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Teaching physician (TP) guidelines date back to 1969 with the publication of Intermediary Letter 372, but did not come under serious scrutiny until 1995 when the results of the Office of the Inspector General’s (OIG) first physicians at teaching hospitals (PATH) audit resulted in a $30 million dollar settlement by the University of Pennsylvania. The audit revealed that there was insufficient documentation in the medical record that the TP was physically present and actively participated in the critical portions of the services billed. This index case prompted a nationwide PATH audit initiative, and on December 8, 1995, the Health Care Financing Administration (HCFA), now the Centers for Medicare and Medicaid Services (CMS), published in the Final Rule, more detailed instructions for documenting and billing for services in a teaching setting. The rules officially went into effect July 1, 1996 and were added to the Medicare Claims Processing Manual, Chapter 12, Section 100. These rules have had modifications and clarifications over the years, last in 2011. Although state Medicaid programs and private insurers often follow Medicare, there are individual differences among these programs, especially in regards to requirements for TP presence and TP documentation. This author suggests using this chapter as a starting point, but checking with local payers for deviation from these guidelines.


The term “resident” in the Medicare Processing Manual refers to “… an individual who participates in an approved graduate medical education (GME) program or a physician who is not in an approved GME program but who is authorized to practice only in a hospital setting ….” Of note, receiving a faculty or staff appointment, or being included in a hospital’s full time equivalency (FTE) count, in and of itself does not alter a resident’s status. For billing purposes, and for this chapter, the term “resident” includes interns and fellows, but not students.

A student is someone in an accredited educational program like a medical school, dental school, or school of osteopathy that is not an approved GME program. Medicare does not pay for student services.

A TP is a physician who is not another resident, who provides care to patients in conjunction with a resident. A TP does not need to have a faculty appointment, thus these regulations are also applicable to private practice physicians who work with residents. Finally, these guidelines are specifically for physicians, and are not applicable to nonphysician providers (NPP), discussed separately in the second part of this chapter.


The reason that medical and surgical services provided only by residents, within the scope of their training program, cannot be reimbursed through the Medicare Physician Fee Schedule (MPFS), is because Medicare Part A already pays for resident services upfront through direct ...

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