"The extreme infection rates may reflect a pattern of up-coding by Prime," wrote State Sen. Elaine Alquist, chairwoman of the influential Senate Health Committee, in a letter last fall requesting an investigation by the California Department of Public Health. "This theory is bolstered by the exceptionally low mortality rate among Prime's reported septicemia patients, indicating that diagnoses of septicemia may not have been warranted in many of the cases. … Prime may have been overpaid around $18 million by Medicare in 2008 alone."
She postulated that if Prime Healthcare was not up-coding, there might be high infection rates in the system's surrounding communities, "or poor quality of care at the hospitals," and thus such events should be reportable under legislation she introduced.
A series of stories by the investigative news group, California Watch, and major California dailies fueled the issue.
In February, California Watch drew from its review of 2009 Medicare billing data to reveal Prime had coded 25% of its Medicare patients as being malnourished and 2.3% as having kwashiorkor, reflected as ICD-9 260. By comparison, according to the California Watch report, hospitals statewide reported 7.5% of their patients as being malnourished and .2% as having kwashiorkor.
Kwashiorkor, a form of malnutrition that results when there is insufficient protein in the diet, is rare in the U.S. Yet California Watch reported that 36% of the kwashiorkor codes in the state were for patients at Prime hospitals, a rate 70 times higher and which can result in several thousands of dollars more per episode of care.
Prime officials did not return phone calls or e-mails Tuesday or Wednesday requesting a response to the state findings. A statement on its website says it is the victim of an extortion campaign by the Service Employees International Union – United Healthcare Workers West (SEIU) over the past year because "PHS rejected SEIU's demands for a 'quick' deal for SEIU members at PHS' Centinela Hospital Medical Center so that SEIU could avoid a challenge from NUHW, an upstart union formed by disgruntled SEIU members."