Payment Matters: CMS Capitulates, Issues Ruling Granting Relief in Hospice Cap Challenges


In the face of losing multiple court challenges to the validity of the beneficiary counting methodology in the hospice cap regulation (42 C.F.R. § 418.309(b)), CMS has now acquiesced by issuing Ruling CMS-1355-R [PDF] on April 14, 2011. Under the Ruling, CMS will grant relief to any hospice provider that has a properly pending administrative appeal on this issue. The relief involves recalculating the hospice cap by prorating beneficiaries among the years in which they received hospice care, instead of counting them only in one year. CMS will also presumably seek to remand pending court cases for a similar recalculation.


As discussed in a previous Payment Matters article “Two More Courts Invalidate CMS's Regulations for Calculating Hospice Cap”, a number of United States district courts have held that CMS’s counting methodology, which counts a beneficiary only in a single year, is invalid because it is contrary to the express direction in the enabling statute to allocate a patient’s stay across multiple fiscal years “to reflect the proportion of hospice care that each such individual was provided in a previous or subsequent accounting year” (42 U.S.C. § 1395f(i)(2)(C)).

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