Who pays when a hospice election is in force
When a Medicare beneficiary elects hospice care, a fundamental statutory shift governs how every subsequent prescription drug claim is funded and adjudicated. Under federal regulations codified at 42 CFR 418.106 and 42 CFR 418.202(f), the Medicare hospice benefit assumes comprehensive clinical and financial responsibility for all medications and biologicals reasonable and necessary for the palliation and management of the terminal prognosis and related conditions. Because these related medications are paid directly from the hospice provider's statutory daily Part A per-diem rate, they are excluded by law from coverage under Medicare Part D.
Medicare Part D may cover a drug during an active hospice election only when the drug is not already paid under the Part A hospice benefit. The July 18, 2014 CMS guidance states the test used at the pharmacy: the drug must treat a condition unrelated to the terminal prognosis. That test is how CMS applies the Part A exclusion. It is not a separate statute that guarantees Part D payment once a clinician says unrelated. Unrelated claims stay subject to the sponsor's formulary rules, including tier placement, quantity limits, step therapy, and prior authorization. Drugs excluded from Part D by statute, including nonprescription drugs, drugs for symptomatic relief of cough and cold, and most prescription vitamins, are not Part D-payable. The same guidance tells hospices not to send beneficiaries to Part D for those products.
The practical answer to the operating scenario is straightforward: relatedness dictates the paying program before any formulary rule is evaluated. If a hospice patient receives a palliative analgesic for breakthrough terminal pain, that medication belongs under the hospice Part A per-diem. If that same patient fills a long-standing maintenance therapy for an unrelated chronic illness, such as open-angle glaucoma, the claim is outside the hospice per diem and may be billed to Part D, still subject to the plan's formulary. However, operationalizing this division across retail pharmacies, hospice interdisciplinary teams, and Part D pharmacy benefit managers (PBMs) requires navigating automated point-of-sale reject edits, standardized clinical attestations, and defined adjudication timelines.
| Coverage Channel | Clinical Scope | Reimbursement Basis | Beneficiary Cost-Sharing | Utilization Rules |
|---|---|---|---|---|
| Hospice Part A Benefit | Palliation and management of terminal illness and related conditions | Bundled into daily Part A hospice per-diem rate paid to provider | About 5% of the hospice's cost, capped at $5, during routine or continuous home care; $0 during general inpatient or respite care | Directed by hospice interdisciplinary group and individualized plan of care |
| Medicare Part D, unrelated drugs | Conditions clinically unrelated to terminal prognosis | Stand-alone Part D plan or MA-PD sponsor | Standard plan copay or coinsurance; capped at $2,100 out-of-pocket in 2026 | Standard formulary tiering, quantity limits, step edits, and clinical PA |
| Part D Statutory Exclusions | OTC products, cough/cold symptom relief, select vitamins | Excluded from federal Part D reimbursement by statutory definition | 100% beneficiary out-of-pocket liability unless provided by hospice under plan of care | Ineligible for Part D billing or coverage exception requests |
Where the relatedness decision is made and recorded
The determination of whether a medication is related or unrelated to a terminal prognosis is fundamentally a clinical decision rendered by the hospice interdisciplinary group (IDG) in collaboration with the patient's attending physician. Under 42 CFR 418.106, the hospice must maintain an individualized written plan of care that specifies all medical interventions, supplies, and medications required to achieve palliation. Because the Medicare hospice benefit is designed to offer holistic, palliative comfort rather than fragmented episodic treatment, the Centers for Medicare & Medicaid Services (CMS) has historically maintained that truly unrelated conditions in a terminally ill patient are exceptional and unusual.
To establish a clear regulatory audit trail, CMS established the formal hospice election statement framework under 42 CFR 418.24. When an individual elects hospice care, the election statement documents the patient's acknowledgment that care will be palliative rather than curative and outlines coverage responsibilities. As part of this structure, the hospice must maintain documentation identifying any conditions, items, services, and drugs determined to be unrelated to the terminal illness. This clinical recordkeeping forms the evidentiary foundation that allows non-hospice providers and Part D sponsors to defend payment determinations during audit reviews.
