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Getting Started with Hospice Billing

A Hospice Agency’s Guide to Getting Started with Medicare Billing

Congratulations! You’re ready to start billing Medicare. Now what? For new hospice agencies, making heads or tails out of where to put your focus and resources might feel overwhelming. This guide explores how to jump into Medicare billing with confidence.

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Medicare is Different.

Billing Medicare is one of the most complicated, important tasks a hospice will undertake. The process is distinctly different from billing commercial payers, with Medicare-specific rules and requirements. Since a majority of hospice patients are Medicare beneficiaries, mastering Medicare billing is essential.

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Get Ready to Submit Claims

In order to submit Medicare claims, your organization and your individual billing team members must have the appropriate IDs established. Individuals who bill or work Medicare claims need a DDE/FISS ID, which is always tied to that individual, no matter where he or she works. Additionally, each facility (or facilities if you have multiple locations) needs a Medicare Submitter ID.

This is where your Medicare Network Service Vendor comes in. You’ll use a certified Medicare Network Service Vendor to set up and manage multiple IDs and ensure smooth access to DDE/FISS.

Hospices may submit claims manually or use Electronic Data Interchange (EDI). Submitting claims electronically requires an EDI agreement with Medicare. Some hospices choose an RCM partner who has direct access to DDE/FISS and can securely transfer claim files to Medicare. RCM partners may also possess technology that analyzes claims before submission to ensure they’re complete and error-free, whether it’s a batch file or single claim. This technology is highly advantageous to busy billing departments, as it identifies claims Medicare didn’t accept and highlights errors you can resolve quickly.

Lifecycle of a Medicare claim timeline

The Lifecycle of a Medicare Claim

Like other types of claims, a Medicare claim has a specific cycle it follows from time of service to adjudication.

A Medicare claim starts with you, the provider. Hospices may use a variety of technology solutions to streamline operations, verify eligibility and generate claim files. Once you submit Medicare claims, you’ll want to keep an eye on their reimbursement cycle status. When a claim is in “Suspense”, it usually means no action is needed. However, if Medicare finds something wrong with a claim, it may take a number of paths while in Suspense.

Medicare assigns a status and location code to each claim that indicates exactly what’s happening. These codes tell you if and when a claim is going to be paid or denied, or alert you to fix an issue.

Here are a few common claim statuses:

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Medicare is processing the claim normally through the system and should pay without intervention.

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Rejected claims contain errors Medicare refuses to process. Patient eligibility issues are the primary cause of rejected claims.

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Additional Development Request (ADR)

Medicare would like additional medical documentation to ensure payment is appropriate. ADRs are also known as Medicare Records Requests, Prepay ADRs, or SB6001.

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Medicare has adjudicated the claim and refuses to pay. Providers may appeal a denied claim through the formal appeals process. Failure to respond in a timely fashion to an ADR is the most common reason for claim denials.

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Return to Provider (RTP)

Medicare has returned the claim to a provider because there’s some level of error. RTP claims aren’t physically returned to you. These claims are placed in the “T” file and will remain there until you correct them.

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Indicates a claim was fully paid or partially paid. A partially paid claim contains denied line items. These line items don’t require appeal, but they do require you to file a replacement claim within Medicare filing parameters.

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Proper reimbursement begins before care starts.

Mistakes and errors during intake are costly. Hospice agencies must check several items off the list before starting patient care:


Medicare beneficiaries who are entitled to hospital insurance (Part A) who have a terminal illness and a life expectancy of six months or less have the option of electing hospice benefits for treatment and management of their terminal condition. The patient can receive hospice care for two 90-day periods and an unlimited number of 60-day periods during the remainder of the patient’s lifetime.

Part of verifying eligibility is to ensure the patient’s hospice benefit doesn’t overlap with other dates of service from another Medicare provider like a hospital, skilled nursing facility or another hospice. This oftentimes occurs when a patient is in a transfer situation or when claims are submitted with incorrect dates of service, or a claim is submitted before a prior hospice submitted its discharge claim.

Verifying patient eligibility for hospice care lays the foundation for the entire reimbursement cycle.
You should verify:

Personal Information

  • Name
  • Birth Date
  • Medicare Beneficiary Identifier
  • Gender

Coverage Information

  • Type of Medicare Coverage (Part A or B)
  • Medicare Secondary Payer Insurance
  • Hospice Period Benefit
  • Hospice Election Period
  • Home Health/Hospice Provider Detail
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Hospice Claim Basics

The Notice of Election

Medicare requires providers to submit a Notice of Election (NOE) on patients who are using hospice benefits. Hospices must complete Form CMS-1450, the official election notice, and submit it to the Medicare Administrative Contractor (MAC). Hospice agencies must follow timely NOE submission rules by filing an NOE within five (5) calendar days of the hospice admission date. Medicare will then update the patient’s Common Working File (CWF). If you fail to meet the timely filing guidelines, Medicare won’t cover and pay for the days of hospice care from the hospice admission date to the date the NOE is submitted on and accepted by your MAC.

