Last week, federal agents suspended 447 hospices and 23 home health agencies in the greater Los Angeles area over allegations of Medicare fraud totaling an estimated $600 million.

The action is part of a broader federal crackdown on fraud across Medicare and Medicaid. Home-based care, in particular, has come under increasing scrutiny from the Centers for Medicare & Medicaid Services (CMS). Providers and industry advocates have largely backed efforts to root out bad actors, while warning CMS to protect compliant providers.

On Tuesday, testimony at a U.S. House of Representatives Ways & Means Committee hearing prompted me to reexamine how a crackdown on fraud would affect compliant home-based care providers that accept Medicare.

“When California imposed a moratorium on new hospice licensure, the fraud did not stop,” Sheila Clark, the president and CEO of the California Hospice & Palliative Care Association (CHAPCA), said during the hearing. “It shifted into home health licensing. In 2025 alone, 310 home health agencies enrolled in Medicare in LA County. Let me be clear, this is not organic growth. It is fraud displaced from one Medicare benefit to another. CMS must take aggressive action to shut down the criminal fraud networks.”

If fraud is indeed migrating from hospice to home health, it’s worth examining how years of fraud and subsequent program integrity efforts have reshaped the hospice industry, and what that might signal for home-based care more broadly.

To better understand that trajectory, I spoke with my colleague Jim Parker, senior editor of Hospice News and Palliative Care News. One key takeaway from my chat with him was that heightened enforcement hasn’t just targeted bad actors – it’s also reshaped the operating environment for legitimate providers.

“Legitimate providers are being caught up in enforcement efforts like dolphins in a fish net,” Parker told me about the hospice industry. “They are experiencing an onslaught of federal audits and are subject to enhanced oversight tactics, along with the fraudulent companies.”

In this week’s exclusive, members-only HHCN+ Update, I’ll explore what the “displacement” of Medicare fraud could mean for home-based care, including:

– How hospice providers have adapted to an increasingly aggressive enforcement environment

– What home-based care providers should brace for next

Hospice fraud crackdown

To understand one path that program integrity efforts could lead the home-based care industry down, we must look at how efforts to root out hospice industry fraud have changed. Growth in hospice industry fraud has led to more aggressive federal and state-level crackdowns, particularly in fraud hotspots, including California.

“Federal regulators and California state agencies are definitely getting more aggressive in combating fraud,” Parker told me. “Hundreds of provider suspensions and license revocations have taken place, and multiple prosecutions have occurred. California also implemented a licensing moratorium.”

California, and in particular, Los Angeles County, has been identified as having a major issue with hospice and home health fraud. One example of intensified attention on hospice fraud: last month, Republicans from the House Committee on Oversight and Government Reform launched an investigation into “rampant” taxpayer fraud in California’s hospice programs.

The Committee requested documents and communications regarding California’s oversight and internal controls.

“California Attorney General Rob Bonta called hospice fraud in California, specifically in Los Angeles County, ‘an epidemic,’” Committee Republicans wrote in a letter to California Governor Gavin Newsom. “The March 2022 audit report highlighted several red flags and key warning signs of fraud: many providers are listed at the same address; very low patient counts compared with the rest of the State; patients listed as terminally ill were later discharged alive; excessive billing for services that may not have been provided; and staff were shared across multiple hospice providers.”

I want to make sure to specify that the day after the investigation announcement, Newsom released a statement highlighting his administration’s efforts to combat hospice fraud,  including the creation of a multi-agency Hospice Fraud Task Force and the moratorium on new hospice licenses that Parker mentioned.

While state and federal program integrity efforts have become more aggressive, some markets remain riddled with fraud, Parker told me.

“The issue is so ingrained and widespread in certain markets that I fear that so far, they have barely made a dent,” he said.

Implications for legitimate home-based care providers

Industry advocacy groups and providers alike have told me that it’s critical to eliminate fraudulent providers. Jennifer Sheets, the CEO of the National Alliance for Care at Home (the Alliance), told me it’s her “first and foremost” priority. Advocacy groups have also stressed that CMS must ensure program integrity efforts don’t inadvertently penalize compliant providers (and I’ve voiced my own concerns that CMS would approach home-based care fraud with too broad a brush).

The hospice sector shows just how real that risk can be. Efforts to eliminate bad actors have, at times, swept up legitimate providers as well. As Parker put it, many have become bycatch in a broad enforcement net.

“CMS is casting a wide net, and there is little transparency into how they select hospices for enforcement actions,” he said. “This is affecting everyone.”

That dynamic creates a layer of uncertainty for both hospice and home health providers, and carries real operational and financial consequences. Responding to audits is time-consuming and costly, and hospice providers have had to redirect resources to these efforts, Parker said. Many providers have also strengthened their compliance efforts and built audit-response teams.

Providers have also had to repair reputational damage. Operators now need strong public outreach and education to counter bad press, Parker said.

“They need to be able to demonstrate their track records as honest providers through their clinical and business practices,” Parker said.

All of this comes as home-based care providers report difficult margins, as labor costs, inflation and Medicare Advantage penetration rising. Layering on additional compliance costs, whether through new hires, legal support or public-facing efforts, only adds to that strain. While home-based care industry advocates continue to push for a thoughtful approach to program integrity, rooting out bad actors while protecting good actors, the hospice experience underscores the risks when enforcement casts too wide a net, and offers a clear warning for what home-based care providers could be facing next.

For more insights on the hospice industry, including fraud trends, subscribe to Jim Parker’s Substack, Inside Hospice.

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