Southern California Renal Disease Council, Inc., Claimed Unallowable and Unsupported Costs Under Medicare Contract Number 500-03-NW18

We reviewed $2.62 million of the $2.75 million that Southern California Renal Disease Council, Inc. (the Council), claimed under Medicare contract number 500-03-NW18, which is a cost-reimbursable contract for the period July 1, 2003, through June 30, 2006.

Of the $2.62 million of costs we reviewed, $352,000 was allowable under the terms of the contract and pursuant to applicable Federal regulations. The remaining $2.27 million consisted of $20,000 in travel costs and other direct costs that we determined were unallowable and $2.25 million that we set aside for CMS resolution. The Council claimed unallowable or unsupported costs because it did not have adequate controls to account for costs claimed under Federal contracts.

We recommended that the Council (1) refund to the Federal Government $20,000 for unallowable travel and other direct costs, (2) work with CMS to determine the allowability of $2.25 million that we set aside and refund to the Federal Government any amount that is determined to be unallowable, and (3) strengthen its controls to account for costs claimed under Federal contracts. The Council concurred with our first and second recommendations and provided information on actions that it had taken or planned to take to address the third recommendation.