California Hospice Compliance in 2026: Navigating CDPH Licensing and Medicare Audit Scrutiny Together

No state's hospice providers face more scrutiny in 2026 than California's. At the state level, the California Department of Public Health (CDPH) adopted the state's first comprehensive hospice licensing regulations, effective June 22, 2026, while a moratorium on new hospice licenses continues. The Governor's office reported in January 2026 that CDPH had revoked more than 280 hospice licenses in the prior two years, with about 300 more under evaluation for revocation. At the federal level, the Western Jurisdiction Unified Program Integrity Contractor (UPIC) issued payment suspension notices to hundreds of California hospices in April 2026, CMS announced suspensions involving about 800 Los Angeles hospices and home health agencies, and CMS imposed a nationwide hospice enrollment moratorium in May.

For legitimate California hospices, compliance now means satisfying two demanding regulators at the same time. This article explains California's licensing developments, the federal enforcement landscape, how the two interact, and practical steps hospices can take to manage both. It is educational and does not replace legal advice. Hospices should review the regulation text and consult experienced California healthcare counsel.

California's Licensing Developments

The Licensing Moratorium

Senate Bill 664 (2021) imposed a moratorium on new hospice licenses beginning January 1, 2022, following concerns about fraud and abuse. The California State Auditor's March 2022 report on hospice licensure and oversight, Report 2021-123, found indicators of large-scale fraud, particularly in Los Angeles County. Later legislation extended the moratorium. According to CDPH guidance, Assembly Bill 177 (2024) provides for the moratorium to end on January 1, 2027, or one year after adoption of emergency regulations, whichever is sooner. CDPH has explained that applications for a multiple location, a change of geographic service area, or a change of location outside an approved service area are also subject to the moratorium.

The 2026 Emergency Regulations

CDPH filed emergency regulations establishing a comprehensive hospice licensing framework, codified at Title 22, California Code of Regulations, sections 74800 through 74908, which took effect June 22, 2026. The regulations implement statutory direction to address fraud indicators identified by the State Auditor. Summaries of the regulations describe requirements including:

• Detailed operational and staffing standards, including staffing ratios.

• Service area limits, with written CDPH approval required for each county before a hospice may initiate, advertise, or provide services there.

• Advance approval requirements for changes of ownership and certain management changes.

• Unannounced inspections with authority to issue citations, require corrective action plans, or suspend licenses.

• Application requirements and denial grounds, including failure to demonstrate unmet need and inaccurate information.

The regulations apply to existing licensees without a transition period. Hospices should review the full text and CDPH guidance carefully, because the requirements are detailed and enforcement is active.

License Transfers and Changes of Ownership

California law restricts the transfer of hospice licenses for five years from initial issuance, with limited exceptions. Commentators have noted that each approved change of ownership may reset the five-year period. Combined with the federal moratorium and the Medicare 36-month rule, these restrictions make hospice transactions in California especially complex.

License Revocations

The Governor's office reported in January 2026 that CDPH had revoked more than 280 hospice licenses in roughly two years and identified about 300 more for evaluation. The state has also described coordination among CDPH, the Department of Health Care Services, the California Department of Justice's Division of Medi-Cal Fraud and Elder Abuse, and other agencies to suspend Medi-Cal payments and revoke licenses when fraud is suspected.

The Federal Enforcement Landscape in California

UPIC Payment Suspensions

In mid-April 2026, the UPIC for the Western Jurisdiction issued payment suspension notices to hundreds of California hospices and some home health agencies. Industry reports indicated that hospice suspensions related to live discharge rates over a lookback period, although CMS has not published specific thresholds. CMS's May 13, 2026 announcement described payment suspensions for about 800 Los Angeles hospices and home health agencies suspected of fraud.

