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Ex-medical coding director questions Prime’s Medicare billing practices

Monica Lam/California WatchDesert Valley Hospital in Victorville is one of 14 hospitals operated by Prime Healthcare Services.

Chuck Phelps went to work for Desert Valley Hospital as a medical coding specialist in 2006 and soon was promoted to a corporate position at Prime Healthcare Services. But the closer Phelps got to the top of the hospital chain, he said, the more evident it became that he would have to leave.

Phelps said corporate executives went too far in cashing in on Medicare payments aimed at rewarding hospitals that treat the sickest patients.

“I kept telling myself, ‘I’m going to be able to make a difference,’ ” Phelps said. “Then it became apparent that it wasn’t a lack of understanding – it was just greed.”

Phelps is one of nine former Prime doctors or employees who have documented or spoken about what they say were unethical or illegal medical coding practices at Prime Healthcare, an Ontario-based chain of 14 hospitals.

Prime has responded to questions about medical coding by saying it relies on doctors to properly diagnose patients and on hospital chief executives to oversee legal compliance. Prime also cautioned against “being duped by innuendo and misstatements” by disgruntled former workers.

Medical coders review patient records and translate doctors’ notes into codes that are used to bill insurers and Medicare. Phelps, who has 10 years’ experience in the field, said he has not previously seen practices like Prime’s.

Phelps said he reported to Ajith Kumar, a top corporate executive and distant relative of chain owner Dr. Prem Reddy. Phelps said Kumar made rounds to chain hospitals to make sure they got maximum reimbursement from each Medicare patient case.

Edward Barerra, a Prime spokesman, said Kumar is a highly qualified medical coding specialist with certifications from several leading industry groups. He said Kumar’s responsibilities as corporate director of reimbursement include reviewing coding to ensure it is compliant with all applicable laws and guidelines.

Phelps said Kumar reviewed medical files of patients whose ailments did not entitle the hospital to a bonus payment.

For those cases, Kumar would scan the file for any sign of a medical complication, then dispatch medical coders to query doctors to document the condition, Phelps said.

Phelps said some doctors refused to add diagnoses. But chain executives pressured doctors to log the conditions. Often, the payment bonus “wasn’t earned and wasn’t deserved,” and the added ailment “misconstrued what was going on with the patient,” Phelps said.

Phelps said his staff also was pressured to log the most lucrative condition as the primary diagnosis. Medicare directives say medical coders must identify the primary condition as the one that motivated the hospital stay, according to Phelps. They are not supposed to cherry-pick the highest-dollar combinations of ailments.

Phelps said he reluctantly accepted a corporate role that involved traveling to Prime hospitals throughout Southern California, hoping to educate staff on proper coding. He said he resigned after less than a year with the company after realizing that Reddy was uninterested in discussing coding rules and ethics.

“You could not have a conversation with him where you explain something,” Phelps said of Reddy. “You didn’t have a chance to convince him.”

Phelps sent medical coders a resignation letter on April 17, 2007, urging them to resist pressure to change or re-sequence diagnoses and to “stay committed to your ethics and knowledge of what is right.”

This story was edited by Denise Zapata and Mark Katches and copy edited by Nikki Frick.


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