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Federal Government Warns Hospitals on Fraudulent EHR Use

The Obama administration, through a strongly worded letter signed by Attorney General Eric H. Holder Jr. and Secretary of Health and Human Services Kathleen Sebelius, warned healthcare providers of “troubling indications” that hospitals are using electronic health records to game the Medicare and Medicaid reimbursement system. The letter was sent to five major hospital trade associations, and follows a New York Times report that the use of electronic records might be contributing to a rise in Medicare billing, particularly in hospital emergency rooms. The administration claims that the use of electronic records, which were introduced to reduce costs and improve care, have lead to false documentation and inappropriate coding.

Throughout the letter, the government vowed to vigorously prosecute doctors and hospitals that are implicated in fraud. Regulators will examine the significant increase in billing for the most expensive evaluation services. The federal government obtained $2.4 billion from health care fraud settlements and judgments last year, and prosecutions against fraud are up 75% since 2008.

Specifically, the letter claims that hospitals are “cloning” electronic medical records, where information of one patient is repeated in other records, and also using electronic records to “facilitate upcoding of the intensity of care or severity of a patient’s condition as a means to profit with no commensurate improvement in the quality of care.” As evidence, the letter cites that hospitals received $1 billion more in Medicare reimbursements in 2010 compared to 2005, and attributes that increase to billing codes that classify more patients as sicker and needing more care.

Conversely, healthcare providers contend that “the new systems allow them to more accurately record information about their patients, leading to higher payments for the services they provide.” The hospital trade associations agree that the alleged practices are unacceptable and cannot be tolerated. However, experts criticize the government for not providing more guidance to both healthcare providers and the software companies developing the electronic records.

The concerns of Regulators, including the Office of Inspector General for Health and Human Services, demonstrate the government’s intention to “ensure payment accuracy and to prevent and prosecute healthcare fraud” and a continuing trend by the government to carefully scrutinize services billed by hospitals and physicians.

Wachler & Associates’ attorneys have extensive experience defending healthcare providers and suppliers facing Medicare and other third party payor audits. Our attorneys can also assist with the development and implementation of comprehensive compliance programs to address potential risk areas. If you have any questions regarding the audit process, the appropriate use of electronic health records or wish to discuss a compliance plan to address audit risk areas, please contact an experienced healthcare attorney at Wachler & Associates at 248-544-0888.