Chino Valley Medical Center owner to pay $65 million in false Medicare claims case - Champion Newspapers: News

Chino Valley Medical Center owner to pay $65 million in false Medicare claims case

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Posted: Saturday, August 11, 2018 8:00 am

Prime Healthcare Services, which owns Chino Valley Medical Center in Chino and 13 other hospitals in California, has agreed to pay $65 million to settle allegations of submitting false claims to Medicare by admitting patients that only required outpatient care and were billed for more expensive patient diagnosis. 

The practice is known as “upcoding,” said Thom Mrosek, the spokesman for the U.S. Attorney’s office in Los Angeles.

The settlement ends a False Claims Act lawsuit by a whistleblower named Karin Berntsen, a former director of performance improvement at the organization’s Alvarado Hospital Medical Center in San Diego. She will receive $17.2 million, according to the settlement. 

“The settlement resolves allegations that from January 2006 to September 2013, Prime engaged in a deliberate, corporate-driven scheme to increase patient admissions of Medicare beneficiaries who originally went to the emergency departments at the 14 hospitals in California,” Mr. Mrosek said. 

Investigators said the inpatient admissions were not medically necessary because the patients’ symptoms and treatments could have been less costly.

“Hospitals generally receive significantly higher payments from Medicare for inpatient admissions as opposed to outpatient treatments,” Mr. Mrosek said. “The admission of beneficiaries who do not need inpatient care can result in substantial financial harm to the Medicare program.”

Prime chief executive officer Dr. Prem Reddy will pay $3.25 million and Prime will pay $61.75 million, according to the settlement. The company is headquartered in Ontario.

Prime officials said in a statement that there was no finding of improper conduct or wrongdoing “of any kind” by Prime Healthcare.

“This matter dealt with the technical classifications of the category under which patients were admitted and billed,” the statement said. “Physicians, not hospitals, direct the level of care needed for their patients. Prime continues to support physicians in the care they determine is best.”

Rules regarding inpatient admissions against outpatient observations is complex, the statement reads, and Medicare doesn’t outline its criteria for inpatient admission, instead leaving it to discretion of the doctor. 

“The way it should be,” the statement said.

They added that Medicare can “second guess” the doctor’s decision on the level of care a patient needs and argues some patients should be on a lower level of care instead of inpatient care.

“If patients are admitted under observation, Medicare beneficiaries end up paying more out-of-pocket deductibles for outpatient observation as opposed to inpatient care,” the Prime Healthcare Services statement said. 

Patients placed under observation status are not eligible for much needed post-hospital care such as rehabilitation and skilled nursing care. Therefore, physicians should decide what level of care patients need,” the statement said. 

Mr. Mrosek said the organization used upcoding by falsifying patient diagnosis information, in order to increase its reimbursement from Medicare. 

In addition to Chino Valley Medical Center and Alvarado Hospital Medical Center, Prime Healthcare owns Garden Grove Medical Center, La Palma Intercommunity Hospital, San Dimas Community Hospital, Desert Valley Hospital, Paradise Valley Hospital, Shasta Regional Medical Center, West Anaheim Medical Center, Centinela Hospital Medical Center, Sherman Oaks Hospital, Montclair Hospital Medical Center, Huntington Beach Hospital, and Encino Hospital Medical Center. 

“When health care companies try to boost their profits by billing federal health care programs for more expensive services than they provide, they are held accountable for their deceptive schemes,” said Christian Schrank, a special agent with the U.S. Department of Health and Human Services Office of Inspector General in Los Angeles.”

Lawsuits related to inpatient admissions are common with hospitals and health care systems, according to Prime’s statement. 

“The American Hospital Association and the California Hospital Association filed briefs in support of Prime Healthcare, stating the government’s regulation of hospital admissions inappropriately challenged the clinical decisions of physicians.”

Those briefs, written in 2016, called for reform of the government’s standards of inpatients admissions against outpatient observation status. 

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