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Response to Harriet Rabb on the PATH Initiative

July 15, 1997

Harriet S. Rabb
General Counsel
U.S. Department of Health and Human Services
200 Independence Avenue, S.W.
Room 713F Washington, D.C. 20201

Dear Ms. Rabb:

We have now had an opportunity to review your July 11, 1997 letter addressed to me and Dr. Seward and have several follow-up points that we want to raise. As I noted when we spoke by phone last Friday, all of us appreciate the time and effort you and your staff have expended to establish new protocols for the PATH initiative. Certainly, those institutions that now are slated to have their audits terminated are especially grateful. Those that have not will, by contrast, undoubtedly view the differential treatment of providers across the country as inherently unfair. They will ask, how can a national program such as Medicare countenance having different rules for different parts of the country, especially when supposed violation of those rules risks multimillion dollar penalties? It just doesn't make sense. Moreover, the new protocols fail to resolve many of the concerns we have expressed both to the Secretary and to the Inspector General. I remain in hopes that we can obtain further clarification and, if appropriate, further modifications of the audit parameters.

First and foremost, we strenuously disagree with your position that the carriers have the legal authority to set standards and documentation requirements that go beyond what HCFA stipulates as necessary for a teaching physician to bill Part B for a covered professional service to a Medicare beneficiary. I understand that we have a fundamental disagreement on this point and that we are obliged to pursue relief on this principle through other mechanisms.

Regardless of what authority carriers may or may not have had, we were surprised that the OIG found only five carriers (covering 16 institutions) in the country that provided inadequate clarification. Our review of carrier documents, and our conversations with carrier and regional office personnel, indicate otherwise. Indeed, a significant percentage of the carriers have, we believe, failed to provide clear and consistent directives; moreover, the action of the carriers was, in many instances, inconsistent with one or more of their own communications. We will pursue this concern with the OIG.

I am requesting that you clarify an issue that does appear to be within your purview. Your letter states that, "where OIG finds egregious cases of upcoding abuse or fraud in the course of its audits of pre-August 1995 records, such matters are appropriate for attention and resolution." As per your analysis of the "presence" issue, I assume that you believe that either HCFA should have defined "egregious cases of abuse or fraud" or, if HCFA policy was not unambiguously clear on this point, that the carriers had the authority and responsibility to inform the teaching institution and teaching physician as to what would constitute egregious upcoding. If you concur with this position, we believe it is essential for the OIG to alter its protocol with respect to the upcoding issue. Based on the content and spirit of your letter of July, 11, 1997, we would like to suggest that the following protocol should be utilized for the upcoding issue:

For those institutions where the OIG has determined that a PATH audit is appropriate, the OIG will not pursue an audit on the upcoding issue until the OIG has obtained carrier (or HCFA) materials showing clear instructions to teaching physicians as to what constituted egregious upcoding while the carriers were awaiting the guidelines. In determining egregious upcoding errors, the new documentation guidelines promulgated in 1994 cannot be used for services provided prior to August 1, 1995. The auditors must assess the appropriateness of the documentation based on whatever standards HCFA and the carrier had in place and communicated to physicians prior to the new guidelines.

In addition, please clarify whether, in your judgment, an institution targeted for a PATH audit relative to the physical presence issue could point to confusing statements by HCFA (as opposed to the carriers), of which it was aware, as evidence that it had received guidance contrary to what the OIG believes to have been the carrier standard.

One final clarification. For the 33 institutions that have not had their audits terminated, will the third guideline described in your July 11, 1997 letter apply, namely, will the audit process be halted until a preaudit review has been completed to determine if a PATH audit should be conducted?

I was disappointed that your letter did not mention two of the four key issues we asked to be addressed in the briefing material we presented to the Secretary at our meeting with her on January 28, 1997. The first was the matter of documentation by teaching physicians of their appropriate involvement in the care of patients. We think that IL-372 and related documents clearly permit countersignature of an accurate note by a resident to suffice as documentation that the teaching physician provided appropriate medical direction for the care of that specific patient and was "present" when the care was provided. The second issue left unaddressed is the application of the False Claims Act (FCA). We think the OIG and DOJ are not justified in routinely applying penalties under the FCA for errors calculated to have occurred on the basis of statistical extrapolation.

Again, despite the concerns raised above, we do thank you for your efforts throughout this arduous process. If you have any questions with respect to the issues raised in this letter, please feel free to contact me at 202/828-0460, Bob Dickler of the AAMC at 202/828-0492, or Laura Loeb at 202/637-5760.

Sincerely,

Jordan J. Cohen, M.D.