Department of Health and Human Services

"Review of Medicare Part A Termination Costs Claimed By Horizon Blue Cross Blue Shield for the Period August 2000 through May 2001," (A-02-02-01005)

January 24, 2003

Complete Text of Report is available in PDF format (6.24 MB). Copies can also be obtained by contacting the Office of Public Affairs at 202-619-1343.


The objectives of this review were to determine whether termination costs claimed by Horizon were allowable, allocable and reasonable. Our audit of Horizonís Medicare Part A termination costs claimed on six termination cost vouchers for the period August 2000 through May 2001, which totaled $3,736,186, disclosed that the reported costs were overstated by $1,832,896.  Specifically, reported termination costs improperly included:  $1,804,000 of unfunded post retirement benefits, $15,529 of unallowable legal fees, $11,367 of severance pay related to non-Medicare employee functions and, $2,000 of employee training that did not benefit Medicare.  We recommended a financial adjustment for $1,832,896.