FY 2027 Hospice Payment Changes: The Final Rule (CMS-1851-F), the New Cap, and the SSVI

Hospices will receive a 2.3% Medicare payment increase — about $755 million — in fiscal year 2027, and the aggregate cap rises to $36,174.75, under the final rule CMS issued July 30, 2026 (CMS, FY 2027 Hospice Final Rule, CMS-1851-F). Unlike the home health proposed rule, this one is final and effective October 1, 2026. And the rate update is the least of it: CMS finalized a new Service and Spending Variation Index (SSVI) that publishes a program-integrity score for every hospice, made the election-statement addendum mandatory for all patients, and tightened quality-reporting enforcement after finding roughly one in five hospices still fails to report. Here is everything that changed, sourced directly from CMS.

Key Takeaways

• The FY 2027 payment update is +2.3% (about +$755 million) (CMS-1851-F).

• The update is a 3.2% market basket minus a 0.9-point productivity adjustment (CMS-1851-F).

• The FY 2027 aggregate cap is $36,174.75, up from $35,361.44 (CMS-1851-F).

• Hospices that don't report quality data face a -1.7% net update (2.3% minus 4 points) (CMS-1851-F).

• CMS finalized the Service and Spending Variation Index (SSVI) — a 9-measure program-integrity score published per hospice (CMS-1851-F).

• The election-statement addendum is now mandatory for every patient, not just on request (CMS-1851-F).

• HQRP non-compliance was 22.06% (FY2024), 23.53% (FY2025), and 20.37% (FY2026) (CMS-1851-F).

• A Care Compare icon will flag non-reporting hospices, effective no earlier than FY 2028 (CMS-1851-F).

• Quality data must be submitted via the HOPE tool within 30 days of admission, update visit, and discharge (CMS-1851-F).

• The rule is final and effective October 1, 2026 (CMS-1851-F).

1. FY 2027 Payment Update and Rates

The routine rate setting is modest and slightly below FY 2026's 2.6% update.

Metric	FY 2027	Source
Hospice payment update	+2.3% (+$755 million)	CMS-1851-F
Market basket	3.2%	CMS-1851-F
Productivity (MFP) reduction	-0.9 percentage point	CMS-1851-F
Non-quality-reporting update	-1.7% (2.3% minus 4 points)	CMS-1851-F
FY 2026 update (prior year)	+2.6%	CMS FY 2026 Final Rule

The four-percentage-point penalty for not reporting quality data is the single largest swing in the rule: it turns a +2.3% raise into a -1.7% cut, a 4-point difference that dwarfs the base update itself.

2. The New Aggregate Cap

The cap — the ceiling on total per-beneficiary payments a hospice can receive in a year — rose with the update.

Cap year	Aggregate cap amount	Source
FY 2027	$36,174.75	CMS-1851-F
FY 2026	$35,361.44	CMS FY 2026 Final Rule
FY 2025	$34,465.34	CMS FY 2026 Final Rule

The cap matters most to long-stay, high-margin hospices: MedPAC found that about 28% of hospices exceeded the cap in 2023, each by roughly $410,000 on average, and that above-cap providers have longer stays and higher live-discharge rates. A higher cap gives a little more room, but it does not change the underlying dynamic — cap liability is still calculated against the reports a hospice files, making the cost report and cap calculation a linked, year-round exercise.

3. The Service and Spending Variation Index (SSVI)

The headline compliance change: CMS finalized a new index that scores every hospice on utilization and — critically — non-hospice spending during a hospice election, which CMS says has grown "substantial(ly) and consistent(ly)" from FY 2020 through FY 2024.

SSVI feature	Detail	Source
Claims-based measures	9	CMS-1851-F
Data years	FY 2024 and FY 2025	CMS-1851-F
Scoring	Higher score = more concerning utilization / non-hospice spending	CMS-1851-F
Transparency	Provider-level scores published in the rule	CMS-1851-F
Purpose	Signals targeted education, oversight, and program-integrity focus	CMS-1851-F

Every hospice now has a public SSVI score. Because it weighs non-hospice Part A/B spending during an election — care that CMS says the hospice should be providing — an outlier score can invite audit attention. Agencies should pull their own claims and understand where they land before a MAC does.

