Department of Health and Human Services
Office of Inspector General -- AUDIT
"Administrative Costs Claimed Under Part A of the Medicare Program For the Period October 1, 1990 Through September 30, 1993, Blue Cross Blue Shield United of Wisconsin, Milwaukee, Wisconsin," (A-05-95-00034)
February 29, 1996
Complete Text of Report is available in PDF format (197 kb). Copies can also be obtained by contacting the Office of Public Affairs at 202-619-1343.
EXECUTIVE SUMMARY:
The primary purpose of our audit was to determine whether the Medicare Part
A administrative costs claimed, totaling $50,528,129 was reasonable, allowable
and allocable in accordance with Part 31 of the Federal Acquisition Regulation,
as interpreted and modified by the terms and conditions of the Medicare contract
and its Appendices. Of the costs claimed of $50,528,129, we consider $50,111,605
to be acceptable and recommend $416,524 for financial adjustment.
Costs recommended for financial adjustment pertain to understated complementary
insurance credits. The Medicare contract and Medicare Intermediary Manual require
that complementary insurance credits be determined through a cost allocation
method and do not allow a standard charge methodology for insurers that routinely
request Medicare claims information. From fiscal year 1986 through our audit
period, Blue Cross & Blue Shield United of Wisconsin (BCBSUW) has credited
the Medicare program using a standard charge of $.35 for each Medicare claim
transferred to its complementary insurance program. Officials of BCBSUW could
not provide cost allocation documentation supporting the initial rate calculation
of $.35 or to show the rate remains applicable during the current audit period.