A nationwide moratorium on new Medicare enrollment for home health agencies and hospices has been in effect since May 13, 2026, and CMS has given no public signal on whether it will extend, lift, or let the freeze run its course when the initial moratorium period closes, six months after it took effect. For a physician planning to open a new home health agency, the moratorium is only the most visible layer of a screening regime that already treats every new HHA as high-risk, before the first claim is filed.
A Nationwide Moratorium on New Enrollment
The Centers for Medicare & Medicaid Services (CMS) announced the moratorium on May 13, 2026, citing systemic fraud concerns. The freeze reaches every new HHA and hospice location nationwide, along with certain changes in majority ownership requiring re-enrollment under 42 CFR 424.550(b). Applications filed during the moratorium are denied outright and must be resubmitted once it lifts; agencies already enrolled before May 13, 2026 can keep billing. An extension or the lifting of the moratorium is announced through a Federal Register notice, and none had published as of this writing.
Why New Home Health Agencies Are Screened as High Risk
A new HHA enrolls differently from a physician practice, moratorium or not. 42 CFR 424.518 sorts every Medicare provider and supplier type into one of three screening tiers: limited, moderate, or high. A prospective home health agency is assigned to the high category by name, the same tier CMS reserves for provider types with the most documented fraud history. The designation attaches automatically on a new application, as a feature of the provider type, not a finding about the specific owner or agency filing it.
Fingerprinting and Site Visits Come With the High-Risk Tier
High-risk screening carries over every limited and moderate tier requirement, including an on-site visit, and adds one requirement of its own. Under 424.518, CMS requires a fingerprint-based criminal background check for every individual with a 5 percent or greater direct or indirect ownership interest, submitted with the application or within 30 days of a contractor's request. CMS or its contractor also conducts an unannounced site visit confirming the agency operates the way its application describes, before CMS approves it to bill Medicare. A missed fingerprint submission or a site visit that contradicts the paper application is grounds for an outright denial, not a curable documentation request.
CMS assigns the high-risk designation to every new home health agency application as a default for the provider type, before a single claim is filed and without regard to the individual owner's own record.
The Capitalization Requirement Behind the Screening
42 CFR 489.28 adds a financial test on top of the screening tiers. A home health agency enrolling on or after January 1, 1998 must hold initial reserve operating funds before billing, calculated from the average per-visit cost of three or more comparable agencies multiplied by projected visits for its first three months, or 22.5 percent of the comparison agencies' average visit volume, whichever is greater. At least 50 percent of that reserve must be non-borrowed funds, including money the owner has personally invested. CMS can deny billing privileges if the reserve does not meet the formula, and can revoke them if the agency cannot maintain it through its first three months.
What Comes After Enrollment: RAC and Prepayment Review
An HHA that clears screening and meets the 489.28 reserve still faces the same oversight as every other Medicare provider. Enrolled agencies remain subject to Recovery Audit Contractor review, CMS prepayment review that holds payment on pending claims, and extrapolated recoupment demands applying a sample error rate across years of already-paid claims. Medicare RAC Audits: Review Types, Record Requests, and Appeals walks through what a RAC document request looks like, and a denied claim can still be challenged at the first redetermination level before it becomes a larger overpayment finding.
Why Early Legal Counsel Is Critical
It is critical that physicians and practice owners promptly retain experienced healthcare defense counsel when planning a new home health agency enrollment or responding to a high-risk screening request. Early legal intervention can protect the agency's rights, help shape an accurate and complete enrollment application, avoid a site visit finding that conflicts with the paper record, preserve relevant defenses to a denial, and allow counsel to communicate with CMS or its contractor on the agency's behalf. Delaying legal representation can significantly affect the outcome of an enrollment matter and expose the agency to unnecessary risk.
How Health Law Alliance Can Help
Health Law Alliance's attorneys have overseen 2,000+ audits and handled 5,000+ matters, with 25+ years of experience. The firm defends home health agencies facing CMS enrollment revocation, high-risk screening scrutiny, or RAC and prepayment review once they are enrolled. If your practice is planning a new home health agency or has received a screening request from CMS or its contractor, contact us for a free, confidential consultation through our hospice and home health audit defense page.
