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Department of Health and Human Services

Office of Inspector General -- AUDIT

"Review Of Medicare Reimbursement For Outpatient Cardiac Rehabilitation Services For Calendar Year 2001," (A-10-03-00009)

November 7, 2003

Complete Text of Report is available in PDF format (1.38 mb). Copies can also be obtained by contacting the Office of Public Affairs at 202-619-1343.


The objective of our this review was to determine whether Medicare properly reimbursed Salem Hospital (the Hospital) for outpatient cardiac rehabilitation services.  We determined that the Hospital met the Medicare cardiac rehabilitation coverage requirements for direct physician supervision although a written policy describing the physician’s roles and responsibilities was not established.  Further, we found that the Hospital did not provide outpatient cardiac rehabilitation services “incident to” a Hospital physician’s professional services.  In addition, from our specific claims review for a non-statistical sample of 10 beneficiaries who received 107 services during Calendar Year 2001, we determined that the Hospital received from Medicare approximately $183, for which the diagnosis used to establish the patient’s eligibility for the services was not supported by medical record documentation, or which were otherwise unallowable.  We attributed these questionable services to weaknesses in the Hospital’s internal controls and oversight procedures.  We recommended that the Hospital (1) develop written policies and procedures regarding physician supervision; (2) work with its Medicare fiscal intermediary regarding the “incident to” requirement; (3) work with its Medicare fiscal intermediary to establish the amount of repayment liability, estimated to be as much as $183; and (4) bill for initial patient evaluation and orientation services only when performed by a physician.  The Hospital concurred with our findings and recommendations.