Review of Outpatient Pharmacy Services Provided By Southcoast Hospitals Group for Fiscal Year Ending September 1998

EXECUTIVE SUMMARY:

Our report points out that, in Fiscal Year (FY) 1998, Southcoast Hospitals Group (SHG) did not establish or follow existing procedures for the proper billing ofMedicare outpatient pharmacy services. Based, in part, on a statistical sample, we estimate that SHG had overstated its FY 1998 Medicare outpatient pharmacy charges by at least $112,030. Specifically, we found that SHG billed for medications used under conditions not covered by Medicare and for medications not properly supported by medical records. We also found billings for unallowable, self 'administered medications, over $80,000 which had been identified by SHG during its own internal review of pharmacy charges. We recommended that SHG strengthen its procedures to ensure that charges for pharmacy services are covered and properly documented in accordance with Medicare regulations. We will provide the results of our review to Associated Hospital Services, the Medicare FI, so that it can apply the adjustment of $112,030 to SHG's FY 1998 Medicare cost report. The SHG concurred with our recommendations and indicated that it has implemented procedures to ensure that services are charged in accordance with Medicare regulations. The SHG stated that it will work with the FI in processing the appropriate adjustment to its cost report.

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