Cahaba Government Benefits Administrators, LLC, Did Not Claim Some Allowable Medicare Pension Costs Through Its Incurred Cost Proposals

Why OIG Did This Audit

The Centers for Medicare & Medicaid Services (CMS) reimburses Medicare contractors for a portion of their pension costs, which are funded by the annual contributions that these contractors make to their pension plans.

At CMS's request, the U.S. Department of Health and Human Services, Office of Inspector General (OIG), Office of Audit Services, Region VII pension audit team reviews the cost elements related to qualified defined-benefit, postretirement benefit, and any other pension-related cost elements claimed by Medicare contractors through Incurred Cost Proposals (ICPs).

Previous OIG audits found that Medicare contractors did not always comply with Federal requirements when claiming pension costs for Medicare reimbursement.

Our objective was to determine whether the calendar years (CYs) 2014 through 2016 qualified defined-benefit plan pension costs that Cahaba Government Benefits Administrators, LLC (Cahaba GBA), claimed for Medicare reimbursement, and reported on its ICPs, were allowable and correctly claimed.

How OIG Did This Audit

We reviewed $10 million of Medicare pension costs that Cahaba GBA claimed for Medicare reimbursement on its ICPs for CYs 2014 through 2016.

What OIG Found

Cahaba GBA claimed pension costs of $10 million for Medicare reimbursement, through its ICPs, for CYs 2014 through 2016; however, we determined that the allowable Cost Accounting Standards-based pension costs during this period were $10.6 million. The difference, $593,158, represented allowable Medicare pension costs that Cahaba GBA did not claim on its ICPs for CYs 2014 through 2016. Cahaba GBA did not claim these allowable Medicare pension costs primarily because it based its claim for Medicare reimbursement on an incorrectly calculated allocable pension cost.

What OIG Recommends and Auditee Comments

We recommend that Cahaba GBA work with CMS to ensure that its final settlement of contract costs reflects an increase in Medicare pension costs of $593,158 for CYs 2014 through 2016.

Cahaba GBA agreed with our recommendation to work with CMS to ensure that its final settlement of contract costs reflects an increase in the Medicare pension costs of $593,158 for CYs 2014 through 2016. In addition, Cahaba GBA stated that it would ensure that future pension costs are claimed in accordance with the Medicare contracts.