Switching to Electronic Medical Records May Not Be a Cure for Billing Abuses


[author: Robert Rose]

Last month, in a joint letter by HHS and DOJ to five prominent hospital associations, the government warned that some providers are using electronic medical records (EMR) to “game the system.” The September 24th letter gave examples of “troubling indications” of EMR misuse:

  • Cutting and pasting the same examination findings for multiple patients—known as “cloning”—to make it appear that physicians conducted more thorough exams that were actually done
  • Upcoding the intensity or severity of a patient’s condition simply to profit without improving the quality of care

Risk v. Reward

More than half of America’s hospitals have qualified for incentive payments authorized by Congress to encourage the shift to EMR. The government will spend more than $30 billion in economic stimulus funds to aid technology purchases by doctors and hospitals.

Most of the manufacturers and hospitals claim that EMR permits more efficient billing. However, a year-long investigation by The Center for Public Integrity published last month found that thousands of providers have steadily billed higher rates for treating Medicare patients, exceeding $11 billion in fees over the past decade. Regulators say the most aggressive billing, by only 1,700 doctors (of more than 440,000 nationally) cost Medicare $100 million in 2010. The largest share of those doctors specialized in family practice, internal medicine and emergency care.

A specific example cited was Baptist Hospital in Nashville. Its share of the highest paying claims rose 82% in 2010, the year after its emergency room began using EMR software. The hospital’s response was that billing had become more accurate using EMR and that its patients required more care in 2010. The New York Times did an analysis, concluding that hospitals receiving incentives to adopt EMR showed a 47% rise in Medicare payments at higher levels from 2006 to 2010 versus a 32% rise in non-incentivized hospitals.

How Will the Government Respond?

New healthcare laws authorize the Centers for Medicine and Medicaid Services (CMS) to stop payments for suspicion of fraud and to mine the data, searching for outliers. As a result, collections are at a record high and prosecutions in 2011 were 75% higher than in 2008. Earlier this year, the acting administrator of CMS confirmed that it planned to contact as many as 5,000 physicians who had been identified as billing outside the norms. CMS said its aim was “not intended to be punitive or sent as an indication of fraud.”

What to Expect?

While switching to EMR allows for better documentation of care and reduces under billings of visits, EMR can also make it faster and easier to defraud.

Most providers use EMR as it was intended, but regulators are gathering proof that it has become a fraud tool to improve the bottom line. With the HHS/DOJ letter, providers have been warned. The sums involved are huge and data mining, in the hunt for outliers, will increase. EMR and aggressive billing is a combination that attracts attention.

Providers who have switched to EMR can audit or sample their new system for compliance before the government does it. Mine your own data. Look for trends, disparities, sharp year-over-year changes. Monitor your compliance training.

Get sound legal advice before the OIG knocks. Providers come in all sizes and shapes. Being tagged as an outlier based on data alone is the beginning of a long conversation about EMR’s individual impact. Don’t forget, because it’s still true: an ounce of prevention is worth a pound of cure.


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Sheppard Mullin Richter & Hampton LLP on:

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