EHRs Under Fire For Inflating Medicare Bills

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The Obama administration has escalated its battle against healthcare providers that submit falsely documented Medicare claims using electronic health records (EHRs). In a letter sent Monday to major national medical organizations, Department of Health and Human Services (HHS) secretary Kathleen Sebelius and attorney general Eric Holder said, "There are troubling indications that some providers are using [EHR] technology to game the system, possibly to obtain payments to which they are not entitled." The Cabinet-level officials also committed to stepping up audits and law enforcement to fight the practice, which results in health care fraud, they said.

Sebelius and Holder said in the letter that "Used appropriately, [EHRs] have the potential to save money and save lives." They went on to say that "there are also reports that some hospitals may be using electronic health records to facilitate 'upcoding' of the intensity of care or severity of patients' condition as a means to profit with no commensurate improvements in the quality of care."

The Center for Public Integrity (CPI), an investigative news organization, last week posted an article documenting the use of electronic health records (EHRs) to justify higher evaluation and management (E&M) codes that it says are costing Medicare billions of dollars a year.

The third report in a five-part series about hospitals' and physicians' use of "upcoding" to increase revenue, the article by Fred Schulte charges that federal officials ignored warnings about the ability of EHRs to help physicians raise coding levels because they were intent on increasing adoption of the technology.

Underpinning the investigative reports is a cross-section of Medicare claims data spanning the period 1999-2008. Based on an analysis of that data, the CPI article says, "The investigation unmasked thousands of doctors consistently billing higher-paying treatment codes than their peers, despite little evidence in many cases that they provided more care."

The CPI reports make clear that the use of EHRs--which was far from widespread in 2008--was only one element in the upcoding trend that the investigation revealed. Nevertheless, EHRs have provided new opportunities for upcoding, Schulte said in his article, citing anecdotal evidence as well as federal reports and whistleblower suits. EHRs and associated billing software have been used to inflate Medicare bills, he asserted, both in physician offices and hospital emergency departments (EDs).

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The core of the allegations is that EHRs enable doctors to copy and paste findings from previous notes into current notes, providing documentation that can be used to justify higher codes. While the issue of "cloned" documentation has been kicked around inside the industry for years, it is not known how many physicians use illegal tactics such as this to boost their revenues. What many doctors claim is that their EHRs help them document the work they actually did, which often results in higher codes than they might have put in if they didn't have an EHR.

The CPI article points out that Medicare auditors have stepped up their scrutiny of EHR documentation and the use of billing systems that prompt ED staffers to upcode certain kinds of visits. And last April, the Office of the National Coordinator of Health IT (ONC) asked the HHS Office of the Inspector General (OIG) to study the issue.

The CPI analysis of Medicare data does not establish a clear connection between upcoding and the use of EHRs, Schulte told InformationWeek Healthcare. However, he pointed out, "We contacted some of the higher-end hospitals and asked them about it, and they all said that EHR software is what's driving up our costs. Their position is that they've been leaving money on the table. Now they have a new electronic system, and they're cooking with gas."

Similarly, he said, physicians had told him and his colleagues that the use of EHRs had raised their average coding levels. "Some said they had been undercoding in the past." Moreover, he noted, EHR vendors pitch physicians on the ability of their products to increase income through higher codes.

Robert Berenson, MD, a senior fellow at the Urban Institute and a former Medicare official, agreed with Schulte. In an interview, he said that every provider he has spoken to believes that EHR documentation is related to the trend of higher E&M codes. "Some of the higher coding is legitimate, because it facilitates doing more work and documenting it, but some of it is illegitimate, because it permits gaming through exporting data [from previous visit notes]," he said.

Berenson contended that the design of EHRs has been distorted because of their emphasis on documentation to support higher charges. The reason that EHR vendors focus on documentation is that the Medicare rules require providers to count certain components in their records to justify E&M codes. He suggests changing the way that codes are defined and the guidelines for documentation.

"Unless you deal with the documentation issue, you've compromised the potential of the EHR," he said. "And from a reimbursement viewpoint, it's counterproductive."