A business’ primary goal is to provide a product or a service to generate revenues and earn profits. This is true even for hospices which aim to improve the quality of life of terminally — ill people. However, keeping revenues while providing quality care proves to be a challenge for most agencies due to the existence of the hospice cap. To help you better understand how the hospice cap report affects providers like you, we have answered some of the common questions revolving around it.
The hospice cap is a payment ceiling which limits the funds you may collect from Medicare for a single fiscal year. The fiscal year’s coverage is from October 1 of a given year until September 30 of the following year. There are generally two caps your agency needs to take into account for your Medicare payments — the inpatient cap and the aggregate cap. The former limits the number of inpatient care days you may provide to 20% or less of total patient care days. For FY 2020, the cap amount (unadjusted for wages) is $29,964.78 with an expected increase of 2.4 percent in FY2021 to $30,683.93. On the other hand, the latter limits the total Medicare payments you may receive within a fiscal year to the cap amount multiplied by the number of beneficiaries you provided care to. It is possible that you have reached or exceeded the inpatient cap for a specific patient but have not reached or exceeded the aggregate cap once all inpatient caps are added up.
As a hospice care provider, you would need to self-report your aggregate cap determination every fiscal year to your Medicare Administrative Contractor (MAC) within three months after the end of the cap year until five months after. For next year, the deadline falls on March 1, 2021 but it is advisable to start the process as early as the first week of January. To ensure that you would have the relevant data for your cap calculations, you would need to have access to the Provider Statistical and Reimbursement (PS&R) database and obtain summary and hospice cap reports. If you are a newly certified hospice, you would need to get data for the period covering your certification date up until the end of the relevant cap year. This would normally cover 12–24 months of operations.
Your cap calculations would show the number of Medicare beneficiaries you served, the statutory cap amount for the year, your allowable Medicare payments, the net payments per the PS&R, and most importantly, the payments in excess of the aggregate cap amount. The goal is for the net amount reflected in the report to be positive with a significant buffer for adjustments. A buffer amount is important as many hospices initially pass the self-reporting test only to find out later on that they have flipped to the negative. If the amount is negative in your calculations, you can already expect to pay the excess to Medicare. The data you submitted though will still be reviewed and assessed by your MAC and you will be notified through a determination letter if you have exceeded the cap.
Should you exceed the aggregate cap, you would need to refund the excess amount to CMS. There are two ways in which you can pay Medicare. You can either pay the full amount upfront (through check or withholding of monthly reimbursements) or apply for a maximum of five years extended payment plan with a minimum interest rate of 10%. You would need to choose which approach you prefer within 15 days from your receipt of the determination letter. In any case however, you would need to repay the excess amount within 6 years. Failure to do so may lead to your agency ceasing operations.
Your agency should be proactive in monitoring your operations and resources to have a better understanding of your position relative to reaching the cap. There should be a regular assessment and evaluation of your beneficiary count and patient care days. Looking at trends and identifying areas which can be adjusted or reallocated is a good approach. Specifically, you can check your patient census and look for patterns in admissions as there might be patients who are better suited for home health rather than hospice and you might need to discuss with the recommending physicians.
Overstaying patients usually result in over capping and as such, you would want to offset that by admitting more patients with shorter stays. If you would be taking in patients who transferred from other hospices, you would generally want to keep them longer than their previous agency as the inpatient cap is prorated based on the number of patient care days. Overall, it is advisable to have a high number of beneficiaries in your portfolio with the mix skewed towards shorter stay patients so that you would have a large buffer before you reach the aggregate cap.
A proactive and preventive approach will help you keep and even increase your agency’s revenues despite the caps. Data Soft Logic, your intelligent care partner, offers software solutions designed by healthcare professionals specifically for hospice care, the Hospice Centre. To find out more, schedule a demo with us now.
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