A Step-by-Step Guide to Medicare Hospice Billing Guidelines

Medicare hospice billing is not a single event it is a sequence of interconnected steps, each with its own compliance requirements, documentation standards, and timing obligations. Miss a step, execute one out of sequence, or apply the wrong billing rule at the wrong point in the process, and the consequences range from a single denied claim to a systematic compliance finding that surfaces months later in an audit.

At MCA Medical Billing Solutions, L.L.C., we manage Medicare hospice billing for organizations that need the full sequence executed correctly, consistently, and on time. Here is a practical, step-by-step guide to the Medicare hospice billing guidelines that govern every patient from election through final claim.

Step 1: The Hospice Election Statement

The Medicare hospice benefit begins with the election statement the formal document by which a Medicare beneficiary (or their representative) elects to receive hospice care under the Medicare Hospice Benefit and agrees to waive coverage of curative treatments for the terminal diagnosis. The election statement is not simply an intake form. It is a Medicare compliance document, and its accuracy and completeness are the foundation of every subsequent claim.

The election statement must include specific required elements: the name of the hospice and the patient, the effective date of the election, the attending physician (if any), the patient’s or representative’s signature, and an acknowledgment that the patient has been informed of their rights under the hospice benefit. CMS has updated election statement requirements to include additional informational elements including a patient notification of which conditions and services are and are not covered under the hospice benefit. A missing or incomplete election statement is one of the most consistent findings in RAC and ZPIC hospice audit activity.

What this means for your organization: The election statement should be reviewed against CMS’s current required elements at the time of every new admission not from a template that was last updated several years ago. Regulatory requirements for election statement content have changed, and organizations using outdated forms are creating audit exposure from the first day of every enrolment.

Step 2: Initial Physician Certification

Before hospice billing can begin, the attending physician (if applicable) and the hospice medical director must certify that the patient has a terminal prognosis with a life expectancy of six months or less if the terminal illness runs its normal course. This certification must be completed before the first claim is submitted not concurrent with or after claim submission. The certification must be signed and dated, and the date of the hospice physician’s signature must precede the start of the hospice benefit period. The attending physician’s signature is required when an attending physician is identified; if no attending physician is named, the hospice medical director’s certification alone is sufficient. Documentation supporting the terminal prognosis clinical findings, functional decline indicators, and relevant diagnoses must be in the medical record and must support the certification. A certification that is not grounded in documented clinical evidence is the primary target of hospice medical necessity audits.

Step 3: Notice of Election and Initial Claim Submission

Once the election statement is executed and the initial certification is complete, the hospice submits a Notice of Election (NOE) to Medicare. The NOE must be filed within five calendar days of the effective date of the hospice election. Late NOE submission results in a payment reduction the hospice is not paid for the days between the effective date of the election and the actual date of the NOE filing. This is a direct financial penalty that accumulates per day and is entirely avoidable with a systematic admission-to-NOE tracking process.

The initial claim for the first benefit period is submitted using Type of Bill code 812 (interim first claim) if the patient remains enrolled at the end of the billing period, or 811 (admit through discharge) if the patient is discharged within the first billing period. Claims are typically submitted monthly, covering the dates of service within each calendar month.

What this means for your organization: NOE filing within five days is one of the most operationally straightforward hospice billing requirements and one of the most missed in high-volume admissions environments. A same-day NOE filing workflow triggered at the time of admission, rather than a batch process run periodically, eliminates per-day payment reductions entirely.

Step 4: Recertification and Continuing Benefit Periods

The Medicare hospice benefit is structured in benefit periods: an initial 90-day period, a second 90-day period, and unlimited subsequent 60-day periods. At the end of each benefit period, the hospice must recertify the patient’s continuing eligibility confirming that the patient’s terminal prognosis still supports a six-month prognosis if the illness runs its normal course. Recertification must be completed and signed by the hospice physician (and attending physician, if applicable) before the start of the new benefit period. CMS requires that the recertifying physician have a clinical visit with the patient before completing the recertification for the third benefit period and beyond this is the face-to-face encounter requirement. The face-to-face encounter must be conducted by a hospice physician or nurse practitioner, must be documented in the clinical record, and the documentation must be signed by the certifying physician before the recertification is completed.

