In April, the Centers for Medicare and Medicaid Services (CMS) suspended roughly 800 hospice providers in the Los Angeles area amid allegations of widespread fraud. Among those affected were a number of small, legitimate agencies that say they were unfairly caught up in the crackdown. The suspensions have forced some providers to shut down operations or transfer patients to other hospices, disrupting care for vulnerable populations.

One small hospice agency owner, who declined to reveal his identity to protect other business interests dependent on Medicare, described the toll of the action. Despite maintaining strict accreditation standards and having no formal complaints over five years, his agency was accused of fraud and cut off from reimbursements. After a prolonged appeal process that CMS ultimately rejected, the provider began closing down.

“It’s no longer you’re innocent until proven guilty, it became that you’re guilty and now you have to prove your innocence,” the owner said.

The current task force, initiated under the Trump administration’s second term and led by Vice President JD Vance, aims to combat fraud across federal health care and other programs. The effort was partly spurred by viral videos alleging fraud in Minnesota day care centers. Yet many investigations cited by the task force predate its formation, and advocates warn the sweeping approach is ensnaring legitimate providers alongside fraudulent ones.

“The Trump administration is taking a pretty aggressive tactic here, but the downside is you’re often going to catch up legitimate actors because you’re not really taking the time to do your due diligence,” said Hillary Loeffler, a former CMS official and vice president of policy at the National Alliance for Care at Home.

CMS Administrator Mehmet Oz has asserted that very few legitimate hospice providers have been affected. However, reviews indicate at least 43 legitimate hospices remain suspended and are seeking to restore funding. Attorneys for many of these agencies report delays and lack of transparency in CMS’s appeal responses, with none of more than 40 appeals reviewed within the 15-day deadline mandated by law.

Oz defended the agency’s approach in early June, stating that the rate of reinstated hospices relative to those suspended was a “fairly good hit rate.” Nonetheless, some critics argue the use of payment suspensions without advance notice favors large companies, which can better absorb financial disruptions, while smaller providers struggle.

The task force has also spotlighted variances in state-level Medicaid fraud enforcement, criticizing Democratic-led states like New York and Hawaii for their perceived underperformance. Officials in those states have pushed back, citing convictions, settlements, and ongoing investigations. Hawaii’s Medicaid fraud unit lost federal funding in June, prompting state leaders to create a new anti-fraud entity.

Vice President Vance’s office and other task force members have declined direct interviews but maintain that fraud cases, including those unrelated to federal benefits, are a priority. The task force recently announced a nationwide audit of all 50 state Medicaid fraud units, despite HHS inspector general reviews already being legally required annually.

The task force also emphasizes recovering funds from fraudulent loans and government contracts. The Small Business Administration flagged over half a million suspected fraudulent loans for Treasury collection, while the General Services Administration identified hundreds of questionable contractors.

Industry groups and affected providers attribute some fraud surges to loosened enrollment standards and reduced oversight during the COVID-19 pandemic, when CMS permitted phone-based hospice enrollments and reduced site inspections to expedite aid delivery. This led to rapid growth in hospice providers, notably in Los Angeles County, where suspicious agencies clustered in low-rent office spaces. In response, California imposed a moratorium on new hospice licenses in 2022, and the Biden administration intensified inspections and warnings about fraud risk.

CMS reports more than 700 revocations of Medicare billing privileges since mid-2023 and in May implemented a six-month moratorium on all new hospice enrollments nationwide.

Suspension notices often cite aberrant patient discharge rates as an indicator of fraud, though legitimate factors such as patient relocation or medical emergencies can also cause higher exit rates. Providers working with high-risk populations, such as individuals experiencing homelessness or substance abuse, say they have been unfairly penalized.

Some suspended hospices report that transferring patients has been difficult, resulting in care disruptions. While CMS states there are sufficient alternative providers, smaller agencies have struggled to absorb increased patient loads.

Critics contend the aggressive enforcement strategy uses a blunt instrument that risks destroying valuable providers. One small hospice co-owner said, “At some point, we’d have to say we really tried to do something right. How far do we have to go to prove we deserve to be here?”

Federal officials acknowledge that while some legitimate operations may be affected “every once in a while,” the primary goal remains protecting program beneficiaries by targeting fraudulent actors. The Department of Justice currently has thousands of active fraud investigations but declined to provide historical comparisons.

As the task force continues, questions remain about balancing fraud prevention with ensuring access to critical care from credible providers.