[Federal Register Volume 85, Number 150 (Tuesday, August 4, 2020)]
[Rules and Regulations]
[Pages 47070-47098]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-16991]
-----------------------------------------------------------------------
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 418
[CMS-1733-F]
RIN 0938-AU09
Medicare Program; FY 2021 Hospice Wage Index and Payment Rate
Update
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This final rule updates the hospice wage index, payment rates,
and cap amount for fiscal year (FY) 2021. This rule also revises the
hospice wage index to reflect the current Office of Management and
Budget area delineations, with a 5 percent cap on wage index decreases.
In addition, this rule responds to comments on the modified election
statement and the addendum examples that were posted on the Hospice
Center web page to assist hospices in understanding the content
requirements finalized in the FY 2020 Hospice Wage Index and Payment
Rate Update final rule, effective for hospice elections beginning on
and after October 1, 2020.
DATES: These regulations are effective on October 1, 2020.
FOR FURTHER INFORMATION CONTACT:
For general questions about hospice payment policy, send your
inquiry via email to: [email protected].
SUPPLEMENTARY INFORMATION:
I. Background
A. Hospice Care
Hospice care is a comprehensive, holistic approach to treatment
that recognizes the impending death of a terminally ill individual and
warrants a change in the focus from curative care to palliative care
for relief of pain and for symptom management. Medicare regulations
define ``palliative care'' as patient and family-centered care that
optimizes quality of life by anticipating, preventing, and treating
suffering. Palliative care throughout the continuum of illness involves
addressing physical, intellectual, emotional, social, and spiritual
needs and to facilitate patient autonomy, access to information, and
choice (42 CFR 418.3). Palliative care is at the core of hospice
philosophy and care practices, and is a critical component of the
Medicare hospice benefit.
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 a
collaboration of professionals and other caregivers, with the goal of
making the beneficiary as physically and emotionally comfortable as
possible. Hospice is compassionate beneficiary and family/caregiver-
centered care for those who are terminally ill.
As referenced in our regulations at Sec. 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 Act and our regulations at Sec. 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 regulations at
Sec. 418.22(b)(3) require that the certification and recertification
forms include a brief narrative explanation of the clinical findings
that support a life expectancy of 6 months or less.
Under the Medicare hospice benefit, the election of hospice care is
a patient choice and once a terminally ill patient elects to receive
hospice care, a hospice interdisciplinary group is essential in the
seamless provision of services. These hospice services are provided
primarily in the individual's home. The hospice interdisciplinary group
works with the beneficiary, family, and caregivers to develop a
coordinated, comprehensive care plan; reduce unnecessary diagnostics or
ineffective therapies; and maintain ongoing communication with
individuals and their families about changes in their condition. The
beneficiary's care plan will shift over time to meet the changing needs
of the individual, family, and caregiver(s) as the individual
approaches the end of life.
If, in the judgment of the hospice interdisciplinary team, which
includes the hospice physician, the patient's symptoms cannot be
effectively managed at home, then the patient is eligible for general
inpatient care (GIP), a more medically intense level of care. GIP must
be provided in a Medicare-certified hospice freestanding facility,
skilled nursing facility, or hospital. GIP is provided to ensure that
any new or worsening symptoms are intensively addressed so that the
beneficiary can return to his or her home and continue to receive
routine home care. Limited, short-term, intermittent, inpatient respite
care (IRC) is also available
[[Page 47071]]
because of the absence or need for relief of the family or other
caregivers. Additionally, an individual can receive continuous home
care (CHC) during a period of crisis in which an individual requires
continuous care to achieve palliation or management of acute medical
symptoms so that the individual can remain at home. Continuous home
care may be covered for as much as 24 hours a day, and these periods
must be predominantly nursing care, in accordance with our regulations
at Sec. 418.204. A minimum of 8 hours of nursing care, or nursing and
aide care, must be furnished on a particular day to qualify for the
continuous home care rate (Sec. 418.302(e)(4)).
Hospices must comply with applicable civil rights laws,\1\
including section 504 of the Rehabilitation Act of 1973 and the
Americans with Disabilities Act, under which covered entities must take
appropriate steps to ensure effective communication with patients and
patient care representatives with disabilities, including the
provisions of auxiliary aids and services. Additionally, they must take
reasonable steps to ensure meaningful access for individuals with
limited 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.
---------------------------------------------------------------------------
\1\ Hospices are also subject to additional Federal civil rights
laws, including the Age Discrimination Act, Section 1557 of the
Affordable Care Act, and conscience and religious freedom laws.
---------------------------------------------------------------------------
B. Services Covered by the Medicare Hospice Benefit
Coverage under the Medicare Hospice benefit requires 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 (here called hospice aide services); physician services;
homemaker services; medical supplies (including drugs and biologicals);
medical appliances; counseling services (including dietary counseling);
short-term inpatient care in a hospital, nursing facility, or hospice
inpatient facility (including both respite care and procedures
necessary for pain control and acute or chronic symptom management);
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 to beneficiaries as needed, 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 also
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). As stated in the FY 1983 Hospice Wage Index and Rate Update
proposed rule (48 FR 38149), the hospice interdisciplinary group should
comprise paid hospice employees as well as hospice volunteers, and that
``the hospice benefit and the resulting Medicare reimbursement is not
intended to diminish the voluntary spirit of hospices.'' This
expectation supports the hospice philosophy of community-based,
holistic, comprehensive, and compassionate end of life care.
C. 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 42 CFR part 418, establish eligibility
requirements, payment standards and procedures; define covered
services; and delineate the conditions a hospice must meet to be
approved for participation in the Medicare program. Part 418, subpart
G, provides for a per diem payment in one of four prospectively-
determined rate categories of hospice care (routine home care (RHC),
CHC, IRC, and GIP), 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 and items needed to
manage the beneficiary's care, as required by section 1861(dd)(1) of
the Act.
While payment is made to hospices is to cover all items, services,
and drugs for the palliation and management of the terminal illness and
related conditions, federal funds cannot be used for prohibited
activities, even in the context of a per diem payment. Recent news
reports \2\ have brought to light the potential role hospices could
play in medical aid in dying (MAID) where such practices have been
legalized in certain states. We wish to remind hospices that The
Assisted Suicide Funding Restriction Act of 1997 (ASFRA) (Pub. L. 105-
12) prohibits the use of federal funds to provide or pay for any health
care item or service or health benefit coverage for the purpose of
causing, or assisting to cause, the death of any individual including
mercy killing, euthanasia, or assisted suicide. However, pursuant to
section 3(b)(4) of ASFRA, the prohibition does not apply to the
provision of an item or service for the purpose of alleviating pain or
discomfort, even if such use may increase the risk of death, so long as
the item or service is not furnished for the specific purpose of
causing or accelerating death.
---------------------------------------------------------------------------
\2\ Nelson, R., Should Medical Aid in Dying Be Part of Hospice
Care? Medscape Nurses. February 26, 2020. https://www.medscape.com/viewarticle/925769#vp_1.
---------------------------------------------------------------------------
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
changes in the methodology concerning updating the daily payment rates
based on the hospital market basket percentage increase applied to the
payment rates in effect during the previous federal FY.
2. Balanced Budget Act of 1997
Section 4441(a) of the Balanced Budget Act of 1997 (BBA) (Pub. L.
105-33) established that updates to the hospice payment rates beginning
FY 2002 and subsequent FYs be the hospital market basket percentage
increase for the FY.
3. FY 1998 Hospice Wage Index Final Rule
The FY 1998 Hospice Wage Index final rule (62 FR 42860),
implemented a new methodology for calculating the hospice wage index
and instituted an annual Budget Neutrality Adjustment Factor (BNAF) so
aggregate Medicare payments to hospices would remain budget neutral to
payments calculated using the 1983 wage index.
[[Page 47072]]
4. FY 2010 Hospice Wage Index Final Rule
The FY 2010 Hospice Wage Index and Rate Update final rule (74 FR
39384) instituted an incremental 7-year phase-out of the BNAF beginning
in FY 2010 through FY 2016. The BNAF phase-out reduced the amount of
the BNAF increase applied to the hospice wage index value, but was not
a reduction in the hospice wage index value itself 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 is
subject to annual reductions related to changes in economy-wide
productivity, as specified in section 1814(i)(1)(C)(iv) of the Act.
In addition, sections 1814(i)(5)(A) through (C) of the Act, as
added by section 3132(a) of the Patient Protection and Affordable Care
Act (PPACA) (Pub. L. 111-148), required hospices to begin submitting
quality data, based on measures 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 that fail to report
quality data have their market basket percentage increase reduced by 2
percentage points.
Section 1814(a)(7)(D)(i) of the Act, as added by section 3132(b)(2)
of the PPACA, required, 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 FY 2011 Hospice Wage
Index final rule (75 FR 70435) that the 180th day recertification and
subsequent recertifications would correspond to the beneficiary's third
or subsequent benefit periods. Further, section 1814(i)(6) of the Act,
as added by section 3132(a)(1)(B) of the PPACA, authorized 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 PPACA could capture
accurate resource utilization, which could be collected on claims, cost
reports, and possibly other mechanisms, as the Secretary determined to
be appropriate. The data collected could 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 were
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
In the FY 2012 Hospice Wage Index final rule (76 FR 47308 through
47314) we announced that beginning in 2012, the hospice aggregate cap
would be calculated using the patient-by-patient proportional
methodology, within certain limits. We allowed existing hospices the
option of having their cap calculated through the original streamlined
methodology, also within certain limits. As of FY 2012, new hospices
have their cap determinations calculated using the patient-by-patient
proportional methodology. If a hospice's total Medicare payments for
the cap year exceed the hospice aggregate cap, then the hospice must
repay the excess back to Medicare.
7. IMPACT Act of 2014
The Improving Medicare Post-Acute Care Transformation Act of 2014
(IMPACT Act) (Pub. L. 113-185) became law on October 6, 2014. Section
3(a) of the IMPACT Act mandated that all Medicare certified hospices be
surveyed every 3 years beginning April 6, 2015 and ending September 30,
2025. In addition, section 3(c) of the IMPACT Act requires medical
review of hospice cases involving beneficiaries receiving more than 180
days of care in select hospices that show a preponderance of such
patients; section 3(d) of the IMPACT Act contains a new provision
mandating that the 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.
8. FY 2015 Hospice Wage Index and Payment Rate Update Final Rule
The FY 2015 Hospice Wage Index and Rate Update final rule (79 FR
50452) finalized a requirement that the Notice of Election (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
50474). Similar to the NOE, the claims processing system must be
notified of a beneficiary's discharge from hospice or hospice benefit
revocation within 5 calendar days after the effective date of the
discharge/revocation (unless the hospice has already filed a final
claim) through the submission of a final claim or a Notice of
Termination or Revocation (NOTR).
The FY 2015 Hospice Wage Index and Rate Update final rule (79 FR
50479) also finalized a requirement that the election form 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.
In addition, the FY 2015 Hospice Wage Index and Rate Update final
rule (79 FR 50496) provided background, eligibility criteria, survey
respondents, and implementation of the Hospice Experience of Care
Survey for informal caregivers. Hospice providers were required to
begin using this survey for hospice patients as of 2015.
Finally, the FY 2015 Hospice Wage Index and Rate Update final rule
required providers to complete their aggregate cap determination not
sooner than 3 months after the end of the cap year, and not later than
5 months after, and remit any overpayments. Those hospices that fail to
submit their aggregate cap determinations on a timely basis will have
their payments suspended until the determination is completed and
received by the Medicare contractor (79 FR 50503).
9. FY 2016 Hospice Wage Index and Payment Rate Update Final Rule
In the FY 2016 Hospice Wage Index and Rate Update final rule (80 FR
47172), we created two different payment rates for RHC that resulted in
a higher base payment rate for the first 60 days of hospice care and a
reduced base payment rate for subsequent days of hospice care. We also
created a service intensity add-on payment payable for services during
the last 7 days of the beneficiary's life, equal to the CHC hourly
payment rate multiplied by the amount of direct patient care provided
by a registered nurse (RN) or social worker that occurs during the last
7 days (80 FR 47177).
In addition to the hospice payment reform changes discussed, the FY
2016 Hospice Wage Index and Rate Update final rule (80 FR 47185)
implemented changes mandated by the IMPACT Act, in which the cap amount
for accounting years that end after September 30, 2016
[[Page 47073]]
and before October 1, 2025 would be updated by the hospice payment
update percentage rather than using the CPI-U. This was applied to the
2016 cap year, starting on November 1, 2015 and ending on October 31,
2016. In addition, we finalized a provision to align the cap accounting
year for both the inpatient cap and the hospice aggregate cap with the
fiscal year for FY 2017 and thereafter. Finally, the FY 2016 Hospice
Wage Index and Rate Update final rule (80 FR 47144) clarified that
hospices would have to report all diagnoses of the beneficiary on the
hospice claim as a part of the ongoing data collection efforts for
possible future hospice payment refinements.
