A New Operating Environment for Home Health and Hospice

Federal healthcare enforcement is becoming more focused, more coordinated, and increasingly driven by data.

The Department of Justice's announcement that home health and hospice fraud schemes are among its top national healthcare enforcement priorities should not be viewed as another routine regulatory development. It reflects a broader federal strategy that includes expanded strike-force activity, increased enforcement resources, stronger use of analytics, and greater collaboration among government agencies. For providers, the implications extend far beyond the possibility of audits or investigations.

Compliance must now be treated as a daily operational responsibility rather than a reactive function that becomes active only after a claim denial, survey finding, or audit notice appears. The organizations best positioned for success will be those that proactively identify risk, monitor performance, and address vulnerabilities before regulators do.

What Changed and Why It Matters

Federal agencies have access to enormous amounts of claims, utilization, referral, and billing data. Advanced analytics can identify patterns and outliers that may indicate risk long before an investigator arrives at an organization.

This reality requires leaders to begin asking the same questions regulators may eventually ask. Does documentation support the services billed? Does the record support patient eligibility? Can medical necessity be clearly demonstrated? Are referral patterns defensible? Do utilization and billing trends differ significantly from peers?

If an organization cannot confidently answer these questions, compliance gaps may exist that warrant attention. Effective leaders recognize that today's enforcement environment rewards organizations that actively evaluate and improve their own performance.

Compliance Must Be Embedded Into Operations

One of the greatest risks organizations face is treating compliance as a separate department responsible for reviewing problems after they occur. Today's environment requires compliance to be integrated throughout clinical, administrative, operational, and financial workflows.

Eligibility determinations, face-to-face encounters, physician orders, certifications and recertifications, clinical documentation, plans of care, visit utilization, billing activity, referrals, and discharge practices should all be monitored routinely. Compliance programs and QAPI initiatives should function as interconnected systems focused on identifying, investigating, and correcting risk.

Technology can support these efforts by providing visibility into operational, quality, billing, and clinical data. However, technology cannot replace accountability, effective leadership, or sound clinical judgment. Organizations must evaluate not only whether systems are available, but whether teams are using them effectively to identify and address vulnerabilities.

Documentation Is Still the Best Defense

In healthcare compliance, the old principle remains true: if care is not documented, it cannot be proven. In today's enforcement environment, weak documentation creates risk even when appropriate care was delivered.

Clinical records should clearly establish medical necessity, skilled need, eligibility, changing patient conditions, interventions provided, patient response, and justification for ongoing services. Assessments, certifications, physician orders, plans of care, medication management activities, and visit notes must work together to tell a consistent patient story.

Leaders should periodically review records with a simple question in mind: if an external reviewer knew nothing about the patient except what appears in the chart, would the documentation clearly justify Medicare payment for the services provided? This standard represents an effective benchmark for evaluating documentation quality and compliance readiness.

Follow the Data Before Someone Else Does

Regulators increasingly rely on data to identify organizations that may warrant additional scrutiny. Providers should adopt the same mindset and use internal data to evaluate performance and uncover risk.

Leadership teams should routinely review:

• Visit utilization patterns
• Length of stay metrics
• Referral concentration trends
• Hospitalization rates
• Diagnosis patterns
• Billing activity and outliers
• Clinical and financial performance indicators
• IPR/APR and PEPPER reports

Simply generating reports is not enough. Findings should be reviewed, unusual patterns should be investigated, corrective actions should be documented through compliance and QAPI processes, and leaders should measure whether interventions actually improve outcomes.

Education Should Be Risk-Based and Continuous

Education is increasingly becoming a critical compliance strategy. Annual training alone is no longer sufficient in a rapidly evolving enforcement environment.

Organizations should align education efforts with identified risks, audit findings, survey results, denial trends, and QAPI initiatives. Clinicians must understand how documentation supports regulatory requirements. Operational leaders must understand how data reveals risk. Sales and marketing teams must understand expectations related to referral relationships and compliance.

Continuous competency development helps organizations strengthen documentation quality, improve regulatory readiness, and create a culture where compliance is viewed as part of patient care rather than a separate administrative responsibility.

The Bottom Line

The DOJ's announcement should not alarm organizations that are committed to compliant care delivery. However, it should reinforce the urgency of strengthening compliance infrastructure across the organization.

