News: Prime Healthcare settles false-claims suit for $65 million
Prime Healthcare in Ontario, California, and its founder and CEO, Dr. Prem Reddy, have agreed to pay $65 million to end a lawsuit alleging the hospital chain engaged in a scheme to fraudulently bill Medicare, the Department of Justice (DOJ) announced last week.
The whistle-blower lawsuit, originally filed in 2011 by a former hospital executive, claims that in order to drive up revenue, Reddy and 14 Prime hospitals pushed doctors to admit Medicare beneficiaries as inpatients when they should have been placed in observation status, according to Modern Healthcare. The government estimates that more than 35,000 patients were improperly admitted to Prime hospitals.
The suit also alleges that the hospitals practiced “up-coding” by billing for more expensive diagnoses than the patients actually had, including when it came to complications and comorbidities, according to the DOJ.
“Patients and taxpayers who finance healthcare programs such as Medicare deserve to know that doctors are making decisions solely based on medical need—and not based on a corporate desire to increase billings,” said First Assistant United States Attorney Tracy Wilkison for the Central District of California, in the DOJ announcement.
Although Prime Healthcare and Reddy have agreed to pay the settlement amount, the organization’s statement does not admit guilt and maintains that they have not done anything wrong, HealthLeaders Media reported.
“There was no finding of improper conduct or wrongdoing of any kind by Prime Healthcare,” the statement said. “Prime Healthcare’s exemplary record of clinical quality care was never in question. This matter dealt with the technical classification of the category under which patients were admitted and billed.”
The settlement also includes a five-year corporate integrity agreement with the Health and Human Services Office of Inspector General. The agreement requires Prime healthcare to retain an independent review organization to review the accuracy of their claims for services furnished to Medicare beneficiaries, according to the DOJ announcement.
Editor’s note: To read ModernHealthcare’s coverage of this story, click here. To read HealthLeaders Media’s coverage of this story, click here. To read the DOJ announcement, click here.