The FY 2027 hospice rates took effect on October 1, and most hospice finance leads already know the headline: a 2.3% update. What fewer have checked is whether their budget, billing system and cap estimate use the right rate table, because CMS replaced its first implementation instruction after finding a technical error in the wage index.
This guide covers the hospice payment rates 2027 actually pays, how to turn a national rate into your local rate, and how to use the new cap amount to test your exposure every month instead of once a year.
Hospice Payment Rates 2027: The Numbers in One Place
The CMS fact sheet for the final rule (CMS-1851-F) sets the update at 2.3%, an estimated $755 million increase over FY 2026. It comes from a 3.2% inpatient hospital market basket increase reduced by a 0.9 percentage point productivity adjustment. The rule is effective October 1, 2026.
The national rates themselves are in CMS Transmittal 13976, Change Request 14557, dated September 30, 2026. They apply to care furnished from October 1, 2026 through September 30, 2027. For hospices that submit the required quality data:
- Routine home care, days 1 to 60 (revenue code 651): $236.33 per day
- Routine home care, days 61 and later (651): $186.33 per day
- Continuous home care (652): $1,726.16 for a full 24 hours, which is $71.92 per hour
- Inpatient respite care (655): $545.93 per day
- General inpatient care (656): $1,231.51 per day
Hospices that do not meet quality reporting requirements receive the 2.3% update minus 4 percentage points, a 1.7% reduction from the prior year. Their routine home care rate for days 1 to 60 is $227.09.
One more payment is tied to the continuous home care rate. Under 42 CFR 418.302(b)(1), routine home care days in the last 7 days of a hospice election that ends in death qualify for a service intensity add-on. It equals the continuous home care hourly rate multiplied by the direct care actually provided by a registered nurse or social worker, up to 4 hours a day. At $71.92 an hour, that is up to $287.68 per qualifying day before wage adjustment. If your visit pattern in the final week does not reflect patient need, you are both underserving families and leaving that payment unclaimed.
The Correction Many Budgets Missed
Transmittal 13976 states that it rescinds and replaces Transmittal 13924, issued August 18, 2026. CMS explains that a technical error affected the FY 2027 hospice wage index, so it recalculated wage index values for all CBSAs and rural areas. That changed the standardization factors and, in turn, the national payment rates for every level of care.
If your FY 2027 budget was built in August from the first set of tables, it is using superseded numbers. Three checks:
- 1.Compare the rates in your budget model with the September 30 tables above.
- 2.Ask your billing vendor which transmittal its pricer reflects.
- 3.Download the current FY 2027 wage index file from the CMS hospice wage index page rather than reusing a saved copy.
From National Rate to Your Rate: A Worked Example
Every national rate splits into a labor portion, which is multiplied by your area wage index, and a non-labor portion, which is not. The transmittal lists the labor shares: 66.00% for routine home care, 75.20% for continuous home care, 61.00% for inpatient respite and 63.50% for general inpatient care.
Take a hypothetical area with a wage index of 1.0500. Use your own CBSA value from the CMS file.
- Routine home care, days 1 to 60: labor portion $155.98 × 1.05 = $163.78, plus non-labor $80.35, gives $244.13 per day.
- Routine home care, days 61 and later: $122.98 × 1.05 = $129.13, plus $63.35, gives $192.48 per day.
Now apply it to a census. Assume an average daily census of 50, with 12 patients inside their first 60 days and 38 beyond:
- 12 × $244.13 = $2,929.56
- 38 × $192.48 = $7,314.24
- Total: $10,243.80 per day of routine home care, or about $307,314 per 30 days
The split matters as much as the update. A program whose census skews toward long stays earns closer to the lower rate on most days, which is also the profile that tends to approach the cap.
Two wage index details catch people out. CMS continues a permanent 5% cap on any year-over-year decrease in an area's wage index. And a short list of counties must report special five-digit codes beginning with 50 instead of their CBSA code; the transmittal names them, and they span Georgia, Idaho, Pennsylvania, Virginia and Puerto Rico.
