When one “elects” to have the statutory Patient by Patient Proportional method used in determining the CAP for payment by Medicare for hospice services in a cost reporting year, that election is permanent and the hospice CAP will be calculated by that method for all subsequent years.

Currently, and in past years, CMS has its contractors calculate the hospice CAP using what is called the “streamlined” methodology. Several years ago, hospice providers began filing suit alleging that the stream-lined methodology of calculation was not in compliance with the statutory requirement. The statutory language supports the more exact Patient by Patient proportional method.

CMS, in response to those lawsuits, drafted ruling 1355-R that allows the contractors to use the “stream-lined” method unless the provider elects to have the Patient by Patient Proportional method used instead. Once a provider elects the Patient by Patient Proportional methodology, all subsequent cost years will be calculated by that method.

The “election” method is not specified, however, and it is presumed that when one appeals to the PRRB citing abuse by the Fiscal Intermediary for using the “stream-lined” method, one will begin receiving calculations using the Patient by Patient Proportional method.

Depending on the particular factors in your hospice, one method of calculation may be more beneficial than the other.

If you need assistance understanding the concept of hospice CAP and related regulations, consult our reputed Dallas healthcare lawyer for guidance.