CMS Moratorium Treats a Symptom, Not the Disease
CMS's May 2026 moratorium on new hospice and home health enrollment is a justified, overdue response to documented fraud, but it treats a symptom rather than the underlying cause. The question we should be asking is why the hospice and home health sectors became so attractive to fraud and rapid, low-quality growth in the first place.
The deeper problem starts long before a patient ever elects hospice. Krista Harrison's 2021 Health Affairs essay, "The Hidden Curriculum Of Hospice: Die Fast, Not Slow," described what happens when a benefit built around a six-month prognosis and a binary election decision meets a patient whose disease doesn't cooperate with that timeline. Her stepfather was discharged alive from hospice, declined again, and died nearly eight months after his initial admission. Her point was that the model offers almost nothing serious between curative treatment and hospice. That gap is exactly where ambulatory and home-based palliative care should live, and largely doesn't, at scale.
The Center to Advance Palliative Care (CAPC) has made a similar point from the oncology side, arguing for integrating palliative and psychosocial support earlier across the cancer continuum and pointing to resource constraints, limited reimbursement, and the concentration of psychosocial expertise in academic centers as the main barriers — this despite the fact that roughly 85% of cancer patients are treated in community settings, far from where that expertise sits. This is not a hospice problem but a failure to build upstream infrastructure for palliative care.
Current Funding Mechanism for Upstream Palliative Care Does Not Cover the Cost
Ambulatory and home-based palliative care is reimbursed almost entirely through fee-for-service billing by physicians, NPs, and PAs — time- and complexity-based codes that were never designed to fund an interdisciplinary team. Chaplains, social workers, and care coordination, the very things that make palliative care palliative, are frequently non-billable. Modeling published in the American Journal of Managed Care, built on American Academy of Hospice and Palliative Medicine's (AAHPM) proposed alternative payment structure, the Patient and Caregiver Support for Serious Illness model (PACSSI), estimated that fee-for-service reimbursement covers only 20% to 60% of the actual operating cost of running a palliative care program (AJMC, 2022). Hospital-based programs often close that gap by absorbing up to half their team's cost as a strategic loss, betting on earlier hospice referrals down the line. Community-based and ambulatory programs frequently have no comparable subsidy.
Verification is the Real Variable
It would be tempting to conclude that palliative care simply needs to be funded the way hospice is: a predictable, bundled payment that finally covers the cost of an interdisciplinary team. That conclusion doesn't hold up. The mechanism that let hospice fraud flourish was never the per-diem structure by itself. It was that payment gets triggered by a classification — a physician-certified prognosis of six months or less — that has proven very difficult to verify before the payment goes out, or to audit rigorously after. Handing Palliative Care an identical bundled structure without addressing that verification gap wouldn't remove the vulnerability but rather relocate it.
This is the documented pattern behind the largest hospice fraud cases on record. In 2016, two California physicians were convicted of certifying patients as terminally ill for an $8.8 million scheme in which, according to federal prosecutors, most enrolled patients were not actually dying. In July 2024, the Department of Justice announced that Gentiva, successor to Kindred at Home, one of the country's largest hospice operators, agreed to pay nearly $19.5M to resolve allegations spanning multiple states and more than a decade, in which hospice locations knowingly billed for patients who were not terminally ill and improperly kept the resulting overpayments. The scale moved from a single operator to a national chain, but the exploited seam stayed the same: a subjective, largely unreviewable clinical judgment call at the front door of a payment system.
Hospice's own aggregate payment cap, a per-beneficiary ceiling on total annual spending, is a useful reminder that this isn't fixed by capping or bundling payment amounts alone. That cap has existed since the benefit was created in the 1980s, and the current fraud wave happened underneath it anyway, because the vulnerable point was never the size or shape of the payment. It was eligibility certification on the front end and audit of actual service delivery on the back end.
This is where the specifics of PACSSI matter, because AAHPM did not design it as a flat per diem linked to a prognosis. PACSSI ties its two-tiered, per-member-per-month payment to eligibility criteria that combine a serious-illness diagnosis with documented functional limitation and a recent history of unscheduled hospital or emergency department use which is a standard built on a claims-based paper trail, and materially harder to fabricate at scale than a six-month terminal prognosis. The model also specifies a required interdisciplinary team (read: physician, nurse, social worker, and spiritual care provider) and offers two accountability tracks: a lighter one with pay-for-reporting incentives tied to quality and patient-experience metrics and a second with genuine shared financial risk based on total cost of care.
That second track deserves a caveat, because it trades one risk for another. A provider bearing financial risk on total cost of care has an incentive to under-treat as well as to over-enroll; capitation and shared-savings arrangements are well known to create "stinting" pressure. PACSSI's inclusion of patient-experience and care-process metrics alongside its cost-based track is the intended counterweight. Whether that counterweight is strong enough remains to be seen. HHS's Physician-Focused Payment Model Technical Advisory Committee, in reviewing PACSSI, flagged that its payment levels could be overly generous in some scenarios and noted that reliance on prognostic-style criteria still carries gaming risk. No payment design now on the table is fraud-proof. The realistic goal is a model whose weakest verification point is harder to exploit, and whose second-order risks — like stinting — are visibly counterbalanced.
