July 24, 2014

Does the Use of Electronic Health Records Lead to Increased Billing Fraud?

A recent article in The New York Times reported that the increased use of electronic health records by hospitals and physicians as a result of federal government financial incentives could be a contributing cause of the recent increase in health care spending. According to this article, hospitals that received government financial incentives to adopt electronic records showed a 47 percent increase in Medicare payments at the highest levels of care – and thus higher reimbursement – compared to a 32 percent increase for hospitals that have not received these financial incentives. This article named several hospitals across the United States that dramatically increased the level of their emergency department claims after they began using electronic health records. It also explained that some experts blamed this increase in reimbursement on electronic health records that automatically generate detailed patient histories or allow physicians to cut and paste the same examination findings for new hospital patients, a practice called “cloning”, with the click of a computer mouse, thus making it appear that a more detailed medical exam was conducted than what actually occurred.

Two days after the Times article appeared, Attorney General Eric Holder and HHS Secretary Kathleen Sebelius sent a joint letter to the major hospital trade associations stating that there were “troubling indications” that some providers were using electronic health records to “game the system”, including the “cloning” of medical records and “upcoding” the intensity of care or severity of patients, and that this activity would not be tolerated. While this letter did not directly mention the Times article, its timing was not coincidental. The American Hospital Association, one of the trade associations that received the joint letter, immediately sent a responsive letter that pointed out that “more accurate documentation and coding does not necessarily equate with fraud”. It also noted that despite many requests, the federal government has failed to develop national guidelines for reporting hospital emergency and clinic visits.

While there does appear to be some posturing on both sides, increased billing fraud could be an unintended consequence of the increased use of electronic health records.

© Lowndes, Drosdick, Doster, Kantor & Reed, PA, 2014. All rights reserved.

About the Author

I. Paul Mandelkern, Corporate, Health Law, Attorney, Lowndes, Law firm

Partner Paul Mandelkern focuses his legal practice on health law, corporate law, and mergers and acquisitions. In his health law practice, Paul routinely represents hospitals, physicians and other health care providers, and managed care companies. On behalf of client hospitals, medical group practices, and individual physicians, he has drafted and negotiated various agreements for compliance with the Stark Law, the Anti-Kickback Statute, and the Florida Patient Self-Referral Act, including joint venture agreements, physician recruitment agreements, leases, and employment agreements.

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