August 30, 2010

Hospice Wage Index for FY 2010

Proposed Rule
Summary

Score: 18 / 60

Key materials
Additional details
Agency
Department of Health and Human Services
Regulatory Identification Number
0938-AP45
Agency Name
Department of Health and Human Services
Rule Publication Date
04/24/2009
Comment Closing Date
06/22/2009

RULE SUMMARY

This proposed rule would set forth the hospice wage index for fiscal year 2010. The proposed rule would adopt a MedPAC recommendation regarding a process for certification and recertification of terminal illness. This proposed rule would also continue the phasing out of the wage index budget neutrality adjustment factor (BNAF), which will conclude in 2011. In addition, we are requesting comments on a suggestion to require recertification visits by physicians or advanced practice nurses, and on issues of payment reform for use in possible future policy development. Finally, the proposed rule would make several technical and clarifying changes to the regulatory text.

METHODOLOGY

There are twelve criteria within our evaluation within three broad categories: Openness, Analysis and Use. For each criterion, the evaluators assign a score ranging from 0 (no useful content) to 5 (comprehensive analysis with potential best practices). Thus, each analysis has the opportunity to earn between 0 and 60 points.

Criterion Score

Openness

1. How easily were the RIA , the proposed rule, and any supplementary materials found online?
0938-AP45 can be found on regulations.gov using the RIN and a keyword search, as well as on the Department of Health and Human Service's website. The regulation can be found by clicking on regulations, then Medicare/Medicaid, then Hospice Center. Here, click on Regulations and search for the proper one.
5/5
2. How verifiable are the data used in the analysis?
Specific data sources are not cited or linked. There is almost no citation of where the data come from. One reference is to the OSCAR database, and the layperson would probably not be able to access this easily. Readers would also have to do digging to look at certain wage adjustment measures.
1/5
3. How verifiable are the models and assumptions used in the analysis?
The principal "model" is the calculation of the new wage index. This is explained, but there is no table showing how the analysis got from raw data on numerous individual hospices to the total $340 million figure. (A table like this, or at least an explanation, often appears in these kinds of Medicare regulations.) Possible perverse incentives in the payment system are explained briefly, with a cite and link to a MedPAC report that examined this issue.
1/5
4. Was the analysis comprehensible to an informed layperson?
The analysis and preamble are heavy on acronyms and details that make this a difficult read. Calculations are explained, so this part is understandable once the reader surmounts the language barrier. It is hard to follow how the analysis got from data to the total cost figure.
2/5

