Overhead Costs

Unallowable and Questionable Costs Charged to Medicare by Hospital Corporation of America Gao ID: T-NSIAD-93-16 June 23, 1993

GAO examined $2.6 million in expenses incurred by the Hospital Corporation of America (HCA) and found that $1.1 million of that amount was questionable. GAO believes that the general nature of the Medicare cost principles was the main reason for HCA including unallowable costs in its Medicare cost reports. The way in which HCA interpreted the cost principles also contributed to questionable costs being included in the report. HCA is not, however, the only health care provider that has included questionable costs in Medicare cost reports. The Inspector General (IG) at the Department of Health and Human Services recently reviewed general and administrative expenses and employee fringe benefit costs at 19 hospitals and two corporate offices across the country. The IG identified $50 million in unallowable costs and more than $3 million in questionable costs included in their Medicare cost reports. Such inappropriate costs are boosting the cost of health care overall and Medicare in particular.



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