CMS Proposes 36-Month Rule for Medicare-Enrolled Hospices

July 19, 2023

The Centers for Medicare & Medicaid Services (CMS) proposed new rules intended to strengthen the integrity of the Medicare hospice enrollment process due to CMS’ view of fraud and abuse concerns in the hospice industry.

CMS proposes three new program integrity efforts aimed at hospices: (1) a 36-month rule that is essentially identical to the one imposed on Medicare-enrolled home health agencies; (2) a more rigorous screening process, including fingerprinting of hospice owners; and (3) stronger Medicare deactivation provisions for non-billing hospices. CMS is soliciting comments on these changes through Aug. 29, 2023.

A Hospice 36-Month Rule

CMS expressed concern over the increased number of enrolled hospices, hospice patients and hospice changes of ownership in recent years, noting that some changes occurred within months of initial Medicare enrollment or the previous change of ownership. Consequently, CMS proposed to extend to hospices certain restrictions on changes in majority ownership that currently apply to Medicare-enrolled home health agencies.

Similar to the Medicare 36-month rule applicable to Medicare-enrolled home health agencies, the proposed rule would prevent Medicare-enrolled hospices from undergoing a change in majority ownership, meaning a direct change in more than 50% of the Medicare-enrolled hospice’s ownership interests, within 36 months of the hospice’s initial enrollment in Medicare or most recent change in majority ownership. A change in majority ownership also includes acquisitions involving asset sales, stocks transfers, consolidations or mergers that have the cumulative effect of changing the majority of ownership.

If a hospice violates the 36-month rule, its Medicare provider agreement and billing privileges would not convey to the new owner and a new Medicare enrollment and certification would be required, thereby necessitating an initial survey, which would cause a significant delay in operations and billing.

“High Risk” Provider Enrollment

The proposed rule would subject initially enrolling hospices and those submitting change of ownership, change of information (reporting any new owner) or revalidation applications to the highest level of Medicare provider enrollment screening (a “high risk” level of categorical screening). This would include fingerprinting all individuals with a 5% or greater direct or indirect ownership interest in the hospice.

CMS currently considers hospice applications under the “moderate risk” screening level — which does not require fingerprinting.

Deactivation of Medicare Billing Privileges for Six Months of Non-Billing

CMS’ proposed rule would revise regulations to permit deactivation of a Medicare provider or supplier number if no claims are submitted under such number during a six-month period — half of what the current rule allows. The current deactivation time period is 12 months. The proposed rule reflects CMS’ concern about hospice agencies utilizing multiple provider numbers, specifically in circumstances where one provider number may be subject to an overpayment or investigation, and a different (dormant) provider number is used to bill services. A deactivated provider or supplier remains enrolled in Medicare but loses billing privileges. A deactivated provider or supplier can be reactivated upon the submission of certain information.

The proposed hospice rules are included in the calendar year 2024 Home Health Prospective Payment System Rate Update proposed rule issued by CMS on June 30, 2023.