Medicare Intensifies Oversight of Hospices Amid Growing Fraud Concerns

Stephen Shaver, Wachler & Associates

August 2025

Hospice care, once viewed as a relatively quiet corner of the Medicare program, is now under a glaring spotlight. A sharp uptick in provider enrollment, especially in specific regions, combined with mounting evidence of fraud, waste, and abuse, has led the Centers for Medicare & Medicaid Services (CMS) to escalate oversight efforts. From launching new enrollment monitoring protocols to accelerating disenrollment for alleged bad actors, CMS is reshaping the regulatory landscape for hospice care and enforcement trends across the nation may soon come to hospice providers in Michigan.

At the center of this evolving oversight regime is the Provisional Period of Enhanced Oversight (PPEO) a CMS initiative launched to combat fraud among new hospice providers. Initially rolled out and currently active in four states, Arizona, California, Nevada, and Texas, the program targets newly enrolling hospices as well as those undergoing ownership changes or reactivating their billing privileges. Providers placed under PPEO are subject to unannounced site visits, prepayment medical reviews, and heightened documentation scrutiny for up to one year.

The program is often framed as an effort to reduce Medicare fraud or to help providers increase Medicare compliance, and can include multiple rounds of documentation review with provider education between rounds, not dissimilar from a Targeted Probe and Educate (TPE) audit. However, unlike a TPE audit, the timeframe and scope of a PPEO review is often significantly contracted. The period after an education session in which the provider can implement any changes to its practices before the next round begins can be as short as three weeks, the contractor often reviews only a small handful of claims, and CMS may revoke a hospice’s Medicare billing privileges after only a single round of PPEO review. As of mid-2025, CMS reported that 668 hospices had been subject to medical review under PPEO, resulting in the revocation of 122 Medicare enrollments so far.

While CMS has not yet extended the PPEO program nationwide, it has signaled its intent to do so and has begun to lay the groundwork. In its 2025 Home Health Prospective Payment System final rule, CMS broadened the definition of providers subject to PPEO to include those reactivating their enrollment, the latest in a gradual broadening of the program. If and when the PPEO program comes to Michigan, Medicare-enrolled hospice providers should treat PPEO reviews with due caution, and newly-enrolling and revalidating hospices should be prepared for the additional scrutiny.

CMS has taken additional steps to increase its oversight of hospices services. The agency has also significantly sped up the beneficiary disenrollment process, claiming to have reduced what used to take six months to under 12 days. Additionally, CMS’s Rapid Response Teams reversed more than 350 improper hospice elections, cases where patients were allegedly wrongly enrolled in hospice care, often without their knowledge or full understanding. These actions may signal a new era of assertive enforcement.

In parallel, the Department of Health and Human Services Office of Inspector General (OIG) has stepped up its oversight of the hospice sector. Recent OIG investigations have uncovered widespread deficiencies in care delivery and billing practices. In one major review, OIG found that Medicare improperly paid hospitals an estimated $190 million over five years for outpatient services provided to beneficiaries who were concurrently enrolled in hospice — a violation of Medicare payment rules. Other audits revealed hospices billing for services never rendered or providing care that fell far short of acceptable standards. OIG’s findings have fueled growing concern in Congress and among advocates that the per-diem hospice payment model, which pays providers a flat daily rate, creates incentives for minimal care.

Beyond enrollment and quality oversight, billing practices are also under the microscope. Hospices across the country are reporting increased audit activity, including Targeted Probe and Educate (TPE) reviews, Recovery Audit Contractor (RAC) inquiries, and Unified Program Integrity Contractor (UPIC) investigations. Much of this scrutiny is focused on General Inpatient (GIP) stays, a more intensive and costly level of hospice care that some providers may overuse. The concern is that hospices are billing for GIP stays without the clinical justification or proper physician documentation required under Medicare rules. A national audit of GIP usage concluded that these billing practices are ripe for abuse, with some estimates suggesting that 31% of hospice billing in this category may be improper.

The implications of this enforcement wave are profound. For legitimate providers, the shifting regulatory environment may pose administrative burdens and financial pressures, particularly if audits result in payment delays or denials. Yet regulators believe the reforms are essential to protecting beneficiaries and safeguarding the integrity of the Medicare hospice benefit. Fraudulent hospices not only drain taxpayer dollars but also put vulnerable patients at risk by enrolling them inappropriately or failing to provide meaningful end-of-life care.

Hospice care will always require a delicate balance between clinical discretion and regulatory oversight. But that balance is shifting. CMS and OIG are sending a clear message: the days of light-touch enforcement in the hospice sector are over. Providers must now increasing demonstrate not only compassion and commitment to patient care, but also compliance with a broad range of regulatory, enrollment, documentation, and coverage requirements, or risk being singled out for punitive action under heightened scrutiny be regulators.