Health Care Providers Abusing The System Through Upcoding & Cloning

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July 30th, 2013
Categories: CEO's BlogHealth News

Healthcare Costs, Cost Containment, Upcoding, Patient Record Cloning, Healthcare Providers, CMS, EHRs, E&M Services

If health care wasn't expensive enough already, many providers are siphoning as much money as they can into their own pockets without anyone even noticing. How are they doing it? Upcoding and Patient-Record Cloning.


In an attempt to ‘game the system’ many healthcare providers nationwide are being found guilty of a process that allows them to systematically overbill Medicare, Medicaid, and anyone else on the paying end of they system. While this is in clear violation of the False Claims act, widespread upcoding and illegal documentation practices – most notably associated with the introduction of Electronic Health Records (EHRs) – has called for government intervention and nationwide audits of our healthcare system.

As the Center for Medicare & Medicaid Services (CMS) policy requires that billing codes appropriately reflect the medical necessity of any office visit or treatment administered, that they be supported by medical records, and that documentation be completed promptly, providers have padded their billing statements and cloned patient records to inflate their reimbursement totals.

Cases, such as the legal complaints filled against the John B. Amos Cancer Center, allow us to delve deeper into how providers are able to get away with this. Former compliance officer, Richard Barker, filed the complaint when he realized the center’s oncologists were using coding practices that allowed them to overbill federally funded benefit programs for millions of dollars in unearned fees. Doctors were given the responsibility to code their own work, and therefore took advantage of the correlation between their compensation and the billing codes used to claim reimbursements from third party payers. Barker identified multiple instances were billing codes reflected office visits at levels that were not supported by the documentation provided, along with further billing for E&M services that were not liable to be billed separately.

After a resulting audit, it was found that the center had an over-coding rate for E&M services of a staggering 63 percent, compared to the 10.5 percent error rate considered acceptable by the CMS.

The John B. Amos Center is not the only provider to be found guilty of such activity. The CMS has reported that similar practices have resulted in hospitals receiving close to $1 billion more in reimbursements in 2010 compared to how much they were receiving five years ago. Furthermore, many of these higher billing code claims are coming from emergency room visits where doctors can classify patients as more sick and requiring higher levels of care. From these emergency room visits, which use special billing codes to indicate how much care a patient needs, hospitals have increased their claims for the highest-paying categories of services to 54 percent of their Medicare claims in 2010, from the 40 percent they claimed in 2006.

More of these illegal coding-malpractices have begun to show up as hospitals and healthcare providers choose to accept the incentives that support the implementation of an Electronic Health Records program. Hospitals that receive these government incentives have seemingly shown a 47 percent rise in Medicare payments from 2006 to 2010, compared to the 32 percent rise amongst hospitals that denied the program.

For example, the emergency department at Faxton St. Lukes Healthcare in NY, saw a 43 percent rise in reimbursement claims in 2009 – the same year they implemented the use of EHRs. Similarly, Methodist Medical Center of Illinois’ Medicare billings for emergency care rose from 50 percent in 2006 to 80 percent in 2010 – again within the same year they adopted the EHR program. The reason? EHR software not only allows doctors to take more control over their billing, but also allows them to clone patient records and document services that were not actually administered.

So what’s the solution? Many providers have shifted the blame and called for the CMS and government officials to provide stricter national guidelines for billing practices, along with monitored guidance to the software companies providing EHR software. As for now, many of the nation’s hospitals will be under audit, starting with extensive medical reviews of billing practices and individual patient records.




- Abelson, Reed. Creswell, Julie. US Warning to Hospitals on Medicare Bill Abuses. The New York Times. September 2012.

- Abelson, Reed. Creswell, Julie. Medicare Bills Rise as Records Turn Electronic. The New York Times. September 2012.

- Brino, Anthony. Whistleblower Suit: Georgia Cancer Center “Systematically” Upcoding. HealthCarePayer News. July, 2013.

- Daly, Richard. HHS Auditors Target Upcoding of Medicare Bills Via EHRs. July, 2013.