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Volume 22.14

Recently, the United States Court of Appeals for the Ninth Circuit ruled that the way Medicare payments and sequestration was being handled when a hospice exceeds the hospice CAP was appropriate.  The Health Group, LLC has previously reported that the calculation of the hospice CAP liability was mathematically correct to achieve sequestration of Medicare payments. 

It is unfortunate that Medicare providers, including hospices, are subject to sequestration solely because Congress was unable to make certain budget reductions.  This is especially true today based on the increasing costs being incurred by healthcare providers.  The history of sequestration and Medicare sequestration is summarized at https://bipartisanpolicy.org/blog/origins-sequester/https://sgp.fas.org/crs/misc/R45106.pdf

The ruling can be secured at “Silverado Hospice, Inc., et al., v. Xavier Becerra, Secretary of United States Department of Health and Human Services –20-56348.pdf (uscourts.gov)”.  The ruling includes:

“The plaintiff hospices exceeded their aggregate caps in the 2013 fiscal year, and three Silverado hospices also exceeded their aggregate caps in the 2014 fiscal year. In 2015, plaintiffs’ MACs issued notices of its aggregate cap determinations for both fiscal years. In each of the eight notices, the MAC included the details of its cap calculations under the TDL’s multi-step method and requested refunds of the overpayment amounts. Plaintiffs appealed their cap determinations to the Provider Reimbursement Review Board (“PRRB”), arguing that their MAC had failed to calculate the aggregate cap using the “actual net amount of payment received by the hospice provider.” Instead, the MAC had calculated their overpayments using the TDL method. Plaintiffs argued that the MAC’s calculation method was contrary to 42 U.S.C. § 1395f(i)(2)(A), which specifies how the aggregate cap is calculated. The PRRB upheld the MAC’s overpayment calculations.

The panel held that CMS correctly concluded that the Budget Control Act required it to reduce the total annual amounts paid to hospices, not only the periodic reimbursements, and that the agency’s chosen method for implementing sequestration was consistent with the Medicare statute. CMS adopted a method that harmonized the Budget Control Act and the Medicare statute, ensuring the necessary percentage reduction to Medicare spending without altering the statutorily mandated calculation of the annual hospice cap. Plaintiffs’ preferred method, by contrast, would not achieve sequestration’s required spending reductions.”


The 2022 Hospice Financial Management Academy is scheduled for September 19-20, 2022 in New Orleans.  The two-day program includes up-to-date information on CAP reporting and management, program integrity, hospice finance and accounting, planning for Medicare Part C (Medicare Advantage), cost reporting, and much more.  Space is limited and only a few spots remain.  Discounted room rates at the Hotel Monteleone expire soon.  Information regarding the program, registration, and room reservations are available here.