Justice Department joins whistleblower suit against Prime Healthcare, alleges CEO inflated Medicare admissions
Prime, however, said its physicians acted in best interest of patients that they felt warranted inpatient treatment.
Alvarado Hospital Medical Center is run by Prime Healthcare.
The U.S. Department of Justice on Monday filed a notice to join a whistleblower lawsuit against for-profit provider Prime Healthcare alleging it routinely submitted inpatient claims for patients who should have been treated as outpatients.
The suit was initially brought about by a nurse and former employee at Prime's Alvarado Hospital, Karin Berntsen, in 2011, and the DOJ has found the claims have enough merit to join the suit.
The suit specifically names Prime CEO Prem Reddy and alleges he personally encouraged employees to admit Medicare patients that should have received outpatient care.
According to the filing, Reddy allegedly would scold or recommend firing for emergency department doctors who missed opportunities to admit Medicare patients. The complaint also claims Reddy would give more work hours to those doctors whose patients had higher admission rates.
[Also: Prime foundation to buy Memorial Hospital of Salem County from Community Health Systems]
Reddy also would "tell ED doctors to find a way to admit all patients over 65 because they all have insurance; and tell ED doctors that an insured patient who would be in the ED for more than two hours waiting for test results should be admitted but an uninsured patient could stay in the ED for six to eight hours awaiting results and then be discharged," the complaint alleges.
The complaint also said that Prime, or several physician staffing companies that contract with the company, has received a total of 10 subpoenas from the Office of the Inspector General since 2013. The DOJ found, through one of those subpoenas, that Prime had been put on notice by a Medicare contractor for inpatient admissions that did not seem necessary.
Prime General Counsel Troy Schell said he expects the company will be exonerated.
"The allegations under investigation arise from complex regulation and a lack of clarity between what federal regulators and physicians believe necessary to adequately document medical necessity for hospital admission," he said in a statement.
"Similar investigations have involved almost every major health system and hundreds of hospitals across the country. We have great confidence in the decision-making and medical judgment of our physicians. The care physicians have deemed necessary is in the best interests of patients and their safety."
[Also: Prime Healthcare Services sues California attorney general]
But the complaint also points to issues found with recent hospital acquisitions by Prime.
"The United States also conducted additional statistical analyses of Medicare claims data that revealed, among other things, that hospital billings for beneficiaries treated on 'observation' status would plummet after Prime acquired a hospital," the complaint claims.
SEIU-United Healthcare Workers West, which is currently involved in a labor dispute with Prime, lauded the DOJ for joining the suit.
[Also: Daughter's of Charity sues SEIU for fouling up Prime deal]
"Time after time we've seen Prime Healthcare's shady practices at hospitals across the country, and we're glad the federal government is getting involved to put a stop to the company's conduct," Union president Dave Regan said in a statement. "To manipulate doctors so they admit more people into a hospital is immoral and disgraceful."
Twitter: @HenryPowderly
