Latest / The Home Health & Hospice Profitability Podcast / Your Hospice Is Over Cap. Now What?

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Your Hospice Is Over Cap. Now What? · The Home Health & Hospice Profitability Podcast

0:02
SPEAKER_01: Every home health and hospice owner knows the feeling.
0:05
SPEAKER_01: Census is up, the team is working harder than it ever has, and the margin still isn't there.
0:10
SPEAKER_01: Your host has spent a career finding out why.
0:13
SPEAKER_01: Doug Walters is a CPA with a master's degree in taxation, and before that, a home health agency owner himself.
0:20
SPEAKER_01: So he's lived the problem before he built a career solving it.
0:24
SPEAKER_01: He founded Walters and Associates in 1999, and the firm has since served more than a thousand home health and hospice providers nationwide.
0:34
SPEAKER_01: Medicare and Medicaid cost reports, hospice cap, outsourced CFO work, and techs.
0:40
SPEAKER_01: It anchors the Walters Family Companies, alongside Walters Billing Solutions, running revenue cycle and denials management for agencies, and Walters Strategic Advisors Managing Wealth for the Owners who built them.
0:54
SPEAKER_01: Three companies, one obsession.
0:56
SPEAKER_01: The profitability of home health and hospice.
0:59
SPEAKER_01: Here's Doug Walters.
1:00
SPEAKER_02: Welcome back to the Home Health and Hospice Profitability Podcast.
1:03
SPEAKER_02: I'm Doug Walters.
1:04
SPEAKER_02: I'm your host.
1:05
SPEAKER_02: And I have Lisa Rivard back with me.
1:07
SPEAKER_02: Hello, thank you.
1:08
SPEAKER_02: Welcome back, Lisa.
1:09
SPEAKER_02: So excited to do another podcast on CAP.
1:12
SPEAKER_02: You know, we've had so many questions on the last one.
1:14
SPEAKER_02: Thought it'd be important to address some of the topics that we didn't address in the first so we're primarily like what's your over cap now, what, right?
1:23
SPEAKER_02: Like like what can we do?
1:24
SPEAKER_02: So let's talk about how many hospices out there are facing CAP today.
1:29
SPEAKER_00: Yes.
1:30
SPEAKER_00: Unfortunately, Doug, we're seeing more and more of that.
1:32
SPEAKER_00: We're up to about 28% of hospice agencies are over the allowable cap.
1:37
SPEAKER_02: Unbelievable.
1:37
SPEAKER_02: Yes, it is.
1:38
SPEAKER_02: I remember when a few years ago I was at some seminars and you know it was 18% and and hearing numbers like you know, 20% of hospices are are approaching CAP.
1:49
SPEAKER_02: It's like, wow, that's a big number.
1:51
SPEAKER_02: Now we're close to 30%.
1:53
SPEAKER_02: So it's it's getting worse.
1:55
SPEAKER_02: It's a major problem for our hospice.
1:57
SPEAKER_00: Yes, unfortunately, it is.
1:59
SPEAKER_02: Yep.
2:01
SPEAKER_02: So the numbers moving.
2:03
unknown: Yes.
2:04
SPEAKER_02: What do we do?
2:05
SPEAKER_02: I mean, uh, in terms of like uh let me back up and ask you this uh what kind of a dollar impact is that?
2:12
SPEAKER_00: Oh gosh, we're seeing we're seeing agencies with amounts of, you know, and and and every agency is different, you know.
2:21
SPEAKER_00: So so what what impacts one agency could be completely profound or not as profound to another hospice agency.
2:30
SPEAKER_00: So we've seen demand letters come in as as small as a few thousand dollars, and they do have to pay that back up into the millions of dollars, um, truly.
2:42
SPEAKER_00: Um so generally what we are seeing is is right around that four to six hundred thousand dollar range, is is generally what we see, what we're what we're working with.
2:50
SPEAKER_02: Yeah, and that that kind of coincides with what MedPAC's reporting.
2:53
SPEAKER_02: That's correct.
2:53
SPEAKER_02: I think based on their data in 2023, the average hospice exceeded by about 410,000 out.
3:00
SPEAKER_02: Yeah.
3:00
SPEAKER_02: Yep.
3:00
SPEAKER_02: So that's a big number.
3:01
SPEAKER_02: It's a large number.
3:02
SPEAKER_02: And when you're relying on that for payroll and everything else, and all of a sudden you get a demand letter.
3:06
SPEAKER_00: And you have to pay it back.
3:07
SPEAKER_02: You gotta pay$410,000.
3:09
SPEAKER_02: I don't know about you, but that's gonna keep me up at night.
3:11
SPEAKER_02: Yes, absolutely.
3:12
SPEAKER_02: For sure.
3:14
SPEAKER_02: So if you know it's coming, and and we talk about and we'll talk a little bit more about the fact that you know, we have a really good monitoring program at our firm for our clients, and we encourage clients that that don't outsource that to have some sort of a monitor monitoring program internally for that.
3:31
SPEAKER_02: What do you do?
3:32
SPEAKER_02: Like the how what do you do if you know that's coming?
3:35
SPEAKER_02: What are some of the things that you can do?
3:37
SPEAKER_00: So that is a great question.
3:38
SPEAKER_00: And that is where you know what I love about our program is really utilizing our monitoring report as a tool.
3:47
SPEAKER_00: So as we as we go along, so how how we monitor um in our in our firm is we monitor on a monthly basis, we monitor the current CAT period.
3:56
SPEAKER_00: So right now we're monitoring 2026 every month, and we will do so right up until the time that we submit the CAC report.
4:04
SPEAKER_00: So an agency will have a continued pulse even after the end of CAP, that close, which is coming up here on September 30th.
4:13
SPEAKER_00: But what we also do is we run all prior CAP periods, all active prior cap periods.
4:19
SPEAKER_00: We continue to monitor those as well because we are seeing movement.
4:23
SPEAKER_00: We know that there are patients still on service either with that agency or we have identified patients that are on service with another hospice agency.
4:33
SPEAKER_02: So even though the cap period's closed, they still have exposure as long as they've got patients that are alive.
4:37
SPEAKER_02: That's correct.
4:38
SPEAKER_02: Even if they're not in the hospice.
4:39
SPEAKER_00: That is correct.
4:40
SPEAKER_00: So what we talked about on our last podcast is that three-year look back window.
4:44
SPEAKER_00: And so when we are monitoring clients who are have activity or movement, um, what we call it movement from 2020, 2023, these are agencies that still have patients on surface with them, or they are somewhere else at another hospice agency, but this patient or beneficiary is being billed for.
5:06
SPEAKER_00: And the both agencies are taking a piece of that pie, so to speak, that piece of that overage, that liability.
5:13
SPEAKER_00: Both agencies are getting hit with a percentage of that patient remaining on service.
