Rising demand for end-of-life care is pushing hospice growth opportunities to the forefront in value-based reimbursement. More payers in this arena are increasingly recognizing the depth of potential beneficial outcomes when it comes to collaborative hospice partnerships.

Swelling aging populations have fueled rising health care costs across the country, with payers and providers alike seeking ways to ensure affordable access and sustainable services. Hospices play an integral role in future health care delivery trends as more seniors reach the end of life, according to David Jackson, CEO and founding partner of Choice Health at Home. The Texas-headquartered company provides hospice, home health and rehabilitation services.

The nation’s health care system is ripe for change when it comes to improved hospice utilization that could help curb expenditures and improve outcomes, Jackson said during Hospice News’ 2025 Industry Outlook webinar. Stepping into the value-based landscape can present important opportunities for hospices to widen patient reach and support growth, he stated.

“As far as tailwinds for the industry specific to hospice, [it’s] predictions for demographic growth,” Jackson said. “The biggest opportunities for growth [are] talking about vertical integration and how we reach up into the health care system. [It’s] talking about the value that we bring from the perspective of patient care, and then talk about the plans, the payers, the opportunity to enhance their financial outcomes.”

Details in the data trends

The U.S. hospice industry as a whole is projected to bring in roughly $34 billion in revenue during 2024, Jackson indicated. This is a rise from Medicare hospice expenditures that reached $23.7 billion in 2022, Medicare (MedPAC) reported.

Hospice revenues could nearly double to nearly $65 billion by 2030, mainly due to an anticipated boon in utilization among a growing senior population, Jackson said.

Approximately 1-in-5 older Americans will be 65 or older during the next decade, according to a U.S. Census Bureau report. The volume of seniors in this age group will outpace growth of any other demographic at a “considerable” rate, the report found.

Despite growing demand, hospice utilization is nowhere near reaching its full potential of support for terminally ill patient populations, according to Jackson.

National hospice utilization rates reached 49.1% in 2022, the National Alliance for Care at Home reported.

“The opportunity is you have this rapidly growing demographic [and] you still have so many people that don’t get the [hospice] benefit,” Jackson said. “So, how do we reach more people and educate them about this tremendous benefit? How do we become a resource to this group? We’ve got to capitalize and find a way to adapt.”

Hospices have much to offer in terms of evidence that their services can improve quality and goal-concordant care delivery while reducing costs, Jackson stated. However, providers are often financially challenged in the ability to offer the full scope of their interdisciplinary hospice services.

Hospice care was found to save Medicare approximately $3.5 billion when delivered to patients in their last year of life, a joint report from the Alliance and NORC at the University of Chicago found. Longer hospice stays can reduce health care costs at the end of life by as much as 11%, according to the report.

Providers have historically relied on fee-for-service reimbursement within the Medicare Hospice Benefit. But the introduction of the hospice component of the value-based insurance design (VBID) demonstration tested the waters of wider payment in this space.

Though the hospice carve-in was sunsetted from the VBID program at the end of last year, the impacts may be lasting as far as the potential for untapped growth opportunities, said Dr. Raihan Faroqui, head of clinical partnerships at Guaranteed Health. The end-of-life, value-based care company operates Guaranteed Hospice in California.

“Our biggest tailwind is accessing newer value-based care streams,” Faroqui told Hospice News during the webinar. “Every hospice agency or operator, they’re looking for more revenue, more admissions, more census growth. What we’re seeing at Guaranteed Health at the cutting edge is strategic partnerships or joint ventures [with] health plans.”

Hospices stand to improve utilization and length of stay by forming strategic partnerships with health plans and managed entities, Faroqui stated. This includes collaborations with Institutional Special Needs Plans (I-SNPs), Chronic Condition Special Needs Plans (C-SNPs) and Dual Special Needs Plan (D-SNPs). Relationships with Accountable Care Organizations (ACOs) also represent a significant tailwind in terms of widening and access and reaching patients sooner in their illness trajectories, Faroqui said.

The U.S. Centers for Medicare & Medicaid Services’ (CMS) recent updates to the Accountable Care Organization Realizing Equity, Access and Community Health (ACO REACH) model pose significant opportunities for hospices, according to Faroqui. The agency’s guiding principles for the model include a focus on care coordination, social determinants of health and addressing health disparities.

About 122 ACOs participated in the model during 2024, including more than 173,000 health care organizations serving an estimated 2.6 million Medicare beneficiaries, CMS reported. The ACO REACH model saw a 25% increase in participation among critical access hospitals and rural health clinics in 2023 alone, the report found.

The data demonstrate increased potential for hospices to reach more underserved terminally ill populations in need of end-of-life care, Faroqui said. Several ACO REACH entities nationwide have high-needs programs with the ability to directly contract with hospices or their referral sources, he said.

Forming ACO relationships can help better “pinpoint” terminally ill patient populations in greater need of end-of-life support, he said. Hospices seeking these opportunities have powerful leverage in their billing claims and patient data if they can demonstrate the cost-saving and quality benefits of earlier hospice utilization, he stated.

“How do we increase hospice median length of stay? There’s a huge opportunity for hospices to very creatively contract with these managed care entities and ACOs, especially ACO REACH, which has a focus on health equity,” Faroqui said. “They’re able to help navigate patients from primary care and specialty care into hospices upstream. There’s certainly opportunities with these two [types of] organizations. By far and large, that’s the largest tailwind that I’ve seen.“