Review of Methodist Hospital Wage Data for the Fiscal Year 2009, Wage Indexes

Methodist Hospital (the Hospital) overstated contract labor costs by $617,000 and understated contract labor hours by 11,143 on its fiscal year (FY) 2006 Medicare cost report.  Under the inpatient prospective payment system for acute-care hospitals, Medicare Part A pays hospital costs at predetermined, diagnosis-related rates for patient discharges.  The Centers for Medicare & Medicaid Services (CMS) adjusts prospective payments by the wage index applicable to the area in which each hospital is located.  While gathering the requested data for the audit, the Hospital identified the errors and reported them to the fiscal intermediary.  Because the fiscal intermediary corrected the Hospital's Medicare cost report, this report has no recommendations.