CMS announced the final rule for hospices regarding the timely filing of the NOE in transmittal 3032 sent out August 22.

In the document, CMS designates that a timely-filed NOE (Notice of Election) shall be filed within five calendar days after the hospice admission date.  This applies to the NOTR (Notice of Election Termination/Revocation) as well.  This regulation is effective for dates of services on or after October 1st.

Previously, there were no regulations regarding the timing of submitting these transactions. The NOE and the NOTR are essentially claims submitted to CMS that do not represent any services being billed, but the execution or revocation of an agreement between the hospice and the beneficiary receiving their services. These agreements are normally executed in the field, away from the office, at the patient’s home or with representatives of their family. The NOE is used to notify CMS that the beneficiary has elected to change their relationship with Medicare and to accept all medical services related to a diagnosis through the hospice only from that point forward, until they elect to change this relationship.

The NOE is represented as a processed claim in the Medicare system and alters the patient data in the Common Working File (CWF) so that CMS knows that all services from the admission date (date the hospice contract is executed) forward are to come from the designated hospice only and to deny payment for any services related to the hospice diagnosis submitted by any other provider during this hospice benefit period.

It is easy to understand why CMS considers the timing of this transaction to be important.  Hospices normally bill on a monthly basis.  From their perspective, it is important that the NOE is accepted by CMS prior to the receipt of the first bill submitted for the patient so that bill will be paid, but this could be several weeks after the admission so this has not previously been an urgent task for the hospice agency depending on the date of the NOE and the date of the next claim. 

From the perspective of CMS, they are not aware that the beneficiary has elected to contract with a hospice rather than other Medicare reimbursement (nursing homes, hospitals, home health) until the NOE is actually posted to the CWF.  Until that time, claims can be submitted and paid by other Medicare providers for services that overlap the hospice benefit period.  Hospices, on their next set of monthly claims, may bill for services back to the original admission date during the previous month.  This forces CMS to pay both entities and later figure out who owes them money.   However, according to my research so far, the implementation of this regulation will create issues for hospices, CMS and Medicare Contractors that I do not believe have been anticipated by these organizations and will represent losses in revenue for hospices and additional administrative tasks for everyone involved.

Let’s begin with the NOE itself. As I mentioned, it is a claim that is submitted with the sole purpose of changing the status of a beneficiary to hospice coverage with a specific provider.  There are only two ways that the NOE can be submitted. It can be printed as a paper UB04 and sent to Medicare or it can be manually entered through DDE (Direct Data Entry in the Medicare FISS computer system). Neither of these processes are immediate. The paper claim is only acknowledged as received when accepted by Medicare from a courier. It can be later rejected if not entered properly by the contractor or if its content is incorrect. With the implementation of the five day window, it does not seem that paper submission is still a valid option.  Although a claim can be entered through DDE at any time, it may take several days to process and appear in the CWF as accepted or rejected.

My first challenge in researching this issue was to determine how to define when an NOE was considered late. The admission date is not a problem. Every hospice knows the exact date the contract was executed so the beginning of the five day window is clear. The challenge is how to determine when the NOE is accepted by Medicare.  Here is the key language from the transmittal regarding this issue.  It contains both the definition of a timely filed NOE and the penalty for late filing:

“Timely-filed hospice NOEs shall be filed within 5 calendar days after the hospice admission date. A timely-filed NOE is a NOE that is submitted to the Medicare contractor and accepted by the Medicare contractor within 5 calendar days after the hospice admission date. While a timely-filed NOE is one that is submitted to and accepted by the Medicare contractor within 5 calendar days after the hospice election, posting to the CWF may not occur within that same time frame. The date of posting to the CWF is not a reflection of whether the NOE is considered timely-filed. In instances where a NOE is not timely-filed, Medicare shall not cover and pay for the days of hospice care from the hospice admission date to the date the NOE is submitted to, and accepted by, the Medicare contractor. These days shall be a provider liability, and the provider shall not bill the beneficiary for them. The hospice shall report these non-covered days on the claim with an occurrence span code 77, and charges related to the level of care for these days shall be reported as non-covered, or the claim will be returned to the provider.”

The question that immediately came to mind is what is the meaning of “accepted by the Medicare contractor”?  As they point out, it may take several days for the NOE to show up in the CWF.  If this was the standard, most timely filed NOEs would be considered late.  However, after the NOE is entered, all claim data is processed by the CMS systems each night, like a bank. For reasons I have not been able to determine, the entered NOE is not processed the night it is entered, but remains in an “in process” status for a varying number of days.  Eventually, if it is clean, it is processed and shows up in DDE and the HETS eligibility system as a new hospice benefit period.  This is the first point in the process that the hospice can positively verify that the NOE has been accepted.

For the hospice, the five day window represents a significant challenge in collecting the data necessary for entering the NOE, getting that information to the office for data entry, verifying that it is accurate and complete, and getting it in to the DDE system. If they were also responsible for the time it took to be recognized in the CWF, this task would be impossible.

I approached CMS about this problem and asked the staff associated with this transmittal how a hospice was supposed to determine the date compared with the admission date (accepted by Medicare Contractor) so that they could determine if the NOE was timely or not? The explanation, from Wil Gehne, division of institutional claims processing at CMS, was: “The practical meaning of ‘submitted to and accepted by the Medicare contractor’ is that the NOE was not returned to the provider for correction. The hospice can determine this most quickly in the negative – no NOEs among their RTP’d records. If the NOE is not returned, timely filing will be determined using the receipt date put on the NOE when it is received by the MAC. They can determine it positively only after the NOE is processed by CWF when they see the beneficiary’s hospice benefit period information changed.”

