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Volume 20.16

At the recent meeting of the Medicare Payment Advisory Commission (“MedPAC”), the matter of wage adjusting the Medicare Aggregate Payment Limitation (“CAP”) and reducing the CAP by an arbitrary 20% was again discussed as MedPAC moves toward making its recommendations to Congress in January 2021.

The staff presentation is available here

In our opinion, some consideration of wage adjusting the CAP, with certain protections for those significantly impacted, makes sense.  However, an overall 20% reduction to the CAP to merely save money for the Medicare program is an inappropriate attempt to penalize those providers who serve long-term patients.  The appropriateness of long-term patients for hospice care should be a focus of admissions and claims review, not a general payment reduction in the CAP.

Hospices should be contacting MedPAC regarding their opposition to a general, and arbitrary reduction to the CAP in the same way that all healthcare providers should be voicing opposition to any payment reductions that lack underlying support.  According to MedPAC, about 18.5% of hospices now exceed the CAP.  It appears that 18.5% is not enough to satisfy their objectives.  In our opinion, efforts should be made to reduce the 18.5%, not increase the 18.5% by simply reducing the CAP by an arbitrary 20%, which is not justified in any way as being reasonable or consistent in meeting other objectives associated with the hospice benefit.

The presentation to MedPAC provides no calculations as to how or why the 20% reduction is appropriate.  The fact that 18.5% of hospices exceed the CAP is not the problem.  It is a symptom of the problem (the original CAP, which is annually adjusted, was originally created assuming a patient population with a primary cancer diagnosis and not the current patient population).  There was an underlying calculation used in the determination of the original CAP, which is missing in any assessment of the current CAP and in the 20% reduction.

Hospice is most valuable when the service is introduced at an early date in the terminal episode.  This provides the maximum benefit to the patient and family members.

Whether MedPAC believes it or not, reducing the CAP will, in fact, reduce access to hospice services.  A reduction to the CAP, especially at such a significant percentage, would surely impact hospice admissions for patients with a non-cancer diagnosis, where the estimate of the life expectancy is more difficult.

Healthcare providers of all types dislike any payment reductions; however, reasonable payment modifications based on facts and circumstances can be justified.  Rate reductions not based on facts and circumstances are inappropriate.  The MedPAC Commissioners should demand real underlying support for payment modifications (increases or decreases).  Merely attempting to reduce Medicare expenditures is not an appropriate rationale for decreasing payments.

We recommend that MedPAC drop any discussion of a 20% CAP reduction without a thorough assessment of the intention of the CAP and assessing what are reasonable total Medicare payments given the nature of the hospice population today, which differs substantially from the original hospice population that existed at the time of the benefit’s creation.  Such an assessment will not support an arbitrary 20% CAP reduction.

The transcript of the recent meeting is available here.