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If you fail to file a NOE in a timely manner, you may request an exception from Medicare to waive the consequences of filing late. Medicare may consider an exception to missing the five-day filing guideline in certain circumstances that are beyond the control of the filing hospice.

If you submit a NOE on time, but it includes inadvertent errors, the error will not trigger the NOE to be immediately returned for correction. You must wait for Medicare to fully process any errors and discrepancies before Medicare returns the NOE to your agency for correction.


Be aware that there are certain NOE errors, like incorrect admission date, that won’t be returned for correction, and instead must be finalized and posted by Medicare before you can correct the NOE. This type of delay in the system could cause the NOE to fall outside the timely filing guidelines. Delays in the Medicare system that are outside the hospice’s control may qualify for an exception to the timely filing requirement.

When requesting an exception under these circumstances, the hospice must be able to provide documentation proving:

  1. The original NOE submission date

  2. When the NOE was accepted and available for correction or returned to the hospice, and;

  3. Proof the hospice corrected and returned the NOE within two business days of when the NOE became available for correction or cancelled an accepted NOE within two business days and submitted the new NOE within two business days after the date that the NOE cancellation finalized.

Submitting the NOE

You must submit the Form CMS-1450 Election Notice to your MAC by mail, EDI or DDE.

Hospice claims must be billed sequentially.

What does hospice sequential billing look like?

  1. You must submit the NOE and it must be processed before you can bill the first claim.
  2. After the first claim processes (pays, denies or rejects), you can bill the subsequent claim.
  3. Submit your claims monthly. Medicare will process claims in date order.
  4. Remember! You can only submit one claim each month per beneficiary.
  5. If you don’t follow sequential billing requirements, the claim will move to RTP status.


Notice of Election Termination/Revocation

You must submit a Notice of Election Termination/Revocation (NOTR) within five calendar days after a hospice discharge/revocation unless you’ve already submitted the final claim.

Recent Changes to NOE Submission

In the past, if a hospice made an error in the election date on the NOE, the hospice had to cancel the NOE and submit a replacement election. In these cases, the original NOE submission date was lost. The result was oftentimes NOEs that didn’t meet timely filing requirements.

Now, if you need to correct an election date, you may simply submit another claim using the correct election date as the From, Admission dates and Occurrence Code 27 dates. You must also submit the original, incorrect election date on the 8xA using Occurrence Code 56. The Medicare system then uses this date to find the NOE record and correct it. You must also indicate the NOE is a correction by adding Condition Code D0 (zero).

Beginning July 2, 2018, Medicare rolled out a redesign of the way hospice elections are displayed in the claims processing system. This change ensures that election and revocation date information are separate from benefit period information, so the two types of information can now be changed independently.

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Turning Medicare Data into Action

Medicare is an incredibly complicated system that generates vast amounts of data. This data generally does not receive the in-depth analysis it should, and without proper insight into this data, you can’t improve billing procedures. If you’re willing to crunch the numbers, the benefits to your revenue cycle can be transformative.

Patient accounting software and Electronic Health Record (EHR) systems offer reporting that’s vital to your organization. But these systems typically cannot handle Medicare payment data analysis and accurate reporting that directs you toward action. This is why an investment in the right RCM technology provides a high return.

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Track Actionable Data for a Healthy Business

Tracking as much claim data as possible is beneficial for any hospice. However, there are certain metrics you should monitor.

Key Metric 1: Days in Accounts Receivable

Hospice agencies should track metrics that directly impact cash flow, especially the number of days in accounts receivable (A/R). Medicare providers sometimes believe they’re getting paid within the 14-day Medicare payment window. It’s important for your organization to track the time between date of service and actual submission of the claim. Any billing delays or inefficiencies during this timeframe can substantially impact full aging of your cash flow.

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If you have outstanding claims more than 40 or 50 days out, it may be time to consider changing your process and looking for areas of improvement. An RCM technology partner can offer reporting on days in A/R and alert you to cash flow trends that you probably hadn’t noticed.

The number of claims paid 60 days or more after discharge is a true indicator of your business health. If this number is high, it creates a detrimental lag in cash flow. Working to decrease claims that fall into this category will dramatically improve reimbursement rates and decrease days in A/R.

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Key Metric 2: Top 10 Reason Codes

Detecting claim trends in the DDE is impossible when you can view only one claim at a time. A successful claims resolution strategy provides insight into why claims are rejected, denied or returned.

