Submitting OIG:
Report Description:
During our audit period, CGS was a subsidiary of Blue Cross Blue Shield of South Carolina (BCBS South Carolina), whose home office is in Columbia, South Carolina. CGS performed Medicare work upon being awarded the MAC contracts for Medicare Durable Medical Equipment (DME) Jurisdiction C and Medicare Parts A and B Jurisdiction 15 (including home health and hospice services), effective September 27, 2006, and July 8, 2010, respectively. , CGS continues to perform Medicare work for DME Jurisdiction C (re-awarded August 31, 2012) and Medicare Parts A and B Jurisdiction 15. The disclosure statement that CGS submits to CMS states that CGS uses pooled cost accounting. Medicare contractors use pooled cost accounting to calculate the indirect cost rates (whose computations include pension and PRB costs) that they submit on their ICPs. Medicare contractors use the indirect cost rates to calculate the contract costs that they report on their ICPs. In turn, CMS uses these indirect cost rates in determining the final indirect cost rates for each contract. Although the CGS employees did not participate in BCBS South Carolina’s qualified-defined benefit pension plan, certain costs from BCBS South Carolina’s home office were allocated to the CGS Medicare segment. Medicare Reimbursement of Pension CostsCMS reimburses a portion of the annual contributions that contractors make to their pension plans. The pension costs are included in the computation of the indirect cost rates reported on the ICPs. In turn, CMS uses indirect cost rates in reimbursing costs under cost-reimbursement contracts. To be allowable for Medicare reimbursement, pension costs must be (1) measured, assigned, and allocated in accordance with CAS 412 and 413 and (2) funded as specified by part 31 of the FAR. In claiming costs, contractors must follow cost reimbursement principles contained in the FAR, the CAS, and the Medicare contracts. Previous Audit of Allocable Pension CostsWe previously reviewed BCBS South Carolina’s allocable pension costs (A-07-17-00509, Aug. 28, 2017). Our previous BCBS South Carolina audit report identified Other segment allocable pension costs that its subsidiaries’ Medicare segments should have used when calculating the subsidiaries’ indirect cost rates for CYs 2006 through 2012. We recommended that BCBS South Carolina decrease the Medicare segment pension costs used to calculate its indirect cost rates by $6,193,748 for CYs 2006 through 2012.
Date Issued:
Wednesday, August 18, 2021
Agency Reviewed / Investigated:
Submitting OIG-Specific Report Number:
A-07-20-00593
Component, if applicable:
Centers for Medicare & Medicaid Services
Type of Report:
Audit
Questioned Costs:
$293,893
Funds for Better Use:
$0
Number of Recommendations:
1