Review of Medicare Part B Administrative Costs Claimed By HealthNow New York, Inc. For The Period October 1, 1999 through September 30, 2002

EXECUTIVE SUMMARY:

The objectives of this audit were to determine whether: (1) HealthNow New York, Inc. (HealthNow) has established effective systems of internal controls, accounting and reporting for administrative costs incurred under the program, and (2) the Final Administrative Cost Proposal (FACP) presents fairly, in all material respects, the costs of program administration allowable in accordance with Part 31 of the Federal Acquisition Regulations (FAR) as interpreted and amended by Appendix B of HealthNow's Medicare agreement with the Centers for Medicare & Medicaid Services (CMS).  We determined that HealthNow generally had established adequate systems for internal control, accounting and reporting for administrative costs.  In addition, nothing came to our attention to indicate any material control weaknesses.  Further, the administrative costs claimed on the FACP for the period October 1, 1999 through September 30, 2002, were generally in accordance with Part 31 of the FAR and Appendix B of HealthNow's Medicare agreement with CMS.  However, our review disclosed that $317,593 of the costs claimed were overstated.  We recommended that HealthNow reduce costs claimed by $317,593, and procedural corrections.