Palmetto GBA, LLC, Accurately Calculated Hospice Cap Amounts but Did Not Collect All Cap Overpayments

To ensure that hospice care does not exceed the cost of conventional care at the end of life, there are two annual limits (called caps) to payments made to hospices. Hospices that receive claim payments exceeding the cap amounts must repay the difference (overpayment) to Medicare. The Centers for Medicare & Medicaid Services (CMS) contracts with four Medicare administrative contractors (MACs) to calculate cap amounts and recover associated overpayments. We selected Palmetto GBA, LLC (Palmetto), one of the four MACs, for our audit because it had the highest number of hospices in its jurisdiction during our audit period of cap year 2017. OIG has not performed previous work related to the hospice caps. When a beneficiary receives hospice services in more than one cap year, the beneficiary count is allocated to each cap year based on the percentage of total hospice days that occurred in each cap year. For the second cap year, Palmetto must adjust the previous year’s (i.e., the first cap year that hospice service was provided) cap calculation if the beneficiary count has changed. If a beneficiary continues to receive hospice care into a third cap year, Palmetto must adjust the cap calculations again for both previous cap years so that each beneficiary is counted only one time for his or her total hospice days. The process of redetermining the cap calculations based on the change in beneficiary counts for previous years is referred to as a “lookback.” Palmetto calculates each hospice’s aggregate cap amount for a specific cap year a total of four times, consisting of the initial cap calculation year and three lookback years. For example, the initial cap calculation for 2014 was performed after the 2014 cap year had ended. For cap year 2015, Palmetto performed a lookback of 2014. For cap year 2016, Palmetto performed lookbacks of 2015 and 2014. For cap year 2017, Palmetto performed lookbacks of 2016, 2015, and 2014. After the third lookback, Palmetto will not review the cap calculation for the initial cap year again. As a result, the 2017 cap calculation was the final lookback at 2014. A hospice is expected to repay cap overpayments promptly. If a hospice cannot repay a cap overpayment immediately, it may submit an Extended Repayment Schedule (ERS) request to Palmetto. If approved, a hospice may receive up to 60 months to repay an overpayment. Palmetto may approve ERS requests up to 36 months, but CMS must approve ERS requests for 37 to 60 months. If a hospice does not make ERS payments, Palmetto classifies the debt as currently not collectible and refers the debt to the Department of the Treasury. According to CMS, debt that is currently not collectible is unlikely to be collected.