FY2015 Hospice Wage Index Proposed Rule

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© NHPCO, 2014. 1 | P a g e

FY2015 Hospice Wage Index Proposed Rule

To: NHPCO Members

From: NHPCO Health Policy Team Date: May 6, 2014

Topics for data analysis

CMS and its hospice payment reform contractor, Abt Associates, have published key findings on data analysis as hospice payment reform is considered. Topics analyzed by Abt Associates include:

• Beneficiaries dying without skilled visits in last 48 hours of life • Analysis of GIP, Continuous Home Care and Inpatient Respite • Live discharges

– Frequency of live discharges

– Live discharges and readmissions after hospital stay • Medicare expenditures in Part A and B outside the MHB

• Medicare expenditures in Part D when patient has elected hospice

Summary of FY2015 Hospice Wage Index Proposed Rule

On Friday, May 2 2014, CMS released the FY2015 Hospice Wage Index proposed rule. Hospice payment reform is NOT proposed in the FY2015 proposed rule. The proposed rule includes the following:

• Data analysis that will inform hospice payment reform • Focus areas

– Definitions of “terminal illness” and “related conditions” – Attending physician is patient decision

– Cap self report and overpayment expected 5 months after close of cap year – 2% payment update (net 1.3%) for FY2015 (less 2% because of sequestration) – Hospice quality reporting updates


© NHPCO, 2014. 2 | P a g e In addition, CMS has posted the May 1, 2014 Abt Associates analyses on the CMS Hospice Center, entitled Medicare Hospice Payment Reform: Analyses to Support Payment Reform. A literature review is also posted: Medicare Hospice Payment Reform: A Review of the Literature (2013 Update)

Definitions of “terminal illness” and “related conditions”

In the proposed rule, CMS states “Because hospice care is unique in its comprehensive, holistic, and palliative philosophy and practice, we want to ensure that the hospice services under the Medicare hospice benefit are preserved and not diluted, or unbundled in any way.” A proposed definition of “terminally ill” is offered for comment:

Proposed definition of terminally ill:

Abnormal and advancing physical, emotional, social and/or intellectual processes which diminish and/or impair the individual’s condition such that there is an unfavorable prognosis and no reasonable expectation of a cure; not limited to any one diagnosis or multiple diagnoses, but rather it can be the collective state of diseases and/or injuries affecting multiple facets of the whole person, are causing progressive impairment of body systems, and there is a prognosis of a life expectancy of six months or less”.

In addition, CMS proposes a corollary definition of “related conditions” for hospice providers to review and comment:

Proposed definition of related conditions:

“Those conditions that result directly from terminal illness; and/or result from the treatment or medication management of terminal illness; and/or which interact or potentially interact with terminal illness; and/or which are contributory to the symptom burden of the terminally ill individual; and/or are conditions which are contributory to the prognosis that the individual has a life expectancy of 6 months or less”.

Guidance on Determining Beneficiaries’ Eligibility for Hospice

The rule provides a reminder that the hospice medical director must consider at least the following information for hospice eligibility per CMS regulations at §418.25 (b):

• Diagnosis of the terminal condition of the patient

• Other health conditions, whether related or unrelated to the terminal condition. • Current clinically relevant information supporting all diagnoses.


© NHPCO, 2014. 3 | P a g e Documentation must include:

• Hospice services must be reasonable and necessary for the palliation and management of the terminal illness and related conditions.

• Documentation supporting a 6-month or less life expectancy is included in the beneficiary’s medical record and available to the MACs when requested.

Resources for Determining Eligibility:

• Multiple public sources available to assist in determining whether a patient meets Medicare hospice eligibility criteria:

– industry specific clinical and functional assessment tools – information on MAC websites

Summary: CMS states that “we expect hospice providers to use the full range of tools available to make responsible and thoughtful determinations regarding terminally ill eligibility.”

Proposed Timeframe for Hospice Cap Determinations and Overpayment Remittances

CMS states that the percentage of hospices exceeding the cap has increased, as the table below shows:

Year % of Hospices

Over Cap

Average Cost per Patient – Below Cap Hospice

Average Cost per Patient – Above Cap Hospice





























CMS has made efforts in the last two years to update the Provider Statistical and Reimbursement (PS&R) system, where the inpatient and aggregate caps could be managed. The updated PS&R enables hospices to calculate estimated caps and to monitor their cap status at different points during the cap year. The PS&R also allows hospices to calculate their cap liability after the cap year ends.

