Review of Henry Ford Hospital's Reported Fiscal Year 2005 Wage

Executive Summary

Henry Ford Hospital (the Hospital) overstated its wage data by $27 million and 316,281 hours in its fiscal year (FY) 2005 Medicare cost report. Correcting the Hospital's errors decreased the average hourly wage rate from $32.26 to $31.08. Under the acute-care hospital inpatient prospective payment system, the Centers for Medicare & Medicaid Services (CMS) adjusts the Medicare base rate paid to participating hospitals by the wage index applicable to the area in which the hospitals are located. CMS updates the wage indexes annually based on hospitals' reported wage data.

We recommended that the Hospital submit a revised FY 2005 Medicare cost report to the fiscal intermediary to correct the wage data overstatements and implement review and reconciliation procedures to ensure that the wage data reported in future Medicare cost reports are accurate, supportable, and in compliance with Medicare requirements. The Hospital agreed with our recommendations and stated that it had submitted revised wage index information to the intermediary and strengthened its review and reconciliation procedures.