Federal Reports

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Danbury Hospital (the Hospital), located in Danbury, Connecticut, did not always comply with Medicare requirements for reporting wage data in its fiscal year (FY) 2010 Medicare cost report. Specifically, the Hospital reported overstated wage data totaling $4.9 million and 10,000 hours, which affected the numerator and denominator of its wage rate calculation. These errors occurred because the Hospital did not sufficiently review and reconcile the data to ensure that it was accurate, supportable, and in compliance with Medicare regulations. Because of the errors, we estimated that in FY 2014 Medicare overpaid the Hospital approximately $249,000 and overpaid five other hospitals in the same core-based statistical area a total of approximately $741,000.

Although the North Dakota Department of Human Services (State agency) generally complied with Federal Medicaid requirements for invoicing manufacturers for rebates for physician-administered drugs, it claimed unallowable Federal reimbursement for some of these drugs. The State agency did not invoice manufacturers for rebates associated with $138,000 ($79,000 Federal share) in physician-administered drugs. Of this amount, $137,000 ($78,000 Federal share) was for single-source drugs, and $1,000 ($700 Federal share) was for top-20 multiple-source drugs. Because the State agency's internal controls did not always ensure that it invoiced manufacturers to secure rebates, the State agency improperly claimed Federal reimbursement for these single-source drugs and top-20 multiple-source drugs.

We could not determine whether West Virginia's Severance and Business Privilege Tax (Severance Tax) is a permissible health-care-related tax. The Severance Tax does not place at least 85 percent of the tax burden on behavioral health services. We could not determine if the Severance Tax treats behavioral health services differently than the other items it taxes because the tax rates are not consistent and the proceeds from the tax on behavioral health services are placed in a fund different from the proceeds from the other items taxed. Citing privacy restrictions in its tax laws, West Virginia would not provide all the documents we needed to complete our analysis. We did not subpoena those records. Without this information, we could not identify the taxpayers or validate the services being taxed. As a result, we could not determine if the Severance Tax is a health-care-related tax and, if it is, whether it is a permissible health-care-related tax.

This report provides the results of our review of the Indian Health Service (IHS) detailed accounting submission, which includes the Table of Drug Control Obligations, related disclosures, and management's assertions for the fiscal year ended September 30, 2015. We also reviewed the Performance Summary Report, which includes management's assertions and related performance information for the fiscal year ended September 30, 2015.