Four Federal Channels Are Reshaping Hospice Payment: What the CARE Act, GAO, MedPAC, and OIG Signals Mean for Owners
Federal attention on hospice payment is coming from Congress, GAO, MedPAC and CMS, and OIG, but none of the developments covered here is enacted. This article explains what each channel is considering and what it does not mean for your agency today. It also outlines practical steps owners can take to strengthen documentation, cost reporting, and exit readiness while policy remains uncertain.
11/2/20267 min read
This article explains how Congress, GAO, MedPAC and CMS, and OIG are examining different aspects of hospice payment, and what those discussions could mean for agency operations. None of the proposals or recommendations described here is enacted, and they do not mean payment reform is imminent.
Quick-Scan Summary
Who this is for
Hospice owners and operators with approximately $2 million to $10 million in revenue who are weighing growth, succession, or a potential sale.
Home health owners who want to understand the wider federal policy climate affecting home based care.
Key takeaways
Federal attention is coming through several channels at once, but each is at a different stage and has a different focus.
GAO’s $7.6 billion estimate is based on a hypothetical per visit model. It is not a forecast or a CMS proposal.
OIG’s $255.1 million estimate relates to a specific audit period and a particular group of new hospice enrollees. OIG recommended possible reviews, not a currently required procedure.
For owners, strong eligibility documentation, accurate cost reports, and clear records of care delivery help reduce diligence risk under any future scenario.
Why this matters now: four channels, plus Medicare Advantage
Hospice payment is under discussion in Congress, in a GAO recommendation, through MedPAC and CMS activity, and in OIG oversight. Medicare Advantage is another area of interest, though its path is particularly uncertain.
The Hospice News overview of federal hospice payment reform reports on these developments and quotes Katie Wehri, vice president of policy, quality and compliance for the National Alliance for Care at Home, speaking at the Alliance Annual Conference: “It’s not just changes to the payment structure. We’re talking about changes to the hospice program itself.”
For home health owners, the specific proposals here concern hospice. The broader policy climate is relevant across home based care, including attention to payment units, cost reporting, eligibility, and Medicare Advantage integration.
Hospice CARE Act: a proposed shift in payment design
The Hospice Care Accountability, Reform, and Enforcement Act, known as the Hospice CARE Act, was first introduced in 2024 by Rep. Earl Blumenauer. It was reintroduced this year by Rep. Linda T. Sánchez in the House and Sen. Mark Warner in the Senate. According to Hospice News, the bill is unlikely to pass this Congress because of the forthcoming midterm elections.
A central feature is a proposed change to hospice per diem payment. The bill would reduce daily rates and add per visit payment for clinical services, with the stated aim of connecting payment more closely to care delivered. It would also create an add on for high acuity palliative services such as chemotherapy, radiation, blood transfusions, and dialysis.
A different payment model could also depend on cost reports. Those reports could be used to set rates, but some providers contend that many are inaccurate. For owners, that is an operational issue today: review how reported costs are assembled and whether the underlying records support them. This is not a claim that the bill will pass or that rates will change.
The Concurrent Care for Comfort Act is another introduced bill. Reps. Mike Kelly and Suzan DelBene introduced it to clarify Medicare coverage for palliative dialysis and provide separate reimbursement for qualifying services from renal dialysis facilities and other qualified providers for certain people who have elected hospice care. It is a separate proposal, not enacted policy.
GAO’s per visit recommendation: understand the math, not just the headline
GAO recommended that hospices be paid for routine home care on a per visit basis rather than per diem. Its report states that Medicare spent $27.5 billion on hospice care in 2024. GAO estimated that a per visit rate would have reduced that spending by $7.6 billion.
That figure is a hypothetical estimate of what a different payment model might have meant for spending. It is not a forecast of savings, a proposed CMS rate, or an enacted change. Reps. Richard E. Neal and Linda T. Sánchez said in a joint statement that payment updates should reflect the care patients receive and address concerns about providers falling short.
Operationally, a per visit model could make visit patterns, staffing, and clinical documentation more directly relevant to payment. Owners should be able to reconcile census, care plans, completed visits, and billing records. The useful action is to make those records reliable now, not to assume a specific payment model is coming.
MedPAC’s three options for high acuity palliative services
MedPAC is considering ways to account for services such as dialysis, radiation, chemotherapy, and blood transfusions. The options are not adopted recommendations:
Outlier payment: pay a portion of costs above a defined loss amount.
Guaranteed add on: provide an additional payment for specified services.
Case mix adjustment: pay a higher bundled per diem for hospices using high acuity palliative services.
For owners with palliative service lines, the distinction matters. Each option would recognize service intensity differently, and each could require clear evidence of the services provided and their costs. There is no basis here to predict which option, if any, would be used.
