Department of Health and Human Services

Office of Inspector General -- AUDIT

"Review of Medicare Contractor's Pension Segmentation Requirements at Blue Cross Blue Shield of Montana for January 1, 1987 to January 1, 2004," (A-07-07-00226)

April 26, 2007

PDF File Complete Text of Report is available in PDF format (513 kb). Copies can also be obtained by contacting the Office of Public Affairs at 202-619-1343.

EXECUTIVE SUMMARY:

The objective of our review was to determine whether Montana complied with the Medicare contracts’ pension segmentation requirements while: (1) identifying the Medicare segment’s initial asset allocation and (2) updating the Medicare segment’s assets from the initial asset allocation to January 1, 2004. Montana did not comply with the Medicare contract’s pension segmentation requirements when identifying the Medicare segment’s initial asset allocation and while updating Medicare segment assets from January 1, 1987, to January 1, 2004. As a result, Montana overstated the January 1, 2004, Medicare segment pension assets by $1,016,181. The overstatement occurred primarily because Montana omitted benefit payments in its rollup of segment assets.

We recommended that Montana: (1) decrease Medicare segment pension assets by $1,016,181 as of January 1, 2004, and (2) implement controls to ensure that the Medicare segment’s assets are updated in accordance with the Medicare contracts. Montana partially concurred with our first recommendation.