10. FY 2017 Hospice Wage Index and Payment Rate Update Final Rule
In the FY 2017 Hospice Wage Index and Rate Update final rule (81 FR
52160), we finalized several new policies and requirements related to
the Hospice Quality Reporting Program (HQRP). First, we codified our
policy that if the National Quality Forum (NQF) made non-substantive
changes to specifications for HQRP measures as part of the NQF's re-
endorsement process, we would continue to utilize the measure in its
new endorsed status, without going through new notice-and-comment
rulemaking. We would continue to use rulemaking to adopt substantive
updates made by the NQF to the endorsed measures we have adopted for
the HQRP; determinations about what constitutes a substantive versus
non-substantive change would be made on a measure-by-measure basis.
Second, we finalized two new quality measures for the HQRP for the FY
2019 payment determination and subsequent years: Hospice Visits when
Death is Imminent Measure Pair and Hospice and Palliative Care
Composite Process Measure-Comprehensive Assessment at Admission (81 FR
52173). The data collection mechanism for both of these measures is the
HIS, and the measures were effective April 1, 2017. Regarding the
CAHPS[supreg] Hospice Survey, we finalized a policy that hospices that
receive their CMS Certification Number (CCN) after January 1, 2017 for
the FY 2019 Annual Payment Update (APU) and January 1, 2018 for the FY
2020 APU will be exempted from the Hospice Consumer Assessment of
Healthcare Providers and Systems (CAHPS[supreg]) requirements due to
newness (81 FR 52182). The exemption is determined by CMS and is for 1
year only.
11. FY 2020 Hospice Wage Index and Payment Rate Update Final Rule
In the FY 2020 Hospice Wage Index and Rate Update final rule (84 FR
38487), we rebased the payment rates for CHC and GIP and set those
rates equal to their average estimated FY 2019 costs per day. We also
rebased IRC per diem rates equal to the estimated FY 2019 average costs
per day, with a reduction of 5 percent to the FY 2019 average cost per
day to account for coinsurance. We finalized the FY 2020 proposal to
reduce the RHC payment rates by 2.72 percent to offset the increases to
CHC, IRC, and GIP payment rates to implement this policy in a budget-
neutral manner in accordance with section 1814(i)(6) of the Act (84 FR
38496). We also finalized a policy to use the current year's pre-floor,
pre-reclassified hospital inpatient wage index as the wage adjustment
to the labor portion of the hospice rates. Finally, in the FY 2020
Hospice Wage Index and Rate Update final rule (84 FR 38505) we
finalized modifications to the hospice election statement content
requirements at Sec. 418.24(b) by requiring hospices, upon request, to
furnish an election statement addendum effective beginning in FY 2021.
The addendum must list those items, services, and drugs the hospice has
determined to be unrelated to the terminal illness and related
conditions, increasing coverage transparency for beneficiaries under a
hospice election.
II. Provisions of the Final Rule
A. Hospice Wage Index Changes
1. Implementation of New Labor Market Delineations
In general, the Office of Management and Budget (OMB) issues major
revisions to statistical areas every 10 years, based on the results of
the decennial census. However, OMB occasionally issues minor updates
and revisions to statistical areas in the years between the decennial
censuses. On April 10, 2018, OMB issued OMB Bulletin No. 18-03 which
superseded the August 15, 2017 OMB Bulletin No. 17-01. On September 14,
2018, OMB issued OMB Bulletin No. 18-04, which superseded the April 10,
2018 OMB Bulletin No. 18-03. These bulletins made revisions to the
delineations of Metropolitan Statistical Areas (MSAs), Micropolitan
Statistical Areas, and Combined Statistical Areas, and guidance on uses
of the delineation in these areas. A copy of the September 14, 2018
bulletin is available online at: https://www.whitehouse.gov/wp-content/uploads/2018/09/Bulletin-18-04.pdf. This bulletin states it ``provides
the delineations of all MSAs, 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
through 37252), and Census Bureau data.'' On March 6, 2020 OMB issued
Bulletin No. 20-01 (available at: https://www.whitehouse.gov/wp-content/uploads/2020/03/Bulletin-20-01.pdf), and, as discussed below,
was not issued in time for development of the FY 2021 Hospice Wage
Index and Rate Update proposed rule.
While the revisions OMB published on September 14, 2018, are not as
sweeping as the changes made when we adopted the Core-Based Statistical
Area (CBSA) geographic designations for FY 2006, the September 14, 2018
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 an
accurate and up-to-date payment system that reflects the reality of
population shifts and labor market conditions. Using the most current
OMB delineations creates a more accurate representation of geographic
variation in wage levels. In the FY 2021 Hospice Wage Index and Payment
Rate Update proposed rule (85 FR 20953), we proposed to implement the
new OMB delineations as described in the September 14, 2018 OMB
Bulletin No. 18-04 for the hospice wage index effective beginning in FY
2021. As noted above, the March 6, 2020 OMB Bulletin No. 20-01 was not
issued in time for development of the proposed rule. As we stated in
the proposed rule, we do not believe that the minor updates included in
OMB Bulletin No. 20-01 would impact our proposed updates to the CBSA-
based labor market area delineations. However, if needed, we would
include any updates from this bulletin in future rulemaking.
i. Micropolitan Statistical Areas
As discussed in the FY 2006 Hospice Wage Index and Payment Rate
Update 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
[[Page 47074]]
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 (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-MSAs.
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 (542)
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 and Payment Rate Update 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 2021 and consistent with the treatment of Micropolitan Areas
under the IPPS, we proposed 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
Under the new OMB delineations (based upon the 2010 decennial
Census data), a total of 34 counties (and county equivalents) that are
currently considered urban would be considered rural beginning in FY
2021. Table 1 lists the 34 counties that would change to rural status
with the implementation of the new OMB delineations.
[[Page 47075]]
[GRAPHIC] [TIFF OMITTED] TR04AU20.002
iii. Rural Counties Becoming Urban
Under the new OMB delineations (based upon the 2010 decennial
Census data), a total of 47 counties (and county equivalents) that are
currently designated rural would be considered urban beginning in FY
2021. Table 2 lists the 47 counties that would change to urban status.
[[Page 47076]]
[GRAPHIC] [TIFF OMITTED] TR04AU20.003
[[Page 47077]]
[GRAPHIC] [TIFF OMITTED] TR04AU20.004
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 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 19380 (Dayton, OH) would
experience both a change to its number and its name, and become CBSA
19430 (Dayton-Kettering, OH), while all of its three constituent
counties would remain the same. In other cases, only the name of the
CBSA would be modified, and none of the currently assigned counties
would be reassigned to a different urban CBSA. Table 3 lists CBSAs that
would change the name and/or CBSA number only.
[[Page 47078]]
[GRAPHIC] [TIFF OMITTED] TR04AU20.005
Upon adoption of the new OMB delineations, counties would shift
between existing and new CBSAs, changing the constituent makeup of the
CBSAs. In another type of change, some CBSAs have counties that would
split
[[Page 47079]]
off to become part of or to form entirely new labor market areas.
Finally, in some cases, a CBSA would lose counties to another existing
CBSA. Table 4 lists the urban counties that would move from one urban
CBSA to a newly or modified CBSA under the new OMB delineations.
[GRAPHIC] [TIFF OMITTED] TR04AU20.006
2. Transition Period
As discussed previously, overall, we believe that our proposal to
adopt the revised OMB delineations for FY 2021 would result in hospice
wage index values being more representative of the actual costs of
labor in a given area. However, we also recognize that some hospices
would experience decreases in their area wage index values as a result
of our proposal. We also realize that many hospices would have higher
area wage index values under our proposal.
To mitigate the potential impacts of adopting new OMB delineations
on hospices, we have in the past provided for transition periods when
adopting changes that have significant payment implications,
particularly large negative impacts. For example, we have proposed and
finalized budget-neutral transition policies to help mitigate negative
impacts on hospices following the adoption of the new CBSA delineations
based on the 2010 decennial census data in the FY 2016 Hospice Wage
Index and Payment Rate Update final rule (80 FR 47142). Specifically,
we applied a blended wage index for 1 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
was 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, which resulted in an
average of the two values. While we believed that using the new OMB
delineations would create a more accurate payment adjustment for
differences in area wage levels, we also recognized that adopting such
changes may cause some short-term instability in hospice payments, in
particular for hospices that would be negatively impacted by the
proposed adoption of the updates to the OMB delineations. Therefore, we
also proposed a transition policy to help mitigate any significant
negative impacts that hospices may experience due to our proposal to
adopt the revised OMB delineations. For FY 2021 as a transition, we
proposed to apply a 5 percent cap on any decrease in a geographic
area's wage index value from the wage index value from the prior FY.
This transition would allow the effects of our proposed adoption of the
revised CBSA delineations to be phased in over 2 years, where the
estimated reduction in a geographic area's wage index would be capped
at 5 percent in FY 2021 (that is, no cap would be applied to the
reduction in the wage index for the second year (FY 2022)). We believe
a 5 percent cap on the overall decrease in a geographic area's wage
index value would be appropriate for FY 2021, as it provides
predictability in payment levels from FY 2020 to the upcoming FY 2021
and additional transparency because it is administratively simpler than
our prior 1-year 50/50 blended wage index approach. We believe 5
percent is a reasonable level for the cap because it would effectively
mitigate any significant decreases in a geographic area's wage index
value for FY 2021.
[[Page 47080]]
Because we believe that using the new OMB delineations would create a
more accurate payment adjustment for differences in area wage levels we
proposed to include a cap on the overall decrease in a geographic
area's wage index value.
Overall, the impact between the FY 2021 wage index using the old
OMB delineations and the proposed FY 2021 wage index using the new OMB
delineations would be 0.0 percent due to the wage index standardization
factor, which ensures that wage index updates and revisions are
implemented in a budget-neutral manner. We solicited comments on this
proposed transition methodology.
We received approximately 12 comments on the FY 2021 hospice wage
index proposals from various stakeholders including hospices, national
industry associations and MedPAC. A summary of these comments and our
responses to those comments appear below:
Comment: Nearly all commenters stated that they support the
adoption of the revised OMB delineations from the September 14, 2018
Bulletin No. 18-04 and the proposed transition methodology that would
apply a 5 percent cap on decreases to a geographic area's wage index
value relative to the wage index value from the prior fiscal year.
Response: We appreciate the commenters' support of the adoption of
the new OMB delineations and a 5 percent cap on wage index decreases
for FY 2021 as an appropriate transition policy.
Comment: A few commenters stated that the adoption of the New
Brunswick-Lakewood, NJ CBSA would result in a reduction in
reimbursement for the four New Jersey counties that would make up the
new CBSA. One commenter recommended that CMS delay finalizing the
proposal to implement the new OMB delineations. While another commenter
suggested that the transition policy is critical to offset economic
losses for hospices like those in the impacted New Jersey counties
throughout the country.
Response: We appreciate the concerns sent in by the commenters
regarding the impact of implementing the New Brunswick-Lakewood, NJ
CBSA designation on their specific counties. While, we understand the
commenters' concern regarding the potential financial impact, we
believe that implementing the revised OMB delineations will create more
accurate representations of labor market areas nationally and result in
hospice wage index values being more representative of the actual costs
of labor in a given area. Although this comment only addressed the
negative impact on the commenter's geographic area, we believe it is
important to note that there are many geographic locations and hospice
providers that will experience positive impacts upon implementation of
the revised CBSA designations. We believe that the OMB delineations for
Metropolitan and Micropolitan Statistical Areas are appropriate for use
in accounting for wage area differences and that the values computed
under the revised delineations will result in more appropriate payments
to providers by more accurately accounting for and reflecting the
differences in area wage levels.
We recognize that there are areas which will experience a decrease
in their wage index. As such, it is our longstanding policy to provide
temporary adjustments to mitigate negative impacts from the adoption of
new policies or procedures. In the FY 2021 Hospice Wage Index and
Payment Rate Update proposed rule, we proposed a transition in order to
mitigate the resulting short-term instability and negative impacts on
certain providers and to provide time for providers to adjust to their
new labor market delineations. We continue to believe that the 1-year 5
percent cap transitional policy provides an adequate safeguard against
any significant payment reductions, allows for sufficient time to make
operational changes for future fiscal years, and provides a reasonable
balance between mitigating some short-term instability in hospice
payments and improving the accuracy of the payment adjustment for
differences in area wage levels. Therefore, we believe that it is
appropriate to implement the new OMB delineations without delay.
