Audit of Observation Service Billings by Baptist Health System September 1, 1995- August 31, 1999

EXECUTIVE SUMMARY:

The objective of this audit was to determine whether outpatient observation services billed by the Baptist Health System (Hospital) met Medicare reimbursement requirements.  Our review covered service dates between September 1, 1995 - August 31, 1999.  The Hospital billed Medicare for observation services that did not meet Medicare criteria.  However, prior to the completion of our audit, fiscal intermediary officials made adjustments of approximately $3 million in observation charges to the Hospital's cost reports for fiscal years 1996 through 1999.  The adjustments made by the fiscal intermediary offset any adjustments resulting from our audit.  Because of the adjustments we are making no financial recommendations.  The fiscal intermediary concurred with our procedural recommendations.