Review of Executive Compensation at Medicare Contractors

EXECUTIVE SUMMARY:

This final audit report points out that the top executives at three Medicare contractors received increases to their compensation packages that were clearly in excess of the Department of Labor's Employment Cost Index (ECI). The ECI is a measure of the compensation rate and is similar in concept to the Consumer Price Index. For the period under review the ECI increased 14.6 percent. In contrast, the average executive compensation at one contractor jumped 108 percent, at another the increase was 57 percent, and at the third contractor the increase was over 35 percent. We recommend that the Health Care Financing Administration consider establishing a ceiling on executive compensation increases that Medicare contractors can allocate to the Medicare program.