As part of the Medicare hospice benefit there are two payment caps:

  1. Inpatient Cap
  2. Aggregate Cap

The inpatient cap limits the number of days of inpatient care for which a hospice can bill Medicare to no more than 20% of total Medicare days billed, and the aggregate cap limits the total dollar amount of payments from Medicare that can be received.  The aggregate cap was originally intended to ensure that hospice payments would not exceed Medicare expenditures in a conventional setting.  The aggregate cap amount is updated annually at the same time that the hospice payment rates are updated.  A hospice must pay back to Medicare any payments it receives in excess of the aggregate cap.  Simplified, the aggregate cap calculation is the total Medicare payments received for the year by the hospice divided by the number of Medicare hospice patients served in the year.  The patient counts are determined based on either the streamlined or proportional method. Agencies obtain their patient data from the Provider Statistical & Reimbursement Report (PS&R).

According to an analysis by Abt Associates (contracted by CMS) the number of hospices exceeding the cap has quadrupled since 2002 when only 2.6% of hospices exceeded the cap. In 2013, 10% of hospices exceeded the cap. The drastic increase is of concern. As a result, hospices saw changes to the aggregate cap calculation:

  • Implementation of the proportional or streamlined methods
  • Change of the update percentage to the hospice payment update percentage instead of the consumer price index update
  • Requiring hospices to complete a self-determined aggregate cap calculation and submit it to their Medicare Administrative Contractor (MAC)
  • Alignment of the aggregate cap accounting year with the fiscal year

The latter was implemented in FY2017. This change in cap accounting year means that hospices will now have to file their self-determined aggregate cap with their MAC by February 28, 2018. The self-determined aggregate cap must be filed no sooner than three months after the end of the aggregate cap year and no later than five months after the end of the aggregate cap year. The cap year change moves the filing deadline up by one month. Healthcare Provider Solutions, Inc. takes this opportunity to remind hospices to mark their calendars with the February 28, 2018 deadline.

As part of its analysis of hospice payments, Abt Associates has indicated other potential reforms to the aggregate cap including a rebasing of the cap amount to reflect the current case mix of patients, adjusting the cap by the local wage index, and estimating average hospice episode costs based on hospice cost reports. The reforms would require statutory changes.

Undoubtedly, CMS will continue to monitor the aggregate cap situation. The current cap amount for FY2017 is $28,404.99 and will increase to $28,689.04 in 2018.

HPS will be hosting an Alliance member webinar on September 12, 2017 that will discuss the FY2018 hospice final rule, and provide a comprehensive update of CMS’ plans and timelines for the hospice quality reporting program including public reporting and a comprehensive patient assessment instrument (HEART). Comments related to concerns CMS has over the source of clinical information used in certifying the terminal illness and comments related to monitoring activities will be discussed.