Review of Vendor Rebates Paid to Hospitals - Review of Vendor Rebates Paid to Hospitals - Penn State Milton S. Hershey Medical Center, Hershey, Pennsylvania

EXECUTIVE SUMMARY:

The objective of our review was to determine whether Penn State Milton S. Hershey Medical Center (the provider) reduced costs reported on its 2004 Medicare cost report by the $34,136 vendor rebate it received. The provider did not reduce costs reported on its fiscal year 2004 Medicare cost report by $34,136 rebate, contrary to Federal regulations and the Centers for Medicare and Medicaid Services (CMS) guidance.

We recommended that the provider (1) revise and resubmit its 2004 Medicare cost report, if not already settled, to properly reflect the $34,136 rebate as a credit 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.