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. 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.

What We Looked AtThe Federal Aviation Administration (FAA) Contract Tower (FCT) Program consists of 257 contract towers in 46 States operated by 3 contractors and the Air National Guard. Contract towers manage about 28 percent of the Nation’s air traffic control operations. The FCT Program is governed by seven contracts, based on geographical regions, which establish controller staffing for contract towers. These contracts normally cover a 5-year period and require contractors to submit controller staffing plans for each tower during the contract solicitation process. Our audit objective was to assess FAA’s approach for establishing and modifying air traffic controller staffing levels at contract towers. What We FoundFAA does not establish controller staffing levels at contract towers; instead the Agency reviews and approves staffing levels the contractors submit during the contract solicitation process. While FAA requires a program-wide staffing minimum of four controllers per tower, this minimum is not based on any Agency analysis or a study of controller staffing levels at contract towers. Also, FAA does not adequately monitor whether contractors adhere to the staffing minimum requirement. This is because FAA has not formally documented its process for establishing and reviewing contract tower staffing minimums. In addition, FAA does not proactively review staffing data to identify when staffing changes are needed; instead it relies on contractors to request and justify such changes. Further, FAA did not provide evidence that it had conducted any reviews of contractor performance relative to the labor hours stated in the approved staffing plans. As a result, the Agency may have missed key indicators of the potential need for staffing modifications. Our RecommendationsWe made four recommendations to improve FAA’s approach for staffing contract towers and monitoring performance levels. FAA concurred with recommendations 1 through 3. Thus, we consider these recommendations resolved but open pending FAA’s completion of planned actions and an Office of Inspector General (OIG) review. FAA partially concurred with recommendation 4, which we consider open and unresolved and request that the Agency reconsider its position within 30 days of the date of this report.

The VA Office of Inspector General (OIG) conducted a risk assessment of VA’s charge card program, evaluating the three types of charge cards—purchase cards (including convenience checks), travel cards, and fleet cards—for transactions during fiscal year (FY) 2020.The OIG conducted its risk assessment from November 2020 through March 2021. The team reviewed applicable VA policies, procedures, and other controls. The team also analyzed FY 2018 and FY 2019 charge card data to identify transactions or patterns of activity that represent potentially illegal, improper, or erroneous charge card purchases.The OIG determined that the purchase card program remains at medium risk of illegal, improper, or erroneous purchases, as previously assessed for FY 2019. Data analytics of purchase card transactions identified potential misuse of purchase cards. OIG investigations and reviews continue to identify patterns of purchase card transactions that do not comply with the Federal Acquisition Regulation and VA policies and procedures.The OIG also found that VA’s Travel Card Program and Fleet Card Program both remain at low risk for illegal, improper, or erroneous purchases. The risk assessment team assigned a low risk level to both programs primarily because they had no year-end spending surges. Additionally, a low percentage of travel card transactions had potentially unauthorized third-party payers, and the Fleet Card Program benefited from VA’s practice of obtaining refunds for sales tax paid on fuel purchases. Travel card transactions represented only about 1.4 percent of the $4.9 billion spent by VA on charge card transactions during FY 2020. Fleet card transactions represented only about 0.3 percent of that amount.