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Audit (A-07-13-00420)

03-18-2014
Noridian Healthcare Solutions, LLC, Understated Its Medicare Segment Postretirement Benefit Assets as of January 1, 2011

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Summary

Noridian Healthcare Solutions, LLC (NHS), a Medicare contractor, understated the Medicare segment postretirement benefit (PRB) assets by $1.1 million as of January 1, 2011. NHS understated the Medicare segment PRB assets because it incorrectly identified Medicare segment participants, and, therefore, incorrectly identified the Medicare segment contributions and prepayment credits. In addition, NHS lacked controls to ensure that it calculated those assets in accordance with Federal requirements and the pension segmentation language of its Medicare contracts when updating the Medicare segment PRB assets for January 1, 2006, through January 1, 2011.

We recommended that NHS (1) increase its Medicare segment pension assets as of January 1, 2011, by $1.1 million and recognize $20.1 million as the Medicare segment PRB assets and (2) establish controls to ensure compliance with Federal regulations and the Medicare contracts' pension segmentation requirements when updating the Medicare segment PRB assets with contributions, income, claims paid, and expenses. NHS concurred with our recommendations and said that it would increase the Medicare segment PRB assets by $1.1 million and that it would recognize $20.1 million as the Medicare segment PRB assets as of January 1, 2011.

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