Prime Healthcare CEO resigns amidst upcoding accusations

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After a year of upcoding accusations and in the face of a reported federal investigation, Prime Healthcare Services President and CEO Lex Reddy has resigned, the California-based health system confirmed yesterday. The company did not mention the reason for his departure, but Reddy reportedly will form a new hospital management company, according to Payers & Providers.

Reddy has been president and CEO of the system since 2001. The organization credits him with expanding the company, turning around financially distressed hospitals in the state and helping the hospital operator earn national recognition for high quality care, Prime said in an announcement.

Last month, Thomson Reuters announced that Prime Healthcare was among its list of top 15 health systems in system-wide clinical performance, despite reports of the alleged upcoding and a very public patient privacy breach in the media.

Prime officials are due to appear before a State Senate and Assembly Health Committee hearing in Los Angeles today for hospital billing practices in which Prime allegedly billed Medicare for rare diseases, such as septicemia, at higher-than-average rates, the San Fernando Valley Business Journal reported.

Prime Healthcare maintains that it is not aware of any federal or state review. "Prime Healthcare is confident that even if there are, the facts will demonstrate that the company has complied with all statutes and regulations," it said in a statement.

Meanwhile, reporters for California Watch, the nonprofit investigative reporting group (and the thorn in Prime Healthcare's side for the better part of 2011), won the George Polk Award for Journalism for the series of articles that sparked the investigation.

"Lex Reddy has been an important part of our success, and he will be missed," founder and board chair Prem Reddy, Lex Reddy's brother-in-law, said in a statement.

Prem Reddy will serve as interim CEO.

For more information:
- read a California Watch article
- read the San Fernando Valley Business Journal article

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