False Medical Billing Costs Millions

The constant drum beat for tort reform relies heavily on the claim that personal injury attorneys and medical malpractice lawsuits are the cause for the out of control costs of today’s healthcare system. In reality there is very little support for this position. On the other hand, there is ample evidence that healthcare costs are spiraling out of control in large part because some healthcare providers have learned to manipulate the system to increase their profits.

For example, between 2008 and 2010, Medicare phased in bonus payments to hospitals that treat patients with major complications. The change allows facilities to be paid additional thousands of dollars for each case that meets the criteria. The increase in compensation was supposed to compensate for the fact that such patients needed more care. However, there is no real way to confirm that a patient really had some of the complications that entitle a hospital to bonus payment.

Experts have uncovered at least one hospital that seems to be taking advantage of these changes. According to the San Francisco Chronicle, Chino Valley Medical Center has claimed 35.2% of their Medicare patients have suffered from acute heart failure since 2008. This percentage is 6 times higher than the state average. Even more telling is the fact that prior to the institution of bonus payments, this hospital reported no cases of acute heart failure. In two years the facility went from 0 cases to 1,971 cases of acute heart failure. It was listed as a secondary diagnosis in 88% of cases.

The hospital argues that the reasons for the high heart failure rates are related to their high risk patients. Many of the Medicare patients come from nursing homes and an “exceptionally high” number of their heart patients are admitted through the emergency room. Despite these claims, many heart specialists have stated it is extremely unlikely that a hospital would have such a high rate of acute heart failure.

Experts suspect that the real reason for the high number of acute heart failure cases is linked to the bonus payments. Doctors or billing specialists could potentially inflate diagnoses in order to receive the Medicare bonus payments. Prime Healthcare Services runs the Chino Valley Medical Center and has been the subject of investigations for fraudulent billing practices. During these investigations, doctors and coders testified they were instructed by the company’s founder on how to maximize Medicare payments through “aggressive coding.”

If a patient has Legionnaire’s disease, Medicare typically pays about $5,500 for treatment. If that same patient is also diagnosed with acute heart failure, Medicare pays over $11,000 which more than doubles the amount of money the hospital receives. For a cardiac patient who needs a defibrillator, the Medicare payment is normally around $30,000. By adding a secondary diagnosis of acute heart failure, that payment jumps by $22,000 to $52,000.

Adding a secondary diagnosis of acute heart failure, or any major complication, could easily cost an additional $5,500 per patient. Based on the number of acute heart failure cases from Chino Valley alone, that is an additional cost of 10.8 million dollars over the course of two years.

Most hospitals, doctors, and other healthcare providers are honest hard working professionals looking out for the best interests of their patients. However, their good intentions will not solve the problem. Blaming the high cost of healthcare on medical malpractice lawsuits will not help either. As long as the medical profession continues to look the other way as their colleagues bilk the system, healthcare costs will continue to spiral out of control. It may be easier for them to point the finger at personal injury lawyers, but the truth is staring them in the mirror.


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