Warning bell

Electronic health records have long been sold to hospitals and doctors with the promise of increased revenue, but now that more money is rolling in, the federal government is pushing back.

Attorney General Eric Holder and HHS Secretary Kathleen Sebelius rattled healthcare providers with a stern warning that authorities are ramping up efforts to see whether hospitals are using healthcare information technology to squeeze more money from Medicare than they are owed.

“We will not tolerate healthcare fraud,” according to the letter.

The Sept. 24 open letter to five national interest groups signaled far greater scrutiny of healthcare IT use at a time when federal officials are doling out $27 billion in the 2009 American Recovery and Reinvestment Act to encourage every hospital and physician in America to buy an EHR system. Providers lacking such a system by 2015 will see Medicare pay cuts.

The hospitals and doctors that should be most alarmed by last week's warning are those who consistently bill Medicare for the most expensive forms of “evaluation and management” services, because investigators are data-mining Medicare for statistical outliers in E/M services.

But overall, healthcare providers say they expect EHR systems to continue generating more revenue than paper documentation, regardless of the warnings.

Although the systems may be vulnerable to fraud by unscrupulous individuals, users say they also enable physicians to do more work during visits with patients who are presenting with more complex problems in the past. An electronic medical record also allows caregivers to document their work better than before.

“When you roll out an EMR, you are not trying to just replicate what you do on paper. It is really an opportunity for process improvement,” said Dr. Lyle Berkowitz, a primary-care physician and associate chief medical officer of innovation at Chicago's Northwestern Memorial Hospital. “In the past, a busy doctor may not have been able to document everything he could bill for.”

Like others in healthcare, Berkowitz doesn't deny that efficiencies in EHR technology may make traditional “upcoding” fraud easier, as well as the risk of cut-and-paste “cloning” of records. But he thinks authorities should focus on all types of fraud, not only those involving electronic records.

In any case, it's not clear what effect any warning of enhanced government investigation could have, given the high degree of scrutiny already at work.

“We suffer from a plague of auditors,” said Connie Kinsella, vice president of revenue cycle for UW Health, based in Madison, Wis., and includes a physician practice and the 493-bed University of Wisconsin Hospital and Clinics.

UW Health is considered an advanced, “paperless” healthcare provider and has experienced the benefits of more accurate recordkeeping and medical-bill coding. But Kinsella said that even systems and hospitals that are slower to install EHRs will continue to see the need to make the switch, including the improvements to patient safety and system efficiency.

“If I were a small community hospital, I would still recognize that there is value in there,” she said. “Everyone is leaving money on the table.”

There's a difference, however, between coding to accurately capture every service rendered by a doctor and “upcoding” to try to reach more expensive levels of medical bills without regard for what actually happens in an exam room or hospital emergency bay.

Pam Arlotto—president and CEO of Maestro Strategies in Atlanta and author of three books on returns on investment for health IT—said EHR sellers need to understand that it may be dangerous to advertise their wares as being able to increase revenue, as many have.

“I would think that would be a big mistake for a vendor to do,” Arlotto said.

But W. Sanders Pitman, president and CEO of ambulatory-care electronic medical-record maker SuccessEHS in Birmingham, Ala., disagreed. SuccessEHS proclaimed in a Sept. 25 news release that its coding, billing and revenue-cycle management services have helped clients increase their revenue by 10%. But Pitman said such claims are derived from helping doctors earn what they are owed and not by alerting doctors to ways that they could increase their bills.

“We're talking about purposely overcoding, which is not a good thing, versus getting reimbursed for what I do” as a physician, Pitman said. The providers who have the most to fear from the government scrutiny are those whose billing patterns make them stand out statistically from their peers, he said.

According to the letter last week, scrutiny would be directed at bills for evaluation and management, which is the class of ambulatory and primary-care services that can be billed at higher charges at the discretion of physicians depending on how much work was done during the patient visit. Federal officials have been investigating about 1,700 doctors whose charges predominantly tend to come in at the more-expensive end of the scale.

“Everything still should be somewhat on a bell curve,” Pitman said.

The government warning followed two investigative news reports that suggest the increased use of computerized records is driving up healthcare bills, but the issue has been on auditors' radars for years. The CMS has already directed its Recovery Audit Contractors and Medicare Administrative Contractors to probe the accuracy of hospital coding and is initiating more extensive reviews of E/M coding.

Meanwhile, HHS' inspector general's office is in the midst of an investigation slated for release in 2013 regarding the relationship between EHR use and rising bills for evaluation and management services such as hospital emergency department visits, physician office visits and “rounding” visits to hospital inpatients.

The CMS paid $33.5 billion for the 370 million individual E/M services delivered in 2010, accounting for about a third of all services billed through Medicare's Part B for physician services.

Recent growth in the program has raised eyebrows. The number of E/M services overall has risen faster than other segments of Medicare in the past decade, and the most-expensive kinds of services have grown the quickest. A May 2012 audit by HHS' inspector general's office identified 1,669 doctors who billed federal healthcare programs for the most expensive types of treatments the vast majority of the time.

At the heart of the controversy is a system that allows healthcare providers to assign one of five levels of intensity to the same type of patient visit, depending on how complex the case is.

It was designed to ensure that a doctor would receive higher reimbursement in caring for a patient with a heart condition, diabetes and multiple prescriptions than he would for seeing a patient with a chest cold.

The difference in dollars can be stark. For example, in 2010, hospitals received an average of $61 for each Medicare patient whose emergency room visit entailed what the doctor considered “medium,” or level 3, complexity. But by documenting specific ways that the patient required a “high” complexity of care, or level 5, the hospital could increase its average payout to $173.

Several of the industry groups that received the EHR warning letter—including the American Hospital Association and the Association of Academic Health Centers—noted a lack of clear standards available to hospitals when deciding which level of E/M code to use. The CMS has been telling hospitals for more than a decade to develop their own standards, even though the AHA first asked for clearer guidance in 2003.

“We have asked for this kind of guidance for many, many years,” said Tom Nickels, senior vice president of federal relations at AHA. “Our members feel that we would benefit from some guidance about what qualifies.”

In the meantime, payments have been skewing higher. The inspector general found that between 2001 and 2010, the percentage of medium-complexity ER visits declined by 11%, while the percentage of high-complexity visits rose 21%.

But defenders of the industry say such figures don't necessarily indicate fraud.

“The OIG report didn't actually look to see if those claims were actually inappropriate. They've just noticed the trend,” said King & Spalding Washington Partner Mark Polston, who formerly worked as a deputy associate general counsel for the CMS. “There is this unspoken premise that because they're EHR records, this is more likely to happen. That is a premise to be tested.”