Healthcare in this United States is a lightning rod for debate. As Congress grapples with the future of the Affordable Care Act, the American people face uncertainty in medical care and costs.
To improve the efficiency, quality, and cost-effectiveness for patient care, hospitals have increasingly turned digital, using Electronic Medical Record (EMR) systems to store and share patient’s medical history. However, as the use of EMR systems increased, so did reported healthcare costs.
Since the adoption of the physician coding systems used to store and update EMRs in 2009, Medicare has experienced an estimated $380 million increase in reimbursements per year. Medicare accused hospitals of “upcoding,” or illegally overstating patients’ diagnoses and treatment, in an effort to receive a higher reimbursement. A 2012 study showed that hospitals in Utica, NY, and Nashville, TN, increased its patient reimbursement claims by 43% and 82% respectively after adopting EMR systems.
In response to this drastic surge in reimbursements, the Centers for Medicare and Medicaid Services conducted a pilot program, the Recovery Audit Program, from 2004 to 2010. Researchers at the Fox School partnered with researchers at McGill University to study how this audit program has been able to reduce illegal Medicare reimbursement claims, thus lessening the financial burden on American taxpayers.
The initial goal of implementing EMRs was to lower costs by reducing medical errors, over-testing, and re-admissions. But the findings of Dr. Kartik K. Ganju of McGill and Drs. Hilal Atasoy and Paul Pavlou of Temple University, confirmed that the adoption of the coding system is associated with an increase in Medicare reimbursements, particularly in the case of for-profit hospitals.
The research found an average of $217,745 in inflated reimbursements to Medicare per hospital per year, and even higher costs (nearly $370,000 in overages) at for-profit hospitals. After finding $693 million in overpayments by Medicare in six pilot states, the audit program was adopted nationwide in 2010.
The researchers looked into this “trillion-dollar conundrum” and found that the audit program successfully combated upcoding by using default templates and by identifying and removing cloned records of old patient that were erroneously copied into a new patient’s medical chart. After the audit became nationwide, the study found that it had corrected up to $2 billion in incorrect claims; yet for-profit hospitals were still reporting high reimbursement fees than their nonprofit counterparts.
The bottom line? While EMRs have enhanced coordination and information sharing, they also make it easier to report expensive and potentially inappropriate healthcare expenses.
As the first successful evaluation of the Recovery Audit Program, the researchers praise the work that has been done, but warn that stronger oversight by the government is still needed to combat ever-increasing costs, especially at for-profit hospitals.