Last week, the Medicare Administrative Contractors (MACs) issued instructions for hospices to self-report their FY 2014 hospice cap. Reports are due March 31, 2015 and failure to submit the report may result in payment suspension until the reports are complete. While instructions for submitting the report include a spreadsheet similar to the one MAC showed earlier this year, CMS plans to revisit the spreadsheet. CMS revisions may cause MACs overpayment demands to be high, requiring hospices to file an appeal.

Hospices should begin compiling their cap report now if they have not already done so. Shepard Mullin’s Hospice Law Blog boils the self-reporting process down to two steps: 

As currently structured, here is the new formula to be applied by the MACs (not to be used by hospices for self-reporting):

Two Step Formula:

Step 1:

Net Reimbursement + Sequestered Funds  – Total Allowances

(Total Allowances = Beneficiary Count * Annual Per Patient Allowance)

As can be seen, this formula will increase the hospice-calculated cap overpayment by the full amount of sequestration (let’s call this new number the “Inflated Cap Overpayment”).

Step 2:

The MACs will then reduce the Inflated Cap Overpayment by the following amount:

(.02) * Inflated Cap Overpayment

The approximate effect of this new sequestration policy is to require hospices to “pay back” sequestration on the portion of allowed revenue to total revenue.

There remains no legal justification to require hospices to “pay back” any portion of monies never paid to the hospice.

 

More details are available in the Hospice Law Blog here.