October 1998 Bulletin

IG to scale back audits

GAO criticizes plan to investigate all institutions

The Inspector General (IG) of the Department of Health and Human Services will cut back the number of institutions where it will conduct Physicians at Teaching Hospitals (PATH) audits, however, it will complete work on audits now in progress.

In a report on PATH, the General Accounting Office (GAO) said the IG attributed the scaling back to "competing demands for its resources and determinations that some carriers did not provide clear communications regarding teaching physician physical presence rules."

The GAO found that the PATH initiative is consistent with law and the IG followed a reasonable methodology in conducting its work. However, the GAO was critical that the audits were not based on risk of noncompliance with teaching physician billing rules. Initially, the IG planned to audit the major teaching hospital or faculty practice plan associated with each of the nation's 125 medical schools.

"While targeting the largest teaching institutions in the country was a reasonable first step, a risk-based approach to prioritizing PATH audits could have enabled the IG to target institutions most likely in violation of teaching physician billing rules and concentrate its efforts on these institutions," the GAO said.

The GAO cited the audit of Dartmouth-Hitchcock Medical Center which took 10 months and cost the institution about $1.7 million in direct and indirect costs. The audit identified billing errors totaling $778.

In the PATH audits, a random sample of 100 Medicare inpatient admissions, typically involving 1,500 to 2,000 individual physician services for one year is selected. All 100 of the 1993 sampled admissions were reviewed in the University of Pennsylvania audit, enabling the IG to project the results of Medicare inpatient admissions for the year audited. Only 50 of the 100 1994 sampled admissions were completely reviewed at Thomas Jefferson University-only one-half of the number the IG considered the minimum to make an extrapolation.

The GAO found that because the review of services was not completed at Jefferson University, the sample was not sufficient to make a statistically valid estimate of total overpayment to the year audited, much less multiple years. Also, the GAO found that at both institutions, the DOJ projected evaluation and management coding errors to time periods that preceded implementation of the current codes.

In both cases, the institutions settled because of possible severe fines and penalties that might have resulted from litigation under the False Claims Act.

A suit coordinated by the Association of American Medical Colleges and the American Medical Association, and joined by the Academy and others, seeks to end "unfair and retroactive audits" of teaching physicians' Medicare billing practices involving residents. The suit asks for an adequate period of time to allow teaching hospitals to implement actions to assure voluntary compliance with new requirements for documentation of physician services.

PATH audits (As of April 30, 1998)

University of Pennsylvania$30
Thomas Jefferson University12
Dartmouth-Hitchcock Medical CenterNone
University of Virginia8.6
University of Pittsburgh17

Source: Concerns with Physicians at Teaching Hospitals (PATH) Audits, GAO report July 1998

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