How the plan learns about the election
A Part D sponsor cannot enforce hospice payment boundaries until its adjudication systems recognize that an active election exists. This data exchange follows a multi-step administrative pipeline. The hospice files a Notice of Election (NOE) with its Medicare Administrative Contractor within five calendar days of the election's effective date. Once the MAC processes the transaction, the beneficiary's enrollment record updates within CMS's central databases, including the Common Working File (CWF) and the Medicare Advantage and Prescription Drug (MARx) system.
CMS transmits this enrollment status to Part D sponsors through the Daily Transaction Reply Report (DTRR). The DTRR delivers a standardized hospice indicator containing the beneficiary's unique identifier, the effective start date of hospice care, and, when applicable, a termination date. At the retail pharmacy counter, when a prescription is presented, the dispensing pharmacy confirms the patient's active Part D sponsor and billing parameters by transmitting an E1 eligibility verification transaction to the CMS Part D Transaction Facilitator.
The four categories and the A3 reject
The point-of-sale mechanism used today is CMS's July 18, 2014 memorandum, Part D Payment for Drugs for Beneficiaries Enrolled in Medicare Hospice. It supersedes portions of a March 10, 2014 memorandum that had sponsors prior-authorize all drugs for hospice enrollees. CMS described access barriers and operational problems after a June 25, 2014 meeting with beneficiary advocates, hospice providers, Part D sponsors, pharmacy benefit managers, and pharmacies. The Center for Medicare Advocacy later reported that more than 40 organizations, including the American Medical Association, objected to the all-drug edit. That count is the advocacy organization's account. It is not a figure stated in the CMS memorandum.
In response to these access barriers, CMS rescinded the universal mandate and replaced it with a targeted, beneficiary-level prior authorization policy restricted to four specific therapeutic categories commonly utilized to manage terminal symptoms:
Analgesics: Opioids, non-opioid pain relievers, and adjuvant medications utilized for pain palliation.
Antinauseants (Antiemetics): Agents prescribed for disease-related or opioid-induced nausea and vomiting.
Laxatives: Agents used to treat constipation, including opioid-induced constipation. A stool softener is in this category only when the NDC listing classifies it as a laxative.
Antianxiety Drugs (Anxiolytics): Sedatives and anxiolytics utilized for terminal anxiety, restlessness, agitation, and dyspnea.
When a pharmacy submits a claim for a medication within these four National Drug Code (NDC) classifications for a beneficiary carrying an active hospice flag, the Part D sponsor's system triggers a point-of-sale rejection under National Council for Prescription Drug Programs (NCPDP) coding standards:
NCPDP Reject Code A3:
This product may be covered under hospice - Medicare A. This code alerts the dispensing pharmacist that Medicare Part A may bear financial responsibility.NCPDP Reject Code 75:
Prior authorization required. This code indicates that administrative approval or a documented override is required to proceed under Part D.Messaging Code 569: Directs the dispensing pharmacy to provide the patient with CMS Form CMS-10147, the standardized Notice of Medicare Prescription Drug Coverage and Your Rights, explaining how to request a coverage determination.
CMS strongly encourages sponsors to place the beneficiary-level hospice prior authorization on only these four categories, and to identify the NDCs with standard industry classifications. Sponsors are not expected to place a hospice prior authorization on other categories. An antihypertensive, a thyroid replacement, or an ophthalmic drop should not receive an A3 hospice reject under that design. It remains subject to ordinary formulary rules. The memorandum uses "strongly encourage" and "not expected." It does not say a broader hospice edit is legally forbidden, so one plan's form shows that plan's practice only.
The same memorandum asks hospices to provide a compassionate first fill when a beneficiary cannot obtain a four-category drug at the point of sale. If that drug later proves unrelated, the hospice and the sponsor are expected to negotiate recovery. The first fill is an access step in the guidance. It is not a Part D coverage determination and it is not a promise that Part D will pay.
