Hospice Series Part 2 | Hospice Cap: Streamlined or Patient by Patient?

Two Methods for Calculating Medicare Hospice Cap.

There are now two methods for calculating the Medicare Hospice Cap: Patient-by-Patient and Streamlined Methodology.  I’ve read through the regulations multiple times; read through industry publications as well and I’m curious as to which direction agencies will choose to go in 2012.

We talked about the differences between the two caps during the webinar we hosted on 12/13/11.  At the risk of repeating ourselves a bit, please allow me a moment to go through a short explanation of each.

Note: For the purposes of the streamlined cap calculation, Medicare defines the cap period as September 28th through September 27th.  For the purposes of the patient-by-patient methodology, the cap year is defined as November 1 through October 31st.

Under this method a hospice reports in its number the fraction that represents the portion of a patient’s total days of care in all hospices and all years that were spent in that particular hospice during that cap year. This would be calculated using the best data available at the time of the calculation.  Whole and fractional numbers of beneficiaries would be added together to identify the total number of Medicare beneficiaries’ served by the hospice during the cap year.  When a patient is on service and discharges during a single cap year this is fairly straight forward.  The larger impact occurs when a patient spans cap years.  For example, the FY2012 cap year began on November 1, 2011.  Any patient that was on service as of 10/31/2011 and remained on service as of 11/1/2011 would be spanning cap years.  That being said, when a patient spans cap years, using this methodology a fractional share of Medicare beneficiary would be accounted for in each year, depending on the days that they provided care to the patient.

Streamlined Methodology
This is the “current” methodology.  In the streamlined methodology a beneficiary is counted only once, for cap purposes, in only one cap year even if their stay in hospice spans more than one cap year.  This methodology is based on patients who have not been counted in previous cap reporting periods.   Using a similar example as the one above, if the beneficiary was on service as of 9/27/2011 and remained on service as of 9/28/2011, they would be counted in one of the two years, but not both.  The only time a proportion of the hospice cap would be accommodated is when the patient has received care from more than one hospice agency.  In that case, the agencies would appropriately report the percentage that represented the beneficiary within each organization’s cap report.  For example, if the patient was on-service at Hospice Agency A for 40 days and 60 days at Hospice Agency B; the first would report 40% and the second would report 60%. This would be estimated using the best data available at the time of reporting.

The Patient-by-Patient methodology is one that will be assigned for FY2012 however agencies have the ability to elect to utilize the Streamlined Methodology.  Agencies that choose to utilize the Patient-by-Patient methodology will not be able to revert to the Streamlined Methodology at a later date.  This is due to concern that there could be over-payments and calculation issues if switching back and forth were to be allowed.  In addition, all newly certified agencies will automatically have their cap calculated using the Patient-by-Patient methodology. This in effect, is the “new” cap calculation.

CMS has indicated that hospices can make a one-time election to utilize the Streamlined Methodology. The election would remain in effect until the hospice submits a written election change to the patient-by-patient methodology OR the hospice appeals the streamlined methodology. The election must be made no later than 60 days after the receipt of the 2012 cap determination. The open period began on 10/1/2011 and will continue until 60 days after the 2012 cap is published.

The good news is, there is a choice.
We don’t often get those. I’ve been thinking about how I might determine which cap method to adopt.  Perhaps the only way possible: Look at historical data and identify for perhaps the last 3 years how my cap might be affected with each approach. How do you plan to make your decision? Or have you already made one? If you have made a decision, have you made your election yet or are you waiting till later in the year?