Vol. 80 Tuesday, 

No. 86 May 5, 2015 

Part III 

Department of Health and Human Services 

Centers for Medicare & Medicaid Services 

42 CFR Part 418 

Medicare Program; FY 2016 Hospice Wage Index and Payment Rate 

Update and Hospice Quality Reporting Requirements; Proposed Rule 


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25832 Federal Register / Vol. 80, No. 86 / Tuesday, May 5, 2015 / Proposed Rules 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Part 418 

[CMS–1629–P] 

RIN 0938–AS39 

Medicare Program; FY 2016 Hospice 

Wage Index and Payment Rate Update 

and Hospice Quality Reporting 

Requirements 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Proposed rule. 

SUMMARY: This proposed rule would 

update the hospice payment rates and 

the wage index for fiscal year (FY) 2016, 

including implementing the last year of 

the phase-out of the wage index budget 

neutrality adjustment factor (BNAF). 

This proposed rule also discusses recent 

hospice payment reform research and 

analyses and proposes to differentiate 

payments for routine home care (RHC) 

based on the beneficiary’s length of stay 

and to implement a service intensity 

add-on (SIA) payment for services 

provided in the last 7 days of a 

beneficiary’s life, if certain criteria are 

met. In addition, this rule would 

implement changes to the aggregate cap 

calculation mandated by the Improving 

Medicare Post-Acute Care 

Transformation Act of 2014 (IMPACT 

Act), align the cap accounting year for 

both the inpatient cap and the hospice 

aggregate cap with the federal fiscal year 

starting in FY 2017, make changes to the 

hospice quality reporting program, and 

would include a clarification regarding 

diagnosis reporting on the hospice 

claim. 

DATES: To be assured consideration, 

comments must be received at one of 

the addresses provided below, no later 

than 5 p.m. on June 29, 2015. 

ADDRESSES: In commenting, please refer 

to file code CMS–1629–P. Because of 

staff and resource limitations, we cannot 

accept comments by facsimile (FAX) 

transmission. 

You may submit comments in one of 

four ways (please choose only one of the 

ways listed): 

1. Electronically. You may submit 

electronic comments on this regulation 

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

the ‘‘Submit a comment’’ instructions. 

2. By regular mail. You may mail 

written comments to the following 

address ONLY: 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, Attention: CMS– 

1629–P, P.O. Box 8010, Baltimore, 

MD 21244–8010. 

Please allow sufficient time for mailed 

comments to be received before the 

close of the comment period. 

3. By express or overnight mail. You 

may send written comments to the 

following address ONLY: 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, Attention: CMS– 

1629–P, Mail Stop C4–26–05, 7500 

Security Boulevard, Baltimore, MD 

21244–1850. 

4. By hand or courier. Alternatively, 

you may deliver (by hand or courier) 

your written comments ONLY to the 

following addresses prior to the close of 

the comment period: 

a. For delivery in Washington, DC— 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, Room 445–G, Hubert 

H. Humphrey Building, 200 

Independence Avenue SW., 

Washington, DC 20201. 

(Because access to the interior of the 

Hubert H. Humphrey Building is not 

readily available to persons without 

Federal government identification, 

commenters are encouraged to leave 

their comments in the CMS drop slots 

located in the main lobby of the 

building. A stamp-in clock is available 

for persons wishing to retain a proof of 

filing by stamping in and retaining an 

extra copy of the comments being filed.) 

b. For delivery in Baltimore, MD— 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, 7500 Security 

Boulevard, Baltimore, MD 21244– 

1850. 

If you intend to deliver your comments 

to the Baltimore address, call telephone 

number (410) 786–9994 in advance to 

schedule your arrival with one of our 

staff members. 

Comments erroneously mailed to the 

addresses indicated as appropriate for 

hand or courier delivery may be delayed 

and received after the comment period. 

For information on viewing public 

comments, see the beginning of the 

SUPPLEMENTARY INFORMATION section. 

FOR FURTHER INFORMATION CONTACT: 

Debra Dean-Whittaker, (410) 786–0848 

for questions regarding the CAHPS®

Hospice Survey. Michelle Brazil, (410) 

786–1648 for questions regarding the 

hospice quality reporting program. For 

general questions about hospice 

payment policy please send your 

inquiry via email to: hospicepolicy@

cms.hhs.gov. 

SUPPLEMENTARY INFORMATION: 

Wage index addenda will be available 

only through the internet on the CMS 

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

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

Inspection of Public Comments: All 

comments received before the close of 

the comment period are available for 

viewing by the public, including any 

personally identifiable or confidential 

business information that is included in 

a comment. We post all comments 

received before the close of the 

comment period on the following Web 

site as soon as possible after they have 

been received: http://

www.regulations.gov. Follow the search 

instructions on that Web site to view 

public comments. 

Comments received timely will also 

be available for public inspection as 

they are received, generally beginning 

approximately 3 weeks after publication 

of a document, at the headquarters of 

the Centers for Medicare & Medicaid 

Services, 7500 Security Boulevard, 

Baltimore, Maryland 21244, Monday 

through Friday of each week from 8:30 

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

appointment to view public comments, 

phone 1–800–743–3951. 

Table of Contents 

I. Executive Summary 

A. Purpose 

B. Summary of the Major Provisions 

C. Summary of Costs, Benefits, and 

Transfers 

II. Background 

A. Hospice Care 

B. History of the Medicare Hospice Benefit 

C. Services Covered by the Medicare 

Hospice Benefit 

D. Medicare Payment for Hospice Care 

1. Omnibus Budget Reconciliation Act of 

1989 

2. Balanced Budget Act of 1997 

3. FY 1998 Hospice Wage Index Final Rule 

4. FY 2010 Hospice Wage Index Final Rule 

5. The Affordable Care Act 

6. FY 2012 Hospice Wage Index Final Rule 

7. FY 2015 Hospice Rate Update Final Rule 

8. Impact Act of 2014 

E. Trends in Medicare Hospice Utilization 

III. Provisions of the Proposed Rule 

A. Hospice Payment Reform: Research and 

Analyses 

1. Pre-Hospice Spending 

2. Non-Hospice Spending for Hospice 

Beneficiaries During an Election 

3. Live Discharge Rates 

B. Proposed Routine Home Care Rates and 

Service Intensity Add-On (SIA) Payment 

1. Background and Statutory Authority 

a. U-Shaped Payment Model 

b. Tiered Payment Model 

c. Visits During the Beginning and End of 

a Hospice Election 

2. Proposed Routine Home Care Rates 

3. Proposed Service Intensity Add-on 

Payment 


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C. Proposed FY 2016 Hospice Wage Index 

and Rates Update 

1. Proposed FY 2016 Hospice Wage Index 

a. Background 

b. Elimination of the Wage Index Budget 

Neutrality Factor (BNAF) 

c. Proposed Implementation of New Labor 

Market Delineations 

2. Proposed Hospice Payment Update 

Percentage 

3. Proposed FY 2016 Hospice Payment 

Rates 

4. Hospice Aggregate Cap and the IMPACT 

Act of 2014 

D. Proposed Alignment of the Inpatient 

and Aggregate Cap Accounting Year with 

the Federal Fiscal Year 

1. Streamlined Method and Patient-byPatient Proportional Method for 

Counting Beneficiaries to Determine 

Each Hospice’s Aggregate Cap Amount 

2. Proposed Inpatient and Aggregate Cap 

Accounting Year Timeframe 

E. Proposed Updates to the Hospice 

Quality Reporting Program 

1. Background and Statutory Authority 

2. General Considerations Used for 

Selection of Quality Measures for the 

HQRP 

3. Proposed Policy for Retention on HQRP 

Measures Adopted for Previous Payment 

Determination 

4. Previously Adopted Measures for FY 

2016 and FY 2017 Payment 

Determination 

5. HQRP Quality Measures and Concepts 

Under Consideration for Future Years 

6. Form, Manner, and Timing of Quality 

Data Submission 

a. Background 

b. Proposed Policy for New Facilities to 

Begin Submitting Quality Data 

c. Previously Finalized Data Submission 

Mechanism, Collection Timelines, and 

Submission Deadlines for the FY 2017 

Payment Determination 

d. Proposed Data Submission Timelines 

and Requirements for FY 2018 Payment 

Determination and Subsequent Years 

e. Proposed HQRP Data Submission and 

Compliance Thresholds for the FY 2018 

Payment Determination and Subsequent 

Years 

7. HQRP Submission Exception and 

Extension Requirements for the FY 2017 

Payment Determination and Subsequent 

Years 

8. Adoption of the CAHPS Hospice Survey 

for the FY 2017 Payment Determination 

a. Background Description of the Survey 

b. Participation Requirements to Meet 

Quality Reporting Requirements for the 

FY 2017 APU 

c. Participation Requirements to Meet 

Quality Reporting Requirements for the 

FY 2018 APU 

d. Vendor Participation Requirements for 

the FY 2017 APU Annual Payment 

Update 

9. Previously Finalized HQRP 

Reconsideration and Appeals Procedures 

for the FY 2016 Payment Determination 

and Subsequent Years 

10. Public Display of Quality Measures 

Data for HQRP 

11. Public Display of other Hospice 

Information 

F. Clarification Regarding Diagnosis 

Reporting on Hospice Claims 

1. Background 

2. Current Discussions About Hospice 

Vulnerabilities 

3. Medicare Hospice Eligibility 

Requirements 

4. Assessment of Conditions and 

Comorbidities Required by Regulation 

5. Clarification Regarding Diagnosis 

Reporting on Hospice Claims 

IV. Collection of Information Requirements 

V. Regulatory Impact Analysis 

A. Statement of Need 

B. Introduction 

C. Overall Impact 

1. Detailed Economic Analysis 

a. Effects on Hospices 

b. Hospice Size 

c. Geographic Location 

d. Type of Ownership 

e. Hospice Base 

f. Effects on Other Providers 

g. Effects on the Medicare and Medicaid 

Programs 

h. Alternatives Considered 

i. Accounting Statement 

j. Conclusion 

2. Regulatory Flexibility Act Analysis 

3. Unfunded Mandates Reform Act 

Analysis 

VI. Federalism Analysis and Regulations Text 

Acronyms 

Because of the many terms to which 

we refer by acronym in this proposed 

rule, we are listing the acronyms used 

and their corresponding meanings in 

alphabetical order below: 

APU Annual Payment Update 

ASPE Assistant Secretary of Planning and 

Evaluation 

BBA Balanced Budget Act of 1997 

BETOS Berenson-Eggers Types of Service 

BIPA Benefits Improvement and Protection 

Act of 2000 

BNAF Budget Neutrality Adjustment Factor 

BLS Bureau of Labor Statistics 

CAHPS® Consumer Assessment of 

Healthcare Providers and Systems 

CBSA Core-Based Statistical Area 

CCN CMS Certification Number 

CCW Chronic Conditions Data Warehouse 

CFR Code of Federal Regulations 

CHC Continuous Home Care 

CHF Congestive Heart Failure 

CMS Centers for Medicare & Medicaid 

Services 

COPD Chronic Obstructive Pulmonary 

Disease 

CoPs Conditions of Participation 

CPI Center for Program Integrity 

CPI–U Consumer Price Index-Urban 

Consumers 

CR Change Request 

CVA Cerebral Vascular Accident 

CWF Common Working File 

CY Calendar Year 

DME Durable Medical Equipment 

DRG Diagnostic Related Group 

ER Emergency Room 

FEHC Family Evaluation of Hospice Care 

FR Federal Register 

FY Fiscal Year 

GAO Government Accountability Office 

GIP General Inpatient Care 

HCFA Healthcare Financing Administration 

HHS Health and Human Services 

HIPPA Health Insurance Portability and 

Accountability Act 

HIS Hospice Item Set 

HQRP Hospice Quality Reporting Program 

IACS Individuals Authorized Access to 

CMS Computer Services 

ICD–9–CM International Classification of 

Diseases, Ninth Revision, Clinical 

Modification 

ICD–10–CM International Classification of 

Diseases, Tenth Revision, Clinical 

Modification 

ICR Information Collection Requirement 

IDG Interdisciplinary Group 

IMPACT Act Improving Medicare PostAcute Care Transformation Act of 2014 

IOM Institute of Medicine 

IPPS Inpatient Prospective Payment System 

IRC Inpatient Respite Care 

LCD Local Coverage Determination 

MAC Medicare Administrative Contractor 

MAP Measure Applications Partnership 

MedPAC Medicare Payment Advisory 

Commission 

MFP Multifactor Productivity 

MSA Metropolitan Statistical Area 

MSS Medical Social Services 

NHPCO National Hospice and Palliative 

Care Organization 

NF Long Term Care Nursing Facility 

NOE Notice of Election 

NOTR Notice of Termination/Revocation 

NP Nurse Practitioner 

NPI National Provider Identifier 

NQF National Quality Forum 

OIG Office of the Inspector General 

OACT Office of the Actuary 

OMB Office of Management and Budget 

PRRB Provider Reimbursement Review 

Board 

PS&R Provider Statistical and 

Reimbursement Report 

Pub. L Public Law 

QAPI Quality Assessment and Performance 

Improvement 

RHC Routine Home Care 

RN Registered Nurse 

SBA Small Business Administration 

SEC Securities and Exchange Commission 

SIA Service Intensity Add-on 

SNF Skilled Nursing Facility 

TEFRA Tax Equity and Fiscal 

Responsibility Act of 1982 

TEP Technical Expert Panel 

UHDDS Uniform Hospital Discharge Data 

Set 

U.S.C. United States Code 

I. Executive Summary for This 

Proposed Rule 

A. Purpose 

This rule proposes updates to the 

payment rates for hospices for fiscal 

year (FY) 2016, as required under 

section 1814(i) of the Social Security 

Act (the Act) and reflects the final year 

of the 7-year Budget Neutrality 

Adjustment Factor (BNAF) phase-out 

finalized in the FY 2010 Hospice Wage 

Index final rule (74 FR 39407). Our 

proposed update to payment rates for 

hospices also includes a proposal to 


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25834 Federal Register / Vol. 80, No. 86 / Tuesday, May 5, 2015 / Proposed Rules 

change the hospice wage index by 

incorporating the new Office of 

Management and Budget (OMB) corebased statistical area (CBSA) definitions, 

changes to the aggregate cap calculation 

required by section 1814(i)(2)(B)(ii) of 

the Act, and includes a proposal to align 

the cap accounting year for both the 

inpatient cap and the hospice aggregate 

cap with the federal fiscal year starting 

in FY 2017. In addition, in accordance 

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

this rule proposes to create two different 

payment rates for routine home care 

(RHC) that would result in a higher base 

payment rate for the first 60 days of 

hospice care and a reduced base 

payment rate days 61 or over of hospice 

care. Also, in accordance with section 

1814(i)(6)(d)(i) of the Act, this rule 

proposes a service intensity add-on 

(SIA) payment that would result in an 

add-on payment equal to the 

Continuous Home Care (CHC) hourly 

payment rate multiplied by the amount 

of direct patient care provided by a 

registered nurse (RN) or social worker 

provided during the last 7 days of a 

beneficiary’s life, if certain criteria are 

met. In addition, section 3004(c) of the 

Affordable Care Act established a 

quality reporting program for hospices. 

In accordance with section 1814(i)(5)(A) 

of the Act, starting in FY 2014, hospices 

that have failed to meet quality 

reporting requirements receive a 2 

percentage point reduction to their 

payment update percentage. Although 

this proposed rule does not propose 

new quality measures, it provides 

updates on the hospice quality reporting 

program. Finally, this proposed rule 

includes a clarification regarding 

diagnosis reporting on the hospice claim 

form. 

B. Summary of the Major Provisions 

Section III.A of this proposed rule 

provides an update on hospice payment 

reform research and analysis. As a result 

of the hospice payment reform research 

and analysis conducted over the past 

several years, some of which is 

described in section III.A of this 

proposed rule and in various technical 

reports available on the CMS Hospice 

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

Center/Provider-Type/HospiceCenter.html). Section III.B proposes to 

create two different payment rates for 

RHC that would result in a higher base 

payment rate for the first 60 days of 

hospice care and a reduced base 

payment rate for days 61 or over of 

hospice care. Section III.B also proposes 

SIA payment, in addition to the per 

diem rate for the RHC level of care, that 

would result in an add-on payment 

equal to the CHC hourly payment rate 

multiplied by the amount of direct 

patient care provided by a RN or social 

worker that occurred during the last 7 

days of a beneficiary’s life, if certain 

criteria were met. 

In section III.C.1 of this rule, we 

propose to update the hospice wage 

index using a 50/50 blend of the 

existing CBSA designations and the new 

CBSA designations outlined in a 

February 28, 2013, OMB bulletin. 

Section III.C.2 of this rule implements 

year 7 of the 7-year BNAF phase-out 

finalized in the FY 2010 Hospice Wage 

Index final rule (74 FR 39407). In 

section III.C.3, we propose to update the 

hospice payment rates for FY 2016 by 

1.8 percent. Section III.C.4 would 

implement changes mandated by the 

Improving Medicare Post-Acute Care 

Transformation Act of 2014 (IMPACT 

Act), in which the aggregate cap for 

accounting years that end after 

September 30, 2016 and before October 

1, 2025, would be updated by the 

hospice payment update rather than 

using the CPI–U. Specifically, the 2016 

cap year, starting on November 1, 2015 

and ending on October 31, 2016, would 

be updated by the FY 2016 percentage 

update for hospice care. In addition, in 

section III.D, we are proposing to align 

the cap accounting year for both the 

inpatient cap and the hospice aggregate 

cap with the fiscal year for FY 2017 and 

later. We believe that this would allow 

for the timely implementation of the 

IMPACT Act changes while better 

aligning the cap accounting year with 

the timeframe described in the IMPACT 

Act. 

In section III.E of this rule, we discuss 

updates to the hospice quality reporting 

program, including participation 

requirements for current year (CY) 2015 

regarding the Consumer Assessment of 

Healthcare Providers and Systems 

(CAHPS®) Hospice Survey, and remind 

the hospice industry that last year we 

set the July 1, 2014 implementation date 

for the Hospice Item Set (HIS) and the 

January 1, 2015 implementation date for 

the CAHPS® Hospice Survey. More than 

seven new quality measures will be 

derived from these tools; therefore, no 

new measures were proposed this year. 

Also, Section III.E of this rule will make 

changes related to the reconsideration 

process, extraordinary circumstance 

extensions or exemptions, hospice 

quality reporting program (HQRP) 

eligibility requirements for newly 

certified hospices and new data 

submission timeliness requirements and 

compliance thresholds. Finally, in 

Section III.F, we clarify that hospices 

must report all diagnoses of the 

beneficiary on the hospice claim as a 

part of the ongoing data collection 

efforts for possible future hospice 

refinements. We believe that reporting 

of all diagnoses on the hospice claim 

aligns with current coding guidelines as 

well as admission requirements for 

hospice certifications. 

C. Summary of Impacts 

TABLE 1—IMPACT SUMMARY TABLE

Provision 

description Transfers 

FY 2016 Hospice Wage 

Index and 

Payment 

Rate Update.

The overall economic impact 

of this proposed rule is estimated to be $200 million 

in increased payments to 

hospices during FY 2016. 

II. Background 

A. Hospice Care 

Hospice care is an approach to 

treatment that recognizes that the 

impending death of an individual 

warrants a change in the focus from 

curative care to palliative care for relief 

of pain and for symptom management. 

The goal of hospice care is to help 

terminally ill individuals continue life 

with minimal disruption to normal 

activities while remaining primarily in 

the home environment. A hospice uses 

an interdisciplinary approach to deliver 

medical, nursing, social, psychological, 

emotional, and spiritual services 

through use of a broad spectrum of 

professionals and other caregivers, with 

the goal of making the individual as 

physically and emotionally comfortable 

as possible. Hospice is compassionate 

patient and family-centered care for 

those who are terminally ill. It is a 

comprehensive, holistic approach to 

treatment that recognizes that the 

impending death of an individual 

necessitates a change from curative to 

palliative care. 

Medicare regulations define 

‘‘palliative care’’ as ‘‘patient and familycentered care that optimizes quality of 

life by anticipating, preventing, and 

treating suffering. Palliative care 

throughout the continuum of illness 

involves addressing physical, 

intellectual, emotional, social, and 

spiritual needs and to facilitate patient 

autonomy, access to information, and 

choice.’’ (42 CFR 418.3) Palliative care 

is at the core of hospice philosophy and 

care practices, and is a critical 

component of the Medicare hospice 

benefit. See also Hospice Conditions of 

Participation final rule (73 FR 32088) 

(2008). The goal of palliative care in 

hospice is to improve the quality of life 

of individuals, and their families, facing 

the issues associated with a lifethreatening illness through the 


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1Connor, Stephen. (2007). Development of 

Hospice and Palliative Care in the United States. 

OMEGA. 56(1), p89–99. 

prevention and relief of suffering by 

means of early identification, 

assessment and treatment of pain and 

other issues. This is achieved by the 

hospice interdisciplinary team working 

with the patient and family to develop 

a comprehensive care plan focused on 

coordinating care services, reducing 

unnecessary diagnostics or ineffective 

therapies, and offering ongoing 

conversations with individuals and 

their families about changes in their 

condition. It is expected that this 

comprehensive care plan will shift over 

time to meet the changing needs of the 

patient and family as the individual 

approaches the end of life. 

Medicare hospice care is palliative 

care for individuals with a prognosis of 

living 6 months or less if the terminal 

illness runs its normal course. When an 

individual is terminally ill, many health 

problems are brought on by underlying 

condition(s), as bodily systems are 

interdependent. In the June 5, 2008 

Hospice Conditions of Participation 

final rule (73 FR 32088), we stated that 

‘‘the medical director must consider the 

primary terminal condition, related 

diagnoses, current subjective and 

objective medical findings, current 

medication and treatment orders, and 

information about unrelated conditions 

when considering the initial 

certification of the terminal illness.’’ As 

referenced in our regulations at 

§ 418.22(b)(1), to be eligible for 

Medicare hospice services, the patient’s 

attending physician (if any) and the 

hospice medical director must certify 

that the individual is ‘‘terminally ill,’’ as 

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

Social Security Act (the Act) and our 

regulations at § 418.3 that is, the 

individual’s prognosis is for a life 

expectancy of 6 months or less if the 

terminal illness runs its normal course. 

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 set out at 

§ 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 at a home level of care. 

Short-term, intermittent, inpatient 

respite services are also available to the 

family of the hospice patient when 

needed to relieve the family or other 

caregivers. Additionally, an individual 

can receive continuous home care 

during a period of crisis in which an 

individual requires primarily 

continuous nursing care to achieve 

palliation or management of acute 

medical symptoms so that the 

individual can remain at home. 

Continuous home care may be covered 

on a continuous basis for as much as 24 

hours a day, and these periods must be 

predominantly nursing care in 

accordance with our regulations at 

§ 418.204. A minimum of 8 hours of 

nursing, or nursing and aide, care must 

be furnished on a particular day to 

qualify for the continuous home care 

rate (§ 418.302(e)(4)). 

Hospices are expected to comply with 

all civil rights laws, including the 

provision of auxiliary aids and services 

to ensure effective communication with 

patients or patient care representatives 

with disabilities consistent with Section 

504 of the Rehabilitation Act of 1973 

and the Americans with Disabilities Act, 

and to provide language access for such 

persons who are limited in English 

proficiency, consistent with Title VI of 

the Civil Rights Act of 1964. Further 

information about these requirements 

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

ocr/civilrights. 

B. History of the Medicare Hospice 

Benefit 

Before the creation of the Medicare 

hospice benefit, hospice programs were 

originally operated by volunteers who 

cared for the dying. During the early 

development stages of the Medicare 

hospice benefit, hospice advocates were 

clear that they wanted a Medicare 

benefit that provided all-inclusive care 

for terminally-ill individuals, provided 

pain relief and symptom management, 

and offered the opportunity to die with 

dignity in the comfort of one’s home 

rather than in an institutional setting.1

As stated in the August 22, 1983 

proposed rule entitled ‘‘Medicare 

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

‘‘the hospice experience in the United 

States has placed emphasis on home 

care. It offers physician services, 

specialized nursing services, and other 

forms of care in the home to enable the 

terminally ill individual to remain at 

home in the company of family and 

friends as long as possible.’’ The 

concept of a patient ‘‘electing’’ the 

hospice benefit and being certified as 

terminally ill were two key components 

of the legislation responsible for the 

creation of the Medicare Hospice 

Benefit (section 122 of the Tax Equity 

and Fiscal Responsibility Act of 1982 

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

of TEFRA created the Medicare Hospice 

benefit, which was implemented on 

November 1, 1983. Under sections 

1812(d) and 1861(dd) of the Act, 

codified at 42 U.S.C. 1395d(d) and 

1395x(dd), we provide coverage of 

hospice care for terminally ill Medicare 

beneficiaries who elect to receive care 

from a Medicare-certified hospice. Our 

regulations at § 418.54(c) stipulate that 

the comprehensive hospice assessment 

must identify the patient’s physical, 

psychosocial, emotional, and spiritual 

needs related to the terminal illness and 

related conditions, and address those 

needs in order to promote the hospice 

patient’s well-being, comfort, and 

dignity throughout the dying process. 

The comprehensive assessment must 

take into consideration the following 

factors: The nature and condition 

causing admission (including the 

presence or lack of objective data and 

subjective complaints); complications 

and risk factors that affect care 

planning; functional status; imminence 

of death; and severity of symptoms 

(§ 418.54(c)). The Medicare hospice 

benefit requires the hospice to cover all 

reasonable and necessary palliative care 

related to the terminal prognosis, 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. Additionally, the 

hospice Conditions of Participation 

(CoP) at § 418.56(c) require that the 

hospice must provide all reasonable and 

necessary services for the palliation and 

management of the terminal illness, 

related conditions and interventions to 

manage pain and symptoms. Therapy 

and interventions must be assessed and 

managed in terms of providing 

palliation and comfort without undue 

symptom burden for the hospice patient 


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2Paolini, DO, Charlotte. (2001). Symptoms 

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

615. 

or family.2 In the December 16, 1983 

Hospice final rule (48 FR 56010 through 

56011), regarding what is related versus 

unrelated to the terminal illness, we 

stated: ‘‘. . .we believe that the unique 

physical condition of each terminally ill 

individual makes it necessary for these 

decisions to be made on a case-by-case 

basis. It is our general view that 

hospices are required to provide 

virtually all the care that is needed by 

terminally ill patients.’’ Therefore, 

unless there is clear evidence that a 

condition is unrelated to the terminal 

prognosis; all conditions are considered 

to be related to the terminal illness. It 

is also the responsibility of the hospice 

physician to document why a patient’s 

medical needs will be unrelated to the 

terminal prognosis. 

As stated in the December 16,1983 

Hospice final rule, the fundamental 

premise upon which the hospice benefit 

was designed was the ‘‘revocation’’ of 

traditional curative care and the 

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

symptom management and 

maximization of quality of life (48 FR 

56008). After electing hospice care, the 

patient typically returns to the home 

from an institutionalized setting or 

remains in the home, to be surrounded 

by family and friends, and to prepare 

emotionally and spiritually for death 

while receiving expert symptom 

management and other supportive 

services. Election of hospice care also 

includes waiving the right to Medicare 

payment for curative treatment for the 

terminal prognosis, and instead 

receiving palliative care to manage pain 

or symptoms. 

The benefit was originally designed to 

cover hospice care for a finite period of 

time that roughly corresponded to a life 

expectancy of 6 months or less. Initially, 

beneficiaries could receive three 

election periods: Two 90-day periods 

and one 30-day period. Currently, 

Medicare beneficiaries can elect hospice 

care for two 90-day periods and an 

unlimited number of subsequent 60-day 

periods; however, the expectation 

remains that beneficiaries have a life 

expectancy of 6 months or less if the 

terminal illness runs its normal course. 

C. Services Covered by the Medicare 

Hospice Benefit 

One requirement for coverage under 

the Medicare Hospice benefit is that 

hospice services must be reasonable and 

necessary for the palliation and 

management of the terminal illness and 

related conditions. Section 1861(dd)(1) 

of the Act establishes the services that 

are to be rendered by a Medicare 

certified hospice program. These 

covered services include: Nursing care; 

physical therapy; occupational therapy; 

speech-language pathology therapy; 

medical social services; home health 

aide services (now called hospice aide 

services); physician services; 

homemaker services; medical supplies 

(including drugs and biologics); medical 

appliances; counseling services 

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

respite care and procedures necessary 

for pain control and acute or chronic 

symptom management) in a hospital, 

nursing facility, or hospice inpatient 

facility; continuous home care during 

periods of crisis and only as necessary 

to maintain the terminally ill individual 

at home; and any other item or service 

which is specified in the plan of care 

and for which payment may otherwise 

be made under Medicare, in accordance 

with Title XVIII of the Act. 

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

requires that a written plan for 

providing hospice care to a beneficiary 

who is a hospice patient be established 

before care is provided by, or under 

arrangements made by, that hospice 

program and that the written plan be 

periodically reviewed by the 

beneficiary’s attending physician (if 

any), the hospice medical director, and 

an interdisciplinary group (described in 

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

services offered under the Medicare 

hospice benefit must be available, as 

needed, to beneficiaries 24 hours a day, 

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

of the Act). Upon the implementation of 

the hospice benefit, the Congress 

expected hospices to continue to use 

volunteer services, though these 

services are not reimbursed by Medicare 

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

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

August 22, 1983 Hospice proposed rule, 

the hospice interdisciplinary group 

should be comprised of paid hospice 

employees as well as hospice volunteers 

(48 FR 38149). This expectation 

supports the hospice philosophy of 

holistic, comprehensive, compassionate, 

end-of-life care. 

Before the Medicare hospice benefit 

was established, the Congress requested 

a demonstration project to test the 

feasibility of covering hospice care 

under Medicare. The National Hospice 

Study was initiated in 1980 through a 

grant sponsored by the Robert Wood 

Johnson and John A. Hartford 

Foundations and CMS (then, the Health 

Care Financing Administration (HCFA)). 

The demonstration project was 

conducted between October 1980 and 

March 1983. The project summarized 

the hospice care philosophy and 

principles as the following: 

• Patient and family know of the 

terminal condition. 

• Further medical treatment and 

intervention are indicated only on a 

supportive basis. 

• Pain control should be available to 

patients as needed to prevent rather 

than to just ameliorate pain. 

• Interdisciplinary teamwork is 

essential in caring for patient and 

family. 

• Family members and friends should 

be active in providing support during 

the death and bereavement process. 

• Trained volunteers should provide 

additional support as needed. 

The cost data and the findings on 

what services hospices provided in the 

demonstration project were used to 

design the Medicare hospice benefit. 

The identified hospice services were 

incorporated into the service 

requirements under the Medicare 

hospice benefit. Importantly, in the 

August 22, 1983 Hospice proposed rule, 

we stated ‘‘the hospice benefit and the 

resulting Medicare reimbursement is not 

intended to diminish the voluntary 

spirit of hospices’’ (48 FR 38149). 

D. Medicare Payment for Hospice Care 

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

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

Act, and our regulations in part 418, 

establish eligibility requirements, 

payment standards and procedures, 

define covered services, and delineate 

the conditions a hospice must meet to 

be approved for participation in the 

Medicare program. Part 418, subpart G, 

provides for a per diem payment in one 

of four prospectively-determined rate 

categories of hospice care (RHC, CHC, 

inpatient respite care, and general 

inpatient care), based on each day a 

qualified Medicare beneficiary is under 

hospice care (once the individual has 

elected). This per diem payment is to 

include all of the hospice services 

needed to manage the beneficiaries’ 

care, as required by section 1861(dd)(1) 

of the Act. There has been little change 

in the hospice payment structure since 

the benefit’s inception. The per diem 

rate based on level of care was 

established in 1983, and this payment 

structure remains today with some 

adjustments, as noted below: 

1. Omnibus Budget Reconciliation Act 

of 1989 

Section 6005(a) of the Omnibus 

Budget Reconciliation Act of 1989 (Pub. 

L. 101–239) amended section 

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

the following two changes in the 


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methodology concerning updating the 

daily payment rates: (1) Effective 

January 1, 1990, the daily payment rates 

for RHC and other services included in 

hospice care were increased to equal 

120 percent of the rates in effect on 

September 30, 1989; and (2) the daily 

payment rate for RHC and other services 

included in hospice care for fiscal years 

(FYs) beginning on or after October 1, 

1990, were the payment rates in effect 

during the previous Federal fiscal year 

increased by the hospital market basket 

percentage increase. 

2. Balanced Budget Act of 1997 

Section 4441(a) of the Balanced 

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

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

of the Act to establish updates to 

hospice rates for FYs 1998 through 

2002. Hospice rates were updated by a 

factor equal to the hospital market 

basket percentage increase, minus 1 

percentage point. Payment rates for FYs 

from 2002 have been updated according 

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

Act, which states that the update to the 

payment rates for subsequent FYs will 

be the hospital market basket percentage 

increase for the FY. The Act requires us 

to use the inpatient hospital market 

basket to determine hospice payment 

rates. 

3. FY 1998 Hospice Wage Index Final 

Rule 

In the August 8, 1997 FY 1998 

Hospice Wage Index final rule (62 FR 

42860), we implemented a new 

methodology for calculating the hospice 

wage index based on the 

recommendations of a negotiated 

rulemaking committee. The original 

hospice wage index was based on 1981 

Bureau of Labor Statistics hospital data 

and had not been updated since 1983. 

In 1994, because of disparity in wages 

from one geographical location to 

another, the Hospice Wage Index 

Negotiated Rulemaking Committee was 

formed to negotiate a new wage index 

methodology that could be accepted by 

the industry and the government. This 

Committee was comprised of 

representatives from national hospice 

associations; rural, urban, large and 

small hospices, and multi-site hospices; 

consumer groups; and a government 

representative. The Committee decided 

that in updating the hospice wage 

index, aggregate Medicare payments to 

hospices would remain budget neutral 

to payments calculated using the 1983 

wage index, to cushion the impact of 

using a new wage index methodology. 

To implement this policy, a Budget 

Neutrality Adjustment Factor (BNAF) 

will be computed and applied annually 

to the pre-floor, pre-reclassified hospital 

wage index when deriving the hospice 

wage index, subject to a wage index 

floor. 

4. FY 2010 Hospice Wage Index Final 

Rule 

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

described in the August 8, 1997 Hospice 

Wage Index final rule, are subject to 

either a budget neutrality adjustment or 

application of the wage index floor. 

Wage index values of 0.8 or greater are 

adjusted by the (BNAF). Starting in FY 

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

began (August 6, 2009 FY 2010 Hospice 

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

with a 10 percent reduction in FY 2010, 

an additional 15 percent reduction for a 

total of 25 percent in FY 2011, an 

additional 15 percent reduction for a 

total 40 percent reduction in FY 2012, 

an additional 15 percent reduction for a 

total of 55 percent in FY 2013, and an 

additional 15 percent reduction for a 

total 70 percent reduction in FY 2014. 

The phase-out will continue with an 

additional 15 percent reduction for a 

total reduction of 85 percent in FY 2015, 

and an additional 15 percent reduction 

for complete elimination in FY 2016. 

We note that the BNAF is an adjustment 

which increases the hospice wage index 

value. Therefore, the BNAF reduction is 

a reduction in the amount of the BNAF 

increase applied to the hospice wage 

index value. It is not a reduction in the 

hospice wage index value or in the 

hospice payment rates. 

5. The Affordable Care Act 

Starting with FY 2013 (and in 

subsequent 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 (Pub. L. 111–148) as 

amended by the Health Care and 

Education Reconciliation Act (Pub. L. 

111–152) (collectively referred to as 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 of the Department of Health 

and Human Services (the Secretary), for 

FY 2014 and subsequent FYs. Beginning 

in FY 2014, hospices which fail to 

report quality data will have their 

market basket update reduced by 2 

percentage points. 

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

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

the Affordable Care Act, and requires, 

effective January 1, 2011, that a hospice 

physician or nurse practitioner have a 

face-to-face encounter with the 

beneficiary to determine continued 

eligibility of the beneficiary’s hospice 

care prior to the 180th-day 

recertification and each subsequent 

recertification, and to attest that such 

visit took place. When implementing 

this provision, we finalized in the CY 

2011 Home Health Prospective Payment 

System final rule (75 FR 70435) that the 

180th-day recertification and 

subsequent recertification’s 

corresponded to the beneficiary’s third 

or subsequent benefit periods. 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 RHC and other 

services included in hospice care, no 

earlier than October 1, 2013, as 

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

Act. In addition, we are required to 

consult with hospice programs and the 

Medicare Payment Advisory 

Commission (MedPAC) regarding 

additional data collection and payment 

revision options. 

6. FY 2012 Hospice Wage Index Final 

Rule 

When the Medicare Hospice benefit 

was implemented, the Congress 

included an aggregate cap on hospice 

payments, which limits the total 

aggregate payments any individual 

hospice can receive in a year. The 

Congress stipulated that a ‘‘cap amount’’ 

be computed each year. The cap amount 

was set at $6,500 per beneficiary when 

first enacted in 1983 and is adjusted 

annually by the change in the medical 


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care expenditure category of the 

consumer price index for urban 

consumers from March 1984 to March of 

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

Act). The cap year is defined as the 

period from November 1st to October 

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

FY 2012 Hospice Wage Index final rule 

(76 FR 47308 through 47314) for the 

2012 cap year and subsequent cap years, 

the hospice aggregate cap will be 

calculated using the patient-by-patient 

proportional methodology, within 

certain limits. We will allow existing 

hospices the option of having their cap 

calculated via the original streamlined 

methodology, also within certain limits. 

New hospices will have their cap 

determinations calculated using the 

patient-by-patient proportional 

methodology. The patient-by-patient 

proportional methodology and the 

streamlined methodology are two 

different methodologies for counting 

beneficiaries when calculating the 

hospice aggregate cap. A detailed 

explanation of these methods is found 

in the August 4, 2011 FY 2012 Hospice 

Wage Index final rule (76 FR 47308 

through 47314). If a hospice’s total 

Medicare reimbursement for the cap 

year exceeded the hospice aggregate 

cap, then the hospice must repay the 

excess back to Medicare. 