5:19
SPEAKER_00: And these just to reiterate, this generally is not caused by one patient.
5:24
SPEAKER_00: These are caused by multiple patients that remain on service for a long period of time.
5:29
SPEAKER_00: An agency now receives a demand letter from the intermediary, the Mac, and that allows that specific cap period to remain open three additional years.
5:40
SPEAKER_00: So once an agency receives a demand letter, from the date of that demand letter, it extends that cap period an additional three years.
5:48
SPEAKER_00: So a cap period uh demand letter received today would keep that cap period open now until 2029.
5:54
SPEAKER_02: So we know we have an amount.
5:56
SPEAKER_02: We know we're gonna be over.
5:58
SPEAKER_02: And one of the things that you said that I thought was interesting is you know, when you when you look at a patient that goes from our hospice to another hospice, they we may be over hospice cap, but the the hospice that so that patient's now costing us, right?
6:13
SPEAKER_02: So let's assume there's only one patient, right?
6:15
SPEAKER_02: That patient now is is we're paying back uh our what we've built on that patient because we've been over capped.
6:22
SPEAKER_02: As long as that patient continues to be on service, if we're over capped.
6:25
SPEAKER_02: The second hospice that that patient went to, they may not have a cap issue.
6:29
SPEAKER_02: And so that patient's, you know, they're getting a fraction of that patient, but it's not affecting them, right?
6:33
SPEAKER_02: So it just depends on where you are in relation to your overall length of stay to see how that's gonna really affect you.
6:38
SPEAKER_02: That's correct.
6:39
SPEAKER_02: So if we have a number, if we can project what that number is, right?
6:44
SPEAKER_02: What do we do about it?
6:45
SPEAKER_00: Like we see it coming, we're flagging it.
6:47
SPEAKER_00: Yes, yes.
6:48
SPEAKER_00: So when we see this, when we see an agency flip, so to speak, so we're monitoring these prior cap periods and we're going along, and um, we we've got um uh a a great um real life uh story to tell you here at the end of how this occurred, but we flag this, we start seeing because we see movement in these reports, we're seeing that beneficiary count number constantly eroding, especially on closed cap periods.
7:14
SPEAKER_00: We see this number decrease, which you know, it's the that beneficiary allowable is what drives your Medicare revenue.
7:26
SPEAKER_00: So the higher that beneficiary count is, you're allowed a certain amount of dollars.
7:31
SPEAKER_00: As long as you stay under that, you are good for you're good for cap at that specific time when we submit the cap report.
7:37
SPEAKER_00: But as we go along and these patients remain on service, they are eroding at that cushion, so to speak.
7:44
SPEAKER_00: And as we monitor these clients, we start seeing that cushion decrease.
7:48
SPEAKER_00: And we start flagging them and having conversations and and really it's looking at their census and identifying who their long-term patients are.
7:57
SPEAKER_00: And then the question is, well, what do we do about that?
8:01
SPEAKER_02: Right.
8:01
SPEAKER_02: So it the importance of now we know we we see it coming.
8:06
SPEAKER_02: We see it coming.
8:07
SPEAKER_02: We don't want to wait for the Mac to tell us.
8:09
SPEAKER_02: Correct.
8:09
SPEAKER_02: Because now it's too late.
8:11
SPEAKER_02: Right.
8:11
SPEAKER_02: But we we can anticipate.
8:13
SPEAKER_02: So if you have a solid monitoring program in place and we can estimate what that ultimate liability is going to be, it's so important now to build a reserve.
8:23
SPEAKER_00: Absolutely.
8:24
SPEAKER_02: So and that's what we encourage our clients to do, right?
8:26
SPEAKER_02: They're like, hey, here's the number.
8:27
SPEAKER_02: As we as we look at it today, and it could change, but but we know within a certain level of certainty, this is what your ultimate liability is going to be.
8:35
SPEAKER_02: Let's start building that reserve so that by the time it does come and you've got you know several months before it will come, you can start building and being prepared for it so that you're not caught in a situation where you can't afford it.
8:48
SPEAKER_02: That's correct.
8:49
SPEAKER_02: Right.
8:49
SPEAKER_02: Okay, great.
8:52
SPEAKER_02: So we talked about the fact that we want to file that in the last episode.
8:58
SPEAKER_02: We want to we want to file the cap array.
9:00
SPEAKER_02: Yes.
9:01
SPEAKER_02: Right?
9:01
SPEAKER_02: And the reason for that is because that's your highest beneficiary count, right?
9:04
SPEAKER_02: So just a reminder, our listeners, can you walk us through that again?
9:07
SPEAKER_00: Yes, absolutely.
9:08
SPEAKER_00: So as the um the cap report is a report at that specific time.
9:14
SPEAKER_00: So when the cap period closed as of September 30th, let's say, for example, you had 15 benefit beneficiaries on service.
9:23
SPEAKER_00: And again, those beneficiaries are have been on service with you, and they could be on service somewhere else because that's what that beneficiary count report pulls.
9:32
SPEAKER_00: So it's it's following the beneficiary, not just your agency.
9:38
SPEAKER_00: In addition with the PSNR, we're going to see continued movement in revenue from the time that the cap period closes up until the time we submit the cap report, just due to claims being, you know, submitted after the end of cap season.
9:53
SPEAKER_00: So as far as the beneficiary count goes, is uh if you remember back from the last episode, we talked about the longer a patient stays on service, they are on for X amount of days.
10:05
SPEAKER_00: They're allowed their$35,000 of allowable.
10:09
SPEAKER_00: And as they're being billed, that allowable becomes less and less.
10:13
SPEAKER_00: And as them as a beneficiary, when they cross over cap period from 26 to 27, we talked about that fractionalization.
10:22
SPEAKER_00: So you were, for example, 50% allowed in 2026, 2027 hit.
10:29
SPEAKER_00: Now you're at 50% in 2027.
10:31
SPEAKER_00: So we see that movement in that beneficiary count report once a CAP report closes.
10:38
SPEAKER_00: And why I say that is the current cap period right now, we're going to see admissions.
10:44
SPEAKER_00: So we're going to see that beneficiary count number actually go up.
10:47
SPEAKER_00: So from July's CAP monitoring report, maybe you had 10 beneficiaries on service.
10:53
SPEAKER_00: We monitored you in August, and now you've got 15.
10:56
SPEAKER_00: And we're going to monitor you again in September, and now you have 20.
10:59
SPEAKER_00: So it's the amount of admissions that is hitting this system.
11:03
SPEAKER_00: So remember, this is a billing report.
11:05
SPEAKER_00: So it's as long as agencies are billing, and we can talk about that and the effects of billing or not billing or delayed billing can can cause some confusion with CAP as well.
11:17
SPEAKER_00: But as long as everything is caught up and those numbers are hitting these reports, these reports are very, very accurate based on the run dates.
