Policy of Caps and Limitations on Hospice Payments
The statute requires that hospice payments be limited by an inpatient cap and by an aggregate cap. Medicare contractors make the cap calculations annually, after the end of the aggregate cap year, which runs from November 1st to October 31st. Contractors send each provider a cap determination letter, which serves as a notice of program reimbursement under 42 CFR §405.1803(a)(3), showing the results of those calculations. Any amounts in excess of either cap are considered to be overpayments, and must be repaid to Medicare. Contractors compute the inpatient cap and the aggregate cap in order to determine whether a provider has exceeded the allowable hospice cap amount. The contractor shall issue a demand for the overpayment from hospices that exceeded the allowable hospice cap amount.
Limitation on Payments for Inpatient Care
Payments to a hospice for inpatient care are subject to a limitation on the number of days of inpatient care furnished to Medicare patients. During the 12-month period beginning November 1 of each year and ending October 31, the aggregate number of inpatient days for general inpatient care and inpatient respite care may not exceed 20 percent of the aggregate number of days of hospice care provided to all Medicare beneficiaries in that hospice during that same period. This limitation is applied once each year, at the end of the hospices’ “cap period‖ (November 1 - October 31). The inpatient cap is calculated by the contractor as follows:
- 1. The maximum allowable number of inpatient days is calculated by multiplying the total number of days of Medicare hospice care by 0.20.
- 2. If the total number of days of inpatient care furnished to Medicare hospice patients is less than or equal to the maximum, no adjustment is necessary.
- 3. If the total number of days of inpatient care exceeds the maximum allowable number, the limitation is determined by:
- Calculating the ratio of the maximum allowable inpatient care days to total inpatient care days reported on the Provider Statistical and Reimbursement Report (PS&R). The calculated ratio is multiplied by the total reimbursement for inpatient care (general inpatient and inpatient respite reimbursement) paid to the provider.
- Multiplying the excess inpatient care days by the routine home care (RHC) rate, wage adjusted for the location of the hospice.
- Adding together the amounts calculated in the two bullets above to derive the total allowable payments for inpatient care.
- Comparing the total allowable payments for inpatient care in bullet 3 above with actual payments made to the hospice for inpatient care during the “cap period" in order to determine the overpayments paid to the provider.
Any excess reimbursement must be refunded by the hospice.