Review of the Classification of Missouri Provider Tax Refunds on Hospitals' Medicare Cost Reports

EXECUTIVE SUMMARY:

This final report points out that fifteen Missouri hospitals did not record the refund of provider tax expenses properly on their Medicare cost reports, and four hospitals included donations to the Missouri Hospital Association on the cost reports that were unallowable expenses under Medicare regulations.  These problems occurred because the hospitals did not follow Medicare regulations on claiming provider tax refunds.  Also, the fiscal intermediary, when settling cost reports, inconsistently applied Medicare rules and regulations relating to provider tax refunds and unallowable expenses.  As a result, the hospitals received $8.4 million in excess Medicare reimbursement.  We recommended that CMS instruct fiscal intermediaries to recover the excess reimbursements from the hospitals.  We also recommended procedural improvements that should preclude this problem in the future.  The CMS concurred with our recommendations.