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Case study - the PATH audit The first large-scale application of the new provisions of HIPAA is now underway in an OIG operation deemed the Physicians at Teaching Hospitals (PATH) Audit. The PATH Audit will almost certainly serve as a model for future federal operations aimed at fraud and abuse in health care. The methodology being used in the PATH Audit serves as a stark warning to doctors and hospitals as to how deadly serious, and how far-reaching, these anti-fraud efforts will be. In mid-1996, the feds adopted a new set of regulations governing how physicians should bill Medicare for services performed in teaching hospitals. These new regulations indicated that in order to bill Medicare for a service provided to a patient, an attending physician must either provide that service directly, or must be physically present when the resident physician (the “trainee”) performs the service. Furthermore, the new regulations spell out strict requirements for documenting that physical presence in writing. At the same time, the OIG announced a series of nationwide audits of how well physicians at teaching hospitals complied with those rules. The audit would cover the six-year period from 1990 – 1995. Alert readers will spot the problem right away – the audit was to be conducted to check compliance with rules that had not yet been promulgated. |
Prior to 1996, the rules governing when a teaching physician could bill Medicare for patient services performed by residents were extremely ambiguous. The most authoritative document prior to the new rules was Intermediary Letter 372 (IL372), written in 1969. IL372 appeared to require the physical presence of the attending physician for billable services only “when a major surgical procedure or a complex or dangerous medical procedure is performed.” Regarding the required documentation of billable services, IL372 was ambiguous. One paragraph states that adequate notes documenting these billable services could be “either written or countersigned by the supervising physician.” In a different paragraph, however, billable services must be “substantiated by appropriate and adequate recordings entered personally by the physician. . . ” (This discrepancy is just one example of how even a single regulatory document can give conflicting advice on a key issue.)
Over the years the ambiguous nature of these regulations was acknowledged by teaching physicians, medical schools, and the government, all of which talked about (some day) initiating clarification efforts. But life must go on, so a de facto standard of behavior was established. In most teaching institutions that standard was as follows: for routine (i.e., non-surgical and non-emergency) services performed by residents, it was okay to bill as long as those services were clearly overseen by an attending physician. Further, the attending physician’s countersignature of the resident’s note was considered adequate evidence of such oversight (and of acceptance of legal responsibility for the resident’s actions).
This de facto standard was adopted not only as a matter of convenience, but also as a vital part of the teaching process. In training good physicians, it is important to allow trainees some degree of independence – with oversight, of course, by an experienced clinician. A resident must learn to assess patients’ problems and to reach tentative clinical decisions on his own. Committing those assessments and decisions to writing in the medical record forces him to carefully consider all the important clinical parameters, and to concisely summarize the patient’s clinical problems, the objective findings, the assessment, and the plan for diagnosis and therapy. The attending physician, after performing her own assessment of the patient, then discusses the case with the resident and reviews his progress note. If there is a deficiency in the resident’s analysis, it is corrected. If there is a discrepancy of opinion regarding the diagnosis or the management of the patient, the discrepancy is discussed and a resolution negotiated (keeping in mind that the attending physician has the last word). The attending physician’s countersignature of the resident’s note (most often with an addendum that makes corrections or underscores issues of importance) indicates that all of the above has occurred.
This has proven an extremely effective training method for decades. Thus, the de facto standard was adopted not only because it appeared to comply with IL372, but also because it was philosophically the right thing to do.
When the new “clarified” regulations became effective in June, 1996, the resident’s independence was significantly reduced. Under the new guidelines, the attending physician now has to be present for even routine patient services. Further, only the attending physician’s own progress note can legally describe those services. The need for the attending physician to write her own extensive progress note (essentially duplicating the resident’s note) automatically devalues the efforts of the resident, and also reduces the attending’s motivation (and time) to carefully critique the resident’s efforts. This requirement dilutes the opportunity for teaching and learning. But rules are rules, especially when violating them constitutes a felony. So, while most teaching physicians viscerally disagree with these new regulations, at least they are clear enough.
The obvious problem with the PATH Audit is that not only does it apply these newly “clarified” regulations retrospectively to events that took place during a time when the existing rules were ambiguous and unclear, but also that the new rules require actions that stand in marked distinction to the “usual operating procedures” used in the nation’s best teaching institutions prior to 1996.
The audit “model” being established by the feds in their PATH initiative, therefore, is none other than the Regulatory Speed Trap. The first four steps of the Speed Trap were successfully completed with the publication of the new 1996 regulations; 1) formulation of ambiguous regulations; 2) establishment of de facto standards; 3) long-term acceptance of those de facto standards by the feds; and 4) sudden reinterpretation (i.e., “clarification”) of ambiguous regulations.
