Allocation and Distribution of Other Administrative and General

110 - Allocation and Distribution of Other Administrative and General Costs (Rev. 4, 10-01-01) Administrative and General (A&G) costs other than those described in section 100 of this chapter which bear a significant relationship to the services rendered are not apportioned to Medicare directly. Instead, these costs are allocated or distributed to the components of the cost-based HMO/CMP which, in turn, are then apportioned to Medicare in accordance with the rules contained in this chapter. The allocation or distribution process occurs in two steps: 1. The total allowable costs of a separate entity or department that performs administrative services (e.g., centralized purchasing, accounting, data processing) that can be quantitatively measured, should be allocated or distributed to each component of the HMO/CMP in reasonable proportion to the benefits received by that component. 2. Those remaining service-related administrative costs that cannot otherwise be distributed or allocated in reasonable proportion to the benefits received by the components must be allocated to the components on the basis of a ratio of total incurred and distributed cost of the component to total incurred and distributed cost to all components.