Hospice margins are falling despite record-high utilization, according to data from the Medicare Payment Advisory Commission (MedPAC).

The commission has released its draft recommendations to Congress, repeating its annual call to eliminate hospice payment rate increases in future years.

“For fiscal year, 2027, Congress should eliminate the update to the 2026 Medicare base payment rate for hospice,” MedPAC indicated in its draft recommendations.

However, the numbers accompanying the recommendation show that providers are facing margin compression with nonprofits bearing the brunt, according to a slide deck from the commission’s recent meeting.

The average Medicare fee-for-service margin for hospices fell to 8% in 2023, down from 9.8% in 2022 and 14.2% in 2020, according to MedPAC. Among for-profit providers, the average 2023 margin was 13.7%, whereas nonprofits in aggregate showed a loss at -1.3%. These numbers exclude cap overpayments and non-reimbursible costs.

These declines occurred during a time of record-breaking demand. Hospice utilization in 2024 reached the highest rate it has ever seen at 53%, MedPAC reported. More than 1.8 million Medicare decedents received hospice care that year for a total of 148 million days of service.

Utilization rose among decedents in all subgroups, MedPAC indicated. This includes those classified by age, gender, race or ethnicity, fee-for-service or Medicare Advantage, rural or urban, dual eligibility status and end-state renal disease status.

The average number of visits that these patients received reached 3.9 per week, up 1% from 2023 but still down from pre-pandemic levels. Meanwhile, total Medicare hospice payments hit $28.3 billion in 2024, up from $25.7 billion year over year.

Despite the squeeze on margins, MedPAC considers hospices to have a rosy financial outlook, enough to justify the elimination of payment increases in coming years. The commission reported that Medicare beneficiaries have ample access to care and that quality of care remains stable based on publicly reported metrics.

MedPAC also contends that hospices have sufficient access to capital and points to the 8% average margin as a positive indicator. However, the commission also acknowledges that it lacks information pertaining to performance among nonprofits compared to for-profits.

“Less information [is] available on nonprofit freestanding providers,” MedPAC indicated in the slide deck.