Review of Resident Data Reported in the Intern and Resident Information System for Medicare Cost Reports Submitted to Highmark Medicare Services, Inc.

Hospitals in Medicare Administrative Contractor (MAC) Jurisdiction 12 did not always claim Medicare graduate medical education (GME) reimbursement for residents in accordance with Federal requirements. Medicare makes two types of payments to teaching hospitals to support GME programs for physicians and other practitioners. Direct GME payments are Medicare's share of the direct costs of training interns and residents. Indirect GME payments cover the additional operating costs that teaching hospitals incur in treating inpatients.

We found that 66 hospitals overstated direct and/or indirect full-time equivalent (FTE) counts on cost reports covering fiscal years (FY) 2006 and 2007. As a result, 50 of those 66 hospitals received excess Medicare GME reimbursement totaling $1.9 million for residents who were claimed by more than 1 hospital for the same period and counted in the Intern and Resident Information System (IRIS) as more than 1 FTE. For the remaining 16 hospitals, the FTE overstatements did not have an effect on the hospitals' Medicare GME reimbursement.

The overstated FTE counts and excess reimbursement occurred because there was no Federal requirement for Highmark to review IRIS data that hospitals in MAC Jurisdiction 12 submitted to detect whether a resident had overlapping rotational assignments at more than one hospital. As a result, Highmark did not have procedures to adequately ensure that no resident was counted as more than one FTE in the calculation of Medicare GME payments.

We recommended that Highmark (1) recover $1.9 million in excess Medicare GME reimbursement paid to 50 hospitals in MAC Jurisdiction 12, (2) adjust the direct and indirect FTE counts claimed on the Medicare cost reports covering FYs 2006 and 2007 for each of the hospitals that did not always claim Medicare GME reimbursement in accordance with Federal requirements, (3) consider developing procedures to ensure that no resident is counted as more than 1 FTE in the calculation of Medicare GME payments, and (4) consider identifying and recovering any additional overpayments made to hospitals in MAC Jurisdiction 12 for residents whose FTE count exceeded 1 on Medicare cost reports submitted after FY 2007. Highmark generally concurred with our first and second recommendations, partially concurred with our fourth recommendation, and disagreed with our third recommendation.