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Physicians At Teaching Hospitals (PATH) Audits

			Related Resources Letter from Harriet Rabb, July 11, 1997 AAMC-AMA legal complaint AAMC Documents Summary of PATH audits that have concluded

Summary

On June 21, 1996, the Department of Health and Human Services (HHS) Office of Inspector General (OIG) sent a letter to the AAMC that announced what it described as "a series of nationwide reviews of compliance with rules governing physicians at teaching hospitals (PATH) and other Medicare payment rules." The letter went on to state that, "This initiative grows out of the extensive work performed by the OIG at a major east coast university. The focus of the review was compliance with Intermediary Letter 372 (IL-372), the Medicare rule affecting payment for physician services provided by residents. We found that the institution was not complying with this rule. We also found that teaching physicians were improperly 'upcoding' the level of service provided in order to maximize Medicare reimbursement....The OIG has initiated the PATH project in order to determine whether, and to what extent, similar problems are present at other teaching institutions throughout the country." Teaching physician services for years 1990 through 1995 were selected for review. Thus, on the basis of an audit conducted at one institution, the PATH initiative was born.

As described by the OIG in the June 1996 letter announcing the PATH initiative, the audits focus on two issues: (1) "compliance with Intermediary Letter 372 (IL 372), the Medicare rule affecting payment for physician services provided by residents"; and (2) whether the level of the physician service was coded properly. Therefore, to determine the standards under which the audits must be conducted it is necessary to understand the requirements of IL-372 and of coding for physician services.

From June 1996 until July 1997 the OIG initiated PATH audits at forty-nine teaching institutions. During this same time period the Department of Health and Human Services, the HHS Office of Inspector General and the Health Care Financing Administration (HCFA) were asked by medical schools, faculty practice plans, teaching hospitals, members of Congress and organizations representing medical schools and teaching hospitals to clarify the parameters under which the PATH audits would be conducted. These requests for clarification, and the ensuing discussions and disagreements over the standards being used by the OIG, were an indication of the confusion which had existed for almost 30 years regarding the standards which teaching physicians must fulfill and document to support Medicare billing for their services when medical residents were involved in the care of their patients.

Harriet Rabb, then HHS General Counsel, issued a letter on July 11, 1997 that reviewed the PATH audits. In that letter Ms. Rabb stated that "the standards for paying for teaching physicians under Part B of Medicare have not been consistently and clearly articulated by HCFA over a period of decades." She then went on to outline five criteria which would be utilized to guide the conduct of the audits:

1. The audits only will be undertaken where carriers, before December 30, 1992, issued clear explanation of the rules regarding reimbursement for the services of teaching physicians.

2. Prior to beginning discussions about PATH with an institution the OIG will obtain carrier materials showing that clear instructions on the need for teaching physicians to be physically present were given to the institution or the physicians served by the carrier.

3. An institution approached by the OIG will have the opportunity to show that it or the teaching physicians received guidance from the carrier which is viewed by the institution as contradictory to the standards discussed in 2. above.

4. Audits for upcoding are appropriate where the OIG finds egregious cases of upcoding abuse or fraud as it audits pre-August 1995 records.

5. If the OIG determines that it will not engage in a PATH audit on the physical presence requirement, it will not pursue a PATH audit for upcoding of physician services.

Additionally, the OIG noted it would credit a hospital's submitted undercoded claims against upcoded claims.

As a result of the Harriet Rabb letter, audits were terminated at 16 institutions. However, audits continued at many institutions and were still conducted under rules that were not considered reasonable nor fair by many at the effected organizations. On October 29, 1997, the Association of American Medical Colleges (AAMC) and the American Medical Association (AMA) filed a legal complaint in the U.S. District Court for the Central District of California seeking relief from the unjust and coercive conduct by the Department of Health and Human Services (HHS) Office of the Inspector General (OIG) and the Department of Justice (DOJ) in investigations of teaching physician Medicare billing practices. The AAMC and the AMA were joined in the complaint against the government by other associations and academic organizations representing medical schools, faculty physicians and teaching hospitals across the country. The complaint challenged:

1. The government's right to conduct an audit and impose damages or penalties under standards that the government itself acknowledged were vague and inconsistent; standards that for nearly three decades were poorly communicated to teaching physicians.

2. The government's use of different rules in different parts of the country by Medicare contract carriers.

3. The imposition of damages and penalties based on the use of statistical sampling.

4. The government's coercive use of the potentially ruinous penalties under the False Claims Act (at the time the complaint was filed, double or treble damages plus $5-$10,000 per claim) and the extraordinary costs for an institution to challenge the government in court, to obtain settlements in the millions of dollars.

In July 2000, the Ninth Circuit Court of Appeals upheld a lower court decision that dismissed the PATH lawsuit brought by the AAMC and others. However, the court left open the door for an individual institution to file a suit once its case is "ripe," i.e., ready for adjudication. No new PATH audits have been initiated by the OIG, though institutions remain vulnerable to whistleblower suits being filed on "PATH-like" issues, such as whether the teaching physician was present and whether services were properly coded. Some PATH audits have concluded and others continue.

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