California Watch: Decoding Prime en Hospital chain to pay $275,000 to settle federal patient-privacy case Health and Welfare Prime Healthcare Decoding Prime Wed, 12 Jun 2013 18:05:57 +0000 Lance Williams 18868 at Doctors claim Prime hospital kept them from patients <p>A dozen Southern California doctors are accusing the leadership of a Prime Healthcare Services hospital of refusing to notify them about their patients because they won&rsquo;t engage in profit-driven practices, according to a request for a restraining order filed this week.</p><p>The San Bernardino County physician group suing Chino Valley Medical Center and its director say it has been asked to needlessly admit patients from the emergency room into hospital beds, <a href="" target="_blank">according to the lawsuit filed Wednesday</a> in San Bernardino County Superior Court. The group&rsquo;s doctors also have been urged to document patient conditions as more complex or severe than they are, the filing says.</p><p><a href="" target="_blank">The doctors suing the hospital maintain</a> that both practices are meant to drive up hospital bills. The result of their refusal to go along, they say, is that they&rsquo;re not receiving what they characterize as legally mandated notifications when their patients land in the hospital.</p><p>The physicians have asked the judge to lift the alleged freeze in communication, saying it puts fragile patients in danger. A hearing is set for April 19 on the temporary restraining order.</p><p>Prime spokesman Edward Barrera <a href="" target="_blank">released a statement Thursday</a> saying Chino Valley expects to prevail and the lawsuit &ldquo;has no merit and is a regurgitation of unproven allegations voiced by critics over the past three years.&rdquo;<span style="font-size: 0.813em; line-height: 1.385em;">&nbsp;</span></p><p>The statement says Chino Valley routinely contacts primary care doctors when their patients come to the ER, and it calls the plaintiff doctors &ldquo;upon request of patients themselves.&rdquo; It also says Prime complies with state law and notifies health plans when their patients arrive in the ER and their medical conditions are stabilized.&nbsp;</p><p>&ldquo;Plaintiff&rsquo;s lawsuit attempts to rewrite (the law) so as to require a hospital to contact a HMO and the HMO&rsquo;s contracted physician,&rdquo; Prime&rsquo;s statement says. &ldquo;There is no requirement to contact the HMO&rsquo;s contracted physicians.&rdquo;</p><p>California&rsquo;s largest health plan is locked in a legal battle with Prime, accusing the hospital chain of shirking the same notification requirement. <a href="" target="_blank">Kaiser Permanente has accused the hospital chain</a> in Los Angeles County Superior Court of &ldquo;trapping&rdquo; Kaiser patients in Prime hospitals, failing to notify Kaiser doctors and upcoding patient diagnoses for profit.&nbsp;</p><p>The suit by the Inland Pulmonary Medical Group marks the first time that a small group of doctors has stepped forward in court to criticize a Prime hospital&rsquo;s practices.&nbsp;</p><p>&ldquo;It&rsquo;s interfering with the care of the patient,&rdquo; said Michael Amir, a Los Angeles attorney representing the doctors. &ldquo;Patients go to the hospital &ndash; a lot of times they want to talk to the doctor who&rsquo;s been treating them for years, and they&rsquo;re being prevented from seeing their doctors, from doctors even knowing they&rsquo;re in the ER.&rdquo;</p><p>The seven physician plaintiffs in the Inland group say that together they&rsquo;ve lost $150,000 in income as a result of Chino Valley&rsquo;s actions. Five other area doctors filed declarations in support of the case but are not plaintiffs.</p><p>One of the supporters, Dr. Gerardo General, said his patients routinely are admitted to Chino Valley without his knowledge and given batteries of tests and drug prescriptions.&nbsp;</p><p>&ldquo;They go upstairs (into the hospital), and they expect to see my face. They don&rsquo;t see me,&rdquo; General said. &ldquo;This is abuse; we can&rsquo;t take it anymore.&rdquo;</p><p>The lawsuit alleges that the communication cutoff endangers patients. It claims one patient with a serious breathing condition was admitted without her doctor&rsquo;s knowledge. During her stay, Chino Valley staff operated to remove her gallbladder.</p><p>&ldquo;Because (Inland) was not contacted, no doctor gave the required pulmonary clearance nor did the patient receive proper respiratory treatment prior to surgery,&rdquo; the lawsuit says.</p><p>The suit alleges that such practices put patients &ldquo;at serious risk of injury and even death.&rdquo;&nbsp;</p><p><a href="" target="_blank">A yearlong California Watch series</a> documented high rates of lucrative and severe medical conditions at Prime hospitals, as well as an aggressive approach to admitting ER patients into hospitals, rather than treating them in the ER and sending them home.</p><p>State hospital data analyzed by California Watch showed that Prime hospitals <a href="" target="_blank">admitted about 63 percent of Medicare-funded ER patients</a> into hospitals in 2009, compared with 39 percent at the state&rsquo;s other leading for-profit chain, Tenet Healthcare Corp. In response, Prime said the analysis &ldquo;utterly fails to consider the medical basis for admissions.&rdquo;</p><p>The U.S. Justice Department is investigating Prime&rsquo;s billing practices, <a href="" target="_blank">according to a document the chain filed</a> as part of a hospital purchase plan. Dr. Prem Reddy, founder of the Ontario, Calif.-based chain, has overseen rapid growth since Prime&rsquo;s 2001 start as the company expanded into a coast-to-coast 21-hospital chain.</p><p>Chino Valley was among the first hospitals the chain bought. It is bound by state laws that say hospitals must notify health plans to discuss post-emergency hospital care decisions for their patients. Federal regulations also say patients have the right to have their doctor &ldquo;notified promptly of his or her admission to the hospital.&rdquo;&nbsp;</p><p>The physician group suing Chino Valley holds contracts with about a dozen managed care firms that expect group doctors to handle local members&rsquo; care in the case of a hospitalization.</p><p>The Inland doctors say that instead, they&rsquo;ve been stonewalled. In their lawsuit, they say the silence is a result of their refusal to follow the direction of the hospital&rsquo;s president and chief medical officer, Dr. James Lally, a defendant in the case.</p><p>Lally suggested that the physicians document serious medical conditions, such as a certain type of pneumonia that Medicare pays hospitals a premium to treat, the suit says.</p><p>Lally also discouraged doctors from putting patients on &ldquo;observation&rdquo; status, according to the suit. That means a doctor will monitor a patient&rsquo;s condition, rather than sending him or her home or admitting the patient to a hospital bed.&nbsp;</p><p>The lawsuit alleges that Lally prefers doctors to admit patients into the hospital so the hospital can receive &ldquo;significantly higher Medicare reimbursements.&rdquo;</p><p>Lally did not return a call for comment. Chino Emergency Medical Associates also is named in the case, accused of failing to call patients&rsquo; doctors. Dr. Val Warhaft, chief risk officer of Chino EMA, declined to comment.</p><p>Prime Healthcare has been criticized for aggressively admitting paying patients since its founding. <a href="" target="_blank">Reddy once referred to an ER as a &ldquo;gold mine,&rdquo;</a> according to court testimony from the medical director of the first hospital taken over by the Prime founder. The reference, which the medical director said during a 2005 trial, was to numerous Kaiser and Medicare patients who could be admitted for further care.</p><p>Another doctor told the Orange County Board of Supervisors in 2006 that when Prime took over Huntington Beach Hospital, doctors were urged to admit insured patients with maladies as minor as a headache.</p><p>Prime also has been accused previously of stonewalling managed care doctors.</p><p>In early 2012, a Kaiser physician testified before a California legislative hearing into Prime Healthcare&rsquo;s practices. <a href="" target="_blank">Dr. John Shohfi told lawmakers</a> that after Prime took over a number of hospitals, they stopped contacting a 24-hour call center where Kaiser doctors coordinate care for members who land in out-of-network hospitals.&nbsp;</p><p>He said the practice means doctors are treating patients with little knowledge of their medical history or prior and ongoing care.</p><p>In turn, lawmakers drafted a bill that would have limited the number of out-of-network patients a hospital can admit before health plans can pay the hospital lower rates.</p><p>Gov. Jerry Brown vetoed the bill in September, acknowledging the problem but saying he was not convinced that the rate setting prescribed in the bill &ldquo;has it right.&rdquo;</p><p>&ldquo;Extraordinary hospital billings are harmful to the health care system as a whole, including patients,&rdquo; the veto message said. &ldquo;If found to be as widespread and as excessive as some claim, such practices will invite an appropriate regulatory response.&rdquo;</p> Health and Welfare Daily Report Decoding Prime Prime Healthcare Decoding Prime Fri, 29 Mar 2013 07:05:03 +0000 Christina Jewett 18850 at Monica Lam/California Watch Excerpts from Reddy’s presentation to Texas doctors <p>On Jan. 2, Knapp Medical Center in Weslaco, Texas, was bought by a nonprofit foundation associated with Prime Healthcare Services, a fast-growing California-based hospital chain that is under federal investigation for aggressive Medicare billings.</p><p>Soon after, Dr. Prem Reddy, Prime&rsquo;s founder and CEO and the foundation&rsquo;s president, instructed Knapp&rsquo;s doctors on how to boost their Medicare payouts using the same controversial strategies that have made his company the target of federal scrutiny.</p><p>According to an hour-long recording of his presentation, Reddy encouraged the doctors to augment their patients&rsquo; charts with multiple secondary diagnoses for what he called &ldquo;comorbid conditions.&rdquo; Medicare pays hefty treatment bonuses worth thousands of dollars per case for treating patients who suffer from specified &ldquo;major complications and comorbidities,&rdquo; federal records show.</p><p>Reddy also urged the doctors to find reasons to admit Medicare patients to the hospital rather than treating them as outpatients, saying the Medicare payouts would triple.</p><p>More than two years ago, two California congressmen <strong><a href="">asked Medicare to investigate</a>&nbsp;</strong>Prime, saying they suspected the chain was committing a form of Medicare fraud called &ldquo;upcoding,&rdquo; or exaggerated diagnoses. Millions may have been lost, the lawmakers wrote in a letter. On Jan. 2, Prime disclosed to health care regulators in Rhode Island that it is facing a U.S. Justice Department probe over its billing practices.</p><p>But Reddy denied improprieties in connection with the Medicare billings that have attracted investigators&rsquo; attention &ndash; rates for a form of blood poisoning called septicemia that were triple the national average and for a rare form of malnutrition called kwashiorkor that were <strong><a href="">nearly 70 times</a>&nbsp;</strong>California&rsquo;s state average.</p><p>Reddy, an Indian-born physician who has become a multimillionaire health care entrepreneur, told the Texas doctors that Medicare&rsquo;s billing rules were a game &ldquo;devised by bureaucrats.&rdquo; Physicians need to &ldquo;understand the rules of the game and improve our scores,&rdquo; he said.</p><p>In a letter in response to a request for comment, Prime lawyer Anthony Glassman said Reddy&rsquo;s presentation &ldquo;focused on complex clinical information,&rdquo; including &ldquo;evolving Medicare reimbursement models for physicians and hospitals.&rdquo;</p><p>&ldquo;Dr. Reddy was not instructing his doctors on methods for cheating Medicare,&rdquo; the lawyer wrote.</p><p>Here are excerpts, including some audio clips, of Reddy&#39;s remarks.</p><p><strong>&lsquo;Scratching the surface&rsquo;</strong></p><p><em>Early on, Reddy encouraged the physicians to diagnose their patients with complications called &ldquo;comorbid conditions&rdquo; that qualify for thousands of dollars of Medicare bonus payments. He urged them to avoid secondary diagnoses that don&rsquo;t qualify for the payout.</em></p><div style="float:left; width:50%; margin: 0 10px 10px 0;"><iframe frameborder="no" height="166" scrolling="no" src=";color=f88d00&amp;auto_play=false&amp;show_artwork=true" width="100%"></iframe></div><p>&ldquo;I am just only scratching the surface of giving you how what you write in the charts is going to make a lot more difference going forward, both for doctors and for the hospital. &hellip;</p><p>&ldquo;For example, I am a cardiologist, So I can tell (you) atrial fibrillation (an irregular heartbeat) should be a comorbid condition, but they (Medicare) removed it a few years ago, three years ago.</p><p>&ldquo;But atrial flutter (an abnormal heart rhythm) is still a comorbid condition. ...</p><p>&ldquo;So now knowing the rules of the game of atrial fibrillation, you now know how to document it.</p><p>&ldquo;For surgeons, for example, each time you write &ldquo;post op&rdquo; (short for &ldquo;post-operative,&rdquo; a term that means following an operation), it&rsquo;s a complication (for Medicare billing purposes).</p><p>&ldquo;Let&rsquo;s say you wrote &lsquo;post op. fever.&rsquo; It&rsquo;s a complication. If you wrote &lsquo;fever,&rsquo; it&rsquo;s not a complication. Now, (if) you wrote &lsquo;post op. bleeding,&rsquo; it&rsquo;s a complication &ndash; the word for that is &lsquo;post hemorrhagic anemia. &hellip;&rsquo;</p><p>&ldquo;It&rsquo;s the same thing, but how do you document is important.</p><p>&ldquo;Anything &lsquo;post op.,&rsquo; &lsquo;post op. ileus&rsquo; (bowel obstruction) is a complication, but if you write the ileus, it&rsquo;s not a complication. So remember some of these things. &hellip;</p><p>&ldquo;Because that&rsquo;s really important for you to understand. Because your future &ndash; and not monetarily, monetarily is only a small part &ndash; but quality-wise, your perception, your reputation in the community is dependent on it.&rdquo;</p><p><strong>&lsquo;The negative side&rsquo;</strong></p><p><em>Reddy blamed the Service Employees International Union, which represents many Prime workers and has butted heads with Prime over labor contracts, for persuading California Attorney General Kamala Harris </em><strong><em><a href="">to block Prime&rsquo;s purchase</a>&nbsp;</em></strong><em>of Victor Valley Community Hospital in San Bernardino County.</em></p><p>&ldquo;Some circumstances which I am going to tell on the negative side of Prime Healthcare Systems. I tried to buy a not-for-profit hospital in California, but the attorney general did not give her consent.</p><p>&ldquo;It&rsquo;s a lady.</p><p>&ldquo;Because we are in a big legal fight with the union called SEIU. Thank God you don&rsquo;t have to deal with unions! SEIU is a very big union and how they do recruitment of the employees is not by going to the employees.</p><p>&ldquo;They intimidate owners, whether it&rsquo;s a hospital system or a system of nursing homes, so they do what is called a corporate campaign.</p><p>&ldquo;In the corporate campaign, they pull out some of the (company&rsquo;s health care) data and twist it and create a big sensation and have their political friends write to all kinds of agencies trying to bring focus so that the employer, the owner, gets intimidated and says, &lsquo;OK, I&rsquo;ll sign with you.&rsquo; &hellip; So you&rsquo;re giving up all your hospitals to the union.&rdquo;</p><p><strong>Addressing septicemia rates</strong></p><p><em>Reddy claimed his hospital chain&rsquo;s high septicemia rates &ndash; triple the national average, according to an SEIU computer study &ndash; were legitimate. Two Democratic California congressmen, Rep. Henry Waxman of Los Angeles and former Rep. Fortney Stark of Fremont, had cited the septicemia rates in </em><strong><em><a href="">advocating for a probe</a>&nbsp;</em></strong><em>of Prime.</em></p><p>&ldquo;True, we have high incidence of septicemia because we diagnose septicemia. &hellip;</p><p>&ldquo;Septicemia has seven criteria, but if you diagnose them early and treat them aggressively early on, you save lives.</p><p>&ldquo;So for example, when we took over a hospital, a large inner city hospital in Los Angeles (an apparent reference to Centinela Hospital Medical Center in Inglewood), the mortality rate was something like 2 percent, which was not high but high enough.</p><p>&ldquo;And after we&rsquo;re done three years later &hellip; the mortality rate for septicemia is minus 28 percent.</p><p>&ldquo;That means you could kill 28 more patients, and you would be normal.