Upcoding of hospital admissions in Medicare Part A : Not a Significant issue Now

A relatively small but influential economics literature is devoted to financial abuse in Medicare.Much of that literature focuses on upcoding/no upcoding for inpatient hospital care inMedicare Part A, where reimbursements requested are greater/the same as justified by the cost of care provided. Analysis of Medicare claims data from 1985 – 1996 suggested that upcoding was a substantial issue. We used a different approach to examine this issue from 2011 – 2019, analyzing audit data from the Comprehensive Error Rate Testing program (CERT). Upcoding represented less than 0.5% of all Medicare fee-for-service reimbursements, a small fraction of improper bills for hospitalization, and was not significantly correlated with diagnosis related group (DRG) weights. Audit data does not discriminate between intentional (fraudulent) and unintentional upcoding. We therefore used Office of the Inspector General reports, showing that of all cases successfully prosecuted for healthcare fraud from 2013 – 2019, only 0.39% were for upcoding of hospital admissions, or 7.2% of all prosecutions for hospitals. Other forms of improper billing/fraud constituted more than 90% of all cases, both for hospital admissions and for Medicare Part B, paid on a fee-for-service basis