Fraudulent Hospice Providers May Be Moving Between States

Fraudulent hospices continue to proliferate, and some may be moving between states to escape regulators.

Beginning in 2021, numerous reports emerged of unethical or illegal practices among hundreds of newly licensed hospices, particularly among new companies popping up in California, Texas, Nevada and Arizona.

Thus far, California is the only state to take action on the issue, including a moratorium on hospice licensing. The U.S. Centers for Medicare & Medicaid Services has also taken steps to bolster program integrity.

But the problem is not going away.

Clark County, Nevada, has emerged as an unfortunate case study in how these issues affect patients and families, as well as legitimate operators. The county has seen a significant influx of providers, some of which may have come to the state after California imposed its moratorium.

“It really ramped up last year. We started to make the connection between the California moratorium on hospice business licenses and the influx of programs coming to Nevada, Arizona and Texas,” Karen Rubel, president and CEO of Nevada-based Nathan Adelson Hospice, told Hospice News. “What concerns me more is not the competition, it’s about poor patient care.”

We started to make the connection between when the California moratorium on hospice business licenses and the influx of programs coming to Nevada, Arizona and Texas

-Karen Rubel, president and CEO, Nathan Adelson Hospice

New hospices still cropping up

While not every new hospice is necessarily engaging in fraud, generally, indications of malfeasance have run high among such providers, CMS and California state agencies have determined. And they continue to pop up in the four affected states.

About 128 new enrolled hospices entered California in 2023, according to data from CMS. Arizona also saw a rise of 27 new hospices during the last year, with Texas and Nevada seeing 96 and 33 new providers, respectively.

Overall, about 69% of all newly licensed hospices in 2023 were located in Arizona, California, Nevada and Texas. No other state had more than 15 new hospices enrolled, with most having single-digit enrollment, according to CMS.

In Nevada, all 33 of those new providers were located in Clark County, CMS data shows.

“Nevada is in really bad shape right now. In Clark County, they have added 70 Medicare-certified agencies in the past two years, and the market is collapsing,” a hospice executive told Hospice News on condition of anonymity. “It’s a lot of the same people coming from California, but they operate very differently.”

In Clark County, they have added 70 Medicare-certified agencies in the past two years, and the market is collapsing.

-A hospice executive, speaking on background

Among the differences is an emphasis on patients in group homes. One pattern among these operators is that they target group home residents and tell them that — if they don’t enroll in the company’s hospice program — their rent could be raised or that they would have to leave the facility.

Some of these providers, in addition to bilking Medicare of millions of dollars, also engaged in referral kickback schemes, enrolled patients who were not eligible for hospice and lied to them about being terminally ill.

Moreover, in some instances, multiple hospices have been operating out of the same address without a corresponding increase in the population of eligible patients. Some individuals also hold management positions at several of these hospices simultaneously.

Stirrings in Clark County

At Nathan Adelson, the trends became apparent when the number of patient transfers from other hospices began to rise exponentially. About five years ago, the typical number of annual transfers hovered around four or five, Rubel indicated. Now, they are getting one or two per week, often from hospices they had never heard of before.

These patients have reported numerous examples of substandard care, such as failure to provide certain medications, durable medical equipment or adequate home visits, Rubel said. Other reports include poor symptom management and, in some cases, instances in which individuals did not even realize they had been admitted to a hospice, Rubel indicated. Many of these providers also do not offer all four levels of care.

In addition to the devastating impact these activities can have on patients and families, longstanding providers are also feeling the pain.

“We’re all seeing shrinking market share. Our referral sources have changed because some of those referral sources are aligning with other hospices,” Rubel said. “If you look at really the top six providers in our community, you can see the decline of hospice admissions. Then you look at the next 40, and those folks have gained hospice admissions, so the numbers are pretty startling.”

More than 3.2 million people dwell in Nevada, according to the U.S. Census Bureau. Of those, about 18% are older than 65. Consistent with national trends, most of these seniors will have one or more chronic or serious illnesses. About 15,900 elected hospice during 2021, according to CMS.

For fraudulent hospice providers, these patients can look like bait on a hook. But in many instances, those operators are evading capture.

One hospice executive told Hospice News on background that they have seen situations where new hospices have opened up at the same addresses where others had been shut down, often with the same owners or medical directors. Some of these medical directors had a history of license suspensions or other prior disciplinary actions, according to the executive.

Possible movement toward solutions

In January 2023, a coalition of four industry organizations made 34 recommendations to CMS and Congress for strengthening hospice oversight. These included the National Association for Home Care & Hospice (NAHC), the National Hospice and Palliative Care Organization (NHPCO), LeadingAge, and the National Partnership for Healthcare and Hospice Innovation (NPHI).

Though CMS has acted on a contingent of these recommendations, the agency has stopped short of implementing its own moratorium to limit Medicare enrollment in counties with highest concentrations of new providers.

Conversations are underway in Nevada about a potential licensing moratorium similar to California’s. While this could make a dent, it wouldn’t impact the federal side of the equation — that of Medicare certification.

“[Nevada state agencies are giving it attention. We’re having very robust conversations at the state level,” Rubel said. “We have started to talk to the state about a potential moratorium, to see who in the community is providing hospice care, to really kind of dig in and find out what’s going on.”