Management failures put California system's Medicare contract in jeopardy, investigation finds

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A California health system faced losing its Medicare and Medicaid funding after an inspection by state health regulators found a pattern of negligence by the system's governing board, administrators and care providers, the Valley Voice reported Aug. 7. 

CMS performed an unannounced survey of Visalia, Calif.-based Kaweah Health in March after the health system reported two incidents of drug diversion to the California Department of Public Health. The drug diversions, discovered in December and January, involved a physician and a non-physician employee of a contracted medical group. 

"While our investigation revealed that no harm came to any of our patients because of these drug diversions, the non-physician member of our team died from an overdose of diverted medication," system CEO Gary Herbst said in a July 9 news release

The health system received a report in May from CMS, detailing deficiencies identified during the survey. 

"While we do have robust systems in place to prevent and detect drug diversion, the surveyors found that we did not consistently follow our established practices and policies," Mr. Herbst said.

The health system submitted a correction plan to CMS, which the agency accepted July 8. Surveyors found the system to be in "substantial compliance" with Medicare rules July 20, Mr. Herbst said

The Valley Voice obtained a copy of the 285-page report outlining the findings from state health regulators, which was based on statements from witnesses and review of emails, security video and documents. The report concluded that leaders of Kaweah Health failed to secure controlled substances against theft and mishandling, which led to the overdose death of a contracted employee at its main facility.

"The hospital failed to ensure it has a process and safety measures that prevented the diversion and abuse of propofol for one of one contracted staff … in the emergency department," the survey report said, according to the Valley Voice. "This failure apparently resulted in the death of the [staff member]."

The report identified several areas in which the hospital staff and leaders did not follow internal policies, laws or regulations, according to the Valley Voice

Mr. Herbst said the inspections and plan of correction were a learning opportunity for the hospital's staff. He said Kaweah has implemented extensive changes. 

"We have … developed new and revised existing policies; rolled out extensive education and training to staff and practitioners; created and implemented new auditing tools and processes; and raised the overall consciousness of Kaweah Health when it comes to matters of impairment, addiction and diversion," he said. 

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