California’s hospice fraud crisis is booming.

By Sheila Clark, especially for CalMatters

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Walking down Victory Boulevard in Los Angeles, you can’t throw a rock without hitting a hospice provider. It’s not because there’s a surge in patients in Los Angeles. That’s because fraudsters have realized that a Medicare ID is more valuable than a stolen credit card.

Eight individuals were recently arrested in connection with $50 million in hospice and skilled home health care fraud in the greater Los Angeles County area. This problem is not new. California auditors previously found that hospices, including potentially illegitimate ones, overpaid Medicare by $105 million in one year in this region.

When investigators and auditors show up at many of these newly licensed providers, they find vacant offices. They found dozens of hospices supposedly housed in one building. They find paper companies without real clinical staff.

Now, the temporary moratorium to prevent the spread of fraud will expire next year while lawmakers finalize emergency licensing regulations to prevent the floodgates from being reopened to fraud.

By fraudulently enrolling elderly people in hospice care unknowingly or fraudulently, fraudsters can bill Medicare and Medi-Calcollecting tens of thousands of dollars for each patient.

But the issue is much deeper. When patients are enrolled in hospice without their knowledge or consent, they are cut off from treatment that could prolong or improve their lives.

Scammers too disproportionately targeting immigrant adults and communities of color in Los Angeles because language barriers and unfamiliarity with Medicare make them less likely to realize or report that they have been fraudulently enrolled.

The scale of this exploitation calls for urgent action. Fraud hurts seniors and taxpayers. It also harms nurses, spiritual and bereavement counselors, aides, social workers, physicians, and all those who provide high-quality hospice care to patients and their families when they need it most.

In 2022, California suspended new hospice license applications because a large number showed signs of potential fraud. Of the 2,605 applications for hospice licenses at that time, 93% were based in Los Angeles and Southern California, and 72% of the applications involved shared addresses. Just one address in Los Angeles was linked to 191 different applications from alleged hospice providers.

California’s moratorium was the right decision. It stopped thousands of potentially fraudulent providers from entering the market and gave the state time to develop emergency licensing regulations that tie new hospice approvals to demonstrated community need. These regulations would make it harder for bad actors to get licensed and bill Medicare, harder to hide behind complex ownership structures, and harder to enroll vulnerable seniors in hospice care they neither need nor want.

The problem is that these emergency provisions have not yet been finalized and the moratorium is about to expire. The emergency provisions are key measures to prevent more fraudsters, to help authorities properly root out fraud and to prevent the same type of abuse from continuing.

Fraud affects red and blue states alike, and this issue has champions on both sides of the aisle. Governor Gavin Newsom and the California Legislature must act quickly to finalize the emergency licensing provisions so that we do not reopen the door to the same conditions that allowed this crisis to begin in the first place.

Anyone who has had a family member experience hospice care deeply understands why protecting them is so important.

Hospice provides clarity, support, peace and dignity in the final months, days and moments of so many people. We cannot allow fraudsters to exploit this essential care and leave the elderly and their families to suffer.

This article was originally published on CalMatters and is republished under Creative Commons Attribution-NonCommercial-No Derivatives license.