CMS overspent millions of dollars on its Medicare Advantage (MA) hospice carve-out from 2017 to 2019, according to a study published in JAMA Network Open on Aug. 19, 2025.  
 
“Carve-out” refers to traditional Medicare payments for hospice care when patients maintain MA coverage for care unrelated to their terminal diagnosis. In these cases, MA payors continue collecting rebates and premiums.  
 
The study authors reviewed traditional claims, MA encounter records and other publicly available plan-level data connected to around 314,000 MA enrollees who elected hospice services between 2017 and 2019. MA spending on these enrollees was approximately $57 per beneficiary per month.   
 
CMS paid these payors around $120 per month in premiums and rebate payments. This allowed the MA plans to collect $174 million in excess payments over three years.  
 
“To reduce overpayments to MA plans resulting from the hospice carve-out, CMS could require MA plans to report hospice enrollees’ use of supplemental benefits and use that information to align monthly MA plan payments with expenditures,” the study authors suggest.