Audit of Administrative Costs Claimed Under Parts A & B of the Health Insurance for the Aged and Disabled Program - Associated Insurance Companies, Inc., Indianapolis, Indiana

This final audit report points out that Associated Insurance Companies (AIC), a Medicare intermediary, overclaimed administrative costs totaling approximately $2.5 million for Fiscal Years 1994 through 1995. The overclaim resulted because AIC understated complementary insurance credits, claimed unreasonable executive salary increases, claimed pension costs that were not funded, claimed non-Medicare related costs, claimed costs that exceeded actual costs, and overstated return on investment. In addition to procedural corrections and improvements to internal controls, we recommended a financial adjustment for $2.5 million. The AIC did not concur with most of our recommendations.