</p><p>&ldquo;I&rsquo;m not saying that &ndash; I&rsquo;m just trying to make fun of that.</p><p>&ldquo;So you could bring it (septicemia) down substantially by properly diagnosing and treating early.</p><p>&ldquo;So, however, the union story says either the hospitals are inundated with bugs that are resistant to antibiotics &hellip;</p><p>&ldquo;Or they will say we are committing Medicare fraud by diagnosing septicemia where there is no septicemia, so naturally, we get investigated by hundreds of agencies.&rdquo;</p><p><strong>&lsquo;Bad rumors&rsquo;</strong></p><p><em>California Watch reported that a Prime hospital in Redding had billed Medicare for treating extremely high rates of a form of malnutrition called kwashiorkor, which is usually seen in developing nations. The hospital ceased the practice after the </em><strong><em><a href="">story</a>&nbsp;</em></strong><em>was published in 2011. Reddy said the diagnosis was required by Medicare billing software.</em></p><p>&ldquo;So, similarly, they publish about having unusual nutrition condition called Kwashiorkor.</p><p>&ldquo;None of our doctors really wrote Kwashiorkor in the charts. &hellip; The doctors would write protein deficiency, but protein deficiency will be coded if you go thru 3M (billing software) as Kwashiorkor.</p><p>&ldquo;So it&rsquo;s medically allowed &hellip; so we never (have) been sanctioned, we never had any negative from the agencies. But there&rsquo;s a publication out there, we diagnose with Kwashiorkor &hellip;</p><p>&ldquo;But that was done in only one hospital. So those are the bad rumors that were circulating.&rdquo;</p><p><strong>&lsquo;We fight every case&rsquo;</strong></p><p><em>Reddy said that when Medicare&rsquo;s Recovery Audit Contractor Program, an entity that provides financial oversight, objects to a Medicare billing, Prime appeals &ndash; and always wins.</em></p><div style="float:right; width:50%; margin: 0 0 10px 10px;"><iframe frameborder="no" height="166" scrolling="no" src=";color=f88d00&amp;auto_play=false&amp;show_artwork=true" width="100%"></iframe></div><p>&ldquo;As chairman and CEO, I will tell you that so far, we have not paid a single penny and as a matter of fact, on our RAC (Recovery Audit Contractor) audits, we never lose a case yet. We fight on every case and we win. It&rsquo;s all in your documentation. &hellip;</p><p>&ldquo;What happens is, RAC denies (a billing) &hellip; and then you appeal it to Medicare intermediary (also called the &ldquo;fiscal intermediary,&rdquo; another part of Medicare&rsquo;s oversight system) and they deny it too &hellip; and then you appeal.</p><p>&ldquo;The second appeal goes to an administrative law judge, a lay person.</p><p>&ldquo;For the lay person, all you have to say is, &lsquo;The physician who (has) actually seen and examined the patient has documented (the) patient needed hospitalization because of these comorbid conditions.&rsquo; &hellip;</p><p>&ldquo;So you have &lsquo;hypertensive heart disease.&rsquo; Or &lsquo;diabetes uncontrolled,&rsquo; or &lsquo;diabetic &ndash; other conditions&rsquo; &ndash; neuropathy (nerve damage), vasculopathy (disorder of the blood vessels), nephropathy (kidney disease).</p><p>&ldquo;Elderly patients have all these, you know, comorbid conditions.</p><p>&ldquo;You know, sometimes I am reading many of these reports from the administrative law judges. Whatever they think (of a) condition, they think it&rsquo;s a serious condition. &hellip;</p><p>&ldquo;That means, the more the better.</p><p>&ldquo;And they&rsquo;ll say, &lsquo;This patient has too many conditions to do it as an outpatient. He should be admitted.&rsquo;</p><p>&ldquo;So every judgment to date has been in our favor.</p><p>&ldquo;And in your hospital, whatever has been refused you have not appealed and are letting it go, and you are probably losing, I don&rsquo;t know, $600,000 to $1 million per year, which we&rsquo;re going to appeal on your behalf.&rdquo;</p><p><strong>&lsquo;More inpatients&rsquo;</strong></p><p><em>Reddy urged the doctors to find ways to admit more Medicare patients to the hospital. Outpatient care doesn&rsquo;t pay, he said</em>.</p><div style="float:left; width:50%; margin: 0 10px 10px 0;"><iframe frameborder="no" height="166" scrolling="no" src=";color=f88d00&amp;auto_play=false&amp;show_artwork=true" width="100%"></iframe></div><p>&ldquo;Outpatient reimbursement for Medicare and Medicaid is small, negligible compared to inpatient. For example, that&rsquo;s not the reason to admit a patient, but it is a knowledge tool you have to assess.</p><p>&ldquo;For example, in your hospital, if you are treating a patient (as an) outpatient, for Medicare, reimbursement is about 10 percent of your billing charges. Whereas, if it is inpatient, it is 30 percent. So just remember it is three times different.</p><p>&ldquo;If it is Medicaid, it is even worse &ndash; your hospital&rsquo;s Medicaid reimbursement outpatient is 6 percent, whereas inpatient is 25 percent. I am giving you just rough numbers.</p><p>&ldquo;Let me give you a practical example. A 75-year-old patient came to the ER (emergency room), came in with chest pain and has multiple comorbid conditions.</p><p>&ldquo;If we admit this patient for observation, you are performing an EKG (electrocardiogram test) and discharging the patient and lab tests, EKG stay overnight &ndash; you could do for every case like that, pretty much. What would you think the Medicare reimbursement would be for that stay, approximately? Anybody?</p><p>&ldquo;$300 to $500 ...</p><p>&ldquo;Medicare doesn&rsquo;t reimburse for the stay, zero, so (Medicare) he pays you for EKG, $10- $15, so three EKGs, three (times) $15, and then a lab maybe $30, OK, an X-ray, chest, keep adding small numbers, it never comes to more than $400-$500.</p><p>&ldquo;Whereas inpatient, the same patient, same treatment, you could justify because of comorbid conditions &ndash; the reimbursement would be &ndash; anybody know? $3,500 &hellip;</p><p>&ldquo;So there is unfair pricing for inpatient versus outpatient, so either Medicare has to change it and improve it or we have to learn how to cope with that kind of disparity.&rdquo;</p><p><strong>&lsquo;Not profitable</strong><em>&rsquo;</em></p><p><em>Knapp Medical Center is a charity hospital, and it was acquired by the nonprofit Prime Healthcare Services Foundation. Reddy, president of the foundation, said the hospital&rsquo;s bottom line was a concern.</em></p><p>&ldquo;I am only here trying to keep this hospital going. When they were trying to sell this hospital, the board &ndash; I don&rsquo;t know if they know all of the factors &ndash; they were saying, &lsquo;This is a very profitable hospital.&rsquo;</p><p>&ldquo;And I believe, &lsquo;Oh, it is a profitable hospital.&rsquo;</p><p>&ldquo;But really, when you look at the numbers, you do lose about a few million dollars a year. So it&rsquo;s definitely not a profitable hospital.&rdquo;</p> Health and Welfare Daily Report Dr. Prem Reddy medicare Prime Healthcare Services Decoding Prime Wed, 06 Feb 2013 08:05:03 +0000 Lance Williams 18802 at Prime hospital chain acknowledges it faces 2 federal investigations <p>The Prime Healthcare Services hospital chain has acknowledged it is the target of two federal investigations: a U.S. Justice Department probe of its Medicare billings and an inquiry into alleged violations of patient confidentiality laws.</p><p>The San Bernardino County-based company disclosed the investigations in a Jan. 2 filing with the state health department in Rhode Island, where Prime hopes to buy its 22nd hospital.</p><p>Prime&rsquo;s filing marked the first time the company has said it is facing a federal investigation. Until now, the company has steadfastly denied being the subject of any such probes.</p><p>Prime claims its Medicare billings are legal and proper, and the company shows little sign of backing away from the kind of aggressive billing practices that have made it the focus of official scrutiny.</p><p>As <a href="" target="_blank">California Watch has reported</a>, Prime hospitals have billed Medicare for treating extremely high rates of some difficult medical conditions, including septicemia, or blood poisoning, and <a href="" target="_blank">kwashiorkor</a>, a form of malnutrition seen among children in African famines. The billings have made Prime eligible for millions of dollars in Medicare bonus payments, according to federal records.</p><p>In June, the Justice Department subpoenaed documents concerning Prime&rsquo;s billings for septicemia and malnutrition, the company said in the Rhode Island filing.</p><p>In a letter in response to California Watch&rsquo;s request for comment, Prime lawyer Anthony Glassman said the company had been targeted for federal investigation because of &ldquo;false allegations&rdquo; made by the Service Employees International Union, which represents many Prime workers and has butted heads with the company over labor contracts.</p><p>He suggested the probe began because the union in 2010 distributed an analysis showing Prime&rsquo;s septicemia rates were triple the national average. Citing the analysis, two California congressmen &ndash; Rep. Henry Waxman, D-Los Angeles, and then-Rep. Fortney &ldquo;Pete&rdquo; Stark, D-Fremont &ndash; asked Medicare <a href="" target="_blank">to investigate Prime</a> for possible Medicare fraud, records show.</p><p>California Watch previously reported that FBI agents had <a href="" target="_blank">interviewed former Prime employees</a> about Medicare billing issues.</p><p>Prime also said it is being investigated by the U.S. Department of Health and Human Services&rsquo; Office for Civil Rights. That probe concerns Prime&rsquo;s 2011 disclosure of the medical files of a patient who was treated for complications of diabetes at a Prime hospital in Redding.</p><p>Federal records show Prime obtained a Medicare bonus payment of more than $6,000 after reporting it had treated the patient for kwashiorkor, a form of malnutrition that usually afflicts children in sub-Saharan Africa.</p><p>Over two years, the hospital claimed to have treated more than 1,000 Medicare patients for the ailment, records show &ndash; a rate more than 60 times the state average.</p><p>In an <a href="" target="_blank">interview with California Watch</a>, the patient denied being malnourished and said she was never treated for kwashiorkor. In an attempt to rebut a California Watch news story about the issue, Prime officials shared the patient&rsquo;s medical files with the local newspaper and with hundreds of hospital employees, records show.</p><p>In November, California regulators <a href="" target="_blank">fined Prime $95,000</a> for violating state confidentiality laws in the case. Disclosing a patient&rsquo;s medical records without consent also violates federal law. The chain denies wrongdoing and is confident it will win on appeal, wrote Glassman, Prime&rsquo;s lawyer. He also contended that the SEIU had urged the patient to complain about her diagnosis.</p><p>As late as last March, Prime said it was unaware of any federal probes. In 2011, it threatened to sue California Watch for defamation for reporting that the company&nbsp;was facing a federal probe.&nbsp;Prime threatened to sue because the company did not yet know it was &ldquo;being unfairly targeted by government agencies,&rdquo; Glassman wrote.</p><p>Prime&rsquo;s disclosure about the investigation was attached to its application to buy Landmark Medical Center, a 214-bed hospital in the Rhode Island town of Woonsocket. The filing was marked confidential, but it can be downloaded from the health department&rsquo;s <a href="" target="_blank">website</a>.</p><p>Soon after Prime made the filing in Rhode Island, the company&rsquo;s founder gave a presentation to doctors at a south Texas hospital that Prime&rsquo;s nonprofit foundation recently acquired. A person who was present <a href="" target="_blank">made a one-hour recording</a> of the session and shared it with California Watch.</p><p>According to the recording, Dr. Prem Reddy, Prime&rsquo;s CEO and the foundation&rsquo;s president, told the doctors how to boost the hospital&rsquo;s Medicare payouts by employing some of the same billing strategies now being investigated.</p><p>In the meeting at Knapp Medical Center in Weslaco, Texas, Reddy encouraged the doctors to augment their patients&rsquo; charts with multiple secondary diagnoses that would qualify for Medicare treatment bonus payments.</p><p>Reddy also urged the doctors to find reasons to admit Medicare patients to the hospital rather than treating them as outpatients, saying the Medicare payouts would triple.</p><p>Reddy told the Texas doctors that Medicare&rsquo;s billing rules were a game &ldquo;devised by bureaucrats.&rdquo; Physicians need to &ldquo;understand the rules of the game and improve our scores,&rdquo; he said.</p><p>Also in the session, Reddy said Medicare had never successfully challenged a Prime billing, saying the company appeals whenever a billing is rejected.</p><p>&ldquo;We never lose a case yet,&rdquo; Reddy said. &ldquo;We fight on every case and we win.&rdquo;</p><p>In his letter, Glassman wrote that Reddy&rsquo;s presentation &ldquo;focused on complex clinical information,&rdquo; including &ldquo;evolving Medicare reimbursement models for physicians and hospitals.&rdquo;</p><p>&ldquo;Dr. Reddy was not instructing his doctors on methods for cheating Medicare,&rdquo; the lawyer wrote.</p> Health and Welfare Daily Report kwashiorkor medicare patient confidentiality Prime Healthcare Services Decoding Prime Wed, 06 Feb 2013 08:05:03 +0000 Lance Williams 18801 at Ana Venegas/The Orange County Register Dr. Prem Reddy, founder of Prime Healthcare Services, recently gave a presentation on Medicare billing practices to doctors at a Texas hospital that Prime’s nonprofit foundation acquired. Former patient claims confidentiality breach in Prime Healthcare lawsuit <p>A former Redding hospital patient has sued the Prime Healthcare Services chain for disclosing her medical files to hundreds of people without permission.</p><p>In a lawsuit filed last month in Shasta County Superior Court, Darlene Courtois, a retired teacher&#39;s aide, accused Prime of repeatedly violating patient confidentiality laws in a frantic effort to discredit a 2011 California Watch <a href="" target="_blank">news report</a> about the hospital chain&rsquo;s billing practices.</p><p>As part of that effort, the CEO at Prime&rsquo;s Shasta Regional Medical Center sent emails to all of the hospital&rsquo;s 785 employees disclosing details of the then-64-year-old diabetes patient&rsquo;s confidential files, the lawsuit says.</p><p>The CEO also showed her medical files to the editor of the local newspaper in a successful effort to dissuade him from publishing the story, the suit says.</p><p>California Watch had interviewed Courtois for a story about a reported outbreak of a rare form of malnutrition called kwashiorkor at the Redding hospital.</p><p>In 2009 and 2010, the hospital diagnosed more than 1,000 Medicare patients with the ailment, Courtois among them. The hospital&rsquo;s kwashiorkor rate was nearly <a href="" target="_blank">70 times the state average</a>, records show. But in her interview, Courtois said she received no treatment for kwashiorkor and had never heard of it.</p><p>&ldquo;Defendants &ndash; in an effort to protect their professional reputation &ndash; abandoned their professionalism,&rdquo; her lawyer, Darryl Stallworth, wrote in the complaint.</p><p>In November, the state Department of Public Health <a href="" target="_blank">fined Prime $95,000</a> for wrongly publicizing Courtois&rsquo; medical files, ruling that the company had repeatedly violated state law. Prime has appealed. It contends that Courtois waived her privacy rights by agreeing to be interviewed.</p><p>&quot;Shasta Regional Medical Center is committed to the privacy of its patients,&quot; Prime spokesman Edward Barrera said in a statement. &quot;It believes that the facts will show that this lawsuit has no merit.&quot;</p><p>The lawsuit closely follows the state health department&rsquo;s findings, but for Prime, the financial stakes could be far higher.</p><p>According to state law, a hospital may be required to pay $1,000 in damages for each wrongful disclosure of a patient&rsquo;s medical files. As a result, Courtois could be entitled to more than $785,000, the lawsuit says.</p><p>Experts say kwashiorkor usually afflicts children in developing nations during famines. But the reported outbreak at the Redding hospital predominantly involved senior citizens, a California Watch analysis shows. Medicare pays a treatment bonus of more than $6,000 for each patient diagnosed with kwashiorkor, according to federal records.</p><p>Courtois told California Watch that she had been hospitalized for complications of diabetes, not malnutrition. She said she had never before heard the word &quot;kwashiorkor&quot; &ndash; it means &ldquo;weaning sickness&rdquo; in the Ghanaian language of West Africa &ndash; and had received no treatment for it.