably.) 

Understanding crosswalking will be 

important to physicians during the 

transition phase when learning which 

new ICD–10 code to use in place of an 

ICD–9 code. We provided information 

regarding the crosswalks from ICD–9– 

CM to ICD–10–CM and this information 

is available for free and can be 

downloaded from the NCHS Web site, 

www.cdc.gov/nchs/icd/icd10cm.htm. 

Hospices should not substitute 

crosswalking for learning and fully 

implementing ICD–10–CM into their 

procedures. Additional information 

regarding the transition to ICD–10–CM 

is available through the CMS Web site 

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

Coding/ICD10/index.html?redirect=/ 

icd10. 

B. Hospice Quality Reporting Program 

• We proposed to eliminate two 

currently reported measures, the 

structural measure related to Quality 

Assurance and Performance 

Improvement (QAPI) and the NQF 

#0209 pain measure, and we offered an 

alternate proposal to retain the currently 

reported NQF #0209 pain measure until 

a suitable comfort outcome measure is 

available as described in section III.B.3 

of the FY 2014 hospice wage index and 

payment update proposed rule (78 FR 

27835); 

• We proposed to implement the 

Hospice Item Set (HIS), a standardized 

patient-level data collection vehicle, 

effective 7/1/2014 and to utilize the 

seven NQF-endorsed measures derived 

from the HIS in the hospice quality 

reporting program as described in 

section III.B.4 of the FY 2014 hospice 

wage index and payment update 

proposed rule (78 FR 27836); and 

• We proposed that hospices begin 

national implementation of the Hospice 

Experience of Care Survey by 

participating in a dry run in January 

2015 through March 2015, and then, 

beginning in April 2015, conduct 

monthly implementation of the survey 

through December 2015 to meet the 

requirements of the 2017 annual 

payment update as described in section 

III.B.6 of the FY 2014 hospice wage 

index and payment update proposed 

rule (78 FR 27837). 

C. FY 2014 Hospice Wage Index and 

Rates Update 

The proposed updates to the hospice 

rates for FY 2014 are as follows: 

• Update the hospice wage index 

using the 2013 pre-floor, pre-reclassified 

hospital wage index as discussed in 

section III.C.1 of the FY 2014 hospice 

wage index and rate update proposed 

rule (78 FR 27839); 

• Update the hospice wage index 

taking into account the application of 

the hospice floor or budget neutrality 

adjustment factor reduced an additional 

15 percent, for a BNAF phase-out of 70 

percent as finalized in the FY 2010 

hospice wage index final rule (74 FR 

39384), as discussed in section III.C.2 of 

the FY 2014 hospice wage index and 

rate update proposed rule (78 FR 

27840); and 

• Apply the hospice payment update 

percentage, as discussed in section 

III.C.3 of the FY 2014 hospice wage 

index and rate update proposed rule, to 

the FY 2013 hospice payment rates as 

discussed in section III.C.4 of the FY 

2014 hospice wage index and rate 

update proposed rule (78 FR 27841 

through 27842). 

D. Update on Hospice Payment Reform 

and Data Collection 

We did not make any payment reform 

proposals or solicit comments on this 

section, but included updates and a 

discussion of payment reform activities, 

including: 

• A discussion of reform options, 

including the U-shaped curve model, a 

tiered model that uses the U-shaped 

curve, a short-stay add-on payment, and 

case-mix adjustment. 

• A discussion of rebasing a portion 

of the routine home care (RHC) payment 

rate; adjusting for current costs would 

reduce the FY 2014 RHC rate by 10.1 

percent. 

• A discussion of the Office of 

Inspector General (OIG) and MedPAC 

recommendations to reduce payments to 

hospices for RHC patients in nursing 

facilities, to account for duplication of 

aide services. The claims visit data on 

aide services revealed that hospice 

patients in nursing facilities receiving 

more visits, but shorter visits than 

patients at home; however, on average, 

hospice patients in nursing facilities 

receive 22 percent more minutes of aide 

care than hospice patients at home. 

• A discussion of reform research 

findings related to cost reports and 

general inpatient care (GIP), and a link 

to the Abt Hospice Study Technical 

Report and an Abt review of the 

literature. 

• A summary of comments received 

from a December, 2012 CMS Web site 

posting about additional data collection 

on hospice claims; a forthcoming 

Change Request will finalize the data 

collection this summer. 

• An update on the status of the 

hospice cost report revisions, which 

were published as part of a Paperwork 

Reduction Act notice in the Federal 

Register on April 29, 2013. 

E. Technical and Clarifying Regulations 

Text Change 

We proposed a technical change to 

correct an erroneous cross reference in 

our regulations text at § 418.311, as 

discussed in section III.E of the FY 2014 

Hospice Wage Index and Rate Update 

proposed rule (78 FR 27847). 

IV. Analysis and Responses to Public 

Comments 

We received approximately 125 

comments, many of which contained 

multiple comments, on the FY 2014 

hospice wage index and payment rate 

update proposed rule. We received 

comments from various trade 

associations, private insurers, 

individual hospices, hospitals, 

physicians, medical directors, nurses, 

visiting nurses associations, home 

health agencies, hospice volunteers, and 

individuals. We appreciate the 

numerous thoughtful and insightful 

comments received and believe that 

communication and collaboration 

between CMS and all hospice 

stakeholders is imperative. The 

comments received and our responses to 

these comments are grouped by subject 

area and are summarized below. 


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A. Diagnosis Reporting on Hospice 

Claims 

We made no new proposals regarding 

ICD–9–CM Coding Guidelines in the FY 

2014 Hospice Wage Index and Payment 

Rate Update proposed rule. However, 

we did make clarifications regarding 

ICD–9–CM Coding Guidelines for the 

selection of principal diagnoses and 

additional diagnoses. These 

clarifications are not to preclude any 

clinical judgment in determining a 

beneficiary’s eligibility for hospice 

services. Eligibility for hospice services 

is based on meeting the eligibility 

requirements as stated in § 418.20 of our 

regulations: ‘‘. . . an individual must 

be— 

(a) Entitled to Part A of Medicare; and 

(b) Certified as being terminally ill in 

accordance with § 418.22.’’ 

Specifically, we clarified the 

following: 

• ‘‘Debility’’ or ‘‘adult failure to 

thrive’’ should not be used as a 

principal hospice diagnosis on the 

hospice claim form per ICD–9–CM 

Coding Guidelines. ‘‘Debility’’ and/or 

‘‘adult failure to thrive’’ may be used as 

another, additional, or coexisting 

diagnosis on the hospice claim form. If 

‘‘debility’’ or ‘‘adult failure to thrive’’ is 

reported as the principal diagnosis on 

the hospice claim forms, these claims 

will be returned to the provider for more 

definitive coding. 

• Dementia codes classified under 

‘‘Mental, Behavioral and 

Neurodevelopmental Disorders’’ are 

among the top twenty hospice claims 

reported diagnoses. Many of these codes 

are not appropriate as principal 

diagnoses because of manifestation/ 

etiology guidelines or sequencing 

conventions under the ICD–9–CM 

Coding Guidelines. Particular attention 

must be paid 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.’’ There are 

also dementia codes that are classified 

under ‘‘Diseases of the Nervous System 

and Sense Organs’’ that also have 

sequencing conventions and, therefore, 

are not appropriate as principal 

diagnoses on the hospice claim. 

• We provided ICD–9–CM coding 

guidance regarding the coding of 

principal and other, additional, and/or 

coexisting diagnoses. The principal 

diagnosis should reflect the condition to 

be chiefly responsible for the services 

provided. ICD–9–CM Coding Guidelines 

specify that the circumstances of an 

inpatient hospital admission diagnosis 

are to be used in determining the 

selection of a principal diagnosis. ICD– 

9–CM Coding Guidelines also state to 

‘‘code all documented conditions at the 

time of the encounter/visit, and require 

or affect patient care treatment or 

management.’’ The principal diagnosis 

reported on the hospice claim form 

should be determined by the hospice as 

the diagnosis most contributory to the 

terminal prognosis. 

• Hospice providers are expected to 

report all coexisting or additional 

diagnoses related to the terminal illness 

and related conditions on the hospice 

claim to be in compliance with existing 

policy, and provide data needed for 

evaluating potential hospice payment 

reform methodologies. 

• We reminded providers of the 

transition to ICD–10–CM, which will 

replace ICD–9–CM on October 1, 2014. 

• Crosswalking from ICD–9–CM to 

ICD–10–CM is important for providers 

in understanding the transition between 

these two code sets. 

We received 109 comments on 

diagnosis reporting on hospice claims, 

which are summarized below according 

to subsection. 

1. ICD–9–CM Coding Guidelines 

The hospice benefit covers all care for 

the terminal illness and related 

conditions, including the management 

of pain and symptoms. HIPAA, federal 

regulations, and the Medicare hospice 

claims processing manual all require 

that ICD–9–CM Coding Guidelines be 

applied to the coding and reporting of 

diagnoses on hospice claims. Regarding 

diagnosis reporting on hospice claims, 

we clarified in our July 27, 2012 FY 

2013 Hospice Wage Index notice (77 FR 

44247 through 44248) that all providers 

should code and report the principal 

diagnosis as well as all coexisting and 

additional diagnoses related to the 

terminal condition or related conditions 

to more fully describe the Medicare 

patients they are treating. 

Comment: Several commenters 

expressed concern that the coding 

clarification would require that hospices 

have a professional coder for coding 

claims, which would create a financial 

burden on hospice providers. Some 

commenters believed that we were 

asking hospices to hire professional 

coders. Other commenters thought that 

we were asking physicians to spend 

time determining the proper ICD–9–CM 

code for the claim. 

Response: We did not state in the FY 

2014 hospice wage index and payment 

update proposed rule that any hospice 

provider would be expected or required 

to have a professional coder to complete 

the coding on the hospice claims. Our 

discussion of the coding guidelines in 

the proposed rule was to assist hospice 

providers in complying with 

longstanding policies. In our 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 CMS’ Hospice Claims Processing 

Manual (Pub 100–04, chapter 11) 

requires that hospice claims include 

other diagnoses ‘‘as required by ICD–9– 

CM Coding Guidelines’’. In the 

proposed rule, we provided guidance 

from the ICD–9–CM Official Guidelines 

for Coding and Reporting to highlight 

coding guidelines for principal and 

other diagnosis selection, as well as the 

various coding and sequencing 

conventions found therein. This 

clarification of the coding guidelines 

was in response to the monitoring of 

diagnostic reporting patterns noted on 

hospice claims, especially in regards to 

the reporting of only one diagnosis and 

the use of diagnoses not appropriate as 

principal diagnoses per the ICD–9–CM 

Coding Guidelines. We believe there are 

ample, available resources in regards to 

the ICD–9–CM Coding Guidelines to 

support hospice providers who choose 

not to have a professional coder 

complete their hospice claims, 

including the links provided within the 

proposed rule. These free resources are 

available at the following links: http:// 

www.cms.gov/Medicare/Coding/ 

ICD9ProviderDiagnosticCodes/ 

index.html?redirect=/ 

ICD9ProviderDiagnosticCodes/, http:// 

www.cms.gov/medicare-coveragedatabase/staticpages/icd-9-codelookup.aspx, or on the CDC’s Web site 

at: http://www.cdc.gov/nchs/data/icd9/ 

icd9cm_guidelines_2011.pdf. 

Additionally, more information 

regarding guidance for hospice claims 

coding can be found in the CMS’ 

Hospice Claims Processing manual (Pub 

100–04, chapter 11) available at https:// 

www.cms.gov/Regulations-andGuidance/Guidance/Manuals/ 

Downloads/clm104c11.pdf. Finally, 

while hospice physicians use their 

clinical judgment to determine the 

principal diagnosis and related 

conditions, we do not require them to 

determine to the actual codes associated 

with those diagnoses for inclusion on 

the hospice claim. Hospices have the 

flexibility to determine how to take the 

physicians’ information about diagnoses 

and translate it into the appropriate 

codes on the claim. 

2. Use of Non-Specific, Symptom 

Diagnoses 

The proposed rule included 

additional diagnosis clarifications to 

address current and ongoing diagnosis 


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reporting patterns noted on hospice 

claims, more specifically the use of 

nonspecific, symptom diagnoses and 

certain dementia diagnoses. In the 

proposed rule, we clarified that the 

ICD–9–CM codes of ‘‘debility’’ and 

‘‘adult failure to thrive’’ are listed in the 

ICD–9–CM Coding Guidelines under the 

classification, ‘‘Symptoms, Signs, and 

Ill-defined Conditions’’, and are not to 

be used as principal diagnoses when a 

related definitive diagnosis has been 

established or confirmed by the 

provider. Therefore, in the proposed 

rule, we clarified that ‘‘debility’’ and 

‘‘adult failure to thrive’’ should not be 

used as principal hospice diagnoses on 

the hospice claim form. When reported 

as a principal diagnosis, these would be 

considered questionable encounters for 

hospice care, and the claim would be 

returned to the provider for a more 

definitive principal diagnosis. 

‘‘Debility’’ and ‘‘adult failure to thrive’’ 

could be reported on the hospice claim 

as other, additional, or coexisting 

diagnoses. The principal diagnosis 

reported should be the condition 

determined by the certifying hospice 

physician(s) as the diagnosis most 

contributory to the terminal decline. 

Comment: We received numerous 

comments in support of or 

acknowledging the need for these 

diagnostic clarifications and 

enforcement of existing coding 

guidelines. Several commenters 

acknowledged understanding the need 

to identify a principal hospice diagnosis 

when a patient has multiple diagnoses 

instead of using ‘‘debility’’ or ‘‘adult 

failure to thrive.’’ Another commenter 

stated that their hospice program has 

tried to avoid the use of ‘‘debility’’ as a 

principal hospice diagnosis and agreed 

that this diagnosis has been over-used 

nationally; several commenters 

acknowledged that there has been 

‘‘sloppy diagnosing’’ with the use of 

‘‘debility’’ and ‘‘adult failure to thrive.’’ 

One commenter stated that the use of 

‘‘debility’’ or ‘‘adult failure to thrive’’ is 

most often a ‘‘failure to diagnose.’’ One 

commenter stated that ‘‘debility’’ cannot 

be reported as a cause of the death on 

a death certificate in his state and that 

he had to select a different diagnosis for 

an immediate cause of death as well as 

a secondary, longer-term related cause. 

Several commenters asked what to 

expect regarding the application of the 

Local Coverage Determination (LCD) 

guidelines provided by the Home Health 

and Hospice Medicare Administrative 

Contractors. 

Response: We appreciate that some 

hospice providers are recognizing the 

issues regarding the inappropriate use of 

‘‘debility’’ or ‘‘adult failure to thrive’’ as 

a principal hospice diagnosis reported 

on the hospice claim and are attempting 

to take steps to more fully describe their 

patient populations. We will continue to 

work with our Home Health and 

Hospice contractors to ensure that all 

LCDs will reflect these principal 

hospice diagnostic coding clarifications 

and that those eligible Medicare hospice 

beneficiaries will continue to have 

access to the benefits of hospice care. 

This collaboration will not be limited to 

the release of Change Requests, which 

can be found on our hospice Web site 

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

Medicare-Fee-for-Service-Payment/ 

Hospice/Hospice-Transmittals.html. 

Additionally, we encourage all 

interested stakeholders to participate in 

the CMS Home Health and Hospice 

Open Door Forums where questions, 

concerns and issues can be addressed 

with specialists within CMS. 

Information regarding Open Door 

Forums can be found on our Web site 

at http://www.cms.gov/Outreach-andEducation/Outreach/OpenDoorForums/ 

index.html. 

Comment: There were a number of 

commenters who expressed concern 

that no longer allowing the use of 

‘‘debility’’ or ‘‘adult failure to thrive’’ as 

a principal hospice diagnosis would 

limit or prohibit access to hospice care 

for Medicare beneficiaries. Commenters 

stated that by not allowing these two 

diagnoses to be coded as a principal 

hospice diagnosis, they believed that 

beneficiaries would elect hospice later 

in their disease trajectories. Other 

commenters felt that eligible 

beneficiaries would not be admitted to 

hospice care at all because a single 

definitive terminal diagnosis could not 

be determined by the certifying 

physician. Other commenters stated that 

it is difficult to determine a single 

principal terminal diagnosis for 

beneficiaries with multiple chronic or 

coexisting conditions. 

Response: Patient-centered care is at 

the core of the Medicare hospice benefit. 

Our mission is to be effective stewards 

of public funds, and we are committed 

to strengthening and modernizing the 

nation’s health care system to provide 

access to high quality care. We believe 

that Medicare beneficiaries who are 

approaching end-of-life are at their most 

vulnerable state and should be afforded 

the most comprehensive and 

responsible clinical judgment. Medicare 

beneficiaries who are hospice eligible 

should be fully informed by their health 

care providers, including hospice 

providers, as to their conditions 

contributing to their terminal decline 

and their treatment options for ongoing 

care. We are aware that diagnosing 

diseases and determining prognosis is 

not always a perfect science. Certifying 

physicians should use their best clinical 

judgment in determining the principal 

diagnosis and related conditions, based 

on the hospice comprehensive 

assessment and review of any and all 

other clinical documentation. 

It remains our belief that the goal of 

hospice care is to provide 

comprehensive, holistic, and 

individualized services to eligible 

Medicare beneficiaries. In order to 

receive these comprehensive hospice 

services, Medicare beneficiaries must be 

certified as terminally ill. This 

certification is based on the 

recommendation of the medical director 

in consultation with, or with input 

from, the beneficiary’s attending 

physician (if any) and a comprehensive 

assessment of all body systems. The 

hospice regulations require that this 

certification be based on a variety of 

factors when making the clinical 

determination that a patient has a life 

expectancy of 6 months or less, should 

the illness run its normal course. The 

regulations in § 418.25(b), Admission to 

hospice care, state, ‘‘In reaching a 

decision to certify that the patient is 

terminally ill, the hospice medical 

director must consider at least the 

following information: 

• Diagnosis of the terminal condition 

of the patient. 

• Other health conditions, whether 

related or unrelated to the terminal 

condition. 

• Current clinical relevant 

information supporting all diagnoses.’’ 

Based on this certification and the 

Medicare beneficiary’s election of the 

hospice benefit, initial and ongoing 

comprehensive assessments are 

conducted to establish and maintain the 

hospice plan of care. A comprehensive 

hospice plan of care starts with accurate 

and thorough assessment and 

identification of the conditions 

(including diseases and symptoms) 

contributing to the terminal prognosis. 

This comprehensive plan of care is to 

include all the services and care needed 

for the management and palliation of 

the terminal illness and related 

conditions. This hospice plan of care is 

to include the following, per the 

Hospice Conditions of Participation: 

• Interventions to manage pain and 

symptoms; 

• A detailed statement of the scope 

and frequency of services necessary to 

meet the specific patient and family 

needs; 

• Measurable outcomes anticipated 

from implementing and coordinating 

the plan of care; 


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4Pacala, J.T., Sullivan, G.M. eds. Geriatrics 

Review Syllabus: A Core Curriculum in Geriatric 

Medicine. 7th ed. New York: American Geriatrics 

Society; 2010. 

• Drugs and treatment necessary to 

meet the needs of the patient; 

• Medical supplies and appliances to 

meet the needs of the patient; and, 

• The interdisciplinary group’s 

documentation of the patient’s or 

representative’s level of understanding, 

involvement, and agreement with the 

plan of care, in accordance with the 

hospice’s own policies, in the clinical 

record (§ 418.56(c)). 

A hallmark clinical characteristic of 

both ‘‘debility’’ and ‘‘adult failure to 

thrive’’ is the presence of multiple 

primary conditions. According to ICD 9 

Coding Guidelines, codes that fall under 

the classification ‘‘Symptoms, Signs, 

and other Ill-defined Conditions’’, such 

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

thrive’’, can only be used as a principal 

diagnosis when a related definitive 

diagnosis has not been established or 

confirmed by the provider. The 

individual diagnosed with ‘‘debility’’ or 

‘‘adult failure to thrive’’ may have 

multiple comorbid conditions that 

individually, may not deem the 

individual to be terminally ill. However, 

the collective presence of these multiple 

comorbid conditions will contribute to 

the terminal prognosis of the individual. 

Additionally, Medicare beneficiaries 

waive their right to Medicare payment 

for curative treatments under the 

Medicare Hospice Benefit; hospice 

providers are clinically and ethically 

responsible for ensuring that eligible 

Medicare beneficiaries are made fully 

aware of all of the conditions 

contributing to their terminal decline so 

they can make the informed decision as 

to which treatment approaches they 

would like to pursue. 

As ‘‘debility’’ and ‘‘adult failure to 

thrive’’ are nonspecific, ill-defined, 

symptom diagnoses, they should not be 

reported as principal diagnosis. Rather, 

the condition that the hospice medical 

director determines is most contributory 

to the terminal prognosis should be 

reported as the principal diagnosis on 

the hospice claim and all other related 

conditions to the terminal prognosis 

should be reported as additional 

diagnoses. Therefore, the claim should 

include not only a principal diagnosis, 

but all other related diagnoses as well, 

to more fully describe the clinical 

picture of the terminally ill individual. 

In fact, reporting all of the related 

conditions that are contributing to the 

terminal prognosis on the hospice claim 

may also further support the eligibility 

for hospice services. Therefore, we do 

not believe that these coding 

clarifications will or should create any 

limitations or barriers to accessing 

Medicare hospice services by eligible 

Medicare beneficiaries, as coding on 

claims occurs after the beneficiary is 

fully informed and has chosen to elect 

and access hospice services. In fact, 

adherence to the ICD–9–CM Coding 

Guidelines should promote access to 

appropriate and comprehensive hospice 

services. Medicare beneficiaries should 

always expect the right care at the right 

time and care that best suits their 

individual clinical status as well as their 

treatment preferences. Further, some 

medical experts have argued that these 

non-specific, ill-defined terms should be 

abandoned because they do not assist in 

the thoughtful evaluation of patients 

who may have treatable, underlying 

conditions.4 We are clarifying these 

coding guidelines so that hospice 

providers can be more intentional about 

addressing all of the beneficiary’s 

identified needs as he or she approaches 

end-of-life. One physician commenter 

stated that he reviews old records, calls 

attending physicians, and uses 

professional judgment to thoughtfully 

evaluate his patients for hospice care. 

Analysis conducted by our hospice 

payment reform contractor, Abt 

Associates, of Medicare hospice 

beneficiaries with ‘‘debility’’ or ‘‘adult 

failure to thrive’’ reported as their 

principal hospice diagnosis, but no 

reported secondary diagnoses in FY 

2012 revealed that over 50 percent of 

these hospice beneficiaries had seven or 

more chronic conditions and 75 percent 

had four or more chronic conditions as 

identified in the Chronic Condition Data 

Warehouse. The Chronic Condition Data 

Warehouse is a research database that 

includes Medicare, Medicaid 

assessments and Part D drug event data 

to support research designed to improve 

the quality of care and reduce cost and 

utilization. These chronic conditions 

include: Alzheimer’s disease, nonAlzheimer’s dementia, senile 

degeneration of the brain, congestive 

heart failure, chronic obstructive 

pulmonary disease, ischemic heart 

disease, chronic kidney disease, and 

various cancer diagnoses. While these 

conditions are labeled as chronic, many 

of these are often terminal conditions as 

well, while others are contributory to 

the terminal prognosis of the individual. 

See Table 3 below: 

TABLE 3—CHRONIC CONDITIONS OF THOSE BENEFICIARIES WITH ‘‘DEBILITY’’ OR ‘‘ADULT FAILURE TO THRIVE’’ REPORTED

AS PRINCIPAL HOSPICE DIAGNOSIS BUT WITH NO SECONDARY DIAGNOSES REPORTED, FY 2012 

Percent 

Percent of Beneficiaries with Anemia ............................................................................................................................................ 76 

Percent of Beneficiaries with Alzheimer’s Disease and Related Disorders or Senile Dementia ................................................. 66 

Percent of Beneficiaries with Rheumatoid Arthritis/Osteoarthritis ................................................................................................. 66 

Percent of Beneficiaries with Ischemic Heart Disease ................................................................................................................. 63 

Percent of Beneficiaries with Depression ...................................................................................................................................... 55 

Percent of Beneficiaries with Heart Failure ................................................................................................................................... 53 

Percent of Beneficiaries with Chronic Kidney Disease ................................................................................................................. 43 

Percent of Beneficiaries with Chronic Obstructive Pulmonary Disease and Bronchiectasis ........................................................ 39 

Percent of Beneficiaries with Osteoporosis ................................................................................................................................... 39 

Percent of Beneficiaries with Alzheimer’s Disease ....................................................................................................................... 38 

Percent of Beneficiaries with Stroke ............................................................................................................................................. 34 

Percent of Beneficiaries with Atrial Fibrillation .............................................................................................................................. 28 

Percent of Beneficiaries with Hip/Pelvic Fracture ......................................................................................................................... 20 

Percent of Beneficiaries with Asthma ............................................................................................................................................ 13 

Percent of Beneficiaries with Acute Myocardial Infarction ............................................................................................................ 9 

Percent of Beneficiaries with Breast Cancer ................................................................................................................................. 7 

Percent of Beneficiaries with Prostate Cancer .............................................................................................................................. 5 

Percent of Beneficiaries with Colorectal Cancer ........................................................................................................................... 5 

Percent of Beneficiaries with Lung Cancer ................................................................................................................................... 2 


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TABLE 3—CHRONIC CONDITIONS OF THOSE BENEFICIARIES WITH ‘‘DEBILITY’’ OR ‘‘ADULT FAILURE TO THRIVE’’ REPORTED

AS PRINCIPAL HOSPICE DIAGNOSIS BUT WITH NO SECONDARY DIAGNOSES REPORTED, FY 2012—Continued 

Percent 

Percent of Beneficiaries with Endometrial Cancer ........................................................................................................................ 1 

Source: FY 2012 hospice claims data from Chronic Conditions Warehouse (CCW), accessed on June 27, 2013. N = 184,924 hospice beneficiaries with principal diagnosis of ‘‘debility’’ or ‘‘adult failure to thrive’’ with no reported secondary diagnoses on the hospice claim. 

Comment: Several commenters stated 

that ‘‘Debility’’ is an allowable principal 

diagnosis under ICD–9–CM Coding 

Guidelines if there is no established or 

confirmed definitive diagnosis. 

Response: While the ICD–9–CM 

Coding Guidelines state ‘‘codes that 

describe symptoms, signs, as opposed to 

diagnoses, are acceptable for reporting 

purposes when a related definitive 

diagnosis has not been established 

(confirmed) by the provider,’’ we 

believe that in encompassing the true 

nature of the holistic hospice 

philosophy, these ill-defined diagnoses 

are not appropriate as the principal 

diagnosis on the hospice claim where an 

individual has typically had multiple 

health care encounters that have 

eventually led to their election of 

hospice services and physician 

certification as being terminally ill. In 

the FY 2014 Hospice Wage Index and 

Payment Rate Update proposed rule (78 

FR 27831), we clarified that if any or all 

of these multiple primary conditions (as 

characterized under ‘‘debility’’ and 

‘‘adult failure to thrive’’) have been or 

are being treated, or if medications have 

been prescribed for the patient to treat 

or manage any or all of these multiple 

primary conditions, we believe that 

these conditions meet the criteria of 

being established and/or confirmed by 

the beneficiary’s health care provider 

and, thus, ‘‘debility’’ or ‘‘adult failure to 

thrive’’ would not be appropriate as the 

principal hospice diagnosis per ICD–9– 

CM Coding Guidelines. For those 

beneficiaries who have not had multiple 

health care encounters prior to hospice 

election, it is that much more important 

that certifying physicians make a 

thoughtful evaluation of all of the 

conditions contributing to an 

individual’s terminal prognosis. The 

physician is responsible for making sure 

that the individual electing hospice care 

is fully aware of all treatment options 

available in order for that individual to 

make the most informed treatment 

decisions. 

Comment: Several commenters noted 

that hospice eligibility is based on the 

prognosis and not the diagnosis, and 

some expressed concern as to why CMS 

is so focused on the diagnosis. 

Response: To address the comments 

regarding the focus on diagnosis rather 

than prognosis, eligibility for hospice 

services under the Medicare Hospice 

Benefit has always been based on the 

prognosis of the individual, not 

diagnosis, since the implementation of 

the Medicare Hospice Benefit in 1983. 

As stated in the proposed rule on 

August 22, 1983, ‘‘The regulations 

would specify, consistent with the 

requirements of sections 1812 and 

1814(a)(8) of the Act, that to be eligible 

for Medicare coverage of hospice care, 

an individual must be entitled to 

Medicare Part A, and must be certified 

as terminally ill’’ (48 FR 38147). These 

criteria have not changed, and we 

believe that all eligible individuals will 

continue to have access to the Medicare 

Hospice Benefit. However, certifications 

and recertifications of hospice eligibility 

are statutory requirements for coverage 

and payment. The content of the 

certifications and recertifications must 

conform to the following requirements 

at § 418.22(b), Content of certification. 