| Therapeutic Class | Palliative Intent in Hospice Care | Why CMS targeted the category | Representative Active Agents |
|---|---|---|---|
| Analgesics | Management of moderate to severe pain from terminal malignancy or organ failure | Often used for terminal pain. Inclusion on the edit is not a finding that the fill is related. | Morphine, oxycodone, hydromorphone, fentanyl. The listing service's class, not the brand or the symptom, decides the edit. |
| Antinauseants / Antiemetics | Control of nausea and vomiting induced by uremia, bowel obstruction, or medication | Often used for nausea at the end of life. Relatedness is still decided drug by drug. | Ondansetron, prochlorperazine, metoclopramide, promethazine. An antipsychotic used for nausea is not in this category unless the NDC is classified as an antiemetic. |
| Laxatives | Prevention and treatment of severe opioid-induced constipation | Often used with opioid regimens. A stool softener is in this category only if its NDC is classified as a laxative. | Senna, bisacodyl, lactulose, polyethylene glycol 3350 |
| Antianxiety / Anxiolytics | Palliation of terminal agitation, delirium, panic, and end-stage respiratory dyspnea | Often used for terminal anxiety or restlessness. The NDC class, not the symptom, decides whether the edit fires. | Lorazepam, clonazepam, diazepam, alprazolam, midazolam |
Clearing the reject: the unrelatedness statement and the standard form
The NCPDP A3 reject is an administrative routing gateway rather than a permanent denial. To clear the reject and allow Part D adjudication, the Part D sponsor must receive an attestation confirming that the drug treats a condition unrelated to the terminal prognosis. CMS guidance maintains low friction for this communication: the sponsor may accept an attestation as simple as the single letter "U" or the word "unrelated" transmitted by the hospice provider or the prescriber.
To establish a uniform transmission standard across commercial plans, Medicare Advantage organizations, and hospices, CMS and the NCPDP Work Group 9 Hospice Task Group developed the standardized two-page form titled Hospice Information for Medicare Part D Plans (OMB Control No. 0938-1269). The form is structured into two functional sections:
Section I (Prior Authorization & Override): Captures beneficiary demographics (Name, DOB, Medicare Beneficiary Identifier), prescriber NPI and contact info, hospice provider NPI and secure fax, specific medication names and NDCs, ICD-10 diagnosis codes for the unrelated condition, and prescriber or hospice clinical attestation. A completed Section I provides all data elements required for the sponsor to enter a point-of-sale override.
Section II (Optional Coordination): Permits hospices to communicate a broader medication profile, including drugs covered under the hospice plan of care and financial responsibility designations. Section II is strictly optional and is not required to clear an A3 reject or execute a status update.
When an attending physician who is not employed by or contracted with the hospice prescribes a medication in one of the four categories, that prescriber may give the unrelatedness statement. The July 18, 2014 memorandum also says an unaffiliated prescriber should attest that the statement was coordinated with the hospice. The hospice is expected to keep the clinical basis for the statement and to provide that basis on request. A proactive notice lets the sponsor override the point-of-sale edit. The memorandum says the notice is not a coverage determination.
graph TD
A["Prescription presented at the pharmacy"] --> B{"DTRR shows an active hospice election?"}
B -->|No| C["Ordinary Part D formulary rules"]
B -->|Yes| D{"NDC in one of the four CMS categories?"}
D -->|No| E["No hospice edit expected; ordinary formulary rules"]
D -->|Yes| F["Point-of-sale reject A3, 75, and 569"]
F --> G{"Unrelatedness statement from hospice or prescriber"}
G -->|Related| H["Hospice furnishes the drug under the Part A per diem"]
G -->|Statement accepted| I["Sponsor overrides the hospice edit; formulary rules still apply"]
G -->|No statement| J["Sponsor tells the beneficiary Part D will not cover the drug"]A worked claim record, start to finish (illustrative)
To illustrate how these regulatory mechanisms intersect during routine operations, consider a representative clinical scenario. A dually enrolled Medicare beneficiary with Part A and a stand-alone Prescription Drug Plan (PDP) elects hospice care for end-stage congestive heart failure (CHF). During the first week following election, the patient's family presents two separate prescriptions to the community pharmacy:
Prescription 1: Latanoprost 0.005% Ophthalmic Solution. Prescribed by an independent ophthalmologist for primary open-angle glaucoma, a chronic condition diagnosed seven years prior to the terminal CHF admission.
Prescription 2: Morphine Sulfate 15 mg Oral Immediate-Release Tablets. Prescribed by the hospice attending physician to alleviate severe dyspnea and acute pulmonary congestion secondary to end-stage heart failure.