</p><p>After a reporter called Prime for comment, hospital officials zeroed in on Courtois, the lawsuit says.</p><p>Claiming that the patient&rsquo;s confidential files undercut her story, they took her records to the editor of the Redding Record Searchlight and lobbied him not to publish the story, the suit says. Prime officials also revealed parts of her medical files to reporters for two other news services, the lawsuit says.</p><p>After California Watch&rsquo;s story was published, the hospital CEO emailed details from the woman&rsquo;s medical file to the hospital&rsquo;s entire staff in a further attempt to counter the story, according to the lawsuit.</p><p>All of that was illegal because it was done without the patient&rsquo;s permission, the lawsuit says.</p><p>Prime officials claimed that the confidential files showed Courtois had been given a nutritional consultation as a treatment for malnutrition. That substantiated the kwashiorkor billing, they claimed.&nbsp;</p><p>But Courtois denied having received a nutritional consultation. When she <a href="" target="_blank">requested her medical records</a> from the hospital, she didn&rsquo;t receive any information indicating she was malnourished, she said.</p><p>The hospital abruptly stopped billing Medicare for kwashiorkor in 2011, soon after California Watch reported on the outbreak, state records show.</p> Health and Welfare Daily Report kwashiorkor Prime Healthcare Services Shasta Regional Medical Center Decoding Prime Fri, 18 Jan 2013 08:05:02 +0000 Lance Williams 18788 at Monica Lam/California Watch Shasta Regional Medical Center in Redding  Prime hospital abruptly stops billing Medicare for rare ailment <p>After billing Medicare for treating more than 1,100 cases of a rare affliction, a Prime Healthcare Services hospital in Redding abruptly stopped last year, state health records show. The change occurred soon after California Watch <a href="" target="_blank">published a story</a> about aggressive billing practices at the hospital.</p><p>About six months after it took control of the Shasta Regional Medical Center in Redding in late 2008,&nbsp;Prime began billing Medicare for treating senior citizens it diagnosed with kwashiorkor, a dangerous nutritional disorder usually seen among children during famines in developing countries. At its height, the hospital&#39;s&nbsp;billing for&nbsp;the malady surged to nearly 70 times the state average.</p><p>The previous&nbsp;high rates of kwashiorkor&nbsp;diagnoses made the hospital eligible for about $6,000 in Medicare bonus payments for each of the&nbsp;more than 1,100&nbsp;cases of&nbsp;kwashiorkor it reported&nbsp;over a two-year period, according to federal records. That&rsquo;s $6.9 million in all.</p><p>Prime said in a statement that its Medicare billings are legal and accurate. It declined to respond to follow-up questions.</p><p>Other hospitals in the Prime Healthcare chain&nbsp;also&nbsp;have&nbsp;geared back on billing Medicare for treating kwashiorkor, according to California Watch&rsquo;s analysis of data from the Office of Statewide Health Planning and Development, which details Medicare cases at general hospitals in California.</p><p>An expert on Medicare fraud said the sudden drop in kwashiorkor billings strongly suggests they were incorrect to begin with.&nbsp;</p><p>&ldquo;Obviously, they felt the heat from the story, and obviously they decided to clean up their act,&rdquo; said Jamie Bennett, a lawyer at the Maryland firm Ashcraft &amp; Gerel, who investigated Medicare billing fraud during 20 years as a federal prosecutor.</p><p>&ldquo;Someone told (the hospital) the billings were incorrect and they stopped &ndash; it&rsquo;s the only explanation,&rdquo; Bennett said.</p><p>In its&nbsp;statement, Prime said the drop in reports of kwashiorkor was the result of &quot;certain changes in Medicare coding guidelines&quot;&nbsp;for documenting malnutrition among&nbsp;elderly patients. As a result, cases that formerly had been classified as kwashiorkor on Medicare billings now are billed as other forms of severe malnutrition, spokesman Edward Barrera wrote.&nbsp;</p><p>But a Medicare spokeswoman said the agency has not changed its guidelines regarding kwashiorkor. And the billing data for Prime hospitals does not show an increase in other forms of severe malnutrition &ndash; only the steep drop in kwashiorkor.</p><p>For example, in 2010, Shasta Regional Medical Center billed Medicare for treating 727 cases of kwashiorkor and 484 cases of other forms of severe malnutrition, the analysis shows. In 2011, it reported 106 cases of kwashiorkor. But the number of billings for other forms of severe malnutrition increased by six, to 490.</p><p>Prime is a chain of 20 hospitals that is based in San Bernardino County. In recent years, Prime hospitals have reported <a href="" target="_blank">high rates of several unusual conditions</a> that qualify for enhanced Medicare payouts, according to the data.</p><p><a href="" target="_blank">Some former Prime employees</a>&nbsp;claim that Dr. Prem Reddy, the chain&rsquo;s founder, has urged doctors and medical coders to pad computerized bills submitted to Medicare for reimbursement with <a href="" target="_blank">conditions that qualify for premium payouts</a>.</p><p>Prime insists its billings are accurate, a reflection of its concern for patient care. But in the past two years, three members of Congress have asked Medicare to investigate&nbsp;Prime for a form of suspected billing fraud called upcoding, in which a provider files false claims via computerized billing codes to reap enhanced reimbursement.</p><p>Among the unusual conditions in Prime&rsquo;s Medicare billings was kwashiorkor. According to the records, the reported outbreak at Shasta Regional Medical Center began and ended abruptly.</p><p>In 2008, the year Prime took over, the hospital reported eight cases of kwashiorkor &ndash; a rate of 0.23 percent, slightly higher than the statewide rate of 0.17 percent. In the first six months of 2009, the hospital reported two cases of kwashiorkor, according to a quarterly breakdown of hospital admission reports.</p><p>Kwashiorkor exploded after that: In the final six months of 2009, the hospital reported 301 cases of kwashiorkor. That was 16.7 percent of all the Medicare patients treated there, a rate 66 times the state average.</p><p>The rise in kwashiorkor cases at Shasta came around the time that the American Hospital Association, which advises hospitals on proper use of diagnostic codes, noted in a 2009 advisory that kwashiorkor is &quot;extremely rare in the United States&quot; and should be coded only when a physician specifically documented the condition.</p><p>In 2010, Shasta&rsquo;s rate was even higher: The hospital claimed 727 seniors suffered from kwashiorkor, 19.4 percent of all the Medicare patients treated. In the first quarter of 2011, Shasta billed Medicare for 100 cases of kwashiorkor.</p><p>California Watch <a href="" target="_blank">published its first report</a> on the outsized rates in February 2011, quoting experts who questioned whether senior citizens in Northern California actually were suffering from kwashiorkor.</p><p>After that, the reports plummeted: The hospital reported six cases for the rest of the year.</p><p>The trend was similar at other Prime hospitals in California. Nine&nbsp;Prime hospitals that previously had billed Medicare for treating kwashiorkor&nbsp;reported no cases in 2011. Only one reported an increase: Garden Grove Hospital Medical Center in Orange County reported 28 cases in 2010. In 2011, it increased to 58 cases, 3.3 percent of its Medicare patients.</p><p>Bennett, the former fraud prosecutor, said the reported fluctuations in kwashiorkor cases were too extreme to reflect a genuine health care trend.</p><p>&ldquo;You don&rsquo;t have 100 cases in one quarter and none in the next,&rdquo; she said.</p><p>Two medical experts told California Watch that they had similar concerns.</p><p>&ldquo;I wouldn&rsquo;t expect the trend to dramatically change,&rdquo; said Dr. Matthew Butteri, a medical professor at UC Irvine and expert in geriatric medicine. It was &ldquo;very hard to believe,&rdquo; he said in a phone interview.</p><p>He said the data likely reflected &ldquo;a coding phenomenon, rather than a trend in nutrition and disease &ndash; a phenomenon of how doctors and health care workers write in the charts and (how) a documentation specialist attempts to label the degree of malnutrition.&rdquo;</p><p>Elaine Morrato, an epidemiologist and professor at the Colorado School of Public Health,&nbsp;said the timeline made her suspect &quot;a change in diagnostic coding practice.&quot; &nbsp;</p><p>&ldquo;Without more information, I cannot assess whether the change in coding corrected an intentional (perhaps fraudulent) billing practice or corrected an honest error in diagnosis,&rdquo; she wrote in an email.</p><p><em>Christina Jewett contributed to this report.</em></p> Health and Welfare Daily Report kwashiorkor medicare Prime Healthcare Services Shasta Regional Medical Center Decoding Prime Thu, 20 Dec 2012 08:05:03 +0000 Lance Williams Stephen K Doig 18751 at Monica Lam/California Watch We stand behind facts uncovered in our Prime Healthcare reporting <p>California Watch has consistently stood behind its reporting on Prime Healthcare Services&rsquo; aggressive Medicare billing practices.</p><p>And we continue to do so &ndash; even as our reporters have come under attack from the editor of the Redding Record Searchlight for our story about a local Prime hospital that claimed in Medicare billings that it was treating an outbreak of a nutritional disorder seen in developing countries called kwashiorkor.</p><p><a href="" target="_blank">In a column Sunday</a>, the editor wrote that he decided not to publish California Watch&rsquo;s <a href="" target="_blank">Dec. 16, 2011, report</a>&nbsp;after meeting with Prime officials to review the confidential medical records of a patient who was interviewed for the story. The state health department recently fined Prime $95,000 for violating patient confidentiality laws by publicizing the patient&rsquo;s records.</p><p>In his column, the editor accused California Watch, a project of the <a href="" target="_blank">Center for Investigative Reporting</a>,&nbsp;of ignoring &ldquo;contradicting facts&rdquo; and failing to correct errors in our report. But the column cited no errors, and the &ldquo;contradicting facts&rdquo; that he accused us of ignoring actually were addressed at length in the story.</p><p>Because the Record Searchlight continues to feel the need to justify its decision not to publish an important local story by criticizing California Watch, we felt the need to respond in more detail regarding the handling of this story.</p><p>Here are the facts:</p><p>Kwashiorkor is a nutritional disorder that experts say typically afflicts children during famines in&nbsp;developing countries. In 2009 and 2010, Prime&rsquo;s Shasta Regional Medical Center billed Medicare for treating more than 1,000 cases of the ailment, a California Watch analysis shows. That&rsquo;s more than 70 times the statewide rate for general hospitals.</p><p>Among the patients was the 64-year-old woman who was the subject of the Dec. 16 story. Records obtained via a Freedom of Information Act request show that Prime billed Medicare for treating the patient for kwashiorkor and received an additional payment of $6,700.</p><p>In an interview, the patient, who we identified in our story as an on-the-record source, said she had never heard of kwashiorkor and was hospitalized and treated for kidney failure, not malnutrition. The patient was described as &ldquo;well nourished&rdquo; in her admitting documents and described herself as overweight. &nbsp;</p><p>The patient requested her hospital records from Prime and allowed California Watch to review them.</p><p>The records supported her account. On the eve of publication, Prime said it had additional documents &ndash; records that the patient said she had not been provided. Prime did not provide these records to California Watch, though it showed them to the Record Searchlight.</p><p>The company maintained that these records showed that the patient had been diagnosed with protein malnutrition and had received a nutritional consultation. That justified a billing for kwashiorkor, Prime contended. Our story quoted Prime spokesman Edward Barrera on these points. We also published his letter on our website.</p><p>But the story also noted that the patient denied receiving a nutritional consultation and insisted she had never been told she was malnourished. In addition, the story quoted experts who described kwashiorkor as a dangerous condition that requires urgent intervention to save the patient&rsquo;s life.</p><p>Since publishing our story we have learned additional details about the patient&rsquo;s case that underscore the concerns our story raised regarding the accuracy of her diagnosis and of the billing Prime submitted to Medicare.</p><p>For example, results from the patient&rsquo;s blood chemistry panel conflicted with a malnutrition diagnosis or could be explained by the fact that she happens to be diabetic. Both the American Hospital Association and Medicare itself have said that hospitals should not equate malnutrition with kwashiorkor on Medicare billings &ndash; even in cases in which a malnutrition diagnosis is justified.</p><p>Our reporters spent a year on our investigation of Prime. California Watch&rsquo;s site&nbsp;<a href=" " target="_blank">provides additional information</a> about Prime&rsquo;s billing practices and about how we reported the story.</p><p>We continue to stand by our work.</p><p><em>Mark Katches is the editorial director of the Center for Investigative Reporting.</em></p> Health and Welfare Newsroom Decoding Prime Tue, 04 Dec 2012 23:31:35 +0000 Mark Katches 18728 at Prime hospital fined $95,000 for confidentiality breach <p>A Prime Healthcare Services hospital in Redding has been fined $95,000 for publicizing a patient&rsquo;s confidential medical files in an effort to discredit a California Watch news report.</p><p>The state Department of Public Health imposed the financial penalties on Prime&rsquo;s Shasta Regional Medical Center on Nov. 9 for five offenses that occurred last year.</p><p>At the time, officials of the Ontario-based hospital chain were trying to undercut a <a href="" target="_blank">California Watch story</a> about aggressive Medicare billing practices at the Redding hospital.</p><p>In an attempt to rebut the story, the hospital&#39;s CEO sent an email to 785 people &ndash; virtually everyone who worked at the hospital &ndash; disclosing details from a 64-year-old diabetes patient&rsquo;s confidential files, state investigators wrote in their report. The patient had been interviewed by California Watch for its story.</p><p>Earlier, the hospital CEO, Randall Hempling, took the woman&rsquo;s medical files to the editor of the local newspaper, the Redding Record Searchlight, to dissuade him from reprinting California Watch&#39;s story.</p><p>All the disclosures were illegal because they were made without the patient&rsquo;s knowledge or permission, the state said. The hospital &ldquo;failed to prevent unlawful or unauthorized access&rdquo; to the patient&rsquo;s medical files, Debby Rogers, a deputy director at the health department, wrote in a letter to Prime.</p><p>Prime spokesman Edward Barrera said the company believes it did nothing wrong and has filed an appeal.</p><p>&ldquo;Shasta Regional Medical Center is committed to the privacy of its patients,&rdquo; he wrote in an email. The company &quot;believes that the disclosures, if any, were permitted under both federal and state law,&quot; he wrote.</p><p>The disclosures found to be illegal by the health department began as California Watch was inquiring about a reported outbreak of a dangerous nutritional disorder called kwashiorkor at the Redding hospital.</p><p>Experts say kwashiorkor usually afflicts children in the Third World during famines. But in 2009 and 2010, the Redding hospital billed Medicare for treating more than 1,000 senior citizens for kwashiorkor, records show. That&rsquo;s about <a href="" target="_blank">70 times the state average</a>, according to Medicare data analyzed by California Watch.&nbsp;</p><p>The billings made the hospital eligible for Medicare bonus payments of more than $6,000 for each patient treated for the affliction, according to federal records.</p><p>In December, California Watch interviewed former hospital patient Darlene Courtois, a retired teacher&rsquo;s aide from Shasta County.</p><p>Records obtained through the federal Freedom of Information Act showed that Shasta Regional Medical Center had billed Medicare for treating her for kwashiorkor. As a result, the hospital received a $6,700 bonus payment from Medicare.