Program integrity issues in the hospice space have led to heightened regulatory scrutiny in recent years. Certain regions are seeing provisional periods of enhanced oversight (PPEO), which in some cases can bring unintended consequences for legitimate providers.
The U.S. Centers for Medicare & Medicaid Services (CMS) in 2023 implemented a PPEO for newly-enrolled hospices and those that have undergone ownership changes in four fraud hotbed states of Arizona, California, Nevada and Texas. The agency has since expanded prepayment reviews in those states. Also earlier this year, the agency added Georgia and Ohio as regions to its PPEO program.
Hospices that were subject to PPEO medical and prepayment review have in some instances seen grave impacts to sustainability, said Bryan Nowicki, partner at Husch Blackwell, during the law firm’s recent podcast.
“We’ve seen it [where] your billing privileges are revoked retroactively several months, and [it’s] this whole domino effect,” Nowicki said. “I remember when one hospice got revoked and extended that revocation to another hospice that was under common ownership. It’s not like there is a playbook that is available to us or providers about how it’s supposed to go. The only thing we can predict is that every new PPEO is going to have a wrinkle in it that’s going to be different from whatever was found before.”
CMS revoked billing privileges for 122 hospices that were subject to medical review under a PPEO period as of June 2025, the agency reported. The agency’s period of enhanced oversight for hospices in California, Nevada, Arizona and Texas resulted in nearly $456,000 in claims denials that year, a rate of 40%.
CMS’s enhanced oversight may not be achieving the goal of targeting fraudulent operators, Nowicki stated. Inconsistencies and variabilities in auditing and claim review processes have muddled hospices’ ability to prepare and respond to PPEO periods. Much opportunity exists for hospices to advocate for improved and more standardized oversight and regulatory enforcement, he said.
Clinical claim denials and technical errors have become increasingly more common outcomes of periods of enhanced oversight, according to Claire Postman, senior associate for Husch Blackwell. Appealing these decisions is important to minimize impacts of potential billing revocation and to avoid the risk of having a targeted probe and education (TPE) period, Postman said.
In addition to newly licensed hospices, organizations that have seen a recent change of ownership are also coming under PPEO scrutiny. Some providers have been subject to periods of pre-payment review for 100% of their claims, while others have moved directly into billing revocation or seen increased auditing, according to Postman. Hospices also risk revocation of their Medicare licensure, as do affiliated organizations and certain clinical staff, she added.
Avoiding regulatory scrutiny involves a strong compliance approach, Postman said. Hospices need internal billing audit processes that identify and prevent claim errors. Timely responses to PPEO reviews are also key to avoiding more serious financial repercussions, she indicated.
“There are a host of options that CMS may choose during the PPEO process,” Postman said during the podcast. “There are very drastic consequences to not performing well … not only for the initial hospice that is subject to the PPEO, but also to the hospices’ medical directors and other hospices that might be affiliated with the same medical director. The most serious of which, and unfortunately it hasn’t been uncommon, is revocation. Do everything you can to shield yourself upfront with the goal of warding off denials in the first place.”
The enhanced oversight has resulted in increased fear of retribution among legitimate providers, according to Meg Pekarske, who recently retired after serving as a partner at Husch Blackwell.
Concerns have mounted around the impacts of regulatory enforcement actions when it comes to financial sustainability, Pekarske said. Hospices have ramped up efforts to educate clinicians and back-office staff on the significance of solid documentation and strong compliance.
“It’s not all bad actors. You’ve got to deal with what you can control and not let the fear take over,” Pekarske told Hospice News. “The magic of what made [hospice] special is somehow going to get diminished if they stay on this track of living in fear. People shouldn’t need to make those choices. Something needs to change so that we don’t lose what [hospice] is.”
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