When the pharmacy submits latanoprost, an ophthalmic prostaglandin analog, the drug is outside the four categories CMS named: analgesics, antinauseants, laxatives, and anxiolytics. Under the 2014 guidance, no hospice prior-authorization edit is expected. The claim is then judged only under the sponsor's ordinary formulary rules. This example does not assign a tier, a copay, or a paid result. Whether the plan covers latanoprost is a formulary fact, separate from the hospice edit.
When the pharmacy submits morphine sulfate, an opioid analgesic in one of the four categories, and the hospice indicator is active, the 2014 guidance calls for a point-of-sale reject with NCPDP codes A3 and 75, plus message code 569. The pharmacy cannot bill Part D for that fill unless the sponsor overrides the hospice edit. CMS did not number the categories, and nothing in the memorandum makes morphine automatically related.
The dispensing pharmacist contacts the hospice clinical coordinator. Because the morphine is intended to palliate terminal CHF dyspnea, the hospice confirms the medication is related to the terminal prognosis. The hospice furnishes the morphine under the Part A per diem. It may charge the beneficiary coinsurance of about 5 percent of the hospice's cost for that outpatient prescription, not more than $5. The example does not set a price.
In a second illustrative branch, an urgent-care prescriber orders a short course of acetaminophen with codeine for an acute wrist sprain after a fall. Codeine is an analgesic, so the four-category edit still fires. The hospice clinical team treats the injury as unrelated to the terminal heart-failure prognosis and sends Section I of Form OMB 0938-1269 with an unrelatedness statement, which CMS allows to be the letter U, and an illustrative sprain diagnosis in the ICD-10 S63 range. Once the sponsor accepts that statement, it can instruct the pharmacy how to override the A3 reject. Ordinary formulary rules still apply. Acceptance does not promise that the claim will pay, and it is not the same thing as an instantaneous approval.
| Operational Step / Parameter | Claim 1: Latanoprost 0.005% Drops | Claim 2: Morphine Sulfate 15 mg Tablets |
|---|---|---|
| Clinical Indication | Primary open-angle glaucoma (pre-existing chronic condition) | Severe dyspnea and pain management in end-stage CHF |
| Therapeutic Classification | Ophthalmic prostaglandin analog, outside the four categories | Opioid analgesic, one of the four categories |
| Point-of-Sale Adjudication | No hospice edit expected; ordinary formulary rules, no tier or payment assumed | Rejected at point of sale: NCPDP Codes A3, 75, and 569 |
| Required Documentation | None; standard prescription order | Form OMB 0938-1269 Section I if unrelated; hospice billing if related |
| Ultimate Paying Program | Part D only if the plan's formulary covers it; no tier assumed | Hospice Part A per-diem (Hospice covers; up to $5 copay) |
Deadlines, coverage determinations and the dispute branches
When the hospice edit is handled as a coverage determination, the July 18, 2014 memo applies the Part D exception timeframes in Chapter 18 of the Medicare Prescription Drug Benefit Manual, section 30.2. Those timeframes are 24 hours for an expedited request and 72 hours for a standard request. For this hospice edit, the memo starts the clock when the hospice or prescriber statement that the drug is unrelated is received, not when the pharmacy first sees the A3 reject.
Expedited requests (24 hours): If applying the standard timeframe could seriously jeopardize the enrollee's life, health, or ability to regain maximum function, the sponsor has 24 hours. Under the 2014 memo, that period begins when the unrelatedness statement is received.
Standard requests (72 hours): The sponsor has 72 hours from receipt of the unrelatedness statement. The memo also says the timeframe may be tolled while necessary information is still outstanding, but only for a reasonable period, and only once when a drug-specific utilization-management exception is part of the same request.
The hospice prior authorization is the threshold question, and any drug-specific utilization-management edit is supposed to be reviewed at the same time. The memo expects sponsors to gather the utilization-management information concurrently with the unrelatedness statement. It does not let a sponsor run the two reviews in sequence and toll the clock twice. Tolling is allowed while the sponsor waits for the information it needs, including the unrelatedness statement, for a reasonable period based on the facts of the case. The sponsor may not keep the request open indefinitely.
The adjudication pathway resolves into three primary operational branches:
Branch 1: Unrelatedness statement accepted. The hospice or prescriber states that the drug is unrelated. The sponsor instructs the pharmacy how to override the hospice edit. Formulary rules, including any separate utilization-management edit, still apply. The override is not itself a promise that the drug is on formulary.
