Medicare Compliance & Reimbursement

Target these problem areas to keep the OIG-and other facilities-off your back. If a facility's numbers influence the wage index for other hospitals in its metropolitan statistical area, it should get ready for the HHS Office of Inspector General to give special attention to its Medicare cost report.

An audit of wage data reported by Boston, MA-based Cape Cod Hospital revealed that the facility overstated its wage data by $4.2 million in its Medicare 2000 cost report.

The impact: The 2004 wage index for the hospital and the two other hospitals in its MSA were overstated by 1.1 percent. The average payment to the two other hospitals was overstated by about $46 per discharge. 

The OIG honed in on these key areas in Cape Cod's Medicare cost report:
      
  Home office costs. Make sure to exclude certain expenses - such as salaries for marketing employees and other personnel unrelated to hospital operations - as well as wage-related benefits like unused vacation time.
      
  Physician salaries. If documentation does not support the distribution of physician time among covered physician services to patients and to the hospital, the facility must record all physician salaries as Part B services.   Overhead. For employee bonuses recorded as salaries, make a corresponding adjustment to the employee benefits category.
           
  An ounce of prevention. The watchdog agency wants facilities to have financial management systems designed to track all wage data, particularly contract labor hours associated with contract services.

Hospitals also need to perform reviews to ensure that all reported wage data is in compliance.

To read "Review of Cape Cod Hospital's Wage Data Used for Calculating Inpatient Prospective Payment System Wage Indices" (A-01-04-00501), go to www.oig.hhs.gov/oas/reports/region1/10400501.htm.
      
Lesson Learned: Hospitals may need to strengthen financial reporting controls to ensure that the wage data reported on its Medicare cost reports are accurate.