Hospice Subcontracting: When Purchased Services Become a Second Medicare Claim

Hospice subcontracted services duplicate billing charges Medicare separately for work another provider purchased from a hospice and must pay for through its own payment package. The hospice sends that provider an invoice, and the provider pays the hospice directly. If you work on either side of the agreement, you may know exactly what the purchaser bought and why the same service appeared on a Medicare claim.

The Centers for Medicare & Medicaid Services hospice coverage manual describes this arrangement for PACE organizations, home health agencies and skilled nursing facilities. After explaining who pays whom in each example, it makes the boundary explicit:

What the Other Provider Is Buying

Hospice subcontracting lets another health care provider buy specialized hospice staff time for its own patients. The manual treats that work as part of the purchasing provider’s service package. The clinician brings hospice expertise to the encounter, but the purchaser’s payment covers the contracted work.

That direction matters in hospice billing. During a hospice election, Medicare pays the hospice a daily rate based on the days and level of care. Here, another provider buys a particular service from the hospice for a patient outside that election. The hospice’s name on the employee’s badge does not decide which benefit pays.

Palliative care explains why hospice expertise can serve a patient who continues curative treatment. The Centers for Medicare & Medicaid Services provider overview describes palliative care as pain and symptom management for serious illness, whether terminal or not. The article “Slow Medicine”…? Why Not Palliative Care?, published in Assisted Living Consult in 2008, makes that clinical overlap explicit:

PACE Buys Pain Management or Grief Counseling

In the manual’s PACE example, the Program of All-Inclusive Care for the Elderly identifies a participant who would benefit from a pain-management specialist or grief counselor. PACE contracts with a Medicare-certified hospice for that expertise. The hospice bills PACE, which pays the hospice directly.

The contracted work belongs within PACE’s capitated payment, the payment covering its participant’s care. PACE maintains the medical record, and the hospice sends it the documentation for the service. Neither provider may bill Medicare separately for that contracted work. For someone processing the hospice invoice, the payer and the destination of the clinical note point to the same purchaser.

A Home Health Agency Buys Specialized Nursing

In the manual’s home health example, a terminally ill patient continues curative treatment and receives skilled services from a home health agency. The patient has intractable pain, and the agency buys specialized pain-control nursing from a hospice. The example places the patient outside the Medicare hospice benefit.

The hospice invoices the home health agency, which pays directly from its home health payment. The agency keeps the medical record and receives the hospice’s pain-management documentation. The nursing work can be real, needed and documented while an additional claim sends the bill to the wrong payer.

A Skilled Nursing Facility Buys Grief Counseling

In the manual’s skilled nursing facility example, a resident’s family needs help as Alzheimer’s disease progresses. The resident’s representative has chosen not to elect hospice, and the facility lacks a trained grief counselor or full-time social worker. It contracts with a local hospice for pastoral grief counseling for the family.

The hospice bills the facility, and the facility pays directly within its nursing-facility payment. The facility retains the patient’s medical record and receives the counseling documentation. Neither provider may separately bill Medicare Part A or Part B for that service. Counseling supplied by a hospice has not turned this resident into an elected hospice patient.

What the Contract and Billing Trail Show

The agreement identifies the work the purchaser is paying the hospice to perform. The Centers for Medicare & Medicaid Services requires it to specify the services, the professionals’ required credentials, the billing method, payment amounts and required documentation. The agreement must remain on file for survey review, and the agency also reviews PACE contracts.

Those terms give us a concrete way to examine a second claim. We connect the service described in the contract with the hospice invoice, the purchaser’s payment and the clinical documentation sent back to the purchaser. Then we compare the Medicare claim with that same patient’s service and date. The question is where the contracted work became a separately billed service.

The clinical note identifies the work performed. A healthcare billing employee or clinician may also know who directed the separate claim and what that person understood about the contract payment.

When the Same Work Reaches Medicare Again

A separate Medicare bill for the work in these examples crosses the payment boundary the manual expressly sets. In examining possible hospice fraud, we want to understand how that claim arose: which provider submitted it, what service it described, and whether the people directing it knew the purchaser was responsible for paying the hospice. The contract, chart and payment records let us examine the same encounter from both providers’ sides.

We see a second bill to taxpayers for expertise already included in the purchaser’s payment package. Same specialist. Same work. Changing the billing destination does not create another service.

Hospice unbundling starts with a patient who has elected hospice and care related to the terminal illness billed outside that benefit. The hospice may be the buyer, arranging nursing care for its enrolled patient while a contractor submits a separate Medicare bill for nursing already covered by the hospice daily payment. Here, the direction is reversed: another provider buys hospice expertise for its own patient. The patient’s election status and the purchasing agreement explain which payment should cover the work.

Hospice pre-election counseling has a separate one-time payment for evaluation and counseling by a hospice medical director or physician employee. The beneficiary or the beneficiary’s physician decides to seek that expertise; the hospice receiving payment may not initiate the service itself. If a purchased nursing or grief-counseling visit appears on a claim labeled pre-election counseling, we examine who performed and requested the work against the contract and clinical note.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. We assess the whistleblower case and potential reward with you around the contracted service, the separate claim and the decisions that connected them.

You Know What the Purchaser Paid For

If you handle the contract, invoice, clinical note or Medicare claim, talk with our whistleblower experts about the service that reached both bills. We work beside you to build your strongest hospice whistleblower case around what the purchaser bought and who directed the additional claim. We bring in hospice fraud whistleblower lawyers who understand provider contracts and Medicare payment, and stay with you throughout the case.