A scathing March 29, 2022 report by Michael Tilden, Acting California State Auditor, charged that the California Department of Public Health “essentially enabled hospice agency operators who are possibly fraudulent to continue functioning, putting patients at serious risk of not receiving appropriate care.”
The long-awaited report opens with a letter to the governor and legislative leaders that states: “Indicators strongly suggest that a network or networks of individual perpetrators in Los Angeles County are engaging in a large and organized effort to defraud the Medicare and Medi-Cal hospice programs. Such fraud places at risk the extremely vulnerable population of hospice patients.”
It describes explosive growth of for-profit hospice agencies in Los Angeles County, fueled by fraudulent providers. The County has 1,841 hospice agencies, a 1,589 percent increase since 2010, and a flood of thousands more hospice applications. Astonishingly, a single office building in Van Nuys has more hospice agencies than the entire states of New York and Florida combined. Van Nuys has 210 active hospice agencies located within 1 mile of each other.
The magnitude and brazen nature of the apparent fraud are staggering. In 2019, hospice agencies in Los Angeles County likely overbilled Medicare by $105 million and overbilled Medi-Cal millions more. Trademark signs of hospice fraud were rampant: high rates of patients discharged alive; long durations of hospice services; employees working for a large number of hospice agencies; and rapid growth and excessive clustering of hospice agencies.
Auditors found that many hospice agencies may be using stolen identities of medical professionals. One medical director was identified as serving more than 30 hospice agencies. A single person is the administrator for 27 different hospice agencies. Hospice licenses are being sold online, advertised as “brand new, never billed.”
Given the evidence, the report concludes: “we are extremely concerned that a network or networks of individuals in Los Angeles County is setting up numerous hospice agencies and applying for licenses to fraudulently bill Medicare and Medi-Cal for services that are substandard or nonexistent – similar to past Medicare fraud schemes. We believe Public Health’s ineffective licensing process … is enabling this fraud.”
While the findings are alarming, none of them are news to the state officials who handed out licenses to hundreds of likely fake hospices. The audit was prompted by an exceptional series of articles on hospice fraud and abuse by the Los Angeles Times in 2020 that mirrors the state auditor’s findings. Yet the California Department of Public Health, which licenses hospice agencies, did nothing to stop it.
A chapter of the report details systemic failures by the Department of Public Health, beginning with its three-decade long failure to issue key regulations for hospice licensing. In some cases, it granted licenses to hospices after becoming aware of suspected fraud. Despite the widespread fraud and abuse, Public Health has not suspended a single hospice license and only once revoked a hospice license since 2015. The state auditor determined that its “perfunctory” licensing process does little to identify and deter unqualified or fraudulent applicants. Read the Los Angeles Times article on the audit findings