These requirements include, but are not 

limited to the following: 

• The certification must specify that 

the individual’s prognosis is for a life 

expectancy of six months or less if the 

terminal illness runs its normal course. 

• Clinical information and other 

documentation that support the medical 

prognosis must be in the medical record 

with the written certification. 

• The physician 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 or 

as an addendum to these forms. On 

hospice claims however, we are not 

seeing the level of completeness of 

diagnosis reporting as is required for the 

certification and recertifications. As 

stated in the proposed rule, data 

analysis of preliminary hospice claims 

data from the first quarter of FY 2013 

(October 1, 2012 through December 31, 

2012) showed that over 72 percent of 

providers only report one diagnosis on 

the hospice claim. Further, analysis of 

third quarter FY 2013 data (April 1, 

2013 through June 30, 2013 as of July 1, 

2013) showed that 69 percent of 

providers still only report one diagnosis 

on the hospice claim. The hospice 

claims processing manual (IOM 

Publication #100–04) states that 

principal and other diagnosis codes are 

to be reported on the hospice claims 

form per ICD–9–CM Coding Guidelines. 

Comment: Some commenters felt that 

the only reason for the focus on 

diagnosis is for CMS to ‘‘save money’’ 

while shifting costs to the elderly and 

that the per diem reimbursement is 

being unbundled with these coding 

clarifications. 

Response: The goal of any 

clarification of longstanding, existing 

policies such as those relating to ICD– 

9–CM Coding Guidelines is to more 

fully describe Medicare beneficiaries 

who are receiving hospice care. We are 

also accountable for maintaining the 

integrity and fiscal viability of the 

Medicare Trust Funds. Diagnosis 

information on claims is also important 

as we move forward with hospice 

payment reform. Section 3132(a) of the 

Affordable Care Act for hospice 

payment reform requires that payment 

reforms occur no earlier than October 1, 

2013, and that the revisions to the 

payments implemented result in the 

same estimated amount of aggregate 

expenditures for hospice care in the 

fiscal year that the revisions are 

implemented as would have been made 

for such care in such fiscal year if such 

revisions had not been implemented. 

That means any monies saved from any 

implemented reform model must go 

back into the hospice benefit. The goal 

of hospice payment reform is to ensure 

appropriate distribution of Medicare 

Trust Funds by better aligning payments 

with resource use, to pay more 

accurately. 

However, there has been some 

concern, as noted by the Office of the 

Inspector General, that some hospices 

are not providing the full range of 

required hospice services, most notably 

drugs, through their per diem 

reimbursement to Medicare hospice 

beneficiaries (OIG Report A–06–10– 

00059, June, 2012). Data analysis 

conducted by our hospice payment 

reform contractor, Abt Associates, 

identified that some hospice-related 

drugs for Medicare hospice beneficiaries 

are being submitted through Part D 

prescription programs instead of being 

covered under the Medicare Hospice 

Benefit as required by the statute. In 

2010, 773,168 Medicare hospice 


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beneficiaries were enrolled in Part D. Of 

these individuals, almost 15 percent 

received over 334,000 analgesic 

prescriptions through Part D during 

hospice enrollment totaling 

$13,000,430. See Figure (1) below. 

This total covered only one drug 

class. During 2010, Medicare hospice 

beneficiaries received 5,878,425 

prescriptions of all classes totaling 

$351,750,202. These drug classes 

encompassed other hospice-related 

drugs including medications for nausea, 

shortness of breath, anxiety, 

constipation, diarrhea, depression, as 

well as disease-specific medications for 

the reported principal hospice 

diagnosis. We continue to conduct 

ongoing analysis regarding the claims 

for Medicare hospice beneficiaries to 

ensure that hospice providers are 

covering the required services, drugs, 

supplies, and DME as required by our 

regulations at 42 CFR 418.200, 418.202, 

and 418.204. 

The hospice reimbursement structure 

has been a bundled per diem rate since 

the implementation of the Medicare 

Hospice Benefit. It is not our intent to 

‘‘unbundle’’ any of the services required 

to be provided by hospices. However, as 

shown in the above figure, it is evident 

that many drugs used for hospice pain 

management are being ‘‘unbundled’’ 

from the hospice per diem rate, and this 

is a concerning trend that we do not 

support. 

Therefore, we continue to support the 

ICD–9–CM Coding Guidelines and stand 

by the ICD–9–CM coding clarifications 

in the proposed rule. These coding 

guidelines are longstanding policies that 

we have reiterated in past rules and 

notices. No new proposals are being 

made; rather we are ensuring that these 

existing policies are being adhered to. 

As such, ‘‘debility’’ and ‘‘adult failure to 

thrive’’ are not allowable as reportable 

principal diagnoses on the hospice 

claims. However, we recognize that this 

may be a paradigm shift for some 

hospices in the way they have coded in 

the past. Therefore, in recognizing the 

process and systems changes that need 

to be put in place, claims received with 

these codes in the principal diagnosis 

field will be returned to the provider for 

more definitive coding of the principal 

diagnosis and additional diagnoses, 

effective for claims dated on or after 

October 1, 2014. This will not affect 

claims submitted before October 1, 

2014. ‘‘Debility’’ and ‘‘adult failure to 

thrive’’ may be reported on the hospice 

claims as additional diagnoses in the 

appropriate claim fields. 

Although claims will not be returned 

to the provider until the start of FY 

2015, we remind hospices that they are 

currently, and have always been, 

required to code all related diagnoses in 

the additional coding fields on the 

hospice claim and thus should be doing 

so now. We will continue to monitor 

and analyze hospice claims data and 

may make further clarifications in the 

future if necessary. In addition to the 

principal diagnosis field, the paper UC– 

04 claim form has up to 17 additional 

diagnosis fields and the electronic 837I 

5010 claim form has up to 24 additional 

diagnosis fields allowing for adequate 

space for the coding all conditions 

related to the beneficiary’s terminal 

prognosis. 

Comment: Many comments were also 

received with specific clinical scenarios 

regarding beneficiaries with a reported 

hospice diagnosis of ‘‘debility’’ or 

‘‘adult failure to thrive.’’ These 

comments went on to list these 

beneficiaries’ comorbidities including 

COPD, atrial fibrillation, congestive 

heart failure, and stroke, to name a few. 


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Other comments included clinical 

presentations, rather than specific 

diagnoses, and felt that ‘‘debility’’ or 

‘‘adult failure to thrive’’ were the only 

appropriate diagnoses that could be 

assigned. These commenters also report 

that they were unable to determine the 

principal terminal diagnosis for these 

beneficiaries as the individual 

conditions did not meet criteria for 

being terminally ill per LCDs. Finally, 

additional commenters asked about 

quantifying comorbidities and whether 

Medicare guidelines for eligibility 

would be updated to support 

comorbidities as terminal diagnoses. 

Response: As referenced in our 

regulations at § 418.22(b)(1), to be 

eligible for Medicare hospice services, 

the beneficiary’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 set 

out at in § 418.22. Therefore, eligibility 

under the Medicare Hospice Benefit is 

based on the prognosis of the individual 

and not only a single diagnosis or 

multiple diagnoses. As generally 

accepted by the medical community, the 

term ‘‘terminal illness’’ refers to an 

advanced and progressively 

deteriorating illness and the illness is 

diagnosed as incurable. When an 

individual is terminally ill, many health 

problems are brought on by underlying 

condition(s), as bodily systems are 

interdependent, meaning that there are 

multiple conditions, and hence 

diagnoses, contributing to the terminal 

prognosis. In the proposed rule, we said 

that the ICD–9–CM Coding Guidelines, 

referring to the selection of the principal 

diagnosis, state to list the diagnosis 

which is ‘‘chiefly responsible for the 

services provided and to list additional 

codes that describe any coexisting 

conditions.’’ We clarified that the 

principal diagnosis listed should be 

determined by the certifying hospice 

physician(s) as the diagnosis most 

contributory to the terminal prognosis. 

Furthermore, ICD–9–CM Coding 

Guidelines state that when there are two 

or more interrelated conditions (such as 

diseases in the same ICD–9–CM chapter 

or manifestations characteristically 

associated with a certain disease) 

potentially meeting the definition of 

principal diagnosis, either condition 

may be sequenced first, unless the 

circumstances of the admission, the 

therapy provided, the Tabular List, or 

the Alphabetic Index indicate 

otherwise. In the unusual instance when 

two or more diagnoses equally meet the 

criteria for principal diagnosis as 

determined by the circumstances of 

admission, diagnostic workup and/or 

therapy provided, and the Alphabetic 

Index, Tabular List, or other coding 

guidelines do not provide sequencing 

direction, any one of the diagnoses may 

be sequenced first. The ICD–9–CM 

Coding Guidelines are clear that all 

conditions contributing to the need for 

services should be listed. 

One commenter provided the 

following clinical scenario regarding an 

individual with a hospice claimsreported principal diagnosis of 

‘‘debility:’’ 

‘‘A patient has dilated cardiomyopathy and 

arrhythmia and has a functional 

classification of NYHA Class III as he has 

symptoms with activity but not at rest. He 

also has pulmonary fibrosis causing 

shortness of breath with activity. His PPS has 

declined to 50 percent in the last 3 months 

and he now needs to use a walker and the 

assistance for one person ambulating <10 ft. 

His weight has declined by 10 percent in the 

last six months, and he states that his 

appetite has decreased to eating breakfast and 

drinking two supplements during the day. He 

has been hospitalized two times in the past 

year for pneumonia and was hospitalized last 

month for arrhythmia requiring medication 

adjustments. He does not want further 

hospitalizations.’’ 

In this scenario, there are multiple 

conditions listed, including dilated 

cardiomyopathy, arrhythmia and 

pulmonary fibrosis. Though any of these 

conditions, individually, may not deem 

the individual as terminally ill, the 

progressive nature of these diseases as 

well as the collective presence of these 

multiple comorbid conditions will 

contribute to the terminal prognosis of 

the individual. We are clarifying that in 

a scenario such as this, the certifying 

physician would select the condition he 

or she feels is most contributory to the 

terminal prognosis, based on 

information in the comprehensive 

assessment, other relevant clinical 

information supporting all diagnoses, 

and his or her best clinical judgment. 

We are clarifying that this principal 

diagnosis, along with the other related 

diagnoses, would be included on the 

hospice claim. The physician’s clinical 

judgment does not negate the fact that 

there must be a basis for hospice 

certification. A hospice needs to be 

certain that the physician’s clinical 

judgment can be supported by clinical 

information and other documentation 

that provide a basis for the certification 

of a life expectancy of six months or less 

if the illness runs its normal course. 

Additionally, the LCDs state that the 

terminal illness eligibility guidelines 

provided therein are applicable to all 

hospice patients regardless of diagnosis. 

The LCD guidelines are intended to be 

used to identify any Medicare 

beneficiary whose current clinical status 

and anticipated progression of disease is 

more likely than not to result in a life 

expectancy of six months or less. LCDs 

are utilized to determine eligibility for 

Medicare hospice services and not to 

determine the appropriate diagnoses to 

code on hospice claims. 

The eligibility requirements for 

Medicare hospice services were stated 

above in a previous response. Eligibility 

under the Medicare Hospice Benefit is 

based on the prognosis of the individual 

and these criteria are not specific to or 

limited by any one condition, multiple 

conditions or presence of comorbidities. 

Rather, the certification of terminal 

illness is based in the unique clinical 

picture of the individual that is reflected 

in the comprehensive assessment and 

other clinical records and 

documentation that deems the person as 

having a life expectancy of six months 

or less, should the illness run its normal 

course. Therefore, the Medicare Hospice 

Benefit eligibility requirements will not 

change as a result of the clarifications in 

the proposed rule. We believe that the 

certifying physicians have the best 

clinical experience, competence and 

judgment to make the determination 

that an individual is terminally ill. We 

continue to require the reporting of all 

related comorbidities, regardless of the 

quantity, in the hospice clinical record 

and on the hospice claims. 

Comment: We received several 

comments regarding whether the 

reported principal diagnosis on the 

Certificate of Terminal Illness needs to 

be changed for current hospice 

beneficiaries where ‘‘debility’’ or ‘‘adult 

failure to thrive’’ was reported as the 

principal terminal condition. 

Response: The regulations at 

§ 418.22(b) state that that the 

certification include—(1) The 

certification must specify that the 

individual’s prognosis is for a life 

expectancy of 6 months or less if the 

terminal illness runs its normal course; 

(2) Clinical information and other 

documentation that support the medical 

prognosis must accompany the 

certification and must be filed in the 

medical record with the written 

certification as set forth in paragraph 

(d)(2) of this section. Initially, the 

clinical information may be provided 

verbally, and must be documented in 

the medical record and included as part 

of the hospice’s eligibility assessment; 

(3) The physician must include a brief 

narrative explanation of the clinical 

findings that supports a life expectancy 

of 6 months or less as part of the 


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5 Verdery, R. (1997). Clinical Evaluation of 

Failure to Thrive in Older People. Clinics in 

Geriatric Medicine. 13(4), 769–778. 

certification and recertification forms, or 

as an addendum to the certification and 

recertification forms; (4) The physician 

or nurse practitioner who performs the 

face-to-face encounter with the patient 

described in paragraph § 418.22(a)(4) 

must attest in writing that he or she had 

a face-to-face encounter with the 

patient, including the date of that visit. 

The attestation of the nurse practitioner 

or a non-certifying hospice physician 

shall state that the clinical findings of 

that visit were provided to the certifying 

physician for use in determining 

continued eligibility for hospice care; 

and (5) All certifications and 

recertifications must be signed and 

dated by the physician(s), and must 

include the benefit period dates to 

which the certification or recertification 

applies. 

Certifications (of which the narrative 

is a part) are based on prognosis, not 

diagnosis as described above in the 

Code of Federal Regulations. Claims 

should include a principal diagnosis 

and all related diagnoses which form 

the prognosis. Certifications are 

completed no more than 15 days prior 

to the start of the benefit period. A new 

certification is not required simply 

because a beneficiary’s principal 

diagnosis changes nor do benefit 

periods or election status change simply 

because a principal diagnosis changes. 

Comment: We received some 

comments expressing concern that no 

longer allowing the use of ‘‘debility’’ 

and ‘‘adult failure to thrive’’ as principal 

hospice diagnoses would mean that 

Medicare hospice beneficiaries would 

be forced into a Medicare ‘‘cookie 

cutter’’ mold diagnosis. Several 

commenters stated that this would mean 

expensive diagnostic testing and/or 

hospitalizations to determine the 

terminal condition. Some commenters 

question what the expectations are for 

those people who are just ‘‘dying of old 

age’’ and some asked if CMS would 

rather see ‘‘otherwise healthy but 

elderly patients experience multiple 

hospital admissions and nursing home 

stays.’’ Another commenter stated that 

doctors may feel compelled to ‘‘makeup’’ diagnoses to satisfy this coding 

clarification. One commenter asked if 

all codes under the classification of 

‘‘Symptoms, Signs, and Ill-defined 

Conditions’’ are included in these 

clarifications. 

Response: As stated above, these ICD– 

9–CM coding clarifications do not 

preclude the clinical judgment of the 

certifying physician(s) regarding the 

hospice eligibility of any given 

Medicare beneficiary; rather, they are to 

ensure that all principal and diagnoses 

related to the terminal prognosis are 

captured on the Medicare hospice 

claims to more accurately describe 

hospice beneficiaries receiving the 

services, drugs, supplies, and DME 

hospices are required to cover under the 

regulations at § 418.200, § 418.202, and 

§ 418.204. A non-specific, ill-defined 

symptom diagnosis such as ‘‘debility’’ 

and ‘‘adult failure to thrive’’ is more of 

a catch-all diagnosis in that a wide 

variety of principal and/or comorbid 

conditions contribute to these 

syndromes. Given the complexity of a 

hospice patient, with multiple 

conditions often contributing to the 

terminal prognosis, we are stating that 

all diagnoses contributing to (that is, 

related to) the terminal prognosis of the 

individual are to be reported on the 

hospice claims in order to account for 

the individual needs of each and every 

Medicare hospice beneficiary. 

In evaluating an individual for 

hospice eligibility, and especially when 

evaluating an individual who has the 

clinical characteristics found under 

‘‘debility’’ or ‘‘adult failure to thrive’’, 

‘‘medical history is probably more 

important than physical examination or 

laboratory testing as failure to thrive 

commonly occurs over the course of 

months and common diagnostic testing 

has generally been done previously.5 ’’ 

Therefore, it is our belief that an 

individual who has elected hospice care 

and has been determined to be 

terminally ill by a certifying physician 

has more than likely already been 

assessed, treated and evaluated by 

health care providers, not limited to just 

hospice providers, prior to coming to 

the decision to elect hospice services 

and waive the right to Medicare 

payment for other curative services. 

Having all related conditions reported 

on the hospice claim form, and not just 

a single diagnosis, such as an illdefined, symptom diagnosis, will ensure 

that hospices are aware of and provide 

all of the expert care, including services, 

drugs, supplies, and DME, that a 

Medicare hospice beneficiary requires 

as he or she approaches end-of-life. 

In the rare event that no single 

definitive terminal diagnosis (or 

diagnoses) can be determined by the 

certifying physician, whether from lack 

of clinical documentation or patient 

refusal for diagnostic work-up, then the 

expectation would be that all conditions 

that are present at the time of hospice 

certification that deem the individual as 

terminally ill would be reported on the 

hospice claim. One example provided 

by a commenter is as follows: 

An 85 year old patient with dysphagia, 

decreased oral intake, malnutrition, weight 

loss, BMI of 18.6 upon admission, decreasing 

functional status, progressed from a walker to 

chair to bed in less than six months, but with 

no underlying diagnoses. This patient was 

determined to be terminally ill by the 

certifying physician and this patient was 

entered into hospice services. 

In this example, while no organ-based 

diagnosis could be confirmed by the 

certifying physician, the clinical record 

reflects that this patient was suffering 

from malnutrition, dysphagia, and 

decreased functional status and muscle 

weakness. 

Eligibility for hospice services is not 

limited by only disease-specific ICD–9– 

CM codes. There are ICD–9–CM codes 

for all of the clinical presentations listed 

above. This clinical scenario has been 

documented in the comprehensive 

assessment, and there is a clinical 

history of this patient’s decline. CMS’s 

expectation is to code these clinical 

presentations on the claim as they are 

listed in the clinical record. The 

condition the physician feels is most 

contributory to the terminal prognosis 

would be reported first on the hospice 

claim form, along with all other related 

conditions. There appears to be some 

confusion and disconnect from the 

comments received regarding the coding 

expectations. The rationale for these 

clarifications is not to limit or prohibit 

access to hospice services, and we 

expect hospice providers to render the 

hospice care needed for those eligible 

individuals. We are only clarifying to 

code this level of specificity on the 

hospice claim form so we have an 

accurate clinical picture of those 

Medicare beneficiaries that are receiving 

hospice care under their Medicare 

Hospice Benefit. This expectation for 

specificity in claims coding is found in 

every other health care setting for 

Medicare beneficiaries—inpatient, 

outpatient, home health, skilled nursing 

facilities, acute rehabilitation facilities 

and in long term care hospitals. 

Hospices are expected to follow the 

same level of specificity especially 

given the complexity of the hospice 

patient population. 

We recognize that this may be a great 

departure from the way some hospice 

providers have been accustomed to 

coding on hospice claims. Ongoing 

analysis of the hospice claims reveals 

that a majority of hospices are coding a 

single terminal diagnosis. However, 

eligibility should always have been 

based on the terminal prognosis of the 

patient, and this prognosis would 

typically involve more than one 

diagnosis. Specifically, as stated 

previously, analysis of third quarter FY 


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6 Verdery, R. (1997). Clinical Evaluation of 

Failure to Thrive in Older People. Clinics in 

Geriatric Medicine. 13(4), 769–778. 

7 Verdery, R. (1997). Clinical Evaluation of 

Failure to Thrive in Older People. Clinics in 

Geriatric Medicine. 13 (4), 769–778. 

2013 data (April 1, 2013 through June 

30, 2013 as of July 1, 2013) showed that 

69 percent of providers still only report 

one diagnosis on the hospice claim. 

Prognosis, as many commenters have 

noted, is based on a multitude of 

clinical processes. We expect hospices 

to code these multiple clinical 

processes. This may be difficult for 

some providers to accept as they may 

not understand how malnutrition, 

anemia, or depression, for example, 

could be reported as a principal hospice 

diagnosis. However, many commenters 

provided clinical scenarios in which 

their patients had one or all of these 

clinical presentations that was 

contributing to the terminal prognosis of 

the individual. We expect hospice 

providers to take a holistic approach to 

diagnostic coding on the claims form, 

reporting the principal diagnosis and all 

related diagnoses. 

According to § 418.22(b)(3), Content 

of certification, ‘‘The physician must 

include a brief narrative explanation of 

the clinical findings that supports a life 

expectancy of six months or less as part 

of the certification and recertification 

forms; or as an addendum to the 

certification and recertification forms.’’ 

Note that ‘‘clinical findings’’ are 

included in the determination of 

terminal prognosis, and hospice 

eligibility is not limited by or to a single 

diagnosis or diagnostic test result(s). 

Therefore, expensive diagnostic testing 

or hospitalizations are not a requirement 

for determining whether an individual 

meets Medicare hospice eligibility 

criteria if the individual’s clinical 

circumstances are evident in that the 

conditions present contribute to the 

terminal prognosis of the individual. 

Oftentimes, if an individual has 

reported a past, resolved problem in 

their medical history, and that problem 

could cause the symptom syndromes of 

‘‘debility’’ or ‘‘adult failure to thrive’’, 

that problem is the most likely one 

underlying the patient’s presentation.6

The expectation remains that hospice 

providers, using their best clinical 

judgment, knowledge, and expertise, 

will ‘‘paint’’ a detailed picture of their 

patients to more fully describe Medicare 

hospice patients. 

If a Medicare beneficiary is reported 

to be ‘‘dying of old age’’ or ‘‘otherwise 

healthy, but elderly,’’ we believe that 

characterization of the beneficiary’s 

condition is inconsistent with 

classifying the individual as terminally 

ill. Eligibility criteria for the Medicare 

Hospice Benefit do not include an age 

requirement, and advanced age alone is 

inadequate documentation of terminal 

prognosis. 

It is normal clinical practice for health 

care providers to fully inform their 

patients about their health status. An 

eligible beneficiary who is considering 

hospice, and who has not seen a doctor 

in years, should be fully informed by 

the potential hospice provider about the 

conditions contributing to their terminal 

prognosis and their palliative treatment 

options for ongoing care. 

Often, many other treatable health 

conditions could be contributing to the 

clinical characteristics associated with 

‘‘debility’’ and ‘‘adult failure to 

thrive.’’ 7 These conditions may include: 

Alzheimer’s Disease, depression, 

primary anorexia, diabetes, cancer, 

chronic lung disease, stroke, chronic 

urinary tract infections, chronic steroid 

use, medication reactions, just to name 

a few. Any eligible individual (or 

representative) who is electing hospice 

under the Medicare Hospice Benefit 

must acknowledge that he or she has 

been given a full understanding of the 

palliative rather than the curative nature 

of hospice care, as it relates to the 

individual’s terminal illness 

(§ 418.24(b)(2)). Upon electing the 

Medicare hospice benefit, an eligible 

patient acknowledges his/her 

understanding that Medicare will no 

longer pay for curative treatment for the 

terminal illness and related conditions, 

and thus the patient is essentially 

waiving curative treatment under 

Medicare, and instead elects to receive 

palliative care to manage pain or 

symptoms. It is the hospice provider’s 

responsibility to ensure that the 

individual is fully informed and 

acknowledges understanding that he or 

she is essentially waiving curative 

treatment and electing only palliative 

care, so the individual (or 

representative) can make his or her own 

informed decision. 

The expectation remains that all 

conditions (hence, diagnoses) that are 

contributing to (that is, related to) the 

terminal prognosis of the individual 

would be reported on the hospice 

claims to fully represent the 

individual’s clinical status and the 

hospice interventions that are being 

provided to address the individual’s 

needs. 

We do not endorse ‘‘making up’’ a 

diagnosis in order for hospice claims 

submission. We believe that 

beneficiaries’ physicians are in the best 

clinical position to determine those 

conditions that are contributing to the 

terminal prognosis of their patients. We 

expect that they will use responsible 

decision making to determine the 

diagnosis contributing most to the 

terminal prognosis utilizing the 

information from the clinical records 

and the comprehensive assessments. 

While the ICD–9–CM Coding Guidelines 

for ‘‘Symptoms, Signs and Ill-defined 

Conditions’’ do apply for all codes 

under this ICD–9–CM classification, we 

are currently focusing on the two most 

frequently reported hospice claims 

diagnoses from this classification, 

‘‘debility’’ and ‘‘adult failure to thrive.’’ 

However, we will continue to monitor 

the diagnostic coding patterns on 

hospice claims for any further issues or 

clarifications that may be needed in this 

regard. 

Comment: A few commenters 

suggested, for those cases reported with 

‘‘debility’’ or ‘‘adult failure to thrive’’ as 

the principal diagnosis, there should be 

a mandatory medical review rather than 

these patients not receiving hospice care 

or to only ‘‘punish’’ those that have 

abused ‘‘debility.’’ One commenter 

suggested that CMS limit the number of 

patients per hospice with ‘‘debility’’ and 

‘‘adult failure to thrive’’ with a 3 percent 

cap. 

Response: As noted previously, 

‘‘debility’’ and ‘‘failure to thrive’’ 

comprised 20 percent of the Medicare 

hospice population in FY 2012. This is 

a substantial number of individuals that 

hospice providers are saying have no 

other diagnoses or conditions that could 

be determined or confirmed. 

Conducting mandatory medical reviews 

on each and every one of these cases 

would require substantial 

administrative burden and costs. Rather, 

we are not stating that individuals with 

the clinical manifestations of ‘‘debility’’ 

and ‘‘adult failure to thrive’’ are 

ineligible for hospice services under the 

Medicare Hospice Benefit. Eligibility is 

determined by the certifying physician 

and based on the review of the clinical 

records and comprehensive assessment. 

These clarifications are to ensure that 

hospice providers are fully describing 

their Medicare hospice patients, which 

should assist them in fully 

understanding and treating all of the 

conditions contributing to the terminal 

prognosis and not just a single terminal 

diagnosis. 

It is our belief that hospice providers 

would not support having another cap 

requirement regarding their census 

populations. We recognize there are 

many new and ongoing requirements 

that hospice providers must fulfill in 

addition to providing high-quality, endof-life care for Medicare beneficiaries. 


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Therefore, it is not our intent, at this 

time, to implement any new cap 

requirements or ‘‘punishments’’ on 

hospice providers with these coding 

clarifications. We expect that hospice 

providers will continue to assess and 

evaluate their own organizational 

policies and processes to ensure that 

they are able to meet requirements and 

to continue to meet the needs of their 

patients. 

Comment: One commenter stated, 

‘‘The need to document secondary 

diagnoses is recognized. It was actually 

commonly done in the pre-electronic 

record (EMR) days, but got lost by many 

hospices with limitations in software 

systems’’. One commenter stated that 

barriers existed with electronic medical 

record systems that did not allow 

additional diagnoses to flow to the 

claim. These commenters went on to say 

that many of these barriers have been 

removed and that the majority of 

hospice providers are either now in 

compliance with the requirement to 

include multiple diagnoses or are in the 

process of implementing procedures 

and technology in order to be in 

compliance. One commenter stated that 

their hospice software vendor has not 

developed a process to allow for 

inclusion of related diagnoses on their 

claims forms. This commenter went on 

further to say that it would be an 

obstacle for hospice providers to make 

software changes to comply with the 

ICD–9–CM coding clarifications 

regarding the reporting of related 

diagnoses. Several commenters stated 

that the occurrence of reporting a 

principal diagnosis of ‘‘debility’’ or 

‘‘adult failure to thrive’’ is uncommon. 

Response: We appreciate the 

comment regarding the common 

hospice practice of including secondary 

diagnoses in the past. While we 

understand that software systems may 

pose some obstacles in reporting more 

than one diagnosis on the hospice 

claim, we also believe that this practice 

of reporting the conditions contributing 

to (that is, related to) the terminal 

prognosis is one that has been 

communicated since the 

implementation of the hospice benefit. 

The expectation is for this practice to 

continue and for hospice providers to be 

active in ensuring that their processes 

and systems promote the hospice 

philosophy of holistic, comprehensive 

care and the intent of the Medicare 

Hospice Benefit in supporting that 

access for the Medicare population. 

