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Volume 22.05

MedPAC has released its March 2022 Report (“Report”) to Congress.  As expected, MedPAC has again recommended hospices not receive any payment update in 2023 and that the aggregate payment limitation (“CAP”) be wage adjusted and reduced by an arbitrary 20% solely as a mechanism to reduce overall hospice expenditures.

“Based on generally positive indicators of payment adequacy and strong margins, the Commission has concluded that, in aggregate, payments are more than sufficient to cover providers’ costs. The Commission’s recommendation is that the hospice payment rates in 2023 be held at their 2022 levels. In addition, the Commission recommends that the hospice aggregate cap be wage adjusted and reduced by 20 percent, which would focus payment reductions on providers with disproportionately long stays and high margins.”

Of course, as you may know, The Health Group, LLC has vigorously argued that a reduction in the CAP of 20% is unsupported and inconsistent with the intent of the CAP.  In fact, if anything, the CAP should be increased to reflect the change in the population served by hospices.  MedPAC, in their Report, provides an alternate approach against an arbitrary reduction to the CAP; instead, focusing on increased review of long-term patients.  This is a far more appropriate approach to addressing those long-term patients which create CAP.

“With the variation in practice patterns across hospices and concerns about the potential for some hospices to focus on patients likely to have long stays and high profitability, the Commission has advocated over the years for a targeted approach to auditing hospice providers, focusing the most resources on providers for which such scrutiny is warranted. In March 2009, the Commission recommended that CMS conduct medical reviews of all hospice stays exceeding 180 days among those hospice providers for which these long stays exceeded a specified share of the provider’s caseload.”

Adjusting the CAP to reflect wage-adjusted reimbursement rates across the country has significant merit; however, any movement in that direction should be phased in or limited as to avoid significant short-term financial impact on financially vulnerable hospices.

The Report indicates that the number of hospices exceeding the CAP for 2019 increased to 19.0% of all hospices compared to 16.3% in 2018 and 12.3% in 2015.  According to MedPAC, “above-cap hospices have fewer patients per year, on average, than below-cap hospices and are more likely to be for-profit, freestanding, recent entrants to the Medicare program, and located in urban areas.”

According to the Report, proprietary hospices now comprise 3,680 of the total 5,058 hospices, or almost 73%.  In 2010, proprietary hospices represented 56% of the total.

The Report also recommends expanded reporting of telehealth use by hospices.

“…the Commission’s recommendation is that CMS should require hospice providers to report telehealth visits on Medicare claims.”

The Report warns of substantial increases in the number of hospices in California and Texas where most of these hospices were small with high lengths of stay.  Many of these hospices are exceeding the aggregate payment limitation (“CAP”).

The Report also provides some analysis of the impact of the COVID-19 PHE on hospice services generally; some specific observations include, “In 2020, the main location where hospice patients receive care shifted. The number of Medicare decedents receiving hospice at home, in an assisted living facility, and in a hospital increased while the number of decedents receiving hospice in a nursing facility or hospice facility decreased that year.”

Although not included in the recommendations, MedPAC briefly discussed PHE funding.  “To the extent that the effects of the PHE are temporary changes or vary significantly across individual hospice providers, they are best addressed through targeted temporary funding policies rather than a permanent change to all hospices’ payment rates in 2023 and future years. Based on information available at the time of publication, we do not generally anticipate long-term PHE-related effects on the hospice sector, except for increased wage rates, which we account for in our margin projection. Instead, to the extent that the PHE continues, any needed additional financial support should be targeted to affected hospice providers that are necessary for access.”  Based on what we are hearing from our hospice clients, MedPAC has not yet seen the financial impact of increased wage rates and other costs, which will be better reflected in 2021 data.

We recommend that all hospices be familiar with Chapter 11 of the MedPAC Report at MedPAC March 2022 Report to the Congress. 


The 2022 Hospice Financial Management Academy is set for September 19-20, 2022, at the Hotel Monteleone, New Orleans, Louisiana.  Program details are still in development; however, the program will include break-out sessions allowing attendees more educational opportunities.

The program will include up-to-date information regarding program integrity audits, Medicare Advantage initiatives, CAP monitoring plans, cost reporting developments and updates, addressing accounting and financial reporting issues for hospices, recent Medicare enrollment review focus by CMS and the MAC, follow-up on PRF reporting due in 2023, PIP reimbursement changes and activities, and more.

Registration information will be available in the next few weeks.  As always, we limit the number of attendees due to the nature of the program.