5th and 9th Circuits Rule the HHS Hospice Cap Invalid

Following a December challenge in the Northern District of Texas, the ninth circuit (Los Angeles Haven Hospice, Inc. v. Sebelius, No. 09-56391 (9th Cir. Mar. 15, 2011)) and the fifth circuit (Lion Health Servs. V. Sebelius, No. 10-10414 (5th Cir. Mar. 11, 2011)) have both ruled that the hospice cap regulation (42 CFR 418.309(b)) is unlawful and must be set aside as it conflicts with the unambiguous statute requiring a proportional versus a single-year allocation method for the hospice cap. 42 USC 1395(i)(2) requires the amount of payment made for hospice care provided by (or under arrangements made by) a hospice program for an accounting year may not exceed the “cap amount” for the year multiplied by the number of Medicare beneficiaries in the hospice program in that year. The “number of Medicare beneficiaries” is defined as the number of individuals who have made an election with respect to the hospice program and have been provided hospice care by (or under arrangements made by) the hospice program in the accounting year, such number reduced to reflect the proportion of hospice care that each such individual was provided in a previous or subsequent accounting year or under a plan of care established by another hospice program. The corresponding regulation, 42 CFR 418.309(b), provides that the hospice cap amount is calculated by multiplying the adjusted cap amount by the number of Medicare beneficiaries who elected to receive hospice care from that hospice during the cap period. According to the 9th Circuit appeals court, “The regulation is at odds with the plain language of the statute in that it omits the individualized proportional allocation calculation expressly called for in the statute, and substitutes an ‘alternative’ that HHS considers more convenient and less burdensome.”

For more information regarding hospice providers please contact Abby Pendleton, Esq. or Jessica L. Gustafson, Esq. at (248) 996-8510 or (212) 734-01218 or visit the HLP website.