11:25
SPEAKER_00: So that beneficiary count come October 1st for CAP period ending 2026, will now start that reversal process.
11:34
SPEAKER_03: Yeah.
11:34
SPEAKER_00: And so January, if we end it at 20 in September, come January, it may go back down to you know 17 or 18 because of the lifetime, the the amount of days these patients have remained on service.
11:48
SPEAKER_02: Right, because we're only counting each patient once.
11:50
SPEAKER_00: Only counting them once, that's correct.
11:51
SPEAKER_02: So if they're split amongst multiple cap periods, it's the patient is literally split based on the days in each cap period.
11:58
SPEAKER_02: So the longer they're in subsequent cat cap periods, the fraction reduces in the first one, right?
12:06
SPEAKER_02: And it continues to reduce as long as that patient's on service.
12:08
SPEAKER_03: That's right.
12:08
SPEAKER_03: That's when we see that objective.
12:10
SPEAKER_02: So we want to we want to run this cap report that as early as possible in January because that's the highest beneficiary account you're possibly gonna get.
12:17
SPEAKER_02: That's correct.
12:18
SPEAKER_02: That's correct.
12:18
SPEAKER_02: Yep, it makes a lot of sense.
12:19
SPEAKER_02: Yes.
12:21
SPEAKER_02: Okay.
12:22
SPEAKER_02: So now we've we've got this cap exposure.
12:26
SPEAKER_02: And you know, now what?
12:29
SPEAKER_02: I mean, what what can we do?
12:31
SPEAKER_02: I mean, we're we're over capped.
12:32
SPEAKER_02: We know we're over capped, we've started to build a reserve for it.
12:36
SPEAKER_02: What other things do we look at?
12:39
SPEAKER_00: So when we talk about once once we've identified that you your agency is over capped and and we you know, and this is where it's really important to to talk to your you know, your your accountant, your CPA to really, you know, overall see how this is going to affect the financial um health of the of the agency.
13:02
SPEAKER_00: Once we identify the overage, we now want to talk about what some of the things that we can do to mitigate that.
13:10
SPEAKER_00: So we look at, we talk about the census, identifying those long-term patients.
13:16
SPEAKER_00: Are those patients, can those patients be safely discharged if they are not declining to home health or palliative care?
13:24
SPEAKER_00: We look at different types of referral sources.
13:28
SPEAKER_00: Um, if we identify a handful of patients that are coming from a specific referral source that tend to be patients who are living longer than that expected lifetime allowable, then do we look at trying to get in with an oncologist, trying to diversify our census, our mix of our senses?
13:49
SPEAKER_00: Because with CAP, is we don't want too long-term patients because that creates CAP issues.
13:54
SPEAKER_00: If we solely have short-term patients, that can create a cap flow issue.
13:59
SPEAKER_00: So it's trying to find that, you know, that sweet spot, so to speak, and and identifying approximately how many days a patient needs to remain on service with your agency and within the health of your um, you know, your census, your what you're billing.
14:17
SPEAKER_00: You know, again, we talked about um last episode, wage index and and where you're at.
14:24
SPEAKER_00: And we can identify that, right?
14:26
SPEAKER_00: It may not ultimately change the outcome as far as you know, patient admissions or definitely doesn't change how patients are being cared for, but it it gives you an awareness of what of what things are coming and what we can do to to help offset.
14:43
SPEAKER_00: And at the end of the day, if you know whatever decisions are made, you can say, well, I know exactly where this overage is coming from.
14:50
SPEAKER_00: I can identify these problems, and we've done everything that we can to mitigate um these these issues.
14:56
SPEAKER_02: Yeah.
14:57
SPEAKER_02: So so talking about census, I love to look at that.
14:59
SPEAKER_02: You know, I always tell our clients, look at your long-term care patients, right?
15:04
SPEAKER_02: Or like where'd they come from?
15:05
SPEAKER_02: Is it a referral source specifically?
15:07
SPEAKER_02: Is it a certain type of patient diagnosis?
15:13
SPEAKER_02: Like where are they coming from?
15:15
SPEAKER_02: Like, let's identify the problem.
15:16
SPEAKER_02: How do we get all these long-term patients, right?
15:18
SPEAKER_02: Because obviously we've got a lot if we're over cap, because because we're we talked about the fact that we look at it in the aggregate.
15:24
SPEAKER_02: So if if the aggregate of our patients are over cap or long-term, then we've got an issue there.
15:31
SPEAKER_02: So so educating our physicians and what's what really is a appropriate hospice admission, looking at our intake process to say, should we be accepting patients if if they don't meet criteria?
15:45
SPEAKER_02: You know, there's some underlying issue here, or maybe it's we have too many of this certain diagnosis with not enough short-term patients to offset that.
15:54
SPEAKER_02: Right.
15:54
SPEAKER_02: And so we've got to limit our exposure to that certain type of patient, right?
15:58
SPEAKER_02: So I think education is key.
16:02
SPEAKER_02: Learning from our mistakes.
16:03
SPEAKER_02: That's right.
16:04
SPEAKER_02: Right.
16:04
SPEAKER_02: So they don't continue to repeat and we take corrective action.
16:07
SPEAKER_02: Now I often have patients earned patients, yeah.
16:10
SPEAKER_02: Um, I often have clients ask me, well, what if we just discharge all the long-term patients?
16:15
SPEAKER_02: Let's walk through that.
16:17
SPEAKER_00: So discharging a lot of your patients, uh a high census of that is going to be a red flag to Medicare.
16:24
SPEAKER_00: Um and unfortunately, we have seen Medicare uh excuse me, hospice agencies go on Medicare suspension because of a high discharge rate.
16:31
SPEAKER_02: We have one right now, I think 100%.
16:33
SPEAKER_00: We are working with a client right now.
16:35
SPEAKER_00: Um and unfortunately, you know, they they think they're they're doing the right thing.
16:38
SPEAKER_00: And again, and what I what we talk to our clients is this is not um, you know, an issue of of running an agency poorly or anything is being done wrong.
16:49
SPEAKER_00: You know, when we talk about CAP, the reality is we are depending on a allotted amount of time in which end of life should occur.
17:00
SPEAKER_00: And uh a lot of times, as we're seeing with with agencies and being over 28% of hospice agencies, patients aren't following those rules, right?
17:09
SPEAKER_00: They're they're they're uh you know, they're respectfully, their their you know, care is they're put on hospice care, their prognosis can change, um, you know, they do show signs of improvement.
17:20
SPEAKER_02: And I think also, and that's interrupt, but I I you know, just to you know talk on that point, is that's why Medicare allows you to look at the aggregate, that's right.
17:28
SPEAKER_02: Still has a crystal ball, right?
