Recent regulatory actions by the Centers for Medicare and Medicaid Services (CMS), the US Drug Enforcement Administration (DEA), and the US Department of Health and Human Services (HHS) highlight heightened federal scrutiny of hospice providers in higher-risk states and continued uncertainty about the future regulation of controlled substance prescribing.
At the end of December 2025, CMS posted a revised MLN Fact Sheet announcing its geographic expansion of its Provisional Period of Enhanced Oversight (PPEO) for newly enrolling hospices and those hospices that had a change of ownership from the initial four states of Arizona, California, Nevada, and Texas to now include Georgia and Ohio. This expansion reflects the agency’s continued aggressive oversight approach aimed at addressing perceived vulnerabilities to fraud, waste, and abuse within the hospice industry, particularly related to new hospice programs.
Indeed, we have seen a steady number of Medicare billing revocation actions by CMS and its hospice Medicare administrative contractors (MACs) arising from PPEO audits where Medicare found the hospices had engaged in “abusive billing practices.” This demonstrates the potentially serious consequences for hospices—both new and those that had a change of ownership (CHOW) or 100% ownership change.
At the same time, the DEA and HHS’s latest extension of COVID-19 pandemic-era telemedicine flexibilities has, once again, delayed the implementation of stricter in-person examination requirements for prescribing controlled substances.
CMS Enhanced Oversight for New Hospices
As with the four initial states subject to enhanced oversight, CMS cited marked increases in reports of hospice fraud, waste, and abuse, as well as rapid growth in hospice enrollment in the applicable states, as the basis for its expansion of the PPEO to Georgia and Ohio.
“Newly enrolling” hospices that are subject to CMS’s enhanced oversight include those
- newly enrolling in Medicare;
- submitting a change of ownership as defined under 42 CFR 489.18;
- undergoing 100% ownership changes (including those not covered under 42 CFR 489.18); or
- reactivating after a deactivation.
During the PPEO, CMS is authorized to conduct medical reviews of claims—such as prepayment reviews—of the “newly enrolled” hospices, and the period may last from 30 days up to one year.
Particularly for those hospice providers located in Georgia and Ohio, stakeholders can take steps to prepare for the increased scrutiny associated with the PPEO by
- analyzing ownership changes and enrollment updates to determine whether any may trigger a PPEO process;
- closely monitoring correspondence from CMS for notification letters identifying the provider’s selection into the PPEO;
- ensuring all claims are thoroughly documented and responding timely to ADR requests for information from CMS, as non-responsiveness may lead to claim denials and revocation of enrollment and billing privileges; and
- preparing for oversight periods ranging from 30 days to one year and recognizing that the MAC’s medical review authority persists even after the provisional period of enhanced oversight.
Consequences of Expanded Oversight – CMS Use of Affiliation Rule to Pursue Program Integrity Goals
In addition to the risk of Medicare enrollment and billing privilege revocation, scrutiny under the PPEO can result in other ripple effects for unsuspecting hospice providers enrolled in Medicare. Consider the following hypothetical situation:
In December 2025, Dr. Jones agrees to serve as a medical director for New Hospice in Georgia, assuming it will not take much time from his busy physician practice. Dr. Jones was also a hospice medical director with another hospice (Best Hospice Care), with whom he had worked for the last six years. Five months later, in April 2026, he hears from New Hospice that it had faced a Medicare audit under the PPEO, and “flunked,” and Medicare said it could no longer bill Medicare. The New Hospice was terminating his medical director agreement. He was surprised but carried on with his busy medical practice and other hospice medical director position at Best Hospice Care.
Unbeknownst to Best Hospice Care, the fact that Dr. Jones was affiliated with New Hospice, which had its billing privileges and Medicare enrollment revoked, places Best Hospice Care at risk of having its billing privileges revoked because Dr. Jones also serves as a medical director (and thus a “managing employee”) for Best Hospice Care. Sure enough, in May, Best Hospice Care receives a notice of billing revocation from its MAC based upon an “Affiliation that poses an undue risk.” Sound implausible? This is now happening with greater regularity.
In 2019, CMS finalized its “Disclosure of Affiliations” rule. The purpose of the rule was to provide CMS with information from providers and suppliers about current and previous “affiliations” with other providers and/or suppliers that have had “disclosable events” (e.g., were subject to a payment suspension under a federal health care program) in order to identify and assess affiliations that could pose a risk of fraud and abuse. At the time of the rulemaking, CMS noted that the agency was frustrated by the “whack-a-mole” scenario in which repeat players were involved in fraud, waste, and abuse. The Disclosure of Affiliations rule would allow CMS to better identify, track, and assess providers and suppliers that may remain risks to the Medicare program.
Under the rule, CMS can revoke Medicare billing privileges and Medicare enrollment based on a provider’s or supplier’s “affiliation” (e.g., an individual or entity with 5% or greater direct or indirect ownership, or an individual or entity that exercises operational or managerial control) with another provider or supplier it determines to pose an undue risk of fraud, waste, or abuse. While the affiliation rule’s intent was for CMS to ask providers or suppliers to provide information on such affiliations during enrollment or revalidation, this little-known discretionary provision also allows CMS great flexibility to take action if it unilaterally determines that an “affiliation” poses undue risk. While CMS had not utilized this provision to any material degree since the final rulemaking in 2019, there are signs that CMS is applying this provision more frequently with hospice medical directors who were affiliated with hospices that had billing privileges revoked on account of a PPEO audit with negative findings. Appeals of such actions directly to CMS are available through the reconsideration process.
What Can You Do?
Stay informed of your medical director’s affiliation with any other hospices, especially new hospices or those undergoing an ownership change that may be subject to a PPEO review.
DEA Extension of Telemedicine Flexibilities
In other hospice news, the US Drug Enforcement Administration (DEA) and HHS issued a joint rule at the end of December 2025 extending (for the fourth time) the ability of prescribers of controlled substances to rely on COVID-19 pandemic-era regulatory flexibilities, including the use of telehealth encounters (remote prescribing), through December 31, 2026. DEA stated that the extension would give it time to promulgate a final set of regulations on telemedicine prescribing, as well as “allow sufficient time for providers to come into compliance with any new DEA registration, recordkeeping, or security requirements eventually adopted in a final set of regulations.”
The DEA further stated that the extension will “ensure a smooth transition for patients and providers that have come to rely on the availability of telemedicine to prescribe controlled substances to patients for whom they have never had an in-person medical evaluation.”
DEA and HHS had issued a final rule in January 2025 that would have required at least one in-person examination for the lawful prescribing of controlled substances (Schedule II-V). However, several industry stakeholders, including hospice and palliative care physicians, had expressed significant concerns around access and disruptions to care associated with the DEA/HHS final rule (the so-called telemedicine cliff), and the agencies agreed to a temporary extension “to maintain access to care during a limited window of time” and to allow providers more time to implement the final rule on controlled substance prescribing. For more details, see Fourth Temporary Extension of COVID-19 Telemedicine Flexibilities for Prescription of Controlled Medications in the Federal Register.
What Can You Do?
Remain informed on whether DEA/HHS will extend yet again the telehealth flexibilities for controlled substance prescribing, given many of your hospice patients have such pain and agitation medication needs. Consider submitting comments to DEA/HHS if it considers potential rulemaking changes.