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Obama Administration Warns Hospitals on Fraud Obama Administration Warns Hospitals on Fraud

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Obama Administration Warns Hospitals on Fraud


Kathleen Sebelius, secretary of Health and Human Services.(PHOTO: CAROLYN KASTER/AP)

The Obama administration warned hospitals on Monday that the government would vigorously pursue cases of fraud involving the use of electronic medical records to inflate bills and generate extra revenue. In a sternly worded letter to several major hospital groups, Health and Human Services Secretary Kathleen Sebelius and Attorney General Eric Holder vowed to prosecute any abuses.

“We will not tolerate any health care fraud,” Sebelius and Holder wrote. “Law enforcement will take appropriate steps to pursue health care providers who misuse electronic health records to bill for services never provided.”


Electronic medical records may be contributing to higher health care costs, according to a story from The New York Times, because it makes it easier for hospitals and doctors to simply check a box and bill for an additional service. The story found that hospitals received an additional $1 billion in Medicare reimbursements in 2010 than they did five years earlier, partly because of changing the billing codes assigned to patients in emergency rooms.

Sebelius and Holder specifically warned hospitals and doctors against “cloning” patients, or simply copying one patient’s information into multiple patients’ records, a practice that is far easier using electronic records than using a pen and paper. They also specifically noted reports of “upcoding,” when health care providers increase the severity or intensity of a patients’ recorded care simply to make more money and not at any benefit to the patient.

“There are troubling indications that some providers are using this technology to game the system, possibly to obtain payments to which they are not entitled,” Sebelius and Holder wrote.


In May 2009, Sebelius and Holder established an interagency task force to fight Medicare fraud, which some estimate can reach as much as $100 billion every year. Prosecutions for Medicare fraud were 75 percent higher in 2011 than in 2008, according to the letter.

Medicare fraud fighting is also one of the few areas of bipartisan agreement on health care among Democrats and Republicans on Capitol Hill. In May, six members of the Senate Finance Committee from both sides of the aisle sent letters to the broader health care community seeking new solutions to fighting fraud.

American Hospital Association CEO Rich Umbdenstock responded in a letter to Sebelius and Holder, promising that hospitals would not game the system.

“Hospitals have a longstanding commitment to compliance, establishing programs and committing resources to ensure that they receive only the payment to which they are entitled. We agree that the alleged practices described in your letter, such as the so-called 'cloning' of medical records and 'upcoding' of the intensity of care, should not be tolerated,” Umbdenstock wrote.


Umbdenstock also urged the federal government to develop national guidelines for reporting emergency room and clinic visits, a request he said the American Hospital Association has made 11 times since 2001.

“It’s critically important to recognize that more accurate documentation and coding does not necessarily equate with fraud,” Umbdenstock said.


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