Proposed change: CMS is proposing to require that hospices complete and self report their


© NHPCO, 2014. 4 | P a g e Fail to file cap report: CMS proposes that if a provider fails to file the cap report, that payments to the provider would be suspended in whole or in part until the self-determined cap is filed with the Medicare contractor.

Proposed Timeframes for Filing the Notice of Election and Notice of Termination/Revocation

Days from Effective Date of

Election to NOE Filing

% of NOEs Filed Within 2 days 16.2% Within 5 days 39.2% Within 10 days 62.1%

CMS notes that the timeliness of reporting the hospice election is critically important. CMS

proposes that the Notice of Election (NOE) be filed as soon as possible after the election occurs, and within three days of the effective date of the NOE.

Benefits of Timely NOE Filing:

• Limits ability of other Part A, B and D providers to bill in error • Provides up to date information on face-to-face encounter • Identify current benefit period

• Provide smooth transitions for sequential billing

Proposed Enforcement Action

CMS proposes that if the hospice does not file within 3 calendar days, Medicare would not cover and pay for days of hospice care from the effective date of election to the date of filing of the NOE. CMS further proposes that these days be considered the financial responsibility of the hospice and that the hospice could not bill the beneficiary for them.

Proposed Timeframe for Filing the Notice of Termination/Revocation

CMS states that it is important to record discharge or revocation in claims processing system in a timely way and that there is no current notification for hospices other than the claims process. CMS proposes to revise the regulations at §418.26 and §418.28 to require hospices to file a Notice of Termination/Revocation (NOTR) within 3 calendar days after the effective date of a beneficiary’s discharge or revocation if final claim is not already filed.

Proposed Addition of the Attending Physician to the Hospice Election Form


© NHPCO, 2014. 5 | P a g e changing a patient’s attending physician when the patient moves to an inpatient setting for care, often to a nurse practitioner, or choosing “whoever is available” as the patient’s attending physician. Further, MACs have noted that the NPI of the attending physician reported on claims was

sometimes changing, and differed from that reported on the NOE. In addition, analysis of Part B claims showed that 35% of beneficiaries had Part B claims during their hospice election from more than one physician who claimed to be their designated attending physician.

Proposed change

If a patient (or representative) wants to change his or her designated attending physician, they must follow a procedure similar to changing the designated hospice. The patient or their representative must file a signed statement that identifies the new attending physician. The information must be in enough detail so that it is clear which physician or NP was designated as the new attending


Components of proposed statement: • the date the change is to be effective • the date that the statement is signed, • the patient’s (or representative’s) signature

• Acknowledgement that this change in the attending physician is the patient’s (or representative’s) choice.

FY 2015 Hospice Wage Index and Rates Update

CMS announced a proposed payment update for FY 2015 of 2.0%. The net impact before

sequestration is 1.3%, after taking the Budget Neutrality Adjustment Factor (BNAF) into account. Note: The 2% sequestration reduction for all Medicare providers means that the rates for FY2015 will remain the same as the FY2014 rates, with no increase.


© NHPCO, 2014. 6 | P a g e IF Hospice Provider Does Not Submit Required Quality Data, FY2015 Hospice Payment Rates will be Reduced by 2.0%

Code Level of Care FY2014 Rate Multiply by 2.0% Rate Increase Proposed FY2015 Rate Proposed FY2015 Rate with Sequestration 651 Routine Home Care $156.06 x 1.00 $156.06 $152.94 652 Continuous Home Care Full rate of 24 hours = $910.78 Hourly = $38.71 $910.78 x 1.00 $910.78 $892.56 655 Inpatient Respite Care $161.41 x 1.00 $161.41 $158.18 656 General Inpatient Care $694.19 x 1.00 $694.19 $680.31

Hospice Cap Amount

The hospice aggregate cap amount for the 2014 cap year will be $26,725.79

Cap year is November 1, 2013 to October 31, 2014

Proposed Updates to the Hospice Quality Reporting Program

Quality Measures

CMS reiterates that the 7 quality measures announced in the FY2014 final hospice wage index rule remain in place for FY2015. They are:

