Review of Vendor Rebates Paid to Hospitals - Methodist Germantown Hospital, Germantown, Tennessee

EXECUTIVE SUMMARY:

The objective of our review was to determine whether Methodist Germantown Hospital (the provider) reduced costs reported on its fiscal year 2003 and 2004 Medicare cost reports by the $12,621 it received for two vendor rebates. The provider did not reduce costs reported on its fiscal year 2003 and 2004 cost reports by the $12,621 it received for two rebates, contrary to Federal regulations and Centers for Medicare and Medicaid Services guidance.

We recommended that the provider (1) revise and resubmit its 2003 and 2004 Medicare cost reports, if not already settled, to properly reflect the $12,621 in rebates as credits reducing its health care costs; and (2) consider performing a self-assessment of its internal controls to ensure that future vendor rebates are properly credited on its Medicare cost reports. The provider agreed with our recommendations.