Palmetto Government Benefits Administrator, LLC, Claimed Some Unallowable Medicare Pension Costs

Why OIG Did This Audit

The Centers for Medicare & Medicaid Services (CMS) reimburses contractors for a portion of their pension costs, which are funded by the annual contributions that contractors make to their pension plans.

At CMS's request, the HHS, OIG, Office of Audit Services, Region VII pension audit team reviews the cost elements related to qualified defined-benefit plans and any other pension-related cost elements claimed by Medicare contractors through Final Administrative Cost Proposals (FACPs).

Previous OIG audits found that Medicare contractors did not always comply with Federal requirements when claiming pension costs for Medicare reimbursement.

Our objective was to determine whether the fiscal year (FY) 2012 qualified defined-benefit plan pension costs (pension costs) that Palmetto Government Benefits Administrator, LLC (Palmetto), claimed for Medicare reimbursement under its fiscal intermediary and carrier contracts, and reported on its FACP, were allowable and correctly claimed.

How OIG Did This Audit

We reviewed $398,188 of Medicare pension costs that Palmetto claimed for Medicare reimbursement on its FACP for FY 2012.

What OIG Found

Palmetto claimed FY 2012 pension costs of $398,188 for Medicare reimbursement; however, we determined that the allowable Cost Accounting Standards (CAS)-based pension costs during this period were $356,134. The difference, $42,054, represented unallowable Medicare pension costs that Palmetto claimed on its FACP for FY 2012. Palmetto claimed these unallowable Medicare pension costs primarily because it calculated an incorrect CAS pension cost.

What OIG Recommends and Auditee Comments

We recommended that Palmetto revise its FACP for FY 2012 to reduce its claimed Medicare pension costs by $42,054. Palmetto concurred with our recommendation.