How the widespread adoption of electronic medical records can raise health care costs

One of the pillars of health care reform is modernizing our antiquated health records system.

That means pouring billions of dollars into the current generation of electronic medical records (EMRs), despite both the flaws, and the myriad of reasons why doctors are so resistant to go digital.

In an excellent piece, orthopedic surgeon Scott Haig points to why electronic records are not likely to save money, and worse, can further balloon health spending.

The major reason is the physician payment system.

“The slightly embarrassing financial reality of EMR,” writes Dr. Haig, “is that large, mechanized medical operations like hospitals, clinics and big multi-doctor practices stand to make quite a bit of money by adopting them “” given our current convoluted system of paying for health care. Two clear factors make EMR a money-winner: improved billing and internal cost control.”

Indeed, EMRs make it very easy to “upcode,” or easily pick a diagnosis or service level that will pay more money. A simple click of the button can blur a diagnosis from “urinary tract infection,” to “pyelonephritis,” for instance, increasing the complexity, and the subsequent reimbursement, of the visit.

Or, consider this example, where a patient can “go to the doctor with a sore knee and for some reason he is examining your ears. It might be that you have a very thorough doctor who is ruling out a rare ear-knee syndrome. More likely, the EMR program he bought is reminding him that notes on the chart about just few more body parts will kick your visit up into a higher-paying code.”

So, be careful when you hear that digital records can cut costs. With the current generation of systems geared towards gaming the flawed physician payment system, it’s unlikely that EMRs will save any money at all.

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  • Anonymous

    “. A simple click of the button can blur a diagnosis from “urinary tract infection,” to “pyelonephritis,” for instance, increasing the complexity, and the subsequent reimbursement, of the visit.”

    Who would click this button? The physician? Are you saying physicians would game the system to make more money? Perish the thought!

  • KianaB

    Patients would raise holy hell if they went in to have a knee examined, and got billed for an ear examination. Whoever did that would end up having to deal with tons of complaints, and losing patients.

  • Chris

    Those that will click the button currently aren’t letting a button get in their way of gaming the system. It will just be easier to catch them when EMRs are in place.

  • Anonymous

    Though I am sure there are some that game the system in both the paper or EMR world, physicians, primary care docs in particular, are notorious for under coding. The problem is that in order to bill for what you have actually done, there is a ridiculous set of documentation rules. Because most physicians would rather spend time with patients than “buffing up” a note to get the money they deserve (they actually deserve much more, but that’s another issue), they simply write what is medically appropriate and bill at a lower level. EMR’s make it easier to document the level of service that physicians provide for the patients. This is not really gaming the system. However, it will end up costing more money, not saving it.

  • roger

    Most of the time, a patient does not receive an itemized bill for each portion of the examination, but rather, the insurer (or medicare, or other payer) determines a payment level based on silly things like, the number of items in a review of systems, or the number of organ systems examined, and how many items per system are examined (and noted) on the chart. Because of this, patients will not complain, and the physicians will get paid more. Unless they fix the system.

    A more common example that I’ve seen is commenting on things you actually have perceived but would normally not make a note of. Here’s an example:

    Constitutional – Alert, oriented, no distress. (3 items)
    Skin – Warm, dry, no jaundice (three items)
    Eyes – Extraocular movements intact, no icterus, clear conjunctiva. (3 items)
    Neuro – Grossly intact, no tremor, normal gait and station. (3 items)
    Respiratory – Breathing even and unlabored. No use of accessory muscles. No perioral cyanosis. (3 items)

    These are all things that any physician will see without doing anything extra or untoward in their examination of a patient. It is not lying to record these findings in your exam.

    The difference is, when you have to write the note you usually wouldn’t waste your time to write things that, while true, are not immediately pertinent to the case. Maybe they would be, if they were abnormal, but them being normal is rather unremarkable. When you get paid more for simply documenting things that you always see in a patient in front of you, and the documentation is as easy as clicking a box that says normal, and then clicking on all of the above systems – the temptation is too much for many physicians. Especially when “gaming” does not involve any actual dishonesty, but rather just more thorough documentation than one would normally use.

    The truth is, Dr. Kevin is very right in these judgments, in my opinion. And the only way to fix them is to pay physicians for the care they provide, not how many items they document.

  • yosh

    Just goes to show that we need electronic medical records AND physician payment system reform!

  • Anonymous

    Payors will merely reduce the payment for each code.

    As the codes shift higher, then the higher codes will get payment at the rate that the lower code used.

    Check and mate.

  • David A.

    Roger’s comments are right on, and he adds “And the only way to fix them is to pay physicians for the care they provide, not how many items they document.”

