Review of the Qualified Pension Plan at Nationwide Mutual Insurance Company, a Terminated Medicare Contractor, for the Period March 1, 1986, to June 30, 2002

10-02-2008 | Audit (A-07-07-00239) | Complete Report

Filed under: Center for Medicare and Medicaid Services

Nationwide Mutual Insurance Company (Nationwide), a terminated Medicare contractor, did not always comply with Federal requirements and the Medicare contracts' pension segmentation requirements. Specifically, Nationwide did not correctly identify the initial allocation of pension plan assets to the Medicare segment as of March 1, 1986, and did not comply with the Medicare contracts’ pension segmentation requirements for updating Medicare segment assets from March 1, 1986, to June 30, 2002, the closing date for the Medicare segment. As a result, Nationwide understated the Medicare segment assets by $2 million.

In addition, Nationwide did not comply with the provisions of its Medicare contracts or the Cost Accounting Standards when determining Medicare's share of the Medicare segment excess pension assets as of the termination of the Medicare contracts. We identified $14.9 million as Medicare’s share; however, Nationwide identified $7.4 million as Medicare’s share. Therefore, Nationwide understated Medicare’s share by $7.5 million.

We recommended that Nationwide increase Medicare segment pension assets as of June 30, 2002, by $2 million; increase Medicare’s share of the excess Medicare segment pension assets as of June 30, 2002, by $7.5 million; and refund to the Federal Government $14.9 million, which we calculated to be Medicare’s share of the Medicare segment excess pension assets as of the termination of the Medicare contracts. In written comments on our draft report, Nationwide did not address our recommendations.