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Letter to June Gibbs Brown on the PATH Initiative

July 16, 1997

Ms. June Gibbs Brown
Inspector General
Department of Health and Human Services
Wilbur J. Cohen Building
330 Independence Avenue, S.W.
Washington, D.C. 20201

Dear Inspector General Brown:

As you know, Ms. Harriet Rabb, General Counsel, Department of Health and Human Services, wrote to me and Dr. John Seward, Executive Vice President of the AMA, on July 11, 1997 concerning the Physician at Teaching Hospital (PATH) initiative being conducted by your office. Based on that letter, and a phone conversation I had with Ms. Rabb on July 11, I have a number of requests and questions regarding the new PATH guidelines that Ms. Rabb suggested I direct to your office.

1. I understand that the OIG has terminated the PATH process at 16 institutions located in five different carrier regions, each of which has been determined to have provided instructions of insufficient clarity to teaching physicians to justify auditing Part B Medicare billing practices. I am requesting a) a list of those 16 institutions and their respective carriers, and b) a list of the 33 institutions and their respective carriers for which the PATH process is not being terminated at this time.

2. What criteria is your office utilizing to determine if clear guidance was provided by a given carrier? If these criteria are available in writing, may we have a copy?

3. Is the OIG still in the process of determining which carriers provided, and which did not provide, clear guidance? If so, when will this process be completed?

4. Is it true that the PATH process is not being terminated at all institutions under the purview of the 5 "unclear" carriers? If so, please advise us of the rationale for this decision?

5. Why have the audits not also been terminated, at a minimum, in Kansas, Iowa, and Florida? Failure to have done so raises major concerns about the uniformity of the process by which carriers are being judged to have provided clear guidance. Based on the OIG's own review of carrier policies, a copy of which is attached, the Kansas carrier did not give clear guidance about physician presence until after the Booth memorandum was issued, and the Iowa and Florida carriers allowed physicians to use stamps or countersignatures to indicate personal and identifiable direction sufficient for billing purposes. This latter standard is identical to that acknowledged by the OIG to have been used by the Missouri carrier. On what basis are the audits in Iowa and Florida being continued while those in Missouri are being terminated?

6. On July 9, 1997 Mr. Lewis Morris of your office told Mr. Robert Dickler of the AAMC, that the OIG has compiled all relevant communications on PATH-related issues for every carrier in the country. When Mr. Morris was asked to furnish the AAMC with a copy of this information, Mr. Dickler was informed that the material was "work product" and could not be released. Is that the position of the OIG? If so, on what basis are carrier documents and communications between carriers and providers considered "work product?" If not, I would appreciate receiving copies of this material as soon as possible.

7. The third guideline in Ms. Rabb's letter calls, in effect, for a pre-audit review to determine if the institution and its physicians understood the "clear guidance" provided by the carrier about the meaning of "presence". Will the PATH process in the 33 non-terminated institutions be suspended while a separate determination is made for each of these institutions? What criteria is the OIG utilizing to determine, "...as a matter of fact, that it or the teaching physicians at the institution received guidance from the carrier which the hospital views as contradictory to the standard referenced above"?

8. I understand from guidelines 4 and 5 in Ms. Rabb's letter that future PATH audits will not consider upcoding for services rendered prior to August, 1995 unless reasons exist to suspect egregious abuse or fraud. Is my interpretation of your intent correct? If so, will audit activity related to upcoding be terminated at the 33 institutions remaining under PATH?

9. If the OIG does intend to continue audit activity related to upcoding at the 33 institutions, given that audit activity relative to upcoding will be confined, prior to August, 1995, to instances of suspected "egregious" abuse or fraud, what criteria will be used to make this judgment? We are mindful that HCFA took into account the putative tendency of physicians to upcode by reducing the conversion factor that is used to calculate Medicare fee-schedule payments; thus, it would seem that HCFA itself would expect auditors to find a certain degree of "upcoding" as a matter of course. Moreover, the acknowledged absence before August, 1995 of clear documentation standards for coding EM services would appear to place a heavy burden of proof on allegations of "egregious" upcoding. How large must the discrepancy between upcoding and undercoding be to constitute, in the OIG's opinion, egregious upcoding abuse or fraud? Would an audit of 100 patient records that finds a 5% of Medicare revenue upcoding rate and a 3% of Medicare revenue undercoding rate represent an egregious case of upcoding abuse or fraud?

10. The proposed new grounding for the PATH initiative, as outlined in Ms. Rabb's letter, did not mention two of the four key issues we asked to be addressed in the briefing material we sent to you in January, 1997. The first was the matter of documentation by teaching physicians of their appropriate involvement in the care of patients. As you know, 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. Will PATH auditors be instructed to accept countersignature as evidence of "presence?" If not what standard will be utilized? Will it be a national or carrier-specific standard?

11. The second issue left unaddressed is the application of the False Claims Act (FCA). As you also know, 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. Will PATH audits under the new guidelines continue to subject all errors to the potential of double or triple penalties? I trust we may have the responses to these questions as soon as possible. Needless to say, our constituents remain greatly concerned about the fairness of the PATH initiative and are eager to receive clarification from your office about the new guidelines you have adopted. If you think a discussion of these issues among our two staffs would be helpful, I would be happy to arrange an early meeting. Please feel free to contact me or Robert Dickler of my staff if you have any questions. Thank you.

Sincerely,

Jordan J. Cohen, M.D.

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