Medicare from The Center for Public Integrity

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.).

Electronic medical records probed for over-billing

2013-02-14T10:59:21-05:00

The Obama administration is forging ahead with a multi-billion dollar plan to shift from paper to electronic medical records, despite continuing concerns the program may be prompting some doctors and hospitals to improperly bill higher fees to Medicare. An investigation into those billing questions — which convened a hearing Wednesday — has yet to produce much in the way of results, and critics are questioning the seriousness of the efforts.

Some digital records software marketed to medical professionals may be encouraging use of elevated billing codes that pay fatter fees, according to the nation’s top health information technology official. That could undermine cost savings the government expects to achieve by adopting the digital systems.

“There is a lot we don’t know about that,” Farzad Mostashari, the National Coordinator for Health Information Technology, said Wednesday at a hearing of policy experts studying the billing issue. “We don’t know if the shift (in higher billing) reflects appropriate coding or inappropriate coding.” He added: “We don’t know if this leads to an increase in costs … or has other impacts.”

In October, Mostashari directed the panel of experts to investigate whether the digital systems allow doctors to cut and paste records from prior encounters with a patient, a practice known as “cloning.” Many experts say 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.

Mostashari’s called for the review 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.

Mostashari said at the start of Wednesday’s daylong hearing that it is “pretty clear” that if digital health records are “documenting care that didn’t occur, that’s not just fraud, it’s really dangerous medicine.”

But the policy panel spent less than an hour listening to four witnesses discuss the billing issue, suggesting that officials aren’t likely to quickly resolve concerns about potential fraud and abuse even as they commit up to $30 billion in government funding to encourage doctors and hospitals to purchase electronic records.

Ivy Baer, representing the Association of American Medical Colleges, recommended in her testimony that use of the “copy/paste” functions be limited and that doctors only document services “pertinent” to treating the patient’s current medical problem.

Michelle Dougherty, director of research and development from the American Health Information Management Association, said in prepared testimony that digital records can produce “volumes of redundant data” that are “very difficult to use and understand.” She said policy makers need to be aware of “red flags” that could produce inaccurate records — for instance, software that allows doctors with a single mouse click to check a box indicating that all body systems were examined and found to be normal, even though that not all were actually examined. Since doctors are compensated for the total amount of service they provide, these systems can improperly generate higher fees.

Dougherty also said that “cloned” documentation produced by cutting and pasting information from previous patient visits “continues to be a significant problem” that creates “unnecessary redundancy and at times inaccurate information.”

There was little talk of how wiring up medicine might raise doctor billings when 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.

At the hearing’s conclusion panel chair Paul Tang, of the Palo Alto Medical Foundation in California, said that the group had little information about whether digital records improperly contributed to rising health care costs.

“We don’t have any data, positive or negative, that would be useful,” he said.

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.

But critics of the initiative have claimed for years that the office of national coordinator (ONC) has been more aggressive as a cheerleader for the technology industry than regulator and steward of billions of dollars in taxpayer money.

Donald W. Simborg, a California physician who participated in two government groups that studied the billing fraud issue, said on Wednesday that Mostashari’s review relies too heavily on panel members with close ties to the burgeoning health information technology industry. He questioned its effectiveness in determining if the digital equipment contributes to Medicare billing fraud.

Simborg likened the situation to “asking the NRA to investigate gun violence.” Simborg noted that the policy committee consists of strong supporters of electronic health records “who could hardly provide an unbiased and objective view on this.”

Ross Koppel, a sociology professor at the University of Pennsylvania, said that officials face a difficult balance in making sure that the software programs accurately reflect the services a doctor rendered and are not just maximizing payments.

In a brief interview on Wednesday, Mostashari bristled at the suggestion that his office is doing little to ensure that digital medical records don’t take taxpayers for a ride. “This is just the beginning of the conversation,” he said. An ONC official said that the Centers for Medicare & Medicaid Services plans to investigate the “upcoding” issue in regard to digital records, but could provide no details. The ONC panel is set to resume its deliberations today.

Criticism of the initiative also has come from Republicans in Congress concerned about its costs and from within the federal government.

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 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 House members have yet to get a response, according to a spokesperson.

The HHS Office of Inspector General also is investigating what it called “fraud vulnerabilities” related to use of electronic health records. The report is “currently in process” and is expected to be released sometime this year, according to agency spokesman Donald White.

