Prime Healthcare Services has expanded into Texas following allegations that some of its hospitals in California engaged in improper billing practices, the Texas Tribune reports.
Prime owns and operates more than a dozen hospitals, most of which are located in California (Ramshaw, Texas Tribune, 6/5).
Background
Prime has come under scrutiny for allegedly submitting fraudulent bills to Medicare and Medi-Cal, California's Medicaid program.
Last year, the California Department of Public Health looked into claims that Prime "upcoded" patient bills and referred the matter to CMS officials.
In addition, the FBI has begun questioning former Prime staff members about the health system's billing practices (California Healthline, 2/27).
An investigation by California Watch found that Shasta Regional Medical Center -- which is owned by Prime Healthcare Services -- billed Medicare for more than 1,000 cases of a rare form of malnutrition known as kwashiorkor over a two-year period (California Healthline, 1/13).
The rate of billing for kwashiorkor increased significantly after Prime acquired the hospital and was 70 times higher than the state average during that period, according to the Tribune.
In addition, the Service Employees International Union-United Healthcare Workers West -- which is involved in a labor dispute with Prime -- conducted research in 2008 and 2009 and found that Prime hospitals reported some of the highest rates of the bloodstream infection septicemia in the U.S.
Details of Expansion
In December, Prime acquired Harlingen Medical Center, a 112-bed facility in South Texas.
The health system later acquired Pampa Regional Medical Center, a 115-bed facility in the state's Panhandle.
Criticisms of Expansion
Critics of Prime say that the health system is known for acquiring hospitals with fiscal problems that are located in communities where they are unlikely to be heavily scrutinized.
Adam Weisberg, research coordinator with SEIU-UHW, said, "They look for opportunities where they can catch people in the emergency room and focus on obtaining as much reimbursement as possible from Medicare and from private payers."
Prime's Response
Prime officials said that allegations of "upcoding" patient bills are false and that SEIU-UHW is trying to tarnish the health system's reputation in California.
Edward Barrera, a Prime spokesperson, in a statement said, "The facts will demonstrate that Prime Healthcare hospitals are committed to following all applicable state and federal laws and regulations."
Barrera noted that the allegations have caused the company to "look outside the state for expansion." He said that Prime "has decided that the current environment in California is not business-friendly" (Texas Tribune, 6/5).