Review of Quality Improvement Organization in Tennessee for August 1, 2002, Through July 31, 2005

Of the $13.81 million of costs reviewed from August 1, 2002, through July 31, 2005, $13.66 million appeared reasonable for Federal reimbursement.  Of the remaining costs, QSource, the Tennessee Quality Improvement Organization (QIO), incurred $31,000 of costs that were unallowable and $124,000 of costs that were potentially unallowable.  The Centers for Medicare & Medicaid Services contracts with QIOs in each State to improve the quality of care.  We conducted this review at the request of the Senate Finance Committee.

We recommended that QSource (1) refund $6,700 for unallowable physician consultant fees, (2) reduce the indirect cost pool by $24,000 for the balance of unallowable costs incurred, and (3) work with the CMS contracting officer to determine what portion of the $124,000 incurred for conference-related costs during our audit period should be excluded from the indirect cost pool for purposes of determining final rates.

In its written comments on our draft report, QSource agreed in part and disagreed in part with our findings and recommendations and submitted additional documentation regarding conference costs.  The comments and additional documentation did not change our findings or recommendations.