Author: Maxwell Healthcare Associates

Posted: May 30, 2023

On March 21 of 2023, CMS proposed 1787P, a ruling adjusting the hospice payment and aggregate cap. There are many nuances within this rule that will affect agencies across the country. Our Chairman and Co-Founder, Tom Maxwell, joins us on the podcast to give an overview on this rule along with his insights on the most impactful changes. 





Welcome to the MHA Corner podcast, where we talk about news and developments in the post-acute space. Today we hear from Tom Maxwell, chairman and co-founder, of Maxwell Healthcare Associates. He'll talk about the proposed rule by CMS to update Medicare hospice payments and the aggregate cap amount for the fiscal year of 2024.  


So, the 2024 routine annual rate setting changes proposed a percentage of 2.8%. It's an estimated increase of 720,000,000 in payments from 2023 to 2024. There are some reporting requirements if you don't do the quality reporting requirements, which most people do, but there are some that fail to do that. It's a four-percentage point reduction to the annual hospice payment update. If you didn't do that, it would be a 1.2 deduction. So make sure you're doing your quality reporting. If you need help with that, call us, will help you.  

The other thing that they did is they updated the hospice cap amount. So, the hospice cap amount is the amount of money that each patient can be spent on. So, cap is super important. Where Cap becomes the real challenge is when you're in a really expensive state like California or New York City, it takes a lot less time to get to the cap amount. I'll explain that here in more in a second. But the proposed hospice cap amount for fiscal year 24 is 33,396.55. That's only a 2.8% increase from the 2023 cap amount, which was $32,486.92.  

So essentially, they're not even keeping up with CPI or the rate of inflation. Essentially, Cap amount says if you admitted all your patients and they all lived longer than 100 days, you're going to get over the cap. So, we know we have lots of hospice patients that live less than 100 days. We have a lot that live longer than 100 days. So, they're going to pay your daily rate per patient and then we average those out. You can't spend more than $33,396 on average for your patients.  


So what does that mean? In California, the length of stay on a patient is a lot less because they'll hit the cap amount quicker. In South Carolina, where the payment rate is $160 versus $200, more days can be spent before you hit the cap amount.  

Medicare does this just to balance it out so that all patients don't have a long length of stay. But you have to manage Cap. You have to focus on this. If you go over Cap, meaning you spend too much money on those patients, the government will take that money back from you. So, it's an automatic deduction from your payments. So, cap is super important. Manage it, focus on it. There's tools in all of the EMRs. There's a couple of other software out there that help you manage Cap. But once you get into cap problems, it's really a challenge. So, you got to manage that. Again, this is all about the length of stay of your patient and the amount of dollars Medicare is paying you for each one of those days.  

So in California, you would hit cap on a patient at 166 days if you did that same thing in South Carolina where cap is lower or Mississippi, where it's even lower than that you could do 208 days before you did it. So, it all depends on where you live and everything else in the government is wage-adjusted and CBSA adjusted. CBSA the statistical area where you live increases or decreases the amount of money they pay you. Everything else in Medicare is wage adjusted except for this cap amount is a standard federal amount. So, they punish the people who are in the really expensive areas where it costs more to live, costs more to have nurses. California State Association, the New York State Association, along with the national association are spending time on advocacy because it's kind of an unfair advantage knowing that the benefits 180 days, you hit the cap amount a lot quicker. So, a long length of stay patient in California is really going to cause you some pain, especially like a late-stage dementia, Parkinson's disease patient. These patients are on hospice longer than a cancer patient. So you got to pay attention to it, and you got to manage it.  

Policy Number 418.312 Overview

They also introduced the hospice quality reporting program. This is policy number 418.312. Go look it up, make sure you do it. This is where they're going to introduce the HOPE, which is the hospice outcomes and patient evaluation tool. And this is looking for quality measures and healthy quality efforts. So this is a tool that they're really going to spend time on, trying to make sure that we're doing the right things in hospice. And we should be. There's lots of tools out there for you such as the Metalogix MUSE tool. There's tools inside of each one of your EMRs that will help you with this. But these are additional requirements you're going to have to answer. So, it's kind of similar to the HIS questions that we introduced a couple of years ago, but hopes that the next version will again really focus in on how much care you're providing also, how are you managing pain? All those kinds of things are where these questions are.  

