Will EMR Adoption Bankrupt Medicare?

Posted on November 27, 2012 I Written By

Mandi Bishop is a healthcare IT consultant and a hardcore data geek with a Master's in English and a passion for big data analytics, who fell in love with her PCjr at 9 when she learned to program in BASIC. Individual accountability zealot, patient engagement advocate, innovation lover and ceaseless dreamer. Relentless in pursuit of answers to the question: "How do we GET there from here?" More byte-sized commentary on Twitter: @MandiBPro.

Much hullaballoo is made over the 47% increase in Medicare payments from 2006-2010, which some seem eager to attribute to the adoption of EMR. The outcry is understandable; a 47% increase is a big dang deal, and taxpayers should be concerned. But haven’t we all heard that statistics lie?

“Hospitals received $1 billion more in Medicare reimbursements in 2010 than they did five years earlier, at least in part by changing the billing codes they assign to patients in emergency rooms,” cited the New York Times based on analysis of Medicare data from American Hospital Directory. Indeed, billing codes have changed from 2006-2010, in accordance with the HCPCS (Health Care Procedure Coding System) reform of CPT (Current Procedural Terminology) application and inclusion guidelines, cited here: HCPCS Reform from CMS. Healthcare industry growth and care advances drove an increase from 50 – 300 new CPT code annual applications between 1994-2004, leading to sweeping change in the review and adoption process starting in 2005 – including elimination of market data requirements for drugs.

Think about that for a second. If Pharma no longer has to submit 6 months of marketing data prior to applying for an official billing code, how many new CPT codes – and resultant billing opportunities – do you think have been generated by drugs alone since that HCPCS process change adoption in 2005? Which leads me to my next correlating fact: the most significant Medicare Part D prescription drug provisions did not start until 2006.

Let’s put two and two together: Medicare Part D prescription drug coverage (2006) + change in HCPCS billing code request process to speed drugs to market adoption (2005) = significant increase in Medicare reimbursements. To use the NYT analyst language, “in part”, administration of those drugs occurs in an emergency room. And who might be in the ER on a regular basis? I’ll give you a hint: “I’ve fallen, and I can’t get up!”

Perhaps the most profound contributor to this Medicare reimbursement increase is a recent dramatic rise in the Medicare-eligible population. Per the National Institute on Aging’s 65+ in the United States: 2005, the 65+ population is expected to double in size between 2005 and 2030 – by which point, 20% of the US will be of eligible age. The over-85 age group, as of 2005, was the fastest-growing population segment. Elderly people who are prone to chronic conditions as well as acute care events just might lead to higher Medicare reimbursements.

Of course, there are myriad contributing factors. Some industry analysts attribute the rise in Medicare claims cost to fraud, citing that the workflow efficiencies that the EMR technology provide allow for easy skimming. Activities such as “cloning”, or copying and pasting procedures from one patient to the next with minimal keystrokes within the EMR software, might contribute to false claim filing for procedures that were never performed. While the nefarious practice of Medicare fraud long predates EMR, the opportunity to scale one’s fraudulent operations to statistically relevant proportions increases significantly with automation. And as my mother always told me, it only takes one bad apple to spoil the bushel.

But how many bad apples would it take to spoil a multi-billion dollar bushel to the tune of a 47% cost increase? According to the NYT article, “The most aggressive billing — by just 1,700 of the more than 440,000 doctors in the country — cost Medicare as much as $100 million in 2010 alone,” and the increase in billing activity for each of those 1700 occurred post-EMR adoption. After all, “hospitals that received government incentives to adopt electronic records showed a 47 percent rise in Medicare payments…compared with a 32 percent rise in hospitals that have not received any government incentives.”

Wait, did that statistic just indicate a significant increase in Medicare reimbursements, across the board? So the differential between those providers who have received government incentives for EMR adoption, and those who have not, is 15%. The representative facilities and providers responded to the “aggressive billing” accusation by indicating that they had 1) more accurate billing mechanisms, 2) higher patient need for billable services. I’ll buy that. Sure, it’s likely that there is Medicare fraud happening, but that’s not new – it’s unfortunate that there will always be ways to game the system, whether manual or electronic. But is the increase in “fraud” pre and post-EMR adoption statistically relevant?

Considering the complex variables involved, I’ll chalk up the 15% increase to the combination of more specific billing practices, Medicare Part D drug provisions, an aging population and the health issues which accompany it, and not vilify the technology which facilitates further advances. Let the EMR adoption expansion continue!