Cracking the Codes from The Center for Public Integrity

How doctors and hospitals have collected billions in questionable Medicare fees

2013-02-13T17:55:11-05:00

Thousands of doctors and other medical professionals have steadily billed higher rates for treating elderly patients on Medicare over the last decade — adding $11 billion or more to their fees and signaling a possible rise in medical billing abuse, an investigation by the Center for Public Integrity has found.

Medical groups argue that the fee hikes are justified because treating seniors has grown more complex and time-consuming, both due to new technology and declining health status. The rise in fees may also be a reaction, they say, to years of under-charging, and reflect more accurate billing. The fees are based on a system of billing codes that is structured to make higher payments for treatments that take more time and effort.

But the Center’s analysis of Medicare claims from 2001 through 2010 shows that over time, thousands of providers turned to more expensive Medicare billing codes, while spurning use of cheaper ones. They did so despite little evidence that Medicare patients as a whole are older or sicker than in past years, or that the amount of time doctors spent treating them on average was rising.

While it’s impossible to know precisely why doctors and hospitals moved to better-paying codes in recent years, it’s likely that the trend in part reflects “upcoding,” — the practice of charging for more extensive and costly services than delivered, according to Medicare experts, analysis of the data and a review of government audits.

And Medicare regulators worry that the coding levels may be accelerating in part because of increased use of electronic health records, which make it easy to create detailed patient files with just a few mouse clicks.

Many health policy experts have long believed that billing errors and abuses, from confusion over how to pick proper payment codes to outright overcharges, are common in Medicare. But the Center’s year-long examination has outlined their scope in an unprecedented manner, uncovering a range of costly medical coding mistakes and abuses that have plagued the government-paid health care plan for years and are worsening amid lax federal oversight.

“This is an urgent problem,” said Dr. Mark McClellan, who directs the Engelberg Center for Health Care Reform at the Brookings Institution in Washington. McClellan, a former director of the Centers for Medicare and Medicaid Services, or CMS, said the agency must send a message that it “won’t stand by and do nothing … that they are paying attention to this.”

Among the investigation’s key findings:

Doctors steadily billed Medicare for longer and more complex office visits between 2001 and the end of the decade even though there’s little hard evidence they spent more time with patients or that their patients were sicker and required more complicated — and time-consuming — care. The higher codes for routine office visits alone cost taxpayers an estimated $6.6 billion over the decade.
More than 7,500 physicians billed the two top paying codes for three out of four office visits in 2008, a sharp rise from the numbers of doctors who did so at the start of the decade. Officials said such changes in billing can signal overcharges occurring on a broad scale. Medical groups deny that.
The most lucrative codes are billed two to three times more often in some cities than in others, costly variations government officials said they could not explain or justify. In some instances, higher billing rates appear to be associated with the burgeoning use of electronic medical records and billing software.
Medicare administrators have struggled for more than a decade to crack down on medical coding errors and abuses, often in the face of opposition from medical groups including the American Medical Association, which helped design, and now controls the codes. Whether they make honest mistakes or engage in willful misconduct, there’s little chance doctors who pad their charges will face any serious penalties.

CMS officials declined numerous interview requests. However, in an e-mail response to written questions, officials said while they believe most doctors and hospitals are “honest and try to bill Medicare correctly,” the agency also “is keenly aware that certain Medicare providers and suppliers seek to defraud the program.”

Dr. Robert Berenson, a former vice chairman of a federal commission that recommends Medicare payment strategies to Congress, called the Center’s findings “clearly significant,” and said they indicate an urgent need to revamp the pay scales.

“It is really time to deal with this issue. There are so many perverse outcomes, including spending for taxpayers,” Berenson said.

That so many doctors deviate widely from billing norms — and have done so for years with apparent impunity — spotlights Medicare’s chronic vulnerability to abuse and fraud, several experts said.

Thomas Scully, an architect of the Medicare pay scales during his White House days under the first President Bush, is now critical of the system. He said it was put in place in order to curb rising doctors’ fees, but Medicare’s pay hikes have been too small to match rising medical office expenses. Many doctors have responded by picking the highest codes possible, he said.

“You are going to pedal faster and code more aggressively,” said Scully, also a former director of the federal Medicare agency and now a Washington lobbyist with a range of health care clients. “I’m not sure it’s malicious. It’s a fact a life,” he said.

However, the U.S. Department of Health and Human Services inspector general in a May report stated that payments made under the doctor-visit codes rose 48 per cent between 2001 and 2010, from $22.7 billion to $33.5 billion. The report also noted that the coding system has been “vulnerable to fraud and abuse.”

And agency officials acknowledge that the surge in these billings has been driven at least partly by potentially illegal “upcoding” which the government has largely failed to stamp out through the years.

“We have some people who will use any excuse to get more money for the services they do,” said Jennifer Trussell, who heads the investigations unit for the HHS inspector general’s office. “They don’t see it as a crime.”

AMA president Jeremy A. Lazarus agreed that doctors have shifted toward billing higher priced codes. But the “contributing factors are unclear,” he said in a written statement. “There could be several possible reasons for this trend, but more analysis is needed,” Lazarus said.

Secret Code

The current billing scales, known as Evaluation and Management codes, were unveiled in 1992 as part of an unusual and secretive arrangement between Medicare officials and the AMA, the nation’s most influential doctors’ group.

The AMA wanted Medicare to reward doctors for the “thinking part” of medicine, or their skill in diagnosing and treating illness, as well as the time it takes. Medicare expected the pay scales to cut down on billing abuses and to save taxpayers money by setting measurable standards that all doctors would follow.

On paper, the process seems straightforward enough: the lowest of the five coding levels for an office visit, 99211, signifies a minimal health problem and five minutes either spent treating the patient or supervising a nurse or other health worker who does so.

That simple visit pays the doctor about $20 from Medicare.

The top code, 99215, requires much more effort. Doctors must do two of three things: a comprehensive examination, a detailed history of the patient’s health status, or make a medical decision of “high complexity.”

That typically requires 40 minutes of face-to-face contact between doctor and patient and pays about $140.

Medicare officials expect medical professionals to bill a range of the five fee codes because some patients require more time and effort to treat than others. The government trusts them to bill correctly and medical groups say the vast majority of America’s physicians follow the complex coding rules as best they can. Medicare pays for more than 200 million office visits each year.

However, doctors and hospitals have increasingly abandoned the lower-level codes for better paying ones. Medicare officials have largely failed to challenge these surges in billing across a broad spectrum of medicine, from doctors working in hospital emergency departments and nursing homes to family physicians and specialists seeing patients in their offices.

Government officials and medical data experts note that sharp spikes in billing strongly suggest some doctors and hospitals engage in “upcoding,” by finding ways to bill for higher codes than justified.

Medical groups counter that most doctors charge less than they deserve. The only way to tell for sure is to review patient records that support each of the 370 million such claims Medicare pays annually, which officials say is impractical and not cost-effective.

Physician groups don’t dispute that coding errors are commonplace in medicine or that a tiny fraction of doctors may exploit loose federal oversight to fatten up their fees.

But they argue that coding guidelines are vague and subjective and that just as many doctors undervalue their work by picking lower codes as might be tempted to bill too much.

The medical organizations also argue that more elderly patients over the past decade have been diagnosed with multiple health problems that require additional time and effort to treat, a contention undercut by much health care research.

And they cite growing use of computerized medical records and billing systems for enabling doctors to document the level of treatment they provide more easily than by hand, which pays off in higher codes. Federal officials are spending as much as $30 billion in economic stimulus money to help doctors and hospitals purchase the digital gear, and more than half the doctors billing Medicare are using it, with more expected to follow.

Dr. Thomas Weida, a family physician in Hershey, Pa., said that wiring up his office has boosted the amount of time spent face-to-face with a typical patient by five minutes or more, both from the amount of stored information he reviews and increased time writing and prescribing treatments. That alone could justify higher billing codes in many instances, he said.

“You’re having to do a lot more than you did before,” said Weida, a medical coding expert for the American Academy of Family Physicians.

But digital systems also can prompt doctors to “code at the highest possible level,” said Dr. David Kibbe, who has consulted with the family physicians’ group. Often, that means that with “the push of a button” doctors can create reams of documentation to support higher codes, Kibbe said.

Some doctors identified by the Center’s data analysis as disproportionately billing high codes for office visits cited the poor health condition of their patients as a key justification for doing so.

“I know they are high,” said Dr. Brantley B. Pace, who has practiced family medicine for more than a half century in Monticello, Miss., when asked about his billing practices, among the highest in the Medicare billing sample.

Pace said many of his longtime patients live with multiple infirmities that require his attention. “I rarely have a person who comes to me for a cold,” he said.

Data experts noted that some individual doctors may in fact be justified in billing much higher than their peers. But they stressed that the sheer numbers of physicians from a range of medical specialties who do suggests some degree of manipulation of the payment scales.

Billing Norms

The Center for Public Integrity analyzed a representative 5 percent sample of Medicare patients and their claims submitted by more than 400,000 medical practitioners and 7,000 hospitals and clinics, starting in 2001. The cost analysis projected the increase in Medicare costs as more doctors picked higher codes each year over the decade.

The added fees totaled at least $11 billion, adjusted for inflation — more than half of it from higher doctor fees for office visits and the rest from other services, including treatment in nursing homes and hospitals.

The investigation identified thousands of doctors, from a broad range of specialties and locales, who adjusted their billing patterns sharply upward and netted higher fees as a result. A 1979 federal court injunction in Florida bars HHS from publicly releasing doctors’ names and Medicare reimbursements.

The Center sued HHS to obtain the Medicare data but had to agree not to publish the names of individual doctors, unless they agreed to discuss their billing histories. Most who were contacted declined to do so.

From 1999 through 2008, the number of doctors who billed at least half of their office visits at one of the two most expensive codes more than doubled to at least 17,000 practitioners. Those who quit using the two least expensive codes rose 63 percent, climbing to more than 13,000 in 2008.

“Those are codes we see abused quite frequently,” said Trussell, of the HHS inspector general’s office.

In 2010 alone, Medicare paid for more than six million more visits at the second highest pay rate than the year before. That upsurge cost Medicare more than $1 billion, government records show.

Some doctors relied on the same code for nearly every patient visit despite Medicare guidelines calling for a balance because not all patients who see the doctor require the same degree of attention or time.

More than 750 doctors billed the two highest-paying codes exclusively for office visits, some for as long as seven years straight, for instance.

