The move would mean that chronically ill people being cared for at home or in a nursing home would have to foot the bill for their own treatment in future.
Health Secretary Alex Neil ordered a review of the system last June after a 27% fall in the number of people receiving help under the NHS Continuing Care scheme.
The review, led by former president of the Royal College of Physicians and Surgeons of Glasgow, Ian Anderson, accepted that the system in Scotland is not working, but recommended no-one in a care home should have their care paid by the NHS. The report said the system should be completely revised and re-branded as "hospital based complex clinical care".
Mr Neil committed the Scottish Government to work with health boards and Cosla to develop new guidance on the role of continuing care, to be implemented by April 2015.
The move is likely to face legal challenges, however, and Scottish Liberal Democrat health spokesman Jim Hume MSP described it as a "backwards" step for patients which goes "against all that the Scottish Government has said about spending to save".
He said: "By removing continuing care costs for people receiving treatment at home for complex care, the Scottish Government is effectively chaining people to a hospital bed when they could be in the community."
NHS continuing healthcare is a fully-funded package arranged by the health service where someone has been assessed as having an unpredictable and very high-level clinical care needs. It emerged last year that the number of people getting all their care costs paid was falling in Scotland, whereas it was rising in England, in line with an ageing population. Since 2003, thousands of people in England have been able to claim back care costs, following a landmark decision by the Ombudsman south of the Border.
Last year, 1,711 people were receiving the care package - three quarters of whom were in NHS facilities and the remainder in private nursing homes. Mr Anderson's report said that no-one should have to live out their life in hospital.
It states: "Only those individuals who are required to live in hospital should be exempted from charges relating to their accommodation. All other individuals, whatever their age or disability should contribute to the funding of accommodation costs, should their financial situation permit."
Mr Neil said: "Where patients are assessed as needing this form of acute long-term care the expert group make clear that the most effective and safe way to deliver this is in a hospital setting."