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Department of Health and Human Services

Office of Inspector General -- AUDIT

"Audit of Administrative Costs - Medicare Parts A and B--Blue Cross and Blue Shield of Michigan," (A-05-94-00064)

June 27, 1996

Complete Text of Report is available in PDF format (604 kb). Copies can also be obtained by contacting the Office of Public Affairs at 202-619-1343.


This final audit report points out unallowable costs of $15.6 million claimed by Blue Cross and Blue Shield of Michigan (BCBSM) for Fiscal Years 1990 through 1993. The unallowable costs consisted of, and we recommended financial adjustments for: $8.1 million in costs in excess of the Health Care Financing Administration's (HCFA) notice of budget authorization; $2.4 million for unallowable strategic planning costs that did not directly benefit the Medicare program; $2.1 million in credits due the Medicare program from BCBSM's Medicare secondary payer activities; $1.3 million for unallowable investments; $1.2 million for implementation and maintenance of a claims processing system contrary to a memorandum of understanding with HCFA; and $0.6 million for various items which were unreasonable, not in accordance with Federal regulation, or did not benefit the Medicare program.