Saying there are "troubling signs" of abuse in the way hospitals use electronic records to bill for Medicare and Medicaid reimbursement, the administration of President Barack Obama has warned in a letter to hospital associations that it would not tolerate what it called attempts to "game the system" and vowed to vigorously prosecute doctors and hospitals implicated in fraud.
The strongly worded letter sent Monday, signed by U.S. Attorney General Eric H. Holder Jr. and Health and Human Services Secretary Kathleen Sebelius, said, "Electronic health records have the potential to save money and save lives." But the letter continued: "There are troubling indications that some providers are using this technology to game the system, possibly to obtain payments to which they are not entitled. False documentation of care is not just bad patient care; it's illegal."
"Obviously, we are very concerned" that the adoption of electronic health records "could lead to coding inappropriately," an administration official said. While aggressively looking for any providers who are committing fraud, the administration will also consider whether it needs to make changes in the way it pays for care.
The letter, sent to five major hospital trade associations, cited possible abuses including "cloning" of medical records, where information about one patient is repeated in other records, to inflate reimbursement.
"There are also reports that some hospitals may be using electronic health records to facilitate 'upcoding' of the intensity of care or severity of patients' condition as a means to profit with no commensurate improvement in the quality of care," the letter said.
The letter was sent two days after a front-page article in The New York Times detailed ways in which greater use of electronic records by hospitals and doctors might be contributing to a rise in Medicare billing. Much of the higher billing is occurring in hospital emergency rooms, where hospitals are classifying many more patients as sicker and needing more of their care.
Hospitals received $1 billion more in Medicare reimbursements in 2010 than they did five years earlier, at least in part by changing billing codes they assign to emergency room patients, according to a Medicare data analysis from the American Hospital Directory. Regulators say physicians have changed the way they bill for office visits similarly, increasing their payments by billions of dollars as well.
Regulators, including the Office of the Inspector General for Health and Human Services, are increasingly concerned about the increase in billing for the most expensive evaluation services by hospitals, in the emergency department, and doctors in their offices. Private insurers have also expressed concern about the higher level of billing.
The federal Centers for Medicare and Medicaid Services is conducting audits to prevent improper billing, and the agency is also starting more extensive medical reviews of billing practices to identify hospitals or doctors that are billing for much more expensive services than their peers, the letter said.
The issue of Medicare costs is front and center in the presidential campaign and has been a centerpiece of the Obama administration. As part of a push that began under the Bush administration, government officials are spending tens of billions of dollars to encourage hospitals and doctors to use electronic records.
"As we phase in electronic health records, though, we ask for your help in ensuring these tools are not misused or abused," Ms. Sebelius and Mr. Holder said. "This letter underscores our resolve to ensure payment accuracy and to prevent and prosecute health care fraud," the letter said.
The letter reminded hospitals that a patient's medical information "must be verified individually to ensure accuracy: It cannot be cut and pasted from a different record of the patient, which risks medical errors as well as overpayments."
The administration said it had undertaken record-high collections and prosecutions against fraud, contending that prosecutions in 2011 were 75 percent higher than in 2008.