Waste, Fraud, & Mismanagement

Massive Hospice Fraud Suspected in Los Angeles, Auditor Says

Fraud Stamp 01

“The state’s weak oversight of hospice agencies has created opportunities for large-scale fraud and abuse,” and the evidence “strongly suggests” that such fraud is occurring in Los Angeles County, the state auditor reported March 29.

At the direction of the Joint Legislative Audit Committee, the auditor reviewed the state’s licensure and oversight of hospice agencies, which typically offer palliative end-of-life care to individuals with medical diagnoses of fewer than six months to live.

The fraud indicators that the auditor found in Los Angeles County include:

  • “A rapid increase in the number of hospice agencies with no clear correlation to increased need.”
  • “Excessive geographic clustering of hospices with sometimes dozens of separately licensed agencies located in the same building.”
  • “Unusually long durations of hospice services provided to individual patients.”
  • “Abnormally high rates of still-living patients discharged from hospice care.”
  • “Hospice agencies using possibly stolen identities of medical personnel.”

“These 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,” the auditor reported. “Such fraud places at risk the extremely vulnerable population of hospice patients. The California Department of Public Health’s inadequate performance of its licensing and investigative functions has enabled this suspected fraud. Without regulations to guide its oversight, its initial licensing site visits and ongoing monitoring do not adequately safeguard patient care or prevent fraud. Its investigation of complaints involving hospice agencies is often incomplete and slow, which increases the risk that patients may receive substandard care or that hospice agencies may engage in fraudulent activity. Public Health has not sought statutory enforcement measures to address problems that it identifies through its oversight, and Public Health and the California Department of Health Care Services do not coordinate with each other to comprehensively assess fraud risks.”