7. FY 2015 Hospice Rate Update Final 

Rule 

When electing hospice, a beneficiary 

waives Medicare coverage for any care 

for the terminal illness and related 

conditions except for services provided 

by the designated hospice and attending 

physician. A hospice is to file a Notice 

of Election (NOE) as soon as possible to 

establish the hospice election within the 

claims processing system. Late filing of 

the NOE can result in inaccurate benefit 

period data and leaves Medicare 

vulnerable to paying non-hospice claims 

related to the terminal illness and 

related conditions and beneficiaries 

possibly liable for any cost-sharing 

associated costs. The FY 2015 Hospice 

Rate Update final rule (79 FR 50452) 

finalized a requirement that requires the 

NOE be filed within 5 calendar days 

after the effective date of hospice 

election. If the NOE is filed beyond this 

5 day period, hospice providers are 

liable for the services furnished during 

the days from the effective date of 

hospice election to the date of NOE 

filing (79 FR 50454, 50474). Similar to 

the NOE, the claims processing system 

must be notified of a beneficiary’s 

discharge from hospice or hospice 

benefit revocation. This update to the 

beneficiary’s status allows claims from 

non-hospice providers to process and be 

paid. Upon live discharge or revocation, 

the beneficiary immediately resumes the 

Medicare coverage that had been waived 

when he or she elected hospice. The FY 

2015 Hospice Rate Update final rule 

also finalized a requirement that 

requires hospices to file a notice of 

termination/revocation within 5 

calendar days of a beneficiary’s live 

discharge or revocation, unless the 

hospices have already filed a final 

claim. This requirement helps to protect 

beneficiaries from delays in accessing 

needed care (79 FR 50509). 

A hospice ‘‘attending physician’’ is 

described by the statutory and 

regulatory definitions as a medical 

doctor, osteopath, or nurse practitioner 

whom the patient identifies, at the time 

of hospice election, as having the most 

significant role in the determination and 

delivery of his or her medical care. We 

received reports of problems with the 

identification of the patient’s designated 

attending physician and a third of 

hospice patients had multiple providers 

submit Part B claims as the ‘‘attending 

physician’’ using a modifier. The FY 

2015 Hospice Rate Update final rule 

finalized a requirement that the election 

form must include the beneficiary’s 

choice of attending physician and that 

the beneficiary provide the hospice with 

a signed document when he or she 

chooses to change attending physicians 

(79 FR 50479). 

Hospice providers are required to 

begin using a Hospice Experience of 

Care Survey for informal caregivers of 

hospice patients surveyed in 2015. The 

FY 2015 Hospice Rate Update final rule 

provided background and a description 

of the development of the Hospice 

Experience of Care Survey, including 

the model of survey implementation, 

the survey respondents, eligibility 

criteria for the sample, and the 

languages in which the survey is 

offered. The FY 2015 Hospice Rate 

Update final rule also outlined 

participation requirements for CY 2015 

and discussed vendor oversight 

activities and the reconsideration and 

appeals process (79 FR 50496). 

Finally, the FY 2015 Hospice Rate 

Update final rule requires providers to 

complete their aggregate cap 

determination within 5 months after the 

cap year, but not sooner than 3 months 

after the end of the cap year, and remit 

any overpayments. Those hospices that 

do not submit their aggregate cap 

determinations will have their payments 

suspended until the determination is 

completed and received by the Medicare 

Administrative Contractor (MAC) (79 FR 

50503). 

8. IMPACT Act of 2014 

The Improving Medicare Post-Acute 

Care Transformation Act (IMPACT Act) 

of 2014 became law on October 6, 2014 

(Pub. L. 113–185). Section 3(a) of the 

IMPACT Act mandates that all Medicare 

certified hospices be surveyed every 3 

years beginning April 6, 2015 and 

ending September 30, 2025, as it was 

found that surveys of hospices were 

being performed on an infrequent basis. 

In addition, the IMPACT Act also 

implements a provision set forth in the 

Affordable Care Act that requires 

medical review of hospice cases 

involving patients receiving more than 

180 days care in select hospices that 

show a preponderance of such patients, 

and the IMPACT Act contains a new 

provision mandating that the aggregate 

cap amount for accounting years that 

end after September 30, 2016, and 

before October 1, 2025 be updated by 

the hospice payment update rather than 

using the consumer price index for 

urban consumers (CPI–U) for medical 

care expenditures. Specifically, the 2016 

cap year, which starts on November 1, 

2015 and ends on October 31, 2016, will 

be updated by the FY 2016 payment 

update percentage for hospice care. In 

accordance with the statute, we will 

continue to do this through any cap year 

ending before October 1, 2025 (that is, 

through cap year 2025). 

E. Trends in Medicare Hospice 

Utilization 

Since the implementation of the 

hospice benefit in 1983, and especially 

within the last decade, there has been 

substantial growth in hospice 

utilization. The number of Medicare 

beneficiaries receiving hospice services 

has grown from 513,000 in FY 2000 to 

over 1.3 million in FY 2013. Similarly, 

Medicare hospice expenditures have 

risen from $2.8 billion in FY 2000 to an 

estimated $15.3 billion in FY 2013. Our 

Office of the Actuary (OACT) projects 

that hospice expenditures are expected 

to continue to increase, by 

approximately 8 percent annually, 

reflecting an increase in the number of 

Medicare beneficiaries, more beneficiary 

awareness of the Medicare Hospice 

Benefit for end-of-life care, and a 

growing preference for care provided in 

home and community-based settings. 

However, this increased spending is 

partly due to an increased average 

lifetime length of stay for beneficiaries, 

from 54 days in 2000 to 98.5 days in FY 

2013, an increase of 82 percent. 

There have also been changes in the 

diagnosis patterns among Medicare 

hospice enrollees. Specifically, there 

were notable increases between 2002 


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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 2013, ‘‘debility’’ 

and ‘‘adult failure to thrive’’ were the 

first and sixth most common hospice 

diagnoses, respectively, accounting for 

approximately 14 percent of all 

diagnoses. Effective October 1, 2014, 

hospice claims were returned to the 

provider if ‘‘debility’’ and ‘‘adult failure 

to thrive’’ were coded as the principal 

hospice diagnosis as well as other ICD– 

9–CM codes that are not permissible as 

principal diagnosis codes per ICD–9– 

CM coding guidelines. We reminded the 

hospice industry that this policy would 

go into effect and claims would start to 

be returned October 1, 2014 in the FY 

2015 hospice rate update final rule. As 

a result of this, there has been a shift in 

coding patterns on hospice claims. For 

FY 2014, the most common hospice 

principal diagnoses were Alzheimer’s 

disease, Congestive Heart Failure, Lung 

Cancer, Chronic Airway Obstruction 

and Senile Dementia which constituted 

approximately 32 percent of all claimsreported principal diagnosis codes 

reported in FY 2014 (see Table 2 below). 

TABLE 2—THE TOP TWENTY PRINCIPAL HOSPICE DIAGNOSES, FY 2002, FY 2007, FY 2013, FY 2014 

Rank ICD–9/Reported Principal Diagnosis Count Percentage 

Year: FY 2002 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Year: FY 2007 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Year: FY 2013 

1 .......................... 799.3 Debility Unspecified ...................................................................... 127,415 9 

2 .......................... 428.0 Congestive Heart Failure ............................................................. 96,171 7 

3 .......................... 162.9 Lung Cancer ................................................................................. 91,598 6 

4 .......................... 496 COPD .............................................................................................. 82,184 6 

5 .......................... 331.0 Alzheimer’s Disease ..................................................................... 79,626 6 

6 .......................... 783.7 Adult Failure To Thrive ................................................................. 71,122 5 

7 .......................... 290.0 Senile Dementia, Uncomp ........................................................... 60,579 4 

8 .......................... 429.9 Heart Disease Unspecified ........................................................... 36,914 3 

9 .......................... 436 CVA/Stroke ...................................................................................... 34,459 2 

10 ........................ 294.10 Dementia In Other Diseases w/o Behavioral Dist ..................... 30,963 2 

11 ........................ 332.0 Parkinson’s Disease ..................................................................... 25,396 2 


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3CMS Transmittal 2864, ‘‘Additional Data 

Reporting Requirements for Hospice claim’’. 

Available at http://www.cms.gov/Regulations-andGuidance/Guidance/Transmittals/Downloads/

R2864P.pdf. 

4http://www.cms.gov/Medicare/Medicare-Fee-forService-Payment/Hospice/Downloads/HospiceProject-Background.pdf. 

TABLE 2—THE TOP TWENTY PRINCIPAL HOSPICE DIAGNOSES, FY 2002, FY 2007, FY 2013, FY 2014—Continued 

Rank ICD–9/Reported Principal Diagnosis Count Percentage 

12 ........................ 153.9 Colon Cancer ............................................................................... 23,228 2 

13 ........................ 294.20 Dementia Unspecified w/o Behavioral Dist ................................ 23,224 2 

14 ........................ 174.9 Breast Cancer .............................................................................. 23,059 2 

15 ........................ 157.9 Pancreatic Cancer ........................................................................ 22,341 2 

16 ........................ 185 Prostate Cancer .............................................................................. 21,769 2 

17 ........................ 585.6 End-Stage Renal Disease ............................................................ 19,309 1 

18 ........................ 518.81 Acute Respiratory Failure ........................................................... 15,965 1 

19 ........................ 294.8 Other Persistent Mental Dis.—classified elsewhere .................... 14,372 1 

20 ........................ 294.11 Dementia In Other Diseases w/Behavioral Dist ......................... 13,687 1 

Year: FY 2014 

1 .......................... 331.0 Alzheimer’s disease ..................................................................... 127,438 9 

2 .......................... 428.0 Congestive heart failure, unspecified ........................................... 106,570 8 

3 .......................... 162.9 Lung Cancer ................................................................................. 89,726 6 

4 .......................... 496 COPD .............................................................................................. 78,643 6 

5 .......................... 290.0 Senile dementia, uncomplicated .................................................. 40,120 3 

6 .......................... 429.9 Heart disease, unspecified ........................................................... 36,929 3 

7 .......................... 436 CVA/Stroke ...................................................................................... 33,466 2 

8 .......................... 294.20 Dementia, unspecified, without behavioral disturbance ............. 33,119 2 

9 .......................... 332.0 Parkinson’s Disease ..................................................................... 30,070 2 

10 ........................ 153.9 Colon Cancer ............................................................................... 23,385 2 

11 ........................ 174.9 Breast Cancer .............................................................................. 23,343 2 

12 ........................ 157.9 Pancreatic Cancer ........................................................................ 22,521 2 

13 ........................ 185 Prostate Cancer .............................................................................. 22,136 2 

14 ........................ 585.6 End stage renal disease .............................................................. 21,467 2 

15 ........................ 294.10 Dementia in conditions classified elsewhere w/o behav disturbance.19,523 1 

16 ........................ 331.2 Senile degeneration of brain ........................................................ 18,660 1 

17 ........................ 518.81 Acute respiratory failure ............................................................. 17,347 1

18 ........................ 290.40 Vascular dementia, uncomplicated ............................................ 17,220 1 

19 ........................ 491.21 Obstructive chronic bronchitis with (acute) exacerbation .......... 15,985 1 

20 ........................ 429.2 Cardiovascular disease, unspecified ............................................ 14,186 1 

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

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

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

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

accessed on January 26, 2015. 

III. Provisions of the Proposed Rule 

A. Hospice Payment Reform Research 

and Analyses 

In 2010, the Congress amended 

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

section 3132(a) of the Affordable Care 

Act. The amendment authorizes the 

Secretary to collect additional data and 

information determined appropriate to 

revise payments for hospice care and for 

other purposes. The data collected may 

be used to revise the methodology for 

RHC and other hospice services (in a 

budget-neutral manner in the first year), 

no earlier than October 1, 2013, as 

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

Act. The Secretary is required to consult 

with hospice programs and the MedPAC 

regarding additional data collection and 

payment reform options. 

Since 2010, we have undertaken 

efforts to collect the data needed to 

establish what revisions to the 

methodology for determining the 

hospice payment rates may be 

necessary. Effective April 1, 2014, we 

began requiring additional information 

on hospice claims regarding drugs and 

certain durable medical equipment and 

effective October 1, 2014, we finalized 

changes to the hospice cost report to 

improve data collection on the costs of 

providing hospice care.3 In addition, 

our research contractor Abt Associates 

conducted a hospice literature review; 

held stakeholder meetings; and 

developed and maintained an analytic 

plan, which supports effort towards 

implementing hospice payment reform. 

During the stakeholder meetings, 

attendees articulated concerns of 

sweeping payment reform changes and 

encouraged us to consider incremental 

steps or to use existing regulatory 

authority to refine the hospice program. 

We also held five industry technical 

expert panels (TEPs) via webinar and inperson meetings; consulted with federal 

hospice experts; provided annual 

updates on findings from our research 

and analyses and reform options in the 

FY 2014 and FY 2015 Hospice Wage 

Index and Payment Rate Update 

proposed and final rules (78 FR 48234 

and 79 FR 50452); and updated the 

hospice industry on reform work 

through Open Door Forums, industry 

conferences and academic conferences.4

We have taken into consideration the 

recommendations from MedPAC on 

reforming hospice payment, as 

articulated in the MedPAC Reports to 

Congress since 2009. The MedPAC 

recommendations and research 

provided a foundation for our 

development of an analytic plan and 

additional payment reform concepts. 

Furthermore, MedPAC participated in 

post-TEP meeting briefings with other 

federal hospice experts. These meetings 

provided valuable feedback regarding 

the TEP’s comments and discussed 


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5Subcommittee of Health of the Committee of 

Ways and Means, House of Representatives, March 

25, 1982. 

6Mor V. Masterson-Allen S. (1987): Hospice care 

systems: Structure, process, costs and outcome. 

New York: Springer Publishing Company. 

7Fogel, Richard. (1983): Comments on the 

Legislative Intent of Medicare’s Hospice Benefit 

(GAO/HRD–83–72). 

8Connor, S. (2007). Development of Hospice and 

Palliative Care in the Unites States. OMEGA. 56(1), 

89–99. doi:102190/OM.5.1.h. 

potential research and analyses to 

consider for hospice payment reform. 

The FY 2012 Hospice Wage Index 

final rule (76 FR 47324) noted our 

collaboration with the Assistant 

Secretary of Planning and Evaluation 

(ASPE) to develop analyses that were 

used to inform our research efforts. The 

results from such analyses were used by 

Abt Associates to facilitate discussion, 

in 2012, of potential payment reform 

options and to guide the identification 

of topics for further analysis. In early 

2014, we began working with Acumen, 

LLC, using real-time claims data, to 

monitor the vulnerabilities identified in 

the 2013 and 2014 Abt Associates’ 

Hospice Payment Reform Technical 

Reports. On September 18, 2014, the 

IMPACT Act, mandated that the Centers 

for Medicare & Medicaid (CMS) 

undertake additional hospice 

monitoring and oversight activities. As 

noted previously, the IMPACT Act 

requires CMS to survey hospices at least 

as frequently as every 3 years for the 

next 10 years and review medical 

records of hospice beneficiaries on the 

hospice benefit for 180 days or greater 

as specified by the Secretary. CMS is 

actively engaged in cross-agency 

collaboration to meet the intent of the 

IMPACT Act to increase monitoring and 

oversight of hospice providers. 

The majority of the research and 

analyses conducted by CMS and 

summarized in this rule were based on 

analyses of FY 2013 Medicare claims 

and cost report data conducted by our 

research contractor, Abt Associates, 

unless otherwise specified. In addition, 

we cite research and analyses, 

conducted by Acumen, LLC that are 

based on real-time claims data from the 

Integrated Data Repository (IDR). In the 

sections below, analysis conducted on 

pre-hospice spending, non-hospice 

spending for hospice beneficiaries 

during a hospice election, and live 

discharge rates highlight potential 

vulnerabilities of the Medicare hospice 

benefit. 

1. Pre-Hospice Spending 

In 1982, the Congress introduced 

hospice into the Medicare program as an 

alternative to aggressive treatment at the 

end of life. During the development of 

the benefit, multiple testimonies from 

industry leaders and hospice families, it 

was reported that hospices provided 

high-quality, compassionate and 

humane care while also offering a 

reduction in Medicare costs.5

Additionally, a Congressional Budget 

Office (CBO) study asserted that hospice 

care would result in sizable savings over 

conventional hospital care.6 Those 

savings estimates were based on a 

comparison of spending in the last 6 

months of life for a cancer patient not 

utilizing hospice care versus the cost of 

hospice care for the 6 months preceding 

death.7 The original language for section 

1814(i) of the Act (prior to August 29, 

1983) set the hospice aggregate cap 

amount at 40 percent of the average 

Medicare per capita expenditure 

amount for cancer patients in the last 6 

months of life. When the hospice benefit 

was created, the average lifetime length 

of stay for a hospice patient was 

between 55 and 75 days. Since the 

implementation of the Medicare hospice 

benefit, the principal diagnosis for 

patients electing the hospice benefit has 

changed from primarily cancer 

diagnoses in 1983 to primarily noncancer diagnoses in FY 2014.8

Alzheimer’s disease and Congestive 

Heart Failure (CHF) were the most 

reported principal diagnoses comprising 

17 percent of all diagnoses reported (see 

Table 2 in section II.E) in FY 2014. 

Analysis was conducted to evaluate 

pre-hospice spending for beneficiaries 

who ever used hospice that died in FY 

2013. To evaluate pre-hospice spending, 

we calculated the median daily 

Medicare payments for such 

beneficiaries for the 180 days, 90 days, 

and 30 days prior to electing hospice 

care. We then categorized patients 

according to the principal diagnosis 

reported on the hospice claim. The 

analysis revealed that for some patients, 

the Medicare payments in the 180 days 

prior to the hospice election were lower 

than Medicare payments associated 

with hospice care once the benefit was 

elected (see Table 3 and Figure 1 

below). Specifically, median Medicare 

spending for a beneficiary with a 

diagnosis of Alzheimer’s disease, nonAlzheimer’s dementia, or Parkinson’s in 

the 180 days prior to hospice admission 

(about 20 percent of patients) was 

$66.84 per day compared to the RHC 

rate of $153.45 in FY 2013 during a 

hospice election (see Table 3 below). 

Closer to the hospice admission, the 

median Medicare payments per day 

increase, as would be expected as the 

patient approaches the end of life and 

patient needs intensify. However, 30 

days prior to a hospice election, median 

Medicare spending was $105.24 for 

patients with Alzheimer’s disease, nonAlzheimer’s dementia, or Parkinson’s. 

In contrast, the median Medicare 

payments prior to hospice election for 

patients with a principal hospice 

diagnosis of cancer were $143.56 in the 

180 days prior to hospice admission and 

increased to $289.85 in the 30 days 

prior to hospice admission. The average 

length of stay for hospice elections 

where the principal diagnosis was 

reported as Alzheimer’s disease, nonAlzheimer’s Dementia, or Parkinson’s is 

greater than patient’s with other 

diagnoses, such as cancer, CVA/stroke, 

chronic kidney disease, and Chronic 

Obstructive Pulmonary Disease (COPD). 

For example, the average lifetime length 

of stay for an Alzheimer’s, nonAlzheimer’s Dementia, or Parkinson’s 

patient in FY 2013 was 119 days 

compared to 47 days for patients with 

a principal diagnosis of cancer (or in 

other words, 150 percent longer). 

TABLE 3—MEDIAN PRE-HOSPICE DAILY SPENDING ESTIMATES AND INTERQUARTILE RANGE BASED ON 180, 90, AND 30 

DAY LOOK-BACK PERIODS PRIOR TO INITIAL HOSPICE ADMISSION WITH ESTIMATES OF AVERAGE LIFETIME LENGTH

OF STAY (LOS) BY PRIMARY DIAGNOSIS AT HOSPICE ADMISSION, FY 2013 

Estimates of daily non-hospice Medicare spending prior to first hospice admission 

Mean 

lifetime 

LOS 

180 day look-back 90 day look-back 30 day look-back 

25th pct. Median 75th pct. 25th pct. Median 75th pct. 25th pct. Median 75th pct. 

All Diagnoses ................................................................ $47.04 $117.73 $240.73 $55.75 $157.89 $337.97 $57.66 $266.84 $545.44 73.8 

Alzheimer’s, Dementia, and Parkinson’s ...................... 23.39 66.84 162.60 23.06 82.00 220.12 21.02 105.24 368.30 119.3 

CVA/Stroke .................................................................... 56.18 116.86 239.30 82.32 170.40 352.74 150.21 352.41 622.23 47.4 


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TABLE 3—MEDIAN PRE-HOSPICE DAILY SPENDING ESTIMATES AND INTERQUARTILE RANGE BASED ON 180, 90, AND 30 

DAY LOOK-BACK PERIODS PRIOR TO INITIAL HOSPICE ADMISSION WITH ESTIMATES OF AVERAGE LIFETIME LENGTH

OF STAY (LOS) BY PRIMARY DIAGNOSIS AT HOSPICE ADMISSION, FY 2013—Continued 

Estimates of daily non-hospice Medicare spending prior to first hospice admission 

Mean 

lifetime 

LOS 

180 day look-back 90 day look-back 30 day look-back 

25th pct. Median 75th pct. 25th pct. Median 75th pct. 25th pct. Median 75th pct. 

Cancers ......................................................................... 62.81 143.56 265.58 78.30 188.08 360.92 81.52 289.85 569.67 47.1 

Chronic Kidney Disease ................................................ 94.78 217.46 402.10 126.41 293.18 541.41 199.01 466.25 820.78 27.3 

Heart (CHF and Other Heart Disease) ......................... 61.28 135.48 255.53 80.62 186.52 364.24 101.80 325.15 588.50 77.2 

Lung (COPD and Pneumonias) .................................... 65.53 142.78 272.13 90.68 201.02 401.12 126.51 367.68 685.17 67.5

All Other Diagnoses ...................................................... 36.00 99.80 222.25 39.45 132.88 316.15 38.96 213.84 504.57 85.3 

Source: All Medicare Parts A, B, and D claims for FY 2013 from the Chronic Conditions Data Warehouse (CCW) retrieved March, 2015. 

Note(s): Estimates drawn from FY2013 hospice decedents who were first-time hospice admissions, ages 66+ at hospice admission, admitted since 2006, and not 

enrolled in Medicare Advantage prior to admission. All payments are inflation-adjusted to September 2013 dollars using the Consumer Price Index (Medical Care; All 

Urban Consumers). 

In the FY 2014 Hospice Wage Index 

and Payment Rate Update proposed and 

final rules (78 FR 27843 and 78 FR 

48272), we discussed whether a casemix system could be created in future 

refinements to differentiate hospice 

payments according to patient 

characteristics. While we do not have 

the necessary data on the hospice claim 

form at this time to conduct more 

thorough research to determine whether 

a case-mix system is appropriate, 

analyzing pre-hospice spending was 

undertaken as an initial step in 

determining whether patients required 

different resource needs prior to hospice 

based on the principal diagnosis 

reported on the hospice claim. Table 3 

and Figure 1 above indicate that hospice 

patients with the longest length of stay 

had lower pre-hospice spending relative 

to hospice patients with shorter lengths 

of stay. These hospice patients tend to 

be those with neurological conditions, 


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9Schaller, S., Mauskopf, J., Kriza, C., Wahlster, P., 

Kolominsky-Rabas, P. (2015). The main cost drivers 

in dementia: a systematic review. International 

Journal of Geriatric Psychiatry. 15, 111–129. doi: 

10.1002/gps.4198. 

10Ayyagari, P., M. Salm, and F. Sloan. 2008. 

‘‘Effects of Diagnosed Dementia on Medicare and 

Medicaid Program Costs.’’ Inquiry 44 (Winter 2007/ 

2008): 481–94. Lamb, V., F. Sloan, and A. Nathan. 

2008. ‘‘Dementia and Medicare at Life’s End.’’ 

Health Services Research 43 (2): 714–32. 

11http://www.rand.org/pubs/external_

publications/EP20040207.html. Accessed on April 

23, 2015. 

12 Yang, Z., Zhang, K., Lin, P., Clevenger, C., & 

Atherly, A. (2012). A Longitudinal Analysis of the 

Lifetime Cost of Dementia. Health Services 

Research, 47(4), 1660–1678. doi:10.1111/j.1475– 

6773.2011.01365.x. 

13Medicare Claims Processing Manual, Chapter 

11-Processing Hospice Claims, Section 30.4-Claims 

from Medicare Advantage Organizations, B-Billing 

of Covered Services. http://www.cms.gov/

Regulations-and-Guidance/Guidance/Manuals/

downloads/clm104c11.pdf. 

14Medicare Claims Processing Manual, Chapter 

11-Processing Hospice Claims, Section 30.3-Data 

Required on the Institutional Claim to Medicare 

Contractors, Conditions Codes. http://

www.cms.gov/Regulations-and-Guidance/

Guidance/Manuals/downloads/clm104c11.pdf. 

including those with Alzheimer’s 

disease, other related dementias and 

Parkinson’s disease. Typically, these 

conditions are associated with longer 

disease trajectories, progressive loss of 

functional and cognitive abilities, and 

more difficult prognostication. Research 

has shown that the majority of dementia 

patients are cared for at home, thereby 

causing informal costs that put an 

economic burden on families rather 

than on healthcare systems.9

Additionally, research using the 

National Long-Term Care Survey 

(NLCS) merged with Medicare claims; 

researchers found that patients with 

Alzheimer’s disease and related 

conditions do not have higher Medicare 

expenditures over the last 5 years of 

their life than the non-demented 

elderly.10 Finally, research conducted 

by the RAND Corporation and 

published in the Annals of Internal 

Medicine in February of 2004 found that 

‘‘adjusted mean [Medicare] 

expenditures were 4.0 percent higher 

overall among hospice enrollees than 

among non-enrollees. Adjusted mean 

[Medicare] expenditures were 1 percent 

lower for hospice enrollees with cancer 

than for patients with cancer who did 

not use hospice. Savings were highest (7 

percent to 17 percent) among enrollees 

with lung cancer and other very 

aggressive types of cancer diagnosed in 

the last year of life. [Medicare] 

Expenditures for hospice enrollees 

without cancer were 11 percent higher 

than for non-enrollees, ranging from 20 

percent to 44 percent for patients with 

dementia and 0 percent to 16 percent for 

those with chronic heart failure or 

failure of most other organ systems’’.11

While analysis examining pre-hospice 

spending for hospice patients according 

to their diagnosis reported on the 

hospice claim has some limitations, it 

does show that, depending on the type 

of research study design selected, 

different conclusions can be drawn 

regarding the effect of Alzheimer’s 

disease and dementia on medical care 

costs.12

2. Non-Hospice Spending for Hospice 

Beneficiaries During an Election 

When a beneficiary elects the 

Medicare hospice benefit, he or she 

waives the right to Medicare payment 

for services related to the terminal 

illness and related conditions, except 

for services provided by the designated 

hospice and the attending physician as 

described in section II.D.7. However, 

Medicare payment is allowed for 

covered Medicare items or services that 

are unrelated to the terminal illness and 

related conditions (that is, the terminal 

prognosis). When a hospice beneficiary 

receives items or services unrelated to 

the terminal illness and related 

conditions from a non-hospice provider, 

that provider can bill Medicare for the 

items or services, but must include on 

the claim a GW (service not related to 

the hospice patient’s terminal 

condition) modifier (if billed on a 

professional claim),13 or condition code 

07 (if billed on an institutional claim).14

Prescription Drug Events (PDEs) 

unrelated to the terminal prognosis for 

which hospice beneficiaries are 

receiving hospice care are billed to Part 

D and do not require a modifier or a 

condition code. We reported initial 

findings on CY 2012 non-hospice 

spending during a hospice election in 

the FY 2015 Hospice Wage Index and 

Payment Rate Update final rule (79 FR 

50452). This section updates our 

analysis of non-hospice spending during 

a hospice election using FY 2013 data. 

For FY 2013, we found that Medicare 

paid $694.1 million for Part A and Part 

B items or services while a beneficiary 

was receiving hospice care. The $694.1 

million paid for Part A and Part B items 

or services was for durable medical 

equipment (6.4 percent), inpatient care 

(care in long- term care hospitals, 

inpatient rehabilitation facilities, acute 

care hospitals; 28.6 percent), outpatient 

Part B services (16.6 percent), other Part 

B services (also known as physician, 

practitioner and supplier claims, such 

as labs and diagnostic tests, ambulance 

transports, and physician office visits; 

38.8 percent), skilled nursing facility 

care (5.3 percent), and home health care 

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

hospice beneficiaries who were at home 

(56.0 percent). We also found that on 

hospice service days in which nonhospice spending occurred, 25.7 percent 

of hospice beneficiaries were in a 

nursing facility, 1.9 percent were in an 

inpatient setting, 15.1 percent were in 

an assisted living facility, and 1.3 

percent were in other settings. Although 

the average daily rate of expenditures 

outside the hospice benefit was $7.65, 

we found geographic differences where 

beneficiaries receive care. The highest 

rates per day occurred for hospice 

beneficiaries residing in West Virginia 

($13.74), Delaware ($12.76), Mississippi 

($12.31), South Florida ($12.24), and 

Texas ($12.10) 

Table 4 below details the various 

components of Part D spending for 

patients receiving hospice care. The 

portion of the $439.5 million total Part 

D spending which was paid by 

Medicare is the sum of the Low Income 

Cost-Sharing Subsidy and the Covered 

Drug Plan Paid Amount, or $347.1 

million. 

TABLE 4—DRUG COST SOURCES FOR

HOSPICE BENEFICIARIES’ FY 2013 

DRUGS RECEIVED THROUGH PART D 

Component FY 2013 expenditures 

(Patient Pay 

Amount) ............. $50,871,517 

(Low Income CostSharing Subsidy) 116,890,745 

(Other True Out-of 

Pocket Amount) 2,125,071 

(Patient Liability 

Reduction due to 

Other Payer 

Amount) ............. 6,678,561 

(Covered Drug 

Plan Paid 

Amount) ............. 230,216,153 

(Non-Covered Plan 

Paid Amount ..... 28,733,518 

(Six Payment 

Amount Totals) .. 435,515,566 

(Unknown/

Unreconciled) .... 3,945,667 

(Gross Total Drug 

Costs, Reported) 439,461,233 

Source: Abt Associates analysis of 100% 

FY 2013 Medicare Claim Files. For more information on the components above and on Part 

D data, go to the Research Data Assistance 

Center’s (ResDAC’s) Web site at: http://

www.resdac.org/. 

Non-hospice Medicare expenditures 

occurring during a hospice election in 

FY 2013 were $694.1 million for Parts 

A and B spending plus $347.1 million 

for Part D spending, or approximately 

$1 billion dollars total. This figure is 

comparable to the estimated $1 billion 

MedPAC reported during its December 


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15MedPAC, ‘‘Assessing payment adequacy and 

updating payments: hospice services’’, December 13 

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

documents/december-2013-meeting-transcript.pdf. 

16 oig.hhs.gov/oas/region6/61000059.pdf 

‘‘Medicare Could Be Paying Twice for Prescriptions 

For Beneficiaries in Hospice’’. 

17The case studies were developed using CY 

2013 claims data for only those beneficiaries with 

Parts A, B and D coverage throughout their hospice. 

In identifying services that overlapped with a 

hospice election, we used two methods. The first 

method identified a match between the first three 

diagnosis codes of the hospice claim and the 

diagnosis codes of the overlapping services in the 

Part A, Part B, and Part D claim for the same 

beneficiary. The second method identified a match 

between the hospice diagnoses and the diagnosis 

codes of the overlapping services in the Part A, Part 

B and Part D based on a diagnosis code on the 

overlapping claim and any diagnosis on the hospice 

claim mapping to the same Healthcare Cost and 

Utilization Project (HCUP). 

18 DMEPOS HCPCS codes are summarized by 

Berenson-Eggers Types of Service (BETOS) 

categories. BETOS categories were developed by the 

American Medical Association (AMA) and 

aggregate HCPCS codes into clinically coherent 

groups. 

2013 public meeting.15 Associated with 

this $1 billion in Medicare spending 

were cost sharing liabilities such as copayments and deductibles that 

beneficiaries incurred. Hospice 

beneficiaries had $132.5 million in costsharing for items and services that were 

billed to Medicare Parts A and B, and 

$50.9 million in cost-sharing for drugs 

that were billed to Medicare Part D, 

while they were in a hospice election. 

In total, this represents an FY 2013 

beneficiary liability of $183.4 million 

for Parts A, B, and D items or services 

provided to hospice beneficiaries during 

a hospice election. Therefore, the total 

non-hospice costs paid by Medicare or 

beneficiaries for items or services 

provided to hospice beneficiaries during 

a hospice election were over $1.2 billion 

in FY 2013. 

In a recent report, the HHS Office of 

Inspector General (OIG) identified 

instances where Medicare may be 

paying under Part D for drugs that 

should be provided by the hospice as 

part of the plan of care.16 To assist CMS 

in identifying and evaluating instances 

where drugs, supplies, durable medical 

equipment (DME), and Part B services 

provided to hospice patients appear to 

be related to the principal diagnosis 

reported on the hospice claim, but were 

billed separately to other parts of the 

Medicare program, Acumen, LLC 

developed case studies that were 

reviewed and evaluated by CMS clinical 

staff.17 Although hospice beneficiaries 

are allowed to continue receiving care 

outside the hospice benefit for 

conditions that are unrelated to the 

terminal illness and related conditions 

(that is, unrelated to the terminal 

prognosis), § 418.56(c) requires hospices 

to provide all services necessary for the 

palliation and management of the 

terminal illness and related conditions. 

Durable Medical Equipment, 

Prosthetics, Orthotics, and Supplies 

Across Terminal Conditions 

Durable Medical Equipment, 

Prosthetics, Orthotics, and Supplies 

(DMEPOS) products whose use was 

initiated during a hospice stay are likely 

related to the terminal prognosis. Table 

5 and 6 below summarizes total 

concurrent billing for DMEPOS 

products by Berenson-Eggers Types of 

Service (BETOS) categories and 

concurrent Durable Medical Equipment 

(DME) billing by the top 20 principal 

diagnoses as reported on hospice claims 

in CY 2013.18 These diagnoses 

comprised 2.3 million hospice stays, 

and accounted for $27.1 million in total 

concurrent spending for DME products. 

This amount does not include spending 

for DME rental products that 

beneficiaries began using prior to a 

hospice stay. 

TABLE 5—CONCURRENT PAYMENTS

FOR ALL DME USE INITIATED DURING A HOSPICE STAY BY BETOS 

CATEGORY, CY 2013 

DMEPOS BETOS 

category 

Total payment for 

related DME 

Hospital Beds ....... $943,731 

Wheelchairs .......... 2,295,038 

Oxygen and Supplies ................... 2,412,281 

Orthotics and Prosthetics ................ 4,400,353 

Medical/Surgical 

Supplies ............ 7,467,616 

Other DME ............ 9,585,003 

Total ............... 27,104,022 

TABLE 6—CONCURRENT PAYMENTS

FOR ALL DME USE INITIATED DURING A HOSPICE STAY BY TOP 20 

PRINCIPAL DIAGNOSIS REPORTED ON

HOSPICE CLAIM, CY 2013 

Principal diagnosis Total payment for 

related DME 

Heart failure .......... $3,365,348 

Malignant neoplasm of trachea, bronchus, 

and lung ............ 1,519,514 

Other cerebral degenerations ....... 2,979,399 

Other organic psychotic conditions 

(chronic) ............ 2,540,146 

TABLE 6—CONCURRENT PAYMENTS

FOR ALL DME USE INITIATED DURING A HOSPICE STAY BY TOP 20 

PRINCIPAL DIAGNOSIS REPORTED ON

HOSPICE CLAIM, CY 2013—Continued 

Principal diagnosis Total payment for 

related DME 

Chronic airways 

obstruction, not 

elsewhere classified .................... 2,610,628 

Senile and presenile organic 

psychotic conditions ................... 2,868,760 

Other ill-defined 

and unknown 

causes of morbidity and mortality ................... 2,349,855 

Ill-defined descriptions and complications of 

heart disease .... 1,584,522 

Acute but ill-defined cerebrovascular disease 1,092,772 

Other diseases of 

lung ................... 412,501 

Chronic renal failure ..................... 415,800 

Symptoms concerning nutrition, 

metabolism, and 

development ...... 1,390,685 

Malignant neoplasm of pancreas ................. 297,573 

Malignant neoplasm of female 

breast ................ 486,019 

Malignant neoplasm of colon ... 521,690 

Parkinson’s disease .................. 955,390 

Malignant neoplasm of prostate .................... 312,754 

Late effects of 

cerebrovascular 

disease .............. 559,253 

Other forms of 

chronic ischemic 

heart disease .... 670,947 

Malignant neoplasm of liver 

and intrahepatic 

bile ducts ........... 170,470 

We noted that hospice beneficiaries 

with hospice claims-reported principal 

diagnoses of chronic airway obstruction, 

congestive heart failure, cerebral 

degeneration and lung cancer were 

receiving services clinically indicated 

and recommended for these conditions 

outside of the hospice benefit, which is 

in violation of requirements regarding 

the Medicare hospice benefit. This 

could be attributed to hospices 


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Cross JT, Owens DK, et al. Evidence-Based 

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Dyspnea, and Depression at the End of Life: A 

Clinical Practice Guideline from the American 

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20Palliative care in lung cancer*: accp evidencebased clinical practice guidelines (2nd edition) 

Kvale PA, Selecky PA, Prakash US. Chest. 

2007;132(3_suppl):368S–403S. 

21 ibid. 

22 DD Marciniuk, D Goodridge, P Hernandez, et 

al. (2011). Canadian Thoracic Society COPD 

Committee Dyspnea Expert Working Group. 

Managing dyspnea in patients with advanced 

chronic obstructive pulmonary disease: A Canadian 

Thoracic Society clinical practice guideline. 

Canadian Respiratory Journal. 18(2), 1–10. 

23 ibid 

24National Clinical Guideline Centre for Acute 

and Chronic Conditions. Chronic obstructive 

pulmonary disease. Management of chronic 

obstructive pulmonary disease in adults in primary 

and secondary care. London (UK): National Institute 

for Health and Clinical Excellence (NICE); 2010 Jun. 

