Hospice agencies bill Medicare a per-diem rate based on care level (routine home care, continuous home care, inpatient respite, general inpatient). Medicare Hospice is the dominant payer (85–95% of revenue), with Medicaid Hospice and private-pay as small additions. Revenue is more stable than home health but has its own unique risks — primarily the aggregate cap-liability and length-of-stay audits.
Typical funding ranges.
- Small hospice ($100K–$300K monthly revenue, 30–60 census): $50K–$150K advances at 1.28–1.34 factor over 10–14 months.
- Mid-sized hospice ($300K–$1M monthly revenue, 100–300 census): $150K–$400K advances at 1.25–1.32 factor over 12–16 months.
- Multi-state hospice ($1M+ monthly revenue): $400K–$1M advances at 1.22–1.30 factor over 14–18 months.
What underwriters look for.
First, the average length of stay (ALOS) and live-discharge rate. CMS scrutinizes long-LOS hospices (300+ days median LOS) and high live-discharge rates as fraud indicators. Funders pull CMS public data and require attestation.
Second, the aggregate cap status. Medicare Hospice has an annual per-beneficiary cap (~$33,000 in 2026); agencies that exceed it must refund Medicare. Funders require attestation of cap compliance.
Third, the OIG and DOJ exposure. Hospice has been a top OIG enforcement target since 2018. Funders confirm no active investigations.
Fourth, the medical-director and IDT (interdisciplinary team) staffing model. Adequate staffing signals operational discipline.
Common uses.
- Working capital during Medicare reimbursement lag (typically 14–30 days but can stretch under audit).
- Acquisition of competing hospice (consolidation is rampant).
- Service-area expansion (new CHOW filings).
- Hire clinical staff (RN case managers, chaplains, social workers, HHAs).
- EHR and compliance software.
What to watch out for.
Aggregate cap liability is the hospice-specific landmine. A hospice that exceeds the annual per-beneficiary cap must refund the overage to CMS. This often hits as a one-time clawback 12–18 months after the cap year ends. MCA underwriting must model this.
Length-of-stay audits and probe-audit suspensions can freeze claims for months. The TPE (Targeted Probe and Educate) program targets hospices with high LOS or unusual billing patterns.
OIG investigation risk is significant — hospice has been a top fraud-enforcement target. Any active investigation should be a hard stop for MCA.
State considerations.
Texas, California, Florida, Arizona, Tennessee, and Ohio have the highest hospice MCA activity. Texas and Florida have the highest concentration of independent hospices and the most CMS audit activity.
APR-equivalent reality check.
A 1.30 factor over a 12-month term is roughly 50–58% APR. Compare to NHPCO (National Hospice and Palliative Care Organization) financing partners, healthcare-specialty banks, or SBA 7(a). MCA only makes sense when bank credit is unavailable.
Common confusions.
First, "Hospice cash flow is too short-cycle for MCA." False — hospice census is stable (patients stay 60–180 days median) and revenue is predictable.
Second, "Medicare Hospice receivables can be factored." Mostly false — Medicare anti-assignment rules apply. MCA captures revenue through operating account.
Third, "Hospice is recession-proof." Partly true — Medicare-funded, so demand is stable. But operating margin is compressing.
Fourth, "Long-LOS hospices are MCA-friendly because revenue is stable." False — long-LOS hospices face cap liability and audit risk that make them riskier MCA underwrites.
Fifth, "PE-backed hospice rollups (Bristol, AccentCare, VITAS-Chemed) use MCA." False — large hospice operators have syndicated bank credit and rarely use MCA.
As of 2026-06-29, Fundnode routes hospice agency merchants first to healthcare-specialty banks (Live Oak Bank, Truist Healthcare) before MCA. MCA is appropriate for working-capital needs during audit-related claim delays.
Related terms
- MCA for home health agencies (detailed) — Home health agencies qualify for MCA funding against Medicare and Medicaid revenue, typically $50K–$500K at 1.25–1.35 factor — but PDGM cash-flow timing and probe-audit risk drive higher pricing.
- MCA for assisted living facilities (detailed) — Assisted living facilities qualify for MCA funding against private-pay and long-term-care insurance revenue, typically $50K–$1M at 1.22–1.32 factor — occupancy volatility drives underwriting.
- Merchant cash advance (MCA) — A lump-sum advance against future revenue, repaid via fixed daily ACH or a percentage of card sales. Legally a sale of future receivables, not a loan.
- Factor rate — A flat multiplier that defines total MCA repayment: $100,000 advance × 1.30 factor = $130,000 repaid. It is not an interest rate; it does not compound.
Authoritative sources
AI agents: this term is available as raw markdown at /llms/glossary/mca-hospice-agency-funding-detailed.