Newsletter for the Standards and Ethics Committee
Eastern Cardiothoracic Surgical Society
By Darryl Weiman, M.D., J.D.
In June 1996, the Office of the Inspector General (OIG) initiated a plan to audit teaching hospitals (the PATH audits). The OIG wrote, “[t]his initiative grows out of the extensive work performed by the OIG at a major East Coast University.”1 The focus of the review was compliance with intermediary Letter 372 (IL-372). This letter explained the Medicare rule affecting payment for physician services provided by residents. The review found that the university hospital was not in compliance with the rule.
The university in question was the University of Pennsylvania where it was alleged that the attending surgeons were billing for services provided by the residents and there was improper “upcoding” of the level of services provided to maximize Medicare reimbursement. The rule in question would allow for billing of the resident services so long as there was proper documentation for attending supervision. The rule required documentation with specificity and, if the documentation was inadequate, the services could not be billed for.
Prior to this audit, it was customary for chief residents to function independently, especially at night, and the attendings did not come in unless requested by the chief resident. With the new rule, which most (if not all) of the attendings were not aware of, the lack of documented supervision put the university at risk for a False Claims Act violation and that is exactly what happened.
The University of Pennsylvania was found to be billing despite “inadequate documentation” and there were 1.4 million claims submitted during the audit period. The Hospital for the University of Pennsylvania calculated that even if only 2% of the records had inadequate documentation, they would be at risk for statutory penalties of $280 million under the False Claims Act (not including treble damages for overpayments). The OIG did not want to bankrupt one of the premier teaching hospitals, so they agreed to a settlement of $30 million.
The University of Washington was the next target and that university agreed to a $35 million dollar settlement. This case was complicated by a neurosurgeon who tried to suborn perjury by having his residents say he was in the operating room when the bills were generated.
The Dartmouth Hitchcock Medical Center was found to have only a minimal billing error ($778) but it cost them $1.7 million to defend against the audit. The costs were high even with a victory.
With these financial victories, the OIG was looking to do more. Attorneys in the OIG found the audits to be a great way to advance their careers and it was no surprise that they planned to audit all teaching hospitals. Of course, the teaching hospitals fought back as their financial viability was on the line. Lobbying efforts by the universities and teaching hospitals led to Congressional hearings. The hearings led to a moratorium on the PATH audits, but this moratorium was not permanent. In fact, a recent audit led to a settlement at the University of Pittsburgh.
Since those PATH audits, teaching hospitals have worked hard to remain in compliance with the requirements for resident supervision at all levels, but an unintended consequence was a detrimental effect on resident training. As RVUs became more important in deciding attending salary, attendings were less likely to let residents do cases independently. The RVU issue was a result of the Omnibus Budget Reconciliation Act of 1989 which pushed surgeons to do more to increase their own operative load; this, of course decreased the resident involvement with the case.
Other laws and regulations on point were the 1997 CME (Coding and Medical Encounter Documentation) modifiers for billing involving resident doing cases and the 2002 CMS Mandates requiring the attending to be present for critical portions of the case. Although these laws and regulations led to a decrease in resident experience, the Libby Zion case probably had the most significance in reducing the “hands on” exposure in the operating room, wards, and clinics.
The Libby Zion case led to the Bell Commission in New York. This led to an 80-hour work week restriction for residents in that state. Other states soon followed the New York example and the ACGME bought in to the 80-hour work week restriction which affected all residencies.
It is now no surprise that up to 60% of general surgery residents finishing training are concerned that they may not be able to function independently, especially in the operating room. In fact, up to 80% of graduating general surgery residents go on to do a fellowship as they hope the added training will allow them to be safe and clinically competitive.2
If your practice is hiring new graduates, it may be prudent to mentor them as they may need to acquire the confidence needed to function safely and independently. It’s not their fault that the states and ACGME decided that residents in training needed more time off. I’m sure the new graduates will appreciate your help.
1Ruth SoRelle, Tracking a Tangled PATH, Circulation, 1998; 97:2191. 2 Yeo H, Viola K, Berg D, et al. Attitudes, training experiences, and professional expectations of US general surgery residents: a national survey. JAMA 2009; 302:1301-1308.