Teaching hospitals fight back against PATH rulings

A coalition of provider groups won't take no for an answer after its lawsuit against the federal Physicians At Teaching Hospitals (PATH) investigation of alleged upcoding and improper billing of physician medical services was dismissed by a California federal district court.

As a result, the groups - which include the Association of American Medical Colleges (AAMC), American Medical Association, American Hospital Association, Medical Group Management Association, and more than a dozen teaching hospitals from across the country - are appealing the ruling.

The provider plaintiffs argued that the findings of the previous and current PATH audits should be thrown out because federal investigators did not have the legal authority to conduct them for these reasons:

· Adherence to related documentation guidelines provided by HCFA was represented to be voluntary, and the guidelines were supposedly only meant to act as guidance - not as official regulations.

· Any rules devised by Medicare carriers are not official government regulations.

· HCFA might have intended the rules to be considered official and binding at some point, but it failed to fully promulgate them and communicate its intention to providers.

However, the court dismissed the group's suit on the grounds that its suit was "not ripe" for trial yet because all other administrative options had not yet been exhausted. "Plaintiffs essentially are asking this Court to render an advisory opinion so they may be better able to gauge their potential exposure under a False Claims Act prosecution or an administrative recoupment action," wrote U.S. District Court Judge Carlos R. Moreno.

In other words, the suit was not as much about challenging the PATH audits as about trying to get the court to set a potential outside limit on providers' liability, the judge concluded.

"We are greatly disappointed with the court's decision to dismiss our complaint," says AAMC president Jordon J. Cohen. "We still believe the Medicare audits of teaching hospitals are unfair and will continue to seek to remedy this situation."

Meanwhile, during June, the Justice Department announced the University of Texas Health Science Center at San Antonio had agreed to reimburse the government $17.2 million to settle allegations that it overbilled Medicare for physician medical services.

In another action, the Greater New York Hospital Association (GNYHA) and a group of New York teaching hospitals have filed their own separate PATH suit (Greater New York Hospital Association v. U.S., DC SNY, No. 98-CIV-2741).

This PATH suit covers many of the same points made in the California case. One difference is the New York suit also brings up the point that in 1997, the OIG released one group of teaching hospitals from a PATH audit of claims submitted before Dec. 30, 1992. This was done on the grounds that the group had not received clear guidance and explanations of the rules governing proper reimbursement of a teaching physician's medical services before that date.

The GNYHA's general counsel Susan C. Waltman says New York teaching hospitals also never received official "clear guidance" on Medicare's rules for reimbursing teaching physicians before that date. As such, they should also be exempted from PATH audits related to claims filed before 1993, Waltman contends. The government has pointed to articles in carrier newsletters as examples of clear guidance, but the GNYHA contends these are only informal internal publications and do not constitute official governmental guidance.