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Responses to Questions Commonly Asked When Discussing the PATH Audits

1. The OIG says that IL-372 has always set out a clear standard requiring the physical presence of the attending physician, at the resident's side, for every service that is billed to Medicare. Is the OIG wrong?

The original Medicare statute provided that the Medicare program should reimburse physician services furnished in teaching hospitals. In 1967, the Medicare program established the general rule that payment to attending physicians:

. . . applies to the professional services furnished to a beneficiary by the attending physician when the attending physician furnishes personal and identifiable direction to interns or residents who are participating in the care of the patient. (emphasis added)

The same regulation established a higher standard for a subset of services:

In the case of major surgical procedures and other complex and dangerous procedures or situations, the attending physician must personally supervise the residents and interns whom the physician involves in the care of the patients. (emphasis added)

As stated in Question 2, below, IL-372, issued in 1969 to clarify the requirement for supervising physicians in teaching settings, followed the 2-tier approach that had been established in the regulations.

In 1980 when the Medicare statute was amended to mention payments for physician services in teaching setting, the law allowed Part B billing if the teaching physician "renders sufficient personal and identifiable physicians' services to the patient to exercise full, personal control over the management of the portion of the case for which the payment is sought . . ." There were no additional implementing regulations to explain the meaning of this requirement. In 1991, the 1967 regulations were re-promulgated as part of the Medicare Fee Schedule rules and HCFA restated its two-tiered approach without any substantive changes.

In 1986 the General Accounting Office documented that there was substantial variation of interpretation by local Medicare carriers as to what would constitute personal and identifiable services provided by the teaching physician. The report concluded that "HCFA needs to establish and enforce explicit documentation requirements so that teaching physicians and hospitals know what is expected to [sic] them and understand that they are to be held accountable for not complying with Medicare requirements." Richard Kusserow, then Inspector General of HHS, wrote a letter to the GAO stating that the OIG had carefully reviewed the report and had no comment.

Throughout the years, HCFA itself has acknowledged that the requirements of IL-372 are ambiguous. It was not until HCFA issued a new teaching physician rule in December 1995, effective July 1, 1996, that Medicare required the teaching physician to be physically present during the "key portion" of any service and to explicitly document this presence.

2. Prior to July 1996, what was required to bill Medicare for a service provided by a teaching physician when a resident was involved in the delivery of care?

The original Medicare statute indicated that the Medicare program would reimburse physician services furnished in teaching hospitals. In 1967 regulations governing payments to physicians in teaching hospitals were issued. In 1969 IL-372 was issued "to clarify and supplement the criteria that govern reimbursement in this area . . . " IL-372 remained in effect until July 1, 1996, when the new teaching physician regulations went into effect. IL-372 provided a list of criteria that assisted the teaching physician in determining whether his/her professional services could be billed to Medicare. In summary, IL-372 stated that the teaching physician had to be recognized as the patient's personal physician and had to establish an "attending physician relationship" as a private physician would do. To achieve this, the attending physician had to fulfill the following criteria:

• review the patient's history, the record of examinations and tests in the institution, and make frequent reviews of the patient's progress; and
  
• personally examine the patient; and
  
• confirm or revise the diagnosis and determine the course of treatment to be followed; and
  
• either perform the physician's services required by the patient or supervise the treatment so as to assure that appropriate services are provided by interns, residents, or others and that the care meets a proper quality level; and
  
• be present and ready to perform any service performed by an attending physician in a nonteaching setting when a major surgical procedure or a complex or dangerous procedure is performed; for the physician to be an "attending physician" his presence as an attending must be necessary (not superfluous as where, for example the resident performing the procedure is fully qualified to do so) from the medical standpoint; and
  
• be recognized by the patient at his personal physician and be personally responsible for the continuity of the patient's care, at least throughout the period of hospitalization.

IL-372, in following the 1967 regulations, set forth two very distinct standards for personal involvement of the teaching physician in services provided and billed to Medicare patients: 1) a standard of physical presence for surgical and complex medical procedures, whereby the teaching physician performed or observed the resident perform the procedure; and 2) a standard of medical direction of the resident's visit and consultation services, when those services were provided in the context of an established attending physician relationship with the patient.

Lastly, IL-372 guidelines required that teaching physicians demonstrate their personal service and medical direction by notes and orders in the patient's record that either were written personally or, if written by the resident, were countersigned by the teaching physician.

3. Doesn't IL 70-2, issued subsequent to IL-372, require the presence of the attending physician for outpatient services?

IL 70-2 requires the attending physician to be "present" during the provision of an outpatient service. But it does not say whether "present" means being at the elbow of the resident or being in the hospital and/or clinic and being "immediately available," to provide personal and identifiable direction to the resident with respect to the care of an individual patient. In a 1989 proposed rule that was never finalized, HCFA defined "present" in the outpatient setting as meaning "immediately available." This illustrates that HCFA acknowledged that "immediate availability" rather than "physical presence" was the appropriate standard for attending physicians under these circumstances.

