Medicare Compliance & Reimbursement

Hospitals may have to refund employees' salaries if activities aren't documented

If a hospital has employees who perform both pre-transplant and post-transplant (or non-transplant) activities, the hospital should make sure their salary gets divided up appropriately.

Medicare allows hospitals to bill all organ acquisition costs associated with the organ donor and recipient before a patient's admission to a hospital for the transplant operation. However, according to the Medicare reimbursement manual, only the portion of employees' salaries that relate to time spent on pre-transplant activities may be included as organ acquisition costs on the Medicare cost report.

An audit report issued July 8 by the HHS Office of Inspector General hit Yale-New Haven Hospital with an overpayment of $793,482. The hospital allegedly failed to properly document salary costs to differentiate between pre-transplant and post-transplant activities, the OIG says. Each employee's entire salary was instead included in the OAC cost centers because Yale-New Haven did not have a system to identify salaries related to post-transplant activities, according to the OIG.

"While we recognize that some portion of the salaries may have related to organ acquisition activities and would have been allowable if properly documented, based on Federal regulations...the costs are considered unallowable," the report reads.

To read the report "Audit of Yale-New Haven Hospital Organ Acquisition Costs Claimed For The Period October 1, 1997 Through September 30, 2001" (A-01-04-00503), go to
http://www.oig.hhs.gov/oas/reports/region1/10400503.pdf.

Lesson Learned: Hospitals need to get internal controls in place to ensure that salaries claimed as OAC are limited to pre-transplant services.