NCPA - National Center for Policy Analysis

Medicare Bills Rise as Records Turn Electronic

September 28, 2012

When the federal government began providing billions of dollars in incentives to push hospitals and physicians to use electronic medical and billing records, the goal was not only to improve efficiency and patient safety, but also to reduce health care costs. In reality, the move to electronic health records may be contributing to billions of dollars in higher costs for Medicare, private insurers and patients by making it easier for hospitals and physicians to bill more for their services, whether or not they provide additional care, says the New York Times.

  • Hospitals received $1 billion more in Medicare reimbursements in 2010 than they did five years earlier, at least in part by changing the billing codes they assign to patients in emergency rooms, according to a New York Times analysis of Medicare data from the American Hospital Directory.
  • Regulators say physicians have changed the way they bill for office visits similarly, increasing their payments by billions of dollars as well.
  • The most aggressive billing -- by just 1,700 of the more than 440,000 doctors in the country -- cost Medicare as much as $100 million in 2010 alone, federal regulators said in a recent report, noting that the largest share of those doctors specialized in family practice, internal medicine and emergency care.
  • Overall, hospitals that received government incentives to adopt electronic records showed a 47 percent rise in Medicare payments at higher levels from 2006 to 2010, the latest year for which data are available, compared with a 32 percent rise in hospitals that have not received any government incentives, according to the analysis by The Times.

Some experts blame a substantial share of the higher payments on the increasingly widespread use of electronic health record systems. Some of these programs can automatically generate detailed patient histories, or allow doctors to cut and paste the same examination findings for multiple patients -- a practice called cloning -- with the click of a button or the swipe of a finger on an iPad, making it appear that the physicians conducted more thorough exams than, perhaps, they did.

Both the Bush and Obama administrations have encouraged electronic records, arguing that they help doctors track patient care. But some critics say an unintended consequence is the ease with which doctors and hospitals can upcode -- industry parlance for seeking a higher rate of reimbursement than is justified.

Source: Reed Abelson, Julie Creswell and Griff Palmer, "Medicare Bills Rise as Records Turn Electronic," New York Times, September 21, 2012.


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