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The objective of this review was to determine whether Medicare transition and termination costs claimed by Blue Cross of California were allowable, reasonable, and allocable, and were supported by adequate documentation under the provisions of applicable Federal Acquisition Regulation, the Medicare contract and subcontract agreement, and other Centers for Medicare and Medicaid Services (CMS) instructions. We concluded that $95,719 of the $137,131 claimed for transition costs was acceptable. We recommended a financial adjustment of $35,452. We also set aside $5,960 of transition costs for CMS’s determination of allowability. In addition, we concluded that $222,943 of the $690,008 claimed for termination costs was acceptable. We recommended a financial adjustment of $283,735. We also set aside $183,330 of termination costs for CMS’s determination of allowability.