• NQF #1617 Patients Treated with an Opioid who are Given a Bowel Regimen • NQF #1634 Pain Screening

• NQF #1637 Pain Assessment • NQF #1638 Dyspnea Treatment • NQF #1639 Dyspnea Screening • NQF #1641 Treatment Preferences


© NHPCO, 2014. 7 | P a g e Hospice Item Set

CMS reiterates that the Hospice Item Set (HIS) will begin with regular and ongoing electronic submission of the HIS data for each patient admission to hospice on or after July 1, 2014, regardless of payer or patient age and a separate admission HIS and discharge HIS for each patient.

Failure to report quality data via HIS in 2014 will result in a market basket update reduced by 2% in FY 2016.

Newly Certified Hospices

On or after November 1, 2014:

If a hospice receives its certification number on or after November 1, 2014, CMS proposes to exclude from quality reporting requirements for the FY 2016 payment determination. Proposed for hospices certified on or after November 1 of the preceding year:

CMS proposes that hospices report quality measures but would be excluded from any payment penalty for quality reporting purposes for the following FY. This provision is proposed to be codified in the Hospice Conditions of Participation at §418.312.

Extraordinary Circumstances and Quality Reporting

CMS proposes that hospices could request extensions/exceptions for extraordinary

circumstances beyond the control of the provider. When an extension/exception is granted, a hospice will not incur payment reduction penalties.

New Measures

Not proposing any new measures at this time. Future measures should expand measures already in use in other quality reporting programs that could apply or develop new measures if no suitable measures are ready for implementation or expansion.

Electronic Health Records

CMS is interested in hearing from hospice providers about their adoption of EHR, what functional aspects are most important, whether hospice EHRs have the ability to send or receive transfer of care Information and whether hospices have the ability to support medication orders/medication reconciliation.


© NHPCO, 2014. 8 | P a g e Electronic Clinical Quality Measures: CMS asks for feedback on whether CMS should develop electronic clinical quality measures for hospice providers. What would be the benefits and limitations?

Public Reporting

Data collected by hospices during Q1-3 CY 2015 will be analyzed starting in CY 2015 and decisions about reporting will be based on findings and analysis of CY2015 data. CMS also states that public reporting may occur during FY2017.

CAHPS® Hospice Survey

The CAHPS® Hospice Survey is a component of CMS’ quality reporting program which emphasizes the experiences of hospice patients and their primary caregivers listed in the hospice patients’ records. Measures from the survey will be submitted to the National Quality Forum (NQF) for approval as hospice quality measures.

Each measure maps directly to one or more questions on the survey. The measures include:  Hospice Team Communication

 Getting Timely Care

 Treating Family Member with Respect  Providing Emotional Support

 Getting Help for Symptoms  Information Continuity

 Understanding the Side Effects of Pain Medication

 Getting Hospice Care Training (Home Setting of Care Only) Survey Implementation

CMS will create a CAHPS website that will be available during the summer of 2014 and will provide resources for hospices and vendors. The website is: www.hospicecahpssurvey.org. The launch date will be announced during an upcoming Open Door Forum.

In general, hospice patients and their caregivers are eligible for inclusion in the survey sample with the exception of the following ineligible groups:

 primary caregivers of patients under the age of 18 at the time of death;

 primary caregivers of patients who died within 48 hours of admission to hospice care;  patients for whom no caregiver is listed or available, or for whom caregiver contact

information is not known;

 patients whose primary caregiver is a legal guardian unlikely to be familiar with care experiences;

 patients for whom the primary caregiver has a foreign (Non-US or US Territory address) home address;


© NHPCO, 2014. 9 | P a g e Identification of patients and caregivers for exclusion will be based on hospice administrative data. Requirements for participation in the CAHPS® Hospice Survey vary depending on number of deaths in the previous calendar year.

