CMS Issues Hospices a 2.4% Pay Raise for 2021

Hospice payment rates will go up 2.4% during Fiscal Year 2021 according to a final rule issued by the U.S. Centers for Medicare & Medicaid Services (CMS). This falls slightly short of the 2.6% increase that the agency had proposed in April. 

The change would increase annual Medicare hospice spending by $540 million, though providers that do not meet quality reporting requirements will see a 2% reduction to the 2021 per diems, as CMS typically mandates.

Due to the COVID-19 pandemic, the agency indicated that it kept policy revisions to a minimum to allow hospices to focus on responding to the outbreak.


“In recognition of the significant impact of the COVID-19 public health emergency, and limited capacity of health care providers to review and provide comment on extensive proposals,” an agency statement said. “CMS has limited annual hospice rulemaking required by statute to essential policies, including Medicare payment to hospices, as well as policies that reduce provider burden and may help providers in the COVID-19 response.”

The payment increase comes with a corresponding 2.4% bump to the aggregate payment cap, limits the overall payments made to a hospice annually. The final hospice cap amount for the FY 2021 is $30,683.93. The 2020 cap was set at $29,964.78.

The pay raise, which adjusts for inflation, comes at a time when hospice providers’ financial resources are strained by expenses associated with the COVID-19 pandemic, such as rising prices and increased demand for supplies as well as paid leave for staff who were exposed to the virus, amid other costs.


In the prior year, CMS rebased payments for hospice providers, reducing the pay rate for routine home care with a corresponding increase to payment amounts for continuous home care, general inpatient care and inpatient respite care.

The 2020 regulation also required 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. 

The 2021final rule included a model election statement and model addendum to guide providers on how to effectively meet those requirements. Due to the complexity of determining which services pertain to the terminal diagnosis and which do not, many hospices were concerned about the feasibility of meeting this requirement when it was introduced last year.

Another significant change is adoption of the White House Office of Management and Budget’s (OMB) statistical area delineations that were made public in September 2018. These delineations determine whether a county is considered rural or urban, and so forth. This applies a 5% cap on any decrease to the wage index used to calculate hospice payments.