Background on CMS’s Anti-Fraud Efforts in Hospice Care

Why It Matters

The crackdown targets rising fraud risk in a fast‑growing, profit‑heavy hospice market, aiming to protect Medicare funds while preserving access to legitimate end‑of‑life care.

Key Takeaways

• CMS bans new hospice entrants for six months nationwide
• Hospice providers rose 35% (2019‑2023), mainly for‑profits
• For‑profit hospice margins hit 13.7% in 2024 versus -1.3% nonprofit
• Median hospice stay stayed 18 days; 90th percentile rose to 278 days
• CMS aims to curb fraud without restricting patient access to hospice

Pulse Analysis

CMS’s six‑month moratorium on new hospice providers marks the most aggressive program‑integrity action in recent years. By halting enrollment, the agency hopes to pause a rapid expansion that saw hospice agencies climb from 4,840 in 2019 to 6,535 in 2023, a 35 % increase driven almost entirely by for‑profit firms. The concentration of these new entrants in Arizona, California, Nevada and Texas raises red flags about market dynamics that may be less about patient need and more about profit opportunities, especially given the 13.7 % average margin reported for for‑profit hospices in 2024.

Hospice care, a modest slice of Medicare’s $1.1 trillion budget, accounts for just 2.6 % of total spending, yet its per‑diem reimbursement structure—$261 for the first 60 days and $182 thereafter—creates incentives for over‑utilization. The fixed per‑patient cap of $35,361 per year further encourages agencies to maximize patient days, sometimes extending stays well beyond the median 18‑day period. While the median length of stay has remained stable since 2010, the 90th‑percentile duration has risen to 278 days, suggesting a subset of providers may be inflating utilization to boost revenues.

Balancing fraud prevention with patient access is critical. Over‑zealous enforcement could deter legitimate providers and limit options for seniors seeking home‑based palliative care, potentially driving them back to costlier hospital or skilled‑nursing settings. Effective oversight will need to target deceptive enrollment practices while preserving pathways for qualified agencies to serve vulnerable beneficiaries. If executed well, the crackdown could safeguard Medicare dollars and reinforce confidence in hospice as a cost‑effective, patient‑centered option for end‑of‑life care.