LOS ANGELES – If a Kaiser Permanente customer ends up in the emergency room of another hospital, Dr. John Shohfi and his team of Kaiser doctors and nurses expect to be informed.
They're on call 24 hours a day, coordinating care when Kaiser patients are treated elsewhere.
But when Prime Healthcare Services took over a chain of Southern California hospitals, Shohfi testified today, there was a noticeable change in his relationship with Prime and its doctors.
“No calls,” said Shohfi, an emergency room physician. “They just stopped calling.”
Two health care providers, Kaiser and Heritage Provider Network, have accused Prime of "trapping" or "capturing" their patients in Prime emergency rooms and hospitals in order to charge more for treating patients from outside their medical networks.
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Shohfi's testimony came during a hearing in Los Angeles arranged by Sen. Ed Hernandez, D-West Covina, and Assemblyman Bill Monning, D-Monterey, chairmen of the Legislature's health committees. The lawmakers said they were troubled and disturbed by Shohfi's testimony.
Many of the legislators' questions focused on issues featured in a yearlong California Watch investigation into the chain's business practices, including billing Medicare for outsized rates of lucrative conditions such as heart failure, septicemia and severe malnutrition. A Prime hospital in Redding has billed Medicare for a condition known as kwashiorkor – a Ghanaian word for “weaning sickness” – at a rate 70 times the state average.
In recent months, FBI agents have begun questioning former Prime employees about the firm's billing practices. On Wednesday, Prime CEO Lex Reddy, the brother-in-law of Prime owner Dr. Prem Reddy, resigned without explanation.
In testimony today, the granddaughter of a former Prime patient, Sandra Taylor-Davey, said her grandmother was held in a Prime hospital despite family wishes to have her moved to her usual hospital and doctors.
Taylor-Davey, whose account was first featured in a California Watch report, testified that the experience was akin to a "Twilight Zone" episode. She said no one at West Anaheim Medical Center seemed willing to respect the family's wishes.
“They just wouldn’t let her out,” Taylor-Davey said.
She said doctors insisted that her grandmother, Dorothy Taylor, had pneumonia, septicemia and heart failure and that she may have died if she were transferred out of the Prime hospital. Taylor-Davey said her grandmother’s usual doctor saw her soon after she was discharged from Prime, and she had experienced only a kidney problem and urinary tract infection.
For his part, Shohfi said families would call Kaiser and let staff know a patient was in a Prime hospital. On those occasions, he said he reached out to doctors, “virtually begging to give them critical patient information.”
He said the response from Prime doctors, some of whom he’d worked with for years, was that the new administration did not allow them to talk to Kaiser physicians.
Hernandez said Shohfi’s account ran counter to his professional experiences as an optometrist.
"We never had an issue where the doctor has not wanted to talk to me about the care of a patient," Hernandez said. "It’s a little disturbing for me to hear that’s not going on."
Monning said he also was "troubled by the testimony from the Kaiser physician."
Monning asked Prime general counsel Michael Sarrao whether the firm has a policy requiring doctors to refuse contact with managed-care physicians. Sarrao said he knew of no such policy. He said the company relies on the independent judgment of its physicians.
Prime has sued Kaiser and Heritage Provider Network, seeking payment for treating its patients. The medical networks have countersued. Sarrao said he is confident that Prime will prevail in court when all the facts are presented.
Jonathan Gluck, general counsel for Heritage, testified that Prime has urged doctors to document that patients are "unstable for transfers" to keep them in their hospitals and charge more money.
Sen. Kevin de León, D-Los Angeles, asked Gluck: "If I direct a doctor to write 'X Y Z' and patient didn’t need 'X Y Z' and I can draw down reimbursement, does that constitute fraud?"
"I would think so ... absolutely," Gluck said.
Lawmakers urged Shohfi and Gluck to report their concerns to regulatory and oversight agencies.
Today's hearing also focused on how Medi-Cal, the state’s health insurer for the needy, will begin paying hospitals based on the severity of each patient’s medical condition. The federal Medicare system reimburses in a similar manner, paying hospitals thousands more per case if they treat patients with certain dire conditions.
Toby Douglas, director of the California Department of Health Care Services, said the new payment system will reward hospitals more fairly for their work. Historically, Medi-Cal has paid hospitals a flat daily rate.
Legislators asked Douglas how his department will be sure that hospitals don’t “upcode,” or exaggerate the severity of patients' illnesses for profit. He said the department would perform audits, but might need to take a closer look at safeguards for the new system.
“We’re moving into unchartered territory,” Douglas said.