Branch 2: No unrelatedness statement. If the hospice or prescriber does not respond, or refuses to state that the drug is unrelated, the memo says Part A coverage cannot be ruled out and the prior authorization is unfulfilled. The sponsor must tell the beneficiary that the drug is not covered under Part D. That notice is not a finding that the hospice has agreed to pay. A separate path applies when the hospice says the drug is related and is reasonable and necessary: the hospice furnishes it under the Part A per diem.
Branch 3: Beneficiary liability. The 2014 memorandum describes drugs that treat the terminal illness but are not paid by the hospice or by Part D. One case is a drug the interdisciplinary group stops because it is no longer reasonable and necessary. Another is a drug the beneficiary wants that is off the hospice formulary, when the beneficiary refuses a formulary equivalent, or that the hospice finds unreasonable for palliation. An illustrative case is a request for branded transmucosal fentanyl after the hospice has determined oral morphine meets the plan of care. If the beneficiary still fills that drug, the memorandum says the cost is the beneficiary's and Part D has no payment responsibility.
Revocation and discharge: when the edit comes off
Medicare beneficiaries retain the statutory right to voluntarily revoke their hospice election at any time to resume curative treatment. Alternatively, a hospice may discharge a patient if the individual moves outside the service geographic area, is discharged for cause, or demonstrates clinical stabilization such that they no longer meet terminal prognosis criteria. When an election terminates, the hospice must promptly file a Notice of Termination/Revocation (NOTR) or final discharge claim with its MAC within five calendar days.
After the hospice files the final claim or the notice of termination/revocation and the Common Working File updates, the DTRR reports the termination to the sponsor within about 2 to 3 days. During that gap, four-category claims can still reject with A3 because the sponsor's file still shows an active election. The memo tells sponsors to accept documentation from the hospice, the beneficiary, or the prescriber and to remove the hospice edit before the DTRR arrives. Acceptable documents include the beneficiary's written revocation, proof that a final claim was submitted, a Notice of Medicare Non-Coverage when one is required, the hospice discharge summary, or page 1 of the standardized prior-authorization form.
If a sponsor learns of an election after it has already paid claims, the memo expects a re-review of paid claims in the four categories during the election period, coordination with the hospice or prescriber, and negotiation of repayment when the drug was the hospice's responsibility. Sponsors are not expected to reopen claims outside those four categories solely to re-decide relatedness. Ordinary Part D retrospective review still applies. The memorandum does not convert that expectation into a payment regulation, and a recovery negotiation is not an adjudicated overpayment.
What changes on October 1, 2026: the mandatory addendum
For hospice elections beginning on or after October 1, 2026, the written relatedness list stops being a document the beneficiary has to request. CMS issued the FY 2027 hospice fact sheet on July 30, 2026. The final rule, CMS-1851-F, was published on August 3, 2026, at 91 FR 49118. The amendatory text revises 42 CFR 418.24(b)(6), the introductory text of 418.24(c), paragraphs (c)(9) and (c)(10), and 418.24(d). The Cornell Legal Information Institute page linked below still displays the earlier request-triggered rule and points to that Federal Register amendment.
The addendum keeps the title Patient Notification of Hospice Non-Covered Items, Services, and Drugs. Under the FY 2020 rule it was provided on request. Under revised 418.24(b)(6) and (d), for elections beginning on or after October 1, 2026, the hospice must give the individual or representative the addendum in writing at the time of election, which the rule defines as within the first 5 days of the effective date of the election. If the plan of care changes in a way that affects the addendum, the hospice must update it within 3 days and provide the update in writing. The addendum must also be on file for non-hospice providers and Medicare contractors. If the individual dies, revokes, or is discharged inside that window, before the addendum is provided, the rule does not require it to be delivered, and the hospice documents why.
CMS's stated reason is spending, not a new definition of relatedness. The fact sheet says Medicare non-hospice spending for beneficiaries who had elected hospice grew substantially and consistently from FY 2020 through FY 2024, with particularly dramatic increases in Part A and Part B spending. The fact sheet does not quantify a Part D increase in that sentence. CMS ties the change to transparency, hospice accountability, and information for non-hospice providers submitting claims.
