The first look a buyer takes at your hospice does not happen in a data room. It happens on Medicare.gov, usually within an hour of hearing your agency might be for sale and long before anyone signs a non-disclosure agreement. What they find there is a public quality file you did not assemble, and that Medicare refreshes every quarter whether you are paying attention or not.

That file is getting thicker. In the final rule for fiscal year 2027, published August 3, 2026, the Centers for Medicare and Medicaid Services reported that 20.37 percent of hospices were found non-compliant with quality reporting requirements for FY 2026, the fourth consecutive year the figure has sat at roughly one in five. The same rule finalized a public warning icon on the Care Compare tool for hospices that miss the reporting threshold, keyed to data CMS is collecting right now, and published a nine-metric Service and Spending Variation Index that scores every hospice in the program.

This article is about that public file: what is in it, what a buyer reads into each part, what changes on October 1, and what an owner can do in the ninety days before going to market. Every figure below comes from a federal or congressional primary source and is linked so you can check it yourself.

What a buyer can see about your hospice without asking you

Before a buyer requests a single document, they can pull all of the following from public federal sources:

• CAHPS Hospice Survey results. Eight caregiver experience measures on Care Compare, if your hospice cleared the reporting minimums.
• Claims-based quality measures. Hospice Visits in the Last Days of Life and the Hospice Care Index, calculated by CMS from your own claims and on Care Compare since August 2022, per the FY 2027 hospice final rule.
• Whether you met the quality reporting requirement at all. Today that is a 4 percentage point cut to your payment update. From FY 2028 it will also be an icon next to your name.
• Survey history. Condition-level deficiencies, plans of correction and complaint surveys, through CMS survey data and state agency records.
• Your place in the Service and Spending Variation Index. A scoring system CMS now publishes across nine claims-based metrics.
• Enrollment history. Your initial enrollment date and any change of majority ownership, which decide whether the 36-month rule applies to your sale.

One in five hospices are failing the quality reporting test

The Hospice Quality Reporting Program has a simple pass or fail test. A hospice must submit at least 90 percent of its required patient assessments within 30 days of the triggering event, and it must participate in the CAHPS survey unless it qualifies for a small-hospice exemption. Fail either, and the annual payment update is reduced by 4 percentage points, a penalty that doubled from 2 points beginning with FY 2024.

The doubling did not work. In the FY 2027 final rule, CMS laid out the record:

Fiscal year	Hospices found non-compliant with HQRP	Penalty in force
FY 2023	20.07 percent	2 points
FY 2024	22.06 percent	4 points
FY 2025	23.53 percent	4 points
FY 2026	20.37 percent	4 points

CMS’s own words: “The consistent lack of data for approximately one-fifth of hospices limits the ability of CMS to accurately measure the quality of care provided by hospices and limits the amount of data available to a consumer.” For FY 2027 the arithmetic is stark. The payment update is 2.3 percent. A non-compliant hospice receives 2.3 minus 4, which the rule states plainly as an update of negative 1.7 percent, applied to every day of care for a full year.

Here is how a buyer reads that table. A hospice that has taken the penalty once had an assessment workflow break down for a year, and the buyer will want to know whether it was a vendor failure, a staffing gap, or a decision not to bother. One that has taken it twice is priced as a rebuild of the clinical documentation function. And because the penalty year lags the data year by two years, whatever happened in your assessment workflow this year will be visible in the next owner’s rates.

The switch to the HOPE tool on October 1, 2025 made this harder. HOPE replaced the Hospice Item Set with more time points and more items at each one, all subject to the same 90 percent within 30 days test. A hospice comfortably compliant under HIS can fall below the line under HOPE with no change in staffing, simply because there are more records to file on time.

The 2026 data window that decides whether your hospice gets a public warning icon

CMS finalized an icon on the Medicare.gov Compare tool that will identify hospices “failing to submit any data or submitting less than the required 90 percent of HOPE submissions within 30 days.” It will appear on both the provider search page and the individual hospice page, the way icons already appear for nursing homes and hospitals. It will be added no earlier than FY 2028, which begins October 1, 2027, and it will be based on “CY 2026 APU submission data received from January 1, 2026, through December 31, 2026.”

Read that date range again. The data that decides whether your hospice carries a public warning label in late 2027 is being generated right now, and as of the date of this article the window is three-quarters closed. A hospice that has been loose on HOPE timeliness through the first nine months of 2026 cannot fully recover the year in the fourth quarter, because the test is a percentage of all records, not a streak.

Two details from the rule matter. The icon is based on HOPE submissions only; CAHPS participation does not factor into it. And CMS considered a hospice star rating, like the ones on nursing home and hospital pages, and declined to propose one for now, saying it “will require the need for more public feedback and additional analyses.” There is no gold star to earn on a hospice page, only a black mark to avoid.

For a seller, that means any buyer closing in 2027 or later is buying a public face already determined by this year’s submissions. Expect them to ask for the HOPE timeliness report by month for all of 2026, and expect the answer to move the price.

