Corporate Compliance

GOV’T AUDIT INSIDER: Washington state should revise per diem rates, says OIG

Healthcare Auditing Weekly, April 5, 2005

The Medicaid funding that Washington state allowed Newport Community Hospital to retain was not adequate to cover its daily Medicaid operating costs for the three years prior to December 31, 2002, says an OIG audit report. The report says, the funding that Newport retained was $290,000 less than its total Medicaid operating costs and the federal government is concerned that Washington did equally participate in its Medicaid responsibility. The OIG recommends that Washington consider revising Newport's per diem rate to more closely reflect operating costs and allow Newport to retain sufficient funding to cover the costs of providing an adequate level of care to its residents.

During the audit, the OIG did the following:

  • Reviewed applicable laws and regulations

  • Interviewed officials and staff from CMS, the state, and Newport

  • Reviewed Newport's documentation

  • Reviewed the Medicaid cost reports submitted annually to the state

  • Reviewed Newport's audited financial statements

  • Verified compliance with the corrective action plans that Newport prepared

  • Analyzed the flow of funds from the federal government to the state and Newport

  • Verified the accuracy and completeness of state claims data

  • Verified the accuracy and completeness of a selected sample of direct and indirect costs reported by Newport

  • Calculated Medicaid operating costs

  • Calculated the Medicaid operating deficit

    Click here to read the audit report, "Adequacy of Washington State's Medicaid Payments to Newport Community Hospital, Long-Term-Care Unit," (A-10-04-00001) issued March 8.

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