Using Data to Manage the Hospice Cap

Janice Mitchell, Communications Specialist at Axxess

Hospice leaders are responsible for the health and well-being of both their patients and their organization. From a financial perspective, this includes minimizing risk by managing spending and the hospice cap.

Defining the Hospice Cap

The cap is designed to ensure that hospice care does not exceed the cost of conventional medical care at the end of life. The allowable amounts are limited by two things: an annual limit per beneficiary and the number of beneficiaries served. Any amount paid to a hospice for its claims that exceeds the cap is considered an overpayment and must be repaid to Medicare.

The fiscal year 2023 hospice cap amount increased by 3.8% from the prior year. The recommendation from the June 2023 MedPAC report is for Congress to update the Medicare base payment rates by the amount specified in current law with a wage adjustment, in addition to reducing the hospice aggregate cap by 20%.

Minimize the Risk of Overpayment

“I was thinking specifically about the Medicare payment and cap rate, and [these are] some of my favorite hospice solution features that I wish I would have had as an operator to minimize my risk – outside of spiral bound notebooks,” said Christina Andrews, Senior Director of Professional Services at Axxess.

Reports on the topics outlined below can help organizations minimize their risk of overpayment:

•  Cap Statistics Report: This type of report calculates allowable Medicare payments, estimates how much revenue is under or over the cap, estimates Medicare beneficiaries and provides the total number of Medicare inpatient days and the maximum inpatient days.
• Median and Average Length of Stay Reports: These reports generate the median and average length of stay for the specified date range. This information helps organizations determine if there is an opportunity to create a balanced length of stay.
• Referral Report: This type of report generates a list of all patients and referrals entered into the system, which also helps balance the length of stay.

How to Balance Length of Stay

Andrews encourages hospice organizations to develop a strategy to balance the average length of stay for their patients. Hospices above the cap admit fewer patients per year and have significantly longer stays and higher discharge rates than hospices below the cap. The following activities can be included in the plan.

• Have daily cap calls to report on daily activity toward goals.
• Assess community needs on an ongoing basis to grow market share and penetration.
• Create a brand and identify key messages to convey based on community needs and how your organization solves them.
• Develop marketing and sales strategies based on referral and admission data.
• Establish weekly admission goals by referral partner.
• Use needs-based selling that highlights the value proposition of the services provided.
• Create a diversification strategy to impact the referral mix and stay within national benchmarks.

Using Business Intelligence

Andrews also recommends the use of business intelligence dashboards to create a road map to success. Useful key performance indicators include:

• Medicare Beneficiaries
• Average Length of Stay
• Media Length of Stay
• Referrals by Referral Partner
• Inpatient Days as a Percentage of Total
• Admissions by Benefit Period
• Admissions by Primary Diagnosis
• Live Discharges by Reason
• Benchmark Against Self
• Benchmark Against National

“Be very cautious of information overload,” Andrews said. “This is the excess of information available to a person aiming to complete a task or make a choice. Managing cap risk is a daily task driven by strategy and the metrics that matter.”

Axxess Hospice, a cloud-based hospice software, includes tools such as intuitive medication management and real-time plan of care updates as outlined above to help keep organizations compliant.

Disclaimer: Axxess is a 2023 Strategic Partner of NHPCO. All views expressed in this blog are the author’s own and do not represent the view of NHPCO.