A coalition of providers and healthcare trade groups sued the government last week in an attempt to moderate its ongoing fraud investigation of the Medicare billing practices of teaching hospitals and their doctors.
Referred to as "Physicians at Teaching Hospitals," or PATH, the 2-year-old probe focuses on how teaching hospitals and faculty practice plans bill Medicare for the work of medical residents. The investigation also has broadened to include a review of whether teaching hospitals exaggerate the severity of patients' illnesses to increase their Medicare reimbursements.
The inquiry has resulted in two settlements totaling $42 million. HHS cleared two hospitals when audits showed no substantial wrongdoing and dropped 16 other investigations after determining the Medicare carrier in their area had issued unclear instructions. Audits are ongoing at nearly 50 organizations.
In their lawsuit, the providers and provider groups charge that the federal government is illegally applying new billing standards retroactively. The suit also contends investigators are treating unintentional billing errors as intentional fraud. By making fraud accusations, the government is coercing hospitals into "highly disadvantageous and unfair `voluntary settlements,' " it said.
Also under attack in the suit are the government's methods of determining the size of fines and penalties and its use of different carrier rules in different areas.
The plaintiffs include the American Hospital Association, the American Medical Association, the Association of American Medical Colleges, and 13 teaching hospitals and physician groups (See chart). The defendants are HHS and the U.S. Justice Department. The lawsuit was filed Oct. 29 in U.S. District Court in Los Angeles.
"Unfortunately, litigation now appears to be the only means available to ensure that the audits of teaching physicians are conducted in a uniform and equitable way," said AAMC President Jordan Cohen, M.D.
But a lawyer familiar with such suits said the complaint could be thrown out of court because the groups might not be able to prove they have exhausted all administrative remedies.
A spokeswoman for HHS' inspector general's office said the agency had not seen the complaint and would not comment.