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The objective of our review was to determine whether Staten Island Hospital (the provider) reduced costs reported on its fiscal years 2003 and 2004 Medicare cost reports by the $48,014 it received for two vendor rebates. The provider properly reduced its fiscal year 2004 Medicare cost report by $33,410 for one rebate. However, the provider did not reduce costs reported on its fiscal year 2003 cost report by the remaining $14,604 rebate, contrary to Federal regulations and Centers for Medicare and Medicaid Services guidance.
We recommended that the provider (1) revise and resubmit its 2003 Medicare cost report, if not already settled, to properly reflect the $14,604 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.