The number of hospice providers enrolled in the Medicare program in four states has skyrocketed over the past few years. The jaw-dropping spike, in turn, has triggered increased oversight efforts – some of which may not be having the desired effect.
A similar trend could be happening in home health care in one major county, U.S. Centers for Medicare & Medicaid Services (CMS) data suggests.
In hospice, the surge of new providers and potentially fraudulent activities has been concentrated in Arizona, California, Nevada and Texas. In home health care, it’s Los Angeles County.
After becoming aware of the data on new hospice openings and following a series of scathing media reports, CMS implemented a Special Focus Program (SFP), effective Jan. 1, while also finalizing a new rule forbidding change in majority ownership during the 36 months after initial Medicare enrollment, including acquisitions, stock transactions or mergers.
In August, the agency additionally announced it was considering administrative action against 400 hospices.
“Unfortunately, hospices are profiting from fraud at the expense of beneficiaries far too often,” CMS said at the time.
Meanwhile, some of the aforementioned states have pushed forward stronger rules and regulations, too. For example, in 2021, California passed two reform laws that included a moratorium on new hospice provider licenses until the state health department weeded out bad actors.
A California Department of Justice (CDOJ) report detailing the state’s history of lax oversight helped fuel that initiative.
“The state’s weak controls have created the opportunity for large-scale fraud and abuse,” CDOJ indicated in its report.
Back in the spotlight
Hospice fraud and the related oversight efforts were back in the spotlight last week, when ProPublica reported that new hospices in California are still receiving Medicare certification with clear instances of fraud happening in the other states as well.
In one instance last year, 15 new hospices received Medicare certification, all operating from the same two-story building in Los Angeles, according to ProPublica.
In another: A location in Phoenix was approved for three new hospice licenses, all at the same location as dozens of other new providers in the previous two years.
According to a review of Medicare claims data shared with Home Health Care News and Hospice News, California had 102 newly enrolled hospices in 2023. In Arizona, the number of new hospices increased by 25 during the same period, while Texas and Nevada saw 72 and 25 new providers, respectively.
Across the board, no other state experienced an influx of more than 15 new hospices, with most states reporting single-digit enrollment figures.
In total, approximately 69% of all newly licensed hospices in 2023 were situated in Arizona, California, Nevada and Texas.
The review was conducted by an industry source familiar with the Medicare claims data. This source also told HHCN and Hospice News that multiple new hospices had been enrolled in California since the time ProPublica finalized its story.
Industry groups, such as the National Hospice and Palliative Care Organization (NHPCO), are taking notice.
“While CMS has implemented many of our program integrity recommendations to root out bad actors, the data make it clear that more needs to be done, and that the hospice Special Focus Program is not the right tool for fraud prevention,” Ben Marcantonio, NHPCO COO and interim CEO, told Hospice News in an email last week.
The home health connection
The numbers point to something similar possibly happening in the home health industry, largely in LA County.
And if that is indeed the case, it casts doubt on how CMS and the Medicare Payment Advisory Commission (MedPAC) gauge the overall home health market, in terms of size and beneficiaries’ access to care.
From the start of 2019 through June 2023, the number of home health agencies delivering services decreased from 8,838 to 8,280 – a market contraction of about 6%. During this same time, however, Los Angeles County’s number of home health agencies delivering services increased from 896 to 1,309 – a jump of about 46%.
With just LA County’s growth removed, the number of home health agencies delivering services in the U.S. fell 12% over that nearly five-year window.
LA County is muddying the waters when it comes to home health utilization as well. Controlling for LA County, there has been a 16% reduction in home health utilization since 2019, according to the data source who spoke with HHCN and Hospice News.
It’s important to note that the 8,838 figure is for home health agencies actually filing claims. There are more than 11,500 actively enrolled home health agencies, but some never provide services.
A timely discussion
LA County’s home health numbers could mean fraud, waste and abuse happening in that market, similar to what was happening with hospice throughout Arizona, California, Nevada and Texas.
More immediately, though, the data tells a less rosy narrative than the one coming from Medicare officials – and the timing around these two views couldn’t be more important.
As the health care landscape has stabilized coming out of the COVID-19 pandemic, CMS has sought to recalibrate the Patient-Driven Groupings Model (PDGM), the mechanism under which home health agencies are paid. Implemented at the start of 2020, PDGM is supposed to be budget neutral, meaning it can’t distribute more or less money to home health care than the previous payment model.
Broadly, CMS believes PDGM has overpaid home health agencies, so the agency has moved forward with adjustments and cuts in 2023 and 2024. The home health industry disagrees with that view, while also arguing that further cuts would jeopardize medicare beneficiaries’ ability to receive care.
Rejection rates for home health agencies reached a record high, averaging 76%, in December 2022, according to industry data. That’s an increase from the denial rate of about 54% seen in 2019.
CMS has pushed back on the notion that access to care is at risk.
“CMS looked closely at our data to ensure the payment rate adequately covers the costs reported by [home health agencies], without creating unnecessary hardship to providers and maintaining access to quality services for all beneficiaries,” CMS wrote in its 2024 final rule. “Maintaining access is one of CMS’s priorities when making policy decisions.”
For 2021, payments to home health agencies in LA County were $1.2 billion, which was 7% of the national fee-for-service spend, even though only 2% of the traditional-Medicare enrollees reside in LA County, according to the HHCN source.
Additionally, spend per traditional-Medicare enrollee in LA County was $1,577 compared to $449 nationally, when controlling for LA County. LA County increases traditional-Medicare enrollee spend per beneficiary by 5%.
If LA County is skewing how the collective home health market is evaluated, it could have profound effects for years to come.