Review of Medicare Outlier Payments at Roger Williams Medical Center for Fiscal Year 1999

EXECUTIVE SUMMARY:

This final points out that outlier payments to RWMC went from $880,029 in FY 1998 to $4.3 million in FY 1999, an increase of 395 percent.  Further, our analysis disclosed that RWMC received significant incorrect outlier payments in FY 1999 because the inpatient operating cost-to-charge ratio used to calculate the payments was incorrect.  In this respect, we found a clerical error on the hospital's FY 1996 cost report that was not identified by the hospital or by Blue Cross Blue Shield of Rhode Island, the fiscal intermediary (FI), during its review of the cost report.  As a result, the FI calculated an incorrect FY 1999 inpatient operating cost-to-charge ratio, which had a significant impact on the amount of RWMC's outlier payments.  Specifically, we estimate that the hospital received a $3.1 million overpayment based on the 260 FY 1999 outlier claims identified in our review period.  We recommended that RWMC repay the overpayment related to its FY 1999 outlier payments.  Further, we recommended that the hospital strengthen its controls to prevent future outlier overpayments.  The RWMC concurred with our findings and recommendations.

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