Evaluation of Hospital Medical Staff's Comments on Report on Review of Medicare Payments for the Services of Salaried Supervisory and Teaching Physicians

Published by the Government Accountability Office on 1971-08-17.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

aj   COMMITTEE   ON FINANCE,_   ;   / , r-i,- i

     Evaluation Of Hospital Medical Staff’s
     Comments On Report On Review Of
     Medicare Payments For The Services
     Of Salaried Supervisory And
     Teaching Physicians a-164037~4~

                                                      COMPTROLLER     GENERAL     OF THE     UP(ITED   STATES
                                                                    WASHINGTON.   D.C.   20348

3                   B-164031(4)

    '1              Dear Mr.               Chairman:
                 Your letter       of April      23, 1971, requested             our evaluation
         of a letter       dated February         22, 1971, which you had received
         from representatives            of the medical         staff      of Wayne County             r, .: ',
       / General Hospital          in Eloise,      Michigan.          The medical      staff's
      / letter      took exception        to certain       matters       pertaining      to our
         December 4, 1970, report              to your Committee            on our review        of
         Medicare      payments      for the services          of salaried        supervisory
         aiEPt"eaching      physicians        at the hospital,,
                                                         ._-_l- ..
                 The medical       staff    took exception         to the following            matters
         pertaining      to our report         or to actions          taken by the Social
    i    Security      Administration         or its carrier,           Michigan    Medical      Ser-
                               --We made a distinction               between        (1) the supervisory       and
                                  teaching       physicians       who supervised          the medical     care
                                  provided       in the hospital         wards and operating           rooms
                                  and (2) hospital-based               specialists,         such as radiolo-
                                  gists    and pathologists.              The medical        staff  stated     that
                                  all its physicians            were specialists            and that all had
                                  responsibilities           involving       teaching       and supervision       as
                                  well   as direct        patient      care.
                               --We concluded         that,    on the basis     of our review      of the
                                  hospital's       medical     records    for 50 Medicare     patients,
                                  the professional          services    billed   on a fee-for-service
                                  basis by the hospital             on behalf   of its salaried       super-
                                  visory     physicians      generally      had been provided      by
                                  residents      and interns        and not by supervisory       physi-
                                  cians.      The medical        staff  stated   that this was not
                               --The medical    staff   maintained   that,   to bill      Medicare,
                                  documentary   evidence    of the services      provided      by them
                                  was not required     by the Social    Security      guidelines
                                  in existence    at the time the services        were rendered.

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           /                                                 50TH ANNiVERSARY              1192%
                                                                                               - 8971:

       -We questioned       whether     the fee-for-service            schedule        of
        charges was the appropriate              basis    for paying        for the
        supervisory       physicians'      services,      because it was ques-
        tionable      whether     many of the services          billed      had been
        furnished      personally     by the physicians.             The medical
        staff     suggested     that our conclusion          was based on a
        retroactive       application      of the Social        Security       April
        1969 guidelines         which specifically          required      that,      to
        bill    Medicare,      a supervisory      physician's         services       be
        supported      by entries     in the patient's          medical       record.
       ,-The carrier       had been withholding              payments     for the
         services      of the hospital's           supervisory        and teaching
         physicians      from August 1969 even though the hospital
         had changed its method of billing                     for such services
         in response       to the Social          Security      April   1969 guide-
          lines.      The medical       staff     suggested       that this     condi-
         tion was due to the lack of clear                     guidance     from the
         Social     Security       Administration         regarding     the
          appropriate      billing      procedures.
      --We pointed       out that,      under the version          of the Social
         Security     Amendments of 1970 (H. R. 17550) which
         passed the House of Representatives                   on May 21, 1970,
         the salaried       supervisory      and teaching        physicians       at
         Wayne County General Hospital               could qualify         for
         payment on a fee-for-service               basis but that,          in our
         opinion,     a cost-reimbursement           method would be more
         appropriate.         The medical     staff     indicated       that the
         use of the cost-reimbursement               method would result           in
         lesser    payments      for the servicesof          teaching      physi-
         cians than would be made to physicians                    in private
         practices     on a fee-for-service           basis.       They stated
         that this     reflected      adversely      on the caliber          of the
         professional       competence      of the teaching          physicians.
     We do not disagree    with the medical  staff@s   contention
that all its physicians    were specialists   and were involved
in supervising  and teaching    as well as in patient   care. We

