GAO reports mixed findings on PATH audits, use of False Claims Act - General Accounting Office; Physicians at Teaching Hospitals

Healthcare Financial Management, Oct, 1998

The GAO issued two reports to Congress in July that gave qualified support to the HHS Office of the Inspector General (OIG) and Department of Justice (DOJ) for key fraud fighting strategies: the Physicians at Teaching Hospitals (PATH) audits and application of the False Claims Act. PATH is a controversial initiative by the OIG to ensure that teaching hospitals are billing Medicare appropriately for the services of attending physicians.

In its first report, the GAO concludes that the OIG was legally correct to institute the PATH audits and used appropriate audit methodology. The GAO determined that the requirement that a teaching physician be present when treatment is rendered in order for the hospital to be eligible to bill Medicare Part B for the teaching physicians' services is a long-standing one. Further, the GAO found that HCFA has issued sufficient information for physicians to be able to code correctly for these services, thus negating the healthcare community's assertion that the audits should be halted because providers have not received clear guidance. The GAO also stated that the OIG's use of records from a single year to calculate improper payments made over a multiyear period is appropriate because this method was used for settlement purposes only.

However, the GAO was less tolerant of the OIG's plan "to audit the major teaching hospital or faculty practice plan associated with each of the nation's 125 medical schools," on the assumption that these providers have the greatest number of residents and therefore may have received the majority of improper payments. The GAO suggested that, instead, the OIG should have used a risk-based approach to identify institutions to audit, "focusing on the most problem-prone institutions." The GAO was particularly critical of the OIG's audit of Dartmouth-Hitchcock Medical Center in New Hampshire, which was not considered a "problem" institution. The audit disclosed no significant violations.

The GAO also noted that the OIG made inappropriate assertions that teaching physicians were billing for services rendered on days they were not working. On the contrary, the GAO found no indication that the physicians were not working; rather, there was no documentation of the physicians' presence. The OIG further stated that most incidents of upcoding were multilevel, whereas the GAO found that most incidents were one-level and, therefore, often subject to interpretation and negotiation between the involved parties. While not disputing that inappropriate claims were submitted, the GAO asserted that "overstating the seriousness of the findings is unnecessary and unfair to the audited institutions."

A separate report from the GAO was less clear on whether the DOJ and OIG are applying the False Claims Act appropriately in healthcare fraud investigations. "HCFA and its fiscal intermediaries also have a responsibility to clearly and consistently delineate Medicare billing policies in a timely manner and install proper edits to ensure that Medicare pays only what it is supposed to," the July report to Congress concluded. By the same token, "voluntary compliance of hospitals is crucial for maintaining the integrity of the Medicare program."

Congress had requested the report in response to providers' claims that the agencies were overstepping their authority in applying the False Claims Act to antifraud initiatives involving Medicare's three-day payment window and the laboratory charge unbundling project. based on its review, the GAO outlined some areas of concern regarding these investigations, namely, the validity of using computer data from various sources as the basis for alleging a provider's liability, the aggressive style of notification to providers, and the brief time allowed for response to the notices. The DOJ's guidance for nationwide investigations (see "Updata," August 1998; the guidelines are on Fax-It, document 400042) addressed some of these issues.

To read "Medicare: Concerns with Physicians at Teaching Hospitals (PATH) Audits" (HEHS-98-174), go to www.gao.gov/new.items/bysubject.htm#11. To read "Medicare: Application of the False Claims Act to Hospital Billing Practices" (HEHS-98-195), go to www.gao.gov/new.items/newtitle.htm.>

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