61 p. (Clinical guideline; no. 101). Retrieved from 

the National Guideline Clearinghouse on February 

19, 2015. http://www.guideline.gov/ 

25 DMEPOS HCPCS codes are summarized by 

Berenson-Eggers Types of Service (BETOS) 

categories. BETOS categories were developed by the 

American Medical Association (AMA) and 

aggregate HCPCS codes into clinically coherent 

groups. 

incorrectly classifying conditions as 

unrelated and referring patients to nonhospice providers, not communicating 

and coordinating the care and services 

needed to manage the needs of the 

hospice beneficiary, or deliberately, to 

avoid costs. The case studies below are 

focused on four of the most commonly 

reported principal hospice diagnoses on 

hospice claims (see Table 2 in section 

II.E) based on evidence based clinical 

guidelines as described for each 

principal hospice diagnosis. 

Malignant Neoplasm of the Trachea, 

Bronchus, and Lung 

Malignant neoplasm of the trachea, 

bronchus, and lung (or lung cancer) is 

defined by ICD–9 diagnosis codes 

beginning with 162 and describes 

malignant cancers affecting various part 

of the pulmonary system. Symptoms for 

this class of conditions may include 

chronic and worsening cough, shortness 

of breath, chest pain, metastatic bone 

pain, and anorexia and weight loss. 

Clinical practice guidelines for endstage cancer recommend treatment and 

management of refractory symptoms 

including pain, mucositis, dyspnea, 

fatigue, depression and anorexia 

through the use of pharmacological 

interventions including nonsteroidal 

anti-inflammatories, corticosteroids, 

opioids and antidepressants.19

Additionally, evidence shows that 

palliative chemotherapy and 

radiotherapy can provide symptom 

relief from bone and brain metastasis.20

Recommended interventions for 

dyspnea include treatment of the 

underlying reason such as, thoracentesis 

for pleural effusion, bronchodilators and 

systemic corticosteroids for 

inflammation and secretions, and 

supportive measures such supplemental 

oxygen, opioids and anxiolytics to 

decrease the sensation of 

breathlessness.21

Our assessment of concurrently billed 

Part D drugs included 89,925 stays for 

beneficiaries with ICD–9 code 162 listed 

as a primary diagnosis on the hospice 

claim. Our assessment of concurrently 

billed Part B services included 153,199 

stays. In CY 2013, concurrent billing for 

all services related this terminal 

condition comprised $3.4 million. Table 

7 below summarizes concurrent 

payments for services that were 

potentially related to this class of 

conditions. Part D drugs that should 

have been covered under the hospice 

benefit for the treatment of this 

condition accounted for $2.1 million. 

DME services that were billed during 

hospice stays related to this condition 

during the same time cost $640,166. 

Concurrent services provided in Part B 

institutional settings accounted for 

$591,772. 

TABLE 7—CONCURRENT PAYMENTS FOR SERVICES PROVIDED TO HOSPICE BENEFICIARIES WITH MALIGNANT NEOPLASM

OF THE TRACHEA, BRONCHUS, AND LUNG, CY 2013 

Type of service Description Total payment 

Drugs/Part D .................................................... Common Palliative Drugs ..................................................................... $851,639 

Drugs/Part D .................................................... Anti-neoplastics (chemotherapy) .......................................................... 1,321,507 

DME ................................................................. Oxygen Equipment and Supplies ......................................................... 454,068 

DME ................................................................. Hospital Beds ........................................................................................ 47,781 

DME ................................................................. Wheelchairs .......................................................................................... 138,316 

Part B Inst. ....................................................... Diagnostic Imaging ............................................................................... 341,601 

Part B Inst. ....................................................... Radiation ............................................................................................... 250,171 

Total .......................................................... ............................................................................................................... 3,405,083 

Chronic Airway Obstruction 

Chronic airway obstruction is defined 

by ICD–9 diagnosis codes beginning 

with 496 and includes chronic lung 

disease with unspecified cause, and is 

characterized by inflammation of the 

lungs and airways. Typical symptoms of 

these pulmonary diseases include 

increasing and disabling shortness of 

breath, labored breathing, increased 

coughing, increased heart rate, 

decreased functional reserve, increased 

infections and unintentional, 

progressive weight loss. Evidence-based 

practice supports the benefits of oral 

opioids, neuromuscular electrical 

stimulation, chest wall vibration, 

walking aids, respiratory assist devices 

and pursed-lip breathing in the 

management of dyspnea in the 

individual patient with advanced 

COPD.22 Oxygen is recommended for 

COPD patients with resting hypoxemia 

for symptomatic benefit.23 Additionally, 

clinical practice guidelines recommend 

inhaled bronchodilators, systemic 

corticosteroids, and pulmonary 

physiotherapy for the management of 

COPD exacerbations.24 Analysis 

conducted by Acumen, LLC, shows 

concurrently billed Part D drugs 

included 130,283 stays for beneficiaries 

with ICD–9 code 469 listed as a primary 

diagnosis on the hospice claim. 

Additionally, concurrently billed Part B 

services included 198,098 such stays. 

Table 8 below summarizes concurrent 

payments for services that are 

potentially related to this class of 

conditions. In CY 2013, concurrent 

billing for all services related this 

terminal condition comprised $10.4 

million. Part D drugs that should have 

been covered under the hospice benefit 

for the treatment of this condition 

accounted for $8.6 million. DME 

services that were billed during hospice 

stays related to this condition during the 

same time amounted to $1.2 million 

dollars.25 Finally, concurrent services 

provided in Part B institutional settings 

accounted for $605,110. 


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26 Includes all analgesics, anxiolytics, 

antiemetics, and laxatives. These four drug types 

are considered ‘‘nearly always covered under the 

hospice benefit’’ and as such are rarely expected to 

be billed separately during a hospice stay. 

27For COPD, we also include respiratory assist 

devices (RADs) in this category. 

28 Development Group of the Clinical Practice 

Guideline [trunc]. Clinical practice guideline on the 

comprehensive care of people with Alzheimer’s 

disease and other dementias. Barcelona (Spain): 

Agency for Health Quality and Assessment of 

Catalonia (AQuAS); 2010. 499 p. Retrieved from the 

National Guideline Clearinghouse on February 19, 

2015. http://www.guideline.gov/. 

29Scottish Intercollegiate Guidelines Network 

(SIGN). Management of chronic heart failure. A 

national clinical guideline. Edinburgh (Scotland): 

Scottish Intercollegiate Guidelines Network (SIGN); 

2007 Feb. 53 p. (SIGN publication; no. 95). 

TABLE 8—CONCURRENT PAYMENTS FOR SERVICES PROVIDED TO HOSPICE BENEFICIARIES WITH CHRONIC AIRWAY

OBSTRUCTION, CY 2013 

Type of service Description Total payment 

Drugs/Part D .................................................... Common Palliative Drugs 26 .................................................................. $1,757,326 

Drugs/Part D .................................................... Antiasthmatics & Bronchodilators ......................................................... 6,545,089 

Drugs/Part D .................................................... Corticosteroids ...................................................................................... 141,179 

Drugs/Part D .................................................... Respiratory Agents ............................................................................... 148,793 

DME ................................................................. Oxygen Equipment and Supplies 27 ...................................................... 525,276 

DME ................................................................. Hospital Beds ........................................................................................ 480,854 

DME ................................................................. Wheelchairs .......................................................................................... 196,692 

Part B Institutional ............................................ Diagnostic Imaging ............................................................................... 605,110 

Total .......................................................... ............................................................................................................... 10,400,319 

Cerebral Degeneration 

Cerebral degeneration is defined by 

ICD–9 diagnosis codes beginning with 

331, and includes conditions such as 

Alzheimer’s disease and Reye’s 

syndrome. These conditions are 

typically characterized by a progressive 

loss of cognitive function with 

symptoms including the loss of memory 

and changes in language ability, 

behavior, and personality. Additionally, 

as these cerebral degenerations progress, 

other clinical manifestations occur such 

as dysphagia, motor dysfunction, 

impaired mobility, increased need for 

activities of daily living assistance, 

urinary and fecal incontinence, weight 

loss and muscle wasting. Individuals 

with these conditions are also at 

increased risk for aspiration, falls, 

pneumonias, decubitus ulcers and 

urinary tract infections. Clinical practice 

guidelines for the treatment of cerebral 

degenerative conditions includes 

pharmacological interventions 

including Angiotensin Converting 

Enzyme inhibitors, memantine or 

combination therapy depending on 

severity of disease, as well as 

antidepressants, antipsychotics, 

psychostimulants, mood stabilizers, 

benzodiazepines and neuroleptics, 

depending on behavioral 

manifestations. Non-pharmacological 

interventions recommended include 

mental, behavioral and cognitive 

therapy, speech language pathology to 

address swallowing issues, and other 

interventions to treat and manage 

manifestations including pressure 

ulcers, cachexia and infections.28

Our assessment of concurrently billed 

Part D drugs included 208,346 stays for 

beneficiaries with ICD–9 code 331 listed 

as a primary diagnosis on the hospice 

claim. Our assessment of concurrently 

billed Part B services included 318,044 

stays. In CY 2013, concurrent billing for 

all services related to this principal 

diagnosis comprised $11.2 million. 

Table 9 below summarizes concurrent 

payments for services that are 

potentially related to this class of 

conditions. Part D drugs that should 

have been covered under the hospice 

benefit for the treatment of this 

condition accounted for $10.3 million. 

Concurrently billed DME products that 

were related this condition cost 

Medicare an additional $390,476. 

Concurrent services provided in Part B 

institutional settings accounted for 

$496,790. 

TABLE 9—CONCURRENT PAYMENTS FOR SERVICES PROVIDED TO HOSPICE BENEFICIARIES WITH CEREBRAL

DEGENERATION, CY 2013 

Type of service Description Total payment 

Drugs/Part D .................................................... Common Palliative Drugs ..................................................................... $1,184,005 

Drugs/Part D .................................................... Antipsychotic/Antimanic Agents ............................................................ 2,336,504 

Drugs/Part D .................................................... Psychotherapeutic & Neurological Agents ........................................... 6,752,270 

DME ................................................................. Hospital Beds ........................................................................................ 138,249 

DME ................................................................. Wheelchairs .......................................................................................... 252,228 

Part B Inst. ....................................................... Diagnostic Imaging ............................................................................... 496,790 

Total .......................................................... ............................................................................................................... 11,160,046 

Congestive Heart Failure 

Congestive heart failure (CHF) is 

defined by ICD–9 diagnosis codes 

beginning with 428. CHF is 

characterized by symptoms such as 

shortness of breath, edema, diminished 

endurance, angina, productive cough 

and fatigue. For the management of 

congestive heart failure, clinical practice 

guidelines recommend pharmacological 

interventions including beta blockers, 

angiotensin converting enzyme 

inhibitors, angiotensin receptor 

blockers, diuretics, anti-platelets, anticoagulants and digoxin, depending on 

symptomology and response or 

nonresponse to other treatments.29

Nonpharmacological interventions 

recommended include continuous 

positive airway pressure and 


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30Lindenfeld J, Albert NM, Boehmer JP, Collins 

SP, Ezekowitz JA, Givertz MM, Klapholz M, Moser 

DK, Rogers JG, Starling RC, Stevenson WG, Tang 

WHW, Teerlink JR, Walsh MN. Executive Summary: 

HFSA 2010 Comprehensive Heart Failure Practice 

Guideline. J Card Fail 2010;16:475e539. 

supplemental oxygen for those with 

coexisting pulmonary disease.30

Our assessment of concurrently billed 

Part D drugs included 158,220 stays for 

beneficiaries with ICD–9 code 428 listed 

as a primary diagnosis on the hospice 

claim. Our assessment of concurrently 

billed Part B services included 256,236 

stays. In CY 2013, concurrent billing for 

all services related this terminal 

condition comprised $5.8 million. Table 

10 below summarizes concurrent 

payments for services that are 

potentially related to this class of 

conditions. Part D drugs that should 

have been covered under the hospice 

benefit for the treatment of this 

condition accounted for $3.8 million. 

DME services that were billed during 

hospice stays related to this condition 

during this time cost $843,534. 

Concurrent services provided in Part B 

institutional settings accounted for $1.2 

million. 

TABLE 10—CONCURRENT PAYMENTS FOR SERVICES PROVIDED TO HOSPICE BENEFICIARIES WITH CONGESTIVE HEALTH

FAILURE, CY 2013 

Type of service Description Total payment 

Drugs/Part D .................................................... Common Palliative Drugs ..................................................................... $1,229,748 

Drugs/Part D .................................................... Diuretics ................................................................................................ 334,700 

Drugs/Part D .................................................... Beta Blockers ........................................................................................ 363,480 

Drugs/Part D .................................................... Anti-hypertensives ................................................................................. 584,799 

Drugs/Part D .................................................... Anti-anginal Agents ............................................................................... 468,333 

Drugs/Part D .................................................... Cardiovascular Agents—Misc ............................................................... 799,605 

Drugs/Part D .................................................... Vasopressors ........................................................................................ 43,496 

DME ................................................................. Oxygen Equipment and Supplies ......................................................... 471,376 

DME ................................................................. Hospital Beds ........................................................................................ 96,219 

DME ................................................................. Wheelchairs .......................................................................................... 275,940 

Part B Inst. ....................................................... Diagnostic Imaging ............................................................................... 690,726 

Part B Inst. ....................................................... EKGs ..................................................................................................... 72,933 

Part B Inst. ....................................................... Cardiac Devices .................................................................................... 242,819 

Part B Inst. ....................................................... Diagnostic Clinical Labs ........................................................................ 79,999 

Part B Prof. ...................................................... Diagnostic Clinical Labs ........................................................................ 64,698 

Total .......................................................... ............................................................................................................... 5,818,871 

Our regulations at § 418.56(c) require 

that hospices provide all services 

necessary for the palliation and 

management of the terminal illness and 

related conditions. We have discussed 

recommended evidence-based practice 

clinical guidelines for the hospice 

claims-reported principal diagnoses 

mentioned in this section. However, this 

analysis reveals that these 

recommended practices are not being 

covered under the Medicare hospice 

benefit. We believe the case studies in 

this section highlight the potential 

systematic unbundling of the Medicare 

hospice benefit and may be valuable 

analysis to inform policy stakeholders. 

3. Live Discharge Rates 

Currently, federal regulations allow a 

patient who has elected to receive 

Medicare hospice services to revoke 

their hospice election at any time and 

for any reason. Specifically, the 

regulations state that if the hospice 

patient (or his/her representative) 

revokes the hospice election, Medicare 

coverage of hospice care for the 

remainder of that period is forfeited. 

The patient may, at any time, re-elect to 

receive hospice coverage for any other 

hospice election period that he or she is 

eligible to receive (§ 418.28(c)(3) and 

§ 418.24(e)). During the time period 

between revocation/discharge and the 

re-election of the hospice benefit, 

Medicare coverage would resume for 

those Medicare benefits previously 

waived. A revocation can only be made 

by the beneficiary, in writing, that he or 

she is revoking the hospice election and 

the effective date of the revocation. A 

hospice cannot ‘‘revoke’’ a beneficiary’s 

hospice election, nor is it appropriate 

for hospices to encourage, request or 

demand that the beneficiary revoke his 

or her hospice election. Like the hospice 

election, a hospice revocation is to be an 

informed choice based on the 

beneficiary’s goals, values and 

preferences for the services they wish to 

receive. 

Federal regulations only provide 

limited opportunity for a Medicare 

hospice provider to discharge a patient 

from its care. In accordance with 

§ 418.26, discharge from hospice care is 

permissible when the patient moves out 

of the provider’s service area, is 

determined to be no longer terminally 

ill, or for cause. Hospices may not 

automatically or routinely discharge the 

patient at its discretion, even if the care 

may be costly or inconvenient. As we 

indicated in the FY 2015 Hospice Wage 

Index and Payment Rate Update 

proposed and final rules, we understand 

that the rate of live discharges should 

not be zero, given the uncertainties of 

prognostication and the ability of 

patients and their families to revoke the 

hospice election at any time. On July 1, 

2012, we began collecting discharge 

information on the claim to capture the 

reason for all types of discharges which 

includes, death, revocation, transfer to 

another hospice, moving out of the 

hospice’s service area, discharge for 

cause, or due to the patient no longer 

being considered terminally ill (that is, 

no longer qualifying for hospice 

services). Based upon the additional 

discharge information, Abt Associates, 

our research contractor performed 

analysis on FY 2013 claims to identify 

those beneficiaries who were discharged 

alive. The details of this analysis will be 

reported in the 2015 technical report 

and will be made available on the 

Hospice Center Web page. In order to 

better understand the characteristics of 

hospices with high live discharge rates, 

we examined the aggregate cap status, 

skilled visit intensity; average lengths of 

stay; and non-hospice spending rates 

per beneficiary. 

Between 2000 and 2013, the overall 

rate of live discharges increased from 

13.2 percent in 2000 to 18.3 percent in 

2013. Among hospices with 50 or more 

discharges (discharged alive or 

deceased), there is significant variation 


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in the rate of live discharge between the 

10th and 90th percentiles (see Table 11 

below). Most notably, hospices at the 

95th percentile discharged 50 percent or 

more of their patients alive. 

TABLE 11—DISTRIBUTION OF LIVE DISCHARGE RATES IN FY 2013 FOR

HOSPICES WITH 50 OR MORE LIVE

DISCHARGES

Statistic 

Live 

discharge 

rate 

(%) 

5th Percentile ............................ 8.1 

10th Percentile .......................... 9.5 

25th Percentile .......................... 12.9 

Median ...................................... 18.3 

75th Percentile .......................... 26.6 

90th Percentile .......................... 39.1 

95th Percentile .......................... 50.0 

Note: n=3,096 

We analyzed hospices’ aggregate cap 

status to determine whether there is a 

relationship between live discharge 

rates and their aggregate cap status. As 

described in section III.4.C and section 

III.D, when the Medicare Hospice 

Benefit was implemented, the Congress 

included an aggregate cap on hospice 

payments, which limits the total 

aggregate payments any individual 

hospice can receive in a year. Our FY 

2013 analytic file contained 3,061 

hospices with aggregate cap information 

and with more than 50 discharges in FY 

2013. We found that 40.3 percent of 

hospices above the 90th percentile were 

also above the aggregate cap for the 2013 

cap year. Conversely, only 3.8 percent of 

hospices below the 90th percentile were 

above the aggregate cap. As illustrated 

by the box plot below, the vertical axis 

represents the hospices’ live discharge 

rates in FY 2013 and the horizontal axis 

represents the total payments hospices 

received at the end of the cap year of 

November 2012 through October 2013 

relative to the total cap amount. 

Hospices under 100 percent on the Xaxis are below the cap and those 100 

percent or higher on the X-axis are 

above the cap. Our analysis found that 

hospices with higher live discharge 

rates are also above the cap. 

Specifically, the top of the rectangle 

represents the 75th percentile of live 

discharge rates, the middle line 

represents the median for that group, 

and the bottom of the rectangle is the 

25th percentile of live discharge rates 

among all hospices ending the year 

within the range of cap percentages of 

live discharge rates as indicated by the 

horizontal axis (see Figure 2 below). We 

found that there appears to be a 

relationship with hospices with high 

live discharge rates and those that are 

above the aggregate cap. 

In FY 2013, we found that hospices 

with high live discharge rates also, on 

average, provide fewer visits per week. 

Those hospices with live discharge rates 

at or above the 90th percentile provide, 

on average, 3.97 visits per week. 

Hospices with live discharge rates 

below the 90th percentile provide, on 

average, 4.48 visits per week. We also 

found in FY 2013 that, when focusing 

on visits classified as skilled nursing or 

medical social services, hospices with 


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live discharge rates at or above the 90th 

percentile provide, on average, 1.91 

visits per week versus hospices with 

live discharge rates below the 90th 

percentile that provide, on average, 2.35 

visits per week. 

We examined whether there was a 

relationship between hospices with high 

live discharge rates, average lengths of 

stay, and non-hospice spending per 

beneficiary per day (see Table 12 and 

Figure 3 below). As described above in 

section III.A.2, we identified instances, 

in the aggregate and illustrated by case 

studies, where Medicare appeared to be 

paying for services twice because we 

would expect them to be covered by the 

hospice base payment rate. Hospices 

with patients that, on average, 

accounted for $30 per day in nonhospice spending while in hospice 

(decile 10 in Table 12 and Figure 3 

below) had live discharge rates that 

were, on average, about 33.8 percent 

and had an average lifetime length of 

stay of 156 days. In contrast, hospices 

with patients that, on average, 

accounted for $4 per day in non-hospice 

spending while in a hospice election 

(decile 1 in Table 12 and Figure 3 

below) had live discharge rates that 

were, on average, about 19.2 percent 

and an average lifetime length of stay of 

103 days. In other words, hospices in 

the highest decile, according to their 

level of non-hospice spending for 

patients in a hospice election, had live 

discharge rates and average lifetime 

lengths of stay that averaged 76 percent 

and 52 percent higher, respectively, 

than the hospices in lowest decile. 


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31Medicare Payment Advisory Commission 

(MedPAC). ‘‘Reforming Medicare’s Hospice 

Benefit.’’ Report to the Congress: Medicare Payment 

Policy. March, 2009. Web. 18 Feb. 2015. http://

medpac.gov/documents/reports/Mar09_Ch06.pdf?

sfvrsn=0. 

The analytic findings presented above 

suggests that some hospices may 

consider the Medicare Hospice program 

as a long-term custodial benefit rather 

than an end of life benefit for 

beneficiaries with a medical prognosis 

of 6 months or less if the illness runs its 

normal course. As previously discussed 

in reports by MedPAC and the OIG, 

there is a concern that hospices may be 

admitting individuals who do not meet 

hospice eligibility criteria. We continue 

to communicate and collaborate across 

CMS to improve monitoring and 

oversight activities. We expect to 

analyze the additional claims and cost 

report data reported by hospices in the 

future to determine whether additional 

regulatory proposals to reform and 

strengthen the Medicare Hospice benefit 

are warranted. 

B. Proposed Routine Home Care Rates 

and Service Intensity Add-On Payment 

1. Statutory Authority and Background 

Section 3132(a) of the Affordable Care 

Act amended 1814(i) of the Act by 

adding paragraph (6)(D), that instructs 

the Secretary, no earlier than October 1, 

2013, to implement revisions to the 

methodology for determining the 

payment rates for RHC and other 

services included in hospice care as the 

Secretary determines to be appropriate. 

The revisions may be based on an 

analysis of new data and information 

collected and such revisions may 

include adjustments to per diem 

payments that reflect changes in 

resource intensity in providing such 

care and services during the course of 

the entire episode of hospice care. In 

addition, we are required to consult 

with hospice programs and MedPAC on 

the revised hospice payment 

methodology. 

This legislation emerged largely in 

response to MedPAC’s March 2009 

Report to Congress, which cited rapid 

growth of for-profit hospices and longer 

lengths of stay that raised concerns 

regarding a per diem payment structure 

that encouraged inappropriate 

utilization of the benefit.31 MedPAC 

stated that a revised payment system 

would encourage hospice stays 

consistent with meeting the eligibility 

requirements of a medical prognosis of 

6 months or less if the illness runs its 

normal course and increase greater 

provider accountability to monitor 

patients’ conditions. In that same report, 

MedPAC stated that their goal was to 

‘‘strengthen the hospice payment system 

and not discourage enrollment in 

hospice, while deterring program 

abuse.’’ 

As described in section III.A, CMS has 

transparently conducted payment 

reform activities and released research 

findings to the public since 2010. At 

that time, Abt Associates conducted a 

literature review and carried out 

original research to provide background 

on the current state of the Medicare 


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32CMS Transmittal 2864. ‘‘Additional Data 

Reporting Requirements for Hospice Claims’’. 

Available at: http://www.cms.gov/Regulations-andGuidance/Guidance/Transmittals/Downloads/

R2864CP.pdf. 

33http://www.cms.gov/Regulations-andGuidance/Guidance/Manuals/Paper-BasedManuals-Items/CMS021935.html?DLPage=

1&DLSort=0&DLSortDir=ascending. 

34http://www.medpac.gov/documents/contractorreports/report-to-the-congress-medicarebeneficiaries’-access-to-hospice-(may-2002).pdf. 

35http://www.medpac.gov/documents/reports/

June04_ch6.pdf. 

36http://www.medpac.gov/documents/reports/

Jun06_Ch03.pdf. 

37http://www.medpac.gov/documents/reports/

Jun08_Ch08.pdf. 

38http://www.medpac.gov/documents/reports/

Mar09_Ch06.pdf. 

39http://www.medpac.gov/documents/reports/

Jun08_Ch08.pdf. 

40Cheung, L., K. Fitch, and B. Pyenson. 2001. The 

costs of hospice care: An actuarial evaluation of the 

Medicare hospice benefit. Report by Milliman USA 

for the National Hospice and Palliative Care 

Organization, August 1. New York: Milliman USA. 

41http://www.medpac.gov/documents/reports/

Mar09_Ch06.pdf?sfvrsn=0. 

42Medicare Payment Advisory Commission 

(MedPAC). ‘‘Reforming Medicare’s Hospice 

Benefit.’’ Report to the Congress: Medicare Payment 

Policy. March, 2009. Web. 18 Feb. 2015. http://

medpac.gov/documents/reports/Mar09_Ch06.pdf?

sfvrsn=0. 

43http://medpac.gov/documents/reports/chapter12-hospice-services-(march-2015-report).pdf?

sfvrsn=0. 

hospice benefit. The initial contract also 

included several technical expert panel 

meetings with national hospice 

association representatives, academic 

researchers, and a cross-section of 

hospice programs that provided 

valuable insights and feedback on 

baseline empirical analyses provided by 

the ASPE. A subsequent award to Abt 

Associates continues to support the 

dissemination of research analyses and 

findings, which are located in the 

‘‘Research and Analyses’’ section of the 

Hospice Center Web page (http://

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

Hospice-Center.html). In addition, 

research findings and payment reform 

concepts were set out in a 2013 

technical report and a 2014 technical 

report, as well as in the FY 2014 

Hospice Wage Index and Payment Rate 

Update final rule (78 FR 48234) and in 

the FY 2015 Hospice Wage Index and 

Payment Rate Update final rule (79 FR 

50452). These research findings and 

concepts provide a basis for an 

important initial step toward payment 

reform outlined in section III.B.2 below. 

Over the past several years, MedPAC, 

the Government Accountability Office 

(GAO), and OIG, have all recommended 

that CMS collect more comprehensive 

data to better evaluate trends in 

utilization of the Medicare hospice 

benefit. Furthermore, section 

3132(a)(1)(C) of the Affordable Care Act 

specifies that the Secretary may collect 

additional data and information on cost 

reports, claims, or other mechanisms as 

the Secretary determines to be 

appropriate. We have received many 

suggestions for ways to improve data 

collection to support larger payment 

reform efforts in the future. Based on 

those suggestions and industry 

feedback, we began collecting additional 

information on the hospice claim form 

as of April 1, 2014.32 Additionally, 

revisions to the cost report form for 

freestanding hospices became effective 

for cost reporting periods beginning on 

or after October 1, 2014. The 

instructions for completing the revised 

freestanding hospice cost report form 

are found in the Medicare Provider 

Reimbursement Manual-Part 2, chapter 

43.33 Once available, we expect the data 

from hospice claims and cost reports to 

provide more comprehensive 

information on the costs associated with 

the services provided by hospices to 

Medicare beneficiaries by level of care. 

a. U-Shaped Payment Model 

For over a decade, MedPAC and other 

organizations have reported findings 

that suggest that the hospice benefit’s 

fixed per-diem payment system is 

inconsistent with the true variance of 

service costs over the course of an 

episode. Specifically, MedPAC cited 

both academic and non-academic 

studies, as well as its own analyses (as 

summarized and articulated in 

MedPAC’s 2002,34 2004,35 2006,36

2008,37 and 2009 38 Reports to 

Congress), demonstrating that the 

intensity of services over the duration of 

a hospice stay manifests in a ‘U-Shaped’ 

pattern (that is, the intensity of services 

provided is higher both at admission 

and near death and, conversely, is 

relatively lower during the middle 

period of the hospice episode). 

According to MedPAC’s 2008 Report to 

Congress, after the high costs at 

admission, the ‘turning point’ or ‘breakeven’ point of profitability was found to 

be about 3 weeks (21 days).39 Beyond 21 

days, the magnitude of profitability 

deficits or ‘marginal costs’ declined and 

the lengths of stay became profitable— 

and more so—with longer stays.40 Since 

hospice care is most profitable during 

the long, low-cost middle portions of an 

episode, longer episodes would 

potentially have very profitable, long 

middle segments. This financial 

incentive appears to have resulted in 

hospices enrolling beneficiaries that are 

not truly eligible for the benefit (that is, 

do not have a life expectancy of 6 

months or less) and ‘‘may lead some 

patients, families, and providers to 

implicitly regard hospice as a source of 

basic health care for failing patients who 

did not qualify for skilled nursing 

facility or home health care and did not 

qualify for Medicaid or otherwise could 

not afford other sources of long-term 

custodial care’’,41 rather than the end-oflife care for which the benefit was 

originally designed. 

In its March 2009 report, ‘‘Reforming 

Medicare’s Hospice Benefit,’’ MedPAC 

recommended that the Congress require 

CMS to implement a payment system 

that would adjust per-diem hospice 

rates based on the day’s timing within 

the hospice episode, with the express 

goal of mitigating the apparent 

inconsistency between payments and 

resource utilization (that is, costs) in 

hospice episodes.42 Specifically, 

MedPAC recommended that payments 

near the beginning and ending of a stay 

be set at higher levels (weighted 

upwards) and payments during the 

middle portion of care be set at lower 

levels (weighted downwards) to better 

mirror documented variation in cost 

over an episode’s duration. Two 

primary weighting schemes were 

outlined in MedPAC’s 2009 Report: A 

‘‘larger intensity adjustment’’ 

(essentially a deeper U-shaped payment 

model, paying twice the base rate in the 

first 30/last 7 days and just a quarter of 

the daily rate in days 181+) and a 

‘‘smaller intensity adjustment’’ (a 

relatively shallower U-shaped model, 

paying 1.5 times the base rate in the first 

30/last 7 days and 0.375 times the daily 

rate in days 181+). 

In its March 2015 Report to the 

Congress,43 MedPAC reiterated its 

continued concerns regarding the 

‘‘mismatch between payments and 

hospice service intensity’’ in the current 

hospice system and the ongoing need 

for payment reform. The Commission 

stated that ‘‘Medicare’s hospice 

payment system is not well aligned with 

the costs of providing care throughout a 

hospice episode. As a result, long 

hospice stays are generally more 

profitable than short stays.’’ The 

Commission previously ‘‘recommended 

that the hospice payment system be 

reformed to better match service 

intensity throughout a hospice episode 

of care (higher per diem payments at the 

beginning of the episode and at the end 

of the episode near the time of death 

and lower payments in the middle)’’. 

Other organizations have also 

explored the concept of a U-shaped 

payment model. The ASPE, in 

conjunction with its contractor, Acumen 

LLC, analyzed hospice enrollment and 

utilization data. ASPE’s research 


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demonstrated that the resource use 

curve becomes more pronounced as 

episode lengths increase for hospice 

users, indicating that this effect occurs 

because resource use declines more 

substantially for the middle days 

relative to beginning and ending days in 

longer episodes of hospice care than it 

does for shorter episodes. The decline in 

the center of the ‘U’ is deeper for those 

users who receive RHC only during 

their hospice episode, which is the case 

for the majority of hospice patients. 

Recently, CMS’s contracting partner, 

Abt Associates, conducted analysis of 

FY 2013 hospice claims data, showing 

that of the approximately 92 million 

hospice days billed, 97.45 percent are 

categorized as RHC. 

b. Tiered Payment Model 

As required under section 3132(a) of 

the Affordable Care Act, CMS also 

explored other options for hospice 

payment reform. Taking into 

consideration the research and analysis 

performed by MedPAC, ASPE, and 

others, our payment reform contractor, 

Abt Associates, examined hospice 

utilization data and modeled a 

hypothetical ‘‘tiered’’ payment system 

similar to MedPAC’s U-shaped payment 

model by paying different per-diem 

rates for RHC according to the timing of 

the RHC day in the patient’s episode of 

care. However, because analysis of 

hospice claims data found that a 

relatively high percentage of patients 

were not receiving skilled visits during 

the last days of life, the ‘‘tiered payment 

model’’ made the increased payments at 

end of life contingent on whether 

skilled services were provided. As 

reported in the FY 2015 Hospice 

Payment Rate Update final rule, in CY 

2012, approximately 14 percent 

beneficiaries did not receive any skilled 

visits in the last 2 days of life (79 FR 

50461). While this could be explained, 

in part, by sudden or unexpected death, 

the high percentage of beneficiaries with 

no skilled visits in the last 2 days of life 

causes concern as to whether 

beneficiaries and their families are not 

receiving needed hospice care and 

support at the very end of life. If 

hospices are actively engaging with the 

beneficiary and the family throughout 

the election, we would expect to see 

skilled visits during those last days of 

life. Therefore, in the tiered payment 

model, making the increased payment at 

the end of life contingent on whether 

skilled visits occurred in the last 2 days 

of life was thought of as one way to 

provide additional incentive for care to 

be provided when the patient needs it 

most. 

The groupings in the tiered payment 

model, presented in Table13 below, 

were developed through Abt Associates’ 

analyses of resource utilization over the 

hospice episode and clinical input. 

Using a sample of 100 percent RHC 

hospice service days from 2011, Abt 

then developed payment weights for 

each grouping by calculating its relative 

resource utilization rate compared to the 

overall estimate of resource use across 

all RHC days (see Table 13 below). 

TABLE 13—AVERAGE DAILY RESOURCE USE BY PAYMENT GROUPS IN THE TIERED PAYMENT MODEL, CY 2011 

Group Days of hospice Implied weight 

Group 1: RHC Days 1–5 ............................................................................................................................. 2,800,144 2.3 

Group 2: RHC Days 6–10 ........................................................................................................................... 2,493,004 1.11 

Group 3: RHC Days 11–30 ......................................................................................................................... 7,767,918 0.97 

Group 4: RHC Days 31+ ............................................................................................................................. 65,958,740 0.86 

Group 5: RHC During Last Seven Days, Skilled Visits During Last 2 Days .............................................. 2,832,620 2.44 

Group 6: RHC During Last Seven Days, No Skilled Visits During Last 2 Days ........................................ 476,809 0.91 

Group 7: RHC When Hospice Length of Stay is 5 Days or Less, Patient Discharged as ‘‘Expired’’. ....... 510,787 3.64 

Total ...................................................................................................................................................... 82,840,022 1.0 

The payment weighting scheme in 

this system, derived from observed 

resource utilization across the entire 

episode, would produce higher 

payments during times when service is 

more intensive (the beginning of a stay 

or the end of life) and produce lower 

payments during times when service is 

less intensive (such as the ‘‘middle 

period’’ of the stay). The tiered payment 

model was discussed in more detail in 

the FY2014 Hospice Wage Index final 

rule (78 FR 48271) and in the Hospice 

Study Technical Report issued in April 

of 2013.44

c. Visits During the Beginning and End 

of a Hospice Election 

Updated analysis of FY 2013 hospice 

claims data continues to demonstrate a 

U-Shaped pattern in of resource use. 

Increased utilization at both the 

beginning and end of a stay is 

demonstrated in Figure 4 below, where 

FY 2013 resource costs (as captured by 

wage-weighted minutes) are markedly 

higher in the first two days of a hospice 

election and once again in the six days 

preceding the date of death and on the 

date of death itself. 


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Analysis of skilled nursing and social 

work visits provided on the first day of 

a hospice election shows that nearly 89 

percent of patients received a visit 

totaling 15 minutes or more, while 11 

percent did not receive a skilled nursing 

visit or social work visit on the first day 

of a hospice election (see Table 14 

below). The percentage of patients that 

did not receive a skilled nursing or 

social work visit on a given day 

increased to nearly 38 percent on the 

second day of a hospice election. In 

accordance with the hospice CoPs at 

§ 418.54(a), hospices are required to 

have a RN complete an initial 

assessment of the hospice patient within 

48 hours of election; therefore, we 

would expect to see a nursing visit 

occurring within the first 2 days of an 

election in order to be in compliance 

with the CoPs. We found that, in FY 

2013, 96 percent of hospice patients did 

receive a skilled visit in the first 2 days 

of a hospice election. The percentage of 

patients that did not receive a skilled 

nursing or social work visit on any 

given day increased to about 65 percent 

by the sixth day of a hospice election. 

Overall, on any given day during the 

first 7 days of a hospice election, nearly 

50 percent of the time the patient is not 

receiving a skilled visit (skilled nursing 

or social worker visit). 

TABLE 14—FREQUENCY AND LENGTH OF SKILLED NURSING AND SOCIAL WORK VISITS (COMBINED) DURING THE FIRST

SEVEN DAYS OF A HOSPICE ELECTION, FY 2013 

Visit length First day 

(percent) 

Second day 

(percent) 

Third day 

(percent) 

Fourth day 

(percent) 

Fifth day 

(percent) 

Sixth day 

(percent) 

Seventh day 

(percent) 

First 

through 

seventh day 

(percent) 

No Visit ............................. 11.0 37.7 56.0 59.1 62.0 65.6 64.2 49.3 

15mins to 1 hr .................. 12.8 27.1 22.2 20.6 20.4 20.1 22.3 20.7 

1hr15m to 2 hrs ............... 32.0 21.4 14.3 13.4 12.2 10.4 10.2 16.9 

2hrs15m to 3 hrs .............. 22.8 8.6 4.8 4.5 3.6 2.5 2.2 7.5 

3hrs15m to 3hrs45m ........ 8.5 2.6 1.3 1.2 0.9 0.6 0.5 2.4 

4 or more hrs ................... 13.0 2.6 1.3 1.2 0.9 0.7 0.6 3.2 

Total .......................... 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 

Source: FY 2013 hospice claims data from the Standard Analytic Files for CY 2012 (as of June 30, 2013) and CY 2014 (as of December 31, 

2013). 

As we noted above, we are concerned 

that many beneficiaries are not receiving 

skilled visits during the last few days of 

life. At the end of life, patient needs 

typically surge and more intensive 

services are warranted. However, 

analysis of FY 2013 claims data shows 

that on any given day during the last 7 

days of a hospice election, nearly 50 

percent of the time the patient is not 

receiving a skilled visit (skilled nursing 

or social worker visit) (see table 15 

below). Moreover, on the day of death 

nearly 30 percent of beneficiaries did 

not receive a skilled visit (skilled 

nursing or social work visit). 