Comment: A few commenters including MedPAC suggested alternatives
to the 5 percent cap transition policy. MedPAC suggested that the 5
percent cap limit should apply to both increases and decreases in the
wage index so that no provider would have its wage index value increase
or decrease by more than 5 percent for FY 2021. One commenter suggested
that wage index decreases should be capped at 3 percent instead of 5
percent. Finally, several commenters recommended that CMS consider
implementing a 5 percent cap, similar to that which we proposed for FY
2021, for years beyond the implementation of the revised OMB
delineations.
Response: We appreciate MedPAC's suggestion that the cap on wage
index movements of more than 5 percent should also be applied to
increases in the wage index. However, as we discussed in the proposed
rule, the purpose of the proposed transition policy is to help mitigate
the significant negative impacts of certain wage index changes.
Additionally, we believe that the 5 percent cap on wage index decreases
is an adequate safeguard against any significant payment reductions and
do not believe that capping wage index decreases at 3 percent instead
of 5 percent is appropriate. We believe that 5 percent is a reasonable
level for the cap rather than 3 percent because it would more
effectively mitigate any significant decreases in a hospice's wage
index for FY 2021, while still balancing the importance of ensuring
that area wage index values accurately reflect relative differences in
area wage levels. Furthermore, a 5 percent cap on wage index decreases
in FY 2021 provides a degree of predictability in payment changes for
providers and allows providers time to adjust to any significant
decreases they may face in FY 2022, after the transition period has
ended. Finally, with regards to the comments recommending that CMS
consider implementing this type of transition in future years, we
believe that this would be counter to the purpose of the wage index,
which is used to adjust payments to account for local differences in
area wage levels. While we believe that a transition is necessary to
help mitigate the negative impact from the revised OMB delineations in
the first year of implementation, this transition must be balanced
against the importance of ensuring accurate payments.
Final Decision: We are finalizing our proposal to adopt the revised
OMB delineations from the September 14, 2018 OMB Bulletin 18-04 and
apply a 1-year 5 percent cap on wage index decreases as proposed,
meaning the counties impacted will receive a 5 percent cap on any
decrease in a geographic area's wage index value from the wage index
value from the prior fiscal year for FY 2021 effective October 1, 2020.
The final wage index applicable to FY 2021 can be found on our
website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/Hospice. The final hospice wage index for FY 2021 is effective
October 1, 2020 through September 30, 2021.
The wage index file also provides a crosswalk between the FY 2021
wage index using the current OMB delineations and the FY 2021 wage
index using the revised OMB
[[Page 47081]]
delineations that will be in effect in FY 2021. This file shows each
state and county and its corresponding wage index along with the
previous CBSA number, the new CBSA number or alternate identification
number, and the new CBSA name.
B. FY 2021 Hospice Wage Index and Rate Update
1. FY 2021 Hospice Wage Index
The hospice wage index is used to adjust payment rates for hospice
agencies under the Medicare program to reflect local differences in
area wage levels, based on the location where services are furnished.
The hospice wage index utilizes the wage adjustment factors used by the
Secretary for purposes of section 1886(d)(3)(E) of the Act for hospital
wage adjustments. Our regulations at Sec. 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 MSAs.
In the FY 2020 Hospice Wage Index and Payment Rate Update final
rule (84 FR 38484), we finalized the proposal to use the current FY's
hospital wage index data to calculate the hospice wage index values. In
the FY 2021 Hospice Wage Index and Payment Rate Update proposed rule
(85 FR 20957) we discussed our proposal to use the FY 2021 pre-floor,
pre-reclassified hospital wage index data to calculate the hospice wage
index values with a 5 percent cap on wage index decreases. This means
that the hospital wage data used for the hospice wage index would
reflect the new OMB delineations but would not 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 hospice 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 GIP or IRC.
In the FY 2006 Hospice Wage Index and Payment Rate Update final
rule (70 FR 45135), we adopted the policy that, for urban labor markets
without a hospital from which hospital wage index data could be
derived, all of the CBSAs within the state would be used to calculate a
statewide urban average pre-floor, pre-reclassified hospital wage index
value to use as a reasonable proxy for these areas. For FY 2021, the
only CBSA without a hospital from which hospital wage data can be
derived is 25980, Hinesville-Fort Stewart, Georgia. The FY 2021
adjusted wage index value for Hinesville-Fort Stewart, Georgia is
0.8527.
There exist some geographic areas where there were no hospitals,
and thus, no hospital wage data on which to base the calculation of the
hospice wage index. In the FY 2008 Hospice Wage Index and Payment Rate
Update final rule (72 FR 50217 through 50218), we implemented a
methodology to update the hospice wage index for rural areas without
hospital wage data. In cases where there was a rural area without rural
hospital wage data, we use the average pre-floor, 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, for rural Puerto Rico, we would not apply this
methodology due to the distinct economic circumstances that exist there
(for example, due to the close proximity to one another of almost all
of Puerto Rico's various urban and non-urban areas, this methodology
would produce a wage index for rural Puerto Rico that is higher than
that in half of its urban areas); instead, we would continue to use the
most recent wage index previously available for that area. For FY 2021,
we will continue to use the most recent pre-floor, pre-reclassified
hospital wage index value available for Puerto Rico, which is 0.4047,
subsequently adjusted by the hospice floor.
As described in the August 8, 1997 Hospice Wage Index final rule
(62 FR 42860), the pre-floor and pre-reclassified hospital wage index
is used as the raw wage index for the hospice benefit. These raw wage
index values are subject to application of the hospice floor to compute
the hospice wage index used to determine payments to hospices. As
discussed above the pre-floor, pre-reclassified hospital wage index
values below 0.8 will be adjusted by 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.
The final hospice wage index applicable for FY 2021 (October 1,
2020 through September 30, 2021) is available on our website at:
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/Hospice/Hospice-Wage-Index .
A summary of the general comments on the hospice wage index and our
responses to those comments appear below:
Comment: One commenter expressed concern that hospices in
Montgomery County, Maryland are at a long-term competitive disadvantage
due to a Medicare hospice federal payment inequity involving CBSAs.
This commenter suggested that since CMS began using CBSAs to determine
payment, hospices in Montgomery County have received lower payments
than hospices in adjacent counties due to Montgomery County being
carved out of Washington DC. The commenter recommended two options to
resolve this issue: allow hospices serving patients in MSAs that are
large enough to be subdivided into metropolitan divisions to opt for
the higher wage index valuation within the MSA's respective CBSAs or
assigning the highest wage index valuation from among the MSA's
metropolitan divisions for the purpose of hospice Medicare
reimbursement.
Response: We thank the commenter for the recommendation. However,
we continue to believe that the OMB's geographic area delineations
represent a useful proxy for differentiating between labor markets and
that the geographic area delineations are appropriate for use in
determining Medicare hospice payments. The general concept of the CBSAs
is that of an area containing a recognized population nucleus and
adjacent communities that have a high degree of integration with that
nucleus. The purpose of the standards is to provide nationally
consistent definitions for collecting, tabulating, and publishing
federal statistics for a set of geographic areas. CBSAs include
adjacent counties that have a minimum of 25 percent commuting to the
central counties of the area. This is an increase over the minimum
commuting threshold for outlying counties applied in the previous
definition of MSAs of 15 percent. Based on the OMB's current
delineations, Montgomery County belongs in a separate CBSA from the
areas defined in the Washington-Arlington-Alexandria, DCVA CBSA. Unlike
inpatient prospective payment system (IPPS) hospitals, inpatient
rehabilitation facilities (IRFs), and
[[Page 47082]]
skilled nursing facilities (SNFs), where each provider uses a single
CBSA, hospice agencies may be reimbursed based on more than one wage
index. Payments are based upon the location of the beneficiary for
routine and continuous home care or the location of the facility for
respite and general inpatient care. Hospices in Montgomery County,
Maryland may provide RHC and CHC to patients in the ``Washington
Arlington-Alexandria, DC-VA'' CBSA and to patients in the ``Baltimore-
Columbia-Towson, Maryland'' CBSA. We have used CBSAs for determining
hospice payments since FY 2006. Additionally, other provider types,
such as IPPS hospitals, home health agencies (HHAs), SNFs, IRFs, and
the dialysis facilities all used CBSAs to define their labor market
areas. We believe that using the most current OMB delineations provides
a more accurate representation of geographic variation in wage levels
and do not believe it would be appropriate to allow hospices to opt for
or be assigned a higher CBSA designation.
Comment: Many commenters recommended more far-reaching revisions
and reforms to the wage index methodology used under Medicare fee-for-
service. MedPAC recommended that Congress repeal the existing hospital
wage index and instead implement a market-level wage index for use
across other prospective payment systems that would use wage data from
all employers and industry-specific occupational weights, and adjust
for geographic differences in the ratio of benefits to wages.
Additionally, many commenters recommended that CMS develop and
implement a wage index model that is consistent across all provider
types, incorporates some means by which providers are protected against
substantial payment reductions due to dramatic reductions in wage index
values from one year to the next, allows hospices and other post-acute
providers to utilize a reclassification board and guarantees that wage
index values do not drop below the rural wage index value applicable in
the state of operation. Finally, one commenter recommended that CMS
implement a policy similar to that of the FY 2020 IPPS final rule which
increased the wage index for hospitals with a wage index value below
the 25th percentile in order to address the discrepancies between
counties whose wage index falls below the statewide rural wage index.
Response: We appreciate the commenters' recommendations; however,
these comments are outside the scope of the proposed rule. Any changes
to the way we adjust hospice payments to account for geographic wage
differences, beyond the wage index proposals discussed in the FY 2021
Hospice Wage Index and Rate Update proposed rule, would have to go
through notice and comment rulemaking. While CMS and other stakeholders
have explored potential alternatives to the current CBSA-based labor
market system, no consensus has been achieved regarding how best to
implement a replacement system. We believe that in the absence of
hospice specific wage data, using the pre-floor, pre-reclassified
hospital wage data is appropriate and reasonable for hospice payments.
Additionally, the regulations that govern hospice reimbursement do
not provide a mechanism for allowing hospices to seek geographic
reclassification or to utilize the rural floor provisions that exist
for IPPS hospitals. The reclassification provision found in section
1886(d)(10) of the Act is specific to hospitals. Section 4410(a) of the
Balanced Budget Act of 1997 (Pub. L. 105-33) provides that the area
wage index applicable to any hospital that is located in an urban area
of a state may not be less than the area wage index applicable to
hospitals located in rural areas in that state. This rural floor
provision is also specific to hospitals. Because the reclassification
provision and the hospital rural floor applies only to hospitals, and
not to hospices, we continue to believe the use of the pre-floor and
pre-reclassified hospital wage index results in the most appropriate
adjustment to the labor portion of the hospice payment rates. This
position is longstanding and consistent with other Medicare payment
systems (for example, SNF PPS, IRF PPS, and HH PPS). However, the
hospice wage index does include the hospice floor which is applicable
to all CBSAs, both rural and urban. Pre-floor, pre-reclassified
hospital wage index values below 0.8 are adjusted by a 15 percent
increase subject to a maximum wage index value of 0.8. Finally, with
regards to the wage index changes detailed in the FY 2020 IPPS final
rule, we would like to note that the hospice wage index is derived from
hospital wage data. As such, any changes in the wage data of hospitals
extend to the hospice setting, as hospital data is used to establish
the wage index for hospices.
Final Decision: After considering the comments received in response
to the proposed rule and for the reasons discussed previously, we are
finalizing our proposal to use the FY 2021 pre-floor, pre-reclassified
hospital wage index data as the basis for the FY 2021 hospice wage
index. The wage index applicable for FY 2021 is available on our
website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/Hospice/Hospice-Wage-Index. The hospice wage index for FY 2021
is effective October 1, 2020 through September 30, 2021.
2. FY 2021 Hospice Payment Update Percentage
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
to be updated by a factor equal to the inpatient hospital market basket
percentage increase set out under section 1886(b)(3)(B)(iii) of the
Act, 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 inpatient market basket percentage increase for that FY.
