Fiscal Year 2027 Hospice Wage Index and Payment Rate Update and Hospice Quality Reporting Program Requirements Final Rule (CMS-1851-F)
On July 30, 2026, the Centers for Medicare & Medicaid Services (CMS) issued a final rule (CMS-1851-F) that would update Medicare hospice payments and the aggregate cap amount for fiscal year (FY) 2027 under existing statutory and regulatory requirements.
This 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 comprehensive scoring system calculated using nine claims-based measures, each representing a different aspect of hospice utilization as well as non-hospice spending. These data indicate hospice providers that might need additional targeted education and oversight. This 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. Additionally, this rule 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, which will help improve flexibility for hospices and reduce regulatory burden.
This rule also finalizes conforming regulation text changes to the hospice telehealth face-to-face policy under the Consolidated Appropriations Act, 2026. The final rule 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.”
FY 2027 Routine Annual Rate Setting Changes
For FY 2027, CMS updated the hospice payment rate by 2.3% (an estimated increase of $755 million in payments from FY 2026). This figure results from the finalized 3.2% inpatient hospital market basket percentage increase reduced, as required by law, by a finalized 0.9 percentage point productivity adjustment. The finalized FY 2027 rates for hospices that do not submit required quality data information include the finalized FY 2027 hospice payment update percentage of 2.3% minus four percentage points as required by law, which would result in a 1.7% reduction over the previous year’s payment rate. These finalized payment rates reflect the most accurate, updated data available on the cost of goods, services, and labor.
Hospice payments are subject to a statutory aggregate cap limiting the overall payments made to a hospice annually. The finalized hospice cap amount for FY 2027 is $36,174.75 (FY 2026 cap amount of $35,361.44 increased by the FY 2027 hospice payment update percentage of 2.3%).
Service and Spending Variation Index
Given the growing concern of fraud, waste, and abuse in hospice care, CMS has continued to monitor trends on a variety of metrics from hospice claims, including non-hospice spending during a hospice election. CMS’ internal monitoring has identified patterns of hospice care delivery and associated non-hospice spending per hospice day. The comprehensive services covered under the Medicare hospice benefit are structured so that hospice beneficiaries do not have to routinely seek items, services, or drugs beyond those provided by hospice. CMS continues to believe that it would be unusual and exceptional to see services provided outside of hospice for those individuals approaching the end of life and has reiterated since 1983 that “virtually all” care needed by the terminally ill would be provided by the hospice.
However, CMS has seen non-hospice spending continue to rise in recent years. In response, CMS developed a service and spending variation index (SSVI), using metrics collected from claims data, that can signal potentially inappropriate utilization or concerns with quality of care or compliance. The SSVI uses a scoring system, with a higher score representing potential concerning hospice utilization and non-hospice spending.
This information provides transparency for CMS data analysis, can help beneficiaries make informed decisions, and could support program integrity efforts. CMS solicited comments on the metrics and the SSVI scoring system and summarizes those comments in this final rule. Additionally, this final rule discusses the SSVI, which includes data from FYs 2024 and 2025, displays provider-level data, and includes each hospice’s SSVI score. This final rule uses more recent claims data to update the SSVI, though no substantive changes to the methodology were made. To view the SSVI scores for FYs 2024 and 2025, additional data from claims-based measures, and related documentation on the methodology, visit: https://www.federalregister.gov/d/2026-15686.
Finalized Mandatory Hospice Election Statement Addendum
The hospice election statement addendum is a written addendum to a Medicare hospice election statement that lists and explains what conditions, items, services, or drugs the hospice has determined are not related to the beneficiary’s terminal illness and related conditions — and will therefore not be covered under the Medicare hospice benefit. In the FY 2020 Hospice Final Rule (84 FR 38484), CMS finalized the requirement that a hospice provide a hospice election statement addendum to a beneficiary upon request to increase coverage transparency and potentially help ensure that Medicare beneficiaries who elect the hospice benefit are provided comprehensive and holistic services. Hospices are also required to provide the hospice election statement addendum to requesting non-hospice providers who furnish services to a beneficiary under hospice.
Despite this addendum requirement being finalized in FY 2020, Medicare non-hospice spending for beneficiaries who have elected the hospice benefit has shown substantial and consistent growth from FY 2020 through FY 2024, with particularly dramatic increases in Part A and B spending. This may suggest that the policy requirement stipulating that hospices only provide the addendum to beneficiaries (or their representatives) that request it — rather than every beneficiary who elects the benefit — has not achieved the intended accountability objective of ensuring that hospices provide virtually all care needed by terminally ill individuals as required under the comprehensive and holistic Medicare hospice benefit. Additionally, many beneficiaries or their representatives may not realize the importance of asking for the addendum and may continue to bear more financial burden as a result.
In this final rule, CMS made the addendum mandatory for all those electing hospice and not just those who request the addendum. This change ensures that all beneficiaries have greater transparency into non-covered items, services, or drugs to make care decisions that align with their treatment preferences and goals, potentially leading to a decrease in beneficiary out-of-pocket costs. This requirement may hold hospices more accountable for the items, services, and drugs they are required to provide. The addendum also will provide needed information to non-hospice providers for claims submission.
Hospice Quality Reporting Program
The Secretary, authorized by Section 1814(i)(5) of the Social Security Act, established the hospice quality reporting requirements for hospice programs and is also required to publicly report quality measures that relate to the care provided by hospice programs across the country on https://www.medicare.gov/care-compare/. Since FY 2014, the failure of hospices to comply with quality data reporting requirements results in a two percentage-point reduction to the annual payment update (APU) for the corresponding FY. In the FY 2022 Hospice Final Rule, CMS finalized that beginning with the FY 2024 APU and for each subsequent year, under statute, the APU penalty increased from two percentage points to four percentage points for hospices that did not comply with the Hospice Quality Reporting Program (HQRP).
Despite the doubling of the APU penalty increase in FY 2024, CMS has not seen significant improvement in the number of hospices meeting the HQRP reporting requirements. In FY 2024, the first year of the percentage points APU penalty, 22.06% of hospices were found to be non-compliant. In FY 2025, the percentage of non-compliant hospices increased to 23.53%, and in FY 2026 the percentage of non-compliant hospices was 20.37%. The consistent lack of data for approximately one-fifth of hospices limits CMS’ ability to accurately measure the quality of care provided by hospices and reduces the amount of data available to consumers.
In this rule, CMS will add an icon to the Medicare.gov Care Compare tool to identify hospices that fail to submit any quality data, or submit less than the required 90%, within a given year — effective no earlier than FY 2028. To comply, hospices must submit quality data through the Hospice Outcomes and Patient Evaluation (HOPE) tool within 30 days of the patient's HOPE admission, HOPE Update Visit (HUV), and HOPE discharge dates.
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