September 19, 2021

Volume XI, Number 262

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Hospice Cap Calculation Changes

Traditionally, the cap accounting year has ended October 31, putting the cap accounting year one month off of the Federal government fiscal year. In May 2015, CMS proposed to adjust the cap accounting year to end September 30 to align with the Federal government fiscal year.  This transition will occur in 2017.

To change the accounting year, CMS will cut short the 2017 cap year, assessing cap for the 2017 cap year across only 11 months from November 2016 through September 2017.

Note: Given the requirement that hospices self-report cap within five months of the end of the accounting year (42 C.F.R. § 418.308(c)), hospice cap self-reports for cap year 2017 and beyond will be due by the end of the following February.  This advanced deadline will not apply to 2016 hospice cap self-reports, which remain due by March 31.

CMS is also changing the measuring year for patient allowances.

Under the newer proportional methodology, allowances will be measured (as they are now) during the same period as revenue (so for 2017, November 1 through September 30; for 2018, from October 1 through September 30).

For those hospices still on the streamlined method, CMS is eliminating the historical allowance shift (that pushed late year admissions into the (more valuable) next accounting year).  Beginning in 2017, streamlined allowances will be measured during the same period as revenue.  So, a patient admitted on September 30, 2017 and staying on service for six months will produce 1.0 units of allowance for a streamlined hospice for 2017 cap but 0 allowances for 2018 cap.  By eliminating the shift, CMS is actually reducing total dollar allowances for streamlined hospices by keeping more allowances in prior years (where they are worth slightly less money).

Streamlined providers may realize a slight benefit during the transition years 2016 and 2017 as it appears that CMS is contemplating counting beneficiaries twice if they were first admitted to hospice care between September 28, 2016 and October 31, 2016 (a window that is now closed).

Copyright © 2021, Sheppard Mullin Richter & Hampton LLP.National Law Review, Volume VII, Number 6
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About this Author

Brian M. Daucher Business Litigation Attorney Sheppard Mullin Orange County, CA
Partner

Brian Daucher specializes in business litigation with emphasis on contract, health care, and intellectual property disputes. Mr. Daucher has represented clients in a wide range of industries including technology, consumer products, fiduciary and banking services, food and alcohol, health care, and energy.

Key Experience

  • Won $16 million arbitration award against Dentsply international for willful trademark infringement.
  • Defeated $66 million earn-out claim by seller brought against major sports clothing and equipment manufacturer.
  • Won $...
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