Hospital Chain Reports Suspiciously High Malnutrition Rates

A major hospital chain already under scrutiny for suspected fraudulent billing has some alarmingly high rates of malnutrition among its Medicare patients. Kwashiorkor, the nutritional disorder named after a Ghanaian word for “weaning sickness,” is almost exclusively found among impoverished children in developing countries, especially during famines. Yet, according to analysis of state data by California Watch, this disorder was found in 16.1% of Medicare patients at Shasta Regional Medical Center in Redding, 70 times higher than the state’s average of being in 0.2% of patients.

Desert Valley Hospital in Victorville also has a high rate of kwashiorkor among its Medicare patients: 9.1%, or about 39 times the state average. Both of these hospitals are owned by Prime Healthcare Services, a Southern California chain that specializes in turning around financially troubled hospitals. The chain is currently under state and federal investigations for allegedly over billing the federal Medicare system by millions of dollars in connection with a reported outbreak of septicemia infections.

While the company denies any allegations of fraud and affirms all their billing actions are legal and a reflection of how seriously they take cases of malnutrition, California Watch investigators are suspicious. Their suspicion in part comes from the financial bonuses hospitals can receive from Medicare for making such malnutrition diagnoses. These are awarded to help offset the high costs of caring for patients with multiple health problems.

A report by the federal Centers for Medicare & Medicaid Services (CMS) gives an example of how the system works.

  • In 2008, hospitals received about $5,300 on average from Medicare for treating a stroke patient. But if the patient also was diagnosed with malnutrition or any of the hundreds of other ailments that Medicare classifies as a medical complication, the payout was about $6,100 – 15% more, according to the report.
  • A bigger bonus is paid if a stroke patient is also suffering from kwashiorkor or other ailments that Medicare classifies as major complications. In that event, a hospital received, on average, about $8,000 – 50% more.

In addition, another factor contributing to suspicion is that the hospital with the highest malnutrition rate for seniors in California in 2009 was Prime’s Huntington Beach Hospital. According to a computer analysis of 2009 Medicare billing data, 39% of this hospital’s Medicare patients were malnourished. This finding is shocking and incongruent with the surrounding population’s low poverty rate and the fact that the average annual income is over $100,000 per family.

Some additional findings from this 2009 Medicare billing data include:

  • In 2009, Prime reported that 25% of its Medicare patients were malnourished, a medical complication that can entitle a hospital to a reimbursement bonus from the government. The state average for hospitalized beneficiaries was 7.5%.
  • Of the 10 California hospitals that reported the highest malnutrition rates among Medicare patients, 8 – including the top 4 – are owned by Prime.
  • Statewide, only 1.3% of Medicare patients were diagnosed with the types of severe malnutrition that pay the biggest treatment bonuses – nutritional wasting and severe protein calorie malnutrition, in addition to kwashiorkor. Prime’s rate for these conditions was 10.1%.
  • In all, records show that the Prime chain treated 3.6% of Medicare patients in California. Yet 12%% of the state’s malnutrition cases, and 36% of all kwashiorkor cases, were reported at Prime hospitals.

For more information on this case under fraud investigation, see California Watch’s article, “Hospital chain, already under scrutiny, reports high malnutrition rates.”

For more information on Medicare fraud and abuse and our Senior Medicare Patrol (SMP) program, see our Medicare Fraud section.

This article was edited from California Watch’s recent article, Feb. 19, 2011.