Understanding Government

Remember the kwashiorkor plague striking Northern California — where the African childhood disease was spreading like wildfire, but only amongst seniors with Medicare getting treatment at hospitals affiliated with Prime Healthcare?

Well, according to Christina Jewett and Stephen K. Doig of California Watch, in a story published in today’s San Francisco Chronicle, in addition to a chronic case of upcoding, Prime Healthcare is also apparently hospitalizing patients who should be discharged, in an effort to maximize bills to Medicare and various H.M.O.’s.

A full 63 percent of all Prime Healthcare ER patients ended up moved into hospital beds, compared to 39 percent at Tenant, another chain with a large presence in California.

Patients report that Prime refused to let them be transferred or to see their own doctors, and ordered unnecessary and expensive tests. According to allegations made by Oakland-based H.M.O. Kaiser Permanente, which operates its own hospitals, Prime refused to release patients in order to drive up bills it would submit to Kaiser. A similar pattern of corrupt billing practices is alleged by Heritage Provider Network, another HMO:

Former Prime employees have described an orchestrated campaign of admitting Medicare and Kaiser patients — moving them from the emergency room to a hospital bed — in the interest of changing the fortune of a money-losing hospital in Victorville (San Bernardino County).

The chain’s founder and board chairman, Dr. Prem Reddy, once described the emergency room as a “gold mine” of Medicare and Kaiser patients, according to the former medical director of Desert Valley Hospital, which Reddy bought in 2001.

Gaming the system is commonplace in America. Two of the nation’s leading white collar professions — law and accounting — are built around creating, finding, or exploiting legal loopholes. The successful hand-out campaign contributions to the nation’s lawmakers make it all the harder to root out this kind of behavior.