Review of Home Office Costs of Surgical Care Affiliates, Inc.

EXECUTIVE SUMMARY:

This review, requested by the Health Care Financing Administration (HCFA), was made to validate reported home office costs that HCFA will use in developing new ambulatory surgical center (ASC) payment rates and to determine if these costs were reimbursable under Medicare regulations and guidelines. The review showed that of $13.3 million in home office costs charged by Surgical Care Affiliates, Inc. (SCA) to its affiliated ASCs, $7.2 million did not meet Medicare requirements for reimbursement. These costs included; (1) debt guarantee fees of $4.3 million; (2) management service fees of $2.4 million charged in excess of costs; and (3) general and administrative expenses of $0.5 million for abandoned development plans, information systems expenses, charitable contributions, and wages not paid. This information is being provided to HCFA officials for use in developing new ASC facility payment rates. No other recommendations are being made at this time.