Feds excluded Prime Healthcare from short-stay claims settlement

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When the Centers for Medicare & Medicaid Services offered to pay hospitals a settlement of 68 cents on the dollar in 2014 for disputed short-stay claims, California-based for-profit hospital chain Prime Healthcare Services was cut out of the offer.

The reason why? CMS officials believed Prime was engaged in a widespread fraud regarding the way it admitted its patients, according to Los Angeles Times Business Columnist Michael Hiltzik.

CMS made the offer to hospitals to settle short-term claims after so many of them were tied up in the appeals process that the backlog stretched to more than two years.

Citing a lawsuit filed against Prime by the U.S. Justice Department, the Los Angeles Times reported that the hospital chain essentially admitted any Medicare patient who came through the doors of its emergency department, as opposed to placing them in observation care, where the rates of reimbursement are much lower.

As a result of auditing 11,000 of Prime's claims for short-stay claims, 8,000 were rejected by Medicare auditors, a rate of more than 70 percent. Less than a quarter were overturned on appeal, according to the Los Angeles Times. Surveys by the American Hospital Association indicate that about two-thirds of audited claims are overturned as a result of pursuing an appeal.

Prime itself has sued the feds for its share of the settlement. Its attorney told the Los Angeles Times that the lawsuit filed against it by the Justice Department was an attempt to get out of paying Prime. Instead, the hospital chain has educated its doctors to document absolutely every medical condition that might have befallen the patient, not only “to make sure we are not missing co-morbidities or complications” but to make sure the hospital chain is “paid as much as we are legally entitled to.”

- read the Los Angeles Times article