What A CMS Fraud Chief Learned By Caring For Her Parents In Hospice

The Mechanics of “Ghost Hospice”

In April, the U.S. Department of Justice introduced the West Coast Health Care Fraud Strike Force, combining efforts with federal agents, the FBI, and the HHS Office of the Inspector General to address a significant increase in fraudulent hospice, sober home, and wound care schemes in California, Arizona, and Nevada.

Simultaneously, California Attorney General Rob Bonta and Governor Gavin Newsom revealed criminal charges against organized crime rings involved in a $267 million scheme targeting the Medi-Cal program in Los Angeles. The scheme involved 14 fraudulent hospice providers who used stolen identities to enroll thousands of seniors without their knowledge. Investigators discovered that no actual hospice services were provided during the conspiracy.

Corrigan emphasizes that the main vulnerability lies in data breaches rather than direct scams. “One of the biggest problems is stolen Medicare Beneficiary Identifiers (MBIs),” she explains. “The main issue is not seniors giving away their IDs. Instead, computer breaches post MBIs on the dark web, where they are reused repeatedly.”

Once these identifiers are purchased by unscrupulous individuals, they set up shell companies and start billing Medicare for services, equipment, and visits that never happen.

In her testimony before the House Committee on Ways and Means, Sheila Clark, President and CEO of the California Hospice and Palliative Care Association, highlighted that the impact goes beyond financial losses.

“Fraud in hospice does not necessarily end when the billing stops,” Clark stated. “Under the current billing structure, the fraudulent hospice controls the paperwork needed to revoke or terminate a hospice election. If a fraudulent provider is uncooperative, unreachable, or no longer operating, the beneficiary may remain reflected in Medicare systems as if an active hospice election still exists. That can interfere with access to curative treatment, prescription drugs, and other needed services.”

Many seniors only realize they are listed as “dying” on paper when they visit their doctor or pharmacist, only to find out that their usual coverage is suspended because they are supposedly enrolled in comfort care.

The Problem With “Whac-A-Mole” Enforcement

Government oversight bodies have faced intense criticism from legislators for not addressing these issues sooner. In March, a congressional investigation by the House Committee on Oversight and Government Reform revealed that both federal and state officials have long been aware of these systemic weaknesses. The Committee cited an estimate from CMS indicating that Los Angeles County alone accounts for approximately $3.5 billion in hospice fraud, nearly 18% of all hospice billing nationwide.

In response, California has imposed a moratorium on new hospice licenses, revoked over 280 licenses in the last two years, and placed another 300 providers under investigation.

Corrigan acknowledges that while administrations often pursue large-scale criminal arrests that make headlines, she believes law enforcement alone is a short-term solution to a deeper structural problem.

“Many hospices were disenrolled and barred from the Medicare program during my tenure, but another 400 had to be shut down after my departure. This cycle is often called ‘Whac-A-Mole.’ While such actions garner headlines, states implementing certificates of need, moratoria on new hospice enrollment, changes in payment incentives, robust survey and certification programs, and limits on the number of hospices a physician can oversee receive less attention. A more meaningful impact would come from tackling these harder policy issues.”

Corrigan suggests shifting from retrospective data analysis to proactive verification. During her time at CMS, her team proposed a pilot program to send letters directly to beneficiaries to confirm their enrollment. More recent efforts have considered immediate phone verifications. “There is a delicate balance here because you do not want to discourage people or scare them away from hospice,” she notes. “But simply picking up the phone early just to verify that the enrollment was not fraudulent is a good step forward.”

Re-engineering an Outdated Law

Corrigan believes the uproar over criminal activities is overshadowing a core policy issue: the law governing hospice care is nearly 50 years old and doesn’t align with current medical realities.

When Medicare started covering hospice care in 1982, it was primarily for cancer patients with predictable declines. The law required a physician’s certification that a beneficiary had six months or less to live. Today, most hospice patients have neurodegenerative conditions like Alzheimer’s, Parkinson’s, and dementia, which follow long, uncertain paths.

Corrigan saw this firsthand with her own parents. Her 92-year-old father contracted Covid-19, entered an emergency room, and passed away two weeks later. His move to an inpatient hospice unit midway through his stay enabled the family to utilize social workers and ensure his comfort.

Her mother, however, had been declining from Parkinson’s and dementia for four years. Her father perceived hospice as admitting defeat and refused the service for his wife, which she only accessed for less than two months after his death.

“Oddly, if my mother had been put in hospice as recommended, her hospice care would have been almost exactly six months,” Corrigan says. “I think my mother and our family would have benefited tremendously from hospice services much earlier. The hospice RN was more helpful than my mother’s neurologist in discussing medications and figuring out what made sense. The social worker and the RN took the time to explain what my mom’s refusal to eat meant.”

To break the psychological barrier that postpones vital care, Corrigan proposes a simple legislative update: extending the statutory period from six months to one year.

“Six months or less feels different from a year,” she says. “This is subjective, of course. But there is a really good study by Jonathan Gruber and Jetson Leder-Luis about how an over-focus on fraud prosecutions in hospice can be a mistake if it drives up overall healthcare costs.”

The research Corrigan references includes work by MIT economists. It demonstrates that timely hospice care leads to substantial savings for U.S. healthcare. For patients with Alzheimer’s and similar dementias, early hospice care saved about $29,000 per patient over five years compared to traditional hospital care. When families avoid hospice due to fear or legal confusion, patients return to emergency rooms, visit specialists, undergo procedures, and increase Medicare expenses.

A New Model for Dignity

Corrigan envisions a different approach: a new, dedicated federal palliative care benefit tailored to the prolonged progression of neurodegenerative diseases. She imagines a system designed from the start with modern anti-fraud measures. By requiring personal certifications from the actual physicians, nurse practitioners, or physician assistants treating these complex conditions, the care would remain anchored in legitimate medical practices rather than the stand-alone shell corporations currently making headlines.

“Our payment system, particularly in hospitals, incentivizes care in a silo,” Corrigan says. “You have someone for wound care, the respiratory specialist, the nurse, the phlebotomist, the radiology tech. When hospice comes in, you turn to considering the whole person. For fraud specifically, I think palliative care provided or overseen by a licensed MD, NP, or PA is going to be far less subject to abuse. Right now, it is simply way too easy to set up a rogue hospice and bill millions without upfront oversight.”

The extensive media coverage of scammers in California might deter vulnerable families from seeking the genuine, life-changing care that reputable providers offer every day.

“A perception of out-of-control fraud affects even the best hospices,” Corrigan says. “We already do not like to think about death in the United States, and if the hospice community is tarnished even more, people will not choose it even if it would make their lives better. Success means having hospice experts help families navigate some of the most difficult parts of life well, for as long as possible.”

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