Prime example

Of the perverse incentives created when government pays the health care bills;

Prime is a fast-growing company that operates hospitals in five states. Its hospitals have reported that many Medicare patients were afflicted with unusual medical conditions, including acute heart failure, septicemia and kwashiorkor, a form of malnutrition usually found in children during famines in Africa, a Center for Investigative Reporting analysis shows.

Billing for those conditions qualified Prime for bonus payments from Medicare worth millions of dollars, federal records show.

And also inflates its ratings--by Truven Health Analytics--for 'curing' its patients. However, Prime and Truven aren't the only ones with possibly questionable motives;

In testimony before a [California state] legislative committee in 2012, some former Prime employees contended that Dr. Prem Reddy, the chain's founder, had urged his staff to pad or "upcode" Medicare billings with exaggerated diagnoses to collect bonus payments.

Prime says its billings are accurate. It says the upcoding allegations were orchestrated by the Service Employees International Union, which was engaged in a Southern California labor dispute with Prime. Fred Ortega, a spokesman for the hospital chain, accused the Center for Investigative Reporting of being a "surrogate" for the union.

In January, in an application to buy a Rhode Island hospital, Prime disclosed that the U.S. Justice Department is investigating its Medicare billings. The company said it expects to be exonerated.

Bold in the above by HSIB.