Home Health & Hospice Week

Tip: Maintain your own database to manage your cap status.

If you were having trouble anticipating your risk of exceeding the hospice cap under the old methodology, you’ll have even more difficulty managing your cap exposure under the new one. But although the new method is much more complicated to track, it’s not impossible.

Recently, more hospices are running into problems regarding the cap, says Rick Ingber of VantaHealth Consulting, LLC. And perhaps the best solution is to take a proactive approach.

Background: The Centers for Medicare & Medicaid Services has slowly transitioned the method in which your hospice cap is calculated, changing over from the old "streamlined" methodology to the new "proportional" method (see HCW Vol. 20, No. 37). "Objective analysis suggests that virtually all hospices can benefit from the proportional cap calculation because, over time, they will be able to serve more patients with less risk of incurring cap demands," notes Solstice Healthcare.

Despite the general consensus among industry leaders that the new cap method is a boon for hospices -- with fewer legal challenges than the old methodology -- you may run into problems calculating your cap vulnerabilities under the proportional method.

Tracking Your Cap Isn’t Any Easier

Bad news: Unfortunately, CMS does not provide an easy way for you to track your cap status during the cap year under the new proportional method. At the end of the cap year, you’ll receive an official "cap letter" detailing in a report your Medicare hospice beneficiaries and how much you went over or under the cap, Ingber explains. This cap letter doesn’t assist you in anticipating your cap status, because it’s an after-the-fact report, meaning the damage is already done.

CMS does provide another report -- which you can obtain the same way as the PS&R report -- that includes a running total of beneficiaries, but it contains no details to back up that total, Ingber says. Ultimately, this running total is not very helpful in managing your cap.

Track Your Cap & Do The Math (The Proportional Way)

Strategy: Without a helping hand from CMS, you’ll need to somehow track your cap exposure yourself. Ingber suggests that you maintain your own database or spreadsheet to track all your Medicare hospice beneficiaries.

In your spreadsheet, you would need to include for each beneficiary:

• The number of days your hospice is billing Medicare for this cap year (a running total); and

• The total number of days of hospice care that the patient received (for this cap year and previous cap years).

Example: Say this cap year, your patient "Mr. Jones" had 365 days of hospice service, and 365 days of hospice service in the previous cap year. So you would take the number of days this cap year, and then divide it by the number of total days for this cap year and the previous cap year (365 / 730 = 0.5). Mr. Jones would count as one-half (½) patient.

Using the old method, Mr. Jones would count as one whole patient. So, here you can see the stark difference between the calculation outcomes of the two methods.

Remember: In your total days (the denominator), you must include the number of days of care from any other hospice where the patient received services, Ingber says.

Then, you would multiply your total number of hospice patients by the annual cap amount. Compare the result with your total Medicare reimbursement for claims during the cap year to see if you exceeded the cap or remained under it. If you went over the cap, of course, the difference between the cap calculation and your reimbursement is what you would need to pay back to Medicare.

Also, remember that you’re working with a cap year that has different start- and end-dates than your fiscal year. The federal government defines the hospice "cap year" as Nov. 1 through Oct. 31. The cap year applies for all "services rendered" between those dates, explains the National Hospice and Palliative Care Organization.

Not Always Black & White

Hard part: "For a patient who remains on service past the end of a cap year, this calculation is constantly changing as days in subsequent cap years also enter into the calculation," Ingber relates. "So the difficult part is when you don’t know how many days a patient may continue to receive hospice care after the end of the cap year."

Additionally, hospices need to learn to "manage the cap" while remaining compliant and ethical, according to the National Alliance for Hospice Access. The NAHA recommends that you look at these five crucial elements for your short- and long-term planning:

1. Ensure you have superb clinical, compliance and admissions leadership, standards and systems;

2. Elect the new proportional cap methodology at the right time;

3. Install systems and metrics that allow you to understand, monitor and forecast your patients’ actual and expected lengths of stay, and your cap trends;

4. Develop a marketing plan with explicit admissions mix, LOS and cap targets; and

5. Get professional advice and hands-on help before you need it, including legal, systems, regulatory and financial.

Bottom line: Under the new hospice cap methodology, you need to deal with your cap exposure now -- not two years from now, Ingber stresses.