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TABLE 15—FREQUENCY AND LENGTH OF SKILLED NURSING AND SOCIAL WORK VISITS (COMBINED) DURING THE LAST

SEVEN DAYS OF A HOSPICE ELECTION, FY 2013 

Visit length 

(percent) 

Day of 

death 

(percent) 

One day 

before 

death 

(percent) 

Two days 

before 

death 

(percent) 

Three days 

before 

death 

(percent) 

Four days 

before 

death 

(percent) 

Five days 

before 

death 

(percent) 

Six days 

before 

death 

(percent) 

Last seven 

days 

combined 

(percent) 

No Visit ............................. 27.8 38.7 45.2 49.8 53.2 55.8 58.0 46.3 

15mins to 1 hr .................. 23.9 27.9 26.5 25.1 24.2 23.5 22.8 24.9 

1hr15m to 2 hrs ............... 24.2 19.3 17.4 15.9 14.5 13.6 12.7 17.1 

2hrs15m to 3 hrs .............. 12.3 7.2 5.9 5.1 4.5 4.1 3.8 6.3 

3hrs15m to 3hrs45m ........ 4.4 2.4 1.9 1.6 1.4 1.2 1.1 2.1 

4 or more hrs ................... 7.4 4.3 3.0 2.4 2.1 1.9 1.6 3.4 

Total .......................... 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 

Source: FY 2013 hospice claims data from the Standard Analytic Files for CY 2012 (as of June 30, 2013) and CY 2014 (as of December 31, 

2013). 

We would expect that skilled visits 

are provided to the patient and family 

at end of life as the changing condition 

of the individual and the imminence of 

death often warrants frequent changes to 

care to alleviate and minimize 

symptoms and to provide support for 

the family. Although previous public 

comments stated that patients and 

families sometimes request no visits at 

the end of life, and there are rare 

instances where a patient passes away 

unexpectedly, we would expect that 

these instances would be rare and 

represent a small proportion of the 

noted days without visits at the end of 

life. However, the data presented in 

Table 15 above suggests that it is not 

rare for patients and families to have not 

received skilled visits (skilled nursing 

or social work visits) at the end of life. 

In the FY 2015 Hospice Wage Index and 

Payment Rate Update final rule, we 

noted that nearly 5 percent of hospices 

did not provide any skilled visits in the 

last 2 days of life to more than 50 

percent of their decedents receiving 

routine home care on those last 2 days 

and 34 hospices did not make any 

skilled visits in the last 2 days of life to 

any of their decedents who died while 

receiving routine home care (79 FR 

50462). 

2. Proposed Routine Home Care Rates 

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 currently reimbursed per 

day regardless of the volume or 

intensity of services provided to a 

beneficiary on any given day. As stated 

in the FY 2014 Hospice Wage Index and 

Payment Rate Update final rule (78 FR 

48234), ‘‘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.’’ However, as discussed in 

section III.B.1 above, there is evidence 

of a misalignment between the current 

RHC per diem payment rate and the cost 

of providing RHC. In order to help 

ensure that hospices are paid adequately 

for providing care to patients regardless 

of their palliative care needs during the 

stay, while at the same time encouraging 

hospices to more carefully determine 

patient eligibility relative to the 

statutory requirement that the patients’ 

life expectancy be 6 months or less, we 

are using the authority under section 

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

section 3132(a) of the Affordable Care 

Act to propose a revision to the current 

RHC per diem payment rate to more 

accurately align the per diem payments 

with visit intensity (that is, the cost of 

providing care for the clinical service 

(labor) components of the RHC rate). We 

are proposing, in conjunction with a 

SIA payment discussed in section III.B.3 

below, two different RHC rates that 

would result in a higher base payment 

rate for the first 60 days of hospice care 

and a reduced base payment rate for 

days 61 or over of hospice care. 

The two proposed rates for RHC are 

based on an extensive body of research 

concerning visit intensity during a 

hospice episode as cited throughout this 

section. We consider a hospice 

‘‘episode’’ of care to be a hospice 

election period or series of election 

periods. Visit intensity is commonly 

measured in terms of wage-weighted 

minutes and reflects variation in the 

provision of care for the clinical service 

(labor) components of the RHC rate. The 

labor components of the RHC rate 

comprise nearly 70 percent of the RHC 

rate (78 FR 48272). Therefore, visit 

intensity is a close proxy for the 

reasonable cost of providing hospice 

care absent data on the non-labor 

components of the RHC rate, such as 

drugs and DME. As shown in Figures 5 

and 6 below, the daily cost of care, as 

measured wage-weighted minutes, 

declines quickly for individual patients 

during their hospice episodes, and for 

long episode patients, remains low for a 

significant portion of the episode. Thus, 

long episode patients are potentially 

more profitable than shorter episode 

patients under the current per diem 

payments system in which the payment 

rate is the same for the entire episode. 

At the same time, the percent of 

beneficiaries that enter hospice less than 

7 days prior to death has remained 

relatively constant (approximately 30 

percent) over this time period, meaning 

the increase in the average episode 

length can be attributed to an increasing 

number of long stay patients. We found 

that the percent of episodes that are 

more than 6 months in length has nearly 

doubled from about 7 percent in 1999 to 

13 percent in 2013. 

Figure 5 displays the pattern of wageweighted minutes by time period within 

beneficiary episodes, but excluding the 

last 7 days of the episode for decedents. 

The wage-weighted minutes for the last 

7 days are displayed separately by the 

bar furthest to the right of the Figure 5. 

The visit intensity curve declines 

rapidly after 7 days and then at a slower 

rate until 60 days when the curve 

becomes flat throughout the remainder 

of episodes (excluding the last 7 days 

prior to death). It is for this reason we 

are proposing to pay the higher rate for 

the first 60 days and a lower rate 

thereafter. It is clear from the figure that 

visit utilization is constant from day 61 

on, until the last 7 days for decedents. 

We believe the most important reason 

for proposing a different RHC rate for 

the first 60 days versus days 61 and 

beyond is that we must account for 

differences in average visit intensity 

between episodes that will end within 

60 days and those that will go on for 

longer episodes. 


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As Figure 6 demonstrates, 

beneficiaries whose entire episode is 

between 8 and 60 days do have higher 

wage-weighted minute usage than those 

with longer stays. Using 60 days for the 

high RHC rate as opposed to an earlier 

time assured that hospices would have 

sufficient resources for providing high 

quality care to patients (for example, 1 

through 60 days) whose average daily 

visit intensity is higher than for longer 

stay patients. 

The SIA payments based on actual 

visits provided would be added to the 

applicable rate during the last 7 days to 

reflect the rapid increase in visit 

intensity during that time period. 

Table 16 below describes the average 

wage-weighted minutes for RHC days in 

FY 2014, calculated both in specific 

phases within an episode as well as 

overall. 


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TABLE 16—AVERAGE WAGE WEIGHTED MINUTES PER RHC DAY, FY 2014 

Phase of days in episode Average wageweighted minutes RHC Days 

Ratio of wage 

weighted minutes 

for each row 

divided by wage 

weighted minutes 

for days 1–7 

1–7 Days .................................................................................................................... 39.32 5,401,497 1.0000 

8–14 Days .................................................................................................................. 20.12 4,276,570 0.5118 

15–30 Days ................................................................................................................ 17.96 7,693,966 0.4567 

31–60 Days ................................................................................................................ 16.10 10,679,971 0.4095 

61–90 Days ................................................................................................................ 15.44 8,061,934 0.3927 

91–180 Days .............................................................................................................. 14.93 16,156,969 0.3797 

181–272 Days ............................................................................................................ 14.79 10,056,928 0.3762 

273–365 Days ............................................................................................................ 14.91 6,844,692 0.3791 

365 up Days .............................................................................................................. 15.05 15,962,038 0.3828 

Total RHC Days ................................................................................................. 17.21 85,134,565 0.4377 

In Table 16, the average wageweighted minutes per day for days 1 

through 7 describe the baseline for the 

other phases of care, set at a value of 

one. Given the demands of the initial 

care in an episode, resource intensity is 

highest during this first week of an 

episode, and resource needs decline 

steadily over the course of an episode. 

The overall average wage-weighted 

minutes per day across all RHC days 

equals $17.21 as described in the last 

row in table 16 above. We then 

calculated the average wage-weighted 

minute costs for the two groups of days 

(Days 1 through 60 and Days 61+) 

utilizing FY 2014 RHC days multiplied 

by the 2013 Bureau of Labor Statistics 

(BLS) average hourly wage values for 

the relevant disciplines, as follows: 

Skilled Nursing: $40.07; Physical 

Therapy: $55.93; Occupational Therapy: 

$55.57; Speech Language Pathology: 

$60.21; Medical Social Services: $38.25; 

and Aide: $14.28. The average wageweighted minute cost for days 1 through 

60 equals to $21.69 while the average 

wage weighted minutes for days 61 or 

more equals $15.01. 

To calculate the RHC payment rate for 

days 1 through 60, we compare the 

average wage-weighted minutes per day 

for days 1 through 60 to the overall 

average wage-weighted minutes per day 

multiplied by the labor portion of the 

FY 2015 RHC rate (column 4 in Table 

17 below), which equals ($21.69/

$17.21)*$109.48 = $137.98. Similarly, 

the RHC payment rate for days 61+ 

equals the average wage-weighted 

minutes per day for days 61+ divided by 

the overall average wage-weighted 

minutes per day multiplied by the labor 

portion of the FY 2015 RHC rate 

(column 4 in Table 17 below), which 

equals ($15.01/$17.21)*$109.48 = 

$95.48. 

TABLE 17—FY 2015 RHC RATE REVISED LABOR PORTION CALCULATION

(1) (2) (3) (4) (5) (6) 

FY 2015 

RHC 

payment 

rate 

RHC Laborrelated 

share 

FY 2015 

RHC 

payment 

rate—labor 

portion 

Average wage weighted 

minutes for RHC 

differential rate/ 

overall RHC average 

wage weighted minutes 

Revised FY 

2015 labor 

portion 

Days 1–60 ............................................................................ $159.34 × 0.6871 $109.48 × 1.2603 

($21.69/$17.21) 

$137.98 

Days 61+ .............................................................................. 159.34 × 0.6871 109.48 × 0.8722 

($15.01/$17.21) 

95.48 

As discussed in section III.C of this 

rule, currently, the labor-related share of 

the hospice payment rate for RHC is 

68.71 percent. The non-labor share is 

equal to 100 percent minus the labor– 

related share, or 31.29 percent. Given 

the current base rate for RHC for FY 

2015 of $159.34, the labor and non-labor 

components are as follows: for the laborshare portion, $159.34 multiplied by 

68.71 percent equals $109.48; for the 

non-labor share portion, $159.34 

multiplied by 31.29 percent equals 

$49.86. After determining the labor 

portion for the RHC rate for the first 60 

days and the labor portion for the RHC 

rate for days 61 and over, we add the 

non-labor portion ($49.86) to the revised 

labor portions as described in column 6 

in Table 17 above and in column 2 in 

Table 18 below. In order to maintain 

budget neutrality, as required under 

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

proposed RHC rates would need to be 

adjusted by a ratio of the total labor 

payments for RHC under using the 

current single rate for RHC to the 

estimated total labor payments for RHC 

using the two proposed rates for RHC. 

This ratio results in a budget neutrality 

adjustment of 0.9985 as shown in 

column 3 in Table 18 below. Finally, 

adding the revised labor portion with 

budget neutrality to the non-labor 

portion results in revised FY 2015 RHC 

payment rates of $187.63 for days 1 

through 60 and $145.21 for days 61 and 

over. 


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TABLE 18—RHC BUDGET NEUTRALITY ADJUSTMENT FOR RHC RATES

(1) (2) (3) (4) (5) (6) 

Revised FY 2015 

labor portion 

Budget neutrality 

factor 1

Revised FY 2015 

labor portion with 

budget neutrality 

FY 2015 Nonlabor portion 

FY 2015 Revised 

RHC payment 

rates 

Days 1–60 .............................................. $137.98 × 0.9985 $137.77 $49.86 $187.63 

Days 61+ ................................................ 95.49 × 0.9985 95.35 49.86 145.21 

1The budget neutrality adjustment is required due to differences in the average wage index for days 1–60 compared to days 61 and over. 

The proposed RHC rates for days 1 

through 60 and days 61 and over 

(column 6 of Table 18 above) would 

replace the current single RHC per diem 

payment rate with two new RHC per 

diem rates for patients who require RHC 

level of care during a hospice election. 

In order to mitigate potential high rates 

of discharge and readmissions, we 

further propose that the count of days 

follow the patient. For hospice patients 

who are discharged and readmitted to 

hospice within 60 days of that 

discharge, his or her prior hospice days 

will continue to follow the patient and 

count toward his or her patient days for 

the receiving hospice upon hospice 

election. The hospice days would 

continue to follow the patient solely to 

determine whether the receiving 

hospice may bill at the 1 through 60 or 

61+ RHC rate. The proposed policy does 

not preclude the receiving hospice 

(same or different hospice) from billing 

for a per diem payment for each hospice 

day. Therefore, we consider an 

‘‘episode’’ of care to be a hospice 

election period or series of election 

periods separated by no more than a 60 

day gap. We will monitor this proposal 

and trends in discharges and 

revocations for potential future 

refinements to address perverse 

incentives. This policy proposal 

attempts to better align RHC payment 

rates with resource use and is not 

intended to place an arbitrary limit on 

hospice services. We continue to expect 

hospices to adhere to the long-standing 

policy to provide ‘‘virtually all’’ care 

during a hospice election as articulated 

in the 1983 Hospice Care proposed and 

final rules as well as most recently in FY 

2015 Hospice Wage Index and Payment 

Rate Update final rule. Furthermore, 

program integrity and oversight efforts 

including but not limited to, medical 

review, MAC audits, Zone Program 

Integrity Contractor actions, Recovery 

Auditor activities, or suspension of 

provider billing privileges, are being 

considered to address fraud and abuse. 

We are soliciting public comment on all 

aspects of the proposed RHC payment 

rates as articulated in this section as 

well as this policy in conjunction with 

the proposed SIA payment described in 

section III.B.3 below. 

3. Proposed Service Intensity Add-On 

(SIA) Payment 

Section 1814(i)(1)(A) of the Act states 

that payment for hospice services must 

be equal to the costs which are 

reasonable and related to the cost of 

providing hospice care or which are 

based on such other tests of 

reasonableness as the Secretary may 

prescribe in regulations. In addition, 

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

amended by section 3132(a) of the 

Affordable Care Act, requires the 

Secretary to implement revisions to the 

methodology for determining the 

payment rates for RHCs and other 

services included in hospice care under 

Medicare Part A as the Secretary 

determines to be appropriate as 

described in section III.B.1 above. Given 

that independent analyses demonstrate 

a U-shaped cost pattern across hospice 

episodes, CMS believes that 

implementing revisions to the payment 

system that align with this concept 

supports the requirements of reasonable 

cost in section 1814(i)(A) of the Act. As 

articulated above, CMS considered 

implementing a tiered payment model 

as described in the FY 2014 Hospice 

Wage Index final rule (78 FR 48271) and 

in the Hospice Study Technical Report 

issued in April of 2013,45 in order to 

better align payments with observed 

resource use over the length of a hospice 

stay. However, operational concerns and 

programmatic complexity led us to 

explore the concept of a SAI that could 

be implemented with minimal systems 

changes that limit reprocessing of 

hospice claims due to sequential billing 

requirements. In addition, while the 

tiered model represented a move toward 

better aligning payments with resource 

use, it only accounted for whether 

skilled services were provided in the 

last 2 days of life (Groups 5 and 6 in 

Table 13 above). Section III.B.1.c, above 

notes that on any given day during the 

first 7 days of a hospice election and last 

7 days of life, only about 50 percent of 

the time are visits being made. In our 

view, increasing payments at the 

beginning of a hospice election and at 

the end of life for days where visits are 

not occurring does not align with the 

requirements of reasonable cost 

articulated in statute in section 

1814(i)(A) of the Act. Therefore, as one 

of the first steps in addressing the 

observed misalignment between 

resource use and associated Medicare 

payments and in improving patient care 

through the promotion of skilled visits 

at end of life with minimal claims 

processing systems changes, CMS 

proposes to implement a SIA payment 

if the criteria outlined below are met 

To qualify for the SIA payment, we 

propose that the following criteria must 

be met: (1) The day is billed as a RHC 

level of care day; (2) the day occurs 

during the last 7 days of life (and the 

beneficiary is discharged dead); (3) 

direct patient care is provided by a RN 

or a social worker (as defined by 

§ 418.114(c) and § 418.114(b)(3), 

respectively) that day; and (4) the 

service is not provided in a skilled 

nursing facility/nursing facility (SNF/

NF). The proposed SIA payment would 

be equal to the CHC) hourly payment 

rate (the current FY 2015 CHC rate is 

$38.75 per hour), multiplied by the 

amount of direct patient care provided 

by a RN or social worker for up to 4 

hours total, per day, as long as the four 

criteria listed above are met. The 

proposed SIA payment would be paid in 

addition to the current per diem rate for 

the RHC level of care. 

CMS would create two separate Gcodes for use when billing skilled 

nursing visits (revenue center 055x), one 

for a RN and one for a Licensed 

Practical Nurse (LPN). During periods of 

crisis, such as the precipitous decline 

before death, RNs are more highly 

trained clinicians with commensurately 

higher payment rates. Moreover, our 

rules at § 418.56(a)(1) require the RN 

member of the hospice interdisciplinary 

group to be responsible for ensuring that 

the needs of the patient and family are 

continually assessed. We would expect 

that at end of life the needs of the 


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46http://oig.hhs.gov/oei/reports/oei-02-10- 

00070.pdf. 

47http://www.medpac.gov/documents/reports/

Jun08_Ch08.pdf. 

48Health Care Strategic Management. 2004. 

Hospice companies benefit from favorable Medicare 

rates. Health Care Strategic Management 22, no. 1: 

13–14. 

49Odyssey HealthCare, Inc. 2004. Annual report 

to shareholders, form 10–K. Filed with the 

Securities and Exchange Commission, Washington, 

DC, March 11. Dallas, TX: Odyssey HealthCare, Inc. 

50 Virnig, B. A., I. S. Moscovice, S. B. Durham, et 

al. 2004. Do rural elders have limited access to 

Medicare hospice services? Journal of the American 

Geriatrics Society 52, no. 5: 731–735. 

51http://www.medpac.gov/documents/reports/

Jun08_Ch08.pdf. 

patient and family would need to be 

frequently assessed; thus the skills of 

the interdisciplinary group RN are 

required. We note that social workers 

also often play a crucial role in 

providing support for the patient and 

family when a patient is at end of life. 

While the nature of the role of the social 

worker does facilitate interaction via the 

telephone, CMS proposes to only pay an 

SIA for those social work services 

provided by means of in-person visits. 

Analysis conducted by Abt Associates 

on the FY 2013 hospice claims data 

shows that in the last 7 days of life only 

approximately 10 percent of 

beneficiaries received social work visits 

of any kind. Moreover, we also found 

that only about 13 percent of social 

work ‘‘visits’’ are provided via 

telephone; therefore, the proportion of 

social work calls likely represents a very 

small fraction of visits overall in the last 

few days of life. The SIA payment 

would be in addition to the RHC 

payment amount and the costs 

associated with social work phone 

conversations; visits by LPNs, aides, and 

therapists; counseling; drugs; medical 

supplies; DME; and any other item or 

service usually covered by Medicare 

would still be covered by the existing 

RHC payment amount in accordance 

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

In 2011, the OIG published a report 

that focused specifically on Medicare 

payments to hospices who served a high 

percentage of nursing facility residents. 

The OIG found that from 2005 to 2009, 

the total Medicare spending for hospice 

care for nursing facility residents 

increased from $2.55 billion to $4.31 

billion, an increase of almost 70 percent 

(OIG, 2011). When looking at hospices 

that had more than two-thirds of their 

beneficiaries in nursing facilities, the 

OIG found that 72 percent of these 

facilities were for-profit and received, 

on average, $3,182 more per beneficiary 

in Medicare payments than hospices 

overall. High-percentage hospices were 

found to serve beneficiaries who spent 

more days in hospice care, to the 

magnitude of 3 weeks longer than the 

average beneficiary. In addition, when 

looking at distributions in diagnoses, 

OIG found that high-percentage 

hospices enrolled beneficiaries who 

required less skilled care. In response to 

these findings, OIG recommended that 

CMS modify the current hospice 

reimbursement system to reduce the 

incentive for hospices to seek out 

beneficiaries in nursing facilities, who 

often receive longer but less complex 

and costly care.46 Per the OIG 

recommendation, we are proposing to 

exclude SNF/NF sites of service from 

eligibility for the SIA payment. 

The for-profit provider community 

has frequently highlighted its concerns 

regarding the lack of adequate 

reimbursement for hospice short stays 

in its public filings with the Securities 

and Exchange Commission (SEC) as 

described in MedPAC’s 2008 Report to 

Congress.47 Specifically, MedPAC cited 

records from the SEC for publicly traded 

for-profit hospice chains as evidence of 

a general acknowledgement of the 

nonlinear cost function of resource use 

within hospice episodes. For instance: 

• VistaCare: ‘‘Our profitability is 

largely dependent on our ability to 

manage costs of providing services and 

to maintain a patient base with a 

sufficiently long length of stay to attain 

profitability,’’ and that ‘‘cost pressures 

resulting from shorter patient lengths of 

stay . . . could negatively impact our 

profitability.’’ 48

• Odyssey HealthCare: ‘‘Length of 

stay impacts our direct hospice care 

expenses as a percentage of net patient 

service revenue because, if lengths of 

stay decline, direct hospice care 

expenses, which are often highest 

during the earliest and latter days of 

care for a patient, are spread against 

fewer days of care.’’ 49

Short lengths of stay were also cited 

as a source of financial difficulties for 

small rural hospices (implying that 

longer stays were more profitable).50 In 

the FY 2014 Hospice Wage Index and 

Payment Rate Update proposed rule, we 

stated that ‘‘analysis conducted by Abt 

Associates found that very short hospice 

stays have a flatter curve than the Ushaped curve seen for longer stays, and 

that average hospice costs are much 

higher. These short stays are less Ushaped because there is not a lower-cost 

middle period between the time of 

admission and the time of death.’’ The 

FY 2014 Hospice Wage Index and 

Payment Rate Update proposed rule 

went on to note that a ‘‘short stay addon’’ was under consideration as a 

possible reform option (78 FR 27843). 

Public comments received in response 

to the proposed rule were favorable 

regarding a possible short stay add-on 

payment. Since the proposed SIA 

payment would be applicable to any 7- 

day period of time ending in the 

patient’s death, hospice elections with 

short lengths of stay would receive an 

additional payment that would help 

mitigate the marginally higher costs 

associated with short lengths of stay, 

consistent with the ‘reasonable cost’ 

structure of the hospice payment 

system. For FY 2013, 32 percent of 

hospice stays were 7 days or less with 

60 percent of stays lasting 30 days or 

less. The median length of stay in FY 

2013 was 17 days. 

Although Figure 4 above 

demonstrates that there is increased 

resource use during the first 2 days of 

an election, we are not proposing an 

additional SIA payment for the first or 

second day of a hospice election when 

the length of stay is beyond 7 days. 

According to MedPAC, the breakeven 

point for a hospice election is about 

three weeks after admission.51 The 

proposed SIA payment for the last 7 

days of life would provide additional 

reimbursement to help to mitigate the 

higher costs for stays lasting 3 weeks or 

less where spreading out the initial 

costs in the first 2 days of the election 

over a smaller number of days is not 

enough to make the overall stay 

profitable. Once a hospice stay reaches 

3 weeks or more, the initial costs 

associated with the first 2 days of a 

hospice election can be spread out over 

a larger number of days, making the 

overall stay profitable. A stay of 7 days 

or less before death would be eligible for 

SIA payment on all days. 

We believe that the proposed SIA 

payment helps to address MedPAC and 

industry concerns regarding the visit 

intensity at end of life and the concerns 

associated with the profitability of 

hospice short stays. The proposed RHC 

rates described in section III.B2 and SIA 

payment would advance hospice 

payment reform incrementally, as 

mandated by the Affordable Care Act 

while simultaneously maintaining 

flexibility for future refinements. Since 

this approach would be implemented 

within the current constructs of the 

hospice payment system, no major 

overhaul of the claims processing 

system or related claims/cost report 

forms would be required, minimizing 

burden for hospices as well as for 

Medicare. CMS needs to further assess 

whether the four levels of care and the 

current payment amounts, as well as the 

amounts after implementation of the 

SIA, will align with the actual cost of 


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providing hospice services. The hospice 

cost report was redesigned, effective for 

cost reporting periods beginning on 

October 1, 2014, and additional data are 

now being collected on the hospice 

claim form, effective April 1, 2014. 

Once additional data is available, CMS 

will continue to assess additional 

refinements that may inform more 

extensive policy and payment 

approaches, in accordance with the 

payment methodology reform required 

by the Affordable Care Act. 

As required by section 

1814(i)(6)(D)(ii) of the Act, any changes 

to the hospice payment system must be 

made in a budget neutral manner in the 

first year of implementation. Based on 

the desire to improve patient care 

through the promotion of skilled visits 

at end of life, regardless of the patient’s 

lifetime length of stay, we are proposing 

to make the SIA payments budget 

neutral through a reduction to the 

overall RHC rate. The SIA payment 

budget neutrality factor (SBNF) used to 

reduce the overall RHC rate is outlined 

in section III.C.3 and is reflected in the 

proposed RHC payment rate tables. 

We also propose to continue to make 

the SIA payments budget neutral 

through an annual determination of the 

SBNF, which will then be applied to the 

RHC payment rate. The SBNF for the 

SIA payments would be calculated for 

each FY using the most current and 

complete fiscal year utilization data 

available at the time of rulemaking. 

Finally, we are soliciting public 

comment on all aspects of the proposed 

SIA payment as articulated in this 

section as well as the corresponding 

proposed changes to the regulations at 

§ 418.302 in section VI. We are also 

proposing to change the word 

‘‘Intermediary’’ to ‘‘Medicare 

Administrative Contractor’’ in the 

regulations text at § 418.302 and 

proposing technical regulations text 

changes to § 418.306 as described in 

section VI. As more data become 

available, CMS will continue to analyze 

hospice payments, costs, and utilization 

and will consider refining the SIA 

payment criteria if needed. 

C. Proposed FY 2016 Hospice Wage 

Index and Rate Update 

1. Proposed FY 2016 Hospice Wage 

Index 

a. Background 

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. Our 

regulations at § 418.306(c) require each 

labor market to be established using the 

most current hospital wage data 

available, including any changes made 

by OMB to the Metropolitan Statistical 

Areas (MSAs) definitions. 

We use the previous fiscal year’s 

hospital wage index data to calculate 

the hospice wage index values. For FY 

2016, the hospice wage index will be 

based on the FY 2015 hospital pre-floor, 

pre-reclassified wage index. This means 

that the hospital wage data used for the 

hospice wage index is not adjusted to 

take into account any geographic 

reclassification of hospitals including 

those in accordance with section 

1886(d)(8)(B) or 1886(d)(10) of the Act. 

The appropriate wage index value is 

applied to the labor portion of the 

payment rate based on the geographic 

area in which the beneficiary resides 

when receiving RHC or CHC. The 

appropriate wage index value is applied 

to the labor portion of the payment rate 

based on the geographic location of the 

facility for beneficiaries receiving 

General Inpatient care (GIP) or Inpatient 

Respite Care (IRC). 

In the FY 2006 Hospice Wage Index 

final rule (70 FR 45130), we adopted the 

changes discussed in the OMB Bulletin 

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

announced revised definitions for MSAs 

and the creation of micropolitan 

statistical areas and combined statistical 

areas. The bulletin is available online at 

http://www.whitehouse.gov/omb/

bulletins/b03-04.html. In adopting the 

CBSA geographic designations for FY 

2006, we provided for a 1-year 

transition with a blended wage index for 

all providers. For FY 2006, the wage 

index for each geographic area consisted 

of a blend of 50 percent of the FY 2006 

MSA-based wage index and 50 percent 

of the FY 2006 CBSA-based wage index. 

As discussed in the Hospice Wage Index 

final rule for FY 2006 (70 FR 45138), 

since the expiration of this 1-year 

transition on September 30, 2006, we 

have used the full CBSA-based wage 

index values. 

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. In the FY 2010 Hospice Wage 

Index final rule (74 FR 39386), 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, prereclassified hospital wage index value to 

use as a reasonable proxy for these 

areas. In FY 2016, the only CBSA 

without a hospital from which hospital 

wage data could be derived is 25980, 

Hinesville-Fort Stewart, Georgia. 

In the 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 prefloor, pre-reclassified hospital wage 

index data from all contiguous CBSAs to 

represent a reasonable proxy for the 

rural area. The term ‘‘contiguous’’ 

means 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. In this 

proposed rule, for FY 2016, we propose 

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

index value available for Puerto Rico, 

which is 0.4047. 

b. Elimination of the Wage Index Budget 

Neutrality Factor (BNAF) 

This proposed rule would update the 

hospice wage index values for FY 2016 

using the FY 2015 pre-floor, prereclassified hospital wage index. As 

described in the August 8, 1997 Hospice 

Wage Index final rule (62 FR 42860), the 

pre-floor and pre-reclassified hospital 

wage index is used as the raw wage 

index for the hospice benefit. These raw 

wage index values were then subject to 

either a budget neutrality adjustment or 

application of the hospice floor to 

compute the hospice wage index used to 

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

index values below 0.8 were adjusted by 

either: (1) The hospice BNAF; or (2) the 

hospice floor—a 15 percent increase 

subject to a maximum wage index value 

of 0.8; whichever results in the greater 

value. 

The FY 2010 Hospice Wage Index rule 

finalized a provision to phase-out the 

BNAF over 7 years, with a 10 percent 

reduction in the BNAF in FY 2010, and 

an additional 15 percent reduction in 

each of the next 6 years, with complete 

phase out in FY 2016 (74 FR 39384). 

The 10 percent reduced BNAF for FY 


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2010 was 0.055598, based on a full 

BNAF of 0.061775; the additional 15 

percent reduced BNAF for FY 2011 (for 

a cumulative reduction of 25 percent) 

was 0.045422, based on a full BNAF of 

0.060562; the additional 15 percent 

reduced BNAF for FY 2012 (for a 

cumulative reduction of 40 percent) was 

0.035156, based on a full BNAF of 

0.058593; the additional 15 percent 

reduced BNAF for FY 2013 (for a 

cumulative reduction of 55 percent) was 

0.027197, based on a full BNAF of 

0.060438; the additional 15 percent 

BNAF for FY 2014 (for a cumulative 

reduction of 70 percent) was 0.018461, 

based on a full BNAF of 0.061538 and 

the additional 15 percent reduced BNAF 

for FY 2015 (for a cumulative reduction 

of 85 percent) is 0.009313, based on a 

full BNAF of 0.062804. For FY 2016, the 

BNAF is reduced by an additional and 

final 15 percent for a cumulative 

reduction of 100 percent. Therefore, for 

FY 2016, the BNAF is completely 

phased-out and eliminated. 

Hospital wage index values which are 

less than 0.8 are still subject to the 

hospice floor calculation. The hospice 

floor equates to a 15 percent increase, 

subject to a maximum wage index value 

of 0.8. For example, if County A has a 

pre-floor, pre-reclassified hospital wage 

index value of 0.3994, we would 

multiply 0.3994 by 1.15, which equals 

0.4593. Since 0.4593 is not greater than 

0.8, then County A’s hospice wage 

index would be 0.4593. In another 

example, if County B has a pre-floor, 

pre-reclassified hospital wage index 

value of 0.7440, we would multiply 

0.7440 by 1.15 which equals 0.8556. 

Because 0.8556 is greater than 0.8, 

County B’s hospice wage index would 

be 0.8. 

c. Proposed Implementation of New 

Labor Market Delineations 

OMB has published subsequent 

bulletins regarding CBSA changes. On 

February 28, 2013, OMB issued OMB 

Bulletin No. 13–01, announcing 

revisions to the delineation of MSAs, 

Micropolitan Statistical Areas, and 

Combines Statistical Areas, and 

guidance on uses of the delineation in 

these areas. A copy of this bulletin is 

available online at: http://

www.whitehouse.gov/sites/default/files/

omb/bulletins/2013/b-13-01.pdf. This 

bulletin states that it ‘‘provides the 

delineations of all Metropolitan 

Statistical Areas, Metropolitan 

Divisions, Micropolitan Statistical 

Areas, Combined Statistical Areas, and 

New England City and Town Areas in 

the United States and Puerto Rico based 

on the standards published on June 28, 

2010, in the Federal Register (75 FR 

37246–37252) and Census Bureau data.’’ 

In the FY 2015 Hospice Wage Index 

final rule (79 FR 50483), we stated that 

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. In the 

FY 2015 Inpatient Prospective Payment 

System (IPPS) final rule (79 FR 49951), 

we finalized the proposal to use OMB’s 

new area delineations, based on the 

2010 Census, in the FY 2015 hospital 

wage index. In addition, the new area 

delineations have been incorporated 

into the FY 2015 SNF PPS (79 FR 

45628) and the CY 2015 Home Health 

(HH) PPS (79 FR 66032) using a 1-year 

transition with a blended wage index. 

While the revisions OMB published 

on February 28, 2013, are not as 

sweeping as the changes made when we 

adopted the CBSA geographic 

designations for FY 2006, the February 

28, 2013 bulletin does contain a number 

of significant changes. For example, 

there are new CBSAs, urban counties 

that have become rural, rural counties 

that have become urban, and existing 

CBSAs that have been split apart. We 

believe it is important for the hospice 

wage index to use the latest OMB 

delineations available in order to 

maintain a more accurate and up-to-date 

payment system that reflects the reality 

of population shifts and labor market 

conditions. While CMS and other 

stakeholders have explored potential 

alternatives to the current CBSA-based 

labor market system (we refer readers to 

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

Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/WageIndex-Reform.html), no consensus has 

been achieved regarding how best to 

implement a replacement system. As 

discussed in the FY 2005 IPPS final rule 

(69 FR 49027), ‘‘While we recognize that 

MSAs are not designed specifically to 

define labor market areas, we believe 

they do represent a useful proxy for this 

purpose.’’ We further believe that using 

the most current OMB delineations 

would increase the integrity of the 

hospice wage index by creating a more 

accurate representation of geographic 

variation in wage levels. We have 

reviewed our findings and impacts 

relating to the new OMB delineations, 

and have concluded that there is no 

compelling reason to further delay 

implementation. We are proposing to 

implement the new OMB delineations 

as described in the February 28, 2013 

OMB Bulletin No. 13–01 for the hospice 

wage index effective beginning in FY 

2016. 

i. Micropolitan Statistical Areas 

As discussed in the FY 2006 Hospice 

Wage Index proposed rule (70 FR 

22397) and final rule (70 FR 45132), 

CMS considered how to use the 

Micropolitan Statistical Area definitions 

in the calculation of the wage index. 

OMB defines a ‘‘Micropolitan Statistical 

Area’’ as a CBSA ‘‘associated with at 

least one urban cluster that has a 

population of at least 10,000, but less 

than 50,000 (75 FR 37252). We refer to 

these as Micropolitan Areas. After 

extensive impact analysis, consistent 

with the treatment of these areas under 

the IPPS as discussed in the FY 2005 

IPPS final rule (69 FR 49029 through 

49032), CMS determined the best course 

of action would be to treat Micropolitan 

Areas as ‘‘rural’’ and include them in 

the calculation of each state’s Hospice 

rural wage index (see 70 FR 22397 and 

70 FR 45132). Thus, the hospice 

statewide rural wage index is 

determined using IPPS hospital data 

from hospitals located in non-MSA 

areas. 

Based upon the 2010 Decennial 

Census data, a number of urban counties 

have switched status and have joined or 

became Micropolitan Areas, and some 

counties that once were part of a 

Micropolitan Area, have become urban. 

Overall, there are fewer Micropolitan 

Areas (541) under the new OMB 

delineations based on the 2010 Census 

than existed under the latest data from 

the 2000 Census (581). We believe that 

the best course of action would be to 

continue the policy established in the 

FY 2006 Hospice Wage Index final rule 

and include Micropolitan Areas in each 

state’s rural wage index. These areas 

continue to be defined as having 

relatively small urban cores 

(populations of 10,000 to 49,999). 

Therefore, in conjunction with our 

proposal to implement the new OMB 

labor market delineations beginning in 

FY 2016 and consistent with the 

treatment of Micropolitan Areas under 

the IPPS, we are proposing to continue 

to treat Micropolitan Areas as ‘‘rural’’ 

and to include Micropolitan Areas in 

the calculation of each state’s rural wage 

index. 

ii. Urban Counties Becoming Rural 

If we adopt the new OMB 

delineations (based upon the 2010 

decennial Census data), a total of 37 

counties (and county equivalents) that 

are currently considered urban would 

be considered rural beginning in FY 

2016. Table 19 below lists the 37 

counties that would change to rural 

status if we finalize our proposal to 

implement the new OMB delineations. 


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TABLE 19—COUNTIES THAT WOULD CHANGE TO RURAL STATUS

County State 

CBSA number 

from FY 2015 

hospice wage 

index 

CBSA name 

Greene County .................................................................... IN ...... 14020 Bloomington, IN. 

Anson County ..................................................................... NC ..... 16740 Charlotte-Gastonia-Rock Hill, NC-SC. 

Franklin County ................................................................... IN ...... 17140 Cincinnati-Middletown, OH-KY-IN. 

Stewart County ................................................................... TN ..... 17300 Clarksville, TN-KY. 

Howard County ................................................................... MO .... 17860 Columbia, MO. 

Delta County ....................................................................... TX ..... 19124 Dallas-Fort Worth-Arlington, TX. 

Pittsylvania County ............................................................. VA ..... 19260 Danville, VA. 

Danville City ........................................................................ VA ..... 19260 Danville, VA. 

Preble County ..................................................................... OH .... 19380 Dayton, OH. 

Gibson County .................................................................... IN ...... 21780 Evansville, IN-KY. 

Webster County .................................................................. KY ..... 21780 Evansville, IN-KY. 

Franklin County ................................................................... AR ..... 22900 Fort Smith, AR-OK. 

Ionia County ........................................................................ MI ...... 24340 Grand Rapids-Wyoming, MI. 

Newaygo County ................................................................. MI ...... 24340 Grand Rapids-Wyoming, MI. 

Greene County .................................................................... NC ..... 24780 Greenville, NC. 

