California-based Prime Healthcare Involved in Possible Medicare Fraud

California-based Prime Healthcare Involved in Possible Medicare Fraud

An investigation by the U.S. Department of Health and Human Services (HHS) and the state Department of Justice is seeking to determine if a surge in septicemia infections among hospitals run by California-based Prime Healthcare Services is due to real health issues or possibly a multi-million dollar Medicare fraud scheme.

"Because of the severity of septicemia, Medicare pays significantly more to treat it as compared to less-severe hospital-acquired infections," notes Alan Weinstock, insurance broker, at www.MedicareSupplementPlans.com. "Therefore, it makes sense that some hospitals might file false septicemia claims in order to receive higher payments."

Background on Septicemia and Claims from Prime Healthcare

Septicemia is the presence of bacteria in the blood and usually arises in hospitals with poor procedures for infection control. Not only are severe cases difficult and costly to treat, but they are often deadly.

In the case of Prime Healthcare, the company reported an unusually high rate of septicemia infections at its hospitals during fiscal year 2008. An investigation was prompted when a computer analysis of Medicare billings conducted by the Service Employees International Union (SEIU) revealed the Prime Healthcare anomaly and the fact that the company might have overbilled Medicare by as much as $18 million for septicemia claims that year.

The SEIU analysis found that the septicemia rate at Prime Healthcare hospitals was nearly 16% (three times higher than the national average among Medicare patients) and yet the mortality rate was only 38% (below the national average).

Medicare "Upcoding" Suspected in Prime Healthcare Investigation

Filing inflated claims with Medicare for one treatment when in actuality a less serious, less expensive condition was treated is known as "upcoding." In the case of Prime Healthcare, septicemia coding may have been substituted for a less-severe infection. The purpose of this type of fraud is to assign false diagnostic codes on Medicare billings in an effort to obtain a higher reimbursement rate.

The way Medicare coding typically works is that when a Medicare patient leaves the hospital, their doctor documents what condition or ailment caused their hospitalization. In addition, they note any other relevant medical conditions or procedures involved in the patient's treatment.

This information is then submitted to a medical coder who reviews the Medicare patient's file and assigns the appropriate diagnostic code so Medicare can determine the proper reimbursement rate.

Upcoding of septicemia is apparently so rampant that according to a 1999 inspector general's report in one sample of hospital billings investigators studied, 20 percent of septicemia cases had been upcoded.

Whether the problem with the Prime Healthcare facilities are due to upcoding or a real-life infection crisis has yet to be determined. In the meantime, there is a moratorium on new hospital licenses for the chain until the probe is complete.

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