Review of Vendor Rebates Paid to Hospitals - Southside Hospital, Bay Shore, New York

EXECUTIVE SUMMARY:

The objective of our review was to determine whether Southside Hospital (the provider) reduced costs reported on its fiscal year 2003 Medicare cost report by the $15,074 it received for two vendor rebates. Of the $15,074 in rebates, the provider reduced costs by $9,690 on its fiscal year 2003 Medicare cost report but did not report $5,384, contrary to Federal regulations and Centers for Medicare and Medicaid Services guidance.

We recommended that the provider (1) revise and resubmit its 2003 Medicare cost report, if not already settled, to properly reflect the $5,384 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.