1. Hospice Aggregate CAP Reporting June 8, 2015 Copyright 2015 HBE Advisors LLC dba HC Healthcare Consulting 1

2. 2 Hospice CAP – References Beneficiary Policy Manual Chapter 9, Section 90 Copyright 2015 HBE Advisors LLC dba HC Healthcare Consulting 2

3. 3 Inpatient Limitation  Time period November 1st – October 31st.  Aggregate number of inpatient care days may not exceed 20% of the aggregate number of days of hospice care provided to all Medicare beneficiaries. Copyright 2015 HBE Advisors LLC dba HC Healthcare Consulting 3

4. 4 Inpatient Limitation  Multiply the total number of Medicare hospice days by 20% to calculate the maximum number of inpatient hospital days allowed.  If the total number of inpatient hospital days is less than, or equal to, the maximum, then no further calculation required. Copyright 2015 HBE Advisors LLC dba HC Healthcare Consulting 4

5. 5 Inpatient Limitation  If the Medicare inpatient days exceed 20%, then:  From the PS&R, calculate the ratio of maximum allowable inpatient care days to total inpatient care days, times the total reimbursement of inpatient care days.  Multiply the excess inpatient care days by your routine hospice rate for the year.  Add these two amounts together to get the total allowable payments. Copyright 2015 HBE Advisors LLC dba HC Healthcare Consulting 5

6. 6 Inpatient Limitation  To determine the overpayment, compare the total allowable inpatient care payments to actual inpatient care payments over the CAP period. Copyright 2015 HBE Advisors LLC dba HC Healthcare Consulting 6

7. 7 Hospice Aggregate CAP First aggregate CAP amount set at $6,500 per beneficiary (1983) – determined to be “well above the cost to care for a hospice patient” Copyright 2015 HBE Advisors LLC dba HC Healthcare Consulting 7

8. 8 Hospice CAP Calc Methods  Two methods for counting the number of Medicare patients –  The Streamlined Method  The Proportional Method  Look at your prior settlement  Probably on the Proportional Method Copyright 2015 HBE Advisors LLC dba HC Healthcare Consulting 8

9. 9 Streamlined Method  When a beneficiary first elects hospice and receives care from only one hospice then:  Include that beneficiary’s total CAP amount in the year beginning September 28th and ending September 27th (you count the patient one time only).  When a beneficiary receives care from more than one hospice:  Include only the fraction that represents the total number of days of care in your hospice as compared to all hospice providers for all years. Copyright 2015 HBE Advisors LLC dba HC Healthcare Consulting 9

10. 10 Proportional Method  Only that fraction which represents the portion of a patient’s total days of care in all hospices and all years that was spent in that hospice in that CAP year.  The whole and fractional shares of Medicare beneficiaries’ time in a given CAP year are then summed to compute the total number of beneficiaries served. Copyright 2015 HBE Advisors LLC dba HC Healthcare Consulting 10

11. 11 Hospice CAP Update  CAP rate is historically updated annually by the Bureau of Labor Statistics medical expenditure category of the Consumer Price Index for all Urban Consumers (CPI-U).  Beginning with accounting years starting on or after September 30, 2016 (until October 1, 2025), the aggregate CAP will be updated by the net hospice market basket index (result of IMPACT Act of 2014). Copyright 2015 HBE Advisors LLC dba HC Healthcare Consulting 11

12. 12 Hospices Exceeding The CAP MedPAC/CMS have tracked data on hospices that exceed the aggregate CAP and found that, in 2012, 11.6% of hospices exceeded the CAP. Copyright 2015 HBE Advisors LLC dba HC Healthcare Consulting 12

13. 13 Hospices Exceeding The CAP  Characteristics of over CAP hospices:  Predominantly for-profit  VERY long length of stay  VERY high profit margin (before repayment) Copyright 2015 HBE Advisors LLC dba HC Healthcare Consulting 13

14. 14 Hospice CAP Reporting  Calculation made NO SOONER than 3 months following close of CAP year (January 31st)  CAP calculation must be provided NO LATER than 5 months following the close of the CAP year (March 31st)  Use proforma spreadsheet supplied by CMS Copyright 2015 HBE Advisors LLC dba HC Healthcare Consulting 14

