University of Maryland Medical Center's Organ Acquisition Costs for State Fiscal Year 2003

The objective of this self-initiated audit was to determine whether the University of Maryland Medical Center (Medical Center) complied with Medicare and Maryland laws, regulations, and guidelines for allocating costs to organ acquisition and for maintaining adequate documentation to support those costs, and to estimate the effect on Medicare reimbursement for State Fiscal Year (SFY) 2003 when costs claimed were unallowed or unsupported. The Medical Center did not always comply with Medicare laws, regulations, and guidelines for reporting its costs, including organ acquisition costs, to the Commission. Specifically, the Medical Center did not have systems that could allocate organ acquisition costs separately from non-organ acquisition costs and other hospital activities. Because the Medical Center did not properly allocate costs totaling $2,562,132 between organ acquisition and all other cost, higher organ reimbursement rates resulted. We estimated that the Medicare portion of those costs is approximately 40 percent, or $1,024,852. We recommend that the Commission ensure that the Medical Center adheres to Medicare laws, regulations, and guidelines by properly identifying organ acquisition costs in the cost data provided to the Commission. In its written comments to our draft report, the Commission, the Medical Center, and the Centers for Medicare and Medicaid Services concurred with our findings and recommendations.