U.S. warns hospitals against Medicare scams, vows to prosecute WASHINGTON (Reuters) - There are "troubling indications" some hospitals may be using electronic records to defraud Medicare, the Obama administration said on Monday, promising to prosecute any doctors and hospitals found "gaming the system." U.S. Health and Human Services Secretary Kathleen Sebelius and Attorney General Eric Holder warned five hospital-related interest groups of signs of abuse of the Medicare healthcare program administered by the federal government. "We will not tolerate health care fraud," Sebelius and Holder said in a letter to the chief executives of the five groups, dated September 24. "Law enforcement will take appropriate steps to pursue healthcare providers who misuse electronic health records to bill for services never provided," the letter said. The Sebelius-Holder letter surfaced two days after the New York Times reported that hospitals and doctors may be using electronic records to contribute to a rise in Medicare billing, much of it in hospital emergency rooms. The Times said hospitals received $1 billion more in Medicare reimbursements in 2010, compared with 2005, partly by changing the billing codes assigned to emergency room patients. Sebelius and Holder said they were specifically concerned about reports that some providers may be using electronic records to inflate payments or to exaggerate the intensity of treatments in order to reap profits from Medicare. The American Hospital Association, which represents 5,000 hospitals and health systems, responded by calling on the U.S. Centers for Medicare and Medicaid Services for greater guidance on how to navigate complex rules and complained that "duplicative" government audits were diverting resources from patient care. "It's critically important to recognize that more accurate documentation and coding does not necessarily equate with fraud," AHA President Rich Umbdenstock said in his own letter to Sebelius and Holder. The Sebelius-Holder letter was also addressed to the Federation of American Hospitals, the Association of Academic Health Centers, the Association of American Medical Colleges and the National Association of Public Hospitals and Health Systems. The Obama administration has stepped up efforts to crack down on fraud, waste and abuse in Medicare, as a means of funding healthcare reform and extending the financial stability of the popular $590 billion healthcare program for the elderly and disabled. U.S. officials said new fraud-busting tools authorized by President Barack Obama's healthcare reform law allow the administration to stop Medicare payments on suspicion of wrongdoing and to mine data to detect fraudulent practices. Reporting by David Morgan; editing by Andrew Hay