Hospitals to Feds: EHRs Mean More Accurate Coding

October 03, 2012

October 3, 2012 — The hospital industry has responded to a recent warning from the Obama administration about misusing electronic health records (EHRs) to overbill Medicare, and it's not exactly a guilty plea.

Don't call it cheating, the providers contend, if EHR technology allows us to more accurately document services that were underbilled in the past.

Although decrying bona fide EHR-enabled fraud in their written replies to the Obama administration, several hospital groups asked it to issue clearer billing guidelines so that providers would not inadvertently get in trouble.

Meanwhile, a former head of the Centers for Medicare and Medicaid Services (CMS) maintains that the controversy over EHR-empowered billing has less to do with fraud and more to do with the inherent flaws of a fee-for-service system.

The administration's warning letter, issued by Health and Human Services (HHS) Secretary Kathleen Sebelius and US Attorney General Eric Holder Jr, comes in the wake of recent media scrutiny of how EHRs — promoted by the federal government — have contributed to a surge in payments to Medicare providers.

On September 24, Sebelius and Holder sent a letter to the American Hospital Association (AHA), 3 other hospital groups, and the Association of American Medical Colleges stating that "law enforcement will take appropriate steps to pursue healthcare providers who misuse electronic health records." The administration officials pointed to the practice of "cloning" unedited patient data from an older visit into a new-visit entry and otherwise using the EHR technology to justify higher-level billing codes than warranted, an illegal tactic called upcoding.

One way in which some EHR programs enable upcoding is by automatically calculating the level of an evaluation and management (E/M) code for a patient visit on the basis of what the physician does, and then informing him or her on-screen what extra elements of, say, a patient history or physical exam would justify a higher-level, higher-paying code.

Billing codes and their associated payments reflect the intensity of care and the severity of the patient's condition as documented in the patient record. In the paper-chart era, busy physicians who failed to write down everything that happened in the patient encounter often undercoded it on the bill, leaving money on the table. EHRs make it easier for physicians to document their work more thoroughly, but the Obama administration worries that the technology also is automating dishonesty.

Media Reported on Suspicious Coding Trends

The HHS Office of Inspector General (OIG) has been tracking the issue of EHRs and overbilling for some time. In its workplan for 2012, the OIG announced that it would investigate how EHRs figure into inflated billing codes for E/M services. As reported by Medscape Medical News in July, an OIG study revealed that Medicare outlays for E/M services had increased 48% from 2001 to 2010, outpacing growth as a whole for Medicare Part B spending. Physicians shifted toward higher-level E/M codes in all categories, including patient visits in the emergency department (ED), the nursing home, and the physician's office. "E/M services have been vulnerable to fraud and abuse," the study noted.

In early September, the nonprofit Center for Public Integrity (CPI) published an investigative series titled "Cracking the Codes" that examined how questionable coding and billing practices, sometimes facilitated by EHRs, were netting Medicare providers billions of extra dollars. Among other things, CPI reported that ED physicians submitted the highest E/M code in their category — 99285 — for 44% of patients in 2008 compared with 27% in 2001.

Following in the tracks of the CPI, the New York Times published a story on September 21 titled "Medicare Bills Rise as Records Turn Electronic" that revealed how ED charges jumped dramatically at some hospitals once they implemented an EHR system.

Three days later, as if enough were enough, Sebelius and Holder issued their warning letter to the AHA and the other groups.

Hospitals Have Their Say

In a letter back to Sebelius and Holder, AHA President Rich Umbdenstock mounted a familiar defense of EHR-aided coding of healthcare services.

The technology, he wrote, enhanced the ability of providers to "correctly document and code the care a patient has received."

"It's critically important to recognize that more accurate documentation and coding does not necessarily equate with fraud," stated Umbdenstock, who nevertheless agreed that cloned documentation and upcoding should not be tolerated.

Charles Kahn III, president of the Federation of American Hospitals, which also received the warning letter, wrote back that a "few bad actors" were bilking Medicare, but that his member hospitals as a whole were committed to a "culture of compliance." Like Umbdenstock, Kahn noted that EHRs improve documentation.

"As a result, we believe that any changes in coding reflect the fact that EHRs are enabling the development of more complete data sets regarding patient care and that these changes generally do not represent instances of inappropriate coding."

The Association of Academic Health Centers (AAHC), another letter recipient, told the government that muddy rules for E/M coding did not help matters.

"In the past few years, the [AAHC] has expressed concern about the availability of clear and useful guidelines on the coding of evaluation and management services," wrote AAHC President Steven Wartman, MD, PhD. "These concerns have only been exacerbated by the increased uptake of electronic health records."

The AHA response to the government bore down on that issue in greater detail. Umbdenstock wrote that beginning in 2001, his group has repeatedly asked CMS to develop coding guidelines that are tailor-made for E/M services provided in hospital EDs and clinics. However, CMS had yet to issue such guidelines, he wrote.

"The Majority Are Right-Coding"

Although the federal government's warning letter was not addressed to them, physicians also have been put on notice about billing fraud committed with EHRs. Steven Waldren, MD, director of the Center for Health Information Technology at the American Academy of Family Physicians (AAFP), believes the government is exaggerating the extent of bad faith among practitioners.

"Coding levels going up with EHRs, that's something we've seen," Dr. Waldren told Medscape Medical News. "But making the leap that the increase is an indication of fraud — I don't think that's accurate.

"I suspect there's been a fair amount of undercoding in the past, and EHRs are allowing physicians now to right-code. Yes, there are hospitals and physicians who are defrauding Medicare, but the majority are right-coding."

Dr. Waldren said he had not yet heard any response from AAFP members to the government's letter, but he suspects that many physicians will find it aggravating.

"The government is saying they're committing fraud when they're working hard and seeing their rates being reduced," he said. "They face penalties for not achieving [her] meaningful use and for not e-prescribing. They feel targeted."

"You Can't Be Surprised When Providers Play by the Rules"

Another physician who does not believe outright fraud is at the heart of increased reimbursement for EHR users is Donald Berwick, MD, who headed CMS under President Barack Obama from July 2010 to December 2011. Instead, EHR users are merely exploiting the vulnerabilities of Medicare's complex payment rules, according to Dr. Berwick.

"The big picture here has to do with a volume-based, fee-for-service system," Dr. Berwick told Medscape Medical News. "CMS sets prices for things that hospitals and doctors do, and makes sure there is discipline and logic to them. That establishes an ongoing game in which the providers use the pricing system to their best advantage.

"You set up the rules, and you can't be surprised when providers play by the rules," said Dr. Berwick, who is currently unemployed. "It's hard to regard it automatically as fraud. An EHR is just a more efficient way to play the game. You can play the billing game with paper. It's independent of the technology."

The long-time advocate of patient safety predicted that as healthcare moves away from the fee-for-service model, Medicare and other third-party payers "will be less vulnerable to this kind of manipulation."