</p><p>But Courtois told California Watch that she had been hospitalized for complications of diabetes, not malnutrition. She described herself as overweight, not malnourished, and said she had never before heard the word &quot;kwashiorkor.&quot; It means &ldquo;weaning sickness&rdquo; in the Ghanaian language of West Africa.</p><p>After a reporter called Prime for comment, hospital officials zeroed in on Courtois, the state report says.</p><p>Claiming that Courtois&rsquo; confidential files undercut her story, they took her records to the local newspaper and showed them to the editor. They also revealed parts of her medical files to reporters from two other news services, the report says.</p><p>After California Watch&rsquo;s story was published in the San Francisco Chronicle and The Orange County Register, the hospital CEO emailed details from the woman&rsquo;s medical file to the hospital&rsquo;s staff in a further attempt to counter the story, according to the report.</p><p>Prime officials claimed that the confidential files showed Courtois had been given a nutritional consultation as a treatment for malnutrition. That substantiated the kwashiorkor billing, they claimed.</p><p>But Courtois denied receiving a nutritional consultation. When she <a href="" target="_blank">requested her medical records</a> from the hospital, she didn&rsquo;t receive any information indicating that she was malnourished, she said.</p><p>Courtois&rsquo;s daughter, Julie Schmitz, called the hospital &ldquo;vindictive&rdquo; for publicizing her mother&rsquo;s files. She said she was pleased to learn of the fine.</p><p>&ldquo;The only way to hit some people is to hit them in their pocketbook,&rdquo; she said in a phone interview.</p><p>The health department report said the hospital&rsquo;s general counsel, communications director, CEO and medical officer were involved in the disclosures&nbsp;found to be illegal by the&nbsp;department.</p><p>The report doesn&rsquo;t identify them by name. Silas Lyons, editor of the Record Searchlight, <a href="" target="_blank">has identified the hospital officials</a> who brought Courtois&rsquo; records to the newspaper as Hempling, the hospital CEO, and Dr. Marcia McCampbell, its chief medical officer.</p><p>A California Watch analysis of state records shows that Prime hospitals have reported high rates of several <a href="" target="_blank">unusual medical conditions</a> that qualify for enhanced Medicare payouts.</p><p>At the same time, former employees of Prime say chain owner Dr. Prem Reddy has urged doctors and medical coders to <a href="" target="_blank">log conditions that qualify for premium payouts</a> when treating Medicare patients.</p><p>Three members of Congress have asked for a federal probe of suspected Medicare fraud at Prime. FBI agents have <a href="" target="_blank">interviewed Courtois</a> and have contacted <a href="" target="_blank">former Prime employees</a>. No charges have been filed.</p><p>Prime has denied wrongdoing, saying its Medicare billings are legal and proper.</p><p>Also on Nov. 9, the health department fined Shasta Regional Medical Center an additional $25,000 for an unrelated violation of patient confidentiality that occurred in February. In that case, &ldquo;a Shasta employee accessed personal information for inappropriate reasons but not for sale or publication,&rdquo; Barrera, Prime&rsquo;s spokesman, wrote in an email.</p><p>The employee was fired, he wrote. The hospital believes the fine is excessive and is appealing, he wrote.</p> Health and Welfare Daily Report kwashiorkor patient confidentiality Prime Healthcare Service Shasta Regional Medical Center Decoding Prime Wed, 28 Nov 2012 20:35:00 +0000 Lance Williams 18706 at Monica Lam/California Watch Shasta Regional Medical Center in Redding  Judge dismisses Prime Healthcare antitrust suit <p>A federal judge dismissed a lawsuit filed by hospital chain Prime Healthcare Services that alleged Kaiser Permanente conspired with a health care workers union to drive Prime out of business.</p><p>The lawsuit cited the Sherman Antitrust Act, which is meant to limit monopolies, and claimed Kaiser and the union &quot;joined forces&quot; to drive up Prime&#39;s costs, in part, by forcing the chain to pay high wages to workers.</p><p>Judge Janis L. Sammartino <a href="" target="_blank">filed an order granting</a> Kaiser&rsquo;s motion to dismiss Prime&rsquo;s complaint Aug. 30.&nbsp;The order says the facts stated in Prime&#39;s complaint did not support an antitrust lawsuit.&nbsp;</p><p>Sammartino wrote that she &ldquo;finds that Prime Healthcare has not sufficiently pleaded specific facts suggesting a conspiracy.&rdquo;</p><p>The judge gave Prime 21 days to file a new complaint.&nbsp;Prime spokesman Edward Barrera said Prime plans to do that &ldquo;to address the issues raised by the court and looks forward to moving this case forward.&rdquo;</p><p>The workers union, the Service Employees International Union United Healthcare Workers West, issued a statement last week from President Dave Regan: &ldquo;This dismissal confirms that Prime&rsquo;s lawsuit was simply an attempt to divert attention away from continuing allegations&nbsp;of potential Medicare fraud.&quot;</p><p>Kaiser declined to comment on the judge&rsquo;s order.</p><p>Prime Healthcare, based in Ontario, Calif., owns 18 hospitals in four states, including 14 in California. <a href="" target="_blank">The chain</a> has expanded rapidly since its board chairman and chief executive, Dr. Prem Reddy, bought his first hospital in 2001, most recently buying hospitals in Texas, Nevada and Pennsylvania.</p><p>A <a href="" target="_blank">California Watch investigation</a> has shown that Prime has billed for outsized rates of rare and dire medical conditions that Medicare pays a premium to treat. Prime has defended its billing for conditions such as kwashiorkor, a rare form of malnutrition, even as <a href="" target="_blank">FBI agents have interviewed</a> a former <a href="" target="_blank">patient</a>&nbsp;and office clerks about the chain&#39;s billing practices.</p><p>Kaiser <a href="" target="_blank">accused Prime</a> in a lawsuit filed in 2010 of &ldquo;illegal upcoding,&rdquo; or exaggerating the severity of patient illnesses to draw more reimbursement. In the same lawsuit, Kaiser, which has about 6.8 million members in California, also accused Prime of capturing Kaiser patients in its emergency rooms and rendering unneeded care to generate hefty bills.</p><p>Prime has disputed the accusations and is <a href="" target="_blank">fighting the case</a> in Los Angeles County Superior Court.</p><p>The SEIU-UHW represents employees at some Prime hospitals and has had wage and layoff disputes with Prime. The union also has sent a researcher to speak at several public hearings about Prime&#39;s aggressive billing practices.</p><p>In November, <a href="" target="_blank">Prime sued both</a>&nbsp;the SEIU and Kaiser, alleging that they &ldquo;share a common objective, to protect their respective business models from the competitive threat presented by Prime in the market.&rdquo; The suit says the two &ldquo;joined forces&rdquo; in an &ldquo;illegal conspiracy&rdquo; to engage in unfair or deceptive conduct to eliminate Prime as a competitor.</p><p>Prime argued that because of Kaiser and the union, it has had to pay higher-than-competitive wages and has suffered a loss of &quot;actual and potential customers, lost profits, and the loss of business goodwill resulting from the campaign to eliminate Prime from The Market.&quot;</p><p>In court records filed in response to the lawsuit, Kaiser noted that Prime&rsquo;s complaint &ldquo;fails utterly to plead any facts that might plausibly show there was ever any agreement between Kaiser and the SEIU to eliminate Prime from the market.&rdquo;</p><p>Kaiser noted that the only formal agreements it has with the union is on collective bargaining, but that document &quot;says nothing about driving Prime or any competitor out of business.&quot;</p><p><a href="" target="_blank">At the time</a> the case was filed in the Southern District of California, the union called the case &ldquo;frivolous,&rdquo; and Kaiser described it as &ldquo;deeply puzzling.&rdquo;</p> Health and Welfare Daily Report hospital Kaiser Permanente lawsuit Prime Healthcare Services SEIU UHW SEIU-UHW Decoding Prime Mon, 17 Sep 2012 07:05:03 +0000 Christina Jewett 17984 at Monica Lam/California Watch Prime Healthcare expands, but not in California <p>In recent months, Southern California-based Prime Healthcare Services has bought financially troubled hospitals in Nevada, Texas and Pennsylvania.</p><p>But the rapidly expanding hospital chain hit a speed bump on its home turf in San Bernardino County, where a bankruptcy judge bypassed Prime&#39;s nonprofit foundation<strong>&nbsp;</strong>and steered the sale of 101-bed Victor Valley Community Hospital to a local investment group.</p><p>Judge Catherine Bauer&rsquo;s decision, reached last week, was a setback in Prime&rsquo;s long-running legal fight to acquire the bankrupt nonprofit hospital in Victorville, east of Los Angeles &ndash; and, perhaps, to continue its expansion in the Golden State.</p><p>At one pivotal point last year, state Attorney General Kamala Harris refused to approve the sale of the Victor Valley hospital to Prime, declaring that wouldn&rsquo;t be in the public interest.</p><p>Prime accused Harris of caving in to political pressure from the Service Employees International Union, which represents health care workers and has been locked in bitter contract struggles with Prime. Then, as lawyers dueled in court, Prime&#39;s foundation began operating the hospital under terms of a controversial consulting agreement.</p><p>Prime spokesman Edward Barrera said the chain&#39;s goal all along has been to keep Victor Valley Community Hospital open. &quot;Toward this goal, the Foundation will continue to do what it can to save this hospital,&quot; he said in a statement.</p><p>Prime is an 18-hospital chain known for turning around financially troubled hospitals by cutting costs and boosting revenues.</p><p>A California Watch analysis of state records last year showed that the chain had reported high rates of several unusual medical conditions that entitle providers to enhanced payouts from the federal Medicare program. Three members of Congress have asked federal regulators to investigate the chain for a suspected form of Medicare fraud called upcoding, in which a provider files false claims via computerized billing codes. Prime says it is innocent of wrongdoing, saying the billings reflect its commitment to aggressive treatment of serious medical ailments.</p><p>In May, the state Department of Public Health issued five deficiencies against Prime&rsquo;s Shasta Regional Medical Center in Redding for what were described as repeated breaches of patient confidentiality last year. The violations &ndash; showing a patient&#39;s medical records to a local newspaper editor &ndash; occurred as Prime sought to discredit a California Watch report about a reported outbreak of a Third World nutritional disorder called kwashiorkor at the hospital. Prime appealed, saying it was blameless.</p><p>The legal dispute in Victorville came after Victor Valley Community Hospital&nbsp;filed for bankruptcy in 2010, citing years of financial losses.</p><p>Prime, which also operates Desert Valley Hospital in Victorville, moved to buy the facility. But in September the attorney general, who by law reviews the sale of nonprofit hospitals, <a href="" target="_blank">refused to approve</a> the transaction, saying the sale might adversely affect health care in the region.</p><p>Critics had warned that if Prime bought the hospital, it would likely cancel contracts with health insurers and charge higher prices for services, driving up health care costs in the High Desert region.</p><p>Prime blamed the SEIU, complaining that the union&rsquo;s &ldquo;blatantly false smear campaign of vilification&rdquo; had swayed the attorney general.</p><p>In the weeks that followed, Victor Valley Community Hospital&rsquo;s trustees continued negotiations with Prime, and at one point <a href="" target="_blank">persuaded the bankruptcy judge</a> to approve an arrangement under which Prime&#39;s foundation took over day-to-day management of the hospital through a consulting agreement.</p><p>But recently, the trustees resumed talks with Riverside health care entrepreneur Kali Chaudhuri, who had sought to buy the hospital last year. The judge&rsquo;s ruling last week cleared the way for the sale of the hospital to Chaudhuri&#39;s KPC Group for a reported $33.8 million. It will operate the hospital on a temporary basis pending transfer of the license &ndash; which again must be approved by Harris.</p><p>Dave Regan, president of SEIU&ndash;United Healthcare Workers West, praised Harris for her earlier decision, of<strong>&nbsp;</strong>&quot;standing up for healthcare access and affordability in Victor Valley.&quot; Prime&#39;s &quot;business model has a negative impact on workers, patients and communities,&quot; the union leader said in a statement.</p><p>In recent months Prime has had an easier time expanding out of state.</p><p>Last weekend, Prime announced that it had completed its purchase of 380-bed Saint Mary&rsquo;s Regional Medical Center in Reno, Nev. The seller was Dignity Health, formerly known as Catholic Healthcare West. The hospital lost $43.5 million in 2011, officials said. The Reno Gazette-Journal reported that employees began receiving <a href="" target="_blank">layoff notices</a> last month as the sale neared completion.</p><p>Earlier this year, the chain bought local hospitals in <a href="" target="_blank">Harlingen and Pampa, Texas</a>, according to the Texas Tribune. Prime also bought a hospital in <a href="" target="_blank">Roxborough, Pa.</a>, near Philadelphia.</p><p>But in February, Prime dropped a bid to buy Christ Hospital in Jersey City, N.J., in the face of opposition from a coalition of business and community groups.</p><p>At one point, the New Jersey attorney general&rsquo;s office <a href="" target="_blank">queried the hospital&rsquo;s trustees </a>about Prime, asking about the reports of &ldquo;high incidence of certain rare diseases&rdquo; at the chain, an apparent reference to California Watch&rsquo;s stories. A Prime spokesman said the queries played no role in the company&rsquo;s decision to back away from the purchase.&nbsp;</p> Health and Welfare Daily Report hospital Kamala Harris medicare fraud Prime Healthcare Decoding Prime Fri, 06 Jul 2012 07:05:03 +0000 Lance Williams 16910 at Monica Lam/California Watch Prime hospital cited for patient confidentiality violation <p>A Prime Healthcare Services hospital in Redding broke state law when it publicized a patient&rsquo;s confidential medical files in an effort to discredit a California Watch news report, state regulators say.</p><p>The state Department of Public Health on Tuesday issued five &quot;deficiencies&quot; against Shasta Regional Medical Center for what were described as repeated breaches of patient confidentiality last year.</p><p>At one point, the hospital CEO sent an e-mail to 785 people &ndash; virtually everyone who worked at the hospital &ndash; disclosing details from a 64-year-old diabetes patient&rsquo;s confidential files, state investigators found.</p><p>Federal and state law forbids hospitals from disclosing a patient&rsquo;s medical files without permission.</p><p>By state law, hospitals can be fined as much as $250,000 for breaching a patient&#39;s confidentiality.</p><p>The health department considers the issue of financial penalties after deficiencies are corrected, a spokesman said. Deficiencies are violations of laws or regulations applying to state hospitals.&nbsp;</p><p>The hospital did nothing wrong and has filed an appeal, said Prime spokesman Edward Barrera. The company &quot;continues to believe that the disclosures, if any, were permitted under both federal and state law,&quot; he said in an e-mail.</p><p>The disclosures occurred as Prime was attempting to rebut <a href="" target="_blank">a California Watch story</a> on a supposed outbreak of a Third World nutritional disorder called kwashiorkor at the Redding hospital. The hospital had billed Medicare for treating more than 1,000 senior citizens for kwashiorkor over a two-year period,&nbsp;records show.&nbsp;</p><p>One of those patients, retired teacher&#39;s aide Darlene Courtois, told California Watch that she had been hospitalized for complications of diabetes, not malnutrition. She denied she was malnourished and said she had never before heard the word kwashiorkor, which means &ldquo;weaning sickness&rdquo; in a Ghanaian language in West Africa.</p><p>According to the health department, Prime officials zeroed in on Courtois in an effort to discredit the California Watch report.</p><p>At one point, top hospital officials took her confidential medical files to the editor of the Redding Record Searchlight newspaper and successfully lobbied him not to print the story.