Highmark Over Claims $1.4M in Postretirement Benefits
A recent audit of Highmark Medicare Services found that the company claimed unallowable Medicare Benefits.
- Recently, the Department of Health and Human Services (HHS) Office of Inspector General released the results of a six year audit of Highmark Medicare Services. It was discovered that during the time frame, fiscal year 2003 through 2009, Highmark claimed unallowable postretirement benefit costs of $1.4 million for Medicare reimbursement during the audit period.
The survey was conducted because Medicare contractors are eligible to be reimbursed a portion of postretirement benefits (PRB) costs. This is funded by direct payments to beneficiaries or contributions to a dedicated trust fund. The amount paid out is determined by cost reimbursement principles contained in the Federal Acquisition Regulation (FAR) as required by the Medicare contracts. Previous audits have found that contractors are not always compliant with regulations.
During the audit period, Highmark administered Medicare Parts A and B operations under cost reimbursement contracts with CMS. It administered both fiscal intermediary and carrier contracts. The audit examined $6.534,904 of Medicare Part A and B PRB costs that were claimed for Medicare reimbursement and reported on its FACPs, for fiscal year 2003 through 2009. The performance audit was conducted in accordance with generally accepted government auditing standards.
It was determined that the allowable PRB costs during this period was $5,172,094, meaning a difference of $1,362,810. This over-calculation occurred primarily because Highmark incorrectly calculated the assignable PRB costs for this time period. More specifically, Highmark revised its PRB cost calculations for calendar years 2003 through 2006 but did not adjust its claims for Medicare reimbursement based on those revisions.
OIG recommends that Highmark revise its FACPs for FYs 2003 through 2009 to reduce PRB costs by $1,362,810. Highmark officials responded to the report and, while they did not directly address the recommendations, it is highly suggested that officials did not agree with them.
“Highmark provided information indicating that it agreed in part with our finding,” the report reads. “However, Highmark did not agree with the methodology we used when applying prepayment credits and referred us to its comments on two of our previously issued reports as the rationale for its disagreement.”
Specifically, Highmark officials did not agree with the “interpretation” of certain rules including FAR 31.205-6(j)(2)(iii) and FAR 31.205-6(o)(4) as it relates to offsetting prepayment credits from the Cost Accounting Standards funding.
OIG believes the only the second rule is applicable to the argument but there is nothing brought-up that changes their original recommendation. The report also states that it disagrees with Highmark’s assertions about the methodology for the calculation of PRB costs when prepayment credits exist.
