Federal Reports

The Tipton, IA, Post Office is located in the Iowa, Nebraska, South Dakota District of the Central Area. Metered mail is any mail class or product with postage printed with a Postal Service approved postage meter or PC Postage product/system. Unused metered indicia are postage amounts (which may include fees) already imprinted onto any mailpiece, shipping label or meter strip (stamp) that was never mailed. Such meter indicia are considered for refund only if complete, legible, and valid. OIG data analytics identified the Tipton, IA, Post Office meter refunds totaling about $183,970 from April 1, 2019 to November 30, 2020, the eighth highest in the nation. We noted that there is a major mailer located in Tipton, IA. Our objective was to determine whether meter refunds were properly issued, supported, and processed.

During our audit period, Palmetto was a subsidiary of Blue Cross Blue Shield of South Carolina (BCBS South Carolina), whose home office is in Columbia, South Carolina. Palmetto administers Medicare operations under the MAC contracts for Medicare Parts A and B Jurisdiction 1 and Jurisdiction 11 effective October 25, 2007, and May 21, 2010, respectively, as well as other CAS-covered and FAR-covered contracts. Currently, Palmetto is the Medicare Parts A and B contractor for Jurisdictions J and M (formerly Jurisdiction 11). Palmetto also continues to perform Railroad Retirement Board contract operations under a specialty MAC contract awarded on November 27, 2012. During our audit period, CMS and BCBS South Carolina entered into an agreement called the “Advance Agreement Regarding the Computation of Nonqualified Defined Benefit Pension Plan Costs for the Periods Beginning January 1, 2015” (agreement). This agreement allowed BCBS South Carolina to change its accounting methodology from a pay-as-you to an accrual method. This agreement also closed costs prior to January 1, 2015. Starting with January 1, 2015, the Excess Plan would, under the terms of this agreement, have three Medicare segments: (1) Palmetto, (2) Companion Data Services, LLC (CDS), and (3) Partial Medicare. This report addresses Palmetto’s compliance with the pension segmentation language under the provisions of Federal requirements and its Medicare contracts. We are addressing the Excess Plan Medicare segment pension assets for the CDS and Partial Medicare segments in separate audits. BCBS South Carolina sponsors the Excess Plan. The purpose of the Excess Plan is to provide benefits in excess of the limits imposed by the Employee Retirement Income Security Act of 1974 for participants in BCBS South Carolina’s qualified defined-benefit plan.

The Office of Inspector General (OIG) is commencing the Fiscal Year 2021 Financial Statement Audit. The objective of the audit is to express an opinion on whether the financial statements are fairly presented, in all material respects, in accordance with the U.S. generally accepted accounting principles for Federal entities. For Federal entities not covered by the Chief Financial Officers Act (CFO Act), the Accountability of Tax Dollars Act of 2002 (ATDA) requires those Federal agencies and entities to prepare and submit audited financial statements to the Office of Management and Budget (OMB) and Congress.

The Office of Inspector General (OIG) is issuing this Management Alert regarding serious concerns with the control environment and the tracking of performance results in the Shuttered Venue Operators Grant (SVOG) program requiring immediate attention and action.SBA should take immediate action to reduce or eliminate risks by strengthening existing controls and implementing internal controls to address potential misuse of federal funds. Strong controls will ensure the SVOG program can effectively help eligible small business owners and entities that have suffered economic injury because of the COVID-19 pandemic.To address serious concerns and potential deficiencies in internal controls of the Shuttered Venue Operators Grant program, we suggest the Administrator:1. Reassess the audit risk plan to identify vulnerabilities, commensurate with the expected volume of applications and average award amount, to strengthen internal controls and reduce risk of misuse of federal funds.2. Clearly establish 2 CFR 200 criteria for the program to ensure compliance during the implementation and oversight phases.3. Implement required performance measures to determine the impact of program funds.4. Ensure sufficient resources are available to implement and oversee the SVOG program.

Contact OIGTo obtain further information about this Classified or Sensitive but UnclassifiedReport, please contact the OIG Office of Counsel atOIGCounsel@oig.treas.gov, (202) 927-0650, or by mail at Office of TreasuryInspector General, 1500 Pennsylvania Avenue, Washington DC.

We issued this to review the Social Security Administration’s telephone services during the COVID-19 pandemic, specifically during June 2020.

NHS is a subsidiary of Blue Cross Blue Shield of North Dakota (BCBS North Dakota) (formerly Noridian Mutual Insurance Company), whose home office is in Fargo, North Dakota. NHS administered Medicare Part A, Medicare Part B, and Medicare Durable Medical Equipment (DME) contract operations under MAC contracts for Medicare Parts A and B Jurisdictions E and F and Medicare DME Jurisdictions A and D. In addition, NHS held the Pricing, Data Analysis and Coding (PDAC) contract. Both BCBS North Dakota and NHS sponsor nonqualified plans called the Noridian Mutual Insurance Company Restoration Savings Plan and Noridian Healthcare Solutions, LLC, Restoration Savings Plan. The purpose of these plans is to provide deferred compensation for a select group of management or highly compensated employees within the meaning of the Employee Retirement Income Security Act of 1974. NHS claimed nonqualified costs using the pay-as-you-go basis of accounting. This report addresses the allowable restoration costs claimed by NHS under the provisions of its MAC contracts and CAS- and FAR-covered contracts. The disclosure statement that NHS submits to CMS states that NHS uses pooled cost accounting. Medicare contractors use pooled cost accounting to calculate the indirect cost rates (whose computations include pension, postretirement benefit, Supplemental Executive Retirement Plan, and Restoration Plan 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. The Medicare contracts require NHS to calculate nonqualified costs in accordance with the FAR and CAS 412 and 413. The FAR and the CAS require that the costs for nonqualified plans be measured under either the accrual method or the pay-as-you-go method. Under the accrual method, allowable costs are based on the annual contributions that the employer deposits into its trust fund. For nonqualified plans that are not funded through the use of a funding agency, costs are to be accounted for under the pay-as-you-go method. This method is based on the actual benefits paid to participants, which are comprised of lump-sum payments and annuity payments. At CMS’s request, Kearney and Company (Kearney) performed an audit of the ICPs that NHS submitted for CYs 2015 and 2016. The objectives of the Kearney audit were to determine whether costs were allowable in accordance with the FAR, the Department of Health and Human Services Acquisition Regulation, and the CAS. For our current audit, we relied on the Kearney audit findings and recommendations when computing the allowable restoration costs discussed in this report. We incorporated the results of the Kearney audit into our computations of the audited indirect cost rates, and ultimately the restoration costs claimed, for the contracts subject to the FAR. CMS will use our report on allowable restoration costs, as well as the Kearney audit report, to determine the final indirect cost rates and the total allowable contract costs for NHS for CYs 2015 and 2016. The cognizant Contracting Officer will perform a final settlement with the contractor to determine the final indirect cost rates. These rates ultimately determine the final costs of each contract.