In the FY 2021 Hospice Wage Index and Payment Rate Update proposed
rule (85 FR 20958), we proposed the market basket percentage increase
of 3.0 percent for FY 2021 using the most current estimate of the
inpatient hospital market basket (based on IHS Global Inc.'s fourth-
quarter 2019 forecast with historical data through the third quarter
2019). We also stated if more recent data became available after the
publication of the proposed rule and before the publication of the
final rule (for example, more recent estimates of the inpatient
hospital market basket update and/or multifactor productivity (MFP)
adjustment), we would use such data to determine the hospice payment
update percentage for FY 2021 in the final rule. For this final rule,
based on IHS Global Inc.'s (IGIs) second-quarter 2020 forecast with
historical data through the first quarter 2020 of the inpatient
hospital market basket update, the market basket percentage increase
for FY 2021 is 2.4 percent. We note that the fourth quarter 2019
forecast used for the proposed market basket update was developed prior
to the economic impacts of the COVID-19 pandemic. This lower update
(2.4 percent) for FY 2021, relative to the proposed rule (3.0 percent),
is primarily driven by slower anticipated compensation growth for both
health-related and other occupations as labor markets are expected to
be significantly impacted during the recession that started in February
2020 and throughout the anticipated recovery.
[[Page 47083]]
Section 1814(i)(1)(C)(iv)(I), as added by section 3401(g) of the
Act, requires, starting with FY 2013 (and in subsequent FYs), that the
market basket percentage increase be annually reduced by changes in
economy-wide productivity 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 MFP.
In the FY 2021 Hospice Wage Index and Payment Rate Update proposed
rule (85 FR 20958), we proposed a MFP adjustment of 0.4 percentage
point based on IGIs fourth quarter 2019 forecast. Based on the more
recent data available for this final rule, the current estimate of the
MFP adjustment for FY 2021 is projected to be -0.1 percentage point.
This MFP adjustment is based on the most recent macroeconomic outlook
from IGI at the time of rulemaking (released June 2020) in order to
reflect more current historical economic data. IGI produces monthly
macroeconomic forecasts, which include projections of all of the
economic series used to derive MFP. In contrast, IGI only produces
forecasts of the more detailed price proxies used in the inpatient
hospital market basket on a quarterly basis. Therefore, IGI's second
quarter 2020 forecast is the most recent forecast of the inpatient
hospital market basket update.
We note that it has typically been our practice to base the
projection of the market basket price proxies and MFP in the final rule
on the second quarter IGI forecast. For the FY 2021 Hospice Wage Index
and Payment Rate Update final rule, we are using the IGI June
macroeconomic forecast for MFP because it is a more recent forecast,
and it is important to use more recent data during this period when
economic trends, particularly employment and labor productivity, are
notably uncertain because of the COVID-19 pandemic. Historically, the
MFP adjustment based on the second quarter IGI forecast has been very
similar to the MFP adjustment derived with IGI's June macroeconomic
forecast. Substantial changes in the macroeconomic indicators in
between monthly forecasts are atypical.
Given the unprecedented economic uncertainty as a result of the
COVID-19 pandemic, the changes in the IGI macroeconomic series used to
derive MFP between the second quarter 2020 IGI forecast and the IGI
June 2020 macroeconomic forecast is significant. Therefore, we believe
it is technically appropriate to use IGI's more recent June 2020
macroeconomic forecast to determine the MFP adjustment for the final
rule as it reflects more current historical data. For comparison
purposes, the 10-year moving average growth of MFP for FY 2021 is
projected to be -0.1 percentage point based on IGI's June 2020
macroeconomic forecast compared to a FY 2021 projected 10-year moving
average growth of MFP of 0.7 percentage point based on IGI's second
quarter 2020 forecast. Mechanically subtracting the negative 10-year
moving average growth of MFP from the market basket percentage increase
using the data from the IGI June, 2020 macroeconomic forecast of the FY
2021 MFP adjustment would have resulted in a 0.1 percentage point
increase in the FY 2021 hospice payment update percentage. However,
under sections 1886(b)(3)(B)(xi)(I) and 1814(i)(1)(C)(v) of the Act,
the Secretary is required to reduce (not increase) the hospice market
basket percentage increase by changes in economy-wide productivity.
Accordingly, we will be applying a 0.0 percentage point MFP adjustment
to the market basket percentage increase. Therefore, the hospice
payment update percentage for FY 2021 is 2.4 percent.
The labor portion of the hospice payment rates are as follows: For
RHC, 68.71 percent; for CHC, 68.71 percent; for GIP, 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 are as follows: For RHC, 31.29
percent; for CHC, 31.29 percent; for GIP, 35.99 percent; and for
Respite Care, 45.87 percent.
A summary of the comments we received regarding the payment update
percentage and our responses to those comments appear below:
Comment: Nearly all commenters noted their support of the proposed
hospice payment update percentage.
Response: We appreciate the comments in support of the hospice
payment update percentage.
Comment: MedPAC recognizes that CMS is required by statute to
update the hospice payments rates for FY 2021 (an increase of 2.4
percent as outlined in this final rule), however, they noted that in
their March 2020 report to Congress, they recommended that Congress
eliminate the payment update for FY 2021 (that is, hold the payment
rates for FY 2021 at the FY 2020 levels).
Response: We appreciate the comment, however, we do not have the
statutory authority to eliminate the annual payment updates to the
hospice payment rates for FY 2021.
Final Decision: We are finalizing the 2.4 percent hospice payment
update percentage for FY 2021. Based on IHS Global, Inc.'s updated
forecast of the inpatient hospital market basket update and the MFP
adjustment, the hospice payment update percentage for FY 2021 will be
2.4 percent for hospices that submit the required quality data and 0.4
percent (FY 2021 hospice payment update of 2.4 percent minus 2.0
percentage points) for hospices that do not submit the required data.
3. FY 2021 Hospice Payment Rates
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 CHC,
IRC, or GIP. 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 be relieved from caregiving; and GIP is to treat
symptoms that cannot be managed in another setting.
Additionally, in the FY 2016 Hospice Wage Index and Payment Rate
Update final rule (80 FR 47172), we implemented two different RHC
payment rates, one RHC rate for the first 60 days and a second RHC rate
for days 61 and beyond. In that final rule we also implemented a SIA
payment for RHC when direct patient care is provided by a RN or social
worker during the last 7 days of the beneficiary's life. The SIA
payment is equal to the CHC hourly rate multiplied by the hours of
nursing or social work provided on the day of service (up to 4 hours),
if certain criteria are met. In order to maintain budget neutrality in
the first year of implementation, as required under section
1814(i)(6)(D)(ii) of the Act, the new RHC rates were adjusted by a
service intensity add-on budget neutrality factor (SBNF). The SBNF is
used to reduce the overall RHC rate in order to ensure that SIA
payments are budget-neutral. At the beginning of every fiscal year, SIA
utilization is compared to the prior year in order calculate a budget
neutrality adjustment. For FY 2021, we calculated the SBNF using FY
2019 utilization data. For FY 2021, the SBNF that would apply to days 1
through 60 is calculated to be 1.0002 and the SBNF that would apply to
days 61 and beyond is calculated to be 1.0001.
As discussed in the FY 2021 Hospice Wage Index and Payment Rate
Update
[[Page 47084]]
proposed rule (85 FR 20958), there have been very minor SBNF
adjustments over the past several years suggesting that the utilization
of the SIA from one year to the next remains relatively constant.
Because the SBNF remains stable, we proposed to remove the factor to
simplify the RHC payment rate updates.
In the FY 2017 Hospice Wage Index and Payment Rate Update final
rule (81 FR 52156), we initiated a policy of applying a wage index
standardization factor to hospice payments in order to eliminate the
aggregate effect of annual variations in hospital wage data. In order
to calculate the wage index standardization factor, we simulate total
payments using the FY 2020 hospice wage index and FY 2020 payment rates
and compare it to our simulation of total payments using the FY 2021
wage index with a 5 percent cap on wage index decreases and FY 2020
payment rates. By dividing payments for each level of care (RHC days 1
through 60, RHC days 61+, CHC, IRC, and GIP) using the FY 2020 wage
index and payment rates by payments for each level of care using the FY
2021 wage index and FY 2020 payment rates, we obtain a wage index
standardization factor for each level of care. The wage index
standardization factors for each level of care are shown in the tables
5 and 6.
The FY 2021 RHC payment rates are shown in Table 5. The FY 2021
payment rates for CHC, IRC, and GIP are shown in Table 6.
[GRAPHIC] [TIFF OMITTED] TR04AU20.007
Sections 1814(i)(5)(A) through (C) of the Act require that hospices
submit quality data, based on measures to be specified by the
Secretary. In the FY 2012 Hospice Wage Index and Payment Rate Update
final rule (76 FR 47320 through 47324), we implemented a 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. The FY 2021 payment rates for hospices that do not
submit the required quality data would be updated by the FY 2021
hospice payment update percentage of 2.4 percent minus 2 percentage
points. These rates are shown in Tables 7 and 8.
[[Page 47085]]
[GRAPHIC] [TIFF OMITTED] TR04AU20.008
A summary of the comments we received regarding the payment rates
and the elimination of the SBNF and our responses to those comments
appear below:
Comment: Several commenters did not support CMS's proposal to
sunset the SBNF and believes the SBNF recalibration should continue on
an annual basis. They suggested that the SBNF serves an important
purpose to retain budget neutrality going forward if visits in the last
seven days of life increase. They stated that the SIA payments have
served to align payment with costs of care and that the SIA payments
help balance the cost of short-length-of stay patients for whom
hospices receive very little reimbursement, but may provide many hours
of intense care by professional staff. A few commenters stated that the
FY 2020 payment rule's recalibration of the payment rates has resulted
in a considerable increase in the hourly rate for CHC, and could have
an impact on SIA utilization going forward; that is, the significant
increase in the CHC rate may incentivize an increase in visits made
during the last 7 days of life. On the other hand, several commenters
were supportive of CMS' efforts to simplify Medicare payment
calculations where warranted, and understands CMS' rationale for
eliminating the SBNF. They stated that the removal of the SBNF from RHC
payment updates would result in a more administratively simple
application of the RHC payment rate updates. One commenter recommended
that CMS wait to implement this change. Many commenters requested that
CMS continue to monitor visits in the last 7 days of life to ensure
that current trends do not change in light of the increased payment
amount associated with the CHC rate.
Response: After considering the comments received in response to
the proposed removal of the SBNF, we are not finalizing the removal of
the SBNF for FY 2021. As noted by commenters, we rebased the CHC
payment amount in FY 2020. Given the increase to the CHC hourly rate in
FY 2020, we agree that it is prudent to evaluate FY 2020 utilization
data prior to eliminating the SBNF. We will continue to analyze data on
visits in the last 7 days of life and whether there are changes in
utilization that could affect overall budget neutrality. If there
continues to be very minor SBNF adjustments in the future, suggesting
that the utilization of the SIA from one year to the next remains
relatively constant, we may propose to remove the factor to simplify
the RHC payment rate updates in future rulemaking.
Comment: While outside the scope of the proposed rule, two
commenters noted their support of the suspension of the sequestration
reduction due to the public health emergency (PHE) in response to the
COVID-19 pandemic. One commenter recommended that quality reporting be
suspended for the duration of CY 2020 and that hospices be held
harmless from a negative payment adjustment for the remainder of the
2020 performance period.
Response: While the HQRP is statutorily mandated under section
1814(i)(5)(A)(i) of the Act, we provided an exemption under its
extraordinary and extenuating circumstances policy for the COVID-19
pandemic as discussed in the FY 2016 Final Rule (80 FR 47194). We may
grant exemptions or
[[Page 47086]]
extensions to hospices without a request if it determines that an
extraordinary circumstances exemption (ECE), such as an act of nature
including a pandemic, affects an entire region or locale. Accordingly,
to allow all Medicare-certified hospices to focus on patient care
during the start of the COVID-19 pandemic, we granted such an exemption
that ended on June 30, 2020. This limited timeframe allowed hospices
time to address issues and continue with submitting quality data for
public reporting starting on July 1, 2020. Further, in coordination
with other provider-types who have also been given blanket waivers, CMS
expects to suspend penalties for Quarter 1 (Q1) and Q2 of 2020 (January
1 through June 30, 2020). Therefore, the calendar year 2020 data used
for meeting the HQRP requirements include July 1 through December 31,
2020. This means that even if hospice providers submit the Hospice Item
Set and CAHPS[supreg] Hospice Survey data for Q1 and Q2 2020, we will
not include any of that data for purposes of calculating whether a
hospice meets the HQRP requirements impacting FY 2022 payments. We
provided a tip sheet to assist providers with this issue that can be
accessed at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Hospice-Quality-Reporting/HQRP-Requirements-and-Best-Practices.
Final Decision: We are finalizing the FY 2021 payment rates in
accordance with statutorily-mandated requirements. We are not
finalizing the removal of the SBNF at this time; the SBNF will be
applied to the payment rates as shown in Tables 6 and 8.
