HHS warns hospitals and health care providers not to "game the system"



October 09, 2012

Health Law Alert

On September 24, 2012, the Secretary of the U.S. Department of Health and Human Services (HHS) and the U.S. Attorney General for the Department of Justice (DOJ) issued a letter to five of the nation’s largest, most influential health care organizations, stating that there are “troubling indications” that some hospitals and health care providers are using electronic health record (EHR) technology “to game the system,” by fraudulently entering billing codes and inflating the level of care provided to a patient, or by ramping up the severity of the patient’s symptoms to increase the amount of reimbursement from Medicare and Medicaid. The letter warns, “False documentation of care is not just bad patient care; it’s illegal.” The health care organizations replied strongly to the letter. Continue reading for more information about this increased level of scrutiny.

On September 24, 2012, Kathleen Sebelius, Secretary of the U.S. Department of Health and Human Services (HHS), and Eric Holder, the U.S. Attorney General for the Department of Justice (DOJ), issued a letter to five of the nation’s largest, most influential health care organizations, stating that there are “troubling indications” that some hospitals and health care providers are using electronic health record (EHR) technology “to game the system,” by fraudulently entering billing codes and inflating the level of care provided to a patient, or by ramping up the severity of the patient’s symptoms to increase the amount of reimbursement from Medicare and Medicaid. The letter warns, “False documentation of care is not just bad patient care; it’s illegal.”

This cautionary letter was sent to the chief executive officer of the American Hospital Association (AHA), the Association of Academic Health Centers (AAHC), the National Association of Public Hospitals and Health Systems (NAPH), the Federation of American Hospitals (FAH), and the Association of American Medical Colleges (AAMC).

The expansive implementation of EHR systems was first introduced in 2009 by the Obama administration’s American Recovery and Reinvestment Act, which sought to improve the quality and efficiency of health care, and ultimately, the costs associated with care. An incentive payment system for hospitals and health care providers was implemented for those who adopted and “meaningfully” used EHR technology. Currently, over fifty-five percent (55%) of hospitals have qualified for incentive payments.

However, according to the letter, there are signs that some hospitals and health care providers are “cloning” medical records to inflate payments received from Medicare and Medicaid. “Cloning” refers to the “copy and paste” function of computer systems, and specifically, within the health care field, the “copying and pasting” of data from past patient visits and evaluations into other sets of records to save time while recording treatment. This leads to misrepresentations and fraudulent submissions to Medicare and Medicaid for reimbursement.

Additionally, the letter notes that some providers are “upcoding” the intensity of care and severity of the patient’s conditions as another means of profit. All services administered and tasks completed for a patient during a visit with a provider are assigned a particular number or “code.” “Upcoding” refers to the use of a different code than the code that should be entered for the services provided. This allows doctors to earn more than what they should be paid for the care they provide. HHS resolves to prevent and prosecute fraud such as this in the health care industry.

To ensure prevention and prosecution, the Center for Medicare and Medicaid Services (CMS) has commenced auditing health care providers’ billing methods and conducting broad record reviews to ensure coding evaluation and management services are correctly entered, and comparing billing reports to identify outliers in the system. By law, CMS can halt Medicare and Medicaid reimbursement payments if there is a suspicion of foul play, and CMS can also mine a hospital or health care provider’s data to detect fraud and demand reimbursement for any incentive payments previously paid.

After HHS released the warning letter, the health care organizations responded.  AHA President, Rich Umbdenstock, asked that CMS provide clearer guidance for complying with the “complex rules” so as not to take away from the quality and time spent on patient care; however, he added that AHA agrees that any such practices “should not be tolerated.” The FAH’s President and CEO, Charles Kahn, stated, “[A]ny 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 as suggested in [the] letter.”

Additionally, AAHC’s President and CEO, Steven Wartman, agreed with AHA’s claim that the CMS guidelines are inadequate; Wartman claims that hospitals have requested clarification from federal regulatory bodies without any success.

AAMC did not agree with the concerns, stating in its response that its hospital and health care provider members maintain “robust compliance programs” to fight fraud and illegality. Similarly, NAPH responded by stating that the hospitals and health care providers in its system “adhere to high ethical standards and reject practices that might result in fraudulent or other improper claims.”

Nevertheless, the DOJ, HHS, the FBI, and other law enforcement organizations will take action where necessary and will monitor hospitals and health care providers for fraudulent activity. In 2011, prosecutions for health care fraud using the EHR systems rose by 75% from 2008, and with the watchful eye of federal regulatory groups, this percentage will continue to rise. In anticipation of this increased level of scrutiny, all hospitals and health care providers should review, and revise if necessary, all of their current EHR system coding practices to ensure enforcement and compliance.

The foregoing has been prepared for the general information of clients and friends of the firm. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel. If you have any questions or require any further information regarding these or other related matters, please contact your regular Nixon Peabody LLP representative. This material may be considered advertising under certain rules of professional conduct.

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