CAHPS: fewer than half of hospices have public scores, and silence reads two ways

The Medicare Payment Advisory Commission’s March 2026 Report to the Congress reports that in the most recent public reporting period (January 2023 to December 2024), just over 3,100 hospices had CAHPS scores published on each measure, “which represents less than half of all hospice providers in 2023.” CMS does not publish scores for a hospice with fewer than 30 completed surveys in the period, and a hospice with fewer than 50 survey-eligible decedents in the prior year may claim an exemption from the survey altogether.

So most hospices for sale in the lower middle market show a blank CAHPS page, and a blank page is not neutral. To a buyer it means either the hospice is small enough to be exempt, which speaks to census, or it participated but did not generate enough completed surveys to publish, which speaks to census or the survey vendor. Neither is disqualifying. But an owner who can explain the blank in one sentence, with the exemption filing or the vendor’s response-rate report in hand, is in a different position from one who is surprised by the question.

For hospices that do have published scores, MedPAC’s median figures are the buyer’s benchmark: 82 percent of caregivers rate the median hospice a 9 or 10 out of 10, 85 percent would definitely recommend it, and 75 percent give the top rating on help for pain and symptoms. A hospice above those medians has a marketing asset. A hospice below them, particularly on pain and symptom management, should expect the clinical diligence team to start there.

The Service and Spending Variation Index: nine metrics and a score

The FY 2027 rule also published a hospice Service and Spending Variation Index. CMS describes it as “a scoring system that monitors nine claims-based metrics in order to comprehensively assess hospice services and yield a provider ranking that can be utilized by beneficiaries to make more informed health decisions and support program integrity efforts.” The FY 2025 version covers 6,673 hospices and more than 6.7 million claims.

The metrics are the ones program integrity teams have watched for years: non-hospice Medicare spending during a hospice election, levels of care, lengths of stay, live discharge rates, and skilled visits in the last days of life. What is new is that CMS has turned them into a single score and published the distribution. Sixty-nine hospices scored above 13 points on FY 2025 claims, which CMS identifies as above the 99th percentile, and the rule notes that FY 2025 claims show “more than 400 hospices have 90 to 100 percent live discharge rates.”

Buyers were already running versions of this analysis privately. The difference now is that the reference distribution is public and CMS has said what it thinks a high score means. A hospice with long stays, a high live discharge rate and a heavy assisted living census will be asked to explain its SSVI position, and “our patients are just sicker” will not be enough. What works is chart-level evidence: recertification narratives, face-to-face documentation, and a live discharge log that shows patient choice rather than administrative discharge.

The cap, and why four states carry a different conversation

Cap status is not on Care Compare, but it is the first question any experienced hospice buyer asks, and MedPAC’s March 2026 chapter explains why. The Commission estimates that in cap year 2023 about 28 percent of hospices exceeded the aggregate cap, up from 23 percent in 2022 and 19 percent in each of 2019 through 2021. The average above-cap hospice owed about $410,000 back to Medicare.

The distribution is the story. Excluding Arizona, California, Nevada and Texas, MedPAC estimates the share of hospices over the cap at about 6 percent. Inside those four states it is a different market: “more than half of hospices in California exceeded the cap in 2023 and approximately 30 percent to 40 percent of hospices in Texas, Nevada, and Arizona.” MedPAC counted 6,706 Medicare hospices in 2024, up 2.6 percent, with about 82 percent for profit.

For an owner in one of those states, cap exposure is not a footnote in diligence, it is the diligence. A buyer will want the cap calculation for the last three cap years, the contractor’s determination letters, any repayment plan, and the current-year projection. For the FY 2027 cap year, which runs October 1, 2026 through September 30, 2027, the cap amount is $36,174.75 per beneficiary, up from $35,361.44, per the CMS fact sheet on the final rule. A hospice that can show three clean cap years in California is rare enough to command attention on that fact alone.

Why the quality file survives the sale

Owners sometimes assume a sale wipes the slate. It does not, and the regulation is explicit. Under 42 CFR 489.18, when a change of ownership occurs “the existing provider agreement will automatically be assigned to the new owner,” and the assigned agreement carries “any existing plan of correction” with it. The provider agreement, the CMS certification number, the survey history, the cap liability and the quality reporting record all belong to the agreement, and the agreement conveys.

Buyers pay for a clean file because they are buying it, and a fresh enrollment is not a shortcut. Under 42 CFR 424.550(b), if a hospice changes majority ownership “within 36 months after the effective date of the HHA’s or hospice’s initial enrollment in Medicare or within 36 months after the HHA’s or hospice’s most recent change in majority ownership, the provider agreement and Medicare billing privileges do not convey to the new owner.” The buyer must instead enroll as a new hospice and obtain a new state survey or accreditation. The main exception is a hospice that has “submitted 2 consecutive years of full cost reports,” and low-utilization cost reports do not count. With the nationwide enrollment moratorium for new hospices still in force, which we covered in our piece on the November decision point, a 36-month problem is not a delay, it is a wall.

