Prime Healthcare blasted the U.S. Justice Department for using a whistle-blower lawsuit to challenge physician judgment over inpatient and outpatient hospital admissions and called for the $50 million complaint to be thrown out.
Prime said CMS' standards for inpatient and outpatient admissions were “confusing” and “subjective” and the hospital chain alleged the agency and DOJ improperly questioned physicians' subjective judgment on patient treatment in their quest to join a $50 million False Claims Act suit against the hospital chain.
DOJ alleged in a June intervening complaint that the Ontario, Calif.-based hospital system had a “culture” that pressures its physicians to admit Medicare beneficiaries to 14 of its hospitals for inpatient stays when they should be on shorter outpatient observation visits, and those billings are false Medicare claims.
But Prime says the feds never tied those allegations to specific false admissions, and that none of the treatment was medically unnecessary. Ultimately, Prime believes the fault lies with the CMS for creating a confusing environment where the agency can reject physician judgment and appropriate billing because it second-guesses how the care should have been delivered.
CMS criteria says physicians should admit beneficiaries for inpatient treatment if they need more than 24 hours of care, whereas outpatient observation stays should be used for treatment that will last less than 48 hours. It's up to physicians to determine which type of admission is appropriate and have the documentation to prove their rationale.
In Prime's situation, the alleged false claims stemmed from inpatient visits that lasted less than 24 hours. Karin Berntsen, the former director of improvement at Alvarado Hospital in San Diego, filed the initial whistleblower complaint back in 2011, alleging that hospital alone raked in an extra $4 million from Medicare thanks to those inpatient stays, and claimed the rest of Prime's hospitals had similar issues.
But the hospital system says the real issue is the confusing criteria the CMS uses to delineate these admissions.
“Predictably, CMS' refusal to provide any objective criteria to clinically distinguish observation care from inpatient care has created a serious Medicare reimbursement issue for hospitals,” the motion to dismiss said.
The American Hospital Association has noticed the issue, too, Prime said. According to AHA data, 68% of denied medically necessary Medicare reimbursements in the third quarter of 2012 were for one-day stays provided in the wrong setting. Even the CMS' administrative law judges are noticing a problem, Prime claimed. AHA also found that hospitals appealed 40% of those denied claims, and the agency's judges sided with the hospitals 70% of the time.
Prime noted that the CMS has acknowledged there has been an increase in outpatient stays in recent years, including long observation visits that should have been inpatient admissions.
“(Prime) cannot be held liable under the FCA based on a Medicare admission coverage standard that is expressly based on independent physicians' subjective decision-making about how long a patient is expected to stay in the hospital where the government has failed to identify any objective and empirical basis for proving that those physicians' time predictions were false,” the hospital chain said.