Review of General and Administrative and Fringe Benefit costs Included in the Fiscal Year 1991 Medicare Cost Reports by Allied Services, Inc., Scranton, Pennsylvania

EXECUTIVE SUMMARY:

Allied Services, Inc. reported general and administrative costs totaling approximately $7 million, as subject to allocation to Medicare for the year ended June 30, 1991. Our final report points out that this amount included $207,352 which were not allowable for allocation to Medicare. The unallowable costs included $105,695 for marketing activities, $28,447 for unallowable travel, $23,741 for charitable contributions, and $49,469 for miscellaneous unallowable costs. These costs were not related to patient care. The inclusion of the $207,352 of unallowable costs in the FY 1991 cost reports resulted in increased Medicare reimbursement of $85,848. We are recommending that AS remove these costs from its FY 1991 cost report and implement controls to prevent the inclusion of such costs in the future.