Hospice fraud

What it is

A hospice operator enrolls a Medicare patient who is not actually dying, sometimes without the patient ever finding out, and bills Medicare’s hospice benefit anyway. Hospice is meant for people certified by a doctor as having a terminal illness with six months or less to live, who elect comfort care over an attempt to cure their illness. Medicare pays for it with a flat daily rate for every certified day a patient is on a hospice’s rolls, paid on the strength of the certification rather than on proof that any particular service was delivered that day. That payment structure, bill for enrollment rather than for care, is the entire scheme: recruit patients who qualify on paper, certify them, and collect the daily rate for as long as they stay enrolled, whether or not they need, want, or ever receive hospice care.

How it actually works

1. The recruitment

   A marketer, sometimes knocking door to door, sometimes working inside a nursing home, group home or low-income housing project, offers a Medicare beneficiary free housekeeping, meals, transportation or home health visits, conditional on enrolling with one specific hospice.

2. The kickback

   The hospice pays the marketer a flat fee or a share of future billings for every patient who ends up enrolled, whether or not that patient is terminally ill.

   Where it could have stopped

   Paying or accepting money for a patient referral is illegal under federal anti-kickback law on its own, before Medicare is ever billed a single dollar. In the cases on this page, prosecutors charged the kickback payments as separate counts from the billing fraud itself.

3. The false certification

   A physician, sometimes the hospice’s own paid medical director, certifies that the patient has a terminal illness and a life expectancy of six months or less, often adopting a diagnosis supplied by hospice staff rather than one reached through an independent examination of the patient.

4. Billed by the day enrolled, not by the care given

   Medicare pays the hospice a flat daily rate for every day a certified patient remains on its rolls, regardless of how much care, if any, is actually delivered that day, which is what makes enrolling patients, rather than treating them, the thing that generates revenue.

5. Real care disappears

   Once enrolled in hospice, a patient’s other Medicare coverage for curative treatment, medication and equipment tied to the certified terminal illness is switched off. Patients in the documented cases here found out they had been enrolled only when they were later denied coverage for care they actually needed.

6. Falsifying the paper trail

   When Medicare requests documentation to support a claim, operators in the cases here directed employees to create or backdate patient charts and recertification paperwork rather than let a real, incomplete file be reviewed.

7. Enforcement, built from the claims themselves

   HHS Office of Inspector General investigators, the FBI and state health-fraud units build cases from the billing data itself: patient survival rates far below ordinary hospice norms, length-of-stay patterns, and kickback payments traced through bank records. In the cases documented here, that process took one to several years to reach a conviction and sentence.

Why it works

Medicare pays the daily rate on certification, not on proof of care. Like most large insurance programs, Medicare pays hospice claims in the first instance on the provider’s own certification, with detailed audits, if they happen at all, coming later, which is exactly the gap every case on this page exploited for months or years before being caught.

The targeted patients are the ones least able to catch it. People with dementia, limited mental capacity, or no family checking their Medicare statements are easy to certify and unlikely to object, a pattern federal prosecutors specifically alleged in the Merida Group case, where marketers enrolled patients from group homes, nursing homes and housing projects.

Enrollment itself can be hidden from the patient. Because hospice is a change in Medicare’s own billing status rather than a visible service, a patient can be enrolled, and billed for, without ever being told, and without noticing anything is wrong until a separate, unrelated Medicare claim for real care is denied.

A prior disqualification doesn’t have to be permanent. An operator already excluded from Medicare for a past fraud can buy or control a hospice through a relative’s or associate’s name, concealing their ownership on paperwork Medicare does not independently verify at the point of enrollment, exactly how California’s largest documented case here got back into the program.

The daily rate rewards keeping patients enrolled, not discharging them. Once a patient is on a hospice’s rolls, every additional day enrolled is additional revenue regardless of whether real care is delivered, which is why the documented cases describe operators fabricating charts to keep a patient’s file looking active rather than letting a weak file trigger a discharge.

