Summary: About 1,200 hospitals in the United States have graduate medical education programs to train doctors in medical specialties after they have completed medical school. In December 1995, the University of Pennsylvania, without admitting wrongdoing, entered into a voluntary settlement with the Justice Department, agreeing to pay about $30 million in disputed billings and damages for Medicare billings by teaching physicians. This settlement resulted from an audit done by the Department of Health and Human Services' Office of the Inspector General (OIG). Concerned that such problems might be widespread, the OIG, in cooperation with the Justice Department, launched a nationwide initiative--now commonly known as Physicians at Teaching Hospitals (PATH) audits--to review teaching physician compliance with Medicare billing rules. As of April 1998, five additional PATH audits had been resolved, resulting in settlements, in three of these cases, totaling more than $37 million. The PATH initiative has generated considerable controversy. The academic medical community disagrees with the OIG about the billing and documentation standards that were in effect during the periods under review. The medical community also contends that the Justice Department is coercing settlements from teaching institutions through threats of federal lawsuits. This report determines (1) whether the Department of Health and Human Services' OIG has a legal basis for conducting PATH audits, (2) whether the OIG has followed an acceptable approach and methodology in conducting the audits, and (3) the significance of the billing problems cited in selected audits.