B-164031    (4)

made a distinction,           however,    between the physicians             supervis-
ing the medical          care in the hospital         wards and in operating
rooms and the hospital-based              specialists        because,     as stated
on page 8 of enclosure              I to our Decetier        19?0 report,       the
hospital      had used       different    procedures       to bill      Medicare    for
their     services.       Also certain     Medicare      regulations       relating
specifically        to supervisory       and teaching        physicians       (20 CFR
 405.521)      generally     are not applicable        to radiologists          and
pathologists        because these specialists            usually      do not bill
in the capacity          of a patient's      "attending"       physician.
          In accordance       with the Committee's           request,   we reported
what the medical           records     showed regarding          who had provided
the services          for which Medicare          had been billed.        Hospital
officials        in developing       their     comments on a draft        of our re-
port,       apparently     verified     that    we  had   reported    accurately
what the records           showed.      The hospital's         comments which
were included           in our final       report   stated     that:
               "We have reviewed    the clinical        records
              of the patients    identified      to us as
              those audited    by your staff       ***.
              "Regrettably,          our review       of the afore-
              mentioned       clinical       records     does not
              enable us to refute              the findings
              reported      *** that our medical             staff
              has not documented             in the clinical
              records     that they provided             all of the
              services      for which bills           were rendered.
              This does not mean that the services                   were
              not rendered.            It does mean, however,
              that our Medical            Staff     cannot confirm    by
              means of the clinical               records    that the
              services      were rendered.
              "The conclusion          indicated      *** that the
              professional        services       for which
              Medicare     billings       were rendered      'generally
              had been furnished            by residents     and
              interns     and not by an attending            physician'
              is considered         erroneous       by our Director
              of Medicine        and our Director         of Surgery."


        As indicated      by several    of our reports      to your Committee,
the question       of what backup documentation          was required        to
support     a bill    for the services      of supervisory     and teaching
physicians      before    the Social    Securit    April   1969 guidelines
has been a matter         of contention    between the Social       Security
Administration        and the teaching     hospitals     and their    affili-
ated medical       schools.
        Notwithstanding          the lack of implementing                instructions
before     April     1969, Social       Security      officials        have main-
tained     that the language           of the August 1967 regulations
implied      that the bills         for the teaching            physicians'        services
should be supported            by documentary         evidence.          These offi-
cials    point     out that such-language             as "personal          and identi-
fiable     direction"       and "the carrying           out by the physician               of
these responsibilities              would be demonstrated               by such actions
as ***m clearly          indicates      that a teaching           physician's
charges      for his professional            services       to a particular           patient
should be susceptible              of verification.
        In addition,      there were certain      generally      accepted     stan-
dards of the Joint          Commission   on Accreditation        of Hospitals
which pertained         to hospital    medical  records     in existence
before    April     1969 and which indicated       to us that,        if a
teaching    physician      was acting    as a Medicare      patient's      attend-
ing physician,         some evidence    should have been included           in the
patient's       medical   records.
       In accordance     with section     1865 of the Social   Security
Act (42 U.S.C.      1395bb),     the Wayne County General Hospital      has
been eligible     to participate      in the Medicare   program by
virtue     of its accreditation      by the Joint   Commission  on
Accreditation     of Hospitals.
     The 1964 version      of the reference      material    explaining
the standards    for medical    records    used by the Joint       Commis-
sion in surveying    hospitals     contained   the following       questions
and answers.
        "What are the recommendations                  of the Joint
        Commission  regarding signatures                 on medical

