Public Policy HCA Public Policy No

Public Policy HCA Public Policy No. 6-2018 T O: FROM: RE: HCA HOSPICE PROVIDER MEMBERS PATRICK CONOLE, VICE PRESIDENT, FINANCE & MANAGEMENT CMS ISSUES PROPOSED FY 2019 HOSPICE PAYMENT RULE DATE: MAY 4, 2018 The U.S. Centers for Medicare and Medicaid Services (CMS) has released its proposed rule (CMS 1692-P) to update the fiscal year (FY) 2019 (October 1, 2018 through September 30, 2019) Medicare payment rates and the wage index for hospices serving Medicare beneficiaries. The proposed rule is currently at https://s3.amazonaws.com/public-inspection.federalregister.gov/2018-08773.pdf. Beginning on May 8, CMS will post this proposed rule in the Federal Register at: https://www.federalregister.gov/documents/2018/05/08/2018-08773/medicare-program-fy-2019-hospice-wageindex-and-payment-rate-update-and-hospice-quality-reporting. CMS estimates that hospices nationally will see an estimated 1.8 percent ($340 million) increase in their payments for FY 2019 over FY 2018. CMS is proposing updates to the hospice payment rates and the hospice aggregate cap. It also proposes to allow physician assistants (PAs) to be considered the Attending Physician, as well as changes to the Hospice Quality Reporting Program (HQRP), including: a new factor for HQRP measure removal; new data review and correction timeframes for data submitted using the Hospice Item Set (HIS); changes to the quality measures displayed on Hospice Compare in FY 2019; updates to the public display of HIS Measures; and an extension of the Consumer Assessment of Healthcare Providers and Systems (CAHPS) Hospice Survey participation requirements, exemption criteria, and public reporting policies for future years. The following summarizes the significant highlights of the proposed rule. Proposed Hospice Payment Update The proposed hospice payment update percentage of 1.8 percent for FY 2019 is based on the estimated inpatient hospital market basket update of 2.9 percent (based on IHS Global Inc. s first quarter 2018 forecast with historical data through the fourth quarter 2017). However, due to previous legislative requirements, the estimated inpatient hospital market basket update for FY 2019 of 2.9 percent must be reduced by a multifactor productivity (MFP) adjustment as mandated by the Affordable Care Act (ACA) and currently estimated to be 0.8 percentage point for FY 2019. The estimated inpatient hospital market basket update for FY 2019 is reduced further by 0.3 percentage point, as mandated by the ACA. Thus the proposed hospice payment update percentage for FY 2019 is 1.8 percent. 1

2019 Hospice Payment Rates There are four payment categories that are distinguished by the location and intensity of the services provided. They are for routine home care (RHC), continuous home care (CHC), inpatient respite care (IRC) and General Inpatient (GIP). The base payments of each payment category 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. As part of the FY 2016 final rule, CMS 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 addition, in that final rule, CMS implemented a Service Intensity Add-on (SIA) payment for RHC when direct patient care is provided by a registered nurse (RN) or social worker during the last seven 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 (up to four hours total) that occurred on the day of service, if certain criteria are met. In order to maintain budget neutrality, as required under the ACA, the new RHC rates were adjusted by an SIA budget neutrality factor. As part of the FY 2017 final rule, CMS 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, CMS simulated total payments using the FY 2019 hospice wage index and compared it to CMS s simulation of total payments using the FY 2018 hospice wage index. CMS divided payments for each level of care using the FY 2019 wage index by payments for each level of care using the FY 2018 wage index. This results in a wage index standardization factor for each level of care (RHC days 1 through 60, RHC days 61+, CHC, IRC and GIP). Table 1 below shows CMS s proposed FY 2019 Hospice RHC payment rates and Table 2 shows CMS s 2019 Hospice CHR, IRC and GIP payment rates. Code Description Table 1: 2019 Hospice RHC Payment Rates FY 2018 Payment Rate SIA Budget Neutrality Factor Wage Index Standardization Factor 2019 Hospice Payment Update 2019 Hospice Payment Rate 651 RHC (Days 1-60) $192.78 X 0.9991 X 1.0009 X 1.018 $196.25 651 RHC (Days 61+) $151.41 X 0.9998 X 1.007 X 1.018 $154.21 Code Table 2: 2019 Hospice CHC, IRC and GIP Payment Rates FY 2018 Wage Index 2019 Hospice Payment Rate Standardization Payment Description Factor Update 2019 Hospice Payment Rate 652 CHC (Full Rate) = 24 hours of care at $41.62 per hour $976.42 X 1.0048 X 1.018 $998.77 655 IRC $172.78 X 1.0007 X 1.018 $176.01 656 GIP $743.55 X 1.0015 X 1.018 $758.07 2