While many experts believe that digital records will eventually prove their worth and help doctors keep people healthier, the government program has spawned an aggressive sales push by technology companies, which typically stress that their products can significantly boost the bottom line for doctors and hospitals. 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 any 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.

Hospital 'facility fees' boosting medical bills, and not just for hospital care

2012-12-23T10:41:34-05:00

After Vermont hospitals started buying up the medical practices of local physicians, state Sen. Kevin Mullin of Rutland, began hearing complaints that prices some patients were paying for routine medical care had soared.

One family accustomed to paying about $120 in out-of-pocket costs for doctor visits and other medical services was outraged when they ended up forking over more than $1,000 for similar visits, Mullin said, mostly for seeing doctors whose practices had been bought out by a local hospital.

“The only thing that was different was the office was [now] hospital-owned,” said Mullin, a Republican. “All of a sudden everything was charged differently.”

The root of these increases are controversial charges known as “facility fees,” and they are routinely tacked on to patients’ bills not just for services actually provided in hospitals, but also by outpatient care centers and doctors’ offices simply because they’ve been purchased by hospital-based health care systems. Hospitals argue they can’t afford to keep the doors open without facility fees.

Hospitals have billed them at least since 2000 when Medicare set billing standards for doctors employed by hospitals, and private insurers went along. Since then, the fees have grown increasingly common, costly and controversial. Critics argue that the billing practice needlessly adds billions of dollars to the nation’s ballooning health care costs and needs to be revamped. Some private insurers have protested the fees and in some cases even refused to pay them, which can add to the patient’s share of the bill. But getting rid of the charges — or even requiring medical offices to post facility fees — has proved daunting, reformers say.

Mullin introduced legislation earlier this year to ban the practice in his state, only to see the bill “watered down” to simply require that the fees be disclosed in advance. The state Senate approved the amended bill, but it failed to pass in the House, even though the state hospital association supported it.

Now, as budget cutters on Capitol Hill drill into Medicare payment policies in hopes of finding new veins of cost savings, the fairness of these fees is facing new scrutiny — including from the federal commission that advises Congress on Medicare spending policy. Hospitals are fighting back and have enlisted support from the Service Employees International Union, which represents more than one million nurses, doctors and other health care workers.

The stakes are high indeed. A decision by Medicare to quit allowing the fees would almost certainly lead private insurers to do the same across the country and all but put an end to them.

“This is low hanging fruit [for cutting costs],” said Dr. Kevin Kavanagh, a retired physician who heads HealthWatch USA, a patient advocacy group based in Kentucky.

Tom Nickels, the American Hospital Association’s vice president for federal relations in Washington, strongly defends the fees. But he agrees that the issue “is clearly in play” as lawmakers scramble to slash health care costs in coming months.

Fees for more than hospital care

Facility fees are a routine part of any hospital bill. But patients can also be hit with facility fees when they seek care from:

· Private physicians who have sold their medical practices to a hospital and stayed on as employees. More than half the nation’s doctors now work on salary. When that happens, patients may suddenly get a bill from the doctor and a separate one from the hospital that owns the office. Some prestigious health systems, such as the Cleveland Clinic, also put their doctors on salary and charge a facility fee for office visits.

· Outpatient medical centers that are part of a hospital-owned network, including centers treating serious diseases such as cancer or operating specialized clinics for the elderly.

· Urgent care centers set up by hospitals largely to treat relatively minor ailments. Thousands of these centers exist nationwide, about one third believed to be hospital-owned. Some don’t tell patients in advance about facility fees.

· Outpatient surgery centers where doctors perform routine operations. The centers can charge facility fees that run into the thousands of dollars. As deductibles rise on some insurance policies, patients may not realize they can get stuck with paying larger hunks of these bills than in the past.

The fees date back to April 2000, when Medicare clarified its policy for billing by health groups that hired physicians. At the time, CMS officials acknowledged that critics wanted the agency to forbid hospitals from buying up medical practices for the purpose of converting them to hospital “facilities” that could tender higher fees for the same services.

In a response published at the time in the Federal Register, CMS said it understood the concerns, but lacked the authority to “prohibit this practice.”