</p><p>Later, the hospital CEO sent an e-mail to 785 of the hospital&rsquo;s medical staff and employees disclosing confidential information about Courtois&rsquo; hospitalization, according to the investigator&#39;s report.</p><p>Prime officials have claimed that her medical files proved she had been given a nutritional consultation as a treatment for malnutrition. That substantiated the kwashiorkor billing, they claimed.&nbsp;</p><p>Courtois denied receiving a nutritional consultation. She said the documents she received when she requested her medical files from the hospital didn&rsquo;t include any information about a nutritional consultation.</p><p>Courtois&rsquo; daughter, Julie Schmitz, said she and her mother were especially troubled<strong> </strong>to learn of the&nbsp;reported mass e-mail of the medical records.<strong>&nbsp;</strong>She called the hospital&rsquo;s actions &ldquo;reckless and vindictive.&rdquo; She said her mother isn&#39;t interested in suing, but would like the hospital to say it&#39;s sorry.</p><p>&ldquo;My mom just wants a written apology, saying what they did was wrong and they wouldn&rsquo;t do it to anybody else,&rdquo; she said. They haven&rsquo;t received an apology, she said.</p><p>The disclosures of Courtois&#39; records were first reported in January <a href="" target="_blank">by the Los Angeles Times</a>. Since then, Prime has insisted it was blameless, arguing that it was permitted to publicize Courtois&rsquo; files to the public because she had showed the medical records she obtained to California Watch.</p><p>The health department report said that the hospital&rsquo;s general counsel, communications director, CEO and medical officer were involved in the illegal disclosures.</p><p>The report doesn&rsquo;t identify them by name. Silas Lyons, editor of the Record-Searchlight, <a href="" target="_blank">has identified the hospital officials</a> who brought Courtois&rsquo; records to the newspaper as Randall Hempling, the hospital CEO, and Dr. Marcia McCampbell, its chief medical officer.</p><p>In January, FBI agents interviewed Courtois in what she&nbsp;described as a federal inquiry into the Redding hospital&#39;s Medicare billings and the unauthorized disclosures of Courtois&#39; files.</p> Health and Welfare Daily Report kwashiorkor Prime Healthcare Shasta Regional Medical Center Decoding Prime Fri, 04 May 2012 07:05:03 +0000 Lance Williams 16049 at Monica Lam/California Watch Shasta Regional Medical Center in Redding When and why should patients get a coronary stent? <p>Medical studies spanning years and examining thousands of patients have upturned conventional thinking about heart attack prevention and treatment. The studies found that for many patients, coronary stents are not more likely to save lives or prevent a heart attack than medication and lifestyle changes. Yet some patients are not given the opportunity to weigh the risks and benefits of various treatment options.</p><p>Regulators for the California Department of Public Health discovered that &ldquo;there was no consent for placing stents&rdquo; in William &ldquo;Ned&rdquo; Smith, 72, who died after the procedure. Nor was there an emergency need for the procedure, regulators concluded.</p><p>His case is one of several highlighted <a href="" target="_blank">in an investigation</a> of heart care at Desert Valley Hospital, a facility owned by Prime Healthcare.</p><p>Physicians typically place stents after performing an angiography, or an imaging procedure to inject dye into the coronary arteries to see whether vessels are blocked. In some cases, physicians thread a tiny tube through an artery in the groin or wrist and then inflate a tiny balloon. That balloon expands a small wire-mesh tube that&rsquo;s meant to facilitate the flow of blood through the blocked artery.</p><p>Physicians agree that placing a stent within 90 minutes of a heart attack is beneficial to patients. They differ when it comes to patients who suffer from milder discomfort that comes with physical activity.</p><p>Here are some considerations to mull, based on a conversation with Dr. John Wong, the medical editor for coronary artery disease at the Informed Medical Decision Foundation. Wong is also chief of the Division of Clinical Decision Making, Informatics, and Telemedicine at Tufts Medical Center in Boston.</p><p><strong>When is a stent elective?</strong></p><p>Wong said a stent is considered elective, or a matter of patient preference, when a patient suffers from stable angina. That condition is characterized by pressure or pain in the chest during physical exertion or emotional strain. Stable <a href="" target="_blank">angina symptoms</a> tend to go away when the physical or emotional stress has passed.</p><p><strong>What are the risks of getting a stent for stable angina?</strong></p><p>According to Wong, elective stent placements carry a risk of death for 6 to 7 people out of 1,000. Complications include heart attack and artery perforation. Risk of death may be higher if you&rsquo;re older, have diabetes, heart failure, kidney disease, or have more than a few vessels blocked.</p><p><a href="" target="_blank">A data analysis</a> by the California Office of Statewide Health and Planning and Development showed that for 2009 inpatient cases, about 2 out of 100 patients died during hospital stays when a stent was placed. That data does not account for whether the patient had stable angina or a more dire condition.</p><p><strong>What are the benefits?</strong></p><p>Wong said that one study showed that coronary stents relieve the pain and pressure of angina more quickly than an approach of taking medications, exercising and improving one&rsquo;s diet. However, <a href="" target="_blank">that study found</a> that in the long run, there was little difference in heart attack or mortality rates between those who had elective stents and those who pursued medical therapy and lifestyle changes.</p><p><strong>What is the bottom line?</strong></p><p>Wong said patients with stable angina should weigh the benefits and risks of both approaches and make a decision that fits best with their lifestyle.</p><p>&ldquo;Some important questions are how much does the angina bother you, and does it bother you enough that you&rsquo;d consider the potential harms,&rdquo; he said.</p><p><strong>What about getting a stent in a hospital with a catheterization lab versus one with open-heart surgery?</strong></p><p>In California, nearly 60 hospitals have a cardiac catheterization lab that allows them to place stents in emergencies, such as after a heart attack, when a patient has pain that doesn&rsquo;t subside with treatment or amid major swings in blood pressure. Those labs are meant for diagnostics, not treatments. A group of California cardiologists is <a href=" " target="_blank">currently studying</a> whether the state should allow stents in those hospitals, as many other states currently do. That team is expected to send a report to lawmakers.</p><p>Hospitals licensed to perform open-heart surgeries have teams and equipment to crack open the chest and operate. If a stent procedure leads to a complication, such as major bleeding from a tear in an artery, those hospitals are best equipped to save patients.</p><p><strong>Where else can I obtain information?</strong></p><p>Emily Bazar with the Center for Health Reporting wrote guides about <a href="" target="_blank">when elective angiography is appropriate</a> and described <a href="" target="_blank">a variety of heart procedures</a>.</p><p>Health Dialog publishes<a href="" target="_blank"> a decision-making guide</a> for patients who are diagnosed with coronary heart disease.</p> Health and Welfare Department of Public Health heart failure heart health Prime Healthcare Services Decoding Prime Wed, 02 May 2012 07:05:03 +0000 Christina Jewett 16010 at Prime hospital’s stent placements violated state regulations <p>Dale Kerkes was lean and tanned at 71. In retirement, he turned a backyard hillside into a terraced garden and built a two-story garage.</p><p>On the morning of April 28, 2008, he and his wife, Charleen, saw his doctor to check into his occasional heart palpitations. Neither expected problems.</p><p>But during a stent placement to prop open a blocked artery, Dale Kerkes died on the operating table at Desert Valley Hospital.</p><p>Desert Valley had a limited cardiac license, which means it was allowed to place stents only in emergencies, such as after heart attacks. State hospital regulators determined several months later that the San Bernardino County hospital <a href="" target="_blank">placed Kerkes</a>&nbsp;&quot;at great health risk&rdquo; by performing the procedure without the trained staff or specialized equipment required.</p><p>Since then, in response to inspections, the hospital repeatedly pledged to follow state regulations&nbsp;and&nbsp;enforce its own policies.</p><p>Yet regulators found repeat violations when they examined the cases of <a href="" target="_blank">another patient</a> who died and two who <a href="" target="_blank">were injured</a> during cardiac care at Desert Valley.</p><p>A fourth patient, whose case was not examined by the state, was injured&nbsp;after a stent treatment that a lawsuit alleges should not have been performed at Desert Valley.</p><p>The state Department of Public Health &ndash; the agency that documented recurring problems and unmet promises &ndash; in March granted Desert Valley a full cardiac license for its new heart center. Public Health officials declined to be interviewed for this story but said in a written statement <a href="" target="_blank">they conducted two</a> thorough inspections and found no deficiencies.</p><p>Charleen Kerkes, who had hoped her husband&rsquo;s death would lead to changes, feels defeated. &ldquo;I do think my husband died in vain,&rdquo; she said. &ldquo;It&rsquo;s disappointing.&rdquo;</p><p>Charleen Kerkes, as well as other patients and family members, said they were not told that until March 20, Desert Valley Hospital had a limited license for cardiac surgeries. Nearby St. Mary Medical Center was in fact the only local hospital with a full license at that time.</p><p>The move to expand Desert Valley&rsquo;s cardiac license came as the hospital&rsquo;s interventional cardiologist, Dr. Siva Arunasalam, <a href="" target="_blank">faces a trial over</a> accusations that he performed heart surgeries for financial gain while working at St. Mary almost a decade ago. Arunasalam is not an employee of Desert Valley; its medical executive committee granted him admitting privileges that allow him to treat patients.</p><p>Families of Desert Valley patients also said they didn&rsquo;t know Arunasalam had been <a href="" target="_blank">banned in 2005</a> from operating at St. Mary. The hospital&rsquo;s medical executive committee revoked his privileges, citing &ldquo;hostile and disruptive conduct&rdquo; that included &ldquo;dishonesty&rdquo; and disregard for patients&rsquo; welfare, according to <a href="" target="_blank">court records</a>.</p><p>Medicare records from Dale Kerkes&rsquo; procedure at Desert Valley, which Charleen Kerkes shared with California Watch, show that 40 minutes after Arunasalam deployed a stent, someone shouted, &ldquo;code blue.&rdquo;</p><p>Charleen Kerkes said she feared the worst when she saw another physician in street clothes sprint toward the operating room. In an instant, she lost the man who brought her coffee in bed each morning for 40 years.</p><p>&ldquo;It was a nightmare,&rdquo; she said.</p><p>After her husband&rsquo;s death, Charleen Kerkes considered filing a lawsuit. She said she decided against it when an attorney who reviewed photos of the procedure asked to dig up her husband&rsquo;s body to commission an autopsy.</p><p>Arunasalam, who has been treating patients at Desert Valley since 1995, declined to be interviewed and said through an attorney that he could not discuss individual cases due to patient confidentiality.</p><p>Desert Valley is owned by Prime Healthcare Services, which has been the subject of a yearlong <a href="" target="_blank">California Watch investigation</a> that uncovered a pattern of billing Medicare for rare ailments that generate lucrative bonus payments for the hospital chain. In recent months, FBI agents have questioned former Prime employees and a former patient about the firm&rsquo;s billing practices.</p><p>Desert Valley implanted 118 stents in 2010, according to information supplied by Prime. That was four times the statewide average for hospitals with a limited heart care license, a California Watch analysis of hospital billing datashows.</p><p>Hospitals <a href=";method=DISCLAIMER_HOME&amp;labelName=Disclaimer.Reimbursement&amp;securityRule=Disclaimer_Reimbursement" target="_blank">earn from</a> $5,500 to $16,300 for stent procedures, depending on whether the case is done on an inpatient basis. For many patients, stents are not the only tool to manage clogged arteries. Leading medical research shows that medications and lifestyle changes can be <a href="" target="_blank">just as effective</a> as stents.</p><p>Prime Healthcare spokesman Edward Barrera said Desert Valley, which Prime bought in 2001, &ldquo;has followed and continues to follow all applicable laws and regulations.&rdquo; He said it is important &ldquo;to remember that there are unexpected complications with coronary interventions at all hospitals that no one can predict or prevent.&rdquo;</p><p>Barrera said two patients died during stent procedures in 2011 at Desert Valley. Statewide, the California Watch analysis shows that about 2 percent of patients undergoing a stent procedure die, about the same percentage for Desert Valley last year.</p><p>Kathleen Billingsley, chief deputy director of policy and programs at the state Department of Public Health, <a href="" target="_blank">wrote hospital executives</a> in November saying the new heart center would not be approved until the department is &ldquo;assured of the absence of systemic health and safety issues in the hospital.&rdquo;</p><p>Since then, state authorities said they performed extensive examinations of the hospital and its cardiac services, on Feb. 14 and March 20. Because the hospital was in compliance with regulations on both of those days, the full cardiac care license was granted, according to the public health department.</p><p><strong>Inspections find repeated deficiencies </strong></p><p>Of the 57 hospitals in the state with a limited heart care license, five facilities implanted more&nbsp;stents than the number Desert Valley says it placed recent years.</p><p>But only Desert Valley has been cited repeatedly for its heart care, state inspection records show. Since 2007, the state has found deficiencies in cases involving 40 patients seen in Desert Valley&rsquo;s cardiac lab.</p><p>The California Department of Public Health has inspected Desert Valley Hospital dozens of times since 2007. During five reviews of cardiac care, it cited lax enforcement of hospital policies or failures to warn patients of surgical risks.</p><p>In response to Kerkes&rsquo; death, regulators inspected Desert Valley in July 2008 and <a href="" target="_blank">determined that<span _fck_bookmark="1" style="display: none;">&nbsp;&nbsp;</span></a><span style="font-weight: bold;"> </span>the hospital violated state regulations by implanting a stent &ldquo;they were not licensed to provide.&rdquo; An inspection in 2011 found that Arunasalam had performed a stent procedure that, for the second time, violated state regulations and resulted in a patient&rsquo;s death.&nbsp;</p><p>Hospitals that don&rsquo;t correct violations face penalties ranging from loss of their state operating licenses to severance of Medicare funding. After each violation at Desert Valley, state public health officials have required the hospital to submit a &ldquo;corrective action plan,&rdquo; but they have not sanctioned the facility.</p><p>The key difference between hospitals with a limited cardiac license and a full open-heart surgery license is staffing and equipment. Limited-license hospitals are expected to diagnose heart conditions through imaging procedures and intervene only in emergencies.</p><p>Hospitals with a full license operate with a heart-lung machine and staff trained to crack open a patient&rsquo;s chest and perform an emergency operation in case of complications.</p><p>The state <a href="" target="_blank">is studying whether</a> to allow coronary stent placements at limited-license hospitals. Legislators are expected to vote on any proposed changes.</p><p>But for now, &ldquo;you&rsquo;re not allowed to do it,&rdquo; said George Smith, past president of the California chapter of the American College of Cardiology and an adviser for the state&nbsp;study overseen by the Department of Public Health.</p><p><strong>Regulations defied</strong></p><p>Although Desert Valley was allowed to implant stents only in emergencies, state inspectors found several cases over the last four years that did not meet that criterion.