17:30
SPEAKER_02: And I always tell tell, like, listen, you know, it the benefit may be six months or less, maybe four months or less, depending on where you are across the country.
17:38
SPEAKER_02: But there's certainly gonna be some patients that you think are gonna be six months or four months or less, but they surprise you.
17:43
SPEAKER_02: They're two years.
17:44
SPEAKER_02: And and I always say those are the church going patients, right?
17:47
SPEAKER_03: That's exactly right.
17:49
SPEAKER_02: They've got a great connection upstairs, and so they're hanging on, right?
17:53
SPEAKER_02: So you just don't know.
17:54
SPEAKER_02: That's why you know they let you look at it in the aggregate, because it's gonna happen.
17:57
SPEAKER_00: Exactly.
17:58
SPEAKER_00: And and that's where you know it it does, you know, when you talk about well, what should we do?
18:03
SPEAKER_00: And and the the reality is is no one knows that that finality of the erosion, but making these you know mitigations and doing the best that you can, what we want to try to is to be proactive and not reactive.
18:17
SPEAKER_00: Yeah.
18:17
SPEAKER_00: So reactive is oh my gosh, we get a demand letter.
18:21
SPEAKER_00: We're blindsided, we had no idea.
18:23
SPEAKER_00: Now we we we have to make a move.
18:26
SPEAKER_00: There, there is, I have to pay this money back.
18:30
SPEAKER_00: Proactive is we see it coming, we flagged it.
18:34
SPEAKER_00: Doesn't mean that you won't be on the receiving end of a demand letter, but we're gonna be much more prepared.
18:40
SPEAKER_00: Yeah.
18:40
SPEAKER_00: And we're gonna have all of our steps in place so that when if the demand letter comes across our desk, we can say, okay, well, remember we talked about this, we identified it.
18:50
SPEAKER_00: Agency is gonna say, yes, I've got everything ready to go.
18:53
SPEAKER_00: We're good.
18:54
SPEAKER_00: We've identified all of our issues.
18:57
SPEAKER_00: You know, let's let's go.
18:59
SPEAKER_02: And reactive would also be discharging all your patients, right?
19:01
SPEAKER_02: Like, reactive would be discharged, yes, long-term care patients.
19:04
SPEAKER_00: We don't want to do anything that's going to raise any red flags.
19:07
SPEAKER_00: We talk about high discharge uh rates.
19:09
SPEAKER_00: We we do get asked a lot about putting placing patients on charity.
19:14
SPEAKER_03: Yeah.
19:14
SPEAKER_00: Um, you know, which we kind of defer away from that suggestion.
19:17
SPEAKER_00: If if there is a payer source, which is Medicare, um, then Medicare should be billed.
19:22
SPEAKER_00: Um, Medicare could look at that as a as a sign of um, you know, avoiding cap, you know, to place patients on Medica on charity.
19:31
SPEAKER_02: So you're still taking care of the patient, but you don't have yeah, you don't have the revenue and they're still counting, right?
19:35
SPEAKER_02: So they're still counting extra cap.
19:36
SPEAKER_00: You're going to you're going to lose either way.
19:38
SPEAKER_02: So you're getting shot in both feet that time, that way.
19:40
SPEAKER_02: Yeah.
19:40
SPEAKER_02: Just not one foot.
19:41
SPEAKER_02: And and I think also the point, you know, I want to just drive home to is on the discharge discussion, is you know, we're talking from a pure for a pure financial position, right?
19:52
SPEAKER_02: So so certainly, you know, um that's one way to to avoid it if it's appropriate, but certainly high discharge rates do raise red flags.
20:02
SPEAKER_02: And the other thing is we've got to make sure that that patient care is appropriate.
20:07
SPEAKER_02: Right.
20:07
SPEAKER_02: So you don't want to dump a patient because that's gonna put you out of business, right?
20:11
SPEAKER_02: And it's not good for the patient.
20:12
SPEAKER_00: The other thing is these high discharge rates, so you discharge a patient, doesn't mean that you're off the hook.
20:19
SPEAKER_03: Right.
20:20
SPEAKER_00: So when a patient is discharged and another hospice agency picks that patient up, again, that patient based on where you are and in the health of your agency with CAP may or may not affect you.
20:35
SPEAKER_00: But if you if that patient and in the other hospice, you there are cap issues, and this patient is discharged and picked up at the hospice agency across the street.
20:45
SPEAKER_00: The hospice agency across the street has cap issues, so they're dealing with that.
20:51
SPEAKER_00: This patient is a piece of that erosion as well.
20:55
SPEAKER_00: However, they're able to bill for that patient and generate revenue.
21:01
SPEAKER_00: What happens to our hospice agency that discharged is that agency obviously is no longer billing for that patient.
21:09
SPEAKER_00: So they're not getting any revenue and they are slow, they are purely eroding.
21:13
SPEAKER_00: So we that's pure erosion.
21:15
SPEAKER_00: So these agencies that are discharging, it doesn't negate the fact that they're they're they're still going to be eroding.
21:21
SPEAKER_00: They're not bringing in any revenues.
21:23
SPEAKER_02: So then they got picked up by another hospice.
21:24
SPEAKER_00: I mean they got picked up by somewhere else, correct.
21:26
SPEAKER_00: Now, if they don't get picked up, then that is where the erosion has stopped or it's paused.
21:31
unknown: Right.
21:31
SPEAKER_00: Um, and so we talk about um, you know, if you if you can transfer a patient to a home health agency or palliative care, it's going to pause that erosion for that amount of time that that patient is with a home health or palliative care, and it's going to to stop that piece of the erosion once that patient is re-entered into your hospice agency or if they're picked up somewhere else and that starts that clock.
21:57
SPEAKER_02: So you mentioned palliative care program.
21:58
SPEAKER_00: Yes.
21:59
SPEAKER_02: So Yeah, we already discussed the fact that if you've got a a high discharge rate, you get that it's a major red flag and you can go on 100% suspension, as we've seen from other clients that have done that.
22:09
SPEAKER_02: But certainly if you look at, you know, a couple clients here, a couple of patients that you say, well, they may not be appropriate for hospice in the future.
22:17
SPEAKER_02: You know, they've they've their diagnosis have changed, or maybe they weren't appropriate from the beginning.
22:21
SPEAKER_02: Right.
22:22
SPEAKER_02: Maybe putting them into a palliative care program might be a good alternative or another home health setting.
22:27
SPEAKER_02: Yes.
22:27
SPEAKER_00: Yes.
22:28
SPEAKER_00: So we talk about really adhering to your admissions policy, right?
22:32
SPEAKER_00: So have an admissions policy to where the best that that that your your nurse, doctor goes out and does these uh eligibility checks, to the best that you can tell is that patient appropriate, hospice appropriate, meaning six months, four to three to four months if you're out on the West Coast.
