The Centers for Medicare and Medicaid Services (CMS) has implemented a new nationwide enrollment moratorium on two new categories of providers in its ongoing effort to address what it claims is rampant Medicare fraud in Home Health Agencies (HHAs) and Hospice providers. This comes on the heels of the nationwide moratorium on enrollment of new Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) suppliers that CMS announced in February, and which will run until August 2026 unless it is extended by CMS.
The two new nationwide moratoria, effective beginning on May 13, 2026, will run for six months (i.e., through November 13, 2026) and prohibit any new hospice provider or HHA from enrolling in Medicare. As with the DMEPOS moratorium, these two new bans do not apply to Medicaid or Children’s Health Insurance Program (CHIP), both of which are run through state agencies and supported through state and federal funding. However, as with the DMEPOS moratorium, in the HHA and hospice moratoria, CMS encourages states to consider implementing their own moratoria for these types of providers, and has begun to withhold Medicaid funds from states that it claims is not sufficiently investigating fraud in the Medicaid program.
On May 14, the state of Ohio implemented its own Medicaid enrollment moratorium for certain provider types. That state level moratorium includes eight distinct provider types within the categories of HHAs and hospice providers and will last until November 14, 2026. We may see other states take similar action based on this encouragement from CMS.
What is the impact of the moratoria?
The newly announced CMS Medicare enrollment moratoria on hospices and HHAs will prevent (i) any new hospice or HHA enrollments and (ii) the addition of new branches/practice locations to existing hospice or HHA enrollments anywhere in the United States until November 2026.
Moreover, just as with the DMEPOS moratorium, the so-called “36-Month Rule” adds another wrinkle that may make it harder even for established providers to survive the moratorium period. Specifically, the 36-Month Rule requires any hospice provider or HHA that undergoes a non-exempt change of majority ownership within 36 months of its initial enrollment or its most recent change in majority ownership to re-enroll as a new provider.
This rule was put in place to address fraud and abuse concerns with HHAs and hospices by disincentivizing investors from purchasing and quickly “flipping” these types of providers. However, with the moratoria in place, the 36-Month Rule will, for the pendency of the moratoria, completely preclude an existing HHA or hospice from participating in the Medicare program if the provider undergoes a non-exempt change in direct majority ownership within the 36-month period after the provider’s initial enrollment or its most recent change to its direct majority ownership. While there are certain exceptions to the 36-Month Rule, their scope is ambiguous and lacks established guidance from CMS.
We note, too, that Medicare participation is often a prerequisite for participation with Medicaid and certain commercial payors. Therefore, although the moratoria only apply to Medicare enrollments, the loss of and/or the inability to obtain Medicare enrollment could have broader implications for a provider’s operations.
There is one more thing to consider with these announced moratoria. One of the reasons that CMS gave for placing nationwide enrollment moratoria on these two provider types was that both were subject to the “high” level of scrutiny when enrolling in Medicare under 42 C.F.R. § 424.518. Each of the notices lists the six provider types that are subject to that level of screening: DMEPOS suppliers, hospices, HHAs, Medicare diabetes prevention programs, Skilled Nursing Facilities and opioid treatment programs. The first three provider types listed are now subject to new enrollment moratoria. It is foreseeable that the remaining three provider types are under consideration for enrollment restrictions as well.
What should HHAs and hospices do?
For providers who bill traditional fee-for-service Medicare, as with the DMEPOS moratorium, this could be very disruptive. They cannot open new locations that will have to be separately enrolled in Medicare. They must be careful in their changes of ownership to review whether a change of ownership could require a new enrollment and thus place their existing locations outside of the moratorium.
Providers will be permitted to change a practice location, update supplier information, such as phone number or address, or update ownership information (known as a “change in information”) which is not viewed as a change of ownership under 42 C.F.R. § 489.18. We note that the increased attention on these provider types emphasizes the need for strong compliance programs and enrollment “hygiene” to ensure enrollment information is properly maintained and promptly updated to reflect the provider’s operations.
Reed Smith will continue to follow developments related to the regulation of hospices and HHAs. If you have any questions about this moratorium or about any other regulatory matters, please contact the authors of this post or your health care lawyers at Reed Smith.