The changes in billing patterns vary sharply by region. For instance the Milwaukee area saw a steep jump in use of the two highest codes, from 19 percent at the start of the decade to 45 percent in 2008. The Phoenix and Salt Lake City areas also saw hefty jumps. By contrast, some major urban areas, including New York City and Los Angeles, decreased slightly over the decade.

Medicare has been paying for longer and more complex office visits despite annual surveys by the federal Centers for Disease Control and Prevention showing that the average time doctors spent with patients didn’t change much over the years.

Jerry Cromwell, a researcher with RTI International in North Carolina, in a 2006 study found the average Medicare doctor visit lasted about 18 minutes, or less. Yet Medicare billing records show a sharp rise in services over the decade that were supposed to take 25 minutes or longer in face-to-face contact with a patient.

Cromwell said it has been a “real challenge” for Medicare officials to verify how much time doctors typically spend with patients. He identified “upcoding” as one possible explanation for the discrepancy.

The Medicare billing data do not show that patients are getting more infirm; their reasons for visiting the doctor’s office were essentially unchanged over the decade. And the May report by the HHS inspector general said its review of 2010 Medicare claims found that many high-end billers tended to treat patients who were slightly younger than average.

Researchers also said there’s not much evidence that elderly people on Medicare have been getting sicker over time — certainly not enough to justify the sharp rise in more costly billings.

Eric Seiber, an Ohio State University researcher who has studied physician billing trends, said Medicare officials have yet to conduct studies to determine to what extent the pay scales are being manipulated.

“There is a lot of money there and we have almost no handle on it. It’s so hard to pin down,” Seiber said.

The Medicare billing data also lend little support to the argument that many doctors on average choose codes that are too low. In 2008, three times as many physicians were billing only the two top codes as picked the two lowest ones, for instance.

In addition, federal officials projected that Medicare overpaid nearly $658 million in 2010 as a result of wrongly coded bills for office visits at the second most expensive payment level. Officials found underpayments to be a tiny fraction of that amount, or about $6.1 million, according to government records.

Malcolm Sparrow, a health care fraud expert and professor at the John F. Kennedy School of Government at Harvard University, said: “If there are changes [in billing] over time costing the public billions of dollars, there should be an explanation.”

Coding Errors

Medicare manuals state that the government trusts doctors to bill accurately and pays bills “generally based solely on your representations” in the claim.

“When you submit a claim for services performed for a Medicare [patient], you are filing a bill with the federal government and certifying that you have earned the payment requested and complied with the billing requirements,” the manual reads.

Yet Medicare auditors through the years have repeatedly detailed high rates of doctor billing errors, though mostly in obscure audits which captured little public notice and spurred little government action.

In June 2000, Medicare officials identified incorrect coding as Medicare’s third most prominent error, triggering $1.7 billion in suspect payments. Much of the time, errors paid doctors too much, not too little.

“These improper payments, as in past years, could range from inadvertent mistakes to outright fraud and abuse. We cannot quantify what portion of the error rate is attributable to fraud,” auditors wrote.

In 2001, members of a government panel were so fed up with the payment scales that they recommended junking them. Two years later, Congress passed Medicare reform legislation that called for studies to consider alternatives to the pay scales.

But the law required Medicare officials to consult physicians’ groups before making any changes, a legacy of the decision to allow the AMA to develop the codes. Medical groups have since been able to block any reform effort, according to former government official Scully and other insiders.

Scully said it was a “big mistake” for the government to give the AMA such a prominent role in creating the doctor payment yardstick. “As a result the AMA has amassed enormous power,” he said.

Medicare officials deny the AMA and other medical groups have outsized influence over the payment system. But they concede that the system has been left in place for years because they could not reach an agreement on ways to improve it.

Most patients have no idea doctor pay scales exist because Medicare and other insurers don’t typically help people decipher them. As owner of the copyrights on the codes and their definitions, the AMA controls their publication and aggressively enforces its copyright.

Princeton University Professor Uwe E. Reinhardt, a prominent health care economist, said government officials could have paid the AMA a lump sum to develop the codes, simplified them and retained their ownership for taxpayers. Doing so would have opened up the process to public scrutiny and given patients a better understanding of health care finances. Other critics note that millions of seniors might help the government check on the veracity of medical bills if they knew the lingo and how to crack the codes.

“I wish I had some way to check up on the billing process,” said Judy Ryden, a retired community college teacher who is on Medicare and lives in Grants Pass, Ore. “Unless I had a degree in medical coding I have no idea what all that means. I can’t tell whether a charge is legitimate or not,” she said.

AMA president Lazarus in his statement noted that while the AMA provides “guidance for the appropriate use” of billing codes, it “does not profit in any way if physicians bill an insurer for a complex service rather than a simple service.”

Lazarus noted that the group “does not receive a single taxpayer dime” for its oversight of the codes. He said the system “saves taxpayers millions of dollars” by allowing medical information to be communicated efficiently and reliably.”

Without the system, “the transfer of vital information between physicians, hospitals and health plans would break down under an even greater burden of costly paperwork,” Lazarus said.

The payment system also has given rise to a cottage industry of coding experts and medical practice consultants who conduct seminars for doctors that often encourage higher coding — in some cases through Internet pitches that promise doctors significantly higher profits.

Medical organizations also teach their members ways to code at higher levels legitimately. In one 2009 article, the academy of family physicians noted that using the second-highest level for most office visits could put an additional $30,000 to $75,000 in a doctor’s pocket.

As a result, the billing codes intended to hold medical fees in check have instead contributed to spiraling Medicare costs.

Error Prone

Today, startlingly high rates of billing mistakes — many of them overcharges — persist, according to Medicare audits conducted in several states.

In May 2011, Medicare contractor Palmetto GBA notified more than 11,000 California doctors that it would begin auditing their claims for office visits after concluding that too many were being billed at high-level codes.

Another Medicare contractor called Trailblazer audited patient office visits in early 2010 in Virginia and found mistakes in half the records it reviewed. A similar audit in Colorado, New Mexico, Oklahoma and Texas reported a 91% error rate for billing for office visits.

Billy Quarles, a spokesman for BlueCross BlueShield of South Carolina, which owns both companies, said “inadequate documentation” was the primary reason for the high denial rates in the Trailblazer audit.

“In some cases the documentation available did not support the level of service billed, but more often, the documentation was not sufficient to determine medical necessity or evidence of a face-to-face encounter with the patient,” Quarles said.

A third Medicare contractor, WPS Medicare, conducted a similar review of doctors in Wisconsin, Illinois, Michigan and Minnesota after discovering unusually high levels of the second highest code, most of them coding errors on routine patient visits.

In both cases, the audits focused on family practice doctors and specialists in internal medicine. Doctors who failed to respond could face denials of their claims.

“Upcoding”

Deliberately inflating bills to boost profits can constitute health care fraud, but few offenders face any liability.

And chances of getting caught are very small because Medicare rarely audits closely and typically has no way of finding out unless someone on the inside comes forward and alerts them. Federal officials have recently stepped up efforts to use computers to detect abnormal billing patterns, however.

Many of the more than 50 “upcoding” court cases reviewed by the Center for Public Integrity resulted from whistleblower lawsuits, often filed by an employee who fears retribution after alerting superiors to the billing problems. They can share in money the government recoups, and most cases are settled with no admission of wrongdoing.

Minnesota family doctor David Lang offers an example. He sued his employer, the Apple Valley Medical Clinic in suburban Minneapolis, as a whistleblower after concluding that some of the 14 doctors working there were upcoding Medicare claims.

He also took his findings to federal officials, who joined the civil case.

In his suit, Lang said that when he brought up some “extraordinarily high” doctor billings to the clinic’s board, he faced threats and retaliation.

For instance, he said he was accused of seeing patients with “alcohol on his breath,” an allegation Lang refuted by demanding a test, which showed no liquor in his body, according to court filings.

The Apple Valley clinic’s managers denied wrongdoing, though they settled the suit by paying the government more than $180,000 in December 2010. The clinic did not respond to requests for comment. But Lang, a partner in the clinic, says it now bills properly.

“We’ve cleaned it up,” he said.

Lang said in an interview that he believes billing irregularities are “prevalent” in medical offices. He said some doctors overbill “consciously and without remorse,” while others may regard inflating a few service codes as a relatively harmless way to help defray rising office expenses — or to silently protest what they regard as stingy pay from Medicare.

According to Lang, Medicare officials should publicize these cases widely to limit what he called “robbing from the public.”

But that seldom happens.

Like many others, Lang’s lawsuit file was sealed by a federal court judge with only his initial allegations made public.

Even criminal prosecutions conducted in open court may not bring a significant penalty. Several criminal cases reviewed were settled with a plea bargain that not only kept the doctor out of jail, but also let him continue participating in Medicare.

Billing administrator Lynne Lewis helped trigger such a case after concluding that her boss, Massachusetts pain specialist Dr. Anil Kumar, was “upcoding” some bills.

When she confronted Kumar about his billing tactics, he testily told her that he did business that way “long before you came,” and would do so “while you are here” and “long after you are gone,” according to her lawsuit.

The tongue lashing didn’t deter Lewis. She filed a whistleblower lawsuit against the doctor and federal authorities charged Kumar with health care fraud.

Prosecutors accused Kumar of fraudulently billing every new patient visit as if it were a consultation referred by another doctor. At the time, Medicare paid more for consultations than for simple office visits.

In June 2010, Kumar agreed to pay the government $586,000 in a settlement deal in which he did not admit any wrongdoing. He still practices in Stoneham, Mass., and is in good standing with Medicare. He had no comment.

Growing Tensions

Though the Obama administration has made a significant commitment to cracking down on Medicare fraud and abuse, officials don’t appear to have an aggressive strategy for cutting down on medical coding abuses.

CMS acting Administrator Marilyn Tavenner earlier this year confirmed that the agency planned to contact as many as 5,000 doctors it identified as billing outside norms, but said the effort was “not intended to be punitive or sent as an indication of fraud.”

She said the agency would focus on the top ten high billers in each Medicare region as a first step, but that it might cost the agency more to investigate suspicious claims than it could collect.

The agency, Tavenner wrote in a letter published in the May IG report, “must take into account the respective return on investment of medical review activities.”

It is clear that CMS is meeting resistance to fraud-control audits from doctors’ groups — and threats that some physicians might dump Medicare patients if the government doesn’t back off.

In December of 2011, California Medical Association president Dr. James T. Hay fired off a letter to federal officials in Washington noting that audits of doctor billings have “created great consternation” among the state’s doctors and saddled them with what he deemed an “enormous administrative burden” on their office staffs.

