Does the Adoption of EMR Systems Inflate Medicare Reimbursements?

The adoption of EMR systems has been argued to lead to physicians “upcoding” their patients to inflate insurance reimbursements. In this paper, we examine if the adoption of the Clinical Physician Order Entry (CPOE) system is associated with an increase in the complexity of the patients' case mix that hospitals report (termed "upcoding"). We make use of a staggered roll-out of the Recovery Audit Program to combat upcoding as a natural experiment to assess the impact of the adoption of the CPOE systems on the case mix that a hospital reports. We find that on average the adoption of CPOE systems is associated with an increase in the reported case mix of hospitals, and that the Audit program has had an effect on reducing the case mix that hospitals report to Medicare for reimbursement. Implications for preventing inflated reimbursements due to "upcoding" are discussed.