22:53
SPEAKER_00: The best that you can tell it looks like they're going to pass within this amount of time.
22:57
SPEAKER_00: That's a hosp appropriate hospice patient.
23:00
SPEAKER_00: If it's determined that, oh, you know, I I I just don't know.
23:04
SPEAKER_00: And and again, you don't have that crystal ball, but it is it appropriate then to take that patient and maybe have them go into that palliative or home health program first.
23:15
SPEAKER_00: Because once you bring that patient on, that beneficiary count clock starts ticking.
23:20
SPEAKER_00: So if you if you defer from the onset and say that patient's on service with home health or palliative care for three weeks and then has to come to your agency because of decline, you've just saved your agency three work, three weeks worth of erosion.
23:35
SPEAKER_00: So again, every patient and and circumstances is obviously individualized, but those are some of the things that we talk about.
23:43
SPEAKER_00: Um making sure you are doing your eligibility checks, having your your biller do that is um really, really important so that you know what type of patient you're you're getting from the from the onset.
23:53
SPEAKER_02: Okay, so we talked about what we can do with some of the patients that are long term.
23:57
SPEAKER_02: Right?
23:58
SPEAKER_02: We we looked at, you know, looking at our emissions, I mean learning from from those experiences, looking at the diagnosis, perhaps looking for another setting that they may be more appropriate for.
24:07
SPEAKER_02: Correct.
24:08
SPEAKER_02: Maybe palliative care, maybe home health, some other things there.
24:13
SPEAKER_02: But inevitably, you're gonna be subject to this cap.
24:16
SPEAKER_02: Yes.
24:17
SPEAKER_02: And you've got this this huge number now that's coming your way.
24:21
SPEAKER_02: And I'm just putting myself in this in this scenario where we've heard from clients before, I've got a$400,000 payback, I have no money to pay it back.
24:29
SPEAKER_02: Yes.
24:29
SPEAKER_02: What do we do?
24:30
SPEAKER_00: What do we do?
24:32
SPEAKER_00: So you will receive a demand letter once once the demand letter is received from the agency, and that is determined um when the intermediary goes in, whether it's at the submission of the CAP report or any time during the year, you're going to receive a demand letter.
24:46
SPEAKER_00: And that demand letter is actually a very interesting read when you when you really read through the demand letter.
24:52
SPEAKER_00: It gives you a wealth of information.
24:54
SPEAKER_00: Most importantly, it is the revised number that the intermediary, the Mac, has determined your overage.
25:00
SPEAKER_00: Um so we have to go by that amount that is on that letter.
25:04
SPEAKER_00: And it it does put us on a little bit of a of a of a clock, so to speak.
25:09
SPEAKER_00: So we have to respond within a certain amount of time on how we're going to pay this money back.
25:13
SPEAKER_03: How much time?
25:14
SPEAKER_00: Typically, it's about two weeks from the date of the demand letter.
25:18
SPEAKER_00: So um just a just a little caveat with that.
25:21
SPEAKER_00: If if we are suspecting based on a submission of a cap report that was over, we identify, obviously, you know, we're we we know what clients those are, and we identify, hey, you really need to be on the look for this demand letter because it's going to be coming within a short amount of time.
25:40
SPEAKER_00: And generally, just general rules, NGS, you will receive your uh demand letters through NGS Connect.
25:47
SPEAKER_00: So make sure that that is being uh monitored.
25:50
SPEAKER_00: Palmetto and CGS also have portals that demand letters go to, but usually we see those come in the form of email and certified mail.
25:59
SPEAKER_02: So there's so there is certified mail, but don't don't rely on that.
26:02
SPEAKER_02: Don't rely on it.
26:03
SPEAKER_02: Because they may they're not required to do it.
26:05
SPEAKER_00: That's correct.
26:06
SPEAKER_00: That's correct.
26:06
SPEAKER_00: So once the demand letter is received and it's dated, we have generally 15 days from the date of that demand letter.
26:15
SPEAKER_00: That's why it's important to have our eye on it because if it sits in somebody's inbox for a week, now we've only got a week left to respond.
26:22
SPEAKER_01: Yeah.
26:23
SPEAKER_00: So we have a couple of options.
26:25
SPEAKER_00: So based on the amount of the demand, we can pay that amount in full, or we can look at paying the amount back over a period of time.
26:35
SPEAKER_00: Paying back over a period of time, we can do one of two ways.
26:38
SPEAKER_00: We can go through traditional loans, you know, with your bank or a third-party lender, or we can look to going through the extended repayment schedule through CMS.
26:49
SPEAKER_00: And that is uh driven by Palmetto, CMS, excuse me, CGS and NGS.
26:56
SPEAKER_00: And that you, that is an agreement that you will have with them regarding a schedule that you are going to propose on what your suggested amount is.
27:06
SPEAKER_00: We put together an initial package and send that off for approval.
27:10
SPEAKER_00: The uh ERS allows a request from six months, is the minimum up to 60 months, which is the maximum.
27:19
SPEAKER_00: We do have to adhere to the uh uh interest rate that is governed uh by the the max, and that is determined every three months.
27:29
SPEAKER_02: That's not cheap, is it?
27:30
SPEAKER_02: No.
27:31
SPEAKER_02: What's the list that you're seeing?
27:32
SPEAKER_00: Right now we're at 11.375%.
27:34
SPEAKER_02: Yes, that's a high interest rate.
27:36
SPEAKER_00: High interest rate.
27:37
SPEAKER_00: So what we talk about is again, based on the amount, there are there are agencies um just for full full full transparency that can pay a lower amount of demand in full.
27:48
SPEAKER_00: What that does is the only way that you will get away without taking a hit of that interest is paying the amount in full.
27:55
SPEAKER_00: So if you're if your amount, dollar amount on your demand letter was$36,000 and you pay that amount in full, they don't accrue any interest.
28:03
SPEAKER_00: However, that$36,000 or any amount over that that we request an extended repayment plan, six months or greater, that interest rate will be calculated into that final payment or overall payments.
28:16
SPEAKER_00: The approval process goes through is solely done by your Mac, so NGS, CGS, or Palmetto, and they have their own accountant team that looks at these financials.
28:30
SPEAKER_00: So generally speaking, any request that's over 11 months does require a full financial, uh strong financial documentation.
28:39
SPEAKER_00: Generally, we have to uh provide the intermediary with two years worth of financials.
28:46
SPEAKER_00: So generally, uh so for right now in 2026, our current demand letters are requesting um all of 25 financials, so a PL and a balance sheet.
28:57
SPEAKER_00: And we are going into the uh they want financials through the second quarter of 2026.
29:04
SPEAKER_00: And then we have to do a projection and we are projecting through the end of 2027.
29:10
SPEAKER_00: Um, along with it's it's a generally about a 50-page report that we ultimately end up turning into the into the uh intermediaries once the demand to the Mac.
