Feds to examine whether doctors are using electronic health records to pad Medicare bills

By Fred Schulte, The Center for Public Integrity 

Dr. Farzad Motashari

The nation’s top health information technology official has launched an internal review to determine if electronic health records are prompting some doctors and hospitals to overbill Medicare.

Dr. Farzad Mostashari, the Obama administration’s National Coordinator for Health Information Technology, said in an interview Monday afternoon that his policy-setting committee of experts would examine the issue and make recommendations on how to address it. 

It is the second government action in the wake of the Center for Public Integrity’s “Cracking the Codes” series, which found that thousands of medical professionals have steadily billed higher rates for treating seniors on Medicare over the last decade — adding $11 billion or more to their fees.

The Center’s year-long investigation, published in September, suggested that Medicare billing errors and abuses are worsening as doctors and hospitals switch to electronic health records. A similar report was subsequently published by the New York Times.

Mostashari said he wants to find out if the digital systems are triggering higher billing codes by allowing doctors to cut and paste records from prior encounters with a patient, a practice known as “cloning.” Many experts say that this process can raise the size of a patient’s bill, even though it reflects little in the way of added or necessary medical service.

“If we are just copying the same information over and over, that’s not good medicine,” Mostashari said. “I’ve asked the policy committee to provide guidance on that.”

Mostshari also said that he wanted to determine if some software functions that do little more than prompt doctors to inflate the size of their bills “should be off limits.”


In a Sept. 24 letter, Department of Health and Human Services Secretary Kathleen Sebelius and Attorney General Eric Holder warned five hospital and medical groups of their intent to ramp up investigative oversight, including possible criminal prosecutions, of doctors and hospitals that use electronic health records to improperly bill for more complex and costly services than they actually deliver — a practice known as “upcoding.”

In response, the American Hospital Association and other groups that received the letter have sought to shift blame to the federal government, which the groups say has done little to set guidelines for acceptable billing tactics, particularly in hospital emergency rooms.

Meanwhile, the 64,000 member American Health Information Management Association has announced it will hold an industry summit in Chicago early next month to press for standard electronic health record guidelines that discourage billing fraud and abuse.

The group said in a statement earlier this month that “recent concerns” that electronic health records “could lead to fraud further highlights the need to establish these standards.”

“We urge the government to truly investigate the depth of the recently reported problems so we can determine the scope of the issue and take steps to fix it,” said Lynne Thomas Gordon, the group’s chief executive officer.

Lydia Washington, an association executive who is chairing the conference, said she hopes the group’s panel of experts will “suggest policy and standards that are needed” both to prevent billing fraud and assure patient safety and data integrity.

President George W. Bush in 2004 set the goal of creating a digital medical record for every American within ten years. In early 2009, the Obama administration added billions of dollars in stimulus funds in the hopes that electronic health records would both enhance the quality of medical care and hold costs in check.

In all, the Obama administration expects to spend more than $30 billion helping doctors and hospitals purchase the gear and use it to improve health care. More than half the nation’s hospitals have received some payments, and so far more than $10 billion has been spent. Just over half the doctors now billing Medicare are using digital records.

In his interview with the Center, Mostashari stressed that doctors and hospitals must do more than simply buy digital systems to collect stimulus dollars. Medical professionals must gradually meet a series of medical quality standards that are designed to “keep people healthier,” he said. Many medical leaders also want to use digital records to mine data from millions of patients in the hope of discovering better ways to treat disease and cut costs.


But the push for better quality medicine is facing off against an aggressive sales push by technology companies, which typically stress that their products can significantly boost the bottom line. One company predicts an increase of one Medicare coding level for each patient visit to the doctor,  potentially adding $225,000 in new revenue in a year, for instance.

Federal officials lack a system to monitor the accuracy of hundreds of billing and medical software packages in use across the country. That shortcoming caught the eye of the American Medical Association, which helped develop the billing codes and favors stricter government standards. In May, the doctors’ group urged officials to require testing that assures digital devices bill accurately and “do not facilitate upcoding.”

The information technology industry generally agrees that computerized medical records can lead to higher costs. But it argues that the software makes it easier for doctors and hospitals to more efficiently document all of the work they do—which they often failed to do on by hand on paper.

While the drive to digitize medicine has received strong support from both political parties in recent years, some cracks have begun to appear.

In an Oct. 4 letter, four Republican House members urged HHS Secretary Sebilius to suspend government payments to hospitals and doctors, arguing the program may be wasting tax dollars and doing little to improve the quality of medical care. They argued that tax dollars spent so far have failed to ensure that the digital systems can share medical information, a key goal. Linking health systems by computer—called interoperability—is expected to help doctors avoid costly duplication of tests and medical errors.

The letter was signed by Ways and Means chairman Dave Camp, R-Mich., Energy and Commerce Chairman Fred Upton, D-Mich., Ways and Means health subcommittee chairman Joe Pitts, R-Pa. and energy health subcommittee chair Wally Herger, R-Calif.

The Ways and Means Committee added in a statement: “Recent reports revealed that the EHR (electronic health records) program may be leading to higher Medicare spending and greater inefficiencies while doing little if anything to improve health outcomes.”

The industry’s trade association, the Healthcare Information and Management Systems Society,  opposed the suspension. It said in a statement that “significant progress has been made” and that “widespread interoperability is within reach.”

Medicare, which covers 49 million elderly and disabled people and spent more than $500 billion in 2011, has emerged as a presidential campaign issue, with both Barack Obama and Mitt Romney promising to tame its spending growth while protecting seniors. But there’s been little talk about the impact of billing and coding practices in driving up costs, and what to do about them.


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