Health Headlines – May 18, 2026

CMS Halts New Medicare Enrollments for Home Health Agencies and Hospices and Expands Enforcement Efforts

Effective May 13, 2026, CMS imposed six-month nationwide temporary moratoria on new Medicare enrollment for home health agencies (HHAs) and hospices. Additionally, CMS and the White House announced a significant escalation in federal healthcare program-integrity enforcement on May 13, 2026, combining the nationwide pause on new Medicare enrollment for hospice and home health agencies with a $1.3 billion deferral of Medicaid reimbursements to California. Federal officials also sent letters to state attorneys general, warning that states could face funding consequences if they do not satisfy fraud-control obligations. Federal officials frame these actions as fraud-prevention measures aimed at high-risk provider categories and state Medicaid oversight, but they also create immediate operational, financing, and access considerations for healthcare organizations and state agencies.

Hospice and Home Health Moratoria

CMS issued separate six-month nationwide moratoria on new Medicare enrollment for hospices and home health agencies, effective May 13, 2026. Existing Medicare-enrolled hospice and home health providers may continue operating, but new enrollments and certain expansion strategies are now constrained while CMS conducts targeted investigations and uses data analytics to identify suspect activity.

The moratoria apply nationwide to new hospices, hospice practice locations, home health agencies, and home health branches or practice locations. The moratoria also reach certain majority-ownership changes or ownership changes that require a new initial Medicare enrollment, making transaction structure and timing more important for affected providers.

The moratoria do not apply to enrollment applications received by Medicare before May 13, 2026, and the regulations exclude certain changes in practice location, provider or supplier information, and ownership changes that do not require initial enrollment. New entrants and organizations pursuing expansion through new enrollments, branches, practice locations, or certain ownership changes may face delayed market entry or deal execution, with limited appeal rights if CMS denies enrollment during the moratorium.

Earlier this year, CMS imposed a separate six-month nationwide moratorium on certain DMEPOS supplier enrollments. CMS called these three moratoria “some of the most significant fraud prevention actions in the agency’s history.” Enrollment freezes may become a recurring program-integrity tool utilized by the Trump Administration.

Additional Scrutiny on Existing Hospice and Home Health Providers

Alongside the moratorium announcement, CMS emphasized its broader enforcement posture toward existing providers. The agency said it will intensify targeted investigations, use advanced data analytics, conduct site visits, enhance enrollment screening for high-risk home health agencies, and expand pre- and post-claim review activity in selected states. CMS also said it would accelerate the removing providers suspected of fraud from the Medicare program.  By way of example, CMS cited its recent enforcement actions in Los Angeles that resulted in suspending $70 million in payments to 773 hospices and 23 home health agencies suspected of fraud.

California Medicaid Reimbursements Deferred

Relatedly, in a press conference on May 13, 2026, Vice President JD Vance announced that the federal government would defer $1.3 billion in Medicaid reimbursements to California. CMS asserts that California must explain the volume of outlier payments and other expenditures that CMS says raise “major red flags.” CMS Administrator Oz described the step as the “largest deferral” CMS has ever made, taken with the goal of bringing state officials to the table.

California officials disputed the premise of the deferral and signaled possible legal and administrative pushback. Governor Newsom’s office argued that growth in the state’s home care program reflects efforts to keep seniors and people with disabilities out of more expensive institutional settings, and California Attorney General Rob Bonta described the administration’s action as unlawful and said his office was reviewing available information.

Broader State Medicaid Oversight

In addition to the California withholding, CMS sent letters to state attorneys general concerning oversight of Medicaid Fraud Control Units. The letters warned that states could lose federal Medicaid funding if their MFCUs did not satisfy their fraud-control obligations. During the Vice President’s press conference, he highlighted particular scrutiny on New York and Hawaii.

With these actions, CMS is demonstrating a focus on earlier fraud-enforcement intervention. Rather than relying mainly on audits and recoupment after claims are paid, CMS is using enrollment restrictions, ownership scrutiny, site verification, data analytics, payment suspensions, and claim review to slow or block participation where the agency sees elevated risk. Hospice and home health organizations should expect heightened scrutiny of ownership changes, new locations, enrollment history, utilization patterns, referral relationships, and billing anomalies.

The Federal Register publication of the home health moratorium is available here. The Federal Register publication of the hospice moratorium is available here.

Reporters, Alana Broe, Atlanta, GA, +1 404 572 2720, abroe@kslaw.com & Morgan Cronin, Atlanta, GA, +1 404 572 2795, mcronin@kslaw.com

OIG Report Finds Ambiguous Medicare Requirements for Inpatient Rehabilitation Facilities Led to Noncompliance and Overpayments

On May 14, 2026, the HHS Office of Inspector General (OIG) published a report finding that unclear Medicare requirements led to differing interpretations of inpatient rehabilitation facility (IRF) documentation, coverage, and billing requirements. OIG estimated that Medicare paid IRFs $5 billion in federal fiscal year 2022 for claims that did not meet Medicare requirements. Noting substantial concerns with differences in interpretation of CMS’s IRF guidance, OIG recommended that CMS provide regulatory clarification to address the existing ambiguities.

Patients who require complex medical attention and would benefit from an inpatient stay may receive care at IRFs through an interdisciplinary team of providers. CMS reimburses IRF care through the prospective payment system, under which beneficiaries are “assigned to case-mix groups based on the primary reason for intensive rehabilitation care . . . age, and level of motor and cognitive function.” Like all Medicare services, payment may not be made for services that are not reasonable and necessary.

