Federal Reports

In May 2014, a private party filed a sealed qui tam complaint in federal court, alleging that Frontier, West Virginia, Inc. (Frontier), a subrecipient of a National Telecommunications and Information Administration (NTIA) Broadband Technology Opportunities Program (BTOP) grant to the State of West Virginia, had violated the False Claims Act. The evidence developed over the course of our investigation established that the Executive Office of West Virginia (EOWV) reimbursed Frontier from BTOP grant funds for approximately $4.7 million in costs that were unallowable under the applicable rules and regulations. The evidence further established that Frontier placed a significantly greater amount of “maintenance coil” on the BTOP project than the company had previously represented to the public, EOWV, and OIG.

Our audit found that the Alabama State Department of Education’s (Alabama) system of internal control did not provide reasonable assurance that reported graduation rates were accurate and complete for the time period covered by our audit (school year 2013–2014). In addition, we found that Alabama misreported Adjusted Cohort Graduation Rate (ACGR) data to the Department because the former State superintendent decided to continue including students who earned an alternative diploma as graduates in the ACGR despite being advised by the Department that those students could not be included.

TVA has both fixed and variable costs that it must recover. Since fuel and purchased power cost can fluctuate significantly with changes in weather and shifts in global supply and demand, TVA recovers these variable costs through a monthly fuel cost adjustment (FCA). The TVA Act assigns rate setting duties to the TVA Board of Directors (Board). The rates approved by the Board include the formula used to calculate the monthly FCA, which represents approximately one-third of the wholesale rate. Due to the importance of TVA correctly calculating the FCA, we performed an evaluation to determine whether the FCA was calculated according to the Board-approved formula. Based on our independent recalculation of the January 2017 FCA rates, we determined all but one calculation within the FCA was performed in accordance with the Board-approved formula, with the exception being the resource cost allocation (RCA). The RCA assigns variable costs based on usage and power supply cost to one of two customer categories. These categories, Non-Standard Service and Standard Service, are defined by the Board-approved formula and are generally based on a customer's demand. We noted TVA's method of calculating the RCA used in the FCA calculation was not in agreement with the approved methodology. Specifically, while calculating the RCA, TVA did not appropriately categorize some direct-served, federal, and interdivisional customers, based on their contract demand. TVA subsequently determined that over a 16-month period (October 2015 through January 2017), the miscalculation of the RCA led to errors of about (1) $449,000 too much deferred cost in the Non-Standard Service Customer deferred account and (2) $462,000 too little deferred cost in the Standard Service Customer deferred account.

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This final report documents the results of our audit of the effectiveness of selected Commerce bureaus unliquidated obligation (ULO) review policies and procedures developed since our OIG audit report issued on June 18, 2013, Monitoring of Obligation Balances Needs Strengthening (OIG-13-026-A). Our objective for this audit was to evaluate the effectiveness of each operating unit’s obligation and deobligation review policies and procedures implemented since the June 2013 audit report.

At the request of the Tennessee Valley Authority (TVA) Supply Chain's former Director of Sourcing, we audited costs billed to TVA by ScottMadden, Inc. (ScottMadden) under Contract Nos. 3526, 8579, and 8689. Under the contracts, ScottMadden provided consulting services that included, but were not limited to, financial management and business management services. Our audit scope included about $19.6 million in costs that ScottMadden billed to TVA from January 1, 2012, through December 31, 2015, under the three separate contracts. Our audit objectives were to determine if (1) the costs billed to TVA by ScottMadden were in compliance with the contracts' terms and (2) task authorizations awarded under the contracts were in compliance with TVA policies, processes, and procedures.In summary, we determined ScottMadden billed TVA (1) $2,077,043 for work that was performed prior to authorization and (2) $273,890 for labor categories that were not included in the pricing schedules of Contract Nos. 3526 and 8579. In addition, although ScottMadden had a higher percentage of sole-source awarded tasks than its competitors, we determined Supply Chain was following its intended competitive model for the blanket contracts to obtain the best value for TVA.(Summary Only)

Congress authorized the President's Emergency Plan for AIDS Relief (PEPFAR) to receive $48 billion in funding for the 5-year period beginning October 1, 2008, to assist foreign countries in combating HIV/AIDS, tuberculosis, and malaria. Congress authorized additional funds to be appropriated through 2018.

This memorandum report presents performance data for the Senior Medicare Patrol (SMP) projects, which receive grants from ACL to recruit and train retired professionals and other senior citizens to recognize and report instances or patterns of health care fraud. OIG has collected these performance data since 1997.

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The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 requires CMS to phase in a Competitive Bidding Program for durable medical equipment, prosthetics, orthotics, and supplies. In July 2013, the program was expanded to include a National Mail-Order Program for diabetes testing supplies. The Medicare Improvements for Patients and Providers Act (MIPPA) prohibits CMS from awarding a contract to a supplier of diabetes test strips if the supplier's bid does not cover at least 50 percent, by volume, of all types of diabetes test strips on the market. (This is known as the "MIPPA 50 percent rule.") MIPPA requires OIG to determine the market shares of the types of diabetes test strips before each round of competitive bidding.

The Health Information Technology for Economic and Clinical Health Act established the Medicare and Medicaid electronic health record (EHR) incentive programs to promote the adoption of EHRs and to improve health care quality, safety, and efficiency through the promotion of health information technology and electronic health information exchange. As an incentive for using certified EHR technology, the Federal Government is making payments to eligible professionals (EPs) and hospitals that attest to the "meaningful use" of EHRs. To receive an incentive payment, EPs attest that they meet program requirements by self-reporting data through the Centers for Medicare & Medicaid Services' (CMS) online system.

Audit Report

The OIG received hotline allegations that AmeriCorps members assigned to the Summit Tutoring Corps (Summit), Redwood City, CA, were displacing staff.

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 established the Competitive Bidding Program for durable medical equipment (DME). The program replaces a fee schedule with a competitive bidding process to set Medicare reimbursement amounts in certain areas. In a 2014 letter to OIG, Members of Congress expressed concerns about the program's effect on access to DME and requested that OIG study this issue.

We determined that the Wisconsin Medicaid program could have saved $16.2 million (approximately $9.6 million Federal share) in 2014 if Wisconsin (1) required its Medicaid managed care plans to meet the minimum medical loss ratio (MLR) standard similar to the Federal standards for certain private insurers and Medicare Advantage plans and (2) required remittances when Medicaid managed care plans did not meet the MLR standard. Specifically, of the 11 managed care plans that we reviewed, we calculated MLRs for 4 plans that were less than 85 percent (the minimum MLR standard for large private insurers) during calendar year 2014.

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The parcel market has evolved rapidly over time, significantly altering the relationship among the players. The parcel market used to be a zero-sum game where growth in parcel delivery by one entity meant a reduction in parcel delivery by competing firms. Professor Panzar’s thereotical model shows that large parcel delivery companies are threatened by more than competition amongst each other — their real battle is over package volumes under the threat of self-delivery by large retailers.

This report contains classified information that is exempt from disclosure under the Freedom of Information Act. To obtain further information, please contact the OIG Office of Counsel at OIGCounsel@oig.treas.gov, (202) 927-0650, or by mail at Office of Treasury Inspector General, 1500 Pennsylvania Avenue, Washington DC 20220.