California has a hospice problem. More specifically, it has too many hospices, which has raised a red flag for state and federal regulators, lawmakers and the hospice community at large.
“It’s a real concern,” Ben Marcantonio, interim president and CEO of the National Hospice and Palliative Care Organization, told McKnight’s Home Care Daily Pulse recently. “It’s even hard to understand how it got to this point.”
A damning report issued by the auditor of the state of California in March helps to explain it. Among the most eye-popping findings: Los Angeles County alone experienced a 1,500% increase in the number of hospices since 2010. In 2019, it had more than six-and-a-half times the nationwide average number of hospice agencies relative to its aged population. And the problem is not just in LA. As of 2019, the state, excluding LA, had 707 hospices. By way of comparison, Florida, which serves the same number of aged persons as California (without LA) — 4,200,000 people — had just 44 hospices.
But hospice problems in the Golden State stretch far beyond the actual number of providers. The report uncovered large-scale abuse that includes likely fraudulent billing of Medicare and Medi-Cal, the state’s Medicaid progam; and the apparent use of stolen identities of medical personnel to obtain licenses. (To wit: While nonprofit organizations provided the majority of hospice services in the past, for-profit companies are almost exclusively responsible for the recent wave. According to federal data as of August 2021, California had the highest percentage of for‑profit hospice agencies of all 50 states.)
The report identified various indicators of fraud and abuse connected to hospice agencies located in LA County: rapid, disproportionate growth in the number of hospice agencies; excessive geographic clustering of hospice agencies; long durations of hospice services; high rates of patients discharged alive; and employees working for a large number of hospice agencies.
The report offered interesting color regarding the extent of the fraud. For example, when visiting the buildings in which hospice agencies were located, the auditor observed that many hospice agencies were not listed on the building directory; many suite doors had simple paper signs for the hospice agencies taped to them; and one hospice agency suite number was included on a door with 13 different suite numbers.
Oversight failures
The culprit, according to the report? The state’s Department of Public Health, for one, whose perfunctory licensing process does little to verify that personnel are qualified or prevent fraud. Specifically, it lacks requirements related to verifying the need for hospice agencies in a proposed location, the size of the hospice agency’s service area, criminal background checks of key hospice agency personnel and other key measures.
And the report detailed even more weaknesses with Public Health. Among them: It has failed to adequately investigate and resolve complaints against hospice agencies. In one instance cited in the report, Public Health did not complete its investigation of a complaint until more than a year after first receiving it. In this case, according to the complaint, the hospice agency was not managing a patient’s insulin appropriately, causing episodes of low blood sugars that greatly diminished the patient’s quality of life and could possibly hasten the patient’s death.
Public Health is not the only entity to blame, the report found. Three state agencies, namely Public Health, the California Department of Health Care Services and Department of Justice, have not adequately coordinated their fraud prevention efforts or developed meaningful enforcement measures for the Med-Cal hospice program.
The California situation has sounded alarm bells on the state and federal level. In 2021, the Medicare Payment Advisory Commission (MedPAC), which advises Congress on Medicare, concluded that given the rise of new providers, additional oversight is warranted.
Hospice providers in California and nationally continue to voice their concern with the situation.
“We don’t know exactly what’s happening there, but it is an area of tremendous concern when you have tremendous variability with hospice per capita and the number of patients they are serving,” Theresa Forster, vice president for hospice policy for the National Association for Home Care & Hospice, told McKnight’s Home Care Daily Pulse.
California perspective
Sheila Clark, president and CEO of the California Hospice and Palliative Care Association (CHAPCA), which represents over 100 for-profit and nonprofit members in California, has a front-row seat on the situation.
“I can’t explain it,” Clark told McKnight’s Home Care Daily Pulse. She believes high reimbursement of hospices in the state is a contributing factor to the rampant fraud and noted that over 50% of hospices in California hit their caps — the highest reimbursement Medicare will pay for beneficiaries. Such a practice should not be common, she said.
Particularly troubling to her are the complaints she has heard from consumers, such as hospices not admitting people because they have exceeded their caps. This reveals hospices’ dissemination of inaccurate information as caps are not a beneficiary issue; they are a provider issue.
“It has nothing to do with their benefit,” she said. “It’s concerning to CHAPCA when we hear this.”
Also raising eyebrows is when her organization fields calls from hospices that reveal their lack of awareness about conditions of participation for Medicare. And she’d like to know why there is a high number of hospices — around 1,400 — in the state that are licensed but uncertified, indicating that they cannot bill the government for services.
“Why are there so many providers that do not continue on in the certification?” she said, pointing out that none of the 1,400 are her members.
Fixes
The state and lawmakers are rapidly trying to remedy the problem. The Legislature has passed AB 1280, which prohibits a hospice referral source from receiving, directly or indirectly, any form of payment in exchange for referring a patient to hospice provider or facility. It also requires a hospice to provide verbal and written notice of the patient’s rights and responsibilities in a language and manner the person understands, before providing care. SB 664 imposes a moratorium on new hospice licenses until one year from the date that the California State Auditor publishes a report on hospice licensure. Both bills were effective in January.
Another bill, AB 2673, which has not yet been passed, would impose more regulations and oversight on hospices. Among its provisions, it would require an application for hospice, if the applicant has not previously qualified for a hospice license, to demonstrate and provide evidence of an unmet need of hospice services in the geographic region a hospice would serve. It also would authorize that any person may request an investigation of an accredited hospice by making a complaint to the California Department of Public Health, orally or in writing, alleging a violation of various laws or regulations, and requires the department to make a preliminary review, as provided.
Clark of CHAPCA said her organization has supported all of the bills passed and is a proponent of AB 2673. And she said her organization also is conducting its own research into the problem and looking into questions such as why so many hospices have licenses but not certifications.
“We are diving into the data of just who is coming into the marketplace here in California,” she said.
While the state is in the spotlight, she knows the nation is watching in part because other states may be next.
“What happens in California, so goes the nation eventually,” Clark said.
Change is coming on a national level. The Centers for Medicare & Medicaid Services has initiated a Technical Expert Panel to explore the creation of a Special Focus Program for hospices similar to the Special Focus Facility program for troubled skilled nursing facilities. A proposal for the SFP program could appear in the fiscal year 2024 hospice proposed rule.
In the meantime, Clark, who operated hospices before she moved into her current role with CHAPCA, worries that a few bad actors will taint the reputation of the many good, well-meaning hospice providers in the state.
“We want to make sure our goal is met, and that is good, compliant care, and [that] patient and families in California know what hospice is and how to access it,” Clark said.
