Review of Quality Improvement Organization in Maryland

The Senate Finance Committee requested that we assess the fiscal integrity of the Medicare Quality Improvement Organizations (QIO) with respect to six specified fiscal integrity areas.  We found that from November 1, 2002, through October 31, 2005, Maryland's QIO incurred approximately $1.6 million of costs that were improperly classified as indirect costs.  These costs included direct costs totaling $89,026 for recruiting that should have been charged to the QIO contract and rents and other costs totaling $1,548,509 attributable to specific contracts with State governments that should not have been included in the indirect costs.  Because indirect costs are used to calculate the indirect cost rates, inflating these costs may have resulted in inflated indirect costs charged to this scope of work (SOW).

We recommended that the QIO work with CMS to resolve the status of the $1,637,535 in questioned indirect costs as part of the final settlement of the SOW.  The QIO took exception to our recommendation but stated that it was changing its accounting practices.