29:19
SPEAKER_00: You're dating yourself intermediary.
29:20
SPEAKER_00: So um, but it is it is then up to the Mac's discretion to approve uh based on our request.
29:27
SPEAKER_00: So we can request 60 months and based on their background.
29:33
SPEAKER_00: So what what the Mac has that we don't have privy to is your is your claims.
29:38
SPEAKER_00: So they really look at your claim history and and they say, you know, uh Walter's Hospice is doing a great job.
29:45
SPEAKER_00: They they are billing consistently every single month, you know, very consistent on what we're seeing regarding um, you know, remits.
29:54
SPEAKER_00: Uh everything is just very well run agency.
29:58
SPEAKER_00: Your approval rate is going to be higher than an agency who maybe their their billing is not uh timely and there's there's lags in between billings because ultimately what will happen is once this ERS is approved, the bill the uh Mac will withhold right from your billing system.
30:17
SPEAKER_00: So you will not have to send in a check every month.
30:20
SPEAKER_00: They will just withhold from your claims that you are that you have submitted.
30:24
SPEAKER_00: Um so if there is an inconsistency with that, then the likelihood of them approving you tends to be a little bit more challenging.
30:33
SPEAKER_00: It doesn't mean that you won't get approved, it can just be a little more challenging and you may have to, you know, uh we we've seen a lot of different scenarios on on then what is requested.
30:42
SPEAKER_00: But generally that's how that goes is we we initiate a a uh request with a certain amount.
30:49
SPEAKER_00: Obviously, based on that amount is going to dictate what the agency feels comfortable with uh requesting, knowing that that loan term can get knocked down.
30:57
SPEAKER_00: So even a 36-month loan term that we request can get knocked down.
31:02
SPEAKER_00: You know, a lot of times we see that knocked down to at least half.
31:05
SPEAKER_02: Yeah.
31:06
SPEAKER_02: And and what's been our experience looking at our clients and our approval ratings?
31:09
SPEAKER_02: I mean, are you seeing 60 months routinely getting approved or 60 months is becoming tougher and tougher.
31:16
SPEAKER_00: Um, it it really is.
31:17
SPEAKER_00: Um so we we we do request the full amount based on these larger amounts that obviously are coming across.
31:24
SPEAKER_00: And I've seen it come down to I think that the most that we had recently approved was 48 months.
31:30
SPEAKER_00: And again, this this is not an approval that that we have any say so um in.
31:34
SPEAKER_00: This is definitely driven, is a financial-driven process and then the claims history, um, which kind of goes into just a little bit different of making sure, you know, when we talk about financials, um, because right now, as I said, June 30th, 2026, are financials that are being requested.
31:54
SPEAKER_00: We we cannot turn in the tax return.
31:57
SPEAKER_00: It has to be a PL and balance sheet.
31:59
SPEAKER_00: So making sure whomever's doing your financials when you have an hospice agency really should be caught up.
32:04
SPEAKER_00: Because if you're on the receiving end of especially a surprise demand letter, we've got to get these financials in.
32:10
SPEAKER_02: Yeah, very time-intensive.
32:11
SPEAKER_02: Yes.
32:12
SPEAKER_02: What if you miss a payment?
32:14
SPEAKER_00: If you miss one payment, they do give you a little bit of a grace.
32:19
SPEAKER_00: Um, what what what will happen is is they if you miss a payment, so your your claims, um, you know, if your claims were late and the Mac goes in and pulls their payment and there's not enough there, they will wait till the next time you do bill, and then they will recoup whatever balance from the what should have been withheld, and they will try to withhold the current balance.
32:46
SPEAKER_00: So sometimes people get calls from agencies saying, hey, I'm seeing different amounts being pulled.
32:51
SPEAKER_00: I thought, you know, we had a, you know, a standard.
32:54
SPEAKER_00: Once you're approved, NGS CGS Palmetto will send you an approval letter and their schedule.
33:00
SPEAKER_00: And you need to make sure that you've got those claims based on that amount that they're going to withhold every month.
33:05
SPEAKER_00: So if you see a difference in that amount every month, generally what's happening is what we find is the agency is is a little bit behind on billing.
33:14
SPEAKER_00: They're not consistent with bull billing.
33:16
SPEAKER_00: So now the Mac is going to pull whatever they can to toll that amount to make sure you don't go into default.
33:22
SPEAKER_00: So you do have one full cycle of where they will give you that grace period.
33:27
SPEAKER_00: If you could come upon that second cycle and there's not enough billing, you will get a letter that says that there will be an intent to refer to the Department of Treasury.
33:37
SPEAKER_00: Um, they may, you know, request letters and documentation as to why you know you've you've not um kept your end of the bargain.
33:45
SPEAKER_00: Um generally after that, three strikes you're out and you will go into complete default where they will suspend your payments until the full amount is recouped.
33:55
SPEAKER_02: Well, let's not get there.
33:56
SPEAKER_02: Let's not get there.
33:58
SPEAKER_02: Let's monitor this thing.
33:59
SPEAKER_02: That's right.
33:59
SPEAKER_02: Let's ex let's understand it's coming, right?
34:02
SPEAKER_02: Let's let's project our cap liabilities.
34:04
SPEAKER_02: Let's let's understand it on a monthly basis.
34:06
SPEAKER_00: Yes.
34:06
SPEAKER_02: And hopefully avoid the the punch altogether, right?
34:09
SPEAKER_02: The whole thing.
34:10
SPEAKER_02: So when we monitor, you know, I just want to touch on a few more things.
34:15
SPEAKER_02: Yes.
34:15
SPEAKER_02: What are some of the metrics?
34:17
SPEAKER_02: I mean, when we look at our CAP monitoring program, help our listeners understand some of the things that we're looking at.
34:22
SPEAKER_02: I mean, we're looking at lifetime length of stay, right?
34:25
SPEAKER_02: It's very important to trend that because as your lifetime length of stay is increasing, so is your cap exposure, right?
34:31
SPEAKER_02: Exactly right.
34:31
SPEAKER_02: That's exactly right.
34:32
SPEAKER_02: What other things are we looking at?
34:33
SPEAKER_00: We um we'd look at your admissions.
34:35
SPEAKER_00: So you we look at your first-time benefit patient uh admissions, we look at other admissions.
34:40
SPEAKER_00: So are you bringing in admissions from another hospice agency, um, readmissions within your own agency that do affect the beneficiary count?
34:49
SPEAKER_00: We um also look at your discharge trend.
34:53
SPEAKER_00: So, you know, just to touch briefly on that, when when we look at a CAP monitoring report and we look at your discharge trend, we can say from October 1st to August, September through the whole CAP year, you you discharged 20 patients with live discharges, regardless of the reason those patients were alive when they left your agency.
