Corporate Compliance

OIG completes the first in a series of FY 2003 cost report wage data

Compliance Monitor, November 23, 2005

The OIG has recommended that Day Kimball Hospital in Putnam, CT, revise its 2003 cost report to correct noncompliant reporting of wage data. In a recent audit, the OIG found the hospital did not fully comply with cost-reporting requirements.

Specifically, the hospital reported unallowable Part B physician salaries, severance payments, understated contract labor services, and other unallowable costs, according to the OIG.

This was the first in a series of OIG reviews on the accuracy of hospitals' fiscal year (FY) 2003 wage data, which CMS will use in developing FY 2007 wage indexes.

To conduct the audit, the OIG

  • reviewed applicable Medicare laws, regulations, and guidance

  • obtained an understanding of the hospital's procedures for reporting wage data

  • verified that wage data on the hospital's trial balance reconciled to its audited financial statements

  • reconciled the total reported wages on the hospital's FY 2003 Medicare cost report to its trial balance

  • reconciled the wage data from selected cost centers to detailed support, such as payroll registers or accounts payable invoices

  • selected for testing wage data in the FY 2003 Medicare cost report from cost centers that accounted for at least 2% of the total hospital wages

  • tested a sample of transactions from these cost centers and reconciled wage data to payroll records

  • interviewed hospital staff regarding the nature of services that employees and contracted labor provided to the hospital

  • reviewed the fiscal intermediary's audit reimbursement adjustments to the wage data that the hospital reported in its FY 2003 Medicare cost report

  • determined the effect of the reporting errors by recalculating the hospital's average hourly wage rate in accordance with instructions published in the Federal Register

      Click here to read the audit report, "Review of Day Kimball Hospital's Controls to Ensure Accuracy of Wage Data Used for Calculating Inpatient Prospective Payment System Wage Indexes," (A-01-05-00506) issued November 4, 2005.

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