The issue popped up last year when the House passed legislation that extended the payroll tax holiday and unemployment compensation benefits. Tucked into the “Middle Class Tax Relief and Job Creation Act” was a provision to cut about $6.8 billion in Medicare costs by targeting doctor services in hospital-owned offices.

The hospital industry fought back hard — and ultimately successfully. The cuts never passed the Senate and were not in the final conference committee bill signed by President Obama in February.

Making the case

The health care industry argues that prices must be based at least in part on where a medical service is rendered. That means hospitals, which have high overhead and substantial costs for equipment, technology and personnel, expect to collect more money for the same service than at a doctor’s office. Similarly, outpatient centers impose fees to cover the cost of supplies, equipment and space and in most states aren’t obligated to tell patients about the fees in advance so they can shop around.

The American Hospital Association argues that phasing out the payments “threatens patient access to care.” The group said that hospitals tend to treat “sicker, more complex patients” and are better equipped than doctors’ offices and should be paid more. Cutting the fees would impact low-income and chronically ill people who depend on networks of hospital-based outpatient clinics, the group said.

Hospitals add that charging facility fees for medical care in doctors’ offices or care centers they own helps spread the cost of keeping expensive units, such as emergency rooms, open round the clock, and helps them absorb losses from patients who can’t pay their bills.

Some patients clearly disagree. Like Linda Romaniello, of Davie, Fla. After her 8-year-old daughter was nipped by a dog, she took her to a local urgent care center and left with a bill for more than $500. The child was treated with antibiotic gel and a simple bandage during her 15-minute visit, according to the South Florida Sun Sentinel, which reported on the incident last year.

Because the center was owned by Baptist Health South Florida, the hospital-based system slapped a $275 facility fee on top of the $233 doctor’s bill. The woman’s insurance refused to pay half the fee and Romaniello argued she would have gone elsewhere had she known about the extra fees beforehand. Florida has since passed a law requiring urgent care centers to post prices and all its clinics do so, a Baptist spokesperson said.

Dr. Marc Salzberg, president of the Urgent Care Association of America, said these fees “should be transparent to the consumer” and that people should know about them “before they get care.” Salzberg says his group believes there are between 6,000 and 9,000 of these centers nationwide, 30 percent to 40 percent of them hospital-owned.

Connie Peterson, 67, a retired graphics designer who lives in Iowa City, Iowa, also experienced the sting of facility fees. She was aghast after receiving a bill for nearly $26,000 in facility fees from an outpatient surgery center where she spent less than an hour.

“I was livid when I received the bill,” said Peterson. She spent months trying to get an explanation that made sense to her. “All I wanted was an itemized bill to let me know exactly what I’m paying for. I never got that,” she said.

Peterson had three procedures to remove nasal polyps during her 45-minute stay at the Iowa City Ambulatory Surgical Center in April. The center billed more than $8,000 in facility fees for each one, bringing the total to $25,872. She had to pay $1,086 of that.

In a letter responding to her complaint, the center said its rates were in accordance with national standards. Unlike hospitals, these centers don’t itemize charges, but bill all inclusive rates which include facility fees.

As more hospital systems set up specialty medical practices, there’s been some movement on requiring more disclosure, but it’s still not clear how many of these hospitals tell patients up front that they could be paying higher rates as a result.

“Hospitals are not really interested in being candid about what they are doing. They tell you that you will get two bills instead of one,” said John W. Phillips, a Seattle lawyer who has filed class action lawsuits seeking to make hospitals disclose the fees — and in ways people can easily understand. In one case he filed, a Seattle hospital agreed to refund the fees and post a price schedule in future.

Some hospitals do so already. New patients at the Senior Health Clinic at North Hills Hospital in North Richland, Texas, receive a letter advising that as an “outpatient department” of the hospital the center will add a facility fee, which “covers the cost of the clinic staff, supplies, equipment and space.” Similarly, Sarasota Memorial Hospital in Florida posts a notice on its website that advises those who schedule clinic visits that they will be charged a fee.

Responding to criticism, hospitals are supporting a bill in Congress that would require more disclosure so that patients can compare prices.

The Health Care Price Transparency Promotion Act of 2012 (HR 5800) introduced in May by U.S. Reps. Michael C. Burgess, R-Texas, and Texas Democrat Gene Green, directs states to pass laws requiring that hospitals notify patients in advance of out-of-pocket costs. It also orders up a study within 18 months to recommend ways in which to make information available to patients in an easy- to-understand format.

