Corporate Compliance

Part B contractor overstates expenses in CMS cost proposal

Healthcare Auditing Weekly, April 21, 2009

Pinnacle Business Solutions, a Medicare Part B contractor, reported $247,040 in unallowable costs in its financial costs proposals for fiscal years 2005 through 2007, according to an OIG audit.
 
Pinnacle reported $594,079 in professional and consulting services costs and $233,193 in subcontractor services costs that may be unallowable, the audit found. A CMS contracting officer is currently reviewing these costs for allowability.
 
The unallowable costs include $172,477 in overstated costs related to subcontracts, $21,324 in fringe benefits, $2,064 in executive compensation, and $74,563 in FY 2004 costs that it also reported on the FY 2005 cost proposal.
 
The OIG recommends Pinnacle:
  • Decrease its FY 2005 cost proposal by $94,079 and its FY 2006 cost proposal by $152,961 to reflect the unallowable costs
  • Work with the CMS contracting officer to determine the allowability of $817,272 in costs related to professional and consulting services, and subcontractor services.
Pinnacle agreed with the OIG audit findings and said it would make the recommended adjustments to its FY 2005 and 2006 cost proposals.

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