Health Care Management's Skilled Nursing Facility Billings and Costs for Ancillary Medical Supplies for the Period January 1, 1993 through December 31, 1994

This report discloses that Health Care Management's (HCM) billings to Medicare for ancillary medical supplies used in its three skilled nursing facilities (SNFs) were generally in compliance with Medicare's rules, but that significant costs were misclassified as ancillary on the medicare cost reports for the 2-year period ended December 31, 1994. The costs should have been classified as routine.

We did not quantify the financial impact of misclassified costs as our review was limited to determining what types of items and services that were claimed as ancillary were unallowable as such.

We recommended that Mutual of Omaha ensure that HCM submits revised cost reports for its three SNFs and that the revised cost reports reclassify all costs for routine items and services that were previously claimed an ancillary medical supplies.