In 2020, over 20 years after the establishment of a special focus facility program for nursing homes, Congress directed the Department of Health and Human Services (HHS) to create a new special focus program (SFP) to increase oversight of hospices that “substantially failed to meet Medicare requirements.” After years of discussion and uncertainty around how hospices would be selected for the SFP, the Centers for Medicare and Medicaid Services (CMS) moved forward with a final rule for the SFP in November 2023. In December 2024, CMS selected the first cohort of hospices for the SFP using an algorithm described in the final rule.
Despite the seeming finalization and launch of the SFP, the future of the program is far from certain. On January 16, 2025, a group of hospice associations and a hospice provider challenged the SFP final rule on the basis that it is arbitrary and capricious, in excess of statutory authority, and promulgated without observance of procedure required by law. Then on February 14, 2025, CMS removed specific information related to the SFP from its website, announcing that it had ceased implementation of the SFP “so that [it] may further evaluate the program.”
This article provides an overview of the history of the hospice SFP, including stakeholder concerns throughout the rulemaking process; a discussion of the SFP algorithm as finalized; an analysis of the 2024 SFP selection process and trends in the data released by CMS with the SFP selection; and a discussion of the status of the SFP following the recent lawsuit and CMS’s pause of the program.
In the Consolidated Appropriations Act of 2021 (CAA), Congress enacted new measures to increase enforcement and oversight of Medicare-certified hospices. One such measure directed the Secretary of HHS to conduct “a special focus program for enforcement of requirements for hospice programs that the Secretary has identified as having substantially failed to meet [Medicare requirements].” Per the CAA, hospices selected for the SFP will be subject to surveys at least once every six months.
The concept of a “special focus” program is not new to Medicare, as the “special focus facility program” has long subjected nursing facilities with high numbers of survey deficiencies to enhanced survey oversight, including surveys every six months. The first proposal for the hospice SFP, as published in July 2021, would have looked more like the special focus facility program in that it would have focused solely on hospices with a certain pattern of survey deficiencies. Specifically, CMS proposed to select hospices that (a) had condition-level deficiencies during two consecutive standard surveys or two consecutive complaint surveys or (2) had two or more condition-level deficiencies during a validation survey. However, commenters were concerned that this selection process would not capture the “most non-compliant hospices” and could raise issues related to inconsistencies across state survey agencies.
Ultimately, CMS decided not to finalize the 2021 proposed rule and instead opted to form a technical expert panel (TEP) to gather feedback from stakeholders on a revised SFP selection process. CMS envisioned that the TEP would assist the agency in developing an algorithm that would consider not only survey findings, but also “other metrics related to hospice performance” when selecting hospices for the SFP.
Indeed, by the time the TEP met in the fall of 2022, CMS had developed a “revised preliminary methodology” that included not only hospice survey data—including condition-level deficiencies from the most recent standard survey and substantiated complaints—but also the hospice care index (HCI) score and Consumer Assessment of Healthcare Providers and Systems (CAHPS) survey scores. CMS solicited feedback from the nine-member TEP on this new proposed methodology. While “[m]ultiple TEP members supported the methodology’s use of several data sources,” they also raised concerns about data source limitations. In particular, TEP members worried about the limited availability of CAHPS scores, namely that only one-third of hospices had a publicly reported CAHPS score. Additionally, like the commenters to the 2021 proposed rule, TEP members expressed concerns about surveyor reliability and state variation in surveys. TEP members also provided feedback on questions involving specific CAHPS measures and HCI indicators, weighting of inputs for the algorithm, stratification of selected hospices, graduation and termination from the SFP, and more.
Following the release of the TEP summary report in April 2023, CMS proposed a new rule for the hospice SFP in July 2023, which largely resembled the program that had been presented to the TEP. In this proposed rule, CMS defined the SFP as “a program conducted by CMS to identify hospices as poor performers, based on defined quality indicators.” As described further below, CMS finalized the rule as proposed, establishing an algorithm and process for selecting hospices for the SFP, setting forth the survey and enforcement procedures for hospices in the SFP, and determining completion and termination criteria for hospices in the SFP.
Per the final regulation, CMS decided to select hospices for the SFP based on the “highest aggregate scores based on the algorithm used by CMS.” While the algorithm itself was not codified in regulation, it was described in detail in the final rule. Specifically, CMS moved forward with using the four indicators that were presented to the TEP as inputs for the algorithm:
The SFP final rule also elaborated on how the algorithm would handle missing data and how it would weight and/or standardize each indicator. Specifically, hospices missing CLD, substantiated complaint, or HCI data were assigned the average value for each metric. Meanwhile, hospices with missing CAHPS data were not assigned the mean value but instead had their algorithm scores calculated based solely on condition-level deficiencies, substantiated complaints, and HCI Index. The CAHPS data was weighted by twice the value of the other indicators.
Ultimately, the indicators are fed into a formula that calculates a single SFP algorithm score, and CMS selects hospices based on the “highest aggregate [algorithm] scores.” CMS codified into regulation that SFP selection would begin in calendar year 2024.
In addition to describing the SFP algorithm in detail, the SFP final rule also established requirements related to public reporting. Per regulation, CMS posts the following on a public-facing website: (1) a list of the 10 percent of hospice programs with the highest aggregate algorithm scores (the “10 Percent List”); (2) the hospices selected for the SFP from the 10 Percent List; and (3) the status of every hospice in the SFP (whether they were in progress, completed the SFP successfully, or were terminated from Medicare).
