Introduction

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.