Medicare reimbursement caps for hospice constitutional, court rules

Medicare's payment cap for hospice treatment doesn't violate a clause of the constitution meant to protect private property rights, a federal appeals court ruled on Thursday.

Southeast Arkansas Hospice Inc., a Helena, AK-based nonprofit hospice provider, argued that Medicare's reimbursement cap counted as an “unconstitutional taking” — a situation where government regulations force private property to be used without compensation — and violated the Takings Clause of the Fifth Amendment.

The provider's argument stemmed from being required to provide care to patients, despite them reaching Medicare's hospice reimbursement cap. That lack of federal compensation for its continued hospice services counts as unconstitutional taking, Southeast said.

In its decision, the U.S. Court of Appeals for the Eighth Circuit ruled that unconstitutional taking relied on three factors: “the character of the governmental action, its economic impact and its interference with reasonable investment-backed expectations.”

The reimbursement cap did not pass the unconstitutional taking test, the court ruled, because it “allocates the government's capacity to subsidize healthcare,” and because Southeast couldn't prove that the cap prevented it from conducting business.

Southeast also voluntarily agreed to become a Medicare hospice provider and adhere to the program's regulations for hospice, the court ruled.

“This voluntariness forecloses the possibility that the statute could result in an imposed taking of private property which would give rise to the constitutional right of just compensation,” Judge William Benton wrote in the ruling, citing a previous unconstitutional taking case.