Deaths in Previous Calendar Year

Survey and Reporting < 50 deaths Exempt from CAHPS data

collection and reporting 50 to 699 deaths

n = 2,326 hospices

Survey and report all cases

>= 700 deaths n = 274 hospices

Sample of 700 will be drawn under equal probability design

CAHPS Survey Vendors

Hospices are required to contract with a third-party vendor that is CMS-trained and approved, which ensures that the data are unbiased and collected by an organization that is trained to collect this type of data. A list of approved vendors will be provided on the CAHPS® Hospice Survey website closer to national implementation. Applications for survey vendors available at


Coordination of Benefits Process and Appeals for Part D Payment for Drugs While

Beneficiaries are Under a Hospice Election

CMS provides comments on the coordination between Part D and Medicare hospices. CMS is considering amending language in the Part D regulations (at 423.64) by adding a new paragraph “Coordination with Medicare hospices.” The new section would require that a Part D sponsor communicate and coordinate with Medicare hospices in determining coverage for drugs whenever coverage determination process is initiated or a hospice furnishes information regarding a

beneficiary’s hospice election or drug profile.

CMS is considering a proposed Hospice Initiated Communication which would report a

beneficiary’s hospice status, notice of election (NOE), notice of termination/revocation (NOTR) and may also provide drug profile information, identification of drugs unrelated to the terminal illness or related conditions and an explanation of why the drug is unrelated.


© NHPCO, 2014. 10 | P a g e plan sponsors to have processes in place to confirm CMS-reported data and communicate with hospice

Part D Plans Use Proposed Definitions

CMS proposes that Part D sponsor be required to use the criteria described in the definitions of “terminal illness” and “related conditions.” It will provide the basis for determining whether drug is unrelated to the terminal illness and related conditions, and will satisfy the beneficiary-level hospice PA. The definitions of “terminal illness” and “related conditions” would guide hospices, prescribers, and Part D sponsors and would clarify and strengthen the concepts of holistic and comprehensive hospice care.

Independent Review Process

CMS is considering establishing an independent review process for hospice providers and Part D plan sponsors. The review process would be separate and distinct from the enrollee appeals process.

CMS states that Independent Review Entity (IRE) decision would be binding on both the Part D sponsor and the hospice, and CMS solicits comments on the changes under consideration regarding the coordination of benefits process and appeals for Part D payment for drugs while beneficiaries are under a hospice election.

Hospice Coordination of Payment with Part D Sponsors and Other Payers


CMS provides anecdotal reports from Medicare hospice beneficiaries that they are not receiving medications related to their terminal illness and related conditions from their hospice. Beneficiaries state that hospices have told patients that “those medications are not on the hospice’s formulary.” CMS states:

If the drugs on the hospice formulary are not providing the relief needed, then the hospice must provide alternatives in order to relieve pain and symptoms EVEN if it means providing drugs that are not on the hospice formulary.

Hospice Conditions of Participation reference: §418.202(f)

Hospices are to cover all drugs which are reasonable and necessary to meet the needs of the patient in order to provide palliation and symptom management of the individual's terminal illness and related conditions.


© NHPCO, 2014. 11 | P a g e

ICD-9 to ICD-10 Coding and Timeline

ICD-9-CM diagnosis codes will continue to be used for hospice claims reporting until October 1, 2015. Diagnosis reporting on hospice claims must adhere to ICD-9-CM coding conventions and guidelines, which applies to both the principal diagnosis and the reporting of additional diagnoses Medicare Code Editor Edits

CMS announced that they will implement certain edits from Medicare Code Editor (MCE). The code editor will report errors in the coding of claims data and will applied to all hospice claims effective October 1, 2014 or later. Inappropriate principal or secondary diagnosis codes, per ICD-9-CM coding conventions and guidelines will be returned to Provider (RTP) for correction and resubmission prior to payment.

Year % of Claims Submitted with One Diagnosis 2010 77.2% First Quarter FY2013 (October 1, 2012 – December 31, 2012) 72% FY 2013 67% What’s Next?

NHPCO Regulatory Committee will review the proposed rule and solicits comments and concerns from the NHPCO membership. NHPCO will write an official comment letter on the proposed rule, which is due to CMS on July 1, 2014. A final rule will be published no later than September 30, 2014, but is most likely published in early to mid August.

Wage Index and Rate Charts

The NHPCO-developed state/county wage index charts will be available on the NHPCO website in the coming days. Watch for the announcement on my.nhpco.org and for the posting on the NHPCO website, under Regulatory/Hot Topics/FY2015 Wage Index.


Please send email to regulatory@nhpco.org if you have questions or need clarification.



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