Prime Healthcare Services for California is reportedly facing allegations from California state lawmakers concerning allegations over a number of controversial medical billing practices.
State lawmakers announced Friday that they will hold a hearing led by the Senate Health Committee, which will investigate suspected overbilling of patients and suspected refusals to transfer out-of-network patients. The potential motives behind these actions could be to increase Prime Healthcare hospital revenues, at the cost of patient care and money, a practice lawmakers suggest could be illegal.
California State Senator Ed Hernandez, chairman of the Senate Health Committee, called the hearing on Friday in Los Angeles after learning of these suspected actions by Prime Healthcare.
“I have no problem with an entity turning a profit, but not at the expense of the consumer to the point it drives up healthcare costs,” Mr. Hernandez said.
The hearing focused primarily on the hospital’s requirement to transfer out-of-network patients once they become stabilized to receive necessary care in other appropriate facilities. By limiting the number of out-of-network patients from being transferred interferes with the quality of their care. Hospitals and medical facilities have an obligation to the patient to ensure the best possible care. While facility revenue is an issue, their revenue concerns should not hinder the care of their patients.
In addition, billing practices of Prime Healthcare were under fire. Prime Healthcare is accused of overbilling medical charges to employers and government-run health programs. The hearing highlighted the upcoming changes to Medi-Cal’s reimbursement system and how the state is preparing to handle the influx of millions of new patients, many of whom will be covered by 2014.
According to Prime Healthcare, it is unaware of any federal or state inquiries. Prime Healthcare believes its practices comply with all state laws and regulations.
These allegations against Prime Healthcare were stimulated by conclusions from a 2010 study that found that 64 percent of Prime Healthcare patients stay in their hospitals for up to two days, compared to 36 percent of patients admitted to out-of-network hospitals. In addition, hospital billing staff and nurses have been interviewed to learn more about the hospitals’ practices.
In the past, Prime Healthcare was investigated for possibly submitting fraudulent bills to Medicare and Medi-Cal. When these issues were brought to light, officials from Medicare and Medi-Cal looked into allegations of Prime Healthcare “upcoding” patient bills.
Prime Healthcare owns 14 hospitals in California Texas, and Pennsylvania. In addition, there are three other California hospitals that are related to nonprofit foundations.
After these allegations against Prime Healthcare were filed, Lex Reddy, the president and CEO, of Prime Healthcare resigned, after 11 years for personal reasons. Prem Reddy, the company’s chairman, has taken over as the interim CEO. This new leadership may lead to management changes within Prime Healthcare, the required changes to rebuild confidence in the patients.
Michael Sarrao, vice president and general counsel at Prime Healthcare, said the investigation is simply politics, adding that he expects the company will be vindicated.
The investigation comes nearly a year after Mr. Hernandez, a Democrat, proposed a measure to hold state hospitals more accountable. The California Democrat was the chief sponsor of legislation that closed a loophole in state law concerning hospital licensing.
During that debate, Mr. Hernandez pointed to a series of actions by Prime Healthcare. Prime Healthcare bought Alvarado Hospital from Plymouth Health Investments in November of 2010. Since the named license-holder for the hospital, Alvarado Hospital LLC, was unchanged in the sale, Prime was not required to apply for a new license. This despite being under investigation by the Dept. of Public Health for problems reported at other hospitals Prime operates, according to Mr. Hernandez.