(Ontario, CA – July 5, 2016) – The United States Department
of Justice (USDOJ) has filed its complaint in intervention in the False
Claims Act action regarding Medicare inpatient admissions filed by a former
employee. The filing was expected following the USDOJ’s notice of
intent to file the complaint on May 23, 2016.
Prime Healthcare denies the allegations and remains committed to providing
quality care that patients need and deserve. Prime Healthcare is confident
that it will prevail and be found to have completely complied with all
Federal regulations regarding Medicare inpatient admissions.
The USDOJ complaint alleges that Medicare patients could have been treated
as outpatients under observation status rather than as inpatient admissions.
However, physicians determine medical necessity for admission using their
independent medical judgement and nationally recognized objective clinical
criteria. Predictably, the complaint alleges that Medicare should have
only paid for outpatient observation care even though this reimbursement
rate is less than the cost of care provided or expected based on the patients’
Prime Healthcare provides award winning quality care to all patients, earning
more patient safety awards from Healthgrades than any other health system
in the country and being named a Top 15 health system three times by Truven
Health Analytics. Prime Healthcare supports the decisions of physicians
in the care they determine is needed for their patients. The USDOJ complaint
does not dispute the safety or quality of care provided to patients at
Prime hospitals, but instead alleges patients should have been admitted
to hospitals under the Medicare observation status, rather than as inpatient
admissions, even though the hospital care provided to the patients is
largely the same.
“Hundreds of independent physicians have used their clinical judgment
to determine the need for inpatient care in the best interests of their
patients. Physicians determine the need for inpatient admission, not hospitals,”
said Troy Schell, General Counsel for Prime Healthcare. In California,
Prime Healthcare does not employ physicians in its hospitals.
“Every admission decision is based on the clinical judgment of physicians
and satisfies nationally recognized objective clinical criteria, including
those issued by Milliman and InterQual criteria,” continued Schell.
“Medicare has no established criteria aside from the determination
of medical necessity made by a physician. The allegation that Prime Healthcare
altered Milliman guidelines is false. Prime Healthcare has confidence
in the medical judgment of the hundreds of independent physicians that
admit patients within our hospitals.”
“The rules to determine medical necessity for inpatient admission
are a challenge faced by all hospitals," said California Hospital
Association President/CEO C. Duane Dauner. "The current maze of federal
and state laws is complex, inconsistent, and can create traps for those
using their best efforts to comply. Even those knowledgeable about these
laws cannot always agree and differing interpretations occur regularly.
All hospitals are under intense regulation and are continuously audited
by governmental agencies and private firms that conduct audits on behalf
of the Centers for Medicare & Medicaid Services (CMS). Physicians
and hospitals are working to ensure the best care for patients and comply
with regulatory requirements while providing value based care.”
"Like most hospital systems, Prime Healthcare has been routinely audited
by federal and state regulatory agencies, including Medicare Administrative
Contractors (MACs), Recovery Audit Contractors (RACs), and Quality Improvement
Organizations (QIOs) regarding its short stay admissions. Similar Medicare
short stay audits have been conducted at almost every major health system
in the country. Thousands of Prime Healthcare short stay admissions have
been routinely audited and have been deemed reasonable and necessary based
upon the medical judgment of the admitting physician.
“Prime Healthcare has had more than 6,800 short-stay admissions reviewed
by CMS contractors and resolved in its favor,” said Schell. “We
have successfully appealed nearly all of the cases that have been reviewed,
which include more than 600 favorable written decisions by Medicare Administrative
Law Judges or the Medicare Appeals Council Judges. The Medicare Office
of Hearings and Appeals, a highly-qualified agency designated by CMS to
hear appeals, has consistently found that physicians correctly admitted
patients because their medical conditions could not be appropriately treated
at a lower level of care under outpatient observation.”
Based on this precedent, and a remarkable success rate of appeals at nearly
100 percent, Prime Healthcare expects to prevail. The Department of Justice
case is based on a non-randomized sample of only 100 short-stay admissions
as opposed to the 6,800 claims Prime Healthcare has successfully appealed.
“This is simply a case of the government wanting another bite of
the same apple; governmental reviews have already validated the need for
inpatient admission as made by independent physicians,” said Schell.
Prime Healthcare’s dedication to provide critical healthcare access
for all in need has been misrepresented in the Department of Justice complaint.
Time and again, Prime Healthcare acquires financially distressed hospitals
and turns them into valuable community assets serving critical safety-net
needs. Emergency departments are central to Prime’s commitment to
all patients, therefore, significant resources and capital are invested
to improve emergency department efficiency and care. Prime Healthcare’s
dedication to provide emergency care for all has led to more than $3 billion
in charity and uncompensated care, more than any other hospital system
Prem Reddy, MD, Prime Healthcare’s Chairman, President & CEO,
founded Prime Healthcare in 2001 with a dedication to clinical excellence,
patient care and giving back to communities. Since then, Prime Healthcare
has saved 43 hospitals across the nation, preserved or created more than
40,000 jobs, and has been named a Top 10 and Top 15 health system as well
as the nation’s fastest growing hospital system. Every year, Prime
Healthcare has remained in the top quintile of all health systems based
on clinical metrics, even while acquiring and assimilating new hospitals.
The Prime Healthcare Foundation, a 501(c)3 public charity with more than
$800 million in assets, includes 11 not-for-profit hospitals and supports
various charities dedicated to improving healthcare through education,
scholarships, grants and free community clinics. Dr. Reddy has consistently
been recognized among the most influential healthcare executives in the
nation and has gifted more than $1 billion to causes related to health
care, education and caring for others.
Prime Healthcare is committed to supporting the needs of patients and the
independent physicians who provide quality, compassionate care while fulfilling
Prime’s mission to save hospitals, save jobs and save lives.
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About Prime Healthcare: Prime Healthcare is an award-winning national hospital system with 43 acute-care
hospitals providing nearly 43,000 jobs in 14 states. Eleven of the hospitals
are members of the Prime Healthcare Foundation, a 501(c)3 public charity.
Based in California and one of the largest hospital systems in the country,
Prime Healthcare is committed to ensuring access to quality healthcare.
Prime Healthcare and its hospitals have been recognized as among the “100
Top Hospitals” in the nation 36 times and among the “15 Top
Health Systems” three times, and Prime is the only "10 Top
Health System" west of the Mississippi. Prime Healthcare hospitals
are annually recognized as “Top Performers on Key Quality Measures”
by The Joint Commission. For more information, please visit