How Medicare hospice actually operates.

1. Who the patient is and who pays

To elect hospice under Medicare a person must be entitled to Part A and be certified as terminally ill: a medical prognosis that life expectancy is six months or less if the illness runs its normal course. The patient chooses hospice care for that illness in place of treatment aimed at curing it. The benefit is counted in election periods, an initial 90-day period, a second 90-day period, and then an unlimited number of 60-day periods, and each needs its own certification. A person in a Medicare Advantage plan may elect hospice; after the election, Original Medicare pays the hospice.

Medicaid hospice is an optional state plan benefit with the same outline: an election statement, a physician’s certification, a plan of care before services begin, and rates that change each year with the Medicare hospice update. Since March 23, 2010, a Medicaid or CHIP beneficiary under age 21 who elects hospice does not have to give up curative treatment. Commercial plans set authorization and payment by contract, but the Medicare rules at 42 CFR Part 418 shape how the whole agency is organized.

2. Certification of terminal illness

For the first 90-day period the certification comes from the hospice medical director or a physician member of the interdisciplinary group, and from the patient’s attending physician if there is one. For later periods a hospice physician alone certifies. The certification states the prognosis and carries a brief narrative, written by the certifying physician, of the clinical findings that support it.

It may be completed no more than 15 calendar days before the period begins. If the written certification is not in hand within two calendar days after the period starts, the hospice must obtain an oral certification within those two days, and the written one before it submits a claim.

Before the third benefit period, and every period after it, a hospice physician or hospice nurse practitioner must have a face-to-face encounter with the patient no more than 30 calendar days before the period begins, and the narrative must explain why its findings support the prognosis. As amended by the fiscal year 2027 final rule, the regulation permits the encounter by telehealth through December 31, 2027, with stated exclusions.

3. The election statement and the Notice of Election

The patient or representative signs an election statement. It identifies the hospice and the chosen attending physician, acknowledges that the care is palliative and not curative, acknowledges the Medicare services that are waived, explains cost-sharing, and states the effective date, which cannot be earlier than the date of signing. By electing, the patient waives Medicare payment for other care related to the terminal illness, except from the designated hospice, a hospice under arrangement with it, and an independent attending physician.

A companion document, the election statement addendum, lists the items, services and drugs the hospice has determined to be unrelated to the terminal illness and will not cover. It used to be furnished on request. Under the fiscal year 2027 final rule, effective October 1, 2026, the hospice must give the addendum to every Medicare beneficiary at the time of election, and must update it in writing when the plan of care changes. It is a dated obligation for every election, not a form filed once.

The hospice must file a Notice of Election with its Medicare contractor within five calendar days after the effective date of the election. If the notice is late, Medicare does not cover the days from the effective date until the notice is filed. Those days are the hospice’s liability and cannot be billed to the patient, though CMS may waive the consequence in exceptional circumstances. The notice is a clerical act, and it decides whether the first days are paid.

4. Assessment and the plan of care

A registered nurse completes an initial assessment within 48 hours after the election. The interdisciplinary group completes the comprehensive assessment no later than five calendar days after the election. It covers physical, psychosocial, emotional and spiritual needs, the drug profile, functional status, symptom severity, and the family’s bereavement needs, and it is updated at least every 15 days.

The group must include at least a physician, a registered nurse, a social worker, marriage and family therapist or mental health counselor, and a pastoral or other counselor. The group, and no single discipline, establishes the plan of care: the interventions for pain and symptoms, the scope and frequency of services, measurable outcomes, drugs, supplies and equipment, and documentation that the patient and family understand it. A plan must exist before services are covered, and the group reviews it at least every 15 calendar days. That standing meeting is the heartbeat of a hospice.

5. Who delivers the care

Three services are core services, which the hospice must routinely provide through its own employees: nursing, medical social services, and counseling, which includes bereavement, dietary and spiritual counseling. Physician services are required and may be contracted. Therapy, aide and homemaker services, volunteers, drugs, supplies, equipment and short-term inpatient care complete the benefit. Nursing services, physician services, and drugs and biologicals must be routinely available 24 hours a day, seven days a week, so a hospice is staffed as a continuous service and not as a schedule of visits.

Hospice aides must complete at least 75 hours of training, with at least 16 classroom hours before at least 16 hours of supervised practical training, pass a competency evaluation, and receive at least 12 hours of in-service training in each 12-month period. A registered nurse writes the aide’s instructions and must visit the patient’s home at least every 14 days to assess the aide’s care; the aide does not have to be present. Once a year a registered nurse observes each aide giving care.

Volunteers are a condition of participation. They must be trained, used in administrative or direct patient-care roles, and provide hours equal to at least 5 percent of the total patient-care hours of all paid hospice employees and contract staff, with the hours and the cost savings documented. Bereavement services must be available to the family for up to one year after the death. They are required and not separately reimbursed, so the hospice’s obligation outlasts both the patient and the last claim.

6. Where hospice is delivered

Most hospice care is routine home care, and home is wherever the patient lives: a private residence, an assisted living residence or a nursing facility. For a facility resident the hospice and the facility must have a written agreement. The hospice takes responsibility for the professional management of the hospice care and the facility continues to provide room and board. Where Medicaid pays for the stay, the state pays the room and board amount to the hospice, which pays the facility.

