Feds: We will prosecute hospitals for Medicare upcoding

Holder, Sebelius say that hospital cannot use EHRs to boost Medicare payments

Topics: Medicaid, Reimbursement, Finance, Medicare, Electronic Medical Records Strategy, Information Technology, Payer and Regulatory Policy, Market Trends, Strategy

September 25, 2012

Attorney General Eric Holder and HHS Secretary Kathleen Sebelius on Monday warned hospitals that the Obama administration will not accept attempts to "game the system" by using electronic health records (EHRs) to boost Medicare and Medicaid payments.

Holder and Sebelius issued the warnings in a strongly worded letter sent to the American Hospital Association (AHA), Association of Academic Health Centers, Association of American Medical Colleges, Federation of American Hospitals, and National Association of Public Hospitals and Health Systems.

Reports suggest that hospitals may use EHRs to upcode care

The letter stated that there is evidence that hospitals are using EHRs to obtain payments for which they are not qualified, a process known as "upcoding."

To that end, two recent reports found that EHRs are pushing up the cost of care, not saving money as they were expected to do.

  • A report by the Center for Public Integrity found that providers began using more higher-paying billing codes for Medicare office visits while reducing the use of lower-paying codes from 2001 to 2010. The report determined that such upcoding added at least $11 billion to physicians' fees during that time.
  • Meanwhile, a Times analysis found that hospitals in 2010 received $1 billion more in Medicare reimbursements than in 2005, at least in part because of changing billing codes used in EDs. Further, the analysis found hospitals that received federal incentive payments for the meaningful use of EHRs experienced a 47% increase in Medicare payments from 2006 to 2010, compared with a 32% increase for hospitals that did not receive government EHR incentive payments.

    For more on the two reports, check out yesterday's Daily Briefing coverage

Letter warns against false documentation of care

The letter stated that EHRs "have the potential to save money and save lives." However, it added, "There are troubling indications that some providers are using this technology to game the system, possibly to obtain payments to which they are not entitled. False documentation of care is not just bad patient care; it's illegal."

Holder and Sebelius also touted new fraud-fighting tools approved by the administration in its aggressive efforts to crack down on Medicare fraud in recent years. CMS is conducting audits to prevent improper billing and has begun broader examinations of billing practices to determine whether certain hospitals are billing for more-costly services more frequently than their peers, the letter notes.

The letter stated, "We will not tolerate health care fraud," adding, "Law enforcement will take appropriate steps to pursue health care providers who misuse [EHRs] to bill for services never provided."

According to the New York Times, the letter—though not unprecedented—is "especially blunt."

Hospitals react

Providers have countered that EHRs allow them to more accurately depict the care they are providing, leading to higher payments. Many hospitals and physicians say paper records did not accurately reflect how much time providers were spending with patients or how sick those patients were.

AHA President Rich Umbdenstock in a letter responded to the warning by urging CMS to provide better guidance on navigating complex rules and arguing that "duplicative" federal audits divert resources away from patient care. "It's critically important to recognize that more accurate documentation and coding does not necessarily equate with fraud," Umbdenstock wrote.

However, he added, "We agree that the alleged practices described in your letter, such as so-called 'cloning' of medical records and 'upcoding' of the intensity of care, should not be tolerated" (Abelson/Creswell, New York Times, 9/24; Baker, "Healthwatch," The Hill, 9/24; Morgan, Reuters, 9/24).

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