The next one is the one that scares me the most. And this could cause real pain for the hospice industry. And I'm not seeing a lot of uproar in the industry about it, but I think we should be.So,o let's all work together to fix this. So it's the physician enrollment certification. So CMS proposes that physicians who order or certify hospice services or a Medicare beneficiary must be enrolled in Medicare and validly opt out as a prerequisite for payment in the hospice period of care. This is a large effort to address the hospice fraud. And so you have to be enrolled in Medicare if you're going to certify a patient in hospice. So that's one piece of it. The other piece of it is they start talking about a physician must visit the patient every 30 days. And so today we don't have physicians visiting patients every 30 days. And so that one has a lot of concern around is it the right thing to do or not? Are we going to minimize access to care? So, we're going to dive deep into this one with the policy changes to try to figure out how to streamline this or make it easier so that we don't impact access to care.  

So, if we say that your doctor at the hospital is going to visit the patient or any doctors, there's a good chance that that patient won't get on service because it's a hassle right, to increase the hassle. So concern around, that the opposite side of that. I understand when the government wants to do it, they want to make sure that we're certified by the patient's hospital, and we're continuing to look at that. So, there's got to be. An easier way to do it than having to visit the patient or having to send transportation for somebody's grandma that's lying in a hospital bed to pick her up and take her to the hospital just so the doctor can serve her. So, we're going to cause additional burdens to hospice patients if this goes through. And there's a lot of stuff around the hospice payment rate update and the proposal it needs to be for fair compensation and quality approval for the hospice industry. It's all focused on fraud and waste. Lots of patients in the industry that are in hospice for a really long period of time then get live discharged. And that's what the government's really focused on, that once a patient elects hospice, it's possible that your disease heals itself or you decide you don't want hospice anymore. There seems to be a large number of hospices that are discharging late after like 150 days and become a live discharge and then readmission later on. So, they're really focusing on that area.  

A18-02 Overview

The other area that the OIG came out and I expect it's going to hit on this as well is called “A18-02” question. The 18-02 question, where were you prior to hospice? Did you have an inpatient stay? Did you have an ER visit or were you a community referral? If you answer physician community referral, skilled nursing, assisted living, or unknown CMS now has the ability in your local states, have the ability at your physical intermittentary to audit those patients. So, they've actually publicly stated, OIG is going to do an ADR or a review of those patients for you. And my concern is that clinicians don't understand this question. They don't ask the right questions to the patient. Did you have an ER stay in the last 30 days? Did you have an inpatient event? Where were you prior to coming to hospice? That's super important to make sure we answer that question right. One and two, it's super important to make sure that our patients are hospice eligible. So, we're passing through the eligibility criteria. We're getting updated CTI, Certificate of Terminal Illness, and it's super important to make sure we're evaluating that hospice patient over and over and over to make sure that they continue to meet the requirements for hospice. 


Again, this is a proposed rule, so not a ton of impact. We got an increase, cap increase. They’ve been talking about a decrease in Cap for a long time. I think the increase that we got was not in line with inflation and kind of the CPI, but at least it's an increase, not a decrease. Please write to your congressman. Write to your senator. Tell them that the worst thing we can do is restrict patients or limit patients that can be seen in hospice. I’m still a firm believer that no patient should die alone. No patients should die alone, period. And no patient should die unless they’re hospice. This is a tragic accident. So, any patient that's sick that needs care should fall into the hospice benefit and not die on home health. Hospice provides all the medication, DME care, chaplain, social workers, spiritual care, family care, bereavement, all those things. So, it's the right place for patients to pass away. Unfortunately, we're going to lose some patients this year, but if we do, we want to make sure they're in hospice. So, get involved.  

With that said, appreciate all your time. Thank you for spending some time with us. It to us again if we can ever be of help, call us. If you have questions, call us. I'm happy to explain the rule. Talk to you very soon. Bye.  


Thanks for listening to the MHA Corner podcast. If you're interested in learning more about the proposed rule, contact us at [email protected].