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Audit (A-03-07-00024)

Review of Thomas Jefferson University Hospital's Reported Fiscal Year 2006 Wage Data

Executive Summary

Thomas Jefferson University Hospital (the Hospital) overstated its wage data by $12.2 million and 412,397 hours for the fiscal year (FY) 2006 Medicare cost report period. Our correction of the Hospital's errors increased the average hourly wage rate from $35.25 to $35.45. Under the inpatient prospective payment system for acute-care hospitals, the Centers for Medicare & Medicaid Services (CMS) adjusts the Medicare prospective payments by the wage index applicable to the area in which each hospital is located. CMS updates the wage indexes annually based on hospitals' reported wage data.

We recommended that the Hospital implement review and reconciliation procedures to ensure that the wage data reported in future Medicare cost reports are accurate, supportable, and in compliance with Medicare requirements.

In its comments on our draft report, the Hospital agreed with or understood and accepted most of our findings; however, the Hospital disagreed in part with our finding regarding the disallowance of $4.2 million in pension benefit costs and the need to submit a revised FY 2006 cost report to correct the wage data overstatements. The Hospital also said that it would work to strengthen its review and reconciliation procedures. Our conclusion regarding overstated pension costs remains unchanged. After reviewing the Hospital's comments and information provided by the intermediary, we deleted our recommendation to submit a revised cost report from this final report.

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