CMS final hospice rule makes the 'unrelated services' addendum mandatory Oct. 1, a document practices billing GW will now see

If a hospice patient comes to your wound clinic on October 2 with a stage 3 pressure ulcer, who is supposed to pay for the dressing, the debridement or the skin substitute? Under the FY 2027 hospice final rule, the hospice will have to answer that question in writing before you ask [1].

CMS published the rule, CMS-1851-F, in the Federal Register on August 3, effective October 1, 2026 [1]. For physician practices, the provision that matters is not the rate update but a document hospices have been required to produce only on request since 2020: the “Patient Notification of Hospice Non-Covered Items, Services, and Drugs” [1].

What changed

Hospice payment rates rise 2.3% for FY 2027: a 3.2% hospital market basket increase minus a 0.9-percentage-point productivity adjustment [1]. CMS estimates the update adds $755 million in hospice payments [1]. The aggregate cap per patient rises to $36,174.75 from $35,361.44, and hospices that fail quality reporting take a 1.7% cut instead of the increase [1].

The bigger change is the addendum. For elections beginning on or after October 1, 2026, every hospice must give the patient or representative the addendum within five days of the election, whether or not anyone asked [1]. It lists the conditions present at admission and any items, services and drugs the hospice has decided are unrelated to the terminal illness and will not cover, with a plain-language clinical explanation [1]. The hospice must update it within three days of any plan-of-care change that affects those decisions, and it must file the addendum with the election statement so it is available to the patient, to non-hospice providers and to Medicare contractors [1]. CMS finalized the requirement as proposed and turned down requests for an implementation delay of up to 18 months [1].

Three smaller items finish the rule. A physician designee or physician member of the hospice team, not only the medical director, may now sign a discharge order, and an attending physician involved in the patient’s care “should be consulted” first [1]. The telehealth option for hospice recertification face-to-face encounters runs through December 31, 2027, under the Consolidated Appropriations Act, 2026 [1]. And CMS kept its new Service and Spending Variation Index, a nine-measure claims score that includes how much Medicare spends outside the hospice for each hospice’s patients [1].

Who it affects

Practices that treat hospice patients for something other than the terminal diagnosis. CMS counted 135,407 non-institutional, non-hospice providers, a group that includes physicians, serving hospice beneficiaries in FY 2024, with an average of 15.5 such patients each [1].

Wound care, podiatry and other practices that apply skin substitutes. CMS singles out this category (more below).

Attending physicians. A patient’s attending physician, named on the election statement and chosen by the patient, keeps billing Medicare separately for related care [1, 2]. The rule’s discharge change and the addendum both put more paper in that physician’s hands.

Hospice physicians and nurse practitioners who do recertification visits by video [1].

What it means for your practice

Today, when a hospice patient needs a service your practice considers unrelated to the terminal illness, you append the GW modifier, which tells Medicare the service is not related [2]. The attending physician’s related services carry GV instead [2]. Nothing in the final rule changes those modifiers. What changes is the record behind them. From October 1, each new hospice patient’s chart at the hospice will contain a written determination of what the hospice considers unrelated, and CMS says that document gives a Medicare contractor something to check a non-hospice claim against [1]. In the agency’s words, the addendum and claims processing “are not competing alternatives, but rather sequential steps in a more complete program integrity process” [1].

For your billing staff, that cuts both ways. CMS’s own burden estimate assumes a nurse in a practice now spends about 15 minutes on the phone with a hospice to sort out what is related, and that a written addendum cuts the call to about five minutes [1]. Across all non-institutional providers, CMS puts that saving at about $27.5 million a year [1]. But a GW claim for a condition the hospice has listed as related, or has not listed at all, will be harder to defend once a dated, filed document says otherwise.

CMS also expects most addenda to say the hospice covers everything [1]. An addendum that lists nothing as unrelated is, in CMS’s reading, a determination that all care is the hospice’s responsibility, not a blank form [1].

Why is CMS targeting wound care billed for hospice patients?

