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Audit (A-07-08-00278)

05-22-2009
Review of Termination Claim for Postretirement Benefit Costs Made by The Regence Group for the Utah Segment

Executive Summary

The Regence Group's (Regence) entire termination claim of $1.4 million in postretirement benefit (PRB) costs for the Utah Medicare Part A and B contracts was unallowable for Medicare reimbursement. The termination claim was calculated based on a retroactive change in accounting practice without Centers for Medicare & Medicaid Services approval. Therefore, and pursuant to Regence's Medicare contracts, none of the costs claimed were allowable.

We recommended that Regence withdraw its termination claim of $1.4 million for PRB costs associated with the Utah Medicare Part A and B contracts.

In written comments on our draft report, Regence did not concur with our recommendation or with the termination claim amount. After reviewing Regence's comments and additional documentation, we revised our finding and recommendation to reflect a revised termination claim amount of $1.4 million. We maintain that Regence should withdraw the full claim amount.

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