Medicare will pay hospices 2.3 percent more next year, and the same rule builds a public score that ranks them
2.3 percent. That is what Medicare adds to hospice payment rates for the fiscal year that begins on 1 October, and almost none of it was a choice.
The Centers for Medicare and Medicaid Services filed the FY 2027 hospice wage index and payment rate final rule for public inspection on Friday afternoon. The formula is statutory. The update is the inpatient hospital market basket increase of 3.2 percent, reduced by a productivity adjustment of 0.9 percentage point, both taken from IGI's second quarter 2026 forecast with historical data running through the first quarter of this year. In the proposed rule the adjustment was 0.8 percentage point and the update was 2.4 percent, so the final number lands a tenth of a point below where the proposal put it, on a revision the agency attributes to newer productivity data from the Bureau of Labor Statistics.
CMS puts the aggregate effect at $755 million in increased payments to hospices.
The cap, and the penalty
The aggregate cap rises by the same percentage because the statute says it must. For the FY 2027 cap year it becomes $36,174.75, up from $35,361.44. Commenters asked for the cap to be replaced, updated differently, or adjusted for regional cost differences, and CMS answered that it has no statutory authority to do any of the three.
Hospices that do not submit the required quality data get minus 1.7 percent, which is the 2.3 percent update less a four percentage point reporting penalty.
A score, and then a ranking
The genuinely new thing in this rule is not a rate.
CMS is finalising a hospice service and spending variation index built from nine claims-based measures, covering visit and discharge patterns and Medicare spending that happens outside the hospice benefit while a patient is enrolled. The rule sets out the reasoning openly: long lengths of stay combined with high live discharge rates may signal enrolment of ineligible beneficiaries, and few visits, short visits or fewer weekend visits may indicate minimal service provision. Non-hospice spending alone carries eight separate thresholds, so a hospice spending well outside the benefit scores worse than one spending modestly outside it.
The agency writes that it should proceed with publicly releasing the index to improve beneficiary choice, and that after considering comments it is keeping the current measures and scoring assignments as designed.
Elsewhere the rule makes the election statement addendum mandatory at every hospice election, extends the telehealth allowance for the face-to-face recertification encounter to 31 December 2027, and adds a data submission icon to the Care Compare tool. The impact analysis rests on FY 2025 claims data as of 12 May 2026. The regulations take effect on 1 October.
