A patient enrolled in a Medicare Advantage plan elects hospice. The plan does not process the claim. Original Medicare does, even though the beneficiary never disenrolled from the MA plan and the MA plan keeps collecting a capitation payment every month the election stays open.
That is the rule the entire billing relationship runs on. The hospice benefit is carved out of the Medicare Advantage contract by design: once a beneficiary elects hospice, Original Medicare fee-for-service becomes financially responsible for services related to the terminal illness and related conditions, regardless of which MA plan the beneficiary is enrolled in. The MA plan continues to receive a reduced, hospice-rate capitation payment and stays responsible for anything unrelated to the terminal prognosis.1 With 54 percent of Medicare beneficiaries enrolled in a Medicare Advantage plan in 2024, up sharply from a decade earlier, this two-payer split is no longer an edge case in hospice billing. It is the default for a majority of new elections.2
Why strong teams still get tripped up
The friction is structural, not procedural. One patient now has two payers active at once: Original Medicare for anything tied to the terminal diagnosis, and the MA plan for everything else, from an unrelated ER visit to a routine prescription refill. Billing workflows built around a single authorization and a single payer per patient do not naturally split that way, and the split has to be re-evaluated every time a claim is coded, not decided once at election.
That workflow gap widened rather than narrowed in early 2025. CMS's Value-Based Insurance Design model let a limited group of participating MA plans "carve in" hospice for a few years, taking on financial responsibility for hospice care directly instead of routing it to Original Medicare. That component of the VBID demonstration ended December 31, 2024.3 Plans and billing teams that built processes around a carve-in relationship for those patients had to unwind them and default back to the standard fee-for-service split described above, for every election made in 2025 and beyond.
What the hospice benefit actually bills
The mechanics don't change based on which plan the beneficiary carries. A hospice has five calendar days from the effective date of election to file the Notice of Election. Miss that window, and the days between the start of care and the date the NOE is actually filed become provider-liable, non-covered days that cannot be billed to any payer, not to Original Medicare and not to the MA plan.4
Claims go out on type of bill 81X for a non-hospital-based hospice or 82X for a hospital-based one. The benefit itself runs on two 90-day election periods followed by an unlimited number of 60-day periods, each requiring its own certification or recertification before billing continues. Occurrence code 27 marks the certification or recertification date on the claim; occurrence code 42 marks a revocation or discharge date. Getting either code wrong, or omitting it, is enough to stall a claim in processing regardless of which payer is on the other end.
The real challenge is unrelated end-of-life care
The genuinely hard part is not the hospice claim itself. It is everything the MA plan is still supposed to pay for. A hospice patient can still have a fall unrelated to the terminal illness, a pre-existing cardiac condition managed separately, or a medication for a chronic condition that has nothing to do with the hospice diagnosis. Original Medicare is not the payer for that care. The MA plan is.
Marking that distinction correctly on the claim is what actually determines whether the right payer gets billed. Professional claims use the GW modifier to flag a service as unrelated to the terminal illness. Institutional claims use condition code 07 for the same purpose. Leave either one off a claim for genuinely unrelated care, and it can land on Original Medicare's desk instead of the MA plan's, or get denied outright as a duplicate or non-covered service under the hospice election.4
Revocations, month-end timing, and AR friction
Revocation is where the payer split creates the most avoidable AR aging. When a beneficiary revokes the hospice election, Original Medicare's hospice benefit covers through the date of revocation itself. The MA plan, however, does not resume full capitation and primary-payer responsibility until the first of the following month.1 A revocation on the 12th of the month leaves a stretch of days where the MA plan is still, on paper, receiving the reduced hospice-rate payment even though the hospice election has ended.
Teams that track revocation only by the date it happened, without also flagging the first-of-next-month date when full MA responsibility resumes, end up billing claims to the wrong payer for that gap. Those claims come back denied, and by the time the correction is identified, they are aging on a report that looks like a coding problem instead of a timing problem.
What changed recently with the Medicare Advantage Plan and why it still matters
Two 2025 changes are doing most of the work behind current denial patterns. First, the VBID hospice carve-in ending on December 31, 2024 pushed a meaningful group of MA-enrolled hospice patients back onto the standard fee-for-service billing path, for teams that had spent a few years billing those cases differently. Second, CMS finalized a 2.6 percent update to hospice payment rates for FY2026, alongside an updated aggregate cap of $35,361.44.5 Neither change is complicated on its own. Together, they mean a larger share of MA-enrolled patients than in prior years are billing through the standard carve-out, at updated rates, at the same time plans and billers are re-learning workflows some of them had stopped using.
Where denials usually start
Four points account for most of the denials on Medicare Advantage hospice claims. A Notice of Election filed after the five-day window creates non-covered days no payer will reimburse. A claim for genuinely unrelated care that goes out without the GW modifier or condition code 07 lands on the wrong payer. A missing or incorrect occurrence code, 27 or 42, stalls processing before the payer split even matters. And a revocation tracked only by its own date, without the first-of-next-month handoff to the MA plan, produces claims billed to whichever payer was responsible before the transition instead of after it.
A cleaner workflow looks boring on purpose
None of the fixes here are dramatic. Confirm MA enrollment status and the hospice election date before the first claim goes out, not after a denial comes back. Track the NOE against the five-day clock the same way for every patient, regardless of which plan they carry. Check that unrelated-care claims carry the correct modifier or condition code before submission, not during an appeal. And build the first-of-next-month capitation handoff date into the AR calendar alongside the revocation date itself, so the payer split at the end of an election gets the same attention the payer split at the start of one already gets.
The takeaway for hospice leaders
Medicare Advantage enrollment no longer changes who gets billed for hospice care at a policy level; with the VBID carve-in option gone, the fee-for-service split is once again the default for the large majority of MA-enrolled hospice patients. The risk left in the system is not the rule. It is a billing workflow that has not fully caught up to how much of the Medicare population that rule now applies to.
Appendix: Sources
- CMS Medicare Managed Care Manual, Chapter 4, "Benefits and Beneficiary Protections" — hospice carve-out from MA plan financial responsibility; reduced hospice-rate capitation; MA resumption of full primary-payer status the month following revocation.
- KFF, "Medicare Advantage in 2024: Enrollment Update and Key Trends" — 54% of Medicare beneficiaries enrolled in a Medicare Advantage plan in 2024.
- CMS, VBID Hospice Benefit Overview — hospice carve-in component of the Value-Based Insurance Design model, ended December 31, 2024.
- CMS Medicare Claims Processing Manual, Chapter 11, "Processing Hospice Claims" — five-calendar-day Notice of Election filing window; type of bill 81X/82X; occurrence codes 27 and 42; GW modifier and condition code 07 for unrelated care.
- CMS FY 2026 Hospice Wage Index and Payment Rate Update Final Rule Fact Sheet — 2.6% FY2026 hospice payment update; $35,361.44 aggregate cap.