4. The Mandatory Election-Statement Addendum

Since FY 2020, hospices only had to give the addendum — the written list of conditions, items, services, and drugs the hospice deems unrelated to the terminal illness and therefore not covered — to patients who asked. CMS found that didn't work, as non-hospice spending kept climbing.

Change	Before	Now (FY 2027)	Source
Addendum provision	On request only	Mandatory for all electing beneficiaries	CMS-1851-F
Goal	Coverage transparency	Accountability + lower beneficiary out-of-pocket cost	CMS-1851-F

This is an operational lift: every admission now requires generating and delivering the addendum, and getting the "related vs. unrelated" determinations right is exactly what protects a hospice if the SSVI or an auditor comes calling.

5. Quality Reporting: HOPE, Care Compare, and Persistent Non-Compliance

CMS doubled the HQRP penalty to four points in FY 2024 and still hasn't moved the needle.

HQRP metric	Value	Source
Non-compliant hospices, FY 2024	22.06%	CMS-1851-F
Non-compliant hospices, FY 2025	23.53%	CMS-1851-F
Non-compliant hospices, FY 2026	20.37%	CMS-1851-F
Non-reporting penalty	4 percentage points	CMS-1851-F
New Care Compare icon	Flags non-reporting hospices, no earlier than FY 2028	CMS-1851-F
HOPE submission window	Within 30 days of admission, update visit, and discharge	CMS-1851-F

With roughly a fifth of hospices still non-compliant and a public Care Compare icon coming, the reputational cost of missing the HOPE deadlines is about to join the financial one.

6. Other Finalized Changes and What It Means for Compliance

Provision	Detail	Source
Discharge flexibility	Physician designee and IDG physician (not just the medical director) may discharge a patient	CMS-1851-F
Telehealth face-to-face	Conforming regulation changes under the CAA, 2026	CMS-1851-F
RFIs summarized	Community palliative care; a hospice-specific BLS wage index; overlap with medical aid in dying	CMS-1851-F

Taken together, FY 2027 is less about the rate and more about oversight: a public integrity score, a mandatory addendum, and tougher quality enforcement. For a hospice, the defensible position runs through the numbers it reports — accurate cost allocation, clean related/unrelated determinations, and on-time HOPE data. That is where disciplined hospice bookkeeping and cost reporting stops being back-office hygiene and becomes audit protection.

Methodology and Sources

This analysis draws on CMS's official FY 2027 Hospice Wage Index and Payment Rate Update final rule fact sheet and the Federal Register notice; margin, cap, and utilization context comes from MedPAC's March 2026 Report to Congress. All figures are final and effective for the FY 2027 cap and rate year beginning October 1, 2026, unless otherwise noted.

Sources used:

• Centers for Medicare & Medicaid Services (CMS), FY 2027 Hospice Wage Index and Payment Rate Update and Hospice Quality Reporting Program Requirements Final Rule (CMS-1851-F), July 30, 2026

• Federal Register, Medicare Program; FY 2027 Hospice Wage Index and Payment Rate Update (2026-15686), August 3, 2026

• CMS, FY 2026 Hospice Final Rule and MLN Matters MM14190 (prior-year comparison)

• Medicare Payment Advisory Commission (MedPAC), Report to the Congress: Medicare Payment Policy, Chapter 10, March 2026 (cap and margin context)

Last updated: September 2026. Reflects the FY 2027 hospice final rule effective October 1, 2026.

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Soriaga & Associates, LLC is a CPA firm with 25+ years of specialized experience in hospice, home health, and home care accounting and Medicare cost report preparation. If you have questions about your hospice's cap position, SSVI score, or FY 2027 compliance, schedule a free consultation.