“Clearly, physicians want their purposefully overbilling and illegally behaving peers to be found and stopped. We also want to be paid fairly,” Hay later wrote in a CMA publication.

Hay added a threat that targeting doctors for review unfairly “will only further induce physicians to decrease or stop their participation in the Medicare program.”

Asked about the controversy, Medicare officials said they didn’t believe the limited number of proposed audits would lead doctors to dump Medicare patients. Officials said they had responded to the letter by “conducting a telephone conference and additional discussions with [Medicare payment contractor] Palmetto,” but declined to offer details.

These sorts of clashes are likely to become more common. Several provisions in the health care reform law step up penalties for doctors and hospitals who fail to return any overpayments within 60 days, for instance.

In draft regulations, Medicare officials predicted the new policies would result in about 125,000 medical providers returning from three to five overpayments each during a typical year.

Many experts also predict an even sharper clash lies ahead over electronic health records, which Medicare officials are pushing doctors and hospitals to purchase, and also are widely marketed for their power to document higher billing codes — and thus boost the bottom line. More than half of doctors billing Medicare used the devices in 2011, and more are expected to do so.

Reinhardt, the health economist, said that government must be cautious to pay health professionals properly for their work, and that under the current coding system, fees often are too low, which in turn encourages higher coding.

“If it is a dishonest payment system, doctors will be dishonest,” Reinhardt said.

Hospitals grab at least $1 billion in extra fees for emergency room visits

2013-01-23T12:40:21-05:00

Judging by their bills, it would appear that elderly patients treated in the emergency room at Baylor Medical Center in Irving, Texas, are among the sickest in the country — far sicker than patients at most other hospitals.

In 2008, the hospital billed Medicare for the two most expensive levels of care for eight of every 10 patients it treated and released from its emergency room — almost twice the national average, according to a Center for Public Integrity analysis. Among those claims, 64 percent of the total were for the most expensive level of care.

But the charges may have more to do with billing practices than sicker patients. A Baylor representative conceded hospital billing for emergency room care “did not align with industry trends,” but said that the hospital since 2009 has reined in its charges.

The Texas hospital’s billing pattern is far from unique. Between 2001 and 2008, hospitals across the country dramatically increased their Medicare billing for emergency room care, adding more than $1 billion to the cost of the program to taxpayers, a Center investigation has found. The fees are based on a system of billing codes — so-called evaluation and management codes — that makes higher payments for treatments that require more time and resources.

Use of the top two most expensive codes for emergency room care nationwide nearly doubled, from 25 percent to 45 percent of all claims, during the time period examined. In many cases, these claims were not for treating patients with life-threatening injuries. Instead, the claims the Center analyzed included only patients who were sent home from the emergency room without being admitted to the hospital. Often, they were treated for seemingly minor injuries and complaints.

While taxpayers footed most of the bill, the charges also hit elderly patients in the pocketbook, increasing the amount of their 20-percent co-payments for emergency room care.

Hospitals and federal officials say the rise has likely been caused by an increase in sicker patients seeking care in emergency rooms, more accurate billing on the part of hospitals, and an increasing number of options for patients who aren’t as sick — options that include retail-based clinics and urgent care facilities. But the Center’s investigation found that the surge in billing also reflects lax government oversight, confusion about proper billing standards, and widespread payment errors that have plagued Medicare for more than a decade. And the data suggest that some hospitals are working the billing system — and its flaws — to maximize payments.

Dr. Donald Berwick, the immediate past administrator of the Centers for Medicare and Medicaid Services (CMS), which administers the Medicare program, said a small portion of the billing increase is likely caused by outright fraud, but in the majority of cases hospitals are legally boosting profits by targeting the vulnerabilities of Medicare’s payment system. “They are learning how to play the game,” Berwick said about the hospitals.

Hospital industry insiders say it’s no secret that hospitals are pushing the limits to bill higher-priced Medicare codes, a practice known as upcoding. “There is such financial pressure to upcode,” said Barbara Vandegrift, a health care consultant at Tennessee-based Quorum Health Resources. “It’s ‘wait until we get caught and we’ll fight it at that point.’ ”

Few hospitals, however, are being scrutinized. Medicare officials are aware of the rising expense of emergency room billing for evaluation and management services, but the agency has downplayed the problem and done little to verify the accuracy of hospital emergency room charges. Instead, it has given hospitals a free hand to set their own billing policies, with little agency guidance and even less auditing.

Medicare lacks rules for hospital ER billing

Since 2000, hospitals have chosen among five codes to bill Medicare and other insurers for evaluating emergency room patients and coordinating their treatment. This hospital “facility fee,” which can add millions of dollars to the hospital’s bottom line in the course of a year, ranges from $50 to $324, depending on which code is chosen for any given case. It comes on top of physician charges.

The system dates back to a change in federal law requiring hospitals be paid a set fee for services, rather than a blanket payment based on the cost of providing care, which was meant to save the program money. Yet instead of developing specialized billing codes just for hospitals, CMS since 2000 has required hospitals to file claims using a set of codes developed and licensed for physician billing by the American Medical Association — so-called Current Procedural Terminology, or CPT, codes. The lack of specific hospital codes, or guidelines for how hospitals should use physician codes, has left the system open to broad interpretation by hospitals.

“All the hospitals looked at each other and said, ‘OK, how are we going to do this?’ To make a long story very short, we still have no guidelines,” said Duane Abbey, a hospital billing consultant in California.

Medicare administrators acknowledge as much. Since 2000, CMS has repeatedly announced plans to develop new hospital evaluation and management codes, or at least provide national guidelines for hospital billing. But the agency has failed to deliver. Instead, CMS requires hospitals to develop their own guidelines for billing those codes designed for doctors. Some follow strict internal policies, Abbey and other hospitals billing consultants said, while others wildly inflate charges, regularly change their billing criteria, and sometimes fail to follow even their own lax internal policies.

“The whole issue of the E and M levels for the emergency department … is an absolute mess,” Abbey said.

Chasing dollars

Left to develop their own billing rules, hospitals have flocked to higher paying emergency room codes. Leatrice Ford, an independent consultant in Louisville, Ky., who uses Medicare claims data to advise hospitals on their emergency room billing, said it’s well known in the industry that many hospitals inflate their charges. But Ford said it’s a tough sell for a consultant to convince hospitals their billing is too high. “In my experience hospitals are reluctant to give up their overpayments,” Ford said. The reason, she said, is that Medicare and the contractors it employs to administer payments are not checking.

“I have never once seen or heard of anyone being audited or called on the carpet for their distribution of E and M codes,” Ford said. “That’s a standard audit for physician practices, but I’ve never seen a hospital get in trouble for it.”

In 2008, more than 500 hospitals of the more than 2,400 in the database billed the two most expensive codes for more than 60 percent of patients. More than 100 billed the two most expensive codes for at least 70 percent of patients.

Some — like Baylor Medical Center in Irving — were even higher. In 2007, Yuma Regional Medical Center, a 369-bed nonprofit hospital in southwestern Arizona, billed the top two most expensive codes for eight of every 10 Medicare emergency room patients. Billing at the hospital made Yuma, Arizona, the nation’s regional leader for the percentage of billing of the top two levels of E and M codes, far higher than metropolitan areas like New York City and Chicago.

Yuma’s CEO Pat Walz, however, said the charges are accurate. When the Center first asked about the claims, Walz said elderly winter visitors have driven up the hospital’s number of serious emergency room cases. Yuma claims data reviewed by the Center for Public Integrity, however, suggest the average age of the hospital’s emergency room patients remained steady from 2001 to 2008 at around 77 years old.

Walz also conceded that the installation of Medhost, an electronic emergency department information system, was likely one of the most significant drivers of the hospital’s push toward more expensive codes. Before Medhost, nurses and doctors wrote patient notes by hand, Walz said. Computerized charting captured much more of the work they actually performed, which he said resulted in higher E and M levels.

But Walz said the electronic system is not overcharging Medicare. Rather, it is simply helping the hospital make money from care that once fell through the cracks. “If you look at any industry — as it goes from human to electronic input, the same thing is going to happen,” Walz said.

Walz said Medhost has paid for itself through increased billing, but he said the decision to install it was not financial. “We did it to improve the quality of patient care,” he said. Medhost did not respond to requests for comment.

CMS: hospital billing increase “slight”

The Centers for Medicare and Medicaid Services has so far downplayed the spike of hospital billing. In 2011 comments published in the Federal Register, CMS said it noticed a “slight shift” toward hospital billing of more expensive evaluation and management codes. The agency said it also noticed that emergency room charges for the higher-level visits “seem to be trending upward year over year.”

Presented with the Center’s analysis, which shows a far more dramatic shift toward expensive codes, CMS declined interview requests. But in written responses to questions, the agency’s press office said the trend is only “notable” over several years. Considered year to year, as the agency said it examined the data, the higher level codes increase at no more than 2 percent.

Further, the agency wrote that the trend may reflect more accurate coding by hospitals and physicians rather than upcoding. Indeed, the agency said its advisory panel, which is made up of physicians, hospital administrators and other hospital financial staff, told CMS that the rise in billing is a result of hospitals getting better at capturing their costs.

“They would argue that the costs were inadequately reflected in our data several years ago,” the agency wrote, “so the increases we are seeing now are bringing the payment system to where it should have been all along.”

Dr. Scott Manaker, a professor of medicine at the University of Pennsylvania Perelman School of Medicine, a member of the panel, said there are a number of possible causes for the rise in high-level billing, including more accurate hospital coding. Manaker said he doubts upcoding is the major cause, but said it’s impossible for the panel to determine without examining individual patient charts and hospital billing records, which it has not done.

Another panel member said hospital emergency room billing has not been a critical issue during meetings. “In my four years in the panel there has not been a lot of discussion of E and M leveling on the facility side,” said Judith Kelly, director of health information management at Unity Health System in Rochester, N.Y. To address the issue, Kelly said CMS should issue hospital-specific billing codes or guidelines for emergency care. “When there is ambiguity, there are problems,” she said.

In response to questions, CMS said some hospitals have been audited. But the agency said the process of auditing and seeking reimbursement of overpayment is “expensive and time consuming relative to the potential return that will be realized on individual claims for relatively low cost services.”

But some question whether CMS contractors — who help administer Medicare payments — can effectively audit hospital billing. Without national billing guidelines, said Abbey, the hospital auditor, it would be difficult for CMS contractors to determine who is cheating the system. Indeed, he said they would need first to ask each hospital for a copy of its internal billing guidelines. “They should have one of their famous committees developing guidelines right now,” Abbey said. “My sense is they aren’t, but they should be.”

