Taxpayers Billed for Liquor, Cruises

Taxpayers for Common Sense is the best organization that monitors excessive government spending. Here is their latest news update.

MEDICARE LOOPHOLE GIVES COMPANIES REASON TO PARTY Taxpayers routinely pay millions of dollars for items that have nothing to do with medical care, according to a recent government report.

An audit of nine managed care organizations (MCOs) that participate in Medicare by the Inspector General of the Department of Health and Human Services (DHHS) found that the MCOs wasted $66.3 million in one year on administrative expenses unrelated to medical care.

In 1997, they splurged on parties, massages, crystal vases for executives, and trips to resort locations. Taxpayers also picked up the tab for a New York-based HMO’s $150,000 party -- including visits to Radio City Music Hall, Madison Square Garden, a dinner cruise, and fireworks.

The report listed the expenses in seven categories it said Medicare normally would not pay for. These expenses included $365,000 in bad debt, $1,069,340 in public relations and sponsorships, $1,230,413 in donations, contributions and community organization memberships, and $122,434 for gifts. The report also estimated that MCOs exaggerated their administrative costs by about $1 billion a year for the years 1994 through 1996.

Moreover, many of the MCOs didn’t maintain good records. In fact, the Inspector General was unable to determine how more than $50 million taxpayer dollars were spent.

Although they found nothing illegal, DHHS auditors said these expenses were unreasonable and are examples of inappropriate administrative costs in the Medicare health-maintenance organization (HMO) program nationwide.

While the Inspector General only assessed a small number of MCOs participating in Medicare, it believes that this problem is prevalent in a majority of MCOs across the nation. If only half of the nation’s MCOs were engaging in similar wasteful practices, taxpayers would be losing $1.4 billion per year.

Under current regulations, the companies that participate in the Medicare program are not required to follow to Medicare’s principle of paying only “reasonable” costs when determining their expected administration expenses for each year. This loophole has allowed these organizations to waste taxpayer money without any repercussions.

Under current law, reasonable costs are defined as those that are directly related to the delivery of medical services. Current government rules also require entities that receive taxpayer monies to maintain adequate records to allow auditors to evaluate organizational expenses.

Congress should eliminate this egregious abuse of taxpayer dollars to ensure that Americans are receiving the benefits they deserve.

----------------------------------

For more information, e-mail keith@taxpayer.net or phone Keith Ashdown at 202-546-8500 ext. 110 ; TCS is at www.taxpayer.net

Page One	Page Two	Archive
Discussion Room	Letters	What's Geoism?

---