CMS Should Spend More on Hospice to Spend Less Overall

Photo credit: nattanan23

When I make buying decisions, I try to lean into the most expensive, inconvenient and complex options while spending as little as possible on better value products and services.

Oh wait, sorry. That wasn’t me; that was the government.

That opening was a little tongue-in-cheek. To be fair, the U.S. Centers for Medicare & Medicaid Services (CMS) isn’t necessarily allocating larger Medicare increases to hospitals, for example. However, I think the agency’s approach to setting payment rates isn’t serving the stated goal of bringing down overall expenditures. Paying providers in lower-cost settings more, to support growth and investment, would align the government’s payment policies more with its spending objectives in the long term.

Earlier this week I wrote about some unfortunate provisions in the 2027 final hospice rule related to non-hospice spending for enrolled patients. But today I am going to take a swing at another portion of the rule – the 2.3% payment increase.

The U.S. Centers for Medicare and Medicaid Services (CMS) needs to stop nickel-and-diming hospices with tiny rate hikes in a high-pressure economic climate.

Health care inflation continues to exceed historical averages, with the cost of delivering care rising faster than the proposed payment update. This trend comes as previous payment rules have fallen short in anticipating and accounting for ongoing market pressures. As providers face growing demand for services, CMS should take these economic realities into account and adjust payment updates to help ensure continued access to care.

Yes, I know that policymakers are focused on preserving and extending the Medicare trust fund and reducing the nation’s preposterously high health care expenditures.

In 2024, U.S. health care spending climbed to $5.3 trillion, a 7.2% increase from the previous year, following a 7.4% rise in 2023. The total equates to $15,474 per person and accounts for 18% of the nation’s economy. Health care spending also outpaced overall economic growth, with gross domestic product increasing 5.3% in 2024.

However, the reality is that greater investment in hospice would actually help to achieve that result.

That’s my opinion, but evidence backs it up. Strengthening support for hospice providers could produce broader savings across the health care system.

Hospice care saves Medicare an estimated $3.5 billion for beneficiaries in their last year of life, according to a joint report from the National Hospice and Palliative Care Organization (NHPCO), the National Association for Home Care & Hospice (NAHC), and NORC at the University of Chicago. (Since the report’s publication, NHPCO and NAHC have merged to form the National Alliance for Care at Home.)

I know many of you have seen those numbers before. If you read Hospice News, you have almost certainly seen them. But I will keep pushing those data until somebody with a proverbial government “checkbook” starts to listen.

Regulators have a responsibility to reduce overspending. In hospice, this could mean a focus on fighting actual fraud, waste and abuse. But it would be beneficial to the health care system, providers and patients if CMS focused more on beefing up the hospice benefit rather than feeding it crumbs.

As always, I love to hear your takes in the comments!