To:       NHPCO Members
From:   NHPCO Regulatory Team
Re:       May 03, 2011

FY2012 Hospice Wage Index Proposed Rule

NHPCO prepared this initial analysis of the FY2012 Hospice Wage Index proposed rule and invites your feedback to inform our final comments.  If you have comments or thoughts on the proposed rule, please let your voice be heard!  You can send comments to regulatory@nhpco.org for inclusion in the official NHPCO comment letter being prepared by NHPCO’s Regulatory and Quality and Standards Committees.  You may also submit comments on the proposed rule directly.  Information on how to submit can be found at the beginning of the proposed rule.  When submitting comments, refer to CMS-1355-P.  Comments are due to CMS no later than June 27, 2011.

A full copy of the proposed rule can be found on Office of the Federal Register website. It will be officially published in the Federal Register on May 9, 2011. 

NHPCO has also prepared a separate document which includes proposed regulatory language in the full regulatory text for the section.  Members can view this document. 

Comments due to CMS:  June 27, 2011

BNAF

This is the third year for the phase out of the Budget Neutrality Adjustment Factor (BNAF), with a total phase-out of 40 percent for FY2012.  The phase-out will continue with successive 15 percent reductions from FY2013 through FY2016.  The BNAF is a multiplier to the wage index and applied only to the wage component of the rate.  It will be automatically applied to the wage index before the calculation of the rates is complete.

Payment increase for FY2012

CMS stated that the estimated inpatient hospital market basket update for FY2012 is 2.8 percent.  The final and official update will be released through a CMS communication in late spring or early summer.

Hospice cap calculation methodology

 In recent years the number of hospices exceeding the annual aggregate cap on payment has increased, and over the past couple of years a number of hospices have gone to court challenging the methodology that CMS has used to calculate the hospice cap amount.  These hospices have argued that the cap calculation provisions established in 42 C.F.R. §418.309 are inconsistent with the Medicare statute, and several courts have agreed and have ruled in favor of the hospices challenging the CMS methodology.  In light of these developments, CMS recently issued a Ruling applicable to hospices challenging the cap methodology, and in the proposed wage index rule, CMS also is proposing changes to the hospice cap regulation.  

