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Audit (A-07-12-00381)

Group Health Incorporated Overstated Allocable Pension Costs for Plan Years 2007 and 2008

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Group Health Incorporated (GHI), an EmblemHealth Company and Centers for Medicare & Medicaid Services (CMS) contractor, overstated the allocable pension costs in its fringe cost pool by $1.4 million, and its general and administrative (G&A) cost pool by $10.4 million, for plan years (PY) 2007 and 2008. Because GHI overstated the allocable CAS pension costs in its cost pools, GHI also overstated the pension costs used to calculate its indirect fringe cost rate by $1.4 million, and its indirect G&A cost rate by $376,000, for PYs 2007 and 2008. GHI administered Medicare Part B operations under cost reimbursement contracts with CMS, which terminated July 18, 2008. However, GHI continues to administer Medicare operations under a Coordination of Benefits contract with CMS.

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