A federal Medicare audit contractor has launched a new review targeting home health agencies whose patients log extended or long lengths of stay, raising compliance pressure on a sector already facing tightening payment rates and intensified federal oversight.
A Recovery Audit Contractor (RAC) responsible for home health and hospice claims nationwide, has added a length-of-stay review to its approved topics list, according to a report published Sunday by McKnight’s Home Care. The new audit will scrutinize Medicare claims where home health episodes stretch across multiple consecutive 30-day payment periods — questioning whether continued services meet medical necessity standards.
A Sector Already Under a Compliance Microscope
The new audit arrives at a fraught moment for home health providers. The Centers for Medicare and Medicaid Services determined through its Comprehensive Error Rate Testing program that the 2023 improper payment error rate for home health claims stood at 7.7 percent — roughly $1.2 billion in potential overpayments in that year alone. Federal auditors and contractors have since accelerated scrutiny of the sector.
A March 2026 audit of VNS Health, one of New York’s largest home health agencies, found that 16 of 100 sampled Medicare claims were incorrectly billed, with the HHS Office of Inspector General estimating $2.97 million in overpayments across the agency’s broader claims universe. VNS Health agreed to repay only $12,606 in directly identified overpayments, disputing the OIG’s methodology for the broader estimate.
CMS awarded Cotiviti the RAC Region 5 contract — which covers all home health and hospice fee-for-service claims nationally — in April 2025. The contractor began active reviews in the summer of 2025, succeeding Performant Healthcare, which retains administrative and appeals functions for audits conducted under its earlier contract.
What Length-of-Stay Audits Examine
Under Medicare’s Patient-Driven Groupings Model (PDGM), home health services are reimbursed in 30-day payment periods — currently set at $2,038.22 per period under the CY 2026 Home Health Prospective Payment System final rule. Medicare coverage requires that a patient remain homebound, need skilled care from a nurse or therapist, have a physician certification, and that continued care be reasonable and necessary.
Length-of-stay audits apply additional scrutiny when patients remain on home health services for many consecutive episodes. RAC reviewers examine whether the clinical record documents functional progress or a clear clinical rationale for continued skilled care — rather than maintenance-level assistance that Medicare does not cover as a skilled service.
Cotiviti’s existing approved Topic 0075 — Home Health: Medical Necessity and Documentation Requirements — has been active since December 2017 and covers documentation compliance across all HH MACs. The new length-of-stay topic represents a more targeted data-driven review aimed at identifying statistical outliers: agencies whose patients routinely remain on service well beyond typical episode counts.
Compliance Implications for Agencies
Industry observers note that Cotiviti employs sophisticated data analytics to flag billing patterns that diverge from local and national norms. Agencies with high proportions of patients receiving five or more consecutive 30-day episodes without documented functional improvement or a change in clinical condition are expected to receive requests for additional documentation.
The audit activity also comes as CMS presses agencies to meet tighter face-to-face encounter documentation requirements and physician certification standards reinforced in the CY 2026 final rule. CMS finalized new provider enrollment provisions in that rule expressly aimed at reducing improper payments.
Home health associations have urged members to conduct internal audits of long-stay cases and ensure that plan-of-care documentation reflects specific measurable goals, progress toward discharge, and a clear skilled-care need for each renewal period. Where a patient’s condition is stable and the primary need is custodial or supportive care, agencies may need to evaluate whether continued Medicare billing is defensible.
Why This Matters for Home Care
For families navigating a loved one’s care journey, this new wave of Medicare audits carries a clear, practical implication: government-funded skilled home health is designed as a strictly temporary, time-limited benefit. As agencies face mounting pressure to discharge patients sooner, the daily reality of caregiving inevitably shifts back to the family. When skilled therapy or nursing goals are met on paper, the pathway forward relies entirely on the ongoing safety and comfort support you manage at home.
This is where having the right physical infrastructure becomes your ultimate safety net. A proper home setup makes the transition away from Medicare-funded care not just manageable, but genuinely safe. Premium, fully adjustable home hospital beds provide the critical clinical positioning, pressure redistribution, and ergonomic caregiver access required for long-term care. Investing in this kind of specialized equipment allows your loved ones to age in place safely and comfortably—completely independent of Medicare’s tightening rules and the anxiety of sudden discharges.