One more piece of the file, because sellers keep asking. The Hospice Special Focus Program, codified at 42 CFR 488.1135, would place the lowest-scoring hospices under surveys at least every six months and publish the bottom 10 percent by algorithm score each year. CMS ceased implementation effective February 14, 2025 “so that CMS may further evaluate the program,” and has not restarted it. The regulation remains on the books, and a buyer with a multi-year hold will ask where your survey record would have placed you.

What changes on October 1

The FY 2027 rule takes effect October 1, 2026, eight days after this article’s date. Three items in it touch a sale directly.

• Payment update of 2.3 percent, from a 3.2 percent market basket increase less a 0.9 point productivity adjustment, worth an estimated $755 million across the sector. Non-compliant hospices receive negative 1.7 percent. A buyer modelling your trailing twelve months will apply the right one.
• Cap amount of $36,174.75 for the FY 2027 cap year, as above.
• The election statement addendum becomes mandatory for every hospice election on or after October 1, 2026, delivered within the first five days of the election rather than only on request. This is an operations change that lands in the middle of a typical sale timeline. A buyer doing chart review in early 2027 will pull elections from October onward and check for the addendum. A missing addendum is a documentation finding, and documentation findings are how diligence teams justify a lower number.

The ninety-day quality file review before you go to market

The work here is not clinical transformation. It is reading your own public file the way a buyer will, and closing the gaps that can be closed in a quarter.

1. Pull your own Care Compare page and your Provider Preview Report. CMS issues preview reports through iQIES before each quarterly refresh with a 30-day correction window; the window for the November 2026 refresh runs August 25 to September 24, 2026, per the CMS HQRP announcements page.
2. Run the HOPE timeliness report by month for calendar 2026. Know your rate against the 90 percent threshold before a buyer asks. If you are below it, the remaining quarter is the time to fix the workflow, even if the annual figure cannot be fully recovered.
3. Confirm your APU compliance history for FY 2024 through FY 2027. CMS issued FY 2027 non-compliance notifications on August 5, 2026, with reconsideration requests due September 4. If you received one, the reconsideration outcome belongs in the data room.
4. Get the CAHPS story straight. Either the exemption filing or the vendor’s response-rate report, plus the most recent published scores against the MedPAC medians.
5. Reconcile cap for the last three cap years. Contractor determination letters, any repayment schedule, and a current-year projection.
6. Assemble the survey file. Every survey in the last three years, every deficiency, every plan of correction and its acceptance letter, organized, because the buyer will get it from the state anyway.
7. Audit a sample of elections for the addendum starting October 1, and put the process change in writing before the sale process starts.
8. Map your SSVI exposure honestly. Average length of stay, live discharge rate and non-hospice spending, with the chart-level explanations ready for the outliers.

None of this changes what your hospice is. All of it changes whether the buyer’s first impression is one you wrote or one they assembled from Medicare.gov on a Tuesday afternoon.

What live hospice inventory looks like right now

For a sense of how the public file shows up in real offerings, three Vallexa hospice listings currently live: a Medicare certified hospice in metro Atlanta with an active PTAN, a Medicare certified hospice agency in Arizona, and a Texas hospice agency in Houston. Two of the three sit in the four states MedPAC singles out for cap attention, where a clean quality file matters most.

If you are twelve to twenty-four months from an exit, our hospice valuation and sale page covers the wider process, and Who Buys Hospice Agencies in 2026 describes the buyer types who will be reading your file. If you want a confidential read on how your public quality file will land with those buyers, contact us. Vallexa Advisors works on a success fee basis, so the first conversation costs you nothing but an hour.

Frequently asked questions

Sources

• CMS, FY 2027 Hospice Wage Index and Payment Rate Update and Hospice Quality Reporting Program Requirements, final rule, 91 FR 49118, August 3, 2026, effective October 1, 2026. HQRP non-compliance rates, the 90 percent threshold, the Care Compare icon, the SSVI, the negative 1.7 percent update, and the election statement addendum.
• CMS fact sheet on the FY 2027 hospice final rule (CMS-1851-F), July 30, 2026. Payment update components, cap amount, aggregate impact.
• Medicare Payment Advisory Commission, Report to the Congress: Medicare Payment Policy, March 2026, Chapter 10, Hospice services. Provider counts, CAHPS coverage and medians, cap estimates by year and state.
• 42 CFR 489.18, 424.550 and 488.1135, eCFR current through September 21, 2026. CMS Hospice Special Focus Program page and Hospice QRP Announcements and Spotlight page.

This article is general information about market and regulatory conditions and is not legal, tax, accounting or investment advice, and it is not a valuation of any specific hospice. Figures are current as of September 23, 2026. Confirm the application of any payment rule or reporting requirement to your agency with your own advisors.