Legitimate hospice providers are likely being caught up in the U.S. Centers for Medicare & Medicaid Services’ (CMS) crackdown on fraud, including through payment suspensions that are leading to some agency closures.
That’s according to several provider executives and industry leaders who have spoken to Hospice News in recent days, as news this week ratcheted up concerns.
CMS on Wednesday imposed a six-month national moratorium on new hospice and home health provider enrollment in Medicare. In tandem with that announcement, the agency indicated that it had suspended payments for 773 hospices and 23 home health agencies suspected of fraud in Los Angeles County, California. To date, this amounts to roughly $70 million in suspended payments, CMS indicated in a statement.
In a social media post, U.S. Vice President J.D. Vance also stated that the federal government was deferring more than $1.3 billion in California Medicaid funds due to suspicion of fraud.
“Stealing from people at the most vulnerable moment of their lives isn’t just fraud — it can cost them their future,” CMS Administrator Dr. Mehmet Oz told Hospice News in an email. “When bad actors trick patients into fraudulent hospice care, they don’t just drain taxpayer dollars; they strip people of the medical care that could have helped them live longer. That’s unconscionable, and CMS is taking aggressive, data-driven action to drive these predators out of the health system and protect patients.”
Widespread hospice fraud has been documented in several states. Some providers have enrolled patients who did not qualify for hospice care or did so without the patients’ knowledge or consent. Others have transferred patients between hospice organizations in exchange for payments, participated in “license flipping,” and offered illegal kickbacks for referrals, among other violations.
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.
Hospices shutting down
However, evidence suggests that not all of the suspended operators have perpetrated criminal fraud. Legitimate providers are also being affected, and some are transferring their patients and even shutting their doors, multiple industry sources have told HSPN. Leaders from several hospice organizations have said that they have received calls from providers that were closing and needed someone to take their patients.
“The government’s approach here, first of all, is laudable. That said, the way that they’re going about it is yielding some collateral damage. Some folks that are genuinely trying to provide good patient care are getting caught up,” Edo Banach, partner at the law firm Foley Hoag, told Hospice News.
Hospices under suspension are receiving notification letters from CMS’s Unified Program Integrity Contractors (UPIC), citing “credible allegations of fraud” and stating that they are under investigation. The suspensions are initially set for 180 days, but CMS can extend them to as long as 360 days, according to Katie Wehri, vice president for regulatory affairs, quality and compliance at the National Alliance for Care at Home. These hospices have a period of 15 days to file a rebuttal opposing the suspension.
“CMS recognizes the seriousness of these actions and is committed to ensuring that legitimate providers have a clear path to demonstrate compliance and resume participation in the Medicare program,” a CMS spokesperson told Hospice News in an email. “Suspended providers have the right to submit a rebuttal statement with supporting evidence demonstrating that services were medically necessary and met Medicare requirements. CMS carefully reviews all submitted information and will lift suspensions when providers demonstrate they are compliant with program requirements.”
One cause for concern is that the investigation of the hospice’s practices does not begin until after the suspension has taken place, according to Annette Lee, CEO and Founder of the consulting firm Provider Insights. One of Lee’s clients received such a suspension letter.
“The letter itself said that they were beginning an investigation and the suspension would be continued throughout the investigation,” Lee told Hospice News. “That shows us that this has not yet been investigated. No one has been found guilty. There’s not many businesses that can be maintained without any income while someone investigates them.”
A focus on live discharges
Five sources have told Hospice News that most, if not all, of the suspension letters indicate live discharges as the reason behind the suspension. A redacted letter obtained by Hospice News fits this description. The redactions removed patient-identifying information.
Multiple sources confirmed that each letter cites five live discharged patients per provider. The letters do not request records associated with those patients, though such a requisition may be forthcoming from the UPIC.
“These are hospices that have been in existence for some time and are serving patients, and some of them have even passed through a review of some type, like a Targeted Probe & Educate review, and they’ve not had any issues yet,” Wehri told Hospice News. “They received the suspension due to high live discharges. So that’s concerning to the Alliance that it’s that one metric is being used now, most of the folks we’ve heard about or talked to, and the letters that we have seen, are for high live discharges.”
The average live discharge rate for U.S. hospices hovers between 17% and 19%, according to CMS. The agency has indicated that providers with a live discharge rate exceeding 40% are subject to higher scrutiny.
But that 40% threshold is an “imperfect number,” according to Banach. For one, UPICs tend to include revocations in a provider’s live discharge percentage, when a patient changes their mind about receiving hospice care or decides to seek treatment in a hospital. Also, patients who have had long lengths of stay or multiple re-certifications can also become regulatory red flags, so hospice physicians order them discharged.
Also, in California, homeowners are subject to laws about disclosing when a person has died in a home that is being sold, Banach said. Some families are revoking the benefit and calling 911 when death is imminent to avoid making those disclosures.
“Most of the numbers are either long lengths of stay or revocations. So, is 40% high or low? It all depends on how you’re counting,” Banach said. “It’s unanswerable until you kind of determine the reason for the live discharge.”
Banach recently visited Los Angeles on a fact-finding mission regarding the payment suspensions. He said that many of the suspended hospices are owned by members of specific immigrant groups.
CMS told Hospice News in an email that the agency routinely monitors for abnormal billing patterns, beneficiary complaints and other indicators of potential fraud. When issues arise, CMS uses a range of tools, including payment suspensions, revocations of billing privileges and referrals to law enforcement. However, CMS does not comment on the specific data analytics, thresholds or investigative methods used to identify providers for review, as doing so could undermine ongoing program integrity efforts, an agency spokesperson said.
‘This needed to happen’
One hospice that received a suspension letter began operations in 2021 and has an average daily census that ranges from 90 to 120. The company is privately held by three owners and serves four California counties, an executive for the company spoke to Hospice News on condition of anonymity.
The hospice received its suspension letter on April 20 and is preparing a rebuttal. The letter indicated that its Medicare payments were suspended and that it was under investigation by the UPIC due to live discharges, citing five patient records. This fits the pattern that multiple sources have described to Hospice News. The five patient cases included some revocations and others that were long lengths of stay. The discharges took place in February 2025, according to the letter.
For now, the company remains in operation and is not transferring patients, the executive said. However, that is not always the case with hospices that receive these letters.
“Our owners are very much like worst-case scenario people. So they never take money out. They keep reinvesting it into the company. So financially, we are able to sustain what we’re doing now,” the executive told Hospice News. “We are hearing from other hospices, people that we worked with in the past, that they are closing their doors. I would say, every day since [April] 21, I’ve heard at least two to three companies closing their doors and trying to transfer their patients out to other hospices.”
The hospice vets patients coming on from these other providers for eligibility, and so far this has been a mixed bag, the executive said. Some of the patients coming from those providers are suitable for hospice according to established criteria, but they have also found some who are not.
Despite their suspension, the executive said that they view CMS’ enforcement efforts “in a positive way.”
“This was definitely needed. We all agree that this needed to happen,” the executive said. “It’s just we never thought we would be rolled up in it.”
Companies featured in this article:
Foley Hoag LLP, National Alliance for Care at Home, Provider Insights
