FBI probes Prime Healthcare for alleged upcoding, watchdog reports

The Federal Bureau of Investigation (FBI) is looking into the billing practices of California-based hospital operator, Prime Healthcare Services, following reports that it allegedly overbilled Medicare for rare and serious conditions at high rates, California Watch reports on the San Francisco Chronicle.

Although the FBI did not confirm or deny an investigation, California Watch reports that a special agent approached two former Prime coders, Anneke Doty and Danika Fedeli, about the hospital chain's billing practices. The coders who worked at Alvarado Hospital Medical Center explained that billing practices changed after Prime acquired the San Diego hospital and that Prime owner Dr. Prem Reddy in December 2010 encouraged doctors to document rare medical conditions so the hospitals could reap more payments, the illegal billing practice known as "upcoding."

Soon after, Alvarado coding manager Joseph Ingrande resigned, stating he could not in good conscience be part of activities that placed him in potential legal jeopardy with Medicare, according to another California Watch article.

Prime Healthcare said it was unaware of an FBI investigation, according to the article.

"Prime Healthcare Services is an award-winning management company, and federal accreditation agencies frequently audit its hospitals and laud their practices," spokesman Edward Barrera said. "No federal agency has contacted us, nor are we aware of any federal review. Any scrutiny will show that our hospitals are committed to following all state and federal laws and regulations."

Prime Healthcare has been under the microscope, accused of falsely billing Medicare for various conditions at higher-than-normal rates. Services Employees International Union (SEIU) alleged that Prime billed Medicare for treating a large number of patients with kwashiorkor, a severe form of malnutrition, as well as bloodstream infections. The state public health department launched a probe into Prime's septicemia cases, but regulators found insufficient evidence to cite Prime Healthcare, according to California Watch. The independent investigative reporting center also said Prime documented for autonomic nerve disorder, accelerated hypertension, and malignant hypertension.

California Watch reported on its year-long investigation into millions of patient admission records. Prime Healthcare repeatedly called the accusations false and based on SEIU information.

For more information:
- read the California Watch article
- read the SF Chronicle article
- read a Prime press release in May

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