A never-ending quest for billing guidelines

During the 12 years that CMS has allowed hospitals to set their own billing policies for E and M codes, a host of organizations have proposed national guidelines. So far, none of them have made the cut.

In 2002, the American Hospital Association (AHA) and the American Health Information Management Association, an association representing health information management professionals, formed an expert panel to develop guidelines for hospital emergency room billing at the urging of CMS. In 2003, the groups submitted detailed recommendations for a billing system that measured hospital emergency room care. The recommendations went nowhere. “It just died a slow death,” said William Briggs, a nurse who represented the Emergency Nurses Association on the expert panel.

CMS has called the AHA proposal the “most appropriate and well-developed guidelines” available. Yet the agency has not required hospitals to follow them. Not long after the AHA proposed the guidelines, a CMS-funded outside study found a number of problems with the guidelines.

A separate small-scale study, however, suggested the guidelines save money. In 2009, the Ohio-based company Permedion, which reviews medical claims for state and federal agencies, found that 37 percent of a sample of Ohio Medicaid emergency room claims should have been coded at lower levels, based on the AHA guidelines. The remainder were in agreement with the guidelines.

The AHA remains one of the loudest voices pushing for guidelines, but it is discouraged over the long delay. “We keep asking them to issue national guidelines,” said Nelly Leon-Chisen, the association’s director of coding and classification. “We do it every year and they don’t do anything about it.”

By 2007, though, it appears CMS had effectively given up on releasing new guidelines. The effort “was proving more challenging than we initially thought,” the agency wrote in the Federal Register.

Industry insiders say there are a number of reasons why the agency never established guidelines. Some suggested a working set of rules that accurately reflects costs for all hospitals may be impossible to develop. Others say CMS is reticent to sign off on an outside group’s system, as it has with the American Medical Association, which licenses the use of the CPT codes it owns and administers.

In written responses to questions submitted by the Center, CMS said “it seems unlikely that one set of straightforward national guidelines could apply to the reporting of visits in all hospitals and specialty clinics.” It also said the agency believes that “as a whole, hospitals have worked diligently and carefully to develop and implement their own internal guidelines that reflect the scope and type of services they provide.”

Asked about the hospital shift toward billing more expensive codes, Roslyne Schulman, the hospital association’s director of policy development, said she was unaware billing had risen at the rate revealed by the Center’s data analysis, and could only speculate on the reasons without comparing billing to patient charts. Asked if hospitals were simply billing for levels of care they did not provide, Schulman said, “I would hope that would not be an issue.”

Hospitals say patients are “sicker and older”

In 2008, Sentara Virginia Beach General Hospital, a 276-bed hospital a few miles from the Atlantic Ocean, billed the top two emergency room codes for 80 percent of all patients, up from about 29 percent in 2001. Hospital spokeswoman Amy Sandoval said the hospital since 2001 has used the electronic charge system Optum Lynx to determine evaluation and management billing levels.

In a written response to questions about the hospital’s billing, Sandoval said Optum reviewed the hospital’s billing and found it within acceptable limits. Sandoval said “possible” reasons for the high level of billing include an older and sicker patient population, the intensive resources required to treat psychiatric patients before transfer, and a trend of less sick patients seeking care outside of emergency rooms to avoid long waits and high co-pays. The hospital, she added, is a level III trauma center, located within a mile of seven assisted-living centers and nursing homes.

Representatives from small-town hospitals and major urban trauma centers generally offered the same justification for their rising charges. These explanations could be accurate for individual hospitals, but they are not borne out in the national Medicare billing data analyzed by the Center. The average age of emergency room patients in data examined by the Center was 77 and remained constant from 2001 to 2008. The total number of emergency room claims rose 31 percent during that time, however, as compared to a less than 10 percent increase in Medicare beneficiaries, which suggests urgent care clinics have not sapped overall business levels.

Some of the rise could be accounted for by emergency room care advances. In the eight years from 2001 to 2008, advances in medical care allowed emergency rooms to treat patients without later admitting them to the hospital. Since the Medicare data the Center for Public Integrity examined includes only treat-and-release patients, these sicker patients would be included in the data more often in 2008 than in 2001. But some experts strongly doubt this accounts for the extent of the rapid rise.

Moreover, the ten most common “primary diagnoses” — the chief complaints for why patients seek care in emergency rooms — remained unchanged during the time period of the data reviewed by the Center. Although those top diagnoses including dangerous symptoms like chest pain and loss of consciousness, the list also included seemingly minor complaints like lower-back discomfort, urinary tract infections and limb pain.

But while the most common diagnoses remained constant, billing of the most expensive codes surged. Take the case of emergency room headaches. From 2001 to 2008, hospital billing of the top two evaluation and management codes for headache patients more than doubled to 43 percent. The number of tests and procedures doctors performed on headache patients also rose. In 2001, hospital emergency rooms billed an average of six revenue codes (which represent areas of the hospital where costs occur, including imaging, labs, and supplies) for headache patients, according to Medicare billing data. In 2008, they billed an average of nine.

In addition to changes in standards of care over those eight years, hospitals say they simply are seeing sicker Medicare patients than in the past. But some disagree.

Berwick, the former CMS head, said patients haven’t changed. What’s changed is the aggressiveness of how hospitals bill. “They are smart,” Berwick said. “If you create a payment system in which there is a premium for increasing the number of things you do or the recording of what you do, well, that’s what you’ll get.”

Dr. Stephen Pitts, an emergency physician and associate professor in the Emory University School of Medicine, examined data from the Centers for Disease Control and Prevention’s National Hospital Ambulatory Medical Care Survey, a well-established nationally representative survey of emergency department visits. Pitts found that between 2001 and 2008 emergency patients did not appear to be getting sicker.

“It’s total nonsense,” Pitts said of hospital claims that sicker patients have led to higher charges.

Emergency physician billing also rises

A more likely cause, Pitts said, is the pressure hospitals put on emergency room physicians to bill every patient at the highest rates possible. Emergency room salaries at many hospitals are tied in part to how much profit doctors generate per patient, Pitts said. From the business side, this makes sense. “If you don’t bill maximally, your ER is going to die,” Pitts said. But from a patient perspective, it means doctors perform more tests and procedures than they did in the past, which increases the costs of care.

Although hospital facility charges are separate from physician charges, billing and coding experts say the two are linked. And like hospital charges, emergency room physician charges for evaluation and management services are soaring. In 2008, emergency room physicians billed the most expensive code for 44 percent of patients, up from 27 percent in 2001, according to Center analysis of Medicare claims data.

The cost associated with this rise is substantial. In 2010, the top level physical evaluation and management code for emergency care cost the program nearly $1.6 billion, up 21 percent form 2008.

Unlike hospital billing, CMS requires that physicians follow American Medical Association criteria for billing emergency room evaluation and management services. The top level code 99285, for example, requires doctors to perform a comprehensive medical history, a comprehensive exam and engage in highly complex medical decision making.

Yet a number of probes have found physicians are over-billing the top-level code. A 2012 probe of physician billing of 99285 in Iowa, Kansas, Missouri, and Nebraska found an error rate of almost 50 percent. The probe, performed by Medicare contractor Wisconsin Physicians Service Insurance Corporation, found that physician documentation did not support the 99285 level.

David McKenzie, the reimbursement director of the American College of Emergency Physicians, said upcoding is not to blame for the rise in physician charges. Emergency room doctors are simply getting better at documenting their work, and Medicare patients in general are getting sicker, McKenzie said. In addition, nurse practitioners and physician assistants are treating less sick patients who in the past would have been treated by doctors, which is skewing their numbers.

Evaluation and management of health care in seniors takes time, McKenzie said. “A broken leg in a 17-year-old football player is not the same as a broken leg in an 88-year-old diabetic.”

CMS says rise unlikely caused by upcoding

In written comments, CMS said upcoding is unlikely to account for the rapid rise in hospital emergency room billing since the trend appears “to be consistent across hospitals and physicians.” But billing at some hospitals is rising much faster than at others. Asked if the agency is monitoring hospitals, like Baylor Medical Center in Irving, Texas, with rates that were nearly twice the national average, CMS said it is inappropriate for the agency to discuss audits involving specific hospitals.

But Baylor Irving’s president, Cindy Schamp, said CMS never questioned the hospital’s 2008 evaluation and management code billing. In 2009, Schamp said, the hospital instituted new billing rules that led to fewer claims for the top two codes. She said the change was voluntary.

Asked if the hospital returned Medicare overpayments, Schamp said it has not. “To date, we have not made any payments back to Medicare,” Schamp wrote in response to questions. “However, continuing to work to do the right thing, we feel it is appropriate to review."

Four months later, a Baylor spokeswoman said the review was complete. “We looked at a sample set of (emergency room) charges made at Baylor Irving during that time period to see if they were accurate in the context of the billing guidelines at that time,” Nikki Mitchell wrote. “That is the appropriate way to review charges. In the review, no overcharges were found.”

Growth of electronic medical records eases path to inflated bills

2013-05-02T16:46:45-04:00

Electronic medical records, long touted by government officials as a critical tool for cutting health care costs, appear to be prompting some doctors and hospitals to bill higher fees to Medicare for treating seniors.

The federal government’s campaign to wire up medicine started under President George W. Bush. But the initiative hit warp drive with a February 2009 decision by Congress and the Obama administration to spend as much as $30 billion in economic stimulus money to help doctors and hospitals buy the equipment needed to convert medical record-keeping from paper files.

In the rush to get the program off the ground, though, federal officials failed to impose strict controls over billing software, despite warnings from several prominent medical fraud authorities. Now that decision could come back to haunt policy makers and taxpayers alike, a Center for Public Integrity investigation has found.

Experts say digital medical records may prove — as promised — to be cost-effective, allowing smoother information sharing that helps cut down on wasteful spending and medical errors.

Yet Medicare regulators also acknowledge they are struggling to rein in a surge of aggressive — and potentially expensive — billing by doctors and hospitals that they have linked, at least anecdotally, to the rapid proliferation of the billing software and electronic medical records. A variety of federal reports and whistleblower suits reflect these concerns.

Regulators may lack the auditing tools to verify the legitimacy of millions of medical bills spit out by computerized records programs, which can create exquisitely detailed patient files with just a few mouse clicks.

“This is a new era for investigators,” said Jennifer Trussell, who directs the investigations unit of the U.S. Department of Health and Human Services Office of Inspector General.