As mentioned in the proposed rule, 

there are hospice providers who are 

reporting more than just the principal 

diagnosis, so it appears that there are 

electronic systems currently in place 

that allow for the inclusion of multiple 

diagnoses. However, data analysis of 

hospice claims continues to show that 

the majority of hospice providers (69 

percent of hospice providers, as stated 

in previous responses) continue to 

report only one diagnosis on hospice 

claims. Additionally, software systems 

are typically designed with end user 

input so we believe those software 

systems that only allow one diagnosis 

were because those hospices 

communicated to the software vendors 

that their needs for claims coding were 

to include only one diagnosis. We 

expect hospices to articulate to the 

vendors the requirements of the 

software that complies with our 

requirements. Furthermore, we have 

reiterated in past notices and rules 

regarding our expectation of the 

inclusion of the principal hospice 

diagnosis as well as all related 

conditions. As mentioned previously, in 

addition to the principal diagnosis field, 

the paper UC–04 claim form has up to 

17 additional diagnosis fields, and the 

electronic 837I 5010 claim form has up 

to 24 additional diagnosis fields 

allowing for adequate space for the 

coding all conditions contributing to 

(that is, related to) the beneficiary’s 

terminal condition. Therefore, we 

believe that we have provided ample 

notice and time for hospice providers to 

evaluate their claims software systems 

to make the necessary systems 

adjustments for the inclusion of all 

related diagnoses. However, we also 

recognize that this will require some 

software systems adjustments for several 

hospice providers, and we are sensitive 

to those time requirement needs. To 

address the comments regarding the rare 

occurrences of the use of ‘‘debility’’ or 

‘‘adult failure to thrive’’ as a principal 

diagnosis, a review of 2011 and 2012 

data from the Chronic Condition 

Warehouse revealed the following 

information (See Table 4 and Table 5): 

TABLE 4—PERCENTAGE OF HOSPICE

PROVIDERS EVER REPORTING ‘‘DEBILITY’’ OR ‘‘ADULT FAILURE TO

THRIVE’’ AS THE PRINCIPAL HOSPICE

DIAGNOSIS WITH NO REPORTED

SECONDARY DIAGNOSES

Condition FY 2011 

% 

FY 2012 

% 

Debility ...................... 89.3 88.9 

Adult Failure to 

Thrive .................... 87.3 87.6 

Source: FY 2011 and FY 2012 Claims from 

Chronic Conditions Warehouse (CCW). 

Accessed on 7/19/13. 

TABLE 5—PERCENTAGE OF CLAIMS

WITH ‘‘DEBILITY’’ OR ‘‘ADULT FAILURE TO THRIVE’’ AS REPORTED

PRINCIPAL DIAGNOSIS WITH NO REPORTED SECONDARY DIAGNOSES

Condition FY 2011 

(%) 

FY 2012 

(%) 

Debility ...................... 11.96 12.07 

Adult Failure to 

Thrive .................... 7.55 7.83 

Source: FY 2011 and FY 2012 Claims data 

from Chronic Conditions Warehouse (CCW). 

Accessed on 7/19/13. 

This data indicates that the majority 

of hospice providers are reporting 

‘‘debility’’ and ‘‘adult failure to thrive’’ 

as a principal hospice diagnosis, thus 

this is not a rare occurrence as 

commenters have stated. Additionally, 

claims with ‘‘debility’’ or ‘‘adult failure 

to thrive’’ as the reported principal 

hospice diagnosis accounted for almost 

20 percent of total hospice claims for 

both FY 2011 and FY 2012. 

Comment: We received several 

comments regarding hospice claims 

with a principal diagnosis of ‘‘debility’’ 

or ‘‘adult failure to thrive’’ being 

returned to the provider immediately for 

more definitive coding. Some expressed 

that CMS is ‘‘jumping the gun’’ by 

announcing that claims would be 

returned to the provider before the 

comment period is over and were 

concerned that claims would starting 

returning upon publication of the 

proposed rule. Several commenters 

expressed concern regarding the ‘‘denial 

of claims payment’’ for claims received 

with ‘‘debility’’ or ‘‘adult failure to 

thrive’’ reported as the principal 

diagnosis. 

Response: We apologize for any 

confusion that may have resulted from 

our statement in the FY 2014 Hospice 

Wage Index and Payment Rate Update 

proposed rule regarding claims being 

returned to providers for more definitive 

coding. We stated in the proposed rule: 

‘‘. . . we would clarify that ‘‘debility’’ 

and ‘‘adult failure to thrive’’ would not 

be used as principal diagnoses of the 

hospice claim form. When reported as a 

principal diagnosis, these would be 

considered questionable encounters for 

hospice care, and the claims would be 

returned to the provider, not denied, for 

a more definitive principal diagnosis.’’ 

We did not specify any time frame for 

these claims or the effective date of 

implementation. The intent was not to 

immediately return claims to the 

provider upon publication of the 

proposed rule, and the returned claim is 

not a denial of the claim, but a request 

for a more definitive and appropriate 


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principal diagnosis. ‘‘Debility’’ and 

‘‘adult failure to thrive’’ could be 

reported on the hospice claim as other, 

additional, or coexisting diagnoses. We 

understand that this is a shift from the 

way some hospice providers have coded 

in the past and that there needs to be 

adequate time to ensure that all clinical 

and electronic processes are in place 

and functioning as not to create 

unnecessary administrative burden in 

an accelerated time frame. 

Comment: There were several 

comments questioning what is 

considered related or unrelated to the 

terminal condition. One commenter 

stated that it is difficult to determine if 

a diagnosis is related to the terminal 

condition with an example given stating 

that renal failure may or may not be 

related to congestive heart failure. 

Another commenter, a hospice 

physician, provided a clinical scenario 

for a beneficiary with chronic 

obstructive pulmonary disease (COPD) 

as the principal diagnosis, but who also 

had coronary artery disease (CAD) and 

Parkinson’s disease which the hospice 

considered unrelated comorbid 

conditions. The patient would only 

receive hospice services for care related 

to the lung disease (COPD). Another 

commenter expressed concern that 

including all of the related diagnoses on 

the hospice claim would mean that 

hospices would have additional costs 

incurred in covering all of the 

medications for the reported diagnoses. 

Response: It is our goal to maintain 

the integrity of hospice philosophy and 

the Medicare Hospice Benefit. The 

intent of the Medicare Hospice Benefit 

is to provide all-inclusive care for pain 

relief and symptom management for the 

terminal prognosis and related 

conditions, and offer the opportunity to 

die with dignity in the comfort of one’s 

home rather than in an institutional 

setting. It is often not a single diagnosis 

that represents the terminal prognosis of 

the patient, but the combined effect of 

several conditions that makes the 

patient’s prognosis terminal. In 

§ 418.54(c), the hospice Conditions of 

Participation 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 which must be 

addressed 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 palliative care related to the 

terminal illness and related conditions. 

The hospice plan of care is established 

based on the review of the clinical 

records and the comprehensive hospice 

assessments in order to ensure that all 

care needs at the end-of-life are 

addressed. 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; speechlanguage 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. 

We recognize that there are conditions 

that are unrelated to the terminal 

condition of the individual. This is why 

there are the ongoing assessment 

requirements of the hospice 

beneficiaries and the collaboration with 

the hospice IDG—to ensure that the 

ongoing and changing needs of the 

hospice beneficiary are assessed and 

changes to the plan of care are made. 

However, in referring to the holistic 

intent of hospice philosophy and care, 

we wrote in the August 22, 1983 

proposed rule, ‘‘. . . we recognize that 

there are many illnesses which may 

occur when an individual is terminally 

ill which are brought on by the 

underlying condition of the patient’’ (48 

FR 38147). In reviewing the many 

clinical scenarios provided by 

commenters and their interpretations of 

what they consider related versus 

unrelated, it is apparent that the 

majority refer to a ‘‘related condition’’ as 

one that is related only to the reported 

single, principal terminal diagnosis and 

not to the terminal prognosis. However, 

within those same comments, it was 

stated numerous times that hospice 

eligibility is related to the prognosis of 

the individual. One example provided 

from a hospice physician regarding a 

Medicare hospice beneficiary who had a 

reported principal terminal diagnosis of 

chronic obstructive pulmonary disease 

(COPD). This individual also had 

documented coronary artery disease 

(CAD) and Parkinson’s disease. The 

provider stated that the CAD and the 

Parkinson’s disease are unrelated to the 

COPD and that the patient would only 

receive hospice services for the COPD. 

This scenario and accompanying 

statement does not appear to encompass 

hospice philosophy of holistic care. 

Therefore, we are restating what we 

communicated in the December 16, 

1983 Hospice final rule regarding what 

is related versus unrelated to the 

terminal illness: ‘‘. . . [W]e 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. As stated in the 

December 16, 1983 Hospice final rule, 

. . . ‘‘hospices are required to provide 

virtually all the care that is needed by 

terminally ill patients.’’ (48 FR 56010). 

Therefore, unless there is clear evidence 

that a condition is unrelated to the 

terminal prognosis, all services would 

be considered related. It is also the 

responsibility of the hospice physician 

to document why a patient’s medical 

need(s) would be unrelated to the 

terminal prognosis. We continue to 

reiterate that this determination of what 

is related versus unrelated to the 

terminal prognosis remains within the 

clinical expertise and judgment of the 

hospice medical director in 

collaboration with the IDG. 

Comment: Two commenters stated 

that the reference to the 1983 final rule 

preamble language quoted above, is 

casting aside language found in the 

§ 418.402, ‘‘Individual liability for 

services that are not covered hospice 

care’’. These comments went on to say 

that § 418.402 ‘‘identified items as 

unrelated and not the responsibility of 

the hospice for ‘services received for the 

treatment of an illness or injury not 

related to the individual’s terminal 

condition’.’’ 

Response: The referenced § 418.402, 

‘‘Individual liability for services that are 

not considered hospice care’’ states, 

‘‘Medicare payment to the hospice 

discharges an individual’s liability for 

payment for all services, other than the 

hospice coinsurance amounts described 

in § 418.400. . .’’ This section goes on 

to state what payment liabilities a 

hospice beneficiary would be 

responsible for (not the hospice 

provider per the commenters) including 

‘‘. . . Medicare deductibles and 


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coinsurance payments and for the 

difference between the reasonable and 

actual charge on unassigned claims on 

other covered services that are not 

considered hospice care.’’ Examples of 

non-hospice services are provided in 

this section including ‘‘. . . Medicare 

services received for the treatment of an 

illness or injury not related to the 

individual’s terminal condition.’’ We 

have previously acknowledged that 

there are those rare circumstances in 

which a service may not be related to 

the patient’s terminal prognosis and that 

this determination is to be done on a 

case-by-case basis by the hospice 

physician with input from the IDG. 

However, § 418.402 refers to the liability 

limitations for the hospice beneficiary 

and does not refer to the liability to the 

hospice provider. To infer that this 

section is a confirmation of the liability 

limitations to the hospice provider 

would be incorrect. 

Comment: Several commenters stated 

that the hospice physician, along with 

input from the IDG, have a process in 

place to help determine related versus 

unrelated conditions and results in the 

holistic and comprehensive care their 

patients need. Other commenters 

explained that the software system 

utilized by their hospice agency marks 

conditions either as ‘‘active’’ (meaning, 

related) or ‘‘historical’’ (meaning, 

unrelated). If a condition went from a 

historical state to an active state during 

the course of a hospice episode, then 

that condition was then considered 

related and treated accordingly under 

the hospice plan of care. Another 

commenter said that while some 

conditions are unrelated to the terminal 

condition, the clinical manifestations of 

these unrelated conditions are as such 

that they contribute to the individual’s 

symptom burden, and the hospice 

provider still provides symptom 

management for these seemingly 

unrelated conditions to meet the 

patient’s needs. 

Response: We applaud these hospices 

in providing a patient-centered 

approach and embracing the holistic 

hospice philosophy. These are all 

examples of hospice providers coming 

up with innovative ways to manage the 

needs of the hospice beneficiaries. 

These are reflections of the true intent 

of hospice philosophy that have been 

incorporated into the Medicare Hospice 

Benefit. We encourage all hospice 

providers to assess their operational 

processes and clinical and claims 

systems to be innovative in meeting the 

challenges of providing end-of-life care 

for the Medicare hospice beneficiaries 

as health care, in general, transitions to 

accountability and value-based models 

of care. 

Comment: One commenter stated that 

these diagnostic clarifications are a 

change in coverage policy and CMS 

must use a National Coverage Decision 

process to change coverage policy rather 

than through the preamble discussion of 

the proposed rule. 

Response: We continue to state that 

these coding clarifications are for 

hospice claims reporting only and are 

not a question of hospice eligibility or 

access to coverage. Eligibility to access 

the Medicare Hospice Benefit remains 

the same since the implementation of 

the benefit in 1983. To restate, eligibility 

for the Medicare Hospice Benefit is 

based on the individual being entitled to 

Part A of Medicare and being certified 

as terminally ill in accordance with 

§ 418.22. These eligibility requirements 

for coverage have not changed and are 

not changing in this rule. We expect 

hospice providers will not discharge, 

from hospice services, those 

beneficiaries who meet eligibility 

requirements but for whom they cannot 

determine a single, principal hospice 

diagnosis. If a Medicare beneficiary 

meets the eligibility requirements as 

stated in § 418.20 and as referenced 

above, that Medicare beneficiary will 

have access to hospice services under 

the Medicare Hospice Benefit. The 

intent of these coding clarifications is to 

request more clarity and detail on the 

hospice claims to reflect a complete 

picture of the Medicare hospice 

population and the hospice services 

rendered and not to make any changes 

in coverage or eligibility policies. 

Therefore, we reject the comment that 

CMS must use the National Coverage 

Decision process. 

Comment: We received a few 

suggestions to help further clarification 

regarding diagnostic coding in the 

hospice setting. One commenter 

suggested that CMS work with the 

National Hospice and Palliative Care 

Organization (NHPCO) to develop 

guidelines regarding diagnostic coding 

for hospices. Another commenter 

suggested that CMS needs to guide 

standardization of the hospice industry. 

The American Academy of Hospice and 

Palliative Medicine (AAHPM) suggested 

collaboration with CMS to convene a 

Palliative Medicine and Hospice Coding 

and Documentation Learning Network 

to have ongoing dialogue regarding 

coding issues and suggestions for the 

hospice industry. 

Response: We appreciate the 

numerous thoughtful and insightful 

suggestions that have been provided in 

response to the diagnostic clarifications. 

CMS strives to involve all stakeholders 

in the collaborative process as health 

care navigates through the 21st century 

and health care reform provisions. We 

continue to have ongoing discussions 

with the industry, including the 

national hospice organizations, to 

remain aware of the issues that affect 

the hospice providers and impact 

Medicare beneficiaries. We believe that 

this communication and collaboration 

will reflect in our ongoing advocacy for 

the Medicare hospice beneficiaries to 

ensure accountability, responsibility 

and quality end-of-life care. We will 

continue to provide outcomes of these 

communications via Medicare Learning 

Network (MLN) articles and through our 

Open Door Forums to ensure that all 

Medicare stakeholders are kept 

informed of progress in maintaining the 

integrity of the Medicare Hospice 

Benefit. 

Final Decision: We will require these 

coding changes beginning on October 1, 

2014. On or after 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 principal diagnosis 

coding. Claims submitted prior to 

October 1, 2014 with ‘‘debility’’ or 

‘‘adult failure to thrive’’ in the principle 

diagnosis field on the claim will not be 

returned to the provider, but we expect 

that hospice providers will code the 

principal hospice diagnosis according to 

the ICD–9–CM Coding Guidelines and 

the clarifications made herein. This 

should provide more than ample time 

for hospice providers to meet with 

clinical staff and their software vendors 

to ensure that these coding needs are 

addressed and processes put into place 

to ensure continuity of care and 

systems. These returned claims, based 

on the principal diagnoses of ‘‘debility’’ 

or ‘‘adult failure to thrive,’’ are not a 

denial of payment because of 

questionable eligibility; rather, these 

claims are being returned for additional 

clarity. Once resubmitted with 

diagnostic codes following the ICD–10– 

CM Coding Guidelines, these claims will 

be processed and paid accordingly. 

However, we expect hospice providers 

to transition immediately to more 

thoughtful coding practices in advance 

of this effective date. 

3. Use of ‘‘Mental, Behavioral and 

Neurodevelopmental Disorders’’ ICD–9– 

CM Codes 

In the proposed rule we discussed the 

use of hospice claims-reported principal 

hospice diagnoses that fall under the 

ICD–9–CM classification, ‘‘Mental, 

Behavioral and Neurodevelopmental 

Disorders.’’ There are several codes that 

fall under this classification that 


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encompass multiple dementia diagnoses 

that are frequently reported principal 

hospice diagnoses on hospice claims, 

but are not appropriate principal 

diagnoses per ICD–9–CM Coding 

Guidelines. There are, however, other 

ICD–9–CM dementia codes, such as 

those for Alzheimer’s disease and 

others, that fall under the ICD–9–CM 

classification, ‘‘Diseases of the Nervous 

System and Sense Organs’’ which are 

acceptable as principal diagnoses per 

ICD–9–CM coding guidelines. 

Comment: One commenter expressed 

concern that ‘‘Lewy Body Dementia,’’ 

‘‘Fronto-temporal Dementia’’ and 

‘‘Vascular Dementia’’ are no longer 

allowed as principal hospice diagnoses. 

Another commenter questioned what 

would be the recommendation if the 

hospice provider is unable to determine 

the cause of the dementia either from a 

lack of medical records or specific 

diagnostic work-up. One commenter 

asked if the LCD for ‘‘Alzheimer’s 

Disease and Related Disorders’’ would 

be applicable to use for coding 

guidance. 

Response: In the FY 2014 Hospice 

wage index and payment rate update 

proposed rule (78 FR 27823), we did not 

state the specific dementia conditions 

and their corresponding ICD–9–CM 

codes that fall under various coding and 

sequencing conventions in the ICD–9– 

CM Coding Guidelines. There are many 

codes for dementia conditions, 

including the neurological causes as 

well as the clinical mental and 

behavioral manifestations of the 

underlying condition. These dementia 

conditions and ICD–9–CM codes are too 

numerous to list within the context of 

the proposed and final rules but are 

found in the ICD–9–CM Official 

Guidelines for Coding and Reporting 

manual. However, we clarified that 

dementia codes can be found under two 

classifications in the ICD–9–CM Official 

Guidelines for Coding and Reporting, 

‘‘Mental, Behavioral and 

Neurodevelopmental Disorders’’ and 

‘‘Diseases of the Nervous System and 

Sense Organs.’’ Per ICD–9–CM Coding 

Guidelines, several, but not all, of these 

ICD–9–CM dementia codes are 

considered manifestation codes, 

especially those dementia codes 

classified under ‘‘Mental, Behavioral 

and Neurodevelopmental Disorders’’. In 

accordance with the 2012 ICD–9–CM 

Coding Guidelines, ‘‘certain conditions 

have both an underlying etiology and 

multiple body system manifestations 

due to the underlying etiology. For such 

conditions, the ICD–9–CM has a coding 

convention that requires the underlying 

condition be sequenced first followed 

by the manifestation. Wherever 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, etiology followed by 

manifestation.’’ In most cases, these 

manifestation codes will have in the 

code title, ‘‘in diseases classified 

elsewhere’’ or ‘‘in conditions classified 

elsewhere.’’ Codes with this in the title 

are a component of the etiology/ 

manifestation convention. The codes 

with the phrase ‘‘in diseases classified 

elsewhere’’ or ‘‘in conditions classified 

elsewhere’’ in the title indicate that they 

are manifestation codes. ‘‘In diseases 

classified elsewhere’’ or ‘‘in conditions 

classified elsewhere’’ codes are never 

permitted to be used as first listed or 

principal diagnosis codes and they must 

be listed following the underlying 

condition. However, there are 

manifestation codes that do not have ‘‘in 

diseases classified elsewhere’’ or ‘‘in 

conditions classified elsewhere’’ in their 

title. For such codes a ‘‘use additional 

code’’ note would still be present, and 

the rules for coding sequencing still 

apply. We noted that several dementia 

codes which are not allowable as 

principal diagnoses per ICD–9–CM 

coding guidelines are under the 

classification of ‘‘Mental, Behavioral 

and Neurodevelopmental Disorders.’’ 

According to the ICD–9–CM Coding 

Guidelines for ‘‘Mental, Behavioral and 

Neurodevelopmental Disorders’’, 

dementias that fall under this category 

are ‘‘most commonly a secondary 

manifestation of an underlying causal 

condition.’’ 

Two of the most frequently reported 

dementia codes on hospice claims fall 

under this manifestation/etiology 

convention: ‘‘dementia in conditions 

classified elsewhere with behavioral 

disturbance’’ and ‘‘dementia in 

conditions classified elsewhere without 

behavioral disturbance’’. Per ICD–9–CM 

Coding Guidelines, these codes are not 

acceptable as a reported principal 

diagnosis, and the underlying physical 

condition must be coded first. These 

codes can be used as additional or other 

diagnoses on the hospice claim. 

Additionally, two other frequently 

reported dementia codes on hospice 

claims have underlying disease-specific 

sequencing conventions: ‘‘senile 

dementia, uncomplicated’’ and ‘‘other 

persistent mental disorders due to 

conditions classified elsewhere’’. There 

are ICD–9–CM Coding Guidelines 

specific to each of these codes and these 

codes cannot be used as the principal 

diagnosis but can be reported as 

additional or other diagnoses on the 

hospice claim. Instructional notes 

regarding the sequencing convention for 

each of these codes can be found under 

each of these codes in the Tabular List 

within the ICD–9–CM Official 

Guidelines for Coding and Reporting. 

Therefore, it is imperative that hospice 

providers understand and follow ICD– 

9–CM Coding Guidelines and 

sequencing rules for all diagnoses and 

especially those noted above. We 

encourage hospice providers to pay 

particular attention to dementia coding 

as there are dementia codes found in 

more than one ICD–9–CM classification 

chapter, and there are multiple coding 

guidelines associated with these 

dementia conditions. 

The clarification of these coding 

guidelines is not to determine eligibility 

for hospice services, but rather, these 

guidelines are to assist with the proper 

coding sequences for the hospice 

claims. Eligibility for Medicare hospice 

services continues to be based on the 

prognosis of the individual based on the 

clinical judgment of the certifying 

physician that the individual has a life 

expectancy of 6 months or less if the 

terminal condition runs its normal 

course. CMS does not make any 

recommendations as to what specific 

diagnoses to select from the ICD–9–CM 

Official Guidelines for Coding and 

Reporting for an individual beneficiary 

as these selections are to be determined 

by the certifying physician(s) based on 

the clinical record review and the 

comprehensive assessment. There are 

dementia diagnoses, including 

Alzheimer’s Disease, Lewy-Body 

Dementia, fronto-temporal dementia, 

and senile degeneration of the brain, to 

name a few, that are allowable as 

principal diagnoses per ICD–9–CM 

Coding Guidelines and are located 

under the classification of ‘‘Diseases of 

the Nervous System and Sense Organs’’ 

in the ICD–9–CM Official Guidelines for 

Coding and Reporting manual. 

Some of the ICD–9–CM dementia 

diagnoses take into account that some 

dementia conditions may be unspecified 

in the event that a definitive diagnostic 

work-up was not or could not be 

performed. However, based on the 

present and historical clinical 

presentation of the individual, there are 

unspecified dementia diagnoses and 

corresponding ICD–9–CM codes that are 

acceptable as a principal diagnosis per 

ICD–9–CM Coding Guidelines. Most of 

these codes can be found under the 

classification, ‘‘Diseases of the Nervous 

System and Sense Organs.’’ However, 

the expectation remains that the 

certifying physician will select the 

appropriate diagnoses and codes that 

determine the terminal prognosis of the 


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individual and that are most 

contributory to the terminal decline. 

4. Guidance on Coding of Principal and 

Other, Additional, and/or Co-existing 

Diagnoses 

In the FY 2014 Hospice Wage Index 

and Payment Rate Update proposed 

rule, we stated based on the ICD–9–CM 

Coding Guidelines, that the 

circumstances of an inpatient admission 

always govern the selection of principal 

diagnosis (78 FR 27833). The principal 

diagnosis is defined in the Uniform 

Hospital Discharge Data Set (UHDDS) as 

‘‘that condition established after study 

to be chiefly responsible for occasioning 

the admission of the patient to the 

hospital for care.’’ In analyzing 

frequently reported principal hospice 

diagnoses, data analysis revealed 

differences between reported principal 

hospice diagnoses and reported 

principal hospital diagnoses in patients 

who elected hospice within 3 days of 

discharge from the hospital. In addition, 

in the proposed rule we stated that our 

expectation is for hospice providers to 

report all coexisting or additional 

diagnosis related to the terminal 

prognosis and related conditions. 

Comment: Several commenters said 

that these statements could be 

interpreted to mean that the principal 

hospice diagnosis must always mirror 

the hospital diagnosis and while this is 

often the case, there are sometimes 

specific clinical scenarios in which this 

would not necessarily occur. The 

commenters requested further 

clarification so that hospice providers 

do not feel compelled to violate their 

own coding judgment just to replicate 

the inpatient hospital diagnoses based 

on ‘‘mandates’’ from CMS. 

Response: In our statements regarding 

the guidelines governing the selection of 

the principal hospice diagnosis, they 

were made to provide additional 

guidance on the selection of the 

principal diagnosis for hospice 

providers based on the ICD–9–CM 

Coding Guidelines. We recognize that 

the principal hospice diagnosis may not 

mirror the inpatient hospital diagnosis 

in certain circumstances. The scenario 

below, provided by a commenter, is an 

example: 

A patient was admitted to the hospital with 

a diagnosis of pneumonia. Upon diagnostic 

work-up, it was discovered that the patient 

had stage 4 lung cancer. The patient opted 

not to pursue curative treatment and was 

discharged to home with hospice services in 

place. The principal hospice diagnosis 

selected for this patient was lung cancer. 

This would be an appropriate principal 

hospice diagnosis, though it was not the 

same as the primary hospital diagnosis. 

However, in the FY 2014 hospice wage 

index and payment rate update 

proposed rule, we presented data 

analysis where the principal hospital 

diagnosis was a cancer diagnosis, but 

the hospice diagnosis was not. It would 

be expected that, in a cancer diagnosis, 

in which the individual received 

inpatient medical care for that diagnosis 

and was discharged home with hospice 

election within three days, that the 

principal hospice diagnosis would be 

the inpatient hospital diagnosis of 

cancer. However, to clarify, we are not 

requiring that the principal hospice 

diagnosis always must be the exactly the 

same as the inpatient hospital diagnosis. 

We continue to reiterate that the 

certifying physician, using his or her 

expert clinical judgment and supporting 

documentation from the clinical records 

and the comprehensive assessment(s), 

will determine the most appropriate 

principal diagnosis, along with other, 

additional related diagnoses, that are 

contributing to the terminal prognosis of 

the individual. Our purpose in 

providing these statements in the 

proposed rule was to remind providers 

of the ICD–9–CM Coding Guidelines 

which state, to list first the diagnosis 

shown in the medical record to be 

chiefly responsible for the services 

provided and to list additional codes 

that describe any coexisting conditions. 

Comment: One commenter questioned 

what the expectation is for the number 

of other, additional diagnoses that 

should be reported on the hospice 

claim. This commenter stated that it was 

not the hospice’s standard to report 

diagnoses not related to the terminal 

prognosis on the hospice claim. Another 

commenter stated that hospice 

providers historically were ‘‘cautioned 

for potential enticement by covering too 

many diagnoses.’’ A few commenters 

expressed concern about how CMS may 

use additional information of the 

secondary and tertiary diagnoses for 

complex patients. 

Response: We do not require 

hospice’s to report a specific number of 

diagnoses on the hospice claims. 

However, ICD–9–CM Coding Guidelines 

are specific in its instructions to 

providers to ‘‘code all documented 

conditions at the time of the encounter/ 

visit, and require or affect patient care 

treatment or management.’’ Therefore, 

we expect that hospice providers will 

adhere to these guidelines in reporting 

the appropriate diagnoses to more fully 

describe the Medicare hospice 

beneficiaries receiving care and services 

needed to palliate and manage their 

terminal conditions, based on the 

information from the comprehensive 

assessment and individualized hospice 

plan of care. Our regulations at 

§ 418.200, hospices must provide all 

services reasonable and necessary for 

the palliation and management of the 

terminal illness and related conditions. 

As noted, we require hospices to 

provide virtually all the care that is 

needed by terminally ill patients. 

Therefore, unless there is clear evidence 

that a condition is unrelated to the 

terminal prognosis, all services would 

be considered related. It is also the 

responsibility of the hospice physician 

to document why a patient’s medical 

need(s) would be unrelated to the 

terminal prognosis. We expect that 

hospice providers will use their best 

clinical judgment in determining which 

diagnoses and conditions are related to 

the terminal prognosis of the individual 

receiving hospice care and will report 

those diagnoses and conditions 

accordingly on the hospice claims. 

In response to the comment regarding 

the diagnosis not being available at the 

time of referral, we understand that a 

diagnosis may not be provided at the 

time of hospice referral given the 

sometimes acute nature of a hospice 

referral. However, upon the hospice 

physician’s review of the 

comprehensive assessment along with 

the other clinical records, the 

expectation is that a diagnosis for 

hospice claims coding should be 

determined based on this review along 

with the hospice physician’s best 

clinical judgment as to the condition 

most contributory to the terminal 

prognosis. 

