Healthcare IT Hospitals Medicare

Do EHRs increase “upcoding”?

Upcoding occurs when physician or hospitals artificially increase the patient’s severity of illness. For instance, a hospital may record additional comorbidities. In Medicare’s inpatient prospective payment systems (IPPS), Medicare reimburses hospitals more for caring for patients who are sicker. Some health policy experts worry that electronic health records (EHRs) will decrease the cost of documenting additional illnesses; thus the number of comorbidities documented may increase and Medicare reimbursements may rise.

To determine whether or not this is the case, a study by Julia Adler-Milstein and Ashish K. Jha uses a difference-in-difference methodology to compare hospitals that adopted EHRs experience a more significant increase in patient case mix severity. Using data from the Information Technology supplement to the American Hospital Association (AHA) Annual Survey, CMS impact files, and Medicare Provider Analysis and Review (MedPAR) files, the authors found the following:

We identified 393 hospitals that newly adopted a basic EHR (181 in the cohort that adopted between 2008 and 2009, and 212 in the cohort that adopted between 2009 and 2010). These were matched to 782 control hospitals that had not adopted during the same time periods. New adopters were predominantly nonteaching (61 percent), for-profit (70 percent), and medium-size hospitals (47 percent)…
In our difference-in-differences model, we found no significant relationship between EHR adoption and patient acuity. The case-mix index increased among adopters by 0.066 and among controls by 0.065…This reflects a difference-in-differences of 0.001 (p = 0.968).

This results may not be surprising. As the authors readily admit, hospitals already devoted significant resources to optimizing coding prior to the advent of EHRs. Further, hospital adoption of EHRs is non-random. “Hospitals that adopt EHRs tend to be more sophisticated (for example, compared to controls, adopters are more likely to be larger and to be teaching hospitals), and these more sophisticated hospitals are the ones that invest in maximizing coding.” Thus, one might expect that EHRs may most affect upcoding for small and medium size physicians practices, who do not benefit from economies of scale and could increase revenue at limited cost by using EHRs to upcode.


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