35:16
SPEAKER_00: Out of those 20 patients, where are they?
35:20
SPEAKER_00: Are they on with another hospice agency that could be affecting your CAP?
35:24
SPEAKER_00: That beneficiary count that we talk about.
35:27
SPEAKER_00: And if so, how many of those patients?
35:29
SPEAKER_00: So out of the 20 we discharge, maybe we identify that five patients are now on another hospice agency.
35:35
SPEAKER_00: We know that those five patients are going to affect our CAP.
35:39
SPEAKER_00: Yeah.
35:39
SPEAKER_00: And so again, there is unfortunately when they're not in our hospice agency, we don't have control over that, but that's an awareness.
35:46
SPEAKER_00: That is something that when we look at the movement in the numbers, we can say, well, we know that there's five patients that are somewhere else.
35:54
SPEAKER_00: And maybe the 15, respectfully, some of them have passed away or they have not readmitted hospice.
35:59
SPEAKER_00: So it does, again, it all of this tells a story, and we're going to try to best we can piece all of these pieces together and give you the most accurate amount of information and potential liability.
36:12
SPEAKER_00: So admissions, other admissions, your discharge trend.
36:16
SPEAKER_00: Um, we look at your payments per day.
36:18
SPEAKER_00: We look at that lifetime length of stay because again, we can identify and go along and say 22, 23, 24, your lifetime length of stay was within that six months.
36:30
SPEAKER_00: And then something happened in 2025 and we saw that lifetime length of stay jump.
36:34
SPEAKER_03: Yeah.
36:34
SPEAKER_00: What happened?
36:35
SPEAKER_00: And so a lot of times we find, you know, there's acquisitions, hospice agencies are taking on patients that are in a higher benefit period.
36:43
SPEAKER_00: Um, you know, we we hear from agencies a lot that sometimes they let their guard down and you know, they're bringing on patients and they're not necessarily doing that Medicare eligibility check.
36:53
SPEAKER_00: And so, you know, they're bringing on patients and they really haven't done their their due diligence on their patient.
36:59
SPEAKER_00: And so, you know, they're they're getting caught in that safety net and and not realizing, you know, ultimately that long-term impact that can happen.
37:08
SPEAKER_02: Yeah, we're also looking, I know some of the things that I'm I'm looking at here is the census relative to emissions.
37:14
SPEAKER_02: Yes.
37:14
SPEAKER_02: Right.
37:15
SPEAKER_02: So we're taking our our census divided by first-time admits plus half of the other admits, and lower is better.
37:22
SPEAKER_02: Lower is better.
37:23
SPEAKER_02: That is correct.
37:23
SPEAKER_02: So it's a nice, that's a nice trend.
37:25
SPEAKER_02: And the other metric that I really love is days to cap.
37:28
SPEAKER_03: Yes.
37:29
SPEAKER_02: Right?
37:29
SPEAKER_02: We're letting the agency owners understand how many days for your specific hospice in your area does it take to hit cap.
37:36
SPEAKER_02: That's exactly right.
37:37
SPEAKER_02: And we want to make sure that we're, on average, lower than that.
37:40
SPEAKER_00: That's exactly right.
37:41
SPEAKER_00: That's exactly right.
37:42
SPEAKER_00: And that's where we can identify um, you know, you know, something, something, some big change happened within a certain cap period when we start to see that that days to cap increase.
37:53
SPEAKER_00: Um, because we we can go along and say, you know, you've been consistently at that 180-day mark.
37:59
SPEAKER_00: And there are a lot of agencies that truly right are at that six month mark.
38:03
SPEAKER_00: And then for whatever reason, something happened and it pushed them, pushed them over.
38:08
SPEAKER_00: And so that's where we have those conversations of that.
38:10
SPEAKER_00: But that's a great tool.
38:11
SPEAKER_00: That's that's one of my favorite tools, is that because again, I think you lose perspective throughout the year of how long these patients really have been on service.
38:23
SPEAKER_02: Yeah, makes sense.
38:25
SPEAKER_02: So when we look at being over cap, and we talk about projecting that liability, right?
38:31
SPEAKER_02: I I think it's important for the for the listeners to to really understand how do we project that liability, right?
38:37
SPEAKER_02: And so we talk about this all the time.
38:38
SPEAKER_02: And and one of the things that we like to do is get the current active census, right?
38:43
SPEAKER_02: Like ask our agencies, let's get a current census, let's look at all of our discharges.
38:49
SPEAKER_02: Correct.
38:49
SPEAKER_02: Right.
38:50
SPEAKER_02: And if and and we don't know where they went.
38:51
SPEAKER_02: We nope.
38:52
SPEAKER_02: So if they're live discharges, we need to understand where they went.
38:55
SPEAKER_02: So maybe doing a Medicare eligibility check, for example, to really find out if they're on service somewhere else, right?
39:03
SPEAKER_02: And then uh from there, we'll we'll kind of project based on on where they are.
39:08
SPEAKER_02: So if they're below our lifetime length of stay, so we'll figure out what their lifetime length of stay is.
39:12
SPEAKER_02: Correct.
39:13
SPEAKER_02: For any patients that are still on service that are less than the lifetime length of stay, we'll estimate the number of days to get them to their lifetime length of stay because that's the average of how long the patient's gonna be there.
39:23
SPEAKER_02: Correct.
39:24
SPEAKER_02: If they're over their lifetime length of stay, now we've got a decision to make, right?
39:28
SPEAKER_02: Like how long are they gonna be on service?
39:29
SPEAKER_02: And that's where an assumption comes in.
39:31
SPEAKER_02: Is it gonna be another 30 days?
39:32
SPEAKER_02: Is it gonna be another 60 days?
39:34
SPEAKER_02: Correct.
39:34
SPEAKER_02: And then from there we just use that, those assumptions to ultimately project that what that liability is.
39:40
SPEAKER_02: Right.
39:40
SPEAKER_02: So it's a pretty good process.
39:42
SPEAKER_02: Uh and then and we find that it it comes fairly close to what it's like.
39:46
SPEAKER_02: It comes for yes, exactly.
39:48
SPEAKER_00: As as we talked about, it's you know it's the end date, and that that's when we have to bring a patient that's already over, you know, we can take that, as you said, up to a certain amount of days.
39:59
SPEAKER_00: What happens is the patient passes away before that, then that's going to change that projection.
40:04
SPEAKER_00: But let's say we bring a patient that's already over um their lifetime length of stay, and we say, uh, let's go 30 more days.
40:13
SPEAKER_00: Say he or she surpasses that and it's now on 31 day.
40:19
SPEAKER_00: So, you know, we take these projections and we do the best that we can with that, with the caveat of it's going to change one way or another if these patients come off service sooner than what we project their respectfully end date is or if they remain beyond.
40:34
SPEAKER_00: Um, but again, we are going to take that.