The providers most likely to succeed in this environment will be those that use technology intelligently, monitor their data consistently, educate their workforce continuously, audit their operations proactively, and integrate compliance into everyday decision-making. The goal is not to avoid finding problems. The goal is to find them first and demonstrate that appropriate corrective action was taken.

5 Recommendations for Home Health and Hospice Organizations

1. Implement routine internal audits of eligibility, clinical documentation, physician orders, certifications, face-to-face encounters, billing activity, and utilization patterns.
2. Train clinicians to document the clinical rationale behind care, including skilled need, medical necessity, patient response, and ongoing eligibility.
3. Establish regular leadership reviews of utilization trends, referral patterns, diagnosis distributions, hospitalization rates, billing indicators, and PEPPER report findings.
4. Evaluate referral relationships, contracts, compensation arrangements, and business development practices to ensure they remain compliant and defensible.
5. Create a formal enforcement-response plan that identifies responsible stakeholders, legal resources, compliance leaders, billing personnel, and record-retrieval procedures before they are needed.

A New Compliance Lens for Hospice Organizations

Hospice leaders should assume their claims data is becoming one of their most important compliance documents.

CMS has developed the Service and Spending Variation Index (SSVI), a scoring system designed to identify hospices whose utilization and spending patterns differ significantly from national norms. Using nine separate measures, CMS assigns each hospice a score ranging from 0 to 16. Organizations receiving higher scores are not automatically considered noncompliant, but CMS has stated that unusually high scores may result in closer review and additional oversight.

A score of 13 or above is considered an outlier because it places a hospice at approximately the 99th percentile nationally. Based on FY 2025 claims data, 69 hospices reached this level. The significance is not necessarily the score itself, but the attention the score may bring from regulators.

What the SSVI Measures

The SSVI evaluates patterns that may indicate concerns involving eligibility, service delivery, discharge practices, or financial accountability. CMS reviews:

• Live discharge rates
• Patients with lengths of stay of 180 days or longer
• Discharges and readmissions to the same hospice within seven days
• Routine home care visit volume and duration
• Weekend skilled nursing visit utilization
• Skilled visits during the final two days of life
• Medicare spending outside the hospice benefit

Any individual metric may have a valid clinical explanation. The concern develops when multiple indicators begin moving in unfavorable directions at the same time. For example, extended lengths of stay combined with elevated live-discharge rates may prompt questions regarding eligibility determinations, recertification practices, or discharge decision-making. Similarly, low visit frequency, limited weekend coverage, or insufficient skilled visits near death may create the appearance that the hospice received reimbursement while delivering minimal services.

Why Spending Outside the Hospice Benefit Is Drawing Attention

One of the most significant findings highlighted by CMS is the growth in Medicare spending occurring outside the hospice benefit. CMS reported that Part A and Part B spending outside hospice increased from nearly $790 million in FY 2020 to more than $2 billion in FY 2024, representing approximately a 160% increase.

Pressure-ulcer-related claims have been particularly notable. CMS reported spending associated with pressure ulcers, largely tied to expensive skin substitute products, increasing from approximately $18 million to $714 million during the same period. These trends have prompted CMS to question whether some hospices may be misclassifying related conditions, referring patients to outside providers, failing to coordinate care appropriately, or shifting costs that should be covered under the hospice per diem.

As a result, related-versus-unrelated determinations involving medications, wound care, supplies, DME, and outside provider services are increasingly becoming compliance risk areas that require clear clinical justification and consistent documentation.

Documentation and IDG Oversight Must Keep Pace

The SSVI reinforces the importance of strong interdisciplinary oversight and thorough documentation. Face-to-face encounter documentation, Certificates of Terminal Illness (CTIs), IDG discussions, and ongoing care reviews should clearly address the clinical rationale behind admissions, recertifications, discharges, readmissions, visit patterns, and coverage determinations.

Because CMS intends to calculate SSVI scores annually using complete claims data, organizations should not wait for published results to identify concerns. The most effective strategy is to establish internal monitoring processes that mirror CMS's methodology and identify trends before they become regulatory issues.

