News: DOJ files False Claims Act complaint against Prime Healthcare Services

Prime Healthcare Services hospitals in California allegedly pressured emergency department (ED) physicians to admit Medicare patients without the medical necessity for an inpatient admission, according to the False Claims Act complaint filed by the Department of Justice on June 23.

The lawsuit accuses Prime, its 14 hospitals, and CEO, Prem Reddy, MD, of submitting claims to Medicare for medically unnecessary admissions where the patient could have been treated in observation, as an outpatient, or discharged. According to the complaint, Reddy coached physicians to embellish medical records to help them supports appeals in the event of claim denials.

The DOJ claims that, since 2006, Prime implemented a number of suspicious practices and procedures, including removing “observation” as an option from admission forms used by ED physicians; imposing quotas for admission of patients from the ED, including a specific goal for admitted Medicare beneficiaries; threatening to remove ED physicians from “the schedule” if they discharged a patient; and telling ED physicians that any insured patient expected to be in the ED more than two hours should be admitted as inpatient, while uninsured patients could be kept waiting for many hours and then be discharged.

Physicians were allegedly led to believe that their admissions were supported by Milliman Care Guidelines, while Prime administrators altered the guidelines before making them available for use, according to the lawsuit.

The DOJ says these inpatient admissions resulted in Medicare paying three to four times the reimbursement amount they would have received for services at the appropriate lower level of care.