Congress launches investigation into California hospice fraud, citing millions in taxpayer losses

House Republicans announced Monday that Congress would open an investigation into “widespread hospice fraud,” alleging that tens of millions of dollars in taxpayer funds may have been lost through improper payments to Southern California companies.

The Republican-led House Oversight Committee, which has the authority to investigate, sent a letter to California’s Democratic Gov. Gavin Newsom requesting documents related to the state’s “oversight and internal controls to detect and prevent fraud for its federally funded hospice programs.”

“Recent reports have revealed alarming evidence of fraudulent activity in California’s hospice programs, including agencies overbilling Medicare and fraudulently enrolling beneficiaries without their knowledge,” committee members wrote, citing a recent CBS News investigation.

The CBS News report examined the business and financial records of every hospice currently operating in Los Angeles County, looking for warning signs that a 2022 state audit identified as potential indicators of fraud.

CBS News analysis found that more than 700 of the approximately 1,800 hospices in Los Angeles County have raised multiple red flags for fraud as defined by the state.

“The Committee is concerned that your Administration does not have sufficient internal controls to prevent and detect fraud and is not conducting appropriate oversight of these hospice programs,” the letter to Newsom said. “As a result, Americans across the country are paying for widespread hospice fraud in California and vulnerable patients are being exploited.”

A spokesperson for Newsom wrote in a statement: “California took decisive action against hospice fraud years ago. In 2021, Governor Gavin Newsom signed a law placing a moratorium on new hospice licenses – a policy that remains in effect today, preventing bad actors from entering the system while increasing oversight of existing providers.

Democrats said the Republican-controlled Congress’s decision to investigate could represent an attempt to distract from other pressing challenges.

“Many voters are constantly bombarded by these Republican political football games,” said Debbie Mucarsel-Powell, a former Democratic congresswoman from Florida and now executive director of the Graduate School of Political Management at George Washington University.

“The reality is that for most Americans, the cost of living continues to rise, and they see no relief from either party at this time.” she said.

Republican elected officials and an army of influencers on social networks have seized of the question fraud as politically powerful – accusing Democratic state leaders of failing to prevent costly projects including in Minnesota – where the Feeding our future The pandemic relief scam cost taxpayers hundreds of millions. Minnesota Democratic Governor Tim Walz announced in January that he no longer seeking re-election amid the fallout from this scandal.

The partisan nature of the California investigation was highlighted in the signature line of the House committee’s letter: It is signed only by Republican members.

Hospice fraud remains a nationwide problem. Medicare is a taxpayer-funded health care program for the elderly and disabled that includes hospice coverage for terminally ill patients. Americans pay into Medicare through taxes on their wages and premiums. When Medicare fraud occurs, it is taxpayer money that is stolen.

The Office of Inspector General of the U.S. Department of Health and Human Services reported in 2023 that suspected hospice fraud totaled approximately $198.1 million. This is an acute problem in Southern California.

Nationally, the average amount a hospice bills Medicare per patient is $13,200. CBS News found that the typical Los Angeles County hospice charges Medicare about $29,000 per patient, more than double the national average. The highest rate charged by a single hospice in the county was $74,000 per patient.

Among Los Angeles County hospices with available Medicare data, CBS News found that almost all submitted bills higher than the national average.

The congressional letter requests documents and communications between the governor’s office and several state agencies, including the Department of Health Care Services, the Department of Public Health, the Department of Human Services and the California Department of Justice’s Medical Fraud and Elder Abuse Division. The letter requests information from January 1, 2019 to the present, with a deadline of April 6.

Although Medicare is administered at the federal level, the state licenses hospices to operate. A moratorium on issuing new hospice licenses in the state was recently extended until January 2027 because the state missed a deadline to adopt new emergency regulations for hospice care. Public health officials told CBS News they are balancing public input to vet new applicants and hold hospices accountable.

A spokesperson for Newsom noted that the governor created a multi-agency hospice fraud task force. “This work is paying off, as more than 280 hospice licenses have been revoked over the past two years and an additional 300 providers are under investigation. The state continues to take coordinated action to suspend Medi-Cal payments, revoke licenses and pursue prosecutions,” she said.

CBS News asked Dr. Mehmet Ozadministrator of the Centers for Medicare and Medicaid Services, if the effort aims to target Newsom because of his political ambitions.

“Governor Newsom is not a target. Governor Newsom is the governor of the state of California, where there is a fraud epidemic that needs to be addressed and that he has known about for several years,” Oz responded.

The Republican-led commission is charged with launching investigations into matters of high public interest. He recently announced an investigation into allegations of fraud in Minnesota’s social services programs. The commission also conducted an investigation into the Biden family’s private business dealings.

Oz also recently sent a letter to Florida Republican Gov. Ron DeSantis requesting documents related to efforts to root out Medicaid fraud that Oz called “out of control.”

“Florida has been a hotbed of health care fraud for years. Taxpayers and vulnerable patients deserve better – and it’s time for state leaders to step up and work with us to stop it,” he added.

Check out our exclusive reporting on hospice fraud

Read the letter