OIG: Sutter Health hospital's errors caused $5.4M in Medicare overpayments

Alta Bates Summit Medical Center in Berkeley, Calif., part of Sacramento, Calif.-based Sutter Health, failed to comply with all Medicare requirements for reporting wage data in its fiscal year 2010 cost report, according to HHS' Office of Inspector General.

Medicare payments to hospitals are adjusted annually based on wage indexes, which measure a geographic area's labor market costs relative to a national average. CMS uses hospital wage data collected four years prior to allow time for the collection of cost report data from all hospitals paid under the Inpatient Prospective Payment System and to give Medicare administrative contractors time to review the data.

The OIG said it selected Alta Bates for review because its FY 2010 average hourly wage rate, which was used to calculate the FY 2014 wage index, was the highest in the nation.

According to the OIG's audit findings, errors in Alta Bates' FY 2010 cost report caused the hospital to overstate its occupational-mix-adjusted average hourly wage rate by $5.78. The errors resulted in the hospital receiving $154,147 in Medicare overpayments, according to the OIG. The OIG estimates Alta Bates' reporting errors caused Medicare to overpay 32 other area hospitals a total of $5.3 million.

Based on its findings, the OIG recommend Alta Bates implement review and reconciliation procedures to ensure future wage data reports are accurate and comply with Medicare requirements.

In written comments, Alta Bates concurred with the OIG's recommendation and highlighted steps it has taken to put review and reconciliation procedures into place.

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