Lax oversight, fraud in California’s hospice system

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LOS ANGELES (AP) — California’s lax oversight of its palliative care system has led to widespread fraud within the rapidly growing end-of-life care industry, potentially putting patients at risk in their final days. , according to a state audit released Tuesday.

The report concludes that the California Department of Public Health is not rigorous enough in reviewing hospices that apply for state licenses and then fails to adequately follow up on investigations into suspected fraud, wrote Michael Tilden, the acting state auditor, in a letter to Governor Gavin Newsom and California lawmakers.

“Without regulations to guide its oversight, its initial visits to licensing sites and ongoing oversight do not adequately protect patient care or prevent fraud. Its investigation of complaints involving hospice care agencies is often incomplete and slow, increasing the risk that patients will receive substandard care or that palliative care agencies may engage in fraudulent activity,” Tilden wrote.

In addition, Public Health and the California Department of Health Services do not coordinate to comprehensively assess fraud risks, according to the audit.

The number of hospices in Los Angeles County has increased since 2010, according to the report, without there being a commensurate need in the county for end-of-life care. Some patients were discharged after receiving palliative care services for long periods, clear indications of potential fraud, the audit found.

Auditors found “excessive geographic clustering” of facilities, including a single building in the Van Nuys neighborhood of Los Angeles that had more than 150 licensed palliative care and home health agencies – “a number that exceeds the capacity apparent physics of the structure,” the report said.

Los Angeles County has 818 hospice agencies, 45 times more than in the states of New York or Florida combined, officials said.


In the past, the majority of palliative care services were provided by non-profit organizations. The recent surge of growth is almost exclusively in for-profit companies that charge for state and federal programs, auditors said.

“These indicators strongly suggest that a network or networks of individual perpetrators in Los Angeles County are engaging in a large, organized effort to defraud Medicare and Medi-Cal hospice care programs,” Tilden wrote. “Such fraud endangers the extremely vulnerable population of hospice patients.”

Auditors found indicators of fraudulent billing to Medicare and Medi-Cal for services rendered to ineligible patients or services not provided at all. This type of fraud can be lucrative, according to auditors. For example, a hospice agency that bills 20 patients at the most current rate may collect about $122,000 per month.

Last month, 16 people were charged in San Bernardino County with defrauding the California Medi-Cal and Federal Medicare systems of more than $4.2 million by enrolling people who were not terminally ill in palliative care. Many patients told investigators they were enrolled in hospice care without knowing or understanding what hospice is, prosecutors said.

Auditors noted that public health approved licenses for some for-profit facilities even after learning of potential issues, essentially allowing “potentially fraudulent operators to continue operating, putting patients at serious risk of not receiving appropriate care”.

The auditor recommended that the state legislature require agencies to create a task force to investigate and prosecute fraud and abuse by hospice providers. Lawmakers should also revise state law to allow regulators to fine hospice care agencies that fail to comply with licensing requirements, according to the report.

Tomás J. Aragón, director of the Department of Public Health, said his agency agreed with the majority of the audit’s findings.

“Public Health will continue its efforts to develop regulations for hospice agencies and facilities and if the Legislature gives Public Health authority to enact emergency regulations, we will transform our efforts to fulfill that mandate,” said writes Aragón in a detailed letter to Tilden.

A moratorium on new licenses for hospice care agencies went into effect January 1 and will remain for 365 days after the audit report’s release date, “to spur attention and action to improve what many stakeholders, including palliative care providers themselves, agree that this is a regulatory system in need of reform,” the auditors wrote.


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