Review of Medicare Inpatient Wage Rate Assignment at Lehigh Valley Hospital, Allentown, Pennsylvania

EXECUTIVE SUMMARY:

The objective of our review was to determine whether Lehigh Valley Hospital (the hospital) complied with Medicare requirements for reporting wage data in its FY 2003 Medicare cost report.  The hospital did not fully comply with Medicare requirements for reporting wage data in its FY 2003 Medicare cost report.  Specifically, the hospital misstated salaries and hours, which understated wage data by $37,798 and 15,326 hours; understated excluded area salaries and hours, which overstated wage data by $37,069 and 1,363 hours; overstated excluded contract services for intern and resident costs, which understated wage data by $326; and overstated physician Part A hours, which overstated wage data by 52 hours.  These errors occurred because the hospital did not sufficiently review and reconcile wage data to ensure that all amounts reported were accurate, supportable, and in compliance with Medicare regulations and guidance.  As a result, the hospital understated its wage data by $1,055 and 13,911 hours for the FY 2003 Medicare cost report period.  Our correction of the hospital's errors reduced the average hourly wage rate 0.23 percent from $28.39 to $28.32.  We recommended that the hospital implement review and reconciliation procedures to ensure that the wage data reported on future Medicare cost reports are accurate, supportable, and in compliance with Medicare requirements.  The hospital concurred with the findings and recommendation.