National Government Services, Inc., Reopened and Corrected Cost Report Final Settlements for Desk Reviews Only With Obvious Errors To Correct Payments Made to Medicare Providers

Why OIG Did This Audit

• Medicare providers are required to submit annual cost reports to their Medicare administrativecontractor (MAC). These financial documents convey the providers’ costs associated with providingservices to Medicare enrollees. MACs use the reports in determining the final amounts due providersfor their cost reporting periods (the final settlements of the cost reports).
• MACs perform a mandatory desk review to determine the accuracy and reasonableness of the datacontained in a provider’s cost report. The desk review does not include detailed verification and isdesigned to identify issues that may warrant additional review in the form of an audit by the MAC.
• This audit assessed cost reports that one MAC, National Government Services, Inc. (NGS), reopened tocorrect final settlements. We performed this audit to determine whether any of the cost reports thatNGS settled with a desk review only and then reopened to correct the final settlements containedobvious errors or were inconsistent with Medicare requirements.

What OIG Found

Of the 60 cost reports (totaling 64 cost report reopenings because some were reopened more than once) that NGS settled with a desk review only and that NGS reopened to correct final settlements, all of the associated desk reviews contained obvious errors or were inconsistent with Medicare requirements.

• The 64 cost report reopenings resulted in corrected final settlements to providers totaling $5.6 million(which consisted of $3.1 million in overpayments and $2.5 million in underpayments).
• NGS reported to us that its auditors and supervisors required additional training on certain types ofpayments. NGS added that its supervisors did not detect the incorrect audit adjustments.
• The risk exists that delays in the correct settlement of the cost reports could prevent some Medicarefunds from being expended in the most efficient and effective ways.

What OIG Recommends

We recommend that NGS develop and provide additional education to desk reviewers and supervisors on applicable criteria and review requirements; and that NGS develop and implement enhanced procedures, which expand upon the current procedures, and which are not limited to the additional training for which NGS has already identified a need, so that supervisors are better qualified to detect incorrect audit adjustments. NGS concurred with both of our recommendations and described the corrective actions it had taken to address them.