Overhead Costs:

Unallowable and Questionable Costs Charged to Medicare by Hospital Corporation of America

T-NSIAD-93-16: Published: Jun 23, 1993. Publicly Released: Jun 23, 1993.

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GAO discussed the results of its review of the Hospital Corporation of America's (HCA) general and administrative expenses for its fiscal year ended December 31, 1991. GAO noted that: (1) $1.1 million of HCA general and administrative expenses were unallowable, questionable, or unsupported; (2) the majority of HCA expenses were unallowable in accordance with Medicare cost principles or questionable because the relationship between costs and patient care services was not clear; (3) there was insufficient documentation to determine the allowability of the costs; (4) the general nature of the Medicare cost principles was the primary reason HCA included unallowable and questionable costs in its Medicare report; (5) HCA excluded net costs of $431.7 million from its Medicare report, but allocated these costs to its hospitals, which increased health care costs at these facilities; and (6) Medicare cost principles do not contain guidance on the allowability of certain expenses and lack sufficient clarity to ensure consistent application by health care providers.

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