More than 30 states already require some degree of disclosure, though critics complain that what patients see often is difficult to compare or simply too dense for many people to decipher.

“Consumers ought to be told what they will be required to pay,” said Nickels, the hospital association’s lobbyist.

The battle is joined

Meantime, though, the broader fight over facility fees continues, albeit a bit under the radar. The Medicare Payment Advisory Commission, or MedPAC, which advises Congress, stirred up the debate in January when it recommended that the health plan for seniors pay for visits with doctors at the same rate, no matter where they occurred, and regardless of whether the doctor practices independently or is employed by a hospital.

The panel noted that hospitals buying up medical practices in recent years have been tacking on facility fees that increase the patient’s bill even when the doctor is working from the very same office. In March, the commission recommended standardizing payments over three years, sparking an outcry from the hospital industry.

MedPAC said that eliminating facility fees that Medicare pays for doctor services would reduce Medicare spending from between $1 billion and $5 billion over five years. The current system fails to create “clear benefits for patients,” the commission said, adding: “Medicare should be discouraging, not encouraging, expenditures by health care providers that do not benefit patients.”

The current system also can leave elderly patients liable for a heftier chunk of the bill. The commission noted that in 2011 Medicare paid doctors $68.97 for a 15-minute office visit, of which the patient was responsible for a co-payment of $13.79. For that same service in a hospital-owned medical practice, Medicare paid a total of $124.40. In that case, the patient co-payment was $24.88.

“I don’t see a policy justification for why a physician’s time is worth more as a hospital employee,” said Jeff Goldsmith, a Virginia health care consultant. Goldsmith said Medicare is paying a “subsidy” that is “encouraging hospitals to buy up practices and dramatically increase the cost of their services.”

Dr. Robert Berenson, a former MedPAC vice-chairman, said the proposed changes would lead to “major league savings” and could prove tempting if Congress “gets serious about reducing Medicare spending.” But Berenson conceded that hospitals opposing the changes are “pretty damn powerful.”

A September letter sent to members of Congress by five hospital groups said the changes proposed by MedPAC would reduce payments to hospitals by 71 percent for ten common outpatient visits. “To pay a hospital — with our emergency department, surgical, nursing, emergency transportation and myriad other costs — the same as a physician office does not make sense,” the letter stated.

Those five hospital groups have plenty of muscle on Capitol Hill. The five organizations together spent at least $22 million in political contributions and lobbying costs this year, according to the Center for Responsive Politics.

Nickels, the hospital association lobbyist, said Congress is looking for ways to finance the so-called “doctor fix,” an annual ritual passed to prevent Medicare payments to physicians from plummeting by 27 per cent, as required by a 1997 law. Hospitals are worried because adopting MedPAC’s recommendations could bring in enough cash to partly pay for the ‘fix.’

To complicate matters further, nearly two dozen prestigious health systems, such as the Cleveland Clinic, which employs physicians and charges facility fees for services rendered in their offices, also are fighting to maintain the status quo. These systems often have been credited with offering higher quality care and for keeping costs in check. To penalize them would be a “giant step backward in [health] delivery system reform,” Dr. J. James Rohack, co-chair of the 19-member Integrated Health Care Coalition, wrote in a July letter to the House Ways and Means Committee.

The health groups also have some powerful allies. In a Dec. 4 full-page ad in The Washington Post, the service employees union argued that hospital-based clinics “have provided the primary — and sometimes only — access to physicians for the nation’s underserved rural and urban communities.” Cutting back the fees “will force these clinics to close,” the ad states.

But MedPAC hasn’t shown any signs of giving up. Last month, the commission suggested that Medicare also pay a single rate for a variety of medical procedures, regardless of the site. The commission staff noted that Medicare pays 90 percent more for a laser eye procedure done in a hospital outpatient department than in a doctor’s office because of added facility fees. The commission is set to vote on a final recommendation in January, though it’s unclear whether Congress would support such a change.

Hospitals have argued that such cuts would impair their ability to keep staff on hand for emergency rooms and “disaster readiness.” In a letter sent to the Medicare advisory panel in late October, Rick Pollack, executive vice president of the hospital association, cited the “threat of terrorist attacks, recent mass shootings, the aftermath of Hurricane Katrina and the devastating tornados over the past year.”

