MedPAC: No 2021 Pay Raise for Hospice, Calls for Payment Cap Cut

The Medicare Payment Advisory Commission (MedPAC) at its January meeting unanimously voted to recommend to Congress that no Medicare payment increases for hospices be implemented in Fiscal Year 2021, as well as a 20% reduction in the aggregate payment cap.

These proposals are not a done deal. Congress would have to accept these recommendations before they could be implemented. If Congress accepts the MedPAC recommendation, hospice payments would remain at 2020 levels. In prior years, MedPAC has called for 2% cuts to the payment rates, but Congress did not enact those recommendations.

Hospice industry stakeholders were quick to react. The National Hospice & Palliative Care Organization (NHPCO) voiced disappointment in the recommendations.

“MedPAC is relaying a message to Congress, and to all Americans, that they encourage care to be provided in acute care settings while discouraging person-centered care in less costly settings like in the home or wherever beneficiaries and their families may consider home,” NHPCO said in a statement.


The payment cap is the upper limit to the amount of funds a hospice can collect from Medicare in a single year. If a hospice exceeds the payment cap, it must refund that amount to CMS. For Fiscal Year 2020, the hospice cap is $29,965 per patient (not wage adjusted). About 14% of hospices exceeded the cap in 2017, according to MedPAC.

According to a December presentation by MEDPAC Principal Policy Analyst Kim Neuman, the proposed cuts to the payment cap would have targeted hospice providers that see longer lengths of stay and high margins, improve equity of the payment cap among different types of providers, and generate cost savings for taxpayers and the Medicare Part A Trust Fund.

LeadingAge, an advocacy group for seniors, opposed the lack of a 2021 payment update, but praised the commission’s approach to the payment cap.


“LeadingAge objects to the recommendation of no payment update in fiscal year 2021 given the thin margins of not-for-profit providers. However, we applaud MedPAC’s effort at thinking creatively about how to be more targeted in their payment recommendation related to the aggregate cap,” LeadingAge said in a statement. “Recommendations for payment adjustments that target specific behaviors that run counter to policy goals, as opposed to blunt approaches of across the board cuts, is a direction that LeadingAge encourages MedPAC and Congress to consider more routinely.”

The U.S. Centers for Medicare & Medicaid Services (CMS) rebased payment rates for the four levels of hospice care in a final rule for Fiscal Year 2020. The rule instituted a 2.7% cut in routine home care payments and a corresponding 2.7% increase in payments for continuous home care, general inpatient care, and inpatient respite care. Prior to this rebasing, payment rates for those three levels of care amounted to less than the cost of providing those types of care.

NHPCO President and CEO Edo Banach called on MedPAC to take a deeper dive into Medicare systems for hospice payment in the commission’s future meeting, taking value-based initiatives into consideration.

“We strongly believe that structural reforms to the hospice benefit, including value-based payments, should be explored in future MedPAC discussions,” said President and CEO Edo Banach. “Today’s recommendations are not structural and are not targeted to improve quality.”

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