Sutter Oaks-Arden and Sutter Oaks-Carmichael Skilled Nursing Facility Billings and Costs for Ancillary Medical Supplies for the Period January 1, 1994 through December 31, 1995

We determined that Sutter misclassified costs on its Medicare cost reports and incorrectly billed for ancillary medical supplies. We found that about 39 percent of costs for ancillary medical supplies were misclassified and about 7 percent of items billed as ancillary medical supplies were actually routine supplies. We also noted that Sutter incorrectly classified $282,018 of supply accounts resulting in excessive ancillary costs. We recommended that Sutter determine the fiscal impact for the incorrectly claimed costs, the billing errors, and the $282,018 of incorrectly classified supply accounts, and make an appropriate refund to Medicare.