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Department of Health and Human Services

Office of Inspector General -- AUDIT

"Audit of Administrative Costs Claimed Under Part A of the Health Insurance for the Aged and Disabled Program by Mutual of Omaha Insurance Company," (A-07-95-01175)

August 1, 1996

Complete Text of Report is available in PDF format (2.23 MB). Copies can also be obtained by contacting the Office of Public Affairs at 202-619-1343.


This final report provides the results of our review of Administrative Costs Claimed under Part a of the Health Insurance for the Aged and Disabled Program by Mutual of Omaha Insurance Company. Our audit of administrative costs of $42,144,233 claimed by Mutual of Omaha (Mutual) for the 2-year period ending September 30, 1994 showed that Mutual had (1) generally presented the administrative costs fairly and (2) Maintained effective internal controls over that accounting and reporting of administrative costs. However, our audit also showed that Mutual:

* claimed $1,210 of unallowable costs because of allocating a portion of a tax penalty to the Medicare program in Fiscal (BY 1994;

* claimed automobile costs of $6,469 and $5,885 which exceeded the Federal Travel Regulation (FTR) mileage rates for FY 1993 and FY 1994; and

* claimed travel costs in excess of the per diem rates published in the FTR.

We recommended a financial adjustment of the unallowable tax penalty cost and are setting aside for Health Care Financing Administration (HCFA) adjudication the automobile costs which exceeded the FTR mileage rate. Due to the materiality, we are not recommending any financial adjustments involving travel costs in excess of published per diem rates. We also recommended certain procedural changes, when needed, involving the noted conditions.