Up to this point, of course, the motives of the feds might still be viewed as being essentially benign. It is only the aggressiveness of the retrospective application of the new regulations (the fifth and most telling step of the Regulatory Speed Trap), that reveals the true motivation of the OIG.
That level of aggressiveness became apparent immediately. The first audits occurred at the University of Pennsylvania and Thomas Jefferson University. After conducting these audits, the OIG extracted settlements from these two prestigious institutions of $30 million and $12 million, respectively.
The amount of these settlements grabbed the attention of the academic community, which then listened in stunned silence as the OIG explained its plan for the broader PATH Audit (both in writing, and in a particularly chilling videotape distributed to academic centers). Those plans were, to say the least, extremely intimidating:
1) All academic centers in the U.S. would be audited during the next few years.
2) Centers would have a choice between two methods of conducting the audit, neither of which was attractive. “PATH 1” would involve the OIG itself conducting an on-site audit. The potential danger here, the OIG pointedly warned, was that many times federal auditors will notice things – peripheral issues aside from the main event – that will cause one thing to lead to another. Once a federal auditor arrives at an institution, the OIG implied, no telling when he or she will leave. “PATH 2” would allow the teaching hospital, at its own expense, to engage an external auditing firm that is acceptable to the OIG. However, the hospital electing this method would surrender certain legal and accounting privileges (such as attorney-client privilege), and would be required to see that a representative of the OIG be present at all meetings related to the audit.
3) Whichever method was selected, only approximately 100 charts would be audited from each hospital. The “error rates” in billing (based on the new standards retrospectively applied) would be determined from this sample, and extrapolated across all billing from the hospital during the six-year period in question, to calculate the total amount “overbilled.” (Any underbilling that is discovered, of course, would not be deducted from rates of overbilling.) The False Claims Act would then be invoked to allow the OIG to recover up to three times the extrapolated overbillings during this six-year interval. Because the total likely to be owed to the government can easily run to the tens of millions of dollars, institutions, it has been suggested, may want to consider an early settlement.
Step five of the Regulatory Speed Trap thus has clearly been fulfilled in the PATH audit, and in a distressingly aggressive and unforgiving manner.
The Association of American Medical Colleges and other organized groups have tried to appeal to reason, and have gotten some response. Two former Secretaries of HHS (Bowen and Sullivan) wrote in a letter to Congressman John Porter (R-IL) that, “Really since the inception of the Medicare program HHS has had a difficult time in setting forth a bright line standard that could be used to separate the services provided by an attending physician that are strictly teaching in nature and those that involve care to a specific patient. . . . Given the contorted history of [IL372] through the years, it would appear to be an unlikely candidate for an OIG investigation." Background Paper – Physicians at Teaching Hospitals (PATH) Intitative. American Medical Association and Association of American Medical Colleges, October 20, 1997.Harriet Rabb, General Counsel of HHS, has stated in a July, 1997 letter that “the standards for paying teaching physicians under Part B of Medicare have not been consistently and clearly articulated by HCFA (Health Care Financing Administration) over a period of decades." Letter on PATH Initiative from Harriet S. Rabb to Jordan J. Cohen, President, Association of American Medical Colleges and P. John Steward, Executive Vice President, American Medical Association.
Yet, the PATH Audit goes on unabated, and the OIG continues harvesting tens of millions of dollars from a succession of financially strapped medical schools. The nature of the PATH Audit speaks for itself. And what is says is that the feds are not fooling around. They’ve got the weapons, as well as the motivation and the public support to use those weapons, and they will use them to the fullest extent possible.
The PATH Audit can properly be considered merely a shake-down cruise for the new federal anti-fraud bureaucracy. It has gone well. Despite organized efforts to stifle the PATH initiative, despite congressional ears sympathetic to those efforts, and despite statements coming from even HHS officials (present and former) decrying the essential unfairness of the process, the OIG has pressed forward to great effect. Having set this precedent, the anti-fraud units will be very difficult to stop, or even slow, as they initiate their future “operations.”
This is an important point, because the PATH Audit affects only a small minority of physicians and institutions. Most physicians are not teaching faculty, most institutions are not medical schools, and most have given only passing attention to what is happening to their academic colleagues. Most of them don't understand yet what is coming.
More examples of what is coming: 1. See how the Feds are attempting to regulate the details of every single physician-patient encounter - The ongoing saga of the E&M guidelines. |
Next - Criminalizing health care
Surviving the Health Care System is adapted with permission from YourDoctorintheFamily.com
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