CBS News correspondent Adam Yamaguchi reported on a widespread hospice fraud scheme in California that investigators say is costing taxpayers hundreds of millions of dollars each year while preventing some patients from receiving legitimate medical treatment.
During his report, Yamaguchi described how the fraud operates, explaining that criminals obtain Medicare identification numbers and use them to enroll people in hospice care without their knowledge.
Once the individuals are falsely registered as hospice patients, companies bill Medicare for services that are never provided.
“The government thinks this woman is dying in hospice care, but she just humiliated me, schooled me on the pickleball court. She’s definitely not dying. She is a victim, though, of hospice fraud,” Yamaguchi said while describing one case that highlighted the problem.
He said the scheme has become a significant financial drain on the federal health care program.
“So hospice fraud costs taxpayers hundreds of millions of dollars every year, and California is ground zero,” Yamaguchi said, adding that the fraud typically begins with stolen Medicare numbers.
“So basically, people steal Medicare numbers. They enroll them in hospices and then Bill for 10s, sometimes hundreds of 1000s of dollars.”
According to Yamaguchi’s investigation, a large number of hospice providers operating in Los Angeles County show signs that they may be involved in fraudulent activity.
“So over 700 of the roughly 1800 hospices in LA County trigger multiple red flags for possible fraud,” Yamaguchi said.
His team attempted to verify the operations of those businesses by visiting listed locations across the county.
“So we went door to door, and what we found was empty office spaces, piled up mail and not a single health care worker in sight,” Yamaguchi said.
The concentration of hospice companies in certain areas raised additional concerns.
In one area of Los Angeles County, hundreds of hospice agencies appear to be clustered within a small geographic area.
“There’s even a stretch in LA with 500 registered hospice companies within just three miles of each other,” Yamaguchi said.
He also reported that investigators found a single building listing dozens of hospice companies.
“In fact, there’s even a single building with 89 registered hospice companies.”
During the investigation, Yamaguchi approached one of the offices listed in public records to ask about the unusually high number of hospice agencies in the area.
“Okay, so my name is Adam Yamaguchi, and I’m with CBS News, and we’re doing a story about hospice, and we’re just trying to understand how and why there’s so many hospice agencies in like, a small cluster in LA County. Would love to speak with you,” he said during the attempt to obtain comment.
The person he approached declined to answer questions.
“I’m sorry you have no comment. Okay.”
Yamaguchi said the fraud schemes often rely on shell companies and stolen personal information obtained through illegal markets.
“Medicare Hospice fraud can happen in a few different ways,” he said.
“Shell companies can buy stolen Medicare numbers on the dark web and then Bill the government for services that they don’t ever actually provide.”
In other cases, recruiters approach seniors in their communities and offer free goods in exchange for Medicare information.
“Sometimes recruiters will go out into the community and look for seniors and say, Hey, we can offer you a bunch of free groceries, housekeeping, free depends. Just give me your Medicare number and I’ll see what you’re eligible for. And then, boom, they’ve they’re off and running.”
Once the fraudsters obtain a Medicare number, the billing can quickly escalate.
“They can charge 10s of 1000s of dollars, and in some cases, hundreds of 1000s of dollars on that one Medicare number.”
Yamaguchi noted that some medical professionals are also involved in the schemes because hospice claims require physician approval.
“Now there are real doctors who are involved in these schemes as well, because they’ve got to sign off on this supposed care,” he said.
According to Yamaguchi, the impact of the fraud extends far beyond the financial losses.
“They get rich. Taxpayers get screwed,” he said.
“But the worst part is, it’s our mother’s father’s grandparents who are denied care.”
Because Medicare records falsely show patients as already receiving hospice care, some victims are turned away when they seek legitimate medical treatment.
“It could be something like physical therapy, like with the woman who whooped my ass on the pickleball court,” Yamaguchi said.
“Could be somebody who needs dialysis or cancer treatment.”
“You know, doors slammed in their faces because the Medicare records show no no, you’re you’re already dying in hospice. We can’t help you.”
The total cost of the fraud is significant.
“This kind of fraud adds up to at least $200 million a year stolen from American taxpayers,” Yamaguchi said.
He added that hospice fraud occurs across the country but appears to be especially severe in California and Los Angeles County.
“Now this is a nationwide problem. This kind of fraud happens in blue states. It happens in red states, but it’s really bad in California and it’s especially bad in LA County.”
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Yamaguchi reported that California’s Attorney General said the state is investigating several cases and expects enforcement action soon.
However, advocates say regulators and federal authorities have not acted quickly enough to address the growing number of suspicious hospice providers.
Those advocates warn that while investigations continue, patients who need legitimate care remain at risk of being denied treatment because of fraudulent hospice enrollments already recorded in the Medicare system.