The Centers for Medicare & Medicaid Services (CMS) has implemented a six-month moratorium on new Medicare home health enrollments to combat fraud and protect patient safety.
This regulatory shift forces providers to consider whether deals are permitted under the current moratorium—which could very well last longer than six months. According to industry insiders, these joint ventures may prove more attractive than M&A as companies look to increase their census and increase patients through management agreements, integrated partnerships and shared service models.
The moratorium is part of a broader effort by the federal government to protect patients, prevent Medicare fraud and safeguard the reputation of the home health and hospice sectors. However, the policy has created a tension between the need for fraud prevention and the necessity of maintaining competitive access to care for beneficiaries.
Why Joint Ventures are Outpacing M&A
M&A comes with complicated analysis on whether deals are permitted under the current CMS enrollment freeze. Ken Albert, CEO of Andwell Health Partners, suggests that providers are more likely to see an expansion of joint ventures and affiliations. According to Albert, this includes the use of integrated partnerships, affiliation agreements, and formal management agreements to increase the number of patients in a provider’s care.
The primary driver for this shift is the uncertainty regarding the duration of the moratorium. While currently set for six months, there is a possibility of extension. M&A deals often require a level of regulatory certainty, making the expansion of joint ventures and affiliations more attractive to growth-minded operators.
By utilizing shared service models, providers can scale their operational footprint and leverage the strengths of a partner.
Strategies for Organic Growth and Service Expansion
For providers who cannot rely on acquisitions, organic growth remains a pathway for scaling. Albert notes that compliant and effective providers are “doubling down” on existing operations to differentiate themselves through quality, access, responsiveness and compliance. This approach focuses on several key operational metrics:
- Improving Conversion Rates: Increasing the percentage of referrals that actually become active patients.
- Strengthening Referral Relationships: Deepening ties to ensure a steady stream of appropriate referrals.
- Expanding Clinical Capacity: Increasing workforce availability where that’s available.
- Reducing Stay Volatility: Managing the timing and duration of patient care to stabilize revenue and resource allocation.
Beyond these internal optimizations, some operators are diversifying their service lines to create new revenue streams. Albert suggests that enhancing or starting palliative care lines allows providers to support a broader range of patient needs while maintaining their market presence.
The Risk of Reduced Competition and Patient Access
While CMS maintains that the moratorium is a necessary tool to prevent Medicare fraud, advocacy groups warn of significant unintended consequences. Hillary Loeffler, vice president of policy and regulatory affairs at the National Alliance for Care at Home, describes the moratorium as a “very blunt policy tool.”
Loeffler argues that the policy can inadvertently restrict participation from high-quality organizations, particularly in areas where there is a critical need for home health access. According to the National Alliance for Care at Home, this restriction can stifle innovation and reduce the overall competition within the industry.
A specific concern highlighted by Loeffler is the financial burden on legitimate providers. Some compliant organizations may be caught up in CMS enforcement actions and lack the financial resources to pay the attorney fees required to fight undue enforcement. This creates an environment where competition and innovation could be stifled.
Moving Toward Data-Driven Oversight
Industry leaders are calling for a shift in how CMS handles fraud prevention. Rather than applying a broad moratorium that affects all potential new entrants, Loeffler suggests a more targeted approach. This would include robust provider screening and data-driven oversight to identify and isolate “bad actors” while ensuring qualified providers can continue to care for patients.
The goal is to ensure that once fraudulent actors are identified, they are held accountable. Loeffler notes that a lack of consistent accountability in the past has sent the wrong message to the industry, making the need for precise, targeted enforcement more urgent.
Providers are now tasked with educating policymakers on how these regulatory actions impact not only fraud rates but also provider diversity, competition and market consolidation.
The home health industry awaits further guidance from CMS regarding the potential extension or modification of the enrollment moratorium.
Do you believe the current moratorium is an effective tool against fraud, or is it hindering patient access? Share your thoughts in the comments below.
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