Home 9 2016 9 July 2016 9 Prime Healthcare’s Response to DOJ Complaint: Prime Healthcare supports physicians and patients in the need for adequate inpatient hospital care

(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’ medical conditions.

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 in California.

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 www.primehealthcare.com.