</p><p>As part of the <a href="" target="_blank">July 2008 inspection</a> in the Kerkes case, public health authorities found that the hospital performed stent procedures on 18 other patients in defiance of regulations. Some stent cases were scheduled ahead of time, records show, and some took place amid no evidence of an emergency.</p><p>Inspectors returned to the hospital in October 2008 and discovered that Arunasalam had injured a patient by delaying care, records show. On July 31, 2008, a 43-year-old uninsured patient suffered a heart attack, an emergency condition that would have allowed Desert Valley to implant a stent.</p><p>But instead of rapidly treating the man or transferring him to another hospital, Arunasalam waited too long, and the patient&rsquo;s heart muscle became severely damaged, the inspection report says. The patient may need a heart transplant, Arunasalam wrote in the medical record and noted, &ldquo;Overall prognosis was poor.&rdquo;</p><p>In response to inspectors&rsquo; questions, Arunasalam said that after the July inspection, a Department of Public Health doctor told him to &ldquo;let patients die before performing cardiac interventions,&rdquo; according to an inspection report. Arunasalam &ndash; who has been licensed in California since 1989 &ndash; had scrawled on the medical records of several other patients that their care was &ldquo;suboptimal&rdquo; due to the state health department &ldquo;protocol,&rdquo; according to the inspection report.</p><p>Desert Valley administrators say they told Arunasalam to stop citing protocols that &ldquo;did not exist.&rdquo;</p><p>Again, the hospital pledged to change. An outside reviewer would look at all coronary stent cases, a new cardiac lab director would be appointed, and an attorney would train the hospital governing board on its oversight duties, according to a February 2009 report Desert Valley Hospital submitted to Medicare.</p><p><strong>Former patient sues</strong></p><p>Three months later<em>, </em>in May 2009, Steve Wong, a 54-year-old machine operator at a Rancho Cucamonga textile warehouse, received two stents in a procedure that left him in need of a heart transplant, <a href="" target="_blank">according to a lawsuit</a> Wong filed against Desert Valley and Arunasalam.</p><p>Ilan Heimanson, Wong&rsquo;s attorney, said a cardiologist paid to review the case found that Arunasalam should have implanted one stent and transferred Wong to a better-equipped hospital to implant the second one. Instead, Arunasalam placed stents in both vessels and did not prescribe medication strong enough to prevent major bloodclots, court records contend.</p><p>Both Desert Valley Hospital and Arunasalam said in court filings that their conduct in the case did not cause damage to Wong&rsquo;s heart. &ldquo;(Wong&rsquo;s case) is replete with speculation and wrongfully attempts through smoke and mirrors to place responsibility on DVH personnel,&rdquo; attorneys <a href="" target="_blank">for the hospital</a> wrote.</p><p>Arunasalam testified in a deposition that he placed Wong&#39;s stents because the case was a true emergency.&nbsp;Wong&rsquo;s team did not prove that Arunasalam caused any injuries, <a href="" target="_blank">according to the</a> cardiologist&rsquo;s attorneys.</p><p>Wong has said he wasn&rsquo;t aware that Desert Valley was limited in the cardiac care it could provide. He testified in a deposition that he&rsquo;s expected to live two to six more years unless he gets a heart transplant.</p><p>&ldquo;I am scared of this operation because I had a narrow escape on my last operation,&rdquo; he testified, noting that he hadn&rsquo;t gotten on a transplant wait list or discussed it with his wife. &ldquo;I&rsquo;m not prepared myself emotionally.&rdquo;</p><p>In November, San Bernardino County Superior Court Judge Steven Malone <a href="" target="_blank">denied Arunasalam&rsquo;s motion</a> to be dismissed from Wong&rsquo;s lawsuit. Malone cited Wong&rsquo;s medical expert, who said Arunasalam should have returned Wong to the operating table as soon as it became apparent that he had a postoperative heart attack.</p><p>Public health inspectors made no note of Wong&rsquo;s case or other catheterization lab deficiencies in a 90-page report documenting a wide-ranging inspection in August 2009. Department of Public Health spokeswoman Anita Gore said authorities did not receive a complaint about the case.</p><p>Prime spokesman Barrera said Prime could not comment on details of the case, but stated, &ldquo;We are completely confident that we will prevail based on the facts.&rdquo; Barrera said the hospital &ldquo;cannot interfere with the clinical judgment of a highly trained cardiologist&rdquo; as to which case is an emergency.</p><p><strong>Doctor faces civil trial</strong></p><p>Arunasalam attracts hundreds of patients with cardiac troubles to his medical office, the <a href="" target="_blank">High Desert Heart Institute</a> in San Bernardino County. Records show that he is board certified in internal medicine and cardiology and obtained his medical degree at Emory University in Atlanta.</p><p>During a 2005 employment trial that covered a wide range of practices at Desert Valley, <a href="" target="_blank">Arunasalam testified</a> on behalf of Prime chain owner and fellow cardiologist Dr. Prem Reddy. On the witness stand, Arunasalam dismissed doctors&rsquo; accusations against Reddy, saying the hospital owner <a href="" target="_blank">is the only area&nbsp;</a>cardiologist he trusts.</p><p>That same year, the state Medical Board <a href="" target="_blank">filed an accusation</a> to revoke Arunasalam&rsquo;s license, alleging gross negligence and failure to keep adequate medical records. Thomas Douvan, an attorney for Arunasalam, said the case was dismissed.</p><p>Arunasalam faces a civil trial in coming weeks over St. Mary&rsquo;s accusations that from 2002 to 2004, <a href="" target="_blank">he implanted 59</a> medically unnecessary defibrillators in patients. A cardiac defibrillator is implanted to regulate the heartbeat. The hospital says it discovered the cases during an internal audit and <a href="" target="_blank">refunded Medicare</a> the $1.4 million it was paid for the procedures.</p><p>Arunasalam has <a href="" target="_blank">denied all accusations</a> in court records, saying Medicare never deemed the procedures improper. Also, his attorneys said St. Mary administrators attempted to ruin Arunasalam&rsquo;s reputation because he planned to build a competing heart hospital.</p><p>Despite Wong&rsquo;s case and others cited by inspectors, Desert Valley continued to implant stents in cases that did not meet emergency criteria.</p><p>William &quot;Ned&quot; Smith, 72, died during a stent procedure at Desert Valley Hospital.On Dec. 30, 2010, William &ldquo;Ned&rdquo; Smith, 72, of Hesperia <a href="" target="_blank">died during a stent</a> placement at Desert Valley, just weeks before the Air Force veteran was planning a vacation to a vintage air show with his wife.</p><p>Patricia Smith, who was married to Ned Smith for 48 years, said Arunasalam did not explain the hospital&rsquo;s limited license status to the couple. She also said he told her that he was only going to examine her husband&rsquo;s heart. Smith said she didn&rsquo;t know a stent was placed until after her husband had died.</p><p>A Medicare report shows that when Arunasalam began the procedure, Ned Smith was <a href="" target="_blank">pain-free</a>&nbsp;and had stable vital signs.</p><p>A report approved by Arunasalam that Patricia Smith shared with California Watch says one of her husband&rsquo;s arteries was perforated, which set off uncontrolled bleeding. According to the report, Arunasalam said he tried to plunge a needle into Ned Smith&rsquo;s chest to draw out the excess blood, but the effort failed.</p><p>Patricia Smith said she remembers seeing Arunasalam emerge from the cardiac lab, somberly shaking his head. &ldquo;I started crying, &lsquo;No, no, no, this can&rsquo;t be right,&rsquo;&rdquo; Smith said.</p><p>Smith said Arunasalam told her family that Ned Smith&rsquo;s vessels may have been fragile because of his diabetes. Patricia Smith said she is upset that no one at Desert Valley told her that nearby St. Mary Medical Center had the staff and equipment to attempt to rescue her husband if something went wrong.</p><p>&ldquo;He&rsquo;s not God,&rdquo; she said of Arunasalam. Smith and her son have shared her husband&rsquo;s medical records with an attorney who has not yet filed suit.</p><p>Inspectors discovered Ned Smith&rsquo;s case while investigating another Desert Valley complaint late last year. Inspectors determined that the hospital put patients <a href="" target="_blank">in &ldquo;immediate jeopardy&rdquo;</a> of injury or death when Arunasalam performed interventions in cases that didn&rsquo;t meet the hospital&rsquo;s definition of a cardiac emergency. In addition to Smith, <a href="" target="_blank">another patient</a> was rushed to a local hospital after a vessel ruptured during an October stent placement.</p><p>In November, the Department of Public Health said in yet another report that the hospital had once again <a href="" target="_blank">failed to hold doctors</a> accountable for violating hospital policies. And Desert Valley, the report said, had failed to send all of its stent cases for review by outside parties, breaking a promise to regulators.</p><p>Patricia Smith, who reviewed state inspection reports, said she is concerned patients at Desert Valley&rsquo;s new heart center might not get clear explanations of surgical risks.</p><p>&ldquo;I feel like they will take more advantage of the system by opening up the heart center,&rdquo; she said. &ldquo;They will have free reign.&rdquo;</p><p><em>This story was edited by Denise Zapata. It was copy edited by Nikki Frick.</em></p> Health and Welfare Department of Public Health heart health hospitals Prime Healthcare San Bernardino County Decoding Prime Wed, 02 May 2012 07:05:03 +0000 Christina Jewett 15955 at Lawmakers move to curb hospitals from 'capturing' patients <p>The&nbsp;emergency room practices of a major California hospital chain&nbsp;have prompted new legislation to&nbsp;reduce what critics describe as a pattern of &quot;capturing&quot;&nbsp;insured patients in order to boost bills.</p><p>Sen. Ed Hernandez,&nbsp;<span style="line-height: 19px; ">D-West Covina,&nbsp;</span>chairman of the state Senate Health Committee, is <a href=";sess=CUR&amp;house=B&amp;author=hernandez" target="_blank">carrying the bill</a>&nbsp;limiting&nbsp;how much hospitals are paid after they admit a certain rate of out-of-network, privately insured patients. Because current state law is so vague, hospitals can charge insurers top dollar for treating patients from outside their medical networks.</p><p>Hernandez, who was co-chairman of a&nbsp;<a href="" target="_blank">Feb. 24 legislative hearing</a> in Los Angeles, said the proposed bill comes after his office heard &ldquo;about a growing business practice in the hospital world where unscrupulous hospitals avoid contracts with health plans, filter patients with commercial insurance through their ER, and bill higher &lsquo;out-of-network&rsquo; charges to maximize profits.&rdquo;</p><p>&ldquo;This practice goes against the very idea of managed care, which is not only bad for our health care system, it harms patients,&rdquo; Hernandez said in a statement.</p><p>He said he introduced the bill to &quot;remove the economic incentive for a hospital to operate in this manner.&rdquo;</p><p>Hernandez introduced his bill after a yearlong California Watch <a href="" target="_blank">investigation</a> into aggressive billing by <a href="" target="_blank">Prime Healthcare Services</a>, a 16-hospital chain based in Ontario.</p><p>Prime spokesman Edward Barrera said the bill is part of Hernandez&#39;s &quot;increasing bizarre and illegal attempts to target one hospital system.&quot;</p><p>&quot;This poorly written bill unduly gives more power to HMOs and insurance companies, makes no sense to anyone who understands the economics of healthcare and the already fragile healthcare safety net, and makes it even more difficult for hospitals across the state to stay solvent,&quot; Barrera said in an e-mail.</p><p>The bill would only affect hospitals where, during the course of a year, half or more of the privately insured patients admitted through the emergency room are outside of their care network. Once a hospital reaches that point, it would be paid Medicare rates or a &quot;good faith and reasonable&quot; estimate of costs.</p><p>The move comes as two health care providers, Kaiser Health Plan and Heritage Provider Network, are suing Prime in Los Angeles County Superior Court. Kaiser accuses the chain of attempting to increase profits by &quot;capturing&quot; their patients who come into Prime emergency rooms. Heritage says the chain misdiagnoses patients to justify keeping them in Prime hospitals.</p><p>Prime has denied those claims and filed the first lawsuits in the disputes with the insurers, saying both wrongfully withheld payments for patient care. The lawsuits are ongoing.</p><p>During the February hearing, Assemblyman Bill Monning, D-Monterey, and Hernandez heard testimony from a Kaiser emergency room doctor who said hospitals bought by Prime stopped communicating with Kaiser about patients.</p><p>Sandra Taylor-Davey, granddaughter of a Medicare patient, testified about <a href="" target="_blank">the difficulties</a> her family faced getting her grandmother moved out of West Anaheim Medical Center, which is owned by Prime.</p><p>Hernandez&rsquo;s bill is up for a hearing and vote Wednesday.</p><p><em>Update: This bill passed out of the committee during the hearing.</em></p><p>The California Hospital Association opposes the bill. In an April 9 <a href="" target="_blank">letter to Hernandez</a>, the hospital association said&nbsp;the bill conflicts with current law, which lays out what emergency room doctors and managed care plans are required to do when dealing with out-of-network patients.</p><p>Kaiser and Heritage have accused Prime of subverting the law by routinely failing to notify them when a covered patient lands in a chain hospital. However,&nbsp;Prime General Counsel and Vice President Michael Sarrao&nbsp;has said its doctors make autonomous decisions about how to handle emergency care.</p><p>The hospital association said in its letter that when disagreements over the process can&#39;t be resolved, &ldquo;the appropriate forum to resolve disputes remains the courts.&rdquo;</p><p>Kaiser and the California Association of Health Plans, which represents major insurers, have not taken a position on the bill, spokeswomen for the organizations said.</p> Health and Welfare Daily Report Heritage Provider Network Kaiser Health Plan managed care Prime Healthcare Sen. Ed Hernandez Senate Health Decoding Prime Mon, 23 Apr 2012 07:05:04 +0000 Christina Jewett 15818 at Monica Lam/California Watch Lawmakers alarmed by hospital chain's practices <p>LOS ANGELES &ndash; 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.</p><p>They&#39;re on call 24 hours a day, coordinating care when Kaiser patients are treated elsewhere.</p><p>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.</p><p>&ldquo;No calls,&rdquo; said Shohfi, an emergency room physician. &ldquo;They just stopped calling.&rdquo;</p><p>Two health care providers, Kaiser and Heritage Provider Network, have accused Prime of &quot;trapping&quot; or &quot;capturing&quot; their patients in Prime emergency rooms and hospitals&nbsp;in order to charge more for treating patients from outside their medical networks.</p><p>Shohfi&#39;s testimony came during&nbsp;a&nbsp;hearing in Los Angeles arranged by Sen. Ed Hernandez, D-West Covina, and Assemblyman Bill Monning, D-Monterey, chairmen of the Legislature&#39;s health committees. The lawmakers said they were troubled and disturbed by Shohfi&#39;s testimony.</p><p>Many of the legislators&#39; questions focused on&nbsp;issues featured in a <a href="" target="_blank">yearlong California Watch investigation</a> into the chain&#39;s&nbsp;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&nbsp;kwashiorkor &ndash; a Ghanaian word for &ldquo;weaning sickness&rdquo; &ndash; at a rate <a href="" target="_blank">70 times</a> the state average.&nbsp;</p><p>In recent months, FBI agents have <a href="" target="_blank">begun questioning</a> former Prime employees about the firm&#39;s billing practices. On Wednesday, Prime CEO Lex Reddy, the brother-in-law of Prime owner Dr. Prem Reddy, <a href="" target="_blank">resigned</a> without explanation.</p><p>In testimony today, the granddaughter of a former Prime patient, Sandra Taylor-Davey, said&nbsp;her grandmother was held in a Prime hospital despite family wishes to have her moved to her usual hospital and doctors.