The Centers for Medicare & Medicaid Services finalized a 2.3% Medicare payment increase for hospice providers for fiscal year 2027, a figure that falls short of what the agency originally proposed and one that major industry groups say will compound financial strain across the sector.
CMS issued the final rule, designated CMS-1851-F, on July 30, 2026. The rule takes effect Oct. 1, 2026, and is projected to increase hospice payments by approximately $755 million over fiscal year 2026.
The finalized rate is lower than the 2.4% increase — worth an estimated $785 million — that CMS had proposed in April. The reduction results from applying a 3.2% inpatient hospital market basket increase against a 0.9 percentage point productivity adjustment required by statute. The aggregate cap amount for FY 2027 was finalized at $36,174.75, up from $35,361.44 in fiscal year 2026.
Industry Groups Express Concern
The National Alliance for Care at Home, an organization formed from the merger of the National Association for Home Care & Hospice and the National Hospice and Palliative Care Organization, said the final rate does not match what hospice providers spend to deliver care.
“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.
LeadingAge, which represents nonprofit providers of aging services, offered a similar assessment.
“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. The organization had submitted a 30-page comment letter to CMS during the proposed rule period raising concerns about both the payment level and the agency’s methodological choices in the final rule.
Hospices that fail to submit required quality reporting data will face a steeper penalty: their payment update is reduced by 4 percentage points, resulting in a net 1.7% reduction from the prior fiscal year’s payment rate under the statute.
Transparency Index Draws Sharp Criticism
Much of the industry’s sharpest reaction focused not on the payment rate itself but on CMS’s decision to finalize the Service and Spending Variation Index — known as the SSVI — largely unchanged from the proposed rule.
The SSVI is a scoring system built on nine claims-based measures designed to identify variation in non-hospice Medicare spending for patients enrolled in hospice. CMS uses the index to generate a public-facing icon on the Medicare.gov Compare Tool, flagging hospice providers whose patients’ non-hospice spending appears elevated relative to peers.
Providers have objected that the index holds them responsible for spending decisions made by other clinicians — decisions hospices neither authorize nor track.
“We are disappointed that the agency finalized the Hospice SSVI largely as proposed, despite the detailed comments submitted by us and others in the provider community raising significant concerns about the methodology,” Gurian said.
Critics have characterized the SSVI as built on a flawed methodology that penalizes providers for non-hospice claims they have no visibility into and no ability to control, with no established process for reviewing or correcting the data before it is made publicly visible on the comparison tool.
Disclosure Requirements Expand
The final rule mandates that all hospice providers supply an addendum to the election statement for Medicare beneficiaries at the time of hospice enrollment. The addendum informs patients and their families about services not covered under the hospice benefit — a disclosure requirement that had not previously been uniformly applied.
The rule also updates telehealth face-to-face encounter policy for hospice in line with the Consolidated Appropriations Act of 2026, and clarifies requirements around discharge from hospice care.
One Win for Providers
Not all provisions of the final rule drew opposition. LeadingAge described CMS’s decision to grant a waiver for Hospice Outcomes and Patient Evaluation assessments dated Oct. 1 through Dec. 31, 2025 as “an enormous win,” saying providers had raised substantive concerns about implementation challenges with the assessment tool during that period.
Background
The annual hospice wage index and payment rate update is required under the Medicare statute. Hospice providers have pushed back in recent years on payment updates they say lag behind inflation and sustained increases in labor costs. The FY 2027 final rule, published in the Federal Register on Aug. 3, 2026, extends that ongoing tension between agency payment calculations and the costs providers report on the ground.
Why This Matters for Home Care
Payment constraints in the hospice sector ripple directly into decisions families make when arranging comfort care at home. As hospice providers absorb tighter margins, families often look beyond covered services to supplemental home care equipment — including adjustable care beds — to support the comfort and dignity of a loved one receiving care at home. Families navigating these choices can explore home hospital bed options at sondercare.com/beds/.