4. Hospice Cap Amount for FY 2021
As discussed in the FY 2016 Hospice Wage Index and Payment Rate
Update final rule (80 FR 47183), we implemented changes mandated by the
IMPACT Act of 2014 (Pub. L. 113-185). Specifically, for accounting
years that end after September 30, 2016 and before October 1, 2025, the
hospice cap is updated by the hospice payment update percentage rather
than using the CPI-U. The hospice cap amount for the FY 2021 cap year
will be $30,683.93, which is equal to the FY 2020 cap amount
($29,964.78) updated by the FY 2021 hospice payment update percentage
of 2.4 percent.
A summary of the two comments we received regarding the hospice cap
amount and our responses to those comments appear below:
Comment: MedPAC recommended reducing the hospice aggregate cap by
20 percent and wage adjusting the hospice aggregate cap.
Response: We appreciate the commission's recommendation, however,
we do not have the statutory authority to wage adjust or reduce the
hospice cap amount.
Comment: Another commenter suggested that the cap amount is an area
that CMS could explore under its program integrity authority using
available claims and quality data to target enforcement activities to
hospices that regularly come close to or go over their aggregate cap
amount.
Response: We appreciate the commenter's suggestion to consider
looking into the practices of hospices that regularly come close to or
exceed their aggregate cap to target further program integrity efforts.
We will continue to closely monitor this issue and address any
identified concerns, if necessary.
Final Decision: We are finalizing the update to the hospice cap in
accordance with statutorily-mandated requirements.
C. Election Statement Content Modifications and Addendum To Provide
Greater Coverage Transparency and Safeguard Patient Rights
In the FY 2020 Hospice Wage Index and Payment Rate Update final
rule (84 FR 38484), we finalized modifications to the hospice election
statement content requirements at Sec. 418.24(b) to increase coverage
transparency for patients under a hospice election. In addition to the
existing election statement content requirements at Sec. 418.24(b), we
finalized that hospices also would be required to include the following
on the election statement:
Information about the holistic, comprehensive nature of
the Medicare hospice benefit.
A statement that, although it would be rare, there could
be some necessary items, drugs, or services that will not be covered by
the hospice because the hospice has determined that these items, drugs,
or services are to treat a condition that is unrelated to the terminal
illness and related conditions.
Information about beneficiary cost-sharing for hospice
services.
Notification of the beneficiary's (or representative's)
right to request an election statement addendum that includes a written
list and a rationale for the conditions, items, drugs, or services that
the hospice has determined to be unrelated to the terminal illness and
related conditions and that immediate advocacy is available through the
Beneficiary and Family Centered Care Quality Improvement Organization
(BFCC-QIO) if the beneficiary (or representative) disagrees with the
hospice's determination.
Also in the FY 2020 Hospice Wage Index and Payment Rate Update
final rule, we finalized the requirements as set forth at Sec.
418.24(c) for the hospice election statement addendum titled, ``Patient
Notification of Hospice Non-Covered Items, Services, and Drugs'' to
include the following content requirements:
1. Name of the hospice.
2. Beneficiary's name and hospice medical record identifier.
3. Identification of the beneficiary's terminal illness and related
conditions.
4. A list of the beneficiary's current diagnoses/conditions present
on hospice admission (or upon plan of care update, as applicable) and
the associated items, services, and drugs, not covered by the hospice
because they have been determined by the hospice to be unrelated to the
terminal illness and related conditions.
5. A written clinical explanation, in language the beneficiary and
his or her representative can understand, as to why the identified
conditions, items, services, and drugs are considered unrelated to the
terminal illness and related conditions and not needed for pain or
symptom management. This clinical explanation would be accompanied by a
general statement that the decision as to whether or not conditions,
items, services, and drugs is related is made for each patient and that
the beneficiary should share this clinical explanation with other
health care providers from which they seek services unrelated to their
terminal illness and related conditions;
6. References to any relevant clinical practice, policy, or
coverage guidelines.
7. Information on:
a. The purpose of addendum; and
b. the patient's right to Immediate Advocacy.
8. Name and signature of Medicare hospice beneficiary (or
representative) and date signed, along with a statement that signing
this addendum (or its updates) is only acknowledgement of receipt of
the addendum (or its updates) and not necessarily the beneficiary's
agreement with the hospice's determinations.
While we finalized that the election statement modifications apply
to all hospice elections, the addendum is only required to be furnished
to beneficiaries, their representatives, non-hospice providers, or
Medicare contractors who requested such information. Additionally, we
finalized a policy that if the beneficiary (or representative)
requested an addendum at the time of hospice election, the hospice has
5 days from the start of hospice care to furnish this information in
writing.
[[Page 47087]]
Furthermore, if the beneficiary requested the election statement at the
time of hospice election, but died within 5 days, the hospice is not
required to furnish the addendum as the requirement would be deemed to
have been met in this circumstance. If the addendum was requested
during the course of hospice care (that is, after the date of the
hospice election), we finalized a policy that the hospice has 72 hours
from the date of the request to provide the written addendum. The
election statement modifications and the election statement addendum
requirements will be effective for hospice elections beginning on and
after October 1, 2020 (that is, FY 2021).
While we finalized the content requirements for the election
statement addendum, we did not mandate that hospices use a specific
form. Hospices are to develop and design the addendum to meet their
needs, similar to how hospices develop their own hospice election
statement (84 FR 38507). Additionally, we finalized a policy that the
signed addendum (and any signed updates) are a new condition for
payment. However, this does not mean in order to meet this condition
for payment that the beneficiary (or representative), or non-hospice
provider needs to agree with the hospice's determination. For purposes
of this condition for payment, we finalized the policy that the signed
addendum is only an acknowledgement of the beneficiary's (or
representative's) receipt of the addendum (or its updates) and this
payment requirement is met if there is a signed addendum (and any
signed updates) in the requesting beneficiary's medical record with the
hospice. This addendum is not required to be submitted routinely with
each hospice claim. Likewise, the hospice beneficiary (or
representative) does not have to separately consent to the release of
this information to non-hospice providers furnishing services for
unrelated conditions, because the Health Insurance Portability and
Accountability Act of 1996 (HIPAA) Privacy Rule allows those doctors,
nurses, hospitals, laboratory technicians, and other health care
providers that are covered entities to use or disclose protected health
information, such as X-rays, laboratory and pathology reports,
diagnoses, and other medical information for treatment purposes without
the patient's express authorization. This includes sharing the
information to consult with other providers, including providers who
are not covered entities, to treat a different patient, or to refer the
patient (45 CFR 164.506).
We delayed the effective date of the election statement content
modifications and the hospice election statement addendum until FY 2021
to allow hospices adequate time to make the necessary modifications to
their current election statements, develop their own election statement
addendum, and make any changes to their current software and business
processes to accommodate the requirements. Additionally, with
publication of the FY 2021 Hospice Wage Index and Payment Rate Update
proposed rule, we posted a modified model election statement and
addendum on the Hospice Center web page to give hospices an
illustrative example as they modify and develop own forms to meet the
content requirements and best meet their respective needs.
While we did not make any proposals in the FY 2021 Hospice Wage
Index and Payment Rate Update proposed rule to the finalized election
statement and election statement addendum content requirements at Sec.
418.24, or the October 1, 2020 effective date, we solicited comments on
both of these model examples to see if they are helpful in educating
hospices in how to meet these requirements effective for hospice
elections beginning in FY 2021. We received 45 comments from primarily
hospices and industry associations. Below is a summary of those
comments and our responses.
Comment: In general, commenters had many suggested revisions for
the modified election statement and the election statement addendum.
Comments on the modifications to the model election statement and the
addendum included formatting changes and reordering the required items
for ease of use and readability. Some commenters suggested language
revisions to make some of the content requirements more clear. Other
suggestions included the removal of certain statements because they are
not content requirements, outlined in regulation, and a few commenters
suggested adding additional language to further explain the purpose of
the addendum.
Several commenters questioned what recourse the hospice has if the
patient/representative refuses to sign the addendum, given the
beneficiary signature is a content requirement. These commenters
suggested a process similar to the Notices of Medicare Non-Coverage
(NOMNC) where CMS has stated that ``[i]f the beneficiary refuses to
sign the NOMNC the provider should annotate the notice to that effect
and indicate the date of refusal on the notice.'' And finally, one
commenter requested an example of a completed addendum as they stated
that it would be helpful for hospices to understand what CMS expects in
terms of the way to write the rationale for an unrelated condition,
item, service, or drug that is considered to be communicated in a
language the beneficiary can understand.
Response: We appreciate commenters taking the time and thoroughly
reviewing the model examples of the modifications to the election
statement and the election statement addendum posted on the Hospice
Center web page. As noted in the proposed rule and in this final rule,
these examples are only meant to be illustrative and are not required
to be in the exact format as provided. We have accepted the majority of
commenters' suggestions and have incorporated them into the model
examples, which we will post on the Hospice Center web page with this
final rule. We removed language and checkboxes that are not content
requirements at Sec. 418.24(b) or (c) for the election statement or
the addendum. We did not accept those recommendations to add language
that are not regulatory requirements. The model examples of the
election statement and the addendum posted with this final rule include
only those content requirements set forth at Sec. 418.24(b) and (c).
However, as we noted in the proposed rule, hospices can develop their
election statement and election statement addendum in any format that
best suits their needs as long as the content requirements at Sec.
418.24(b) and (c) are met. The examples were intended to assist
hospices in understanding how they could format their election
statement and addendum to meet the content requirements.
To address the comment of beneficiary (or representative) refusal
to sign the addendum, we again point to the statement that must be
included on the addendum that the signature is only acknowledgement of
receipt and not a tacit agreement to its contents. Additionally, if the
beneficiary (or representative) requests the addendum, we believe that
hospices would conduct due diligence that the beneficiary (or
representative) has been informed about the purpose of the addendum and
the rationale for the signature. However, we recognize that there may
be those rare instances in which the beneficiary (or representative)
may refuse to sign the addendum, even though he or she has requested
the form. We did not make any proposals addressing situations in which
the beneficiary (or representative)
[[Page 47088]]
refuses to sign a requested addendum. While we believe that this would
be a rare occurrence given this is primarily a beneficiary (or
representative) request to receive such form, we will consider whether
this issue needs to be addressed in future rulemaking.
We do not believe that providing an example of a completed addendum
would be particularly helpful because of the unique clinical conditions
of hospice beneficiaries and given that determinations regarding what
is related versus unrelated to a patient's terminal illness and related
conditions are made on a case-by-case basis.
As mentioned previously in this final rule, we did not propose any
new policies as they relate to the modifications to the hospice
election statement or the addendum requirements. These policies were
finalized in the FY 2020 Hospice Wage Index and Payment Rate Update
final rule with a delayed effective date of October 1, 2020. However,
we still received comments on various aspects of the finalized policy
and we have summarized these and responded below.
Comment: One commenter questioned if there is any impact on the
election statement if non-covered items, services, or drugs are
requested after the initial admission to hospice. That is, whether
there are any additional documentation requirements to note that the
addendum was requested. Another questioned whether there is a different
form to sign, other than the election statement, if the patient
requests the addendum after the effective date of the election
acknowledging that the addendum was requested.
Response: If a beneficiary (or representative) requests the
addendum after the effective date of the election, there is no impact
on the election statement. Similarly, there is no separate form or
additional documentation required if the beneficiary does request the
addendum after the effective date of the election. As we stated in the
FY 2020 Hospice Wage Index and Payment Rate Update final rule, we would
expect hospices to document that the addendum was discussed with the
patient (or representative) similar to how other patient and family
discussions are documented. However, we did not propose a specific
format in which to document such conversations and hospices can develop
their own processes to incorporate into their workflow. This could be
done however the hospice determines best meets its' needs.
Comment: A commenter stated that the regulations for the election
statement addendum do not include language addressing the issuance of a
requested addendum at the time of hospice election but where the
beneficiary dies within the first 5 days of hospice care. This
commenter stated that the preamble of the FY 2020 Hospice Wage Index
and Payment Rate Update final rule addressed this particular issue.
Specifically, CMS stated that if a beneficiary requests the addendum at
the time of hospice election and dies within 5 days from the start of
the hospice election and before the hospice can furnish the addendum,
the hospice would not be required to furnish such addendum after the
patient has died, as this requirement would be deemed as being met in
this circumstance.
Response: Commenters are correct that, in the FY 2020 Hospice Wage
Index and Payment Rate Update final rule (84 FR 38511), we stated that
if the addendum is requested on the effective date of the hospice
election (that is, the start of care date) and the beneficiary dies
within the first 5 days from the start of hospice care and before the
hospice is able to furnish the addendum, the addendum would not be
required to be furnished after the patient has died, and this condition
for payment would be considered met. While this was not codified in the
regulations, we will issue sub-regulatory guidance to this effect and
we will consider including this in the regulations in future
rulemaking.
Comment: Several commenters remarked that there is conflicting
language in Sec. 418.24(c) as to who can request the addendum.
