Sixth Circuit Clarifies Medicare Safe Harbor for Hospice Providers in Landmark Coverage Decision

Key Takeaways

• The Sixth Circuit clarified that hospice providers may qualify for Medicare’s statutory safe harbor when they reasonably and in good faith interpret Medicare coverage requirements, even if coverage is later denied.
• The decision rejects a blanket rule that knowledge of a LCD automatically defeats safe harbor protection under 42 U.S.C. § 1395pp, requiring individualized reasonableness analysis instead.
• Hospice providers should review documentation, eligibility determinations, and Medicare appeal strategies in light of this precedent, which may significantly affect future overpayment disputes and recoupment actions.

On July 27, 2026, the United States Court of Appeals for the Sixth Circuit issued a published opinion in In Home Health, LLC v. Robert F. Kennedy, Jr., No. 25-3542, vacating a district court judgment and holding that an administrative law judge applied the wrong legal standard when denying a hospice provider’s entitlement to the Medicare safe harbor under 42 U.S.C. § 1395pp.  The decision is a significant victory for hospice providers across the country, clarifying that mere awareness of a Medicare coverage standard does not automatically disqualify a provider from safe harbor protection when it has acted reasonably and in good faith.

AGG represented the National Alliance for Care at Home and the American Academy of Hospice and Palliative Medicine, Inc. as “friends of the court” in support of In Home Health’s position on appeal. Bill Dombi, AGG Healthcare senior counsel and former president of the National Association for Home Care and Hospice (“NAHC”), and Jason Bring, AGG Healthcare Litigation Team chair and former member of NAHC’s board of directors, submitted an amicus brief urging the Sixth Circuit to adopt the reasonableness standard that the court ultimately embraced. Bill’s decades of leadership in the home health and hospice industry and deep expertise in Medicare reimbursement policy made him a leading voice in advancing this argument, and his identification with the hospice community lent significant weight to the amici’s position.

Medicare Hospice Coverage Rules and the Statutory Safe Harbor

Medicare covers hospice services that are “reasonable and necessary for the palliation or management of terminal illness.” An individual qualifies as “terminally ill” if they have a life expectancy of six months or less, assuming the illness runs its normal course. Because predicting life expectancy is inherently uncertain, Medicare does not cap the duration of hospice enrollment; instead, so long as a patient continues to have a prognosis of six months or less, they may remain in hospice indefinitely.

To assess whether patients meet the terminal illness standard, Medicare contractors rely on Local Coverage Determinations (“LCDs”).  LCD 33393, the determination at issue here, sets forth clinical diagnoses, statuses, signs, symptoms, and characteristics demonstrating terminal illness. If, upon post-payment review, a contractor concludes that services were not reasonable and necessary, it may seek to recoup the payment.

Critically, however, Medicare contains a statutory safe harbor. Under 42 U.S.C. § 1395pp, a provider need not reimburse an overpayment if it “did not know, and could not reasonably have been expected to know, that payment would not be made” for the services at issue. As then-Judge Gorsuch characterized it in the Tenth Circuit, this provision is “[a] sort of good faith affirmative defense” reflecting Congress’s “recognition of the complexity of the Medicare maze.”

How the Medicare Safe Harbor Dispute Reached the Sixth Circuit

In Home Health, a Medicare-certified hospice provider, faced recoupment demands on 252 of 374 claims reviewed, amounting to nearly $1 million in alleged overpayments. After navigating multiple levels of administrative appeals, the Administrative Law Judge (“ALJ”) upheld the denial of 104 claims for four patients and concluded that In Home could not benefit from the safe harbor because it should have had “knowledge of the billing and practice information contained in the appropriate CMS notices . . . as well as the standards for sufficient documentation of services.”

The Medicare Appeals Council did not act within 90 days, and In Home appealed to federal district court, which affirmed the ALJ. In Home then timely appealed to the Sixth Circuit.