Identifying the top 10 reason codes for rejections, denials and RTPs will maximize timely recovery and reimbursement levels, allowing you to take steps to protect revenue. According to MGMA, the cost to rework a claim is $25. If your team reworks 100 claims a month, that’s $2,500 plus wasted staff time. That’s expensive business!

A viable RCM solution helps you identify recurring problems using reason code reporting. You can then create an action plan and make workflow changes that remove road blocks and improve cash flow.

Key Metric 3: Timely NOE Submission

Monitoring NOEs to ensure they’re submitted and accepted within Medicare’s five-day timely filing guideline is critical to your financial livelihood. If your agency files a late NOE, you're financially liable for all care from the date of election until the date the NOE is filed. If the NOE is late, the hospice cannot bill for any days of care provided prior to the date the NOE is filed.

The Problem with Submitting NOEs Electronically

As of January 1, 2018, CMS began allowing hospices to submit NOEs using EDI. Previously CMS only accepted NOEs through DDE or paper claims. The goal was to reduce errors associated with entering NOEs manually into FISS. Hospice agencies quickly learned that submitting NOEs through the EDI can add one to two days onto the alright tight five-day NOE submission deadline.

Hospices can avoid transmitting NOEs through paper or EDI by using technology tools that allow providers to submit NOEs directly to Medicare. These solutions also feature extra safeguards to ensure you’re submitting error-free claims. Not only will your NOEs be on time, you’ll eliminate manual work, decrease entry errors, accelerate cash flow and increase efficiencies.

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Other Critical Hospice RCM Metrics

Due to the particular nature of hospice Medicare claims, follow these other key metrics to keep on top of your revenue cycle.

  • RTP Reason Codes
    • Common causes of RTPs:
      • Sequential billing errors
      • Occurrence Code 27 required when certificate date falls within dates of service
      • Change dates of service condition code is preset, but dates of service on the adjustment didn't change
      • Overlapping hospice election periods
      • Duplicate claims
  • Rejection and Denial Reasons:
    • Untimely filing of NOE
    • Documentation doesn't support terminal prognosis
    • Unmet Face-to-Face Encounter requirements
    • Noncompliant Plan of Care
    • Missing or late Medicare Review ADR documentation

Medicare Review

Unfortunately, hospice agencies are subject to Medicare scrutiny. This means the potential of Medicare prepayment reviews and post-payment audits by ZPICs, MACs, RACs and CERTs. ZPICs, RACs and MACs can conduct prepayment reviews and post payment audits. Sometimes, poor results of a review or audit may equal a financial penalty.


Targeted Probe and Educate (TPE)

Medicare began the TPE program in October 2017, which is designed to help providers reduce claim denials and appeals through one-on-one help. MACs work with providers to identify errors and quickly correct them.

Hospice agencies are a target for TPE if they have higher claim error rates than their peers or unusual billing practices.

Avoiding reviews and audits takes ongoing, system-wide efforts at the operational, clinical and financial levels. The best strategy is to be proactive within your agency and conduct your own audits, then use findings to educate and train your team.

Conducting internal audits would be nearly impossible without access to clinical and claim data. Hospice agencies should employ RCM technology that delivers digestible data throughout the claim lifecycle. Investing in solutions that promote quality care and compliance also will also pay dividends.

When review and audits inevitably happen, tools that help you handle appeals and audits with business intelligence and suggestive workflows are essential.

Medicare Secondary Payer Claims

Medicare Secondary Payer (MSP) claims are those claims where the beneficiary is covered by group insurance, Workers’ Compensation, or other third-party providers. Medicare doesn’t accept primary payer responsibility for patients who have other payer benefits. Claims that include MSP information must be submitted either directly or electronically to Medicare.

Why do MSP claims create so many headaches for hospices? If a hospice failed to determine correct coverage and billed Medicare for a claim that should have been billed as an MSP claim, the claim will go into RTP status or may be rejected altogether.

Second, when a primary payer pays the MSP claim, it may not cover all the charges. This means providers must bill Medicare for the remaining charges. The only way to bill these charges is through manual entry into the DDE or via paper, which are both costly for agencies. This is a burdensome process, leading many agencies to simply write off what’s left on these claims.

Hospice agencies can effectively handle MSP claim challenges using a technology solution that will track and rebill these claims without the hassle of manual DDE entry.

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Next Steps

Hospices new to Medicare billing will face challenges related to the complexity of Medicare. Keep these next steps handy as you navigate new waters:

  • Be certain your reimbursement team fully understands the importance the Notice of Election and sequential billing play in your revenue cycle
  • Build an intake process that lays the foundation for reimbursement
  • Develop a system for tracking and analyzing claim statuses
  • Use your claim data to maximize revenue and workflow
  • Be prepared for extra scrutiny through Medicare review and audits
  • Consider working with a partner who has the tools to help you automate the complex hospice reimbursement cycle and ensure you’re getting paid what you deserve

About Us

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