15. 15 Preparing The CAP Report  Use PS&R information as of January 31st (earliest date possible) to minimize any interim liability.  Keep in mind that the CAP report you prepare is only preliminary.  If the prior year has not been finalized, revisit it to determine if an additional liability exists. Copyright 2015 HBE Advisors LLC dba HC Healthcare Consulting 15

16. 16 Preparing The CAP Report The MAC will issue the final CAP report generally by October 31st of the following year. Copyright 2015 HBE Advisors LLC dba HC Healthcare Consulting 16

17. 17 Preparing The CAP Report  Identify the method used to compute your CAP:  Streamlined Method  Proportional Method  Once the Proportional Method is elected, the Streamlined Method can never be used again. Copyright 2015 HBE Advisors LLC dba HC Healthcare Consulting 17

18. 18 Preparing The CAP Report  If still on the Streamlined Method, you can elect to switch to the Proportional Method.  If you switch computations, you will revert to the Proportional Method back 3 years or to the 2012 CAP Year (November 1, 2011 through October 31, 2012). Copyright 2015 HBE Advisors LLC dba HC Healthcare Consulting 18

19. 19 Preparing The CAP Report  Using User Name and Password access IACS/EIDM  Get Beneficiary Counts - Under Miscellaneous Reports select Beneficiary Counts (CAP Report)  Streamlined Method beneficiary period (September 28th through September 27th)  Proportional Method beneficiary period (November 1, 2013 through October 31, 2014) Copyright 2015 HBE Advisors LLC dba HC Healthcare Consulting 19

20. 20 Preparing The CAP Report  Payment dates through January 31, 2015 (earliest date available)  Run reports for the prior periods as well (2012 CAP Year and 2013 CAP Year)  If on Streamlined Method, run reports for Proportional Method, as well, for comparison Copyright 2015 HBE Advisors LLC dba HC Healthcare Consulting 20

21. 21 Sample Beneficiary Count Proportional Method Copyright 2015 HBE Advisors LLC dba HC Healthcare Consulting 21

22. 22 Sample Payments Report  Using IACS/EIDM, PS&R – secure payment report. The report will automatically produce multiple year reports.  Service Dates (initial period)  November 1, 2011 – October 31, 2012  You will now get multiple year payments Copyright 2015 HBE Advisors LLC dba HC Healthcare Consulting 22

23. 23 Sample Payments Report Copyright 2015 HBE Advisors LLC dba HC Healthcare Consulting 23

24. 24 Sample Calculation Copyright 2015 HBE Advisors LLC dba HC Healthcare Consulting 24 CAP ON OVERALL MEDICARE REIMBURSEMENT 1. MEDICARE BENEFICIARIES UNDER HOSPICE CARE PER THE PS&R279.9250 a.Identify the method used for counting beneficiaries: Patient by Patient Proportional (Streamlined or Patient by Patient Proportional) b.Paid through date of report used:3/11/2015 2. STATUTORY CAP AMOUNT FOR THE CAP YEAR$26,725.79 3. ALLOWABLE MEDICARE PAYMENTS ( line 1 x line 2)$7,481,216.77 4. NET PAYMENTS PER THE PS&R$7,549,759.36 5. PAYMENTS IN EXCESS OF THE AGGREGATE CAP AMOUNT (line 3 - line 4) $68,543 THE CONTRACTOR WILL MAKE THE ADJUSTMENT FOR SEQUESTRATION AT THE FINAL CAP DETERMINATION

25. 25 Conversion To Proportional Method  Make your election prior to, or with the, submission of the report for the CAP Year.  Any conversion after the Notice of CAP Liability is issued requires PRRB Appeal to be filed. The PRRB then instructs the MAC to re-compute.  Three year look back or back to 2012 (whichever is shorter). Copyright 2015 HBE Advisors LLC dba HC Healthcare Consulting 25

26. 26 New Hospice Providers  The initial CAP calculation must cover a period of at least 12 months, but less than 24 months.  The Proportional Method is required for all hospice providers certified on or after October 2011. Copyright 2015 HBE Advisors LLC dba HC Healthcare Consulting 26

