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Department of Health and Human Services

Office of Inspector General -- AUDIT

"Review of Vendor Rebates Paid to Hospitals - St. Luke's Hospital & Health Network, Bethlehem, Pennsylvania," (A-05-07-00054)

May 14, 2007

PDF File Complete Text of Report is available in PDF format (241 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 St. Luke’s Hospital and Health Network (the provider) reduced costs reported on its 2004 Medicare cost report by the $34,579 vendor rebate it received. The provider did not reduce costs reported on its fiscal year 2004 cost report by the $34,579 rebate, contrary to Federal regulations and Centers for Medicare and Medicaid Services guidance. 


We recommended that the provider (1) revise and resubmit its 2004 Medicare cost report, if not already settled, to properly reflect the $34,579 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 on its Medicare cost reports. The provider agreed with our recommendations.