Furthermore, the expectation is to 

provide the diagnostic codes on the 

claim to reflect the individual’s clinical 

status regardless of the number of 

diagnoses to do so. There are an ample 

number of diagnosis fields on the 

hospice claims for reporting. Because 

the hospice reimbursement is a bundled 

per diem rate, there is no enticement for 

reporting too many. The goal of 

requesting all of the related diagnoses 

on the hospice claim is to have a more 

accurate picture of the Medicare hospice 

beneficiary population. This accurate 

picture of the Medicare hospice 

population will also help to ensure that 

any payment reform model that is 

considered is done so in a responsible 

and thoughtful manner to protect the 

viability, integrity, and intent of the 

Medicare Hospice Benefit and the care 

philosophy of the hospice industry. 

5. Transition to ICD–10–CM 

In the FY 2014 Hospice Wage Index 

and Payment Rate Update proposed rule 

we reminded hospice providers of the 

upcoming transition from ICD–9–CM to 

ICD–10–CM on October 1, 2014. We 


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provided additional information 

regarding the transition to ICD–10–CM 

that is available through the CMS Web 

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

Coding/ICD10/index.html?redirect=/ 

icd10; and ICD–10–CM coding 

guidelines can be found on the CDC’s 

Web site at www.cdc.gov/nchs/data/ 

icd10/10cmguidelines2012.pdf. 

Comment: We received multiple 

comments asking to suspend the 

enforcement of the clarifications of ICD– 

9–CM Coding Guidelines until the 

implementation of ICD–10–CM. It was 

stated that the preparation for the 

transition to ICD–10–CM was 

burdensome enough for hospice 

providers. 

Response: The transition to ICD–10– 

CM has been discussed in previous 

hospice rules and notices, and the 

transition deadline for ICD–10–CM has 

already been pushed back until its 

current October 1, 2014 implementation 

date to allow for providers to have 

adequate time to prepare their 

administrative processes and systems. 

Additionally, in our 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 CMS’ 

Hospice Claims Processing manual (Pub 

100–04, chapter 11) requires that 

hospice claims include other diagnoses 

‘‘as required by ICD–9–CM Coding 

Guidelines’’. Furthermore, these ICD–9– 

CM Coding Guidelines have been 

existing and longstanding policies that 

should be adhered to by all providers. 

Other health care providers in both 

the inpatient and outpatient settings are 

required to follow these coding 

guidelines, and enforcement of these 

policies has been part of their payment 

systems for years. The expectation for 

hospice providers to follow those same 

guidelines is imperative to ensure 

continuity and quality of care 

throughout a Medicare beneficiary’s 

health care continuum. Therefore, we 

stand by our clarifications regarding the 

ICD–9–CM Coding Guidelines and ICD– 

10–CM Coding Guidelines. However, in 

response to the comments received 

regarding the additional time needed to 

implement these coding clarification 

changes within their software systems, 

we will require these coding changes 

beginning on October 1, 2014, when all 

hospice claims submitted on or after 

October 1, 2014 will be subject to 

having claims returned if presented for 

payment with incorrect codes. 

B. The Hospice Quality Reporting 

Program 

1. Background and Statutory Authority 

Section 3004 of the Affordable Care 

Act amended the Act to authorize a 

quality reporting program for hospices. 

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

requires that beginning with FY 2014 

and each subsequent FY, the Secretary 

shall reduce the market basket update 

by 2 percentage points for any hospice 

that does not comply with the quality 

data submission requirements with 

respect to that FY. Depending on the 

amount of the annual update for a 

particular year, a reduction of 2 

percentage points could result in the 

annual market basket update being less 

than 0.0 percent for a FY and may result 

in payment rates that are less than 

payment rates for the preceding FY. Any 

reduction based on failure to comply 

with the reporting requirements, as 

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

Act, would apply only for the particular 

FY involved. Any such reduction will 

not be cumulative and will not 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 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. 

Section 1814(i)(5)(D)(iii) of the Act 

requires that the Secretary publish 

selected measures applicable with 

respect to FY 2014 no later than October 

1, 2012. 

2. Quality Measures for Hospice Quality 

Reporting Program and Data Submission 

Requirements for Payment Year FY 2014 

The successful development of a 

Hospice Quality Reporting Program 

(HQRP) that promotes the delivery of 

high quality healthcare services is our 

paramount concern. We seek to adopt 

measures for the HQRP that promote 

efficient and safer care. Our measure 

selection activities for the HQRP takes 

into consideration input we receive 

from the Measure Applications 

Partnership (MAP), convened by the 

National Quality Forum (NQF), as part 

of a pre-rulemaking process that we 

have established and are required to 

follow under section 1890A of the Act. 

The MAP is a public-private partnership 

comprised of multi-stakeholder groups 

convened by the NQF for the primary 

purpose of providing input to CMS on 

the selection of certain categories of 

quality and efficiency measures, as 

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

Act. By February 1st of each year, the 

NQF must provide that input to CMS. 

Input from the MAP is located at: 

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

Priorities/Partnership/Measure_

Applications_Partnership.aspx). For 

more details about the pre-rulemaking 

process, see the FY 2013 IPPS/LTCH 

PPS final rule (77 FR at 53376 (August 

31, 2012)). 

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), and the National 

Strategy for Quality Improvement in 

Healthcare located at (http:// 

www.healthcare.gov/news/reports/

nationalqualitystrategy032011.pdf). 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. 

As stated in the August 4, 2011 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 as 

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

we finalized the requirement that 

hospices report two measures: 

• An NQF-endorsed measure that is 

related to pain management, NQF 

#0209. The data collection period for 

this measure was October 1, 2012 

through December 31, 2012, and the 

data submission deadline was April 1, 

2013. The data for this measure are 

collected at the patient level, but are 

reported to CMS 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 


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includes at least three quality indicators 

related to patient care. The data 

collection period for this measure was 

October 1, 2012 through December 31, 

2012, and the data submission deadline 

was January 31, 2013. Hospices are not 

asked to report their level of 

performance on these patient care 

related indicators, but simply to 

indicate that a QAPI program with 

patient care related indicators has been 

implemented. 

Hospices failing to report quality data 

before the specified deadline in 2013, 

will have their market basket update 

reduced by 2 percentage points in FY 

2014. Hospice programs will be 

evaluated for purposes of the quality 

reporting program based on whether or 

not they submit data, and not based on 

their performance level on required 

measures. 

For the FY 2014 payment 

determination, hospices were asked to 

provide identifying information, and 

then complete a web based data entry 

for the required measures. For hospices 

that could not complete the web based 

data entry, a downloadable data entry 

form was made available upon request. 

Electronic data submission will be 

required for the FY 2015 payment 

determination and beyond; there will be 

no other data submission method 

available. 

3. Quality Measures for Hospice Quality 

Reporting Program and Data Submission 

Requirements for Payment Year FY 2015 

and Beyond 

In the November 8, 2012 CY 2013 

Home Health Prospective Payment 

System Rate Update final rule (77 FR 

67068, 67133), to meet the quality 

reporting requirements for hospices for 

the FY 2015 payment determination and 

each subsequent year, as set forth in 

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

finalized the requirement that hospices 

report two measures: 

• The NQF-endorsed measure that is 

related to pain management, NQF #0209 

• The structural measure: 

Participation in a Quality Assessment 

and Performance Improvement (QAPI) 

Program that includes at least three 

quality indicators related to patient care. 

We did not extend the requirement that 

hospices complete a check list of their 

patient care indicators and indicate the 

data sources they used for their quality 

indicators. 

In the proposed rule for FY2014 (78 

FR 27823), we proposed that the 

structural measure related to QAPI 

indicators and the NQF #0209 pain 

measure would not be required for the 

hospice quality reporting program 

beyond data submission for the FY 2015 

payment determination. The original 

intent of the structural measure was for 

hospices to submit information about 

number, type, and data source of quality 

indicators used as a part of their QAPI 

Program. Data gathered as part of the 

structural measure were used to 

ascertain the breadth and context of 

existing hospice QAPI programs to 

inform future measure development 

activities including the data collection 

approach for the first year of required 

reporting (the reporting period which 

could result in payment reductions in 

FY 2014). To date, hospices have 

reported two cycles worth of structural 

measure data to CMS: 

• Voluntary reporting period 

(submitted to CMS by January 31, 

2012)—For the voluntary reporting 

period hospices submitted free text data 

describing each quality indicator in 

their QAPI programs; data regarding 

number and data source of quality 

indicators were also submitted. 

• FY 2014 (submitted to CMS by 

January 31, 2013)—For the FY 2014 

cycle, hospices submitted data about the 

topic areas of care addressed by quality 

indicators in their QAPI Programs, using 

a drop-down menu checklist rather than 

free text, in order to reduce burden. Data 

regarding number and data source of 

quality indicators were also submitted. 

CMS has analyzed data from both 

reporting periods. Findings from the 

voluntary reporting period showed that 

hospices use quality indicators that 

address a wide range of patient care 

related topics and that there is great 

variation in how hospices collect and 

use ‘‘standardized’’ quality indicators. 

The majority of reported indicators 

addressed patient safety and physical 

symptom management. Likewise, 

findings from analysis of the FY 2014 

structural measure data reiterated 

findings from the voluntary reporting 

period. 

Other topics addressed included 

management of psychosocial aspects of 

care, bereavement and grief, 

communication, and care coordination. 

Overall, findings from both data 

collections of the structural measure 

have provided adequate information on 

hospice’s patient care-related indicators 

making further reporting on the 

structural measure unnecessary. 

Comment: We received several 

comments in favor of the proposal to 

remove the structural measure 

requirement beyond data submission for 

the FY 2015 payment determination. 

There were no comments in opposition 

to removing the structural measure 

requirement after FY 2015. One 

commenter indicated that CMS should 

make clear that it was only removing the 

structural measure requirement, not the 

QAPI program requirement from the 

Conditions of Participation. 

Response: The results of the voluntary 

reporting period and the analysis of the 

FY 2014 structural measure data 

provided adequate information about 

hospices’ patient care-related quality 

indicators. We are finalizing the 

proposal to remove the structural 

measure requirement beyond data 

submission for the FY 2015 payment 

determination. We are reiterating that 

the requirements regarding QAPI in the 

Conditions of Participation remain 

intact. 

As stated above, in the proposed rule, 

we proposed that the NQF #0209 pain 

measure not be required for the hospice 

quality reporting program beyond data 

submission for the FY2015 payment 

determination. We determined that the 

NQF #0209 measure as it is currently 

collected and reported by hospices is 

not suitable for long term use as part of 

the Hospice Quality Reporting Program 

(HQRP). In making this decision, we 

considered findings from the Voluntary 

Reporting Period and the Hospice Item 

Set pilot. Since the publication of the 

proposed rule, we examined data from 

the first year of reporting on the 

measure (impacting FY 2014 APU 

determination). In addition, we 

considered stakeholder input including 

comments submitted during 

rulemaking, expert input from a 

Technical Expert Panel (TEP), and 

provider questions and comments 

submitted to the hospice quality help 

desk during the 2012/2013 data 

collection and reporting period. There 

are two central concerns with the NQF 

#0209 measure. First, the measure does 

not easily correspond with the clinical 

processes for pain management, 

resulting in variance in what hospices 

collect, aggregate, and report. This 

concern could potentially be addressed 

by extensive and ongoing provider 

training or standardizing data 

collection. However, even with 

extensive training and the use of a 

standardized item set during the pilot 

test, the data showed continued 

variance in implementation of the 

measure. Second, there is a high rate of 

patient exclusion due to patient 

ineligibility for the measure and 

patients’ denying pain at the initial 

assessment. This high rate of patient 

exclusion from the measure results in a 

small denominator and creates validity 

concerns. These concerns cannot be 

addressed by training or standardizing 

data collection. We recognize the value 

of measuring hospices’ ability to achieve 

patient comfort and the desire to 

include a patient outcome measure such 


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as the NQF #0209 in the HQRP. By 

removing the requirement that hospices 

submit the NQF #0209 measure, pain 

comfort will not be measured as part of 

the HQRP. However, we plan to require 

that hospices collect data on two other 

measures that address care for pain. The 

standardized item set that CMS has 

developed contains data elements to 

collect 7 quality measures endorsed by 

NQF for hospice. Among these are two 

process measures related to pain: the 

NQF #1634, Pain Screening, and NQF 

#1637, Pain Assessment. However, 

while these measures provide insight 

about screening and assessment of 

patients, they do not offer information 

about patient-reported comfort related 

to pain. 

In the proposed rule, an alternative 

proposal was made to retain NQF #0209 

until a more suitable outcome measure 

was available for use in the HQRP, to 

maintain a focus on achieving patient 

comfort. We also recognize the 

importance of adherence to 

standardized data collection 

specifications when producing 

measures for public reporting. We 

intend to work toward the HQRP’s 

future inclusion of an improved pain 

outcome measure. We solicited 

comment on the removal of the 

checklist and data source questions 

from the structural measure, and the 

removal of the NQF #0209 measure. We 

also solicited comment on the 

alternative proposal of maintaining NQF 

#0209 until another pain outcome 

measure is available. 

Comment: A large majority of 

comments received agreed with the 

proposal to remove the NQF #0209 pain 

measure from the HQRP because of the 

concerns with the measure as described 

above. Commenters stated that the 

measure is difficult to implement and 

does not correspond with clinical 

processes for pain management. One 

commenter suggested that there is not 

an issue with the data collection not 

corresponding to hospice clinical 

practice, but rather a learning curve 

phenomenon. Commenters also agreed 

that high rates of patient exclusion from 

the measure lead to validity issues. The 

majority of commenters were also 

against the alternate proposal to retain 

the NQF #0209 until an alternate pain 

outcome measure is developed, citing 

that continuing to collect it would be an 

unnecessary burden on providers. Some 

also commented that discontinuing data 

collection for the NQF #0209 pain 

measure after the CY 2013 data 

collection period would permit hospices 

more time to focus on preparing for the 

implementation of the Hospice Item Set 

(HIS) and other requirements. A few 

commenters indicated that the NQF 

#0209 should be retained. Commenters 

in favor of retaining the measure stated 

that, though flawed, the measure has 

merit because it is an outcome measure. 

They also felt it has merit because it 

incorporates patient preferences for pain 

management and is meaningful to 

consumers. Commenters also stated that 

hospices invested a lot of time and 

energy to establish their data collection 

and submission processes for this 

measure. One commenter thought CMS 

should evaluate additional quarters of 

data submissions by hospices to fully 

evaluate the measure’s validity before 

deciding whether to eliminate its use 

from the HQRP. 

Response: Since the release of the 

proposed rule, we have analyzed the 

NQF #0209 pain measure data from the 

FY 2014 hospice reporting cycle. 

Results from the analysis support our 

central concerns with the NQF #0209 

pain measure as stated above. Due to 

exclusions, a very small percentage of 

patients admitted to hospice would be 

represented by this quality measure, 

suggesting validity issues with the 

measure. FY 2014 data analysis shows 

that data errors affected approximately 

one-third of all hospices’ data 

submissions despite the use of warning 

and error messages in the data 

submission system. In addition, the data 

showed that approximately 30 percent 

of the patients who were asked the 

initial comfort question ended up in the 

measure denominator (the denominator 

is set by patients who said ‘‘yes’’ to the 

initial comfort question). The data also 

showed that approximately 54 percent 

of hospices had 10 or fewer admissions 

during the data collection period (Q4 

2012), indicating a denominator size 

problem that would affect the potential 

use of the measure for public reporting 

purposes in the future. We will post a 

document summarizing the findings 

related to the NQF #0209 measure on 

the cms.gov Web site at http:// 

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

index.html. The document includes 

findings from the Voluntary Reporting 

Period, the Hospice Item Set Pilot Test, 

and the FY 2014 national reporting of 

the NQF #0209 data. These three 

sources of information along with 

stakeholder comments during the public 

comment period were considered in 

finalizing the proposal to discontinue 

the requirement that hospices report the 

NQF #0209 measure beyond FY 2015. 

We understand that hospices may 

choose to use the NQF #0209 as part of 

their ongoing quality improvement 

efforts. However, we believe that 

continuing to require hospices to report 

the NQF #0209 measure beyond FY 

2015 is inappropriate and burdensome. 

We agree that outcome measures are 

essential to the HQRP. We are 

committed to developing an improved 

pain outcome measure and we will 

work toward the HQRP’s future 

inclusion of an improved pain outcome 

measure. Although we appreciate the 

value of including an outcome measure 

as part of the HQRP, based on the 

majority of comments received and FY 

2014 NQF #0209 data analysis findings, 

we are finalizing the proposal to 

discontinue use of the NQF #0209 pain 

measure after FY 2015 reporting. We 

will not finalize the alternate proposal 

to retain the NQF #0209 until another 

pain outcome measure is available. 

4. Quality Measures for Hospice Quality 

Reporting Program for Payment Year FY 

2016 and Beyond 

As stated in the November 8, 2012 CY 

2013 Home Health Prospective Payment 

System Rate Update 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, 

collection of the needed data elements 

will require a standardized data 

collection instrument. We have 

developed and tested a hospice patientlevel item set to be used by all hospices 

to collect and submit standardized data 

items about each patient admitted to 

hospice. We contracted with RTI 

International to support the 

development of the Hospice Item Set 

(HIS) for use as part of the HQRP. In 

developing the HIS, RTI focused on the 

NQF endorsed measures that had 

evidence of use and/or testing with 

hospice providers. Most of these 

measures were initially developed 

during the PEACE (Prepare, Embrace, 

Attend, Communicate, and Empower) 

Project, which was funded by CMS to 

develop and test an initial set of quality 

measures for use in hospice and 

palliative care. The PEACE project, 

which ended in 2008, resulted in the 

identification of recommended quality 

measure and data collection tools that 

hospice providers could use in their 

Quality Assessment and Performance 

Improvement (QAPI) programs to assess 

quality of care and target areas for 

improvement. Additional information 

on the PEACE project can be found at 

http://www.thecarolinascenter.org/ 

default.aspx?pageid=24. 

Most of the measures endorsed by 

NQF are already widely in use by 


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hospices nationwide as part of their 

internal Quality Reporting and 

Performance Improvement (QAPI) 

programs. Data we received from 

hospices during the Voluntary 

Reporting Period in 2011 showed that 

hospices had implemented and were 

using the PEACE measures. Some of the 

PEACE measures were endorsed by NQF 

in February, 2012, and are listed below 

with their NQF endorsement numbers. 

The HIS standardizes the collection of 

the data elements that are needed to 

calculate seven of the NQF endorsed 

measures. The HIS was pilot tested 

during the early summer of 2012. The 

primary objective of the pilot was to 

explore data collection methods and the 

feasibility of implementing a patientlevel item set for possible future use as 

part of the HQRP. 

In developing the standardized HIS, 

we considered comments offered in 

response to the July 13, 2012 CY 2013 

Home Health Prospective Payment 

System Rate Update proposed rule (77 

FR 41548, 41573). We have included 

data items that support the following 

NQF endorsed measures 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 proposed the 

implementation of the HIS in July 2014. 

We believe that to support the 

standardized collection and calculation 

of any or all of the hospice quality 

measures listed above, it is necessary to 

use a standardized data collection 

mechanism. The HIS was developed 

specifically for this data collection 

purpose. The HIS Paperwork Reduction 

Act (PRA) package is posted on the PRA 

area of the CMS.gov Web site at: 

https://www.cms.gov/Regulations-andGuidance/Legislation/ 

PaperworkReductionActof1995/ 

index.html. 

We proposed that hospices begin the 

use and submission of the HIS in July 

2014. To meet the quality reporting 

requirements for hospices for the FY 

2016 payment determination and each 

subsequent year, we proposed regular 

and ongoing electronic submission of 

the HIS data for each patient admitted 

to hospice on or after July 1, 2014, 

regardless of payer. Hospices will be 

required to complete and submit an 

admission HIS and a discharge HIS for 

each patient. 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. 

Hospice programs will be evaluated for 

purposes of the quality reporting 

program based on whether or not they 

submit data, not on their performance 

level on required measures. 

Comment: We received comments 

that were supportive of the 

implementation of the Hospice Item Set 

(HIS). Commenters agreed with the need 

for a standardized item set to collect 

patient level information that could be 

used to calculate the quality measures 

endorsed by the National Quality Forum 

(NQF) for hospice. However, 

commenters were concerned that the 

proposed July 1, 2014 date for starting 

submission of the HIS was too soon, and 

didn’t allow for adequate time to 

prepare processes and systems for data 

collection, staff training, and other 

organizational preparations for 

implementation, particularly in the 

context of the other proposals in the 

rule such as the implementation of the 

hospice experience of care instrument. 

Commenters noted that vendors would 

have less than 12 months to create 

software for providers to use to submit 

the HIS data. Commenters were 

concerned that there were too many 

changes coming in too short a time. 

Response: We appreciate the general 

support of standardized data collection 

and the Hospice Item Set (HIS). We are 

aware of the effort hospices and vendors 

will have to make to prepare for 

implementation of the HIS. The HIS 

pilot showed that implementing the HIS 

is feasible, and that hospices are most 

likely already collecting the information 

needed to complete the HIS data items. 

A draft version of the HIS technical data 

specifications was posted on the CMS 

Web site on May 24, 2013. Based on 

other provider settings (for example, 

Home Health Agencies and Nursing 

Homes), it is our experience that when 

there are changes to the draft version of 

data specification the changes are minor 

and few, if any, compared to the final 

version of the technical data 

specifications. Thus, vendors have been 

provided with more than adequate time 

(greater than 12 months) to develop 

products for their clients. We expect 

vendors to begin reviewing the draft 

technical data specifications as soon as 

they are posted. We encourage vendors 

to submit questions and comments to 

the HIS technical email box: 

HospiceTechnicalIssues@cms.hhs.gov. 

On July 16, 2013, CMS held a call 

specific for software developers and 

vendors regarding the HIS technical 

data specifications. We will hold 

additional vendor calls as needed to 

ensure that software vendors have the 

appropriate information to develop their 

own products for HIS. Software vendors 

should not be waiting for final technical 

data specifications to be posted to begin 

development of their own products. 

Therefore, we believe that vendors have 

been provided with adequate time and 

resources to meet the July 1, 2014 

implementation date of the HIS. 

CMS will provide free software for the 

HIS. We will make a beta version of the 

software available in May 2014 and the 

final version in June 2014. Providing a 

beta version for hospice agencies to 

download in May will allow their staff 

to become familiar with the 

functionality of the tool. We will 

provide training on the CMS HIS 

software and the submission process. 

We anticipate the training to occur in 

the spring of 2014. Furthermore, in 

cases where a hospice has purchased 

vendor software and the product is not 

available by July 1, 2014, the hospice 

may download the CMS software and 

submit records to the Quality 

Improvement and Evaluation System 

(QIES) Assessment and Submission 

Processing (ASAP) system as required. 

Thus, hospices will be able to comply 

with the July 1, 2014 implementation 

date of the HIS. We are finalizing 

implementation of the HIS on July 1, 

2014. 

Comment: Several commenters 

expressed concern over the ‘‘100 

percent submission requirement’’ of the 

HIS and stated that exceptions for 

natural disasters and other extenuating 

circumstances should be allowed. In 

addition, a few commenters expressed 

concern that a hospice would be 

penalized if even one submission was 

missed, and that there needs to be a 

receipt process that would provide 

proof of data submission. 

Response: Submission of the HIS on 

all patients admitted to hospice, 

regardless of payer, is expected. As is 

common in other quality reporting 

programs, we will propose to make 

accommodations in the case of natural 

disaster or other extenuating 

circumstances in next year’s 

rulemaking. In addition, the data 

submission system will include 

validation and receipt processes that 

will serve as evidence of submission. 


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Comment: Some commenters 

indicated that they support the 

implementation of the HIS and the 

endorsed measures that can be 

calculated from the items on the HIS. 

However, while overall supportive of 

the measures and the HIS, they also 

indicated concern about the length of 

stay exclusion in the endorsed measures 

that will be calculated from the HIS. 

Commenters were also concerned that 

there were no outcome measures that 

will be calculated from the HIS. We also 

received a few comments indicating 

concern over other measure 

specifications (for example, additional 

exclusions for measures). 

Response: To comply with the 

requirements of the Affordable Care Act, 

CMS seeks to implement meaningful 

quality measures with demonstrated 

scientific acceptability that have been 

endorsed by an endorsing body, 

currently the NQF. Thus, we are 

somewhat, but not completely 

constrained by the availability of 

endorsed hospice quality measures. In 

addition, in selecting and implementing 

measures, we are constrained by the 

measures specifications of the endorsed 

measures. All of the measures that will 

be implemented are endorsed with a 7- 

day length of stay exclusion as part of 

the measure specifications. Section 

1841(i)(5)(D) of the Act requires us to be 

deferential to measures approved by an 

endorsing body such as the NQF. 

However, we agree that the length of 

stay exclusion in particular is of 

concern because it effectively excludes 

an important segment of hospice 

patients from the measures. We plan to 

analyze HIS data to continue to assess 

the scientific acceptability of the 

measures and are willing to work with 

measure developers and stewards to 

make modifications to measures where 

needed. In addition, we support the 

development of additional hospice 

quality measures, particularly outcome 

measures, and will seek opportunities to 

use outcome measures as they are 

developed and validated. 

Comment: We received a few 

comments indicating concern over the 

potential burden of the HIS on patients 

and families. 

Response: The HIS is a set of data 

elements that can be used to calculate 

7 NQF endorsed quality measures. The 

HIS is not a patient assessment and it 

will not be administered to the patient 

and/or family or caregivers during the 

initial assessment visit. The HIS is not 

intended to replace a hospice’s current 

initial patient assessment. The HIS pilot 

demonstrated that hospices use a variety 

of patient assessment forms during the 

initial patient assessment; all hospices 

were able to crosswalk items from their 

patient assessment forms to the HIS data 

elements, and complete the HIS items. 

Therefore, the HIS did not add items to 

the hospice’s customary patient initial 

assessment, and did not present an 

additional burden to the patient and/or 

family or caregivers. 

Comment: A few commenters 

suggested removing the discharge HIS, 

indicating that the items on the 

discharge HIS are only administrative, 

and provide no additional value in 

terms of the quality measures while 

adding burden of completion to the 

hospice. Other commenters indicated 

that they were pleased to see the 

proposal of an admission and discharge 

HIS. 

Response: The discharge HIS is 

needed to provide an end date for the 

episode of care, and to establish the 

length of stay exclusion for patients 

whose hospice stay was less than 7 

days. The discharge HIS items are 

minimal, but necessary for accurate 

records in the CMS data system and 

potentially for the providers’ use with 

their own QAPI activities. Vendor 

software would pre-populate the 

majority of these items and the hospice 

would only code a few of the items on 

the discharge HIS; burden on hospices 

would be reduced as a result. 

Comment: A few commenters voiced 

concerns about potential ceiling effects 

with the NQF quality measures stating 

that measures may ‘‘top out.’’ Two 

commenters stated that NQF #1634 Pain 

Screening should not be considered for 

use in the quality reporting program, 

citing concerns about ceiling effects 

with the measure. 

Response: We recognize the 

commenters’ concerns about the 

appropriateness of use of quality 

measures that have ‘‘topped out,’’ 

demonstrating ceiling effects. Ceiling 

effects on quality measures would 

indicate that there is little room for 

improvement on the particular quality 

measures across providers, rendering 

the measures of little use in measuring 

quality. There is currently no national 

data available to determine whether any 

of the proposed measures demonstrate 

ceiling effects. We will analyze data 

submitted to determine validity and 

reliability of measures, and part of this 

analysis will include analyzing for 

ceiling effects. We will determine 

appropriateness of measures for 

retention in the quality reporting 

program based on these analyses. We 

appreciate commenters’ concerns about 

NQF #1634 Pain Screening. However, 

NQF #1634 Pain Screening and NQF 

#1637 Pain Assessment are paired 

measures meaning NQF #1634 is 

necessary to generate the denominator 

for NQF #1637. 

Comment: Two comments stated that 

items for the NQF #1641 and #1647 

should appear on the discharge HIS to 

meet measure specifications. 

Response: The NQF #1641 measure 

endorsement form does not specify a 

time window for the measure 

numerator. The commenters are correct 

that the NQF #1647 measure 

endorsement form does specify that the 

numerator criteria can be met any time 

during the period the patient is enrolled 

in the hospice program. We have 

consulted NQF about our proposal to 

capture the data on the admission HIS, 

and have received guidance that by 

limiting the time window in this way, 

we are proposing to use a ‘‘modification 

of the NQF #1647’’ measure. We have 

opted to include the relevant items for 

both the NQF #1641 and the NQF #1647 

on the Admission HIS, even though the 

measure specifications for the NQF 

#1647 permit the numerator condition 

to be met at any time during the hospice 

episode of care. For multiple reasons, 

CMS has opted to include the NQF 

#1647 measure items as part of the 

Admission HIS, reflecting the initial 

period of time the patient is in hospice 

care. Addressing patients’ values/beliefs 

and preferences for treatment by 

providing an opportunity for patients 

and families to discuss their preferences 

during the comprehensive assessment 

period is an important step in ensuring 

the delivery of hospice care that is 

patient and family-centered. Including 

the NQF #1647 measure items as part of 

the Admission HIS also aligns with the 

Conditions of Participation for hospices 

at § 418.54(c), which state that the 

comprehensive assessment ‘‘must 

identify the physical, psychosocial, 

emotional and spiritual needs related to 

the terminal illness that must be 

addressed in order to promote the 

hospice patient’s well-being, comfort, 

and dignity throughout the dying 

process. . . .’’ We recognize that the 

discussion can take place at any time in 

the course of a patient’s hospice care but 

believe the patient should be offered the 

opportunity to address these concerns 

in the early days of care when they are 

more likely to be able to do so. We 

consider it best practice. We have 

chosen this approach also because it 

allows the gathering of the data for the 

measure closer to ‘‘real time’’ in terms 

of usual hospice assessment and 

workflow and because this approach 

will likely improve accuracy and reduce 

burden to the provider. If these items 

were on the discharge HIS, hospices 

would have to review the entire episode 

of care documentation to find the 


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information needed to complete the 

relevant items on the HIS. We worked 

with the measure developer to ensure 

that the intent of the measure is still met 

with the HIS admission data collection. 