1. Ruling on Hospice Cap Appeals On April 15, 2011, separate from the hospice wage index proposed rule, CMS issued a Ruling entitled “Medicare Program; Hospice Appeals for Review of an Overpayment Determination” (CMS-1355-R). In this Ruling, CMS stated that all currently pending appeals that are challenging the validity of 42 CFR 418.309(b)(1) will be remanded to the applicable Medicare contractor for recalculation of the hospice's cap using a patient-by-patient proportional methodology, as described in the Ruling.  Under this methodology, each  beneficiary who received care from the hospice during a cap year will be allocated to that hospice on the basis of a fraction, to account for the portion of their overall hospice stay that occurred in that hospice during that cap year.  CMS acknowledges that at the time of the calculation the beneficiary may still be receiving care and therefore the proper final allocation of the patient between multiple cap years and multiple hospices may not be completely accurate, but the contractors are instructed to use the best data available and not wait until all patients have died or otherwise left hospice care.  The determinations will be subject to reopening, so if the hospice later wants to go back and have the cap recalculated using final data that wasn't available at the time of the initial calculation, they may do so.   For hospices that have not filed administrative appeals challenging the cap calculation methodology, CMS will continue using the current methodology set forth in the hospice regulations unless and until CMS adopts a different methodology pursuant to the hospice wage index rule for FY2012.   
2. Proposed Changes in Cap Calculation in the Hospice Wage Index Rule In response to previous comments, the FY2012 hospice wage index proposed rule proposes to revise the cap calculation regulation at 42 C.F.R. §418.309 to give providers the option of either having their cap calculated using the current methodology, or having it calculated using a patient-by-patient proportional methodology.  More details on the proposed cap methodologies are below. Cap determinations for cap years ending on or before October 31, 2011 For cap years ending October 31, 2011 and for prior cap years, hospices will have their cap calculated under the current methodology set forth in 42 CFR 418.309 (referred to in the proposed rule as the “streamlined methodology”), subject to the following:  if, as of October 1, 2011 the hospice hasn’t yet received a cap determination for any year ending October 31, 2011 or earlier, the hospice may elect to have the calculation done using the patient-by-patient proportional methodology (described below).  This is in addition to those hospices that have filed challenges to the current cap calculation methodology and are subject to the CMS Ruling addressed above.  As noted, all of these hospices that have already challenged the cap regulation through an administrative or court proceeding will have their cases remanded to their Medicare contractor for recalculation of their cap using a patient-by-patient proportional methodology.  Cap determinations for cap years ending on or after October 31, 2012 For cap years ending October 31, 2012 and all subsequent cap years, a hospice’s cap will be calculated using the patient-by-patient proportional methodology, subject to the following:  if the hospice had not filed a challenge to the current cap regulation and did not opt to have the patient-by-patient proportional methodology applied for a cap year ending on or before October 31, 2011, as described above, the hospice is eligible to make a one-time election to have its cap calculated using the streamlined methodology.  The election would remain in effect for subsequent years unless the hospice submits a written election to change to the patient-by-patient proportional methodology or the hospice appeals the streamlined methodology.  Once such a hospice elects the patient-by-patient proportional methodology, or challenges the streamlined methodology, they cannot later opt to switch back to the streamlined methodology.  In such cases, past cap year determinations may be adjusted to avoid over-counting of beneficiaries.   Patient-by-Patient Proportional Methodology Defined Under the proposed patient-by-patient proportional methodology, a hospice includes in its number of Medicare beneficiaries only that fraction which represents the portion of a patient’s total days of care in all hospices and all years that was spent in that hospice in that cap year, using the best data available at the time of the calculation.  The total number of beneficiaries for a hospice’s cap year is determined by adding the whole or fractional share of each Medicare beneficiary that receives hospice care from that hospice during that actual cap year.  In this way, the cap “credit” for a single beneficiary may be divided up between more than one cap year in which the patient received hospice care and more than one hospice that provided care to the patient. When a hospice’s cap is calculated using the patient-by-patient proportional methodology and a beneficiary included in that calculation survives into another cap year, the contractor may need to make adjustments to prior cap determinations, subject to existing re-opening regulations. Streamlined Methodology Defined Under what CMS is now terming the “streamlined methodology,” a hospice’s cap is calculated by including in its cap calculation those beneficiaries who have elected to receive care from that hospice and who have not previously been included in the calculation of any hospice cap.  So under this methodology a beneficiary is counted for cap purposes in only one cap year, even if their stay in hospice includes time in more than one cap year.  In the case in which a beneficiary received care from more than one hospice, each hospice includes in its number of Medicare beneficiaries only that fraction that represents the portion of a patient’s total days of care in all hospices and all years that was spent in that hospice in that cap year, using the best data available at the time.  The cap calculation may later be adjusted based on updated data.   Contractors will provide hospices with instructions regarding the cap determination methodology election process. Regardless of which methodology is used, the contractor will continue to demand any additional overpayment amounts due to CMS at the time of the hospice cap determination. The contractor will continue to include the hospice cap determination in a letter which serves as a notice of program reimbursement (“NPR”) under 42 CFR 405.1803(a)(3).  
3. Timeframe for counting beneficiaries using the streamlined methodology Beneficiaries and their associated days are proposed to be counted from September 28th to September 27th. This timeframe for counting beneficiaries was implemented because it allows those beneficiaries who elected hospice near the end of the cap year to be counted in the year when most of the services were provided.  
4. Timeframe for counting beneficiaries using the patient-by-patient proportional methodology Beneficiaries and their associated days of care are proposed to be counted from November 1st through October 31st, to match that of the cap year. This ensures that the proportional share of each beneficiary’s days in that hospice during the cap year is accurately computed. CMS also proposes that the aggregate cap calculation for a given cap year could be adjusted after the calculation for that year based on updated data.

Face-to-Face encounter

1. Same physician:   CMS is proposing to revise the regulatory text at 418.22(b)(4) to allow any hospice physician to perform the face-to-face encounter, whether or not that same physician also recertifies the patient’s terminal illness and composes the recertification narrative.  The proposed new regulatory text at 418.22(b)(4) clearly states that the nurse practitioner or non-certifying hospice physician shall attest that the clinical findings of the encounter were provided to the certifying physician for use in determining continued eligibility for hospice services.   
2. Use of LCDs: In the proposed rule, CMS reiterated that certification or recertification is based upon a physician’s clinical judgment, and is not an exact science, and they referred providers to section 322 of the Benefits Improvement and Protection Act of 2000 (BIPA), which says that the hospice certification of terminal illness “shall be based on the physician’s or medical director’s clinical judgment regarding the normal course of the individual’s illness.”  
3. Definition of hospice employee: As a result of inquiries from the field and from NHPCO, CMS has added clarification about the definition of a hospice employee, which is included in 418.3 as follows: “Employee means a person who:     a)  Works for the hospice and for whom the hospice is required to issue a W–2 form on his or her behalf;     b)  if the hospice is a subdivision of an agency or organization, an employee of the agency or organization who is assigned to the hospice; or     c)  is a volunteer under the jurisdiction of the hospice.” CMS clarified in this proposed rule that the definition of employee given at 418.3 applies in the context of providing face-to-face encounters. Therefore, if the hospice is a subdivision of an agency or organization, an employee of the agency or organization who is assigned to the hospice is considered a hospice employee.  
4. “Prior to” clarification:  There has been confusion about the use of the “prior to” language in the final rule.  CMS proposes to change the regulatory text to clarify that the face-to-face encounter must occur prior to, but no more than, 30 calendar days prior to the 3rd benefit period and every recertification period thereafter.