    I would add that the only way to fix the payment system is to have patients pay physicians directly. Eliminating the routine use of third-party payers is at the heart of fixing the current system.

  • Sgent

    This “might” be an issue for some physicians, but the documentation of normals (as explained by Roger) has been done for decades using paper templates — which are also allowable according to Medicare rules.

  • Anonymous

    Will it be easier or more difficult to audit a provider who uses EMRs? Upcoding -as in the example given – from 599.0 (UTI, site not specified) to 590.80 (pyelonephritis, unspecified) might fly under the radar for a while. A pattern of higher utilization of codes not normally used by a particular provider, practice, etc. will raise a red flag somewhere, whether it is with an insurance company or the OIG. Should one hope that the EMR vendor has programmed in the other stuff the provider needs to look at and document to justify the diagnosis “upgrade”, hope that such a practice doesn’t become as automatic as clicking through meaningless medication interaction warnings, or hope for something else? What hasn’t been discussed is faulty diagnoses following a patient around like a black cloud. (Echoes of my ICD-9 instructor commenting on commonly miscoded test items – Why did you give the patient a disease he doesn’t have?)

  • Manalive

    EMRs slowed our ER to a crawl; nurses, techs, doctors – everyone is typing. Patients notice this and are unhappy.
    Office-based docs like me who dictate our notes will see fewer patients per day with EMRs – not more.
    EMRs are a bad idea whose time has come.

  • Rishi

    From a market perspective, this would probably be a great time to invest in Cerner (NASDAQ: CERN) – the lead supplier of healthcare technology in the United States.

  • Joseph Sucher, MD FACS

    Dr. Pho,

    This is the third sensationalist headline in a month. Great work. I took the bait and read it. I also read the link to your article in USA Today which was more even minded. Additionally, I read Dr. Haig's article which lamented the bad points of computerization.

    I think that the vast majority of computerized healthcare systems are in fact poorly designed and have created as many problems as they have helped solve. There are two sides to this one-sided post of yours, and this is my point for calling your post sensationlism.

    "The slightly embarrassing financial reality of EMR" is no more an EMR phenomena than our day to day lives of filling out forms and dictating H&P's. To say that EMR has any more to do with the broken system of documentation for the sake of financial remuneration is simply naive. In fact, since it is unlikely that our documentation will be decoupled from billing, the EMR is the only solution to help decrease our burden and help the physician get back to work. Unfortunately the embarrassing truth is that we are more the servant of these current systems than they our to us. This is the real problem that needs to change.

    The whole "upcode" argument is freshman and unprofessional. Again, this has nothing to do with EMR. Plenty of unscrupulous physicians fraudulently coded long before EMRs, and they will continue to do so after. And to suggest that someone will change a diagnosis to something of more complexity because of EMR is ludicrous. A physician can do this on paper just as easily.

    Finally, in the example of going "to the doctor with a sore knee…" Doesn't hold water at all. The final E&M encounter doesn't get any higher billing no matter how many systems you examine as long as the medical decision making component isn't complex. So therefore you can document all about the ear, the EMR system won't help you upcode to something that can't be upcoded. It in fact will show you that you wasted your time.

    So, be careful what you post about digital records. "Gaming the system" is a problem with unethical un-professionals. It has nothing to do with EMRs.

    Finally, why trash the reputation of EMRs as they relate to billing? I guess we should just keep our current systems of generating form after form, that we need to fill out for the insurance companies to deny. Let's keep our 120 day A&Rs. Let's keep the plausible deniability. Let's ensure that our patients get bills that are completely undecipherable. Let's keep the systems that a patient receives bills for months and even a year after being in a hospital. If we have to deal with a system of bills based off documentation, then I for one need an EMR (at least one that works). That's the real problem… we need these systems to work more for us and us work less for them.


  • Anonymous

    as i understand billing, dr sucher’s comments about low level decision making precluding upcoding are not wholly accurate. there are a number of e/m codes which only require 2/3 key components so expanded physican exams may help ‘upcode’ a bill
    of course his comments about unethical professionals not needing an emr to game the system is dead on.

    we are currently implementing an emr in the office. it is terrible frankly. really expensive way to decrease physican efficiency and decrease overall patient volume so far. decreased patient satisfaction as well. also had to hire more staff to scan in information.

  • Anonymous

    The end net effect on fees per visit will be neutral due to payment adjustments as noted above.

    The real effects on cost will occur as a result of any impact on what services are provided:

    Reduction of duplication: reduced costs

    Increase in guideline recommended testing that now isn’t done by neglect or sound clinical judgement: increased costs.

    Net: Who knows? Certainly not the policy wonks who pulls predictions out of the air.

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