However, CMS will 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. Note: In forecasting the impact of these changes on FY 2019 revenues, hospices should keep in mind that some of the factors (including the hospital market basket and the productivity adjustment) may change somewhat in the final rule that will be issued in late July. Additionally, there is a 0.1 percentage point discrepancy in the underlying market basket value between the hospital FY 2019 payment rule (a 2.8 percent market basket value) issued earlier this week and the hospice rule (a 2.9 percent market basket value). The hospice rule incorporates the more recently available data. Proposed Hospice Cap Amount for FY 2019 The hospice payment system also includes a statutory per-patient aggregate cap. The cap limits the overall payments made per-patient to a hospice annually. As mandated by the Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act), the cap amount for accounting years that end after September 30, 2016, and before October 1, 2025 must be updated by the hospice payment update percentage, rather than the Consumer Price Index (CPI). Therefore, the proposed cap amount for FY 2019 will be $29,205.44. (This is the 2018 cap amount of $28,689.04 increased by 1.8 percent.) 2019 Wage Index In 2016, CMS finalized significant changes to the home health wage index. Specifically, CMS implemented a one-year blend of: 1) the wage indexes of the previously used Core Based Statistical Areas (CBSA) designations; and 2) the new CBSA areas designated by the Office of Management and Budget (OMB) in 2013. The one-year, transitional blend utilized the old CBSA designation at 50 percent and the newer OMB designations at 50 percent. This one-year transition period expired at the end of FY 2015. CMS states that the hospice wage index for FY 2019 continues to be fully based on the revised OMB delineations, as adopted in FY 2015 and then fully implemented in FY 2016. CMS also proposes to continue to use the most recent pre-floor, pre-reclassified hospital wage index value available. Table 3 provides the breakdown of the labor and non-labor adjusted portions of the wage index calculation for the proposed FY 2019 payment rates (these have remained the same for a number of years): Table 3: Labor and Non Labor Percentage of Wage Index Description Labor Percentage Non-Labor Percentage RHC 68.71% 31.29% CHC 68.71% 31.29% IRC 54.13% 45.87% GIP 64.01% 35.99% 3

In the proposed rule, CMS indicates that it is currently analyzing the new cost report data for possible use in updating the labor portion of the hospice payment rates. Any changes to the labor portions will be proposed in future rulemaking and will be subject to public comment. Finally, the proposed hospice wage index applicable for FY 2019 will be made available on CMS s website at: http://www.cms.gov/medicare/medicare-fee-for-service-payment/hospice/index.html. FY 2018 Proposed Rule & CMS s Comments on Responses to Request for Information Solicitation As part of its FY 2018 proposed rule, CMS solicited comments on ways that it could relieve regulatory burdens on hospice providers. According to the proposed FY 2019 rule, comments included recommendations that CMS relieve burdens associated with the requirement to report drugs on hospice claims on a line item basis, and include charge information, the HCPCS code and the NDC number for each. Commenters also recommended that CMS eliminate the sequential billing requirement for submission and processing of hospice claims. While CMS indicated that it cannot eliminate the requirement for sequential billing and processing of hospice claims, CMS indicates that, beginning October 1, 2018, providers will have the option to report aggregate durable medical equipment (DME) such as pump and infusion drug information and drug charges on claims. CMS estimates this change will potentially reduce the number of line items required to be billed on hospice claims by approximately 21.5 million in the aggregate. CMS released a transmittal detailing these changes on April 26. It can be downloaded at https://www.cms.gov/regulations-and-guidance/guidance/transmittals/2018downloads/r4035cp.pdf. CMS Proposes Changes for Physician Assistants The Bipartisan Budget Act of 2018 authorizes physician assistants (PAs) to serve as a hospice patient s designated attending physician. This is a change that that many in the hospice industry have long advocated and it becomes effective on January 1, 2019. In the rule, CMS proposes revisions to hospice regulations to reflect this change, and specifies that a PA will be defined as a professional who has graduated from an accredited physician assistant educational program who performs such services as he or she is legally authorized to perform, in accordance with state law, and who meets the training, education, and experience requirements as the Secretary may prescribe. Under this change, Medicare will pay for services that are: Medically reasonable and necessary services that would normally be provided by a physician, and will be paid at 85 percent of the fee schedule amount; Provided by a PA to patients who have selected the PA as their attending physician; Regardless of whether or not the PA is directly employed by the hospice; and Not related to the certification of terminal illness. PAs may not: serve as hospice medical directors; lead a hospice interdisciplinary team; certify a beneficiary s terminal illness; or conduct the hospice face-to-face encounter. CMS is soliciting comments on this proposed change. 4

