The observation of increasing healthcare bills with health IT adoption could arise in two fashions: the bill-inflation and complete-coding mechanisms. Prior studies using claims data may not distinguish between them, as both lead to similar patterns in claims data. Using data from the Medicare Recovery Audit Program, which reviews Medicare Parts A and B fee-for-service claims, we examine how the overpayments/underpayment rate for hospitalization changes as hospitals adopt electronic medical records (EMRs). Our finding of little correlation between EMRs and overpayments but lower underpayments in EMR hospitals suggests EMRs improve coding and documentation. The results have potentially important policy implications.