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Our objective was to determine whether the organ acquisition costs that Clarian claimed on the calendar year 2000 Medicare cost report for its kidney, heart, liver, lung, and pancreas transplant programs were allowable. Specifically, we determined whether Clarian complied with Medicare law, regulations and guidelines for claiming organ acquisition costs and whether it received excess Medicare reimbursement for organ acquisition activities. Clarian claimed $414,385 in unallowable costs representing duplicated salary costs and missing or incorrect adjustments for unallowable costs. Based on these unallowable costs, Medicare overpaid Clarian an estimated $270,665. Unsupported costs of $2,524,864 did not comply with Medicare documentation requirements for reimbursement. If Clarian cannot provide alternative support for this amount, a Medicare overpayment of $1,818,679 will exist related to unsupported costs.
We recommended that the Medicare intermediary: (1) recover the Medicare overpayment of $270,665 for unallowable costs claimed as organ acquisition, (2) work with Clarian to determine the allowable portion of the $2,524,864 in unsupported costs and the related Medicare payment of $1,818,679 and recover the portion that Clarian is unable to support, (3) review organ acquisition costs that Clarian claimed on subsequent Medicare cost reports for issues similar to those identified in CY 2000 and recover any Medicare overpayments, (4) monitor Clarian’s future Medicare cost report claims for organ acquisition costs to ensure compliance with Medicare requirements, and (5) instruct Clarian to develop and maintain adequate time studies and accounting controls and to provide clear direction to responsible personnel as to Medicare requirements for claiming and documenting organ acquisition costs. In response to our draft report, officials for the intermediary stated that they could not respond to the recommendations until they reviewed our working papers and documentation Clarian provided in response to the draft report. Clarian officials agreed with the amounts of unallowable costs, but not with amounts for unsupported salaries or space.