Revenue Cycle Insider

See which issues they discovered and the key element you need to help reduce exposure.

In November 2024, U.S. Department of Health and Human Services (HHS) Office of the Inspector General (OIG) released audit findings from a five-year study (2017-2021) that looked at whether Medicare payments to acute-care hospitals for outpatient services provided to hospice enrollees complied with Medicare requirements.

Regulations dictate that once hospice care is elected, Medicare doesn’t pay separately for services to palliate (ease) or manage a terminal illness and related conditions and only pays for Part B outpatient services that are “unrelated” to the terminal illness and related conditions.

Shockingly, OIG concluded that 70 percent of the Medicare payments were incorrect, as the services were already included in the hospice’s per diem.

Keep reading to make sure you’re neither facing exposure nor risking loss of payment.

Understand Improper Payment Reasons

The OIG advised that the services should have been provided directly by the hospices or under arrangements between hospices and acute-care hospitals.

The hospitals were improperly paid by Medicare because, among other causes:

• Most hospitals reviewed only whether the outpatient services palliated or managed terminal illnesses, but not related conditions;
• Medicare prepayment edit processes were not properly designed;
• Medicare guidance lacked details; and
• Medicare contractors did not conduct prepayment or post-payment reviews.

The OIG estimated Medicare could have saved $190.1 million over the audit period. In addition, they estimated enrollees could have saved deductibles/coinsurance of $43.6 million.

Utilize This Code to Bill for Outpatient Services to Hospice Patients

An acute-care hospital bills Medicare for an outpatient service that is truly “unrelated” to a hospice enrollee’s terminal illness and related conditions using an institutional form.

The claim must contain the condition code 07 (Treatment of a non-terminal condition for a hospice patient).

Warning: The OIG points out that falsely appending condition code 07 to claims for outpatient services given to palliate or manage an enrollee’s terminal illness and related conditions may violate federal laws governing Medicare fraud and abuse, including: the False Claims Act, Anti-Kickback Statute, Physician Self-Referral Law, Social Security Act (which includes the Exclusion Statute and the Civil Monetary Penalties Law), and other provisions of the U.S. Criminal Code.

The Medicare Administrative Contractor (MAC) automatically processes the claim and pays the acute-care hospital.

If warranted, a MAC may conduct prepayment or post-payment reviews to validate that the services were actually “not related” to the enrollee’s terminal illness and related conditions.

Protect Yourself by Requesting an Addendum

To avoid improper payments, hospitals and other non-hospice providers should request and analyze any available patient hospice election statement addenda.

The addendum is designed to provide transparency and ensure there is a clear understanding of the hospice’s coverage responsibilities, which can directly assist hospitals and other non-hospice providers in treatment decisions. It is a written notification to the requester (e.g., hospice enrollee, hospital or other non-hospice provider, or Medicare contractor) of any conditions, items, services, and drugs the hospice has determined to be “unrelated” to the patient’s terminal illness and related conditions and not covered by the hospice.

Beware: The OIG found for dates of service (DOS) after Oct. 1, 2020 (the effective date of the hospice election statement addendum), addenda were available but never requested by hospitals in all cases.

Know this: There is no mandatory format for the addendum. Hospices can layout the addendum however they wish as long as all content requirements of 418.24(c) are met.

Furthermore:

• Hospices must provide every electing beneficiary a notification that an addendum is available, but they only need to provide a written addendum when the patient (or representative) requests it.
• Medicare beneficiaries who elect to receive hospice care have the right to request a written addendum (and any updates) at any time.
• The hospice must furnish this notification within five days for requests on the start-of-care date, and within 72 hours (or three days) for requests made during the course of hospice care.

Key point: The patient does not have to authorize release of the addendum for the hospice to provide it to a hospital or other non-hospice provider.

To see a sample addendum, click here. For more on proper processing of hospice claims see Chapter 11 of the Medicare Claims Processing Manual.

Patricia Zubritzky, BS, CRCE-I, Contributing Writer, Pittsburgh