CMS Increases Hospice Payment Rate by 2.3%

WASHINGTON—The Centers for Medicare & Medicaid Services (CMS) issued a final rule that would increase Medicare hospice payments and the aggregate cap amount for fiscal year 2027 under existing statutory and regulatory requirements.

For fiscal year 2027, CMS said it updated the hospice payment rate by 2.3% (an estimated increase of $755 million in payments from fiscal year 2026). This figure results from the finalized 3.2% market basket percentage increase reduced, as required by law, by a 0.9 percentage point productivity adjustment.

In April, CMS proposed updating the hospice payment rate by 2.4%, an increase of about $785 million in payments from the 2026 fiscal year.

The rates for hospices that do not submit required quality data information include the fiscal year (FY) 2027 hospice payment update percentage of 2.3% minus four percentage points, which would result in a 1.7% reduction over the previous year’s payment rate.

Hospice payments are subject to a statutory aggregate cap limiting the overall payments made to a hospice annually. The finalized hospice cap amount for fiscal year 2027 is $36,174.75 (that is the FY 2026 cap amount of $35,361.44, increased by the FY 2027 hospice payment update percentage of 2.3%).

CMS said the final rule also highlights Medicare non-hospice spending under a hospice election, using data from the hospice service and spending variation index (SSVI). The SSVI includes a scoring system calculated using nine claims-based measures, each representing a different aspect of hospice utilization as well as non-hospice spending. This data indicates hospice providers that might need additional targeted education and oversight.

CMS said the new rule also: 

• Finalizes changes to the hospice election statement regulations; these regulations require hospices to provide to all Medicare beneficiaries, at the time of hospice election, an addendum to the election statement regarding coverage of non-hospice services
• Finalizes conforming regulation text changes that allow a physician designee and the physician member of the interdisciplinary group, in addition to the hospice medical director, to discharge a patient from hospice care
• Finalizes conforming regulation text changes to the hospice telehealth face-to-face policy under the Consolidated Appropriations Act, 2026
• Includes a summary of comments from requests for information on enhancing community palliative care services under current Medicare benefits; developing a hospice-specific wage index using BLS data; and describing any experiences with overlap between hospice and assisted suicide or “medical aid in dying.”

Advocates expressed disappointment that CMS settled on a payment update that is lower than the one it proposed earlier.

The National Alliance for Care at Home (the Alliance) said it was deeply concerned because provider-level SSVI data is not suitable for targeting oversight or enforcement due to fundamental validity and methodological problems. The organization said hospices have little to no insight into claims submitted by non-hospice providers that drive these scores, and the Alliance is particularly troubled that CMS finalized the SSVI without a reconsideration process or preview period.

“CMS’s 2.3% payment update does not reflect the true cost of delivering hospice care and adds further strain to providers who are already stretched thin,” said Jennifer Sheets, CEO of the Alliance. “Compounding that pressure is a Service and Spending Variation Index built on a fundamentally flawed methodology that penalizes legitimate providers for non-hospice claims they have no visibility into nor control over, with no process to review or correct the data before it is made public. This is not a sound approach to program integrity. An inadequate payment update combined with an unreliable oversight tool creates a serious and growing burden for legitimate providers working to serve their communities.” 

LeadingAge called out the SSVI issues as well, and also said it was deeply concerned by CMS’s decision to require an addendum for every hospice enrollment, saying it would increase administrative burden and divert resources away from care. 

“The final rule’s 2.3% payment update, a reduction from the initial proposal, falls short of what providers, including our mission-driven and nonprofit members, need to keep pace with rising costs,” said Mollie Gurian, vice president of government affairs for LeadingAge. “Reimbursement that fails to cover the true cost of delivering care and services puts providers’ ability to serve those in need at risk and creates a threat to care access.