We will monitor the performance over 

time to inform future evaluation for 

maintenance of the measure’s 

endorsement. We will proceed with the 

collection of the NQF #1641 measure 

and the modified NQF #1647 measure 

as part of the Admission HIS. 

Comment: We received a few 

comments regarding what should count 

towards the numerator for NQF #1641 

(Treatment Preferences). Commenters 

suggested that review of advance 

directives count in the numerator for 

these items. 

Response: Discussion of patient 

preferences is important to ensure that 

care is individualized, patient and 

family centered, and consistent with 

patient and/or family preferences. The 

intent of the NQF #1641 measure is to 

ensure that hospices engage patients 

and families in opportunities to discuss 

their treatment preferences. Hospices 

meet the #1641 numerator requirements 

by asking the patient and/or family 

about their preferences and 

documenting that a discussion of 

preferences occurred, or by 

documenting that the patient and/or 

family did not wish to discuss their 

preferences. The measure endorsement 

forms clearly state that the measure is 

meant to capture evidence of 

communication and discussion. Prior to 

implementation of the HIS, we will 

provide hospices with guidance and 

training materials, including a detailed 

user guide. 

Comment: We received a comment 

that NQF #1641 (Treatment Preferences) 

does not mention cardiopulmonary 

resuscitation (CPR) or hospitalization. 

Response: The measure specifications 

as endorsed by NQF do not clearly 

define what constitutes preferences for 

life-sustaining treatment. As such, we 

included data items F2000 (CPR 

Preference) and F2200 (Hospitalization 

Preference) in the HIS to provide 

clarification and improve usability. 

These specifics are important to 

measure maintenance and development 

and does not stray from the measure 

specifications. We will provide 

guidance and training materials, 

including a detailed user guide for 

hospices prior to implementation of the 

HIS. 

Comment: For NQF #1647, one 

commenter questioned which hospice 

staff would be eligible to ask the patient 

about concerns related to beliefs and 

values to satisfy the numerator for the 

measure. This commenter questions if a 

social worker or bereavement staff 

member could collect the data or if it 

had to be a chaplain. 

Response: The measure specifications 

for NQF #1647 require documentation 

of a discussion between the patient and/ 

or family and a member of the 

interdisciplinary team or clergy or 

pastoral worker, or documentation that 

the patient/family declined to discuss. 

We will provide guidance and training 

materials, including a detailed user 

guide, to hospices prior to 

implementation of the HIS. 

Comment: We received comments 

providing input about specific items on 

the HIS. Commenters offered 

suggestions on items in Sections A, F, 

I, J, N, and Z of the HIS. 

Response: We appreciate the 

comments received about specific items 

in the HIS. The items in Section A are 

a subset of those that appear and are 

standardized across data submission 

vehicles in multiple CMS quality 

reporting programs; they are needed for 

adequate record identification in CMS 

systems. Items in Sections F, I, J, and N 

are all necessary to establish the 

numerator and/or denominator; meet 

other measure specifications for the 7 

NQF endorsed measures that can be 

calculated from the HIS; or for purposes 

of future potential risk adjustment to the 

measures. 

Comment: We received several 

comments regarding who the hospice 

must speak with about items in Section 

F (Preferences) to meet the numerator 

condition for the corresponding 

measures. A few commenters noted that 

not all patients have caregivers. 

Response: For items F2000, F2100, 

and F2200, the hospice must ask the 

patient or the patient’s representative if 

the patient is unable to self-report. The 

responsible party may or may not be a 

family member or caregiver. We will 

provide guidance and training materials, 

including a detailed user guide to 

hospices prior to implementation of the 

HIS. 

Comment: We received several 

comments regarding Section I (Active 

Diagnoses) and item I0010 (Principal 

Diagnosis) that appears in this section. 

Some commenters felt the item did not 

include enough diagnoses to be useful 

and that principal diagnoses was not 

relevant to the measures. One 

commenter suggested that we obtain 

this data from claims or Program for 

Evaluating Payment Patterns Electronic 

Report (PEPPER) reports. 

Response: Disease processes and 

conditions impact service delivery. 

Cancer and dementia/Alzheimer’s 

Disease are two of the most common 

principal diagnoses among hospice 

patients. We believe that this item is 

important for measure maintenance and 

development. The HIS applies to all 

payers, which is why CMS is not relying 

on claims or other available data 

sources. To limit the burden on hospice 

providers we chose to limit the 

diagnostic categories. 

Comment: We received comments 

that J0900 (Pain Screening) and J0910 

(Comprehensive Pain Assessment) went 

beyond the measures specifications for 

NQF #1634 and NQF #1637. Some 

commenters did not understand the 

purpose of J0900D (the patient’s pain 

severity rating); others argued that 

J0900D should be removed from the 

item set because it incorrectly implies 

that a clinician’s opinion of pain 

severity is an acceptable datum. Others 

questioned the inclusion of J0910C 

(Comprehensive Pain Assessment 

included). 

Response: The NQF # 1634 and 1637 

are ‘‘paired measures’’. The NQF #1634 

forms the denominator for the NQF 

#1637 measure. The measure 

specifications for NQF #1634 require 

that patients must be screened for the 

presence or absence of pain (and if 

present, a rating of its severity) using a 

standardized tool. The measure 

specifications do not require hospices to 

use one particular tool or clinical 

approach, in recognition of prior 

stakeholder input that indicated it is 

important to allow clinicians to select 

and use the appropriate screening tool 

on a case-by-case basis. The HIS is not 

a patient assessment; it is an item set 

designed to collect data elements that 

can be used to calculate NQF endorsed 

measures, including NQF #1634 and 

#1637. As a result, item J0900D is 

needed to establish whether or not the 

standardized screening tool selected and 

used by the clinician indicated that the 

patient had pain. Details of how to code 

item J0900D will be provided in the 

User Guide. CMS has involved the 

measure steward in developing that 

User Guide. J0900 D is also needed 

because it forms the denominator for 

NQF #1637, pain comprehensive 

assessment. The measure specifications 

for NQF #1637 indicate that a 

comprehensive clinical assessment 

should include 5 of the following 7 

characteristics of pain: location, 

severity, character, duration, frequency, 

what relieves or worsens the pain, and 

the effect on function or quality of life. 

J0910C provides a checklist of these 7 

items and forms the numerator for NQF 

#1637. 

Comment: We received several 

comments regarding J0900 (Pain 

Screening) and J0910 (Pain Assessment). 

Some commenters expressed that we 


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should provide more clarity on 

acceptable pain screening tools and 

determining patient pain severity. 

Regarding J0910C (Comprehensive Pain 

Assessment included), one commenter 

indicated that finding the elements of 

the comprehensive pain assessment in 

the medical record would be tedious. 

Response: The measure specifications 

for NQF #1634 (Pain Screening) require 

that patients must be screened for the 

presence or absence of pain (and if 

present, a rating of its severity) using a 

standardized tool. The HIS is not a 

patient assessment, and we do not want 

to be overly prescriptive in which 

standardized pain screening tools 

hospices use or how patient pain is 

rated. Thus, the items listed in J0900C 

(Type of standardized pain screening 

tool used) are not specific screening 

tools in and of themselves. Instead they 

are tools that may be utilized for the 

assessment of pain severity. Item J0910C 

(Comprehensive pain assessment 

included) helps form the numerator for 

NQF #1637 (Pain Assessment) and must 

be retained. We will provide guidance 

and training materials, including a 

detailed user guide to hospices prior to 

implementation of the HIS. 

Comment: We received comments on 

J2030 (Screening for Shortness of 

Breath) and J2040 (Treatment for 

Shortness of Breath). One commenter 

suggested that the respiratory screening 

should require evaluation of shortness 

of breath upon exertion. Another 

commenter questioned the purpose of 

J2040C (Type(s) of treatment for 

shortness of breath initiated). 

Response: The measure specifications 

for NQF #1639 (Dyspnea Screening) do 

not require that the respiratory 

screening include evaluation upon 

exertion. J2040C helps form the 

numerator for NQF #1639. We believe 

that this item will improve usability by 

indicating the treatments/types of 

treatment that may be considered 

treatment for shortness of breath for 

purposes of the measure numerator 

condition. The HIS is not a patient 

assessment, and we do not want to be 

overly prescriptive in which screening 

tools hospices use, particularly for 

shortness of breath where there is no 

accepted standardized screening or 

assessment tool. We will provide 

guidance and training materials, 

including a detailed user guide to 

hospices prior to implementation of the 

HIS. 

Comment: One commenter wanted to 

know when N0520 (Bowel Regimen) 

required a response. 

Response: As noted on the draft HIS, 

providers will respond to the bowel 

items if a scheduled opioid and/or a 

PRN opioid is initiated or continued. 

Comment: We received several 

comments related to Section Z (Record 

Administration), particularly item 

Z0400 (Signature(s) of Person(s) 

Completing the Record). Commenters 

were unclear on the purpose of this 

section and how Z0400 should be 

completed. 

Response: The items in Section Z 

appear in and are standardized across 

data submission vehicles in multiple 

CMS quality reporting programs. This 

section allows providers to verify, 

internally, the individuals responsible 

for completing the HIS (that is the 

abstracters, not those completing the 

patient assessment). In accordance with 

processes used in other care settings, it 

is suggested that the signature page of 

Section Z be retained by the hospice in 

accordance with the hospice’s policies 

and procedures related to patient 

information and clinical records. 

Comment: Several commenters 

inquired about future guidance and 

training on the HIS. 

Response: We will provide guidance 

and training materials, including a 

detailed user guide, to hospices prior to 

implementation of the HIS. We plan to 

provide Hospices with further 

information and details about use of the 

HIS. We will provide this information 

through venues such as postings on the 

Hospice Quality Reporting Program Web 

page, Open Door Forums, 

announcements in the CMS E-News, 

provider training, and National Provider 

calls. Electronic data submission will be 

required for HIS submission in CY 2014 

and beyond; there will be no other data 

submission method available. We will 

make available submission software for 

the HIS to hospices at no cost. We will 

also provide reports to individual 

hospices on their performance on the 

measures calculated from data 

submitted via the HIS. The specifics of 

the reporting system and precisely when 

specific measures will be made 

available have not yet been determined. 

We will report to providers on the 

following measures on a schedule to be 

determined: 

• 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) 

TABLE 6—SUMMARY TABLES

Data collection Data submission APU Impact Measure name 

Finalized in the CY 2013 HH PPS Final Rule 

1/1/2013–12/31/2013 ............... 4/1/2014 ....... FY 2015 (10/1/2014) ............... Structural/QAPI measure NQF #0209. 

Finalized in this Final Rule 

7/1/2014–12/31/2014 ............... Rolling .......... FY 2016 (10/1/2015) ............... Hospice and Palliative Care—Pain Screening, NQF #1634. 

7/1/2014–12/31/2014 ............... Rolling .......... FY 2016 (10/1/2015) ............... Hospice and Palliative Care—Pain Assessment, NQF #1637. 

7/1/2014–12/31/2014 ............... Rolling .......... FY 2016 (10/1/2015) ............... Hospice and Palliative Care—Dyspnea Screening, NQF 

#1639. 

7/1/2014–12/31/2014 ............... Rolling .......... FY 2016 (10/1/2015) ............... Hospice and Palliative Care—Dyspnea Treatment, NQF 

#1638. 

7/1/2014–12/31/2014 ............... Rolling .......... FY 2016 (10/1/2015) ............... Patients Treated with an Opioid who are Given a Bowel Regimen, NQF #1617. 

7/1/2014–12/31/2014 ............... Rolling .......... FY 2016 (10/1/2015) ............... Hospice and Palliative Care—Treatment Preferences, NQF 

#1641. 

7/1/2014–12/31/2014 ............... Rolling .......... FY 2016 (10/1/2015) ............... Beliefs/Values Addressed (if desired by patient), modified 

NQF #1647. 


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As stated in the August 4, 2011 FY 

2012 Hospice Wage Index final rule (76 

FR 47302, 47320), we finalized that all 

hospice quality reporting periods 

subsequent to that for Payment Year FY 

2014 will be based on a CY instead of 

a calendar quarter and for FY 2015 and 

beyond, the data submission deadline 

will be April 1st of each year. The 

implementation of the HIS in July 2014 

will negate the CY data collection 

requirement and the April 1st data 

submission deadline. We will provide 

details on data collection and 

submission timing prior to 

implementation of the HIS. 

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. The procedures ensure that a 

hospice will 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 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 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 the data from 

Q3 and Q4 CY 2014 will not be used for 

assessing validity and reliability of the 

quality measures. Data collected by 

hospices during Q 1, 2 and 3 CY 2015 

will be analyzed starting in CY 2015. 

Decisions about whether to report some 

or all of the quality measures publicly 

will be based on the findings of analysis 

of the CY 2015 data. In addition, as 

noted, the Affordable Care Act requires 

that reporting be made public on a CMS 

Web site and that providers have an 

opportunity to review their data prior to 

public reporting. We will develop the 

infrastructure for public reporting, and 

provide hospices an opportunity to 

review their data. In light of all the steps 

required prior to data being publicly 

reported, we anticipate that public 

reporting will not be implemented in FY 

2016. Public reporting may occur during 

the FY 2018 APU year, allowing ample 

time for data analysis, review of 

measures’ appropriateness for use for 

public reporting, and allowing hospices 

the required time to review their own 

data prior to public reporting. We will 

announce the timeline for public 

reporting of data in future rulemaking. 

We welcome public comment on what 

we should consider when developing 

future proposals related to public 

reporting. 

Comment: We received a few 

comments regarding what should be 

considered in developing future 

proposals related to public reporting of 

hospice quality data. Commenters were 

in favor of public reporting, and 

indicated that they felt it was time to 

make this information available to 

consumers. Commenters also indicated 

that they appreciate the opportunity to 

review their data prior to the initiation 

of public reporting, and CMS’s efforts to 

ensure that public reporting would not 

occur before adequate data analysis had 

taken place to establish the suitability of 

the measures for public reporting 

purposes. A few commenters suggested 

that outcome measures and measures 

from the family experiences of hospice 

care survey would be more meaningful 

for public reporting than the measures 

from the HIS. Several commenters had 

concerns about which of the NQF 

measures proposed would be 

appropriate for public reporting. 

Commenters noted that all of the NQF 

measures proposed were process 

measures and it may ‘‘take effort’’ for 

the public to understand the 

relationship of process measures to 

quality of care. One commenter stated 

that a comprehensive explanation of 

this relationship should be provided to 

the public. 

Response: We appreciate and 

recognize commenters’ concerns about 

appropriateness of quality measures for 

public reporting. As stated in the 

proposed rule, we will analyze data for 

validity and reliability of quality 

measures and review measures’ 

appropriateness for public reporting 

prior to determining which measures 

will be publicly reported. Moreover, we 

appreciate the suggestion to provide a 

comprehensive explanation of 

relationships between quality measures 

selected for public reporting and quality 

of care. We will consider this suggestion 

when developing processes, procedures 

and future proposals for public 

reporting. We also recognize the 

importance of outcome data, both for 

quality measurement and for public 

reporting. We also reiterate that we are 

committed to seeking opportunities to 

use outcome measures—both as part of 

the quality reporting program and for 

public report—as they are developed 

and become endorsed by NQF. 

6. The CMS Hospice Experience of Care 

Survey for the FY 2017 Payment 

Determination and That of Subsequent 

Fiscal Years 

Background 

In the CY 2013 Home Health 

Prospective Payment System Rate 

Update final rule (77 FR 67135), we 

stated that were considering the use of 

a patient/family experience of care 

survey in addition to other hospice 

quality of care (clinical) measures. We 

have developed a draft Hospice 

Experience of Care Survey questionnaire 

drawing heavily on questionnaires in 

the public domain such as the Family 

Evaluation of Hospice Care (FEHC). We 

are testing the draft survey in a national 

field test in fall 2013. The Hospice 

Experience of Care Survey will treat the 

dying patient and his or her informal 

caregivers (family members or friends) 

as the unit of care. 

Before the development of this 

survey, there was no official national 

standard experience of care survey that 

included standard survey 

administration protocols. The Hospice 

Experience of Care Survey will include 

detailed survey administration protocols 

which will allow for comparisons across 

hospices. The survey will focus on 

topics that are important to hospice 

users and for which informal caregivers 

are the best source for gathering this 

information. In addition, the ‘‘About 

You’’ section of the instrument includes 

demographic characteristics of the 

patients and their caregivers which can 

be used to feed into case mix 

adjustments of the publicly reported 

data. 


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Description of the Survey 

The Hospice Experience of Care 

Survey will seek information from 

informal caregivers of patients who died 

while enrolled in hospices. We plan to 

field the questionnaires after the 

patient’s death. Fielding timelines will 

be established to give the respondent 

some recovery time (two to three 

months), while simultaneously not 

delaying so long that the respondent is 

likely to forget details of the hospice 

experience. 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 will be required to 

offer the survey, but individual 

caregivers will respond only if they 

voluntarily chose to do so. 

The Hospice Experience of Care 

Survey captures such topics as hospice 

provider communications with patients 

and family members, hospice provider 

care, and patient and family member 

characteristics. The survey will allow 

the informal caregiver (family member 

or friend) to provide an overall rating of 

the hospice care their patient received, 

and will ask if they will recommend 

‘‘this hospice’’ to others. 

The Hospice Experience of Care 

Survey is following the principles used 

in the development of the Consumer 

Assessment of Healthcare Providers and 

Systems (CAHPS®) surveys. Therefore, 

we are— 

• Obtaining input from consumers 

and stakeholders regarding how hospice 

patients perceive hospice care and what 

elements in hospice programs are of 

greatest importance to patients and 

informal caregivers. 

• Drafting a version of the hospice 

questionnaire that will be cognitively 

tested with a small number of 

respondents in both English and 

Spanish. This type of testing will allow 

us to assess how respondents interpret 

and respond to individual questionnaire 

items. 

• Providing a field test of the Hospice 

Experience of Care Survey instrument 

after the development of an initial 

questionnaire is completed. This field 

test will allow us to review survey 

implementation procedures and use 

statistical analysis of the survey results 

to select the final set of questions. In 

addition, it will allow us to select 

variables which may be used in the case 

mix adjustment of survey results for 

public reporting. 

The Hospice Experience of Care 

Survey, as well as the CAHPS® family 

of surveys, focuses on patient 

perspectives on the experience of care, 

rather than on patient satisfaction. 

CAHPS® data complements other data, 

including clinical measures. CAHPS®

surveys are specifically intended to 

focus on issues where the patient (or in 

this case the caregiver) is the best source 

of information. We intend the Hospice 

Experience of Care Survey to have a 

similar focus. Once the survey is final, 

we will submit it for CAHPS®

endorsement and National Quality 

Forum endorsement. 

We plan to move forward with a 

model of survey administration in 

which we will approve and train survey 

vendors to administer the survey on 

behalf of hospices. This will be very 

similar to the models that we use for 

Hospital CAHPS® (HCAHPS) and Home 

Health CAHPS® (HHCAHPS). 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. 

Participation Requirements for the 

Survey Begin in CY 2015 for the FY 

2017 Payment 

We proposed that we would begin 

required implementation of the survey 

in January 2015 in the FY 2014 Hospice 

Wage Index and Payment Rate Update; 

Hospice Quality Reporting 

Requirements; and Updates on Payment 

Reform proposed rule (78 FR 27823, 

published May 10, 2013). We are 

finalizing the proposed timeline due to 

the importance of the caregiver’s voice. 

Beginning in first quarter of CY 2015, 

hospices will be required to conduct a 

dry run of the survey for at least one 

month in January 2015, February 2015, 

or March 2015. Beginning in April 2015, 

all hospices will be required to 

participate in the survey on an ongoing 

basis. The one ‘‘dry run month,’’ plus 

the nine months of April 2015 to 

December 2015 participation, will be 

required to meet the pay for reporting 

requirement of the Hospice Quality 

Reporting Program for the FY 2017 

annual payment update. 

Approved Hospice Experience of Care 

Survey vendors will submit data on the 

hospice’s behalf to the CMS hospice 

patient experience of care survey data 

center. The deadlines for data 

submission have not yet been finalized. 

For the ‘‘dry run’’ the survey vendor 

would follow all the national 

implementation procedures, but the 

data would not be publicly reported. 

The dry run would provide hospices 

and their vendors with the opportunity 

to work together under ‘‘test’’ 

circumstances. We will allow 

exemptions for very small hospices. 

Hospices that have fewer than 50 

unduplicated or unique deceased 

patients in the period from January 1, 

2014 through December 31, 2014 will be 

exempt from the Hospice Experience of 

Care Survey data collection and 

reporting requirements for the FY 2017 

payment determination. The hospices 

would be required to submit their 

patient counts for the period of January 

1, 2014 through December 31, 2014 to 

CMS. The due date for the participation 

exemption form will be stated in next 

year’s rule. To qualify for the small size 

exemption, hospices will need to submit 

to CMS their patient counts annually for 

each future APU period. 

As part of the national 

implementation, we will develop 

technical specifications for vendors to 

follow and will issue a detailed survey 

guidelines manual prior to the dry run 

months. 

In addition, there will be a Web site 

devoted specifically to the Hospice 

Experience of Care Survey. It will 

include information and updates 

regarding survey implementation and 

technical assistance. Hospices interested 

in viewing similar model Web sites are 

encouraged to visit the HCAHPS Web 

site at www.hcahpsonline.org or the 

HHCAHPS Web site at https:// 

homehealthcahps.org. On these Web 

sites, viewers can see and download the 

detailed manuals about the surveys (the 

Quality Assurance Guidelines for 

Hospital CAHPS® and the Protocols and 

Guidelines Manual for Home Health 

Care CAHPS®), as well as obtain 

information about the surveys’ histories, 

data submission information, and 

survey updates. 

Consistent with our other 

implemented surveys, we will provide 

an email address and toll-free telephone 

number for technical assistance. 

The Affordable Care Act requires that 

beginning with FY 2014 and each 

subsequent FY, the Secretary shall 

reduce the market basket update by 2 

percentage points for any hospice that 

does not comply with the quality data 

submission requirements with respect to 

the FY. Any such reduction would not 

be cumulative and would not be taken 

into account in computing the payment 

amount for subsequent FYs. In the 

November 8, 2012 CY 2013 Home 

Health Prospective Payment System 

final rule (77 FR 67068), it was stated 

that all hospice quality reporting 

periods subsequent to that for Payment 

Year 2014 would be based on a CY 

rather than on a FY. We are finalizing 

adding the Hospice Experience of Care 

Survey to the Hospice Quality Reporting 

Program requirements for the FY 2017 

payment determination. To meet the FY 

2017 requirements, hospices would 

participate in a dry run for at least 1 


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month of the first quarter of CY 2015 

(January 2015, February 2015, March 

2015) and hospices must collect the 

survey data on a monthly basis for the 

months of April 1, 2015 through 

December 31, 2015 in order to qualify 

for the full APU. 

The following is a summary of the 

comments we received regarding the 

Hospice Experience of Care Survey 

proposal. 

Comment: We received a number of 

comments that the timeline for 

implementation of the Hospice 

Experience of Care Survey placed it too 

close in proximity to the 

implementation of the HIS items and 

that there should be a gap of at least 12 

months between the HIS 

implementation and the survey 

implementation dates. 

Response: We carefully reviewed the 

comments asking for a delay in the 

timing of the national implementation 

of the Hospice Experience of Care 

Survey. However, we concluded that 

obtaining data from caregivers is so 

important that we cannot delay. As 

proposed we will begin with a dry run 

in the first quarter of 2015. Continuous 

data collection will begin April, 1, 2015 

for the 2017 APU. 

Comment: We received comments 

that there are financial and 

administrative burdens on hospices 

participation in the Hospice Experience 

of Care Survey. Commenters also stated 

that the financial burden of 

participation would outweigh the 2 

percent reduction in the annual 

payment update that would be given to 

non-participating hospices. We also 

received comments stating that this 

would require more staffing and the 

development of a process to handle the 

implementation of the survey and 

comments that this is a burden to small 

hospices. We received a comment 

asking if hospices can self-administer 

the survey to save costs in 

implementing the hospice survey. In 

addition, we received a comment that 

the Family Evaluation of Hospice Care 

(FEHC) survey does not pose a financial 

burden to hospices because the FEHC 

survey is a benefit of National Hospice 

and Palliative Care Organization 

(NHPCO) membership. 

Response: We appreciate the 

comments concerning that the proposed 

survey is a financial burden to 

participating hospices. We are using the 

same survey implementation model that 

we use for other CAHPS® surveys where 

providers pay approved survey vendors 

to conduct the data collection on their 

behalf and CMS pays for the survey 

vendor training, technical support and 

assistance for hospices and their 

approved survey vendors, oversight of 

the approved survey vendors, the public 

reporting of the data, and the data 

analysis of the hospice survey data. 

Before national implementation begins 

in 2015, hospices are strongly 

encouraged to shop around for the best 

cost value for them before contracting 

with an approved survey vendor to 

conduct the Hospice Experience of Care 

Survey on their behalf. Hospices cannot 

self-administer the survey because we 

need to eliminate any potential bias in 

the administration of the survey. We do 

not believe that the annual burden to 

hospices will exceed the annual burden 

and costs that we see in the 

implementation of HHCAHPS. 

Basically, once national implementation 

starts, hospices will need to choose a 

vendor and contract with them, and 

then they will be responsible on a 

monthly basis to produce a file of all the 

caregivers (the persons on the records 

for the hospice patients) for hospice 

patients who died in the past month. 

We are not surveying people who have 

living hospice patients. We cannot fully 

comment on whether the survey costs to 

the individual hospice providers will 

outweigh the costs of the loss of 2 

percent of the APU. However, most 

survey costs will be much less than the 

loss of the 2 percent reduction in the 

APU. Small hospices serving 50 or 

fewer patients in an annual period will 

complete (annually) a Participation 

Exemption Request Form so that they 

will not incur survey costs. The CMS 

hospice survey will require the 

approved survey vendors to implement 

the survey in accordance to a uniform 

set of protocols and guidelines to assure 

consistency in the survey 

administration, in the implementation 

of other CMS CAHPS® surveys, such as 

HCAHPS, and HHCAHPS. 

Comment: We received comments 

that the draft hospice experience of care 

survey instrument is too long and 

‘‘daunting’’ to read and respond to. 

Response: This is a survey that is 

going to be used in a national field test 

in fall 2013. There are more questions 

in this test survey than we intend to 

keep in the final survey. We anticipate 

that we will eliminate questions that do 

not contribute to the composites 

measuring key areas of the hospice care 

experience. We do anticipate keeping all 

of the demographic questions, because 

they will be used to adjust the results 

for differences in the mix of patients 

across hospices and for analysis of 

disparities of care. It is important that 

the data are adjusted to ensure accurate 

comparisons across hospices. We 

actually anticipate that the final survey 

instrument will be significantly shorter 

than the FEHC, which has 54 items, and 

a shorter instrument will translate into 

lower vendor costs for the participating 

hospices. To give an example of this, the 

field test version of the HHCAHPS 

survey had 54 items and the final 

approved version of the survey that we 

use today, has 34 items. 

Comment: We received a comment 

expressing the preference that NHPCO 

be allowed to be a survey vendor for the 

Hospice Experience of Care Survey. 

Response: We will be using survey 

vendor eligibility criteria that are very 

similar or identical to our other 

CAHPS® surveys, and if NHPCO meets 

the stated survey vendor eligibility 

criteria then we welcome NHPCO to 

complete the survey vendor application 

for the hospice experience of care 

survey. 

Comment: We received comments 

that we are administering the survey too 

close to the death of the patient. 

Response: We thank you for this 

comment. We are sensitive that a survey 

about this issue will be difficult for the 

families and friends of their loved ones 

who have passed, especially in the first 

year following the deaths. We anticipate 

administering the survey about two or 

three months following the deaths of the 

hospice patients. We are hesitant about 

waiting too long following the deaths 

because the survey respondents may 

forget the details of the hospice 

experiences if the survey is 

administered too long following the 

deaths. 

Comment: We received several 

comments supporting CMS for 

developing a new survey instrument 

that is independent of existing hospice 

survey instruments, and that has the 

uniform survey implementation 

guidelines of the CAHPS® surveys. 

