More Final Rules: CMS Pegs FY27 Hospice Rate Hike of 2.3%

Shark Week it’s not, but it is Final Rules Week for the Centers for Medicare and Medicaid Services (CMS), with the agency on July 30 issuing a final rule (CMS-1851-F) that would update Medicare hospice payments and the aggregate cap amount for fiscal year (FY) 2027.

This rule and others follow the big news for SNFs late on July 29 when CMS released the FY 2027 SNF PPS, which is summarized in this Park Place news article myzPAX.

For hospice, CMS said it is increasing the hospice payment rate for FY 2027 by 2.3 percent, or $755 million. The number is the result of a finalized 3.2 percent inpatient hospital market basket percentage increase reduced by a 0.9 percentage point productivity adjustment. In April, CMS proposed a hospice payment hike of 2.4 percent, or $785 million.

CMS said 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 percent). 

Service and Spending Variation Index

On other matters, CMS said “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’s 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,” the agency said.

However, CMS said it 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,” CMS said.

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.

Hospice Quality Reporting Program 

CMS said federal regulation has established the hospice quality reporting requirements for hospice programs and requirements 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), CMS said.

“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 percent of hospices were found to be non-compliant. In FY 2025, the percentage of non-compliant hospices increased to 23.53 percent, and in FY 2026 the percentage of non-compliant hospices was 20.37 percent,” CMS said.

The consistent lack of data for approximately one-fifth of hospices limits CMS’s ability to accurately measure the quality of care provided by hospices and reduces the amount of data available to consumers, the agency said.

As a result, in the final rule, CMS said it 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 percent, 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.

More Final Rules

Other final payment rules released by CMS this week include:

-              FY 2027 Inpatient Rehabilitation Facilities (IRF) Prospective Payment System (PPS) Final Rule (CMS-1845-F) - The final rule can be viewed at the Federal Register at: https://www.federalregister.gov/public-inspection/current. For more information about IRF QRP, please visit: https://www.cms.gov/medicare/quality/inpatient-rehabilitation-facility. For more information about IRF PPS, please visit: https://www.cms.gov/medicare/payment/prospective-payment-systems/inpatient-rehabilitation.

-              Fiscal Year 2027 Medicare Inpatient Psychiatric Facility Prospective Payment System Final Rule (CMS-1847-F) The final rule can be viewed at the Federal Register at: https://www.federalregister.gov/public-inspection/current. Information on the Inpatient Psychiatric Facility PPS is available at: https://www.cms.gov/medicare/payment/prospective-payment-systems/inpatient-psychiatric-facility. Information on the Inpatient Psychiatric Facility Quality Reporting Program is available at: https://www.cms.gov/medicare/quality/initiatives/hospital-quality-initiative/inpatient-psychiatric-facility-quality-reporting-ipfqr-program.

Contact Patrick Connole at pconnole@parkplacelive.com with questions.