Hospital Outpatient Billing for Hospice Patients: When the Hospice Payment Already Covers the Care

Hospital outpatient billing for hospice patients depends on whether the service treats the terminal illness or related conditions, which fall within the hospice’s payment responsibility. If your hospital bills Medicare separately for care the hospice already covers, you may see the problem from the billing desk. The service took place. The question is why Medicare received another bill for care its hospice payment was supposed to cover.

When Hospice Outpatient Services Relate to the Terminal Condition

Hospice outpatient services related to the terminal condition belong in the care Medicare already pays the hospice to provide. That responsibility includes related conditions, even when the hospital uses a different diagnosis.

Under Medicare’s hospice election rules, a patient electing hospice waives separate Medicare payment for treatment of the terminal illness and related conditions, with specific exceptions. The hospice accepts responsibility for the covered package. It can provide care directly or arrange for another provider to furnish it.

The economics explain why the distinction matters. Medicare pays routine hospice care by the enrolled day. The payment covers a package that includes nursing, drugs, equipment, supplies and other services for the terminal illness and related conditions. Revenue continues on days when no one visits, while the hospice remains responsible for the care in the patient’s plan.

That is the connection to hospice billing fraud. A separate claim can move the cost of covered care out of the package Medicare is already paying for.

What Is Not Covered Under Hospice?

Care unrelated to the terminal illness and related conditions falls outside the hospice package and can remain covered by Medicare. Certain services from an independent attending physician also have a separate payment route. The physician’s relationship with the hospice matters to that question.

The Centers for Medicare & Medicaid Services describes unrelated services as exceptional and unusual. Its expectation is that the hospice will provide virtually all the care a terminally ill patient needs. A different diagnosis on the hospital’s bill therefore leaves a clinical question to answer: how does the condition being treated relate to the illness and related conditions the hospice is managing?

For a hospital revenue-cycle team, that question reaches beyond confirming that a service occurred. It reaches the reason for the service and the hospice’s responsibility for it. The same distinction applies to an outside supplier’s bill for equipment or supplies that belong in the hospice package.

The Hospital and Hospice Records Have to Meet

The hospital service record and the hospice care record answer different parts of the payment question. The hospital record describes what the patient received. The election identifies the period of hospice coverage. The hospice’s plan of care connects the terminal illness and related conditions to the services the patient needs.

We examine the treatment notes, the conditions being managed and the explanation for treating the service as unrelated. The useful comparison is between the clinical reason for the care and the payment responsibility assigned to it.

An arrangement between the hospital and hospice adds another part of the story. A hospice can arrange for another provider to furnish covered care while retaining responsibility for that care. We examine what the arrangement covered, what the outside provider supplied and where the resulting bill went. The place that delivered the service and the party responsible for paying for it can be different.

For the insider, the most useful knowledge may be how the decision reached the claim. Who supplied the clinical explanation? Did the billing staff have it? If someone raised a contradiction between the treatment record and the unrelated-care determination, what happened to the next claim? These are the connections we work through with you.

When Do I Need a Hospice Election Statement Addendum?

For hospice elections beginning on or after October 1, 2026, the hospice must provide the patient or representative an election statement addendum identifying conditions, items, services and drugs it considers unrelated and would not cover. Before that date, the election statement had to notify the patient of the right to request the addendum.

The CMS rule establishing that change makes the hospice’s position explicit in a document given to the patient. For an outpatient billing question, the useful detail is what the hospice identified as unrelated and how that determination compares with the hospital treatment.

Why the Hospital Service Date Matters

The hospice’s financial responsibility changes when a patient leaves hospice. A hospital service during an election and a service after discharge therefore belong in different payment periods.

Milliman’s Hospice Medicare Margins, a 2019 analysis of care before and after hospice, found that patients discharged alive from for-profit hospices incurred higher daily Part A costs in the following week than patients discharged alive from nonprofit hospices. The paper identified a gap in the payment incentive:

For an outpatient claim during hospice, we connect the hospital service date to the active election and the care the hospice was responsible for at that time.

Medicare Spending Outside Hospice Has Grown

Medicare has paid substantial amounts to other providers while beneficiaries were enrolled in hospice. The HHS Office of Inspector General’s February 2022 report on nonhospice payments counted $6.6 billion over ten years and called for increased oversight.

More recent Government Accountability Office reporting describes Part A and Part B spending outside hospice rising from $0.6 billion in fiscal 2015 to $2.0 billion in fiscal 2024. It shows how much money moves through the separate payment streams alongside the hospice benefit.

The boundary also reaches patients’ bills. The Centers for Medicare & Medicaid Services reported $510 million in beneficiary cost sharing for nonhospice care during hospice elections in fiscal 2024. Whether care belongs in the hospice package matters to the patient as well as to the providers and Medicare.

For an insider, the practical question remains attached to a particular service: what did Medicare pay the hospice to cover, what did the outside provider bill, and why did the business treat those as separate obligations?

What a Revenue-Cycle Review Can Reveal

Separate billing for hospice patients has produced civil False Claims Act settlements involving outside health care providers. When Medicare pays a separate bill for care already included in the hospice payment, taxpayers pay twice.

Therapy Billed Directly to Medicare

American Senior Communities, a nursing-facility operator, agreed to pay $5.6 million in an August 2022 settlement. The Justice Department alleged that it billed Medicare directly for therapy furnished to hospice beneficiaries when the hospice benefit should have covered those services.

The whistleblower was a former employee of a hospice company doing business with American Senior Communities. Someone on the hospice side of the relationship brought the outside provider’s billing to the government’s attention.

The connection for a hospital billing employee is the payment route. In the government’s allegation, therapy furnished to an enrolled hospice patient became a direct Medicare claim even though responsibility for that care belonged with hospice. The service records and the hospice relationship explain why the destination of the bill mattered.

Revenue Goals Behind Unnecessary Therapy

Guardian Elder Care’s February 2020 settlement concerned allegations of unnecessary rehabilitation therapy driven by revenue goals, including therapy for dying patients receiving hospice care.

That case puts the reason for delivering the service beside the reason for billing it. For a hospital or hospice insider, it raises a distinct question about the treatment record: did the care follow the patient’s needs, or did a revenue instruction drive the service? We examine both the clinical decision and the billing decision when building the account of what happened.

When Separate Billing Becomes a Whistleblower Case

A hospice fraud case over outside billing connects the payment to what the business knew about its responsibility for the care. The treatment notes explain the service. The election and hospice records explain the coverage. Instructions, review findings and management’s response explain how the claim came to be submitted.

If staff identified related care but management continued directing separate Medicare billing, the warning and the later claims belong in the same account. We look at who received the concern, what they were told and whether the billing practice continued. Finance and compliance staff may know that history even when they never treated the patient.

The people who see the patient and the billing decisions can supply different parts of that account. A clinician may understand why the treatment related to the terminal illness. A biller may know how the claim was routed. A manager may know why the practice continued after a review raised concerns.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. We work with you to show why the treatment belonged in hospice care and who directed the separate bill.

When You Know Why the Bill Went Elsewhere

If you work in hospital revenue cycle, hospice billing or clinical care and know why covered treatment became a separate Medicare claim, talk with our whistleblower experts about that billing decision. We build the case with you around the treatment, the payment responsibility and the instructions that sent the bill elsewhere. We bring in healthcare whistleblower lawyers who understand hospice and hospital billing, and remain your partners throughout the case.