Review of East Jefferson General Hospital's Reported Fiscal Year 2005 Wage Data

EXECUTIVE SUMMARY:

East Jefferson General Hospital (the Hospital) overstated fringe benefit costs by almost $4.5 million ($4.9 million after factoring in overhead) in its fiscal year (FY) 2005 Medicare cost report.  Under the inpatient prospective payment system for acute-care hospitals, CMS adjusts the Medicare base rate paid to participating hospitals by the wage index applicable to the statistical area in which hospitals are located.  CMS calculates wage indexes based on hospitals' wage data reported 4 years earlier.  Our correction of the Hospital's error decreased the average hourly wage rate from $28.99 to $27.85.  If the Hospital does not revise the wage data in its FY 2005 cost report, the FY 2009 wage index for the Hospital's statistical area will be overstated, which will result in overpayments to all of the hospitals that use this wage index.

We recommended that the Hospital submit a revised FY 2005 Medicare cost report to the fiscal intermediary and implement procedural improvements.  The Hospital agreed with our finding.

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