Heart failure cases surge among Prime hospital’s
November 27, 2011
Lance Williams, Stephen K. Doig and Christina Jewett
Monica Lam/California WatchChino Valley Medical Center in San Bernardino
County is one of 14 hospitals in the Prime Healthcare Services hospital chain.
For three years, a small hospital east of Los Angeles has billed Medicare for the
costs of confronting what appears to be a cardiac crisis of unprecedented
From 2008 through 2010, Chino Valley Medical Center in San Bernardino County
claimed that 35.2 percent of its Medicare patients were suffering from acute heart
failure – a dangerous, often-deadly breakdown in the heart’s ability to pump blood.
That’s six times the state average, according to a California Watch analysis of
Medicare billing data.
This reported surge of heart failure among older patients entitled the hospital’s
parent company, Prime Healthcare Services, to bonus treatment payments from
the federal government worth thousands of dollars per case, Medicare records
The hospital appears to have taken advantage of Medicare rule changes that
authorized bonus payments for treating patients with major complications.
In 2006, before Medicare began making bonus payments, the hospital didn’t report
any acute heart failure cases, records show. From 2008 through 2010, after the
new reimbursement system was phased in, the hospital said it treated 1,971
Medicare patients for acute heart failure, according to the billing data.
Interactive graphic: Prime reports outsized rates of unusual conditions
Chainwide, Prime has high heart failure rates
Patient’s case illustrates bonus payment for heart failure
How we calculated hospitals’ heart failure rates
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Without access to internal records, it’s impossible to determine how Prime billed for
its cases of acute heart failure. But in 88 percent of the cases, it was listed as a
secondary diagnosis that typically would trigger bonus payments.
Prime attorney Anthony Glassman said in a letter that the heart failure diagnoses
at Chino Valley were accurate and were made by treating physicians, not the
hospital itself. He said California’s Watch’s analysis was “faulty, unfair and biased.”
Chino Valley has a high rate of acute heart failure because its patients are
especially prone to the ailment, Glassman wrote: Compared with other hospitals,
more patients come from nursing homes, and an “exceptionally high” number of
heart patients are admitted via the emergency department.
But when California Watch excluded patients from nursing homes and focused
solely on patients admitted from the emergency room, the acute heart failure rate
at Chino Valley dropped only 1.5 percentage points, to 33.7 – still the highest in
California and five times the state rate.
Two heart specialists said it would be unlikely for a hospital to have a heart failure
rate anywhere near what has been claimed at Chino Valley.
“You don’t see (hospitals) where 35 percent of the Medicare population has heart
failure,” said Dr. Gregg Fonarow, medicine professor at UCLA and director of the
Ahmanson-UCLA Cardiomyopathy Center. “Even 10 percent would be unusual.”
Fonarow said his review of national data shows about 5 or 6 percent of Medicare
patients have acute heart failure as a primary diagnosis.
When cardiologist Dr. Steven Shayani, president of the New York Heart Research
Foundation, was apprised of the heart failure rate at the hospital, he asked why
Medicare officials weren’t investigating.
“Acute heart failure is very prevalent, as you know,” he said. “However, there is no
way of explaining” Chino Valley’s high rate, he said. “It doesn’t make any sense.”
Both experts said they suspected the high rate at Chino Valley reflects
exaggerated diagnoses – either by doctors or by the hospital’s coders, the
personnel who prepare computerized Medicare bills to obtain reimbursement from
State data analyzed
California Watch’s analysis focused on Medicare billing data provided by the
hospitals themselves and compiled by the state Office of Statewide Health
Planning and Development. The analysis looked at every general hospital in the
state that treated at least 300 Medicare patients age 65 and older per year – 273
hospitals in all. Convalescent hospitals were excluded, as were the hospitals in the
Kaiser Permanente managed care chain because of billing differences.
Brian Cragin/California Watch
The surge of heart failure cases at Chino Valley and other Prime hospitals is of
note because the Ontario-based chain already is the target of a federal
investigation for suspected Medicare fraud involving “upcoding” – billings
deliberately exaggerated to obtain big payouts from the government.
That probe, by the U.S. Department of Health and Human Services, was requested
by two lawmakers in response to the chain’s high rate of blood infections known as
septicemia, federal records show. The company has denied wrongdoing.
As California Watch has reported, state records show Prime also has claimed high
rates of other conditions entitling the chain to treatment bonuses from Medicare.
Among them: an unusual brain injury called encephalopathy and kwashiorkor, a
form of malnutrition found among Third World children.
In court testimony and interviews, several former Prime doctors and coders have
contended that Prime’s founder and board chairman, Dr. Prem Reddy, urged
aggressive coding of routine medical conditions to obtain enhanced Medicare
As part of a bitter interhospital billing dispute playing out in Los Angeles County
Superior Court, the Kaiser Foundation Health Plan has accused Prime of
“routinely” upcoding heart failure “to deliberately overcharge by false billing.”
Earlier this month Prime sued Kaiser and the Service Employees International
Union, accusing them of conspiring to drive Prime from the Southern California
health care market in violation of anti-trust laws.
