Noridian Healthcare Solutions, LLC, Understated Its Medicare Segment Pension Assets as of January 1, 2011

Noridian Healthcare Solutions, LLC (NHS), a Medicare contractor, understated the Medicare segment pension assets by approximately $2.4 million as of January 1, 2011. NHS understated the Medicare segment pension assets primarily because it incorrectly identified Medicare segment participants and, therefore, incorrectly identified the Medicare segment benefit payments and participants who transferred out of the Medicare segment. In addition, NHS lacked controls to ensure that it calculated those assets in accordance with Federal requirements and the pension segmentation language of its Medicare contracts when updating the Medicare segment pension assets from January 1, 2006, through January 1, 2011.

We recommended that NHS (1) increase its Medicare segment pension assets as of January 1, 2011, by $2.4 million and recognize $19.6 million as the Medicare segment pension assets and (2) establish controls to ensure compliance with Federal regulations and the Medicare contracts' pension segmentation requirements when allocating contributions and transferred prepayment credits, benefit payments, participant transfers, and investment earnings and expenses. NHS concurred with our recommendations and said that it would increase and recognize the Medicare segment assets as of January 1, 2011.