27. 27 CAP Liability  Must be remitted with CAP report (on or before March 31, 2015), or  Submit request for ERS (Extended Repayment Schedule).  Each MAC has information on their site detailing how to prepare and submit and ERS. Copyright 2015 HBE Advisors LLC dba HC Healthcare Consulting 27

28. 28 Extended Repayments  If a provider cannot pay the full amount within 30 days, they should request an ERS to prevent a 100% withhold of payments.  If the ERS, along with the first payment, is submitted within the first 15 days after receiving the demand letter, withholds may be reduced from 100% to 30% during the review process. Copyright 2015 HBE Advisors LLC dba HC Healthcare Consulting 28

29. 29 Extended Repayments  If a provider notifies the MAC within 15 days that they intend to submit an ERS request, but cannot do so within 15 days, then 30% of interim payments may be withheld.  If a complete ERS and first payment are not received within 30 days, then 100% of payments will be withheld. Copyright 2015 HBE Advisors LLC dba HC Healthcare Consulting 29

30. 30 Extended Repayments  A provider can request a 60-month repayment, but any ERS request greater than 36 months will be forwarded to CMS for approval. Copyright 2015 HBE Advisors LLC dba HC Healthcare Consulting 30

31. 31 Request For ERS  Information Needed:  Signed amortization schedule  First installment payment  Balance sheets, income statements, most recent and last complete year  Cash flow statements for the period covered by the balance sheet  Sources and application of funds for the periods covered by the income statements  Projected cash flow statements covering the remainder of the fiscal year and, perhaps, the following year Copyright 2015 HBE Advisors LLC dba HC Healthcare Consulting 31

32. 32 Request For ERS  Information Needed - continued:  Investments  Notes and mortgages payable  Related-party transactions and balances  Loan application and denial letter from bank  Occupancy  Copy of the overpayment demand letter  Copy of the MAC’s request form Copyright 2015 HBE Advisors LLC dba HC Healthcare Consulting 32

33. 33 Hospice CAP Monitoring  Length of stay trends should be monitored:  Track average lengths of stay based on discharges.  Track current months admissions/months average daily census.  If the number goes down, the average length of stay is going up. Copyright 2015 HBE Advisors LLC dba HC Healthcare Consulting 33

34. 34 Settlement Process  CAP Report to be submitted on or before March 31st.  MAC acceptance of the submitted CAP Report and issues demand for overpayment, if payment not made with report.  MAC review of final CAP (expected approximately 10-12 months after end of CAP Year).  MAC ongoing review of CAP for 3 years. Copyright 2015 HBE Advisors LLC dba HC Healthcare Consulting 34

35. 35 Questions Copyright 2015 HBE Advisors LLC dba HC Healthcare Consulting 35

36. 36 Contact Information  Kenneth E. Hooper, CPA/CFF, CFE, CHC 3597 E. Monarch Sky Lane Suite F240 Meridian, ID 83646 (208) 489-2538 khooper@hbeadvisors.com Copyright 2015 HBE Advisors LLC dba HC Healthcare Consulting 36

37. 37 Contact Information  Leia Neely 3597 E. Monarch Sky Lane Suite F240 Meridian, ID 83646 (208) 489-2540 lneely@hbeadvisors.com@hbeadvisors.com Copyright 2015 HBE Advisors LLC dba HC Healthcare Consulting 37

38. 38 Contact Information  Amy Bailey, CHC, CPC, COC (CPC-H), CPC-I, CCS-P 3597 E. Monarch Sky Lane Suite F240 Meridian, ID 83646 (208) 489-2539 abailey@hbeadvisors.com Copyright 2015 HBE Advisors LLC dba HC Healthcare Consulting 38

39. 39 Contact Information  Timothy P. Eaton, MBA, MAJ (Retired) 3597 E. Monarch Sky Lane Suite F240 Meridian, ID 83646 (262) 443-0265 teaton@hbeadvisors.com Copyright 2015 HBE Advisors LLC dba HC Healthcare Consulting 39