EHR Incentive Increases Medicare Costs

There is a major trend happening in healthcare that was covered pretty well in The New York Times. That’s right. EHR doesn’t often get much play in the major journals, but this is a really big deal. Plus, I’ve had doctors write into me about the subject as well.

The key finding that The New York Times article discusses is that Medicare costs have gone up substantially for those using an EHR. This is happening because doctors are upcoding more than they’d done previously. It’s a bit ironic to me that this is going to be a major problem for Medicare since 6 years ago when I first started writing about EHR software one of the major reasons to implement an EHR was to increase your revenue by upcoding.

I’ll never forget the first time I saw the challenge of coding first hand. I was at AAFP sitting at a table of physicians who were there to discuss EHR. This older lady and a gentleman shared with the group that they were chronic under coders. It felt a bit like an AA meeting where these doctors were finally coming clean on their habits. The rest of the doctors in the group just nodded their head since they knew that under coding was a major issue in healthcare.

What Medicare or the administration didn’t seem to realize is that the cost of Medicare is based on this under coding. Doctors have been under coding for so long that it just became part of the cost structure. Little did those in Congress think that by spending $36 billion on EHR (or whatever number you prefer) they’d actually cost Medicare billions of extra dollars. I bet the CBO didn’t plan for that in their budget projections.

This new trend in upcoding begs the question on whether doctors are doing this legitimately or if this is a form of fraud and abuse that’s being made possible by EHR. In a completely unscientific way, I suggest that probably 95% of the upcoding that’s happening is legitimate. Plus, a large portion of the 5% upcoding fraud and abuse would have been happening regardless of EHR. Why do I believe that so little of the upcoding is legitimate?

It goes back to that experience at AAFP where I heard doctors talk about their under coding habits. There was an underlying tension in their statements that they would love to bill more, but they had a number of underlying fears that made them choose not to code higher. First was fear of audit. The last thing any doctor wants is an audit and if under coding will avoid the dreaded audit, then it is the price to pay for that comfort. Second, I’ve heard doctor after doctor talk about times a patient examination should have been at a higher coding level, but their documentation didn’t match that higher level code. The doctors chose to under code the visit as opposed to documenting the normal findings in the visit which would allow them to code at a higher level.

EMR doesn’t do much for the first fear described above. However, EMR often makes it possible for a doctor to code a normal finding in the EMR that they wouldn’t have taken the time to code in a paper chart. I expect that this accounts for a good portion of the upcoding we’re seeing. Combine that with easy chart reviews and EMR coding engines and you see Medicare costs increasing by billions of dollars thanks to EHR. Oh the unintended consequences of government intervention.

About the author

John Lynn

John Lynn

John Lynn is the Founder of the, a network of leading Healthcare IT resources. The flagship blog, Healthcare IT Today, contains over 13,000 articles with over half of the articles written by John. These EMR and Healthcare IT related articles have been viewed over 20 million times.

John manages Healthcare IT Central, the leading career Health IT job board. He also organizes the first of its kind conference and community focused on healthcare marketing, Healthcare and IT Marketing Conference, and a healthcare IT conference,, focused on practical healthcare IT innovation. John is an advisor to multiple healthcare IT companies. John is highly involved in social media, and in addition to his blogs can be found on Twitter: @techguy.


  • You are spot on; but I do believe this is temporary and will even out over the long haul. And costs will reduce over long haul through better and efficient preventive care. Before anyone gets annoyed about this statement and mean this to be “that the Docs today (without EHR) do not provide Preventive Care Today” – NO that’s not what I meant. EHR combined with PHR and Physician Portal can provide many more data points to connect with the patient through the system and have interactive Physician/Patient Communications at many levels.

    So I would look at this blip as temporary and when we take the holistic view – the advent of IT in healthcare should make the entire process much more efficient resulting in increased productivity ultimately leading to reduced costs.

  • Anthony,
    I can’t disagree with the basis of what you’re saying. I think the challenge with what you’re saying is that many people probably think those results are going to happen in the next couple years. I don’t see us seeing the benefits you mention for 5 or maybe even 10 years.

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