Examples of the inappropriate costs included expenses not related to the plan's service area, expenses for entertainment, inflated reinsurance costs, corporate administration costs, IRS penalties and interest, political contribution and lobbying costs, and employee morale expenses. The methodology which allows MCOs to apportion administrative costs to Medicare is flawed and results in Medicare covering a disproportionate amount of the MCO's administrative costs.
Additional reviews are underway and preliminary results show similar problems at other MCOs.
The results of these reviews will be shared with the Health Care Health Financing Administration in the coming months so that appropriate legislative changes can be considered.