By: Ethan McChesney

Since its creation in 1983, the Medicare Hospice Benefit has been one of the most successful care delivery innovations in the history of the Medicare program. It brought compassionate, interdisciplinary, patient- and family-centered care to people at the end of life, reduced unnecessary hospital utilization, and saved Medicare money compared to the intensive, often futile treatments that too often filled a patient’s final days. For millions of families, hospice has meant the chance to spend a loved one’s last months, weeks, or days at home, surrounded by the people and places that matter most, rather than in an institutional setting focused on curative care that no longer serves the patient’s goals. 

More than forty years later, that founding philosophy still holds up. But the healthcare system around it has changed dramatically, and the benefit itself has changed relatively little. 

A System Transformed 

When the hospice benefit was designed, cancer dominated hospice admissions, stays were generally short, and the delivery system was made up largely of independent, community-based, mission-driven providers operating with limited technology in a comparatively simple, fee-for-service environment. 

Today’s landscape looks very different. Patients are living longer with multiple chronic illnesses rather than a single terminal cancer diagnosis, and the length of a hospice stay varies enormously from patient to patient. Consolidation and private investment have reshaped the provider landscape. Care itself is more highly coordinated, but the broader healthcare system is more fragmented, and both patients and providers now operate under far greater expectations for value and accountability. Americans are living longer with serious chronic illness, care delivery has grown more complex, and the provider landscape has fundamentally shifted — even as the benefit’s basic structure has stayed largely the same. 

Where the Current Benefit Shows Its Age 

Payment systems shape behavior, and good policy aligns incentives with what patients actually need. The trouble is that the current hospice payment structure creates incentives, likely unintentionally, around length of stay, patient mix, care setting, live discharge practices, and documentation and compliance burdens — incentives that don’t always track with what is best for the patient in front of a care team. Community-based, mission-driven hospice providers often feel the friction of these misaligned incentives most acutely, competing in a landscape that doesn’t always reward the values that drew them to this work in the first place. 

At the same time, reform is no longer just a theoretical conversation happening in white papers. It is actively being discussed within today’s federal policy environment. The real question facing the hospice community is not whether the Medicare Hospice Benefit will be modernized, but whether providers, patients, and advocates will help shape that reform — or whether modernization will happen without them at the table. 

Principles for Thoughtful Reform 

Any conversation about modernizing the hospice benefit has to start with what should never change: the interdisciplinary, patient- and family-centered model; care delivered where patients call home; and a philosophy built around compassion and quality of life at the end of life. Thoughtful reform builds on those foundations rather than discarding them. 

From there, a few concepts stand out as particularly promising. 

• Better align payment with patient needs.
  Today’s payment structure generally treats routine home care similarly across the length of an episode, regardless of how intensive a patient’s needs are at any given point. A more modern approach could pay more during the early, resource-intensive period of care, moderate amounts during stable periods, and less during prolonged, low-intensity stays — while preserving the existing higher-acuity levels of care, such as general inpatient care, continuous home care, and the service intensity add-on, for patients who need them. 
  
  
• Strengthen program integrity.
  Protecting patients, protecting the Medicare program, and protecting the reputation of hospice as a whole has to be part of any reform effort — otherwise, payment reforms alone won’t matter. That could mean clearer accountability for provider-initiated live discharges, more targeted enforcement against bad actors, and grace periods for high-quality providers who have repeatedly demonstrated strong compliance. 
• Expand what hospice can do — and get paid for it.
  As patients’ needs have grown more complex, the benefit’s scope hasn’t kept pace. Potential enhancements include transitional residential care support, concurrent palliative treatments, specialized dementia care pathways, and better continuity across the broader serious illness continuum. 

Done well, this kind of reform should produce better incentives against profiteering, stronger alignment with patient complexity, greater nonprofit sustainability, and greater accountability to CMS and to patients themselves — while reducing administrative burden, one-size-fits-all payment structures, incentives that reward the wrong behaviors, and opportunities for fraud. 

The Question Ahead 

The question isn’t whether hospice still matters — four decades of evidence answer that clearly. The real question is whether and how the Medicare Hospice Benefit can evolve to better support the patients, providers, and healthcare system of today and tomorrow. 

That’s a conversation the Healthsperien Center for Healthy Aging believes the entire hospice and aging services community should be part of. What aspects of today’s hospice benefit should never change? Where does the current benefit create the greatest challenges? Which modernization concepts have the greatest potential? And how should the hospice community help shape the future of the Medicare Hospice Benefit, rather than simply react to it? 

We’ll continue tracking this issue as it develops in Washington and will keep our community informed as policy conversations advance.