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Department of Health and Human Services

Office of Inspector General -- AUDIT

"Review of TrailBlazer Health Enterprises' Outlier Payments to Foundation Behavioral Health Center for Partial Hospitalization Services for the Period August 1, 2000, Through December 31, 2003," (A-07-04-04035)

April 26, 2005

Complete Text of Report is available in PDF format (623 kb). Copies can also be obtained by contacting the Office of Public Affairs at 202-619-1343.


Our objective was to determine whether the fiscal intermediary, TrailBlazer, calculated Medicare outlier payments to Foundation in accordance with Medicare reimbursement requirements.  TrailBlazer did not calculate Medicare outlier payments to Foundation in accordance with Medicare reimbursement requirements, using an incorrect cost-to-charge ratio in computing the outlier payments.  As a result, TrailBlazer overpaid Foundation approximately $1.4 million.  We recommended that TrailBlazer (1) recover from Foundation the improper outlier payments and (2) implement internal controls that ensure the correct cost-to-charge ratios are used for future outlier payments.  TrailBlazer agreed that an error was made in determining the cost-to-charge ratio used to compute outlier payments, but disagreed with the cost-to-charge ratio we used to compute the overpayment.  TrailBlazer also agreed that adequate internal controls were not in place to identify and correct the error in determining the cost-to-charge ratio for this provider.