CMS Finalizes Important Changes to Medicare Enrollment Requirements for Hospice, Home Health Providers

BACKGROUND

To receive Medicare reimbursement for providing services to Medicare beneficiaries, healthcare providers and suppliers are required to enroll in the Medicare program. Medicare providers and suppliers are required to continuously comply with enrollment regulations applicable to the specific Medicare provider or supplier type, including making any necessary updates to the provider or supplier’s enrollment file in order to receive Medicare reimbursement.

These regulations are intended to promote program integrity and ensure that Medicare providers and suppliers are operating in accordance with program requirements. CMS and Medicare Administrative Contractors (MACs) are permitted to take proactive action against providers and suppliers engaging (or potentially engaging) in fraudulent or abusive behavior that present a risk of harm to Medicare beneficiaries or that are otherwise unqualified to furnish Medicare services or items. Consistent with these continuing policy goals, CMS finalized changes to the Medicare enrollment regulations for home health and hospice providers in the CY 2024 Home Health Prospective Payment System Final Rule. Please see our prior summary of additional recent Medicare enrollment changes from other CMS final rules for more information.

Under current Medicare enrollment regulations, HHAs are subject to what is referred to as a 36-month rule. If an HHA undergoes a change in majority ownership within 36 months after the HHA’s initial enrollment in Medicare or within 36 months of the HHA’s most recent change in majority ownership, the HHA’s Medicare provider agreement (and billing privileges) cannot be transferred to the HHA’s new owner. The new owner must instead enroll in Medicare as a new HHA and obtain a state survey or accreditation from an approved CMS accreditation organization. This is a time- and resource-intensive process that can serve as a barrier to a change in majority ownership of a Medicare-enrolled HHA.

KEY CHANGES TO MEDICARE ENROLLMENT FOR HOME HEALTH AND HOSPICE PROVIDERS

Due to CMS’s increased concerns about program integrity with respect to hospices, CMS finalized changes to the Medicare enrollment regulations that are intended to scrutinize hospice owners and limit hospices’ ability to change ownership.

Applying the 36-Month Rule to Hospices

In the CY 2024 home health rule, CMS finalized the expansion of the 36-month rule to apply to hospices undergoing a change in majority ownership. A ‘‘change in majority ownership’’ occurs when an individual or organization acquires a direct ownership interest of more than 50% in a hospice during the 36 months following the hospice’s initial enrollment or most recent change in majority ownership (including an acquisition of majority ownership through the cumulative effect of asset sales, stock transfers, consolidations or mergers). CMS indicated that it made this change to prevent hospices being sold after Medicare enrollment or a prior purchase to avoid scrutiny of the hospice’s new ownership. CMS was concerned that hospice ownership changes do not typically result in a state survey or accreditation review, similar to HHAs. These types of surveys can ensure that the hospice is operating in compliance with Medicare conditions of participation. The four existing exceptions to the 36-month rule that apply to HHAs will also apply to hospices.

Hospices Designated as High-Risk Providers

Certain enrolled provider types are subject to heightened scrutiny based on the level of risk the provider or supplier type poses to the Medicare program. For all providers, the MAC is required to conduct basic screening, which includes verifying that the provider meets all applicable federal regulations and state requirements for its provider type, that the provider is appropriately licensed in the state(s) of operation and that the provider meets the enrollment criteria for its provider type.

Prior to this home health final rule, hospices were a provider in the moderate-risk screening category, which required a site visit in addition to the basic screening. In the home health rule, CMS includes initially enrolling hospices and those submitting applications to report a new owner as part of the high-risk category. MACs will now require hospice owners with 5% or greater direct or indirect ownership to submit fingerprints for a criminal background check.

CMS temporarily waived the requirement for fingerprint-based criminal background checks during the COVID-19 public health emergency (PHE). CMS will now perform fingerprint-based criminal background checks for high-risk providers and suppliers (including both hospices and home health providers) that initially enrolled during the PHE upon their revalidation.

Provisional Periods of Enhanced Oversight

At its discretion, CMS can subject new providers and suppliers to a provisional period of between 30 days and one year, during which the provider or supplier will be subject to enhanced oversight. CMS has previously implemented these procedures through subregulatory guidance. These provisional periods of enhanced oversight may include, but are not limited to, prepayment review and payment caps. For example, CMS implemented a period of enhanced oversight with respect to newly enrolled HHAs’ requests for anticipated payments. . In addition, effective July 2023, CMS established a provisional period of enhanced oversight for new hospices located in Arizona, California, Nevada and Texas.

In the home health rule, CMS finalized regulations to clarify the definition of “new” provider or supplier for purposes of a provisional period of enhanced oversight. Specifically, a “new” provider or supplier includes:

• Newly enrolling Medicare providers or suppliers, including providers that must enroll as new providers following a change in majority ownership
• Certified providers undergoing a change of ownership, including providers that qualify for an exception from the change in majority ownership requirements
• Providers or suppliers, including HHAs and hospices, undergoing a 100% change of ownership via a change of information request

The effective date of the provisional period of oversight for a new provider is the date on which the new provider or supplier submits its first claim to Medicare (rather than, for example, the date the first service was performed or the effective date of the ownership change). This change is also intended to ensure that the new provider or supplier cannot avoid the provisional oversight period by delaying billing until the period’s expiration date.

CONCLUSION

In the most recent regulatory rulemaking cycle, CMS continued the trend of strengthening its program integrity authority. These new enrollment requirements significantly affect new and existing Medicare-enrolled hospices, which will be subject to increased scrutiny upon initial enrollment, revalidation and any changes in ownership. The expansion of the 36-month rule in particular could limit a Medicare-enrolled hospice’s ability to change ownership more frequently than once every three years.