Decades of unbridled growth in the California hospice industry will stall on January 1, when a moratorium on new licenses and reforms to curb widespread fraud in end-of-life care come into effect.
The licensing moratorium and crackdown on kickbacks and patient recruitment programs are at the heart of legislative reforms outlined in two bills, largely driven by a Los Angeles Times investigation into the state’s booming hospice business last year.
Governor Gavin Newsom signed the laws on Monday. A full review by the state auditor is also ongoing to identify deficiencies and recommend improvements in hospice licensing and oversight.
“The new laws won’t stop the rampant fraud and abuse the Times has uncovered, but they are a good first step as the State Audit Office conducts its investigation into the need for major hospice oversight reform in California,” said Michael Connors, a longtime nursing advocate with the California Advocates for Nursing Home Reform.
The Times research, published in December, found that explosive growth in hospice providers has turned end-of-life care, which was once the realm of charities and religious groups, into a multibillion-dollar business dominated by for-profit operators.
The rapid expansion has led to widespread fraud, negligence and mistreatment of some of California’s most vulnerable residents, the newspaper noted.
In the past 20 years, the number of US providers has roughly doubled, while Medicare spending on hospice care has grown more than six-fold to nearly $ 21 billion a year. More than 1.6 million Medicare beneficiaries are now served in approximately 5,000 hospices, the vast majority of which are for-profit.
Los Angeles County’s hospices have grown six-fold in the past decade, accounting for more than half of the state’s 1,200 Medicare-certified providers last year, according to the Times state health data analysis.
Numerous hospices have sprung up along a corridor that extends west from the San Gabriel Valley through the San Fernando Valley, which had the highest concentration of providers in the country.
Glendale had 60 hospices, Burbank 61 and Van Nuys 63. New York State and Florida each had fewer than 50.
The moratorium is subject to a comprehensive review requested by Senator Ben Allen (D-Santa Monica), author of Senate Act 664, who orders it.
“We have serious concerns that current regulations fail to cope with the dramatic increase in hospice licensing, some of which appear to be undermining the quality of patient care,” Allen and Senator Henry Stern (D-Los Angeles) wrote in May, requesting the exam.
The moratorium – which includes exceptions for pending applications and for those who can demonstrate a need for a new hospice in a given geographic area – applies for 365 days after the audit report is published, which is expected to be in March to the Court of Auditors. Officials say the far-reaching test:
- Assess the growth of California hospice providers over the past decade and the factors that led to it, and see if other states have seen similar expansion and taken steps to counter this.
- Assess the extent of hospice fraud and abuse in California and its impact on the Medicare and medical programs that cover most end-of-life care.
- Identify the most common types of hospice fraud and whether government regulators could do more to protect elderly Californians.
- Assess the effectiveness of California’s systems to detect, combat, track, and prevent hospice fraud and whether additional resources are needed.
- Assess the effectiveness and completeness of government systems to screen and license new hospice providers.
A second bill signed by Newsom addresses another of the Times’ key findings, namely that intense competition for new patients has spawned a home industry of bribes to crooked doctors and recruiters targeting potential patients in retirement homes and other locations.
To qualify for a hospice, patients must be certified as terminally ill by their treating doctors, if any, and by a hospice doctor.
But many of those hired by recruiters with promises of medical care, equipment, or housekeeping did not die, the Times noted. Some later learned that they had relinquished their right to emergency life-saving medical treatment.
Assembly Bill 1280, sponsored by Assemblywoman Jacqui Irwin (D-Thousand Oaks), prohibits hospice providers or their agents, recruiters, or others from paying for patient referrals.
“We have a responsibility to ensure that end-of-life patients receive the right care that meets the needs of patients and their families,” said Irwin, adding that the new law prohibits all forms of payment, including the use of cash and gift cards to initiate the selection of a hospice.
“It also requires that information about hospice care be provided in a way that is understandable to the patient and their caregivers, and that the assessment for the patient accurately identifies the patient’s need for hospice care and services,” she said.
Many of the state hospices are small businesses run by people with little or no healthcare experience. There are few requirements to starting or running a hospice other than having a clean record of crime and obtaining a state license and Medicare certification, a process that costs only a few thousand dollars.
Connors, the patient advocate, cited a number of other reforms that are needed: better screening of potential operators; annual inspections; a complaints hotline; immediate investigation of complaints; Sanctions against inferior providers; and access to online information that will help the public “tell good hospices from bad”.
“Much depends on what comes out of the ongoing state exam,” he said. “Hopefully it will pave the way for major regulatory reforms.”