California Gov. Gavin Newsom (D) has provided an update on how the state is tackling fraudulent activity in the hospice space amid rising federal concerns.
More than 280 licenses have been revoked among new hospice operators entering the state during the last two years, the governor reported on Tuesday.
Despite the progress, state regulators and watchdog agencies have faced an onslaught of increased scrutiny from the federal government and agencies such as the U.S. Centers for Medicare & Medicaid Services (CMS), Newsom indicated. CMS Administrator Dr. Mehmet Oz and other agency officials visited hospices in California and Nevada earlier this month, pledging greater efforts to combat fraud.
“It’s rich to see the Trump administration suddenly talking tough on hospice fraud after pulling back federal oversight just last year,” Newsom said in the report. “California didn’t wait — we’ve identified and cracked down on hospice fraud for years, taking real action to protect patients and taxpayers.”
The ‘Golden State’ steps up
California is among the fraud hotspots that began to emerge in 2021, joined by Arizona, Nevada and Texas. Georgia and Ohio were also recently identified as areas of concern.
Throngs of new fraudulent operators have entered these states, often enrolling Medicare beneficiaries in hospice care without their knowledge or without providing services. In some cases, the fraud schemes have involved illegal kickbacks, potentially billions of misspent Medicare dollars and a practice known as “license flipping,” in which new operators sell their licenses soon after obtaining them before regulators can act. Fraudsters have faced prison sentences and millions in fines for their alleged involvement.
California is the only one of these states to have taken substantive action to curb fraud. A moratorium has been implemented on hospice licensing in the state, except when a market has a “demonstrated need” for additional providers.
A hospice fraud task force has also been developed. It includes the California Department of Public Health (CDPH) and representation from the California Health & Human Services Agency (CalHHS), Department of Health Care Services (DHCS), California Department of Social Services (DSS) and California Department of Justice’s Division of Medi-Cal Fraud and Elder Abuse (DMFEA).
Investigations by the DMFEA have resulted in hundreds of prosecutions since 2019, according to the governor’s report. The CDPH has identified roughly 300 hospices suspected of malfeasance, which are currently being evaluated for revocation.
CMS and the U.S. Department of Justice (DOJ) in January announced that they would aggressively ramp up efforts to investigate hospice fraud. The initiative is dedicated to educating the public and providing clear, accessible reporting resources for patients and their families impacted by hospice fraud, according to California Attorney General Rob Bonta.
The California DOJ has filed 24 civil fraud cases, investigated 101 criminal enterprises and 284 criminal defendants since Bonta took office, the governor’s report indicated. To date, 109 individuals have been charged with hospice-related criminal offenses.
“Our message is simple: hospice care must be rooted in compassion, not corruption,” Bonta said in the governor’s report. “This effort builds on our longstanding commitment to protecting patients and empowering families with the knowledge they need to recognize and report abuse. Hospice fraud preys on people at their most vulnerable in our communities. These practices don’t just waste public dollars, they rob families of dignity, peace and confidence at one of life’s most critical moments.”
California is in the process of adopting temporary emergency regulations that could become permanent, according to the governor’s report. The increased program integrity oversight efforts include initiatives such as:
Establishing educational and experience requirements for key hospice leadership personnel
Establishing numerical limits for the personnel management on their involvement with hospice agencies
Reviewing the qualifications of potential licensees before they begin operating a hospice
Establishing licensure standards for geographic service area and unmet need requirements
Establishing a nurse-to-patient ratio for hospices
Recent federal fraud backlash
Despite the statewide moratorium, a ProPublica 2024 report found that new hospices were still cropping up in California and receiving Medicare certification. In one instance, 15 new hospices received Medicare certification, all operating from the same two-story building in Los Angeles, according to a ProPublica.
Roughly 18% of the nation’s overall home health and hospice Medicare billing activity occurs among operators in Los Angeles County, California, according to Oz.
CMS and the U.S. Department of Health & Human Services (HHS) on Tuesday inked a letter to Gov. Newsom seeking detailed information regarding program integrity, eligibility verification and provider oversight within California’s state funding Medi-Cal program.
In the letter, which Oz announced in a social media post, the two agencies requested that the state provide a comprehensive program integrity action plan within the next three weeks. The plan should include written responses and supporting documentation related to how the state addresses fraud, waste, abuse and improper payments.
Through this plan, CMS and HHS are requesting information such as how the California’s department of health care services establishes thresholds of fraud recovery amounts and how fraud case referrals are received and addressed, among other issues.
CMS has identified more than $1.6 billion in recouped federal funds from the Medi-Cal program, which represents 88% of recovered Medicaid funding across seven states and in Washington D.C., the agency indicated in the letter.
“I’ve instructed Governor Newsom within the next three weeks a comprehensive action plan to address major fraud in their health care system,” Oz said in a recent social media post. “[Los Angeles (LA)] county’s corrupt practices are hurting innocent seniors outside of southern California. I’m hearing horror stories from seniors duped by these fraudsters because California is not stopping these criminals. Governor Newsom, the clock is ticking on the deadline for your comprehensive program integrity action plan.”
Oz recently visited the Van Nuys neighborhood in Los Angeles, which is a diverse, densely populated urban area. Fraudulent activity is occurring among 42 hospices within a four-block region in the area, according to Oz. He alleged in a recent YouTube video that many of the hospices were operated by suspected criminals from Russia and Armenia.
In the video, Oz referred to one case involving a years-long Medicare billing fraud and money laundering scheme that bilked nearly $16 million through sham hospice companies in California. Two individuals received prison sentences for their alleged involvement, who were identified by the DOJ among a total of five “foreign nationals” operating the companies and submitting false claims for services that were either never provided or medically unnecessary.
“There is lots of action, it seems,” Oz said in a YouTube video posted on Tuesday. “In this four-block area in Los Angeles, there are 42 hospices. So, either there are a lot of people dying here, or you’ve got fraudulent activity that is so good that everyone wants to get in on it. What we have learned is there is roughly $3.5 billion of fraud taking place here in Los Angeles in hospice and home care. It’s run, quite a bit of it, by the Russian-Armenian mafia.”
Six Republican U.S. House of Representatives recently penned a letter to the U.S. Department of Health & Human Services (HHS) Office of Inspector General (OIG) urging stronger program integrity oversight.
The lawmakers are members of the House Energy and Commerce and Ways and Means Committees and included Reps. Brett Guthrie (R-Ky.), Dr. John Joyce (R-Pa.), Morgan Griffith (R-Va.), Jason Smith (R-Mo.), David Schweikert (R-Ariz.) and Vern Buchanan (R-Fla.).
Guthrie and Joyce on Tuesday announced a forthcoming hearing to better understand the common threads in fraud schemes occurring nationwide. Set for Feb. 3, the hearing has been dubbed as “Common Schemes, Real Harm: Examining Fraud in Medicare and Medicaid.”
Greater insight is needed to uncover how taxpayer dollars are being misspent, as well as the impacts on patients, according to Guthrie and Joyce.
“As fraud schemes are being perpetrated across the United States, it’s important we recognize that we cannot preserve our Medicare and Medicaid programs for our most vulnerable if we don’t combat destructive fraud that is draining the system,” Guthrie and Joyce said in a statement. “The goal of this hearing is to understand current trends in fraud schemes targeting Medicare and Medicaid nationwide — how taxpayer dollars are being wasted, how beneficiaries are affected, and how transnational crime organizations are increasingly involved— and explore ways to better prevent and detect fraud.”