CMS wage index RFI: a question, not a rule
CMS is considering whether to create a hospice specific wage index. Its 2027 hospice proposed rule included a request for information, or RFI, on the subject, and CMS has assembled a technical expert panel.
Wehri noted that the current wage index is based on hospital costs, even though hospice organizations may have a different workforce makeup. A hospice specific index could affect how labor costs are reflected in rates across rural and suburban areas, but the RFI is a request for input, not a new rule. Owners should monitor the discussion and keep accurate labor cost information available.
OIG eligibility reviews: documentation matters at admission
OIG said CMS should consider certain new hospice patients a high risk area in eligibility reviews. The issue identified was new enrollees with no inpatient or emergency room use in the 18 months before entering hospice care.
OIG estimated that CMS could have saved $255.1 million in hospice claim payments during the audit period had Medicare Administrative Contractors focused more on these patients. This is an audit period estimate, not a projection of future savings. OIG recommended that CMS work with hospice MACs to consider the area and possibly develop prepayment or postpayment reviews. No such procedures are currently required.
For owners, the practical takeaway is to make sure the admission record clearly supports eligibility, including the clinical facts and rationale when a patient has no recent inpatient or emergency room claims. This complements the election addendum and other compliance work agencies already perform. It does not mean that the absence of prior hospital use by itself determines eligibility.
Medicare Advantage: interest continues, outcome uncertain
Rep. David Schweikert introduced the Medicare Advantage Reform Act, H.R. 3467, which includes a proposed requirement for MA plans to pay for hospice care. A previous test of hospice in Medicare Advantage, the hospice component of the VBID model, ended in 2024 because of costs, operational difficulties, and other roadblocks.
If hospice payment within MA were ever required, it could affect payer mix, contracting, authorization processes, and the way owners track revenue by plan. But the bill is only proposed, and future MA policy is uncertain. Owners should keep payer and referral mix data current without building a transaction plan around an assumed change.
What this means for valuation and exit planning
No specific multiple change can be predicted from these policy discussions. Buyers may view unresolved payment questions as a risk to underwrite, especially if an agency cannot clearly support its eligibility decisions, cost reports, or service delivery.
For illustration only, an agency with $800,000 in normalized EBITDA valued at 5.0 times EBITDA would indicate $4.0 million. At 5.25 times, it would indicate $4.2 million. This example is not a forecast, offer, or claim that policy reform changes a buyer’s multiple. It simply shows how a quarter turn in the illustrative multiple changes the math by $200,000.
A hospice with consistent documentation, accurate cost reporting, and support for eligibility is better positioned under any of the scenarios discussed. That can reduce diligence uncertainty and help a buyer understand the business’s underlying performance.
What owners can do now
Document per visit clinical service delivery patterns and reconcile completed visits to the care record.
Review the assumptions and supporting records behind cost reports.
Strengthen eligibility documentation at admission, especially for enrollees without recent inpatient or emergency room use.
Track the Hospice CARE Act and CMS wage index RFI without treating either as enacted policy.
Keep Medicare Advantage payer mix, referrals, and plan level revenue information current.
So what should you do now?
Ask your finance and clinical leads to compare billing, visit, and documentation records.
Identify gaps in cost report support and assign an owner to address them.
Review admission documentation for clear eligibility support, including cases with no recent hospital use.
If succession or a sale is on your horizon, prepare a clear account of policy exposure and the controls in place to manage it.
Plain-Language Glossary
Per diem: A fixed payment for each day of care.
Per visit payment: Payment tied to a completed service visit.
High acuity palliative services: More intensive treatments intended to relieve symptoms or support comfort, such as dialysis or radiation.
Outlier payment: Additional payment when costs exceed a specified threshold.
Case mix adjustment: A payment adjustment based on the type or intensity of care.
Wage index: A factor used to adjust payment for differences in labor costs by location.
RFI: A request for information that gathers feedback before a possible policy decision.
Technical expert panel: A group asked to provide technical input on a policy topic.
MAC: A Medicare Administrative Contractor that processes claims and performs certain review activities.
VBID: The Value-Based Insurance Design model, which included a hospice component that ended in 2024.
EBITDA: Earnings before interest, taxes, depreciation, and amortization.
Normalized EBITDA: EBITDA adjusted to reflect ongoing business operations.
Multiple: A factor applied to EBITDA to illustrate or determine business value.
A buyer conversation focused on readiness
Senate Healthcare LLC is the buyer and strategic partner pursuing home health or hospice agency acquisitions. We are not a broker or advisor. If you own a hospice or home health agency and are considering a sale, succession, or partnership, your business does not need to be perfectly positioned to start a confidential conversation with us. We can discuss how to reduce risk, understand readiness, and explore a potential transaction with Senate Healthcare.
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