Quality Reporting Section 3004 of the Affordable Care Act amends the Social Security Act to authorize a quality reporting program for hospices, beginning in FY2014.  The Secretary is required to reduce the market basket update of the hospice by 2 percentage points for any hospice that does not submit comply with the quality data submission requirements.  CMS also notes that, “depending on the amount of the annual update for a particular year, a reduction of 2 percentage points may result in payment rates that are less than payment rates for the preceding fiscal year.”

1. Proposed Recommendations for Hospice Quality Reporting for FY2014 a.    NQF #0209:  The percentage of patients who were uncomfortable because of pain on admission to hospice whose pain was brought under control within 48 hours. b.    Participation in a Quality Assessment and Performance Improvement (QAPI) Program that Includes at Least Three Quality Indicators Related to Patient Care. Examples of domains of indicators related to patient care include providing care in accordance with documented patient and family goals, effective and timely symptom management, care coordination, and patient safety.  
2. Timelines for Data Submission Data on the two performance measures MUST be submitted in 2013 in order to determine whether the hospice meets the participation requirement for FY2014 payments, including the 2% payment reduction for lack of participation.  CMS is proposing to prepare a spreadsheet template for data to be submitted by hospice providers.  CMS is also proposing a voluntary reporting for 2011 to assist CMS  
3. Voluntary Reporting Data reporting period:  October 1, 2011 through December 31, 2011. This timeframe will permit analysis of the data to learn what the important patient care quality issues are for hospices as quality reporting program is designed to require more standardized and specific quality measures to be reported by hospices in subsequent years. January 2012 •   Voluntary reporting of the structural measure data on a spreadsheet template provided by CMS •   Help CMS identify the important patient care quality issues in hospice •   Provide useful information on the design and structure of the hospice quality reporting program. •   Timeframe for data:  October 1, 2011 through December 31, 2011.  
4. Mandatory Reporting Data reporting period:  October 1, 2012 through December 31, 2012. This timeframe will permit us to determine whether each hospice is eligible to receive the full market basket update for FY2014 based on a full quarter of data. January 31, 2013 – QAPI Quality Indicators Related to Patient Care •    Submit description of each of the patient-care focused quality indicators on a spreadsheet template provided by CMS •    Report whether or not the hospice has a QAPI program that addresses at least three indicators related to patient care •    Submit a list of all patient care indicators •    Hospices will be judged on whether they respond, not on how they respond April, 2013 – Pain on Admission, Pain at 48 hours •    Measure specifications found at www.qualityforum.org •    Submit data based no later than April 1, 2013  
5. Watch for More Details:  CMS will announce more details on the data submission methods and format for the hospice quality data reporting program using this CMS website.  
6. Standardized Data Submission:  CMS  has stated that they believe the required data elements to support the “standardized collection and calculation of quality measures specifically focused on hospice services” may require a standardized assessment instrument, similar to the current MDS 3.0 or OASIS-C.  CMS is inviting comments on the implementation of a standardized assessment instrument for hospices that would similarly support the calculation of quality measures.  One option for standardized data submission is the use of the Continuity Assessment Record & Evaluation (CARE) tool.  The latest version of the instrument can be found at www.pacdemo.rti.org

Payment Reform and Value-based Purchasing

CMS is in the early stages of hospice payment reform analysis and are in the process of conducting data analysis and convening an expert panel. They hope to share the options for payment reform in future rulemaking and will solicit public comments on the payment reform methodology. Quality reporting will begin with two measures no later than January 31, 2013, as described above.  No later than FY2015, CMS will require hospices to report a more comprehensive set of quality measures.  From those quality measures, CMS can select measures to use for pilot testing a value-based purchasing program, which CMS states “would improve quality of care while reducing spending.”  There are demonstration projects ongoing now on value-based purchasing, which will be used to design the hospice pilot.  

Update on the Redesigned Provider Statistical & Reimbursement Report (PS&R) CMS states that the redesigned PS&R system will provide hospices with an increased ability to monitor their hospice caps by providing readily accessible information on beneficiary utilization. CMS states that the redesigned report will be available by the end of 2011.  It is possible that in the future, hospices may be required to self-report their cap information, using PS&R data.

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