Home Health Rule Brings ‘Unfettered’ Hospice Oversight

Hospices could see some potentially significant impacts from recent regulatory provisions in the U.S Centers for Medicare & Medicaid Services’ (CMS) recently finalized 2027 home health rule.

Through the rule, the agency rolled out new measures designed to improve program integrity and curb fraudulent activity. It contained sweeping changes for hospices and other healthcare providers.

The rule’s most significant changes relate to Medicare enrollment and payment oversight, according to Laura Mosby, chief ethics and compliance officer at Empath Health.

“Hospice providers should pay close attention to CMS’ expanded authority around Medicare enrollment and payment recovery,” Mosby told Hospice News in an email. “The agency is clearly strengthening its ability to address fraud, waste and abuse through broader enrollment oversight and expanded recovery mechanisms. The changes reinforce the importance of strong compliance programs, accurate documentation and ongoing monitoring of regulatory requirements. With the new expanded requirements, hospices will need to assess and adjust their internal enrollment oversight.”

Significant risks

Through the new home health rule, CMS expanded its authority to recover improper payments and to deny or revoke Medicare enrollment.

The agency can now recover payments from enrollment-revoked Medicare providers and suppliers. CMS previously had authority to do so retroactively only in certain cases. Additionally, the rule grants CMS the authority to revoke enrollment in instances of potentially heightened fraud risk. This could include hospices in areas with unusually high concentrations of providers and suppliers within a geographic region.

Providers need to pay close attention to CMS’ “broader scope and discretion” related to enrollment, Mosby said. A primary concern for hospices is the risk of not fully meeting new reporting requirements within a timely manner.

Provisions in the home health rule underscore the value of transparency, trust and accountability for healthcare providers, according to Mosby. Hospices prioritizing quality, compliance and ethical practices will be well-positioned to adapt to the regulatory changes.

xEpanded regulatory discretion and oversight is a key theme in the rule, according to Howard Young, partner at the law firm Morgan, Lewis & Bockius LLP.

CMS has not clarified what the agency defines as risky, suspicious or fraudulent activity, Young said. This leaves hospices and other healthcare providers in a grey area when it comes to compliance, he indicated.

“The public was asking for more factors, more specific definitions and in some cases retaining certain factors,” Young told Hospice News. “CMS basically said, ‘No, we want that unfettered discretion.’ CMS is expressing program integrity concern that it feels needs greater, not less, discretion to use [its] authorities. CMS refused to provide definitions. They effectively want as much latitude and discretion as possible.”

Important hospice components

The final home health rule included “big operational changes” for hospices, Young stated.

The rule expanded CMS’ authority to deny Medicare enrollment if a hospice medical director or administrator is employed at numerous hospices, or if they are located far from their geographic service region.

The changes can create significant obstacles for rural-based providers and organizations seeking organic growth across their service areas, Young said. Hospices need to pivot their professional vetting practices to ensure that a hospice medical director’s or administrator’s affiliations do not pose undue risk.

Hospice providers must develop hiring and compliance processes that reflect regulatory updates in the home health rule, said Katie Wehri, vice president of regulatory affairs, quality and compliance at the National Alliance for Care at Home.

Medical directors and administrators can serve at multiple hospices. However, CMS now has authority to deny Medicare enrollment when concerns are raised about their ability to realistically perform their required duties, Wehri indicated.

The agency did not stipulate any geographic distance rates or how many hospices it would consider excessive for a medical director or administrator, according to Wehri.

Hospices and other healthcare providers need greater clarity from CMS around the new regulatory reporting requirements that impact Medicare enrollment and revocation, she indicated. Legitimate providers also need more time to understand and adopt their policies and avoid inadvertently getting swept up in the fraud hunt.

CMS needs to issue clearer regulatory guidance and use more targeted, data-driven enforcement strategies, Wehri stated.

“This rule helped clarify that the medical director and administrator provision applies to denials only, not to existing arrangements at enrolled hospices, and it did not set caps or mileage thresholds,” Wehri told Hospice News. “CMS declined to define key terms, add materiality thresholds, offer an opportunity to cure or phase in implementation. We’re concerned these provisions don’t distinguish bad actors from legitimate hospices acting in good faith, and a missed or late disclosure or an administrative error could now carry severe consequences.”

All Medicare providers, including hospices, are facing increased regulatory risks, according to Katy Barnett, director of home care and hospice operations and policy at LeadingAge, an association of nonprofit aging service providers. The concerns extend beyond Medicare enrollment denials and into heightened risk of potential revocation, Barnett said.

The home health rule included a new requirement for revoked providers seeking Medicare reactivation. Providers must now obtain a new state survey or accreditation prior to being reactivated, according to Barnett.

“Hospices should read the Medicare provider enrollment section in detail,” Barnett told Hospice News. “This is a significant expansion of CMS’ authority to deny or revoke Medicare enrollment from Medicare-enrolled providers, including hospice, home health and skilled nursing providers. It is key to develop a process to regularly update and maintain enrollment information and ensure that all reported information is accurate and current.”