</p><p>Taylor-Davey,&nbsp;whose account was first&nbsp;<a href="">featured in a California Watch report</a>, testified that the experience was akin to a &quot;Twilight Zone&quot; episode. She said no one at West Anaheim Medical Center seemed willing to respect the family&#39;s wishes.</p><p>&ldquo;They just wouldn&rsquo;t let her out,&rdquo; Taylor-Davey said.</p><p>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&rsquo;s usual doctor saw her soon after she was discharged from Prime, and she had experienced only a kidney problem and urinary tract infection.</p><p>For his part,&nbsp;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, &ldquo;virtually begging to give them critical patient information.&rdquo;</p><p>He said the response from Prime doctors, some of whom he&rsquo;d worked with for years, was that the new administration did not allow them to talk to Kaiser physicians.</p><p>Hernandez said Shohfi&rsquo;s account ran counter to his professional experiences as an optometrist.</p><div><p>&quot;We never had an issue where the doctor has not wanted to talk to me about the care of a patient,&quot; Hernandez said. &quot;It&rsquo;s a little disturbing for me to hear that&rsquo;s not going on.&quot;</p><p>Monning said he also was &quot;troubled by the testimony from the Kaiser physician.&quot;</p><p>Monning asked&nbsp;Prime general counsel Michael Sarrao&nbsp;whether the firm has a policy requiring doctors to refuse contact with managed-care physicians.&nbsp;Sarrao said he knew of no such policy. He said the company relies on the independent judgment of its physicians.</p><p>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.</p><p>Jonathan Gluck, general counsel for Heritage, testified that Prime has urged doctors to document that patients are &quot;unstable for transfers&quot; to keep them in their hospitals and charge more money.</p><p>Sen. Kevin de León, D-Los Angeles, asked Gluck: &quot;If I direct a doctor to write &#39;X Y Z&#39; and patient didn&rsquo;t need &#39;X Y Z&#39; and I can draw down reimbursement, does that constitute fraud?&quot;</p><p>&quot;I would think so ... absolutely,&quot; Gluck said.</p><p>Lawmakers urged Shohfi and Gluck to report their concerns to regulatory and oversight agencies.</p><p>Today&#39;s hearing also focused on how Medi-Cal, the state&rsquo;s health insurer for the needy, will begin paying hospitals based on the severity of each patient&rsquo;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.</p><p>Toby Douglas, director of the California Department of Health Care Services, said the <a href="" target="_blank">new payment system</a> will reward hospitals more fairly for their work. Historically, Medi-Cal has paid hospitals a flat daily rate.</p><p>Legislators asked Douglas how his department will be sure that hospitals don&rsquo;t &ldquo;upcode,&rdquo; or exaggerate the severity of patients&#39; illnesses for profit. He said the department would perform audits, but might need to take a closer look at safeguards for the new system.</p><p>&ldquo;We&rsquo;re moving into unchartered territory,&rdquo; Douglas said.</p></div> Health and Welfare Daily Report Assemblyman Bill Monning Decoding Prime Kaiser Permanente Prime Healthcare Sen. Ed Hernandez Sen. Kevin De Leon Decoding Prime Sat, 25 Feb 2012 04:43:26 +0000 Christina Jewett 15010 at Andrew Bain/Flickr Prime Healthcare CEO abruptly steps down <p>The president and chief executive officer of Prime Healthcare Services resigned yesterday, leaving as FBI agents are questioning former employees about the firm&#39;s billing practices and state legislators prepare to question the company&#39;s attorney in a Los Angeles hearing tomorrow regarding hospital reimbursement.</p><p>Prime confirmed the resignation in a statement released today.</p><p>Lex Reddy, who is the brother-in-law of Prime&#39;s owner and board chairman, Dr. Prem Reddy, began working as a clerk for Prem Reddy&rsquo;s medical group in 1995. During the last 11 years, Prem Reddy, a cardiologist, built the 16-hospital Prime chain with Lex Reddy at the helm.</p><p>According to a&nbsp;<a href="" target="_blank">company statement</a>, Prem Reddy will take over as interim chief executive. &ldquo;Lex Reddy has been an important part of our success, and he will be missed,&rdquo; Prem Reddy said in a statement.</p><p>No reason was given for the departure.</p><p>A joint Senate and Assembly health <a href="" target="_blank">committee hearing</a> tomorrow is expected to feature testimony from Prime&#39;s general counsel and from critics of the firm&rsquo;s patient admission practices. The Kaiser Health Plan&nbsp;and Heritage Provider Network, which have representatives scheduled to speak, have sued Prime, <a href="" target="_blank">accusing the firm</a> of &quot;trapping&quot; or &quot;capturing&quot; their patients and rendering unnecessary care for profit.</p><p>Prime filed the first lawsuits in a dispute with the insurers, saying both wrongfully withheld payments for patient care.</p><p>Sen. Ed Hernandez, D-West Covina, chairman of the Senate Health Committee, said, &quot;There is obviously a lot coming at (Prime) right now.&quot;</p><p>&quot;Prime Healthcare is a rapidly growing health system in California, and I&#39;m hopeful that new leadership will be able to provide answers to some of the questions that have been circulating about this hospital chain,&quot; Hernandez said in a statement in response to today&#39;s news.</p><p>A <a href="" target="_blank">yearlong investigation</a> by California Watch has shown that Prime bills for outsized rates of rare and dire conditions that entitle hospitals to bonus Medicare payments. In recent months, FBI agents <a href="" target="_blank">have begun interviewing</a> former company billing clerks and patients. One patient <a href="" target="_blank">also told agents</a> that Prime disclosed her confidential health information to some members of the media without her permission, her daughter told California Watch.</p><p>Prime has said it is not aware of any investigations, but &quot;is confident that even if there are, the facts will demonstrate that the company has complied with all statutes and regulations,&quot; chain spokesman Edward Barrera said in today&#39;s statement.</p><p>While Prem Reddy has served as spokesman for the firm during numerous public hearings over the years, Lex Reddy has stepped forward to represent the chain in recent months.</p><p>In August, Lex Reddy testified <a href="" target="_blank">during a hearing convened</a> by the state attorney general over the sale of Victor Valley Community Hospital in San Bernardino County.</p><p>Lex Reddy characterized his brother-in-law&rsquo;s role during the hearing: &ldquo;Dr. Reddy does not sit and be there at every single facility, doing the work. It&rsquo;s my 9,000 employees that contribute to the success or failure of our institutions. And at the end of the day, the buck does stop with Dr. Reddy, because he takes the responsibility, making sure these facilities are kept open, deal with all the &hellip; trash that is thrown at us.&ldquo;</p><p>The attorney general&#39;s office denied the sale of the Victor Valley hospital to Prime, saying it was not in the public interest.</p><p>In today&#39;s statement, Barrera said that under Lex Reddy&#39;s tenure, &quot;the company has rapidly expanded, turning around financially distressed hospitals across California, and earned national recognition for high quality care, including being named among the top 15 health systems in the nation in 2012.&quot;</p><p>Prime also announced this week that it <a href="" target="_blank">acquired</a> Roxborough Memorial Hospital in Philadelphia, its 16th hospital. The firm owns 13 hospitals in Southern California, one in Shasta County and another in Texas.</p><p>The chain dropped a bid just weeks ago to acquire a New Jersey hospital. Critics of the acquisition in New Jersey had raised questions about the chain&#39;s billing methods cited in California Watch&#39;s series.&nbsp;</p><p>Lex Reddy has highlighted the differences between his role and his brother-in-law&rsquo;s before. He testified on Prem Reddy&rsquo;s behalf during an employment dispute between Prime&#39;s owner and nurse managers at Desert Valley Hospital in Victorville in 2005.</p><p>Two nurse managers accused Prem Reddy of taking unethical steps to turn around the finances of the hospital, such as turning away uninsured patients in need of care. Former chief nursing officer Tina Buchanan testified that she went to Lex Reddy, asking him to talk to his brother-in-law.</p><p>&ldquo;Lex was tearful during the meeting,&rdquo; Buchanan testified. &ldquo;He said, &lsquo;Please, give me 30 days to make these problems go away. I&rsquo;ll work with Dr. Reddy. I&rsquo;ll talk to Dr. Reddy. I&rsquo;ll make this go away. &hellip; We will make it better.&rsquo; &rdquo;</p><p>Lex Reddy, then the hospital&rsquo;s chief executive, took the witness stand during the eight-week trial stemming from the nurse managers&#39; complaints. He drew a distinction between his and Prem Reddy&#39;s methods, saying, &quot;I try to work with the employees.&quot;</p><p>&ldquo;The best way to say it is that sometimes, he&rsquo;s a little bit abrupt, just gets to the point, doesn&rsquo;t have time for discussing the details,&quot;&nbsp;Lex Reddy testified. &quot;We have different management styles.&rdquo;</p><p>During the trial, Prem Reddy testified that he took reasonable measures to bolster hospital finances and was misunderstood by the nurses.</p><p>The jury awarded more than $850,000 to the nurses, but the case was declared a mistrial as a result of juror misconduct. The case later was settled. The terms were not disclosed.</p><p>Today, the company also announced that it named a chief operating officer, Luis Leon, who has worked for Prime and its predecessor firms for 17 years. Leon started with the company as a physician assistant at Prime&rsquo;s first facility, Desert Valley Hospital, and most recently was regional chief executive for San Diego.</p> Health and Welfare Daily Report Decoding Prime Lex Reddy Prem Reddy Prime Healthcare Sen. Ed Hernandez Decoding Prime Fri, 24 Feb 2012 04:16:29 +0000 Christina Jewett 15033 at Monica Lam/California Watch California Watch 'Decoding Prime' series honored with Polk award <p>I am privileged and honored to write today that the Center for Investigative Reporting&rsquo;s California Watch has won the George Polk Award for our multi-platform <a href="" target="_blank">series</a> on aggressive billing practices at a Southern California hospital chain, Prime Healthcare Services.</p><p>Our reporting team of Lance Williams, Christina Jewett and contributor Stephen K. Doig uncovered a pattern at Prime of billing Medicare for rare ailments that generate lucrative bonus payments to the chain.</p><p>The <a href="" target="_blank">Polk award</a>, one of the most prestigious in journalism, was named after a CBS newsman murdered while covering the Greek Civil War in 1948. A total of 15 winners were announced today by the contest administrators at Long Island University. Other recipients include the New York Times, Wall Street Journal, the Boston Globe, and ABC News 20/20. Williams, Jewett and Doig won in the category of medical reporting. In announcing the award, Polk administrators cited our reporters for their &quot;groundbreaking&quot; investigation that &quot;offered a glimpse into the broader problem of waste, fraud and abuse within the nation&#39;s $2.5 trillion health-care system.&quot;</p><p>It is a great honor and deeply gratifying. The work of our reporters was painstaking, thorough and courageous. We have produced our yearlong series amidst a barrage of criticism from Prime,&nbsp;which has waged a PR campaign against our small nonprofit newsroom, as we stood by our reporting.</p><p>Our reporters analyzed data containing more than <a href="" target="_blank">51 million patient records</a> from 2005 through 2010 and reviewed thousands of pages of documents to uncover <a href="" target="_blank">billing patterns at Prime that stand apart</a> from other acute care general hospitals in the state.&nbsp;</p><p>The series &ldquo;Decoding Prime&rdquo; also prompted heightened scrutiny of the Southern California hospital chain by state and federal investigators. The FBI began questioning former <a href="" target="_blank">Prime billing administrators</a> and <a href="" target="_blank">patients</a>&nbsp;after first seeing these sources quoted in our stories.</p><p>Earlier this month, Prime <a href="" target="_blank">abandoned its efforts</a> to acquire a New Jersey hospital. Health regulators there had begun asking questions about the chain&#39;s billing methods raised in our series.The chain also <a href="" target="_blank">lost its bid</a> last fall to acquire another hospital in California when the state attorney general ruled it wouldn&#39;t be in the public&#39;s interest.&nbsp;This week, a legislative committee will hear testimony about <a href="" target="_blank">patient-admission practices</a> that we detailed in our series.<span style="background-color: rgba(255, 255, 255, 0.918); color: rgb(34, 34, 34); font-family: arial,sans-serif;">&nbsp;</span></p><p><span style="background-color: rgba(255, 255, 255, 0.918); color: rgb(34, 34, 34); font-family: arial,sans-serif;">Our reporters relied heavily on data and documents to tell these stories. But our series came to life because of the courage of several former Prime workers and patients who spoke to us on the record about their experiences.&nbsp;</span></p><p>Recognition is not what drives journalists. It is passion, creativity, the rush to get your story out. Above all, it&rsquo;s the chance to make a difference.</p><p>In today&#39;s world journalists around the country&nbsp;are being buffeted and challenged by upheaval laced with opportunities that not all can see. It is a new moment but the old values of investigative reporting, accountability journalism, whatever one likes to call it, are more needed than ever.</p><p>Last Thursday the Center for Investigative Reporting was <a href="" target="_blank">honored by the John D. and Catherine T. MacArthur Foundation</a> as one 15 organizations in six countries to receive the MacArthur Award for Creative and Effective Institutions.&nbsp;</p><p>The MacArthur award recognized the innovation, creativity, and fortitude CIR has shown in growing and evolving in the face of &nbsp;daunting obstacles. It also cited the role of investigative reporting &quot;in changing the world.&quot; It was truly an award for everyone at CIR.</p><p>The Polk award recognizes journalistic excellence. Lance, Christina and Steve were named in the award. But their recognition is not only about the work but about a culture and a value we are nurturing and building that we believe is important everywhere. This is the first Polk award for our California Watch operation, which we launched at the Center for Investigative Reporting less than three years ago. Some of you may recall that CIR won its first Polk award in 1992 for &quot;The Great American Bailout,&quot; co-produced with Frontline.</p><p>We hope our recent success can inspire and lead others to emulate what we are doing. And we are here to help.&nbsp;</p><p>Onward.</p> Newsroom Decoding Prime Mon, 20 Feb 2012 05:56:25 +0000 Robert J. Rosenthal 14956 at Prime Healthcare drops bid for N.J. hospital <p>Prime Healthcare Services pulled its bid to buy a New Jersey hospital last week, saying it was deferring to the wishes of local elected officials who wanted to see the hospital remain a locally operated nonprofit.</p><p>The proposed deal met strong resistance from a <a href="" target="_blank">health workers union</a> and a <a href="" target="_blank">community group</a> that aired concerns over Prime&rsquo;s business model.</p><p><a href="" target="_blank">Prime</a> leaders and <a href="" target="_blank">Christ Hospital</a> attorneys also faced tough questions from health regulators and the New Jersey attorney general&rsquo;s office, including queries about billing practices based on findings of a yearlong investigation by California Watch. The nonprofit investigative news operation has <a href="" target="_blank">identified a pattern</a> at Prime Healthcare of billing Medicare for treatment of rare conditions among its elderly patients &ndash; conditions that enable the chain to reap lucrative bonus payments.</p><p>&ldquo;They were getting hit from all sides,&rdquo; said Jeanne Otersen, public policy director for Health Professionals and Allied Employees, a union that represents 400 nurses at Christ Hospital.</p><p>Prime spokesman Edward Barrera said in an e-mail that the chain already had shared a great deal of information with state health regulators and &ldquo;was in the process of finalizing its responses.&rdquo;</p><p>&ldquo;The queries played no role in Prime Healthcare&rsquo;s decision to withdraw,&rdquo; according to Barrera.