Proposed Health Quality Reporting Program (HQRP) Updates As part of its proposed rule, CMS mentions a continuing interest in accounting for social risk factors as part of the HQRP. As a next step, CMS is considering options to improve health disparities among patient groups within and across hospitals by increasing the transparency of disparities as shown by quality measures. CMS will continue to work with a variety of stakeholders in this area. New HQRP Factor for Measure Removal As part of the FY2016 rule, CMS adopted seven factors to consider when evaluating measures for removal from the HQRP, and announced as part of this rule its intent to incorporate an eighth factor: Whether the costs associated with a measure outweigh the benefit of its continued use in the program. CMS is proposing that it will remove measures on a case-by-case basis. CMS is inviting public comment on inclusion of this new factor. Revised Data Review and Correction Timeframes for Data Submitted Using the Hospice Item Set (HIS) CMS notes that hospices currently have 36 months to modify HIS records. In keeping with requirements that are currently imposed on some other provider types, CMS proposes that hospices be given a distinct period of time to review and correct the data that is to be publicly reported. Specifically, for each calendar quarter of data submitted using the HIS, CMS would allow a period of 4.5 months for the submission of corrections to records. Any modification or deactivation of a record that occurs after the proposed correction deadline would not be reflected in publicly reported data on the Hospice Compare website. Under the proposal, beginning January 1, 2019, HIS records with target dates on or after January 1, 2019 would have a data correction deadline for public reporting of approximately 4.5 months after the end of each calendar year quarter in which the target date falls, and hospices will have until 11:59:59 PM PST on the deadline to submit corrections. The first quarterly freeze date for calendar year 2019 data corrections would be August 15, 2019. CMS is soliciting comment on this proposal. Table 4 provides the deadlines as proposed by CMS. Table 4: Data Correction Deadlines for Public Reporting beginning CY 2019 Data Reporting Period Data Correction Deadline for Public Reporting Prior to January 1, 2019 August 15, 2019 January 1, 2019 March 31, 2019 August 15, 2019 April 1, 2019 June 30, 2019 November 15, 2019 July 1, 2019 September 30, 2019 February 15, 2020 October 1,2019 December 31, 2019 May 15, 2020 Quality Measures to be Displayed on Hospice Compare in FY2019 CMS anticipates that it will begin public reporting of the HIS-based Hospice Comprehensive Assessment Measure (National Quality Forum No. 3235) on the Hospice Compare website in fall 2019. CMS plans to begin public reporting of this measure with a minimum denominator size of 20. 5

