OIG Report Cites Concerns with Hospice Enrollment Eligibility Costing Medicare $255.1 Million
A report released by the Office of Inspector General (OIG) on June 23 found that Medicare could have saved $255.1 million if Medicare Administrative Contractors (MACs) had stricter eligibility review procedures. The report looked at 100 initial certification period documentation from 2021 for new hospice enrollees who did not have inpatient or emergency room (ER) claims 18 months prior to starting hospice care. Additionally, these sampled enrollees had at least one paid hospice claim in FY2021 and were still alive 180 days after starting hospice care. OIG found that of the 100 certification periods reviewed, 45 did not meet hospice eligibility requirements.
First, clinical documentation for 21 did not support the enrollee’s 6-month prognosis. Second, of the 100 periods reviewed 24 did not meet eligibility documentation requirements due to missing supporting documentation, missing elements on the election statement, missing certification of terminal illness, missing information on the certification of terminal illness, and missing signatures from physicians or enrollees. Based on this review, OIG determined that the Centers for Medicare and Medicaid Services (CMS) overpaid these claims by $545,499 and extrapolated that estimate across all hospice claims for these patients in FY2021 to total $255.1 million.
In the report, OIG recommended that CMS work with the hospice MACs to consider hospice enrollees with no hospital or ER visits 18 months prior to hospice as a high-risk area in their hospice eligibility reviews. They also recommend MACs “possibly develop pre- or post payment review procedures” for these new hospice enrollees. CMS concurred with OIG’s recommendation and will share the report with MACs to incorporate into their risk analysis and work planning to determine whether the risk area identified in this audit report should be prioritized. LeadingAge will work to follow up with members on the outcomes of this report in terms of MAC audits. Hospice members should consider reviewing their own enrollees and determining the potential risk of compliance issues for individuals with no hospitalizations or ER visits in the preceding 18 months before enrollment and were still on hospice service after 180 days.
New Legal Opinion from Department of Justice Could Jeopardize Community-Based Services for People with Disabilities
On June 18, 2026, the Department of Justice, Office of Legal Counsel issued a legal opinion, titled, Application of the Rehabilitation Act and Americans with Disabilities Act to State Institutionalization of Patients with Severe Mental Illness or Disabilities. The opinion made three findings: 1) In prohibiting discrimination on the basis of disability, neither section 504 of the Rehabilitation Act nor Title II of the Americans with Disabilities Act (ADA) imposed an integration mandate on states in their treatment of mentally disabled individuals. Nor does either statute authorize the responsible Executive Branch agencies to impose such a mandate; 2) A statutory mandate that states treat mentally disabled patients in maximally integrated settings would raise serious questions regarding the scope of Congress’s power under the Fourteenth Amendment, the Interstate Commerce Clause, and the Spending Clause; 3) In Olmstead v. L.C. ex rel. Zimring, 527 U.S. 581 (1999), the Supreme Court did not hold that section 504 of the Rehabilitation Act or Title II of the ADA require states to treat mentally disabled patients in the most integrated setting appropriate to their needs.
This legal opinion, which is only binding on the executive branch, goes against decades of federal court precedent upholding the requirement to administer programs and activities in the most integrated setting appropriate the needs of individuals with disabilities and in particular, requiring community-based treatment for persons with mental disabilities when (1) the State’s treatment professionals determine that such placement is appropriate, (2) the affected persons do not oppose such treatment, and (3) the placement can be reasonably accommodated, taking into account the resources available to the State and the needs of others with mental disabilities. Even though private litigants can continue to pursue their rights under the integration mandate in court, we are monitoring what policy changes executive branch agencies will take in response to this opinion, which could further undergird efforts to reduce Medicaid for home and community-based services. We have reached out to the Centers for Medicare and Medicaid Services for more information on their intent to provide guidance to states on the Home and Community Based Settings Final Rule, including clarifying the scope of community integration provisions, which have been interpreted by some states to require activities that may not necessarily be appropriate for the needs of the older adults even though they intend to promote community integration (e.g., requiring care plans to ask older adults about employment ambitions). Read our article here.
