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Series: Medicare Administrative Contractor Cost Report Settlements with Audit

Announced on  | Last Modified on  | Series Number: W-00-24-35886
Status
Active
Agency
Centers for Medicare and Medicaid Services

OBJECTIVE

HHS contracts with Medicare Administrative Contractors (MACs) to process claims and cost reports and determine payment amounts to providers (Social Security Act, § 1874A(a)). MACs determine the total amount of reimbursement based on providers' cost reports. MACs perform a desk review, and at their discretion, may perform either a field audit or an in-house audit to determine the cost report's adequacy, completeness, and accuracy. Generally, some cost reports that have been audited and settled are later reopened to correct audit adjustments. CMS has stated that it does not maintain data related to the number of cost reports that are reopened, the monetary adjustments to the settlement made as a result of reopenings, or the types and/or causes of adjustments. Our objective will be to: (1) quantify the extent to which the MAC amends audit adjustments after cost reports have been audited and settled, and whether the audit adjustments contain obvious errors or are inconsistent with the law, regulations and rulings, or general instructions; (2) quantify the effect of amended audit adjustments; and (3) gain an understanding of the types and/or causes of amended audit adjustments. Initially, we will audit a single MAC, and based on the results, we may expand this work to others.

There are 7 projects in this series.

Project titles will remain unpublished until projects are complete and reports are posted.

ACTIVE PROJECTS IN THIS SERIES (1)

Project OAS-25-06-154 • Announced on Mar 1, 2024

COMPLETED PROJECTS IN THIS SERIES (6)

National Government Services, Inc.

Project A-06-24-05004 • Completed on August 29, 2025

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

Project A-06-24-05003 • Completed on August 28, 2025

Wisconsin Physicians Service Government Health Administrators

Project A-06-24-04001 • Completed on July 17, 2025

National Government Services, Inc.

Project A-06-24-05000 • Completed on October 28, 2024

Novitas Solutions, Inc.

Project A-06-23-05001 • Completed on September 11, 2024

Noridian Healthcare Solutions Cost Report Settlements with Audit

Project A-06-22-05000 • Completed on November 1, 2023

TIMELINE

  • May 15, 2022
    Series Number W-00-24-35886 Assigned
  • May 15, 2022
    Project Announced

    Noridian Healthcare Solutions Cost Report Settlements with Audit - A-06-22-05000

  • July 31, 2023
    Project Announced

    Novitas Solutions, Inc. - A-06-23-05001

  • October 31, 2023
    Project Announced

    National Government Services, Inc. - A-06-24-05000

  • November 1, 2023
    Project Complete - A-06-22-05000

    Noridian Healthcare Solutions Cost Report Settlements with Audit has been marked as complete. This audit resulted in 3 recommendations.

  • March 1, 2024
    Projects Announced

    Wisconsin Physicians Service Government Health Administrators - A-06-24-04001

  • Novitas Solutions, Inc., Reopened and Corrected Cost Report Final Settlements for Desk Reviews Only With Obvious Errors To Correct Payments Made to Medicare Providers - A-06-24-05003

  • National Government Services, Inc. - A-06-24-05004

  • Project OAS-25-06-154

  • September 11, 2024
    Project Complete - A-06-23-05001

    Novitas Solutions, Inc. has been marked as complete. This audit resulted in 2 recommendations.

  • October 28, 2024
    Project Complete - A-06-24-05000

    National Government Services, Inc. has been marked as complete. This audit resulted in 2 recommendations.

  • July 17, 2025
    Project Complete - A-06-24-04001

    Wisconsin Physicians Service Government Health Administrators has been marked as complete. This audit resulted in 2 recommendations.

  • August 28, 2025
    Project Complete - A-06-24-05003

    Novitas Solutions, Inc., Reopened and Corrected Cost Report Final Settlements for Desk Reviews Only With Obvious Errors To Correct Payments Made to Medicare Providers has been marked as complete. This audit resulted in 2 recommendations.

  • August 29, 2025
    Project Complete - A-06-24-05004

    National Government Services, Inc. has been marked as complete. This audit resulted in 2 recommendations.

  • Today
    1 Audit In-Progress
  • Est FY2026
    Estimated Fiscal Year for Series Completion

6 REPORT PUBLISHED

Noridian Healthcare Solutions Reopened and Corrected Cost Report Final Settlements To Collect $11 Million in Net Overpayments That Had Been Made to Medicare Providers (A-06-22-05000)

24-A-06-010.01 to CMS - Closed Implemented
Closed on 02/05/2024
We recommend that Noridian Healthcare Solutions develop and deliver additional education to auditors and audit supervisors regarding applicable criteria and review requirements.

24-A-06-010.02 to CMS - Closed Implemented
Closed on 02/05/2024
We recommend that Noridian Healthcare Solutions develop and implement procedures to allow enough time for adequate auditor and supervisory review of audit adjustments and related actions.

