Southern California Hospital System Sues Kaiser Permanente for Managing Bills Rather...

Southern California Hospital System Sues Kaiser Permanente for Managing Bills
Rather Than Managing Care

CHINO, Calif., Feb. 13 /PRNewswire/ -- Prime Healthcare Services announced
today that eight of its hospitals have filed lawsuits in four different
Southern California counties against Kaiser Permanente seeking more than
$25 Million for Kaiser's failure to properly pay thousands of claims for
emergency medical services provided to Kaiser's HMO members. Under both
federal and California law, each of these hospitals were required to provide
medical screening examinations to each patient who sought emergency care and
such further stabilizing care as was necessary to stabilize the patient's
emergency medical condition regardless of the patient's insurance status.
Kaiser, as well as other HMOs, is required to reimburse the hospitals for the
reasonable and customary value of the emergency services provided. Although
Prime Healthcare's hospitals provided emergency care to thousands of Kaiser's
enrollees, Kaiser failed to properly reimburse Prime Healthcare's hospitals
for the emergency services provided to its members. Instead, Kaiser has
routinely denied claims in their entirety, paid only small portions of the
claims, and/or reimbursed the hospitals at rates which are far below the
reasonable and customary value of the emergency services. For example, Kaiser
has failed to pay any portion of Sherman Oaks Hospital's $1.6 Million claim
for emergency burn services provided to a critically-injured Kaiser member at
the world-renowned Grossman Burn Center who was hospitalized for more than
thirty days.
Given the rising costs of providing healthcare and the dramatic increase
in the number of uninsured and underinsured patients, many hospitals have been
forced to close, file bankruptcy, or limit services. Since 2001 more than
17 hospitals throughout Southern California have closed due to financial
constraints and several others were forced to file bankruptcy. As noted by
Roger Krissman, Chief Financial Officer of Prime Healthcare Services, "it is
especially important that HMOs like Kaiser fairly and properly reimburse
providers of emergency medical services because otherwise more hospitals may
be forced to close". Mr. Krissman commented further that "Prime Healthcare
had no choice but to file lawsuits against Kaiser in order to ensure continued
access to healthcare for the members of the communities in which its hospitals
are located."
In contrast to financially distressed hospitals, Kaiser reported profits
of $1.3 Billion in 2006 and $2.5 Billion in 2007. This is not surprising
given that although insurance premiums have increased; the amount of revenue
spent on patient care has remained the same or decreased. Rather than
spending the increased premiums on patient care, HMOs are using the money on
increased layers of bureaucracy and middle management whose job it is to
refuse necessary patient care, deny provider claims or find other ways to not
pay provider claims properly. According to Dr. Prem Reddy, a board certified
Cardiologist and Chairman of Prime Healthcare Services, "HMOs, including
Kaiser, ought to be focused on effectively managing patients' care; but
unfortunately, they are focused on managing bills". Also, in order to
implement a process of working efficiently with Kaiser, Dr. Hassan Alkhouli,
Medical Director of Prime Healthcare's Orange County Hospitals, attempted
numerous times to arrange for a meeting with Kaiser's utilization managers to
address utilization issues but his telephone calls went unanswered.
According to Prime Healthcare, Kaiser's tactics to avoid properly paying
claims include making repeated and unnecessary demands for medical records,
denying reimbursement for emergency medical services under the guise that the
care was not medically necessary even though the Prudent Layperson Standard is
met on every occasion, retrospectively reviewing claims for emergency care,
and demanding the transfer of Kaiser members to Kaiser's hospitals with no
regard to the patients' medical condition and safety. Dr. James Lally,
Medical Director of Chino Valley Medical Center, expressed frustration with
Kaiser because "I am pressured by Kaiser to transfer patients when I do not
believe that the patient is stable for transfer". Dr. Humberto Silva, Medical
Director of Desert Valley Hospital's Emergency Department, noted that "Kaiser
insists on the transfer of patients down the treacherous Cajon Pass even
though doing so may sometimes be life-threatening". Dr. Luis Noronha, Medical