Major complications bring bonus payments
Acute heart failure is the sudden malfunction of one of the heart’s ventricles,
chambers of the heart that pump blood to the lungs and supply oxygenated blood
to the rest of the body. As America ages, acute and chronic heart failure is an
increasing problem. About 5 million Americans are afflicted and 500,000 cases are
recorded each year, according to The Merck Manual medical reference guide.
About 30 percent of people who are hospitalized with the condition die within a
People suffering from acute heart failure often complain of shortness of breath
after only mild exertion or even upon waking from a sound sleep. Drugs and
surgery may be used for treatment.
Medicare classifies acute heart failure as a particularly severe condition, one that
is costly to treat. As a result, it is among hundreds of serious medical conditions
classified as a “major complication” – and eligible for a bonus treatment payment.
For example, federal records show that Medicare pays about $5,522 for treating a
patient with the infection known as Legionnaires’ disease. But Medicare pays
about $11,377 – $5,855 more – if the same patient is also diagnosed with acute
For a patient with a back ailment associated with a lesion of the sciatic nerve,
Medicare says the payout is an extra $2,375 – about $7,137 with heart failure,
The payout bonus for acute heart failure can be much greater if surgery is
involved. A Medicare reimbursement primer [PDF] prepared by Boston Scientific
Corp. cites the case of a cardiac patient who needs a defibrillator. The payout from
Medicare could rise by $22,000 – from $30,000 to $52,000 – if the patient also is
diagnosed with acute heart failure.
Medicare pays hospitals according to computerized bills prepared by coders,
personnel who consult physician notes in medical charts to document diagnoses
Some former Prime coders have contended that Reddy, the company founder,
personally coached them on strategies to ensure maximum payout from Medicare.
Sandy Barber, a coding supervisor who worked at Prime’s Desert Valley Hospital in
Victorville in San Bernardino County, testified in a 2005 employment lawsuit that
Reddy convened meetings where he “ordered” coders to engage in illegal
upcoding to boost reimbursements from Medicare.
In his letter, Prime lawyer Glassman called Barber’s claims “unproven” and said
she hadn’t worked for Prime in 10 years. He said Prime rarely gets paid more
money for treating Medicare patients with acute heart failure because they often
are diagnosed with other complications as well. Medicare pays for only one
complication per case, no matter how many complications are noted on the bill.
Thus, in many cases, the company would be entitled to a Medicare bonus payment
even if acute heart failure were deleted from the bill, Glassman indicated.
Hospital earns honors for heart care
Chino Valley Medical Center itself shows no outward signs that it is confronting a
health care crisis, people familiar with the institution say.
It’s a 126-bed facility in Chino, on the western edge of Southern California’s Inland
Empire region, that Prime obtained in 2004 after the prior owners, a physicians
group, went bankrupt.
Since then, Prime says it has spent $10 million upgrading the hospital. Among the
improvements, according to its website: a state-of-the-art cardiovascular lab,
where angioplasties and stent placements are performed to treat coronary artery
The hospital’s chief medical officer, Dr. James Lally, has been honored by the
American Heart Association for screening thousands of local high school athletes
for heart problems.
Brian Cragin/California Watch
The hospital itself has won the HealthGrades excellence award for emergency
medicine two years running, in 2010 and 2011, and a five-star rating for treatment
of heart failure. That rating was based on the survival rate of heart patients:
Mortality rates, both at the time of hospitalization and six months later, were much
better than expected, the rating service said.
The California Watch analysis found that Chino Valley reported no cases of acute
heart failure in 2006. In 2007, as Medicare phased in its system of bonus payouts
for treating medical complications, the hospital reported 109 cases – a rate of 5.8
percent of Medicare admissions. Around California, 63 other hospitals that had
reported no acute heart failure in 2006 also began recording cases of the ailment.
Then, in 2008, the acute heart failure rate at Chino Valley exploded – 729 cases,
or 39.8 percent of Medicare admissions. It remained consistently high through
2010, the last year for which data were available. From 2008 to 2010, 1,971 of
5,596 Medicare patients were diagnosed with acute heart failure.
In all but 235 cases, acute heart failure was noted as a secondary diagnosis – and
thus eligible for a bonus payout. Those numbers underscore concerns about the
accuracy of the diagnosis, said Fonarow, the UCLA expert.
“The rates where acute heart failure is a secondary diagnosis are much higher
than generally expected,” he wrote in an e-mail. “This suggests the potential for
misclassification at the physician chart documentation or hospital coding level.”
Because hospital rating services rely on Medicare data, the high rate of acute
heart failure diagnoses may have helped Chino Valley win its five-star award from
HealthGrades for excellence in care of heart failure.
A padded acute heart failure rate can boost a hospital’s ratings, said Shayani, the
New York expert.
“If you put heart failure as the diagnosis and the patient survives, that’s how you
would statistically lower your mortality rate,” he said. “And so your ratings are
Rating service awards can be very important to hospitals, he noted, and some
“play with their numbers” to improve scores.
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