Specifically, commenters referenced Sec. 418.24(c)(6), which states
that the beneficiary or representative should request the addendum and
share the information with other health care providers. However,
commenters stated that Sec. 418.24(c) requires that the hospice
provide the addendum to not only the requesting individual (or
representative), but also to requesting non-hospice providers or
Medicare contractors. One commenter expressed concern that the
regulatory language at Sec. 418.24(c) allows non-hospice providers and
Medicare contractors to request the addendum absent the beneficiary (or
representative) requesting such information from the hospice and this
violates the rights of the patient to have control over their protected
health information. A few commenters expressed concern that any lack of
clarity regarding the addendum requirements could result in non-payment
for hospice services given the addendum is a condition for payment.
Response: The regulations at Sec. 418.24(c) reference who can
request the addendum, that is the beneficiary (or representative), non-
hospice provider, or Medicare contractor. Whereas, the regulations at
Sec. 418.24(c)(6) refer to one of the specific content items required
on the addendum form, along with the statement that the individual
should share this clinical explanation with other health care providers
from which they seek items, services, or drugs unrelated to their
terminal illness and related conditions.
We note that it is not a violation of patient rights to have
control over their health information in the scenario where a non-
hospice provider or Medicare contractor requests the addendum absent
the beneficiary (or representative) requesting such information. As
discussed previously in this final rule, the hospice beneficiary (or
representative) does not have to separately consent to the release of
this information to non-hospice providers furnishing services for
unrelated conditions, because the Health Insurance Portability and
Accountability Act of 1996 (HIPAA) Privacy Rule allows those doctors,
nurses, hospitals, laboratory technicians, and other health care
providers that are covered entities to use or disclose protected health
information, such as X-rays, laboratory and pathology reports,
diagnoses, and other medical information for treatment purposes without
the patient's express authorization (45 CFR 164.506).
Though non-hospice providers and Medicare contractors can request
the addendum even in the event that the beneficiary (or representative)
did not request this information, we remind commenters that this
condition for payment is met only in those circumstances in which the
beneficiary (or representative) has requested the addendum and there is
a signed form in the hospice's medical record. In the event that a non-
hospice provider or Medicare contractor requests the addendum, but the
beneficiary (or representative) did not already request and sign the
addendum, this would not be a violation of the condition for payment as
described previously. Hospices can develop processes (including how to
document such requests from non-hospice providers and Medicare
contractors) to address circumstances in which the addendum was
requested by a non-hospice provider or Medicare contractor but where
there was no previous beneficiary
[[Page 47089]]
(or representative) request to receive the addendum.
Comment: One commenter requested that CMS clearly delineate in the
final rule the differences between the election statement addendum and
the Advance Beneficiary Notice (ABN) and provide guidance on when each
document should be used as there are concerns that hospices may be
confused as to each documents' purpose.
Response: We agree that it is important to ensure that hospices do
not conflate these two documents and their respective purposes. We note
that we provided detailed information on the purpose and use of the ABN
in the FY 2020 Hospice Wage Index and Payment Rate Update final rule
(84 FR 38512).
The ABN, Form CMS-R-131,\3\ is issued by providers (including
independent laboratories, home health agencies, and hospices),
physicians, practitioners, and suppliers to Original Medicare (Fee-for-
Service) beneficiaries in situations where Medicare payment is expected
to be denied. The ABN is issued in order to transfer potential
financial liability to the Medicare beneficiary in certain instances,
and its use is very limited for hospices. The three situations that
would require issuance of the ABN by a hospice are:
---------------------------------------------------------------------------
\3\ CMS R-131. Advance Beneficiary Notice. https://www.cms.gov/Medicare/CMS-Forms/CMS-Forms/CMS-Forms-Items/CMS012932.
---------------------------------------------------------------------------
Ineligibility because the beneficiary is not determined to
be ``terminally ill'' as defined in section 1879(g)(2) of the Act;
Specific items or services that are billed separately from
the hospice per diem payment, such as physician services, that are not
reasonable and necessary as defined in either sections 1862(a)(1)(A) or
1862(a)(1)(C) of the Act; or
The level of hospice care is determined to be not
reasonable or medically necessary as defined in sections 1862(a)(1)(A)
or 1862(a)(1)(C) of the Act.
Guidelines for issuing the ABN are published in the Medicare Claims
Processing Manual, chapter 30, section 50. An ABN is not required to be
given to a beneficiary for those items and services the hospice has
determined to be unrelated to the terminal illness and related
conditions, as these still may be covered under other Medicare
benefits. Additionally, an ABN cannot be issued to transfer liability
to the beneficiary when Medicare would otherwise pay for items and
services. The purpose of the ABN is to inform beneficiaries of the
listed items and services that Medicare in general, is not expected to
approve, and the specific denial reason (that is, not medically
reasonable and necessary). The hospice election statement addendum is
intended to inform beneficiaries of items and services that the hospice
benefit will not cover as the hospice has determined them to be
unrelated to the terminal illness and related conditions. However,
these items, services, and drugs may be covered under other Medicare
benefits it eligibility and coverage conditions are met. Table 9
provides a quick reference as to the type of document that can be
issued to Medicare hospice beneficiaries, the purpose of each document,
the timing of when the document must be provided to the beneficiary,
and when hospices would use the respective documents.
[[Page 47090]]
[GRAPHIC] [TIFF OMITTED] TR04AU20.009
Comment: A few commenters urged CMS to encourage the use of an
electronic format for both the hospice election statement and the
addendum given the shift of most hospice providers to electronic
platforms. Several other commenters questioned whether the addendum
could be provided via an electronic patient portal and whether there
could be an electronic version for potential use in communicating with
other non-hospice providers. Another commenter recommended that CMS
provide additional guidance for the hospice community and Medicare
contractors on patient/representative electronic signatures and include
in such guidance the ability to print an electronically signed document
to provide a hard copy to a patient or representative. Other commenters
stated that they are hopeful that if the election statement is in an
electronic format then the electronic exchange of same data elements
can be used to provide hospice election information to Part D plans
more timely.
Response: We agree with these commenters that the use of electronic
platforms can help facilitate more timely notification of hospice
elections and can be expanded to increase interoperability. As noted in
the FY 2020 Hospice Wage Index and Payment Rate Update final rule (84
FR 38511), hospices are free to develop their modified election
statement and addendum to best meet their needs. This includes those
hospices who develop these forms in an electronic format. As long as
the content requirements at Sec. 418.24(b) and (c) are met, there is
nothing precluding a hospice from having an election statement and
addendum in an electronic format.
While we did not specifically address the provision of the addendum
via electronic patient portals or whether the addendum could be
developed as an electronic version, we note that the requirement is
that the information must be provided to the beneficiary (or
representative), in writing. While we envisioned a hard copy document
for ease of use and sharing with non-hospice providers, we note that we
did not explicitly prohibit the use of an electronic patient portal or
provision of the addendum as an electronic version, as we recognize
information can be provided in a written, electronic format. We want
hospices to be able to furnish
[[Page 47091]]
such information in the least burdensome way to facilitate the
communication of this information to hospice patients and their
families, and even potentially for communicating with non-hospice
providers as suggested by the commenters. We also recognize that
hospices may already have their existing election statements in an
electronic format and hospices may prefer to have the addendum
incorporated into their Electronic Medical Records (EMRs) as well. As
long as the content requirements at Sec. 418.24 (b) and (c) are met,
including securing the beneficiary's (or representative's) signature
acknowledging receipt of the addendum, there is nothing precluding a
hospice from leveraging such technology. However, we require that the
information be provided in a language and format that the beneficiary
(or representative) understands. Therefore, if the beneficiary (or
representative) receives the addendum in an electronic format but
requests to have a hard copy version for their records, we expect that
the hospice would accommodate such request.
The commenter is correct that there is no specific guidance
addressing beneficiary (or representative) electronic signatures on the
hospice election statement. Generally, it is at the contractor's
discretion as to how they address patient (or representative)
electronic signatures in their review of medical records. However, we
will consider future guidance, if warranted, to address any issues as
they relate to electronic signatures.
Finally, we are aware of some of the issues where Part D Plans are
not aware of a beneficiary's hospice election in a timely fashion. We
understand that delayed notifications of a hospice election prevent the
Part D plan from placing patient-specific prior authorization on the
drugs in the four classes commonly paid by the hospice providers;
analgesics, anti-nauseants (antiemetics), laxatives, and antianxiety
drugs (anxiolytics). Currently, hospices are encouraged to use an OMB
approved form entitled ``Hospice Information for Medicare Part D
Plans'' (OMB NO 0938-1269) to communicate hospice election and drug use
to Part D plans.\4\ However, since OMB form NO 0938-1269 was first
approved, hospices have begun to use electronic health records (EHRs)
in growing numbers. This development has opened the door to electronic
transactions from the hospice to part D plans. The National Council for
Prescription Drug Plans (NCPDP) convened a diverse task group which
included payers, hospice organizations and processors to see if they
could leverage hospice EHR capabilities to produce standard electronic
transactions that can be used by Part D plans. CMS was pleased to learn
that the NCPDP hospice task group is embarking upon a pilot project
which extract data from a hospice's EHR and route that information to
the correct Part D plan in real-time, thereby minimizing delays in the
prior authorization process. We encourage hospices, their software
vendors and Part D plans to participate in the pilot project and we
await its outcome.
---------------------------------------------------------------------------
\4\ Medicare Part D Hospice Care Hospice Information for
Medicare Part D Plans. https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/Hospice/Downloads/Instruction-and-Form-for-Hospice-and-Medicare-Part-D.pdf.
---------------------------------------------------------------------------
Comment: Most commenters still disagree with CMS's decision to make
the election statement addendum a condition for payment. One commenter
stated the addendum is redundant to existing obligations and that there
is no basis for the addendum to be treated as a condition for payment
for hospice services. This commenter added that the Social Security Act
only authorizes the condition for hospice payment based on a patient's
having made an election to receive hospice care and that an addendum,
provided after the election, cannot and should not legally alter the
election or make the election retroactively invalid for purposes of
payment. Concerns about any errors to the addendum or an unreturned
addendum could give rise to non-payment of hospice services for what
CMS implies could be the patient's entire election period.
Response: We disagree with commenters that the election statement
addendum should not be a condition for payment given the enormity of
the decision of a Medicare beneficiary electing to receive hospice
services. In fact, the content requirements for the hospice election
statement at Sec. 418.24 specifically state that there must be the
individual's or representative's acknowledgement that he or she has
been given a full understanding of the palliative rather than curative
nature of hospice care, as it relates to the individual's terminal
illness and related conditions, as well as beneficiary acknowledgement
that certain Medicare services are waived by the election. Moreover,
section 1812(d)(2)(A) of the Act makes it clear that ``except in such
exceptional and unusual circumstances as the Secretary may provide . .
. if an individual makes such an election for a period with respect to
a particular hospice program, the individual shall be deemed to have
waived all rights to have payment made by Medicare'' for services that
are related to the treatment of the individual's condition for which a
diagnosis of terminal illness has been made. The Secretary has not
provided for any ``unusual and exceptional circumstances'' and in the
1983 hospice final rule (48 FR 56010) we stated that hospices are
required to provide virtually all the care needed by terminally ill
patients. Our position remains the same today.
We do not believe that the decision to elect hospice services can
be made without full information and disclosure as to what items,
services, and drugs the hospice will and will not be covering based on
their determinations of what is and what is not related to the terminal
illness and related conditions. As detailed in the FY 2020 Hospice Wage
Index and Payment Rate Update final rule (84 FR 38518), we believe
making the hospice election statement addendum a condition for payment
is necessary to ensure that hospices are diligent in providing this
information to Medicare hospice beneficiaries on request. We regard
this addendum as a means of accountability for hospices to provide
coverage information to beneficiaries electing the hospice benefit.
In the FY 2020 Hospice Wage Index and Payment Rate Update proposed
and final rules (84 FR 17570 and 84 FR 38484), we provided examples
from OIG reports 5 6 that highlight the issues with a
patient's lack of knowledge regarding hospices' limitation on their
coverage, and the potential for hospice non-coverage of certain
expected items, services, and drugs. Also, as described in the preamble
of the FY 2020 Hospice Wage Index and Payment Rate Update proposed
rule, the impetus for this policy was not only from these various OIG
reports, but from numerous anecdotal reports received by CMS describing
situations in which hospice beneficiaries and their families had to
continually seek items, services, and drugs outside of the hospice
benefit to receive needed care that they expected the hospice would
cover and provide.
---------------------------------------------------------------------------
\5\ Vulnerabilities in the Medicare Hospice Program Affect
Quality Care and Program Integrity: An OIG Portfolio. July 2018.
https://oig.hhs.gov/oei/reports/oei-02-16-00570.pdf.