            "Each clinical       entry should be signed by the
            attending    physician.        This includes      the face
            sheet *** as well         as history,    physical
            examination,      operative     report1   progress    notes,
            and orders     for treatment."
                                  *    *   *    *     *

            "Our attending       staff   physicians        object   to
            signing    or authenticating         the interns'       or
            residents'    histories      and physicals.           They
            claim it might be held against               them.     Why
            does the Joint       Commission      require      it?
            "The Joint        Commission        states     in the Explanatory
            Supplement:         'In hospitals         with house
            officers,       the attending          physician     should
            countersign        at least       the history       and physical
            examination        and the summary written             by the
            house officer.'              This requirement        was made for
            two reasons.            First,    the house officer's          years
            are learning          years.      If a hospital       medical
            staff      does not supervise            by reading,     amending,
            criticizing,          and authenticating          these documents
            of the house officer,               they are not living          up to
            their      responsibilities           and are plainly       guilty
            of exploitation."
             At Wayne County General Hospital,                    our comparision       of part
     B bills     with the medical           records     applicable        to 50 Medicare
     patients      included       33 charges      for the first         day of hospitali-
     zation     (initial      visit).       The initial        visit    generally    was billed
     at $15 and included              a medical     diagnosis,       physical     examination,
     and preparation          of the patient's          medical      history.      According
     to the medical         records      applicable      to these 33 charges:
            --In    one case, the staff             or attending   physician         in
                whose name the service              was billed   was involved.
            --In    one case, a staff  physician    other than the one in
                whose name the service   was billed     was involved.
            --In     the   remaining   31 cases,          only   residents    and
                interns     were involved.

            In our opinion,        the foregoing        findings     indicated       that,
     if the salaried      staff      physicians      at the hospital         were act-
     ing as the Medicare         patients'      attending      physicians,        the
     applicable    medical      record accreditation            standards      for hos-
     pitals    had not been complied           with.
             The 50 Medicare       patients      covered by our review were
     hospitalized      before    the effective        date of the Social       Security
     April     1969 guidelines;       however,      as indicated    in our December
     1970 report,      the carrier's        auditors,     in December 1969, re-
     viewed 100 patients'          medical     records    at the hospital      and con-
     cluded that the Social           Security     April    1969 guidelines     were
     not being complied         with,    because the medical        records    for 74
     of the patients        did not support        the hospital's      bills.
     According     to the carrier        the patients       had been hospitalized
     during     August and September          1969, or about 3 months after
     June 1, 1969, the effective              date of the April       1969 gmines.
            Therefore     our conclusion      questioning  the appropriate-
     ness of the fee-for-service           method of paying    for physicians'
     services    to this hospital       was based on information      applicable
     to periods     before    and after    the effective   date of the Social
     Security    April    1969 guidelines.
     SINCE AUGUST 1969
             As indicated     by the carrier's       comments included       in our
     December 1970 report,         the carrier      concluded     that a per diem
     rate for each day of hospitalization              would be a more appro-
     priate     basis for reimbursing        the hospital      under part B for
     the services       of its salaried     physicians      than would the fee-
     for-service      method. The carrier        also advised       us that it
'_   would be in a better        position      to make a more accurate         as-
     sessment of the situation           when the results        of the interme-
     diary's     audit of the hospital's         Medicare     cost reports     be-
..   came available.
           We have been informed       by the intermediary      that its audit
     for the 6-month period       ended December 31, 1966, and for each
     of the years ended December 31, 1967, 1968, and 1969, was
     substantially    completed    in May 1971.     The carrier     told us
     that the results    of the audit would be used to determine            (11
     the amount of the excessive        part B payments to the hospital
     from 1966 to 1969 and (2) the proper per diem rate for pay-
     ing for services    provided     during later   periods.

