CLARITY IN CAP LIABILITY PROVISIONS OF PURCHASE AGREEMENTS
As more hospices exceed hospice aggregate payment limitations (“CAP”) and hospice acquisitions continue at a rapid pace, we are constantly becoming involved in disputes between the Buyer and the Seller regarding the calculation of a CAP liability and responsibility for the liability. Unfortunately, the final CAP liability for any respective CAP Year is not determinable until such time as all patients served in the respective CAP Year are deceased or the Medicare Administrative Contractor (“MAC”) ceased updating the CAP liability calculation for the respective year.
Any calculation of an ultimate CAP liability at acquisition will be based on estimates due to the continued recalculation of any CAP liability. However, both the Buyer and Seller are encouraged to seek resolution of a pending CAP liability at the time of acquisition or ensure language in the Purchase Agreement leaves no doubt regarding the ultimate calculation of the CAP liability and associated responsibility. Clarity in addressing this issue at the date of the acquisition can avoid a subsequent dispute regarding this issue as well as incurring costs that could have been avoided.
LESSONS FROM THE 2021 COST REPORT SEASON
With the end of the 2021 cost report season, The Health Group, LLC is accumulating notes regarding all of the cost reporting issues identified and how hospices can improve the quality of their respective cost report submission. Some of the issues identified are those that have historically created difficulties, some are related to the COVID-19 PHE, and some are new. Many of the issues relate to the inadequacy of the hospice’s financial records primarily resulting from failure to track necessary revenues and expenses.
Improving the quality of the cost report submissions is increasingly important as CMS uses cost report data in the determination of reimbursement rates and the segregation of the labor component for all four (4) levels of care. The Health Group, LLC will be providing discussion of these cost reporting issues in future releases. Additionally, these matters will be part of the upcoming Hospice Financial Management Academy in September 2022.
REGISTRATIONS NOW BEING ACCEPTED FOR THE HOSPICE FINANCIAL MANAGEMENT ACADEMY
The Health Group, LLC is now accepting registrations for the 2022 Hospice Financial Management Academy scheduled for the Hotel Monteleone, New Orleans, on September 19-20, 2022. We are very excited to be back in New Orleans at one of our favorite conference venues.
As always, space is limited to enhance the interactive nature of the program. Discounted rates have been secured with the Hotel Monteleone. Reservations can be made by calling (800) 217-2033 or online at Hotel Monteleone. If you reserve by phone, make certain you inform the hotel that you are attending The Health Group conference to secure the discounted rates.
The preliminary conference information will be available at www.healthgroup.com shortly: however, if you want to receive preliminary conference information by email, please reach out to us at firstname.lastname@example.org or call us at (304) 241-1261. We look forward to seeing you in New Orleans.