The U.S. Centers for Medicare & Medicaid Services (CMS) is expanding its enhanced oversight for new hospices in fraud-ridden states, including California, Nevada, Arizona and Texas.

The agency in July 2023 first announced a “provisional period of enhanced oversight” for new hospices in those states. A key component of the enhanced oversight includes a medical review of claims before a Medicare Administrative Contractor (MAC) will pay them.

“To combat fraud, waste and abuse under the hospice benefit, CMS will expand prepayment medical review this September in Arizona, California, Nevada and Texas,” the agency indicated in a statement. “To help reduce burden on compliant providers, initial review volumes will be low and adjusted based on results. If you’re noncompliant, we may implement extended review or take additional administrative actions.”

These actions follow reports of potentially unethical or illegal practices among hospices, particularly among new companies popping up in those four states, which have spurred calls for stronger oversight from lawmakers and other stakeholders. CMS and the State of California have already implemented a series of new regulations designed to combat fraud, waste and abuse.

The newly expanded oversight program will cover any new hospice or those pursuing a change of ownership. These companies may also undergo other forms of payment and medical reviews. Potential penalties for noncompliance could range from claims denials to expulsion from the Medicare program.

Individual hospices will receive notice from CMS that they will be receiving this additional oversight, which can last from 30 days to as long as a year. Hospices that do not respond to requests from CMS may also see claims denied or their Medicare certification revoked.

This is the latest development in CMS’ response to a surge of newly licensed hospices in California, Arizona, Texas and Nevada. Many of these have been accused of gaming the Medicare system, enrolling patients who are not eligible — sometimes without their knowledge — and delivering poor-quality care.

In some instances, multiple hospices have been operating out of the same address without a corresponding increase in the population of eligible patients. Some individuals also hold management positions at several of these hospices simultaneously.