24-A-06-010.03 to CMS - Closed Implemented
Closed on 02/05/2024
We recommend that Noridian Healthcare Solutions develop and implement enhanced procedures so that supervisors and higher-level reviewers are better qualified to detect incorrect audit adjustments.

View in Recommendation Tracker

Novitas Solutions, Inc., Reopened and Corrected Cost Report Final Settlements With Obvious Errors To Collect Overpayments Made to Medicare Providers (A-06-23-05001)

24-A-06-104.01 to CMS - Closed Implemented
Closed on 02/06/2025
We recommend that Novitas develop and deliver education to auditors and supervisors regarding applicable criteria and review requirements.

24-A-06-104.02 to CMS - Closed Implemented
Closed on 02/06/2025
We recommend that Novitas develop and implement enhanced procedures so that supervisors are better qualified to detect incorrect audit adjustments.

View in Recommendation Tracker

Wisconsin Physicians Service Government Health Administrators Reopened and Corrected Cost Report Final Settlements for Desk Reviews Only With Obvious Errors To Correct Payments Made to Medicare Providers (A-06-24-04001)
  • Of the 15 cost reports that WPS settled with a desk review only and that WPS reopened to correct the final settlements, all of the associated desk reviews contained obvious errors or were inconsistent with Medicare requirements.
  • WPS reported to us that errors in the 15 final settled cost reports were caused by a lack of effective controls and effective auditor training and by inadequate supervisory review.
  • The 15 cost report reopenings resulted in corrected final settlements to providers totaling $1.2 million in net overpayments.

25-A-06-083.01 to CMS - Open Unimplemented
Update expected on 01/16/2026
We recommend that Wisconsin Physicians Service Government Health Administrators develop and deliver additional education regarding applicable criteria and review requirements to auditors who perform desk reviews and supervisors who oversee the process.

25-A-06-083.02 to CMS - Open Unimplemented
Update expected on 01/16/2026
We recommend that Wisconsin Physicians Service Government Health Administrators develop and implement enhanced procedures so that supervisors are better qualified to detect incorrect adjustments.

View in Recommendation Tracker

National Government Services, Inc., Reopened and Corrected Cost Report Final Settlements With Obvious Errors To Collect Overpayments Made to Medicare Providers (A-06-24-05000)

25-A-06-007.01 to CMS - Closed Implemented
Closed on 03/04/2025
We recommend that National Government Services, Inc. develop and deliver additional education to auditors and audit supervisors regarding applicable criteria and review requirements.

25-A-06-007.02 to CMS - Closed Implemented
Closed on 03/04/2025
We recommend that National Government Services, Inc. develop and implement enhanced procedures so that supervisors are better qualified to detect incorrect audit adjustments.

View in Recommendation Tracker

Novitas Solutions, Inc., Reopened and Corrected Cost Report Final Settlements for Desk Reviews Only With Obvious Errors To Correct Payments Made to Medicare Providers (A-06-24-05003)

Of the 118 cost reports (totaling 122 cost report reopenings because some were reopened more than once) that Novitas settled with a desk review only and that Novitas reopened to correct the final settlements, all of the associated desk reviews contained obvious errors or were inconsistent with Medicare requirements.

  • The 122 cost report reopenings resulted in corrected final settlements to providers totaling $9.4 million (which consisted of $5.0 million in overpayments and $4.4 million in underpayments).
  • Novitas reported to us that its auditors and supervisors required additional training on certain types of payments. Novitas 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 Medicare funds from being expended in the most efficient and effective ways.

25-A-06-111.01 to CMS - Closed Implemented
Closed on 12/02/2025
We recommend that Novitas Solutions, Inc. develop and provide additional education to desk reviewers and supervisors regarding applicable criteria and review requirements.

25-A-06-111.02 to CMS - Open Unimplemented
Update expected on 06/02/2026
We recommend that Novitas Solutions, Inc. develop and implement enhanced procedures, which expand upon the current procedures and which are not limited to the additional training for which Novitas has already identified a need, so that supervisors are better qualified to detect incorrect adjustments.

View in Recommendation Tracker

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 (A-06-24-05004)

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.

25-A-06-112.01 to CMS - Open Unimplemented
Update expected on 02/27/2026
We recommend that National Government Services, Inc. develop and provide additional education to desk reviewers and supervisors regarding applicable criteria and review requirements.

25-A-06-112.02 to CMS - Open Unimplemented
Update expected on 02/27/2026
We recommend that National Government Services, Inc. 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 adjustments.

View in Recommendation Tracker
Work Plan Type
Office of Audit Services
HHS Agencies
Centers for Medicare and Medicaid Services
Issue Areas
Departmental Operational Issues Hospitals
Target Groups
-
Financial Groups
Medicare A Medicare B