CMS Crackdown Upends Hospice Dealmaking

Healthcare attorney Michelle Huntsman was quoted in a Law360 article examining how the federal government's moratorium on new Medicare enrollments in the home health and hospice care industry will affect dealmaking and private equity strategy. The six-month pause, announced by the Centers for Medicare and Medicaid Services (CMS) in mid-May, comes in response to increasing federal scrutiny of fraud in the sector, with CMS citing cases of kickbacks to physicians, home health agency openings disproportional to eligible populations and false statements to hospice patients among the allegations justifying the move. While in effect, the ban will make companies that already participate in Medicare more attractive targets for investors, but after it's lifted, Ms. Huntsman cautioned to anticipate more detailed legal reviews from transactional attorneys and tougher enforcement from regulators. These steps will increase the timeline for deal flow, she added, but activity will not cease altogether.

"Given the heightened scrutiny at the federal level, I do expect diligence to be more robust," she said. "There will be more deals, and they'll likely take a little bit longer."

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