Hospice's specific vulnerability was low capital barriers to entry, a payment triggered by a certifiable-but-largely-unverifiable clinical judgment, and a chronically underfunded upstream alternative that couldn't absorb patients who needed this care earlier. Any credible expansion of upstream palliative care financing has to solve for the middle term specifically — verified, claims-documented eligibility and audited service delivery — rather than assuming a different payment vehicle solves it by default.
What This Means for Palliative Physicians, APPs, Patients, and Families
None of this is an argument against the moratorium. Enforcement, site visits, ownership screening, and a public hospice scoring system are overdue. That said, the commitment that actually protects patients is making sure people who need serious illness care get access to it at the right time, in partnership with their clinicians and families, rather than being steered into a six-month benefit simply because it's the only interdisciplinary option Medicare will pay for.
If CMS and Congress want fewer opportunities for fraud and better outcomes, the moratorium should be paired with reimbursement reform that lets ambulatory and home-based palliative care do its job upstream — and the design requirement is verification, not just adequate funding. Whatever the vehicle, it needs claims-documented eligibility criteria, a defined and certified interdisciplinary team, independent audit of what was actually delivered, and outcome- and experience-linked accountability that guards against stinting as deliberately as it guards against over-enrollment.
Built this way, upstream palliative care would relieve pressure on the hospice pipeline, give patients an option when they are diagnosed with serious or life-limiting illness, and let clinicians do the relational work of trust-building, goals-of-care conversations, caregiver coaching — that is the actual source of value, long before six months of life remain.
Fixing the upstream gap won't happen through an enrollment freeze, and it won't happen by simply copying hospice's funding logic either. It requires paying for palliative care as a real interdisciplinary commitment while building in, from the start, the eligibility verification and audit infrastructure the hospice benefit is only now retrofitting under enforcement pressure.
The Vantage Perspective
The gap this piece describes — between what patients and families need upstream and what today's payment models are built to verify and fund — is exactly the kind of design challenge organizations face when building or refining serious illness care programs. Vantage Clinical Partners is built to help organizations review, refine, and deploy clinical care models across the continuum that support patients, families, clinicians, physicians/APPs, and financials. Contact Us | Get in Touch Today — Vantage Clinical Partnersto learn more and to connect with us.
Beth Papetti, MBA FHM
Principal & Chief Operating Officer
AAHPM. (2026, April 30). AAHPM makes a statement on hospice fraud. https://aahpm.org/about-aahpm/news-room/aahpm-makes-a-statement-on-hospice/
Center to Advance Palliative Care. (2026, July 31). Moving palliative care upstream: A roadmap for holistic cancer care. https://www.capc.org/blog/moving-palliative-care-upstream-a-roadmap-for-holistic-cancer-care/
Centers for Medicare & Medicaid Services. (2026, May 13). CMS announces aggressive nationwide crackdown on fraud with six-month hospice and home health agency enrollment moratoria [Press release]. https://www.cms.gov/newsroom/press-releases/cms-announces-aggressive-nationwide-crackdown-fraud-six-month-hospice-home-health-agency-enrollment
Harrison, K. L. (2021). The hidden curriculum of hospice: Die fast, not slow. Health Affairs, 40(5), 844–847. https://doi.org/10.1377/hlthaff.2021.00259
Healthcare Finance News. (2016). Two California doctors convicted in $8.8 million hospice fraud. https://www.healthcarefinancenews.com/news/two-california-doctors-convicted-88-million-hospice-fraud-face-decades-prison-falsely
Hospice News. (2024, April 24). Palliative care's value-based future. https://hospicenews.com/2024/04/24/palliative-cares-value-based-future/
Modeling of an alternative reimbursement method for palliative care. (2022, June 24). American Journal of Managed Care. https://www.ajmc.com/view/modeling-of-an-alternative-reimbursement-method-for-palliative-care
Physician-Focused Payment Model Technical Advisory Committee. (2018, May 7). Comment and recommendation regarding the AAHPM and C-TAC proposed payment models [Letter to the Secretary of Health and Human Services]. https://aspe.hhs.gov/system/files/pdf/255906/PTACCommentsRecommendationAAHPMCTAC.pdf
U.S. Department of Justice, Office of Public Affairs. (2024, July 17). Kindred and related entities agree to pay $19.428M to settle federal and state False Claims Act lawsuits alleging ineligible claims for hospice patients [Press release]. https://www.justice.gov/opa/pr/kindred-and-related-entities-agree-pay-19428m-settle-federal-and-state-false-claims-act