The numbers in the rule are steep. Medicare paid more than $2.8 billion across Parts A, B and D for care outside the hospice benefit during hospice elections in FY 2024 [1]. Part A and B spending of that kind rose from nearly $790 million in FY 2020 to over $2 billion in FY 2024, an increase of 160% [1]. Patients paid $510 million of it in cost sharing in FY 2024, cost sharing they would not owe under the hospice benefit [1].

Physician and supplier claims grew fastest: up 317.5% from FY 2020 to FY 2024, including 90.8% in the last year alone [1]. Pressure ulcer claims, which CMS says are largely tied to skin substitutes, made up 47% of that FY 2024 carrier spending and went from $18 million to $714 million over the four years [1]. CMS notes that it already moved most skin substitutes to a single national rate of about $127.14 per square centimeter starting January 1, 2026 [1].

The agency’s position is blunt. Pressure ulcers that develop “as a direct consequence of the patient’s deconditioned state” in a bedbound or chairbound patient are not exceptional, CMS says, and are “expected to be covered under the hospice benefit” [1]. Hospice commenters argued that skin substitute fraud by outside wound care companies is driving the growth and that hospices should not answer for spending they do not control [1]. CMS disagreed that the spending is solely attributable to outside providers [1].

None of this is new to auditors. A 2022 HHS inspector general data brief found $6.6 billion in Medicare payments to non-hospice providers for hospice patients from 2010 through 2019, and that almost half of hospice beneficiaries each year received such items or services [2]. Of $3.2 billion in physician, supplier and DME payments in that period, about 58% carried the GW modifier [2]. An earlier inspector general audit it cited found that 63% of DME claims billed with GW were in error and should have been part of the hospice per diem [2].

What to do now

1. Ask for the addendum. For any hospice patient whose election began on or after October 1, the hospice must have one on file and available to you [1].
2. Check GW claims against it. If the condition you treated is not listed as unrelated, talk with the hospice before billing Medicare [1, 2].
3. Send wound care questions to the hospice first. CMS treats pressure ulcers in terminally ill, immobile patients as hospice-covered in the ordinary case [1].
4. Tell patients what the addendum means for them. The patient’s signature acknowledges receipt only, and the patient keeps the right to go to the Beneficiary and Family Centered Care Quality Improvement Organization if they disagree with the hospice’s call [1].
5. Prepare for the telehealth G-code. Telehealth recertification encounters on or after January 1, 2027, must be flagged on hospice claims; CMS says it will publish the code and instructions before then [1]. Encounters with a patient in a moratorium area, at a hospice under enhanced oversight, or by an unenrolled practitioner cannot be done by telehealth [1]. CMS says the nationwide hospice enrollment moratorium does not stop enrolled hospices from using telehealth for these visits [3].

The policy fight

Hospice groups opposed the mandatory addendum in large numbers, according to CMS’s summary of comments. They called it technical rather than compassionate, said it could overwhelm patients at admission, objected to collecting signatures from declining patients and asked for up to 18 months to comply [1]. One commenter said 55% of hospice patients in FY 2024 had no outside spending at all, an argument for limiting the addendum to patients with non-covered items [1].

The Medicare Payment Advisory Commission, patient advocates and a non-hospice provider group took the other side, citing duplicate billing, higher out-of-pocket costs and outside providers who could not reach the hospice [1]. CMS sided with them and went further, writing that the volume of burden complaints “may reflect a pattern of non-compliance with existing disclosure obligations rather than a genuine patient-centered concern” [1].

On rates, commenters said 2.4%, the proposed update, would not keep up with labor and supply costs, and asked for a one-time correction for forecast errors from FY 2022 through FY 2026 [1]. They cited MedPAC’s 2023 aggregate Medicare margins of -1.3% for nonprofit hospices and 13.7% for for-profit ones [1]. CMS said the law gives it no mechanism to correct past forecast errors, and the final update came in lower than proposed, at 2.3% [1].

The rule does not say how contractors will treat a GW claim that conflicts with a filed addendum. CMS says only that it will consider commenters’ requests and update sub-regulatory guidance on related and unrelated determinations “as appropriate” [1].