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Connolly Posts New Issue for Hospice Billing

(April 12, 2012): The Centers for Medicare & Medicaid Services (CMS) recently approved a new Recovery Auditor (RAC) Audit Issue for use by Connolly Healthcare in its audits of hospice billing in Region C. The new audit issue, CMS Issue Number C000162012, concerns services that are bundled with the hospice’s per diem payment.  Details on the new RAC audit issue are below :

Issue Name:Hospice Related Services –Outpatient CMS Issue Number: C000162012
Description:Services related to a Hospice terminal diagnosis provided during a Hospice period are included in the Hospice payment and are not paid separately.
Provider Type Affected:Outpatient Hospital-Unspecified
Date of Service:10/01/2007 – Open
States Affected:Alabama, Arkansas, Colorado, Florida, Georgia, Louisiana, Mississippi, New Mexico, North Carolina, Oklahoma, Puerto Rico, South Carolina, Tennessee, Texas, Virgin Islands, Virginia, and West Virginia.
Additional Information:


Based on the issue posting above, the new issue seems to be focused on services billed by outpatient hospitals during a hospice period that should have been considered bundled with the hospice’s institutional payment and not separately billable.  However, the rules on hospice billing for services that are not related to a patient’s terminal illness during a covered hospice period are both complex and relevant to physicians and others providers outside of the outpatient hospital environment, so a brief overview of the rules may be helpful for them as well.

The manual provisions cited in the Audit Issue announcement are to the chapters of the Medicare Benefit Policy Manual and the Medicare Claims Processing Manual covering hospice services.  Section 50 in Chapter 11 of the Medicare Claims Processing Manual explains the rules for hospice billing and payment for services unrelated to a patient’s terminal illness (and therefore separately billable). That section states that “[a]ny covered Medicare services not related to the treatment of the terminal condition for which hospice care was elected, and which are furnished during a hospice election period, may be billed by the rendering provider using professional or institutional claims for non-hospice Medicare payment.” It goes on to state that professional claims for services unrelated to a hospice patient’s terminal illness must be billed with the “GW” modifier as a “service not related to the hospice patient’s terminal condition.” For institutional claims, the services must be coded with condition code “07” for “Treatment of Non-terminal Condition for Hospice.”  The section also states that contractors can conduct prepayment or post-payment reviews to validate that services billed with the GW modifier or condition code 07 were actually unrelated to the patient’s terminal illness. With the posting of CMS Issue Number C000162012, it seems that Connolly Healthcare will be conducting post-payment reviews to do just that.

Providers should review their use of the GW modifier (for professional claims) and condition code 07 (for institutional claims) to ensure that they are properly coding and billing for these services. Consider revising your facility’s documentation practices to ensure that supplemental services unrelated to the patient’s terminal illness are clearly delineated.

Les Johnson Healthcare AttorneyLes Johnson, J.D., LL.M. is Partner at Liles Parker PLLC and is Co-Leader of the firm’s national Health Law Practice Group. He practices out of the firm’s Baton Rouge, LA office. If you have any questions regarding the issues described above or any other questions about a RAC, ZPIC or other Medicare audit, you can reach Mr. Johnson at 225-244-9400 or by email to for a free consultation.

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