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Department of Health and Human Services

Office of Inspector General -- AUDIT

"Audit of the Pension Plan at a Terminated Medicare Contractor, Blue Cross Blue Shield of North Carolina," (A-07-02-03017)

February 12, 2003

Complete Text of Report is available in PDF format (689 KB). Copies can also be obtained by contacting the Office of Public Affairs at 202-619-1343.


Blue Cross Blue Shield of North Carolina (BCBSNC) served as a Medicare contractor until their contract was terminated in October 2001. Federal regulations and Medicare contract provisions require pension gains, which occur when a Medicare segment of a contractor’s pension plan closes, be credited to the Medicare program. We identified about $5.3 million in excess Medicare pension assets at BCBSNC at the time of contract termination. Our methodology and calculations were reviewed by the Centers for Medicare and Medicaid Services’ pension actuarial staff. We are recommending that BCBSNC refund the $5.3 million to the Medicare program.