This paper discusses the current status of hospice care in the U.S. as an approach consonant with the needs of the terminally ill; and implications of new legislation which make it a cost-effective alternative to standard inpatient care. The impact of hospice reimbursement legislation on discharge planning, home care, use of staff, and the integration of hospice and acute care is described for use by practitioners and health care administrators. Regulations currently under development will further define the implementation of this legislation.