Provisional Period of Enhanced Oversight

California has been subject to CMS's Provisional Period of Enhanced Oversight for new hospices since July 2023. Under 42 CFR 418.22(a)(4), as amended to reflect the Consolidated Appropriations Act, 2026, telehealth may not be used for face-to-face recertification encounters on or after January 31, 2026 for hospices subject to enhanced oversight.

The Nationwide Moratorium

CMS's nationwide moratorium on new hospice enrollment took effect May 13, 2026 and blocks initial enrollments and certain changes in majority ownership. CMS can extend it in six-month increments.

Affiliations and Revocations

CMS has authority under 42 CFR 424.519 to deny or revoke enrollment based on affiliations with providers that have certain disclosable events, such as payment suspensions, exclusions, or revocations. In California, where many providers share owners, managers, addresses, or staff, affiliation reviews add another layer of risk.

Prosecutions and Congressional Attention

Federal prosecutors in the Central District of California announced hospice fraud cases in 2026, and a congressional committee opened an inquiry into California hospice programs. The Department of Justice has also described regional health care fraud enforcement efforts in the West.

The Federal Telehealth Question

California hospices subject to enhanced oversight may not use telehealth for face-to-face recertification encounters on or after January 31, 2026. CMS has stated that the nationwide moratorium itself does not affect telehealth flexibility for enrolled hospices, but enhanced oversight is a separate limit. California hospices should:

• Confirm whether they are subject to enhanced oversight.

• Schedule in-person face-to-face encounters when required.

• Document whether each encounter was in person or by telehealth.

• Prepare to report telehealth encounters on claims for encounters on or after January 1, 2027.

How State and Federal Oversight Interact

State and federal actions often reinforce each other:

• A CDPH license revocation or suspension can lead to Medicare termination and Medi-Cal termination.

• A Medicare payment suspension or revocation can prompt state review.

• Medi-Cal payment suspensions based on credible allegations of fraud are required under federal Medicaid rules at 42 CFR 455.23, unless good cause exists.

• Information gathered in one review may be shared with other agencies.

Because of this overlap, inconsistencies between state licensing records and Medicare enrollment records can be particularly harmful. A hospice whose licensed service area, address, administrator, or ownership does not match its Medicare enrollment may face questions from both regulators.

Practical Steps for California Hospices

1. Conduct a Licensing Gap Analysis

• Compare current operations with the new Title 22 hospice regulations.

• Review staffing ratios, qualifications, and supervision.

• Confirm that each county served is approved in writing by CDPH.

• Review policies required by the regulations.

• Prepare for unannounced inspections.

2. Align State and Federal Records

• Make sure the hospice's name, address, service area, administrator, owners, and managing employees match across the CDPH license, Medicare enrollment in PECOS, and Medi-Cal enrollment.

• Report changes to each agency within required timeframes.

3. Strengthen Medicare Documentation

• Audit election statements and the mandatory addendum for elections on or after October 1, 2026.

• Audit certifications, narratives, and face-to-face encounters.

• Confirm whether the hospice is subject to enhanced oversight and therefore must conduct face-to-face encounters in person.

• Review long-stay patients for continued eligibility.

4. Review Live Discharges and Revocations

• Calculate live discharge rates by type and compare with peers.

• Review discharges and revocations for proper documentation.

• Confirm that revocations reflect the patient's own choice.

• Review readmissions within seven days.

5. Review Affiliations

• Inventory owners, managing employees, and their other healthcare affiliations.

• Identify any affiliations with providers that have been suspended, revoked, or excluded.

• Discuss risks with counsel.

6. Review Referral Sources and Marketing

• Make sure the hospice does not pay for referrals or use recruiters.

• Review relationships with physicians, facilities, and community organizations.

• Confirm that marketing materials and practices meet federal and state rules.

7. Prepare for Site Visits and Inspections

• Keep the office open and staffed during posted hours.

• Post required signage.

• Train staff on how to respond to CDPH surveyors and federal site visitors.

• Keep records organized and accessible.

8. Prepare a Suspension and Revocation Response Plan

• Identify California healthcare counsel experienced with CDPH and Medicare matters.