The addendum lists conditions, items, services, and drugs the hospice has determined are unrelated and will not cover, with a clinical explanation the beneficiary can understand and references to relevant clinical practice, policy, or coverage guidelines. It also states that immediate advocacy is available through the Beneficiary and Family Centered Care Quality Improvement Organization if the person disagrees. Plans and pharmacies can use that document as the clinical record behind an unrelatedness statement. It does not replace Section I of Form OMB 0938-1269. The 2014 memo still says sponsors should not require a particular form when they already have a statement that the drug is unrelated, and a hospice's proactive notice is not itself a coverage determination.
Does the control work? The OIG and peer-reviewed record
While the 2014 guidance established an operational truce between payers and palliative providers, oversight audits and academic literature reveal that the four-category prior authorization edit remains structurally porous. In August 2019, the HHS Office of Inspector General (OIG) released a landmark audit titled Medicare Part D Is Still Paying Millions for Drugs Already Paid for Under the Part A Hospice Benefit (Report A-06-17-08004). Analyzing 2016 national claims data comprising 6,689,255 prescription records filled during active hospice elections, OIG calculated that Medicare Part D spent $422.7 million for drugs provided to hospice beneficiaries.
OIG drew a stratified random sample of 200 Part D prescription drug event records, not 200 beneficiaries. Hospices told OIG they should have paid for 86 of those records. From that sample OIG estimated $160.8 million in 2016 Part D total cost for drugs hospices said they should have covered. For the drugs associated with the remaining $261.9 million, hospices said they should not have paid. OIG's basis for disagreeing was a review of CMS communications with hospices and sponsors from 2012 through 2016, which indicated that hospices or beneficiaries likely should have paid for many of those drugs. OIG recommended that CMS work directly with hospices and develop controls, with Part D sponsors, seeking whatever authorities are necessary so Part D does not pay for drugs the hospice benefit should cover. CMS said its existing work, including hospice education and sponsor prior authorization, would address duplicate payment. OIG disagreed and kept the recommendation. These are 2016 estimates from a sample. They are not an adjudicated overpayment and not a current-year program total.
A separate study asked a narrower question. Tjia and colleagues, in the Journal of Pain and Symptom Management (2025;70(1):e55-e64), analyzed medications reported on Medicare hospice claims from 2014 through 2018. They did not analyze Part D payments. Table 1 shows hospice enrollment of 1,047,341 in 2014, and the methods exclude January through March 2014, then 1,344,593 in 2015, 1,367,186 in 2016, 1,415,917 in 2017, and 1,464,405 in 2018.
Mean hospice dispensings per enrollee moved from 12.1 in 2014 to 12.4 in 2015, a change the authors report as statistically significant, and returned to 12.1 in 2016. The test for trend from 2014 through 2018 was not significant (p = 0.48). Morphine and lorazepam remained the most frequently reported medications. The authors describe the prior-authorization mechanism as largely ineffective at changing hospice medication reporting, and they note that the study cannot show whether Part D duplicate payment changed. The practical reading for sponsors is limited: a four-category point-of-sale edit did not, in these hospice claims, produce a lasting rise in drugs the hospice reported. It is not a current measurement of Part D leakage.
Cost-sharing: the $5 hospice copay versus 2026 Part D cost-sharing
The financial consequences of the relatedness determination extend directly to beneficiary out-of-pocket liability. For related drugs provided under the Medicare Part A hospice benefit, statutory cost-sharing is exceptionally modest. Under Chapter 11 of the Medicare Claims Processing Manual (Pub. 100-04), a hospice provider may charge an outpatient coinsurance of five percent of the reasonable cost of the drug to the hospice, capped at an absolute maximum of $5.00 per prescription. The hospice provider is legally responsible for billing and collecting this coinsurance; retail pharmacies do not collect it at the counter. Furthermore, during general inpatient care or inpatient respite care, drug coinsurance is waived entirely ($0).
For unrelated drugs that Part D covers, the plan's ordinary cost-sharing applies. In 2026 the Medicare prescription drug law caps a beneficiary's out-of-pocket spending on covered Part D drugs at $2,100. After the enrollee reaches that amount, the enrollee owes $0 for covered Part D drugs for the rest of the calendar year. The cap is the beneficiary's limit. It does not mean the plan pays the full drug cost, and it does not apply to drugs Part D does not cover, including drugs paid under the hospice per diem and drugs excluded from Part D by statute. The Medicare Prescription Payment Plan can spread covered-drug out-of-pocket costs across the year. It does not create coverage for a rejected hospice claim.
