Congress has finally decided to wade into the deep waters of hospice fraud in California. That is a good thing. But what members need to know is that this problem is not new, and it is not confined to one state.
What’s more, enforcement alone will not solve it — what is desperately needed is more prevention.
Federal officials have been flagging the same patterns for years. The Department of Justice has brought cases involving sham hospice operators billing Medicare for patients who were not eligible or not receiving care at all, including prosecutions tied to large-scale fraud schemes in California and Texas.
The Centers for Medicare and Medicaid Services have repeatedly identified hospice as a program integrity risk. Medicare spends more than $25.7 billion annually on hospice care, serving roughly 1.7 million Americans each year. The exposure is national and runs into the billions. Yet the system continues to admit providers that should never have been allowed in.
Hospice fraud is often described as a problem of bad actors. It is, more accurately, a problem of inadequate design. The hospice benefit was created more than 40 years ago, when there were relatively few providers and the priority was access. The system was built for simplicity, speed and trust. Payments move quickly, and oversight comes later.
That approach worked when the market was small and easier to observe, but that world no longer exists. Today, there are more than 5,000 hospice providers nationwide, with explosive growth in certain markets. In Los Angeles County alone, there are more than 1,000 licensed hospice agencies. In some regions, provider supply has far outpaced patient need — a signal that regulators should not have missed.
The underlying support structure has not changed. Patients are still sent into a fragmented market with little visibility as to which providers are trustworthy. Payments are still made before services are verified. New licenses are granted with uneven scrutiny.
The result is predictable. Bad actors can enter the market, scale quickly and operate for years before being identified. By the time enforcement arrives, the damage is already done — public dollars have been spent and are often unrecoverable, and patients and families have been drawn into care that may not meet basic standards.
And then the system takes on a second layer of cost in the form of investigations, prosecutions and incarceration. This is not a failure of detection — it is a failure of prevention. Oversight today relies heavily on retrospective tools such as audits, claims analysis and whistleblower cases. Those tools matter, but they are not designed to stop bad actors from entering the system or to limit their growth once they are in it.
What is missing is a so-called “Blue Book” for the hospice industry — an ongoing, up-to-date reference of providers and their quality performance, to distinguish high-quality providers from those that should not be in the program.
The data for this already exists. Claims patterns, visit reliability, length of stay, revocation rates and patient experience can make outliers visible early. Unfortunately, that information is not consistently surfaced or used at the point where decisions are made.
