OIG: Medicare Contractor Erred in Two Reimbursement Claims
By - One Medicare contractor was found by the Office of the Inspector General (OIG) to have made errors in two different aspects of the filing of its Medicare reimbursement claims.
First, the National Heritage Insurance Company (NHIC) claimed unallowable Benefit Restoration Plan (BRP) costs of $219,000 for fiscal years 2003 through 2009. The OIG report found that NHIC claimed the unallowable BRP costs because it did not calculate them in accordance with Federal regulations and the Medicare contracts’ requirements.
NHIC is a subsidiary of Hewlett-Packard Enterprise Systems (HPES), and administered Medicare Part B carrier operations under cost reimbursement contracts with the Center for Medicare and Medicaid Services (CMS) until their contract ended on June 1, 2009.
“In addition, during our review of BRP benefit payments paid to participants during FYs 2003 through 2009, we noted that some payments appeared to be based on excessive compensation,” the report said. “While none of these individuals was considered one of the five most highly compensated employees in management positions at each home office and each segment of the Medicare contractor, these participants’ compensation exceeded the compensation limits described in FAR 31.205-6(p).”
OIG recommended that the agency revise its Final Administrative Cost Proposals (FACPs) for FY 2003 to 2009, reducing its claimed BRP costs by $219,107. Moreover, NHIC was told to work with CMS to determine the allowability of $52,761 in BRP costs that it claimed for Medicare reimbursement in the previously mentioned timeframe.
In response, OIG reported that HPES agreed that NHIC based its claim for Medicare reimbursement on an incorrect cost accounting method. However, HPES disagreed with OIG’s second finding that NHIC used unreasonable compensation when calculating its BRP costs for Medicare reimbursement.
The second issue in Medicare reimbursement claims was with retirement plan costs. Specifically, NHIC did not claim $8,000 of allowable Supplemental Executive Retirement Plan costs for Medicare reimbursement for fiscal years 2003 through 2009.
According to OIG, HPES offers two nonqualified defined-benefit pension plans: the EDS 1998 SERP and the EDS Benefit Restoration Plan (BRP). Moreover, NHIC claimed SERP costs of $251,945 for Medicare reimbursement during the allotted timeframe. However, OIG reported that allowable SERP costs during those six years were $259,678.
“The difference, $7,733, constituted allowable Medicare SERP costs that NHIC did not claim on its Final Administrative Cost Proposals (FACPs) for FYs 2003 through 2009,” the report stated. “NHIC did not claim these allowable SERP costs primarily because it did not calculate them in accordance with Federal regulations and the Medicare contracts’ requirements.”
For the unclaimed retirement cost issue, OIG recommended that NHIC revise its FACPs for the fiscal years 2003 through 2009 to claim the additional allowable SERP costs of $7,733. Moreover, it was recommended that NHIC work with CMS to determine the allowability of $98,091 in SERP costs that NHIC claimed for Medicare reimbursement the same time frame.
In this second scenario, HPES agreed with OIG that NHIC based its claim for Medicare reimbursement on an incorrect cost accounting method. However, HPES disagreed with the finding that NHIC used unreasonable compensation when calculating its SERP costs for Medicare reimbursement.