\6\ Medicare Could Be Paying Twice for Prescription Drugs for
Beneficiaries in Hospice (A-06-10-00059). June 2012. https://oig.hhs.gov/oas/reports/region6/61000059.pdf.
---------------------------------------------------------------------------
One commenter remarked that requiring an addendum is redundant,
implying that because hospices are already making determinations of
relatedness, the beneficiary (or representative) is already being
[[Page 47092]]
informed of these determinations in order to allow them to make
treatment decisions that best align with their preferences and goals of
care. While we are encouraged that many hospices are already providing
this important coverage information to hospice beneficiaries, both the
OIG reports and anecdotal reports, as mentioned previously in this
final rule, indicate that a lack of coverage transparency continues to
be an issue for hospice beneficiaries.
Comment: A few commenters requested clarity regarding transfer
situations; when to update the addendum; situations where a beneficiary
requests the addendum but where the hospice has determined that there
are no unrelated conditions, items, services, or drugs; whether
specific QIO language must be used; the timeframe for providing the
addendum if requested after the effective date of the election but
within the first 5 days of hospice care; handling situations in which
the beneficiary elects hospice care but with a future hospice date; the
timing to obtain a signature on the addendum; and whether the addendum
must be provided to all individuals receiving hospice care, including
non-Medicare patients.
Response: Regarding the timeframe for providing the addendum to a
requesting beneficiary who has transferred from one hospice to another,
we remind commenters that a transfer does not change the effective date
of hospice election. That means, if the beneficiary (or representative)
requests the addendum from the receiving hospice, the hospice would
have 72 hours (or 3 days) to furnish this information in writing. As to
when hospices should update the addendum, in the FY 2020 Hospice Wage
Index and Payment Rate Update final rule, we stated that hospices have
the option to make updates to the addendum, if necessary, to include
such conditions, items, services and drugs they determine to be
unrelated throughout the course of a hospice election. This could also
include updating the addendum in situation where a condition, item,
service or drug was previously considered unrelated, and therefore
included on the addendum, is now considered related, and therefore
would be covered by the hospice and removed from the addendum. Given
that hospices develop their own addendum, hospices may add additional
language to inform beneficiaries that the addendum reflects the most
accurate information that the hospice has at the time the addendum is
completed and that updates would be provided, in writing, if there are
any changes that would need to be included based on any new
information. Additionally, if the beneficiary (or representative)
requested the addendum but the hospice has determined that all
conditions, items, services, and drugs were related, and thereby
covered by the hospice, the hospice could explain to the beneficiary
(or beneficiary) that it is furnishing all care or the hospice can
provide the addendum noting that at the time of the request, the
hospice has determined that there were no unrelated conditions, items,
services, and drugs. Hospices are free to develop any process for
addendum updates to distinguish whether any updates are additions,
deletions, or modifications, similar to processes hospices have in
place for updates to the hospice plan of care.
As for the comment regarding specific BFCC-QIO language, we note
that we did include specific BFCC-QIO language in the FY 2020 Hospice
Wage Index and Payment Rate Update proposed rule. We finalized a
requirement that the election statement itself must include information
on the BFCC-QIO (including the BFCC-QIO contact information), and both
the election statement and the addendum must include a statement about
the beneficiary's right to Immediate Advocacy. Hospices can use
whatever language they choose as long as this information is included
in accordance with the requirements at Sec. 418.24.
If the beneficiary does not request the addendum on the effective
date of the election (that it, the start of care date), but within the
5-day timeframe after the effective date, the hospice would have 72
hours (or 3 days) from the date of the request to furnish the addendum
as the regulations are clear that the 5-day timeframe relates to
whether the beneficiary (or representative) requested the addendum on
the effective date of the election (that is, the start date of hospice
care). Regarding those situations in which the beneficiary elects
hospice care, but with a future effective date, we remind commenters
that the addendum would be furnished to the beneficiary (or
representative) within 5 days of the effective date of the election.
For example, if the beneficiary elects hospice on May 1st with an
effective date of May 7th, the addendum, if requested, would be
provided within 5 days of May 7th. And because the beneficiary
signature is an acknowledgement of receipt of the addendum, this means
that the beneficiary would sign the addendum when the hospice provides
it, in writing, to the beneficiary (or representative). We note that
these finalized policies relating to the election statement
modifications and the addendum are for beneficiaries receiving services
under the Medicare hospice benefit. While the addendum is not required
to be provided to non-Medicare patients, hospices can choose to do so.
Comment: One commenter recommended that to effectively address
inappropriate spending outside of the Medicare hospice benefit, CMS
must take steps in addition to the addendum policy, to identify the
breadth of issues that are contributing to the problem. The commenter
suggested analysis of the spending data to determine what proportion of
this spending is occurring within the first weeks of hospice care when
CMS systems have not been updated with Medicare election information
and what proportion of this spending is a result a hospice informing
the provider that the item, service, or drug is unrelated. Finally,
this commenter stated that CMS must look at any additional systems
issues, as well as any other delays that slow the posting of new
beneficiary status information. This commenter also stated that a large
proportion of non-hospice spending is a result of related items,
services, or drugs but which are not reasonable and necessary under a
hospice plan of care.
Response: We appreciate the suggestions made by this commenter and
we note that we continue to analyze hospice utilization data, including
analyzing data on live discharges, lengths of stay, pre-hospice
spending, and non-hospice spending. We have previously shared these
results through rulemaking and other mechanisms of communication. We
also note that we have made every effort to enhance the processing time
of the hospice NOE to ensure that Medicare systems are updated in a
timelier fashion. Specifically, effective January 1, 2018, hospices can
submit the NOE via Electronic Data Interchange (EDI). EDI transmission
and receipt of NOEs would reduce, and potentially eliminate, problems
with NOEs that result from Direct Data Entry (DDE) keying errors.
Hospices could export data from their electronic medical record or
other software system into the EDI format without human intervention.
We continually look at ways to further streamline these processes and
appreciate commenter suggestions. We will consider the commenter's
recommendations moving forward as we continue to analyze the effects of
current hospice policies and for any future rulemaking and other
efforts.
Comment: Most commenters recommended that CMS delay the
[[Page 47093]]
October 1, 2020 effective date because of the public health emergency
declared by the Secretary in response to the COVID-19 pandemic.
Specifically, commenters recommended a delay of at least one full year
beyond the end date of the COVID-19 public health emergency because of
concerns that hospices have shifted their operational priorities to
address the pandemic and have not had time to complete the
modifications to the election statement, develop the addendum, or
establish new processes and train new staff on the new content
requirements. Commenters also expressed concerns over EMR software
readiness citing that EMR vendors have not provided any deliverables
related to the modifications to the election statement and the
addendum, and that hospices need delivery of software modifications in
order to test the software, as well as develop processes and prepare
for implementation.
Commenters also stated that, based on their research and inquiries
to the Medicare contractors and the BFCC-QIOs, there has been no
communication from CMS to the contractors related to the addendum as a
condition for payment, or to the BFCC-QIOs related to a patient/
representative request for Immediate Advocacy if the beneficiary (or
representative) disagrees with the hospices determinations as to those
items, services, and drugs the hospice has determined to be unrelated
to the terminal illness and related conditions. These commenters cited
the delayed implementation of OASIS-E as a result of the public health
emergency as precedent and requested a similar delay for the addendum
requirements as this would allow for adequate time for hospices, EMR
vendors, Medicare contractors, and BFCC-QIOs to be fully prepared for
these changes.
Response: We appreciate the magnitude of efforts undertaken by
hospice providers as our country responds to the public health
emergency for the COVID-19 pandemic. The effective date for the
election statement modifications and the addendum implementation are
effective for hospice elections on and after October 1, 2020 and this
finalized policy already reflects a delayed effective date of 1 year.
We note that there were no proposed changes to the election statement
modifications or the addendum in the FY 2021 Hospice Wage Index and
Payment Rate Update proposed rule, therefore, all of the content
requirements were finalized in the FY 2020 Hospice Wage Index and
Payment Rate Update final rule. We expect that hospices have already
begun making the modifications to their election statements and
developing their addendums in anticipation of a FY 2021 effective date
and well before the start of the public health emergency. We also
anticipate that hospices already have engaged with their EMR vendors to
start making the necessary changes resulting from a policy that was
finalized in the FY 2020 Hospice Wage Index and Payment Rate Update
final rule but with a delayed effective date. The expectation was that
hospices would start making these modifications when these requirements
were finalized in the FY 2020 Hospice Wage Index and Payment Rate
Update final rule (published on August 6, 2019). The public health
emergency underscores the importance of providing the ``Patient
Notification of Hospice Non-Covered Items, Services, and Drugs'' to
requesting hospice beneficiaries to ensure they are able to make
treatment decisions to best meet their needs during this time.
We continue to have ongoing discussions with the MACs and BFCC-QIOs
and will continue to provide education throughout the upcoming months
leading up to the effective date of this policy. This will include the
release of sub-regulatory guidance, and MLN[supreg] articles to ensure
education is furnished to all relevant stakeholders. We assure hospices
that all parties will be aware of the policies and their respective
roles. And with any new policy, we will continue to monitor and
communicate with stakeholders to determine if any future changes are
warranted. The goal is to ensure the least amount of burden to
providers while also ensuring beneficiary protection and engagement.
In summary, the hospice election statement modifications and the
hospice election statement addendum requirements at 42 CFR 418.24(b)
and (c) will be effective for hospice elections beginning on and after
October 1, 2020 as finalized in the FY 2020 Hospice Wage Index and
Payment Rate Update final rule (84 FR 38520). The hospice election
statement addendum will remain a condition for payment and as
finalized, this condition for payment would be met if there is a signed
addendum (and its updates) in the requesting beneficiary's hospice
medical record. The signed addendum is only acknowledgement of the
beneficiary's (or representative's) receipt of the addendum and not
agreement with the hospice's determination. To assist hospices in
understanding these content requirements and based on comments
received, we have posted with this final rule, the modified model
examples of the hospice election statement and hospice election
statement addendum on the Hospice Center web page as illustrative
examples. As finalized in the FY 2020 Hospice Wage Index and Payment
Rate Update final rule, hospices will make the election statement
modifications and develop the addendum to best suit their needs as long
as the content requirements are met.
D. Hospice Quality Reporting Program (HQRP)
Although CMS did not propose any changes to the HQRP for FY 2021,
some therapy associations commented and encouraged the agency to
continue to provide adequate provider training to ensure accuracy and
consistency in linking care planning and services with data collection
to allow the data to effectively promote improved care planning and
service implementation. Another commenter stated that CMS should
require quality performance be factored into payment and determinations
of any performance-based incentives for hospice providers. We thank
commenters for their suggestions. While these comments are outside the
scope of this rule, we assure commenters that we continue to consider
ways to inform and educate hospices regarding quality reporting, data
collection, and processes to ensure that hospice beneficiaries continue
to receive high quality hospice care. We agree that quality performance
should factor into performance-based incentives for hospice providers
and the HQRP is one mechanism to promote such performance.
III. Collection of Information Requirements
This final rule does not impose any new or revised ``collection of
information'' requirements or burden. For the purpose of this section
of the preamble, collection of information is defined under 5 CFR
1320.3(c) of OMB's Paperwork Reduction Act of 1995 (PRA) (44 U.S.C.
3501 et seq.) implementing regulations. Since this rule does not impose
any new or revised collection of information requirements or burden,
the rule is not subject to the requirements of the PRA.
IV. Regulatory Impact Analysis
A. Statement of Need
This final rule meets the requirements of our regulations at Sec.
418.306(c) and (d), which require 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
[[Page 47094]]
of CBSAs or previously used MSAs, as well as any changes to the
methodology for determining the per diem payment rates. This final rule
also updates payment rates for each of the categories of hospice care,
described in Sec. 418.302(b), for FY 2020 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. Lastly, 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 HQRP in accordance with section 1814(i)(5) of the
Act.
B. Overall Impacts
We estimate that the aggregate impact of the payment provisions in
this rule will result in an increase of $540 million in payments to
hospices, resulting from the hospice payment update percentage of 2.4
percent for FY 2021. The impact analysis of this rule represents the
projected effects of the changes in hospice payments from FY 2020 to FY
2021. Using the most recent data available at the time of rulemaking,
in this case FY 2019 hospice claims data as of May 12, 2020, we apply
the current FY 2020 wage index. Then, using the same FY 2019 data, we
apply the FY 2021 wage index to simulate FY 2021 payments. Finally, we
apply a budget neutrality adjustment so that the aggregate simulated
payments do not increase or decrease due to changes in the wage index.