4. What were the issues discussed in the Charles Booth memoranda of 1992 and 1993? Was "presence" of the teaching physician ever clearly defined by HCFA prior to July 1996?

In 1992 and 1993, Charles Booth, then Director of HCFA's Office of Payment Policy, issued memoranda that stated the teaching physician must be "present" for all services that involved residents in order to bill Medicare. In March of 1993, Dr. Robert Petersdorf, then President of the Association of American Medical Colleges, sent a letter to Mr. Booth stating that the AAMC believed that the "key requirement historically under IL-372 was that in order to receive payment from Part B, the attending physician relationship must be established with the patient." In his letter of response on May 7, 1993, Mr. Booth agreed with the AAMC's interpretation and stated: "We would agree with you that the establishing of the attending physician relationship is the key requirement that must be met before determining whether payment should be made for individual services and the level of such payments." He further commented that "it is the attending physician's input (emphasis added) into the individual service that makes the service a covered service payable on a fee-for-service basis by the carrier." Finally, Booth cited the Medicare Carrier's Manual (MCM), section 8201, that says "for a service to be furnished in a hospital by a resident to be payable by the carrier, it must be furnished in the presence (emphasis added) of a physician who meets the attending physician requirements."

The term "present", as used by Booth in these memoranda, was never defined although it was evident that Booth had a much higher standard in mind for teaching physicians than was ever communicated or enforced by HCFA or the majority of the local Medicare carriers. Although the AAMC did not respond in writing directly to Mr. Booth's second memorandum in 1993, the AAMC held a series of meetings with HCFA staff, including Mr. Booth, in the months following his memo to Dr. Petersdorf. It was explained that the AAMC believed Booth failed to demonstrate an adequate basis and statutory authority for his interpretation of existing policy, evidenced by the following points:

1. IL-372 never clearly articulated (moreover, the AAMC believes it never intended to address) the requirements for billing an individual service.
   
2. Booth did not define what IL-372 required in terms of the attending physician's additional "input" into the individual service billed.
   
3. Booth did not define "presence" as referenced in the Medicare Carrier Manual instruction.
   
4. Booth does not articulate a standard for documentation of the teaching physician's presence. Thomas Ault, then Director of the Bureau of Policy Development and Charles Booth's supervisor, subsequently issued a letter in which he stated that Medicare should not enforce a physical presence interpretation if they had not done so previously, until final rules were issued. HCFA then initiated and completed the required process to establish new payment policy in July 1996 with the issuance of a duly promulgated rule for teaching physician billing requirements. The AAMC participated throughout this process.

5. What is meant by Evaluation and Management (EM) Services? What is "upcoding?" What is "under-coding?"

In 1992, along with the implementation of the resource-based Medicare Fee Schedule payment system for physicians, HCFA established a new coding system for billing evaluation and management (EM) services, also known as physician visits and consultations. The new EM codes were developed by the AMA CPT Editorial Board, with considerable input from major physician specialty societies and the Physician Payment Review Commission. Currently, a physician selects an EM code based initially on two criteria: 1) where the service is performed, e.g., hospital, outpatient clinic, private office, emergency department, nursing home; and 2) whether or not the patient is a new patient or an established patient of the treating physician. In addition, a physician must select from a series of code "levels" that best represents the physician's work performed to deliver the service.

The new coding system is extremely complex and takes considerable effort to learn and apply correctly to everyday medical practice. HCFA and the AMA's CPT Editorial Board, working with input from a number of physician specialty societies and other organizations, developed extensive educational materials, vignettes, illustrations and tables for the key elements to assist physicians in selecting the best code. Not only is the system difficult to use, it is difficult to audit, due to the extensive number of codes and levels within codes for visit and consultation services.

During the period that HCFA and the AMA were developing the documentation guidelines (1992-1994), HCFA instructed all the carriers not to conduct medical reviews (audits) on EM services. When HCFA issued guidelines in November 1994, carriers again were instructed to allow providers a grace period to familiarize themselves with the guidelines. HCFA instructed the carriers not to audit EM services for recoupment purposes until after August 1, 1995.

Due to the complexity of the EM coding system, mistakes are easily made whereby physicians may inadvertently select the wrong code. For example, a physician may select a code higher than his/her actual work or documentation indicates. This is commonly referred to as "up-coding". Conversely, a physician may select a code that does not represent the full extent and level of his/her work. This is commonly referred to as "down-coding."

Moreover, the OIG itself in a May 1995 report acknowledged that at least prior to the issuance of these documentation guidelines, carriers and physicians alike had difficulty selecting the proper level of coding. In addition, the OIG report found that carriers understood that HCFA had instructed them not to audit these services.

March 3, 1997
AAMC