Hospices Willing to ‘Take Hits’ from Regulators to Ensure Ethical, Quality Care

Some hospice providers are willing to take on additional regulatory pressure if it successfully roots out “bad actors” in the space, Sarah McSpadden, president and CEO of The Elizabeth Hospice, told Hospice News.

Regulatory scrutiny is on the rise for hospices nationwide, but is gaining particular traction in California. For example, a recent report from the California State Auditor revealed that “weak oversight” has created widespread opportunities for fraud and abuse.

Hospice News recently sat down with McSpadden to discuss how hospices view the intensifying regulatory pressure in California, as well as how they are responding and what’s needed to raise the bar on quality care.

The Elizabeth Hospice is a San Diego-based nonprofit provider that in 2021 cared for 2,667 hospice patients as well as 756 who received palliative care.

McSpadden also serves on board of directors for the National Hospice and Palliative Care Organization (NHPCO) and as the committee chair of the Quality and Standards Committee. Additionally, she serves on the board of the Hospice Advocacy Network and is on the Legislative Affairs and Reimbursement Committees at the California Hospice and Palliative Care Association (CHAPCA).

How has a lack of regulatory hospice oversight in California created opportunities for large-scale fraud and abuse? Can you expand upon what the audit results indicate on a broader scale?

What was found in the audit was that the market of for-profit providers has grown tremendously in the state, and the problem with that has become twofold as far as the bad side of hospice delivery.

There are two different types of “bad actor” hospices. There are providers that are poor performers who are just very poor at the delivery of hospice and following the rules. Then there are the providers that aren’t really in it for hospice and the right reasons— they’re just in it to make money. These are hospices that are fraudulently billing for hospice services that many times were never delivered. These bad actors are absolutely committing fraud, and there’s a lot of them.

Patients and families are having terrible end-of-life care experiences, or no experience at all. When they enter hospice, many don’t really understand what to expect until they really get into it. It’s important for patients and families who require a certain level of care to receive it. Many times these hospice programs do not offer all the required levels of care, and therefore, don’t adequately manage patient symptoms. These four levels of required care include inpatient, respite, routine and continuous care at home.

On a wider scale, the good-acting hospices, many of which are nonprofits, are being swallowed up by the bad actors and competing with them for patients. We’re competing to try and ensure these patients and families have a good program. In fact, a lot of our referrals are patients that get transferred out of the bad programs because the hospice never showed up. We’re competing with these hospices on the front end to get patients and also on the back end to deliver care. We end up working even harder to have greater outcomes.

Fraud really stands out in California, but we aren’t the only state with this issue. The national licensing, certifying, credentialing and accrediting bodies all play a part. It makes you question what has caused such a lack of oversight from all of these, and what is going on at a larger scale level. If these indicate a higher set of standards and quality of care and that isn’t happening, something isn’t right.

How are hospices and advocates in the space navigating rising regulatory pressure?

We’re meeting with nonprofits across the country on a regular basis to talk about how to provide services and the breadth and depth of this oversight issue.

Myself and other hospices have been pushing for better regulatory oversight for years in California. We’ve asked for surveyors to come out more often to see in-person what’s happening. We’ve even turned in providers that we know were performing really poorly. It takes a lot to turn in another provider, because you don’t always know the full scope of what’s going on. But when patients and families come to you with horrific stories, we knew we needed to say something.

We are willing to take the hits from increased investigations and oversight.

As a good hospice provider, you recognize that you’re going to get swept up in this scrutiny. If you’ve got a small hospice and a big hospice, you’re going to investigate the bigger hospice first, since it may have a greater investigative return on investment. This approach, is not going to identify the poor performers or those committing fraud. We know the scrutiny will come and we are willing to endure hits if it helps to solve bigger issues in hospice care delivery.

We follow the rules, we’re good advocates for care and our quality indicators are good. Let’s use some of our regulatory oversight to identify the bad actors and weed them out.

What are some of the industry-wide concerns regarding these “bad actors”? How does this trend tie into the overall delivery and quality of hospice care?

In terms of quality, hospice referral sources don’t always see the difference or know what is happening with these bad actors. Health care providers, hospitals and physicians don’t necessarily know which hospices are good and not good, they don’t have the insights into the issue. They don’t have insight on the claims-based data — you can tell a lot from billing data. If the referring customer doesn’t know how to identify a good quality hospice program, then they’re going to send patients in the wrong direction.

For fraudulent hospices, their live discharge rates or their readmission rates back into acute care settings that are really high signal a quality issue. Not only are these bad acting hospices taking patients that are not necessarily sick enough to be on hospice, they’re also not keeping them on their services like they should.

They are bringing people on to hospice who aren’t appropriate, and they’re making money doing it. When you bring a patient on to hospice, Medicare will pay you about $5,000 to $6,000 on average a month to manage their care. Hospices can actually make quite a bit of money on a small pool of patients by not delivering a lot of services.

If it’s a smaller hospice, the government doesn’t require them to report quality metrics and patient satisfaction reports, so it’s hard to get an idea of what’s happening there and it’s easier for them to fly under the regulatory and quality radar. Billing and claims data can give us a better view of what’s going on without these requirements in place.

What steps are hospices taking to address these concerns? How can they set themselves apart from “bad-acting” hospices in a crowded market?

Some patients and families actually think that all hospices are strung together and don’t understand that not all hospices are the same.

We’re all very different. It’s about getting the word out to referring sources and our communities from the very beginning and develop trust and relationships. We can inform them of what’s going on and the negative impacts poor care can have on their business. If their patients are well-cared for and get bounced back and forth from setting to setting, that costs everyone money and quality.

It’s getting involved on regional, state and national legislative levels, coordinating with other providers and reaching out to band together to help identify fraudulent issues and tackle them. It’s educating all of our partners, patients, families, providers and sharing audit results like these or reports that paint a picture and identify the issue.

Hospices can stand out by identifying what they do right versus what others don’t do, and what the difference in delivery of stellar hospice service looks like. It’s identifying those differentiators that we provide through outreach. Hospice is an emotional business with families in very tough places. It’s being the best for them. You’re competing with the impact of this fraud on the front end with your marketing and sales and on the back end to deliver the best care.

What would it mean if the U.S. Department of Justice got more involved in hospice oversight?

It’s very disappointing. What really hit me in this audit was the fact that not only was the Department of Health Care Services not doing what they should have done for oversight, but the California Department of Public Health didn’t do their part either.

Those two entities can see both the billing and the quality side and they can manage the providers that are actually delivering care. When you identify somebody who is committing fraud, you have to jump on that.

The Department of Justice plays a specific role in this, and that is genuinely looking at data that support fraudulent behavior and following through on the investigations.

The California Audit Group reported important areas to review and investigate to the Department of Justice, and they didn’t follow through on investigating these. Its role in working with the Department of Health Care Services and Department of Public Health is about improving that relationship in identifying serious allegations and following through.

The Department of Justice plays a huge role in identifying truly bad actors on the long-end, meaning the day-to-day practicing and ensuring people get better than poor care. If they receive no care, then taxpayer money is being stolen.

These regulatory bodies are responsible for protecting people and making sure that they are well-cared for, and they aren’t doing what they need to do. They need to step up, step together and do a better job of protecting people in hospice. These are the most vulnerable people at the most vulnerable time in life, and we aren’t doing enough to ensure they have access to quality care.