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Department of Health and Human Services

Office of Inspector General -- AUDIT

"Audit of Medicare Part B Administrative Costs October 1, 2003, Through September 30, 2006 - Wisconsin Physicians Service Insurance Corporation," (A-05-07-00060)

June 13, 2008

PDF File Complete Text of Report is available in PDF format (2.76 mb). Copies can also be obtained by contacting the Office of Public Affairs at 202-619-1343.


In its fiscal year (FY) 2004 through 2006 cost proposals, Wisconsin Physicians Service Insurance Corporation (WPS) reported expenditures that substantially complied with the Federal Acquisition Regulations and the Medicare contract provisions.  However, WPS reported unallowable costs totaling $83,000 because it overstated costs for management and medical consulting services, executive compensation, postage, and entertainment.  Following the close of each FY, contractors submit to the Centers for Medicare and Medicaid Services (CMS) a Final Administrative Cost Proposal, which reports the Medicare administrative costs incurred during the year. 

We recommended that WPS decrease its cost proposals by $63,000 for FY 2004, $6,000 for FY 2005, and $14,000 for FY 2006 to reflect the unallowable costs.  In written comments on our draft report, WPS agreed with our findings regarding medical consulting services, executive compensation, postage, and entertainment costs and disagreed with our finding regarding management consulting services costs. We took WPS’s comments into consideration and made appropriate changes to our report.