Fiscal Year (FY) 2027 Hospice Wage Index and Payment Rate Update and Hospice Quality Reporting Program Requirements Proposed Rule (CMS-1851-P)
On April 2, 2026, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule (CMS-1851-P) that would update Medicare hospice payments and the aggregate cap amount for fiscal year (FY) 2027 in accordance with existing statutory and regulatory requirements.
This proposed rule also includes an analysis of Medicare non-hospice spending under a hospice election, including details regarding a hospice service and spending variation index (SSVI). The SSVI includes a comprehensive scoring system that is calculated using nine claims-based measures, each representing different aspects of hospice utilization as well as non-hospice spending, that identifies hospice providers for increased transparency and oversight. This rule also proposes changes to the hospice election statement regulations by proposing to require the addendum to be mandatory for all Medicare beneficiaries at the time of hospice election. Additionally, this rule proposes conforming regulation text changes to 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 proposes conforming regulation text changes to the hospice telehealth face-to-face policy in accordance with the Consolidated Appropriations Act, 2026. This proposed rule also includes requests for information on enhancing community palliative care services under current Medicare benefits; the development of a hospice-specific wage index using BLS data; and information regarding the overlap between hospice and assisted suicide or “medical aid in dying.” Finally, this rule proposes adding an icon identifying hospice facilities on the Medicare.gov Compare Tool that have failed to meet Hospice Outcomes and Patient Evaluation (HOPE) reporting requirements for the Hospice Quality Reporting Program (HQRP).
FY 2027 Routine Annual Rate Setting Changes
For FY 2027, CMS proposes to update the hospice payment rate by 2.4% (an estimated increase of $785 million in payments from FY 2026). This results from the proposed 3.2% inpatient hospital market basket percentage increase reduced, as required by law, by a proposed 0.8 percentage point productivity adjustment. The proposed FY 2027 rates for hospices that do not submit the required quality data would reflect the proposed FY 2027 hospice payment update percentage of 2.4% minus four percentage points as required by law, which would result in a 1.6% reduction over the previous year’s payment rate. These proposed 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 which limits the overall payments made to a hospice annually. The proposed hospice cap amount for FY 2027 is $36,210.11 (FY 2026 cap amount of $35,361.44 increased by the FY 2027 hospice payment update percentage of 2.4%).
Service and Spending Variation Index
With the growing concern of fraud, waste, and abuse around 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 included identifying patterns of hospice care delivery and associated non-hospice spending per hospice day. The comprehensive nature of the services covered under the Medicare hospice benefit is structured so that hospice beneficiaries would not have to routinely seek items, services, and 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 who are approaching the end of life, and CMS has reiterated since 1983 that “virtually all” care needed by the terminally ill individual 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 potential inappropriate utilization, quality of care, or compliance concerns. The SSVI uses a scoring system, with a higher score representing potential concerning hospice utilization and non-hospice spending. CMS is soliciting comments on the metrics and the scoring system of the SSVI. This information provides transparency into the data CMS is analyzing, can help beneficiaries make informed decisions, and can be used to help target program integrity efforts. This rule discusses the SSVI, which includes data from FYs 2024 and 2025, displays provider-level data, and includes each hospice’s SSVI score. 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.cms.gov/medicare/payment/fee-for-service-providers/hospice/hospice-regulations-and-notices/cms-1851-p.
Proposed 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 transparency regarding coverage for beneficiaries and potentially help ensure the provision of comprehensive and holistic services for Medicare beneficiaries who elect the hospice benefit. 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 finalizing this policy beginning 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 proposed rule, CMS is proposing to make the addendum mandatory for all hospice elections and not just upon request. This would ensure that all beneficiaries have additional transparency regarding non-covered items, services, and 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 may hold hospices more accountable for the items, services, and drugs they should provide. The addendum would also provide needed information to non-hospice providers for claims submission.
Hospice Quality Reporting Program (HQRP)
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, in accordance with statute, the APU penalty increased from two percentage points to four percentage points for hospices that did not comply with HQRP.
Despite the doubling of the APU penalty increase from two percentage points to four percentage points in FY 2024, CMS has not observed a 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 the ability of CMS to accurately measure the quality of care provided by hospices and limits the amount of data available to consumers.
In this proposed rule, CMS is proposing to add an icon on the Medicare.gov Compare Tool that will identify hospices failing to submit any data or submitting less than the required 90% of quality data, under the HOPE tool within 30 days of the patient’s admission or discharge date within a year period beginning no earlier than FY 2028.
View the propose rule on the Federal Register at https://www.federalregister.gov/d/2026-06604.
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