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Audit (A-03-08-00019)

Review of the Altoona Regional Health System's Reported Fiscal Year 2006 Wage Data

Executive Summary

The Altoona Regional Health System (the Hospital), located in Pennsylvania, did not fully comply with Medicare requirements for reporting wage data in its fiscal year (FY) 2006 Medicare cost report. Under the acute-care hospital inpatient prospective payment system, CMS adjusts the Medicare base rate paid to participating hospitals by the wage index applicable to the area in which each hospital is located. CMS updates the wage indexes annually based on hospitals' wage data reported 4 years earlier.

We found that the Hospital overstated its wage data by $1.1 million and 1,977 hours. Our correction of the Hospital's errors decreased the average hourly wage rate approximately 0.83 percent. Because the Hospital did not revise the wage data in its cost report before CMS computed the FY 2009 wage indexes, the FY 2009 wage index for the Hospital's statistical area was overstated, which will result in overpayments to both of the hospitals that use this wage index.

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 stated that it would do so.

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