“We are all excited about the many benefits of electronic health records, but we need to be on the lookout for unscrupulous providers who take advantage of this new technology,” she said.

The Center for Public Integrity has recently documented how some health professionals have seemingly manipulated Medicare billing codes to gain higher fees. The investigation unmasked thousands of doctors consistently billing higher-paying treatment codes than their peers, despite little evidence in many cases that they provided more care.

Some of the sharpest surges in more costly coding have occurred in hospital emergency rooms, according to the Center’s data analysis, where billing software has been widely used.

Interviews with hospital administrators, doctors and health information technology professionals confirmed that digital billing gear often prompts higher coding, though many in the medical field argue that they are simply recouping money that they previously failed to collect.

For example, Holy Name Medical Center in Teaneck, N.J., saw a spike in billing codes after wiring up its emergency room in 2007, according to hospital CEO Joe Lemaire.

Coding ‘Slam Dunk’

Electronic medical records can influence pay scales known as “Evaluation and Management” codes. Medicare spent more than $33.5 billion in 2010 using these numeric codes for services ranging from routine doctor office visits to outpatient hospital or nursing home care. More than half the doctors billing Medicare were using electronic records in 2011, and more are expected to follow.

For an office visit, a doctor must choose one of five escalating payment codes that best reflects the amount of time spent with a patient as well as the complexity of the care. The lowest-level code for a minor problem, 99211, pays about $20. But the doctor can bill roughly $100 more for the top level. Hospitals use similar codes for billing emergency room and outpatient services.

The subjective nature of the coding process has left the medical community and those who pay its bills in constant conflict. Many doctors and billing consultants argue that most practitioners habitually charge too little because they neglect to put down on paper all of the work they do, which if done more diligently would justify higher codes and fees.

The HHS Agency for Healthcare Research and Quality, an advocate for pressing ahead with electronic health records, accepted that view when it wrote in September 2009 that doctors may choose billing codes that are too low. The agency suggested that converting to digital systems would enable doctors to bill higher fees, “translating into enhanced revenue.”

By contrast, government auditors and many private insurance investigators see evidence that some doctors pick higher codes to inflate their bills — a practice known in medical circles as “upcoding.”

The rapid expansion of electronic health records is adding a whole new dimension to that quarrel. Government officials, however, have yet to step in and settle whether the hundreds of software products on the market consistently prompt doctors and hospitals to bill at higher levels than they did prior to going electronic — and if the higher fees are merited.

Doctor Backlash

Warnings that digital billing equipment could unleash a torrent of inflated charges date back to the administration of President George W. Bush.

In July 2005, the American Health Information Management Association identified an “unintended incentive for fraud because healthcare organizations and software developers need to prove a return on investment for the coding products,” reads the report, which was commissioned by HHS officials.

Two months later, a second American Health Information Management Association panel stated that “without a deliberative effort to build fraud management” into networks of digital medical records “health care payers and consumers will be exposed to new and potentially increased vulnerability to electronically-enabled healthcare fraud.”

Dr. Donald W. Simborg, a California physician who co-chaired that panel, said its findings were dismissed out of fear that doctors would shun the digital devices if they thought buying one might lead the government to second-guess their fees, and perhaps even accuse them of impropriety.

Simborg also headed up an executive team HHS turned to in 2007 to recommend fraud controls in digital gear certified for sale to doctors and hospitals.

In a May 2007 report, the 23-member group, which included representatives from medical groups, health insurers and government, warned against approving software that assisted doctors in selecting billing codes. It is “not appropriate to suggest to the provider that certain additional data, if entered, would increase the level” of the billing code, according to the report.

“Our report was totally ignored for fear of a physician backlash,” said Simborg. The report saw print under the bland title “Recommended Requirements for Enhancing Data Quality in Electronic Health Records” that gave little hint it dealt with the sensitive fraud issue, he said.

The billing tools that the study panel panned have been trumpeted in recent years by electronic health record manufacturers hoping to persuade doctors and hospitals to shell out thousands of dollars — millions in the case of a hospital — to computerize.

“This is the big elephant right now and we aren’t touching it,” said Simborg.

Dr. Robert Kolodner, a physician who headed the federal push for electronic medical records in 2007, acknowledged that billing abuse took a backseat to steps likely to entice the medical community to embrace the new technology.

Kolodner said officials were certain the savings achieved by computerizing medicine would be so great that billing abuse, “while needing to be monitored, was not something that should be put as the primary issue at that time.”

That view didn’t change much with the 2009 arrival of the Obama team, which was sympathetic to some of the tech companies that stood to benefit handsomely from the conversion.

For instance, giant tech vendor McKesson submitted to the Obama-Biden Transition Team its vision for the rollout, which recommended “significant start-up funds” to get the ball rolling.

Since 2009, the Obama administration has held dozens of public meetings on electronic health record policies and standards, but none that focused primarily on fraud control and billing integrity.

The administration’s Office of National Coordinator for Health Information Technology, which is spearheading the drive, declined to discuss the billing controversy.

But on April 27 of this year that office asked the HHS Office of Inspector General to study the issue. Spokesman Peter Ashkenaz said that ONC “will review any recommendations that are made in the report and will address those at that time.”

Donald White, a spokesman for the inspector general’s office, said that the issue “is on the radar” and the office will be “looking into these codes and how electronic health records may be affecting them.”

But government officials admit they lack a system to monitor the hundreds of billing and medical software packages in use across the country. That shortcoming caught the eye of the American Medical Association, which helped develop the billing codes and favors stricter government standards. In May, the doctors’ group urged officials to require testing that assures digital devices bill accurately and “do not facilitate upcoding.”

‘Improper Payments’

Connecticut doctor Stephen R. Levinson, who authored a major textbook on medical coding published by the AMA, strongly believes that many electronic medical records systems improperly raise coding levels.

He said the units are programmed to easily allow doctors to cut and paste records from prior encounters with a patient so that “records of every visit read almost word for word the same except for minor variations confined almost exclusively to the chief complaint.”

That extra documentation often triggers the software to raise the billing level and the size of the patient’s bill. But Levinson said information from previous visits is often not “medically necessary” to treat a current problem — and thus not a legitimate factor in charges.

Levinson said “cloned documentation” in a patient’s file often “doesn’t make sense clinically,” but it steps up billing and rewards the doctors with a “slam dunk” higher billing level, even though it takes 30 seconds to copy and paste.

“This is done in the wrong way and doesn’t satisfy the patient’s needs,” he said.

These “cut and paste” features produce voluminous files that are difficult for auditors to challenge, even when they suspect that the doctor did very little to warrant the higher fees.

That’s starting to change, however, greatly raising the stakes for doctors and hospitals that could face a demand for repayment from the government on behalf of patients.

Insurance auditors criticized “over documentation” as a billing ploy as far back as 2006. That year Medicare contractor First Coast Service Options chided Connecticut doctors who “frequently over-documented” to justify higher billing codes.

The Department of Health and Human Services Office of Inspector General late last year announced it would ratchet up audits of “potentially improper payments” linked to electronic medical records. The office also advised doctors they could be held accountable if the codes they used didn’t “accurately reflect the services they provide.”

Electronic health records figured prominently in a critical Medicare audit of Texas and Oklahoma hospital emergency rooms in March. The audit concluded that $45.14 of every $100 billed for emergency room care “was paid in error.”

Auditors said that billing codes were “higher than was reasonable and necessary to adequately care for the patient’s needs or treat the presenting problem.”

One unidentified hospital billed Medicare for the highest level code, 99285, for treating a woman who arrived at the emergency room complaining of mild to moderate abdominal pain. The code is generally reserved for conditions of “high severity” that “pose an immediate significant threat to life and limb,” auditors wrote.

After a battery of tests, including a CT scan, and intravenous antibiotics and morphine, the doctor diagnosed a urinary tract infection, sent the woman home and told her to follow up with her regular doctor.

Auditors said the woman’s case should have been coded two rungs lower based on the degree of medical decision-making required.

They also criticized the electronic record system for generating “testis and penile assessment findings” for a female, noting “coding at a higher level based on clinically unnecessary (or anatomically incorrect) systems examined is not acceptable.”

Hospitals have faced scrutiny over their use of electronic billing in emergency rooms from other quarters as well.

Dr. Alan Gravett, an Illinois emergency physician, argues in a federal “whistleblower” lawsuit that hospitals have jacked up emergency room bills with the help of aggressive billing software.

The doctor filed suit under seal in the U.S. District Court for Northern Illinois in January 2007. He alleges Methodist Medical Center in Peoria, Ill., where he worked for six years, installed a McKesson Corporation digital records system in March 2006 “specifically to increase its billings and recovery from government funded health insurance programs.”

Gravett alleges that the billing system had a “tendency to inflate nearly every” emergency room code. This happened “despite the physicians’ belief that lower … codes were warranted based on the degree of care they provided,” according to the suit.

The lawsuit alleged that patients who were treated in the emergency room for many seemingly simple conditions were “as a matter of course” coded at high levels. The diagnoses included toe injury, sprained ankle and toothache.

The software, according to Gravett, prompted charges for conditions such as “alcoholic intoxication” or “psychiatric cases” to a code four or five, “even when such patients are treated and released, or released with no treatment.”

The screen also prompts doctors to add documentation to reach a higher coding level, according to Gravett’s court filings.

To pressure doctors to go along, the hospital distributed a monthly report called a “lost charge analysis,” which ranked doctors by how much revenue they produced, according to the suit.

“This was done to pressure the physicians to out-bill one another, and weed out physicians that were not generating as much income as those willing to upcode,” according to the court filing.

Methodist hospital spokesman Duane Funk said the hospital has yet to be served with the suit and would have no comment. McKesson did not respond to requests for comment.

A second “whistleblower” lawsuit filed in the state of Washington in 2006 alleged that Health Management Associates, a Florida-based hospital chain, used software called Pro-Med Clinical Systems that prompted questionable billing.

The suit was brought by two emergency room physicians at one of the company’s hospitals, Yakima Regional Medical and Heart Center. The doctors alleged that using Pro-Med led to “misleading medical charts,” including “examinations which had not occurred and physical observations which had not been noted by the physician.”

The software “automatically ordered a series of expensive and unnecessary tests,” according to the suit, which was dismissed in February 2009.

Pro-Med, based in Coral Springs, Fla., was not named as a defendant. Pro-Med CEO Thomas Grossjung said the hospital, not the software company, set the treatment protocols.

Maryann Hodge, vice president of marketing for Health Management Associates, said the hospital chain was never served with a copy of the suit, though it had cooperated with federal officials investigating the matter.

