The Benefit That Is Paid by the Day

In May of this year Medicare stopped letting new hospices enroll. The moratorium is national, covers initial applications and most changes of ownership, took effect immediately, and runs six months with the option to extend. Nothing like it had been done for hospice before. The agency's stated reasons were rapid provider growth in particular markets, questionable ownership activity, and suspicious billing patterns.

To understand why a program built around dying people ended up under a fraud moratorium, it helps to look at how it pays. Medicare pays a hospice a flat amount for each day a patient is enrolled, regardless of the amount of service provided on that day. For the first sixty days of routine home care the rate this year is 230.83 dollars a day. After day sixty it drops to 181.94. The payment arrives whether the nurse visits or not.

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What a Day Actually Contains

Federal analysts measured what that day buys. In 2024 the average routine home care patient received 3.9 visits a week, averaging 55 minutes each, which comes to about three and a half hours of in-person care across seven days. A nurse accounts for 1.8 of those visits, an aide 1.9, a social worker 0.3.

Families consistently expect more, and the gap is structural rather than a failure by any particular provider. Hospice supplies a team, equipment, drugs for the terminal condition and a physician and nurse on call around the clock. It does not supply round-the-clock caregiving, and it does not cover room and board in any setting, including a nursing home or a residential hospice house. That combination is what makes the benefit valuable and frequently misunderstood at once.

The Mechanics of a Rate That Rewards the Calendar

Follow the per diem through and the incentive appears without anyone having to behave badly. Revenue is a function of enrolled days, not delivered care, so the economically strongest patient is one who lives a long time and needs comparatively little. In 2024 the average length of stay among hospice decedents was 99.6 days while the median was 19, a gap that tells you the average is being pulled by a long tail. For-profit hospices averaged 120 days, nonprofits 71. Sixty-one percent of the 28.3 billion dollars Medicare spent on hospice in 2024 went to stays longer than 180 days.

Congress anticipated this and capped it. A hospice must repay Medicare if its total payments exceed the number of patients it served times an annual cap amount, which is 36,174.75 dollars for the year beginning this month. The cap is not theoretical: in 2023, 28 percent of hospices exceeded it, owing an average of about 410,000 dollars each. More than half of California's hospices went over.

Who Owns Them Now

The ownership shift underneath all this is the largest in any Medicare sector. In 2000, for-profit companies ran 29.8 percent of Medicare hospices. By 2024 they ran 82 percent. The number of hospices grew from about 5,000 in 2020 to nearly 6,700 in 2024, and the growth was geographically concentrated to a degree that is hard to explain by demand: California added 1,046 hospices in five years, Texas 257, Arizona 96, Nevada 60.

Regulators reacted in stages. Enhanced oversight with full prepayment review began for new hospices in Arizona, California, Nevada and Texas in 2023 and added Georgia and Ohio at the end of 2025. Through mid-2025 that review had led to 122 revocations of billing privileges. California's own regulators revoked more than 280 hospice licenses in two years, and in April the state attorney general charged 21 people over 14 hospice companies bought by straw owners, describing a scheme in which no legitimate service was ever provided. Then came the national enrollment moratorium.

What This Changes at the Kitchen Table

For a family choosing a hospice, none of this argues against the benefit, which remains the only part of Medicare that pays for a team to come to the house. It argues for asking different questions. Roughly 19 percent of hospice patients are discharged alive each year, about a third of them because the hospice determined they were no longer terminally ill. A live discharge is appealable: the hospice must give written notice at least two days before stopping care, and the patient can ask a quality improvement organization for an expedited review by noon the next day.

The payment is a daily rate, the care is a visit schedule, and nothing in the enrollment paperwork makes the second number visible even though it is the one that determines what the week looks like. Starting with this month's stays, every patient electing hospice now automatically receives a written addendum listing what the hospice will not cover, rather than only on request. That document and one question, how many nurse and aide visits a week this hospice provides for a patient at this stage, get closer to the reality of the benefit than any brochure will.

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The content in this email does not constitute an offer or solicitation to buy or sell any financial instrument. All commentary is general in nature and is not directed at any individual investor.

— John Stone