</p><p><a href="" target="_blank">In a statement</a>, Prime Healthcare chief executive Lex Reddy, who is chain founder Prem Reddy&rsquo;s brother-in-law, said Prime had hoped to &ldquo;play a key role in stabilizing the financial future of healthcare in Hudson County by acquiring Christ Hospital and investing tens of millions of dollars to upgrade its services, provide much-needed charity care and keep jobs in Jersey City.&rdquo;</p><p>&ldquo;It is unfortunate things did not work out the way we had hoped,&rdquo; he said.</p><p>Christ Hospital chief executive Peter Kelly also said in a statement that he regrets that a partnership with Prime will not move forward. The hospital received another offer from a local hospital group.</p><p>Prime Healthcare leaders said they spent months in New Jersey, investing in an effort to keep the hospital financially solvent.</p><p>Prime was opposed by a coalition of business and neighborhood associations. Paul Bellan-Boyer, a leader of the group, said community members banded together and concluded that the $15.7 million offer by Prime, with a promise to invest $35 million in upgrades, didn&rsquo;t &ldquo;withstand any reasonable scrutiny.&rdquo; Another group offered $104 million for the hospital in January.</p><p>Otersen, of the nurses union, said Christ Hospital nurses had read California Watch reports about Prime Healthcare billing and patient admission practices with concern and brought them to the attention of state authorities. &ldquo;It was hard, real research,&rdquo; she said. &ldquo;It was so important.&rdquo;</p><p>The New Jersey Department of Health and Senior Services, which plays a role in granting hospital licenses, <a href="" target="_blank">inquired about high rates</a> of acute heart failure at one Prime hospital. California Watch <a href="" target="_blank">reported</a> that Chino Valley Medical Center billed Medicare for six times more cases of the condition than other state hospitals.</p><p>The New Jersey <a href="" target="_blank">attorney general&rsquo;s office</a> also sent inquiries to the Christ Hospital counsel as part of its hospital-vetting process, asking why hospital trustees didn&rsquo;t conduct independent investigations into reports about &ldquo;high incidence of certain rare diseases&rdquo; or &ldquo;over billing.&rdquo;</p><p>California Watch has reported that Prime hospitals billed for <a href="" target="_blank">outsized rates</a> of some medical conditions that also draw enhanced Medicare payments. Those ailments include kwashiorkor, a form of malnutrition usually associated with starving children, and autonomic nerve disorder, a condition seen in Prime hospitals nearly 90 times more often than the statewide average.</p><p>Three California members of Congress have asked the U.S. Department of Health and Human Services&#39; inspector general to investigate Prime&rsquo;s billing practices. FBI agents have interviewed a <a href="" target="_blank">former Prime hospital patient</a> and contacted <a href="" target="_blank">two former Prime employees</a> as part of a federal inquiry into billing methods at the hospital chain.</p><p>Prime has maintained that its billings are appropriate and that it relies on physicians to diagnose patients. It also called California Watch&rsquo;s analysis of acute heart failure cases &ldquo;faulty, unfair and biased.&rdquo;</p><p>Prime&#39;s Barrera noted that Thomson Reuters, a business data firm, recently ranked Prime Healthcare one of the top 15 health systems in the nation, compared with 321 other organizations.&nbsp;The report examined hospital outcomes for three medical conditions: pneumonia, heart attacks and acute heart failure.</p><p>The Thomson Reuters report, based in part on Medicare billing data, concluded that Prime hospitals had the nation&rsquo;s lowest 30-day mortality rate for acute heart failure patients, at 9 percent. That means that compared with the number of patients diagnosed with the condition, the number who died within 30 days was exceptionally low.</p><p>In November, Dr. Steven Shayani, president of the New York Heart Research Foundation, <a href="" target="_blank">told California Watch</a>&nbsp;that he was skeptical about the high rate of acute heart failure among Medicare patients at Chino Valley Medical Center.</p><p>The San Bernardino County hospital reported that 35.2 percent of its Medicare patients had acute heart failure, a breakdown in the body&rsquo;s ability to circulate blood. That&rsquo;s far higher than 4.8 percent, the rate at California hospitals not owned by Prime, according to an analysis of billing data from 2008 to 2010.</p><p>In an interview, Shayani said that while acute heart failure is prevalent among the elderly, there was &ldquo;no way of explaining&rdquo; the hospital&rsquo;s high rate. He also noted that an inflated acute heart failure rate could boost a hospital&rsquo;s quality ratings.</p><p>&ldquo;If you put heart failure as the diagnosis and the patient survives, that&rsquo;s how you would statistically lower your mortality rate,&rdquo; he said. &ldquo;And so your ratings are better.&rdquo;</p><p>The Thomson Reuters awards also reflect hospital performance in achieving low complication rates, high patient safety ratings and optimal patient lengths of stay.</p><p>Prime has been involved in other unsuccessful attempts to buy hospitals in recent years. In September, California Attorney General Kamala Harris <a href="" target="_blank">denied a bid</a>&nbsp;by the chain&#39;s nonprofit arm to buy Victor Valley Community Hospital over concerns about patient access to care.</p><p>During <a href="" target="_blank">an August hearing</a> over the proposed Victor Valley sale, John Petty, who spoke on behalf of another would-be buyer, submitted several California Watch articles to the attorney general&rsquo;s office.</p><p>&ldquo;We all have, you know, dogs in this fight,&rdquo; he said. But independent investigative journalists &ldquo;have &hellip; developed a series of articles that, I think, are fairly irrefutable,&rdquo; he said.</p><p>It was the second hospital sale that a California attorney general denied. Gov. Jerry Brown, the state&rsquo;s previous attorney general, also blocked the chain&rsquo;s bid to purchase an Orange County hospital after a <a href="" target="_blank">contentious public hearing</a> in 2007.</p><p>Prime signaled its interest in buying two bankrupt hospitals in Hawaii but backed out of the deal in December. The chain <a href="" target="_blank">bought a share</a> of a Texas hospital in December.</p> Health and Welfare Daily Report attorney general certificate of need Christ Hospital Decoding Prime hospital sale Prime Healthcare Prime Healthcare Services Decoding Prime Tue, 07 Feb 2012 08:05:03 +0000 Christina Jewett Lance Williams 14783 at Monica Lam/California Watch Prime-managed hospital draws potential buyer <p>A San Bernardino County hospital managed by Prime Healthcare Services is considering a purchase offer from a nonprofit Catholic health system, possibly signaling an end to a long and rocky bankruptcy.</p><p>Orange County-based St. Joseph Health System has offered $35 million to buy Victor Valley Community Hospital, with the promise of $25 million in upgrades over five years.</p><p>Last year, state Attorney General Kamala Harris <a href="" target="_blank">denied a sale</a> of the hospital to Ontario-based Prime, concluding that it was not in the public interest. Since then, Prime and the hospital board reached a loan and management consulting agreement that went forward <a href="" target="_blank">over Harris&rsquo; legal objections</a>.</p><p>The chain has been the subject of a <a href="" target="_blank">yearlong California Watch investigation</a>. The FBI has begun interviewing former workers and at least one patient over the chain&#39;s billing matters.</p><p>While the Victor Valley Community Hospital board reviews the offer,&nbsp;St. Joseph and its local facility, St. Mary Medical Center in Apple Valley, are examining the books of the financially troubled hospital.</p><p>St. Joseph&nbsp;<a href="" target="_blank">owns 14 general hospitals</a> in California and Texas, as well as home health agencies and nursing homes.&nbsp;Randy Bevilacqua, St. Mary Medical Center&#39;s vice president of strategic services, said the purchase might relieve crowding at its busy facility and ensure that community residents have access to the care they need.</p><p>&ldquo;We know that medical center takes care of a significant population of poor and vulnerable, that&rsquo;s part of our mission,&rdquo; he said.</p><p>An attorney for the Victor Valley Community Hospital board said the top priority is to get the hospital in the hands of an operator with the financial resources to make improvements.</p><p>&ldquo;Time is not on our side at Victor Valley,&rdquo; said attorney Charles Slyngstad. &ldquo;We have to do something as soon as we can do it &ndash; whether it&#39;s a resolution with Prime or St. Mary, whatever is needed to get the hospital in financially stronger hands.&rdquo;</p><p>A spokesman for Prime declined to comment on the possible sale, deferring to Victor Valley hospital leaders.</p><p>Initially, the hospital was approved for sale to a group including Hemet physician Kali Chaudhuri, but the deal did not close within an agreed-upon timeline. Prime brought a second offer of $35 million, and chain chief executive Lex Reddy called for approval of the deal during a divisive August hearing before deputy attorneys general.</p><p>Harris did not approve the sale, <a href="" target="_blank">citing the potential impact [PDF]</a> on patients&#39; access to care. It was the second time the attorney general&rsquo;s office <a href="" target="_blank">denied a nonprofit hospital sale</a> to Prime. In the first case, Prime tried to buy Anaheim Memorial Medical Center.</p><p>During hearings convened by the attorney general&rsquo;s office <a href="" target="_blank">in mid-2007 in Orange County</a> and in August in Victorville, speakers aired concerns about the chain&rsquo;s tendency to eschew contracts with insurers, thus limiting in-network choices for covered patients.</p><p>Most hospitals agree to bargain over prices with insurers, knowing they will see a steady flow of patients. Prime, in many cases, has avoided such contracts and charged higher prices to insurers that cover the patients who end up in its emergency rooms.</p><p>The practice has been <a href="" target="_blank">particularly controversial with insurers</a> such as Kaiser Permanente, which <a href="" target="_blank">has accused the chain</a> in court of &ldquo;capturing&rdquo; its patients in the interest of profit. Prime has <a href="" target="_blank">denied the allegations</a>, which are being deliberated in ongoing litigation.</p><p>If Victor Valley and St. Joseph leaders arrive at a deal, it would require the approval of the bankruptcy court and attorney general.</p><p>Bevilacqua said the attorney general has not, to his knowledge, denied a sale to the health system. And he said staff, patients and the community have reacted favorably to news of the possible sale.</p> Health and Welfare Daily Report Kamala Harris Prime Healthcare St. Joseph Health System Victor Valley Community Hospital Decoding Prime Fri, 13 Jan 2012 08:05:02 +0000 Christina Jewett 14445 at Monica Lam/California Watch FBI interviews Prime hospital patient as inquiry widens <p>FBI agents interviewed a former Shasta County hospital patient Friday amid indications of a widening federal inquiry into Medicare billing practices at the Prime Healthcare Services hospital chain.</p><p>Darlene Courtois, 64, who was featured in a California Watch <a href="" target="_blank">report</a> last month about unusual Medicare billings at a Prime hospital in Redding, spent more than an hour with three federal agents, said her daughter, Julie Schmitz.</p><p>Schmitz said the agents asked questions about a 2010 hospital stay after which Prime had billed Medicare for treating Courtois for kwashiorkor, a dangerous form of malnutrition that afflicts children during African famines.</p><p>The agents&nbsp;also asked questions about an incident last month in which the hospital allegedly publicized Courtois&rsquo; medical records&nbsp;&ndash; without her permission &ndash; in an effort to refute the California Watch story, Schmitz said in a telephone interview.</p><p>Medicare pays hefty bonuses to hospitals for treating complicated medical cases, and a diagnosis of kwashiorkor can boost a hospital&rsquo;s payout by more than $6,000 per patient, records show.</p><p>As California Watch has reported, in the past two years, Prime&rsquo;s Shasta Regional Medical Center has billed Medicare for more than 1,000 kwashiorkor cases &ndash; 70 times the statewide rate.</p><p>Among them was Courtois, a retired teacher&rsquo;s aide who lives in rural Shingletown, west of Mount Lassen.</p><p>Courtois told the agents that she was hospitalized in 2010 for kidney failure, not kwashiorkor, her daughter said. She told the agents she received no treatment for kwashiorkor or any other kind of malnutrition during her 2010 hospitalization, by the daughter&#39;s account.</p><p>Schmitz said her mother disputed the hospital&rsquo;s account that she had received diet counseling to treat her for a condition called protein malnutrition.</p><p>&ldquo;No. They didn&rsquo;t. Nobody has,&rdquo; said Schmitz, who monitors her mother&rsquo;s care and who participated in the FBI interview.</p><p>In an e-mail in response to a request for comment, a hospital spokesman wrote, &quot;Shasta Regional Medical Center believes it has followed all state and federal laws and regulations. In abundance of caution, Shasta Regional has already notified all the proper agencies.&rdquo;</p><p>In the past 18 months, three California congressmen have asked Medicare to investigate Prime for a suspected form of Medicare fraud called upcoding, in which a provider files false claims via computerized billing codes to reap enhanced reimbursement.</p><p>A <a href="" target="_blank">California Watch analysis</a> of state records shows that hospitals owned by the Ontario-based chain reported unusually high rates of several conditions that qualify for enhanced Medicare payouts. At the same time, former employees of Prime say that chain owner Dr. Prem Reddy has urged doctors and medical coders to log conditions that pay a premium when treating elderly Medicare patients.</p><p>Last month, California Watch reported that <a href="" target="_blank">FBI agents</a> had contacted two former employees of Prime&#39;s Alvarado Hospital Medical Center in San Diego to discuss billing practices. In an earlier interview with California Watch, the employees said that at a 2010 meeting, Reddy had urged physicians to document a disorder called autonomic nerve disorder in cases when patients fainted. Reporting the disorder would boost the hospital&rsquo;s payout, by their account.</p><p>Prime has denied wrongdoing, saying its Medicare billings are legal and proper.</p><p>In their interview with the Shasta County patient, investigators also were focusing on patient confidentiality issues, said Schmitz, the patient&rsquo;s daughter.</p><p>Last week, the <a href=",0,3519433.column" target="_blank">Los Angeles Times reported</a> that in December, two executives from the Redding hospital had taken Courtois&rsquo; medical file to the Redding Record Searchlight and showed its contents to the newspaper&rsquo;s editor.&nbsp;The executives were urging the newspaper not to publish California Watch&rsquo;s story on the case, the Times reported.</p><p>Medical records that Courtois obtained from the hospital and shared with California Watch supported her account of being treated for kidney failure, not severe malnutrition. But a Prime spokesman said that physician notes in the hospital&#39;s possession verified that the hospital had accurately billed Medicare.&nbsp;</p><p>Courtois told the FBI that she had never given the hospital permission to make her hospital files public, according to her daughter.</p><p>In its report, the Times quoted legal experts as saying that Prime likely had violated federal patient confidentiality laws. Violators can be fined and sentenced to prison.</p><p>In a statement issued Thursday, Prime contended that it was legally entitled to publicize the patient&rsquo;s medical information because she had &ldquo;voluntarily disclosed her medical records as part of an inflammatory news story by California Watch.&rdquo; That meant Courtois had waived her privacy rights, the company said.</p><p>The statement also said Prime believed that disclosing Courtois&rsquo; records was &ldquo;necessary to prevent or lessen a threat to the health and safety of the public.&rdquo;</p><p>The statement did not elaborate on the nature of the threat to public safety or how releasing the patient&rsquo;s medical files would address it.&nbsp;</p> Health and Welfare Daily Report Decoding Prime FBI kwashiorkor medicare Prime Healthcare Decoding Prime Mon, 09 Jan 2012 08:05:02 +0000 Lance Williams 14361 at Monica Lam/California Watch Julie Schmitz (left) and her mother, Darlene Courtois, were interviewed by the FBI.