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HRD-85-74 1 (1985-07-18)

handle is hein.gao/gaobabfep0001 and id is 1 raw text is: BY THE COMPTROLLER GENERAL Report To The Congress OF THE UNITED STATES Use Of Unaudited Hospital Cost Data Resulted In Overstatement Of Medicare's Prospective Payment System Rates When the Department of Health and Human Services (HHS) computed Medicare's prospective payment rates for inpatient hos- pital services, it used unaudited cost reports. Because unaudited cost reports frequently include items that Medicare does not allow and the law calls for setting the prospective rates based on allowable costs, GAO performed a recalculation using audited cost reports for a sample of hospitals. A comparison of the HHS and GAO computations showed that the rates would be an estimated 2.98 percent lower using audited data. Also, HHS did not remove all hospital capital costs from the data used to compute the prospective rates. These costs should have been removed because capital costs are paid separately from the prospective rates. GAO estimates that removing the remaining capital costs from the prospective payment computation would lower the rates by an estimated 1.29 percent and prevent double payment for these costs. GAO recommends that HHS correct its data base for computing the prospective payment rates to remove the overstatement re- sulting from using unaudited cost data and the inclusion of some capital costs. Doing so would reduce Medicare payments by an estimated $940 million in fiscal year 1986 and by over $8 billion during fiscal years 1986-90. t7 D S71 O3 oiGAO/HRD-85-74 July 18, 1985 ~03-4of

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