CMS Just Proposed New Medicare Fraud Safeguards. Nursing Homes Could Lose Payments Retroactively.

Washington, D.C. — The Centers for Medicare and Medicaid Services is tightening its grip on Medicare fraud — and skilled nursing facilities are squarely in the crosshairs.

In a proposed rule published this week, CMS outlined new enrollment safeguards that would allow the agency to claw back improper payments retroactively for all Medicare provider revocations, regardless of the reason. The agency estimates the changes could save roughly $82 million annually.

“These proposals would give CMS stronger tools to protect Medicare beneficiaries and taxpayer dollars from fraud, waste, and abuse,” CMS Administrator Dr. Mehmet Oz said in a press release.

For nursing homes, the immediate impact centers on enrollment compliance. The rule would require SNFs and other providers to maintain accurate Medicare enrollment records and properly report ownership, management, and operational details. CMS is also seeking broader authority to deny or revoke enrollment for high-risk providers operating in geographic areas with excessive concentrations of facilities that may increase fraud risk.

Under current regulations, some Medicare enrollment revocations take effect 30 days after CMS mails notice. Others already apply retroactively to the date of noncompliance. The proposed rule would make all revocation grounds retroactive, allowing CMS to recover payments made to non-compliant providers from the moment they fell out of line.

Additional provisions would extend to providers with recent misdemeanor convictions related to sexual assault or financial misconduct within the past 10 years. CMS also wants to expand its suspension and revocation authority to include owners and managing employees of providers, not just the providers themselves.

The move arrives as federal prosecutors continue aggressively pursuing Medicare fraud in the nursing home sector, including a recent $64 million scheme that targeted an Illinois operator.

What comes next

LeadingAge, the nonprofit association representing more than 5,300 aging services providers, is cautiously backing the effort.

“The rule also makes several proposals related to program integrity focused on provider enrollment, personnel, and more — areas we asked CMS to focus on,” said Katie Smith Sloan, president and CEO of LeadingAge, in a statement. “We look forward to reviewing these proposals in more detail with an eye toward ensuring targeted efforts that do not overly burden legitimate providers, including our members.”

The proposal is included in the Calendar Year 2027 Home Health Prospective Payment System proposed rule, but the enrollment provisions would apply across all Medicare provider and supplier types, including skilled nursing facilities.

CMS is accepting public comments on the proposed rule through the standard federal regulatory timeline. The final rule is expected later this year, with changes potentially taking effect for the 2027 calendar year.

For operators already struggling with thin margins and rising regulatory costs, the prospect of retroactive payment clawbacks adds another layer of financial risk. But for advocates of program integrity, the shift marks a long-overdue move toward holding providers accountable from day one.

Industry reports say the proposal is already drawing attention from legal and compliance teams across the sector.