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Department of Health and Human Services

Office of Inspector General -- AUDIT

"Review of Outpatient Pharmacy Services Provided by Lawrence and Memorial Hospital for Fiscal Year 1999, (A-01-01-00507)"

September 27, 2001

Complete Text of Report is available in PDF format (573 kb). Copies can also be obtained by contacting the Office of Public Affairs at 202-619-1343.


The objective of our review was to determine whether outpatient pharmacy services were billed for and reimbursed in accordance with Medicare regulations. Our review covered the period October 1, 1998 to September 30, 1999 (FYI999). We reviewed the medical and billing records for a two strata sample of 112 pharmacy claims totaling $48,825. Our analysis of the 112 pharmacy claims showed that $9,313 did not meet the Medicare criteria for reimbursement. Specifically, we noted that $1,687 in radiology related pharmacy charges were not covered and $7,626 in other pharmacy charges were not properly supported by medical records. Based, in part, on our statistical sample, we estimated that the Hospital billed at least $41,210 in pharmacy charges that did not meet the Medicare criteria for reimbursement.  We recommended that the Hospital ensure that charges for outpatient pharmacy services are properly billed, documented, and coded in accordance with Medicare regulations.  We will also provide the results of our review to Empire Medical Services in Syracuse, New York, the Medicare FI, so that it can apply the appropriate adjustment of $41,210 to the Hospital's FY 1999 Medicare cost report.