Hospice Suspensions & Revocations

‍CMS, its RACs and UPICs, state agencies like Medi-Cal and OMIG, have broad discretion to suspend a provider’s ability to bill government programs or revoke enrollment. A suspension coupled with post-payment review typically is the first signal that the provider is under scrutiny. A suspension begins as a 180-day hold on payments or program participation while an investigation occurs, while a revocation bars the provider from further participation in federal or state programs.

The most common trigger for a hospice suspension or revocation is a “credible allegation of fraud” under Section 405.371 of Title 42, Code of Federal Regulations. A credible allegation of fraud is an allegation from any source, including fraud hotline tips, claims data mining, and patterns identified through provider audits, civil false claims cases, and law enforcement investigations. Allegations are considered to be credible when they have indicia of reliability. In short, any hospice facility can be subject to suspension, revocation, and post-payment review, even if you believe your practices are compliant.

The federal government requires that all Medicare and Medicaid agencies monitor the expenditure of funds to prevent fraud, waste and abuse. In the event that a plan sponsor or first tier, downstream, or related entity (FDR) learns of a “credible allegation of fraud” in connection with the delivery or payment of Medicare or Medicaid services, it is legally required to refer the matter for further investigation. At the federal level, such referrals may be made to HHS-OIG, DOJ, FBI, or another investigative agency. At the state level, such referrals are made to the Attorney General, Office of Inspector General, or the state Medicaid Fraud Control Unit (MFCU).

Federal and state investigations of hospice suspensions and revocations based on credible allegations of fraud are very serious. First, the investigation may result in an audit or other overpayment demand if claims were not medically necessary or properly documented, based on live discharge, length of stay, or other billing and coding requirements. These demands can easily reach hundreds of thousands or even millions of dollars for a hospice facility or home health agency. Beyond recoupment, the referral for investigation can open the door to fraud allegations under the False Claims Act, which carries heavy civil penalties (up to three times the damages) and potentially even criminal prosecution. Even honest providers can find themselves accused of fraud over documentation mistakes. Failure to respond properly to a suspension or revocation significantly increases the chance of escalation. This is why having legal counsel is essential – to rebut unfounded findings and demonstrate your good-faith compliance before things spiral.

CMS and its contractors are using data mining to identify “outliers,” which dramatically raises the risk of suspension or revocation for hospice facilities. Data is often manipulated and is particularly subject to erroneous or incomplete interpretation absent further information. CMS has advanced and refined its data mining capabilities in recent years, including the “Comprehensive Regulations to Uncover Suspicious Healthcare (CRUSH)” initiative, launched in February 2026 together with the Task Force to Eliminate Fraud, reporting to the Vice President of the United States as Chairman of the Task Force.

However, there is not a provider in this country who is not a purported data “outlier” in one manner or the other, depending on which values are input in the algorithm and the procedures for mining those inputs. As the saying goes, “garbage in, garbage out,” undermining the integrity of the process and opening it to challenge. Finally, regulators often focus on areas of higher cost, so if your hospice facility is successful, it will be targeted by CMS and its contractors as a result. Unfortunately, as we know, data is a poor substitute for the realities of patient care in healthcare, but it is often not only the government’s starting point, but also its flawed end point.

CMS, Cotiviti and other government contractors tend to hone in on documentation weaknesses to justify hospice suspensions or revocations. Common issues include:
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‍Lack of Clinical Decline: Following a live discharge, CMS will often look-back through the chart for evidence that the patient was stable with no change in FAST (Functional Assessment Staging) or PPS (Palliative Performance Scale) scores to invalidate all claims back to the time of enrollment. CMS expects that documentation must show a specific, objective improvement in the patient’s condition that explains why the patient no longer has a six-month prognosis.

‍Live Discharge: Although a live discharge shows that the hospice is following applicable rules and regulations, the government has now taken the position that a high live discharge rate is evidence that patients were fraudulently enrolled because they were never terminally ill and in need of palliative care. Patient revocation, unexpected stabilization, and relocation are mitigating factors.

‍Length of Stay: CMS has focused on lengths of stay exceeding 180 days, including early live discharges followed by re-enrollment within 7 to 30 days. This is considered a red flag if done to reset the clock on benefits periods and bypass secondary physician certifications.

‍“Cloned” or generalized notes: Using identical language for multiple patients or visits can suggest inappropriate cookie-cutter care. CMS contractors look for patient-specific documentation of decline. If notes are too generic, they may deny claims for lack of individualized justification.

‍New and Material Evidence and Obvious Error: CMS and its contractors have selected claims for post-payment review because there is new and material evidence that was not available or known at the time of the determination or decision and may result in a different conclusion; and the evidence that was considered in making the determination or decision clearly shows on its face that an obvious error was made at the time of the determination or decision.

Being aware of these common pitfalls can help providers improve their records. But if your hospice facility has already been suspended or revoked, a lawyer will scrutinize the cited documentation issues and counter any unfair or incorrect conclusions.

Our specialized hospice defense attorneys will serve as your advocate throughout the suspension or revocation process, in which time is of the essence. Here’s how we help:

‍Strategic Legal Response: From the moment your hospice facility receives a suspension, revocation, or medical records documentation request, we guide you on exactly how to respond. We ensure that submitted documentation is complete and presented in a way that supports your case, preventing missteps that could prevent the suspension from being lifted or revocation overturned.