Medicare PPEO Audits

Medicare-certified hospice providers are facing heightened regulatory oversight. In response to ongoing concerns about hospice compliance, as well as fraud, waste, and abuse within the hospice industry, both the Centers for Medicare & Medicaid Services (“CMS”) and the Department of Health and Human Services Office of Inspector General (“OIG”) have expanded their use of audits, investigations, and enforcement actions targeting hospice providers. Among these enforcement tools are Provisional Period of Enhanced Oversight (“PPEO”) audits, which apply to certain Medicare-enrolled hospice agencies. Providers should recognize that a PPEO audit can carry significant consequences, even where the perceived compliance issues appear relatively minor.

CMS introduced PPEO audits to address concerns surrounding hospice program integrity and regulatory compliance. Under the PPEO initiative, beginning in mid-2023, CMS has required audits of all “newly enrolled” hospice providers located in Arizona, California, Nevada, and Texas. Georgia and Ohio were added in late 2025. For purposes of the program, the term “newly enrolled” extends beyond providers entering the Medicare program for the first time. It also includes hospices that have undergone a Change of Ownership (“CHOW”), as defined by Medicare regulations, providers that have experienced a 100% ownership transfer, and agencies reactivating Medicare enrollment after a period of deactivation.

PPEO audits are sometimes likened to Targeted Probe and Educate (“TPE”) reviews because both processes may involve multiple rounds of claim review during which providers can receive feedback and, in some cases, an opportunity to correct identified deficiencies. That comparison, however, is limited, and in practice the two review processes differ substantially. TPE audits typically involve three rounds of review, and occasionally a fourth. CMS guidance requires the reviewing contractor to provide education to the provider and to allow time between review rounds so the provider can implement corrective measures and improve compliance. In addition, providers generally are not referred to CMS for administrative sanctions unless they fail three consecutive rounds of review by demonstrating persistently high error rates throughout the TPE process. Although TPE audits can ultimately result in revocation of Medicare billing privileges, that outcome generally occurs only after repeated unsuccessful review cycles.

PPEO audits, by contrast, are not governed by the same procedural requirements that apply to TPE reviews and are frequently conducted on a much more accelerated timeline. In some cases, CMS has revoked a provider’s Medicare billing privileges after only a single round of PPEO review, without providing education or an opportunity to implement corrective actions. Contractors performing PPEO reviews also often move quickly from one review round to the next, leaving providers little or no meaningful opportunity to address previously identified deficiencies. As a result, providers may predictably receive adverse findings in subsequent review rounds based on the same unresolved issues.

Although PPEO audits currently apply only to hospice providers in Arizona, California, Nevada, Texas, Georgia, and Ohio, CMS has considered expanding the program nationwide. Hospice providers should understand that, in practice, PPEO reviews frequently function less as a mechanism for improving compliance or billing accuracy and more as a pathway toward revocation of Medicare billing privileges. Providers should therefore approach any PPEO audit with considerable care and take proactive steps to strengthen the compliance of their documentation and Medicare hospice claims with applicable program requirements.

For over 40 years, Wachler & Associates has represented healthcare providers and suppliers nationwide in a variety of health law matters, and our attorneys can assist providers and suppliers in understanding new developments in healthcare law and regulation. If you or your healthcare entity has any questions pertaining to hospice audits or healthcare compliance, please contact an experienced healthcare attorney at 248-544-0888 or wapc@wachler.com