Director of Desert Valley Hospital, has "personally witnessed Kaiser calling
patients' families urging them to request transfer to a Kaiser facility even
though the patient is not stable".
Many providers believe that Kaiser's aggressive and intractable approach
is part of a larger decision on Kaiser's part to pad its bottom line by simply
denying payments due to outside providers by hook or crook. Kaiser has been
sued in both Northern and Southern California by hospitals seeking
reimbursement for services provided to Kaiser members as referenced by legal
proceedings commenced by Alvarado Hospital Medical Center, Providence Medical
Center, South Coast Medical Center, Glendale Adventist Medical Center, Simi
Valley Hospital, and North Bay Medical Center to recover amounts due for
healthcare services. Prime Healthcare also believes that several other
prominent hospitals are engaged in legal disputes with Kaiser and may be
filing similar lawsuits in the near future.
Kaiser's profits are even greater than other for-profit HMOs because it is
not required to pay taxes on a single penny of its earnings as it enjoys the
status of being a non-profit entity. The only real difference between Kaiser
and other for-profit health plans is that Kaiser is not required to pay taxes.
Even though Kaiser is a non-profit entity, it provides very little, if any,
charity care at the hospitals it owns and the emergency departments in these
hospitals see very few Medi-Cal patients and uninsured patients. In contrast
to Kaiser's hospitals, Prime Healthcare's hospitals consistently provide
millions of dollars in charity care every year which, in almost all cases,
exceed the amount of charity care provided by other neighbor hospitals
including non-profits.
Prime Healthcare has a history of acquiring financially distressed and
struggling hospitals and providing the resources and expertise necessary to
improve the infrastructure at these hospitals and implement proven patient
care protocols which ensure the hospitals' survival and continued access to
care by those community members who rely on the hospitals for care. Prime
Healthcare has successfully turned around each hospital it has acquired while
at the same time guaranteeing community members access to high quality medical
care for years to come. Prime Healthcare's success depends not only on its
resources and expertise but also on receiving proper reimbursement for the
care it has rendered. Unfortunately, Kaiser refuses to properly reimburse
Prime Healthcare's hospitals for the care they provide to Kaiser members.
Prime Healthcare has been engaged in negotiations and mediation processes for
over two years in resolving its claims' disputes with no success. Prime
Healthcare's attempts to resolve the disputes through Independent Dispute
Resolution Process (IDRP) as recommended by the Department of Managed
Healthcare (DMHC) were thwarted as Kaiser declined to participate in the
voluntary program repeatedly. Prime Healthcare's request to submit the
disputes to a binding judicial arbitration procedure has also been repeatedly
denied by Kaiser. Therefore, Prime Healthcare is left with no choice but to
pursue the litigation henceforth.
Kaiser's behavior not only threatens the ability of Prime Healthcare to
meet its mission of turning around financially struggling community hospitals
but also threatens community hospitals throughout the State of California.
Prime Healthcare believes that many other community hospitals are similarly
concerned with this dilemma as to how to deal with this proverbial 800-pound
gorilla that endangers their survival. Prime Healthcare cannot sit idly by
while the future of community hospitals is put at risk by HMOs like Kaiser.
Therefore, Prime Healthcare encourages other providers, both physicians and
hospitals, to join Prime Healthcare in its efforts to force Kaiser to pay fair
and reasonable reimbursement. Unless all hospitals, physicians and other
providers join together to fight Kaiser's aggressive, unreasonable, and
intractable approach to claims processing and reimbursement, Kaiser's sheer
size may allow it to obtain an unfair advantage and continue its improper
behavior.
For further information about Prime Healthcare Services, please contact
Jana Retes at (760) 241-8222. For further information about the lawsuits
filed by Prime Healthcare Services, please contact Michael J. Sarrao, Prime
Healthcare's General Counsel, or Radha A. Savitala, Prime Healthcare's
Assistant General Counsel, at (909) 464-8896.
SOURCE Prime Healthcare Services

Jana Retes, +1-760-241-8222, for Prime Healthcare Services