Review of Medicare Part A Administrative Costs Claimed by Anthem Health Plans of Maine - October 1998 Through September 2001

EXECUTIVE SUMMARY:

The objectives of this review were to determine whether the fiscal intermediary (FI) established effective controls over the accounting and reporting of administrative costs, and the costs claimed on the proposal complied with applicable Federal regulations and contract provisions.  As a result, the FI did not employ control procedures sufficient to ensure compliance with Federal cost principles and Medicare contract provisions.  During fiscal years (FY) 1999 through 2001, the FI claimed $67.6 million in Medicare administrative costs.  We found that the FI claimed unallowable costs totaling $2,754,992.  Internal control weaknesses also resulted in $634,724 in data processing costs being set aside for the Centers for Medicare and Medicaid Services review and $1.4 million of pension cost reporting errors being included in the FY 2001 proposal.  The above findings primarily related to inadequate controls for supporting and allocating indirect costs to the Medicare program.  We recommended financial adjustments and improvements to internal controls.

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