Saint Louise Hospital and Health Center's Skilled Nursing Facility Billings and Costs for Ancillary Medical Supplies for the Period July 1, 1992 through June 30, 1994

This report discloses that Saint Louise Hospital and Health Center's skilled nursing facility (SNF) billed Medicare for ancillary medical supplies that were not in compliance with Medicare's rules and misclassified significant costs on the Medicare cost reports. About 54 percent of the amount billed as ancillary medical supplies and 55 percent of the amount claimed as ancillary medical supply costs in our judgmental samples were for routine medical supplies on the Medicare cost reports for fiscal year ended June 30, 1993 and June 30, 1994.

However, the improper billings and cost classifications did not have a material financial effect for our 2-year review period because the SNF had an exemption from the Medicare limit on its routine costs during this time period.

We recommended that Blue Cross ensure that Saint Louise Hospital and Health Center's SNF identifies and adjusts its claims to reverse all routine items billed as ancillary medical supplies, identifies and reclassifies any routine costs previously claimed as ancillary on its costs reports, and does not bill or claim future routine medical supplies as ancillary.