Limitation on Payments for Inpatient Care

90.1 – Limitation on Payments for Inpatient Care (Rev. 246, Issued: 09-14-18, Effective: 12-17- 18, Implementation: 12-17-18) Payments to a hospice for inpatient care are subject to a limitation on the number of days of inpatient care furnished to Medicare patients. The total inpatient days reported for both general inpatient and inpatient respite care may not exceed 20% of the total Medicare days reported by the hospice for a cap year. This limitation is applied once each year, at the end of the hospice’s “cap year.” The inpatient cap is calculated by the Medicare contractor as follows: 1. The maximum allowable number of inpatient days is calculated by multiplying the total number of days of Medicare hospice care by 0.20. 2. If the total number of days of inpatient care furnished to Medicare hospice patients is less than or equal to the maximum, no adjustment is necessary. 3. If the total number of days of inpatient care exceeds the maximum allowable number, the limitation is determined by: • Divide the maximum allowable inpatient days by total inpatient days reported on the Provider Statistical and Reimbursement Report (PS&R). Multiply the resulting ratio against total inpatient care reimbursement reported on the PS&R. • Multiply the excess inpatient care days by the routine home care (RHC) rate, wage adjusted for the location of the hospice. • Add together the amounts calculated in the two bullets above to derive the total allowable payments for inpatient care. • Compare the total allowable payments for inpatient care in bullet 3 above with actual payments made to the hospice for inpatient care during the “cap period" (i.e., the cap year) in order to determine the overpayments paid to the provider. Any excess reimbursement must be refunded by the hospice. EXAMPLE: Assume that: 40,000 total hospice days x 0.20 = 8,000 = the maximum allowable inpatient care days. 10,000 inpatient care days were reported and paid to the hospice. The ratio of maximum allowable days to the number of actual days equals 8,000 to 10,000 or 0.80. Assume the total reimbursement for inpatient care revenue codes 0655 and 0656 (representing Inpatient Respite Care and General Inpatient Care, respectively) for services provided between October 1st and September 30th is $4,000,000. $4,000,000 x 0.80 = $3,200,000 = payments for allowable inpatient care days. Excess inpatient days = (10,000 actual days) – (8,000 allowable days) = 2,000. Multiply the excess inpatient care days by the routine home care rate of $192.78, wage adjusted for a hospice located in Redding, California, using the FY 2018 Wage Index value of 1.4968, leading to a wage-adjusted rate of $288.55: 2,000 x $288.55= $577,100= allowable payments for the excess inpatient care days. Add the allowable inpatient payments and the allowable payments for excess days to derive the inpatient cap: $3,200,000 + $577,100= $3,777,100= inpatient cap. Compare $3,777,100 inpatient cap with $4,000,000 actually paid for inpatient revenue codes. The hospice must refund $4,000,000 - $3,777,100= $222,900 If a provider’s covered days of hospice care or Medicare payments are adjusted through an audit or other review, the Medicare contractor may recalculate the inpatient cap if the amount is material.