      In other words it appears that part of the delay in re-
suming payments   for the services  of the salaried   physicians
has been due to delays in completing     the Medicare  cost audits
at the hospital.
        In our December 1970 report           to your Committee,    we
pointed     out that,    under the provisions        of House bill   17550--
which had passed the House of Representatives                in May 1970--
the supervisory       physicians     at Wayne County General Hospital
could qualify      for payments on a fee-for-service           basis but
that,     in our opinion,      a cost-reimbursement      method would be
more appropriate.
        Under the version     of the bill     as reported     by your
Committee     on December 11, 1970, and passed by the Senate
on December 29, 1970, but which was not enacted                during   the
ninety-first      Congress,   the supervisory      physicians     at the
hospital     would not qualify     for payment on a fee-for-service
      Under the Senate version     of the bill,   Medicare    would
pay for the services   of teaching     physicians  on a reasonable-
cost basis under part A rather      than on a fee-for-service
basis under part B, except when
       --a bona fide relationship     of "private              patient"     to
          physician has been established      or
       --the     hospital,    in the 2-year period          ended December 31,
           1967# and subsequently,            customarily    had charged all
           patients      on a fee-for-service         basis and had collected
           from a majority       of them.                                  .

        According       to your Committee's         report    that accompanied
House bill       17550 (S. Rept. 91-1431),              the criteria      for estab-
lishing     that a bona fide relationship                 of "private     patient"
to physician         existed    would be that        (1) the physician         saw
the patient        in his office        before   the hospital        admission,
arranged      the patient's       admission      to the hospital,         treated
the patient        during    his hospital      stay,      and ordinarily       would
be available         to provide     follow-up      care after      the patient's
discharge,        (2) the Medi care patient           legally     was obligated
      to pay the physician's      charges billed,    including       the             deductible
      and coinsurance    amounts,   and the physician      routinely                 and regu-
      larly  sought to collect     such charges.
              We believe     that Medicare      patients       at the Wayne County
      General Hospital         did not meet the above criteria            of a "private
      patient"     because     (1) a patient     usually      was assigned     to a
      staff    physician     upon admission      and (2) historically,           the staff
      physicians       did not bill    hospital      patients--the     hospital     billed
      the patients        in the physician's       name.
              We believe     further      that the hospital         could not meet the
      second exception         to the proposed          cost reimbursement          method of
      paying    for teaching       physicians'         services   because,       before     the
      effective      date of Medicare          (July    1, 19661, only patients            with
      private    health    insurance        were charged for physicians'               services
      on a fee-for-service           basis.      Other patients,         including      those
      covered by the federally              aided Medical       Assistance       for the Aged
      program,     were charged an all-inclusive                hospital      per diem rate
      that included      physicians'         services.

              The legislation        as proposed   by       your Committee     in Decem-
        ber 1970 for paying         supervisory   and       teaching  physicians     was
        adopted by the House Ways and Means                 Committee  in reporting      !I. -' Ii -'
     ,'out the Social       Security     Amendment of         1971 (H. R. 1) on
        May 26, 1971, and was passed by the                 House of Representatives
        on June 22, 1971.
               Neither     the comments in our December 1970 report                     nor
      the legislation           proposed       by your Committee         and subsequently
      adopted by the House, in our opinion,                      should be construed
      as adversely         reflecting        upon the caliber         of professional
      competence        of the teaching          physicians       at Wayne County Gen-
      eral Hospital          or at any other hospital.                Under the proposed
      legislation,         the teaching         physicians'      salaries     would provide
      the basis        for Medicare        reimbursement        for their     services     to
..    individual        patients       in the same manner as the salaries                have
      provided       the basis       for reimbursement          for their     services     in-
      volving       administration,          teaching,      and supervision        under the
--    hospital       insurance        (part A) portion        of the Medicare        program.

      We plan to make no further   distribution    of this report
unless copies are specifically   requested,     and then we will
make distribution  only after your agreement has been obtained.
                                          Sincerely   yours,

                                          of the United    States

The Honorable  Russell B. Long
Chairman,   Committee on Finance   : .:
United States Senate