MIR-2007 06A, June 2007

Medicare Program, Correction of the Hospice Cap for FYs 2003 and 2004 (CR5596)

Effective Date : April 20, 2007
Implementation Date: July 31, 2007

Background
Section 1814(i)(2)(A) of the Social Security Act (the Act) requires that Medicare payments for hospice services be subjected to an aggregate hospice cap. The hospice cap is updated annually in accordance with §1814(i)(2)(B) of the Act and provides an increase (or decrease) in the hospice cap amount. Specifically, the cap amount is increased or decreased, for accounting years after 1984, by the same percentage as the percentage increase or decrease, respectively, in the medical care expenditure category of the Consumer Price Index for all Urban Consumers. Section 418.309 42 C.F.R. set the cap year as November 1 until October 31 of the following year.

Policy
As discussed in the Medicare Claims Processing Manual, Pub. 100-04, Chapter 11, Section 80.2.3, the original cap amount of $6,500 per year is increased or decreased for accounting years that end after October 1, 1984, by the same percentage as the percentage of increase or decrease in the medical care expenditure category of the consumer price index for all urban consumers, published by the Bureau of Labor Statistics, from March 1984 to the fifth month of the accounting year. The hospice aggregate cap is applied on the basis of a cap year beginning November 1 and ending the following October 31.

In transmittal number 3977, Update to the Hospice Payment Rates, Hospice Cap, Hospice Wage Index, and the Hospice Pricer for FY 2006, it was noted that the hospice aggregate cap amount for the cap period ending October 31, 2004 published August 4, 2004 was incorrect. Also, in reviewing all published aggregate cap amounts, it was noted that the aggregate cap amount for the cap period ending October 31, 2003 published July 3, 2003 was incorrect.

For the cap period ending October 31, 2003, the incorrect amount previously published was $18,661.29. The correct cap amount for that period is $18,143.26. For the cap period ending October 31, 2004, the incorrect amount previously published was $19,635.67. The correct amount for that period is $18,963.47.

Regional Home Health and Hospice Intermediaries (RHHI), fiscal intermediaries (FI) and Medicare Administrative Contractors (A/B MAC) have been advised to recompute the aggregate cap for each provider for the cap period ending October 31, 2004 utilizing the corrected cap amount. The revised cap calculations are to be completed and the related demand letters issued by July 31, 2007.

RHHIs, FIs, and A/B MAC contractors have been advised to recompute the aggregate cap for the cap period ending October 31, 2003 for those providers whose initial cap determination is within the three-year reopening period. The date of the cap determination letter is to be used to decide if the cap is within the three-year reopening period. If a determination letter was not sent, the date the provider submitted its 2003 cap report will be used to decide if the cap determination is within the three-year reopening period. The revised cap calculations are to be completed and the related demand letters issued by July 31, 2007.