Audit of Administrative Costs Claimed Under Parts A & B of the Health Insurance for the Aged and Disabled Programs

EXECUTIVE SUMMARY:

During the period covered by our audit, pension costs claimed on the FACPs were overstated by $4,595,563 because AdminaStar did not fund its pension plan with cash contributions.  In addition, executive salary increases claimed on the FACPs of $405,035 were excessive because salary increases awarded to selected AdminaStar and Anthem executives exceeded the average increases for comparable positions established by the Employment Cost Index (ECI).  We are recommending financial adjustment of both amounts.