Federal Monitoring Surveys for FY 2026
The Centers for Medicare & Medicaid Services (CMS) will be making adjustments to the number of Federal Monitoring Surveys being completed in FY 2026 as a result of the government shutdown at the beginning of the fiscal year during which surveys were not authorized. CMS is statutorily required to complete federal monitoring surveys in “at least 5% of the number of skilled nursing facilities surveyed by the state in the year, but in no case less than 5 skilled nursing facilities in the state.” CMS will continue to meet these requirements but is adjusting the basis for calculating the required number of surveys in each state. Fewer federal monitoring surveys will be conducted in FY 2026; however, at least 5 nursing homes in each state will be surveyed. Federal monitoring surveys will include both Resource and Support Surveys (RSS) and Health Comparative surveys. Life Safety Code / Emergency Preparedness federal monitoring surveys will additionally include desk audits. The CMS location will work with the state agency to identify nursing homes for surveys and will be focusing on nursing homes that provide good training opportunities. Priorities include those at risk for noncompliance, those with a history of noncompliance, those with allegations of noncompliance, CMS-specific concerns, and media attention. Health surveys will breakdown to 60% of federal monitoring surveys being conducted on complaint surveys and 40% being conducted on standard recertification surveys. For Life Safety Code / Emergency Preparedness, surveys will be split between 80% of surveys being completed on recertification surveys and 20% being completed on revisits. Recall that while the purpose of the federal monitoring survey is to evaluate state agency performance, federal surveyors may cite noncompliance and may impose enforcement remedies in comparative surveys, including suspension of the nurse aide training and competence evaluation program (NATCEP). More information, including actual numbers of surveys per state, can be found in CMS Administrative Information Memo 26-06-NH.
Analysis: Impact of CMS’ Accrediting Organization Final Rule on Aging Services Providers
The final rule aims to improve healthcare quality and patient safety through enhanced oversight of Accrediting Organizations. Read the analysis here.
HHS OIG Focus: Duplicate VA and Medicaid Payments
On June 10, the Department of Health and Human Services (HHS) Office of Inspector General (OIG) announced a new workplan project focusing on the potential for duplicative payment by Medicaid for covered services in the Veteran’s Administration (VA) Community Care Benefit. Because Medicaid is the payer of last resort, VA should be billed for services where a veteran is dually eligible for VA and Medicaid benefits. While it is unlikely that provider members receive reimbursement from both programs, it is foreseeable that a provider would select to bill Medicaid instead of VA because of challenges with service authorizations and the VA’s third-party administrators. This creates a challenge for the VA and state Medicaid agencies, though could also have provider-level implications. We will watch for more from the OIG on this work-plan item.
IRS Announces Forthcoming Rulemaking on Excise Tax on Excess Tax-Exempt Executive Compensation
On June 6, 2026, IRS issued a Notice of Intent to Issue Regulations Under Section 4960. Section 4960 of the Internal Revenue Code generally imposes an excise tax on any applicable tax-exempt organization (ATEO) or related person or governmental entity that pays a covered employee remuneration in excess of $1 million in a taxable year or an excess parachute payment. Section 501(c) organizations would be considered ATEOs since they are exempt from taxation under Section 501(a) of the Internal Revenue Code. The One Big Beautiful Bill Act (OBBBA) changed the definition of “covered employee” under Section 4960. Previously, “covered employee” was defined as “any employee (including any former employee) of an ATEO if the employee (1) is one of the five highest-compensated employees of the ATEO for the taxable year, or (2) was a covered employee of the ATEO (or any predecessor) for any preceding taxable year beginning after December 31, 2016.” The OBBBA revised the definition of “covered employee” to “any employee of an applicable tax-exempt organization (or any predecessor of such an organization) and any former employee of such an organization (or predecessor) who was such an employee during any taxable year beginning after December 31, 2016.” IRS intends to issue regulations to remove references to an ATEO’s five highest-compensated employees and to provide its interpretation of the post-OBBBA definition of covered employee. IRS also anticipates that the proposed regulations would provide covered employee exceptions for limited hours and nonexempt funds similar to those currently in the regulations at 26 C.F.R 53.4960-1(d)(2)(ii) and (iii). IRS has requested comments on the issues raised in the notice by August 4, 2026, particularly on (1) any changes that are needed or appropriate to adapt the current limited hours and nonexempt funds exceptions to the new definition of covered employee under the OBBBA and the appropriateness of applying these exceptions to officers of the ATEO, and (2) any other issues that should be addressed in the forthcoming proposed regulations.
Weekly Recaps: June 24, 2026
- Affordable Housing Weekly Recap.
- Home Health Weekly Recap.
- Hospice Weekly Recap.
- Life Plan Community Weekly Recap.
- Medicaid, HCBS, and PACE Weekly Recap.
- Nursing Home Weekly Recap.
- Workforce Policy Weekly Recap.
