Worcester, Mass.-based UMass Memorial Health Care saw operating income fall in the nine months ended June 30 due in part to a math error Boston-based Partners HealthCare submitted to Medicare last year.
Under hospital payment rules, Medicare is required to reimburse employee wages at urban hospitals at the baseline set at rural hospitals in the state. The error, concerning how employee wages at 19-bed Nantucket (Mass.) Cottage Hospital were reported to Medicare, caused UMass Memorial to lose $12 million in the first nine months of fiscal year 2017, UMass Memorial executive vice president and CFO Sergio Melgar told Becker's Hospital Review.
UMass Memorial's operating income for the nine month period ended June 30 dropped to $19.5 million compared to $43 million in the same period a year prior, according to unaudited financial documents. At the same time, revenues increased 2.6 percent year-over-year to $1.8 billion. UMass Memorial pointed to volume increases, a positive case-mix and a decrease in free care expense of $43.1 million as reason for the incline.
UMass Memorial also saw expenses increase from $1.75 billion for the nine months ended June 30, 2016, to $1.82 million in the same period this year. The system attributed the change to increases in salaries and benefits and supply costs.