Stone County ...................................................................... MS .... 25060 Gulfport-Biloxi, MS. 

Morgan County ................................................................... WV .... 25180 Hagerstown-Martinsburg, MD-WV. 

San Jacinto County ............................................................. TX ..... 26420 Houston-Sugar Land-Baytown, TX. 

Franklin County ................................................................... KS ..... 28140 Kansas City, MO-KS. 

Tipton County ...................................................................... IN ...... 29020 Kokomo, IN. 

Nelson County .................................................................... KY ..... 31140 Louisville/Jefferson County, KY-IN. 

Geary County ...................................................................... KS ..... 31740 Manhattan, KS. 

Washington County ............................................................. OH .... 37620 Parkersburg-Marietta-Vienna, WV-OH. 

Pleasants County ................................................................ WV .... 37620 Parkersburg-Marietta-Vienna, WV-OH.

George County .................................................................... MS .... 37700 Pascagoula, MS. 

Power County ..................................................................... ID ...... 38540 Pocatello, ID. 

Cumberland County ............................................................ VA ..... 40060 Richmond, VA. 

King and Queen County ..................................................... VA ..... 40060 Richmond, VA. 

Louisa County ..................................................................... VA ..... 40060 Richmond, VA. 

Washington County ............................................................. MO .... 41180 St. Louis, MO-IL. 

Summit County ................................................................... UT ..... 41620 Salt Lake City, UT. 

Erie County ......................................................................... OH .... 41780 Sandusky, OH. 

Franklin County ................................................................... MA .... 44140 Springfield, MA. 

Ottawa County .................................................................... OH .... 45780 Toledo, OH. 

Greene County .................................................................... AL ..... 46220 Tuscaloosa, AL. 

Calhoun County .................................................................. TX ..... 47020 Victoria, TX. 

Surry County ....................................................................... VA ..... 47260 Virginia Beach-Norfolk-Newport News, VA-NC. 

iii. Rural Counties Becoming Urban 

If we finalize our proposal to 

implement the new OMB delineations 

(based upon the 2010 decennial Census 

data), a total of 105 counties (and 

county equivalents) that are currently 

designated rural would be considered 

urban beginning in FY 2016. Table 20 

below lists the 105 counties that would 

change to urban status. 

TABLE 20—COUNTIES THAT WOULD CHANGE TO URBAN STATUS

County State CBSA number CBSA name 

Utuado Municipio ................................................................ PR ..... 10380 Aguadilla-Isabela, PR. 

Linn County ......................................................................... OR .... 10540 Albany, OR. 

Oldham County ................................................................... TX ..... 11100 Amarillo, TX. 

Morgan County ................................................................... GA ..... 12060 Atlanta-Sandy Springs-Roswell, GA.

Lincoln County .................................................................... GA ..... 12260 Augusta-Richmond County, GA-SC. 

Newton County ................................................................... TX ..... 13140 Beaumont-Port Arthur, TX. 

Fayette County .................................................................... WV .... 13220 Beckley, WV. 

Raleigh County ................................................................... WV .... 13220 Beckley, WV. 

Golden Valley County ......................................................... MT ..... 13740 Billings, MT. 

Oliver County ...................................................................... ND ..... 13900 Bismarck, ND. 

Sioux County ....................................................................... ND ..... 13900 Bismarck, ND. 

Floyd County ....................................................................... VI ...... 13980 Blacksburg-Christiansburg-Radford, VA. 

De Witt County .................................................................... IL ....... 14010 Bloomington, IL. 

Columbia County ................................................................ PA ..... 14100 Bloomsburg-Berwick, PA. 

Montour County .................................................................. PA ..... 14100 Bloomsburg-Berwick, PA. 

Allen County ........................................................................ KY ..... 14540 Bowling Green, KY. 

Butler County ...................................................................... KY ..... 14540 Bowling Green, KY. 

St. Mary’s County ............................................................... MD .... 15680 California-Lexington Park, MD. 

Jackson County .................................................................. IL ....... 16060 Carbondale-Marion, IL. 

Williamson County .............................................................. IL ....... 16060 Carbondale-Marion, IL. 


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TABLE 20—COUNTIES THAT WOULD CHANGE TO URBAN STATUS—Continued 

County State CBSA number CBSA name 

Franklin County ................................................................... PA ..... 16540 Chambersburg-Waynesboro, PA. 

Iredell County ...................................................................... NC ..... 16740 Charlotte-Concord-Gastonia, NC-SC. 

Lincoln County .................................................................... NC ..... 16740 Charlotte-Concord-Gastonia, NC-SC. 

Rowan County .................................................................... NC ..... 16740 Charlotte-Concord-Gastonia, NC-SC.

Chester County ................................................................... SC ..... 16740 Charlotte-Concord-Gastonia, NC-SC. 

Lancaster County ................................................................ SC ..... 16740 Charlotte-Concord-Gastonia, NC-SC.

Buckingham County ............................................................ VA ..... 16820 Charlottesville, VA. 

Union County ...................................................................... IN ...... 17140 Cincinnati, OH-KY-IN. 

Hocking County ................................................................... OH .... 18140 Columbus, OH. 

Perry County ....................................................................... OH .... 18140 Columbus, OH. 

Walton County .................................................................... FL ...... 18880 Crestview-Fort Walton Beach-Destin, FL. 

Hood County ....................................................................... TX ..... 23104 Dallas-Fort Worth-Arlington, TX.

Somervell County ................................................................ TX ..... 23104 Dallas-Fort Worth-Arlington, TX. 

Baldwin County ................................................................... AL ..... 19300 Daphne-Fairhope-Foley, AL. 

Monroe County ................................................................... PA ..... 20700 East Stroudsburg, PA. 

Hudspeth County ................................................................ TX ..... 21340 El Paso, TX. 

Adams County .................................................................... PA ..... 23900 Gettysburg, PA. 

Hall County ......................................................................... NE ..... 24260 Grand Island, NE. 

Hamilton County ................................................................. NE ..... 24260 Grand Island, NE. 

Howard County ................................................................... NE ..... 24260 Grand Island, NE. 

Merrick County .................................................................... NE ..... 24260 Grand Island, NE. 

Montcalm County ................................................................ MI ...... 24340 Grand Rapids-Wyoming, MI. 

Josephine County ............................................................... OR .... 24420 Grants Pass, OR. 

Tangipahoa Parish .............................................................. LA ..... 25220 Hammond, LA. 

Beaufort County .................................................................. SC ..... 25940 Hilton Head Island-Bluffton-Beaufort, SC. 

Jasper County ..................................................................... SC ..... 25940 Hilton Head Island-Bluffton-Beaufort, SC. 

Citrus County ...................................................................... FL ...... 26140 Homosassa Springs, FL. 

Butte County ....................................................................... ID ...... 26820 Idaho Falls, ID. 

Yazoo County ..................................................................... MS .... 27140 Jackson, MS. 

Crockett County .................................................................. TN ..... 27180 Jackson, TN. 

Kalawao County .................................................................. HI ...... 27980 Kahului-Wailuku-Lahaina, HI. 

Maui County ........................................................................ HI ...... 27980 Kahului-Wailuku-Lahaina, HI. 

Campbell County ................................................................ TN ..... 28940 Knoxville, TN. 

Morgan County ................................................................... TN ..... 28940 Knoxville, TN. 

Roane County ..................................................................... TN ..... 28940 Knoxville, TN. 

Acadia Parish ...................................................................... LA ..... 29180 Lafayette, LA. 

Iberia Parish ........................................................................ LA ..... 29180 Lafayette, LA. 

Vermilion Parish .................................................................. LA ..... 29180 Lafayette, LA. 

Cotton County ..................................................................... OK ..... 30020 Lawton, OK. 

Scott County ....................................................................... IN ...... 31140 Louisville/Jefferson County, KY-IN. 

Lynn County ........................................................................ TX ..... 31180 Lubbock, TX. 

Green County ...................................................................... WI ..... 31540 Madison, WI. 

Benton County .................................................................... MS .... 32820 Memphis, TN-MS-AR. 

Midland County ................................................................... MI ...... 33220 Midland, MI. 

Martin County ...................................................................... TX ..... 33260 Midland, TX. 

Le Sueur County ................................................................. MN .... 33460 Minneapolis-St. Paul-Bloomington, MN-WI. 

Mille Lacs County ............................................................... MN .... 33460 Minneapolis-St. Paul-Bloomington, MN-WI. 

Sibley County ...................................................................... MN .... 33460 Minneapolis-St. Paul-Bloomington, MN-WI. 

Maury County ...................................................................... TN ..... 34980 Nashville-Davidson-Murfreesboro-Franklin, TN. 

Craven County .................................................................... NC ..... 35100 New Bern, NC. 

Jones County ...................................................................... NC ..... 35100 New Bern, NC. 

Pamlico County ................................................................... NC ..... 35100 New Bern, NC. 

St. James Parish ................................................................. LA ..... 35380 New Orleans-Metairie, LA. 

Box Elder County ................................................................ UT ..... 36260 Ogden-Clearfield, UT. 

Gulf County ......................................................................... FL ...... 37460 Panama City, FL. 

Custer County ..................................................................... SD ..... 39660 Rapid City, SD. 

Fillmore County ................................................................... MN .... 40340 Rochester, MN. 

Yates County ...................................................................... NY ..... 40380 Rochester, NY. 

Sussex County .................................................................... DE ..... 41540 Salisbury, MD-DE. 

Worcester County ............................................................... MA .... 41540 Salisbury, MD-DE. 

Highlands County ................................................................ FL ...... 42700 Sebring, FL. 

Webster Parish ................................................................... LA ..... 43340 Shreveport-Bossier City, LA. 

Cochise County ................................................................... AZ ..... 43420 Sierra Vista-Douglas, AZ. 

Plymouth County ................................................................. IA ...... 43580 Sioux City, IA-NE-SD. 

Union County ...................................................................... SC ..... 43900 Spartanburg, SC. 

Pend Oreille County ............................................................ WA .... 44060 Spokane-Spokane Valley, WA. 

Stevens County ................................................................... WA .... 44060 Spokane-Spokane Valley, WA. 

Augusta County .................................................................. VA ..... 44420 Staunton-Waynesboro, VA. 

Staunton City ...................................................................... VA ..... 44420 Staunton-Waynesboro, VA. 

Waynesboro City ................................................................. VA ..... 44420 Staunton-Waynesboro, VA. 

Little River County .............................................................. AR ..... 45500 Texarkana, TX-AR. 

Sumter County .................................................................... FL ...... 45540 The Villages, FL. 


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TABLE 20—COUNTIES THAT WOULD CHANGE TO URBAN STATUS—Continued 

County State CBSA number CBSA name 

Pickens County ................................................................... AL ..... 46220 Tuscaloosa, AL. 

Gates County ...................................................................... NC ..... 47260 Virginia Beach-Norfolk-Newport News, VA-NC. 

Falls County ........................................................................ TX ..... 47380 Waco, TX. 

Columbia County ................................................................ WA .... 47460 Walla Walla, WA. 

Walla Walla County ............................................................ WA .... 47460 Walla Walla, WA. 

Peach County ..................................................................... GA ..... 47580 Warner Robins, GA. 

Pulaski County .................................................................... GA ..... 47580 Warner Robins, GA. 

Culpeper County ................................................................. VA ..... 47894 Washington-Arlington-Alexandria, DC-VA-MD-WV. 

Rappahannock County ....................................................... VA ..... 47894 Washington-Arlington-Alexandria, DC-VA-MD-WV. 

Jefferson County ................................................................. NY ..... 48060 Watertown-Fort Drum, NY. 

Kingman County ................................................................. KS ..... 48620 Wichita, KS. 

Davidson County ................................................................. NC ..... 49180 Winston-Salem, NC. 

Windham County ................................................................ CT ..... 49340 Worcester, MA-CT. 

iv. Urban Counties Moving to a Different 

Urban CBSA 

In addition to rural counties becoming 

urban and urban counties becoming 

rural, several urban counties would shift 

from one urban CBSA to another urban 

CBSA under our proposal to adopt the 

new OMB delineations. In other cases, 

applying the new OMB delineations 

would involve a change only in CBSA 

name or number, while the CBSA 

continues to encompass the same 

constituent counties. For example, 

CBSA 29140 (Lafayette, IN), would 

experience both a change to its number 

and its name, and would become CBSA 

29200 (Lafayette-West Lafayette, IN), 

while all of its three constituent 

counties would remain the same. We are 

not discussing these proposed changes 

in this section because they are 

inconsequential changes with respect to 

the hospice wage index. However, in 

other cases, if we adopt the new OMB 

delineations, counties would shift 

between existing and new CBSAs, 

changing the constituent makeup of the 

CBSAs. In one type of change, an entire 

CBSA would be subsumed by another 

CBSA. For example, CBSA 37380 (Palm 

Coast, FL) currently is a single county 

(Flagler, FL) CBSA. Flagler County 

would be a part of CBSA 19660 

(Deltona-Daytona Beach-Ormond Beach, 

FL) under the new OMB delineations. In 

another type of change, some CBSAs 

have counties that would split off to 

become part of or to form entirely new 

labor market areas. For example, CBSA 

37964 (Philadelphia Metropolitan 

Division of MSA 37980) currently is 

comprised of 5 Pennsylvania counties 

(Bucks, Chester, Delaware, Montgomery, 

and Philadelphia). If we adopt the new 

OMB delineations, Montgomery, Bucks, 

and Chester counties would split off and 

form the new CBSA 33874 (Montgomery 

County-Bucks County-Chester County, 

PA Metropolitan Division of MSA 

37980), while Delaware and 

Philadelphia counties would remain in 

CBSA 37964. Finally, in some cases, a 

CBSA would lose counties to another 

existing CBSA if we adopt the new OMB 

delineations. For example, Lincoln 

County and Putnam County, WV would 

move from CBSA 16620 (Charleston, 

WV) to CBSA 26580 (HuntingtonAshland, WV KY OH). CBSA 16620 

would still exist in the new labor market 

delineations with fewer constituent 

counties. Table 21 lists the urban 

counties that would move from one 

urban CBSA to another urban CBSA if 

we adopt the new OMB delineations. 

TABLE 21—COUNTIES THAT WOULD CHANGE TO A DIFFERENT CBSA 

Previous CBSA New CBSA County State 

11300 ............................. 26900 Madison County ....................................................................................................................... IN. 

11340 ............................. 24860 Anderson County ...................................................................................................................... SC. 

14060 ............................. 14010 McLean County ........................................................................................................................ IL. 

37764 ............................. 15764 Essex County ........................................................................................................................... MA. 

16620 ............................. 26580 Lincoln County .......................................................................................................................... WV. 

16620 ............................. 26580 Putnam County ......................................................................................................................... WV. 

16974 ............................. 20994 DeKalb County ......................................................................................................................... IL. 

16974 ............................. 20994 Kane County ............................................................................................................................. IL. 

21940 ............................. 41980 Ceiba Municipio ........................................................................................................................ PR. 

21940 ............................. 41980 Fajardo Municipio ..................................................................................................................... PR. 

21940 ............................. 41980 Luquillo Municipio ..................................................................................................................... PR. 

26100 ............................. 24340 Ottawa County .......................................................................................................................... MI. 

31140 ............................. 21060 Meade County .......................................................................................................................... KY. 

34100 ............................. 28940 Grainger County ....................................................................................................................... TN. 

35644 ............................. 35614 Bergen County ......................................................................................................................... NJ. 

35644 ............................. 35614 Hudson County ......................................................................................................................... NJ. 

20764 ............................. 35614 Middlesex County ..................................................................................................................... NJ. 

20764 ............................. 35614 Monmouth County .................................................................................................................... NJ. 

20764 ............................. 35614 Ocean County .......................................................................................................................... NJ. 

35644 ............................. 35614 Passaic County ........................................................................................................................ NJ. 

20764 ............................. 35084 Somerset County ...................................................................................................................... NJ. 

35644 ............................. 35614 Bronx County ............................................................................................................................ NY. 

35644 ............................. 35614 Kings County ............................................................................................................................ NY. 

35644 ............................. 35614 New York County ..................................................................................................................... NY. 

35644 ............................. 20524 Putnam County ......................................................................................................................... NY. 

35644 ............................. 35614 Queens County ........................................................................................................................ NY. 

35644 ............................. 35614 Richmond County ..................................................................................................................... NY. 


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25864 Federal Register / Vol. 80, No. 86 / Tuesday, May 5, 2015 / Proposed Rules 

TABLE 21—COUNTIES THAT WOULD CHANGE TO A DIFFERENT CBSA—Continued 

Previous CBSA New CBSA County State 

35644 ............................. 35614 Rockland County ...................................................................................................................... NY. 

35644 ............................. 35614 Westchester County ................................................................................................................. NY. 

37380 ............................. 19660 Flagler County .......................................................................................................................... FL. 

37700 ............................. 25060 Jackson County ........................................................................................................................ MS. 

37964 ............................. 33874 Bucks County ........................................................................................................................... PA. 

37964 ............................. 33874 Chester County ........................................................................................................................ PA. 

37964 ............................. 33874 Montgomery County ................................................................................................................. PA. 

39100 ............................. 20524 Dutchess County ...................................................................................................................... NY. 

39100 ............................. 35614 Orange County ......................................................................................................................... NY. 

41884 ............................. 42034 Marin County ............................................................................................................................ CA. 

41980 ............................. 11640 Arecibo Municipio ..................................................................................................................... PR. 

41980 ............................. 11640 Camuy Municipio ...................................................................................................................... PR. 

41980 ............................. 11640 Hatillo Municipio ....................................................................................................................... PR. 

41980 ............................. 11640 Quebradillas Municipio ............................................................................................................. PR. 

48900 ............................. 34820 Brunswick County ..................................................................................................................... NC. 

49500 ............................. 38660 Gua ́nica Municipio .................................................................................................................... PR. 

49500 ............................. 38660 Guayanilla Municipio ................................................................................................................ PR. 

49500 ............................. 38660 Pen ̃uelas Municipio .................................................................................................................. PR. 

49500 ............................. 38660 Yauco Municipio ....................................................................................................................... PR. 

v. Transition Period 

Overall, we believe that implementing 

the new OMB delineations would result 

in wage index values being more 

representative of the actual costs of 

labor in a given area. Among the 458 

total CBSA and statewide rural areas, 20 

(4 percent) would have a higher wage 

index using the newer delineations. 

However, 34 (7.4 percent) would have a 

lower wage index using the newer 

delineations. Therefore, to remain 

consistent with the manner in which we 

ultimately adopted the revised OMB 

delineations for FY 2006 (70 FR 45138), 

we are proposing to implement a 1-year 

transition to the new OMB delineations. 

Specifically, we propose to apply a 

blended wage index for one year (FY 

2016) for all geographic areas that 

would consist of a 50/50 blend of the 

wage index values using OMB’s old area 

delineations and the wage index values 

using OMB’s new area delineations. 

That is, for each county, a blended wage 

index would be calculated equal to 50 

percent of the FY 2016 wage index 

using the old labor market area 

delineation and 50 percent of the FY 

2016 wage index using the new labor 

market area delineation. This results in 

an average of the two values. We refer 

to this blended wage index as the FY 

2016 hospice transition wage index. 

This proposed 1-year transition policy 

is also consistent with the transition 

policies adopted by both the FY 2015 

SNF PPS (79 FR 25767) and the CY 2015 

HH PPS (79 FR 66032). This transition 

policy would be for a 1-year period, 

going into effect on October 1, 2015, and 

continuing through September 30, 2016. 

Thus, beginning October 1, 2016, the 

wage index for all hospice payments 

would be fully based on the new OMB 

delineations. We invite comments on 

our proposed transition methodology. 

The proposed wage index applicable 

to FY 2016 is set forth in Addendum A 

available on the CMS Web site at http:// 

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

index.html. Addendum A will not be 

published in the Federal Register. The 

proposed hospice wage index for FY 

2016 would be effective October 1, 2015 

through September 30, 2016. 

Addendum A provides a crosswalk 

between the FY 2016 wage index using 

the current OMB delineations in effect 

in FY 2015 and the FY 2016 wage index 

using the proposed revised OMB 

delineations, as well as the proposed 

transition wage index values that would 

be in effect in FY 2016 if these proposed 

changes are finalized. Addendum A 

shows each state and county and its 

corresponding proposed transition wage 

index along with the previous CBSA 

number, the new CBSA number, and the 

new CBSA name. 

Due to the way that the transition 

wage index is calculated, some CBSAs 

and statewide rural areas may have 

more than one transition wage index 

value associated with that CBSA or rural 

area. However, each county will have 

only one transition wage index. For 

counties located in CBSAs and rural 

areas that correspond to more than one 

transition wage index value, the CBSA 

number will not be able to be used for 

FY 2016 claims. In these cases, a 

number other than the CBSA number 

would be necessary to identify the 

appropriate wage index value on claims 

for hospice care provided in FY 2016. 

These numbers are five digits in length 

and begin with ‘‘50.’’ These codes are 

shown in the last column of Addendum 

A in place of the CBSA number where 

appropriate. For counties located in 

CBSAs and rural areas that still 

correspond to only one wage index 

value, the CBSA number would still be 

used. 

2. Proposed Hospice Payment Update 

Percentage 

Section 4441(a) of the Balanced 

Budget Act of 1997 (BBA) amended 

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

establish updates to hospice rates for 

FYs 1998 through 2002. Hospice rates 

were to be updated by a factor equal to 

the market basket index, minus 1 

percentage point. Payment rates for FYs 

since 2002 have been updated according 

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

Act, which states that the update to the 

payment rates for subsequent FYs must 

be the market basket percentage for that 

FY. The Act requires us to use the 

inpatient hospital market basket to 

determine the hospice payment rate 

update. In addition, section 3401(g) of 

the Affordable Care Act mandates that, 

starting with FY 2013 (and in 

subsequent FYs), the hospice payment 

update percentage will be annually 

reduced by changes in economy-wide 

productivity as specified in section 

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

statute defines the productivity 

adjustment to be equal to the 10-year 

moving average of changes in annual 

economy-wide private nonfarm business 

multifactor productivity (MFP) (as 

projected by the Secretary for the 10- 

year period ending with the applicable 

FY, year, cost reporting period, or other 

annual period) (the ‘‘MFP adjustment’’). 

A complete description of the MFP 

projection methodology is available on 

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


asabaliauskas on DSK5VPTVN1PROD with PROPOSALS
Federal Register / Vol. 80, No. 86 / Tuesday, May 5, 2015 / Proposed Rules 25865 

Research-Statistics-Data-and-Systems/

Statistics-Trends-and-Reports/

MedicareProgramRatesStats/

MarketBasketResearch.html. 

In addition to the MFP adjustment, 

section 3401(g) of the Affordable Care 

Act also mandates that in FY 2013 

through FY 2019, the hospice payment 

update percentage will be reduced by an 

additional 0.3 percentage point 

(although for FY 2014 to FY 2019, the 

potential 0.3 percentage point reduction 

is subject to suspension under 

conditions specified in section 

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

proposed hospice payment update 

percentage for FY 2016 is based on the 

estimated inpatient hospital market 

basket update of 2.7 percent (based on 

IHS Global Insight, Inc.’s first quarter 

2015 forecast with historical data 

through the fourth quarter of 2014). Due 

to the requirements at 

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

of the Act, the estimated inpatient 

hospital market basket update for FY 

2016 of 2.7 percent must be reduced by 

a MFP adjustment as mandated by 

Affordable Care Act (currently estimated 

to be 0.6 percentage point for FY 2016). 

The estimated inpatient hospital market 

basket update for FY 2016 is reduced 

further by a 0.3 percentage point, as 

mandated by the Affordable Care Act. In 

effect, the proposed hospice payment 

update percentage for FY 2016 is 1.8 

percent. We are also proposing that if 

more recent data are subsequently 

available (for example, a more recent 

estimate of the inpatient hospital market 

basket update and MFP adjustment), we 

would use such data, if appropriate, to 

determine the FY 2016 market basket 

update and the MFP adjustment in the 

FY 2016 Hospice Rate Update final rule. 

Currently, the labor portion of the 

hospice payment rates is as follows: For 

RHC, 68.71 percent; for CHC, 68.71 

percent; for General Inpatient Care, 

64.01 percent; and for Respite Care, 

54.13 percent. The non-labor portion is 

equal to 100 percent minus the labor 

portion for each level of care. Therefore, 

the non-labor portion of the payment 

rates is as follows: For RHC, 31.29 

percent; for CHC, 31.29 percent; for 

General Inpatient Care, 35.99 percent; 

and for Respite Care, 45.87 percent. 

3. Proposed FY 2016 Hospice Payment 

Rates 

Historically, the hospice rate update 

has been published through a separate 

administrative instruction issued 

annually in the summer to provide 

adequate time to implement system 

change requirements; however, 

beginning in FY 2014 and for 

subsequent FY, we are using rulemaking 

as the means to update payment rates. 

This change was proposed in the FY 

2014 Hospice Wage Index and Payment 

Rate Update proposed rule and finalized 

in the FY 2014 Hospice Wage Index and 

Payment Rate Update final rule (78 FR 

48270). It is consistent with the rate 

update process in other Medicare 

benefits, and provides rate information 

to hospices as quickly as, or earlier than, 

when rates are published in an 

administrative instruction. 

There are four payment categories that 

are distinguished by the location and 

intensity of the services provided. The 

base payments are adjusted for 

geographic differences in wages by 

multiplying the labor share, which 

varies by category, of each base rate by 

the applicable hospice wage index. A 

hospice is paid the RHC rate for each 

day the beneficiary is enrolled in 

hospice, unless the hospice provides 

continuous home care, IRC, or general 

inpatient care. CHC is provided during 

a period of patient crisis to maintain the 

patient at home; IRC is short-term care 

to allow the usual caregiver to rest; and 

GIP is to treat symptoms that cannot be 

managed in another setting. 

As discussed in section III.B.2, of this 

proposed rule, we are proposing two 

different RHC payment rates, one RHC 

rate for the first 60 days and a second 

RHC rate for days 60 and beyond. As 

discussed in section III.B.3, we are 

proposing to make a SIA payment, in 

addition to the daily RHC payment, 

when direct patient care is provided by 

a RN or social worker during the last 7 

days of the patient’s life. The SIA 

payment would be equal to the CHC 

hourly rate multiplied by the hours of 

nursing or social work provided (up to 

4 hours total) that occurred on the day 

of service. The SIA payment would also 

be adjusted by the appropriate wage 

index. In order to maintain budget 

neutrality, as required under section 

1814(i)(6)(D)(ii) of the Act, for the 

proposed SIA payment, the proposed 

RHC rates would need to be adjusted by 

a budget neutrality factor. The budget 

neutrality adjustment that would apply 

to days 1 through 60 is equal to 1 minus 

the ratio of SIA payments for days 1 

through 60 to the total payments for 

days 1 through 60 and is calculated to 

be 0.9853. The budget neutrality 

adjustment that would apply to days 61 

and beyond is equal to 1 minus the ratio 

of SIA payments for days 61 and beyond 

to the total payments for days 61 and 

beyond and is calculated to be 0.9967. 

Lastly, the RHC rates would be 

increased by the proposed FY 2016 

hospice payment update percentage of 

1.8 percent as discussed in section 

III.C.3. The proposed FY 2016 RHC rates 

are shown in Table 22. The proposed FY 

2016 payment rates for CHC, IRC, and 

GIP would be the FY 2015 payment 

rates increased by 1.8 percent. The 

proposed rates for these three levels of 

care are shown in Table 23. The 

proposed FY 2016 rates for hospices 

that do not submit the required quality 

data are shown in Tables 24 and 25. The 

proposed FY 2016 hospice payment 

rates would be effective for care and 

services furnished on or after October 1, 

2015, through September 30, 2016. 

TABLE 22—PROPOSED FY 2016 HOSPICE PAYMENT RATES FOR RHC 

Code Description Proposed 

rates 1

Proposed SIA 

budget 

neutrality factor adjustment 

(1–0.0081) 

Proposed FY 

2016 hospice 

payment 

update 

percentage 

Proposed FY 

2016 payment 

rates 

651 .................................................... Routine Home Care (days 1–60) ..... $187.63 × 0.9853 × 1.018 $188.20 

651 .................................................... Routine Home Care (days 61+) ....... 145.21 0.9967 × 1.018 147.34 

1See section III.B.2 for the proposed RHC rates for days 1–60, and days 61 and beyond before accounting for the proposed Service Intensity 

Add-on (SIA) payment budget neutrality factor and the proposed FY 2016 hospice payment update percentage of 1.8 percent as required by section 1814(i)(1)(C) of the Act. 


asabaliauskas on DSK5VPTVN1PROD with PROPOSALS
25866 Federal Register / Vol. 80, No. 86 / Tuesday, May 5, 2015 / Proposed Rules 

52National Hospice and Palliative Care 

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

Medicare Hospice Cap on Total Expenditures.’’ Web 

19 Feb. 2014. http://www.nhpco.org/sites/default/

files/public/regulatory/History_of_Hospice_

Cap.pdf. 

TABLE 23—PROPOSED FY 2016 HOSPICE PAYMENT RATES FOR CHC, IRC, AND GIP 

Code Description FY 2015 

payment rates 

Proposed FY 

2016 hospice 

payment 

update of 1.8 

percent 

Proposed FY 

2016 payment 

rate 

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

Full Rate = 24 hours of care 

$=39.44 FY 2016 hourly rate 

$929.91 × 1.018 $946.65 

655 .................................................................. Inpatient Respite Care ................................... 164.81 × 1.018 167.78 

656 .................................................................. General Inpatient Care ................................... 708.77 × 1.018 721.53 

We reiterate in this proposed rule, 

that the Congress required in sections 

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

hospices begin submitting quality data, 

based on measures to be specified by the 

Secretary. In the FY 2012 Hospice Wage 

Index final rule (76 FR 47320 through 

47324), we implemented a Hospice 

Quality Reporting Program (HQRP) as 

required by section 3004 of the 

Affordable Care Act. Hospices were 

required to begin collecting quality data 

in October 2012, and submit that quality 

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

the Act requires that beginning with FY 

2014 and each subsequent FY, the 

Secretary shall reduce the market basket 

update by 2 percentage points for any 

hospice that does not comply with the 

quality data submission requirements 

with respect to that FY. We remind 

hospices that this applies to payments 

in FY 2016 (See Tables 24 and 25 

below). For more information on the 

HQRP requirements please see section 

III.E. in this proposed rule. 

TABLE 24—PROPOSED FY 2016 HOSPICE PAYMENT RATES FOR RHC FOR HOSPICES THAT DO NOT SUBMIT THE

REQUIRED QUALITY DATA

Code Description Proposed 

RHC rates 1

Proposed SIA 

budget neutrality factor 

adjustment 

(1–0.0081) 

Proposed FY 

2016 hospice 

payment 

update of 1.8 

percent minus 

2 percentage 

points = ¥0.2 

percent 

Proposed FY 

2016 payment 

rates 

651 .................................................... Routine Home Care (days 1–60) ..... $187.63 × 0.9853 × 0.998 $184.50 

651 .................................................... Routine Home Care (days 61+) ....... 145.21 0.9967 × 0.998 144.44 

1See section III.B.2 for the proposed RHC rates for days 1–60, and days 61 and beyond before accounting for the proposed Service Intensity 

Add-on (SIA) payment budget neutrality factor and the proposed FY 2016 hospice payment update percentage of 1.8 percent as required by section 1814(i)(1)(C) of the Act. 

TABLE 25—PROPOSED FY 2016 HOSPICE PAYMENT RATES FOR CHC, IRC, AND GIP FOR HOSPICES THAT DO NOT 

SUBMIT THE REQUIRED QUALITY DATA

Code Description FY 2015 

payment rates 

Proposed FY 

2016 hospice 

payment 

update of 1.8 

percent minus 

2 percentage 

points = ¥0.2 

percent 

Proposed FY 

2016 payment 

rate 

652 .................................................................. Continuous Home Care Full Rate= 24 hours 

of care $=38.67 hourly rate.

$929.91 × 0.998 $928.05 

655 .................................................................. Inpatient Respite Care ................................... 164.81 × 0.998 164.48 

656 .................................................................. General Inpatient Care ................................... 708.77 × 0.998 707.35 

4. Hospice Aggregate Cap and the 

IMPACT Act of 2014 

When the Medicare hospice benefit 

was implemented, the Congress 

included 2 limits on payments to 

hospices: An inpatient cap and an 

aggregate cap. As set out in sections 

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

through (C) of the Act, respectively, the 

hospice inpatient cap limits the total 

number of Medicare inpatient days 

(general inpatient care and respite care) 

to no more than 20 percent of a 

hospice’s total Medicare hospice days. 

The intent of the inpatient cap was to 

ensure that hospice remained a homebased benefit. The hospice aggregate cap 

limits the total aggregate payment any 

individual hospice can receive in a year. 

The intent of the hospice aggregate cap 

was to protect Medicare from spending 

more for hospice care than it would for 

conventional care at the end of life. 

The aggregate cap amount was set at 

$6,500 per beneficiary when first 

enacted in 1983; this was an amount 

hospice advocates agreed was well 

above the average cost of caring for a 

hospice patient.52 Since 1983, the 


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$6,500 amount has been adjusted 

annually by the change in the medical 

care expenditure category of the 

consumer price index for urban 

consumers (CPI–U) from March 1984 to 

March of the cap year, as required by 

section 1814(i)(2)(B) of the Act. The cap 

amount is multiplied by the number of 

Medicare beneficiaries who received 

hospice care from a particular hospice 

during the year, resulting in its hospice 

aggregate cap, which is the allowable 

amount of total Medicare payments that 

hospice can receive for that cap year. 

The cap year is currently November 1 to 

October 31, and was set in place in the 

December 16, 1983 Hospice final rule 

(48 FR 56022). 

Section 1814(i)(2)(B)(i) and (ii) of the 

Act, as added by section 3(b) of the 

IMPACT Act requires, effective for the 

2016 cap year (November 1, 2015 

through October 31, 2016), that the cap 

amount for the previous year to be 

updated by the hospice payment update 

percentage, rather than the original 

$6,500 being annually adjusted by the 

change in the CPI–U for medical care 

expenditures since 1984. This new 

provision will sunset for cap years 

ending after September 30, 2025, at 

which time the annual update to the cap 

amount will revert back to the original 

methodology. This provision is 

estimated to result in $540 million in 

savings over 10 years starting in 2017. 

As a result, we are proposing to 

update § 418.309 to reflect the new 

language added to section 1814(i)(2)(B) 

of the Act. 

In accordance with section 

1814(i)(2)(B)(i) of the Act, the hospice 

aggregate cap amount for the 2015 cap 

year, starting on November 1, 2014 and 

ending on October 31, 2015, will be 

$27,135.96. This amount was calculated 

by multiplying the original cap amount 

of $6,500 by the change in the CPI–U 

medical care expenditure category, from 

the fifth month of the 1984 accounting 

year (March 1984) to the fifth month the 

current accounting year (in this case, 

March 2015). The CPI–U for medical 

care expenditures for 1984 to present is 

available from the Bureau of Labor 

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

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

Step 1: From the BLS Web site given 

above, the March 2015 CPI–U for 

medical care expenditures is 444.020 

and the 1984 CPI–U for medical care 

expenditures was 105.4. 

Step 2: Divide the March 2015 CPI– 

U for medical care expenditures by the 

1984 CPI–U for medical care 

expenditures to compute the change. 

440.020/105.4 = 4.174763 

Step 3: Multiply the original cap base 

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

2) to get the updated aggregate cap 

amount for the 2015 cap year. 

$6,500 × 4.174763 = $27,135.96 

As required by section 

1814(i)(2)(B)(ii) of the Act, the hospice 

aggregate cap amount for the 2016 cap 

year, starting on November 1, 2015 and 

ending on October 31, 2016, will be the 

2015 cap amount updated by the FY 

2016 hospice payment update 

percentage (see section III.C.2 above). As 

such, the 2016 cap amount will be 

$27,624.41 ($27,135.96 * 1.018 = 

$27,624.41). A Change Request with the 

finalized hospice payment rates, a 

finalized hospice wage index, the Pricer 

for FY 2016, and the hospice cap 

amount for the cap year ending October 

31, 2015 will be issued in the summer. 

D. Proposed Alignment of the Inpatient 

and Aggregate Cap Accounting Year 

With the Federal Fiscal Year 

As noted in section III.C.4, when the 

Medicare hospice benefit was 

implemented, the Congress included 2 

limits on payments to hospices: an 

aggregate cap and an inpatient cap. The 

intent of the hospice aggregate cap was 

to protect Medicare from spending more 

for hospice care than it would for 

conventional care at the end-of-life. If a 

hospice’s total Medicare payments for 

the cap year exceed such hospice’s 

aggregate cap amount, then the hospice 

must repay the excess back to Medicare. 

The intent of the inpatient cap was to 

ensure that hospice remained a homebased benefit. If a hospice’s inpatient 

days (GIP and respite) exceed 20 percent 

of all hospice days then, for inpatient 

care, the hospice is paid: (1) the sum of 

the total reimbursement for inpatient 

care multiplied by the ratio of the 

maximum number of allowable 

inpatient days to actual number of all 

inpatient days; and (2) the sum of the 

actual number of inpatient days in 

excess of the limitation by the routine 

home care rate. 

1. Streamlined Method and Patient-byPatient Proportional Method for 

Counting Beneficiaries To Determine 

Each Hospice’s Aggregate Cap Amount 

The aggregate cap amount for any 

given hospice is established by 

multiplying the cap amount by the 

number of Medicare beneficiaries who 

received hospice services during the 

year. Originally, the number of 

Medicare beneficiaries who received 

hospice services during the year was 

determined using a ‘‘streamlined’’ 

methodology whereby each beneficiary 

is counted as ‘‘1’’ in the initial cap year 

of the hospice election and is not 

counted in subsequent cap years. 

Specifically, the hospice includes in its 

number of Medicare beneficiaries those 

Medicare beneficiaries who have not 

previously been included in the 

calculation of any hospice cap, and who 

have filed an election to receive hospice 

care in accordance with § 418.24 during 

the period beginning on September 28th 

(34 days before the beginning of the cap 

year) and ending on September 27th (35 

days before the end of the cap year), 

using the best data available at the time 

of the calculation. This is applicable for 

cases in which a beneficiary received 

care from only one hospice. If a 

beneficiary received care from more 

than one hospice, each hospice includes 

in its number of Medicare beneficiaries 

only that fraction which represents the 

portion of a patient’s total days of care 

with that hospice in that cap year, using 

the best data available at the time of the 

calculation. Using the streamlined 

method, a different timeframe from the 

cap year is used to count the number of 

Medicare beneficiaries because it allows 

those beneficiaries who elected hospice 

near the end of the cap year to be 

counted in the year when most of the 

services were provided (48 FR 38158). 

