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Is Technology Perpetuating Medicare Fraud?

 |  By smace@healthleadersmedia.com  
   December 11, 2012

What are we to make of recent allegations that technology may be facilitating an uptick in Medicare fraud?

As the fiscal cliff looms, Medicare can ill afford a crisis. But that's just what CBS News' 60 Minutes December 2 broadcast set out to document.

The report opened with an estimate, derived from a 2009 Institute of Medicine statistic, that $210 billion per year—10% of all health expenditures—goes towards unnecessary tests and treatments, much of it paid out via Medicare and Medicaid.

In the report, former physicians working for Health Management Associates, which is the fourth-largest for-profit hospital chain in the U.S., accuse the corporation of systematically setting quotas for its doctors to admit more and more patients regardless of medical condition.

With 70 hospitals in 15 states, HMA has thrived by buying small, struggling hospitals in non-urban centers. Under fee-for-service reimbursements, the more empty beds hospitals fill, the more revenue they generate.

Scott Rankin, MD, interviewed by 60 Minutes, worked in the emergency department of the Carlisle Regional Medical Center in Carlisle, Pa. "In a relatively rural, limited resource community hospital, your admission rate out of the emergency department is somewhere in the neighborhood of 10%," Rankin told interviewer Steve Kroft. "And they wanted 20."

According to more than 100 people interviewed by 60 Minutes over the course of a year-long investigation, HMA institutionalized these corporate goals through computer software that HMA had installed in every emergency room. According to Jeffrey Hamby, a former emergency room doctor at HMA's Summit Medical Center in Van Buren, Ark., this software had been customized by HMA to order a battery of predetermined tests once a patient's chief complaint and age were recorded. Rankin said these tests were ordered even before the patient was seen by the treating physician.

When doctors decided to send an emergency room patient home, the computer would often intervene, Hamby said. "The minute I hit home, it says 'qualcheck,' and then it comes up with a warning. This patient meets criteria for admission. Do you want to override?" The ex-employees also allege that the software generated printed reports, some of which 60 Minutes displayed, evaluating each doctor's performance and productivity. Doctors who hit corporate admission goals received praise from company managers, and those who didn't "knew it," said Kroft.

The broadcast also quoted Paul Meyer, former director of compliance for HMA and a 30-year veteran of the FBI, accusing HMA of Medicare fraud based on his audit of four hospitals in Texas, Florida, and Oklahoma.

Even before the broadcast aired, HMA took the offensive, holding a November 30 webcast for analysts. In short, the company denies allegations of requiring emergency room physicians to meet any admission quotas. HMA further says that 60 Minutes did not produce a single patient who it could say was admitted unnecessarily.

So what does this ruckus mean for Medicare? I want to make several points.

First, the authorities, including the Justice Department, will have the final judgment on this matter. I have no doubt that HMA has the resources to keep this dispute unresolved for years, if they so choose.

Second, it seems unlikely that upward of 100 employees would speak to 60 Minutes just because of their general unhappiness with the company or its technology. Some doctors do chafe at having software trying to override their judgment, but in a world of evidence-based medicine and team-based care, a certain amount of that won't be denied. The challenge is determining which of HMA's software algorithms, if any, were business-driven rather than in the best interest of patients.

Third, this episode brings to mind accusations of voter fraud caused by voting machines that lack a paper trail. HMA was able to argue that the documents produced by 60 Minutes were not HMA documents. Much like a voting machine that produces no paper record, many electronic medical records may not produce a sufficiently protected audit trail. Stories of pop-ups on screens urging admission of patients can be plausibly denied.

One would hope that the end result of all this won't be an overly cumbersome and costly new set of government regulations. After all, the days of fee-for-service medicine are numbered. Once the financial incentive to admit disappears, this avenue of fraud is scheduled to be shut off. That's a good thing, because the thought of generating a paper trail for all EHR transactions is mind-boggling.

But since fee-for-service isn't exactly going away tomorrow, how much taxpayer and insurance money is at risk of being wasted before that day arrives? What interim steps need to be taken to minimize that waste?

Whatever the merits of the 60 Minutes report, bringing these allegations to light is appropriate. During a conference call held last week by the Patient-Centered Primary Care Collaborative, Paul Grundy, the organization's president, commented that "There's just so much data now that's becoming available that it's going to be increasingly hard to do the kinds of things that you saw on 60 Minutes. If there's one thing I could say to hospital systems like that, you're either part of the problem or you're part of the solution, and increasingly, if you want to insist on being part of the problem, you're going to get caught. You're going to go out of business. It's criminal."

HMA says its admission rates show no spike from industry averages. While time and the courts will weigh in on that matter, I think it remains to be seen if the data now out there is sufficient to catch fraud. My experience with software over the past three decades says that there are lots of devious ways to engineer fraud into a system. The question is whether CMS and the Justice Department have sufficient resources to smoke it out.

Farzad Mostashari, the national coordinator for health information technology at the Department of Health and Human Services, recently weighed in on allegations of upcoding, i.e., billing for care that wasn't delivered. "It doesn't matter if you do it on paper, if you do it through voice, whether you do it through transcription service, or you do it through an electronic health record. That's fraud and we take that very seriously," Mostashari said at a policy meeting of the Office of the National Coordinator.

But when fraud has the potential to be perpetrated on such a massive scale, aided and abetted by technology, can the regulators keep up?

Editor's Note:  A prior version of this article attributed certain comments to Paul Grundy, MD, president of the Patient-Centered Primary Care Collaborative. His actual remarks were made about hospital systems generally and were not specific to HMA or any particular hospital system.  IBM confirms that HMA hospitals continue to be available for use by its employees under its health plans.

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Scott Mace is the former senior technology editor for HealthLeaders Media. He is now the senior editor, custom content at H3.Group.

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