After further clarification, I was able to determine that the date of acceptance of the NOE is the date that the NOE was entered, as long as it was subsequently accepted. The “receipt date” assigned by the Medicare contractor is equal to the entry date of the NOE through DDE. However, this acceptance date can be “revoked” if the NOE is later returned in error. The acceptance date then becomes the receipt date (entry date) of the NOE that finally, and eventually, becomes accepted in the CWF. This means that although the processing time of a clean NOE to the CWF does not impact the hospice, the days it takes to identify it as in error are at the cost of the hospice. It appears that CMS believes that the notification of a rejected NOE is much faster than the notification of an accepted one.  My research so far does not back this up.

When I became aware of this new regulation, I began analyzing this process so that our organization might begin designing tools to assist our customers in the tracking of the NOE and its acceptance.  As part of this task, I had some hospices assist me in tracking when NOEs were entered, when they were rejected or accepted, and when these results were available through DDE or the HETS eligibility system.

One thing that I found is that both accepted and rejected NOEs take several days to process before the hospice has evidence that they can act on regarding the status of the NOE. I believe that this will become a major problem for both CMS and hospice agencies since it will affect reimbursement, and appeals.  To illustrate this point, let’s look at the penalty for late filing and how it is implemented.

CMS has set up the timely filing penalty as a self-reported penalty on the first claim submitted for a hospice patient.  To begin with, the hospice must determine the date the NOE is accepted. If you were to interview 100 hospices today, I believe you would find a wide variety of answers on how this date is determined and how these days are calculated, yet the implementation of this rule is only days away.

Once you determine the date of acceptance, you need to determine if the NOE was timely by counting the number of days since the NOE admission date. The first day is zero (thank you CMS!). This means that if you sign up a patient on Thursday, your NOE has to be accepted by the end of the day Tuesday, or it will be considered late.

If you have determined that the NOE is late, you go back to the admission date and count the number of days from that date to the date you have associated with the acceptance of the NOE. These days are the “liability of the provider”, meaning the CMS should not be billed for the services. This means that the minimum penalty for a late filed NOE is six days of services.  If you receive $150 per day, this is $900.

Once you identify a late filing, you are instructed to alter your first claim for the patient’s first covered month.  On this claim, your are required to report these non-covered days on the claim with an occurrence span code of 77 and the charges related to this span of days are to be reported as non-covered.  This means that the hospice provider is responsible for identifying the late filing, the number of days it was late, and adjusting the claim, all accurately.  These are all tasks that were not previously required and are, in my opinion, weakly defined in this transmittal.

Since CMS has recorded the receipt date of the NOE and has the admission date from the NOE, it can be assumed that they are also capable of determining when an NOE has been filed late and by how many days. This means that it is possible that if the late NOE is not reported or not documented correctly in the subsequent claim, the entire claim could be rejected, further impacting revenue. This option is stated by CMS in my earlier paragraph quoted from the transmittal.

If you are associated with a hospice and you are reading this, I hope that you are beginning to understand the cost associated with this process and the necessity that you handle it as efficiently as possible.  Here are some suggestions that might help:

Examine the flow of documentation from the field to the office.  Timing is essential, develop procedures to electronically transfer this information every day, or some equivalent of this process that assures timely transfer of this information.

  • Make sure that no essential information is omitted, there is not enough time to perform any action twice.

  • Double check and triple check the accuracy of the NOE as it is entered.  Any rejected NOE for any reason will almost certainly put you in the penalty box.

  • Create a spreadsheet to be used for every NOE you execute, at a minimum, include the following information and who performed each task:

    • Admission Date

    • Date NOE documentation received (if different)

    • Date NOE entered (this is your acceptance date)

    • Date the NOE was rejected

    • Date NOE was reentered (this is your new NOE acceptance date)

    • Repeat the previous two steps, if needed

    • Number of days late (if it applies)

  • Make sure that your initial claims reflect the actual late days to the best of your ability, don’t risk your remaining reimbursement on the claim by entering an inaccurate non-covered period.

  • If you deliver your NOE on paper (UB04), implement DDE entry ASAP.

  • Use eligibility (HETS) before the entry of the NOE to verify that the patient is not already contracted with another hospice provider in the CWF.

  • Become familiar with the appeals process, if you are not already, you will need to use it.

In addition to these issues, as if this was not enough, there are other problems that will impact your reimbursement and clog the appeals process.  For example, hospice transfers.  Currently, you cannot enter an NOE and have it accepted until the hospice transferring the patient to you has either entered their NOTR or their final claim.  They are allowed up to five days for this to occur and it takes even longer before it is noted in the CWF so that your NOE can be accepted.  At this point, your NOE, which has not yet been entered, is already late.
This biggest issue you will probably deal with is the rejection of the NOE.  I received a copy of an e-mail recently from PGBA to providers that explained many different issues that can cause an NOE to be rejected.

It explains that an incorrect NOE must be cancelled and resubmitted.  This can only be detected by monitoring all NOEs in the DDE system until they are accepted, even then, they are corrected and resubmitted against your five-day window.

Another issue is that originally CMS wanted this window to be three days instead of five.  Although they adjusted it to five in the final rule, the have announced their intention to drop it back to three at some point in the future.

Like all new CMS regulations, it pays to adapt as much as you can.  There is no avoiding the issue, if you are a hospice, this one is going to cost you. Be one of the organized ones and minimize this expense.

Kalon Mitchell is the president of HIPAA transaction vendor MedTranDirect.

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