Hospital Bill Bubble

Costly Medicare reform

Buried within the American Recovery and Reinvestment Act, a.k.a. the 2009 stimulus bill, was $27 billion in spending aimed at encouraging health care providers to adopt new information technology, especially electronic patient records. "Once patients experience the benefits of this technology, they will demand nothing less from their providers," Medicare Director Marilyn Tavenner and David Blumenthal, who is the national coordinator for health information technology at the Department of Health and Human Services, wrote in a 2010 note to The New England Journal of Medicine. "Hundreds of thousands of physicians have already seen these benefits in their clinical practice."

So far those clinical benefits are unclear. But health care providers certainly are getting financial benefits from their government-subsidized electronic record systems, which are helping them maximize their Medicare reimbursements. The new record systems help hospitals streamline the payment process, leading to more and higher bills. A September New York Times analysis found that Medicare reimbursements had increased by at least $1 billion in 2010, largely because of electronic records. The Department of Health and Human Services, which oversees Medicare, still insists the record systems can save money, but it has not provided any evidence of that.