The Centers for Medicare & Medicaid Services has issued a proposed rule that would increase hospice payments by an estimated $695 million in FY 2026, update the hospice wage index, and clarify several regulatory requirements for hospice providers.
On April 11, 2025, CMS released a proposed rule updating hospice payment rates and policies for fiscal year 2026 as required under the Social Security Act. The proposal includes a 2.4 percent payment increase across all four levels of hospice care, which would result in approximately $695 million in additional payments to hospice providers nationwide. The rule also clarifies regulations regarding hospice admissions and certification of terminal illness requirements. CMS has set a deadline of June 10, 2025, for public comments on the proposed changes.
The proposed rule contains seven major provisions:
CMS is actively seeking public input on approaches to streamline the proposed regulations. In the proposed rule, CMS specifically references the need for alignment with Executive Order No. 14192, "Unleashing Prosperity Through Deregulation," issued by President Trump on January 31, 2025.
“We are also proposing that if more recent data become available after the publication of this proposed rule and before the publication of the final rule (for example, a more recent estimate of the inpatient hospital market percentage increase or productivity adjustment), we would use such data, if appropriate, to determine the hospice payment update percentage in the FY 2026 final rule,” CMS stated in the proposed rule. “We continue to believe it is appropriate to routinely update the hospice payment system so that it reflects the best available data regarding differences in patient resource use and costs among hospices as required by the statute.”
Hospice care provides specialized support for individuals with terminal illnesses, focusing on comfort and quality of life rather than curative treatment. Medicare's hospice benefit covers a range of services including nursing care, medical equipment, medications for symptom control, and grief counseling for patients and families. Payment rates vary based on the level of care provided and the geographic location of services.
The hospice wage index accounts for regional variations in labor costs across the country. When OMB reclassifies counties from rural to urban or vice versa, this can significantly impact reimbursement rates for hospice providers operating in those locations, as urban and rural areas have different payment calculations.
The proposed payment increases come at a time when hospice providers are facing rising operational costs and staffing challenges. By expanding which physicians can recommend hospice admission and simplifying attestation requirements, CMS is addressing administrative burdens that have complicated hospice access and operations.
These regulatory changes could improve access to hospice care for Medicare beneficiaries by streamlining the admission process. The wage index updates will realign payments to reflect current demographic and geographic realities, potentially resolving payment disparities in areas that have undergone significant population shifts since the last census.
For hospice administrators and financial planners, the proposed 2.4% increase provides more certainty for budget planning in the coming fiscal year, though some industry advocates have questioned whether this increase sufficiently addresses inflation in healthcare costs.
Hospice providers should review the proposed rule in detail and consider submitting comments before the June 10 deadline, particularly regarding any operational impacts from the wage index reclassifications or administrative changes. The proposed increases, while welcome, will affect providers differently based on their service mix and geographic location. Providers should also begin preparing for implementation of these changes, which would take effect on October 1, 2025, the start of FY 2026.