Hospice Industry Faces Regulatory and Medicare Advantage Integration Challenges in 2025

Hospice providers face increasing challenges as the possibility of integrating hospice benefits under Medicare Advantage (MA) gains traction. Currently, Medicare Advantage enrollees transition to traditional fee-for-service Medicare when electing hospice benefits, but proposed regulatory changes could shift hospice coverage into MA plans. This shift raises concerns about restricted provider networks, reduced service quality, and financial impacts on families and hospice organizations.

The hospice sector is closely monitoring legislative efforts, including the Medicare Advantage Reform Act, which would require MA plans to cover hospice care directly. Previous initiatives, such as the Value-Based Insurance Design (VBID) model, encountered operational difficulties leading to their discontinuation, reflecting challenges in evaluating and implementing hospice services through MA plans.

Hospice providers also grapple with rising operational costs amid inflation and mounting regulatory compliance burdens. Audits by Medicare Administrative Contractors have intensified, with many hospices facing multiple simultaneous audits, contributing to financial strain from potential clawbacks. These audits represent broader efforts by CMS to ensure program integrity and quality oversight.

The transition of presidential administrations introduces both uncertainty and potential opportunities for regulatory relief. While the current administration has reduced staff at health agencies, which might affect enforcement intensity, it has also initiated reviews to identify and reduce regulatory burdens on hospice providers. Industry leaders emphasize the need for strategic adaptation to maintain margins and sustain care delivery amidst evolving market and policy dynamics.

Overall, hospices are navigating a complex landscape where payment reforms, regulatory scrutiny, and economic pressures intersect. The integration of hospice into Medicare Advantage plans represents a significant policy shift with far-reaching implications for hospice care accessibility, provider networks, and financial viability in the U.S. healthcare system.