With the 2014 cap year just concluded, it’s time to think about the new cap calculation requirements.

Over the summer, CMS finalized its revisions to the hospice cap rule, requiring hospices beginning with cap year 2014 (just completed) to calculate and return hospice cap overpayments within a very tight window.  Hospices that fail to submit this calculation and, if applicable, repayment (or repayment plan) will be subject to suspension of all reimbursement pending completion of the report/repayment.

As a result, every hospice must give this careful attention, whether they face likely cap liability or not.

And, although CMS initially proposed to allow hospices to submit such reports immediately upon the close of a cap year, as finalized, the regulation requires hospices to use data that is derived from the PS&R system at least three months after the end of the cap year.

So for the 2014 cap year, hospices must wait until February 1, 2015 to run the necessary reports.

Hospices must then report and, if applicable, repay 2014 cap not later than March 31, 2015.

3,700 hospices therefore have a narrow window in which to query the PS&R system (not before February 1, 2015 for cap year 2014) and file the report and plan for overpayment (not later than March 31, 2015).

In our comments to CMS’ proposed rule, we noted that not all hospices are registered for, or know how to use, the PS&R system.  All hospices should now make sure that their registration is active and that their staff is educated on its proper use.

In our comments, we also noted that the PS&R system would be under severe strain when 3,700 providers submit virtually simultaneous queries after year end.  The PS&R system is known to respond slowly in times of heavy use.  It has never been put through the strain that this new tight timeline will impose.  For this reason, we recommend that hospices submit queries early in February to ensure that no matter how long the reporting takes it is likely to be in hand during the two month window.

To calculate cap using the PS&R system, providers must run two distinct reports, a cap report (called Beneficiary Count) and a Provider Summary Report (revenue report).  In our comments, we suggested that CMS automate these calculations into one function and even send hospices the cap report automatically.  CMS ignored this suggestion, leaving hospices to run both reports and make the correct technical calculations.  For instance, the Provider Summary Report must set to report revenue for the period 11/1/13 to 10/31/14.  If not set properly, the summary report will run calendar year numbers which will not be accurate.

The cap calculation is just allowances (product of provider Beneficiary Count and annual per patient allowance (2014 = $26,725.79)) LESS Net Reimbursement (as shown on the Provider Summary Report).   (Since sequestered revenue is not a “payment made” to the hospice under the statute, it is not includable in revenue subject to the cap and is excluded.)

If allowances exceed revenue, no cap overpayment exists; by contrast, if revenues exceed allowances, the difference is considered a cap overpayment and is due to be refunded to CMS.

Attached are sample Beneficiary Count and Provider Summary (Net Reimbursement) reports with the applicable numbers circled (these are for 2013, but convey the point).

CMS has said it will issue a pro forma spreadsheet for use in calculating the cap, but it has not done so.

We have prepared a basic spreadsheet that providers can use.  Due to site restrictions, we cannot post native Microsoft Excel files on the blog.  If you would like a copy of the spreadsheet, please email Doug Luther care of dluther@smrh.com for a copy.

A few important notes:

• Although many hospices have not yet received a cap letter for FY 2013, nothing in the new regulation requires that hospices report any numbers for FY 2013.  Hospices can report FY 2014 and simply wait, as usual, for the intermediaries to report FY 2013.

• Despite reporting, hospices should expect that contractors will later restate the cap position.  If a hospice has cap liability or is close as of the reporting window, then, under either method, the hospice should expect the contractor to report additional liability perhaps 12 months later.

Cap allowances are dynamic.  This is why contractors wait 12-18 months to make calculations; by then, the calculations are comparatively stable.  But CMS knows some money could be had earlier and so has insisted upon premature reporting, thus increasing burdens upon both providers and contractors.

For reference, here is the amended portion of section 418.308:

Sec.  418.308  Limitation on the amount of hospice payments.

(c) The hospice must file its aggregate cap determination notice with its Medicare contractor no later than 5 months after the end of the cap year (that is, by March 31st) and remit any overpayment due at that time. Hospices shall file the aggregate cap using data no earlier than 3 months after the end of the cap period. The Medicare contractor will notify the hospice of the final determination of program reimbursement in accordance with procedures similar to those described in Sec. 405.1803 of this chapter. If a provider fails to file its self-determined cap determination with its Medicare contractor within 5 months after the cap year, payments to the hospice will be suspended in whole or in part, until a self-determined cap determination is filed with the Medicare contractor, in accordance withSec. 405.371(e) of this chapter.