Medicare Spent $7.6 Billion More on Hospice Care Than Comparable Home Health Services
A GAO report found Medicare spent $7.6 billion more on hospice care than it would have paid under comparable home health per-visit rates, prompting calls for payment reform.
Objective Facts
The Government Accountability Office released a June 9, 2026 report concluding that if Medicare paid per-visit rates for hospice care comparable to home health, it would have spent $7.6 billion less for beneficiaries in 2024. The analysis of claims from 2022 through 2024 showed Medicare paid about $16.7 billion for hospice routine home care but estimated would have paid about $9.1 billion under home health per-visit rates. Low-visit hospices delivered 2.5 visits per week on average compared to 5.5 for high-visit hospices, meaning Medicare effectively paid low-visit hospices twice as much per visit despite the same daily rate structure. House Democrats Neal and Sánchez said the report confirms updates are necessary to root out bad actors and reward high-quality providers while ensuring efficient Medicare spending. Industry groups contend the GAO report oversimplifies differences between hospice and home health, arguing hospice's per-diem model is a deliberate design reflecting its holistic, comprehensive nature including 24/7 availability.
Left-Leaning Perspective
House Democrats Richard Neal (D-Mass.) and Linda Sánchez (D-Calif.) issued a joint statement in response to the GAO report, asserting that Medicare hospice spending has nearly doubled over the past decade and that Congress has a responsibility to ensure payments reflect the care patients actually receive. They stated the report confirms updates are necessary to root out bad actors, reward high-quality providers, and ensure the Medicare program efficiently spends taxpayer dollars. Neal, ranking member of the House Ways and Means Committee, had originally requested the GAO study after concerns about rising costs and utilization of hospice services, noting that growth is concentrated in the expanding for-profit and private equity segment linked to longer stays and higher discharge rates, raising questions about CMS's monitoring sufficiency to safeguard Medicare hospice program integrity. Under Sánchez and Senator Mark Warner's Hospice CARE Act, payment reform would revise the structure for routine home care to reward hospices for providing in-person care. Democrats' arguments rest partly on the premise that current per-diem incentive structures enable low-visit hospices to receive excessive payments, though they do not substantively engage industry claims about the comprehensive nature of hospice services or statutory limitations on CMS authority to unilaterally alter payment structures.
Right-Leaning Perspective
Industry groups including the National Alliance for Care at Home and LeadingAge contested the GAO's core comparison, arguing the report fails to recognize distinct differences between home health and hospice benefit structures, regulatory requirements, and skillsets. The Alliance emphasized that hospice is a holistic, comprehensive benefit that includes medication, supplies, equipment, skilled nursing, aide services, social work, chaplaincy, homemaker services, grief and bereavement support, physician visits, care coordination, and 24/7 on-call availability—services not all required by home health. CMS officials pointed out that statute requires daily hospice payment rates and does not provide flexibility for further refinements beyond those made in 2016 and 2020, stating CMS will continue monitoring hospice utilization to determine if additional refinements are needed within existing statutory authority. The National Alliance for Care at Home further argued that savings claimed in the GAO report are generated partly by paying less to low-visit hospices that are concentrated in known high-fraud areas, and that hospice reform discussions should focus on first stopping fraudulent activity, which would result in greater savings than the GAO identifies. Mollie Gurian, vice president of policy and government affairs for LeadingAge, offered a more measured response, suggesting the GAO's attempt to look at per-visit payments by comparing to home health and adding uncovered services could be a helpful starting point, though the comparison does not constitute a full systems-wide comparison and the industry is likely to contend that home health payment rates themselves are insufficient.
Deep Dive
Medicare spent $27.5 billion on hospice in 2024, paying daily rates for hospice care regardless of the number of visits, while paying per-visit rates for comparable home health services. The GAO analysis found low-visit hospices—the 20 percent delivering fewest visits per week—averaged 2.5 visits weekly compared to 5.5 for high-visit hospices, meaning Medicare effectively paid low-visit hospices twice as much per visit despite identical daily rates. Medicare's hospice spending nearly doubled from $15.5 billion in fiscal 2015 to $27.5 billion in 2024, raising legitimate questions about cost control. The growth has been concentrated in for-profit and private equity hospices linked to higher payment proportions, longer stays, and higher live discharge rates—a pattern that justifies scrutiny. However, CMS officials correctly noted statutory constraints: the statute requires daily hospice payment rates and does not provide CMS flexibility to unilaterally transition to per-visit systems, meaning the GAO recommendation requires Congressional action. Industry groups raise a substantive point that hospice includes services home health doesn't—medication management, supplies, equipment, chaplaincy, bereavement support, and 24/7 availability—suggesting the per-diem model reflects these comprehensive obligations. Critically, the National Alliance's observation that low-visit hospices concentrate in high-fraud areas suggests measurement issues: whether overpayment reflects system design flaws or fraud distorting data. Recent enforcement actions—CMS suspending ~800 hospices in LA responsible for $1.4 billion in spending with $70 million in suspended funds—indicate fraud may explain some cost anomalies. Whether structural payment reform or targeted fraud enforcement would be more effective remains unresolved. The GAO provides valuable data on payment disparities but does not sufficiently disentangle overpayment due to structural incentives from overpayment due to fraud, making policy prescriptions uncertain.