- Written by
- Nikki Patton
- Published
- Filed under
- Field Notes
The nursing home line item is about to get expensive. Here’s what I’d change before the final rule lands.
I’ve sat in a lot of owner meetings where the nursing home census was the thing everybody was proud of.
Stable referrals. Predictable admissions. A facility partner who calls you first. If you built your census on skilled nursing, you didn’t do anything wrong. You did what the market rewarded.
The market is about to stop rewarding it.
WHAT ACTUALLY HAPPENED
The HHS Office of Inspector General added a project to its work plan that will examine routine home care payments for hospice patients living in nursing homes. The question they’re asking is whether the personal care your aides provide duplicates what the facility is already required to provide. If they decide it does, the recommendation to CMS will be to pay you less for those patients.
The project status is “announced.” Nothing has changed yet. But read that item next to everything else that landed this year.
In June, GAO reported that the lowest-visit hospices averaged about 2.5 visits per week per patient while the highest-visit hospices averaged about 5.5. Same daily rate for both. GAO recommended Congress consider directing Medicare to revise how it pays. Their estimate for one 2024 group of patients: $7.6 billion less under per-visit rates.
In April, CMS proposed the FY2027 rule. A 2.4% update, a cap just over $36,200, and something most operators skimmed past. It’s called the Service and Spending Variation Index. A single score, zero to sixteen, built from nine claims-based measures. CMS has already calculated one for every Medicare-certified hospice in the country. Yours exists right now.
That same rule documents $2.1 billion in non-hospice Medicare spending during hospice elections in FY2024, up 160% since 2020. It proposes giving the election statement addendum to every beneficiary at election instead of on request. It proposes flagging hospices on Care Compare when they don’t submit required quality data.
The final rule is due any day.
THE PART THAT SHOULD ACTUALLY GET YOUR ATTENTION
It isn’t the payment estimate. It’s one sentence in the OIG work plan saying they’ll examine the practices of hospices with a high percentage of their patients in nursing homes.
Nursing home residents are roughly 14.5% of hospice patients nationally, according to the National Alliance for Care at Home. If you’re sitting well above that, you are no longer just a high-performing agency with a strong facility strategy. You’re a data point in somebody’s screen.
Concentration used to be a growth story. It’s becoming a risk signal.
WHAT I’D DO IF I WERE ADVISING YOUR GROWTH PLAN
I want to be honest about something first. The trade associations will argue that these services aren’t duplicative, and I KNOW they are right. Hospice is designed to wrap around a patient no matter where that patient sleeps. Nobody should lose that layer of support because of a billing address. But advocacy is not a business plan. You can support the comment letter and still protect your agency.
Here’s where I’d put my energy over the next 12 to 24 months.
- Set a ceiling on nursing home census. On purpose. Pick your number and write it down. For most operators I’d be modeling somewhere in the 25 to 30% range, not defending 50%. Then change what BD gets paid on. If your comp plan rewards volume without regard to source, your team will keep filling the riskiest bucket you own. They’re doing exactly what you told them to do.
- Stop selling the SNF on aide hours. The entire OIG premise is that your aide duplicates their aide. So take it out of the pitch. Lead with symptom crisis management, avoided transfers to the ED, families who don’t fall apart at 2am, and staff education that shows up in the facility’s own survey performance. Sell them the thing they can’t hire for.
- Document that you’re not duplicating before somebody else decides you are. Sit down with your clinical leader and pull what your team actually does in facilities. Discipline, visit purpose, duration, what changed because you were there. The agencies that can hand an auditor a clean picture in 2027 will be fine. The ones reconstructing it under a records request will not. This is a 90-day project, not a five-year one.
- Build the palliative lane now. CMS asked for public input on strengthening palliative care outside the hospice benefit. That’s a signal about where the money and the policy attention are heading. Build it, partner for it, or contract into it. When the serious illness conversation starts with you 18 months out, hospice stops being a cold ask and starts being the next step.
- Go earlier. Stop trying to go longer. Long-stay facility census is the single most exposed inventory in this industry right now. Between cap pressure, eligibility reviews, and a public variation score, that’s where the scrutiny is going to sit. Retrain the team toward earlier referrals from home, assisted living, oncology, cardiology, and dialysis. Those are patients whose longer stays you can actually defend.
- Make BD responsible for what happens after the signature. Eligibility defense starts at the referral conversation, not at chart review. Teach your liaisons to capture decline evidence, prognostic indicators, and the family’s goals in real language, then hand it forward. This is the cheapest, fastest change on this list and almost nobody is doing it.
- Turn your compliance record into a sales asset. A public score next to your name and a Care Compare flag change the conversation with hospitals and physician groups. Referral partners with their own quality exposure are going to start screening you. Build the one-page “here’s why we’re safe to refer to” leave-behind now. Your competitors haven’t figured out yet that this is a sales document.
- Run the numbers on a payment structure you don’t have yet. Model your agency two ways. Once with reduced facility routine home care rates. Once with some version of per-visit. Then let that math drive strategy: geographic density so visits are efficient, payer diversification, referral sources whose patients hold up under either structure. Operators who model this now get to make choices. Operators who wait for the final rule get to make cuts.
WHERE I’D START
Numbers one, three, and six. All three are internal, all three are cheap, and all three can be underway before the final rule publishes.
Two, five, and seven belong to FY2027 as the score goes public and the market adjusts.
Four and eight are your 18 to 24 month bets. Those are the ones that decide whether you’re still growing in 2028.
None of this is about fear. This industry has absorbed harder things than a work plan item. It’s about being the operator who saw it coming and moved first, instead of the one explaining to a lender why census dropped 20% in a quarter.
Growth and integrity are not opposites (just like hope and planning.) They never have been. But right now they both require the same thing from you, which is a referral strategy that can withstand daylight.
Build that, and none of the rest of it scares you. Call me if you want to implement this plan in your own organization. The clock just started.
Tags:
- Hospice Owner
- Hospice Sales Leadership
- Hospice Sales Growth
