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Department of Health and Human Services

Office of Inspector General -- AUDIT

"Audit of Administrative Costs Claimed Under Parts A and B of the Health Insurance for the Aged and Disabled Program--Blue Cross and Blue Shield of Minnesota," (A-05-01-00037)

May 31, 2001

Complete Text of Report is available in PDF format (1.27 mb). Copies can also be obtained by contacting the Office of Public Affairs at 202-619-1343.


This audit of Blue Cross and Blue Shield of Minnesota (BCBSM) covered Medicare Part A and Part B administrative costs of $44.6 million claimed during the period October 1, 1994 through July 31, 1999. The audit also included the contractor's termination costs claim submitted to HCFA in July 2000. We recommended a financial adjustment of $1,037,090 because (i) costs for employee retention exceeded the HCFA approved amount by $932,052 and (ii) termination costs of $105,038 were inappropriately included on the Final Administrative Cost Proposal instead of on a separate voucher. BCBSM officials concurred with the recommendation. In addition, we recommended set aside for HCFA adjudication $173,853 of termination costs which consisted of severance payments to employees who retired rather than accept positions offered with the replacement contractor. The BCBSM did not concur with this recommendation.