CMS Proposes 2.6% Pay Raise for Hospice in 2021

The U.S. Centers for Medicare & Medicaid Services has proposed a rule that would determine hospice payment rates, payment caps and the wage index for fiscal year 2021. The agency has proposed a 2.6% payment adjustment, totaling an additional $580 million for the Medicare Hospice Benefit.

The proposed rule would also raise the annual payment cap to $30,743.86, up from the 2020 cap of $29,964.78, to reflect the payment increase. 

“The proposed 2.6 percent hospice payment update for FY 2021 is based on an estimated 3.0 percent inpatient hospital market basket update reduced by the multifactor productivity adjustment (0.4 percentage points.),” the agency indicated. “Hospices that fail to meet quality reporting requirements receive a 2 percentage point reduction to the annual market basket update for the year.”


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.

The Medicare Payment Advisory Commission (MEDPAC) had recommended to Congress that 2021 per diem payments for hospices remain unchanged from fiscal year 2020 levels and that the aggregate payment cap be reduced by 20%. The proposed rule does not reflect such a reduction.

The proposed rule also includes a model election statement that is consistent with changes to associated requirements that became effective in fiscal year 2020.


The 2020 final rule contained a provision requiring hospices to provide an election statement addendum listing the rationales for items, drugs, and services that the hospice has determined to be unrelated to the terminal illness and related conditions to the patient or patient’s representative, as well as any other providers caring for the patient, and to Medicare contractors. Submission of that document became a condition for payment.

Many hospices feared this requirement would prove problematic due to the complexity of determining which services pertain to the terminal diagnosis and which do not, as well as the work time that such an addendum would require.

The model statement is an exemplar of what CMS expects from such an addendum.