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Volume 23.23

At the December meeting of the Medicare Payment Advisory Commission (“MedPAC”), the only recommendation presented was to eliminate the update to the 2024 Medicare hospice payment rates.  A formal vote by MedPAC on the recommendation will occur at the January 2024 MedPAC meeting.

This recommendation is generally based on the margins being generated by hospices, as determined by the MedPAC staff, and the continuing increase in the number of hospices.  The increase in the number of hospices is predominantly an increase in the number of for-profit providers, consistent with the trend experienced in past years.

Margins generated, based on MedPAC’s data, have decreased from prior MedPAC reports and hospices are being significantly impacted by increases in costs and increasing regulatory demands requiring an increase in resources and costs.  Furthermore, MedPAC projects margins in 2024 to further decline, even if 2024 rates are increased.  The recommendation to eliminate the update to the established 2024 Medicare hospice payment rates is not justified.  Additionally, it is time that MedPAC and CMS consider the fact that historical rate increases were substantially less than the actual increase in costs experienced by hospice providers.  For example, when hospice costs increase by five percent (5%), but payment rates were only increased by three percent (3%), the base for a payment increase in the subsequent year is less than it should be.  In fact, the hospice suffers an ever-increasing effective rate shortfall to what the payment rates should be.

MedPAC has, at least for now, dropped their recommendations to wage-adjust the hospice CAP and reduce the aggregate CAP by twenty percent (20%).  The hospice CAP is discriminatory in nature due to its applicability to all hospices regardless of geographical location and needs to be wage adjusted.  There never was any reasonable justification for an across-the-board CAP reduction.

At the meeting, MedPAC staff presented potential policy proposals directed at non-hospice, unrelated, spending for Medicare beneficiaries enrolled in the hospice benefit.  These potential policies include:

  • Requiring CMS to develop more precise definitions of related and unrelated spending and more accurate and timely information-sharing across hospice and non-hospice providers and suppliers.
  • An increased bundling of services, and increased payment to the hospice, whereby unrelated services could be bundled with the hospice benefit to better account for all payments made on behalf of the beneficiary.
  • Penalties imposed on hospices with high levels of unrelated spending on their hospice patients.

The meeting transcript is available here.

Time to Consider 2023 CAP Year Reporting and CAP Liability Monitoring

The hospice self-reporting of the CAP liability computation (“CAP Report”) for the 2023 CAP Year ended September 30, 2023, must be filed with the Medicare Administrative Contractor (“MAC”) on or before February 29, 2024.  If, based on the filing, the hospice has a CAP liability, the liability payment must be submitted to the MAC or a request for Extended Repayment Schedule (“ERS”) needs to be submitted at that time.  Our recommendations are as follows:

  • Make certain you can access PS&R data to be able to complete the self-filing.
  • Secure PS&R data as soon as possible after January 1, 2024, to minimize any CAP liability that needs to be paid at the time of filing.  Remember, the submission is not required until February 29, 2024.  Knowing the liability early also provides the hospice time to determine how any liability will be liquidated.
  • If you have a CAP liability, establish a mechanism for tracking the CAP liability as it continues to increase as time passes.
  • Make an estimate of the ultimate CAP liability (the amount to which the liability is expected to increase over the next several years) or determine if an outside consultant is needed to make that estimate or assist in making that estimate.
  • If you will be requesting an Extended Repayment Schedule to liquidate the liability, determine if the request will be for a period of less than one year or more than one year.  If the ERS is for a period of one year or more, significant financial information will need to be accumulated to support the ERS request.  Prepare to secure the data required for the submission.

It is important to recognize that if the report reflects a CAP liability, the actual liability is a higher amount because the reporting is based on net payments (net of sequestration); however, this is not consistent with the calculation that will be eventually made by the MAC.

Do not hesitate to contact us at contact@healthgroup.com if you need assistance in continuous tracking of any CAP liability or need to estimate how the liability will grow going forward into the future.