The hospital chain’s use of Pro-Med has come under review in a more recent federal investigation of emergency room billing, records show.

Health Management Associates, which owns or leases more than 60 hospitals in 15 states, disclosed in a May Securities and Exchange Commission filing that the HHS inspector general’s office was investigating it’s business operations, including whether “Pro-Med software has led to any medically unnecessary tests or admissions.” Hodge said the company could not comment further on the investigation.

A second hospital chain that has used Pro-Med also has been served with a subpoena from federal investigators.

Community Health Systems, Inc., which owns and operates some 130 hospitals in more than two-dozen states, told investors in April 2011 that HHS was investigating “possible improper claims.” The subpoena requested documents concerning use of the Pro-Med software in emergency rooms, according to the SEC filing. Tomi Galin, Community Health Systems’ vice-president for corporate communications, said at the chain's hospitals the software does not order tests or “make any recommendation to physicians about whether to admit patients, place patients in observation or discharge patients.”

Both hospital chains said in SEC filings that they are cooperating with investigators. Pro-Med CEO Grossjung said his firm also had met with federal investigators, but the probe had “nothing to do with the software itself.”

Doctors’ groups also are reporting higher fees associated with electronic records, though they argue that the systems merely allow them to catch up with billing practices that for years did not pay them enough.

Robert Tennant, a Washington lobbyist with the Medical Group Management Association, which represents large medical practices, said the software simply helps doctors pick the correct code. “With a paper based system there’s a little bit of concern from providers that they don’t have sufficient documentation to support a particular” coding level, he said. Electronic systems, however, can quickly retrieve a patient’s documented history.

“I don’t use the term ‘upcode.’ I use ‘correct code.’ I see it more as physicians being reimbursed more appropriately for the work that they’re doing,” he said.

After the Gold Rush

Judging from their marketing strategies, there’s little doubt among the makers of electronic health records that their products will pay for themselves — and then some — through higher coding of patient bills.

Sales literature touts features such as “charge capture,” highlighting the computer’s skill at never missing a billable item that a human might overlook.

Many companies stress that the software can pay for itself through more lucrative codes, a benefit called “ROI,” short for return on investment. That pitch suggests a doctor who collects stimulus payments over time will cover the purchase costs and eventually turn a nice profit as a result of higher fees from higher coding.

For instance, one manufacturer predicts a rise of one coding level for each patient visit, which it said could add up to $225,000 over the course of a year. Another cites a medical journal report that a medical practice in Utah “produced an average billable gain of $26 per patient visit.”

Ross Koppel, a sociology professor at the University of Pennsylvania who has studied design weaknesses in the software, said that sales agents stress how the machines help doctors document the work they do.

“That presumably is fair and good, but everybody knows there is a ‘wink, wink’ behind that indicating it will help … make the patient’s visit look more involved than it is.” That “generates additional revenue” for doctors, Koppel said.

The industry’s trade association, the Healthcare Information and Management Systems Society, has published a guide for doctors to use in estimating how much new revenue they can expect by going electronic. It cites as one key benefit, “increased coding due to elimination of lost charges and using appropriate coding levels based on services delivered.”

But some others note that doctors may initially lose money from wiring up their practices, mainly due to the time it takes them and their staffs to learn how to use the equipment and its high upfront cost.

‘Unintended Consequences’

The emphasis on improving the bottom line, rather than the quality of medical care, has disappointed some longtime health policy hands.

The Obama administration’s foray into digital medicine “has backfired at this point,” said Dr. Robert Berenson, a former vice chairman of MedPac, a commission that advises Congress on Medicare payment issues.

Berenson said that the current crop of electronic medical records encourage too much medical documentation “for the purposes of billing” and not better patient care.

The software helps doctors submit bills for “a higher level code than was performed,” said Berenson, who served as a member of the 2008 Obama transition team on health policy. “It’s a lot of money and the money goes right to the bottom line,” he said.

The criticisms are not just about money. The American College of Physicians, which represents more than 100,000 internists, considered the threat to patient safety serious enough that in May it announced a class for doctors in “potential problems associated with the use” of electronic medical records and “strategies to overcome these problems.”

Some doctors grumble about slogging through pages of redundant information that appears to be in a patient’s file simply to satisfy requirements for stepped up billing codes.

Just like in the days of poor physician handwriting, the voluminous computer generated files can prove tough for doctors to quickly decipher and decide how to treat a patient’s illness.

“We’re getting a whole generation of records that are not illegible, they are largely un-interpretable. It’s a horrific problem,” said Dr. Bob Elson, a former health information technology specialist, now a physician at the Cleveland Clinic.

These criticisms aside, many in the medical community regard the switchover not only as inevitable, but also as an opportunity to revolutionize medicine. For starters, researchers hope to be able to mine data from millions of patients to discover better ways to treat disease and improve the nation’s overall health.

The initiative continues to pick up speed behind a broad coalition of political players, from an elite corps of technology experts to organized labor groups that support moving medicine into the 21st century with dispatch.

Tennant, whose group represents medical practices, noted that Congress and the Obama administration have sent a “clear message” that they want physicians to adopt electronic health records.

He said “a slight uptick” in codes would be more than offset by savings on duplicative tests and other waste associated with paper records systems, and by higher quality care.

So far, the government has shelled out about $5 billion in incentive payments to doctors and hospitals that have adopted the technology, according to the Government Accounting Office.

How much Medicare has paid out in higher codes related to digital billing is trickier to assess. In 2011, 57% of Medicare doctors were using an electronic health record, most for three years or less, according to an HHS survey. Officials expect those numbers to climb as doctors scramble to avoid Medicare payment cuts to those who fail to adopt the technology starting in 2015.

But Elson, the Cleveland clinic doctor, said that government officials may have oversold the benefits to Congress by failing to account for health care costs to rise from higher coding, at least in the short term.

“That’s a huge oversight if that whole issue wasn’t factored into the strategy,” Elson said.

Feds 'listen' for sounds of Medicare billing abuse

Baltimore,Maryland,United States — 2013-05-03T10:28:43-04:00

When news broke last September that some doctors and hospitals could be using electronic health records to overbill Medicare, top government officials swung into action.

U.S. Health and Human Services Secretary Kathleen Sebelius and Attorney General Eric Holder fired off a stern letter to five prominent medical groups threatening criminal prosecution for applying the technology to bill for more complex and costly services than merited — a practice is known as “upcoding.”

But the Centers for Medicare and Medicaid Services, which reports to Sebelius, is taking a much less confrontational stance as it opens a “listening session” this morning in Baltimore on the digital billing controversy.

The agency has lined up nearly a dozen health industry speakers representing mostly hospitals, doctors and the software industry to give their take on fair and honest billing and coding standards to impose as medicine wires up. No one at the meeting will represent patients or others who pay medical bills.

A CMS spokesman called the meeting "another step toward ensuring appropriate use" of electronic records, which are "critical to our efforts to reform the health care delivery system, lowering costs while improving the quality of care.”

The initial reaction from Sebelius and Holder came on the heels of the Center for Public Integrity’s “Cracking the Codes” series, a year-long investigation which showed that thousands of medical professionals billed sharply higher rates for treating seniors over the last decade — adding $11 billion or more to their fees. The findings suggested billing abuses could be worsening as doctors and hospitals switch from paper to electronic health records.

As the government has made good on plans to invest some $35 billion helping doctors and hospitals convert from paper to digital records, hundreds of technology firms have jumped into the market — often by promising doctors and hospitals that their gear can significantly boost the bottom line.

Most manufacturers and medical users contend the software merely allows them to more efficiently bill for their services, which in the past was often done by hand.

Critics argue, however, that with a flick of the wrist the devices can create a finely detailed medical file that’s often difficult for auditors to verify. Sebelius and Holder noted that in some cases, the machines can “cut and paste” information from previous doctor visits “in order to inflate what providers get paid.”

Sue Bowman, of the American Health Information Management Association, said her testimony in Baltimore would recommend research to figure out the precise role — if any — electronic records are playing in encouraging errant billing. “Like any tool (electronic health records) can help us be more efficient, but it can also be misused,” she said in an interview.

The Baltimore session takes place amid rumblings in Congress — at least among Republicans — that the multi-billion dollar initiative has veered off course.

Last month, six Republican U.S. Senators called for an overhaul of the plan, citing a range of concerns from patient privacy to stepped-up Medicare billing fraud.

Their report noted that many medical experts believe the digital systems can reduce health care costs and enhance medical quality by reducing wasteful testing and cutting down on harmful errors. But it also cited “troubling indications that some providers are using this technology to game the system, possibly to obtain payments to which they are not entitled.”

GOP senators call for overhaul of electronic health records program

2013-04-16T16:01:39-04:00

Six U.S. Senators are calling for an overhaul of the federal government’s $35 billion plan for doctors and hospitals to switch from paper to electronic medical records, citing concerns from patient privacy to possible Medicare billing fraud.

The report issued Tuesday by the half-dozen Republicans concedes that many lawmakers and medical experts believe the digital systems can reduce health care costs and improve the quality of care by reducing duplicative testing and cutting down on medical errors.

But the report asserts that the Obama administration’s push to use billions of dollars in stimulus money helping doctors and hospitals buy digital systems needs to be “recalibrated.”

“Now, nearly four years after the enactment…and after hundreds of pages of regulations implementing the program,” the document says, “we see evidence that the program is at risk of not achieving its goals and that $35 billion in taxpayer money is being spent ineffectively in the process.”

Among the report’s conclusions:

Despite expectations of cost savings, the digital systems may be increasing unnecessary medical tests and billings to Medicare.
The government has not demanded that the various digital systems be able to share medical information, a critical element to their success.
Few controls exist to prevent fraud and abuse. Many doctors and hospitals are receiving money by simply attesting that they are meeting required standards.
Procedures to protect the privacy of patient records are “lax and may jeopardize sensitive patient data.”
It remains unclear whether doctors and hospitals that have accepted stimulus funding will be able to maintain the systems without government money.

Some of the concerns cited were detailed by the Center for Public Integrity’s “Cracking the Codes” series last year. The year-long investigation found that thousands of medical professionals have steadily billed higher rates for treating seniors on Medicare over the last decade — adding $11 billion or more to their fees.

The Center’s probe uncovered a broad range of costly billing errors and abuses that have plagued Medicare for years—from confusion over how to pick proper payment codes to outright overcharges. The findings indicated that Medicare billing problems are worsening as doctors and hospitals switch to electronic health records.

