Federal Reports

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.

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. During our audit period, CMS and BCBS South Carolina entered into an agreement called the “Advance Agreement on the Computation of Nonqualified Defined-Benefit Pension Plan Costs for Periods Beginning January 1, 2015” (agreement). This agreement allowed BCBS South Carolina to change its accounting methodology from a pay-as-you-go to an accrual method. This agreement also closed costs prior to January 1, 2015. Starting with January 1, 2015, the SERP III plan would, under the terms of the agreement, identify its segments by individual participant. These segments allocate to each of the BCBS South Carolina’s Medicare subsidiaries: Palmetto Government Benefits Administrator, LLC; Companion Data Services, LLC; and CGS. This report addresses CGS’s compliance with the provisions of the Federal requirements and its Medicare contracts in claiming SERP III costs. 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 plan, PRB plan, SERP III, and Excess 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. BCBS South Carolina sponsors a SERP III plan. The purpose of this deferred compensation plan is to supplement participants’ benefits payable under BCBS South Carolina’s retirement plans. This plan is provided to a limited group of management employees who are responsible for earnings and long-term growth of the company. BCBS South Carolina allocated costs to the CGS Medicare segment. The Medicare contracts require CGS to calculate the SERP III 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, the 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. CGS claimed SERP III costs on an accrual basis. At CMS’s request, CliftonLarsonAllen, LLP (Allen), performed audits of the ICPs that CGS submitted for CYs 2015 and 2016. The objectives of these ICP audits were to determine whether costs were allowable in accordance with the FAR, the CAS, and the Department of Health and Human Services Acquisition Regulation System.

Personnel actions are changes to an employee’s status such as hiring, reassignment, promotion, benefit changes, separations, and retirements. Local Human Resources personnel, as well as supervisors and managers across the organization, are responsible for initiating actions by providing the relevant information online to the Human Resources Shared Services Center (HRSSC). Our objective was to assess the Postal Service’s effectiveness of processing selected personnel actions and identify potential process improvements. We limited our scope to selected late resignation and reassignment personnel actions.

The VA Office of Inspector General (OIG) conducted a healthcare inspection regarding allegations of incompletely screening for COVID-19 and treatment of a patient with serious mental illness who presented for same-day care at the Michael E. DeBakey VA Medical Center (facility).The OIG substantiated that facility staff did not complete the patient’s COVID-19 temperature screening.The OIG substantiated that facility staff failed to medically manage the patient with COVID-19 symptoms, sent the patient to the drive-through testing area without medical evaluation, and did not isolate the patient, complete a plan of care, or follow policy for transporting patients suspected to have COVID-19.The vulnerable patient disappeared while in the facility’s care, was found off-site four days later experiencing a medical emergency, taken back to the facility, and died the following day.The OIG determined that the Mental Health Intensive Case Management team failed to address documentation discrepancies related to the patient’s surrogate and educate the family on COVID-19 visitor policy and screening processes.The OIG identified the facility’s noncompliance with the missing patient policy, and facility leaders’ failure to report an adverse event and to ensure a timely review of the patient’s episode of care.The OIG identified that facility leaders did not timely or accurately disclose to the patient’s family the medical mismanagement that led to the patient’s adverse clinical outcome.The OIG concluded the failure to screen, isolate, and evaluate the patient resulted in potential COVID-19 exposure to staff, patients, and the public when the patient moved through facility grounds.The OIG made nine recommendations to the Facility Director related to COVID-19 screening, the visitor policy for patients requiring mental health support, identification of patients’ surrogates, mental health care coordination, missing and at-risk patients, adverse event reporting, issue briefs, root cause analyses, and institutional disclosures.