40:38
SPEAKER_00: So let's say that patient we estimated 30 days and is still on service day 31.
40:44
SPEAKER_00: Okay, well then maybe let's go out another 45 days.
40:47
SPEAKER_00: So we can we can play with the numbers respectfully to give an agency the the best possible, you know, kind of worst case scenario.
40:57
SPEAKER_00: Um again, it's having that pulse and having that awareness and being proactive, going, hey, this is what could happen.
41:03
SPEAKER_00: And of course, you know, anything can change from that standpoint.
41:07
SPEAKER_02: But so we talked about, you know, really concluding with with the story.
41:11
SPEAKER_02: Yeah.
41:12
SPEAKER_02: And and uh we'll call this this client Walter's Hospice, right?
41:16
SPEAKER_02: To protect the innocent.
41:18
SPEAKER_02: And this was a hospice provider that you worked with where they had a$1.2 million uh projected overrich.
41:26
SPEAKER_02: Or I'm sorry, they're$1.2 million under under cap.
41:28
SPEAKER_02: They were undercapped by like$1.2 million.
41:30
SPEAKER_02: And as we ran our monitoring services, we saw that they dropped drastically to$587 within a few months.
41:37
SPEAKER_02: Yes.
41:37
SPEAKER_02: And so that cushion significantly reduced.
41:41
SPEAKER_00: Significantly.
41:42
SPEAKER_02: And so you re you flagged it right away.
41:44
SPEAKER_00: We flagged it right away.
41:45
SPEAKER_00: We flagged it um early on, um, very early on, uh, once cat period closed.
41:52
SPEAKER_00: And what and we're and we're still actually, we just had a conversation with them um actually this this past week.
42:01
SPEAKER_00: Um the flagging of this was such a huge positive for the agency because without this, they're we're submitting a report at a million dollars under.
42:18
SPEAKER_00: That's a lot, that's a lot of money.
42:22
SPEAKER_00: Now they're half that, they eroded half of that.
42:25
SPEAKER_00: And so now they are in the proactive phase of the reality is because now they've got three years worth of erosion, they eroded$500,000 within five months.
42:37
SPEAKER_00: So the expectation if this trend continues, they are going to flip.
42:42
SPEAKER_00: They're going to flip to become over the allowable cap.
42:45
SPEAKER_00: What does that number look like?
42:48
SPEAKER_00: This is where we have those conversations of projections and looking at census.
42:52
SPEAKER_00: Um, so it is something that has been such an an amazing tool because of all the things that we just talked about, we can now look back at this report and when we when we flag this, we can say these are the identifying factors.
43:06
SPEAKER_00: And it's just been it's been very eye-opening.
43:08
SPEAKER_00: I I do think um what what we see a lot of times too, especially now we're coming to the end of a cat period, we're going to see that fractionalization happen.
43:19
SPEAKER_00: So you we're going to see movement.
43:24
SPEAKER_00: I don't want to say drastically, but we're going to see a good, a moderate amount of movement in this beneficiary count because these patients now are fractionalizing.
43:32
SPEAKER_00: They just now crossed into 2027.
43:35
SPEAKER_00: So we see that that cushion decrease.
43:40
SPEAKER_00: Um, and I again I kind of go back to the thinking of like a overdraft protection.
43:46
SPEAKER_00: So we've got overdraft protection, and the longer these patients stay on service and we hit that, um, it is going to flip.
43:55
SPEAKER_00: So this agency um is on the right path, is is definitely made some very strong strides on all the things that we've talked about, referral sources, um, getting a good mix of census.
44:07
SPEAKER_00: They have started a reserve fund.
44:09
SPEAKER_00: We've identified the patients that are um their extreme long-term patients.
44:14
SPEAKER_00: Um just continuing to have these conversations and letting them know one, they're not alone, that you know, this this is something that we are seeing and that we're there for them.
44:26
SPEAKER_00: And, you know, what whatever partnership and you know, um, you know, we're we're their biggest cheer cheerleaders.
44:34
SPEAKER_00: We're going to be there for them, we're gonna walk through the journey with them.
44:37
SPEAKER_02: I think it's important too.
44:38
SPEAKER_02: I mean, even though they're over for the first cap period, you know, they they've learned from it.
44:44
SPEAKER_02: Absolutely.
44:44
SPEAKER_02: And so that, you know, learning early and making changes corrects it so it's not over in the second cap period.
44:52
SPEAKER_02: Yeah, right.
44:52
SPEAKER_02: So we're not continuing to exacerbate the problem is so critical.
44:55
SPEAKER_02: And they're prepared for it.
44:56
SPEAKER_02: Now they've got a reserve, they're ready for it.
44:58
SPEAKER_02: And I think what what I find more times than not is that agency owners don't realize they have a cap issue until they until it's too late, right?
45:07
SPEAKER_02: Until they have a cap issue.
45:08
SPEAKER_02: And they don't even understand cap until they have a cap issue, right?
45:11
SPEAKER_02: Or until they get that demand letter.
45:13
SPEAKER_02: And you know, I think I think when they when they really dig into this and they understand the metrics, they realize yeah, you know, because when you look at the numbers, like, hey, everything's great.
45:24
SPEAKER_02: We're we have a nice profitability, we've got a great census, everything's going great, but they don't realize the effect on these these long-term care patients are having on their long-term financial stability.
45:35
SPEAKER_02: Correct.
45:35
SPEAKER_02: And so being able to identify that early is has been critical to the to the profitability of these agencies.
45:41
SPEAKER_02: And what we find is that I think even MedPAC said that the average home the average hospice is about 17.8% profitability before a cap issue, and subsequent to the cap, it drops to 1.8%.
45:55
SPEAKER_02: So it's a it's a drastic change in their profitability.
46:00
SPEAKER_02: So in order to remain profitable, we've got to remain under cap.
46:03
SPEAKER_02: That's correct.
46:03
SPEAKER_02: Yeah.
46:04
SPEAKER_02: So Lisa, it's been a pleasure.
46:05
SPEAKER_00: Thank you.
46:06
SPEAKER_02: Thank you for your time once again.
46:08
SPEAKER_00: Thank you so much.
46:08
SPEAKER_00: I appreciate it.
46:09
SPEAKER_02: Thank you.
46:10
SPEAKER_02: And I'm your host, Doug Walters.
46:12
SPEAKER_02: Thanks again for tuning in.
46:19
SPEAKER_01: Thanks for listening to the Home Health and Hospice Profitability Podcast.
46:23
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46:28
SPEAKER_01: You can also follow us on social media for more insights, updates, and practical ideas for running a stronger home health or hospice organization.
46:37
SPEAKER_01: And if you'd like to learn more about how Walters can help your agency, visit WaltersAccounting.com, Walters Billing.com, and Walters Advisors.com.