Missing, late, or inadequately documented recertifications and face-to-face encounters are among the most common and most costly hospice compliance findings. A missed face-to-face encounter does not just generate a denial for the recertification period, but it can result in recoupment of payments for the entire benefit period if the lack of documentation is identified in an audit.

What this means for your organization: Recertification deadline tracking should be a proactive, calendar-driven function not a reactive process that responds when a certification is about to expire. Every patient’s current benefit period end date should always be visible to the clinical and billing teams, with alerts triggered well in advance of the deadline to allow sufficient time for the face-to-face encounter and physician signature.

Step 5: Care Level Billing

Medicare hospice reimbursement uses four levels of care, each billed at a different daily rate: Routine Home Care, Continuous Home Care, General Inpatient Care, and Inpatient Respite Care. Each level has its own clinical criteria, documentation requirements, and revenue code on the UB-04 claim.

Routine Home Care (revenue code 0651) is the standard daily rate for patients receiving care at home or in an assisted living setting. Continuous Home Care (revenue code 0652) applies when a patient is in crisis and requires continuous nursing or aide services for at least eight hours in a 24-hour period and is the highest-reimbursed hospice care level. General Inpatient Care (revenue code 0656) covers acute pain and symptom management that cannot be managed in the home setting and requires inpatient care. Inpatient Respite Care (revenue code 0655) provides short-term inpatient care to relieve family caregivers for up to five consecutive days. Each care level transition must be reflected in the claim on the correct date of service, supported by clinical documentation that establishes the medical necessity for the level provided. Billing a care level that is not supported by the clinical record in either direction, over coding or under coding is a compliance risk. The most common finding in hospice care level audits is Continuous Home Care billed without documentation that meets the minimum eight-hour threshold or the crisis-care clinical criteria.

What this means for your organization: Care level billing accuracy requires real-time communication between the clinical team and the billing team. When a patient’s care level changes, the billing record must be updated the same day not at the end of the month during claim generation. A lag between clinical care level and billing record creates both inaccurate claims and audit exposure.

Step 6: The Hospice Aggregate Cap

Medicare limits total annual reimbursement per hospice provider through the aggregate cap a calculation that compares the hospice’s total Medicare payments for the cap year against a per-beneficiary cap amount multiplied by the number of Medicare beneficiaries served. If total payments exceed the cap, the hospice must repay the difference to Medicare. The cap year runs from November 1 through October 31. CMS calculates the cap and issues a final determination after the close of the cap year which means organizations that are not actively monitoring their cap position throughout the year may not discover an overage until the reconciliation is complete and the repayment is due. Monthly cap utilization tracking, with projections of cap position based on current census and expected LOS, gives organizations the lead time needed to manage cap exposure before it becomes a repayment liability.

Step 7: Final Claim and Discharge

When a patient is discharged from hospice whether due to death, revocation of the election, transfer to another hospice, or determination that the patient is no longer terminally ill the hospice submits a final claim covering the remaining dates of service in the current billing period. The final claim uses Type of Bill code 814 if it follows one or more prior interim claims, or 811 if the entire enrolment falls within a single billing period. The discharge reason must be correctly documented on the claim, and the final claim must be submitted within the timely filing window one year from the date of service. Missing the timely filing deadline on a final claim is a permanent revenue loss with no appeal remedy.

Ready to Strengthen Your Hospice Billing Compliance?

MCA Medical Billing Solutions, L.L.C. manages the complete Medicare hospice billing cycle election statement review, NOE filing, certification and recertification tracking, care level billing, aggregate cap monitoring, and final claim submission for hospice organizations that need every step executed correctly and on time.