Federal Reports

During our audit period, Cahaba GBA was a subsidiary of Blue Cross and Blue Shield of Alabama (BCBS Alabama), whose home office is in Birmingham, Alabama. Cahaba GBA administered the Medicare Parts A and B Jurisdiction 10 MAC contract under cost reimbursement contracts with CMS. The Jurisdiction 10 MAC contract ended on January 11, 2014. Cahaba GBA continued to perform Medicare work after being awarded the MAC contract for Medicare Parts A and B Jurisdiction J (formerly Jurisdiction 10) effective September 17, 2014. BCBS Alabama has two Medicare segments that participate in its qualified defined-benefit pension plan: (1) Cahaba GBA and (2) Cahaba Safeguard Administrators, LLC (Cahaba CSA). On January 1, 2013, BCBS Alabama created the Healthcare Business Solutions, LLC (HBS), intermediate home office segment (HBS segment) by transferring assets into it from the Cahaba GBA and Cahaba CSA segments. This report addresses the allowable pension costs claimed by Cahaba GBA under the provisions of its MAC contracts and CAS- and FAR-covered contracts. We are addressing Cahaba CSA’s compliance with the MAC contracts in a separate audit.The disclosure statement that Cahaba GBA submits to CMS states that Cahaba GBA 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. 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. Incurred Cost Proposal AuditsAt CMS’s request, Davis Farr, LLP (Farr), performed audits of the ICPs that Cahaba GBA submitted for CYs 2014 through 2016. The objectives of the Farr ICP audits were to determine whether costs were allowable in accordance with the FAR, the U.S. Department of Health and Human Services Acquisition Regulation, and the CAS. For our current audit, we relied on the Farr ICP audit findings and recommendations when computing the allowable pension costs discussed in this report. We incorporated the results of the Farr ICP audits into our computations of the audited indirect cost rates, and ultimately the pension costs claimed, for the contracts subject to the FAR. CMS will use our report on allowable pension costs, as well as the Farr ICP audit reports, to determine the final indirect cost rates and the total allowable contract costs for Cahaba GBA for CYs 2014 through 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.

During our audit period, Cahaba CSA was a subsidiary of Blue Cross and Blue Shield of Alabama (BCBS Alabama), whose home office is in Birmingham, Alabama. The Cahaba CSA Medicare segment administered program safeguard functions under a contract with CMS. With the implementation of the Health Insurance Portability and Accountability Act of 1996 and the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), CMS established the Medicare Integrity Program zones. CMS created seven program integrity zones based on the newly-established MAC jurisdictions. CMS awarded Zone Program Integrity Contactor (ZPIC) contracts for Zone 3 and Zone 6 to Cahaba CSA effective April 8, 2011, and September 30, 2011, respectively. BCBS Alabama has two Medicare segments that participate in its qualified defined-benefit pension plan: (1) Cahaba Government Benefits Administrators, LLC (Cahaba GBA), and (2) Cahaba CSA. On January 1, 2013, BCBS Alabama created the Healthcare Business Solutions, LLC (HBS), intermediate home office segment (HBS segment) by transferring assets into it from the Cahaba GBA and Cahaba CSA segments. This report addresses Cahaba CSA’s compliance with the MAC contracts when claiming pension costs for Medicare reimbursement. We are addressing Cahaba GBA’s compliance with the MAC contracts in a separate audit. The disclosure statement that Cahaba CSA submits to CMS states that Cahaba CSA 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. 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. Incurred Cost Proposal AuditsAt CMS’s request, Davis Farr, LLP (Farr), performed audits of the ICPs that Cahaba CSA submitted for CYs 2014 through 2016. The objectives of the Farr ICP audits were to determine whether costs were allowable in accordance with the FAR, the U.S. Department of Health and Human Services Acquisition Regulation, and the CAS. For our current audit, we relied on the Farr ICP audit findings and recommendations when computing the allowable pension costs discussed in this report. We incorporated the results of the Farr ICP audits into our computations of the audited indirect cost rates, and ultimately the pension costs claimed, for the contracts subject to the FAR. CMS will use our report on allowable pension costs, as well as the Farr ICP audit reports, to determine the final indirect cost rates and the total allowable contract costs for Cahaba CSA for CYs 2014 through 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.

We reviewed four recommendations from our 2017 evaluation report titled Improvements Needed in the Bureau of Reclamation’s Oversight of Tribal Rural Water Projects to verify whether the Bureau implemented them.We confirmed that the recommendations have been resolved and implemented.

This Office of Inspector General (OIG) Comprehensive Healthcare Inspection Program report provides a focused evaluation of the quality of care delivered in the inpatient and outpatient settings of the Ralph H. Johnson Medical Center and multiple outpatient clinics in Georgia and South Carolina. The inspection covers key clinical and administrative processes that are associated with promoting quality care. This inspection focused on Leadership and Organizational Risks; Quality, Safety, and Value; Medical Staff Privileging; Environment of Care; Medication Management: Long-Term Opioid Therapy for Pain; Mental Health: Suicide Prevention Program; Care Coordination: Life-Sustaining Treatment Decisions; Women’s Health: Comprehensive Care; and High-Risk Processes: Reusable Medical Equipment.The executive leadership team had worked together in their current positions for five months prior to the inspection, although three of the five leaders had worked together for several years. Survey scores related to employee satisfaction were generally better than those for VHA. Patient experience survey data indicated satisfaction with the care provided. Leaders appeared to support efforts to improve and maintain patient safety, quality care, and other positive outcomes. The OIG’s review of accreditation findings and disclosures did not identify any substantial organizational risk factors. The leaders were knowledgeable about Strategic Analytics for Improvement and Learning data and should continue to take actions to sustain and improve performance.The OIG issued 13 recommendations for improvement across six areas:(1) Quality, Safety, and Value• Peer review processes(2) Medical Staff Privileging• Professional practice evaluations• Provider exit reviews(3) Environment of Care• Safety and cleanliness(4) Mental Health• Staff training(5) Women’s Health• Women’s health primary care providers• Committee membership• Maternity care coordinator(6) High-Risk Processes• Airflow testing