But adopting what MedPAC calls a “site-neutral” payment policy would save Medicare $900 million over the course of a year and seniors would save $250 million more in out of pocket costs, according to the commission.

The controversy is erupting as the hospital industry faces tighter scrutiny over billing matters. In September, the Center for Public Integrity series Cracking the Codes documented how hospital emergency rooms have dramatically increased Medicare billings for facility fees and doctor services, adding more than $1 billion in costs to taxpayers over the past decade. Top government officials, including Attorney General Eric Holder, have since threatened possible criminal prosecution for doctors and hospitals that bill for more complex and costly services than they provided.

Insurers are getting more combative, too. Dolores Mitchell, who heads the state of Massachusetts Group Insurance Commission, said she is encouraging health plans and patients to resist paying higher prices for the same services.

“If the nature of the visit is identical, it shouldn’t cost more money,” said Mitchell, who oversees health plans that cover more than 400,000 government employees and their families. “It shouldn’t make any difference.”

Mitchell said that the fees may be justified when patients are treated in a room that requires a sterile atmosphere or other high-tech hospital equipment. “But where it’s simply an office visit, to charge a facility fee is inappropriate,” she said. But she added: “Once you get a revenue stream, it’s very hard to turn off the spigot.”

Whether Congress will cut off these payments is not yet clear. Former MedPac vice-chairman Berenson said that any policy change would need to account for losses hospitals incur to keep essential services open. That might happen, he said, if Congress considers the matter as part of a deal on taxes and entitlement programs such as Medicare.

“If not part of ‘entitlement reform,’ I think prospects for congressional adoption are less,” Berenson said.

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 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 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.

Top House Republicans demand suspension of electronic medical records program

2012-10-05T12:11:27-04:00

Four Republican House leaders want federal officials to suspend payments to hospitals and doctors who switch from paper to electronic health records, arguing the program may be wasting billions of tax dollars and doing little to improve the quality of medical care.

In an Oct. 4 letter to Health and Human Services Secretary Kathleen Sebilius, they suggested that $10 billion spent so far on the program has failed to ensure that the 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.

The letter urges Sebilius to “change the course of direction” of the incentive program to require that doctors and hospitals receiving tax money get digital systems that can “talk with one another.” Failure to do so, the letter says, will result in a “less efficient system that squanders taxpayer dollars and does little, if anything, to improve outcomes for Medicare.” The letter urges Sebelius to suspend payments under the program until rules are written requiring that the systems share information.

The letter is 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 Office of National Coordinator for Health Information Technology, which runs the incentive program, did not respond to a request for comment on the letter on Friday.

The harsh criticism from Congress is unusual given the strong support that digitizing medicine has received from both political parties in recent years.

President George W. Bush in 2004 first set the goal of creating a digital medical record for every American within ten years. But in early 2009 the Obama administration championed using stimulus money to achieve the goal, hoping 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 to help doctors and hospitals purchase the gear and use it to improve health care. More than half the nation’s hospitals have received some payments from the program, and so far more than $10 billion has been spent. About half the doctors now billing Medicare are using digital records.

Many medical leaders also hope digital records revolutionize the nation’s health care delivery. 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, which requires computers to link to each other. The initiative also is backed by a broad coalition of groups, from an elite corps of technology experts to organized labor.

But the congressmen also noted emerging concerns that so far the digital medical revolution has prompted doctors and hospitals to bill higher charges to Medicare.

The Center for Public Integrity’s “Cracking the Codes” series, published last month, 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 strongly 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.

“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 House Ways and Means Committee said in a statement.

Obama administration officials acknowledged the problem for the first time last month, asserting 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.”

The Center for Public Integrity investigation found that digital medical and billing equipment can with the touch of a button create an exquisitely detailed medical file and thus present a challenge to government auditors concerned about preventing billing abuse and fraud.

But in the rush to get the program off the ground federal officials failed to impose strict controls over billing software, despite warnings from several prominent medical fraud authorities to do so. Now officials admit they lack a system to monitor the hundreds of billing and medical software packages in use across the country to prevent overbilling.

Most manufacturers and medical professionals using the gear contend that it merely allows them to more efficiently bill for their services, which in the past was often done by hand.

Medicare’s shaky finances also have 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.