Clamping down on upcoding: Government efforts to curb a Medicare billing fraud and abuse

“Upcoding,” a type of Medicare fraud and abuse in hospital billing practices, represents the attempt by some hospitals to get reimbursed for a higher paying diagnosis-related group (DRG) than is justified by a given patient\u27s disease or condition. Though recognized as a problem shortly after the DRG system of Medicare reimbursement went into effect in 1983, only since the passage of the Health Insurance Portability and Accountability Act of 1996 (HIPAR) has the federal government instituted systematic regulatory enforcement actions to curb upcoding. HIPAR greatly increased the severity of penalties for all types of Medicare fraud and abuse and strengthened the main regulatory agency dealing with upcoding, the Office of the Inspector General of the U.S. Department of Health and Human Services (OIG). This study will assess how effective HIPAR and five subsequent OIG enforcement initiatives targeting five specific DRGs have been in curbing the practice of upcoding. The passage of HIPAR and the five DRG enforcement actions, which took place in 1997–1999, will be the independent variables. Dependent variables will be the ratio of both the five targeted DRGs and twelve other high upcoding DRGs to total hospital discharges; these seventeen DRGs have been identified by the government and prior literature as being at high risk of upcoding. The incident of upcoding of these seventeen DRGs will also be investigated in hospitals which show a high probability of being high upcoding hospitals versus the remaining group of hospitals. Data comes from the Agency for Healthcare Research and Quality Nationwide Inpatient Sample (NIS), drawn from 900–1000 hospitals in seventeen states around the country