• Prepare document preservation procedures.

• Maintain cash reserves where possible.

• Understand appeal and hearing rights for state license actions and federal enrollment actions.

9. Plan Transactions Carefully

• Consider the state license transfer restrictions, CDPH approval requirements, the federal moratorium, and the 36-month rule before signing any transaction.

• Conduct thorough due diligence on enforcement history and affiliations.

Preparing for Unannounced CDPH Inspections

The new regulations give CDPH authority to conduct unannounced inspections. Hospices should:

• Keep licensing documents, policies, and staffing records organized and accessible.

• Keep personnel files complete, including licenses, background checks, and competency records.

• Make sure the administrator or designee is available during business hours.

• Train staff on how to greet surveyors and where to find documents.

• Conduct mock inspections based on the new regulations.

• Track corrective actions from prior surveys.

Preparing for UPIC Records Requests and Suspensions

• Log every UPIC request and calendar deadlines, generally 30 days for records requests.

• Submit complete, organized records and never alter documents.

• Respond to suspension notices with an accurate rebuttal within the stated timeframe, typically 15 days, through counsel.

• Under 42 CFR 405.375, the contractor's determination on the rebuttal is not appealable through the Medicare administrative appeals process, so the rebuttal must be strong.

• Continue billing accurately during any suspension.

Medi-Cal Considerations

Many California hospice patients are dually eligible for Medicare and Medi-Cal. The state has described coordination among CDPH, the Department of Health Care Services, and the California Department of Justice to suspend Medi-Cal payments and revoke licenses when fraud is suspected. Hospices should:

• Keep Medi-Cal enrollment information consistent with CDPH and Medicare records.

• Respond promptly to Medi-Cal requests.

• Understand Medi-Cal payment suspension and appeal processes.

Staff and Governance

• Make sure the governing body is informed about state and federal requirements and enforcement risks.

• Assign responsibility for state licensing compliance and federal Medicare compliance, with coordination between them.

• Provide regular training on the new state regulations and federal documentation requirements.

• Report compliance results to leadership and the governing body.

Common Mistakes

• Assuming existing licenses are unaffected by the new regulations.

• Serving counties without documented CDPH approval.

• Allowing state and federal records to drift out of alignment.

• Using telehealth for face-to-face encounters while under enhanced oversight.

• Overlooking affiliations with suspended or revoked providers.

• Ignoring live discharge and long-stay patterns.

• Waiting until a suspension or inspection to prepare.

Documentation That Satisfies Both Regulators

Many documentation practices support both state and federal compliance:

• Complete, accurate clinical records for every patient.

• Interdisciplinary group meetings and plans of care that reflect each patient's needs.

• Staff credentials and competency records.

• Visit records showing that services were actually provided.

• Clear patient consent and election documentation.

• Accurate records of ownership and management.

A Hypothetical Example

A Los Angeles County hospice that has operated for 12 years reviews its readiness after the June 2026 regulations take effect. A gap analysis finds that it serves two counties, but its CDPH approval documentation for one county is unclear. Its staffing records do not clearly show compliance with new ratio requirements, and its Medicare enrollment lists a former administrator.

The hospice confirms its county approvals with CDPH, updates staffing schedules and documentation, files PECOS updates, and trains staff for unannounced inspections. It also audits its long-stay patients and live discharges, finding that several revocations lacked documentation of the patient's reasons. It retrains staff on revocation requirements and adds interdisciplinary review before every live discharge. When a CDPH surveyor arrives unannounced months later, the hospice provides records promptly and receives no citations.

Admission Practices That Satisfy Both Regulators

Strong admission practices address both state and federal concerns:

• A hospice physician reviews clinical information before every admission.

• The patient and family receive clear explanations of hospice and sign a complete election statement.

• The addendum is provided within five days for elections on or after October 1, 2026.

• Admissions occur only in CDPH-approved counties.

