Review of Windham Hospital's Controls to Ensure Accuracy of Wage Data Used for Calculating Inpatient Prospective Payment System Wage Indexes

EXECUTIVE SUMMARY:

Our objective was to determine whether Windham Hospital (the hospital) reported fiscal year (FY) 2000 Medicare cost report wage data in compliance with Medicare laws, regulations, and guidance.  We found that the hospital did not fully comply with Medicare laws, regulations, and guidance for the reporting of wage data and overstated wage data reported by $404,402 for the Medicare FY 2000 cost report period.  Due to the impact of overstated wages, the FY 2004 (1) Connecticut statewide rural wage index is overstated by about 1 percent, and (2) average payment to the 2 hospitals in the Connecticut statewide rural area and 17 additional hospitals in 2 Connecticut urban metropolitan statistical areas is overstated by about $24 per hospital discharge.  We recommended that the hospital strengthen financial reporting controls.  The hospital concurred with our findings and recommendations, except our finding that wage data was overstated due to the inclusion of unfunded postretirement benefit costs.  We removed this finding from our final report and addressed the issue in the Other Matters section of the report.

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