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Audit (A-07-09-02758)

Review of Geographic Classification of Skagit Valley Hospital for Medicare Operating Disproportionate Share Hospital Payment

Executive Summary

Geographic classifications used by Noridian Administrative Services, LLC (Noridian), to calculate the Medicare operating disproportionate share hospital (DSH) adjustment resulted in an overpayment at one hospital. Of the operating DSH adjustment of $2.2 million that Skagit Valley Hospital (Skagit Valley) claimed on its cost report for the fiscal year ending December 31, 2004, $418,000 was excessive because Noridan calculated the operating DSH adjustment as if the hospital was urban for the entire cost report period. However, Skagit Valley was rural for the period January 1, 2004, through September 30, 2004.

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