Response: We appreciate this support 

of the CMS survey instrument. We are 

following the CAHPS® guidelines and 

we will apply for CAHPS® endorsement 

as well as the endorsement of the 

National Quality Forum. Commenters 

supporting us noted that the final 

survey instrument will be shorter and 

that we will allow flexibilities in the 

implementation of the survey that will 

allow hospices to add their own 

questions, but that the core questions 

will be used for valid comparisons 

across hospices because we will define 

the protocols and guidelines for the 

implementation of the survey to create 

an equal implementation process for the 

survey. 

Comment: We received a comment 

that we cannot regulate payment based 

on what the living family members 

think of hospice care because it is not 

possible to make everyone happy and 


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asking about this experience post death 

seems odd and could result in a larger 

percentage of negative responses. 

Response: We appreciate this 

viewpoint. However, the survey itself 

does not focus on the death. It focuses 

on the hospice care and the details 

about the experience of care with the 

hospice. The survey’s purpose is to 

provide useful information to other 

caregivers and families who are in the 

position of comparing hospices for the 

care of their loved ones. 

Comment: We received a comment 

that there are many family and friends 

at the time of the death but that they 

may not be present after the death when 

the survey goes out. We also received a 

comment that some hospices will send 

out multiple surveys to family members 

who had perceived good experiences, 

and conversely, will not send out 

surveys to family members who are 

mentally ill, or were not involved in the 

hospice patient’s care, even if they were 

listed as the closest relative. We 

received a comment that the results may 

be skewed by the family member’s 

degree of contact with the patient and 

hospice team. 

Response: We appreciate these 

sensitive comments concerning who 

will be the survey respondent. We 

propose to have a uniform standard for 

the designation of the survey 

respondent. We propose that the survey 

respondent will be the person who is 

listed in the hospice record as the 

primary caregiver or primary contact 

person for the hospice patient. 

Comment: We received a comment 

that surveys should not be sent more 

than two times to families as there is a 

need not to be too intrusive. 

Response: For the field test, we will 

have one survey mode, called the mixed 

mode that includes both a mail survey 

and telephone follow-up for nonrespondents. If the survey respondent 

does not return the mailed 

questionnaire, then the survey 

respondent is called and asked to 

complete the telephone survey 

instrument. For national 

implementation of the survey, we will 

have three modes: Mail only, telephone 

only, and mixed. For the mail only 

mode, only two surveys are mailed to 

the sampled person. For the telephone 

only mode, there will be up to five call 

attempts to reach the sampled 

respondent, but once the sampled 

respondent answers the telephone and 

speaks with the telephone surveyor, the 

respondent will only be asked to 

complete the survey once. 

Comment: We received comments 

that rural hospices will be at a 

disadvantage paying for the Hospice 

Experience of Care Survey, and that 

there should not be a 2 percent 

reduction since hospices save money for 

Medicare. 

Response: We are requiring the survey 

for all hospices, to meet the goals of 

transparency for hospices regardless of 

their location. We believe that the 

burden to rural and urban hospices is 

equal, and we reiterate that small 

hospices serving 50 or fewer in a given 

year will be exempt from survey 

participation if they complete the 

survey’s Participation Exemption 

Request form for each APU. 

Comment: We received a comment 

asking if CMS would require the survey 

to be available in other languages, such 

as Spanish. 

Response: Vendors will be required to 

offer the survey in English and Spanish. 

Hospices will be able to administer the 

survey in additional languages if needed 

for their patient populations; however, 

they must use the CMS official 

translations. We plan to make additional 

translations of the survey available as 

needed. If you would like to request a 

specific translation, please email CMS at 

hospicesurvey@cms.hhs.gov. 

Comment: We received a comment 

stating that it is not clear whether 

hospices are given the full credit for 

survey participation regardless of the 

survey results. 

Response: We stated in the proposed 

rule that survey participation is required 

for the full APU; the data results are not 

part of the requirements for the APU. 

The survey requirement is part of the 

Hospice Quality Reporting Program; this 

is not a pay for performance program. 

Comment: We received a comment 

stating that their vendor for the FEHC 

notifies them immediately about 

negative comments that are received 

about their hospice. This commenter 

noted that there is no information in the 

proposed rule that describes how the 

comment section of the proposed survey 

will be used, or available to the hospice 

paying for survey service. 

Response: Hospices will still be able 

to have this arrangement with their 

respective vendors in the CMS Hospice 

Experience of Care Survey. 

Comment: We received a comment 

asking if hospices will be responsible 

for a certain response rate for the 

Hospice Experience of Care Survey. 

Response: No, hospices will not be 

responsible for a certain response rate 

for the Hospice Experience of Care 

Survey. However, all approved survey 

vendors must follow the survey 

administration protocols to implement 

the survey. 

Comment: We received a comment of 

support for the FEHC survey and 

questions about why CMS is mandating 

the new survey in place of the FEHC. 

We also received a comment that CMS 

should allow the FEHC to be substituted 

for the CMS Hospice Survey. 

Response: We respect the work that 

went into the FEHC; however, we 

cannot allow the FEHC to substitute for 

the CMS survey. To be useful to the 

public, Hospice Survey data must be 

comparable across hospices. Two 

different surveys would create 

inconsistencies among hospices that 

would not allow for direct comparisons. 

In addition, the FEHC was designed by 

and for a private entity. CMS must 

ensure that no private entity has a 

preferred relationship with the agency. 

The CMS survey was developed under 

the standards of the CAHPS® surveys 

and will be implemented with the 

rigorous guidelines of the CAHPS®

surveys. 

Comment: A commenter stated that 

the dry run should be 3 months, instead 

of 1 month. 

Response: The requirement for the dry 

run is 1 month, but hospices are 

allowed to do 2 or 3 months, in the 

period of January through March 2015. 

Comment: We received a comment 

that consideration needs to be given to 

the diverse audiences responding to the 

survey. Issues related to primary 

language, socioeconomic status, culture, 

and health literacy, may impact the 

completion of the survey and the 

responses to the survey questions. 

Response: We agree with this 

commenter and will adjust the survey 

results for respondent mix. We will also 

be offering multiple translations and 

different modes of survey 

administration so hospices can choose 

what meets their needs the best. 

Comment: We received a comment 

that consideration needs to be given to 

the smaller agency where one negative 

survey can skew the data results for that 

agency. 

Response: For other CAHPS® surveys, 

we have received comments about the 

comparability of the data for small 

providers with large providers. In the 

practice of statistics, it is established 

that the sample size in absolute 

numbers is more important than the 

proportion of the population surveyed. 

Surveying a sample of 300 will produce 

the same level of precision whether the 

sample large or small. The larger the 

sample, the less the variability is a 

provider’s ratings over time. We will be 

proposing the required sample sizes for 

all hospices in next year’s proposed 

rule. Small agencies will need to 

conduct census sampling if they do not 

qualify for the size exemption. 


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Comment: We received a comment 

that CMS needs to know what its 

ultimate goal is of the surveys without 

losing sight of the goal itself. 

Response: The goals of the Hospice 

Experience of Care Survey are the same 

as the goals of our other CAHPS®

surveys: (1) To produce comparable data 

on the caregiver’s or loved one’s’ 

perspectives on care that allow objective 

and meaningful comparisons between 

hospices on domains that are important 

to consumers; (2) to create incentives for 

hospices to improve their quality of care 

through public reporting of survey 

results; and (3) to enhance public 

accountability in health care by 

increasing the transparency of the 

quality of the care provided in return for 

the public investments. CMS is serious 

about these three goals for all of our 

perspectives of care/CAHPS® surveys, 

and we intend to never lose sight of 

their importance. 

Comment: We received a comment 

that the first portion of the survey is 

nearly identical to HHCAHPS, while the 

latter portion seems more representative 

of hospices. This commenter stated that 

questions regarding goals of care or the 

patient’s plan of care were absent, two 

areas of particular importance for 

hospices. This commenter also noted 

that questions regarding after-hour 

response to needs were absent, an area 

known to create much anxiety for 

patients and families. 

Response: We reviewed both surveys 

side-by-side and disagree with this 

commenter about the similarity to 

HHCAHPS. We have some similar 

questions, but this is because in focus 

groups and later testing these issues 

were all raised by our testing 

participants. Also, we have many 

questions about care. We also have 

questions about after-hour response to 

needs. They are: ‘‘While your family 

member was in hospice care, did you 

need to contact the hospice team during 

evenings weekends or holidays for 

questions or help with your family 

member’s care?, and ‘‘How often did 

you get the help you needed from the 

hospice team during evenings, 

weekends, or holidays? 

Comment: We received a comment 

about transitioning from the current 

FEHC program to the CMS Hospice 

Survey. 

Response: We do not have any 

relationship to the FEHC program. 

Hospices can continue to continue to 

use the FEHC. However, the FEHC 

cannot be substituted for the CMS 

Hospice Experience of Care Survey. 

Hospices can conduct both surveys 

under specific conditions that will be 

detailed in the CMS Hospice Survey 

Guidelines Manual, which has not been 

written. 

Comment: We received a comment 

that the survey should meet the quality 

needs of individual hospices. 

Response: We hope that the survey 

will serve the quality needs of all 

hospices. However, hospices may have 

unique quality needs and hospices will 

be permitted to add their own 

additional questions to the standardized 

survey. 

Comment: We received comments 

that the caregiver of record is not always 

the best person to receive the survey. 

Response: We are aware the caregiver 

of record may not be the best person to 

receive the survey. However, because 

the hospice is likely to have contact 

information for this person, they are the 

best person for us to contact. 

Comment: We received comments 

expressing the concern that collecting 

demographic information from 

respondents could reduce response, 

especially from minority populations. In 

addition, commenters said that asking 

for this information could raise privacy 

and confidentiality concerns. We 

received a comment suggesting CMS 

redesign the Hospice Experience of Care 

Survey so that there were no survey 

questions about demographic 

characteristics. The commenter has 

received feedback that no one likes to 

answer those kinds of questions. 

Response: We ask for demographic 

information on surveys for two 

purposes: First, to allow us to make case 

mix adjustments so that hospices’ 

survey responses can be compared 

fairly. We have not determined how 

case mix adjustments will be calculated 

for this survey, and therefore, need 

demographic variable to test different 

case mix adjustment variables. Second, 

we also need demographic information 

to allow for research on health care 

disparities between groups of people, 

including minorities. All sampling data, 

which will include these items, will be 

treated as private and confidential. The 

approved survey vendors who conduct 

these surveys will be responsible for 

maintaining the security, privacy and 

confidentiality of sampling information 

and survey results in accordance with 

HIPAA requirements. Above all, the 

completion of the survey is voluntary 

for all persons who receive the survey 

in the mail, or who are telephoned and 

are asked to complete the survey on the 

telephone. Any person who receives the 

survey, or who is telephoned and is 

asked to complete the survey, is free not 

to complete the survey. 

Comment: We received a comment 

that the survey data should be adjusted 

for length of hospice stay and for the 

care setting. 

Response: We will use the data from 

the field test to determine if the 

administrative data (such as length of 

stay and hospice setting) has an impact 

on the survey data results. 

Comment: We received comments 

that CMS should not exempt very small 

rural hospices from the requirements. 

Response: Besides the burden to these 

hospices, there is the issue of privacy to 

the respondents. In very small settings, 

it could be apparent who the survey 

respondents are. Also, there are 

sampling and reliability issues because 

the sample and the data could be very 

small. 

Comment: We received comments 

stating that it is going to be very difficult 

for survey respondents to complete the 

survey if their loved ones changed 

hospice settings. 

Response: At the beginning of the 

survey, respondents are instructed to 

reply to the questionnaire as pertaining 

to the last setting of hospice care. 

Comment: We received comments 

suggesting that CMS add questions to 

the survey. The suggested topics for 

added items include questions 

specifically relevant to veterans as well 

as questions about care planning, care 

goals, and volunteers. 

Response: One of the concerns often 

expressed to us is that the CMS Hospice 

Experience of Care Survey is too long. 

We intend to shorten the survey after 

the field test. In this context, we are 

reluctant to add still more questions to 

the core survey instrument. However, 

we know that it can be important for 

providers to ask questions that are not 

on the approved core survey instrument. 

Hospices will be permitted to add their 

own questions to the survey, following 

the required core set of questions. 

Comment: We had one comment that 

suggested the follow-up schedule for the 

field test of the Hospice Experience of 

Care Survey was too aggressive and 

would make family members or friends 

of the deceased feel harassed. 

Response: Our follow-up plan for the 

field test is very typical for professional 

mixed-mode surveys. We plan to mail a 

survey to the sample members. Sample 

members who have not responded 

within three weeks will receive followup telephone calls. We will make up to 

a maximum of five telephone calls, at 

different days and times, in an effort to 

reach the sample member. If we have 

not reached the sample member after 

five attempts, calls will be curtailed. If 

the sample member is reached but 

refuses to complete the survey, no more 

calls will be made. We will not 


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repeatedly call the sample member and 

ask for a response. 

Summary of Final Rule Changes for the 

Hospice Experience of Care Survey 

As a result of these comments, we are 

finalizing the requirements as proposed. 

Hospices must participate in and report 

data from a dry run for at least 1 month 

in the first quarter of CY 2015 (January 

2015, February 2015, or March 2015) 

with continuous monthly data 

collection beginning in April 1, 2015 

and continuing through December 31, 

2015. 

7. Notice Pertaining to Reconsiderations 

Following APU Determinations 

At the conclusion of any given quality 

data reporting period, we will review 

the data received from each hospice 

during that reporting period to 

determine if the hospice has met the 

reporting requirements. Hospices that 

are found to be non-compliant with the 

reporting requirements set forth for that 

reporting cycle could receive a 

reduction in the amount of 2 percentage 

points to their annual payment update 

for the upcoming payment year. 

We are aware that there may be 

situations when a hospice has evidence 

to dispute a finding of non-compliance. 

We further understand that there may be 

times when a provider may be 

prevented from submitting quality data 

due to the occurrence of extraordinary 

circumstances beyond their control (for 

example, natural disasters). It is our goal 

not to penalize hospice providers in 

these circumstances or to unduly 

increase their burden during these 

times. 

Other CMS Quality Reporting 

Programs, such as Home Health Quality 

Reporting and Inpatient Quality 

Reporting, include an opportunity for 

providers to request a reconsideration 

pertaining to their APU determinations. 

We are aware of the potential need for 

providers to request reconsideration and 

that we will be making APU 

determinations for FY 2014 in the 

coming months. Therefore, to be 

consistent with other established quality 

reporting programs, we used the 

proposed rule to notify providers of our 

intent to provide a process that would 

allow hospices to request 

reconsiderations pertaining to their FY 

2014 and subsequent years’ payment 

determinations. 

Specifically, as part of the 

reconsideration process for hospices 

beginning with the FY 2014 payment 

determinations, hospices found to be 

non-compliant with the reporting 

requirements during a given reporting 

cycle would be notified of that finding. 

The purpose of this notification is to put 

hospices on notice of the following: (1) 

That they have been identified as being 

non-compliant with section 3004 of the 

Affordable Care Act for the reporting 

cycle in question; (2) that they would be 

scheduled to receive a reduction in the 

amount of 2 percentage points to the 

annual payment update to the 

applicable fiscal year; (3) that they may 

file a request for reconsideration if they 

believe that the finding of noncompliance is erroneous, or that if they 

were non-compliant, they have a valid 

and justifiable excuse for this noncompliance; and, (4) that they must 

follow a defined process on how to file 

a request for reconsideration, which 

would be described in the notification. 

Upon the conclusion of our review of 

each request for reconsideration, we 

would render a decision. We could 

reverse our initial finding of noncompliance if: (1) The hospice provides 

proof of full compliance with the all 

requirements during the reporting 

period; or (2) the hospice was not able 

to comply with requirements during the 

reporting period, and it provides 

adequate proof of a valid or justifiable 

excuse for this non-compliance. We 

would uphold our initial finding of noncompliance if the hospice could not 

show any justification for noncompliance. 

C. FY 2014 Hospice Wage Index and 

Rates Update 

1. 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). That 

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 (70 FR 45139), 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 the FY 2007 

hospice wage index and beyond, we 

have used CBSAs exclusively to 

calculate wage index values. OMB has 

published subsequent bulletins 

regarding CBSA changes. The OMB 

bulletins are available at http:// 

www.whitehouse.gov/omb/bulletins/ 

index.html. 

When adopting OMB’s new labor 

market designations in FY 2006, we 

identified some geographic areas where 

there were no hospitals, and thus, no 

hospital wage index data, which to base 

the calculation of the hospice wage 

index. We also adopted the policy that, 

for urban labor markets without a 

hospital from which hospital wage 

index data could be derived, all of the 

CBSAs within the state would be used 

to calculate a statewide urban average 

pre-floor, pre-reclassified hospital wage 

index value to use as a reasonable proxy 

for these areas in our August 6, 2009 FY 

2010 Hospice Wage Index final rule (74 

FR 39386). In FY 2014, 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 


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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 2014, we will continue to use the 

most recent pre-floor, pre-reclassified 

hospital wage index value available for 

Puerto Rico, which is 0.4047. 

For the FY 2014 Hospice Wage Index 

and Payment Rate Update proposed rule 

(78 FR 27840), we proposed to use the 

2013 pre-floor, pre-reclassified hospital 

wage index to derive the applicable 

wage index values for the FY 2014 

hospice wage index. We proposed to 

continue to use the pre-floor, prereclassified 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 wagerelated 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 2014 hospice wage index 

values presented in this final rule were 

computed consistent with our pre-floor, 

pre-reclassified hospital wage index 

policy (that is, our historical policy of 

not taking into account Inpatient 

Prospective Payment System (IPPS) 

geographic reclassifications in 

determining payments for hospice). The 

2013 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 2014 pre-floor, 

pre-reclassified hospital wage index 

does not contain OMB’s new area 

delineations because those changes 

were not published until the IPPS 

proposed rule was in advanced stages of 

development (78 FR 27552). CMS 

intends to propose changes to the FY 

2015 hospital wage index based on the 

newest CBSA changes in the FY 2015 

IPPS proposed rule. Therefore, if CMS 

incorporates OMB’s new area 

delineations, based on the 2010 Census, 

in the FY 2015 hospital wage index, 

those changes would also be reflected in 

the FY 2016 hospice wage index. 

We received nine comments on our 

proposal to use the 2013 pre-floor, prereclassified hospital wage index to 

derive the applicable wage index values 

for the FY 2014 hospice wage index, 

which are summarized below. 

Comment: Some commenters 

commented that is difficult to have the 

hospice wage index dependent on the 

hospital wage index due to the lack of 

data sometimes submitted by the 

hospital on their cost report data and 

the added responsibility for the hospice 

to monitor the hospital wage index. 

Some commented that the phase out of 

the BNAF will leave the hospice 

industry with an exceptionally 

imprecise and un-validated wage index 

with large geographic variations that 

cannot be defended by local wage 

pressures. Some commenters stated that 

CMS should actively seek the 

Congressional authority for granting 

hospices wage index parity with 

hospitals until an appropriate 

alternative wage index approach for 

hospices and other post-acute providers 

can be developed. One commenter 

asked CMS to re-evaluate the CBSA for 

Montgomery County, Maryland as it is 

considered a rural area at paid at a 

lower rate than all the surrounding 

counties. 

Response: The pre-floor, prereclassified hospital wage index was 

adopted in 1998 as the wage index from 

which the hospice wage index is 

derived by a committee of CMS (then 

Health Care Financing Administration) 

and industry representatives as part of 

a negotiated rulemaking effort. The 

Negotiated Rulemaking Committee 

considered several wage index options: 

(1) Continuing with Bureau of Labor 

Statistics data; (2) using updated 

hospital wage data; (3) using hospice 

specific data; and (4) using data from 

the physician payment system. The 

Committee determined that the prefloor, pre-reclassified hospital wage 

index was the best option for hospice. 

Each hospice’s labor market area is 

based on definitions of CBSAs issued by 

the Office of Management and Budget 

(OMB), not CMS. We note that section 

3137(b) of the Affordable Care Act 

requires CMS to submit to Congress a 

report that includes a plan to reform the 

hospital wage index system. The report 

to Congress outlines the recent history 

of analysis and proposed reform to the 

Medicare wage index system. This 

report was submitted by the Secretary 

on April 11, 2012. The report can be 

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

Medicare-Fee-for-Service-Payment/ 

AcuteInpatientPPS/Wage-IndexReform.html. The latest information on 

hospital wage index reform is discussed 

in the ‘‘Hospital Inpatient Prospective 

Payment Systems for Acute Care 

Hospitals and the Long-Term Care 

Hospital Prospective Payment System 

and Fiscal Year 2013 Rates;’’ final rule, 

published August 31, 2012 in the 

Federal Register (77 FR 53660–53664). 

We continue to believe that the prefloor, pre-reclassified hospital wage 

index, which is updated yearly and is 

used by many other CMS payment 

systems, is the most appropriate method 

available to account for geographic 

variances in labor costs for hospices. 

Regarding about the commenters 

concerns regarding the CBSA 

classification of Montgomery County, 

Maryland, it is important to note that 

the cities and counties which make up 

CBSAs are not determined by CMS, but 

instead are established by the Office of 

Management and Budget (OMB) and 

have been adopted by Medicare through 

notice and comment rule making. 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). In 

addition, in the FY 2006 Hospice Wage 

Index final rule (70 FR 45130), 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. Moreover, we also note that 

under the hospice payment system, 

payments are wage-adjusted based on 

the location of the beneficiary. 

Final Decision: After carefully 

considering all of the comments that we 

received on our proposal to use the 2013 

pre-floor, pre-reclassified hospital wage 

index to derive the applicable wage 

index values for the FY 2014 hospice 

wage index, we are finalizing the 

proposal as discussed in the FY 2014 

Hospice Wage Index and Payment Rate 

Update proposed rule. 

2. FY 2014 Hospice Wage Index With an 

Additional 15 Percent Reduced Budget 

Neutrality Adjustment Factor (BNAF) 

This final rule will update the hospice 

wage index values for FY 2014 using 

2013 pre-floor, pre-reclassified hospital 

wage index. As described in the August 

8, 1997 Hospice Wage Index final rule 

(62 FR 42860), the pre-floor and prereclassified 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. Pre-floor, prereclassified 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. 


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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 2014 Hospice Wage Index final rule, 

that means estimating payments for FY 

2014 using units (days or hours) from 

FY 2012 hospice claims data, and 

applying the FY 2014 hospice payment 

rates. The FY 2014 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 (74 FR 39384) 

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. 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 (74 FR 

39384), the BNAF for FY 2014 will be 

reduced by an additional 15 percent for 

a total BNAF reduction of 70 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 and an additional 

15 percent in FY 2014). 

The unreduced BNAF for FY 2014 is 

0.061538 (or 6.1538 percent). A 70 

percent reduction to the BNAF is 

computed to be 0.018461 (or 1.8461 

percent). For FY 2014, this is 

mathematically equivalent to taking 30 

percent of the unreduced BNAF value, 

or multiplying 0.061538 by 0.30, which 

equals 0.018461 (1.8461 percent). The 

BNAF of 1.8461 percent reflects a 70 

percent reduction in the BNAF. The 70 

percent reduced BNAF (1.8461 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; and the additional 15 percent 

reduced BNAF for FY 2014 (for a 

cumulative reduction of 70 percent) is 

0.018461, based on a full BNAF of 

0.061538. 

Hospital wage index values which are 

less than 0.8 are subject to the hospice 

floor calculation. For example, if in FY 

2013, 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 

0.061538, less 70 percent, or 0.018461) 

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+ 

70 percent reduced BNAF: (0.3994 × 

1.018461 = 0.4068); 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 FY 2014 wage index values for 

rural and urban areas, will not be 

published in the Federal Register. The 

FY 2014 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 FY 

2014 hospice wage index set forth in 

this final rule includes the BNAF 

reduction and will be effective October 

1, 2013 through September 30, 2014. 

We received nine comments which 

referenced the BNAF reduction, and are 

summarized below. 

Comment: Several commenters 

continued to voice opposition to the 

BNAF reduction and were concerned 

about the impact of the elimination of 

BNAF phase-out. 

Response: The BNAF phase-out has 

already been finalized for the remaining 

years of the phase-out, as described in 

the FY 2010 Hospice Wage Index final 

rule (74 FR 39384). However, we are 

sensitive to the issues raised by 

commenters, especially the possible 

effects of the BNAF reduction. Our 

analysis reveals an overall growth in 

number of hospices since the start of the 

phase-out. We also note that the FY 

2014 hospice wage index includes a 

hospice floor calculation which benefits 

many rural providers. However, we will 

continue to monitor for unintended 

consequences associated with the BNAF 

phase-out. 

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 which is 

0.5 percentage point for FY 2014. 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). In FY 2014 

Hospice Wage Index and Payment Rate 

Update proposed rule (78 FR 27841), we 

proposed 1.8 percent hospice payment 

update percentage which was based on 

a 2.5 percent estimated inpatient 

hospital market basket update for FY 

2014 reduced by a 0.4 percentage point 

productivity adjustment and by 0.3 

percentage point as mandated by the 

Affordable Care Act. The final hospice 

payment update percentage for FY 2014 

is 1.7 percent and is based on the final 

inpatient hospital market basket update 

for FY 2014 of 2.5 percent reduced by 

a 0.5 percentage point productivity 

adjustment and by 0.3 percentage point 

as mandated by the Affordable Care Act. 

A detailed description of how the 

inpatient hospital market basket is 

derived is described in the FY 2014 

IPPS Final Rule. 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 

2014 of 2.5 percent must be reduced by 

a productivity adjustment as mandated 

by Affordable Care Act (0.5 percentage 

point for FY 2014). The inpatient 


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hospital market basket for FY 2014 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 2014 

is 1.7 percent. 

The labor portion of the hospice 

payment rates are 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 of the 

payment rates is as follows: for Routine 

Home Care, 31.29 percent; for 

Continuous Home Care, 31.29 percent; 

for General Inpatient Care, 35.99 

percent; and for Respite Care, 45.87 

percent. 

4. Final FY 2014 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, starting 

in this FY 2014 rule and for subsequent 

FYs, we proposed in the FY 2014 

Hospice Wage Index and Payment Rate 

Update proposed rule to use rulemaking 

as the means to finalize hospice 

payment rates. This change was 

proposed to be consistent with the rate 

update process in other Medicare 

benefits, and would provide 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 2014 payment rates will 

be the FY 2013 payment rates, increased 

by 1.7 percent, which is the final 

hospice payment update percentage for 

FY 2014 as discussed in section IV.C.3 

above. The final FY 2014 hospice 

payment rates will be effective for care 

and services furnished on or after 

October 1, 2013, through September 30, 

2014. 

TABLE 7—FINAL FY 2014 HOSPICE PAYMENT RATES UPDATED BY THE FINAL HOSPICE PAYMENT UPDATE PERCENTAGE

Code Description FY 2013 

Payment rates 

Multiply by the 

FY 2014 final 

hospice payment update 

of 1.7 percent 

FY 2014 final 

payment rate 

651 .... Routine Home Care ..................................................................................................... $153.45 × 1.017 $156.06 

652 .... Continuous Home Care Full Rate = 24 hours of care = 37.95 hourly rate ................. 895.56 × 1.017 910.78 

655 .... Inpatient Respite Care ................................................................................................. 158.72 × 1.017 161.42 

656 .... General Inpatient Care ................................................................................................. 682.59 × 1.017 694.19 

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. Beginning in FY 2014, 

hospices which fail to report quality 

data will have their market basket 

update reduced by 2 percentage points. 

In the August 4, 2011 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. Hospices failing to report 

quality data in 2013 will have their 

market basket update reduced by 2 

percentage points in FY 2014. 

TABLE 8—FINAL FY 2014 HOSPICE PAYMENT RATES UPDATED BY THE FINAL HOSPICE PAYMENT UPDATE PERCENTAGE

FOR HOSPICES THAT DO NOT SUBMIT THE REQUIRED QUALITY DATA

Code Description FY 2013 

Payment rates 

Multiply by the 

FY 2014 hospice payment 

update percentage of 1.7 

percent minus 

2 percentage 

points (¥0.2) 

FY 2014 

Payment rate 

651 ...................... Routine Home care .................................................................................... $153.45 × 0.997 $152.99 

652 ...................... Continuous Home Care Full Rate = 24 hours of care = 37.20 hourly rate 895.56 × 0.997 892.87 

655 ...................... Inpatient Respite Care ............................................................................... 158.72 × 0.997 158.24 

656 ...................... General Inpatient Care ............................................................................... 682.59 × 0.997 680.54 

A Change Request with the finalized 

FY 2014 hospice payment rates, a 

finalized FY 2014 hospice wage index, 

the FY 2014 PRICER, and the hospice 

cap amount for the cap year ending 

October 31, 2013 will continue to be 

issued in the summer. 

We received two comments on our 

proposal to use rulemaking as the means 

to finalize hospice payment rates, which 

are summarized below. 

