Hospice Reimbursement Caps Challenged in Supreme Court Petition

Forcing hospices to pay for Medicare patients’ care without being reimbursed is unconstitutional, according to one hospice agency in Arkansas.

Southeast Arkansas Hospice Inc. (SEARK) claims it is a constitutional violation to mandate that hospices care for Medicare patients after the government has reached its annual Medicare reimbursement limit, saying in a petition to the U.S. Supreme Court that the practice involves an illegal taking of private property and consequently violates the Fifth Amendment.

Earlier this year, an Arkansas district court and the Eighth Circuit court ruled that SEARK, which operates two hospice locations in Arkansas, must keep caring for Medicare patients, even after the government has hit its annual reimbursement limit. Because SEARK voluntarily entered into the Medicare agreement, the government did not illegally take private property, the courts found.

Entering into a voluntary contract does not mean an agency can be forced to subsidize patients who cannot legally be discharged and whose care Medicare won’t cover, SEARK now argues in its petition. “The government is requiring SEARK to subsidize the care of terminally ill hospice patients for an unlimited number of days in exchange for the right to be in the Medicare hospice program,” SEARK explains.

The main purpose of the Takings Clause in the Fifth Amendment is to prevent the government from forcing some people to bear public burdens alone that in all justice and fairness should be borne by the public as a whole, SEARK says, arguing that subsidizing hospice care for Medicare is a public burden.

“Beyond all other needs this is a burden to be borne by the public, not a single operator,” the petition states.

Meanwhile, the government can’t determine the value of a day of hospice care and then dismiss that value after it has reached the annual limit Medicare can pay the hospice, SEARK argues, calling to mind the Supreme Court’s 2015 ruling in Horne v. U.S. Department of Agriculture.

“In Horne the government calculated and thereby established the fair market amount of just compensation, just as the government herein calculated and established the value of a single day of hospice care,” SEARK says. “The government cannot now disavow that valuation.”

SEARK, meanwhile, couldn’t avoid surpassing the cap because the government never told the agency when it had been reached, SEARK says. As opposed to denying claims, the government keeps paying the hospice and later sends “exorbitant demands for reimbursements,” SEARK says.

“A hospice like SEARK enters the program as something of an expert at providing hospice care but usually not an expert at the Medicare hospice billing program, how they will be paid for services rendered and how the payment system will work against their ability to make a profit providing hospice services to mostly Medicare patients, given that the program is the largest purveyor of hospice services in the country and most hospices operate with a majority of their patients being Medicare hospice patients in their facility,” SEARK says.

Written by Mary Kate Nelson