Oregon lawmakers on Monday advanced a bill designed to strengthen oversight of hospice providers and prevent fraudulent operators from entering the state.
Senate Bill 1575 would temporarily pause most new hospice licenses while the state updates its licensing rules — a process the agency would have two years to complete. The Senate Committee on Health Care voted 3-2 to send it to the full Senate.
Hospice care provides medical, emotional and spiritual support to people nearing the end of life, most often in their homes or long-term care facilities. It is largely funded through Medicare and plays a crucial role for families navigating terminal illness.
As of late January, the Oregon Health Authority listed about 75 licensed hospice providers operating statewide.
State Sen. Deb Patterson, D-Salem, the bill’s chief sponsor, said the bill is meant to get ahead of problems that have surfaced elsewhere.
The Centers for Medicare & Medicaid Services, for example, has expanded its enhanced oversight program — originally focused on California, Arizona, Nevada and Texas — to include Georgia and Ohio, reflecting rising concerns about hospice fraud. Senior leaders of the federal agency recently visited states with high levels of documented fraud.
Oregon lawmakers and hospice leaders say the state hasn’t seen the same large-scale fraud schemes uncovered in California and other states, but they want to prevent that from happening before it starts.
Patterson said lawmakers brought the proposal back in the short session because it nearly passed last year but needed more time for input.
“We wanted to be sure every voice was heard,” Patterson said. “Hopefully we will help to protect the dying and make sure that they get quality care through hospice.”
The bill would prohibit the Oregon Health Authority from issuing new hospice licenses for up to two years. During that time, the agency would be required to develop tougher screening standards aimed at ensuring hospice operators are financially stable, well-run and qualified to care for dying patients.
SB 1575 would require new hospice applicants to disclose license suspensions, fraud findings and other negative performance history in Oregon and other states. That scrutiny would extend to anyone with at least a 5% ownership stake, as well as the hospice’s top manager and supervising doctor.
The bill also would require the Oregon Health Authority to conduct criminal background checks on administrators, medical directors and those who own at least a 5% stake in the hospice. The agency could deny a license based on the severity or frequency of past violations or if an applicant knowingly provides false information. It could also suspend or revoke a license for false statements.
Under the proposal, hospice providers that have been banned from Medicare or Medicaid, or found liable for health care fraud or abuse, would be prohibited from owning a hospice in Oregon.
Lawmakers carved out exceptions to the temporary pause on new licenses. For example, state regulators could still approve licenses for existing hospices expanding into new service areas, ownership changes, health facilities adding hospice services for their own patients and providers serving underserved communities.
Supporters of SB 1575 said the changes are needed as the hospice industry has expanded rapidly nationwide in recent years, fueled in part by corporate and private equity investment. In several states, regulators have uncovered cases of fraud and patient neglect.
In California, state and federal investigators found some for-profit hospices enrolling people without their knowledge, stealing identities, submitting fake Medicare claims and then neglecting patients in their final months of life. The state has revoked the licenses of more than 280 hospices over the past two years.
Federal officials have also flagged cases of hospices listing fake business addresses and signing up patients who were not terminally ill.
In 2023, the Centers for Medicare & Medicaid Services launched a claims review process for new hospices in Arizona, California, Nevada and Texas after identifying patterns of fraud. The federal agency described so-called “churn and burn” schemes in which a hospice opens, bills Medicare, then shuts down once audited or capped — only to reopen under a new billing number and start billing again.
Iria Nishimura, CEO of Willamette Vital Health, a licensed hospice provider with one location in Salem, testified during a public hearing earlier this month that hospice fraud and abuse are real, growing problems that don’t just happen elsewhere. She gave examples of how fraud and abuse are happening in Oregon.
Nishimura described a patient who was denied cataract surgery after discovering she had been enrolled in hospice without her knowledge because her Medicare number had been stolen. In another case, she said, a dying patient arrived at her hospice after going more than four weeks without a visit from a previous provider.
“This is not poor quality care,” she said. “This is fraudulent hospice care.”
Andrea Meyer, director of government relations for AARP Oregon, testified that the state’s demographics and aging population also make the issue urgent. She said older adults now outnumber children in Oregon, and more than a quarter of residents are 65 or older.
“Families enter hospice believing they are choosing a compassionate, reputable organization and they may have little time or ability to do due diligence,” Meyer said. “The state plays a critical role to ensure that the services they receive match what’s in the brochure.”
Critics, however, argued that the bill could slow licensing and limit access to hospice care, particularly in rural communities.
Jessica Adams, who testified on behalf of Providence Health & Services, said the organization had concerns about how ownership changes would be handled. Providence operates two licensed hospices in Oregon.
Providence supports stronger oversight, she said, but wants to ensure that requiring a new license after a change in ownership is clear and not overly burdensome. Too much red tape, she said, could discourage ownership transfers that help preserve services in local communities.
“We want to maintain the robust and high-quality providers that we have in this community today,” Adams said, while preventing “folks coming in from the outside that are going to act inappropriately.”
Sen. Cedric Hayden, R-Fall Creek, voted against the bill. He said he supports stronger oversight but worries the bill could slow licensing and limit expansion in smaller cities and counties. He added he may reconsider his vote on the Senate floor.
Sen. Diane Linthicum, R-Klamath Falls, also voted no, saying she was uncomfortable adding more regulations during a short session. She said one hospice provider in her district has already closed because it could not keep up with regulatory and financial pressures.
Lawmakers removed earlier requirements for detailed financial reviews, narrowing the bill to focus on ownership transparency, background checks and compliance history.
They also carved out exceptions to the temporary licensing pause for providers expanding into underserved, including rural, areas.
If passed, SB 1575 would take effect immediately.