During FY 2012 rulemaking, in 

addition to the streamlined method, 

CMS added a ‘‘patient-by-patient 

proportional’’ method as a way of 

calculating the number of Medicare 

beneficiaries who received hospice 

services during the year in determining 

the aggregate cap amount for any given 

hospice (76 FR 47309). This method 

specifies that a hospice should include 

in its number of Medicare beneficiaries 

only that fraction which represents the 

portion of a patient’s total days of care 

in all hospices and all years that was 

spent in that hospice in that cap year, 

using the best data available at the time 

of the calculation. The total number of 

Medicare beneficiaries for a given 

hospice’s cap year is determined by 

summing the whole or fractional share 

of each Medicare beneficiary that 

received hospice care during the cap 

year, from that hospice. Under the 

patient-by-patient proportional 

methodology, the timeframe for 

counting the number of Medicare 

beneficiaries is the same as the cap 

accounting year (November 1 through 

October 31). The aggregate cap amount 

for each hospice is now calculated using 

the patient-by-patient proportional 

method, except for those hospices that 

had their cap determination calculated 

under the streamlined method prior to 

the 2012 cap year, did not appeal the 

streamlined method used to determine 


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the number of Medicare beneficiaries 

used in the aggregate cap calculation, 

and opted to continue to have their 

hospice aggregate cap calculated using 

the streamlined method no later than 60 

days after receipt of its 2012 cap 

determination 

2. Proposed Inpatient and Aggregate Cap 

Accounting Year Timeframe 

As stated in section III.C.4, the cap 

accounting year is currently November 

1 to October 31. In the past, CMS has 

considered changing the cap accounting 

year to coincide with the hospice rate 

update year, which is the federal fiscal 

year (October 1 through September 30). 

In the FY 2011 Hospice Wage Index 

notice (75 FR 42951), CMS solicited 

comments on aligning the cap 

accounting year for both the inpatient 

and aggregate hospice cap to coincide 

with the FY. In the FY 2012 Hospice 

Wage Index proposed rule, we 

summarized the comments we received, 

stating that ‘‘several commenters 

supported the idea of our aligning the 

cap year with the federal fiscal year; 

with some noting that the change would 

be appropriate for a multi-year 

apportioning approach (the patient-bypatient proportional method).’’ Other 

commenters stated that we should not 

change the cap year at this time, and 

recommended that we wait for this to be 

accomplished as part of hospice 

payment reform (76 FR 26812). 

In FY 2012, we decided not to finalize 

changing the cap accounting year to the 

FY, partly because of a concern that a 

large portion of providers could still be 

using the streamlined method. As stated 

earlier, the streamlined method has a 

different timeframe for counting the 

number of beneficiaries than the cap 

accounting year, allowing those 

beneficiaries who elected hospice near 

the end of the cap year to be counted in 

the year when most of the services were 

provided. However, for the 2013 cap 

year, only 486 hospices used the 

streamlined method to calculate the 

number of Medicare hospice patients 

and the remaining providers used the 

patient-by-patient proportional method. 

Since the majority of providers now use 

the patient-by-patient proportional 

method, we believe there is no longer an 

advantage to defining the cap 

accounting year differently from the 

hospice rate update year and 

maintaining a cap accounting year (as 

well as the period for counting 

beneficiaries under the streamlined 

method) that is different from the 

federal fiscal year creates an added layer 

of complexity that can lead to hospices 

unintentionally calculating their 

aggregate cap determinations 

incorrectly. In addition, shifting the cap 

accounting year timeframes to coincide 

with the hospice rate update year (the 

federal fiscal year) would better align 

with the intent of the new cap 

calculation methodology required by the 

IMPACT Act of 2014, as discussed in 

section III.C.4. Therefore, we are 

proposing to align the cap accounting 

year for both the inpatient cap and the 

hospice aggregate cap with the federal 

fiscal year for FYs 2017 and later. Under 

this proposal, in addition to aligning the 

cap accounting year with the federal 

fiscal year, we would also align the 

timeframe for counting the number of 

beneficiaries with the federal fiscal year. 

This proposal would eliminate 

timeframe complexities associating with 

counting payments and beneficiaries 

differently from the federal fiscal year 

and would help hospices avoid mistakes 

in calculating their aggregate cap 

determinations. 

In shifting the cap accounting year to 

match the federal fiscal year, we note 

that new section 1814(i)(2)(B)(ii) of the 

Act, as added by section 3(b) of the 

IMPACT Act, requires the cap amount 

for 2016 to be updated by the hospice 

payment update percentage in effect 

‘‘during the FY beginning on the 

October 1 preceding the beginning of 

the accounting year’’. In other words, 

we interpret this to mean that the statute 

requires the 2016 cap amount to be 

updated using the most current hospice 

payment update percentage in effect at 

the start of that cap year. For the 2016 

cap year, the 2015 cap amount would be 

updated by the FY 2016 hospice 

payment update percentage outlined in 

section III.C.2. For the 2017 cap year 

through the 2025 cap year, we would 

update the previous year’s cap amount 

by the hospice payment update 

percentage for that current federal fiscal 

year. For the 2026 cap year and beyond, 

changing the cap accounting year to 

coincide with the federal fiscal year will 

require us to use the CPI–U for February 

when updating the cap amount, instead 

of the current process which uses the 

March CPI–U to update the cap amount. 

Section 1814(i)(2)(B) of the Act requires 

us to update the cap amount by the 

same percentage as the percentage 

increase or decrease in the medical care 

expenditure category of the CPI–U from 

March 1984 to the ‘‘fifth month of the 

accounting year ’’ for all years except 

those accounting years that end after 

September 30, 2016 and before October 

1, 2025. 

In shifting the cap year to match the 

federal fiscal year, we are proposing to 

also align the timeframes in which 

beneficiaries and payments are counted 

for the purposes of determining each 

individual hospice’s aggregate cap 

amount (see table 26 below) as well as 

the timeframes in which days of hospice 

care are counted for the purposes 

determining whether a given hospice 

exceeded the inpatient cap. In the year 

of transition (2017 cap year), for the 

inpatient cap, we propose to calculate 

the percentage of all hospice days of 

care that were provided as inpatient 

days (GIP care and respite care) from 

November 1, 2016 through September 

30, 2017 (11 months). For those 

hospices using the patient-by-patient 

proportional method for their aggregate 

cap determinations, for the 2017 cap 

year, we would count beneficiaries from 

November 1, 2016 to September 30, 

2017. For those hospices using the 

streamlined method for their aggregate 

cap determinations, we propose to allow 

3 extra days to count beneficiaries in the 

year of transition. Specifically, for the 

2017 cap year (October 1, 2016 to 

September 30, 2017), we would count 

beneficiaries from September 28, 2016 

to September 30, 2017, which is 12 

months plus 3 days, in that cap year’s 

calculation. For hospices using either 

the streamlined method or the patientby-patient proportional method, we 

propose to count 11 months of 

payments from November 1, 2016 to 

September 30, 2017 for the 2017 cap 

year. For the 2018 cap year (October 1, 

2017 to September 30, 2018), we would 

count both beneficiaries and payments 

for hospices using the streamlined or 

the patient-by-patient proportional 

methods from October 1, 2017 to 

September 30, 2018. Likewise, for the 

2018 cap year would calculate the 

percentage of all hospice days of care 

that were provided as inpatient days 

(GIP care or respite care) from October 

1, 2017 to September 30, 2018. Because 

of the non-discretionary language used 

by Congress in determining the cap for 

a year, the actual cap amount for the 

adjustment year would not be prorated 

for a shorter time frame. We are 

soliciting public comment on all aspects 

of the proposed alignment of the cap 

accounting year with the federal fiscal 

year, as articulated in this section, as 

well as the corresponding proposed 

changes to the regulations at 

§ 418.308(c) in section VI. 


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TABLE 26—HOSPICE AGGREGATE CAP TIMEFRAMES FOR COUNTING BENEFICIARIES AND PAYMENTS FOR THE PROPOSED

ALIGNMENT OF THE CAP ACCOUNTING YEAR WITH THE FEDERAL FISCAL YEAR

Cap year 

Beneficiaries Payments 

Streamlined method Patient-by-patient 

proportional method Streamlined method Patient-by-patient proportional method 

2016 ................................................. 9/28/15–9/27/16 11/1/15–10/31/16 11/1/15–10/31/16 11/1/15–10/31/16 

Proposed 2017 (Transition Year) .... 9/28/16–9/30/17 11/1/16–9/30/17 11/1/16–9/30/17 11/1/16–9/30/17 

Proposed 2018 ................................ 10/1/17–9/30/18 10/1/17–9/30/18 10/1/17–9/30/18 10/1/17–9/30/18 

E. Proposed Updates to the Hospice 

Quality Reporting Program (HQRP) 

1. Background and Statutory Authority 

Section 3004(c) of the Affordable Care 

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

Act to authorize a quality reporting 

program for hospices. Section 

1814(i)(5)(A)(i) of the Act requires that 

beginning with FY 2014 and each 

subsequent FY, the Secretary shall 

reduce the market basket update by 2 

percentage points for any hospice that 

does not comply with the quality data 

submission requirements with respect to 

that FY. Depending on the amount of 

the annual update for a particular year, 

a reduction of 2 percentage points could 

result in the annual market basket 

update being less than 0.0 percent for a 

FY and may result in payment rates that 

are less than payment rates for the 

preceding FY. Any reduction based on 

failure to comply with the reporting 

requirements, as required by section 

1814(i)(5)(B) of the Act, would apply 

only for the particular FY involved. Any 

such reduction would not be cumulative 

or be taken into account in computing 

the payment amount for subsequent 

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

requires that each hospice submit data 

to the Secretary on quality measures 

specified by the Secretary. The data 

must be submitted in a form, manner, 

and at a time specified by the Secretary. 

2. General Considerations Used for 

Selection of Quality Measures for the 

HQRP 

Any measures selected by the 

Secretary must be endorsed by the 

consensus-based entity, which holds a 

contract regarding performance 

measurement with the Secretary under 

section 1890(a) of the Act. This contract 

is currently held by the National Quality 

Forum (NQF). However, section 

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

in the case of a specified area or medical 

topic determined appropriate by the 

Secretary for which a feasible and 

practical measure has not been endorsed 

by the consensus-based entity, the 

Secretary may specify measures that are 

not so endorsed as long as due 

consideration is given to measures that 

have been endorsed or adopted by a 

consensus-based organization identified 

by the Secretary. Our paramount 

concern is the successful development 

of a Hospice Quality Reporting Program 

(HQRP) that promotes the delivery of 

high quality healthcare services. We 

seek to adopt measures for the HQRP 

that promote patient-centered, high 

quality, and safe care. Our measure 

selection activities for the HQRP take 

into consideration input from the 

Measure Applications Partnership 

(MAP), convened by the NQF, as part of 

the established CMS pre-rulemaking 

process required under section 1890A of 

the Act. The MAP is a public-private 

partnership comprised of multistakeholder 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. We also 

take into account national priorities, 

such as those established by the 

National Priorities Partnership at 

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

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

secretary/about/priorities/

priorities.html), the National Strategy 

for Quality Improvement in Healthcare, 

(http://www.ahrq.gov/

workingforquality/nqs/

nqs2013annlrpt.htm) and the CMS 

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

Medicare/Quality-Initiatives-PatientAssessmentInstruments/

QualityInitiativesGenInfo/CMS-QualityStrategy.html). To the extent 

practicable, we have sought to adopt 

measures endorsed by member 

organizations of the National Consensus 

Project recommended by multistakeholder organizations, and 

developed with the input of providers, 

purchasers/payers, and other 

stakeholders. 

3. Proposed Policy for Retention of 

HQRP Measures Adopted for Previous 

Payment Determinations 

Beginning with the FY 2018 payment 

determination, for the purpose of 

streamlining the rulemaking process, we 

propose that when we adopt measures 

for the HQRP beginning with a payment 

determination year, these measures are 

automatically adopted for all 

subsequent years’ payment 

determinations, unless we propose to 

remove, suspend, or replace the 

measures. 

Quality measures may be considered 

for removal by CMS if: 

• Measure performance among 

hospices is so high and unvarying that 

meaningful distinctions in 

improvements in performance can be no 

longer be made; 

• Performance or improvement on a 

measure does not result in better patient 

outcomes; 

• A measure does not align with 

current clinical guidelines or practice; 

• A more broadly applicable measure 

(across settings, populations, or 

conditions) for the particular topic is 

available; 

• A measure that is more proximal in 

time to desired patient outcomes for the 

particular topic is available; 

• A measure that is more strongly 

associated with desired patient 

outcomes for the particular topic is 

available; or 

• Collection or public reporting of a 

measure leads to negative unintended 

consequences. 

For any such removal, the public will 

be given an opportunity to comment 

through the annual rulemaking process. 

However, if there is reason to believe 

continued collection of a measure raises 

potential safety concerns, we will take 

immediate action to remove the measure 

from the HQRP and will not wait for the 

annual rulemaking cycle. The measures 

will be promptly removed and we will 

immediately notify hospices and the 

public of such a decision through the 

usual HQRP communication channels, 

including listening sessions, memos, 

email notification, and Web postings. In 

such instances, the removal of a 


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53 IOM (Institute of Medicine). 2014. Dying in 

America: Improving quality and honoring 

individual preferences near the end of life. 

Washington, DC: The National Academies Press. 

measure will be formally announced in 

the next annual rulemaking cycle. 

CMS is not proposing to remove any 

measures for the FY 2017 reporting 

cycle. We invite public comment on our 

proposal that once a quality measure is 

adopted, it be retained for use in the 

subsequent fiscal year payment 

determinations unless otherwise stated. 

4. Previously Adopted Quality Measures 

for FY 2016 and FY 2017 Payment 

Determination 

As stated in the CY 2013 HH PPS final 

rule (77 FR 67068, 67133), CMS 

expanded the set of required measures 

to include additional measures 

endorsed by NQF. We also stated that to 

support the standardized collection and 

calculation of quality measures by CMS, 

collection of the needed data elements 

would require a standardized data 

collection instrument. In response, CMS 

developed and tested a hospice patientlevel item set, the HIS. Hospices are 

required to submit an HIS-Admission 

record and an HIS-Discharge record for 

each patient admission to hospice on or 

after July 1, 2014. In developing the 

standardized HIS, we considered 

comments offered in response to the CY 

2013 HH PPS proposed rule (77 FR 

41548, 41573). In the FY 2014 Hospice 

Wage Index final rule (78 FR 48257), 

and in compliance with section 

1814(i)(5)(C) of the Act, we finalized the 

specific collection of data items that 

support the following six NQF endorsed 

measures and one modified measure for 

hospice: 

• NQF #1617 Patients Treated with 

an Opioid who are Given a Bowel 

Regimen, 

• NQF #1634 Pain Screening, 

• NQF #1637 Pain Assessment, 

• NQF #1638 Dyspnea Treatment, 

• NQF #1639 Dyspnea Screening, 

• NQF #1641 Treatment Preferences, 

• NQF #1647 Beliefs/Values 

Addressed (if desired by the patient) 

(modified). 

To achieve a comprehensive set of 

hospice quality measures available for 

widespread use for quality improvement 

and informed decision making, and to 

carry out our commitment to develop a 

quality reporting program for hospices 

that uses standardized methods to 

collect data needed to calculate quality 

measures, we finalized the HIS effective 

July 1, 2014 (78 FR 48258). To meet the 

quality reporting requirements for 

hospices for the FY 2016 payment 

determination and each subsequent 

year, we require regular and ongoing 

electronic submission of the HIS data 

for each patient admission to hospice on 

or after July 1, 2014, regardless of payer 

or patient age (78 FR 48234, 48258). 

Collecting data on all patients provides 

CMS with the most robust, accurate 

reflection of the quality of care 

delivered to Medicare beneficiaries as 

compared with non-Medicare patients. 

Therefore, to measure the quality of care 

delivered to Medicare beneficiaries in 

the hospice setting, we collect quality 

data necessary to calculate the adopted 

measures on all patients. We finalized 

in the FY 2014 Hospice Wage Index (78 

FR 48258) that hospice providers collect 

data on all patients in order to ensure 

that all patients regardless of payer or 

patient age are receiving the same care 

and that provider metrics measure 

performance across the spectrum of 

patients. 

Hospices are required to complete and 

submit an HIS-Admission and an HISDischarge record for each patient 

admission. Hospices failing to report 

quality data via the HIS in FY 2015 will 

have their market basket update reduced 

by 2 percentage points in FY 2017 

beginning in October 1, 2016. In the FY 

2015 Hospice Wage Index final rule (79 

FR 50485, 50487), we finalized the 

proposal to codify the HIS submission 

requirement at § 418.312. The System of 

Record (SOR) Notice titled ‘‘Hospice 

Item Set (HIS) System,’’ SOR number 

09–70–0548, was published in the 

Federal Register on April 8, 2014 (79 FR 

19341). 

5. HQRP Quality Measures and 

Concepts Under Consideration for 

Future Years 

We are not currently proposing any 

new measures for FY 2017. However, 

we are working with our measure 

development and maintenance 

contractor to identify measure concepts 

for future implementation in the HQRP. 

In identifying priority areas for future 

measure enhancement and 

development, CMS takes into 

consideration input from numerous 

stakeholders, including the Measures 

Application Partnership (MAP), the 

Medicare Payment Advisory 

Commission (MedPAC), Technical 

Expert Panels, and national priorities, 

such as those established by the 

National Priorities Partnership, the HHS 

Strategic Plan, the National Strategy for 

Quality Improvement in Healthcare, and 

the CMS Quality Strategy. In addition, 

CMS takes into consideration vital 

feedback and input from research 

published by our payment reform 

contractor as well as from the Institute 

of Medicine (IOM) report, titled ‘‘Dying 

in America,’’ released in September 

2014.53 Finally, the current HQRP 

measure set is also an important 

consideration for future measure 

development areas; future measure 

development areas should complement 

the current HQRP measure set, which 

includes HIS measures and CAHPS®

Hospice Survey measures. Based on 

input from stakeholders, CMS has 

identified several high priority concept 

areas for future measure development: 

• Patient reported pain outcome 

measure that incorporates patient and/

or proxy report regarding pain 

management; 

• Claims-based measures focused on 

care practice patterns including skilled 

visits in the last days of life, 

burdensome transitions of care for 

patients in and out of the hospice 

benefit, and rates of live discharges from 

hospice; 

• Responsiveness of hospice to 

patient and family care needs; 

• Hospice team communication and 

care coordination. 

These measure concepts are under 

development, and details regarding 

measure definitions, data sources, data 

collection approaches, and timeline for 

implementation will be communicated 

in future rulemaking. CMS invites 

comments about these four high priority 

concept areas for future measure 

development. 

6. Form, Manner, and Timing of Quality 

Data Submission 

a. Background 

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

Act requires that beginning with the FY 

2014 and for 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. 

b. Proposed Policy for New Facilities To 

Begin Submitting Quality Data 

In the FY 2015 Hospice Wage Index 

and Payment Rate Update final rule (79 

FR 50488) we finalized a policy stating 

that any hospice that receives its CCN 

notification letter on or after November 

1 of the preceding year involved is 

excluded from any payment penalty for 

quality reporting purposes for the 

following FY. For example, if a hospice 

provider receives their CCN notification 

letter on November 2, 2015 they would 


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not be required to submit quality data 

for the current reporting period ending 

December 31, 2015 (which would affect 

the FY 2017 APU). In this instance, the 

hospice would begin with the next 

reporting period beginning January 1, 

2016 and all subsequent years. 

However, if a hospice provider receives 

their CCN notification letter on October 

31, 2015, they would be required to 

submit quality data for the current 

reporting period ending December 31, 

2015 (which would affect the FY 2017 

APU) and all subsequent years. This 

requirement was codified at § 418.312. 

We are proposing to modify our 

policies for the timing of new providers 

to begin reporting to CMS. Beginning 

with the FY 2018 payment 

determination and for each subsequent 

payment determination, we propose that 

a new hospice be responsible for HQRP 

quality data reporting beginning on the 

date they receive their Certification 

Number (CCN) (also known as the 

Medicare Provider Number) notification 

letter from CMS. Under this proposal, 

hospices would be responsible for 

reporting quality data on patient 

admissions beginning on the date they 

receive their CCN notification. 

Currently, new hospices may 

experience a lag between Medicare 

certification and receipt of their actual 

CCN Number. Since hospices cannot 

submit data to the Quality Improvement 

and Evaluation System (QIES) 

Assessment Submission and Processing 

(ASAP) system without a valid CCN 

Number, CMS proposes new hospices 

begin collecting HIS quality data 

beginning on the date they receive their 

CCN notification letter by CMS. We 

believe this policy will provide 

sufficient time for new hospices to 

establish appropriate collection and 

reporting mechanisms to submit the 

required quality data to CMS. We invite 

public comment on this proposal that a 

new hospice be required to begin 

reporting quality data under HQRP 

beginning on the date they receive their 

CCN notification letter from CMS. 

c. Previously Finalized Data Submission 

Mechanism, Collection Timelines and 

Submission Deadlines for the FY 2017 

Payment Determination 

In the FY 15 Hospice Wage Index 

final rule (79 FR 50486) we finalized our 

policy requiring that, for the FY 2017 

reporting requirements, hospices must 

complete and submit HIS records for all 

patient admissions to hospice on or after 

July 1, 2014. Electronic submission is 

required for all HIS records. Although 

electronic submission of HIS records is 

required, hospices do not need to have 

an electronic medical record to 

complete or submit HIS data. In the FY 

14 Hospice Wage Index (78 FR 48258) 

we finalized that, to complete HIS 

records, providers can use either the 

Hospice Abstraction Reporting Tool 

(HART) software, which is free to 

download and use, or a vendor-designed 

software. HART provides an alternative 

option for hospice providers to collect 

and maintain facility, patient, and HIS 

Record information for subsequent 

submission to the QIES ASAP system. 

Once HIS records are complete, 

electronic HIS files must be submitted 

to CMS via the QIES ASAP system. 

Electronic data submission via the QIES 

ASAP system is required for all HIS 

submissions; there are no other data 

submission methods available. Hospices 

have 30 days from a patient admission 

or discharge to submit the appropriate 

HIS record for that patient through the 

QIES ASAP system. CMS will continue 

to make HIS completion and submission 

software available to hospices at no cost. 

We provided details on data collection 

and submission timing at http://

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

Hospice-Item-Set-HIS.html. 

The QIES ASAP system provides 

reports upon successful submission and 

processing of the HIS records. The final 

validation report may serve as evidence 

of submission. This is the same data 

submission system used by nursing 

homes, inpatient rehabilitation 

facilities, home health agencies, and 

long-term care hospitals for the 

submission of Minimum Data Set 

Version 3.0 (MDS 3.0), Inpatient 

Rehabilitation Facility—Patient 

Assessment Instrument (IRF–PAI), 

Outcome Assessment Information Set 

(OASIS), and Long-Term Care Hospital 

Continuity Assessment Record & 

Evaluation Data Set (LTCH CARE), 

respectively. We have provided 

hospices with information and details 

about use of the HIS through postings 

on the HQRP Web page, Open Door 

Forums, announcements in the CMS 

MLN Connects Provider e-News (ENews), and provider training. 

d. Proposed Data Submission Timelines 

and Requirements for FY 2018 Payment 

Determination and Subsequent Years 

Hospices are evaluated for purposes 

of the quality reporting program based 

on whether or not they submit data, not 

on their substantive performance level 

with respect to the required quality 

measures. In order for CMS to 

appropriately evaluate the quality 

reporting data received by hospice 

providers, it is essential HIS data be 

received in a timely manner. 

The submission date for any given 

HIS record is defined as the date on 

which a provider submits the completed 

record. The submission date is the date 

on which the completed record is 

submitted and accepted by the QIES 

ASAP system. Beginning with the FY 

2018 payment determination, we 

propose that hospices must submit all 

HIS records within 30 days of the Event 

Date, which is the patient’s admission 

date for HIS-Admission records or 

discharge date for HIS-Discharge 

records. 

• For HIS-Admission records, the 

submission date should be no later than 

the admission date plus 30 calendar 

days. The submission date can be equal 

to the admission date, or no greater than 

30 days later. The QIES ASAP system 

will issue a warning on the Final 

Validation Report if the submission date 

is more than 30 days after the patient’s 

admission date. 

• For HIS-Discharge records, the 

submission date should be no later than 

the discharge date plus 30 calendar 

days. The submission date can be equal 

to the discharge date, or no greater than 

30 days later. The QIES ASAP system 

will issue a warning on the Final 

Validation Report if the submission date 

is more than 30 days after the patient’s 

discharge date. 

The QIES ASAP system validation 

edits are designed to monitor the 

timeliness and ensure that providers 

submitted records conform to the HIS 

data submission specifications. 

Providers are notified when timing 

criteria have not been met by warnings 

that appear on their Final Validation 

Reports. A standardized data collection 

approach that coincides with timely 

submission of data is essential in order 

to establish a robust quality reporting 

program and ensure the scientific 

reliability of the data received. We 

invite comments on the proposal that 

hospices must submit all HIS records 

within 30 days of the Event Date, which 

is the patient’s admission date for HISAdmission records or discharge date for 

HIS-Discharge records. 

e. Proposed HQRP Data Submission and 

Compliance Thresholds for the FY 2018 

Payment Determination and Subsequent 

Years 

In order to accurately analyze quality 

reporting data received by hospice 

providers, it is imperative we receive 

ongoing and timely submission of all 

HIS-Admission and HIS-Discharge 

records. To date, the timeliness criteria 

for submission of HIS Admission and 

HIS-Discharge records has never been 

proposed and finalized through 

rulemaking process. We believe this 


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matter should be addressed by defining 

a clear standard for timeliness and 

compliance at this time. In response to 

input from our stakeholders seeking 

additional specificity related to HQRP 

compliance affecting FY payment 

determinations and, due to the 

importance of ensuring the integrity of 

quality data submitted to CMS, we are 

proposing to set specific HQRP 

thresholds for timeliness of submission 

of hospice quality data beginning with 

data affecting the FY 2018 payment 

determination and subsequent years. 

Beginning with the FY 2018 payment 

determination and subsequent FY 

payment determinations, we propose 

that all HIS records must be submitted 

within 30 days of the Event Date, which 

is the patient’s admission date or 

discharge date. To coincide with this 

requirement, we propose to establish an 

incremental threshold for compliance 

with this timeliness requirement; the 

proposed threshold would be 

implemented over a 3 year period. To be 

compliant with timeliness requirements, 

we propose that hospices would have to 

submit no less than 70 percent of their 

total number of HIS-Admission and 

HIS-Discharge records by no later than 

30 days from the Event Date for the FY 

2018 APU determination. The 

timeliness threshold would be set at 80 

percent for FY 2019 and at 90 percent 

for FY 2020 and subsequent years. The 

threshold corresponds with the overall 

amount of HIS records received from 

each provider that fall within the 

established 30 day submission 

timeframes. Our ultimate goal is to 

require all hospices to achieve a 

timeliness requirement compliance rate 

of 90 percent or more. 

For example, beginning in FY 2018, 

hospices will have met the timeliness 

requirement threshold if at the end of 

the reporting period 70 percent of all 

their HIS reporting data for the year has 

been received within the 30 day 

submission timeframe. 

To summarize, we propose to 

implement the timeliness threshold 

requirement beginning with all HIS 

admission and discharge records that 

occur on or after January 1, 2016, in 

accordance with the following schedule. 

• Beginning on or after January 1, 

2016 to December 31, 2016, hospices 

must submit at least 70 percent for all 

required HIS records within the 30 day 

submission timeframe for the year or be 

subject to a 2 percentage point reduction 

to their market basket update for FY 

2018. 

• Beginning on or after January 1, 

2017 to December 31, 2017, hospices 

must score at least 80 percent for all HIS 

records received within the 30 day 

submission timeframe for the year or be 

subject to a 2 percentage point reduction 

to their market basket update for FY 

2019. 

• Beginning on or after January 1, 

2018 to December 31, 2018, hospices 

must score at least 90 percent for all HIS 

records received within the 30 day 

submission timeframe for the year or be 

subject to a 2 percentage point reduction 

to their market basket update for FY 

2020. 

We invite public comment on our 

proposal to implement the new data 

submission and compliance threshold 

requirement, as described previously, 

for the HQRP. 

7. HQRP Submission Exception and 

Extension Requirements for the FY 2017 

Payment Determination and Subsequent 

Years 

In the FY 2015 Hospice Wage Index 

and Payment Rate Update final rule (79 

FR 50488), we finalized our proposal to 

allow hospices to request and for CMS 

to grant exemptions/extensions with 

respect to the reporting of required 

quality data when there are 

extraordinary circumstances beyond the 

control of the provider. When an 

extension/exception is granted, a 

hospice will not incur payment 

reduction penalties for failure to comply 

with the requirements of the HQRP. For 

the FY 2016 payment determination and 

subsequent payment determinations, a 

hospice may request an extension/

exception of the requirement to submit 

quality data for a specified time period. 

In the event that a hospice requests an 

extension/exception for quality 

reporting purposes, the hospice would 

submit a written request to CMS. In 

general, exceptions and extensions will 

not be granted for hospice vendor 

issues, fatal error messages preventing 

record submission, or staff error. 

In the event that a hospice seeks to 

request an exception or extension for 

quality reporting purposes, the hospice 

must request an exception or extension 

within 30 days of the date that the 

extraordinary circumstances occurred 

by submitting the request to CMS via 

email to the HQRP mailbox at 

HQRPReconsiderations@cms.hhs.gov. 

Exception or extension requests sent to 

CMS through any other channel would 

not be considered as a valid request for 

an exception or extension from the 

HQRP’s reporting requirements for any 

payment determination. In order to be 

considered, a request for an exception or 

extension must contain all of the 

finalized requirements as outlined on 

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

Medicare/Quality-Initiatives-PatientAssessment-Instruments/

HospiceQuality-Reporting/index.html. 

If a provider is granted an exception 

or extension, timeframes for which an 

exception or extension is granted will be 

applied to the new timeliness 

requirement so providers are not 

penalized. If a hospice is granted an 

exception, we will not require that the 

hospice submit any quality data for a 

given period of time. If we grant an 

extension to a hospice, the hospice will 

still remain responsible for submitting 

quality data collected during the 

timeframe in question, although we will 

specify a revised deadline by which the 

hospice must submit this quality data. 

This process does not preclude us 

from granting extensions/exceptions to 

hospices that have not requested them 

when we determine that an 

extraordinary circumstance, such as an 

act of nature, affects an entire region or 

locale. We may grant an extension/

exception to a hospice if we determine 

that a systemic problem with our data 

collection systems directly affected the 

ability of the hospice to submit data. If 

we make the determination to grant an 

extension/exception to hospices in a 

region or locale, we will communicate 

this decision through routine 

communication channels to hospices 

and vendors, including, but not limited 

to, Open Door Forums, ENews and 

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

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

codify the HQRP Submission Exception 

and Extension Requirements at 

§ 418.312. 

8. Hospice CAHPS Participation 

Requirements for the 2018 APU and 

2019 APU 

In the FY 2015 Hospice Wage Index 

and Payment Rate Update final rule (79 

FR 50452), we stated that CMS would 

start national implementation of the 

CAHPS® Hospice Survey as of January 

1, 2015. We started national 

implementation of this survey as 

planned. The CAHPS® Hospice Survey 

is a component of CMS’ Hospice Quality 

Reporting Program that emphasizes the 

experiences of hospice patients and 

their primary caregivers listed in the 

hospice patients’ records. Measures 

from the survey will be submitted to the 

National Quality Forum (NQF) for 

endorsement as hospice quality 

measures. We refer readers to our 

extensive discussion of the Hospice 

Experience of Care Survey in the 

Hospice Wage Index FY 2015 final rule 

for a description of the measurements 

involved and their relationship to the 

statutory requirement for hospice 


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quality reporting (79 FR 50450 also refer 

to 78 FR 48261). 

a. Background and Description of the 

Survey 

The CAHPS® Hospice Survey is the 

first national hospice experience of care 

survey that includes standard survey 

administration protocols that allow for 

fair comparisons across hospices. 

CMS developed the CAHPS® Hospice 

Survey with input from many 

stakeholders, including other 

government agencies, industry 

stakeholders, consumer groups and 

other key individuals and organizations 

involved in hospice care. The Survey 

was designed to measure and assess the 

experiences of patients who died while 

receiving hospice care as well as the 

experiences of their informal caregivers. 

The goals of the survey are to— 

• Produce comparable data on 

patients’ and caregivers’ perspectives of 

care that allow objective and meaningful 

comparisons between hospices on 

domains that are important to 

consumers; 

• Create incentives for hospices to 

improve their quality of care through 

public reporting of survey results; and 

• Hold hospice care providers 

accountable by informing the public 

about the providers’ quality of care. 

The development process for the 

survey began in 2012 and included a 

public request for information about 

publicly available measures and 

important topics to measure (78 FR 

5458, January 25, 2013); a review of the 

existing literature on tools that measure 

experiences with end-of-life care; 

exploratory interviews with caregivers 

of hospice patients; a technical expert 

panel attended by survey development 

and hospice care quality experts; 

cognitive interviews to test draft survey 

content; incorporation of public 

responses to Federal Register notices 

(78 FR 48234, August 7, 2013) and a 

field test conducted by CMS in 

November and December 2013. 

The CAHPS® Hospice Survey treats 

the dying patient and his or her 

informal caregivers (family members or 

friends) as the unit of care. The Survey 

seeks information from the informal 

caregivers of patients who died while 

enrolled in hospices. Survey-eligible 

patients and caregivers are identified 

using hospice records. Fielding 

timelines give the respondent some 

recovery time (2 to 3 months), while 

simultaneously not delaying so long that 

the respondent is likely to forget details 

of the hospice experience. The survey 

focuses on topics that are important to 

hospice users and for which informal 

caregivers are the best source for 

gathering this information. Caregivers 

are presented with a set of standardized 

questions about their own experiences 

and the experiences of the patient in 

hospice care. During national 

implementation of this survey, hospices 

are required to conduct the survey to 

meet the Hospice Quality Reporting 

requirements, but individual caregivers 

will respond only if they voluntarily 

choose to do so. A survey Web site is 

the primary information resource for 

hospices and vendors 

(www.hospicecahpssurvey.org). The 

CAHPS® Hospice Survey is currently 

available in English, Spanish, 

Traditional Chinese, and Simplified 

Chinese. CMS will provide additional 

translations of the survey over time in 

response to suggestions for any 

additional language translations. 

Requests for additional language 

translations should be made to the CMS 

Hospice CAHPS® Project Team at 

hospicesurvey@cms.hhs.gov. 

In general, hospice patients and their 

caregivers are eligible for inclusion in 

the survey sample with the exception of 

the following ineligible groups: primary 

caregivers of patients under the age of 

18 at the time of death; primary 

caregivers of patients who died within 

48 hours of admission to hospice care; 

patients for whom no caregiver is listed 

or available, or for whom caregiver 

contact information is not known; 

patients whose primary caregiver is a 

legal guardian unlikely to be familiar 

with care experiences; patients for 

whom the primary caregiver has a 

foreign (Non-US or US Territory 

address) home address; patients or 

caregivers of patients who request that 

they not be contacted (those who sign 

‘‘no publicity’’ requests while under the 

care of hospice or otherwise directly 

request not to be contacted). 

Identification of patients and caregivers 

for exclusion will be based on hospice 

administrative data. Additionally, 

caregivers under 18 are excluded. 

Hospices with fewer than 50 surveyeligible decedents/caregivers during the 

prior calendar year are exempt from the 

CAHPS® Hospice Survey data collection 

and reporting requirements for payment 

determination. Hospices with 50 to 699 

survey-eligible decedents/caregivers in 

the prior year will be required to survey 

all cases. For hospices with 700 or more 

survey-eligible decedents/caregivers in 

the prior year, a sample of 700 will be 

drawn under an equal-probability 

design. Survey-eligible decedents/

caregivers are defined as that group of 

decedent and caregiver pairs that meet 

all the criteria for inclusion in the 

survey sample. 

We moved forward with a model of 

national survey implementation, which 

is similar to that of other CMS patient 

experience of care surveys. Medicarecertified hospices are required to 

contract with a third-party vendor that 

is CMS-trained and approved to 

administer the survey on their behalf. A 

list of approved vendors can be found 

at this Web site: 

www.hospicecahpssurvey.org. Hospices 

are required to contract with 

independent survey vendors to ensure 

that the data are unbiased and collected 

by an organization that is trained to 

collect this type of data. It is important 

that survey respondents feel comfortable 

sharing their experiences with an 

interviewer not directly involved in 

providing the care. We have 

successfully used this mode of data 

collection in other settings, including 

for Medicare-certified home health 

agencies. The goal is to ensure that we 

have comparable data across all 

hospices. 

Consistent with many other CMS 

CAHPS® surveys that are publicly 

reported on CMS Web sites, CMS will 

publicly report hospice data when at 

least 12 months of data are available, so 

that valid comparisons can be made 

across hospice providers in the United 

States, to help patients, family and 

friends choose a hospice program for 

themselves or their loved ones. 

b. Participation Requirements To Meet 

Quality Reporting Requirements for the 

FY 2018 APU 

In section 3004(c) of the Affordable 

Care Act, the Secretary is directed to 

establish quality reporting requirements 

for Hospice Programs. The CAHPS®

Hospice Survey is a component of the 

CMS Hospice Quality Reporting 

Requirements for the FY 2018 APU and 

subsequent years. 

The CAHPS® Hospice Survey 

includes the measures detailed in Table 

27. The individual survey questions that 

comprise each measure are listed under 

the measure. These measures are in the 

process of being submitted to the 

National Quality Forum (NQF). 


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Table 27—Hospice Experience of Care Survey Quality Measures and Constituent Items 

Hospice team communication 

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

for your family member? 

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

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

care? 

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

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

Getting timely care 

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

you get help as soon as you needed it? 

