The U.S. Centers for Medicare & Medicaid Services (CMS) has launched a new initiative designed to help curb fraudulent billing and tax evasion tactics commonly used by unscrupulous hospice operators.

The agency announced its new Fraud Tax Project, an effort to improve program integrity, in a recent letter to the U.S. Department of Health & Human Services (HHS) penned by CMS Administrator Dr. Mehmet Oz.

CMS is seeking a partnership with HHS and state tax authorities to identify and take action against fraudulent health care operators. The collaborative approach is aimed at uncovering operators who are committing both health care and tax fraud, Oz indicated.

“Pursuing tax fraud cases provides state authorities with a faster, more direct path to enforcement

than traditional health care fraud prosecutions,” Oz wrote in the letter shared with Hospice News. “In many instances, criminal tax fraud convictions allow CMS to swiftly revoke billing privileges, cutting off fraudulent billing activity and preventing future losses. Fraud is not only a financial offense — it is a moral one. Stopping it requires teamwork, creativity and collaboration across every level of government.”

CMS has notified all state governors of the launch of its fraud tax project. The new initiative will allow CMS, HHS and state tax agencies to work together to identify patterns of tax and billing claim data that could signal fraudulent activity. The collaborative approach is designed to create a “powerful, mutually reinforcing system” that protects program integrity and taxpayer dollars, Oz stated in the letter.

Fraudulent operators who submit false Medicare billing claims often also fail to report the associated income on their tax returns, according to CMS. The trend results in a “dual-layered crime,” which strains both federal health care programs and state tax systems, Oz said.

Anticipated outcomes of the new enforcement initiative include:

• Identification and prosecution of a significant number of fraudulent Medicare providers and suppliers for state tax evasion
• CMS to take “rapid administrative action” to revoke billing privileges following state tax convictions
• Employing a strategy for enhanced protection of taxpayer funds and public trust that leverages tax data, investigative insights and Medicare oversight

The new tax fraud project is the latest of CMS’ efforts to address the various ways in which Medicare scammers are taking advantage of vulnerable older adults.

Program integrity concerns heating up in the hospice space in recent years have regulators increasingly seeking avenues to safeguard patients and their families against unscrupulous activity. The activity has included several instances of falsely submitted Medicare claims for hospice services that were not delivered, billed for care that was not medically necessary or involved kickback schemes for referrals and enrolling patients in hospice who are not terminally ill.

Fraudulent operators in the hospice space have misspent millions of Medicare dollars in recent years. This problem has become so severe that it has become one of the defining issues facing the hospice industry, with providers and other industry stakeholders expressing concern about significant impacts to future payment, access, sustainability and utilization.

Arizona, California, Nevada and Texas are the four hotbed states seeing escalating program integrity issues in recent years. A slew of newly licensed hospice programs in these states have been involved in fraudulent billing activity. Some owners have been involved in “license flipping,” or selling their licenses soon after obtaining them, or before regulators can act on alleged malfeasance.

The unscrupulous activity has resulted in negative impacts in terms of access, quality and the outlook of program integrity in the hospice space, according to Sheila Clark, president and CEO of the California Hospice and Palliative Care Association (CHAPCA).

“California’s hospice fraud crisis revealed the power of tax enforcement to expose scammers quickly and decisively,” Clark told Hospice News in an email. “California has been disproportionately harmed by hospice fraud. The Fraud Tax Project reflects CHAPCA’s recommendations to CMS that tax data is a powerful, fast and objective enforcement tool. We thank Dr. Oz and the CMS leadership team for acting with urgency and adopting a national strategy that will protect patients, families and high-quality hospice providers.”