The Sixth Circuit’s Holding

Coverage Determination Affirmed

On the first issue — whether substantial evidence supported the ALJ’s coverage denials — the court agreed with the government. The panel found that the ALJ conducted a “thorough, reasoned assessment of the record,” examining face-to-face encounter notes, recertification evaluations, nursing visit notes, and interdisciplinary team care plans for each patient. The court emphasized that it could not reweigh conflicting evidence or substitute its judgment for the ALJ’s reasoned determination.

Safe Harbor Standard Vacated and Remanded

On the safe harbor issue, the central question on which our amicus brief focused, the Sixth Circuit sided squarely with our position. The court held that the ALJ applied the wrong legal standard by effectively reading the safe harbor “right out of the statute.”

The ALJ’s error was treating In Home’s mere awareness of LCD 33393 as a “bright-line rule with only one reasonable interpretation” for these patients. Under the ALJ’s reasoning, “all providers are imputed with knowledge of the relevant notices and standards, and that knowledge alone is sufficient to say they should have known Medicare excluded their claims.” This meant “no provider could ever qualify for the safe harbor irrespective of how vague or ambiguous the Medicare notice and standards are as applied to their claims nor how reasonable the providers’ view that Medicare would cover them.”

The Sixth Circuit rejected this approach and articulated the proper standard: an ALJ must consider whether a provider could reasonably have interpreted the relevant notices or local standards of practice as covering each denied claim. The court held:

• If a provider is on “clear notice” that Medicare would not cover a claim, the safe harbor does not apply.
• Even absent clear notice, the safe harbor does not apply if the provider’s interpretation of the relevant notice is unreasonable.
• But if a provider “reasonably — albeit incorrectly — interpreted the Medicare notices and standards as covering a patient’s claim, then the safe harbor saves them from liability.”

The court highlighted internal inconsistencies in the ALJ’s own reasoning that underscored the LCD’s indeterminacy. For example, the ALJ relied on a 10% decline in Karnofsky Performance Status (“KPS”) score to approve coverage for Beneficiary 3, yet Beneficiary 1 exhibited the same decline and the ALJ did not even consider whether In Home’s belief in coverage was reasonable.  The court also noted that LCD 33393 is a “multi-factor, fact intensive standard” that “allows for multiple reasonable applications in some instances.”

The government pointed to nothing in the patients’ records that should have alerted In Home, at the time of treatment, that its determination of terminal illness was unreasonable.

Implications for Hospice Providers

This decision is the first published Sixth Circuit opinion articulating the legal standard for the Medicare safe harbor as applied to hospice providers, and it establishes critical precedent:

1. Knowledge alone is not disqualifying. A hospice provider’s awareness of an LCD or Medicare notice does not, standing alone, defeat the safe harbor. The inquiry is whether the provider reasonably interpreted the standard as covering its claims.
2. Multi-factor standards allow reasonable disagreement. Where an LCD, like LCD 33393, employs open-ended, multi-factor criteria without precise metrics, providers acting in good faith may reach different conclusions. A reasonable but incorrect interpretation still triggers safe harbor protection.
3. ALJs must conduct individualized reasonableness analysis. On remand, and going forward, ALJs must evaluate the reasonableness of the provider’s interpretation on a claim-by-claim basis rather than relying on a blanket presumption of knowledge.

AGG’s Role in the Sixth Circuit Appeal

AGG was privileged to represent amici curiae in this appeal. Bill Dombi, whose tenure as president of NAHC made him one of the most recognized advocates in the home health and hospice space, and Jason Bring, who served on NAHC’s board of directors, submitted briefing that urged the Sixth Circuit to adopt the reasonableness framework the court ultimately embraced. This outcome reflects our firm’s deep commitment to the hospice industry and our ability to shape national policy on issues critical to providers and the patients they serve.

For questions about how this decision may affect your hospice operations or Medicare reimbursement strategy, please contact AGG Healthcare attorneys Bill Dombi and Jason Bring.