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3 Tricks for Finding Hidden Cash in Medicare Cost Reports

Karen Minich-Pourshadi, for HealthLeaders Media, October 4, 2010

“We worked with a large Michigan hospital that was missing between $3-$4 million, though typically [this type of review of Medicaid yields] $200k,” says Soper.

Trick #3: Wage Index. Medicare has

some complicated rules on compensating a hospital and they further complicated it with the wage index. What was the purpose of the wage index? To adjust Medicare payments to hospitals to account for area differences in wage costs. The formula is the relative hospital wage level for each geographic area compared to the national average, thus it varies significantly among areas.

Since the formula uses an average hourly wage of all hospital employees, there’s a potential for hospitals to be underpaid by Medicare. How? Soper explains that at one hospital with which he worked, all the on-call physicians were paid for eight hours, regardless of whether or not they were needed. The hospital was counting those unworked hours in their formula. However, Medicare regulations note that you only need to count hours worked in the average hourly wage.

Moreover, contracted physicians’ and nurses’ hourly wages should be counted in a hospitals’ average hourly wage—doing so can cause you to justifiably be geographically re-classed by Medicare, resulting in your hospital receiving all the money owed through this program.

There is plenty of money in Medicare and much of it is rightfully owed to hospitals—it just needs to be claimed. These three tricks aren’t quick, but by digging into your patient files and uttering a little “abracadabra” you just might levitate your bottom line.


Karen Minich-Pourshadi is a Senior Editor with HealthLeaders Media.
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