Hospices and home health agencies, referring providers, states, and patients and their caregivers should prepare to cope with the likely impacts of a new Medicare program enrollment moratorium on new hospice and home health agencies and changes in Medicare and Medicaid reimbursement rules announced last week as part of a new federal antifraud initiative.
KEY TAKEAWAYS: CMS has imposed immediate nationwide six-month enrollment moratoria for home health agencies and hospices in Medicare, effective May 13, 2026. Separately, CMS has issued guidance capping Medicaid State Directed Payments at or below Medicare rates. Existing enrolled providers are unaffected by the moratorium and may continue billing with the understanding that they must ensure their billing and other practices can withstand scrutiny of newly heightened fraud investigations and review. Prospective new providers and certain ownership change transactions are blocked during the moratorium period.
BACKGROUND
On May 13, 2026, the Centers for Medicare & Medicaid Services (CMS) published two Federal Register notices imposing immediate, nationwide, six-month enrollment moratoria on new Medicare enrollment for hospice providers and home health agencies (HHAs). The moratoria are effective as of the May 13, 2026 publication date and apply to all states, territories, and the District of Columbia. This action follows an earlier, still-active moratorium on durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) companies imposed in February 2026, making these among the most expansive fraud-prevention actions in CMS’ history.
At the same time, CMS issued preliminary guidance to states regarding new payment limits on Medicaid State Directed Payments (SDPs) under managed care, pursuant to the recently enacted “One Big Beautiful Bill Act.”
NATIONWIDE MEDICARE ENROLLMENT MORATORIA: HOSPICES AND HOME HEALTH AGENCIES
Legal Authority
CMS derives its moratorium authority from Section 1866(j)(7) of the Social Security Act, added by the Affordable Care Act, and implemented through 42 C.F.R. § 424.570. CMS may impose a temporary moratorium on new Medicare, Medicaid, or CHIP enrollment when it determines there is a significant potential for fraud, waste, or abuse. The decision to impose a moratorium is not subject to judicial review.
Scope and Effective Date
Both moratoria became effective May 13, 2026 and will remain in effect for six months, subject to renewal in additional six-month increments. CMS will publish any extension or termination in the Federal Register. The moratoria cover:
- All new initial Medicare enrollment applications for hospice providers and HHAs (including HHA branch offices)
- Certain changes in majority ownership (CIMOs) that would require initial re-enrollment—a mechanism CMS has identified as frequently exploited to obscure bad-actor control
The moratoria do NOT affect:
- Currently enrolled hospice providers and HHAs, which may continue providing services and billing Medicare without interruption;
- Changes in practice location (unless relocating from outside to inside the moratorium area);
- Routine administrative changes (phone number, address, etc.);
- Any enrollment application received by a Medicare contractor before May 13, 2026
Rationale: Data-Driven Findings
CMS grounded both moratoria in extensive data analysis and law enforcement experience. Key findings cited by the agency include:
- In Los Angeles County alone, the number of enrolled HHAs rose more than 40 percent between 2019 and 2023, with over 1,000 new HHAs enrolling despite no corresponding change in the Medicare beneficiary population. Los Angeles County now holds roughly 12–15 percent of all HHAs nationwide, while accounting for only approximately 3 percent of the national Medicare beneficiary community.
- Clusters of multiple HHAs operating from a single shared address have been detected in Ohio, Texas, Michigan, North Carolina, and Nevada, which CMS views as a strong indicator of fraud.
- CMS, in coordination with Vice President JD Vance’s Anti-Fraud Task Force, has suspended payments to approximately 800 hospices and HHAs in Los Angeles, which were responsible for $1.4 billion in Medicare spending in the prior year, with $70 million in payments suspended to date.
- Numerous recent criminal convictions and civil settlements involve hospice and HHA operators across many states, including multimillion-dollar fraud schemes in Massachusetts, Michigan, Texas, Ohio, Illinois, Oklahoma, and Pennsylvania.
CMS emphasized that because fraud schemes are “highly migratory,” a nationwide moratorium—rather than a targeted geographic one—is necessary to prevent bad actors from simply relocating to avoid scrutiny.
Applicability to Medicaid and CHIP
The moratoria announced in the Federal Register apply to Medicare enrollment only. CMS has expressly invited each state to consult with the agency about implementing a parallel moratorium tailored to their Medicaid and CHIP programs. States are not required to comply if they determine that doing so would adversely affect beneficiary access to care.
