The hospital chain called Prime Healthcare Services is being investigated for possibly submitting fraudulent bills to Medicare and Medi-Cal. It also appears that the hospital chain is running up patients bills by not letting them transfer to an in network hospital. The CEO stepped down this week.
A hearing was called by California State Senator Ed Hernandez. He is chairman of the California Senate Health committee. This hearing was called because of news that Prime Healthcare had been engaging in some controversial billing practices that would drive up the hospital chain’s revenue.
There have been allegations that the Prime Healthcare Services has been overbilling for medical care, and has also been refusing to transfer stabilized patients over to hospitals that are in the patient’s health insurance network.
The result of doing that would cause the patient to receive a much higher bill than is necessary. Most health insurance companies will cover hospitals that are in their network, but will only cover part of, or none of, the health care that comes from hospitals that are out of network.
In recent years, Prime Healthcare Services came under scrutiny for possibly submitting fraudulent bills to the Medicare program and to the Medi-Cal program. The California Department of Public Health looked into allegations that the hospital chain was “upcoding” patient bills.
In “plain English”, this would mean that the hospital chain has been accused of treating a patient for something, and then choosing to use a medical code that would result in a higher bill than would normally be generated if the hospital used the correct billing code. This would be similar to if you walked into McDonalds and ordered, and received, a kid’s meal, but were charged for a large size combo meal instead.
The hearing was called almost immediately after Prime Healthcare Services’ CEO, Lex Reddy, stepped down. A spokesman for Prime, Edward Barrera, says that Reddy left for unspecified “personal reasons”. Prime Healthcare owns fourteen hospitals that are located in California, Texas, and Pennsylvania. They also own a non-profit foundation that, itself, owns three more California hospitals.
On the other side of the issue, Michael Sarrao, who is the Vice President and general counsel at Prime Healthcare says that he is not aware of any federal or state inquires that involve the chain. He has stated that he feels confident that Prime Healthcare has complied with all laws and regulations. He has also said that there is no company policy that involves refusing to accept calls from patients’ regular physicians, (in order to avoid transferring patients out of the hospital).
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