Will Medicare PPEO Audits Come to Michigan?

Stephen Shaver, Wachler & Associates PC
June 2026

As Medicare continues to expand its efforts to combat fraud, waste, and abuse, healthcare providers across the country are paying close attention to new audit and compliance initiatives. Hospice providers have experienced particularly intense scrutiny and one of Medicare’s preferred tools has increasingly become the Provisional Period of Enhanced Oversight (PPEO) program. While PPEO audits have thus far only been implemented in a few states, CMS has already expanded the program and further expansion or nation-wide implementation may not be far off. Understanding the purpose of the PPEO initiative and the broader direction of Medicare oversight can help healthcare organizations prepare for potential future changes.

In July 2023, CMS implemented the PPEO program for newly Medicare-enrolled hospices and hospices that underwent a change in ownership. Initially, PPEO only applied to hospices in Arizona, California, Neveda, and Texas. The initiative was developed as part of a broader effort to strengthen program integrity in response to growing concerns over fraudulent hospice billings. CMS has since expanded the program, first in September 2024 to include enhanced pre-payment review for existing Medicare-enrolled hospices in Arizona, California, Neveda, and Texas; and again in December 2025 to expand the program into Ohio and Georgia.

Under the PPEO program, a qualifying hospice is subjected to a prepayment review of medical records and other documentation supporting claims submitted to Medicare. The Medicare contractor reviews the documentation to determine whether the services meet Medicare coverage, coding, and documentation requirements. A PPEO audit can consist of one or more rounds of prepayment review. At any time during the review, a low error rate may mean the provider is successfully removed from the program, while a higher error rate may lead to further rounds of review or referral to CMS for further action.

An experienced provider or healthcare attorney may see echoes of the Targeted Probe and Education (TPE) audit program in the PPEO program. However, PPEO audits differ from TPE audits in several important regards. PPEO audits generally involve far fewer claims. A single round of TPE review generally involves 20 to 40 claims, giving at least a somewhat reasonable snapshot of the provider’s billing and documentation practices. A single round of PPEO generally involves only 10 claims, leading to at best an incomplete impression wherein a small number of claims can have out-sized impacts. PPEO audits are also much less well-defined than TPE audits. CMS has issued a significant amount of guidance regarding TPE audits, as well as rules and procedures for contractors to follow in their execution. Providers and their representatives can be well-informed regarding what to expect from a TPE audit. PPEO audits, on the other hand, conducted on a much more ad hoc basis. There are few published procedures for the Medicare contractors to follow and what few there are often applied inconsistently.

Perhaps most importantly, PPEO audits generally do not involve education, a core component of a TPE review. In a TPE review, the contractor is required to conduct a real-time meeting (usually telephonic) with the provider, explain the alleged deficiencies identified by the contractor, and give the provider 45 days to address the alleged deficiencies before the contractor begins another round of review. PPEO has no such educational requirement. In most cases, a provider will receive only a code and a generic denial reason, for example “55H1L- the documentation submitted does not support a terminal prognosis/illness of six months or less.” Contractors will generally decline or refuse provider’s request for further information, education, or discussion with the reviewers. This lack of communication often leaves providers in the unenviable position of having to guess at what the contractor believes they are doing wrong, especially where the provider’s documentation appears to satisfy applicable coverage guidance.

Given their abbreviated and ad hoc nature, PPEO audits are unlikely to consistently identify non-compliant billing practices or to improve billing practices. However, CMS uses PPEO audit results as a pretense to revoke Medicare billing privileges. According to CMS data, through December 2025, 817 hospices were subject to medical review under the PPEO program. CMS revoked the Medicare enrollment of 181 of these hospices. While a provider technically has the ability to appeal claim denial determinations made during a PPEO audit, CMS will use the denials against the provider long before the glacially slow Medicare claims appeal process has overturned the denials. Even where the PPEO denials are eventually overturned, the provider must appeal the revocation decision separately and, once filed, these appeals are often left pending for months before CMS considers them.

All told, the PPEO program is a crude tool, effective at quickly thinning the numbers of hospice providers, but in a haphazard and often profoundly unfair manner. Nonetheless, CMS currently seems satisfied with the program. Historically, successful Medicare demonstration programs have been expanded in scope or have come to influence future regulatory strategies, even when the original model itself is not adopted nationwide. TPE itself was once a pilot program. Although CMS has not currently announced an expansion of the PPEO program into Michigan, given its satisfaction with the program, further expansion or nationwide implementation is likely. Hospice providers and those looking to acquire hospices providers should be aware of the PPEO program and its implications.