Home Health & Hospice Week

CMS could retroactive lower cap for 2004, triggering overpayments.

Hospices whose reimbursement is limited under Medicare's per-beneficiary cap have received bad news.

The Centers for Medicare & Medicaid Services has issued updated payment rates for hospices for fiscal year 2006, which will take effect Oct. 1. Next year's rates will increase 3.7 percent over current levels.

But the per-beneficiary cap for 2005 is $18,963.47, CMS has announced. That's $672.20 less than the previous year's amount, notes hospice chain Odyssey HealthCare Inc.

The drop comes because 2004's cap was "incorrectly computed," CMS says in Transmittal No. 644 issued Aug. 19 (CR 3977). CMS plans additional instructions regarding the mistake in a future transmittal, the agency says.

Translation: If CMS lowers its per-beneficiary hospice cap for FY 2004 due to the calculation problem, some hospices could face retroactive overpayments going back to last year.

National Hospice and Palliative Care Organization members are "anxious" about the announcement, NHPCO's Judi Lund Person tells Eli. CMS hasn't released the details of how the 2004 cap is incorrect, but has maintained that the hospice regulations allow the agency to either raise or lower the cap, Person reports.

While CMS maintains its 2005 cap figure is correct, it has never lowered the cap before, Person notes.

Cap Affects More Hospices as Patient Mix Changes

The hospice cap figures more prominently as hospices' patients trend more toward longer-term, non-cancer diagnoses. "As we go forward and see the patient mix for hospices continue to change, the cap will become an increasingly important issue for all hospices to consider," says John Mahoney, principal of the Summit Business Group in Penfield, NJ.

NHPCO estimates less than 10 percent of the nation's roughly 2,450 Medicare-certified hospices have reimbursement limited by the cap, Person says.

While that's a relatively small number, "there are some hospices who have had significant problems with the cap already," Mahoney points out. "Even a small reduction for either year could add significantly to their woes."

Hospice chains Odyssey and VistaCare Inc. are two such organizations. "Both VistaCare and Odyssey have struggled with Medicare cap issues impacting financial results," notes Wall Street analyst Legg Mason in a bulletin to investors.

Companies protest: But they aren't taking the news lying down. Odyssey believes there is an error in CMS' calculation and has submitted data to the agency accordingly, the Dallas-based company says in a release.

Scottsdale, AZ-based VistaCare also believes the cap amount is incorrect, and "is currently working with CMS and ... NHPCO to get clarification on the calculation of the hospice cap amount," it says in a release.

The "negative" Medicare cap drop will dog hospices "until further clarification is issued," Legg Mason says. That could take a while - possibly until after the start of the fiscal year, Oct. 1, Person warns.

Heads up: In FY 2006, hospices also will switch to the new Core-Based Statistical Area (CBSA) for wage index. CMS has set a 50 percent phase-in to the CBSA designations (see Eli's HCW, Vol. XIV, No. 28, p. 221).

Hospice payment rates for FY 2006 are $126.49 for routine home care; $738.26 ($30.76 hourly) for continuous home care; $130.85 for inpatient respite care; and $562.69 for general inpatient care.

Note: The transmittal is at www.cms.hhs.gov/manuals/pm_trans/R655CP.pdf.