• Referral sources are reviewed for unusual patterns.

• The hospice never pays for referrals or uses recruiters.

Live Discharge and Long-Stay Management

Federal suspensions in 2026 were reported to be related to live discharge rates, and CMS has stated that long stays combined with high live discharge rates may signal inappropriate enrollment. California hospices should:

• Review live discharge rates monthly by type.

• Audit long-stay patients for continued eligibility.

• Require interdisciplinary review before every live discharge.

• Confirm that revocations are the patient's own choice.

• Document clinical reasons for discharges and readmissions.

A California Dual-Compliance Checklist

• Title 22 hospice regulation gap analysis completed.

• Staffing ratios and qualifications documented.

• Written CDPH approval for every county served.

• CDPH, Medicare, and Medi-Cal records aligned.

• Election statements, addenda, certifications, and face-to-face encounters audited.

• Enhanced oversight status confirmed and face-to-face process adjusted.

• Live discharges, revocations, and long stays reviewed.

• Affiliations inventoried and reviewed with counsel.

• Referral and marketing practices reviewed.

• Inspection and site visit readiness trained.

• Counsel identified and response plans in place.

Transactions and Expansion in California

California hospices considering acquisitions, sales, new locations, or new counties face layered restrictions:

• The state licensing moratorium affects new licenses, additional locations, and service area changes.

• State law restricts license transfers for five years from issuance.

• The new regulations require advance CDPH approval for changes of ownership and certain management changes.

• The federal moratorium blocks new Medicare enrollments and certain changes in majority ownership.

• The Medicare 36-month rule may require new enrollment after a change in majority ownership.

• Buyers that accept assignment of a Medicare provider agreement may inherit overpayment liability.

Any transaction should begin with counsel's review of both state and federal requirements and thorough due diligence on enforcement history and affiliations.

Questions California Hospice Leaders Should Ask

• Have we reviewed every requirement in the new Title 22 hospice regulations?

• Do we have written CDPH approval for every county we serve?

• Do our CDPH, Medicare, and Medi-Cal records match?

• Are we subject to federal enhanced oversight, and are our face-to-face encounters in person when required?

• What are our live discharge and long-stay rates?

• Do any owners or managers have affiliations with suspended or revoked providers?

• Are we ready for an unannounced CDPH inspection or federal site visit today?

Looking Ahead to 2027

The state licensing moratorium is expected to end January 1, 2027, and CDPH has described the emergency regulations as a bridge to permanent rules. The Medicare nationwide moratorium may be extended or lifted, and telehealth face-to-face claims reporting begins January 1, 2027. California hospices should watch for permanent CDPH regulations, CMS notices, and any new federal or state enforcement initiatives.

Staying Focused on Patients

California's regulators and federal contractors are trying to separate legitimate hospices from fraudulent ones. Hospices that keep the focus on eligible patients, accurate documentation, and transparent operations make that distinction easy to see.

Key Takeaways

• California hospices face new state licensing regulations and intense federal scrutiny at the same time.

• The state licensing moratorium continues until January 1, 2027.

• CDPH's 2026 regulations apply immediately to existing licensees.

• Federal actions include UPIC suspensions, enhanced oversight, and the nationwide moratorium.

• State and federal actions reinforce each other, so consistent records and strong documentation are essential.

Frequently Asked Questions

When did California's new hospice regulations take effect?

CDPH's emergency regulations at Title 22, California Code of Regulations, sections 74800 through 74908, took effect June 22, 2026.

When does the licensing moratorium end?

Under CDPH guidance on AB 177, the moratorium ends January 1, 2027, or one year after adoption of emergency regulations, whichever is sooner.

Can a hospice expand into a new county?

Summaries of the regulations indicate that each county must be approved in writing by CDPH before a hospice initiates, advertises, or provides services there. Service area changes have also been subject to the moratorium.

Can California hospices use telehealth for face-to-face encounters?