Medicare Advantage coordination is a medical-benefit rule and a drug-benefit rule, and they do not use the same termination date. Chapter 9 of the Medicare Benefit Policy Manual, section 20.4, says that after a managed care enrollee elects hospice, Medicare pays the hospice, and pays for attending-physician services and for care unrelated to the terminal illness, through fee-for-service. The enrollee can remain in the plan for extra benefits such as dental or vision. Fee-for-service payment continues through the end of the month of a live discharge or revocation, and plan billing resumes on the first day of the next month. The manual points to 42 CFR 417.531 and 417.585. Those sections govern hospice services for cost-contract HMOs and competitive medical plans. They are not the MA-PD drug rule. CMS publication 02154 states that if a Medicare Advantage plan includes drug coverage, the plan covers drugs that are not related to the terminal illness. The 2014 Part D memo draws a different line for Part D: coverage of Part D drugs, including drugs related to the terminal illness, resumes on the hospice termination date, while Part C medical claims stay in fee-for-service through the end of that month. Unrelated Part D drugs during the election still follow the plan's formulary and the 2026 $2,100 out-of-pocket cap.
| Administrative Instrument | Coding / Identifier | Core Operational Function | Governing Authority |
|---|---|---|---|
| Hospice Point-of-Sale Reject | NCPDP Reject Code A3 | Flags claim that product may be covered under Medicare Part A hospice per-diem | CMS July 18, 2014 Revised Guidance |
| Prior Authorization Edit | NCPDP Reject Code 75 | Informs dispensing pharmacy that administrative prior authorization is required | NCPDP Telecommunication Standard |
| Notice of Beneficiary Rights | Code 569 pharmacy notice (CMS-10147) | Pharmacy-delivered notice informing patient of rights to request coverage determination | July 18, 2014 CMS memo |
| Part D Hospice Information Form | OMB Control No. 0938-1269 | Standardized form; Section I provides data elements to override A3 reject | CMS / NCPDP Work Group 9 |
| Expedited Determination | 24-Hour Adjudication Clock | 24 hours after the unrelatedness statement is received, under the 2014 memo | 2014 CMS memo, applying expedited exception timeframes |
| Standard Determination | 72-Hour Adjudication Clock | 72 hours after the unrelatedness statement is received; limited tolling is allowed | 2014 CMS memo, applying standard exception timeframes |
| Mandatory Non-Covered Addendum | 42 CFR 418.24(b)(6) and (d) | Written unrelated-item list within 5 days of election; updates within 3 days | CMS-1851-F, 91 FR 49118 (August 3, 2026), elections on or after October 1, 2026 |
Sources
This analysis is based on the CMS July 18, 2014 memorandum, the August 3, 2026 hospice final rule and its July 30, 2026 fact sheet, the Medicare manuals, the 2019 OIG audit of 2016 claims, and the 2025 hospice-claims study:
42 CFR 418.106, Condition of participation: Drugs and biologicals, medical supplies, and durable medical equipment (Cornell Legal Information Institute mirror)
42 CFR 418.202, Covered hospice services (Cornell Legal Information Institute mirror)
42 CFR 418.24, Election of hospice care (Cornell Legal Information Institute mirror of the pre-amendment text, with a link to the August 3, 2026 amendment at 91 FR 49176)
CMS Model Guidance: Model Example of Hospice Election Statement (Last updated August 2026)
Medicare.gov: Hospice Care Coverage, Prescription Drug Coinsurance, and Provider Rules
CMS Publication No. 02154: Medicare Hospice Benefits Booklet
Medicare.gov: Medicare Prescription Payment Plan - Cost-Sharing Caps and Payment Spreading
Blue Shield of California: Medicare Part D Prescription Coverage Request Form - Hospice (2023)
NCPDP Work Group 9: Medicare Part D Frequently Asked Questions on Hospice Prior Authorization
Center for Medicare Advocacy: Hospice and Access to Medications Update - CMS Replacement Guidance




