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Hospice Cap Reduction


As providers file this year’s cap self-determination report, questions loom about potential wage-adjusted and reduced hospice cap for 2021
 

It is cap report season for the nation’s hospice providers, who are required by Medicare to calculate their cap position for the 2020 cap year as part of an annual self-determined hospice aggregate cap report due at the end of February.

For hospice providers with efficient tracking in place and sound operational practices, the annual self-evaluation may be no more than business as usual, just another piece of documentation to be squared away.

For others, February can be a harrowing month of last-minute calculation, subject to variables such as unpredictable lengths of stay for certain terminal diagnoses, service periods spanning multiple cap reporting years, and other complexities.  The most recent data show that roughly one in six hospice providers are getting it wrong each year, exceeding the maximum aggregate cap amount allowed for a hospice provider.

Assessing a liability can become even more complicated when plans to buy or sell the hospice agency are added to the equation, according to Lisa M. Lapin, Principal, Simione Healthcare Consultants. 

“We often work with buyers or sellers who are trying to fully understand potential risk of any cap liability as part of a possible transaction,” Lapin said. “Due diligence makes up a large part of the services we provide, and of course we offer regular periodic cap monitoring and reporting for hospice providers as well. We work with our clients to help them understand what drives cap liability and implement the changes needed to be able to maintain a healthy cushion and stay out of a liability situation.”

Hospices are required to file the self-determined cap liability report each year between Dec. 31 and Feb. 28. They face suspension of Medicare payments if the report is not filed within seven days of the March 1 due date.

A 20% cap reduction

As providers prepare cap self-determination reports this year, they are already looking warily to next year, wondering whether a recommendation by the Medicare Payment Advisory Commission (MEDPAC) will gain traction.

Prompted by increasing hospice utilization and longer average lengths of stay, MEDPAC has recommended to Congress that the aggregate payment cap for 2021 be wage-adjusted and reduced by 20 percent.

“The intent is to make the cap more equitable across providers and focus payment reductions on providers with high margins and the longest stays,” Lapin said. 

Medicare margins vary greatly among hospice providers, she said, determined by factors such as whether the hospice is freestanding, home-health based, hospital-based, non-profit or for profit, urban or rural or part of a larger chain organization. 

In addition, payment rates vary significantly depending upon the geographical location of a hospice provider, making wage adjusted cap an important consideration.  Right now, the cap is one set amount for all providers across the country ($30,684). At differing reimbursement rates based on a provider’s geographical locale, some providers would run up against the new, 20-percent lower limit much sooner than others.

“A wage-adjusted cap not reduced by 20 percent would level the playing field,” Lapin said.

A wage adjusted and 20 percent reduced cap means most hospice providers would be able to provide approximately 30 to 40 fewer days of service to a patient, according to Lapin. “The end result would be shortening the length of the benefit, turning what is currently a six-month benefit now into more of a four to five-month benefit, because 140-150 days of service would be right at cap,” she said.

Will it happen?

Whether Congress will act on MEDPAC’s recommendation remains unclear, Lapin said.

“At this point, there is no pending regulation before Congress – just a recommendation from MEDPAC,” Lapin said. “And Congress doesn’t have to do what the Commission asks. It has declined to act in the past on eliminating the hospice payment increase. For the last few years, the focus for hospice has been on operational changes rather than any sweeping payment changes, with the most recent exception being the rebasing of the inpatient and continuous care rates.”

Among the unknowns for this year, however, are a new administration in the White House and the continuing pandemic. The Covid-19 national public health emergency will enter its second year in March and has been extended at least through the end of 2021.

“We’re all curious to see how it will play out,” Lapin said.

What providers should do

Lapin recommends hospice providers “keep an ear to the ground” with regard to MEDPAC’s recommendation, working with state and national hospice associations to advocate for a fair consideration of the issues at stake and reasonable implementation if the cap reduction should be enacted.

The National Association for Home Care and Hospice (NAHC), for example has opposed the cut, calling it a "crude tool to change hospice financial incentives" and saying it fails to account for the many variations in patient needs, especially for Alzheimer's disease and other neurological disorders. NAHC has suggested a phased-in implementation should the measure go forward.

"Hospice providers need to maintain awareness on this issue and add their voices to advocate for this vulternable patient population," Lapin said.

Need help with cap reporting?

Simione helps hospice providers with all aspects of cap liability, whether it is preparing, assessing and reportig 2020 self-determinations, monitoring and reporting cap liability going forward, or implementing new processes to mitigate, reduce and prevent future liability.  

Contact us at 800.949.0388 or request a service online.