General inpatient care may be provided only in a Medicare-participating hospital, skilled nursing facility or hospice inpatient facility. Respite care may be provided in a Medicare-participating hospital or hospice inpatient facility, or a Medicare- or Medicaid-participating nursing facility.

7. The four levels of care, and how each is paid

Medicare pays a prospectively set rate for each day a patient is on the benefit, whether or not a visit is made that day. The rate depends on that day’s level of care. Rates are updated each federal fiscal year, and the labor share of each is adjusted by the wage index where care is delivered. The figures below are the national rates before wage adjustment for fiscal year 2027, October 1, 2026 through September 30, 2027, for hospices that submit the required quality data. The fiscal year 2027 payment update was 2.3 percent, a 3.2 percent market basket increase less a 0.9 point productivity adjustment; for a hospice that did not meet the quality reporting requirements it was minus 1.7 percent.

The service intensity add-on is paid on top of routine home care in the last seven days of life, when the election ends with the patient’s death. It equals the continuous home care hourly rate times the hours of direct care a registered nurse or social worker actually provided, up to four hours a day in total. It can be claimed only if those visits were recorded with their times and disciplines.

Direct patient care by hospice physicians is billed separately at the physician fee schedule amount; the medical director’s supervisory work is inside the daily rates. A patient may be charged coinsurance in two places only: up to 5 percent of the cost of an outpatient drug, capped at $5 per prescription, and 5 percent of the Medicare payment for a respite day.

8. The two caps

Two limits are applied after the fact, over a cap year that runs October 1 through September 30. The inpatient cap limits inpatient days, general inpatient and respite together, to 20 percent of the hospice’s total Medicare hospice days. Days above the limit are paid at the routine home care rate.

The aggregate cap limits total Medicare payment for the year to a per-beneficiary cap amount multiplied by the hospice’s number of Medicare beneficiaries, where a patient served across years or hospices counts as a fraction in proportion to days of care. The amount is updated each year by the hospice payment update percentage; for the 2027 cap year it is $36,174.75. A hospice must file its own cap determination within five months after the cap year ends and refund any payment above the cap. Failure to file leads to suspension of payment.

The aggregate cap makes length of stay a financial question as well as a clinical one. A hospice learns its exposure after the year closes unless it has been computing it all along.

9. Quality reporting and HOPE

The Hospice Quality Reporting Program draws on a standardized patient assessment, the CAHPS Hospice Survey of family experience, and measures CMS calculates from claims. Results are published on Care Compare. The assessment instrument is HOPE, the Hospice Outcomes and Patient Evaluation. It was finalized in the fiscal year 2025 hospice final rule, data collection began on October 1, 2025, and it replaced the Hospice Item Set. HOPE records are collected at admission, at up to two HOPE Update Visits in the first 30 days after the election, and at discharge, and at least 90 percent of required records must be submitted within 30 days.

A hospice that does not meet the reporting requirements has its annual payment update reduced by four percentage points; the reduction was two points before fiscal year 2024. The survey must be run by a CMS-approved vendor, and a hospice with fewer than 50 survey-eligible decedents in the prior calendar year may be exempted.

10. Conditions of Participation, survey and enforcement

The Conditions of Participation are subparts C and D of 42 CFR Part 418. They cover patient rights, assessment, the interdisciplinary group and plan of care, quality assessment and performance improvement, infection control, core services, aides, volunteers, governance, the medical director, clinical records, drugs and equipment, inpatient care, facility residents, emergency preparedness and personnel qualifications. Clinical records are kept for six years after death or discharge, or longer where state law requires.

A hospice is surveyed at least once every 36 months, by the state survey agency or an approved accrediting organization, and on complaint at any time. For condition-level deficiencies CMS may terminate the provider agreement or impose civil money penalties, suspension of payment for new admissions, temporary management, a directed plan of correction or directed in-service training.

The regulations at 42 CFR 488.1135 also provide for a hospice Special Focus Program, under which selected poor performers are surveyed at least every six months. On the read date, CMS’s program page states that implementation of the program for calendar year 2025 ceased effective February 14, 2025, so that CMS could evaluate it further.

11. Revocation, discharge, transfer and death

A patient may revoke the election at any time by a signed statement whose effective date cannot be earlier than the date of signing. The waived Medicare benefits resume, and the patient may elect hospice again later. A patient may change hospices once in each election period; a transfer is not a revocation.

A hospice may discharge a patient for three reasons only: the patient moves out of the service area or transfers; the hospice determines the patient is no longer terminally ill; or, after documented efforts to resolve the problem, behavior in the home is so disruptive, abusive or uncooperative that care cannot be delivered. After a discharge or revocation the hospice files a Notice of Termination or Revocation within five calendar days, unless it has already filed the final claim. Most elections end with the patient’s death. The final claim carries the last days, and the family’s bereavement year begins.

What goes wrong when the work is spread across systems

Each rule above links people who usually work in different tools. The losses in hospice are rarely clinical failures. They are a correct act recorded in the wrong place or a day late.