Hospitals bilk Medicare for $ millions with kwashiorkor

Recent disclosures about hospitals reporting high rates of a third world disease in Medicare patients, and in turn receiving enhanced payments, validates the suspicion that some hospitals game the Medicare billing system, up coding, to rake in extra cash.

Tip of the iceberg

In a series of stories reported by California Watch, Prime Healthcare Services is being investigated for an unusually high number of Medicare treatments for septicemia and malnutrition at several of their hospitals throughout California. The first story discussed the high rates of malnutrition at the Redding and Victorville hospitals owned by Prime. The second story this past December of 2012, described how the mysterious malnutrition disease striking Medicare beneficiaries sharply declines after the hospital organization started to be investigate for fraud.

California struck by famine

In the case of the malnutrition reported at hospitals in Redding and Victorville, Prime Healthcare Services was billing Medicare for treatment of kwashiorkor disease which is a form of malnutrition found in countries racked by famine and civil war. A kwashiorkor malnutrition diagnosis can also trigger enhanced reimbursements from Medicare to treat a local endemic problem.

Key Findings

• Prime Healthcare Services had been investigated for aggressive billing practices and high incidents of treatment for septicemia.
• In 2009, Prime’s Redding hospital, Shasta Regional Medical Center, reported 16% of Medicare patients suffered from kwashiorkor, 70 times the state average.
• In 2009, Prime’s Victorville hospital, Desert Valley Hospital, reported the kwashiorkor malnutrition disease was in 9% of its Medicare patients, 39 times the state average.
• 8 of the top 10 hospitals reporting high incidence of malnutrition in seniors are owned by Prime.
• California reported 1.3% of Medicare patients diagnosed with severe malnutrition. Prime reported their rate was 10.1%
• 1,100 cases of kwashiorkor treatment over two years equated to $6.9 million in bonus payments to Prime hospitals.
• Prime reduced their reported incidents of kwashiorkor at its Redding hospital from 727 in 2010 to 106 in 2011. Similar drops have occurred at other Prime hospitals through out the state.

Prime Healthcare Services feels the heat

So what led to the sudden drop of this rare disease being treated at Prime hospitals? Most folks attribute the increased scrutiny from California Watch, current investigation by the Centers for Medicare and Medicaid and new Affordable Care Act regulations penalizing hospitals for readmissions of Medicare beneficiaries for Prime hospitals decline in kwashiorkor disease.

Where’s the elder abuse?

If there were over 1,000 cases of kwashiorkor disease throughout California, and some of them may be the same patient, you would hope there would be a similar increase in the reporting of elder abuse in the form of starvation. But I haven’t found any such evidence of either gross negligence in skilled nursing facilities starving their residents, a rash of children starving their parents or localized famine. Without any corresponding evidence of environmental or social causes for widespread malnutrition and kwashiorkor disease, we have to conclude that this was mostly fabricated.

Management decision to up code Medicare billing

All the experts quoted in the California Watch stories were often diplomatic in their phrasing of how Prime may have slipped into coding under nourished Medicare patients with kwashiorkor diseases. But the facts and timeline suggest nothing less than a concerted effort to up code a patient illness to milk extra cash from Medicare. The folks at Prime knew they could use a plausible defense that the patients may have been underweight and exhibited signs of a less than balanced diet causing someone in the billing department, who is not a physician, to code the treatment for malnutrition and/or kwashiorkor.

Medicare is a soft target

I would like to see how often the Prime hospitals billed private health insurance for treatment of malnutrition or kwashiorkor. One of the strengths of private health insurance is that they are constantly sniffing to see if a rat is in the billing nest. Private insurance rarely gets played like Medicare is rolled by their hospitals and other providers. In reality Prime Healthcare Services thought they were experiencing the wasting disease of low cash flow so they decided to treat themselves to high protein Medicare reimbursements to pump up their bottom line at the expense of the taxpayer.

Exploiting a complicated medical coding system

Because malnutrition and kwashiorkor treatment triggers bonus payments of between $6,100 and $8,000 per patient, depending on the accompanying illness, and Prime Healthcare Services reported 1,100 cases in 2010, it is estimated that the hospitals may have received upwards of an extra $6.9 million. Prime insists there was no fraud involved with their medical coding of illness for these Medicare patients. The reporting of kwashiorkor disease of 65 to 70 times the state average for other hospitals suggests either a conspiracy to deprive Medicare patients of food in Redding and Victorville, or Prime just saw the opportunity yo generate some needed cash for those hospitals.

Raw data for investigation

It is no easy task to gather and analyze this data. California mandates that hospitals report semi-annually all inpatient discharges with the type of treatment, billing codes and generic information of age, sex and county of residence. The information is in no easy form for the public to start paging through. At a minimum you need to be proficient with MS Excel pivot tables and the analysis can require a deep back ground in statistics. If it weren’t for consumer advocates and investigative journalism like California Watch, connecting the dots of how these hospitals bilk Medicare would go virtually unnoticed for years, if ever recognized.

Prime selects diet high in Medicare cash

These Prime hospitals that were “gaming” the Medicare medical billing code system also shows how much fraud, waste and abuse there is in the reimbursements. Until we have made certain that all the fraud perpetrated by Medicare providers is virtually eliminated, we should not be asking the beneficiaries to realize less coverage so hospitals can keep collecting bloated Medicare checks.