Accompanying Enforcement Intensification
CMS also announced that, during the moratorium period, it will:
- Intensify targeted investigations and deploy advanced data analytics;
- Accelerate revocation and deactivation of currently enrolled providers suspected of fraud;
- Continue nationwide site visits to hospices to verify operations;
- Maintain heightened oversight of newly enrolled hospice providers in states identified as high-risk: Arizona, California, Georgia, Ohio, Nevada, and Texas;
- Operate a new publicly available hospice scoring system to increase transparency;
- Implement enhanced HHA enrollment screening, including site verification and fingerprinting-based background checks; and
- Expand a pre- and post-claim review demonstration for HHA claims in Florida, Illinois, Oklahoma, Ohio, North Carolina, and Texas.
Existing hospice and home health providers and those in the targeted regions particularly are urged to work with qualified legal counsel within the scope of attorney-client privilege to assess and tighten their existing practices and audit prior billings in response to recent OIG and other recent reports to assess and address risks from practices the government now views as fraudulent or aggressive as this enhanced scrutiny targets identification of practices the government views as fraud and other aggressive practices by current providers. Providers subjected to this scrutiny must be prepared to defend their actions to avoid fraud charges, recoupment, program participation suspensions or exclusions or other adverse consequences.
Moratorium Termination
Under 42 C.F.R. § 424.570(d), CMS may lift a moratorium early if: (1) a Presidential disaster declaration applies; (2) circumstances warranting the moratorium have abated; (3) a public health emergency is declared; or (4) the Secretary determines the moratorium is no longer necessary. Upon lifting, formerly blocked provider types would be assigned to the “high” screening level for six months.
Appeals
A provider whose enrollment application is denied due to the moratorium may appeal under 42 C.F.R. part 498. However, the scope of such an appeal is limited solely to whether the moratorium applies to the particular provider—not to the merits of CMS’ decision to impose the moratorium. Application fees will be refunded where a denial results from the moratorium.
CMS GUIDANCE ON MEDICAID STATE DIRECTED PAYMENT LIMITS
Overview
On September 9, 2025, CMS issued preliminary guidance to states implementing new federal payment limits on Medicaid State Directed Payments (SDPs) in managed care, as required by the One Big Beautiful Bill Act. SDPs—arrangements that direct how Medicaid managed care plans pay providers—have grown dramatically, from use by only two states in 2016 to 39 states today, with projected annual SDP spending exceeding $124.3 billion for FY 2025 and $144.6 billion for FY 2026.
New Payment Limits
Effective for rating periods beginning on or after July 4, 2025, SDPs for the following service categories must not exceed specified Medicare rate benchmarks:
- Inpatient hospital services;
- Outpatient hospital services;
- Nursing facility services; and
- Qualified practitioner services at an academic medical center.
The applicable ceiling is:
- 100% of the Medicare rate in Medicaid expansion states;
- 110% of the Medicare rate in non-expansion states; or
- Where no Medicare rate exists, the Medicaid state plan rate applies.
Grandfathering
Certain SDPs submitted or approved before July 4, 2025 may qualify for a temporary grandfather period through rating periods beginning January 1, 2028, followed by a phased reduction to meet the new limits. CMS will notify states in approval letters whether a particular SDP likely qualifies for grandfathering.
Next Steps for States
States must revise any pending or future SDP preprints that do not qualify for grandfathering before CMS will continue review. Health care providers participating in SDPs should coordinate with their state Medicaid agencies to understand the impact of these limits on their payment arrangements.
IMPLICATIONS FOR PROVIDERS
Hospice and home health providers should assess the following in light of these actions:
For Currently Enrolled Providers
For currently enrolled providers:
- Operations may continue uninterrupted. No action is required to maintain current enrollment status. However, currently enrolled providers must ensure that current and future practices can withstand the heightened oversight and scrutiny HHS and it’s auditors will apply to current and previously submitted bills as part of their fraud investigation and enforcement practices.
- Expect heightened CMS scrutiny during the moratorium period, including potential site visits, billing audits, and enhanced data monitoring.
- Providers in the identified high-risk states (AZ, CA, GA, NV, OH, TX for hospices) should anticipate heightened oversight and ensure documentation and compliance programs are robust.
- Providers in the HHA pre- and post-claim review demonstration states (FL, IL, OK, OH, NC, TX) should review their claims processes for compliance.
For Providers Seeking New Enrollment
For providers seeking new enrollment:
- Applications received by a Medicare contractor before May 13, 2026 will be processed. Providers should confirm their contractor’s receipt of a timely-filed application.
- Applications submitted on or after May 13, 2026 will be denied. Application fees will be refunded in these instances.
- Any denied applicant wishing to contest applicability of the moratorium may appeal under 42 C.F.R. part 498, with the narrow scope described above.
- Any provider granted authorization to operate under the programs must be prepared to meticulously comply with the current rules, taking to count all guidance passed and emerging.
For Transactions Involving Ownership Changes
For transactions involving ownership changes:
- Parties to acquisitions, mergers, or other transactions involving hospice or HHA ownership should carefully evaluate whether the transaction constitutes a “change in majority ownership” (CIMO) that would require initial re-enrollment under 42 C.F.R. § 424.550.
