Direct Answer
Hospice billing under Medicare uses a per diem payment model — the hospice receives a daily rate based on the level of care provided, and that rate is intended to cover the full interdisciplinary team (nurses, aides, social workers, chaplains) and most drug and supply costs related to the terminal diagnosis. The hospice physician's services have a specific billing framework separate from the hospice per diem. Palliative care — provided outside the hospice election, typically for patients not yet on hospice — is billed using standard E&M and care management codes. Understanding the boundary between what is included in the hospice per diem and what can be separately billed is the central compliance challenge in hospice billing.
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Hospice Levels of Care
Medicare hospice has four levels of care, each with a specific per diem rate: Routine Home Care (RHC) — the most common level; the patient receives hospice services at home at the standard daily rate. The RHC rate has two tiers: a higher rate for days 1–60 (RHC-High) and a lower rate for days 61+ of the hospice benefit period. Continuous Home Care (CHC) — for acute symptom crises; requires primarily nursing care (at least 8 hours per 24-hour period with more than 50% nursing hours) to manage pain or symptom crises at home. CHC is billed at a higher hourly rate × hours of care. Inpatient Respite Care (IRC) — short-term inpatient care (maximum 5 consecutive days per admission) to give the family caregiver a rest period; care is provided in an approved inpatient facility. General Inpatient Care (GIP) — inpatient hospice care for pain/symptom management that cannot be provided at home; requires skilled nursing or physician management that necessitates the inpatient setting. GIP is billed at the highest daily rate. Hospice claim type: UB-04 claim with revenue codes identifying the level of care (Revenue Code 0651 for RHC, 0652 for CHC, 0655 for IRC, 0656 for GIP).
Hospice Election and Revocation
A Medicare patient elects hospice by signing an election statement — voluntarily waiving their right to Medicare coverage for curative treatment of the terminal diagnosis. The hospice election is organized into benefit periods: two 90-day periods followed by an unlimited number of 60-day periods. At the start of each benefit period (except the first), the hospice attending physician or nurse practitioner must recertify that the patient continues to have a terminal prognosis of six months or less if the illness runs its normal course. Recertification for benefit periods 3 and beyond requires a face-to-face encounter between the patient and either the hospice physician, the medical director, or a nurse practitioner to assess the patient's status and support recertification. This face-to-face encounter must occur no more than 30 days prior to the start of the subsequent benefit period. Revocation: a patient may revoke their hospice election at any time, resume standard Medicare benefits for the terminal condition, and later re-elect hospice. The hospice submits a discharge claim when a patient revokes, dies, or is discharged.
Hospice Physician Billing
Hospice physician services are handled through two mechanisms depending on the physician's relationship to the hospice: Attending physician (non-hospice-employed): the patient's primary attending physician (who may be an independent physician outside the hospice organization) can separately bill Medicare for their professional services under Part B using standard E&M codes — these services are NOT included in the hospice per diem. The attending physician appends Modifier GV (attending physician not employed by the hospice) to E&M codes when treating the hospice patient for the terminal diagnosis. Hospice-employed physician: the hospice medical director or other hospice-employed physicians bill for administrative/medical director services (HCPCS G0237/G0238/G0239) through the hospice organization — these services are within the hospice benefit. Modifier GW (service not related to the terminal condition of the hospice patient) is appended when a physician (attending or other) bills Medicare for treatment of a condition unrelated to the patient's terminal hospice diagnosis — those unrelated services remain payable under Medicare Part B outside the hospice per diem. Nurse practitioner services: NPs can serve as attending physicians for hospice patients (for most purposes under the hospice benefit) and bill accordingly with the appropriate modifier.
Medicare Hospice Cap
The Medicare hospice aggregate cap limits the total amount a hospice organization can receive in Medicare payments per patient for a cap year. If a hospice's total Medicare payments for the cap year exceed the cap amount multiplied by the number of Medicare beneficiaries it served, the excess must be returned to Medicare. The cap is calculated annually by CMS. There is also an inpatient cap — hospice organizations cannot exceed 20% of total aggregate patient care days in inpatient settings (GIP + IRC). Exceeding the inpatient cap triggers a repayment obligation. Hospice operators must monitor their cap utilization throughout the year (not just at cap settlement time) to avoid end-of-year surprises. High-cost patients, patients living longer than initially estimated, and geographic market dynamics all affect cap exposure. Hospice billing teams should produce monthly cap exposure reports comparing projected total Medicare payments to cap limits and forecasting based on census trends.
Palliative Care (Non-Hospice) Billing
For patients receiving palliative care outside the hospice benefit (patients still pursuing curative treatment, or patients not ready to elect hospice), standard billing codes apply: Palliative care E&M visits: standard office or inpatient E&M codes (99202–99215, 99221–99233) based on MDM or time — there is no separate "palliative care" E&M code; the specialty of the billing provider and the nature of the visit determine the code. Advance Care Planning (ACP): 99497 (ACP — first 30 minutes, face-to-face); 99498 (each additional 30 minutes). ACP codes are separately billable for conversations with patients (and/or caregivers) about advance directives, healthcare proxies, and goals of care — distinct from the routine E&M visit. Under Medicare, ACP is covered as a preventive service without cost-sharing when provided during the Annual Wellness Visit. Chronic Care Management (CCM): 99490/99491 are applicable for palliative care patients with multiple chronic conditions managed monthly with care coordination. Transitional Care Management (TCM): 99495/99496 apply for care transitions from inpatient settings for palliative care patients. Palliative care consultations to other services are billed using standard consultation codes where applicable or follow-up E&M codes where consultation codes are not recognized by the payer.
FAQ
Can a hospice patient's other medical conditions (unrelated to the terminal diagnosis) still be treated and billed under Medicare?
Yes — the hospice election waives Medicare coverage for curative treatment of the terminal diagnosis, but Medicare Part B coverage for conditions unrelated to the terminal diagnosis remains intact. A hospice patient with terminal lung cancer may still receive Medicare-covered treatment for a hip fracture, cardiac arrhythmia, urinary tract infection, or other condition unrelated to the lung cancer — billed through the usual Medicare Part B pathway with Modifier GW (service not related to the terminal condition). The practical challenge is defining what is "related to" the terminal diagnosis — for complex patients, some conditions are clearly related (the cancer patient's pain management is related; their hypertension management may or may not be depending on clinical context). The hospice organization and the attending physician must coordinate to avoid billing Medicare Part B for services that are related to the terminal diagnosis and therefore should be within the hospice per diem. Auditors look for Part B claims for services that appear related to the hospice diagnosis — consistent documentation of the unrelated condition rationale is essential when using Modifier GW.
What documentation is required for the Advance Care Planning (ACP) code?
Advance Care Planning codes (99497/99498) require documentation of a face-to-face conversation between the physician (or other QHP) and the patient and/or their family/surrogate, specifically focused on advance directives, healthcare proxy designation, and/or goals of care. The documentation should include: confirmation that the visit was for advance care planning (not just incidental discussion during an E&M); the topics discussed (advance directive explanation, goals of care, surrogate decision-maker, POLST/MOLST forms if completed); the patient's and/or family's understanding, questions, and responses; the time spent (30 minutes minimum for 99497); and any resulting documents or patient decisions. ACP visits may be billed on the same day as an E&M visit with Modifier 25 on the E&M, when the ACP conversation is a genuinely separate service from the E&M. The ACP codes are among the few time-based codes in the Medicare physician fee schedule where the time requirement can be satisfied by a qualified non-physician practitioner — nurse practitioners and physician assistants can bill 99497/99498 independently within their scope of practice.
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