Updates to the Cap Amount

90.2.5 – Updates to the Cap Amount (Rev. 11056; Issued: 10-21-21; Effective: 10-01-21; Implementation: 12-22-21) The aggregate cap amount was set at $6,500 per beneficiary when first enacted in 1983. Since 1983, the $6,500 amount has been adjusted annually by the change in the medical care expenditure category of the consumer price index for urban consumers (CPI–U, United States city average), published by the Bureau of Labor Statistics, from March 1984 to the fifth month of the cap year, as required by section 1814(i)(2)(B) of the Act. Section 1814(i)(2)(B)(i) and (ii) of the Act, as added by section 3(b) of the Improving Medicare Post-Acute Care Transformation Act (IMPACT Act) of 2014 (Pub. L. 113– 185) requires, effective for the 2016 cap year (November 1, 2015 through October 31, 2016), that the cap amount for the previous year to be updated by the hospice payment update percentage, rather than the original $6,500 being annually adjusted by the change in the CPI–U for medical care expenditures since 1984. This provision would have sunset for cap years ending after September 30, 2025, at which time the annual update to the cap amount would have reverted back to the original methodology. However, division CC, section 404 of the Consolidated Appropriations Act, 2021 (CAA 2021) has extended the accounting years impacted by the adjustment made to the hospice cap calculation until 2030. Therefore, for accounting years that end after September 30, 2016 and before October 1, 2030, the hospice cap amount is updated by the hospice payment update percentage rather than using the CPI–U. This provision will sunset for cap years ending after September 30, 2030, at which time the annual update to the cap amount will revert back to the original methodology. In those situations where a hospice begins participation in Medicare at any time other than the beginning of a cap year, and hence has an initial cap calculation for a period in excess of 12 months, a weighted average cap amount is used. The following example illustrates how this is accomplished. EXAMPLE (Cap amounts utilized in this example are for illustrative purposes only and do not reflect actual cap amounts.) 09/01/18 - Hospice A is Medicare certified. 09/01/18 to 10/31/19 - First cap period (13 months) for hospice A. Statutory cap amount for first Medicare cap year (09/01/18 - 09/30/18) = $28,000.00 Statutory cap amount for second Medicare cap year (10/01/18 - 09/30/19) = $28,500.00 Weighted average cap amount calculation for hospice A: One month (09/01/18 – 09/30/18) at $28,000.00 = $28,000.00 12 months (10/01/18 - 09/30/19) at $28,500.00 = $342,000.00 13 month period $370,000.00 divided by 13 = $28,461.54 (rounded) In this example, $28,461.54 is the weighted average cap amount used in the initial cap calculation for Hospice A for the period September 1, 2018, through September 30, 2019. NOTE: If Hospice A had been certified in mid-month, a weighted average cap amount based on the number of days falling within each cap period is used.