From “Yes, No, Maybe” to Defensible Clinical Judgment

From “Yes, No, Maybe” to Defensible Clinical Judgment

Hospice Relatedness, Part 1

By Jennifer Kennedy, EdD, MA, BSN, RN, CHC

Hospice providers work at the intersection of compassionate care, complex clinical decision-making, and heightened regulatory scrutiny. Under the Medicare Hospice Benefit (MHB), providers must furnish and cover care related to the terminal illness and related conditions that contribute to the patient’s terminal prognosis. This requires determining whether a condition, medication, item, or service is related to a patient’s terminal illness. While the concept may sound simple, in practice, it is one of the most consequential judgments a hospice makes because relatedness drives coverage responsibility, shapes care planning, and can quickly become a focal point in audits, denials, and payment disputes. Federal rules and CMS guidance make clear that hospice election carries broad coverage responsibility for the terminal illness and related conditions, while unrelated services are expected to be exceptional and unusual, not routine carve-outs (42 CFR §418.24; Medicare Benefit Policy Manual, Ch. 9).

The MHB and CMS Expectations

The Medicare Part A hospice benefit covers hospice services with little to no cost to the beneficiary when the services are related to the terminal condition and approved by the hospice. Because hospice is a “carve-out” benefit, beneficiaries who elect hospice waive traditional Medicare Parts A and D coverage for care related to the terminal illness, including prescription medications, and instead receive that care through the MHB.

However, the Centers for Medicare & Medicaid Services (CMS) has stated plainly in regulation and sub-regulatory that hospice providers are responsible for virtually all care related to the terminal illness unless there is clear clinical evidence to the contrary. That framework places a significant burden on hospice providers, not only to make sound determinations, but to support them with patient-specific clinical reasoning and documentation that can withstand review (42 CFR §418.24; Medicare Benefit Policy Manual, Ch. 9).

At its core, Medicare coverage requires that hospice services be:

  • Reasonable and necessary
  • Provided for the palliation and management of the terminal illness and related conditions

Why Relatedness Matters More Than Ever

Activity from CMS and the Office of Inspector General (OIG) has elevated relatedness from a difficult clinical decision to a major compliance and payment integrity issue. The  CMS FY 2027 Hospice Wage Index and Payment Rate Update and Hospice Quality Reporting Program Requirements [CMS-1851-P] focuses heavily on program integrity and billing transparency by highlighting a massive, 160% surge in non-hospice spending for beneficiaries during their hospice elections. CMS’s internal analysis of Medicare claims data revealed the following spending amounts and trends outside of the hospice benefit: 

  • Parts A & B Spending: Spending on non-hospice Part A and Part B items and services for hospice beneficiaries rises steeply from nearly $790 million in FY 2020 to over $2 billion in FY 2024. This represents a total increase of roughly $1.3 billion. 
  • Recent Spikes: The most substantial year-over-year surge occurred between FY 2023 and FY 2024, which saw an increase of $770 million in a single year alone. 
  • Part D Drug Spending: In FY 2024, there was an additional $813 million in non-hospice prescription drug spending outside of the hospice benefit.

CMS has also emphasized that services unrelated to the terminal illness and related conditions should be “exceptional and unusual,” and that hospice should be providing “virtually all care” needed by the beneficiary who elects hospice (42 CFR §418.24). 

The OIG reported that Medicare paid $6.6 billion to non-hospice providers for items and services furnished to hospice beneficiaries between 2010 and 2019, underscoring the government’s concern about services billed outside the hospice benefit that may have been included in the hospice per diem. CMS has continued to emphasize that non-hospice spending for hospice enrollees warrants closer oversight and that hospice should be furnishing virtually all care needed in all but rare circumstances (OIG Report A-09-20-03015; CMS, FY 2027 Hospice Wage Index and Payment Rate Update Proposed Rule/Press Release, Apr. 2, 2026).

Key concerns include:

  • Billions in non-hospice Medicare spending for hospice beneficiaries
  • Improper payments for hospital, outpatient, and durable medical equipment services
  • Growing scrutiny of services billed outside the hospice benefit

Who Decides Hospice Relatedness?