Where it comes from

Entirely domestic: hospice fraud exploits Medicare’s own hospice benefit, which does not exist outside the United States in this form, so every documented case here is a US case.

California and Texas are the two states with the largest documented scandals. A 2022 California State Auditor report found Los Angeles County alone saw a 1,500% increase in hospice agencies over the preceding decade, with indicators of large-scale billing fraud and evidence that thieves used stolen medical personnel identities to obtain hospice licenses in the first place. California responded with a moratorium on new hospice licenses beginning in 2022, still in effect, while the state Attorney General has filed 119 hospice-related criminal cases since 2021, including an April 2026 case alleging $267 million in fraud across 21 defendants.

Texas produced the largest single scheme documented on this page. The Merida Group, a hospice and home health chain with dozens of locations across the state, ran its false-certification-and-kickback scheme from 2009 to 2018, billing Medicare more than $150 million before its owner, chief executive and medical director were convicted at trial and sentenced to 20, 15 and just over 4 years respectively.

Operators range from a single storefront to a multi-location chain. California’s documented cases here involve one or two hospices apiece, run by an individual owner working with a handful of paid marketers. Texas’s Merida Group shows the same fraud structure, kickbacks for referrals, false certifications, billing for days rather than care, scaled across dozens of locations and nearly ten thousand patients.

Real cases

Red flags

• An unsolicited offer of free housekeeping, meals or home health visits in exchange for Medicare information or for enrolling with a specific hospice, by phone, text, email or a door-to-door visit.
• Gift cards, cash or groceries offered in exchange for signing up for hospice.
• Someone claiming to represent Medicare who wants to visit your home to sign you up for services, which Medicare itself never does.
• Losing access to a medication, piece of equipment or treatment you were previously getting through Medicare, which can be a sign you were enrolled in hospice without realizing it.
• A certifying physician who has never examined the patient, or who is not the patient’s own doctor.
• Unfamiliar hospice names on a Medicare Summary Notice or explanation of benefits, for services never requested or received.
• A hospice with an unusually low star rating on Medicare’s Care Compare site, or one that keeps reopening under a new name after losing its billing privileges.

If it’s happening to you

If you or a family member may have been signed up for hospice without needing it:

1. Ask the hospice directly for the name of the certifying physician, and whether that physician has examined the patient; a legitimate hospice answers this without hesitation.
2. Check whether coverage for an existing treatment, medication or piece of equipment has stopped. That is often the first sign a fraudulent enrollment happened, since electing hospice switches off Medicare’s coverage for curative care related to the certified terminal illness.
3. Review recent Medicare Summary Notices or explanation of benefits statements for a hospice name you don’t recognize.
4. Don’t agree to disenroll or sign anything on the spot if someone shows up in person; verify who they are and who they work for first.
5. Report what you’ve found to 1-800-MEDICARE (1-800-633-4227), your local Senior Medicare Patrol, the FBI’s Internet Crime Complaint Center at ic3.gov, or the HHS Office of Inspector General at 1-800-HHS-TIPS (1-800-447-8477) or TIPS.HHS.GOV. See where to report for agencies in other countries.

Where the money goes

Entirely domestic, moving from Medicare’s Trust Fund into the hospice’s own operating accounts, then out again as kickbacks and personal spending.

Medicare pays its flat daily rate directly into the hospice company’s bank account, typically the smallest and most traceable step in the chain since it comes from a federal program with its own records. From there, the hospice’s owner or controlling operator pays kickbacks to the marketers and recruiters who supplied the patients, a cost the documented cases here describe as running up to roughly $1,000 a month per enrolled patient. What’s left moves into real estate, forfeited bank accounts and, in the Merida Group case, personal perks for the medical director who kept certifying unqualified patients, luxury trips and nightclub bottle service, paid in exchange for his signature.

By the numbers

No published dataset breaks this scheme out as its own category yet, so there is no chart to show. The data page explains which agency categories exist and why some schemes are invisible in official statistics.