Federal Reports

In accordance with our Annual Performance Plan Fiscal Year 2020, dated October 2019, the Office of Inspector General (OIG) conducted a review of  the United States Capitol Police's (USCP or the Department) Occupational Safety, Health and Environment Division (OSHE) to determine whether the Department (1) established controls and processes for ensuring compliance with select Department policies, and (2) complied with select policies and procedures, laws, regulations, and best practices. Our scope included occupational safety and health policies, procedures, practices, and training for Fiscal Year 2019 through March 31, 2020.

The Office of the Inspector General (OIG) conducted an inspection of GPO’s Electronic Waste (e-waste) Processes and Procedures to evaluate and e-waste accounting, sanitization, and disposal. We found that GPO has sufficient e-waste accounting policies. However, GPO can improve its oversight of e-waste disposal and accounting once assets are transferred to the contractor. In addition GPO can clarify e-waste related directives and procedures to alleviate confusion over sanitization procedures. Management provided comments and concurred with the finding and recommendations.

GHI, a subsidiary of EmblemHealth Services Company, LLC, administered Medicare operations under Coordination of Benefits (COB) contracts with CMS. During our audit period, GHI also performed Medicare work on the Medicare Secondary Payer Recovery and Benefit Coordination and Recovery (MSPRC) contracts. GHI also performed work as a subcontractor on the Retiree Drug Subsidy (RDS) contract. GHI participates in the EmblemHealth Services Health and Welfare Benefits Plan. The purpose of this plan is to provide medical and life coverage to eligible retirees and their eligible family members. Medicare Reimbursement of Postretirement Benefit Plan CostsCMS reimburses a portion of its contractors’ PRB costs. In claiming PRB costs, contractors must follow cost reimbursement principles contained in the FAR and applicable CAS as required by the Medicare contracts. To be allowable for Medicare reimbursement, pay-as-you-go PRB costs must be assigned to the period in which the benefits are actually provided, or when the costs are paid to an insurer, provider, or other recipient for current-year benefits or premiums. Incurred Cost Proposal AuditsAt CMS’s request, Figliozzi & Company, P.C. (Figliozzi), Kearney & Company, P.C. (Kearney), and Davis Farr, LLP (Farr), performed audits of the ICPs that GHI submitted for CYs 2009 through 2016. The objectives of the Figliozzi, Kearney, and 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 Figliozzi, Kearney, and Farr ICP audit findings and recommendations when computing the allowable PRB costs discussed in this report. We incorporated the results of the Figliozzi, Kearney, and Farr ICP audits into our computations of the audited indirect cost rates, and ultimately the PRB costs claimed, for the contracts subject to the FAR. CMS will use our report on allowable PRB costs, as well as the Figliozzi, Kearney, and Farr ICP audit reports, to determine the final indirect cost rates and the total allowable contract costs for GHI for CYs 2009 through 2016.

GHI, a subsidiary of EmblemHealth Services Company, LLC, administered Medicare operations under a Coordination of Benefits (COB) contract with CMS. During our audit period, GHI also performed Medicare work on the Medicare Secondary Payer Recovery and Benefit Coordination and Recovery (MSPRC) contracts. GHI also performed work as a subcontractor on the Retiree Drug Subsidy (RDS) contract. During our audit period, GHI had three defined-benefit pension plans: the GHI Local 153 Pension Plan; the GHI Cash Balance Pension Plan; and the EmblemHealth Services Company, LLC, Employees’ Retirement Plan. Medicare segment employees of GHI participated in all three of these pension plans. This report addresses the allowable pension costs claimed by GHI under the provisions of its MAC contracts and CAS- and FAR-covered contracts. The disclosure statement that GHI submits to CMS states that GHI uses pooled cost accounting. Medicare contractors use pooled cost accounting to calculate the indirect cost rates (whose computations include pension, PRB, and Supplemental Executive Retirement 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. CMS 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. At CMS’s request, Figliozzi & Company, P.C. (Figliozzi), Kearney & Company, P.C. (Kearney), and Davis Farr, LLP (Farr), performed audits of the ICPs that GHI submitted for CYs 2009 through 2016. The objectives of the Figliozzi, Kearney, and Farr 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 Figliozzi, Kearney, and Farr audit findings and recommendations when computing the allowable pension costs discussed in this report. We incorporated the results of the Figliozzi, Kearney, and Farr 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 Figliozzi, Kearney, and Farr audit reports, to determine the final indirect cost rates and the total allowable contract costs for GHI for CYs 2009 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.

GHI, a subsidiary of EmblemHealth Services Company, LLC, administered Medicare operations under Coordination of Benefits (COB) contracts with CMS. During our audit period, GHI also performed Medicare work on the Medicare Secondary Payer Recovery and Benefit Coordination and Recovery (MSPRC) contracts. GHI also performed work as a subcontractor on the Retiree Drug Subsidy (RDS) contract. The disclosure statement that GHI submits to CMS states that GHI uses pooled cost accounting. Medicare contractors use pooled cost accounting to calculate the indirect cost rates (whose computations include pension, PRB, and SERP 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. Group Health Incorporated Supplemental Executive Retirement Plan CostsGHI sponsors two SERPs: the Supplemental Executive Retirement Plan for EmblemHealth Services Company, LLC (SERP I), and the Supplemental Executive Retirement Plan II for EmblemHealth Services Company, LLC (SERP II). Both the SERP I and SERP II plans’ purpose is to provide a competitive level of benefits in order to attract and retain well-qualified senior executives of EmblemHealth Services Company, LLC. GHI’s SERPs are thus designed to restore benefits to participants who lost benefits under the GHI Local 153 Pension Plan, GHI Cash Balance Pension Plan, and EmblemHealth Services Company, LLC, Employees’ Retirement Plan because of the Internal Revenue Code, sections 401(a) and 415, limits. , This report addresses both the SERP I and SERP II plan costs that GHI claimed under the provisions of its MAC-related contracts. Accounting MethodologiesThe Medicare contracts require GHI to calculate SERP costs in accordance with the FAR and CAS 412 and 413. The FAR and the CAS require that the costs for nonqualified defined-benefit 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 defined-benefit 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. Incurred Cost Proposal Audits At CMS’s request, Figliozzi & Company, P.C. (Figliozzi), Kearney & Company, P.C. (Kearney), and Davis Farr, LLP (Farr), performed audits of the ICPs that GHI submitted for CYs 2009 through 2016. The objectives of the Figliozzi, Kearney, and 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 this audit, we relied on the Figliozzi, Kearney, and Farr ICP audit findings and recommendations when computing the allowable SERP costs discussed in this report. We incorporated the results of the Figliozzi, Kearney, and Farr ICP audits into our computations of the audited indirect cost rates, and ultimately the SERP costs claimed, for the contracts subject to the FAR. CMS will use our report on allowable SERP costs, as well as the Figliozzi, Kearney, and Farr ICP audit reports, to determine the final indirect cost rates and the total allowable contract costs for GHI for CYs 2009 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.