Analysis

5. How well does the analysis identify the desired outcomes and demonstrate that the regulation will achieve them?
0/5
Does the analysis clearly identify ultimate outcomes that affect citizens’ quality of life?
No rationale for this rule is given besides implementing the law. The proposal says the purpose of the rule is to comply with a regulatory mandate that requires HHS to make wage adjustments, but the underlying congressional rationale is not explained. Topics like quality of hospice care, results for patients, cost savings, etc. are not presented as desired outcomes.
0/5
Does the analysis identify how these outcomes are to be measured?
Cost savings to the federal government are measured, but this is not explicitly articulated as an intended outcome of the rule.
0/5
Does the analysis provide a coherent and testable theory showing how the regulation will produce the desired outcomes?
No relevant discussion.
0/5
Does the analysis present credible empirical support for the theory?
No relevant discussion.
0/5
Does the analysis adequately assess uncertainty about the outcomes?
No relevant discussion.
0/5
6. How well does the analysis identify and demonstrate the existence of a market failure or other systemic problem the regulation is supposed to solve?
1/5
Does the analysis identify a market failure or other systemic problem?
No relevant discussion for the purpose of the proposals in this rule. It does, however, note that the current payment system may create perverse incentives and seeks comments on possible reforms; Congress would have to act in order to accomplish reforms.
1/5
Does the analysis outline a coherent and testable theory that explains why the problem (associated with the outcome above) is systemic rather than anecdotal?
No relevant discussion in regard to the proposals in this rule.
0/5
Does the analysis present credible empirical support for the theory?
A MedPAC study is cited which suggests the need for payment reform.
1/5
Does the analysis adequately assess uncertainty about the existence or size of the problem?
No relevant discussion.
0/5
7. How well does the analysis assess the effectiveness of alternative approaches?
1/5
Does the analysis enumerate other alternatives to address the problem?
Proposal says it calculated total payments with and without the 75 percent reduction in the "budget neutrality" factor, but retaining the budget neutrality factor is not really presented as an alternative that was considered.
1/5
Is the range of alternatives considered narrow (e.g., some exemptions to a regulation) or broad (e.g., performance-based regulation vs. command and control, market mechanisms, nonbinding guidance, information disclosure, addressing any government failures that caused the original problem)?
Even if budget neutrality were evaluated as an alternative, it does not widen the range of alternatives much.
1/5
Does the analysis evaluate how alternative approaches would affect the amount of the outcome achieved?
No relevant discussion.
0/5
Does the analysis adequately address the baseline? That is, what the state of the world is likely to be in the absence of federal intervention not just now but in the future?
The baseline, implicitly, is the previous year's expenditures, but it is not possible for the reader to verify this.
1/5
8. How well does the analysis assess costs and benefits?
2/5
Does the analysis identify and quantify incremental costs of all alternatives considered?
A table shows the cumulative effect of each proposed change for the chosen alternative only.
3/5
Does the analysis identify all expenditures likely to arise as a result of the regulation?
The RIA estimates these changes will reduce federal expenditures by $340 million. No other expenditures estimated.
3/5
Does the analysis identify how the regulation would likely affect the prices of goods and services?
Only to the extent that the calculations determine how much HHS will pay for hospice services. In reality, hospice care is likely a substitute for a number of different services and is tied to other healthcare services. One would expect, therefore, some effect on prices of other goods and services; there is no discussion of this, however.
1/5
Does the analysis examine costs that stem from changes in human behavior as consumers and producers respond to the regulation?
There is no discussion of costs from changes in human behavior in response to these payment changes. Such changes are likely to occur given that there are some noticeable changes in payments because the budget neutrality factor is being phased out. HHS expresses concern about perverse incentives in the current payment system, citing a MedPAC study: "MedPAC believes that the current hospice payment system contains incentives that make long hospice stays more profitable, which may result in misuse of the benefit." The proposal seeks public comment on reforming the hospice payment system and notes congressional action would be necessary.
3/5
If costs are uncertain, does the analysis present a range of estimates and/or perform a sensitivity analysis?
No relevant discussion.
0/5
Does the analysis identify the alternative that maximizes net benefits?
Since benefits are not calculated, net benefits cannot be calculated.
0/5
Does the analysis identify the cost-effectiveness of each alternative considered?
Since benefits are not calculated, cost effectiveness cannot be calculated.
0/5
Does the analysis identify all parties who would bear costs and assess the incidence of costs?
Effects of changes are shown for different categories of hospices: by location, size, ownership type, etc.
3/5
Does the analysis identify all parties who would receive benefits and assess the incidence of benefits?
One part of the preamble notes that the makeup of hospice patients has changed, with a smaller proportion of cancer patients. But since benefits were not calculated, this is not really linked to incidence of benefits.
1/5

Use

9. Does the proposed rule or the RIA present evidence that the agency used the analysis?
Only in the sense that the calculations determine how much the federal government will pay for hospice services.
3/5
10. Did the agency maximize net benefits or explain why it chose another alternative?
Benefits are not calculated or really even defined, so net benefits could not be estimated from the information in this analysis. The proposal has no explicit discussion that could be interpreted as showing cognizance of, or sensitivity to, net benefits issues.
0/5
11. Does the proposed rule establish measures and goals that can be used to track the regulation's results in the future?
No measures or goals are established. The only thing measured in the analysis is costs, so if cost reduction were a desired outcome, the analysis could be used to establish some goals and measures.
1/5
12. Did the agency indicate what data it will use to assess the regulation's performance in the future and establish provisions for doing so?
The proposal says a forthcoming administrative instruction will require hospices to report visit and time data. This appears to be intended for compliance purposes; there is no explicit mention of using these data to assess the results of the rule. It is not clear how these activity data would measure outcomes for patients. HHS obviously has cost data.
1/5
 
Total 18 / 60