OIG Home  Reports  Office of Audit Services  Centers for Medicare and Medicaid Services 

Audit (A-07-07-00239)

10-02-2008
Review of the Qualified Pension Plan at Nationwide Mutual Insurance Company, a Terminated Medicare Contractor, for the Period March 1, 1986, to June 30, 2002

Executive Summary

Nationwide Mutual Insurance Company (Nationwide), a terminated Medicare contractor, did not always comply with Federal requirements and the Medicare contracts' pension segmentation requirements. Specifically, Nationwide did not correctly identify the initial allocation of pension plan assets to the Medicare segment as of March 1, 1986, and did not comply with the Medicare contracts’ pension segmentation requirements for updating Medicare segment assets from March 1, 1986, to June 30, 2002, the closing date for the Medicare segment. As a result, Nationwide understated the Medicare segment assets by $2 million.

In addition, Nationwide did not comply with the provisions of its Medicare contracts or the Cost Accounting Standards when determining Medicare's share of the Medicare segment excess pension assets as of the termination of the Medicare contracts. We identified $14.9 million as Medicare’s share; however, Nationwide identified $7.4 million as Medicare’s share. Therefore, Nationwide understated Medicare’s share by $7.5 million.

We recommended that Nationwide increase Medicare segment pension assets as of June 30, 2002, by $2 million; increase Medicare’s share of the excess Medicare segment pension assets as of June 30, 2002, by $7.5 million; and refund to the Federal Government $14.9 million, which we calculated to be Medicare’s share of the Medicare segment excess pension assets as of the termination of the Medicare contracts. In written comments on our draft report, Nationwide did not address our recommendations.

Complete Report

Download the complete report (PDF)
Adobe Acrobat Reader is required to view PDF files.

Copies can also be obtained by contacting the Office of Public Affairs at 202-619-1343.