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Department of Health and Human Services

Office of Inspector General -- AUDIT

"Audit of Administrative Costs - Part A and Part B of the Medicare Program - Blue Cross Blue Shield of Texas," (A-06-99-00006)

November 18, 1999

Complete Text of Report is available in PDF format (2.54 MB). Copies can also be obtained by contacting the Office of Public Affairs at 202-619-1343.


This audit, performed under contract with the OIG by the certified public accounting firm, O'Neal Saul, L.L.C., points out that Blue Cross Blue Shield of Texas (BCBST) charged unallowable administrative costs to Medicare totaling approximately $1.6 million over the 4-year period ending September 30, 1998. The unallowable costs consisted of unallowable merger and lobbying costs ($726,186), unallowable executive compensation that exceeded the Employment Cost Index ($626,981), non-Medicare compensation and fringe benefits charged to Medicare ($103,044), duplicate charges and unallowable dues ($90,793), and amounts due but not credited to Medicare ($68,059). In addition to procedural improvements, the auditors recommended financial adjustments totaling $1.6 million.