- CIMOs within 36 months of an HHA’s initial enrollment (or most recent prior CIMO) that trigger initial re-enrollment will be blocked during the moratorium. Deal teams should factor this into transaction planning and timelines.
For Organizations Participating in Medicaid Managed Care SDPs
Organizations participating in Medicaid Managed Care SDPs should:
- Review existing and planned SDP arrangements for compliance with the new Medicare rate caps.
- Identify whether any current SDPs qualify for the grandfathering period and assess the financial impact of the eventual phase-down.
- Work with state Medicaid agency partners to ensure pending preprints are revised as necessary.
Patients and Their Caregivers
Patients and their caregivers should anticipate and prepare to cope with likely delays and disruptions in the ability to access care and changes in services as providers respond to the moratorium, rule changes and enforcement. Declines in staffing and services also are likely due to rule changes and reimbursement cuts.
For Help or More Information
The author of this update, Cynthia Marcotte Stamer advises hospices, home health agencies, and other Medicare and Medicaid providers and other health industry clients on enrollment matters, compliance programs, government investigations, transaction due diligence, reimbursement compliance and disputes, audits and investigations, and other legal and operational compliance and risk management and legislative and regulatory affairs. She is available to assist your organization in assessing the impact of these developments and navigating the compliance and strategic steps that follow. For more information about these or other health care, managed care and other health benefits, or other health care developments, please contact Ms. Marcotte Stamer via e-mail or via telephone at (214) 452 -8297.
About the Author
Peer recognized as “Top Rated Lawyer” and “LEGAL LEADER™ “Top Rated Lawyer” and “Best Lawyer” for her work in Health Care Law, Labor and Employment Law; ERISA & Employee Benefits,” and “Business and Commercial Law,” Cynthia Marcotte Stamer is an A Martindale-Hubble “AV-Preeminent” (Top 1%) attorneys board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for her more than 35 years of health industry and other management work, public policy leadership and advocacy, coaching, teachings, and publications including leading edge work on PBM, pharmacy and pharmaceutical and other health care, managed care, insurance, and insured and self-insured contracting, design, administration and regulation..
Author of numerous highly regarded works on health care fraud and other compliance, risk management and operations, Chair of the Tort Trial and Insurance Practice Section Medicine and Law Committee, past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, the ABA International Section Life Sciences Committee and the former Group Chair and Welfare Benefit Committee Co-Chair of the ABA RPTE Employee Benefits & Other Compensation Group, Ms. Stamer is widely recognized for her decades of pragmatic, leading edge work, scholarship and thought leadership on health industry legal, public policy and operational concerns.
Ms. Stamer’s work throughout her career has focused heavily on working with hospitals, health care systems, long term care, rehabilitation, home health, hospice, clinics, and other health care organizations; physician and other provider organizations and practitioners; accreditation, medical staff, peer review, and quality committees and organizations; billing, audit, practice management, utilization management, EMR, claims, payroll and other technology, billing and reimbursement and other services and product vendors and services organizations; pharmaceutical, pharmacy, and prescription benefit management and organizations; DME; health care and managed care, health and other employee benefit plan, insurance and financial services and other public and private organizations; consultants; products and solutions consultants and developers; investors; managed care organizations, self-insured health and other employee benefit plans, their sponsors, fiduciaries, administrators and service providers, insurers and other payers, health industry advocacy and other service providers and groups and other health and managed care industry clients as well as federal and state legislative, regulatory, investigatory and enforcement bodies and agencies on billing and reimbursement, government investigations and enforcement, and other legal and operational compliance and risk management, performance and workforce management, regulatory and public policy, and other legal and operational concerns.
Author of a multitude of highly regarded publications and presentations, Ms. Stamer is widely recognized for her thought leadership on these and other health care, managed care and other health plan,and other health industry matters. In addition, Ms. Stamer contributes her time and leadership to numerous policy, professional, civil and other organizations including service as the, the American Bar Association (ABA) International Section Life Sciences Committee Vice Chair, a Scribe for the ABA Joint Committee on Employee Benefits (JCEB) Annual OCR Agency Meeting and a former Council Representative, Past Chair of the ABA Managed Care & Insurance Interest Group, former Vice President and Executive Director of the North Texas Health Care Compliance Professionals Association, past Board President of Richardson Development Center (now Warren Center) for Children Early Childhood Intervention Agency, past North Texas United Way Long Range Planning Committee Member, and past Board Member and Compliance Chair of the National Kidney Foundation of North Texas, and a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her extensive publications and thought leadership as well as leadership involvement in a broad range of other professional and civic organizations. For more information about Ms. Stamer or her health industry and other experience and involvements, see www.cynthiastamer.com or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.
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