Medicare: Better Guidance Is Needed To Preclude Inappropriate General and
Administrative Charges (Letter Report, 10/15/93, GAO/NSIAD-94-13).

GAO found that $1.1 million of $2.6 million in administrative expenses
claimed by the Hospital Corporation of America (HCA) in its Medicare
cost report was either unallowable, questionable or unsupported.  In a
recently completed review of administrative expenses and employee fringe
benefit costs claimed by hospitals and corporate offices in their
Medicare cost reports, the Inspector General at the Department of Health
and Human Services found more than $50 million in unallowable and
questionable expenses.  He concluded that a lack of explicit guidance in
Medicare cost principles was at least a contributing factor to this
problem. Similarly, the general nature of the Medicare cost principles
was a major reason why HCA included inappropriate costs in its report.
Medicare cost principles, for example, do not specifically address many
of the costs that GAO questioned, such as liquor, flowers, gifts,
entertainment, Christmas parties, and scholarships for employee
children.  In GAO's view, the cost principles contained in the Federal
Acquisition Regulation and in Office of Management and Budget Circular
A-21 provide useful guidance on allowable general and administrative
expenses.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  NSIAD-94-13
     TITLE:  Medicare: Better Guidance Is Needed To Preclude 
             Inappropriate General and Administrative Charges
      DATE:  10/15/93
   SUBJECT:  Expense claims
             Administrative costs
             Contractors
             Documentation
             Overhead costs
             Hospital care services
             Patient care services
             Medicare programs
             Health care cost control
             Cost analysis

             
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