Addressing the coding abuses the senators wrote: “However, early reports raise concerns that health IT may have actually accelerated the ordering of unnecessary care as well as increased billing for the same procedures.”

The administration’s Office of National Coordinator, which oversees the program, referred a request for comment on the report to the Centers for Medicare and Medicaid Services. A CMS official did not respond to written questions.

It’s unclear what steps administration officials are taking to combat fraud and abuse from errant billing, a process known as “upcoding.”

U.S. Health and Human Services Secretary Kathleen Sebelius and Attorney General Eric Holder last September notified five medical groups of their intention to ramp up investigative oversight of upcoding, including possible criminal prosecutions, but it is not clear if any follow-up actions are underway.

In addition, the Centers for Medicare and Medicare Services on May 3 is holding a summit in Baltimore to discuss electronic records systems, “the increase in code levels billed for some Medicare services, and appropriate coding in an increasingly electronic environment.”

The Congressional report, titled “REBOOT: Re-examining the Strategies Needed to Successfully Adopt Health IT” was released on Tuesday by Senators John Thune (R-S.D.), Lamar Alexander (R-Tenn.), Pat Roberts (R-Kan.), Richard Burr (R-N.C.), Tom Coburn (R-Okla.), and Mike Enzi (R-Wyo.).

Feds tighten scrutiny of health records

2012-12-14T14:38:00-05:00

Federal officials, in an apparent effort to clamp down on Medicare fraud and abuse, are tightening scrutiny of the growing numbers of doctors who rely on electronic medical records to bill for their services.

The Centers for Medicare and Medicaid Services has directed its auditors to look more closely to make sure the systems are properly documenting the services being paid for by the government. The new policy, announced in November, went into effect earlier this week.

The new directive was first reported by FierceEMR.

At issue is the impact electronic medical records can have on billing for doctor visits. Doctors must choose one of five escalating payment levels, known as “Evaluation and Management” codes that best reflect the amount of time spent with a patient as well as the complexity of the care.

Medical groups argue that computers make it easier for them to document all of the work they do, which leads to higher codes and fees. But officials worry that the software also can be manipulated to inflate bills — a practice known as “upcoding.”

The stakes are high. Medicare spent more than $33.5 billion in 2010 using these numeric codes for services ranging from routine doctor office visits to outpatient hospital or nursing home care. More than half the doctors billing Medicare were using electronic records in 2011, and that number has since grown further, officials said.

CMS officials would not comment directly on the new policy, but said their purpose was partly to remind doctors that they must document that all billed medical care was necessary. The directive discourages the use of check-off lists that the agency said gather information “primarily for reimbursement purposes.” These sorts of records “generally do not provide sufficient information to adequately show” that a doctor visit was necessary, CMS said.

Dr. Stephen R. Levinson, a Connecticut physician and expert on medical coding, said that “this is another way of saying that cloned documentation won’t be approved for payment,” said Levinson.

Michelle Dougherty, director of research and development for the American Health Information Management Association, said the new directive “will help shape billing practices.” She said it was an “important clarification” that has identified weaknesses in billing using the software in electronic records systems. The group, which boasts about 64,000 members, has strongly supported more guidance from the government about what is proper as medicine enters the digital era.

Dr. David Kibbe, a senior advisor to the American Academy of Family Physicians on digital medicine, said the digital records systems can be misused in order to promote higher billing. “I don't know how extensive a problem this represents,” he added. “Perhaps no one does.”

The Medicare billing process has come under heightened scrutiny in the wake of the Center’s "Cracking the Codes" series, published in September. The investigative project documented that thousands of medical professionals have steadily billed Medicare for more complex and costly health care over the past decade — adding $11 billion or more to their fees—and strongly suggested that the rapid growth in the use of electronic health records and billing software has contributed to the higher charges.

The Center’s year-long examination also identified a wide range of costly billing errors and abuses that have plagued Medicare for years—from confusion over how to pick proper payment codes to outright false charges.

Officials have pushed ahead with digitizing medicine without taking steps to minimize billing fraud. Insurance auditors criticized digital records systems as far back as 2006. That year Medicare contractor First Coast Service Options chided Connecticut doctors who “frequently over-documented” to justify higher billing codes.

In early 2009, federal officials announced they would pay billions of dollars to hospitals and doctors who agreed to buy electronic medical records and use them to improve the quality of health care. CMS has since provided about $4 billion to medical professionals who made the switch.

Yet late last year, the Department of Health and Human Services Office of Inspector General said its contractors had detected overbilling and would begin investigating “potentially improper payments” linked to electronic medical records. The office also advised doctors they could be held accountable if the codes they used didn’t “accurately reflect the services they provide.”

William Mahon, a Virginia expert on health care fraud, called the new CMS directive a “big deal.” He said federal officials have realized they must strike a balance between encouraging doctors to adopt the new technology and preventing them from using it to game the system. “This will create a lot of waves,” Mahon said.

Joe Ferro, a Florida billing consultant who serves on a panel on fraud and abuse for the trade association Healthcare Information and Management Systems Society, or HIMSS, said that one of the selling points for electronic health records was their ability to offer powerful tools for documenting medical care. Now the government appears to be restricting the use of the tools. “That’s the way I read this,” he said.

Many experts believe electronic health records hold great potential to keep people healthier and the shift from paper to digital medical records has enjoyed strong political support in Congress. Yet in recent months Republicans have begun to question the billions in tax dollars spent on the program. Funds for the conversion are part of the nearly $800 billion economic stimulus package passed by Congress in February 2009.

Medicare paid $3.6 billion for electronic health records but didn't verify quality goals were met

2012-11-29T10:33:32-05:00

In early 2009, federal officials announced they would pay billions of dollars to hospitals and doctors who agreed to buy electronic medical records and use them to improve the quality of health care.

But the Centers for Medicare and Medicaid Services has since paid out more than $3.6 billion to medical professionals who made the switch without verifying they are meeting the required quality goals, according to a new federal audit to be released today.

The Department of Health and Human Services Inspector General’s audit warns that the electronic records program is “vulnerable” to abuse and that officials should immediately “strengthen” oversight to protect tax dollars from being wasted.

Many experts believe electronic health records hold great potential to keep people healthier. To achieve that goal, government officials insisted that doctors and hospitals receiving payments meet a lengthy checklist of quality standards, ranging from writing prescriptions electronically to recording immunization and smoking histories.

Yet it’s not clear if that’s happening because nobody checks to make sure. In a response included in the audit report, CMS Acting Administrator Marilyn Tavenner said that requiring medical professionals to prove they are meeting the quality requirements prior to cutting them a check would be burdensome and “significantly delay payments.”

Tavenner said that the agency plans to conduct some audits in the future and would then take steps to recover any improper payments. But the Inspector General opined that CMS should verify compliance first to avoid having to track down miscreants later, a much maligned practice sometimes referred to as “pay and chase.”

A CMS spokesman declined to address the audit findings directly, but said: "Protecting taxpayer dollars is our top priority and we have implemented aggressive procedures to hold providers accountable."

The shift from paper to digital medical records has enjoyed strong political support in Congress, though how best to pay for it—and who deserves the money— has been controversial. Funds for the conversion are part of the nearly $800 billion economic stimulus package passed by Congress in February 2009.

Last year, the Center for Public Integrity reported that about half the first batch of federal dollars went to providers who had converted to the technology long before the stimulus program was announced. A spokesman for Sen. Tom Coburn, R-Okla., called that an “inexcusable waste of taxpayer dollars,” saying it “makes no sense” for the government to “pay physicians for systems they already have.”

Criticism from Republicans in Congress has mounted in the wake of the Center’s "Cracking the Codes" series published in September. The investigative project documented that thousands of medical professionals have steadily billed Medicare for more complex and costly health care over the past decade — adding $11 billion or more to their fees—and strongly suggested that the rapid growth in the use of electronic health records and billing software has contributed to the higher charges.

In an Oct. 4 letter to Health and Human Services Secretary Kathleen Sebilius, four Republican House leaders asked federal officials to suspend the payments, arguing the program may be wasting billions of tax dollars and doing little to improve the quality of medical care.

The four members wrote that the program has failed to ensure digital systems can share medical information, a key goal. Linking health systems by computer is expected to help doctors do a better job treating the sick by avoiding costly waste, medical errors and duplication of tests.

From May 2011 to August of this year, Medicare paid about $3.6 billion to 74,317 medical providers and 1,333 hospitals that made the switch to electronic records. Doctors can receive as much as $44,000 each, while hospitals get a minimum of $2 million. Costs are expected to rise to $6.6 billion over the next four years.

According to the Inspector General’s audit, CMS lacks the tools to check whether many of the medical quality measures are being met. For instance, auditors said that CMS had no way to know whether doctors and hospitals were writing the required numbers of prescriptions electronically.

“CMS does not verify the accuracy of professionals’ and hospitals’ self-reported information prior to payment because data necessary for verifications are not readily available,” auditors wrote.

The Inspector General also noted that some of the problem may stem from software systems that can’t produce accurate quality assessments.

The report cited as an example a “report to customers” issued in February by GE Healthcare, a manufacturer of digital records systems. The notice said that two of its products could produce “inaccurate” quality reports and that it had notified CMS and its customers, and was working to correct the problem.

The new report said the Inspector General has audits underway to find out if some medical providers have been gaming the system. It did not say when those audits would be completed.

Hospitals request government help in curbing possible billing abuses

2012-11-15T13:01:24-05:00

The nation’s largest hospital group has asked federal officials to create new Medicare pay scales for emergency rooms and outpatient clinics and determine if electronic health records are prompting hospitals to overcharge the federal program.

The American Hospital Association, which represents about 5,000 hospitals nationwide, also signaled that it wants to work with law enforcement officials to write Medicare billing standards that keep its members on the right side of the law.

Hospitals want to ensure that they “receive only the payment to which they are entitled,” Rich Umbdenstock, the group’s president, wrote in a letter dated Nov. 12. The letter was sent to Department of Health and Human Services Secretary Kathleen Sebelius and Attorney General Eric Holder.

“Hospitals share the administration’s goal of a health system that offers high-quality, affordable care and work hard to ensure billing is correct the first time,” Umbdenstock wrote.

The industry has come under fire in the wake of the Center for Public Integrity’s “Cracking the Codes” series, which found that thousands of medical professionals have steadily billed higher rates for treating seniors on Medicare over the last decade — adding $11 billion or more to their fees. The investigation suggested that Medicare billing errors and abuses have been worsening as doctors and hospitals switch to electronic health records.

