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Department of Health and Human Services

Office of Inspector General -- AUDIT

"Audit of Blue Cross Blue Shield of Tennessee's Unfunded Pension Costs," (A-07-04-00165)

October 4, 2004

Complete Text of Report is available in PDF format (309 kb). Copies can also be obtained by contacting the Office of Public Affairs at 202-619-1343.


The objectives of this audit were to determine if Blue Cross Blue Shield of Tennessee’s prior unfunded pension costs had been properly accounted for; whether Tennessee funded pension costs in accordance with Federal Acquisition Regulations for plan years 1994 and 1995; and to identify any unallowable parts of the accumulated unfunded pension costs.  We found that Tennessee had properly accounted for the unfunded pension costs identified in our prior review.  As such, Tennessee should identify unallowable unfunded pension costs for the Medicare segment of $173,669 and unallowable unfunded pension costs for the Other segment of $1,402,939.  Additionally, Tennessee should establish procedures to update annually the unallowable components of unfunded pension costs for both the Medicare and Other segments.  Tennessee agreed with our recommendations.