Corporate Compliance

GOV’T AUDIT INSIDER: Unallowed and unsupported costs at Seattle hospital

Healthcare Auditing Weekly, April 26, 2005

Virginia Mason Medical Center in Seattle improperly claimed acquisition costs associated with kidney and pancreas transplants in 1997-1999, according to an OIG audit report. The audit found that Virginia Mason claimed $268,848 in unallowable costs and approximately $1.3 million in unsupported costs. The OIG recommends that Virginia Mason recover the unallowable costs; determine which of the unsupported costs are allowable and recover those that aren't; monitor future claims; and develop and maintain adequate reporting and accounting controls.

During the audit, the OIG did the following:

  • Obtained an understanding of applicable Medicare reimbursement principles

  • Reviewed supporting documentation for the costs claimed

  • Reviewed accounting records and reports

  • Reviewed payroll records, which included time-and-effort reporting

  • Interviewed Virginia Mason employees and managers

  • Toured the transplant center

  • Obtained documentation from the Medicare intermediary

  • Reviewed cost report adjustments previously made by the Medicare intermediary

  • Discussed the recommended adjustments with the Medicare intermediary

    Click here to read the audit report, "Audit of Virginia Mason Medical Center's Organ Acquisition Costs Claimed for the Period January 1, 1997, Through December 31, 1999," (A-10-03-00010) issued March 25.

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