SAN BERNARDINO,CA - One of the nation’s largest hospital systems and its founder have agreed to pay $65 million to resolve allegations that it overbilled Medicare,according to a report in the San Bernardino Sun. The settlement agreement with Ontario-based Prime Healthcare Services, Prime Healthcare Foundation, Prime Healthcare Management and Dr. Prem Reddy, Prime’s founder and chief executive officer,
resolves allegations that 14 Prime hospitals in California knowingly submitted false claims to Medicare by admitting patients who required less costly, outpatient care and by billing for more expensive patient diagnoses, a practice known as up-coding, according to the United States Attorney’s Office. Under the settlement agreement announced Aug. 3, Prime will pay $61.75 million and Reddy will pay $3.25 million. Prime Healthcare contends that there was no finding of improper conduct or wrongdoing, saying its record of clinical quality care was never in question. “The parties have reached a settlement in recognition of the significant costs of continuing to litigate this matter,” Prime Healthcare spokeswoman said in an email. “Short-stay admissions have been a problem in the hospital industry for well over a decade and many other health systems have agreed to large settlements much larger than ours. While we have disputed the government’s claims since the inception of the case in 2012, it is time to move forward. It is impossible to fight an army of regulators and the enormous resources of the federal government.”
Reddy, who is also founder and board chairman of the California University of Science and Medicine in San Bernardino, supports the settlement, according to a statement. In July, the university, a private nonprofit medical school commonly called CalMed, opened with an inaugural class of 60 aspiring physicians.
The settlement resolves a False Claims Act lawsuit filed in federal court in Los Angeles by Karin Berntsen, the former director of performance improvement at Alvarado Hospital Medical Center in San Diego. Berntsen will receive $17.2 million as part of the settlement, according to the U.S. Attorney’s Office.
The U.S. Attorney’s Office said that from 2006 to 2013, Prime engaged in a deliberate, corporate-driven scheme to increase inpatient admissions of Medicare beneficiaries who sought emergency treatment at its 14 Prime hospitals in California.
The government claimed that the inpatient admission of these beneficiaries was not medically necessary, because their symptoms and treatment should have been managed in a less-costly outpatient or observation setting.
Hospitals generally receive significantly higher payments from Medicare for inpatient admissions as opposed to outpatient treatment; therefore, the admission of beneficiaries who do not need inpatient care, as alleged here, can result in substantial financial harm to the Medicare program, according to the release.
“Patients and taxpayers who finance health care programs such as Medicare deserve to know that doctors are making decisions solely based on medical need – and not based on a corporate desire to increase billings,” said First Assistant United States Attorney Tracy Wilkison in the release. “The Justice Department is committed to preserving the integrity of public health programs and preventing improper billing practices.”
Prime, however, says that Medicare does not outline criteria for inpatient admission and instead leaves it to the sole discretion of the treating physician, as it should be. The U.S. Attorney’s Office also alleges that from 2006 through 2014, Prime engaged in up-coding by falsifying information concerning patient diagnoses in order to increase Medicare reimbursement.
Prime denies these claims, saying that the government did not find merit and declined to intervene. “Prime Healthcare has always put people first and determined that it was in the best interest of its patients, independent physicians, and employees to resolve this matter despite not agreeing that there was any truth to the allegations related to coding,” according to the release.
Reddy, who is also founder and board chairman of the California University of Science and Medicine in San Bernardino, supports the settlement, according to a statement. In July, the university, a private nonprofit medical school commonly called CalMed, opened with an inaugural class of 60 aspiring physicians.
The settlement resolves a False Claims Act lawsuit filed in federal court in Los Angeles by Karin Berntsen, the former director of performance improvement at Alvarado Hospital Medical Center in San Diego. Berntsen will receive $17.2 million as part of the settlement, according to the U.S. Attorney’s Office.
The U.S. Attorney’s Office said that from 2006 to 2013, Prime engaged in a deliberate, corporate-driven scheme to increase inpatient admissions of Medicare beneficiaries who sought emergency treatment at its 14 Prime hospitals in California.
The government claimed that the inpatient admission of these beneficiaries was not medically necessary, because their symptoms and treatment should have been managed in a less-costly outpatient or observation setting.
Hospitals generally receive significantly higher payments from Medicare for inpatient admissions as opposed to outpatient treatment; therefore, the admission of beneficiaries who do not need inpatient care, as alleged here, can result in substantial financial harm to the Medicare program, according to the release.
“Patients and taxpayers who finance health care programs such as Medicare deserve to know that doctors are making decisions solely based on medical need – and not based on a corporate desire to increase billings,” said First Assistant United States Attorney Tracy Wilkison in the release. “The Justice Department is committed to preserving the integrity of public health programs and preventing improper billing practices.”
Prime, however, says that Medicare does not outline criteria for inpatient admission and instead leaves it to the sole discretion of the treating physician, as it should be. The U.S. Attorney’s Office also alleges that from 2006 through 2014, Prime engaged in up-coding by falsifying information concerning patient diagnoses in order to increase Medicare reimbursement.
Prime denies these claims, saying that the government did not find merit and declined to intervene. “Prime Healthcare has always put people first and determined that it was in the best interest of its patients, independent physicians, and employees to resolve this matter despite not agreeing that there was any truth to the allegations related to coding,” according to the release.
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