5 Recommendations for Hospice Organizations

1. Build an internal SSVI dashboard and monitor all CMS measures at least monthly to identify developing trends before CMS does.
2. Audit every live discharge and rapid readmission to ensure decisions are clinically justified, thoroughly documented, and properly reviewed during IDG meetings.
3. Strengthen related-versus-unrelated determinations by requiring clear clinical evidence and incorporating ongoing reviews into both IDG and QAPI activities.
4. Review all Medicare billing occurring outside the hospice benefit, paying particular attention to wound care, skin substitutes, DME, Part B services, and medication utilization.
5. Evaluate care actually delivered, including visit frequency, duration, weekend coverage, and end-of-life skilled visits, to ensure claims, schedules, documentation, and patient care records tell the same story.

Documentation Expectations Continue to Expand

What hospice leaders need to know now

As you have probably already heard, CMS has finalized the FY 2027 Hospice Wage Index and Payment Rate Update. These payment updates and changes take effect on October 1, 2026, and the headline number is a 2.3% payment increase, just slightly below the 2.4% proposed increase. The 3.2% market basket remained unchanged, but the productivity adjustment increased from 0.8 to 0.9 percentage points, reducing the estimated aggregate Medicare payment increase from $785 million to approximately $755 million. The FY 2027 hospice aggregate cap is $36,174.75, and hospices that fail to meet HQRP requirements will receive a negative 1.7% update. In other words, there is a modest payment increase, but CMS continues to make clear that payment, quality reporting, claims behavior, and program integrity are increasingly connected.

The operational changes need just as much attention as the rate update. Beginning with hospice benefit elections on or after October 1, 2026, the hospice election statement added to the addendum has some changes, and here they are:

1.     The addendum must be furnished to every Medicare beneficiary or representative, not merely upon request.

2.     The addendum is due within the first five days of the election.

3.     An updated addendum is due within three days when a plan-of-care change affects the hospice's relatedness determination.

CMS has also decided to go ahead with the public reporting of the Service and Spending Variation Index (SSVI).  It also finalized the future Care Compare icon tied to HOPE submission compliance. I would not be surprised to see hospice go to a VBP model much like home health in the future. The rule also expanded who may sign a written hospice discharge order to include:

1.     The medical director;

2.     A physician designated by the medical director or;

3.     The physician member of the IDG

CMS also extended the hospice recertification face-to-face telehealth allowance through December 31, 2027, with telehealth claim reporting beginning January 1, 2027. Effective on that date, hospices must report each recertification face-to-face encounter conducted by a hospice physician or hospice nurse practitioner via telecommunications technology on the hospice claim using HCPCS G0679. CMS instructs hospices to report G0679 in line-item detail under revenue code 0657 and identifies the telehealth encounter as an administrative expense. G0679 is the HCPCS code for a hospice face-to-face encounter conducted by a hospice physician or hospice nurse practitioner for recertification via telecommunications technology. CMS will return claims containing G0679 if the type of bill is other than 81X or 82X, if a revenue code other than 0657 is used, or if G0679 with revenue code 0657 is the only service reported on the claim.

The message is the same: your election documentation, relatedness decisions, HOPE submissions, claims data, and clinical record must all tell the same story.  Compliance with all of this is of utmost importance.

Interestingly enough, there is also an important hospice provision tucked inside the separate CY 2027 Home Health Proposed Rule that leaders should be watching closely.

CMS is proposing a new Standard-§ 424.530(a)(20), which would permit CMS to deny a hospice enrollment application if the hospice's medical director is the medical director of multiple other hospices, if the administrator is the administrator of multiple other hospices, or if either individual is located so far from the enrolling hospice that the person cannot realistically perform the required functions; CMS also proposes denial when the medical director lacks an active physician license in the state in which the physician is practicing. Importantly, this is proposed - not final - and it does not establish a specific numerical limit or formally prohibit an individual from serving more than one hospice. However, it is a very clear warning that CMS is scrutinizing whether these positions reflect real, accountable leadership rather than names attached to multiple providers. Hospice organizations should look at all leadership arrangements now and be prepared to demonstrate meaningful oversight, reasonable geographic access, and current licensure.

5 Recommendations for Hospice Organizations

1. Make the election addendum an admission standard.
2. Audit the clinical story from admission through claims.
3. Treat HOPE and SSVI as compliance metrics.
4. Review leadership oversight arrangements.
5. Update operations and budgets together.