Department of Health and Human Services

Office of Inspector General -- AUDIT

"Review of Cahaba Government Benefit Administrators Unfunded Pension Costs," (A-07-04-03053)

February 18, 2004


Complete Text of Report is available in PDF format (299 kb). Copies can also be obtained by contacting the Office of Public Affairs at 202-619-1343.


EXECUTIVE SUMMARY:

The objective of this review was to:  (1) determine if pension costs allocable to the Medicare contracts for plan years 1994 through 1995 were funded in accordance with the Federal Acquisition Regulations (FAR), (2) determine if the accumulated unfunded pension costs identified in our prior review have been properly accounted for, and (3) identify any unallowable components of the accumulated unfunded pension costs. We found that Cahaba funded the pension costs allocable to the Medicare contracts for plan years 1994 and 1995 in accordance with FAR.   Additionally, Cahaba accounted for the accumulated unfunded pension costs that were identified in our prior review.  However, Cahaba had some minor errors in its calculation of unallowable unfunded pension costs.  We updated the unallowable portion of Cahaba’s accumulated unfunded pension costs from January 1, 1994 to January 1, 2002.   We found the unallowable costs to be $672,724 for the Medicare segment, and $3,333,817 for the “Other” segment as of January 1, 2002.  We recommended that Cahaba:  (1) adjust the unallowable component of Medicare segment pension costs to $672,724 as of January 1, 2002, (2) adjust the unallowable component of the “Other” segment’s pension costs to $3,333,817 as of January 1, 2002, and (3) update annually the unallowable components of pension costs for the Medicare and “Other” segments.  Cahaba primarily agreed with our report.