Medicare regulators acknowledge they are struggling to rein in a surge of aggressive — and potentially expensive — billing by doctors and hospitals linked in some cases to the rapid proliferation of electronic medical records and billing software. A variety of federal reports and whistleblower suits also reflect these concerns.

The center’s analysis of Medicare billing data found that between 2001 and 2008, hospitals dramatically increased their Medicare billing for emergency room care, adding more than $1 billion in costs to taxpayers. Use of the top two most expensive billing codes nearly doubled, from 25 percent to 45 percent of all claims, during that time. In many cases, patients were treated for seemingly minor injuries and complaints in the emergency room.

Hospitals argue that some of the possible overbilling lies in the government’s repeated failure to establish strict billing guidelines for hospitals. As a result, hospitals have since 2000 been using a set of codes designed for physician billing —a system open to broad interpretation by hospitals. The letter suggests AHA should work with the Centers for Medicare and Medicaid Services to “establish a set of national hospital…guidelines.”

Although the Obama administration in early 2009 laid plans for spending as much as $30 billion helping doctors and hospitals purchase electronic health records, little effort was spent making sure that the systems billed accurately.

“We recommend that HHS take immediate steps to develop mechanisms to ensure these new technologies are consistent with existing coding conventions,” the hospital association letter said.

The hospital association also called for HHS to develop a code of ethics for software manufacturers and make sure that the systems can’t be used for “unlawful financial gain.”

Federal officials acknowledged in September that some doctors and hospitals may be cheating Medicare by using electronic health records to improperly bill the health plan for more complex and costly services than they actually deliver — a practice known as “upcoding.”

HHS Secretary Sebelius and Attorney General Eric Holder on Sept. 24 warned five hospital and medical groups of their intention to ramp up investigative oversight, including possible criminal prosecutions, of upcoding.

The stimulus-funded plan to help finance the purchase of digital medical records by doctors and hospitals to improve the quality of medical care has enjoyed widespread political support in the past. But it has recently come under fire from Republicans.

Some are concerned primarily about the wisdom of spending billions on the projects, while others have raised questions about the safety of the devices. Critics worry that the software glitches in electronic medical records can contribute to medical errors.

U.S. Rep. Renee Ellmers, R-N.C, who chairs the Committee on Small Business healthcare and technology subcommittee, expressed concerns about safety in a Nov. 14 letter to HHS Secretary Sebelius. She noted that a year ago the Institute of Medicine had urged HHS to develop a plan to minimize patient safety risks, but that the plan has not yet been provided to Congress.

IMPACT: HHS IG pledges focus on Medicare billing abuse involving electronic records

2012-10-24T13:35:33-04:00

Federal officials will focus on possible Medicare overbilling by doctors and hospitals that use electronic medical records, a top government fraud investigator said Wednesday, in announcing investigative priorities for the coming year.

“Electronic medical records can improve quality of care and efficiency and help us uncover cases of fraud and abuse. At the same time, we must guard against the use of electronic records to cover up crime,” said Daniel Levinson, the Department of Health and Human Services inspector general, in a video presentation.

The video posted on the agency’s website on Wednesday summarized the inspector general’s “work plan,” for 2013, a listing of Medicare and Medicaid fraud fighting efforts the agency plans to emphasize.

The plan states that the agency “will identify fraud and abuse vulnerabilities in electronic health records (EHR) systems as articulated in literature and by experts to determine how certified EHR systems address these vulnerabilities.” The agency did not provide further details of its review.

The economics of switching to electronic health records is receiving new scrutiny in the wake of the Center for Public Integrity’s “Cracking the Codes” series, which found that thousands of medical professionals have steadily billed higher rates for treating seniors on Medicare over the last decade — adding $11 billion or more to their fees. The investigation suggested that Medicare billing errors and abuses are worsening as doctors and hospitals switch to electronic health records. A similar report was subsequently published by the New York Times.

Earlier this month, Dr. Farzad Mostashari, the Obama administration’s National Coordinator for Health Information Technology, said he would ask a panel of policy experts to examine the billing controversy. Mostashari said he wants to find out if the digital systems are triggering higher billing codes by allowing doctors to cut and paste records from prior encounters with a patient, a practice known as “cloning.”

Many experts say that this process can raise the size of a patient’s bill, even though it reflects little in the way of added or necessary medical service.

Dr. Stephen R. Levinson, a Connecticut physician and expert on medical coding and billing issues, called the inspector general’s focus a “warning shot across the bow” for physicians. While Medicare requires an efficient auditing effort, Levinson also criticized the “punitive nature” of the audits, which are “turning physicians off.”

Other critics have noted that the software itself may encourage medical professionals to bill for more complex and costly services than they actually deliver — a practice known as “upcoding.”

Republicans in Congress also are expressing concern about the government’s program to spend more than $30 billion helping doctors and hospital purchase digital record keeping systems—and to use them as a means to improve the quality of medical care.

In an Oct. 17 letter to HHS Secretary Kathleen Sebelius, four Republican senators raised questions about whether electronic health records are hiking the number of medical tests doctors ordered as well as boosting billing and “thereby [increasing] the overall costs of the program” to taxpayers.

IMPACT: Administration official asks for Medicare billing review

2012-11-07T23:52:00-05:00

The nation’s top health information technology official has launched an internal review to determine if electronic health records are prompting some doctors and hospitals to overbill Medicare.

Dr. Farzad Mostashari, the Obama administration’s National Coordinator for Health Information Technology, said in an interview Monday afternoon that his policy-setting committee of experts would examine the issue and make recommendations on how to address it.

It is the second government action in the wake of the Center for Public Integrity’s “Cracking the Codes” series, which found that thousands of medical professionals have steadily billed higher rates for treating seniors on Medicare over the last decade — adding $11 billion or more to their fees.

The Center’s year-long investigation, published in September, suggested that Medicare billing errors and abuses are worsening as doctors and hospitals switch to electronic health records. A similar report was subsequently published by the New York Times.

Mostashari said he wants to find out if the digital systems are triggering higher billing codes by allowing doctors to cut and paste records from prior encounters with a patient, a practice known as “cloning.” Many experts say that this process can raise the size of a patient’s bill, even though it reflects little in the way of added or necessary medical service.

“If we are just copying the same information over and over, that’s not good medicine,” Mostashari said. “I’ve asked the policy committee to provide guidance on that.”

Mostshari also said that he wanted to determine if some software functions that do little more than prompt doctors to inflate the size of their bills “should be off limits.”

In a Sept. 24 letter, Department of Health and Human Services Secretary Kathleen Sebelius and Attorney General Eric Holder warned five hospital and medical groups of their intent to ramp up investigative oversight, including possible criminal prosecutions, of doctors and hospitals that use electronic health records to improperly bill for more complex and costly services than they actually deliver — a practice known as “upcoding.”

In response, the American Hospital Association and other groups that received the letter have sought to shift blame to the federal government, which the groups say has done little to set guidelines for acceptable billing tactics, particularly in hospital emergency rooms.

Meanwhile, the 64,000 member American Health Information Management Association has announced it will hold an industry summit in Chicago early next month to press for standard electronic health record guidelines that discourage billing fraud and abuse.

The group said in a statement earlier this month that “recent concerns” that electronic health records “could lead to fraud further highlights the need to establish these standards.”

“We urge the government to truly investigate the depth of the recently reported problems so we can determine the scope of the issue and take steps to fix it,” said Lynne Thomas Gordon, the group’s chief executive officer.

Lydia Washington, an association executive who is chairing the conference, said she hopes the group’s panel of experts will “suggest policy and standards that are needed” both to prevent billing fraud and assure patient safety and data integrity.

President George W. Bush in 2004 set the goal of creating a digital medical record for every American within ten years. In early 2009, the Obama administration added billions of dollars in stimulus funds in the hopes that electronic health records would both enhance the quality of medical care and hold costs in check.

In all, the Obama administration expects to spend more than $30 billion helping doctors and hospitals purchase the gear and use it to improve health care. More than half the nation’s hospitals have received some payments, and so far more than $10 billion has been spent. Just over half the doctors now billing Medicare are using digital records.

In his interview with the Center, Mostashari stressed that doctors and hospitals must do more than simply buy digital systems to collect stimulus dollars. Medical professionals must gradually meet a series of medical quality standards that are designed to “keep people healthier,” he said. Many medical leaders also want to use digital records to mine data from millions of patients in the hope of discovering better ways to treat disease and cut costs.

But the push for better quality medicine is facing off against an aggressive sales push by technology companies, which typically stress that their products can significantly boost the bottom line. One company predicts an increase of one Medicare coding level for each patient visit to the doctor, potentially adding $225,000 in new revenue in a year, for instance.

Federal officials lack a system to monitor the accuracy of hundreds of billing and medical software packages in use across the country. That shortcoming caught the eye of the American Medical Association, which helped develop the billing codes and favors stricter government standards. In May, the doctors’ group urged officials to require testing that assures digital devices bill accurately and “do not facilitate upcoding.”

The information technology industry generally agrees that computerized medical records can lead to higher costs. But it argues that the software makes it easier for doctors and hospitals to more efficiently document all of the work they do—which they often failed to do on by hand on paper.

While the drive to digitize medicine has received strong support from both political parties in recent years, some cracks have begun to appear.

In an Oct. 4 letter, four Republican House members urged HHS Secretary Sebilius to suspend government payments to hospitals and doctors, arguing the program may be wasting tax dollars and doing little to improve the quality of medical care. They argued that tax dollars spent so far have failed to ensure that the digital systems can share medical information, a key goal. Linking health systems by computer—called interoperability—is expected to help doctors avoid costly duplication of tests and medical errors.

The letter was signed by Ways and Means chairman Dave Camp, R-Mich., Energy and Commerce Chairman Fred Upton, D-Mich., Ways and Means health subcommittee chairman Joe Pitts, R-Pa. and energy health subcommittee chair Wally Herger, R-Calif.

The Ways and Means Committee added in a statement: “Recent reports revealed that the EHR (electronic health records) program may be leading to higher Medicare spending and greater inefficiencies while doing little if anything to improve health outcomes.”

The industry’s trade association, the Healthcare Information and Management Systems Society, opposed the suspension. It said in a statement that “significant progress has been made” and that “widespread interoperability is within reach.”

Medicare, which covers 49 million elderly and disabled people and spent more than $500 billion in 2011, has emerged as a presidential campaign issue, with both Barack Obama and Mitt Romney promising to tame its spending growth while protecting seniors. But there’s been little talk about the impact of billing and coding practices in driving up costs, and what to do about them.