Comment: Commenters were 

supportive of CMS’ proposal to use 

rulemaking as the means to finalize 

hospice payment rates followed by a 

change request with the finalized 

hospice payment rates, a finalized 


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hospice wage index, the PRICER for FY 

2014. 

Response: We thank you for your 

support. We will finalize hospice 

payment rates as stated in the FY 2014 

Hospice Wage Index and Payment Rate 

Update proposed rule (78 FR 27841). 

Comment: We also received several 

additional comments that expressed 

concern that hospice industry is being 

over regulated, while reimbursement is 

decreasing and examples given include 

the face-to-face regulation, data 

collection efforts, and quality initiatives. 

Several commenters are concerned that 

these regulations not only increase 

financial burden for hospice industry 

but also pull hospices away from patient 

care and keep hospice providers in the 

office to perform administrative duty to 

comply with regulations. Some 

commenters described a shortage of staff 

in some areas of the country, especially 

small hospices and in rural areas, and 

stated that the staff travel hours in rural 

areas to examine the patient, which is 

a burden itself because of travel 

distance. Several commenters stated 

that reimbursement is decreasing 

because of the continuing rate cuts 

resulting from the elimination of the 

budget neutrality adjustment factor, the 

cuts resulting from the productivity 

adjustment factor, and further rate 

reduction resulting from sequestration. 

A commenter stated that the proposed 

hospice payment update of 1.8 percent 

for 2014, coupled with other cuts is 

devastating. 

Response: We appreciate comments 

regarding sequestration cut, but it is 

outside the scope of this rule. As stated 

in FY 2013 Hospice Wage Index notice 

(77 FR 44245), section 3401(g) of the 

Affordable Care Act mandates that 

starting with FY 2013 (and in 

subsequent FYs), 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. 

We do not have authority to change the 

application of economy-wide 

productivity adjustment as it is required 

by the statute. We are sensitive to 

concerns about hospices being 

overregulated and concerns expressed 

from rural hospices that the additional 

time and distance required to visit a 

rural patient adds significantly to their 

costs. We do not have the authority to 

change the hospice rates beyond the 

limits set out in the statute, but will 

consider the costs of rural providers in 

the context of broader hospice payment 

system reform. We will continue to 

monitor the impact of our regulations 

for any unintended consequences. As 

described in the Regulatory Impact 

Analysis (Section, VI), we note that the 

overall impact of this final rule is an 

estimated net increase in Federal 

payments to hospices of $160 million, 

or 1.0 percent, for FY 2014. 

Final Decision: As stated in the FY 

2014 Hospice Wage Index and Payment 

Rate Update proposed rule, we 

proposed to finalize hospice payment 

rates through rulemaking and we are 

finalizing this policy as proposed. A 

change request with the finalized FY 

2014 hospice payment rates, a finalized 

FY 2014 hospice wage index, the FY 

2014 PRICER, and the hospice cap year 

ending October 31, 2013 will continue 

to be issued in the summer. 

D. Update on Hospice Payment Reform 

and Data Collection 

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 types of data and 

information described in the Act would 

capture resource utilization and other 

measures of cost, which can be collected 

on claims, cost reports, and possibly 

other mechanisms determined 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. 

The proposed rule contained three 

subsections which updated the public 

or discussed different aspects of hospice 

payment reform; there were no 

proposals in any of these three 

subsections. 

1. Update on Reform Options 

Our hospice contractor, Abt 

Associates, continues to conduct 

research and analyses, to identify 

potential data collection needs, and to 

research and develop hospice payment 

model options. To date, we completed 

an environmental scan; a draft analytic 

plan; and convened technical advisory 

panel meetings under the initial 

contract with Abt in 2010. We are 

continuing with these efforts under a 

contract awarded in September 2011. In 

June 2012, we convened stakeholder 

meetings where research findings were 

presented on potential payment system 

vulnerabilities; utilization of the 

Medicare Hospice Benefit, including 

general inpatient care use during the 

period the beneficiary is enrolled in 

hospice care; analysis of hospice cost 

reports; and the effects of the face-toface encounter requirement. These and 

other findings are described in the Abt 

Hospice Study Technical Report, which 

is available on the CMS Hospice Center 

Web page, at http://www.cms.gov/ 

Center/Provider-Type/HospiceCenter.html. 

Additionally, we continue to conduct 

analyses of various payment reform 

model options under consideration. 

These models include a U-shaped 

model of resource use, which MedPAC 

recommended that we adopt, as 

originally described in Chapter 6 of its 

March, 2009 report entitled ‘‘Report to 

the Congress: Medicare Payment Policy’’ 

(available online at: http:// 

www.medpac.gov/chapters/ 

Mar09_Ch06.pdf). The report noted that 

the constancy of the per diem payment 

over the course of a hospice stay is 

misaligned with a hospice’s costs during 

the stay. A hospice’s costs typically 

follow a U-shaped curve, with higher 

costs at the beginning and end of a stay, 

and lower costs in the middle of the 

stay. This cost curve reflects hospices’ 

higher service intensity at the time of 

the patient’s admission and the time 

surrounding the patient’s death 

(MedPAC, page 358). Payment under a 

U-shaped model would be higher at the 

beginning and end of a hospice stay and 

lower in the middle portion of the stay. 

Analysis conducted by Abt Associates 

found that very short hospice stays have 

a flatter curve than the U-shaped curve 

seen for longer stays and that average 

hospice costs are much higher. These 

short stays are less U-shaped because 

there is not a lower-cost middle period 

between the time of admission and the 

time of death. As such, we are also 

considering a tiered approach, with 

payment tiers based on the length of 

stay. For example, payment for stays of 

5 days or less, which occurred for about 

25 percent of hospice beneficiaries in 

2011, could be made under a per diem 

system that accounts for the higher 

hospice costs, with no variation in the 

rate based on length of stay as would 

occur under a U-shaped model. 

Payment for longer stays, where costs 

follow more of a U-shape, could be 

made under a tier based on the Ushaped payment model, where the per 

diem amount fluctuates depending 

upon whether the days billed are at the 

beginning, middle, or end of the stay. 


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8The original RHC rate in 1983 was $46.25. The 

FY 2011 rate for RHC was $146.63. $146.63/46.25 

= 3.1704. 

Another option is to analyze whether 

a short-stay add-on payment, similar to 

the home health Low Utilization 

Payment Amount (LUPA) add-on, 

would improve payment accuracy if we 

retain the current per diem system. The 

LUPA add-on is made for home health 

patients who require four or fewer visits 

during the 60-day episode. These home 

health episodes are paid based on the 

visits actually furnished during the 

episode. For LUPA episodes that occur 

as the only episode or the first episode 

in a sequence of adjacent home health 

episodes for a given beneficiary, an 

increased payment is made to account 

for the front-loading of costs (see 

http://www.cms.gov/Outreach-andEducation/Medicare-Learning-NetworkMLN/MLNProducts/downloads/ 

HomeHlthProspaymt.pdf for more 

information). 

Finally, as we collect more accurate 

diagnosis data, including data on related 

conditions, we will also evaluate 

whether case-mix should play a role in 

determining payments. 

a. Rebasing the Routine Home Care 

(RHC) Rate 

In the proposed rule, we updated our 

review of the hospice RHC rate, but did 

not include any proposals to rebase the 

rate. Rebasing the RHC rate involves 

using the existing components that 

make up the rate, and recalculating 

based on more current data. RHC is the 

basic level of care under the Hospice 

benefit, where a beneficiary receives 

hospice care, but remains at home. With 

this level of care, hospice providers are 

reimbursed per day regardless of the 

volume or intensity of services provided 

to a beneficiary on any given day. It is 

anticipated that there would be days 

when a beneficiary does not require any 

services, as well as days when a 

beneficiary requires several visits from 

the hospice provider. 

When the hospice benefit was created 

in 1983, the RHC base payment rate was 

set using nine different components of 

cost from a relatively small set of 

hospices (n = 26) that were participating 

in a CMS hospice demonstration, as 

described in the December 16, 1983 

Hospice final rule (48 FR 56008). The 

nine cost components were: nursing 

care ($16.25); home health aide ($12.74); 

social services/therapy ($3.23); home 

respite ($1.46); interdisciplinary group 

($2.78); drugs ($1.18); supplies ($4.49); 

equipment ($1.13); and outpatient 

hospital therapies ($2.99). The sum of 

all the components’ costs equaled the 

base payment rate for RHC as stated in 

that 1983 hospice final rule. The 

original RHC rate was set at $46.25. In 

addition to RHC, we also established 

three other levels of care for hospice 

care from data obtained from the 

Medicare hospice demonstration 

project: Continuous Home Care (CHC), 

Inpatient Respite Care (IRC) and General 

Inpatient Care (GIP). 

It is CMS’ intent to ensure that 

reimbursement rates under the Hospice 

benefit align as closely as possible with 

the average costs hospices incur when 

efficiently providing covered services to 

beneficiaries. As we continue to gather 

and analyze more data for payment 

reform, we have found evidence of a 

potential misalignment between the 

current RHC payment rate and the cost 

of providing RHC. One potential option 

to address this misalignment could be to 

rebase the hospice RHC rate, though we 

did not propose to do so in the proposed 

rule, so that the cost categories 

established in the rate reflect the 

changes in the utilization of hospice 

services provided for palliation and 

management of terminally ill patients. 

However, we are still evaluating data 

and did not propose any changes to 

address the misalignment. 

At this time, we do not have the data 

to support rebasing six of the nine cost 

components described in the 1983 final 

rule. Information on the utilization of 

drugs, supplies, and equipment is not 

available from hospice claims data, and 

the corresponding information that is 

available from cost reports, such as 

outpatient hospital therapies, is not 

sufficiently detailed to allow for 

rebasing. One approach to consider in 

more closely aligning RHC payments 

with costs is to rebase the three clinical 

service components (nursing, home 

health aide, social services/therapy) that 

currently comprise 69.7 percent of the 

RHC rate by calculating the average cost 

per day, weighted by the number of 

RHC days, for each of the three 

components using FY 2011 cost report 

data matched to FY 2011 claims data. 

As part of rebasing the RHC rate we 

would then inflate the 1983 cost per day 

for each of the six remaining 

components by a factor of 3.1704, which 

corresponds to the market basket 

increases between 1983 and 2011.8 We 

note that our cost report analysis thus 

far found that drug costs over the years 

have declined, and the other non-labor 

components are plateauing. A detailed 

methodology for rebasing the clinical 

service components of the RHC rate can 

be found in the Abt Hospice Study 

Technical Report which was published 

shortly after displaying the proposed 

rule, at http://www.cms.gov/Center/ 

Provider-Type/Hospice-Center.html. 

Using the methodology described 

above, the rebased amount for FY 2011 

would be $130.54 as described in Table 

9 below. 

TABLE 9—COMPARISON OF RHC RATE COST COMPONENTS FROM 1983 TO FY 2011 

RHC components 

1983 Final 

rule cost per 

day 

Inflation 

factor 

FY 2011 

Cost per 

day 

Nursing Care ............................................................................................................................................ $16.25 N/A $56.54 

Home Health Aide ................................................................................................................................... 12.74 N/A 19.24 

Social Services/Therapy .......................................................................................................................... 3.23 N/A 10.29 

Home respite ........................................................................................................................................... 1.46 × 3.1704 4.63 

Interdisciplinary group .............................................................................................................................. 2.78 × 3.1704 8.81 

Drugs ....................................................................................................................................................... 1.18 × 3.1704 3.74 

Supplies ................................................................................................................................................... 4.49 × 3.1704 14.23 

Equipment ................................................................................................................................................ 1.13 × 3.1704 3.58 

Outpatient Hospital Therapies ................................................................................................................. 2.99 × 3.1704 9.48 

Total .................................................................................................................................................. 46.25 .................... 130.54 

Source: 1983 Final Rule and FY 2011 hospice cost report and claims data. 


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Note(s): The costs per day for the clinical services components (nursing care, home health aide and social services/therapy) were calculated 

based on the cost per minute for each discipline using cost report data multiplied by the RHC minutes for each discipline per RHC day from 

claims data to compute the cost of a discipline per RHC day. The average cost per day across all hospices in our sample was weighted by the 

number of RHC days. Of the 2,717 FY 2011 hospice cost reports for freestanding and facility-based hospices that were matched to FY 2011 

claims data, we excluded: (1) Cost reports with period less than 10 months or greater than 14 months; (2) cost reports with missing information 

or negative reported values for total costs or payments; (3) providers in the highest and lowest percentile (1% and 99%) in costs per days across 

all levels of care; (4) the top and bottom 5% of provider margin; and (5) providers were excluded if the log payment to cost ratio was greater than 

the 90th or less than the 10th percentile of this value across all providers plus or minus 1.5 times the range between the 10th and 90th percentiles of this log ratio. The number of hospices remaining in our sample was 2,140 representing 73.1 percent of RHC days in 2011.

For example, if we were to apply the 

rebased amounts for the clinical services 

components of RHC to FY 2014, we 

would inflate the FY 2011 rebased 

amount to FY 2013 levels. We first 

inflated the FY 2011 rebased rate by full 

hospital market basket of 3.0 percent for 

FY 2012. The FY 2012 rebased rate 

would be $134.46 ($130.54 × 1.03 = 

$134.46). We then inflated the FY 2012 

rebased rate by full hospital market 

basket of 2.6 percent for FY 2013. The 

FY 2013 rebased rate would be $137.96 

($134.46 × 1.026 = $137.96). Finally, we 

inflated the rebased FY 2013 rate 

($137.96) by applying the proposed 

hospice payment update percentage of 

1.8 percent to calculate a FY 2014 

rebased RHC rate. Therefore, the FY 

2014 rebased rate would be $140.44, a 

10.1 percent reduction in the FY 2014 

proposed RHC payment rate of $156.21, 

or an estimated reduction in payments 

to hospices of $1.6 billion in FY 2014. 

Rebasing the clinical service 

components of the RHC payment is one 

of several approaches to hospice 

payment reform that CMS could 

consider for revising the RHC payment 

rate. As outlined in the Affordable Care 

Act, hospice payment reform must be 

done in a budget neutral manner. As 

rebasing is considered part of hospice 

payment reform, any savings achieved 

through the reduction of the RHC rate 

would need to be redistributed in a 

budget neutral manner. 

b. Site of Service Adjustment for 

Hospice Patients in Nursing Facilities. 

As part of future hospice payment 

reform, we are considering an OIG 

recommendation to reduce payments to 

Medicare hospices for beneficiaries in 

nursing facilities who are receiving 

hospice care. The OIG’s July 2011 report 

entitled ‘‘Medicare Hospices that Focus 

on Nursing Facility Residents,’’ 

(available at https://oig.hhs.gov/oei/ 

reports/oei-02-10-00070.pdf) studied 

hospice patients in nursing facilities. 

This report noted the growth of hospice 

services provided to beneficiaries in 

nursing facilities, and discussed 

hospices that have a high percentage of 

their beneficiaries in nursing facilities. 

The OIG’s report noted that the current 

payment structure provides incentives 

for hospices to seek out beneficiaries in 

nursing facilities, as these beneficiaries 

often receive longer but less complex 

care. The OIG noted that unlike private 

homes, nursing facilities are staffed with 

professional caregivers and are often 

paid by third-party payers, such as 

Medicaid. These facilities are required 

to provide personal care services, which 

are similar to hospice aide services that 

are paid for under the hospice benefit. 

To lessen this incentive, the OIG 

recommended that we reduce Medicare 

payments for hospice care provided in 

nursing facilities. 

In addition, the March 2012 Medicare 

Payment Advisory Commission 

(MedPAC) report entitled ‘‘Report to 

Congress: Medicare Payment Policy’’ 

noted that hospices with a higher share 

of their patients in nursing facilities 

have margins as high as 13.8 percent 

(pages 302 and 303). MedPAC attributed 

these higher margins to possible 

efficiencies in the nursing home setting 

(multiple patients in a single setting, 

reduced driving time and mileage), and 

to reduced workload due to an overlap 

in aide services and supplies provided 

by the nursing facility. 

In response to both MedPAC’s and 

OIG’s concerns about possible 

duplication of aide services provided 

both by the hospice and the nursing 

facility, in the proposed rule we 

discussed an analysis of the number and 

length of aide visits per day using 2011 

hospice claims data. Table 10 below 

describes the number and length of aide 

visits for RHC beneficiaries at home 

(including patients in an assisted living 

facility) compared to RHC beneficiaries 

in a long term care nursing facility (NF) 

or skilled nursing facility (SNF). 

TABLE 10—HOSPICE ROUTINE HOME CARE AIDE SERVICES, CY 2011 

Sites of service Difference 

Home Q5001/2 NF/SNF Q5003/4 NF/SNR–Home % 

Number of beneficiaries ................................................................... 769,640 302,004 (467,636) ............................

Total days ........................................................................................ 58,637,171 22,946,972 (35,690,199) ............................

Total visits ........................................................................................ 16,625,635 8,501,366 (8,124,269) ............................

Total minutes ................................................................................... 1,223,254,095 584,825,520 (638,428,575) ............................

Visits per beneficiary ....................................................................... 21 .6 28 .1 6 .5 30.3 

Minutes per visit ............................................................................... 73 .6 68 .8 (4 .8) 6.5 

Total visits/day ................................................................................. 0 .28 0 .37 0 .09 30.7 

Total minutes/day ............................................................................ 20 .86 25 .49 4 .62 22.2 

Source: Abt Associates Hospice Claims Data File, CY 2011. 

Table 10 demonstrates that hospice 

patients in a NF/SNF receive more visits 

than patients at home, though the length 

of those visits is shorter. Average 

minutes per day shows that RHC 

patients in a NF/SNF had hospice aide 

services of longer duration (25.49 

minutes) than RHC patients at home 

(20.86 minutes). The Medicare 

Conditions of Participation (CoPs) 

require that hospices provide services at 

the same level and to the same extent as 

those services would be provided if the 

NF/SNF resident were in his or her 

home. Hospices provide aide services to 

beneficiaries at home depending on the 

beneficiaries’ needs. It seems reasonable 

to expect that a beneficiary who has a 

paid caregiver (that is, a NF/SNF aide) 

does not need as many services from the 

hospice aide, because those services are 

being provided by the paid caregiver. As 

described in the June 5, 2008 Hospice 

Conditions of Participation final rule (73 


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FR 32095), ‘‘[h]ospice care is meant to 

supplement the care provided by the 

patient’s caregiver.’’ Given the presence 

of the paid caregiver in the NF/SNF, we 

would expect that on average, there 

would be fewer hospice aide services 

provided to hospice patients in a NF/ 

SNF than to hospice patients at home. 

It is not clear why hospice patients in 

nursing facilities are receiving more 

minutes per day of aide services than 

hospice patients at home. We used 

regression analysis to control for age, 

gender, diagnosis, length of stay, and 

provider characteristics (ownership 

status, base, size, age of hospice, 

geographic location) when analyzing the 

visit data. However, we still found that 

significantly more aide services were 

provided to NF/SNF patients than to 

patients at home, even after controlling 

for patient and provider characteristics. 

The June 5, 2008 Hospice Conditions 

of Participation final rule (73 FR 32088) 

preamble details the requirements 

related to aide services provided to 

hospice patients residing in a nursing 

facility. These requirements can also be 

found at § 418.112(c)(4) through (5). The 

CoPs require a written agreement 

between the hospice and NF/SNF, 

which specifies that the NF/SNF should 

continue to provide the aide services 

that are provided prior to the hospice 

election, to meet the patient’s needs at 

that same level of care as if the patient 

were at home. These services include 

providing 24 hour room and board care, 

meeting the patient’s personal care 

needs, and to the degree permitted by 

State law, administering medications or 

therapies. There should be no reduction 

of NF/SNF aide services to a patient in 

anticipation of a future hospice election, 

or once the patient (or his/her 

representative) elects the hospice 

benefit. As such, hospice patients in 

nursing facilities should have much, if 

not most, of their need for aide services 

provided by the facility’s aide. As stated 

previously, we would expect that, on 

average, the hospice aide would be 

providing fewer services to nursing 

facility patients than to patients at 

home. 

Table 10 suggests that the hospice 

aide may be replacing the facility aide, 

rather than supplementing or 

augmenting the care of the facility aide. 

Or, as the OIG and MedPAC identified, 

there could be an overlap in aide 

services when a hospice beneficiary is 

in a NF/SNF. It would not be 

appropriate for the Medicare Hospice 

Benefit to subsidize the nursing home 

benefit by providing aide services that 

the facility aide should provide. Section 

1862(a)(1)(C) of the Social Security Act 

(the Act) forbids payment for any items 

or services which are not reasonable and 

necessary for the palliation and 

management of the terminal illness. 

Services which are not needed, or 

which are duplicative of those to be 

provided by the facility aide, would not 

be reasonable and necessary. 

In the proposed rule, we did not 

propose to make a site of service 

adjustment to reduce payments for RHC 

patients in a nursing facility. Any 

reform option considering reduced 

payments for RHC care provided to 

hospice patients in a NF or SNF should 

not result in a reduction in the services 

that hospice patients in NFs or SNFs 

receive, but would instead be a shifting 

of who provides those aide services; 

some of the services currently provided 

by the hospice aide would be provided 

by the facility aide as expected. As such, 

we do not expect that the quality of care 

to hospice patients in a NF/SNF would 

be diminished. If such a policy were to 

be finalized and implemented, it would 

be made in a budget neutral manner as 

required by the Affordable Care Act. In 

addition, we would monitor for any 

unintended consequences. 

2. Reform Research Findings 

The proposed rule also included a 

discussion of a number of analyses we 

conducted to better understand hospice 

utilization and trends, to identify 

vulnerabilities in the payment system, 

and to develop and test models that 

would more accurately match hospice 

resource use with Medicare payments. 

We posted the Abt Hospice Study 

Technical Report on hospice payment 

reform on our hospice center Web page, 

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

Provider-Type/Hospice-Center.html. 

The report summarizes research 

findings related to resource use and 

payment system vulnerabilities. 

The report also includes a discussion 

of hospice cost report analyses. Overall, 

the total cost per election period has not 

significantly increased from 2007 to 

2010, in real dollars. Inpatient costs 

constitute about 14 percent of hospice 

costs across freestanding hospice 

providers that reported inpatient costs. 

About one-third of providers reported 

no inpatient costs. It appeared that some 

providers with no inpatient costs were 

substituting continuous home care 

(CHC) for GIP, based on analysis of the 

proportion of CHC days. Visiting 

services (for example, direct labor costs 

for nurses, aides, social workers, 

counselors, and therapists) account for 

about two-thirds of hospice costs, and 

have trended upward from 2004 to 

2010. Nursing care, hospice aides, and 

medical social services comprise 90 

percent of visiting service costs. 

Other hospice service costs include 

non-labor costs such as drugs, durable 

medical equipment (DME), supplies, 

imaging, patient transportation, and 

outpatient services. These types of 

services represent about 20 to 25 

percent of total hospice costs. Drugs, 

DME, and supplies account for 90 

percent of these other hospice services 

costs. Drug costs have trended 

downward over time, while medical 

supply costs have remained steady. 

Finally, in examining non-reimbursable 

costs, we found that 26 percent of 

providers in 2010 showed no 

bereavement costs on their cost report, 

even though bereavement services are 

required by statute; it is unclear if 

bereavement services were not provided 

or if bereavement costs were not 

correctly reported. 

The report also describes an analysis 

of GIP utilization. In 2010 through 2011, 

a quarter of all hospice beneficiaries had 

at least one GIP stay, with a quarter of 

those stays associated with cancer 

diagnoses. While most GIP stays were 2 

days long, the average GIP length of stay 

was 5.66 days, reflecting a small number 

of extremely long GIP stays. Sixty-five 

percent of GIP stays were provided in a 

hospice inpatient unit. Almost 80 

percent of hospices provided at least 

one GIP day in 2010 through 2011. 

Hospices that provided GIP tended to be 

older and larger. 

The Abt Hospice Study Technical 

Report also provides descriptive 

statistics for all beneficiaries and for 3 

major sites of routine home care 

services. It includes visit data findings, 

including visits per day, visits per 

beneficiary, minutes per day, and 

minutes per beneficiary for key 

disciplines reported on hospice claims. 

Additionally, there are several figures 

which depict the U-shaped curve for 

key personnel by length of stay. The 

curves show that resource use tends to 

follow a U-shaped curve, but one which 

is higher at the beginning rather than at 

the end of the hospice stay. There was 

little evidence that strong differences in 

the U-shape exist across most subgroups 

(for example, freestanding vs. providerbased, ownership status, patient 

diagnosis). 

For more detailed information on 

these findings, and a description of the 

methods used, see the Abt Hospice 

Study Technical Report, which is 

posted on the hospice center Web page 

(http://www.cms.gov/Center/ProviderType/Hospice-Center.html). We have 

also posted a review of pertinent 

hospice literature as of December 2012 

on the hospice center Web page. This 

should be considered an evolving 

document, as Abt Associates updates 


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the review periodically. We encourage 

interested stakeholders to review this 

update on our progress. We will 

continue to collaborate with other 

federal experts regarding hospice 

payment reform research efforts and to 

update stakeholders on our progress on 

hospice payment reform. 

3. Additional Data Collection 

Over the past several years, MedPAC, 

the Government Accountability Office 

(GAO), and the HHS Office of Inspector 

General (OIG) have also recommended 

that we collect more comprehensive 

data in order to better understand the 

utilization of the Medicare Hospice 

Benefit. In the proposed rule, we noted 

that in December 2012 we posted a 

document to our Hospice Center Web 

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

Provider-Type/Hospice-Center.html) 

describing additional data collection 

which we are considering, and noting 

that cost report revisions are 

forthcoming. We received 65 comments 

about the claims data collection items 

under consideration, which are briefly 

summarized below. 

• Line item visit data, including 

length of visit in 15-minute increments, 

for hospice chaplains and counselors 

providing care to hospice beneficiaries. 

Commenters were supportive, but 

suggested we include phone calls by 

chaplains and counselors, and allow 

reporting of chaplain time spent 

officiating or attending beneficiary 

funerals, as this is part of their service 

to families. A few suggested that we 

have a separate category for 

Bereavement Counseling to 

acknowledge this requirement even if it 

is not subject to reimbursement. Several 

suggested we define ‘‘other counselors.’’ 

• Line item visit data, including 

length of visits in 15-minute increments, 

for hospice staff providing care to 

hospice patients receiving GIP in a 

hospital or nursing facility, but not for 

hospice patients receiving GIP in a 

hospice facility. Our suggestion to 

collect GIP visit data did not include 

visits by non-hospice staff, and was 

focused on patients in a hospital or 

nursing facility only. Therefore, GIP 

visits to hospice patients in hospice 

inpatient facilities continue to be 

reported as weekly totals, without 

including the length of visits. 

Commenters were generally supportive, 

provided the visits were for hospice 

staff only. Several comments noted that 

this would be no more difficult than 

what already occurs when recording 

visits to patients’ homes. 

• The National Provider Identifier 

(NPI) of facilities where hospice patients 

are receiving care. Most commenters 

noted that it would not be difficult to 

get this information and enter it into 

their systems. A few commenters noted 

that sometimes patients are in more 

than one facility type during a claim 

period, but that there is only space for 

one NPI on the claim. 

• Post-mortem visits on the calendar 

day of death. Commenters suggested we 

collect visit data for various timeframes 

after the time of death, rather than the 

calendar day of death, since many 

deaths occur late at night. They 

suggested we clarify what we mean by 

time of death (time death actually 

occurs, or time the death is 

pronounced). Several commenters 

suggested we gather post-mortem visit 

data regardless of level of care or site of 

service. 

• Any durable medical equipment 

(DME) provided by the hospice. Some 

commenters indicated that this would 

be difficult to collect and record on 

claims. Many indicated that DME 

suppliers bill them monthly, and 

waiting for the DME invoice would 

cause a delay in submission of their 

claims. They also noted that it would 

take a great deal of lead time to set this 

up with suppliers and software vendors 

to track DME at the patient level. A few 

suggested that we use aggregate data on 

DME costs from the cost reports instead. 

• Non-routine supplies provided by 

the hospice. Most commenters indicated 

that this would be difficult to collect 

and record on claims. A number of 

commenters wrote that their software 

does not accommodate such reporting, 

and that it would create an additional 

burden on clinical staff to track these 

items. Several mentioned that it would 

take some lead time to modify existing 

systems to enable hospices to track and 

report this information accurately. A 

few suggested we use aggregate data on 

non-routine supplies from the cost 

reports instead. 

• Drugs (injectable, non-injectable, 

and over-the-counter) provided by the 

hospice. Most commenters indicated 

that this would be difficult to collect 

and record on claims. Several asked if 

injectable drugs include infusion 

pumps, which is considered DME. 

Several commenters noted that the 

hospice staff person is not always the 

person administering drugs, making 

tracking more complicated; they 

suggested focusing on the fills, rather 

than drugs administered. Some wrote 

that hospices get their drugs from 

multiple pharmacies, making reporting 

more difficult due to inconsistencies in 

pharmacy billing. Others wrote that 

their data systems are not able to track 

drugs by patient, and suggested that we 

use aggregate data from the cost reports 

instead. Some noted that they purchase 

some drugs in larger quantities, making 

reporting at the patient level more 

complicated. A few noted that this 

could be done, but said that hospices 

would need lead time to prepare 

systems to track and report at the 

patient level. One suggested that we 

specify what cost structure drug charges 

should be based upon, such as average 

wholesale price plus a percentage. 

