EXECUTIVE SUMMARY:

This report provides the results of the OIG review of the consolidation of University Hospital (University) and the Medical Center of Louisiana at New Orleans (MCLNO).  The objective of the review was to determine whether Medicare’s regulations, especially those dealing with a change of ownership, were adhered to when the hospitals consolidated to form the MCLNO East and West Campuses.  A consolidation of hospitals is a change of ownership in Medicare regulations.  These regulations require that Medicare payments for services to patients, who are discharged after the date of the consolidation, be made to the legal owner on the date of discharge.  After consolidation, MCLNO was not only the legal owner, but also the hospital surviving the consolidation. 

The MCLNO’s consolidation with University was effective July 1, 1994.  The  University’s Medicare provider number was improperly used to submit Medicare claims to TriSpan for payment after that date.  This, along with other claims errors, resulted in $1,811,781 of Medicare overpayments.  We recommended that TriSpan and the hospitals work together to make the required adjustments to the appropriate Medicare claims and cost reports for the errors identified.  In their written response to our draft report, TriSpan officials stated that the recovery related to the consolidation was being pursued.