This report follows a 2018 OIG audit that found Medicare paid IRFs $5.7 billion (84 percent of the audited amount) for care that was not reasonable and necessary. After the American Medical Rehabilitation Providers Association, the American Academy of Physical Medicine and Rehabilitation, and the Federation of American Hospitals (the IRF Stakeholders) questioned OIG's methodology in that audit, OIG developed this audit approach jointly with CMS and the IRF Stakeholders to determine the root causes of the varying interpretations of IRF regulations, with a goal to “identify areas in which CMS could clarify Medicare IRF claims payment requirements.”

Audit Findings

This OIG audit “covered $7 billion in Medicare payments to 1,109 IRFs for 300,269 claims in Federal fiscal year (“FFY”) 2022,” with a stratified random sample of 200 claims reviewed by an independent medical review contractor. The contractor determined that 42 of the 200 sampled claims complied with Medicare IRF requirements. The IRF Stakeholders independently reviewed the remaining 158 claims and reported a much lower error rate in “the high teens to low twenties,” and OIG noted “substantial concerns given the large payment amounts at risk” due to “differences in interpretations of CMS’s regulations[.]” The deficiencies found in this audit involve documentation, coverage, and billing.

• Documentation Deficiencies: The contractor found that 107 sampled IRF claims did not comply with documentation requirements, such as failure to meet Plan of Care (“POC”) requirements, weekly interdisciplinary team (“IDT”) meeting requirements, preadmission screening requirements, and therapy discipline requirements. Specifically, OIG found documentation deficient where there was generic, templated language and a lack of support to demonstrate the IDT’s involvement in the POC’s development. In contrast, IRF Stakeholders contended that documentation was appropriate where the POC included individualized therapy durations and outcome goals and reflected IDT contributions made before approval by the rehabilitation physician. Additionally, where OIG determined the documentation was insufficient to demonstrate that a rehabilitation physician “led” each IDT meeting, IRF Stakeholders argued that “reliance on the word ‘led’” was misplaced and asserted that “[p]hysician participation should be presumed to satisfy the leadership requirement.” Areas noted as needing clarity include defining what an “individualized” POC “developed by” a rehabilitation physician means, what it means for IDT meetings to be “led by” a rehabilitation physician, and what should be documented in terms of prior functional status.
• Coverage Deficiencies: The contractor found 84 claims with coverage-related deficiencies, including failures related to physician supervision, active and ongoing therapeutic intervention from multiple disciplines, enrollee stability to participate in therapy, and face-to-face visits. Specifically, where OIG deemed the documentation deficient to support an enrollee’s need for supervision, citing medical stabilization and return to functional baseline, IRF Stakeholders emphasized the importance of deferring to the rehabilitation physician’s clinical judgment, noting that the physician’s signature reflects the determination that coordinated IDT care was necessary. OIG recognized that CMS has not defined terms such as what constitutes a “reasonable expectation that an enrollee requires supervision by a rehabilitation physician,” what documentation is expected to demonstrate “active and ongoing therapeutic intervention of multiple therapy disciplines,” or what “sufficiently stable” to participate in therapy means.
• Billing and Coding Deficiencies: The contractor found 36 claims with billing- and coding-related deficiencies, including those that did not comply with the IRF Patient Assessment Instrument or had missing clinical information.

Based on the above audit results, OIG concluded that “unclear Medicare requirements led to differing interpretations between OIG, IRF [S]takeholders, and CMS related to documentation, coverage, and billing requirements.” OIG made four recommendations to CMS:

1. Revise or clarify IRF documentation requirements related to POC development and individualization, IDT meeting physician leadership, review of enrollee progress at IDT meetings, and functional status during preadmission screening.
2. Revise or clarify IRF coverage requirements to define what constitutes a reasonable expectation of physician supervision, active and ongoing therapeutic intervention from multiple disciplines, and sufficient stability to actively participate in therapy.
3. Revise or clarify IRF-PAI signature requirements.
4. Offer training and learning sessions to assist IRFs with regulation compliance.

CMS did not concur with the first three recommendations and concurred only with the fourth, to continue offering educational resources. While IRF Stakeholders agreed that most deficiencies stemmed from good-faith differences in interpretation due to unclear regulations, they questioned the utility of additional regulatory guidance. Rather, IRF Stakeholders emphasized the importance of auditors affording “appropriate deference to rehabilitation physicians making clinical decisions at the time of IRF admission and throughout the course of IRF treatment.” OIG maintained that its recommendations are valid and warned that noncompliance findings will continue absent clarification of documentation, coverage, and signature requirements.

A copy of the OIG Full Report is available here.

Reporter, Rebecca Hsu, Atlanta, GA, +1 404 572 3339, rhsu@kslaw.com

Client Alert

DOJ Announces New Initiative to Prioritize Working with Certain “Data Miner” Relators in False Claims Act Cases

On April 30, 2026, the U.S. Department of Justice (DOJ) announced the Fraud Oversight through Careful Use of Statistics (FOCUS) initiative, which has the stated goal of strengthening DOJ’s working relationship with relators who use advanced data analysis techniques to identify fraud and bring qui tam actions under the federal False Claims Act (FCA). Under this initiative, DOJ plans to prioritize working with relators who successfully uncover fraud by “data mining,” or analyzing publicly available government data. Describing the shifting qui tam landscape that led to the FOCUS initiative, DOJ explained that it is on pace to receive a record number of FCA qui tam complaints for the third year in a row, receiving 980 in Fiscal Year (FY) 2024, 1,300 in FY 2025, and 780 so far in FY 2026. DOJ attributed the record-breaking increase of qui tam complaints to the shifting characteristics of relators, explaining that since FY 2024, more than 45% of qui tam complaints originated from “data miners,” who uncovered fraud through the analysis of publicly available government data rather than insider knowledge. King & Spalding’s Client Alert on this topic is available here.  

Editors: Chris Kenny and Ahsin Azim

Issue Editors: Alek Pivec and Jenna Anderson