The Fiscal Year 2023 Appropriations Bill (“Omnibus Budget”) recently passed includes the following of immediate interest to hospice providers:
Sequestration – The legislation extends Medicare sequestration into 2032 and sets the sequestration at two percent (2%) for 2030 and 2031.
CAP Reduction and Modification – Even though MedPAC continues to recommend modifying the CAP calculation based on wage indexing and applying a 20% reduction to the CAP calculation, the Omnibus Budget does not include either.
Telehealth F2F Hospice Certifications – The Omnibus Budget provides hospices with the ability to perform face-to-face recertification via telehealth until December 31, 2024.
Use of MFTs and/or MHCs – Effective January 1, 2024, hospices are allowed to include marriage and family therapists (“MFTs”) and/or mental health counselors (“MHCs”) as part of the interdisciplinary team in lieu of a social worker. The Hospice is not required to utilize an MFT or MHC. Additionally, if the plan of care identifies the use of a social worker, the hospice will still be required to utilize a social worker.
While the Omnibus Budget has not altered the calculation of the CAP, MedPAC has preliminarily approved its recommendation to wage adjust the CAP and reduce the CAP by twenty percent (20%). While modifying the CAP calculation based on wage index (geographical location of the hospice), efforts should continue to avoid any overall CAP reduction as an effort to reduce Medicare expenditures. An overall CAP reduction is a bad policy and not supported by underlying data. Such an overall reduction would be an attack on the hospice benefit itself. MedPAC’s own data estimates hospice margins to significantly decline in 2023 based on other factors.
IRS RELEASES STANDARD MILEAGE RATES FOR 2023
On December 29, 2022, the IRS released the 2023 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical, or moving purposes.
Beginning on January 1, 2023, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
- 65.5 cents per mile driven for business use, up 3 cents from the mid-year increase setting the rate for the second half of 2022.
- 22 cents per mile driven for medical or moving purposes for qualified active-duty members of the Armed Forces, consistent with the increased mid-year rate set for the second half of 2022.
- 14 cents per mile driven in service of charitable organizations; the rate is set by statute and remains unchanged from 2022.
Hospices can reimburse employees up-to 65.5 cents per-mile traveled with no tax impact to the employee. It is important to note that under the Tax Cuts and Jobs Act, taxpayers cannot claim a miscellaneous itemized deduction for unreimbursed employee travel expenses. Accordingly, employees cannot claim additional expenses above those reimbursed by the hospice. Given continuing increases in costs associated with vehicles used to support hospice services, each hospice must determine its own policy regarding payments to employees for the use of their personal vehicle.
HOSPICE CAP SELF-REPORTING
Hospices must submit their Self-Determined CAP Liability (“CAP Report”) on or before February 28, 2023. If your hospice expects a CAP liability, the CAP Report should be prepared as soon as possible, thereby minimizing any CAP liability at the time of the filing. Even if the hospice prepares the CAP Report early, it does not need to be submitted until February 28, 2023. Hospices that have or expect a CAP liability should estimate the ultimate CAP liability for financial statement and other purposes. The calculation of estimated CAP liabilities could also influence tax filings, quality of earnings calculations, and Provider Relief Fund reporting if lost revenues are part of the support for use of these funds.