On March 11 and 15, the U.S. Court of Appeals for the Fifth Circuit and the U.S. Court of Appeals for the Ninth Circuit, respectively, issued near identical opinions that the HHS regulation that calculates Medicare’s hospice reimbursement “cap” on providers is invalid.

Under its current policy, Medicare reimburses providers a set amount for each day that a patient is in hospice, and after receipt of those payments, a fiscal intermediary determines the hospice cap for the relevant accounting year. Providers must then return any overpayments if it is determined that they exceeded their aggregate cap for that accounting year (though they may appeal the repayment demand).

In the cases before the Fifth Circuit, Ninth Circuit and several others, at issue is the regulation that HHS has set for calculating that aggregate amount. Statutory language requires that calculation to reflect the proportion of care that hospice patients received in previous or subsequent accounting years, but HHS put forth a regulation that counts patients only in the reporting year in which the bulk of hospice care would be expected to be provided.

In its ruling, the Ninth Circuit stated that HHS “decided to deviate from the statutory directive primarily as a matter of administrative convenience.” Additionally, the Fifth Circuit stated that “The text of the statute explicitly refers to ‘the proportion of hospice care that each such individual was provided,’ which cannot be accomplished through a single-year allocation that only seeks proportionality on the aggregate level across several years.”