Do EMRs Increase the Cost of Care?

The hypothesis is as follows: By automating the care delivery process with tools such as EMRs and EHRs, we have the opportunity to increase efficiency and reduce the cost of care by decreasing duplication of tests and investigations, lowering errors through decision support tools and reminders and identifying diseases earlier, thereby treating patients in ambulatory practices vs. expensive acute care settings. However, what if the hypothesis is incorrect? The need to automate care and move away from a dominantly paper-based system has obvious advantages, but does it save money?

A number of critical articles recently in United States have raised some warning flags about the potential for information technology to increase costs. The arguments supporting this evidence are not exclusive to the U.S. healthcare system and could be quite applicable in Canada as an unintended consequence of health information technology.

A Sept 22, 2012, New York Times article “Medicare Bills Rise as Records Turn Electronic” suggests a possible association between Electronic Medical Records and an increase in Medicare billings. (Medicare in the U.S. is a federal system of health insurance for people over 65 years of age and for some younger people with disabilities.) According to analysis by the NY TImes, 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 for EHRs.

It is difficult to explain these differences. One argument is that the population is aging, diseases are becoming more complex, and physicians have tended to under-bill in the past as they did not have as much information as easily available as they now do with an EHR to support these higher billings. This is a process referred to as “up-coding”. A defined set of E/M (evaluation and management) codes are used to determine the complexity of an encounter that must then be supported through documentation and conducting an increasingly more comprehensive assessment. Essentially, they are learning how to take advantage of the system.

The Center for Public Integrity, a non-profit news and investigative organization published a similar article on Sept 20,2012, titled, “Hospitals grab at least $1 billion in extra fees for emergency room visits”. In the article, the authors quote Dr. Donald Berwick, the immediate past administrator of the Centers for Medicare and Medicaid Services (CMS), which administers the Medicare program:

“A small portion of the billing increase is likely caused by outright fraud, but in the majority of cases hospitals are legally boosting profits by targeting the vulnerabilities of Medicare’s payment system. They are learning how to play the game.”

Understanding that a percentage of increased billings are likely due to error as well as outright fraud, what are the possible appropriate reasons for the increase in billings?

• Physicians may be appropriately billing for services that were previously under-billed, supported by more comprehensive information in the EMR.
• The increasing complexity and severity of disease in an older sicker population is likely to be a legitimate contributing factor in the up-coding of billings.

In what ways could the increased billings be a result of EMRs and EHRs?

• The computer never forgets. With a push of a button, a clinician can move information from a prior to a new visit and then “upcode” the billings. For example, as part of a system’s design, an EMR can be configured to pre-populate data (or templates) in clinical encounters with default values. This gives the impression of a more complete encounter or problem history.
• By providing hints and guides to physicians at the point of care through the EMR, they will become better at coding. For example, if an encounter requires one more element to be assessed in order to code at a higher level, the EMR/billing system can suggest this option at the time of the visit, making it easier to capture the higher fee code. Many EMRs use this capability to market their systems.

There is a subjective component to the provision of every service. What one physician considers a medium complexity encounter, another could define as high complexity resulting in higher billings. What is certain is that U.S. trends are applicable to hospitals as well as ambulatory physician practices. Ensuring that health IT is used appropriately to provide care and support decision-making is a primary defence against these practices, many of which are enabled by the technology. Without some controls, the increase in billings and overall system costs are likely to increase as technology is more widely adopted. More stringent audit processes are inevitable; however, the cost of auditing and administering/adjudicating millions of clinical encounters can also add significant administrative cost to the healthcare system.

Are we facing similar issues in Canada? Should we be revising our hypotheses regarding EMR, EHR, and IT adoption to be more focused on improvements in clinical care and quality vs. reductions in cost? Add your thoughts by clicking on the “Comments” link below.

Comments

[Alan Brookstone]

Since publication of this blog post, a strongly worded letter of warning has been sent to a number of hospital organizations by the Obama administration stating they would not tolerate attempts to "game the system" by using electronic health record systems to boost Medicare and Medicaid payments. Read the article in the New York Times

[Alan Brookstone]

Additional feedback from hospital organizations as reported on iHealthbeat. Read the article

[Alan Brookstone]

Read Dr Peter Basch and Dr. Michael Zaroukian's responses as listed in this blog post on AmericanEHR