National Institute of Transplantation, an Independent Histocompatibility Laboratory, Did Not Fully Comply With Medicare's Cost-Reporting Requirements

The National Institute of Transplantation (NIT), an independent histocompatibility laboratory located in Los Angeles, California, did not fully comply with Medicare requirements for reporting tissue-typing costs and revenues on its fiscal year (FY) 2012 Medicare cost report. Of the 186 cost transactions that we reviewed, 177 were correctly reported; however, the remaining 9 transactions, totaling $81,063, were incorrectly reported. Of the 751 tissue-typing tests that we reviewed, 711 were correctly reported; however, the remaining 40 tests and 94 additional tests, with combined revenues totaling $50,000, were incorrectly reported.

As a result of these reporting errors, NIT incorrectly calculated its total tissue-typing costs and Medicare reimbursement ratio, which is used to determine the Medicare reimbursement for kidney tissue-typing services. Consequently, NIT received $45,940 in overpayments from Medicare. These incorrectly reported costs and revenues were included on NIT's FY 2012 cost report, which is outside of the 3-year reopening period.

We recommend that NIT (1) work with the Medicare administrative contractor (MAC) to return $45,940 in potential overpayments identified in this report that are outside of the 3-year reopening period but within the 6 year lookback period in accordance with the 60-day rule, and identify the returned overpayments as having been made in accordance with this recommendation; and (2) exercise reasonable diligence to identify and return any additional similar overpayments related to cost reports that were not part of our audit in accordance with the 60-day rule, and identify any returned overpayments as having been made in accordance with this recommendation.

NIT concurred with our recommendations and provided information on actions that it planned to take to address our recommendations. Regarding our finding that four cost transactions were incurred outside of the cost-reporting period, NIT stated that by removing these costs from the FY 2012 cost report, NIT would suffer the loss of reimbursement because the costs were not reported on the cost report in the year incurred and cannot be recaptured. Although NIT concurred with our first recommendation, NIT stated that it will work with the MAC to return the overpayments identified after our consideration of its comment on our finding.

We maintain that our findings and recommendations are valid. Federal regulations state that independent histocompatibility laboratories must provide adequate cost data that are based on the accrual basis of accounting, which means that an expense is reported in the period in which it is incurred, regardless of when it is paid.