Hospices are among the health care sectors to see a payment rate increase in 2026. However, concerns are mounting about whether it will provide sufficient support for sustainable growth.

The finalized 2026 payment rule was implemented on Oct. 1 and has thus far spurred challenges in the hospice community. The U.S. Centers for Medicare & Medicaid Services’ (CMS) final rule resulted in a 2.6% increase in Medicare base rate payments

Smaller hospices, in particular, may see financial headwinds as a result of the modest payment increase, said Christie Rivelli, co-founder, nurse practitioner and executive director of Solterra Hospice, during the Hospice News Payment Summit.

“I’m very thankful that there was an increase, but just rolling that forward and how that translates when a margin is really tight on a family-run hospice,” Rivelli told Hospice News during the summit. “It’s just wanting to really make sure that we’re sustainable, which comes into question when we’re seeing the cost of living of our team. With a 2.6% [increase], when it comes to annual raises, we’re going to be having some tough decisions.”

Hospices are being challenged to provide more care with less resources amid rising demand, Rivelli said. Oregon-based Solterra Hospice could see a nearly 18% deficit in its financial margins next year as a result of insufficient reimbursement, she stated.

Reimbursement increases over the last few years have fallen far behind the curve of covering the full scope of hospices’ financial needs, according to Katie Wehri, vice president for regulatory affairs, quality and compliance at the National Alliance for Care at Home.

Payment rate updates have not kept pace with inflation or rising care delivery and labor costs, an issue challenging sustainability and growth, Wehri stated. The trend has brought many hospices to a tipping point, with some shuttering their programs temporarily or permanently due to financial strain, she said.

“We should really be seeing for hospices a payment rate that is about 5% higher than what we’re seeing now,” Wehri said during the summit. “So, it’s certainly giving hospices many challenges … but it’s a cumulative effect. You’re feeling it because it’s real.”

The 2.6% increase represents a “headway” rather than a “surplus” for providers, said MiraSol Health CEO James Dismond.

South Carolina-based MiraSol Health is projecting a 14%–24% deficit in its overall revenue related to the rate update, according to Dismond. The organization provides community-based palliative care, hospice and bereavement. Impacting its bottom line are also increases in compensation and expanded employee benefits. Offsetting the financial gap will take increased fundraising efforts and philanthropic support, as well as revenue from its other service lines, Dismond stated.

Hospices need to better advocate the value proposition of their services to fuel reimbursement reform, he indicated.

A growing body of research has found that hospice services can result in better outcomes and reduced costs. Hospice care was associated with a 35% reduction in total cost of care during the final year of patients’ lives, a recent study found.

“Some of the financial implications we are all feeling are that the workforce needs are super high, it’s super competitive,” Dismond told Hospice News during the summit. “There’s a significant margin to try to fill with community donations, which is why I think diversification of our business is super important for home care in general.”