By Ana B. Ibarra, CalMatters
This story was originally published by CalMatters. Sign up for their newsletters.
California has emerged as the epicenter of a sweeping hospice fraud crisis, one that is costing taxpayers hundreds of millions of dollars and putting vulnerable seniors at risk.
Yet years after the state acknowledged the problem, key regulatory fixes remain in limbo while state and federal officials trade blame.
Hospice care, an end of life service typically reserved for people with less than six months to live, has become a target for fraudsters looking to steal taxpayer dollars — with devastating consequences for patients caught in the middle. It has also become rich fodder for government and media investigations.
Last week, Sheila Clark, who leads the California Hospice and Palliative Care Association, became emotional as she told congressional leaders the story of a woman in Southern California who in 2020 suffered a devastating fall in the middle of the night on the way to the bathroom. The woman, a Medicare recipient, could not see; she needed cataract surgery. But scheduling that surgery ran into a hitch: at the time, Clark said, the woman’s records showed her enrolled in hospice – seemingly fraudulently. Unable to recover from the injuries of her fall, the woman died two months later. “That did not need to happen,” Clark said.
That case and others have refocused attention on a problem that advocates say has never gone away – and is again sparking a partisan fight. At the congressional hearing, some Republicans blamed California and Gov. Gavin Newsom for failing to get a handle on it, while some Democrats blamed the Trump administration for not doing enough and pardoning fraudsters.
The Newsom administration says it has not been standing idle. Just this month, California Attorney General Rob Bonta announced charges against 21 suspects who allegedly defrauded the state of $267 million in a major hospice fraud ring. Since 2021, the office has filed 119 hospice-related criminal cases. The U.S. Attorney’s Office also announced separate recent arrests in California.
The California Department of Health has also revoked 280 hospice licenses over the last two years and is reviewing another 300, according to officials. Meanwhile, state regulations meant to limit who can obtain a hospice license were due months ago.
Stuck in the middle of delays and political back-and-forth are Medicare and Medi-Cal beneficiaries. Californians who truly need end-of-life services may be at risk if they sign up with a sham hospice operator who may provide inadequate care or none at all, while others are enrolled in hospice services even though they are not dying and are locked out of services they need. “People lose access to care, they lose access to medications, to their [doctor], elective surgery,” Clark said. “It’s disheartening.”
Stricter hospice rules are still pending
In 2022, the California State Auditor found that the state’s “weak controls have created the opportunity for large-scale fraud and abuse.” Among other red flags, auditors noted a clustering of hospices in single buildings, particularly in Los Angeles County, and high rates of living patients discharged from hospice.
The audit found that Los Angeles County saw a 1,500% increase in hospice agencies over a decade, along with indicators of large-scale billing fraud and evidence that thieves stole medical personnel’s identities to obtain licenses.
That same year, the state placed a moratorium on new hospice licenses, which is set to expire next year. Meanwhile, emergency hospice regulations intended to tighten who can obtain a hospice license are again delayed. The state Department of Public Health says it’s revising draft emergency regulations based on feedback from industry representatives and consumer groups.
“Once these regulations are in place they will include stricter standards for who can own or run a hospice, nurse-to-patient ratios, limits on operators who try to oversee multiple agencies at once, minimum staffing requirements, and more thorough screening of potential licensees before a license can be approved,” said Mark Smith, a department spokesperson.
Licensing is only the first step – the federal Centers for Medicaid and Medicare Services must certify operators before they can start billing. Clark and Isidro say better fraud prevention would demand more transparency and better data sharing between state and federal government.
Fraud can happen in a number of ways
Psychotherapist Lynn Ianni still does not know how fraudsters got a hold of her information. Two summers ago she was finishing her last physical therapy session for a shoulder injury when Medicare denied her claim: Records showed she was enrolled in hospice care.
Ianni, who also testified in last week’s hearing, assumed it was a clerical error – she had hurt herself playing pickleball, but led an active healthy life. Medicare pointed her to a hospice in Arcadia where she was supposedly enrolled. The address was in a strip mall; she had never heard of the doctor. She spent hours on the phone, over months, trying to clear up the problem. Medicare refused to cover care for her shoulder even as she paid her premiums.
“It was over six months that I had no coverage or no services,” Ianni said. “I was really terrified because I couldn’t figure out how to solve it, and I had no resolution in sight.”
Fraud can take different forms. It can be providers knowingly overbilling Medicare and Medi-Cal or submitting false claims — but it can also be elaborate cases in which bad actors create sham agencies, steal medical information and bill for services they never provide or that are not medically necessary.
These scams sprawl past hospice care. The U.S. Centers for Medicare and Medicaid Services and the Office of Inspector General have also raised concerns over fraud in home health services, skin substitutes, and durable medical equipment such as wheelchairs and walkers or oxygen tanks. Just Tuesday, the feds accused a Pasadena clinic of improperly charging Medicare more than $34 million for skin grafts and wound care services it didn’t provide.
Scammers have many tricks. They make robocalls or approach people at grocery stores, after church, or door-to-door, offering gift cards, meals, or free health services in exchange for forms that ask for personal and medical information.
“They don’t realize that their Medicare number is being stolen, and next thing you know, they’re being entered into hospice,” said Catherina Isidro, director of the California Senior Medicare Patrol, a group that helps people report and navigate Medicare fraud.
Health workers have also filed whistleblower complaints reporting that colleagues share patient information with fraudsters in exchange for kickbacks, Isidro said. That kind of fraud is harder to guard against because medical providers are supposed to be people of trust.
Clark said fraudsters have made a business of stealing Medicare identification numbers from the dark web and then selling them to hospices or home health agencies. “They literally call themselves brokers,” Clark said. “‘Here’s 10 beneficiary numbers. How much will you give me every month that you’re able to bill?’”
Safeguarding your medical information is key
Families who truly need hospice care should not shy away from seeking the benefit over fear of fraud, said Mollie Gurian, vice president of government affairs at Leading Age, a group that represents providers of aging services. People can use the Medicare Care Compare site’s quality scores and phone directory to start looking for legitimate hospice providers. Legitimate providers should pick up the phone and be able to answer questions about their services, Gurian said.
“[Hospice] is a great benefit, and the fact that it’s been utilized to commit fraud in this way is very distressing.”
For everyone else, advocates advise guarding Medicare and Medicaid identification numbers like a Social Security number – never sharing the number over the phone or in exchange for freebies. People should also read Medicare summary notices and explanation of benefits documents to ensure everything looks accurate.
“It’s really critical that older adults, you know, Medicare beneficiaries, their caregivers or their family members, whoever is taking care of them, that they be very vigilant,” Isidro said.
Those who suspect fraud should call their state’s Senior Medicare Patrol, a federally-funded helpline that can help people disenroll from services they did not request, often within a day or two.
That hotline helped clear up Ianni’s Medicare account and restarted her benefits. Six months after first learning she was fraudulently enrolled in hospice, Ianni got a new Medicare card in the mail, with no explanation for what had happened. Just in time, too, she said: two weeks later, she broke a finger. “I was so relieved.”
Supported by the California Health Care Foundation (CHCF), which works to ensure that people have access to the care they need, when they need it, at a price they can afford. Visit www.chcf.org to learn more.
This article was originally published on CalMatters and was republished under the Creative Commons Attribution-NonCommercial-NoDerivatives license.