
Study of Medicare Claims Finds Electronic Medical Records Boost Hospital Bottom Lines by Increasing Accuracy of Billing, Not by Overbilling
A new study led by a University of Massachusetts Amherst health economist dispels the notion that hospitals’ adoption of electronic medical records (EMRs) is driving up health care spending by helping providers overbill Medicare. Moreover, the research, published in the journal Contemporary Economic Policy, shows that EMRs can help hospitals navigate the complex system of medical billing codes to reduce underpayments by the federal health insurance program.
Jianjing Lin, assistant professor of resource economics at UMass Amherst, and Dr. Keith A. Joiner, professor of medicine at the University of Arizona College of Medicine, found an 11.7% average reduction in Medicare underpayments for hospitals with advanced EMRs compared to those without. This suggests EMRs enhance the accuracy of medical coding and documentation, enabling hospitals to recover more billable services without resorting to overbilling. Notably, EMR adoption did not correlate with an increase in overpayments, countering concerns that these systems facilitate “upcoding” — where providers inflate billing codes to secure higher reimbursements.

This technology is helping hospitals capture more legitimate reimbursements rather than facilitating improper billing behavior.
Jianjing Lin, assistant professor of resource economics at UMass Amherst
“This technology is helping hospitals capture more legitimate reimbursements rather than facilitating improper billing behavior,” Lin explains.
Lin and Joiner examined data from the Medicare Recovery Audit Program, focusing on claims for inpatient care between 2009 and 2015, when EMRs were becoming widely adopted due to federal incentives. They evaluated how the implementation of advanced EMR systems impacts improper payments, defined as either overpayments or underpayments. The study is among the first to analyze audit outcomes to understand how EMR adoption affects hospital billing and coding.
Hospitals examined in the study were categorized based on their adoption of EMRs, specifically the use of computerized physician order entry, a core EMR component. Using fixed-effect estimation methods, the researchers analyzed 3.5 million audits, covering approximately 70% of U.S. hospitals.
The results also reveal variations among different types of hospitals. For-profit hospitals saw the most significant reductions in underpayments with an average decrease of 49.6%. Teaching hospitals experienced a 36.7% decline in underpayments on average, highlighting the technology’s potential to streamline billing processes for complex cases.
The findings support “complete coding,” where EMRs improve billing accuracy by capturing comprehensive clinical data. The study suggests policymakers might leverage this evidence to refine health care reimbursement models and provide incentives for EMR adoption. Additionally, hospital administrators could prioritize EMR integration to enhance financial performance and ensure compliance with Medicare requirements.
However, the study also underscores the complexity of Medicare’s billing system. With a high administrative burden, achieving accurate documentation remains a challenge for health care providers. Lin and Joiner suggest that future reforms focus on simplifying billing criteria while promoting the adoption of advanced health IT solutions.
“The fixed costs to implement EMRs are high and there is certainly a learning curve, but our research shows that in the long run, the technology has the potential to benefit health care providers,” Lin adds.
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Michal Horný, assistant professor of health policy and management, has also shown that providers charge disadvantaged groups a higher amount for preventive services.