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EXECUTIVE SUMMARY:
The objective of this audit was to determine whether organ acquisition costs claimed on the fiscal year (FY) 2001 Medicare cost report by the University of Alabama at Birmingham (UAB) Hospital for its kidney, liver, pancreas, lung, and heart transplant programs were allowable. The UAB Hospital’s procedures were not adequate to separately accumulate and report certain costs and revenues associated with organ acquisition activities. UAB Hospital claimed $1,665,866 in unallowable organ acquisition costs and did not offset revenue of $272,510 or include the associated ancillary costs of $75,574 on its FY 2001 cost report. Consequently, Medicare overpaid UAB Hospital an estimated $913,208 in FY 2001. We made procedural recommendations and recommended that the Medicare intermediary recover the overpayment of $913,208.