Paradigm Shift: CMS Is No Longer Waiting for Fraud to Happen and Why It Matters

The proposed 2027 Home Health Prospective Payment System rule suggests health agencies may receive an estimated 2.4% payment increase—approximately $420 million—while Medicare beneficiaries would continue to receive expanded access to care at home.

But that’s hardly the biggest headline here. The most significant part of the proposal has little to do with reimbursement. Instead, CMS is proposing one of its most aggressive expansions of Medicare program integrity authority in recent years.

A Shift From Detecting Fraud to Preventing it

Historically, Medicare has often operated under what compliance professionals describe as a "pay and chase" model. Providers enroll. Claims are paid. When fraud is discovered months—or years—later, CMS and the Department of Justice attempt to recover improper payments through audits, investigations, False Claims Act litigation, or criminal prosecution.

That approach has recovered billions of dollars, but it has an obvious weakness. By the time enforcement occurs, the money has already been spent, beneficiaries may have been harmed, and fraudulent entities may have disappeared.

The proposed rule clearly spells out that CMS is seeking additional authority to identify high-risk providers before they enter or remain in the Medicare program. Proposed changes include expanding CMS's ability to deny or revoke enrollment based on heightened fraud risk, geographic concentrations of fraudulent activity, certain ownership issues, and specified criminal histories.

This represents a fundamental change in philosophy. The goal is no longer simply recovering improper payments. The goal is preventing those payments from being made in the first place.

Why this Matters Beyond Home Health

Although these proposals appear in the Home Health Prospective Payment System rule, their implications extend well beyond one provider type. Over the past several years, CMS, HHS-OIG, and the Department of Justice have increasingly embraced proactive fraud prevention strategies.

We've seen:

• Expanded use of predictive analytics.

• Greater coordination among federal agencies.

• Enrollment moratoriums in high-risk sectors.

• Increased scrutiny of ownership structures.

• More aggressive provider screening before enrollment.

Taken together, these actions suggest Medicare is becoming progressively less tolerant of allowing questionable providers into the program while relying on audits to identify problems later.

Compliance Starts Before the First Claim

For providers, the compliance implications are significant. Many organizations think of compliance as something that begins after Medicare enrollment. Increasingly, CMS appears to view compliance as beginning much earlier.

·      Corporate ownership

·      Leadership backgrounds

·      Governance

·      Enrollment accuracy

·      Business relationships

·      Organizational transparency

These are no longer simply administrative matters. They are becoming program integrity issues.

Organizations should expect greater scrutiny not only of what they bill, but of whether CMS believes they should participate in Medicare at all.

A Broader Trend in Healthcare Enforcement

This proposal also aligns with a larger shift occurring across healthcare regulation. Federal agencies are investing heavily in preventing fraud through predictive analytics, enhanced screening, and risk-based oversight rather than relying solely on retrospective investigations.

For compliance officers, this means the conversation is changing. Success is no longer measured simply by avoiding audits or repayments. Organizations must demonstrate that they have strong governance, transparent ownership, effective compliance programs, and a culture that supports ethical decision-making before regulators ever identify a problem.

The Takeaway

The proposed rule is about far more than home health reimbursement.

It reflects CMS's evolving philosophy that the best way to protect Medicare isn't simply to prosecute fraud after it occurs. It's to prevent high-risk organizations from entering—or remaining in—the program in the first place. For healthcare organizations, that means compliance is becoming increasingly proactive.

And for compliance officers, it reinforces an important reality: the strongest compliance programs are no longer built solely to survive an audit. They are built to demonstrate, from the outset, that the organization deserves the privilege of participating in Medicare.

Source: CMS News Medicare Enrollment