New hospice, home health agency providers subject to CMS enrollment moratoria

CMS’s authority and scope of the moratoria

Under 42 C.F.R. § 424.570(a)(2), CMS may impose a temporary moratorium on newly enrolling Medicare providers and suppliers upon determining significant potential for fraud, waste, and abuse with respect to a particular provider or supplier type, geographic location, or both. CMS previously imposed a more limited geographic moratoria targeting HHAs in Florida, Illinois, Michigan, and Texas between 2013 and 2019. However, the newly implemented moratoria mark the first nationwide enrollment freeze implemented for HHAs and the first time that CMS has exercised its moratorium authority for hospice providers.

In announcing the moratoria, CMS indicated it is carefully scrutinizing the total number of HHA and hospice provider enrollments in geographic locations relative to the total Medicare population and number of practice locations associated with a single location address. CMS observed that potential fraud schemes appear to have migrated across the United States and wrongdoers have easily crossed state lines, including to states that historically have not been a hotbed for HHA or hospice enforcement, thereby justifying a national scope to limit the potential for fraud, waste, and abuse.

Critically, the moratoria apply not only to newly enrolling HHAs and hospice providers, but also to new HHA branch offices and hospice practice locations. HHA branch offices are approved locations or sites from which the HHA provides services within a portion of its total geographic area under the supervision and control of the parent HHA. Hospice practice locations include any physical address from which the hospice is approved to deliver services to Medicare beneficiaries under the same certification number. The moratoria prohibit HHAs or hospices from opening or acquiring net “new” locations, as these sites will be unable to be added to their Medicare enrollment record.

Other than for new locations, the moratoria only affect new enrollment applications. They do not restrict existing providers’ ability to continue participating in Medicare, submit claims for covered services, or make certain changes to their enrollment information. Temporary moratoria do not apply to any of the following:

• Changes in practice location (42 C.F.R. § 424.570(a)(1)(iii) provides that practice location changes are not subject to the moratorium unless the location is changing from a location outside to inside the moratorium area, which is not applicable given the nationwide scope here. It is not clear whether CMS would view a change in practice location (e.g., swapping one location for another) as distinct from adding another practice location to an existing enrollment, which would clearly fall within the moratoria).
• Changes in provider or supplier information, such as phone numbers.
• Changes in ownership (except changes in ownership of HHAs and hospices that would require an initial enrollment because of the 36-month rule).

Notwithstanding, HHAs and hospices must timely and accurately report these updates.

The HHA and hospice moratoria run through November 13, 2026, and may be extended in six-month increments, with any extensions announced in the Federal Register. HHAs and hospices whose enrollment applications were received by the Medicare Administrative Contractor (MAC) prior to May 13, 2026, will be unaffected. CMS has published frequently asked questions (FAQs) that provide further interpretation of the moratoria’s scope.

Implications for HHA and hospice transactions

Since January 1, 2024, CMS has applied the “36-month rule” (42 C.F.R. § 424.550) to both HHAs and hospices. Under this rule, an HHA or hospice that undergoes a change in majority ownership (CIMO) within 36 months after its initial enrollment or most recent CIMO must enroll as a new provider, thus subjecting it to the now-imposed moratorium. A CIMO occurs when an individual or organization acquires more than 50% direct ownership interest via asset sale, stock transfer, merger, or consolidation.

The 36-month rule does not apply to HHAs or hospices in the following instances:

• The HHA or hospice submitted two consecutive years of full cost reports since initial enrollment or the last CIMO, whichever is later. This exception does not apply to low utilization or no utilization cost reports.
• An HHA or hospice’s parent company is undergoing an internal corporate restructuring, such as a merger or consolidation.
• The owners of an existing HHA or hospice change the HHA or hospice’s existing business structure (e.g., from a corporation to a partnership, from an LLC to a corporation, or from a partnership to an LLC) and the owners remain the same.
• An individual owner of an HHA or hospice dies.

Imposition of the moratoria introduces mergers and acquisitions (M&A) complexities and will require additional care when structuring transactions. Under current Medicare rules, the buyer in an asset sale may choose to assume, or accept assignment of, an HHA or hospice’s existing provider agreement and billing number rather than enrolling as a new provider. Absent further CMS guidance, such transactions remain permissible during the moratoria so long as the 36-month rule is not implicated. This transaction structure presumes that the buyer is willing to assume any historical Medicare liability of the seller. An asset transaction without assumption of historical Medicare liability will result in the creation of a new HHA or hospice entity that will not be eligible for Medicare enrollment during the moratorium.

Direct stock or equity purchases do not trigger a new provider enrollment so long as the 36- month rule is not implicated. Structuring transactions at an indirect level (i.e., a transfer at the grandparent level or higher) avoids application of the 36-month rule entirely, which in turn avoids the moratoria. This structure also presumes the buyer is willing to assume any historical Medicare liability of the seller.

Medicaid, CHIP, and state moratoria

CMS’s HHA and hospice moratoria currently only apply to Medicare enrollments. CMS determined that it is currently in the best interests of Medicaid and Children’s Health Insurance Program (CHIP) beneficiaries to allow each state to determine whether to impose HHA and/or hospice moratoria and the scope of any such moratoria. CMS has offered to consult with any states that may wish to implement moratoria in their jurisdictions. While it remains to be seen whether any states (e.g., Florida in the DMEPOS context) will implement such moratoria, there is increasing pressure on states to prevent fraud and abuse from occurring in such programs.

Broader enforcement climate for HHA and hospice providers

California has been a focus for state-led crackdowns and federal congressional investigations into alleged post-acute care fraud. CMS noted in its moratorium announcement that Los Angeles County currently has approximately 12% to 15% of all HHA enrollments nationwide, despite being the place of residence of approximately 3% of the US’s Medicare beneficiaries. Furthermore, in April 2026, the federal Anti-Fraud Task Force suspended 447 hospices and 23 HHAs in Los Angeles alleged to have been responsible for more than $600 million in suspected fraud. While California has maintained its own moratorium on new hospice licenses since January 1, 2022, the state’s Department of Public Health has revoked approximately 280 hospice licenses and announced that it is actively reviewing another 300 providers.

CMS also stated in its moratoria announcement that it will use advanced data analytics to intensify its targeted investigations of HHAs and hospices and accelerate their removal (i.e., deactivate or revoke their enrollment) from Medicare if the provider is suspected of committing fraud.

Key takeaways

Given the increasingly aggressive efforts to combat fraud, waste, and abuse for HHA and hospice providers at both the federal and state levels, stakeholders operating in this environment should focus their compliance efforts and actively monitor evolving developments. This includes:

• Track CMS’s implementation of the moratoria. Watch for moratorium extension notices and any counterpart state Medicaid moratoria. Monitor the FAQs for updates and guidance on additional topics, such as relocation of an HHA branch office or hospice practice location.
• Maintain compliance. Ensure timely enrollment updates, maintain organized documentation, prepare for site visits, and conduct internal auditing. CMS is closely scrutinizing HHA and hospice activity during the moratoria.
• Evaluate M&A structures. Analyze ownership history for CIMO trigger risks. Consider transaction structures that avoid the 36-month rule and new enrollment requirement and ensure appropriate purchase agreement protection and due diligence review.
• Prepare for enforcement. Engage counsel promptly upon receiving inquiries from any federal or state healthcare regulator or any MAC.

Please contact the authors or your regular McDermott Will & Schulte lawyer with any questions.