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Department of Health and Human Services

Office of Inspector General -- AUDIT

"Review of Vendor Rebates Paid to Hospitals, Option Care, Inc., Buffalo Grove, Illinois" (A-05-07-00045)

August 10, 2007

PDF FileComplete Text of Report is available in PDF format (337 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 Option Care, Inc. (the provider) reduced costs reported on its fiscal year 2003 Medicare cost report by the $173,805 vendor rebate it received.  For the $173,805 rebate reviewed, the provider did not reduce costs reported on its 2004 Medicare cost report by $43,451, contrary to Federal regulations and CMS guidance.


We recommended that the provider (1) revise and resubmit its 2003 Medicare cost report, if not already settled, to properly reflect the $43,451 portion of the rebate as a credit reducing its health care costs and (2) consider performing a self-assessment of its internal controls to ensure that future vendor rebates are properly credited in its Medicare cost reports.  The provider disagreed with our finding and recommendations.