Lastly, the final rule established details regarding the oversight efforts and potential consequences involved in the SFP. Hospices selected for the SFP are surveyed at least once every six months. To complete the program, a hospice must either (a) have two SFP surveys within 18 months with no condition-level deficiencies and have no pending complaint surveys triaged at an immediate jeopardy or condition level or (b) return to substantial compliance with all Medicare requirements. A hospice that does not complete the program successfully, or that has an immediate jeopardy citation during the program, may be considered for termination from the Medicare program. Additionally, accredited hospices selected for the SFP do not retain their deemed status during the program.
In mid-December 2024, CMS began notifying hospices that they had been selected for the SFP. On December 20, 2024, CMS published the list of the first SFP cohort, comprising 50 hospices (the “SFP List”). Alongside the SFP List, CMS released data on the substantiated complaints and condition-level deficiencies that served as inputs for the SFP algorithm, as well as a “Special Focus Program User’s Guide” designed to help hospices better understand the SFP algorithm and selection process. The timeframe for the survey findings considered in the SFP algorithm was a three-year period from May 1, 2021, through April 30, 2024.
Perhaps the most notable finding from the release of the SFP List is that it does not appear that CMS selected the 50 hospices with the highest SFP algorithm scores for the program. In rulemaking and guidance documents, CMS repeatedly stated that it would select the 50 hospices with the highest SFP algorithm scores in sequential value. Surprisingly, CMS did not release the 10 Percent List or any other compilation of algorithm scores, so the hospices selected for the SFP were unable to confirm where they fell among the general hospice population (i.e., whether they were in the top 50 hospices or not). However, consultants claim that they have been able to replicate CMS’s algorithm based on publicly available data, and as alleged in the Texas complaint described further below, 31 hospices that were selected for the SFP do not rank within the top 50 hospices in terms of their SFP algorithm scores. Instead, those hospices appear to fall within the top 121 hospices, rather than the top 50.
If, in fact, CMS did not select the 50 hospices with the highest SFP algorithm scores, it is not clear what criteria it did use to select the first SFP cohort. It is possible that CMS had to pull hospices from further down the list because it excluded hospices that were currently undergoing other enhanced oversight or enforcement activity, but it has not explained its ultimate reasoning.
From a geographic perspective, the SFP List includes hospices in 19 states and one territory, crossing eight of the 10 CMS regions (Regions 1 and 10 are not represented). Hospices selected for the SFP were largely concentrated in three states, with 14 hospices selected from California, 10 from Texas, and six from Georgia. No other state had more than two hospices represented on the list.
In terms of performance, 15 of the hospices selected for the SFP had no condition-level deficiencies, while 31 hospices had two or more condition-level deficiencies. Of the hospices on the SFP List, 23 had no substantiated complaints, while 17 hospices had two or more. There was a range of HCI scores represented among the hospices selected for the SFP, with 14 hospices receiving an HCI of 10 (the highest possible) and 10 hospices receiving a score of 6 or lower. More than half of the hospices selected for the SFP did not report CAHPS scores, while those that did report CAHPS scores again displayed a range of scores, with four hospices having better-than-average CAHPS performance. CMS has not stated when SFP surveys will begin for the selected hospices.
On January 16, 2025, the state hospice associations in Texas, Indiana, North Carolina, and South Carolina, and a hospice provider in Texas filed a lawsuit in the United States District Court for the Southern District of Texas, Texas Association for Home Care & Hospice, et al. v. Xavier Becerra, et al., No. 4:25-cv-0019, challenging the SFP final rule. The plaintiffs allege that the SFP final rule and the SFP List violate the Administrative Procedure Act as contrary to law and promulgated in excess of the Secretary’s statutory authority, arbitrary and capricious, and promulgated without observance of procedure required by law. On the first point, the plaintiffs allege that Congress authorized CMS to select hospices for the SFP based on noncompliance with Medicare requirements, and that CMS exceeded that authority by selecting hospices for the SFP using data inputs, like CAHPS and HCI scores, that are unrelated to compliance with Medicare requirements. On the second point, the plaintiffs allege that the final rule is arbitrary and capricious for a plethora of reasons, including that CMS employed arbitrary criteria for selecting hospices outside of the top 50, relied on factors that Congress did not intend for it to consider (e.g., CAHPS and HCI scores), made errors in assigning complaints to providers, selected providers for the SFP that have no history of Medicare noncompliance, failed to appropriately scale survey data based on hospice size, and inappropriately assigned average HCI scores to hospices with missing data, among other things. Lastly, the plaintiffs allege that the final rule was promulgated without observance of procedure required by law because it did not release any of its underlying data during the rulemaking process to allow stakeholders an opportunity to comment.
On February 14, 2025, while the plaintiffs’ application for a temporary restraining order (TRO) was pending, CMS removed the names of all hospices selected for the SFP from its website and “ceased” implementation of the SFP. Just a few days later, CMS filed its response to the plaintiffs’ application for a TRO, stating that it had “exercised its enforcement discretion to retract the SFP List by deactivating the SFP website in its entirety, which removed the SFP List from public view, and to cease implementation of the SFP until it can further explore options for program implementation and further rule making.” CMS further stated that it was in the process of having deemed status returned to hospice programs that lost such status due to their selection for the SFP. The plaintiffs subsequently withdrew their application for a TRO.
While TRO proceedings are no longer underway and the SFP program has been paused indefinitely, the case as a whole is ongoing, as plaintiffs note that their “underlying action seeks additional relief, including the invalidation of the Special Focus Program Final Rule.” Ultimately, if the court rules that the SFP final rule is invalid, CMS may need to go back to the drawing board and restart the rulemaking process for the SFP. Even without such a ruling, CMS appears to already be reconsidering its SFP rulemaking. It is unlikely that additional rulemaking will proceed quickly in light of Executive Order 14192, which requires agencies that are promulgating new regulations to identify at least 10 existing regulations to be repealed. After four years of uncertainty surrounding the SFP, it seems like the hospice industry will have to continue waiting to see what becomes of this program.
