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Volume 21.11

Hospices continue to lead the healthcare sector in investor interest and valuation even during the COVID-19 PHE.  The price of hospices continues to rise due to the continually increasing demand and return opportunities expected for the next few years.

The increasing interest in hospice ownership is significantly driven by the aging demographics and the general acceptance of hospice services by the population.  According to MedPAC, hospice utilization has increased to 51.6% of Medicare decedents in 2019 and the Median length of stay has increased to 92.6 days.  Approximately 10,000 people become Medicare eligible every day.

Most observers expect that Medicare length of stay will have declined during the COVID-19 PHE once numbers are reported due to a decline in referrals of patients residing in nursing home settings and senior living facilities (typically longer-term patients); however, services to these populations are not expected to remain at current levels.  Likewise, many hospices experienced a general reduction of revenues during the COVID-19 PHE and an increase in operating costs during the same period.  These revenue losses have been significantly offset by the availability of forgiven PPP loans and Provider Relief Funding.

Threats to the financial future of hospices primarily comes from the potential inability to secure staff to serve the increasing demand and efforts by the federal government to slow growth in Medicare spending generally and hospice services specifically.  Hospice payment rates have been based on cost report submissions and continued focus on rate rebasing is expected.  Likewise, MedPAC is focusing on redesigning the calculation of the hospice aggregate payment limitation (CAP) to both generally reduce the CAP and alter the calculation based on geography. 

There are less than 5,000 Medicare-certified hospices nationally.  As strategic buyers, private equity firms, and non-traditional buyers look for hospice acquisitions, the limited number of sellers only enhances the value of hospice assets.

In addition to acquiring existing hospice providers, look for existing hospices to focus on start-up operations in attractive locations. 


In 2019, the OIG presented findings of significant deficiencies and/or complaints regarding hospice providers.  As a follow-up Congress enacted significant changes to the hospice survey process, including actions available to CMS to address seriously deficient hospices, including penalties.

On June 25, CMS issued, as part of the CY 2022 Home Health Prospective Payment System Rate Update, proposed rules intended to implement the legislative intent.

Some of the proposed regulations include submission of the Form CMS-2567 (Statement of Deficiencies and Plan of Correction) by the accrediting organizations as part of their contractual agreement with CMS and require public posting of State and Accrediting Organization findings.

The proposed rule makes permanent that hospices are required to be surveyed every 36 months; however, standard, or abbreviated surveys are required in response to complaint allegations.  It also requires that CMS develop a training and testing program for surveyors, thereby improving the consistent survey process among surveyors, which has been a concern for hospices in the past.  Other programs are to be put in place to better ensure consistency of the survey process and survey results.

The proposed rules provide significant attention to the surveyors, including the elimination of conflicts of interest (defined in the proposed rule), requirements for survey teams, creation of measures to determine survey accuracy, and required reporting by the accrediting organization based on pre-determined criteria.

The proposed rule establishes a Special Focus Program (SFP) to address issues that place beneficiaries at risk for poor care.  An SFP hospice is to be surveyed at least every six (6) months.  SFP hospices are determined in a cooperative effort between CMS and the applicable State Agency.  Non-compliant hospices can be exposed to significant remedies.

Expect significant education on these proposed rules by national and state associations, as well as other organization.  All hospices must get prepared to deal with the implications of the proposed rules.  Comments to the proposed rules must be received by CMS on or before August 27, 2021.


The 2021 Financial Management Academy, scheduled for September 13-14, 2021 in Las Vegas, is almost sold out (only a few more registrations can be accepted).  We were able to secure additional rooms at discounted rates at Bally’s Hotel & Casino, which adjoins Paris Las Vegas Hotel & Casino (the event hotel).  Program information, registration, and hotel information is available here.  If we can assist you in any way, do not hesitate to contact us.