Relatedness Determination

A relatedness determination is the clinical and billing judgment a hospice makes for each condition, item, service, and drug at admission and throughout the plan of care: is this related to the patient's terminal illness and related conditions (and therefore the hospice's coverage responsibility under the per diem), or unrelated (and therefore billable outside the hospice benefit)? CMS expects "unrelated" to be exceptional and unusual.

When a beneficiary elects hospice, the hospice assumes coverage responsibility for virtually all care related to the terminal illness and related conditions under the per diem (42 CFR 418.202)^[1]. The beneficiary simultaneously waives Medicare payment for related services furnished by non-hospice providers (42 CFR 418.24(g), https://www.ecfr.gov/current/title-42/chapter-IV/subchapter-B/part-418/subpart-B/section-418.24). Any condition, item, service, or drug the hospice determines to be unrelated must be documented with a written clinical explanation stating why it is unrelated and why it is not needed for pain or symptom management, accompanied by references to relevant clinical practice or coverage guidelines (42 CFR 418.24(c)(6)–(7), https://www.ecfr.gov/current/title-42/chapter-IV/subchapter-B/part-418/subpart-B/section-418.24). That documentation is the hospice election statement addendum — titled "Patient Notification of Hospice Non-Covered Items, Services, and Drugs" — which must be provided to all Medicare beneficiaries at the time of election for elections beginning on or after October 1, 2026 (FY2027 final rule, CMS-1851-F, July 30, 2026, https://www.cms.gov/newsroom/fact-sheets/fiscal-year-2027-hospice-wage-index-payment-rate-update-hospice-quality-reporting-program).

CMS applies a presumption of relatedness: the regulation states that services unrelated to the terminal illness "are exceptional and unusual" and that hospice "should be providing virtually all care needed by the individual who has elected hospice" (42 CFR 418.24(b)(3), https://www.ecfr.gov/current/title-42/chapter-IV/subchapter-B/part-418/subpart-B/section-418.24). In practice, this means the burden of proof runs toward coverage, not exclusion. Medications are the most common judgment call — CMS guidance and audit practice treat drugs that contribute to symptom control, comfort, or management of a condition affecting the terminal disease trajectory as related, even when the drug also serves a separate clinical purpose (Medicare Benefit Policy Manual, Ch. 9, https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/bp102c09.pdf).

The consequences of weak or overused unrelated determinations are now directly measurable. In FY2024, Medicare paid over $2.1 billion in Part A and Part B non-hospice spending and $813 million in Part D spending during hospice elections — roughly $2.8 billion total, a 160% increase since FY2020 (CMS FY2027 final rule fact sheet)^[2]. Carrier claims for pressure ulcers related to skin substitutes rose nearly 4,000% in that same window, accounting for 47% of carrier claim spending in FY2024 (FY2027 proposed rule)^[3]. CMS folds non-hospice spending directly into the SSVI, where it accounts for up to 8 of the index's 16 possible points ^[4].

Relatedness is the clinical decision point that connects the election statement addendum, the non-hospice spending that feeds the SSVI, and the audit surface for UPIC and MAC medical review. A hospice whose relatedness determinations routinely exclude borderline conditions — particularly Part D medications and wound care — generates a visible non-hospice spending profile that is now scored and publicly reported through the SSVI. The $2.8 billion in FY2024 non-hospice spending and the 4,000% spike in skin substitute claims are the data points CMS has identified as the highest-risk areas for audit. Each unrelated determination must be supported by patient-specific clinical rationale reviewed at the IDG level and updated at each plan-of-care revision to withstand scrutiny under 42 CFR 418.24(c)(6)–(7).