Department of Health and Human Services

Office of Inspector General -- AUDIT

"Audit of Medicare Adjusted Community Rate Proposals Submitted by 55 Medicare+Choice Organizations for Contract Year 2000," (A-09-01-00051)

July 15, 2002

Complete Text of Report is available in PDF format (633 MB). Copies can also be obtained by contacting the Office of Public Affairs at 202-619-1343.


This final report summarizes the results of our reviews, made at the request of the Centers for Medicare & Medicaid Services (CMS), of 186 adjusted community rate proposals (ACRPs) submitted by 55 Medicare+Choice (M+C) organizations for Contract Year 2000. In general, we found that: 49 percent of the ACRPs were not prepared in accordance with CMS’ instructions; 66 percent contained errors that affected at least one of the three components of the adjusted community rate (direct medical care, administration, or additional revenues); and 36 percent overstated the beneficiary premium/cost sharing amounts and/or did not provide additional benefits. We were unable to determine an overall dollar effect of the miscalculated ACRPs, however, there could have been a significant impact on (1) payments made by the M+C organizations to their providers, (2) out-of-pocket expenses of the beneficiaries, and (3) amount of profit earned by the M+C organizations. Among other things, we recommended that CMS (1) reiterate to M+C organizations the importance of following CMS’ instructions in preparing the ACRPs, (2) work with the M+C organizations to have them develop corrective actions to address the deficiencies noted in our audits to ensure that future ACRP submissions are correct, and (3) perform follow-up evaluations of such actions. The CMS generally concurred with our recommendations.