Review of Pension Costs Claimed for Medicare Reimbursement by AdminaStar Federal

This final report provides the results of our review of Pension Costs Claimed for Medicare Reimbursement by AdminaStar Federal. For 1987 through 1995, we determined that AdminaStar Federal (Kentucky) claimed pension costs of $736,134 that are unallowable for Medicare reimbursement. During this period, the allowable Medicare pension costs were $1,576,657. However, Kentucky claimed pension costs of $2,312,791 for Medicare reimbursement. As a result, Kentucky claimed $736,134 in pension costs that are not allowable. The over claim occurred because the pension costs exceeded the funded portion of the Cost Accounting Standards (CAS) computed pension costs. We are recommending that Kentucky revise its Final Administrative Costs Proposals (FACPs) to eliminate the unallowable pension costs. The auditee did not provide a response to our report.