The determination of relatedness is not administrative, it is clinical and physician-driven. The hospice medical director or IDG physician is ultimately responsible for:

  • Evaluating diagnoses and comorbidities 
  • Determining whether conditions are related to the primary terminal diagnosis and contributing to the prognosis
  • Documenting the rationale for relatedness decisions

Relatedness determinations and their rationale should be clearly documented in the clinical record, aligned with the plan of care, and revisited as the patient’s condition changes.

The former National Hospice and Palliative Care Organization (NHPCO), now the National Alliance for Care at Home, developed a Determining Relatedness to the Terminal Prognosis Process Flow to assist hospice physicians in making relatedness determinations. Effective relatedness determinations typically hinge on two core questions in their algorithm:

  1. Is this condition caused or exacerbated by the terminal illness?
  2. Does this condition contribute to a prognosis of six months or less?

If the answer to either is yes, the condition is likely related, and the hospice provider is responsible for furnishing and covering it.

NHPCO also developed a similar process flow titled Determination of Hospice Medication Coverage for medication-relatedness determination. Effective relatedness determinations in this algorithm center on the following questions:

  1. Does the medication manage or palliate a diagnosis or symptom arising from the PRINCIPAL HOSPICE DIAGNOSIS?
  2. Irrespective of the PRINCIPAL HOSPICE DIAGNOSIS, are there medications that manage or palliate a diagnosis or symptom arising from a RELATED CONDITION?
  3. Does the medication manage or palliate a diagnosis or symptom caused or exacerbated by treatment of a RELATED CONDITION?

If the answer to these questions is yes, the condition is likely related, and the hospice provider is responsible for furnishing and covering it.

Both process flow resources have detailed guidance and should be reviewed carefully by hospice physicians to understand the scope of the decision-making process.

Best Practices for Compliance

High-performing hospice organizations take a proactive, structured approach to the process of relatedness determination:

  • Implement a standardized relatedness assessment tool and educate physicians on it’s use
  • Require robust physician documentation 
  • Review relatedness at every interdisciplinary group meeting
  • Conduct routine internal audits for quality and compliance 
  • Train staff to consistently articulate and document relatedness
  • Maintain clear policies and governance structures
  • Document early, document often, and document clearly

Final Takeaway

Relatedness is not a one-time checkbox. It is an ongoing clinical determination process that must evolve with the patient’s condition, the plan of care, and the hospice’s continuing responsibility for palliation and management of the terminal illness and related conditions. The strongest organizations treat relatedness as a clinical, quality, and compliance consideration, one grounded in interdisciplinary review, physician engagement, and accurate documentation.

CMS’s expectation is unmistakable: hospices should be providing virtually all care related to the patient’s terminal illness, and determinations that something is unrelated must be transparent and clinically defensible. In today’s oversight environment, organizations that overuse unrelated classifications or fail to document them well invite avoidable risk. Organizations that build disciplined relatedness processes, however, are better positioned to protect beneficiaries, support clinicians, and withstand regulatory scrutiny (42 CFR §418.24; CMS Medicare Benefit Policy Manual, Ch. 9; OIG Report A-09-20-03015).

Organizations that embrace this philosophy and support it with strong clinical processes and documentation will be best positioned to deliver high-quality care while minimizing compliance risk.

The next blog in this series will take a deep dive into CMS’s data and compliance concerns about non-hospice spending outside of the Medicare Hospice Benefit and their proposed algorithm in the FY 2027 Hospice Wage Index and Payment Rate Update and Hospice Quality Reporting Program Requirements [CMS-1851-P].

References

  1. 42 CFR §418.24, Election of hospice care.
  2. 42 CFR §418.56, Condition of participation: Interdisciplinary group, care planning, and coordination of services.
  3. Centers for Medicare & Medicaid Services. Medicare Benefit Policy Manual, Chapter 9: Coverage of Hospice Services Under Hospital Insurance, Rev. 13664, issued Mar. 5, 2026.
  4. Office of Inspector General, U.S. Department of Health, and Human Services. Medicare Payments of $6.6 Billion to Nonhospice Providers Over 10 Years for Items and Services Provided to Hospice Beneficiaries Suggest the Need for Increased Oversight, Report No. A-09-20-03015, Feb. 14, 2022.
  5. Centers for Medicare & Medicaid Services. CMS Proposes New Transparency Measures to Strengthen Oversight of Hospice Providers, Apr. 2, 2026.
  6. Medicare Interactive. Drug coverage under hospice, updated Mar. 31, 2025.