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EXECUTIVE SUMMARY:
The objective of this audit was to determine if capitation payments to PacifiCare of Arizona (formerly FHP) were appropriate for beneficiaries reported as institutionalized. We determined PacifiCare received Medicare overpayments totaling $8,941 for 13 beneficiaries incorrectly classified as institutionalized. The 13 beneficiaries were part of a statistical sample of 100 Medicare beneficiaries reported as institutionalized during the period October 1, 1994 through September 30, 1996. Based on our sample results, we estimate that PacifiCare received Medicare overpayments of at least $100,173 for beneficiaries incorrectly classified as institutionalized during the audit period.