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Department of Health and Human Services

Office of Inspector General -- AUDIT

"Review of Severance and Termination Costs Claimed by CareFirst Blue Cross/Blue Shield of Maryland for the Period October 2005 Through December 2006," (A-03-07-00022)

January 9, 2008

PDF File Complete Text of Report is available in PDF format (352 kb). Copies can also be obtained by contacting the Office of Public Affairs at 202-619-1343.


Our objective was to determine whether CareFirst Blue Cross/Blue Shield of Maryland's (CareFirst) claims for severance and termination costs were allowable, reasonable, and allocable, in accordance with the Federal Acquisition Regulation, the Medicare contract provisions, and CareFirst severance policies.  CareFirst claimed $1,394,977 in severance and termination costs for the period October 2005 through December 2006.  We did not question $1,362,526 of this amount.  However, CareFirst claimed $32,451 in unallowable costs.  In its comments on our draft report, CareFirst concurred with all but one of our findings.  CareFirst provided additional documentation (letter, invoice, and schedule of hours/wages) from AON Consulting to support the professional fees totaling $12,024 for services claimed for November 2005.

Although CareFirst provided additional information about the work performed, it did not document the details of the agreements. Therefore, we continue to support our recommendation.