Telehealth is allowed through December 31, 2027 for recertification encounters, but not if the hospice is subject to enhanced oversight or other statutory limits apply.

How do state and federal actions affect each other?

License revocations, Medicare suspensions or revocations, and Medi-Cal suspensions can each lead to action by the other agencies.

Conclusion

California hospices must now comply with demanding new state licensing regulations while facing some of the most intense Medicare scrutiny in the country. The two regimes reinforce each other, and inconsistencies between them create risk. Hospices that conduct a licensing gap analysis, align state and federal records, strengthen Medicare documentation, review live discharges and affiliations, prepare for unannounced inspections and site visits, and have counsel and a response plan ready will be best positioned to continue serving Californians through this period.

How HealthBridge Can Help

HealthBridge is a healthcare management consulting firm that helps California hospices navigate state licensing and federal audit requirements through licensing gap analyses, record alignment reviews, Medicare documentation audits, live discharge and long-stay reviews, inspection readiness, and support for counsel during suspensions and investigations. If your California hospice needs help managing both, please get in touch with us. We will be happy to help you with this topic.

References

• California Department of Public Health. AFL 22-28, Hospice Licensure Moratorium and Related Legislation. https://www.cdph.ca.gov/Programs/CHCQ/LCP/Pages/AFL-22-28.aspx

• California Department of Public Health. Hospice Agency Initial Licensure. https://www.cdph.ca.gov/Programs/CHCQ/LCP/Pages/AppPacket/Hospice-Initial.aspx

• Office of Governor Gavin Newsom. In the Four Years Since Governor Newsom's New Hospice Provider Ban Took Effect, California Has Revoked More Than 280 Licenses (January 27, 2026). https://www.gov.ca.gov/2026/01/27/in-the-four-years-since-governor-newsoms-new-hospice-provider-ban-took-effect-california-has-revoked-more-than-280-licenses/

• California State Auditor. Report 2021-123, California Hospice Licensure and Oversight (March 29, 2022). https://www.auditor.ca.gov/reports/2021-123/

• Centers for Medicare & Medicaid Services. CMS Announces Aggressive Nationwide Crackdown on Fraud with Six-Month Hospice and Home Health Agency Enrollment Moratoria (May 13, 2026). https://www.cms.gov/newsroom/press-releases/cms-announces-aggressive-nationwide-crackdown-fraud-six-month-hospice-home-health-agency-enrollment

• Centers for Medicare & Medicaid Services. Provisional Period of Enhanced Oversight for New Hospices in Arizona, California, Nevada, and Texas (MLN7867599). https://www.cms.gov/files/document/mln7867599-period-enhanced-oversight-new-hospices-arizona-california-nevada-texas.pdf

• Centers for Medicare & Medicaid Services. Home Health and Hospice Nationwide Moratorium Q&As. https://www.cms.gov/files/document/hh-hospice-moratorium-faqs.pdf

• Electronic Code of Federal Regulations. 42 CFR Part 418, Subpart B (including 418.22). https://www.ecfr.gov/current/title-42/chapter-IV/subchapter-B/part-418/subpart-B

• Electronic Code of Federal Regulations. 42 CFR 424.519, Disclosure of Affiliations. https://www.ecfr.gov/current/title-42/chapter-IV/subchapter-B/part-424/subpart-P/section-424.519

• Electronic Code of Federal Regulations. 42 CFR 455.23, Suspension of Payments in Cases of Fraud. https://www.ecfr.gov/current/title-42/chapter-IV/subchapter-C/part-455/subpart-A/section-455.23

• Federal Register. Medicare Program; FY 2027 Hospice Wage Index and Payment Rate Update and Hospice Quality Reporting Program Requirements (August 3, 2026). https://www.federalregister.gov/documents/2026/08/03/2026-15686/medicare-program-fy-2027-hospice-wage-index-and-payment-rate-update-and-hospice-quality-reporting