Can CMS terminate a hospital’s Medicare agreement over facility issues?

Q: Can CMS terminate a hospital's Medicare agreement over facility issues?

Yes, under 42 CFR 489.53, for failure to meet the Conditions of Participation including physical environment and Life Safety from Fire. Termination is the last resort after notice, opportunity to correct, and lesser remedies (directed correction, payment denial, civil money penalties, temporary management). Providers may appeal under 42 CFR Part 498.

Q: What regulation governs CMS termination of provider agreements?

42 CFR 489.53 — Termination by CMS, with appeals under 42 CFR Part 498.

Medicare provider agreement with gavel; lesser remedy steps — corrective plan, payment symbol, penalty notice — arranged below — Termination is rare because correction usually works — make sure yours does.

Yes — but termination is the last resort, not the first move. Under 42 CFR 489.53, CMS may terminate a hospital’s Medicare provider agreement for failure to meet the Conditions of Participation, including the physical environment and Life Safety from Fire conditions. Before termination, CMS must give notice and an opportunity to correct — the process is designed to produce correction, with a graduated set of lesser remedies tried first.

The remedies short of termination

CMS has a full toolkit before it reaches termination:

Directed plans of correction — CMS dictates what must be fixed and by when
Denial of payment for new admissions — the financial pressure valve
Civil money penalties — per-day fines that accumulate until correction
Temporary management — CMS installs oversight when leadership can’t or won’t correct
Directed in-service training — for systemic competency failures

How termination actually works

When lesser remedies fail — or for Immediate Jeopardy that isn’t promptly removed — CMS issues notice of its intent to terminate. The notice states the reasons and the effective date, and CMS gives concurrent notice to the public. Payment remains available for up to 30 days after the effective date for inpatient hospital services already underway (§489.55). A terminated provider can only get a new agreement when CMS finds the reason for termination has been removed, there’s reasonable assurance it won’t recur, and all prior responsibilities have been fulfilled.

The provider’s rights

Termination isn’t unilateral and final on the spot: providers may appeal under 42 CFR Part 498. And the classic accelerated track — 23-day termination for hospital emergency-department violations posing Immediate Jeopardy under §489.24 — shows how fast things move when patients are in immediate danger. The lesson: treat every plan of correction as binding, because CMS tracks whether you kept your promises.

Termination is rare because correction usually works — make sure yours does.

See what happens when a hospital fails a life safety survey and continuous compliance monitoring.

FAQ

What regulation governs CMS termination of provider agreements?
42 CFR 489.53 — Termination by CMS. Appeals go through 42 CFR Part 498.

Does CMS have to warn a hospital before terminating?
Yes — notice and opportunity to correct are required, except on the accelerated Immediate Jeopardy track where the timeline compresses.

Can a terminated hospital get Medicare back?
Only when CMS finds the cause removed, with reasonable assurance against recurrence and all prior obligations fulfilled.