In summary, commenters were largely 

supportive of our suggestions to collect 

additional visit and NPI data on claims. 

Many suggested collecting data on DME, 

supplies, and drugs from the cost 

reports, rather than at the patient level. 

Several commenters reminded us that 

their primary focus is patient care, and 

were concerned about the cost of such 

data collection. We appreciate the 

comments submitted, and will consider 

this input as we move forward towards 

implementing any new data collection 

for hospices. We issued Change Request 

8358 on Friday, July 26, 2013 detailing 

the new data collection requirements. 

Section 3132(a)(1)(C) of the 

Affordable Care Act also authorizes us 

to collect more data on hospice cost 

reports. The revisions to the hospice 

cost report and its associated 

instructions are described in detail in a 

revision to the information collection 

request currently approved under OMB 

control number 0938–0758. As required 

by the Paperwork Reduction Act, we 

published the both 60-day and 30-day 

notices with comment periods in the 

Federal Register on April 29, 2013 (78 

FR 25089). 

The proposed rule did not solicit 

comments on our hospice payment 

reform updates and discussions, but we 

received 54 comments on this section. 

We thank the commenters for their 

input and we will consider the 

comments received as we move forward 

with hospice payment reform. 

E. Technical and Clarifying Regulations 

Text Change 

We proposed to incorporate the 

following technical change to correct an 

erroneous cross reference in our 

regulations text. 

Administrative Appeals (§ 418.311) 

A hospice that does not believe its 

payments have been properly 

determined may request a review from 

the intermediary or from the Provider 

Reimbursement Review Board (PRRB), 

depending on the amount in 

controversy. Section 418.311 details the 

procedures for appealing a payment 

decision and also refers to 42 CFR part 

405, subpart R. The rationale for this 

appeals process was explained in the 


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9 14 minutes of time by a Registered Nurse at 

$33.23/60 minutes per hour = $0.56; $0.56 per one 

minute × 5 minutes = $7.75. 

10 5 minutes of time by a Medical Data Entry 

Clerk at $15.59/60 minutes per hour = $0.265; 

$0.265 per one minute × 5 minutes = $1.30. 

August 22, 1983 Hospice proposed rule 

(48 FR 38146) and finalized in the 

December 16, 1983 Hospice final rule 

(48 FR 56008). Hospices are permitted 

to appeal computation of the payment 

limit or the amount due to the hospice 

to the PRRB if the amount in 

controversy is $10,000 or more. 

We made a technical correction in 

§ 418.311 to correct an erroneous 

reference to § 405.1874. The published 

reference to § 405.1874 does not exist 

and was a typographic error. We are 

correcting this error by changing the 

referenced § 405.1874 to § 405.1875— 

Administrator review. Section 405.1875 

allows for the Administrator, at his or 

her discretion, to immediately review 

any decision of the Board as described 

in the August 22, 1983 proposed and 

December 16, 1983 final rules (48 FR 

38159, and 48 FR 56019, respectively). 

We received no comments on this 

proposed technical correction, and are 

implementing the correction as 

proposed. 

V. Collection of Information 

Requirements 

Under the Paperwork Reduction Act 

of 1995, we are required to provide 60- 

day notice in the Federal Register and 

solicit public comment before a 

collection of information requirement is 

submitted to the Office of Management 

and Budget (OMB) for review and 

approval. In order to fairly evaluate 

whether an information collection 

should be approved by OMB, section 

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

Reduction Act of 1995 requires that we 

solicit comment on the following issues: 

• The need for the information 

collection and its usefulness in carrying 

out the proper functions of our agency. 

• The accuracy of our estimate of the 

information collection burden. 

• The quality, utility, and clarity of 

the information to be collected. 

• Recommendations to minimize the 

information collection burden on the 

affected public, including automated 

collection techniques. 

We solicited public comment on each 

of these issues for this section of this 

document that contains information 

collection requirements (ICRs). 

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

requires that each hospice submit data 

to the Secretary on quality measures 

specified by the Secretary. Such data 

must be submitted in a form and 

manner, and at a time specified by the 

Secretary. Under section 

1814(i)(5)(D)(iii) of the Act, the 

Secretary must publish selected 

measures that will be applicable with 

respect to FY 2014 not later than 

October 1, 2012. In implementing the 

Hospice quality reporting program, we 

seek to collect measure information 

with as little burden to the providers as 

possible and which reflects the full 

spectrum of quality performance. 

We proposed and will implement a 

Hospice Experience of Care Survey to 

reflect the patients’ families’ and 

friends’ perspectives of care in hospices. 

The 60-day notice for the field test of 

the survey was published on April 4, 

2013 (78 FR 20323) under CMS–10475 

(OCN 0938-New). While we set out the 

requirements and burden estimates for 

the field study, it is too early to set out 

the requirements and burden estimates 

for the national implementation of the 

survey. We anticipate having the final 

survey instrument in 2014 and setting 

out the collection of information 

requirements and burden estimates in 

the proposed rule for CY 2015. We will 

implement the survey in 2015. 

In this final rule we are requiring 

implementation of a hospice patientlevel item set to be used by all hospices 

to collect and submit standardized data 

on each patient admitted to hospice. 

This Hospice Item Set will be used to 

support the standardized collection of 

the requisite data elements to calculate 

quality measures. Hospices will be 

required to complete and submit an 

admission HIS and a discharge HIS on 

all patients admitted to hospice starting 

July 1, 2014 for FY 2016 APU 

determination. The admission and 

discharge HIS will collect the 

standardized data elements needed to 

calculate 7 NQF endorsed measures for 

hospice. 

Using 2011 Medicare claims data we 

have estimated that there will be 

approximately 1,089,719 admissions 

across all hospices per year and 

therefore, we expect that there should 

be 1,089,719 Hospice Item Sets 

(consisting of one admission and one 

discharge item set per patient), 

submitted across all hospices yearly. 

There were 3,742 certified hospices in 

the U.S. as of October 1, 2012; we 

estimate that each individual hospice 

will submit on average 291 Hospice 

Item Sets annually or 24 Hospice Items 

Sets per month. 

The Hospice Item Set consists of both 

an admission and a discharge data 

collection. As noted above, we estimate 

that there will be 1,089,719 hospice 

admissions across all hospices per year. 

Therefore, we expect there to be 

2,179,438 Hospice Item Set 

submissions, (both admission and 

discharge data) submitted across all 

hospices annually or 181,620 across all 

hospices monthly. We further estimate 

that there will be 582 Hospice Item Set 

submissions by each hospice annually 

or 49 submissions monthly. 

For the Admission Hospice Item Set, 

we estimate that it will take 14 minutes 

of time by a clinician such as a 

Registered Nurse at an hourly wage of 

$33.23 to abstract data for Admission 

Hospice Item Set. This will cost the 

hospice approximately $7.75 for each 

admission assessment.9 We further 

estimate that it will take 5 minutes of 

time by clerical or administrative staff 

person such as a medical data entry 

clerk or medical secretary at an hourly 

wage of $15.59 to upload the Hospice 

Item Set data into the CMS system. This 

will cost the hospice approximately 

$1.30 per assessment.10 For the 

Discharge Hospice Item Set, we estimate 

that it will take 5 minutes of time by a 

clinician such as a nurse at an hourly 

wage of $33.23 to abstract data for 

Discharge Hospice Item Set. This will 

cost the hospice approximately $2.77. 

We further estimate that it will take 5 

minutes of time by clerical or 

administrative staff such as a medical 

data entry clerk or medical secretary at 

an hourly wage of $15.59 to upload data 

into the CMS system. This will cost the 

hospice approximately $1.30. 

We estimate that the total nursing 

time required for completion of both the 

admission and discharge assessments is 

19 minutes at a rate of $33.23 per hour. 

The annualized cost across all Hospices 

for the nursing/clinical time required to 

complete both the admission and 

discharge Hospice Item sets is estimated 

to be $11,458,528 and the cost to each 

individual Hospice is estimated to be 

$3,062.14. The estimated time burden to 

hospices for a medical data entry clerk 

to complete the admission and 

discharge Hospice Item Set assessments 

is 10 minutes at a rate of $15.59 per 

hour. The cost for completion of the 

both the admission and discharge 

Hospice Item sets by a medical data 

entry clerk is estimated to be $2,829,401 

across all Hospices and $756.12 to each 

Hospice. 

The total combined time burden for 

completion of the Admission and 

Discharge Hospice Data Item Sets is 

estimated to be 29 minutes. The total 

annualized cost across all hospices is 

estimated to be $14,287,929. For each 

individual hospice, this annualized cost 

is estimated to be $3,818.26. The 

estimated cost for each individual 

Hospice Item Set submission is $13.11. 


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Comment: We received several 

comments indicating concern about 

general burden that would be associated 

with implementing and using the HIS. 

Commenters stated hospices will have 

to conduct training among staff to 

implement and use the HIS, in addition 

to staff time that will be required to 

complete and submit the HIS. 

Commenters also stated that 

implementing the HIS will require 

modifications to clinical documentation 

processes. Some commenters expressed 

concerns that implementing the HIS 

will concurrently entail both 

implementation of a new data collection 

tool and implementation of new quality 

measures. No commenters stated that 

these burdens were great enough to 

consider not implementing the HIS for 

use in the HQRP. 

Response: We recognize these 

activities and efforts will be required to 

implement and use the HIS as part of 

the quality reporting program. We agree 

that it is important for Hospices to learn 

about and understand the new HIS and 

we plan to provide hospices with 

training resources to facilitate 

implementation of the HIS. We further 

acknowledge that specific training costs 

were not identified in the proposed rule 

because calculating the training burden 

is outside the scope of the information 

collection requirements. 

Comment: A few commenters 

expressed concern that the estimated 29 

minutes to complete and upload the 

admission and discharge HIS was 

underestimated. One commenter said 

that the estimated 14 minutes for a staff 

member to extract data for the 

Admission HIS and 5 minutes for the 

Discharge HIS seemed accurate, another 

commenter indicated that, based on 

their experiences with the Home Health 

OASIS, they felt the HIS would take 

longer than the estimated time. 

Response: Burden estimates for 

completing the HIS data items were 

based on the HIS pilot test. The HIS is 

a set of data elements that can be used 

to calculate 7 NQF endorsed quality 

measures. The HIS is not a patient 

assessment that would be administered 

to the patient and/or family or 

caregivers during the initial assessment 

visits; therefore, it cannot be compared 

to the OASIS instrument. As the HIS is 

not a true patient assessment, the 

estimated burden of 14 and 5 minutes 

do not include the time a clinician 

would spend assessing the patient. The 

time estimates are intended to reflect 

the time it would take hospice staff to 

complete and submit the HIS, 

irrespective of clinical activities to 

collect initial assessment data. The HIS 

pilot demonstrated that hospices use 

varying patient assessment forms during 

the initial patient assessment; all 

hospices were able to crosswalk items 

from their hospice’s patient assessment 

forms to the HIS data elements, and 

complete the HIS items. Therefore, the 

HIS did not add new data collection 

efforts to the hospice’s customary 

patient initial assessment. 

VI. 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 

index based on the most current 

available CMS hospital wage data. This 

rule finalizes hospice payment rates for 

FY 2014. In addition, this final rule 

provides background on hospice care, 

clarifies diagnosis coding on hospice 

claims, updates the public on the status 

of hospice payment reform, finalizes a 

technical and clarifying regulatory text 

change, and finalizes changes to the 

hospice quality reporting program. 

B. Overall Impact 

The overall impact of this final rule is 

an estimated net increase in Federal 

payments to hospices of $160 million, 

or 1.0 percent, for FY 2014. This 

estimated impact on hospices is a result 

of the final hospice payment update 

percentage for FY 2014 of 1.7 percent 

and changes to the FY 2014 hospice 

wage index, including a reduction to the 

BNAF by an additional 15 percent, for 

a total BNAF reduction of 70 percent (10 

percent in FY 2010, and 15 percent per 

year for FY 2011 through FY 2014). A 

70 percent reduced BNAF is computed 

to be 0.018461 (or 1.8461 percent). The 

BNAF reduction is part of a 7-year 

BNAF phase-out that was finalized in 

the August 6, 2009 FY 2010 Hospice 

Wage Index final rule (74 FR 39384), 

and is not a policy change. 

1. 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. Also, the rule has been 

reviewed by OMB. 

2. Detailed Economic Analysis 

This final rule sets forth updates to 

the FY 2013 hospice payment rates. The 

impact analysis of this final rule 

presents the estimated expenditure 

effects of policy changes finalized in 

this rule. 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 11 represents how hospice 

revenues are likely to be affected by the 

policy changes finalized in this rule. In 

column 1 of Table 11, we indicate the 

number of hospices included in our 

analysis as of December 31, 2012, which 

had also filed claims in FY 2012. In 

column 2, we indicate the number of 

routine home care days that were 

included in our analysis, although the 

analysis was performed on all types of 

hospice care. Column 3 shows the 

percentage change in estimated 

Medicare payments for FY 2014 due to 

the effects of the updated wage data 

only, compared with estimated FY 2013 

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 

2013 to FY 2014 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 


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payments from FY 2013 to FY 2014 due 

to the combined effects of using updated 

wage data, an additional 15 percent 

BNAF reduction, and the final 1.7 

percent hospice payment update 

percentage. Taking into account the 1.7 

percent final hospice payment update 

percentage (+$280 million), the use of 

updated wage index data ($¥20 

million), and the additional 15 percent 

reduction in the BNAF ($¥100 million), 

hospice payments will increase by an 

estimated $160 ($280 million¥$20 

million ¥$100 million = $160 million) 

or 1.0 percent in FY 2014. 

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 11 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 2,594 hospices located in urban 

areas and 975 hospices located in rural 

areas. The next two row groupings in 

the table indicate the number of 

hospices by census region, also broken 

down by urban and rural hospices. The 

next grouping shows the impact on 

hospices based on the size of the 

hospice’s program. We determined that 

the majority of hospice payments are 

made at the routine home care rate. 

Therefore, we based the size of each 

individual hospice’s program on the 

number of routine home care days 

provided in FY 2012. 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. 

Column 5 of Table 11 shows the 

combined effects of the updated wage 

data, the additional 15 percent BNAF 

reduction, and the final 1.7 percent 

hospice payment update percentage on 

estimated FY 2014 payments as 

compared to estimated FY 2013 

payments. Overall, hospices are 

anticipated to experience a 1.0 percent 

increase in payment, with urban 

hospices anticipated to experience a 1.0 

percent increase in payments, and rural 

hospices anticipated to experience 1.1 

percent increase in payments. Urban 

hospices are anticipated to experience 

an increase in estimated payments in 

every region, ranging from 0.3 percent 

in the Mountain region to 2.2 percent in 

New England. Rural hospices in every 

region but one are estimated to see an 

increase in payments ranging from 0.4 

percent in New England to 1.7 percent 

in the East South Central and Outlying 

region. The Pacific region is estimated 

to see a decrease in payments of 1.2 

percent, largely due to fluctuations in 

the updated hospital wage index data 

used to create the FY 2014 hospice wage 

index. Hospital wages in the Pacific 

region declined compared to the 

previous year, which led to the decrease 

in the hospital wage index values, and 

which thus affected the FY 2014 

hospice wage index values. 

Column 5 of Table 11 also shows an 

estimated payment increase by hospice 

base and hospice size. Payments to 

hospices in FY 2014 are estimated to 

increase by 1.4 percent for HHA-based 

hospices, 1.1 percent for hospital-based 

hospices, 1.0 percent for SNF-based 

hospices, and by 0.9 percent for 

freestanding hospices. Payments to 

small hospices (less than 3,500 RHC 

days) in FY 2014 are estimated to 

increase by 0.8 percent, whereas 

payments to large hospices (more than 

20,000 RHC days) in FY 2014 are 

estimated to increase by 1.0 percent. 

TABLE 11—ANTICIPATED IMPACT ON MEDICARE HOSPICE PAYMENTS IN FY 2014 IN 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 70 PERCENT) AND APPLYING A 1.7 PERCENT HOSPICE

PAYMENT UPDATE PERCENTAGE

Number of 

hospices 

Number of 

routine home 

care days in 

thousands 

Percent 

change in hospice payments 

due to the 

wage index 

update 

Percent 

change in hospice payments 

due to wage 

index update, 

additional 15% 

reduction in 

budget neutrality adjustment 

Percent 

change in hospice payments 

due to wage 

index update, 

additional 15% 

reduction in 

budget neutrality adjustment and hospice payment 

percentage 

update 

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

ALL HOSPICES ................................................................... 3,569 62,945 ¥0.1 ¥0.7 1.0 

URBAN HOSPICES ...................................................... 2,594 55,101 ¥0.1 ¥0.7 1.0 

RURAL HOSPICES ...................................................... 975 7,844 ¥0.2 ¥0.6 1.1 

BY REGION—URBAN: 

NEW ENGLAND ........................................................... 129 1,472 1.1 0.5 2.2 

MIDDLE ATLANTIC ...................................................... 249 5,702 0.0 ¥0.6 1.1 

SOUTH ATLANTIC ....................................................... 378 13,173 ¥0.7 ¥1.3 0.4 

EAST NORTH CENTRAL ............................................. 338 7,224 0.0 ¥0.6 1.1 

EAST SOUTH CENTRAL ............................................. 155 3,278 ¥0.5 ¥1.0 0.7 

WEST NORTH CENTRAL ............................................ 197 2,494 0.4 ¥0.2 1.5 

WEST SOUTH CENTRAL ............................................ 517 6,622 ¥0.4 ¥1.0 0.7 

MOUNTAIN ................................................................... 263 5,698 ¥0.8 ¥1.4 0.3 

PACIFIC ........................................................................ 333 8,141 0.9 0.2 1.9 

OUTLYING .................................................................... 35 1,296 0.3 0.3 2.0 

BY REGION—RURAL: 

NEW ENGLAND ........................................................... 24 195 ¥0.7 ¥1.3 0.4 

MIDDLE ATLANTIC ...................................................... 43 439 ¥0.1 ¥0.7 1.0 

SOUTH ATLANTIC ....................................................... 135 1,918 ¥0.3 ¥0.7 1.0 


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TABLE 11—ANTICIPATED IMPACT ON MEDICARE HOSPICE PAYMENTS IN FY 2014 IN 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 70 PERCENT) AND APPLYING A 1.7 PERCENT HOSPICE

PAYMENT UPDATE PERCENTAGE—Continued 

Number of 

hospices 

Number of 

routine home 

care days in 

thousands 

Percent 

change in hospice payments 

due to the 

wage index 

update 

Percent 

change in hospice payments 

due to wage 

index update, 

additional 15% 

reduction in 

budget neutrality adjustment 

Percent 

change in hospice payments 

due to wage 

index update, 

additional 15% 

reduction in 

budget neutrality adjustment and hospice payment 

percentage 

update 

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

EAST NORTH CENTRAL ............................................. 138 1,154 0.4 ¥0.2 1.5 

EAST SOUTH CENTRAL ............................................. 134 1,529 0.1 0.0 1.7 

WEST NORTH CENTRAL ............................................ 182 604 ¥0.8 ¥1.2 0.5 

WEST SOUTH CENTRAL ............................................ 176 977 ¥0.1 ¥0.2 1.5 

MOUNTAIN ................................................................... 95 568 0.4 ¥0.1 1.6 

PACIFIC ........................................................................ 47 445 ¥2.2 ¥2.8 ¥1.2 

OUTLYING .................................................................... 1 15 0.0 0.0 1.7 

BY SIZE/DAYS: 

0–3499 DAYS (small) ................................................... 841 1,373 ¥0.3 ¥0.8 0.8 

3500–19,999 DAYS (medium) ...................................... 1815 17,403 ¥0.2 ¥0.7 1.0 

20,000+ DAYS (large) .................................................. 913 44,168 ¥0.1 ¥0.7 1.0 

TYPE OF OWNERSHIP: 

VOLUNTARY ................................................................ 1080 23,296 0.0 ¥0.5 1.1 

PROPRIETARY ............................................................ 2002 32,992 ¥0.3 ¥0.9 0.8 

GOVERNMENT ................................................................ 487 6,656 ¥0.1 ¥0.7 1.0 

HOSPICE BASE:2 

FREESTANDING .......................................................... 2569 50,665 ¥0.2 ¥0.8 0.9 

HOME HEALTH AGENCY ........................................... 522 7,728 0.3 ¥0.3 1.4 

HOSPITAL .................................................................... 458 4,430 0.0 ¥0.6 1.1 

SKILLED NURSING FACILITY .................................... 20 122 0.0 ¥0.7 1.0 

Source: Provider data as of December 31, 2012 for hospices with claims filed in FY 2012 (Based on the 2012 standard analytic file (SAF). 

Note(s): The final 1.7 percent hospice payment update percentage for FY 2014 is based on an estimated 2.5 percent inpatient hospital market 

basket update, reduced by a 0.5 percentage point productivity adjustment and by 0.3 percentage point; these reductions were mandated by section 3401(g) of ACA. 

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 

3. Cost Allocation of Quality Reporting 

This final rule also implements a 

hospice patient-level data set to be used 

by all hospices to collect and submit 

standardized data about each patient 

admitted to hospice. This Hospice Item 

Set will be used to support the 

standardized collection and calculation 

of quality measures, collection of the 

requisite data elements. Hospices will 

be required to complete and submit an 

admission HIS and a discharge HIS on 

all patients admitted to hospice starting 

July 1, 2014 for FY 2016 APU 

determination. The admission and 

discharge HIS will collect the 

standardized data elements needed to 

calculate 7 NQF endorsed measures for 

hospice. The total annualized cost 

across all hospices, starting July 2014, is 

estimated to be $14,287,929. 

Furthermore, the structural measure 

related to QAPI indicators and the NQF 

#0209 pain measure will no longer be 

required for the hospice quality 

reporting program beyond data 

submission for the FY 2015 payment 

determination. The original intent of the 

structural measure was for hospices to 

submit information about number, type, 

and data source of quality indicators 

used as a part of their QAPI Program. 

Data gathered as part of the structural 

measure were used to ascertain the 

breadth and context of existing hospice 

QAPI programs to inform future 

measure development activities 

including the data collection approach 

for the first year of required reporting 

(FY 2014). Please refer to section B, the 

Hospice Quality Reporting Program, for 

a detailed discussion of these programs. 

4. Alternatives Considered 

In continuing the reduction to the 

BNAF by an additional 15 percent, for 

a total BNAF reduction of 70 percent (10 

percent in FY 2010, and 15 percent per 

year for FY 2011 through FY 2014), and 

implementing the hospice payment 

update percentage and the updated 

wage index, the aggregate impact will be 

a net increase of $160 million in 

payments to hospices. In the proposed 

rule for FY 2014, 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 


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to discontinue the reduction to the 

BNAF by an additional 15 percent, 

Medicare would pay an estimated $100 

million more to hospices in FY 2014. 

The final 1.7 percent hospice payment 

update percentage for FY 2014 is based 

on a final 2.5 percent inpatient hospital 

market basket update for FY 2014, 

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). Since the 

hospice payment update percentage is 

determined based on statutory 

requirements, we did not consider not 

updating hospice payment rates by the 

payment update percentage. 

C. Accounting Statement 

As required by OMB Circular A–4 

(available at http:// 

www.whitehouse.gov/omb/circulars/ 

a004/a-4.pdf), in Table 12 below, we 

have prepared an accounting statement 

showing the classification of the 

expenditures associated with this final 

rule. Table 12 provides our best estimate 

of the increase in FY 2014 Medicare 

payments under the hospice benefit as 

a result of the changes presented in this 

final rule using data for 3,569 hospices 

in our database. In addition, the table 

presents the costs to hospice providers 

for submitting data to the Hospice Item 

Set starting in July 2014. 

TABLE 12—ACCOUNTING STATEMENT: 

CLASSIFICATION OF ESTIMATED EXPENDITURES, FROM FY 2013 TO FY 

2014 

[In $millions] 

Category Transfers 

Annualized Monetized 

Transfers.

$160. 

From Whom to Whom Federal Government 

to Hospices. 

Category Costs 

Annualized Monetized 

Costs for Hospices 

to Submit Data*.

$14.3. 

* All hospices are required to submit data for 

the Hospice Item Set starting in July of 2014. 

D. Conclusion 

In conclusion, the overall effect of this 

final rule is an estimated $160 million 

increase in Federal 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 1.7 percent. Furthermore, 

hospices are estimated to incur total 

costs of $14.3 million as a result of data 

submission requirements starting in July 

2014. Lastly, the Secretary has 

determined that this final rule will not 

have a significant impact on a 

substantial number of small entities, or 

have a significant effect relative to 

section 1102(b) of the Act. 

1. 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 $34.5 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 2014 hospice payment update 

percentage of 1.7 percent results in an 

increase in estimated hospice payments 

of 1.0 percent for FY 2014. 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 2014 hospice payment update 

percentage reflect increases in payments 

of 0.8 percent and 1.0 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. 

2. 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 2013, 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. 

Comment: We received a few 

comments on Unfunded Mandates 

Reform Act Analysis section. 

Commenters disagreed that we did not 


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Federal Register / Vol. 78, No. 152 / Wednesday, August 7, 2013 / Rules and Regulations 48281 

meet the statutory threshold of the 

Unfunded Mandates Reform Act of 

1995. A commenter stated that the total 

costs of additional staff time, 

professional consulting fees and 

software necessary to comply fully with 

the new billing; coding, quality 

reporting and survey administration 

tasks will exceed that threshold figure of 

$141 million. 

Response: The hospice benefit covers 

all care for the terminal prognosis, 

related conditions, and for the 

management of pain and symptoms. 

HIPAA, federal regulations, and the 

Medicare hospice claims processing 

manual all require that ICD–9–CM 

Coding Guidelines be applied to the 

coding and reporting of diagnoses on 

hospice claims. In our 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 CMS’ 

Hospice Claims Processing manual (Pub 

100–04, chapter 11) requires that 

hospice claims include other diagnoses 

‘‘as required by ICD–9–CM Coding 

Guidelines.’’ In the proposed rule, we 

provided guidance from the ICD–9–CM 

Official Guidelines for Coding and 

Reporting to highlight coding guidelines 

for principal and other diagnosis 

selection, as well as the various coding 

and sequencing conventions found 

therein. We are not requiring any new 

ICD–9–CM coding guidelines in this 

rule, rather we are reiterating existing 

policies and reminding providers of the 

expectations in regards to diagnostic 

coding on hospice claims. In addition, 

as indicated in section V of this final 

rule, we set out the requirements and 

burden estimates for the Hospice 

Experience of Care Survey field study 

and indicated that it is too early to set 

out the requirements and burden 

estimates for the national 

implementation of the survey. We 

anticipate having the final survey 

instrument in 2014 and setting out the 

collection of information requirements 

and burden estimates in the proposed 

rule for CY 2015. In addition, we 

provided a burden estimate for the 

Hospice Item Set that providers will be 

required to submit starting FY 2015, 

with a total annualized cost across all 

hospices estimated at $14,287,929. 

Therefore, we do not believe that any 

clarifications or requirements 

promulgated in this rule exceed the 

Unfunded Mandates Reform Act 

threshold. 

VII. Federalism Analysis and 

Regulations Text 

Executive Order 13132 on Federalism 

(August 4, 1999) establishes certain 

requirements that an agency must meet 

when it promulgates a proposed rule 

(and subsequent final rule) that imposes 

substantial direct requirement costs on 

State and local governments, preempts 

State law, or otherwise has Federalism 

implications. We have reviewed this 

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. 

List of Subjects in 42 CFR Part 418 

Health facilities, Hospice care, 

Medicare, Reporting and recordkeeping 

requirements. 

For the reasons set forth in the 

preamble, the Centers for Medicare & 

Medicaid Services proposes to amend 

42 CFR part 418 as set forth below: 

PART 418—HOSPICE CARE 

■ 1. The authority citation for part 418 

continues to read as follows: 

Authority: Secs. 1102 and 1871 of the 

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

1395hh). 

§ 418.311 [Amended] 

■ 2. Amend § 418.311 by removing the 

reference to ‘‘§ 405.1874’’ and adding in 

its place the reference ‘‘§ 405.1875’’. 

(Catalog of Federal Domestic Assistance 

Program No. 93.778, Medical Assistance 

Program) (Catalog of Federal Domestic 

Assistance Program No. 93.773, Medicare— 

Hospital Insurance; and Program No. 93.774, 

Medicare—Supplementary Medical 

Insurance Program) 

Dated: July 24, 2013. 

Marilyn Tavenner, 

Administrator, Centers for Medicare & 

Medicaid Services. 

Approved: July 30, 2013. 

Kathleen Sebelius, 

Secretary, Department of Health and Human 

Services. 

[FR Doc. 2013–18838 Filed 8–2–13; 4:15 pm] 

BILLING CODE 4120–01–P 


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