CMS Proposes FY 2027 Hospice Payment Update and New Oversight Measures

On April 2, 2026, the Centers for Medicare & Medicaid Services (CMS) issued the Fiscal Year (FY) 2027 Hospice Wage Index and Payment Rate Update Proposed Rule, outlining payment changes, new oversight mechanisms, and evolving quality reporting requirements for hospice care.

With hospice providers continuing to navigate workforce pressures, rising costs, and increasing compliance demands, understanding the potential impact of this proposed rule is essential.

Here's an overview of the proposed updates—and where the industry may need further clarity and support.

Hospice Payment Rate Update for FY 2027

CMS proposes a 2.4% increase to hospice payment rates for FY 2027, an estimated $785 million in additional payments over FY 2026. As in prior years, this update reflects a 3.2% inpatient hospital market basket increase, reduced by a 0.8 percentage point productivity adjustment in accordance with statutory requirements.

The aggregate cap on payments would increase from $35,361.44 to $36,210.11.

Hospices that do not submit required quality data would see their update percentage reduced by four points, resulting in a 1.6% payment cut compared to FY 2026.

While the payment increase offers some relief, many providers continue to face economic pressures that outpace reimbursement growth, particularly related to workforce shortages, inflation, and rising supply and service costs.

National Alliance for Care at Home CEO, Jennifer Sheets, said of the proposed rule:

"While a 2.4% payment increase is a step in the right direction, more must be done to ensure that high-quality providers have the resources they need to operate in this demanding environment. We must protect this essential service so every American can receive compassionate, dignified care at the end of life."

New: Service and Spending Variation Index (SSVI)

One of the more significant additions in this proposed rule is the introduction of the Service and Spending Variation Index (SSVI)—a comprehensive scoring system calculated using nine claims-based measures that captures hospice utilization patterns and non-hospice spending during a hospice election.

CMS has observed a consistent rise in non-hospice spending for beneficiaries who have elected hospice, raising concerns around fraud, waste, and abuse. The SSVI is designed to bring greater transparency to provider-level data and help target program integrity efforts. A higher SSVI score signals potentially concerning utilization or compliance patterns.

CMS is soliciting public comments on the SSVI's metrics and scoring methodology, and provider-level SSVI scores for FYs 2024 and 2025 are available for review on the CMS website.

For hospice organizations, understanding where your agency falls within this index—and why—will be increasingly important as CMS uses this data to inform oversight activity.

Proposed Mandatory Hospice Election Statement Addendum

Since FY 2020, hospices have been required to provide the election statement addendum—a written document listing items, services, and drugs not covered under the hospice benefit—only upon request. CMS now proposes making the addendum mandatory for all hospice elections, effective for elections on or after October 1, 2026.

The rationale? Non-hospice Medicare spending for hospice-enrolled beneficiaries has grown substantially from FY 2020 through FY 2024, with notable increases in Part A and B spending. CMS believes the request-only policy has not achieved its intended accountability objective, and that many beneficiaries may not know to ask.

Making the addendum universally required would increase transparency for beneficiaries, potentially reduce out-of-pocket costs, and hold hospices more accountable for the comprehensive, holistic care they are expected to provide. It would also give non-hospice providers the documentation they need for claims submission.

Industry leaders like the National Alliance for Care at Home have expressed support for CMS's efforts to strengthen program integrity through both the SSVI and the mandatory addendum, while urging CMS to implement these measures carefully to avoid unintended consequences that could disrupt access to care or create unnecessary burden for legitimate providers. As the Alliance noted, it is critical that any new policies reflect the clinical complexity of end-of-life care.

Hospice organizations should begin evaluating their current addendum workflows now to understand what operational changes this proposal would require.

Regulatory Clarifications

This rule also proposes conforming changes to existing regulations aimed at improving flexibility and reducing administrative burden.

• Hospice discharge authority: CMS proposes allowing 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.
• Telehealth face-to-face policy: Conforming changes to hospice telehealth face-to-face regulations are proposed in accordance with the Consolidated Appropriations Act, 2026.

These updates reflect CMS's ongoing effort to align documentation requirements with current care delivery practices.

Hospice Quality Reporting Program (HQRP) Updates

Non-compliance with HQRP reporting requirements remains a persistent challenge. In FY 2024, the first year of the four-percentage-point APU penalty, 22.06% of hospices were found non-compliant. That figure rose to 23.53% in FY 2025 before declining slightly to 20.37% in FY 2026.

Approximately one in five hospices is consistently not submitting required quality data, limiting CMS's ability to accurately measure care quality and reducing the information available to consumers.

In response, CMS is proposing to add an icon to the Medicare.gov Compare Tool identifying hospices that fail to submit any data, or submit less than the required 90% of HOPE tool data within 30 days of admission or discharge. This transparency measure would take effect no earlier than FY 2028.

For agencies still working toward HOPE optimization, the public visibility implications of this proposal are significant. Organizations that have not yet operationalized HOPE submission workflows should treat this as an additional call to action.

Requests for Information

CMS issued several Requests for Information (RFIs) alongside this proposed rule, seeking public input on:

• Enhancing community palliative care services under current Medicare benefits
• Developing a hospice-specific wage index using Bureau of Labor Statistics (BLS) data
• The overlap between hospice and assisted suicide or medical aid in dying

These RFIs signal areas where CMS is gathering field perspective before taking regulatory action. Hospice providers and advocacy organizations have a meaningful opportunity to shape future policy direction by responding.

What's Next: CMS Invites Public Feedback

The FY 2027 proposed rule introduces meaningful changes, from the payment update and new SSVI to a mandatory election statement addendum and increased quality reporting transparency. The stakes for non-compliance and underperformance are growing, and the window to influence the final rule is now.

CMS is currently seeking public input. Providers, industry groups, and stakeholders are encouraged to review and respond to ensure the final rule reflects the needs and realities of today's hospice environment:

• Full proposed rule: Federal Register – CMS-1851-P
• SSVI data and methodology: CMS Hospice Regulations and Notices

As the industry reflects on these proposals, one thing is clear: ongoing feedback from the field will be key to shaping a future where high-quality, compassionate hospice care is both sustainable and accessible.

Stay Ahead of CMS Proposed Hospice Changes with Maxwell TEC's Expertise

CMS's proposed updates—from the SSVI to the mandatory election statement addendum—are adding new layers of complexity for hospice organizations. Maxwell TEC is dedicated to helping hospice providers navigate these changes with confidence. Our expert consulting team helps evaluate operational readiness, train staff, and ensure your agency is prepared for the hospice changes ahead.

Don't wait until the final rule to start preparing. Connect with us today at maxwelltec.com or reach out to sales@maxwelltec.com to learn how we can support your success.

This blog was originally published as "Proposed Hospice Payment Rule" on April 2, 2025, for Maxwell Healthcare Associates. The Maxwell TEC editorial team has since updated this article to reflect the latest Hospice Payment Rule from CMS.