The Aggregate Cap: Run the Number Monthly
The FY 2027 aggregate cap is $36,174.75 per beneficiary, the FY 2026 amount of $35,361.44 increased by the 2.3% update. The 2027 cap year runs October 1, 2026 to September 30, 2027. The transmittal also notes that the Consolidated Appropriations Act, 2026 extended, through accounting years ending before October 1, 2035, the rule that the cap rises by the hospice payment update rather than by CPI-U.
The cap is a ceiling on total Medicare payments: your beneficiary count for the cap year multiplied by the cap amount. A worked example with illustrative figures:
- Cap-year beneficiaries (your MAC's method may count partial beneficiaries): 140
- Allowable payments: 140 × $36,174.75 = $5,064,465
- Projected Medicare payments for the year: $5,400,000
- Projected liability: $335,535, to be repaid
Run this every month with year-to-date payments, an annualized projection and your beneficiary count to date. A hospice that finds a liability in March can still change admission patterns or set money aside. A hospice that finds it after the year closes can only repay it.
This is not a niche risk. In its March 2026 report, hospice chapter, MedPAC estimated that about 28% of hospices exceeded the aggregate cap in 2023, up from about 23% in 2022, and that each over-cap hospice exceeded it by about $410,000 on average. MedPAC found these hospices concentrated in Arizona, California, Nevada and Texas.
Quality Reporting: Where the 4 Points Go
The 4-point reduction for missing quality reporting is easy to treat as theoretical. Put it in dollars. The gap between $236.33 and $227.09 is $9.24 per routine home care day. At an average daily census of 50 for a year, before wage adjustment, that is $168,630.
The final rule sets the FY 2027 timeliness threshold at 90%: at least 90% of HIS and HOPE records must be submitted to and accepted by CMS within 30 days of the relevant date. The rule also adds a Care Compare icon, no earlier than FY 2028, identifying hospices that submit no data or fall below the 90% threshold.
Other Changes in the Final Rule That Touch Operations
The final rule as published in the Federal Register also does three things your clinical and admissions teams need to know:
- The election statement addendum is now mandatory. For elections beginning on or after October 1, 2026, the hospice must give every Medicare beneficiary the addendum listing conditions, items, services and drugs the hospice has determined are unrelated to the terminal illness, at the time of election. The rule describes that as within the first 5 days. Previously it was provided only on request.
- Face-to-face encounter regulations were conformed to the Consolidated Appropriations Act, 2026.
- Discharge regulations received conforming changes.
MedPAC's Recommendation Is a Signal
MedPAC recommended that Congress eliminate the FY 2027 hospice update entirely, citing an aggregate fee-for-service Medicare margin of 8.0% in 2023 and a projected margin of 9% for 2026. Congress did not act, and the 2.3% update stands. The recommendation still tells you where scrutiny is heading: long stays, cap overpayments and program integrity in a handful of states.
An October Checklist
- 1.Confirm the budget and pricer use the September 30, 2026 rate tables, not the August ones.
- 2.Pull your FY 2027 wage index and recalculate local rates for each level of care you provide.
- 3.Recalculate revenue using your actual split of days 1 to 60 versus day 61 and later, not a national average.
- 4.Build a monthly aggregate cap projection at $36,174.75 and name the person who reviews it.
- 5.Check HOPE submission timeliness against the 90% threshold for every month since January.
- 6.Update admission packets and intake training for the mandatory election statement addendum.
- 7.Review last-seven-days visit patterns for patients who died, and whether nurse and social worker time is being recorded for the add-on.
The denial guide covers the notices with their own clocks, including the hospice Notice of Election. For agencies weighing systems, Nuraflow is being designed so that billing and revenue cycle management checks claims against the current rate and authorization context, with hospice-specific workflows on the same record.
This article is general information, not financial or legal advice. Confirm rates, wage index values and cap calculations with your MAC and your reimbursement advisor.