CMS Proposes 36-Month Rule for Hospices, 2024 Launch of Special Focus Program

The U.S. Centers for Medicare & Medicaid Services (CMS) has proposed a requirement that would prohibit hospice owners from selling their businesses within 36 months of Medicare enrollment.

The agency included these plans in its proposed home health rule for 2024. This is the latest step in the agency’s efforts to improve hospice program integrity following widespread reports of unethical or illegal activity among new providers in several states.

It mirrors a regulation that has existed for several years for home health agencies. The rule forbids any change in majority ownership during the 36 months after initial enrollment, including acquisitions, stock transactions or mergers.

“This requirement is designed to address circumstances under which Medicare provider certification is sought for the sole purpose of selling the certification rather than providing services to beneficiaries,” a National Association for Home Care & Hospice (NAHC) Fact Sheet indicated. “The policy also helps to ensure that when a provider changes ownership that CMS has knowledge as to whether the entity, under new management and ownership, meets the Medicare conditions of participation.”

Additionally, under the proposed rule, a provider that is denied Medicare enrollment would not be able to reapply for up to three years. It would also impose restrictions on physicians who have had felony convictions within the previous 10 years as well as any provider who has been denied enrollment during the previous three years. 

Also in the proposed rule was the long-awaited implementation of a Special Focus Program (SFP) for hospice providers.

CMS initially pitched the idea in 2022 but instead convened a Technical Expert Panel (TEP) to further guide the development process. The agency wants to move ahead with it in 2024.

If designed similarly to those used in other settings, the SFP would have the power to impose enforcement remedies against hospices with poor performance on regulatory or accreditation surveys. Hospices flagged by the SFP would be surveyed every six months rather than the current three-year cycle.

The program would have the authority to impose fines, suspend reimbursement, appoint temporary management to bring the hospice into compliance or revoke a provider’s Medicare certification altogether.

However, the SFP could have a more positive impact, according to National Hospice and Palliative Care Organization (NHPCO) COO and interim CEO Ben Marcantonio.

“It’s another opportunity to really identify where we can grow and improve,” Marcantonio told Hospice News. “We want to make sure that we are committed to ongoing quality improvement.”

But the most prominent aspect of the proposed rule is a 2.2% cut to reimbursement home health providers for next year. This follows additional cuts that were implemented in 2023.

CMS is using a flawed method for calculating the reimbursement update, according to NAHC President Bill Dombi.

“We continue to strenuously disagree with the budget neutrality methodology that CMS employed to arrive at the rate adjustments,” Dombi said in a statement. “Overall spending on Medicare home health is down, fewer patients are receiving care, patient referrals are being rejected because providers cannot afford to provide the care needed within the payment rates, and providers have closed their doors or restricted service territory to reduce care costs. If the rate was truly budget neutral, we would not see these actions occurring.”

The ability to retain their workforce after taking a financial haircut is also a concern for home health providers.

Providers continue to hemorrhage dollars to boost hiring while adjusting wages and purchasing for inflation. The labor shortages have reduced clinical capacity for both home health and hospice, which has contributed to drops in patient census and length of stay.

Rejection rates reached 41% among hospice providers and 58% for home health agencies in 2022, according to data from CarePort, a WellSky company.

“Providers’ operating environment is tough. A 2.2% cut will hurt. Reduced payment will limit members’ ability to recruit, hire, and retain staff in a very tight labor market – and without staff, there is no care,” Katie Smith Sloan, president of LeadingAge said in a statement. “This proposed rule contradicts the Biden Administration’s oft-stated commitment to ensuring access to home and community-based care and threatens to harm those who most need home health: older adults and families.”