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

Treating family member with respect 

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

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

Providing emotional support 

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

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

Getting help for symptoms 

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

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

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

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

Getting hospice care training 

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

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

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

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

Single Item Measures 

Providing support for religious and spiritual beliefs 

• (Support for religious or spiritual beliefs includes talking, praying, quiet time, or other ways of meeting your religious or spiritual needs.) 

While your family member was in hospice care, how much support for your religious and spiritual beliefs did you get from the hospice 

team? 

Information continuity 

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

Understanding the side effects of pain medication 

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

with you or your family member? 

Global Measures 

Overall rating of hospice 

• Using any number from 0 to 10, where 0 is the worst hospice care possible and 10 is the best hospice care possible, what number

would you use to rate your family member’s hospice care? 

Recommend hospice 

• Would you recommend this hospice to your friends and family? 

To comply with CMS’s quality 

reporting requirements for the FY 2018 

APU, hospices will be required to 

collect data using the CAHPS® Hospice 

Survey. Hospices would be able to 

comply by utilizing only CMS-approved 

third party vendors that are in 

compliance with the provisions at 

§ 418.312(e). Ongoing monthly 

participation in the survey is required 

January 1, 2016 through December 31, 

2016 for compliance with the FY 2018 

APU. 

Approved CAHPS® Hospice Survey 

vendors will submit data on the 

hospice’s behalf to the CAHPS® Hospice 

Survey Data Center. The deadlines for 

data submission occur quarterly and are 

shown in Table 28 below. Deadlines are 

the second Wednesday of the 

submission months, which are August, 

November, February, and May. 

Deadlines are final; no late submissions 

will be accepted. However, in the event 

of extraordinary circumstances beyond 

the control of the provider, the provider 

will be able to request an exemption as 

previously noted in the Quality 

Measures for Hospice Quality Reporting 

Program and Data Submission 

Requirements for Payment Year FY 2016 

and Beyond section. Hospice providers 

are responsible for making sure that 

their vendors are submitting data in a 

timely manner. 


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TABLE 28—CAHPS® HOSPICE SURVEY DATA SUBMISSION DATES FY2017 APU, FY2018 APU, AND FY2019 APU 

Sample months (that is, month of death) 1

Quarterly data 

submission 

deadlines 2

FY2017 APU 

Dry Run January–March 2015 (Q1) ........................................................................................................................................ August 12, 2015. 

April–June 2015 (Q2) .............................................................................................................................................................. November 11, 2015.3

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

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

FY2018 APU 

January–March 2016 (Q1) ....................................................................................................................................................... August 10, 2016. 

April–June 2016 (Q2) .............................................................................................................................................................. November 9, 2016. 

July–September 2016 (Q3) ..................................................................................................................................................... February 8, 2017. 

October–December 2016 (Q4) ................................................................................................................................................ May 10, 2017. 

FY2019 APU 

January–March 2017 (Q1) ....................................................................................................................................................... August 9, 2017. 

April–June 2017 (Q2) .............................................................................................................................................................. November 8, 2017. 

July–September 2017 (Q3) ..................................................................................................................................................... February, 14, 2018. 

October–December 2017 (Q4) ................................................................................................................................................ May 9, 2018. 

1 Data collection for each sample month initiates two months following the month of patient death (for example, in April for deaths occurring in 

January). 2 Data submission deadlines are the second Wednesday of the submission month. 

2 Corrected from the Final Rule published August 22, 2014, 79 FR 50493. 

In the FY 2014 Hospice Wage Index 

and Rate Update final rule, we stated 

that we would exempt very small 

hospices from CAHPS® Hospice Survey 

requirements. We propose to continue 

that exemption: Hospices that have 

fewer than 50 survey-eligible decedents/ 

caregivers in the period from January 1, 

2015 through December 31, 2015 are 

exempt from CAHPS® Hospice Survey 

data collection and reporting 

requirements for the 2018 APU. To 

qualify for the survey exemption for the 

FY 2018 APU, hospices must submit an 

exemption request form. This form will 

be available on the CAHPS® Hospice 

Survey Web site http://

www.hospicecahpssurvey.org. Hospices 

are required to submit to CMS their total 

unique patient count for the period of 

January 1, 2015 through December 31, 

2015. The due date for submitting the 

exemption request form for the FY 2018 

APU is August 10, 2016. 

c. Participation Requirements To Meet 

Quality Reporting Requirements for the 

FY 2019 APU 

To meet participation requirements 

for the FY 2019 APU, we proposed that 

hospices collect data on an ongoing 

monthly basis from January 2017 

through December 2017 (inclusive). 

Data submission deadlines for the 2019 

APU will be announced in future 

rulemaking. 

Hospices that have fewer than 50 

survey-eligible decedents/caregivers in 

the period from January 1, 2016 through 

December 31, 2016 are exempt from 

CAHPS® Hospice Survey data collection 

and reporting requirements for the FY 

2019 payment determination. To 

qualify, hospices must submit an 

exemption request form. This form will 

be available in first quarter 2017 on the 

CAHPS® Hospice Survey Web site 

http://www.hospicecahpssurvey.org. 

Hospices are required to submit to 

CMS their total unique patient count for 

the period of January 1, 2016 through 

December 31, 2016. The due date for 

submitting the exemption request form 

for the FY 2018 APU is August 10, 2016. 

d. Annual Payment Update 

The Affordable Care Act requires that 

beginning with FY 2014 and each 

subsequent fiscal year, the Secretary 

shall reduce the market basket update 

by 2 percentage points for any hospice 

that does not comply with the quality 

data submission requirements with 

respect to that fiscal year, unless 

covered by specific exemptions. Any 

such reduction will not be cumulative 

and will not be taken into account in 

computing the payment amount for 

subsequent fiscal years. In the FY 2015 

Hospice Wage Index we added the 

CAHPS® Hospice Survey to the Hospice 

Quality Reporting Program requirements 

for the FY 2017 payment determination 

and determinations for subsequent 

years. 

• To meet the HQRP requirements for 

the FY 2018 payment determination, 

hospices would collect survey data on a 

monthly basis for the months of January 

1, 2016 through December 31, 2016 to 

qualify for the full APU. 

• To meet the HQRP requirements for 

the FY 2019 payment determination, 

hospices would collect survey data on a 

monthly basis for the months of January 

1, 2017 through December 31, 2017 to 

qualify for the full APU. 

e. CAHPS® Hospice Survey Oversight 

Activities 

We propose to continue a requirement 

that vendors and hospice providers 

participate in CAHPS® Hospice Survey 

oversight activities to ensure 

compliance with Hospice CAHPS®

technical specifications and survey 

requirements. The purpose of the 

oversight activities is to ensure that 

hospices and approved survey vendors 

follow the CAHPS® Hospice Survey 

technical specifications and thereby 

ensure the comparability of CAHPS®

Hospice Survey data across hospices. 

We propose that the reconsiderations 

and appeals process for hospices failing 

to meet the Hospice CAHPS® data 

collection requirements will be part of 

the Reconsideration and Appeals 

process already developed for the 

Hospice Quality Reporting program. We 

encourage hospices interested in 

learning more about the CAHPS®

Hospice Survey to visit the CAHPS®

Hospice Survey Web site: http://

www.hospicecahpssurvey.org. 


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9. HQRP Reconsideration and Appeals 

Procedures for the FY 2016 Payment 

Determination and Subsequent Years 

In the FY 2015 Hospice Wage Index 

and Payment Rate Update final rule (79 

FR 50496), we notified hospice 

providers on how to seek 

reconsideration if they received a 

noncompliance decision for the FY 2016 

payment determination and subsequent 

years. A hospice may request 

reconsideration of a decision by CMS 

that the hospice has not met the 

requirements of the Hospice Quality 

Reporting Program for a particular 

period. Reporting compliance is 

determined by successfully fulfilling 

both the Hospice CAHPS® Survey 

requirements and the HIS data 

submission requirements. 

We wish to clarify that any hospice 

that wishes to submit a reconsideration 

request must do so by submitting an 

email to CMS containing all of the 

requirements listed on the HQRP Web 

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

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

Reconsideration-Requests.html. 

Electronic email sent to 

HQRPReconsiderations@cms.hhs.gov is 

the only form of submission that will be 

accepted. Any reconsideration requests 

received through any other channel 

including U.S. postal service or phone 

will not be considered as a valid 

reconsideration request. We codified 

this process at § 418.312. In addition, 

we codified at § 418.306 that beginning 

with FY 2014 and each subsequent FY, 

the Secretary shall reduce the market 

basket update by 2 percentage points for 

any hospice that does not comply with 

the quality data submission 

requirements with respect to that FY 

and solicited comments on all of the 

proposals and the associated regulations 

text at § 418.312 and in § 418.306 in 

section VI. 

In the past, only hospices found to be 

non-compliant with the reporting 

requirements set forth for a given 

payment determination received a 

notification of this finding along with 

instructions for requesting 

reconsideration in the form of a certified 

United States Postal Service (USPS) 

letter. In an effort to communicate as 

quickly, efficiently, and broadly as 

possible with hospices regarding annual 

compliance, we are proposing additions 

to our communications method 

regarding annual notification of 

reporting compliance in the HQRP. In 

addition to sending a letter via regular 

USPS mail, beginning with the FY 2017 

payment determination and for 

subsequent fiscal years, we propose to 

use the Quality Improvement and 

Evaluation System (QIES) National 

System for Certification and Survey 

Provider Enhanced Reports (CASPER) 

Reporting as an additional mechanism 

to communicate to hospices regarding 

their compliance with the reporting 

requirements for the given reporting 

cycle. The electronic APU letters would 

be accessed using the CASPER 

Reporting Application. Requesting 

access to the CMS systems is performed 

in two steps. Details are provided on the 

QIES Technical Support Office Web site 

(direct link), https://www.qtso.com/

hospice.html. Once successfully 

registered, access the CMS QIES to 

Success Welcome page https://

web.qiesnet.org/qiestosuccess/

index.html and select the ‘‘CASPER 

Reporting’’ link. Additional information 

about how to access the letters will be 

provided prior to the release of the 

letters. 

We propose to disseminate 

communications regarding the 

availability of hospice compliance 

reports in CASPER files through routine 

channels to hospices and vendors, 

including, but not limited to issuing 

memos, emails, Medicare Learning 

Network (MLN) announcements, and 

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

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

We further propose to publish a list of 

hospices who successfully meet the 

reporting requirements for the 

applicable payment determination on 

the HQRP Web site http://www.cms.gov/ 

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

updating the list after reconsideration 

requests are processed on an annual 

basis. 

We invite comment on the proposals 

to add CASPER Reporting as an 

additional communication mechanism 

for the dissemination of compliance 

notifications and to publish a list of 

compliant hospices on the HQRP Web 

site. 

10. Public Display of Quality Measures 

and Other Hospice Data for the HQRP 

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 must ensure that 

a hospice would have the opportunity to 

review the data regarding the hospice’s 

respective program before it is made 

public. 

We recognize that public reporting of 

quality data is a vital component of a 

robust quality reporting program and are 

fully committed to developing the 

necessary systems for public reporting 

of hospice quality data. We also 

recognize that it is essential that the 

data made available to the public be 

meaningful and that comparing 

performance between hospices requires 

that measures be constructed from data 

collected in a standardized and uniform 

manner. Hospices have been required to 

use a standardized data collection 

approach (HIS) since July 1, 2014. Data 

from July 1, 2014 onward is currently 

being used to establish the scientific 

soundness of the quality measures prior 

to the onset of public reporting of the 

seven quality measures implemented in 

the HQRP. We believe it is critical to 

establish the reliability and validity of 

the quality measures prior to public 

reporting in order to demonstrate the 

ability of the quality measures to 

distinguish the quality of services 

provided. To establish reliability and 

validity of the quality measures, at least 

four quarters of data will be analyzed. 

Typically, the first one or two quarters 

of data reflect the learning curve of the 

facilities as they adopt standardized 

data collection procedures; these data 

often are not used to establish reliability 

and validity. We began data collection 

in CY 2014; the data from CY 2014 for 

Quarter 3 (Q3) will not be used for 

assessing validity and reliability of the 

quality measures. We are analyzing data 

collected by hospices during Quarter 4 

(Q4) CY 2014 and Q1–Q3 CY 2015. 

Decisions about whether to report some 

or all of the quality measures publicly 

will be based on the findings of analysis 

of the CY 2015 data. 

In addition, the Affordable Care Act 

requires that reporting be made public 

on a CMS Web site and that providers 

have an opportunity to review their data 

prior to public reporting. CMS will 

develop the infrastructure for public 

reporting, and provide hospices an 

opportunity to review their quality 

measure data prior to publicly reporting 

information about the quality of care 

provided by ‘‘Medicare-certified’’ 

hospice agencies throughout the nation. 

CMS also plans to make available 

provider-level feedback reports in the 

Certification and Survey Provider 

Enhances Reports (CASPER) system. 

These provider-level feedback reports or 

‘‘quality reports’’ will be separate from 

public reporting and will be for provider 

viewing only, for the purposes of 

internal provider quality improvement. 

As is common in other quality reporting 

programs, quality reports would contain 

feedback on facility-level performance 

on quality metrics, as well as 


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54Connor, S. (2007). Development of Hospice and 

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

89–99. 

55 Institute of Medicine (IOM), ‘‘Dying in 

America: Improving Quality and Honoring 

Individual Preferences Near End-of-Life,’’ 2014, 

p.5–10. 

56 Institute of Medicine (IOM), ‘‘Dying in 

America: Improving Quality and Honoring 

Individual Preferences Near End-of-Life,’’ 2014, 

p.5–52. 

57http://www.washingtonpost.com/sf/business/

collection/business-of-dying/ 

benchmarks and thresholds. For the CY 

2014 Reporting Cycle, there were no 

quality reports available in CASPER; 

however, CMS anticipates that providerlevel quality reports will begin to be 

available sometime in CY 2015. CMS 

anticipates that providers would use the 

quality reports as part of their Quality 

Assessment and Performance 

Improvement (QAPI) efforts. 

As part of our ongoing efforts to make 

healthcare more transparent, affordable, 

and accountable, the HQRP is prepared 

to post hospice data on a public data set, 

the Medicare Provider Utilization and 

Payment Data: Physician and Other 

Supplier Public Use File located at 

https://data.cms.hhs.gov. This site 

includes information on services and 

procedures provided to Medicare 

beneficiaries by physicians and other 

healthcare professionals and serves as a 

helpful resource to the healthcare 

community. A timeline for posting 

hospice data on a public data set has not 

been determined by CMS. Should a 

timeline become available prior to the 

next annual rulemaking cycle, details 

would be announced via regular HQRP 

communication channels, including 

listening sessions, memos, email 

notification, and Web postings. 

Furthermore, to meet the requirement 

for making such data public, we will 

develop a CMS Compare Web site for 

hospice, which will list hospice 

providers geographically. Consumers 

can search for all Medicare approved 

hospice providers that serve their city or 

zip code (which would include the 

quality measures and CAHPS® Hospice 

Survey results) and then find the 

agencies offering the types of services 

they need. Like other CMS Compare 

Web sites, the Hospice Compare Web 

site will feature a quality rating system 

that gives each hospice a rating of 

between one (1) and five (5) stars. 

Hospices will have prepublication 

access to their own agency’s quality 

data, which enables each agency to 

know how it is performing before public 

posting of data on the Compare Web 

site. Decisions regarding how the rating 

system will determine a providers star 

rating and methods used for 

calculations, as well as a proposed 

timeline for implementation will be 

announced via regular HQRP 

communication channels, including 

listening sessions, memos, email 

notification, provider association calls, 

Open Door Forums, and Web postings. 

We will announce the timeline for 

public reporting of quality measure data 

in future rulemaking. 

F. Clarification Regarding Diagnosis 

Reporting on Hospice Claims 

1. Background 

During the grass roots movement of 

hospice growth in the United States in 

the 1970s, healthcare providers 

recognized the need for a care delivery 

model to address the needs of those 

individuals who no longer wanted to 

seek out the curative care for advancing 

illnesses and injuries. In the early stages 

of development, hospice leaders worked 

with key legislative leaders to develop 

a system to reimburse hospice care in 

the United States.54 However, it was 

evident that before governmental 

reimbursement could occur, data had to 

be collected and analyzed to 

demonstrate what hospices actually 

provided and what costs were involved 

in rendering hospice care. The Health 

Care Financing Administration 

(HCFA)—now known as the Centers for 

Medicare & Medicaid Services (CMS)— 

conducted a demonstration that 

included 26 hospices located 

throughout the country to study the 

effect of Medicare-reimbursed hospice 

care. The results of this demonstration, 

as well as those sponsored by the 

private health insurance sector and 

private foundations, along with the 

testimony of multiple hospice industry 

leaders, legislators, and hospice 

families, helped to form the structure of 

the Medicare hospice benefit. 

Stakeholders agreed that a Medicare 

hospice benefit needed to be structured 

to promote cost control and appropriate 

service provision, while discouraging 

providers from entering the hospice 

market with the intent of maximizing 

reimbursement from Medicare. 

Both the Congress and the hospice 

industry wanted the Medicare hospice 

benefit to provide a coordinated range of 

services to ensure that terminally ill 

individuals would have access to 

comprehensive care aimed at addressing 

their physical, emotional, psychosocial 

and spiritual needs as they approached 

the end of life. As stated in the 1983 

hospice final rule, and reiterated 

throughout hospice rules since 

implementation of the benefit, it is our 

general view that the waiver required by 

the law is a broad one and that hospices 

are required to provide virtually all the 

care that is needed by terminally ill 

patients (48 FR 56010). Therefore, 

hospices are to provide pain and 

symptom management, as an alternative 

to the curative model of care, focused on 

the ‘‘total person’’ as opposed to 

individual disease or injury states. The 

goal of hospice care is to help terminally 

ill individuals continue life with 

minimal disruption to normal activities 

while remaining primarily in the home 

environment. We continue to support 

the philosophy of holistic, 

comprehensive, virtually all-inclusive 

hospice care and seek to protect 

beneficiary access and coverage under 

the Medicare hospice benefit. 

2. Current Discussions About Hospice 

Vulnerabilities 

The Institute of Medicine (IOM) 

recently released the report, Dying in 

America: Improving Quality and 

Honoring Individual Preferences Near 

the End of Life. This report discussed 

vulnerabilities in the current health care 

system, especially as it relates to those 

who are approaching the end of life, and 

stated that one of the largest barriers in 

providing efficient, quality end-of-life 

care is the lack of coordination and 

communication among different 

components of the health care system.55

The report states that better 

coordination of care is essential in 

improving patient outcomes and that 

end-of-life care should be 

individualized based on patient values, 

goals, needs, and informed preferences 

with a recognition that individual 

service needs and intensity will change 

over time.56

Recent news articles on hospice care 

highlight the same concerns expressed 

in the IOM report regarding 

vulnerabilities in the current health care 

system. While recent news articles agree 

that hospice care is a valuable and 

needed service for patients who are near 

death, the articles identified issues with 

hospice quality of care, the lack of 

services provided, conflicts of interest, 

and the current Medicare payment 

structure that may incentivize the 

provision of fewer services.57 Overall, 

the IOM report and recent news articles 

raise concerns regarding fragmented and 

uncoordinated care for those who are 

terminally ill. 

As mentioned in previous rules, and 

in section III.A of this proposed rule, 

there is data suggesting a significant 

amount of ‘‘unbundling’’ is occurring 

for services that should be included in 

the hospice bundled payment. As 


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58 ‘‘Background Materials on Medicare Hospice 

Benefit Including Description of Proposed 

Implementing Regulations,’’ September 9, 1983. 

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

98–88, p. 1. 

59Hoyer, T. (1998). A History of the Medicare 

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

69. 

60http://www.washingtonpost.com/business/

economy/medicare-rules-create-a-boomingbusiness-in-hospice-care-for-people-who-arentdying/2013/12/26/4ff75bbe-68c9-11e3-ae56- 

22de072140a2_story.html. 

discussed previously above, our data 

analysis shows that $1.3 billion is being 

paid outside of the Medicare hospice 

benefit for those under an active hospice 

election. With such a significant amount 

of services being provided outside of the 

Medicare hospice benefit, it raises 

questions whether hospices are 

providing full disclosure of the nature of 

hospice care, which focuses on 

improving quality of life as one is 

approaching the end of life while 

eliminating the need for unnecessary, 

futile and possibly harmful diagnostics, 

treatments, and therapies. Additionally, 

we have received anecdotal reports from 

non-hospice providers who have 

rendered care and services to hospice 

beneficiaries in which the non-hospice 

provider states that the care given was 

related to the terminal prognosis of the 

individual. These reports go on to say 

that they have contacted hospices to 

coordinate the care of the hospice 

beneficiary only to be told by those 

hospices that they disagreed with the 

non-hospice providers’ clinical 

judgment that the care was related to the 

terminal prognosis. We have been told 

that hospices are refusing to reimburse 

the non-hospice provider for care 

related to the terminal prognosis. These 

non-hospice providers also informed us 

that the hospices told them to code the 

claim with a different diagnosis or to 

code condition code 07 (treatment of 

Non-terminal Condition for Hospice) or 

the modifier ‘‘GW’’ (service not related 

to the hospice patient’s terminal 

condition) on their claims to ensure that 

the non-hospice provider would 

consequently get paid through 

Medicare. These non-hospice providers 

stated that they disagreed with this 

practice, and considered it fraudulent. 

As such, they were unable to be 

reimbursed by the hospice or by 

Medicare for services provided that they 

felt were the responsibility of hospice. 

We have also received anecdotal reports 

from hospice beneficiaries and their 

families that they have been told by the 

hospice to revoke their hospice election 

to receive high-cost services that should 

be covered by the hospice, such as 

palliative chemotherapy and radiation. 

Given the legislative history, the 

statements provided by hospices during 

the development of the benefit, and 

anecdotal reports from non-hospice 

providers and hospice beneficiaries, we 

are concerned that some hospices are 

making determinations of hospice 

coverage based solely on cost and 

reimbursement as opposed to being 

based on patient-centered needs, 

preferences and goals for those 

approaching the end of life. We believe 

this to be counter to the holistic, 

comprehensive, and coordinated 

hospice care model promoted during the 

development of the Medicare hospice 

benefit.58 It was very clear throughout 

the development, and years after the 

implementation, of the Medicare 

hospice benefit that hospices were 

expected to make good on their promise 

to do a better job in the provision and 

coordination of care than conventional 

Medicare services for those who were at 

the end of life.59 However, if hospices 

are not making good on that promise, it 

results in increased burden on hospice 

beneficiaries and their families—both 

clinically and financially—and is not in 

keeping with the intent of the Medicare 

hospice benefit as originally developed 

and implemented in 1983. 

3. Medicare Hospice Eligibility 

Requirements 

The Medicare hospice regulations at 

§ 418.25(b) state that in reaching a 

decision to certify that a patient is 

terminally ill, meaning that the patient 

has a medical prognosis of a life 

expectancy of 6 months or less, the 

certifying physician(s) 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 clinically relevant 

information supporting all diagnoses. 

Eligibility for the Medicare hospice 

benefit has always been based on the 

prognosis of the individual. As we have 

mentioned in previous rules, prognosis 

is not necessarily established through 

just a single diagnosis or even multiple 

diagnoses; rather, it is based on the 

totality of the individual and everything 

that affects their life expectancy. In the 

FY 2015 Hospice Payment Rate Update 

final rule (79 FR 50471), we reminded 

providers that there are multiple public 

sources available to assist in 

determining whether a patient meets 

Medicare hospice prognosis eligibility 

criteria (that is, industry-specific 

clinical and functional assessment tools 

and information on MAC Web sites, 

including Local Coverage 

Determinations (LCDs)). We have 

mentioned that there are 

prognostication tools available for 

hospices to assist in thoughtful 

evaluation of Medicare beneficiaries for 

determining eligibility for the Medicare 

hospice benefit. We expect hospice 

providers to use the full range of tools 

available, including guidelines, 

comprehensive assessments, and the 

complete medical record, as necessary, 

to make responsible and thoughtful 

clinical determinations regarding 

prognosis eligibility. 

As mentioned earlier in this section, 

the hospice industry has come under 

increased media scrutiny, much of it 

related to hospices enrolling patients 

who may not be eligible for the benefit 

because they are not terminally ill and 

enrolling patients with certain 

diagnoses that typically have a longer 

length of stay, mainly non-cancer 

diagnoses. In the December 26, 2013 

Washington Post article, ‘‘Hospice firms 

draining billions from Medicare’’, the 

author discusses the incentives for 

hospices to recruit patients who are not 

yet terminally ill or not yet ready to 

elect the hospice benefit. This article 

also goes on to describe allegations from 

former hospice employees who say that 

some hospices knowingly admitted 

patients who were not declining in 

health.60 To address some of these noted 

hospice vulnerabilities, the recent 

IMPACT Act legislation, as summarized 

in Section II.D.8. of this proposed rule, 

requires increased hospice program 

oversight through more frequent hospice 

surveys and medical review efforts. All 

of these efforts seek to protect the 

Medicare hospice beneficiaries, as well 

as, the integrity of the Medicare hospice 

benefit. 

4. Assessment of Conditions and 

Comorbidities Required by Regulation 

We have recognized throughout the 

federal regulations at part 418 that the 

total person is to be assessed, including 

acute and chronic conditions, as well as, 

controlled and uncontrolled conditions, 

and comorbidities, in order to determine 

an individual’s terminal prognosis. We 

have also been clear that the original 

intent of the Medicare hospice benefit is 

to provide comprehensive, integrated 

and holistic care for those who have a 

terminal prognosis. While hospices are 

responsible for the palliation and 

management of the terminal illness and 

related conditions, in the 1983 hospice 

proposed rule (48 FR 38147) we stated 

that upon hospice election, the 

individual waives payment for certain 

other benefits except in ‘‘exceptional 

and unusual circumstances.’’ In that 


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61 Gijsen, R., Hoeymans, N., Schellevis, F., 

Ruwaard, Satariano, W., van den Bos, G., (2001). 

Causes and consequences of comorbidity: A review. 

Journal of Clinical Epidemiology, 54(2001), 661. 

62 Yancik, R., Ganz, P, Varricchio, C., Conley, B. 

(2001). Perspectives on Comorbidity and Cancer in 

Older Patients: Approaches to Expand the 

Knowledge Base. American Society of Clinical 

Oncology. PAGE #. 

Repetto, L., Comandini, D., Mammoliti, S. (2001). 

Life expectancy, comorbidity and quality of life: 

The treatment equation in the older cancer patients. 

Critical Reviews in Oncology/Hematology, 

37(2001), 148. 

Escarrabill, J., Cataluna, J., Hernandez, C., 

Servera, E. (2009). Recommendations for End-ofLife Care in Patients with Chronic Obstructive 

Pulmonary Disease. Archivos de 

Bronconeumologia, 45(6), 297–303. 

63Legler et al. (2011). The effect of comorbidity 

burden on health care utilization for patients with 

cancer using hospice. Journal of Palliative Care 

Medicine. 14(6), 751–756. 

64Stevenson, J., Abernethy, A., Miller, C, Currow, 

D. (2004). Managing comorbidities in patients at the 

end of life. British Medical Journal. 324(2004), 909– 

912. 

65Stevenson, J., Abernethy, A., Miller, C, Currow, 

D. (2004). Managing comorbidities in patients at the 

end of life. British Medical Journal. 324(2004), 909– 

912. 

66National Hospice and Palliative Care 

Organization. (2010). Standards of Practice for 

Hospice Programs. 

proposed rule, we did not specify these 

‘‘exceptional and unusual 

circumstances’’ because we did not yet 

know what specific types of 

circumstances would warrant the use of 

this exception and invited comments on 

this point. In the 1983 hospice final rule 

(48 FR 56010 through 56011), we stated 

that we did not receive any suggestions 

for identifying exceptional and unusual 

circumstances that warranted the 

inclusion of a specific provision in the 

regulations to accommodate them. We 

stated this because most of the 

comments that were made attempted to 

suggest this exception as a means of 

routinely providing non-hospice 

Medicare financing for the expense of 

costly services needed by hospice 

patients and we do not view this as an 

appropriate interpretation of the law (48 

FR 56011). We reiterated that 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 and that it is our 

general rule that the waiver required by 

law is a broad one. 

Since the implementation of the 

Medicare hospice benefit, there have 

been many questions and requests for 

CMS to provide those ‘‘exceptional and 

unusual’’ circumstances for which a 

condition would be unrelated to the 

prognosis of the terminally ill 

individual. We continue to state that 

those circumstances would be 

‘‘exceptional and unusual’’ and that 

hospices continue to be required to 

provide virtually all the care that is 

needed by terminally ill patients. To 

respond to the many requests for greater 

clarification, in the Medicare Program; 

FY 2015 Payment Rate Update proposed 

rule (79 FR 26554 through 26555), we 

solicited comments on definitions we 

provided for ‘‘terminal illness’’ and 

‘‘related conditions.’’ Based on 

comments received in response to those 

definitions and from comments received 

in prior year’s proposed rules, it appears 

that there continues to be widely 

varying interpretation as to what 

constitutes ‘‘terminal illness’’ and 

‘‘related conditions’’ and hence the 

services that should be provided and 

covered by hospices. Similar to the 1983 

hospice final rule, some commenters 

appear to have a very broad 

interpretation stating that all conditions 

are related to the terminal prognosis. 

Other commenters have a very narrow 

interpretation as to what illnesses and 

conditions would be and would not be 

the responsibility of hospice, and felt 

that those conditions are limited to a 

single diagnosis. Additionally, some 

comments previously received stated 

that longstanding, preexisting, chronic, 

stable and controlled conditions and 

disease states as well as comorbidities, 

should not be considered related to a 

patient’s terminal illness or related 

conditions. Some commenters went on 

to say that not all pain and symptoms 

are related to a patient’s terminal 

prognosis. Many commenters stated that 

determining ‘‘related conditions’’ was 

often very difficult, while others 

reported that it wasn’t difficult at all. 

Many commenters felt that the 

management and maintenance of 

comorbidities is not the responsibility of 

hospice as they felt that these 

comorbidities are not related to the 

reason why an individual is terminally 

ill. These commenters believed that 

these types of conditions should not be 

included in the bundle of services 

covered under the Medicare hospice 

benefit. As we have previously stated in 

response to those comments, we believe 

these conditions are included in the 

bundle of hospice services as hospices 

are required to provide reasonable and 

necessary services for both palliation 

and management of all conditions that 

contribute to a terminal prognosis. 

Conversely, several commenters were in 

agreement that all medical problems 

will affect a person’s prognosis and will 

relate, in some way, to the disease that 

will ultimately end that person’s life. 

Defined at § 418.3, ‘‘terminally ill’’ 

means that the individual has a medical 

prognosis that his or her life expectancy 

is 6 months or less if the illness runs its 

normal course. The original 

implementing regulations of the 

Medicare hospice benefit, beginning 

with the 1983 hospice propose and final 

rules (48 FR 318146 and 48 FR 56008), 

articulate a set of requirements that do 

not delineate between preexisting, 

chronic, controlled or comorbid 

conditions. The presence of 

comorbidities is recognized as an 

important factor contributing to the 

overall status of an individual and 

should be considered when determining 

terminal prognosis. Mental health 

comorbidities must also be considered 

as it is not uncommon for terminally ill 

individuals to have underlying mental 

health conditions that could contribute 

to their prognosis and/or affect the plan 

of care. Health care researchers agree the 

importance of comorbidity is clear, due 

to its high prevalence in older 

populations and its impact on health 

and health care.61 It is also welldocumented that comorbidities affect 

overall general health, treatment choice, 

prognosis, and is a predictor of poor 

survival.62 A study of U.S. hospice 

patients also showed that hospice 

patients with higher comorbidity index 

scores were more likely to— 

• Be admitted to the ER and hospital; 

• Die in the hospital; 

• Be discharged from hospice.63

It is not an uncommon clinical 

practice for some clinicians to stop 

drugs for comorbid conditions 

arbitrarily because the person has a 

progressive life-limiting illness; 

however, withdrawing long term drugs 

from comorbidities without considering 

the natural course of the illness can lead 

to serious problems, such as rebound 

hypertension, tachycardia, depression 

and death.64 It is imperative for hospice 

patients with comorbidities to have 

careful management and for clinicians 

to consider both the physical and 

psychological effects of treatment.65

The National Hospice and Palliative 

Care Organization (NHPCO) recognizes 

the importance of comorbidities. They 

define ‘‘comorbidity’’ as known factors 

or pathological disease impacting on the 

primary health problem and generally 

attributed to contributing to increased 

risk for poor health status outcomes 66

This aligns with the Medicare hospice 

benefit requirements in which the 

physical, psychosocial, emotional and 

spiritual needs of the individual and his 

or her family must be assessed to 

develop the hospice plan of care. The 

individualized plan of care is developed 

and refined, as necessary, through the 

course of an individual’s hospice 

election and is based on the initial and 

ongoing comprehensive assessments. 


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67Preliminary FY 2014 hospice claims data from 

the Chronic Conditions Data Warehouse (CCW), 

accessed on January 13, 2015. 

68Preliminary FY 2014 hospice claims data from 

the Chronic Conditions Data Warehouse (CCW), 

accessed on January 21, 2015. 

Our regulations at § 418.54(c) require 

that 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, including the 

patient’s ability to understand and 

participate in his or her own care. 

• Imminence of death. 

• Severity of symptoms. 

• Drug profile. A review of all of the 

patient’s prescription and over-thecounter drugs, herbal remedies and 

other alternative treatments that could 

affect drug therapy. 

• Bereavement. An initial 

bereavement assessment of the needs of 

the patient’s family and other 

individuals focusing on the social, 

spiritual, and cultural factors that may 

impact their ability to cope with the 

patient’s death. Information gathered 

from the initial bereavement assessment 

must be incorporated into the plan of 

care and considered in the bereavement 

plan of care. 

• The need for referrals and further 

evaluation by appropriate health 

professionals. 

The hospice CoPs at § 418.56(c) 

require that the hospice plan of care 

reflect patient and family goals and have 

measurable outcomes. Furthermore, the 

plan of care is a dynamic and fluid 

document that will change as the 

individual’s condition changes 

throughout the course of a hospice 

election. A comprehensive, holistic, 

integrated and coordinated approach to 

service delivery is the hallmark of 

hospice care and a valued service for 

Medicare beneficiaries and families as 

the individual approaches the end-oflife. We believe that many hospices 

practice this comprehensive approach 

as they recognize that it is the hospices’ 

responsibility to provide all medical, 

emotional, psychosocial and spiritual 

services for all component conditions of 

the terminal prognosis along the 

continuum of care. 

5. Clarification Regarding Diagnosis 

Reporting on Hospice Claims 

International Classification of 

Diseases, Tenth Revision, Clinical 

Modification (ICD–10–CM) Coding 

Guidelines state the following regarding 

the selection of the principal diagnosis: 

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 the case of 

selection of a principal diagnosis for 

hospice care, this would mean the 

diagnosis most contributory to the 

terminal prognosis of the individual. In 

the instance where two or more 

diagnoses equally meet the criteria for 

principal diagnosis, ICD–10–CM coding 

guidelines do not provide sequencing 

direction, and thus, any one of the 

diagnoses may be sequenced first, 

meaning to report all of those diagnoses 

meeting the criteria as a principal 

diagnosis. Per ICD–10–CM Coding 

Guidelines, for diagnosis reporting 

purposes, the definition for ‘‘other 

diagnoses’’ is interpreted as additional 

conditions that affect patient care in 

terms of requiring: 

• Clinical evaluation; or 

• therapeutic treatment; or 

• diagnostic procedures; or 

• extended length of hospital stay; or 

• increased nursing care and/or 

monitoring. 

The UHDDS item #11–b defines Other 

Diagnoses as all conditions that coexist 

at the time of admission, that develop 

subsequently, or that affect the 

treatment received and/or the length of 

stay. ICD–10–CM coding guidelines are 

clear that all diagnoses affecting the 

management and treatment of the 

individual within the healthcare setting 

are requirement to be reported. This has 

been longstanding existing policy. 

Adherence to coding guidelines when 

assigning ICD–9–CM and ICD–10–CM 

diagnosis and procedure codes is 

required under the Health Insurance 

Portability and Accountability Act 

(HIPAA) as well as our regulations at 45 

CFR 162.1002. 

However, though established coding 

guidelines are required, it does not 

appear that all hospices are coding on 

hospice claims per these guidelines. In 

2010, over 77 percent of hospice claims 

reported only one diagnosis. Previous 

rules have discussed requirements for 

hospice diagnosis reporting on claims 

and the importance of complete and 

accurate coding. Preliminary analysis of 

FY 2014 claims data demonstrates that 

hospice diagnosis coding is improving; 

however, challenges remain. Analysis of 

FY 2014 claims data indicates that 49 

percent of hospice claims listed only 

one diagnosis.67 We conducted 

additional analysis on instances where 

only one diagnosis was reported on the 

FY 2014 hospice claim and found that 

50 percent of these beneficiaries had, on 

average, eight or more chronic 

conditions and 75 percent had, on 

average, five or more chronic 

conditions.68 These chronic, comorbid 

conditions include: Hypertension, 

anemia, congestive heart failure, chronic 

obstructive pulmonary disease, 

ischemic heart disease, depression, 

diabetes and atrial fibrillation, to name 

a few. 

In the Medicare Program; Hospice 

Wage Index for Fiscal Year 2013 Notice 

(77 FR 44248) we stated that hospices 

should report on hospice claims all 

coexisting or additional diagnoses that 

are related to the terminal illness; they 

should not report coexisting or 

additional diagnoses that are unrelated 

to the terminal illness, even though 

coding guidelines required the reporting 

of all diagnoses that affect patient 

assessment and planning. However, as 

discussed earlier in this section, there is 

widely varying interpretation as to what 

factors influence the terminal prognosis 

of the individual (that is, what 

conditions render the individual 

terminally ill and which conditions are 

related). Furthermore, based on the 

numerous comments received in 

previous rulemaking, and anecdotal 

reports from hospices, hospice 

beneficiaries, and non-hospice 

providers discussed above, we are 

concerned that hospices may not be 

conducting a comprehensive assessment 

nor updating the plan of care as 

articulated by the CoPs to recognize the 

conditions that affect an individual’s 

terminal prognosis. 

Therefore, we are clarifying that 

hospices will report all diagnoses 

identified in the initial and 

comprehensive assessments on hospice 

claims, whether related or unrelated to 

the terminal prognosis of the individual. 