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.
We have examined the impacts of this rule as required by Executive
Order 12866 on Regulatory Planning and Review (September 30, 1993),
Executive Order 13563 on Improving Regulation and Regulatory Review
(January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19,
1980, Pub. L. 96- 354), section 1102(b) of the Social Security Act,
section 202 of the Unfunded Mandates Reform Act of 1995 (March 22,
1995; Pub. L. 104-4), Executive Order 13132 on Federalism (August 4,
1999), the Congressional Review Act (5 U.S.C. 804(2)), and Executive
Order 13771 on Reducing Regulation and Controlling Regulatory Costs
(January 30, 2017).
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). Section
3(f) of Executive Order 12866 defines a ``significant regulatory
action'' as an action that is likely to result in a rule: (1) Having an
annual effect on the economy of $100 million or more in any 1 year, or
adversely and materially affecting a sector of the economy,
productivity, competition, jobs, the environment, public health or
safety, or state, local or tribal governments or communities (also
referred to as ``economically significant''); (2) creating a serious
inconsistency or otherwise interfering with an action taken or planned
by another agency; (3) materially altering the budgetary impacts of
entitlement grants, user fees, or loan programs or the rights and
obligations of recipients thereof; or (4) raising novel legal or policy
issues arising out of legal mandates, the President's priorities, or
the principles set forth in the Executive Order.
A regulatory impact analysis (RIA) must be prepared for major rules
with economically significant effects ($100 million or more in any 1
year). We estimate that this rulemaking is ``economically significant''
as measured by the $100 million threshold, and hence also a major rule
under the Congressional Review Act. Accordingly, we have prepared a RIA
that, to the best of our ability presents the costs and benefits of the
rulemaking.
C. Anticipated Effects
The Regulatory Flexibility Act (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 hospices and most other hospice-related 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 greater than 5 percent of
providers reach a threshold of 3 to 5 percent or more of total revenue
or total costs. The effect of the FY 2021 hospice payment update
percentage results in an overall increase of hospice payments of 2.4
percent, or $540 million. The distributional effects of the final FY
2021 hospice wage index do not result in a greater than 5 percent of
hospices experiencing decreases in payments of 3 percent or more of
total revenue. Therefore, the Secretary has determined that this rule
will not create a significant economic impact on a substantial number
of small entities.
In addition, section 1102(b) of the Social Security 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 MSA and has fewer than 100 beds. This rule will only affect hospices.
Therefore, the Secretary has determined that this rule will not have a
significant impact on the operations of a substantial number of small
rural hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) 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 2020, that
threshold is approximately $156 million. This final rule is not
anticipated to have an effect on state, local, or tribal governments,
in the aggregate, or on the private sector of $156 million or more.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct requirement costs on state
and local governments, preempts state law, or otherwise has Federalism
implications. We have reviewed this rule under these criteria of
Executive Order 13132, and have determined that it will not impose
substantial direct costs on state or local governments.
If regulations impose administrative costs on private entities,
such as the time needed to read and interpret this rule, we should
estimate the cost associated with regulatory review. Due to the
uncertainty involved with accurately quantifying the number of entities
that will review the rule, we assume that the total number of unique
commenters on last year's proposed rule
[[Page 47095]]
will be the number of reviewers of this rule. We acknowledge that this
assumption may understate or overstate the costs of reviewing this
rule. It is possible that not all commenters reviewed last year's rule
in detail, and it is also possible that some reviewers chose not to
comment on the proposed rule. For these reasons we believe that the
number of past commenters would be a fair estimate of the number of
reviewers of this final rule. We also recognize that different types of
entities are in many cases affected by mutually exclusive sections of
the proposed rule, and therefore, for the purposes of our estimate we
assume that each reviewer reads approximately 50 percent of the rule.
Using the wage information from the May 2019 Bureau of Labor
Statistics (BLS) for medical and health service managers (Code 11-
9111), we estimate that the cost of reviewing this rule is $110.74 per
hour, including overhead and fringe benefits (https://www.bls.gov/oes/current/oes_nat.htm). This rule consists of approximately 23,000 words.
Assuming an average reading speed of 250 words per minute, it would
take approximately 0.77 hours for the staff to review half of it. For
each hospice that reviews the rule, the estimated cost is $85.27 (0.77
hour x $110.74). Therefore, we estimate that the total cost of
reviewing this regulation is $4,519.31 ($85.27 x 53 reviewers).
D. Detailed Economic Analysis
1. Hospice Payment Update for FY 2021
The FY 2021 hospice payment impacts appear in Table 10. We tabulate
the resulting payments according to the classifications (for example,
provider type, geographic region, facility size), and compare the
difference between current and future payments to determine the overall
impact. The first column shows the breakdown of all hospices by
provider type and control (non-profit, for-profit, government, other),
facility location, facility size. The second column shows the number of
hospices in each of the categories in the first column. The third
column shows the effect of using the FY 2021 updated wage data. This
represents the effect of moving from the FY 2020 hospice wage index to
the FY 2021 unadjusted hospice wage index with the old OMB
delineations. The fourth column shows the effect of moving from the old
OMB delineations to the new OMB delineations with a 5 percent cap on
wage index decreases. The aggregate impact of the changes in columns
three and four is zero percent, due to the hospice wage index
standardization factor. However, there are distributional effects of
the FY 2021 hospice wage index. The fifth column shows the FY 2021
hospice payment update percentage of 2.4 percent as mandated by section
1814(i)(1)(C) of the Act, and is consistent for all providers. The 2.4
percent hospice payment update percentage is based on an estimated 2.4
percent inpatient hospital market basket update, reduced by a 0
percentage point productivity adjustment. It is projected that
aggregate payments would increase by 2.4 percent, assuming hospices do
not change their service and billing practices. The sixth column shows
the estimated total impact for FY 2021.
We note that simulated payments are based on utilization in FY 2019
as seen on Medicare hospice claims (accessed from the CCW in May of
2020) and only include payments related to the level of care and do not
include payments related to the service intensity add-on.
As illustrated in Table 10, the combined effects of all the
proposals vary by specific types of providers and by location.
[GRAPHIC] [TIFF OMITTED] TR04AU20.010
[[Page 47096]]
[GRAPHIC] [TIFF OMITTED] TR04AU20.011
[[Page 47097]]
[GRAPHIC] [TIFF OMITTED] TR04AU20.012
2. Hospice Election Statement Addendum
In the FY 2020 Hospice Wage Index and Payment Rate Update final
rule (84 FR 38553), we finalized modifications to the election
statement content requirements at Sec. 418.24(b) and (c) to include a
hospice election statement addendum, effective for hospice elections
beginning on and after October 1, 2020. This effective date reflects a
1-year delay to allow hospices to make the necessary modifications to
their existing election statement, develop their own addendum to best
meet their needs, and establish processes for incorporating the
addendum into their work flow.
In the FY 2020 Hospice Wage Index and Payment Rate Update final
rule (84 FR 38532), we estimated that the addendum requirement would
generate an annualized net reduction in burden of approximately $5.2
million, or $3.7 million per year on an ongoing basis discounted at 7
percent relative to year 2016, over a perpetual time horizon beginning
in FY 2021.
While we did not re-estimate this burden in the regulatory impact
analysis in the FY 2021 Hospice Wage Index and Payment Rate Update
proposed rule, we received the following comment regarding the hospice
election statement burden estimate as described and calculated in the
FY 2020 Hospice Wage Index and Payment Rate Update final rule.
Comment: One commenter noted that there was no updated burden
estimate in the FY 2021 Hospice Wage Index and Payment Rate Update
proposed rule even though we stated in the FY 2020 Hospice Wage Index
and Payment Rate Update final rule (84 FR 38533) that we would re-
estimate the burden estimate using more current data for 2021
rulemaking. The commenter stated that the previous burden estimate
underestimates the amount of time it takes to complete the addendum and
requested an updated estimate in the FY 2021 Hospice Wage Index and
Payment Rate Update final rule with an opportunity for stakeholder
comment.
Response: We apologize for any oversight in providing an updated
burden estimate in the FY 2021 Hospice Wage Index and Payment Rate
Update proposed rule. The calculated burden for completion of the
hospice addendum is only an estimate using the most current data at the
time of rulemaking. Hospices are already required to make
determinations as to the items, services, and drugs that are to be
included in the individualized hospice plan of care; therefore, this
means they are also making decisions as what items, services, and drugs
it will not be covering as the hospice has determined them to be
unrelated to the terminal illness and related conditions.
[[Page 47098]]
We do not believe that a hospice can make a determination of what is
related to the terminal illness and related conditions without also
determining what is unrelated. Therefore, this decision making process
is already occurring; the addendum is only requiring to furnish this
information, in writing, to the beneficiary (or representative). We
believe that hospices are developing their respective addendums to
incorporate into their work flow processes in the most efficient way
possible to ensure that the communication of these determinations is
done in the most unobtrusive and least burdensome way possible.
We recalculated the overall burden using the May, 2019 BLS wage
data and 2019 hospice claims data for this final rule. To calculate
this burden estimate, we used the same methodology described in the FY
2020 Hospice Wage Index and Payment Rate Update final rule (84 FR
38532). We calculated this updated estimate based on 1,387,331 hospice
elections in FY 2019. Of these hospice elections, 27 percent of
beneficiaries died within the first 5 days of hospice care, leaving
1,012,752 eligible hospice elections for this burden estimate
(1,387,331 x 0.73). We remind commenters that the addendum would not
need to be furnished if the beneficiary dies within 5 days of the
hospice effective date. For FY 2021, we estimate the annualized net
burden for hospice providers with the one-time form development and
completion of election statement addendum to be $12.8 million. This is
slightly higher than the estimated $11.3 million in the FY 2020 Hospice
Wage Index and Payment Rate Update final rule primarily because there
were more eligible hospice elections using FY 2019 hospice claims data
compared to the FY 2017 hospice claims data used in the previous
calculation. We estimate the annualized monetized net reduction in
burden for non-hospice providers with the regulations change at Sec.
418.24, Election Statement Addendum, to be $19.3 million. This would
result in a total annualized net reduction in burden with the election
statement addendum in FY 2021 to be $6.5 million. Because we included
these burden estimates in the accounting statement in the FY 2020
Hospice Wage Index and Payment Rate Update final rule (84 FR 38543),
this updated estimate is not included in accounting statement in this
FY 2021 Hospice Wage Index and Payment Rate Update final rule.
E. Accounting Statement
As required by OMB Circular A-4 (available at: https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/circulars/A4/a-4.pdf), in Table 11, we have prepared an accounting statement showing
the classification of the transfers and costs associated with the
provisions of this final rule. This table shows an estimated $540
million in transfers to hospices in FY 2021. All expenditures are
classified as transfers to hospices. The costs for the hospice election
statement addendum were accounted for in the FY 2020 Hospice Wage Index
and Payment Rate final rule (84 FR 38543) and therefore these are not
accounted for in this FY 2021 final rule accounting statement.
[GRAPHIC] [TIFF OMITTED] TR04AU20.013
F. Regulatory Reform Analysis Under E.O. 13771
Executive Order 13771, entitled ``Reducing Regulation and
Controlling Regulatory Costs,'' was issued on January 30, 2017 (82 FR
9339, February 3, 2017) and requires that the costs associated with
significant new regulations ``shall, to the extent permitted by law, be
offset by the elimination of existing costs associated with at least
two prior regulations.'' It has been determined that this rule is an
action that primarily results in transfers and does not impose more
than de minimis costs as described above and thus is not a regulatory
or deregulatory action for the purposes of Executive Order 13771.
G. Conclusion
We estimate that aggregate payments to hospices in FY 2021 will
increase by $540 million, or 2.4 percent, compared to payments in FY
2020. We estimate that in FY 2021, hospices in urban areas will
experience, on average, 2.4 percent increase in estimated payments
compared to FY 2020, while hospices in rural areas will experience, on
average, 2.6 percent increase in estimated payments compared to FY
2020. Hospices providing services in the Middle Atlantic region would
experience the largest estimated increases in payments of 2.9 percent.
Hospices serving patients in areas in the New England and Outlying
regions would experience, on average, the lowest estimated increase of
1.7 percent and 1.6 percent, respectively in FY 2021 payments.
In accordance with the provisions of Executive Order 12866, this
regulation was reviewed by the Office of Management and Budget.
Dated: July 23, 2020.
Seema Verma,
Administrator, Centers for Medicare & Medicaid Services.
Dated: July 29, 2020
Alex M. Azar II,
Secretary, Department of Health and Human Services.
[FR Doc. 2020-16991 Filed 7-31-20; 4:15 pm]
BILLING CODE 4120-01-P