Government Warns Hospitals on Using Electronic Medical Records to Engage in Fraudulent Billing

by Snell & Wilmer

On September 24, 2012, the U.S. Department of Health and Human Services (HHS) and U.S. Department of Justice (DOJ) wrote a joint letter to the Chief Executive Officers of five prominent hospital associations.[1] The letter warned that there are troubling indications that some providers are using electronic medical records (EMR) to “game the system, possibly to obtain payments to which they are not entitled (emphasis added).” The letter provided specific examples of providers using EMR for “upcoding” the intensity or severity of a patient’s condition – to inflate what they get paid – “with no commensurate improvement in the quality of care.”

The HHS/DOJ letter was sent shortly after an August 14, 2012[2] front page article in the New York Times describing how profits at Hospital Corporation of America (HCA), which owns 163 facilities in about 20 states, have soared by billing aggressively for services provided in its emergency departments. According to the N.Y. Times, “HCA changed the billing codes it assigned to sick and injured patients who came into the emergency rooms. Almost overnight, the numbers of patients who HCA said needed more care, which would be paid for at significantly higher levels by Medicare, surged.”

The trending and analysis of provider billing codes is becoming a primary investigative tool for government agents. In May 2012, the HHS Office of Inspector General published a report “Coding Trends of Medicare Evaluation and Management Services,” which found that in 2010, aggressive coding by 1,700 doctors alone resulted in a cost of $100 million to Medicare. Similarly, hospitals using more aggressive coding received $1 billion more in Medicare reimbursement in 2010 compared to 2005.

Adding to the controversy, on September 17, 2012, the Center for Public Integrity, a non-profit center for investigative journalism, published an article entitled: “How Doctors and Hospitals Have Collected Billions in Questionable Medicare Fees.” The article concludes that doctors and hospitals have moved to better paying codes – thereby charging more or “upcoding” for the services provided. The article noted that Medicare regulators believe that the use of EMR makes it easy to create detailed patient records to justify using higher paying billing codes. Similarly, the September 24, 2012 HHS/DOJ letter is particularly critical of “cloning” – using cut and paste methods – to create detailed medical records justifying higher billing codes.

The federal government is specifically reviewing provider billing through audits and initiating more extensive medical reviews to ensure billing accuracy. The HHS/DOJ letter also reminds providers that aggressive billing is a serious compliance risk and that the government had a record number of prosecutions and recoveries for health care fraud in 2011.

Although most providers use EMR appropriately; HHS and DOJ now have evidence that EMR is being used unlawfully to increase billing codes and payments. The unmistakable message from the HHS/DOJ letter is that hospitals and providers have now been warned. As noted, how you use EMR for billing is being watched closely. New tools provided by the health care law authorize CMS to stop Medicare payments upon suspicion of fraud and to “mine data” to detect it. The government is escalating efforts to prevent fraud and prosecute it aggressively. Stay tuned for new developments.

[2]“A Giant Hospital Chain is Blazing a Profit Trail”, N.Y. Times, 8/14/12, available here.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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