This is in keeping with the requirements 

of determining whether an individual is 

terminally ill. This would also include 

the reporting of any mental health 

disorders and conditions that would 

affect the plan of care as hospices are to 

assess and provide care for identified 

psychosocial and emotional needs, as 

well as, for the physical and spiritual 

needs. Our regulations at § 418.25(b) 

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 clinically relevant 

information supporting all diagnoses. 


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ICD–10–CM Coding Guidelines state 

that diagnoses should be reported that 

develop subsequently, coexist or affect 

the treatment of the individual. 

Furthermore, having these diagnoses 

reported on claims falls under the 

authority of the Affordable Care Act for 

the collection of data to inform hospice 

payment reform. Section 3132 a(1)(C) of 

the Affordable Care Act states that the 

Secretary may collect the additional 

data and information on cost reports, 

claims, or other mechanisms as the 

Secretary determines to be appropriate. 

Having adequate data on hospice patient 

characteristics will help to inform 

thoughtful, appropriate, and clinically 

relevant policy for future rulemaking. 

We will monitor compliance with 

required coding practices and 

collaborate with all relevant CMS 

components to determine whether 

further policy changes are needed or if 

additional program integrity oversight 

actions need to be implemented. 

IV. Collection of Information 

Requirements 

This document does not impose 

information collection requirements, 

that is, reporting, recordkeeping or 

third-party disclosure requirements. 

Consequently, there is no need for 

review by the Office of Management and 

Budget under the authority of the 

Paperwork Reduction Act of 1995. 

V. Regulatory Impact Analysis 

A. Statement of Need 

This proposed rule meets the 

requirements of our regulations at 

§ 418.306(c), which requires annual 

issuance, in the Federal Register, of the 

hospice wage index based on the most 

current available CMS hospital wage 

data, including any changes to the 

definitions of Core-Based Statistical 

Areas (CBSAs), or previously used 

Metropolitan Statistical Areas (MSAs). 

This proposed rule would also update 

payment rates for each of the categories 

of hospice care described in § 418.302(b) 

for FY 2016 as required under section 

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

payment rate updates are subject to 

changes in economy-wide productivity 

as specified in section 

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

addition, the payment rate updates may 

be reduced by an additional 0.3 

percentage point (although for FY 2014 

to FY 2019, the potential 0.3 percentage 

point reduction is subject to suspension 

under conditions specified in section 

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

Congress amended section 1814(i)(6) of 

the Act with section 3132(a) of the 

Affordable Care Act. The amendment 

authorized the Secretary to collect 

additional data and information 

determined appropriate to revise 

payments for hospice care and for other 

purposes. The data collected may be 

used to revise the methodology for 

determining the payment rates for 

routine home care and other services 

included in hospice care, no earlier than 

October 1, 2013. In accordance with 

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

proposed rule would provide an update 

on hospice payment reform research 

and analyses and proposes a SIA 

payment in accordance with the 

requirement to revise the methodology 

for determining hospice payments in a 

budget-neutral manner. Finally, section 

3004 of the Affordable Care Act 

amended the Act to authorize a quality 

reporting program for hospices and this 

rule discusses changes in the 

requirements for the hospice quality 

reporting program in accordance with 

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

B. Introduction 

We have examined the impacts of this 

proposed rule as required by Executive 

Order 12866 on Regulatory Planning 

and Review (September 30, 1993), 

Executive Order 13563 on Improving 

Regulation and Regulatory Review 

(January 18, 2011), the Regulatory 

Flexibility Act (RFA) (September 19, 

1980, Pub. L. 96–354), section 1102(b) of 

the Act, section 202 of the Unfunded 

Mandates Reform Act of 1995 (UMRA, 

March 22, 1995; Pub. L. 104–4), and the 

Congressional Review Act (5 U.S.C. 

804(2)). 

Executive Orders 12866 and 13563 

direct agencies to assess all costs and 

benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). Executive Order 13563 

emphasizes the importance of 

quantifying both costs and benefits, of 

reducing costs, of harmonizing rules, 

and of promoting flexibility. A 

regulatory impact analysis (RIA) must 

be prepared for major rules with 

economically significant effects ($100 

million or more in any 1 year). This 

proposed rule has been designated as 

economically significant under section 

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

thus a major rule under the 

Congressional Review Act. Accordingly, 

we have prepared a regulatory impact 

analysis (RIA) that, to the best of our 

ability, presents the costs and benefits of 

the rulemaking. This proposed rule was 

also reviewed by OMB. 

C. Overall Impact 

The overall impact of this proposed 

rule is an estimated net increase in 

Federal Medicare payments to hospices 

of $200 million, or 1.3 percent, for FY 

2016. The $200 million increase in 

estimated payments for FY 2016 reflects 

the distributional effects of the 1.8 

percent proposed FY 2016 hospice 

payment update percentage ($290 

million increase), the use of updated 

wage index data and the phase-out of 

the wage index budget neutrality 

adjustment factor (-0.7 percent/$120 

million decrease) and the proposed 

implementation of the new OMB CBSA 

delineations for the FY 2016 hospice 

wage index with a one-year transition 

(0.2 percent/$30 million increase). The 

elimination of the wage index budget 

neutrality adjustment factor (BNAF) was 

part of a 7-year phase-out that was 

finalized in the FY 2010 Hospice Wage 

Index final rule (74 FR 39384), and is 

not a policy change. The proposed RHC 

rates and the proposed SIA payment, 

outlined in section III.B, would be 

implemented in a budget neutral 

manner in the first year of 

implementation, as required per section 

1814(i)(6)(D)(ii) of the Act. In section 

III.B., we also proposed continuing to 

make the SIA payments budget neutral 

annually. The RHC rate budget 

neutrality factors and the SBNF used to 

reduce the overall RHC rate are outlined 

in section III.C.3. Therefore, the 

proposed RHC rates and the proposed 

SIA payment would not result in an 

overall payment impact for the 

Medicare program or hospices. 

1. Detailed Economic Analysis 

Table 29, Column 3 shows the 

combined effects of the use of updated 

wage data (the FY 2015 pre-floor, prereclassified hospital wage index) and 

the phase-out of the BNAF (for a total 

BNAF reduction of 100 percent), 

resulting in an estimated decrease in FY 

2016 payments of 0.7 percent ($¥120 

million). Column 4 of Table 29, shows 

the effects of the proposed 50/50 blend 

of the FY 2016 hospice wage index 

values (based on the use of FY 2015 prefloor, pre-reclassified hospital wage 

index data) under the old and the new 

CBSA delineations, resulting in an 

estimated increase in FY 2016 payments 

of 0.2 percent ($30 million). Column 5 

displays the estimated effects of the 

proposed RHC rates, resulting in no 

overall change in FY 2016 payments for 

hospices as this proposal would be 

implemented in a budget neutral 

manner. Column 6 shows the estimated 

effects of the proposed SIA payment, 

resulting in no change in FY 2016 


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payments for hospices as this proposal 

would be implemented in a budget 

neutral manner through a reduction to 

the overall RHC rate for FY 2016. 

Column 7 shows the effects of the 

proposed FY 2016 hospice payment 

update percentage. The proposed 1.8 

percent hospice payment update 

percentage is based on a 2.7 percent 

inpatient hospital market basket update 

for FY 2016 reduced by a 0.6 percentage 

point productivity adjustment and by 

0.3 percentage point as mandated by the 

Affordable Care Act. The estimated 

effects of the 1.8 percent proposed 

hospice payment update percentage 

would result in an increase in payments 

to hospices of approximately $290 

million. Taking into account the 1.8 

percent proposed hospice payment 

update percentage ($290 million 

increase), the use of updated wage data 

and the phase-out of the BNAF (¥$120 

million), and the proposed adoption of 

the new OMB CBSA delineations with 

a one-year transition for the FY 2016 

hospice wage index ($30 million), 

Column 8 shows that hospice payments 

are estimated to increase by $200 

million ($290 million ¥ $120 million + 

$30 million = $200 million), or 1.3 

percent, in FY 2016. 

a. Effects on Hospices 

This section discusses our analysis of 

the estimated impacts on FY 2016 

payments to hospices due to: (1) The 

use of updated wage index data for the 

proposed FY 2016 hospice wage index 

(using FY 2015 hospital pre-floor, prereclassified hospital wage data) and the 

phase-out of the BNAF, (2) the proposed 

FY 2016 hospice wage index that adopts 

the new OMB CBSA delineations with 

a one-year transition, (3) the proposed 

RHC rates, (4) the proposed SIA 

payment, and (5) the proposed 1.8 

percent hospice payment update 

percentage. Table 29 below shows the 

results of our analysis. For the purposes 

of our impact analysis, we use the 

utilization observed in the most 

complete hospice claims data available 

at the time of rulemaking (FY 2014 

hospice claims submitted as of 

December 31, 2014). Presenting these 

data gives the hospice industry a more 

complete picture of the effects on their 

total revenue based on the use of 

updated hospital wage index data and 

the BNAF phase-out, the proposed 

adoption of the new OMB CBSA 

delineations with a one-year transition, 

the proposed SIA payment, and the 

proposed FY 2016 hospice payment 

update percentage as discussed in this 

proposed 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 29—ESTIMATED HOSPICE IMPACTS BY FACILITY TYPE AND AREA OF THE COUNTRY, FY 2016 

Providers 

Updated FY 

2016 wage 

index data 

and phaseout of BNAF 

(% change) 

Proposed 

50/50 blend 

of FY 2016 

wage index 

values 

under old 

and new 

CBSA 

delineations 

(% change) 

Proposed 

routine 

home care 

rates (days 

1 thru 60 

and days 

61+) 

(%) 

Proposed 

FY 2016 

SIA 

payment 

(% change) 

Proposed 

FY 2016 

hospice 

payment 

update 

percentage 

(% change) 

Total FY 

2016 

proposed 

policies 

(% change) 

(1) (2) (3) (4) (5) (6) (7) (8) 

All Hospices .............................................................................. 4,010 ¥0.7 0.2 0.0 0.0 1.8 1.3 

Urban Hospices ......................................................................... 3,015 ¥0.7 0.3 0.0 0.0 1.8 1.4 

Rural Hospices .......................................................................... 995 ¥0.3 ¥0.2 0.4 0.0 1.8 1.7 

Urban Hospices—New England ............................................... 140 0.0 0.1 1.3 ¥0.1 1.8 3.1 

Urban Hospices—Middle Atlantic ............................................. 251 ¥0.7 ¥0.2 0.8 0.0 1.8 1.7 

Urban Hospices—South Atlantic ............................................... 410 ¥1.1 0.3 ¥0.7 ¥0.1 1.8 0.2 

Urban Hospices—East North Central ....................................... 388 ¥0.8 0.7 ¥0.2 0.0 1.8 1.5 

Urban Hospices—East South Central ...................................... 165 ¥0.7 0.5 ¥0.3 0.0 1.8 1.3 

Urban Hospices—West North Central ...................................... 221 ¥0.7 0.6 0.7 0.0 1.8 2.4 

Urban Hospices—West South Central ..................................... 593 ¥1.1 0.6 ¥1.2 ¥0.2 1.8 ¥0.1 

Urban Hospices—Mountain ...................................................... 299 ¥0.6 0.2 ¥0.4 0.0 1.8 1.0 

Urban Hospices—Pacific .......................................................... 511 ¥0.1 0.0 1.0 0.2 1.8 2.9 

Urban Hospices—Outlying ........................................................ 37 0.0 0.3 ¥1.1 ¥0.2 1.7 0.7 

Rural Hospices—New England ................................................. 24 ¥0.3 0.0 3.3 0.3 1.8 5.1 

Rural Hospices—Middle Atlantic ............................................... 42 0.3 ¥0.1 1.8 0.5 1.8 4.3 

Rural Hospices—South Atlantic ................................................ 141 ¥0.6 0.1 ¥0.2 0.0 1.8 1.1 

Rural Hospices—East North Central ........................................ 135 ¥0.7 ¥0.4 0.8 0.2 1.8 1.7 

Rural Hospices—East South Central ........................................ 133 ¥0.1 ¥0.1 ¥0.9 ¥0.2 1.8 0.5 

Rural Hospices—West North Central ....................................... 184 ¥0.3 ¥0.1 2.2 ¥0.1 1.8 3.5 

Rural Hospices—West South Central ....................................... 184 ¥0.1 ¥0.1 ¥1.0 ¥0.2 1.8 0.4 

Rural Hospices—Mountain ....................................................... 102 ¥1.4 ¥0.7 0.3 0.1 1.8 0.1 

Rural Hospices—Pacific ............................................................ 47 2.1 0.1 3.3 0.3 1.8 7.6 

Rural Hospices—Outlying ......................................................... 3 ¥0.8 ¥0.2 1.9 0.2 1.8 2.9 

0–3,499 RHC Days (Small) ...................................................... 840 ¥0.5 0.1 3.0 0.1 1.8 4.5 

3,500–19,999 RHC Days (Medium) .......................................... 1,924 ¥0.6 0.2 0.6 0.0 1.8 2.0 

20,000+ RHC Days (Large) ...................................................... 1,246 ¥0.7 0.3 ¥0.2 0.0 1.8 1.2 

Non-Profit Ownership ................................................................ 1,070 ¥0.6 0.2 1.2 0.1 1.8 2.7 

For Profit Ownership ................................................................. 2,398 ¥0.7 0.3 ¥1.0 ¥0.1 1.8 0.3 

Govt/Other Ownership .............................................................. 542 ¥0.6 0.3 0.6 0.1 1.8 2.2 

Freestanding Facility Type ........................................................ 3,016 ¥0.7 0.3 ¥0.4 0.0 1.8 1.0 

HHA/Facility-Based Facility Type .............................................. 994 ¥0.4 0.2 1.8 0.2 1.8 3.6 

Rate of RHC NF/SNF Days is in Lowest Quartile (Less than 

or equal to 3.1%) ................................................................... 1,002 ¥0.5 0.1 0.7 0.0 1.8 2.1 

Rate of RHC NF/SNF Days is in 2nd Quartile (Greater than 

3.1 and Less than or equal to 16.7%) .................................. 1,003 ¥0.6 0.1 0.4 0.2 1.8 1.9 

Rate of RHC NF/SNF Days is in 3rd Quartile (Greater than 

16.7 and less than or equal to 35.5%) .................................. 1,003 ¥0.7 0.3 ¥0.1 0.0 1.8 1.3 


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TABLE 29—ESTIMATED HOSPICE IMPACTS BY FACILITY TYPE AND AREA OF THE COUNTRY, FY 2016—Continued 

Providers 

Updated FY 

2016 wage 

index data 

and phaseout of BNAF 

(% change) 

Proposed 

50/50 blend 

of FY 2016 

wage index 

values 

under old 

and new 

CBSA 

delineations 

(% change) 

Proposed 

routine 

home care 

rates (days 

1 thru 60 

and days 

61+) 

(%) 

Proposed 

FY 2016 

SIA 

payment 

(% change) 

Proposed 

FY 2016 

hospice 

payment 

update 

percentage 

(% change) 

Total FY 

2016 

proposed 

policies 

(% change) 

(1) (2) (3) (4) (5) (6) (7) (8) 

Rate of RHC NF/SNF Days is in Highest Quartile (Greater 

than 35.5%) ........................................................................... 1,002 ¥0.7 0.4 ¥0.6 ¥0.2 1.8 0.7 

Source: FY 2014 hospice claims data from the Standard Analytic Files for CY 2013 (as of June 30, 2014) and CY 2014 (as of December 31, 2014). 

Note: The proposed 1.8 percent hospice payment update percentage for FY 2016 is based on an estimated 2.7 percent inpatient hospital market basket update, 

reduced by a 0.6 percentage point productivity adjustment and by 0.3 percentage point. Starting with FY 2013 (and in subsequent fiscal years), the market basket 

percentage update under the hospice payment system as described in section 1814(i)(1)(C)(ii)(VII) or section 1814(i)(1)(C)(iii) of the Act will be annually reduced by 

changes in economy-wide productivity as set out at section 1886(b)(3)(B)(xi)(II) of the Act. In FY 2013 through FY 2019, the market basket percentage update under 

the hospice payment system will be reduced by an additional 0.3 percentage point (although for FY 2014 to FY 2019, the potential 0.3 percentage point reduction is 

subject to suspension under conditions set out under section 1814(i)(1)(C)(v) of the Act). 

REGION KEY: 

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

Atlantic=Delaware, District of Columbia, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia, West Virginia; East North Central=Illinois, Indiana, Michigan, Ohio, Wisconsin; East South Central=Alabama, Kentucky, Mississippi, Tennessee; West North Central=Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota; West South Central=Arkansas, Louisiana, Oklahoma, Texas; Mountain=Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah, Wyoming; Pacific=Alaska, California, Hawaii, Oregon, Washington; Outlying=Guam, Puerto Rico, Virgin Islands. 

Table 29 above also presents the 

impact of the changes in this proposed 

rule according to the type of hospice, 

geographic location, type of ownership, 

hospice base, size, and percentage of 

RHC days in a SNF/NF. 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 

2014. As indicated in column 2 of Table 

29, there are 4,010 hospices included in 

the regulatory impact analysis. 

Approximately 40 percent of Medicarecertified hospices are identified as 

voluntary (non-profit) or government 

agencies (1,612 hospices) and 60 

percent are proprietary (for-profit) 

(2,398 hospices). In addition, our 

analysis shows that most hospices are in 

urban areas, are medium-sized, and are 

freestanding. 

b. Hospice Size 

The use of updated wage data 

combined with the BNAF phase-out is 

anticipated to decrease FY 2016 

payments to large hospices by 0.7 

percent and to decrease payments to 

small and medium hospices by 0.5 

percent and 0.6 percent respectively 

(column 3). The proposed 50/50 Blend 

for FY 2016 wage index values under 

the old and the new CBSA delineations 

is anticipated to result in an increase in 

payments to small hospices of 0.1 

percent, an increase in payments to 

medium hospices of 0.2 percent, and an 

increase to large hospices of 0.3 percent 

(column 4). The proposed RHC rates are 

projected to increase payments by 3.0 

percent for small hospices and 0.6 

percent for medium hospices. The 

proposed RHC rates are anticipated to 

decrease payments by 0.2 percent for 

large hospices. The proposed FY 2016 

SIA payment is projected to result in an 

increase in FY 2016 payments of 0.1 

percent for small hospices and no 

change in payments for medium and 

large hospices (column 6). 

c. Geographic Location 

Column 3 of Table 29 shows the 

combined estimated effects of using 

updated wage data and the BNAF 

phase-out and results in a decrease in 

FY 2016 payments of 0.7 percent for 

urban hospices and 0.3 percent for rural 

hospices. Urban hospices can anticipate 

a decrease in payments ranging from 1.1 

percent in the South Atlantic and West 

South Central regions to 0.1 percent for 

hospices in the Pacific. No change in 

payments is expected for urban hospices 

in the New England and outlying areas. 

Rural hospices are estimated to see a 

decrease in payments in eight regions, 

ranging from 1.4 percent in the 

Mountain region to 0.1 percent in the 

East South Central and West South 

Central regions. Rural hospices can 

anticipate an increase in payments in 

the Middle Atlantic region of 0.3 

percent and an increase of 2.1 percent 

in the Pacific region. 

Column 4 shows the effect of the 

proposed 50/50 Blend of the FY2016 

wage index values under the old and the 

new CBSA delineations. Overall, 

hospices are anticipated to experience a 

0.2 percent increase in payments, with 

urban hospices experiencing an 

estimated increase of 0.3 percent and 

rural hospices experiencing an 

estimated decrease of 0.2 percent. All 

urban areas other than Middle Atlantic 

and Pacific are estimated to see 

increases in payments, ranging from 0.7 

percent in the East North Central region 

to 0.1 percent in the New England 

region. No change in FY 2016 payments 

for hospices in urban areas in the Pacific 

region is expected. In contrast, rural 

hospices are estimated to experience a 

small decrease in payments in seven 

regions, ranging from 0.1 percent in the 

East South Central, Middle Atlantic, and 

West North Central regions to 0.7 

percent in the Mountain region. 

Payments in the New England region are 

anticipated to remain unchanged and 

payments in the South Atlantic and 

Pacific regions are estimated to increase 

slightly by 0.1 percent. 

Column 5 shows the anticipated 

effects of the proposed RHC rates, that 

is, paying separate rates for days 1 

through 60 and days beyond 60. Overall, 

hospices would experience no change in 

overall payments for FY 2016 due to the 

proposed RHC rates. FY 2016 payments 

are estimated to range from an increase 

of 3.3 percent for rural hospices in New 

England and Pacific regions to a 

decrease of 1.2 percent for urban 

hospices in the West South Central 

region. 

Column 6 shows the effects of 

proposed FY 2016 SIA Payment. 

Overall, hospices are anticipated to 

experience no change in overall 

payments for FY 2016. However, FY 

2016 payments are estimated to range 

from an increase of 0.5 percent for rural 

hospices in the Middle Atlantic region 

to a decrease of 0.2 percent for urban 

hospices in the West South Central 

region and the Outlying region. 

Column 8 shows the total anticipated 

impact of the FY 2016 proposed policy 


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changes. Overall, all hospices are 

anticipated to receive a 1.3 percent 

increase in payment. Rural hospices in 

the Pacific Region show the largest 

anticipated payment increase of 7.6 

percent. Rural hospices in New England 

are anticipated to receive an increase of 

5.1 percent, Middle Atlantic hospices 

are anticipated to receive an increase of 

4.3 percent and rural hospices in the 

outlying regions are estimated to receive 

an increase of 2.9 percent in payments. 

d. Type of Ownership 

Column 3 demonstrates the effect of 

the use of updated wage data and BNAF 

phase-out on estimated FY 2016 

payments. We estimate that using the 

updated wage data and BNAF phase-out 

would decrease estimated payments to 

voluntary (non-profit) and government 

hospices by 0.6 percent. Proprietary 

(for-profit) hospices are expected to 

have a decrease in payments of 0.7 

percent. Column 4 demonstrates the 

effects of the proposed 50/50 Blend of 

FY 2016 wage index values under the 

old and the new CBSA delineations. 

Estimated FY 2016 payments to 

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

anticipated to increase by 0.2 percent, 

0.3 percent and 0.3 percent, 

respectively. Column 5 shows the 

anticipated impacts for the two 

proposed RHC rates. Estimated FY 2016 

payments are anticipated to increase for 

voluntary (non-profit) and government 

hospices by 1.2 percent and 0.6 percent 

respectively and to decrease for 

proprietary (for-profit) hospices by 1.0 

percent. Column 6 shows the estimated 

effects of the proposed SIA payment. 

Estimated FY 2016 payments are 

anticipated to increase for voluntary 

(non-profit) and government hospices 

by 0.1 percent and decrease for 

proprietary (for-profit) hospices by 0.1 

percent. 

e. Hospice Base and Percentage of RHC 

Days in a SNF/NF 

Column 3 demonstrates the combined 

effects of using the updated wage data 

and the BNAF phase-out on estimated 

payments for FY 2016. Estimated 

payments are anticipated to decrease for 

freestanding hospices by 0.7 percent 

and decrease for HHA/facility-based 

hospices by 0.4 percent. Column 4 

shows the effects of the proposed 50/50 

Blend of FY 2016 wage index values 

under the old and new CBSA 

delineations. Payments are estimated to 

increase by 0.3 percent for freestanding 

hospices and by 0.2 percent for HHA/

facility-based hospices. Column 5 shows 

the effects of the proposed RHC rates. 

Payments to freestanding hospices are 

expected to decrease by 0.4 percent 

while payments to HHA/facility-based 

hospices are expected to increase by 1.8 

percent. Column 6 shows the effects of 

the proposed SIA payment. Payments to 

freestanding hospices are expected to 

neither increase nor decrease due to the 

SIA proposal, while payments for HHA/ 

facility-based hospices are expected to 

increase by 0.2 percent. 

Table 29 also shows the effects of the 

proposed changes in this rule by the rate 

of RHC NF/SNF days in quartiles. 

Column 3 shows that all four quartiles 

(lowest quartile being less than or equal 

to 3.1 percent of RHC days in a SNF/NF 

to the highest quartile being greater than 

35.5 percent of RHC days in a SNF/NF) 

are anticipated to experience a decrease 

in payments ranging from 0.5 percent 

for the first quartile to 0.7 percent for 

the third and fourth quartiles. Column 

4 shows the effect of the proposed 50/ 

50 Blend of FY 2016 wage index values 

under the old and the new CBSA 

delineations. All four quartiles are 

anticipated to experience an increase in 

payments under this proposal with the 

first and second quartiles anticipated to 

experience increases of 0.1percent, the 

third quartile anticipated to experience 

an increase of 0.3 percent, and the 

highest quartile to experience an 

increase in payments of 0.4 percent. 

Column 5 shows the anticipated impact 

of the proposed RHC rates on hospices 

by their rates of RHC days in a SNF/NF. 

The first and second quartiles are 

anticipated to see an increase in 

payments of 0.7 percent and 0.4 percent 

respectively. The third and fourth 

quartiles are anticipated to see decreases 

of 0.1 percent and 0.6 percent 

respectively due to the proposed RHC 

rates. Column 6 shows the anticipated 

effect of the proposed FY 2016 SIA 

payment on hospices by their rates of 

RHC days in a SNF/NF. The second 

quartile is anticipated to see an increase 

in payments of 0.2 percent. The first and 

third quartile is expected to experience 

no change in payments under the FY 

2016 SIA payment proposal and the 

highest quartile is anticipated to 

experience a decrease in FY 2016 

payments of 0.2 percent under this 

proposal. 

f. Effects on Other Providers 

This proposed rule would only affect 

Medicare hospices, and therefore has no 

effect on other provider types. 

g. Effects on the Medicare and Medicaid 

Programs 

This proposed rule only affects 

Medicare hospices, and therefore has no 

effect on Medicaid programs. As 

described previously, estimated 

Medicare payments to hospices in FY 

2016 are anticipated to increase by 1.3 

percent, or $200 million. 

h. Alternatives Considered 

For the FY 2016 proposed rule, we 

considered several alternatives to the 

proposals articulated in section III.B. As 

described in Table 13 in section III.B.1 

of this preamble, previous work on a 

tiered payment model indicates that a 

different RHC payment could begin at 

day 31. Therefore, we considered 

proposing that the higher rate of the 

RHC payment to be the first 30 days of 

hospice care given the results above and 

given that MedPAC identified in their 

2008 Report to Congress that the ‘breakeven’ point of profitability was found to 

be about three weeks. However, because 

our analysis found that ‘marginal costs’ 

continued to decline slightly between 

days 15–30 and days 31–60 (see figure 

5 in section III.B.2 of this preamble), we 

proposed to begin the lower RHC 

payment rate on day 61. In addition, we 

proposed to have the ‘‘count of days’’ 

follow the patient (that is, count the 

days relative to the patient’s lifetime 

length of stay) to mitigate potential high 

rates of live discharge and readmission 

due to the proposed RHC payment rates 

based on the days of care. For hospice 

patients who are discharged and 

readmitted to hospice within 60 days of 

that discharge, his/her prior hospice 

days will continue to follow the patient 

and count toward his/her patient days 

for the receiving hospice upon hospice 

election. We also considered a longer 

(that is, 90 days) window of time 

between a discharge and a subsequent 

hospice election as a basis of 

determining which RHC payment rate 

would be applied based on the days 

following the beneficiary. However, we 

proposed the 60 day time period. We 

also considered not applying the higher 

initial RHC rate (1 through 60 days) to 

beneficiaries in nursing homes. 

For the SIA payment, we considered 

allowing the first two days of a new 

hospice election with a unique hospice 

provider to also be eligible for the SIA 

payment. The reason for not proposing 

to allow the SIA payment to apply to the 

first two days of a new hospice election 

with a unique hospice was outlined in 

section III.B. In addition, because the 

SIA payment is required to be 

implemented in a budget neutral 

manner in the first year of 

implementation, per section 

1814(i)(6)(D)(ii), allowing the first two 

days of the hospice election with a 

unique hospice provider to be eligible 

for the SIA payment would result in a 

larger decrease to the RHC rate for all 

hospice providers. We estimate that the 


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RHC would need to be reduced by 1.26 

percent (rather than the proposed 0.81 

percent). 

i. Accounting Statement 

As required by OMB Circular A–4 

(available at http://

www.whitehouse.gov/omb/circulars/

a004/a-4.pdf), in Table 30 below, we 

have prepared an accounting statement 

showing the classification of the 

expenditures associated with this 

proposed rule. Table 30 provides our 

best estimate of the increase in Medicare 

payments under the hospice benefit as 

a result of the changes presented in this 

proposed rule for 3,879 hospices in our 

impact analysis file constructed using 

FY 2014 claims as of December 31, 

2014. 

TABLE 30—ACCOUNTING STATEMENT: 

CLASSIFICATION OF ESTIMATED

TRANSFERS, FROM FY 2015 TO FY 

2016 

[In $millions] 

Category Transfers 

FY 2015 Hospice Wage Index and Payment 

Rate Update 

Annualized Monetized 

Transfers.

$200. 

From Whom to 

Whom? 

Federal Government 

to Hospices. 

j. Conclusion 

In conclusion, the overall effect of this 

proposed rule is an estimated $200 

million increase in Medicare payments 

to hospices. The $200 million increase 

in estimated payments for FY 2016 

reflects the distributional effects of the 

1.8 percent proposed FY 2016 hospice 

payment update percentage ($290 

million increase), the use of updated 

wage index data and the phase-out of 

the wage index budget neutrality 

adjustment factor (¥0.7 percent/$120 

million decrease) and the proposed 

implementation of the new OMB CBSA 

delineations for FY 2016 hospice wage 

index with a one-year transition (0.2 

percent/$30 million increase). The 

proposed SIA payment does not result 

in aggregate changes to estimate hospice 

payments for FY 2016 as this proposal 

would be implemented in a budget 

neutral manner through an overall 

reduction to the RHC payment rate for 

all hospices. 

2. Regulatory Flexibility Act Analysis 

The RFA requires agencies to analyze 

options for regulatory relief of small 

businesses if a rule has a significant 

impact on a substantial number of small 

entities. 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 $7.5 

million to $38.5 million in any 1 year), 

or being nonprofit organizations. For 

purposes of the RFA, we consider all 

hospices as small entities as that term is 

used in the RFA. 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 and the 

BNAF phase-out (¥0.7 percent decrease 

or ¥$120 million) the proposed 

implementation of the new OMB CBSA 

delineations for FY 2016 hospice wage 

index with a one-year transition (0.2 

percent increase or $30 million), the 

proposed SIA payment (no estimated 

aggregate impact on payments), and the 

proposed FY 2016 hospice payment 

update percentage (1.8 percent increase 

or $290 million) results in an overall 

increase in estimated hospice payments 

of 1.3 percent, or $200 million, for FY 

2016. Therefore, the Secretary has 

determined that this proposed rule will 

not create a significant economic impact 

on a substantial number of small 

entities. 

In addition, section 1102(b) of the Act 

requires us to prepare a regulatory 

impact analysis if a rule may have a 

significant impact on the operations of 

a substantial number of small rural 

hospitals. This analysis must conform to 

the provisions of section 604 of the 

RFA. For purposes of section 1102(b) of 

the Act, we define a small rural hospital 

as a hospital that is located outside of 

a metropolitan statistical area and has 

fewer than 100 beds. This proposed rule 

only affects hospices. Therefore, the 

Secretary has determined that this 

proposed rule would not have a 

significant impact on the operations of 

a substantial number of small rural 

hospitals. 

3. Unfunded Mandates Reform Act 

Analysis 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 also 

requires that agencies assess anticipated 

costs and benefits before issuing any 

rule whose mandates require spending 

in any 1 year of $100 million in 1995 

dollars, updated annually for inflation. 

In 2015, that threshold is approximately 

$144 million. This proposed rule is not 

anticipated to have an effect on State, 

local, or tribal governments, in the 

aggregate, or on the private sector of 

$144 million or more. 

VI. Federalism Analysis and 

Regulations Text 

Executive Order 13132, Federalism 

(August 4, 1999) requires an agency to 

provide federalism summary impact 

statement when it promulgates a 

proposed rule (and subsequent final 

rule) that has federalism implications 

and which imposes substantial direct 

requirement costs on State and local 

governments which are not required by 

statute. We have reviewed this proposed 

rule under these criteria of Executive 

Order 13132, and have determined that 

it will not impose substantial direct 

costs on State or local 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 and 

Medicaid Services propose to amend 42 

CFR chapter IV as set forth below: 

PART 418—HOSPICE CARE 

■ 1. The authority citation for part 418 

continues to read as follows: 

Authority: Secs. 1102 and 1871 of the 

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

1395hh). 

Subpart G—Payment for Hospice Care 

■ 2. Section 418.302 is amended by— 

■ a. Adding paragraphs (b)(1)(i) and (ii). 

■ b. Amending paragraphs (d)(1), (d)(2), 

(e) introductory text, (f)(2) and (f)(5)(ii) 

by removing the word ‘‘intermediary’’ 

and adding in its place the words 

‘‘Medicare Administrative Contractor’’. 

■ c. Revising paragraph (e)(1). 

The revisions and additions read as 

follows: 

§ 418.302 Payment procedures for hospice 

care. 

* * * * * 

(b) * * * 

(1) * * * 

(i) Service intensity add-on. Except as 

provided in paragraph (b)(1)(ii) of this 

section, routine home care days that 

occur during the last 7 days of a hospice 

election ending with a patient 

discharged as ‘‘expired’’ are eligible for 

a service intensity add-on payment. 

Such payment must be equal to the 

continuous home care hourly payment 

rate, as described in paragraph (e)(4) of 

this section, multiplied by the amount 

of direct patient care provided by a RN 

and/or social worker, up to 4 hours total 

per day. 

(ii) Routine home care days provided 

to patients residing in a skilled nursing 

facility (SNF) or a long-term care 


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nursing facility (NF) are not eligible for 

the service intensity add-on payment. 

* * * * * 

(e) * * * 

(1) Payment is made to the hospice for 

each day during which the beneficiary 

is eligible and under the care of the 

hospice, regardless of the amount of 

services furnished on any given day 

(except as set out in paragraph (b)(1)(i) 

of this section). 

* * * * * 

■ 3. Section 418.306 is amended by 

revising the section heading and 

paragraphs (a), (b), and (c) to read as 

follows: 

§ 418.306 Annual update of the payment 

rates and adjustment for area wage 

differences. 

(a) Applicability. CMS establishes 

payment rates for each of the categories 

of hospice care described in 

§ 418.302(b). The rates are established 

using the methodology described in 

section 1814(i)(1)(C) of the Act and in 

accordance with section 1814(i)(6)(D) of 

the Act. 

(b) Annual update of the payment 

rates. The payment rates for routine 

home care and other services included 

in hospice care are the payment rates in 

effect under this paragraph during the 

previous fiscal year increased by the 

hospice payment update percentage 

increase (as defined in 

sections1814(i)(1)(C) of the Act), 

applicable to discharges occurring in the 

fiscal year. 

(1) For fiscal year 2014 and 

subsequent fiscal years, per section 

1814(i)(5)(A)(i) of the Act, in the case of 

a Medicare-certified hospice that 

submits hospice quality data, as 

specified by the Secretary, the payment 

rates are equal to the rates for the 

previous fiscal year increased by the 

applicable hospice payment update 

percentage increase. 

(2) For fiscal year 2014 and 

subsequent fiscal years, per section 

1814(i)(5)(A)(i) of the Act, in the case of 

a Medicare-certified hospice that does 

not submit hospice quality data, as 

specified by the Secretary, the payment 

rates are equal to the rates for the 

previous fiscal year increased by the 

applicable hospice payment update 

percentage increase, minus 2 percentage 

points. Any reduction of the percentage 

change will apply only to the fiscal year 

involved and will not be taken into 

account in computing the payment 

amounts for a subsequent fiscal year. 

(c) Adjustment for wage differences. 

Each hospice’s labor market is 

determined based on definitions of 

Metropolitan Statistical Areas (MSAs) 

issued by OMB. CMS will issue 

annually, in the Federal Register, a 

hospice wage index based on the most 

current available CMS hospital wage 

data, including changes to the definition 

of MSAs. The urban and rural area 

geographic classifications are defined in 

§ 412.64(b)(1)(ii)(A) through (C) of this 

chapter. The payment rates established 

by CMS are adjusted by the Medicare 

contractor to reflect local differences in 

wages according to the revised wage 

data. 

* * * * * 

§ 418.308 [Amended] 

■ 4. Section 418.308(c) is amended by 

removing the phrase ‘‘(that is, by March 

31st)’’. 

■ 5. Section 418.309 is amended by 

revising the introductory text and 

paragraph (a) to read as follows: 

§ 418.309 Hospice aggregate cap. 

A hospice’s aggregate cap is 

calculated by multiplying the adjusted 

cap amount (determined in paragraph 

(a) of this section) by the number of 

Medicare beneficiaries, as determined 

by one of two methodologies for 

determining the number of Medicare 

beneficiaries for a given cap year 

described in paragraphs (b) and (c) of 

this section. 

(a) Cap amount. The cap amount was 

set at $6,500 in 1983 and is updated 

using one of two methodologies 

described in paragraphs (a)(1) and (2) of 

this section. 

(1) For accounting years that end on 

or before September 30, 2016 and end 

on or after October 1, 2025, the cap 

amount is adjusted for inflation by using 

the percentage change in the medical 

care expenditure category of the 

Consumer Price Index (CPI) for urban 

consumers that is published by the 

Bureau of Labor Statistics. This 

adjustment is made using the change in 

the CPI from March 1984 to the fifth 

month of the cap year. 

(2) For accounting years that end after 

September 30, 2016, and before October 

1, 2025, the cap amount is the cap 

amount for the preceding accounting 

year updated by the percentage update 

to payment rates for hospice care for 

services furnished during the fiscal year 

beginning on the October 1 preceding 

the beginning of the accounting year as 

determined pursuant to section 

1814(i)(1)(C) of the Act (including the 

application of any productivity or other 

adjustments to the hospice percentage 

update). 

* * * * * 

Dated: April 23, 2015. 

Andrew M. Slavitt, 

Acting Administrator, Centers for Medicare 

& Medicaid Services. 

Approved: April 27, 2015. 

Sylvia M. Burwell, 

Secretary, Department of Health and Human 

Services. 

[FR Doc. 2015–10422 Filed 4–30–15; 4:15 pm] 

BILLING CODE 4120–01–P 


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