Audit of the Outpatient Oncology Clinic Costs at Parkway Regional Medical Center

EXECUTIVE SUMMARY:

Our audit showed that Parkway did not meet Medicare cost guidelines in two areas:  documenting the reasonable cost of the management fees, and claiming rental costs not related to patient care.  Parkway did not maintain records to demonstrate that it carried out its fiduciary responsibilities to ensure costs are reasonable as outlined in the Medicare cost guidelines.  As a result, we cannot render an opinion as to the reasonableness of the nearly $8.9 million the Medicare program reimbursed Parkway for the outpatient oncology clinic.  Our audit also showed that Parkway claimed rental charges on the 1999 Medicare cost report that were not related to patient care.  We estimate Medicare overpaid Parkway about $52,000 .  We are recommending that Parkway:  (1) strengthen its procedures to ensure that Parkway record its justifications for future management support service agreements and to have that documentation available for review; and (2) remove unallowable rental charges from the cost report for the Fiscal Year ending September 30, 1999.