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Guide · Hospice

How Hospice Payment Works

Hospice is paid differently from skilled nursing or home health — there’s no case-mix grouper. Medicare pays a flat daily rate set by the level of care, with a two-tier routine rate, an end-of-life add-on, and an annual cap. Here’s the whole picture.

In short

Medicare pays hospices a per-diem for every day a patient is enrolled, based on one of four levels of care — not a case-mix score. Routine home care, the most common level, pays a higher rate for days 1–60 and a lower rate after, with a service-intensity add-on in the last week of life. Total annual payments are limited by an aggregate cap.

What makes hospice different

PDPM and PDGM classify a patient into a case-mix group and scale a base rate by a weight. Hospice doesn’t work that way. Medicare pays a flat daily rate for each day of enrollment, regardless of how many visits or services happened that day — even days with no visit. What sets the rate is the level of care the patient needed that day, plus, for routine care, how far into the election the day falls.

The four levels of care

Every hospice day is billed at one of four levels. Three are paid as a flat per-diem; only continuous home care is paid by the hour.

RHCRoutine Home CareHome, SNF, or ALF — patient not in crisisPer diem · two-tier (days 1–60 vs 61+)~95% of hospice daysCHCContinuous Home CareHome — short crisis, mainly nursing (min. 8 hrs)Hourly rateBrief crisis periods onlyIRCInpatient Respite CareInpatient — a break for the caregiverPer diemUp to 5 days at a timeGIPGeneral Inpatient CareInpatient — symptoms unmanageable at homePer diemMost intensive level
Medicare pays one daily rate per patient, set by the level of care that day — regardless of how many services were delivered. CHC is the only level paid by the hour.
  • Routine Home Care (RHC) — the everyday level when the patient isn’t in crisis. About 95% of all hospice days. “Home” can be a house, a nursing facility, or assisted living.
  • Continuous Home Care (CHC) — for a short crisis that needs mainly continuous nursing at home (a minimum block of hours). Paid hourly, so it varies with the hours delivered.
  • Inpatient Respite Care (IRC) — a short inpatient stay (up to five days at a time) to give the caregiver a break.
  • General Inpatient Care (GIP) — the most intensive level, for symptoms that can’t be managed at home, delivered in a hospice unit, hospital, or SNF.

The routine rate is two tiers — plus an end-of-life add-on

Routine home care isn’t a single rate. Because care tends to be heavier at the start and again at the very end, Medicare pays a higher RHC rate for days 1–60 of the election and a lower rate from day 61 on. (If a patient leaves hospice for more than 60 days and returns, the day count restarts.)

On top of that, the Service Intensity Add-on (SIA) pays extra during the last 7 days of life for direct visits by a registered nurse or social worker — up to four hours per day, paid at the continuous-home-care hourly rate. It only applies to routine-care days for patients discharged due to death.

Days 1–60 — higher RHC rateDay 61+ — lower RHC rate+ SIAlast 7 daysday 1day 61deathday of the hospice election
Routine home care pays a higher per-diem for the first 60 days, then a lower rate from day 61. In the last 7 days of life, the service-intensity add-on pays extra for RN and social-worker time.

Benefit periods and election

A patient elects hospice for defined benefit periods: two 90-day periods, then an unlimited number of 60-day periods. Eligibility is recertified each period, and a hospice physician or nurse practitioner must conduct a face-to-face visit before the third benefit period and before every period after that.

1st benefit period90 days2nd benefit period90 days3rd60 d4th60 d5th +60 d …Election: two 90-day periods, then unlimited 60-day periodsface-to-face recertification required before the 3rd period and each one after
Eligibility is recertified each benefit period. A hospice physician or nurse practitioner must see the patient face-to-face before the third period and every period thereafter.

The aggregate cap

To limit total spending, each hospice has an annual aggregate cap: a per-beneficiary cap amount multiplied by its number of Medicare patients. If the hospice’s total payments for the year exceed that cap, the difference is an overpayment it must return. A separate inpatient cap limits the share of days billed as GIP or respite.

cap amount × patients= each hospice’sannual aggregate capCap limitTotal paymentsexcess → repaid
Each hospice has an annual aggregate cap (a per-patient cap amount times its number of beneficiaries). Payments above the cap are overpayments the hospice must return. A separate inpatient cap limits inpatient days.

Wage adjustment and the rate year

Each per-diem has a labor-related share that is adjusted by the local hospice wage index, so the same level of care pays differently by area. Rates run on the federal fiscal year (October 1–September 30) and are updated annually, with a reduction for hospices that don’t meet quality-reporting requirements.

Key takeaways

  • Hospice pays a flat per-diem by level of care — no case-mix grouper.
  • Four levels: routine home, continuous home (hourly), inpatient respite, and general inpatient.
  • Routine care is two-tier (days 1–60 higher, 61+ lower), with an SIA in the last 7 days of life.
  • Election runs in two 90-day then unlimited 60-day periods, with face-to-face recert from the 3rd period on.
  • An aggregate cap limits each hospice’s total annual Medicare payment.

Try it on the tools

Per-Diem Calculator →Hospice Rates →Cap Calculator →Benefit Period Tracker →Claim Codes →

Last reviewed May 2026. Educational overview only — verify specifics against the current CMS Hospice guidance and the FY hospice wage index final rule before billing.