California Fraud May Go Beyond Hospice
In light of the recent reports about hospice fraud in Los Angeles, and Monday’s announcement that the House Oversight Committee will investigate same, some people may think that Washington is finally coming to grips with Medicare program integrity. Unfortunately, however, hospice may represent the proverbial tip of the fraud iceberg in California. And cracking down on fraud in only one sector of the health care system will encourage it to migrate to other areas.
Consider the annual report released earlier this month by the Medicare Payment Advisory Commission (MedPAC). In addition to outlining concerns about Los Angeles-based fraud in the hospice chapter, MedPAC noted the potential for fraud in an adjacent sector in its chapter on home health agencies (HHAs). Specifically, HHAs within California nearly doubled from 2019 through 2024, at a time when the number of agencies in the other 49 states was declining:
- “The California state auditor’s report on hospice noted that home health agencies were operating in the same areas of Los Angeles County that were identified as having a ‘suspiciously high number of hospice agencies.’ For example, the report highlighted a 22,500-square-foot office building that housed the corporate offices of 112 hospice agencies and 49 HHAs.”
- “The report also flagged irregularities in inspections of HHAs conducted by the California Department of Public Health in Los Angeles County. These inspections revealed issues such as HHA staff being unavailable and patients being admitted without their knowledge or without meeting eligibility requirements for services.”
- “Industry stakeholders have also expressed concern about potential home health fraud in Los Angeles County and have urged CMS to investigate aberrant trends and take appropriate action to address program-integrity issues.”
- “Home health care spending in Los Angeles County has risen alongside rapid HHA growth. In 2024, the county accounted for $1.4 billion—about 9 percent of total FFS home health care expenditures—even though it represents only about 2 percent of FFS Medicare beneficiaries. That year, approximately 16 percent of FFS Medicare beneficiaries in Los Angeles County received home health services—more than double the national average.”
- “The substantial growth in HHAs within an area associated with hospice-related fraud, the higher than-average home health utilization and spending, findings from the California State Auditor and the Department of Public Health, and concerns raised by industry stakeholders all indicate an aberrant pattern of home health care supply and utilization in Los Angeles County. Further investigation may be warranted to determine whether these trends stem from program-integrity issues.”
And while California imposed a moratorium on new hospice licenses in 2022, MedPAC notes that “no moratoriums [on HHA enrollment] are in effect in Los Angeles County or other areas.” Moreover, Medicare provides home health services as a “free” benefit, with no beneficiary cost-sharing imposed — a dynamic that encourages the proliferation of fraudsters.
Welcome as the crackdown on hospice fraud in Los Angeles County is, a piecemeal approach will only encourage crooks to transform their hospice scams into fraudulent HHAs. Investigators at the state and federal levels must investigate ALL potential sources of fraud — and in Los Angeles, that also means examining the questionable explosion in home health spending.