Corporate Compliance

GOV’T AUDIT INSIDER: Alabama hospital claimed $1.6 million in unallowable organ acquisition costs

Healthcare Auditing Weekly, January 25, 2005

Alabama hospital claimed $1.6 million in unallowable organ acquisition costs

The University of Alabama at Birmingham Hospital (UAB Hospital) claimed $1.6 million in unallowable organ acquisition costs on its fiscal year (FY) 2001 Medicare cost report, according to an OIG audit. UAB Hospital's procedures were not adequate to separately accumulate and report certain costs and revenues associated with organ acquisition activities, the audit concluded.

The OIG recommends UAB Hospital should look at recovering the Medicare overpayments, monitoring future Medicare cost report claims for organ acquisition costs to ensure compliance, and implementing procedures to properly account for and report organ acquisition costs and related revenue.

During the audit, the OIG did the following:

  • Obtained an understanding of Medicare reimbursement principles for organ acquisition costs

  • Reviewed working papers from prior Medicare intermediary audits

  • Traced the amounts claimed as organ acquisition costs on the cost report

  • Reviewed the documentation and detail accounting records supporting organ acquisition costs claimed by UAB Hospital for FY 2001

  • Reviewed payroll records

  • Estimated unallowable employee benefits

  • Interviewed UAB Hospital employees and managers

  • Reviewed documentation supporting revenue received from the organ procurement organization

  • Reviewed documentation supporting the accumulation of select ancillary charges

    Click here to read the audit report, "Audit of University of Alabama at Birmingham Hospital's Organ Acquisition Costs Claimed for the Period October 1, 2000, through September 30, 2001," (A-04-04-00001) issued December 23, 2004.

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