CMS also expects to begin public reporting of the HIS-based Hospice Visits when Death is Imminent Measure Pair in FY 2019. The exact timeline for public reporting of the measure pair will be announced through regular subregulatory channels once necessary analyses and measure specifications are finalized. Updates to Public Display of HIS Measures Currently seven "component" HIS measures are displayed on Hospice Compare. CMS believes that the HIS Composite Measure provides consumers a more accessible measure for evaluating the quality of a hospice and holds hospices to a higher standard because it requires that they perform all seven care processes for a patient admission. Once the HIS Composite Measures are available for reporting on the Compare website, CMS is proposing to no longer directly display the seven component measures, although they will remain accessible to patients and others who are seeking additional detail on a hospice s quality of care. This proposal would not change existing HIS data collection requirements and the seven component measures would still be reported on CASPER QM reports and HIS provider preview reports. CMS invites public comment on this proposal. Consumer Assessment of Healthcare Providers and Systems (CAHPS) Hospice Survey The Hospice CAHPS Survey is a component of the HQRP. The proposed rule reviews the requirements for the Hospice CAHPS Survey for the FY 2019 through FY 2025 annual payment updates. In addition, the rule maintains the two global CAHPS Hospice Survey measures and six composite CAHPS Hospice Survey-based measures, which would be derived from data submitted on the survey. To meet the CAHPS Hospice Survey requirements for the HQRP, hospices must contract with a CMS-approved vendor to collect survey data for eligible patients on a monthly basis and report that data to CMS on the hospice s behalf by the quarterly deadlines established for each data collection period. The list of approved vendors is available at: http://www.hospicecahpssurvey.org/en/approved-vendor-list. Hospices are responsible for making sure their respective survey vendors meet all data submission deadlines. Vendor failures to submit data on time are the responsibility of the hospices. HCA has concerns about this requirement and will include them in our comments to CMS. CMS began public reporting of the CAHPS results on Hospice Compare as of February 2018. The first report of CAHPS data covered survey results from deaths occurring between second quarter of 2015 and the first quarter of 2017. CMS reports the most recent eight quarters of data on the basis of a rolling average with the most recent quarter of data being added and the oldest quarter of data removed from the averages for each data refresh. CMS refreshes the data four times a year in February, May, August and November. CMS will not publish CAHPS data for any hospice that has fewer than 30 completed surveys due to concerns about statistical reliability. CMS proposes to use the same public reporting policies in future years and is soliciting comments on this proposal. Finally, CMS will continue to exempt very small hospices from CAHPS requirements. Hospices with fewer than 50 survey-eligible decedents/caregivers in the period from January 1, 2018 through December 31, 2018 are exempt from CAHPS data collection and reporting requirements for the 2021 annual payment update (APU). To qualify for the survey exemption for FY 2021 APU, hospices must submit an exemption request form. This form and any additional information on the survey can be found on the official CAHPS website for hospice at: http://www.hospicecahpssurvey.org/. 6

CMS s Proposed Hospital Rule Provides Update to the Transfer Policy for Early Discharges to Hospice Last week, CMS also released the FY 2019 payment rule for inpatient hospitals which extends the hospital post-acute transfer policy to hospice, effective October 1, 2018. CMS has also recently released Transmittal No. 2055 (https://www.cms.gov/regulations-and-guidance/guidance/transmittals/2018downloads/r2055otn.pdf) on this new policy change. Specifically, the regulations state that when a patient is transferred to another hospital and his or her length of stay (LOS) is less than the geometric mean LOS for the Medicare Severity Diagnosis-Related Group (MS-DRG), the transferring hospital will be paid based on a graduated per-diem rate for each day of stay, not to exceed the full MS- DRG payment. For discharges to certain post-acute care settings, this per-diem-based payment adjustment is limited to certain MS-DRG discharges. Currently, the regulation limits post-acute care transfers to those where the patient is transferred to a distinct part of a hospital unit, a skilled nursing facility, or discharged with a written plan for home health services commencing within three days of discharge. Section 53109 of the Bipartisan Budget Act of 2018 modified the law to require that, beginning in fiscal year 2019, discharges to hospice care would also qualify as a post-acute care transfer and be subject to payment adjustments. Comment Period & Issuance of the FY 2019 Final Rule CMS s proposed rule will be open for public comment until 5 p.m. on June 26, 2018. HCA plans to submit comments on behalf of the membership. Hospice members are encouraged to share with HCA their concerns by e-mailing Patrick Conole at pconole@hcanys.org. Providers interested in submitting their own comments can do so either electronically, by regular mail, express or overnight mail, hand, or courier and should refer to File Code CMS-1692-P. Electronic comments on the proposed rule can be sent to http://www.regulations.gov (follow the instructions under the More Search Options tab). Providers preferring to submit comments by regular mail should send them to: CMS, Department of Health and Human Services, Attention: CMS-1692-P, P.O. Box 8010, Baltimore, MD 21244-1850. HCA will share with the membership our comments to CMS shortly after they are submitted. HCA expects CMS to post the final rule for the FY 2019 Hospice Wage Index and Payment Rate in the Federal Register towards the end of July or early August. HCA will provide the membership with a follow-up Public Policy Memorandum when this occurs. For further information, contact Patrick Conole at (518) 810-0661 or pconole@hcanys.org. 7