Audit of Administrative Costs - Medicare Parts A and B--Blue Cross and Blue Shield of Michigan

This final audit report points out unallowable costs of $15.6 million claimed by Blue Cross and Blue Shield of Michigan (BCBSM) for Fiscal Years 1990 through 1993. The unallowable costs consisted of, and we recommended financial adjustments for: $8.1 million in costs in excess of the Health Care Financing Administration's (HCFA) notice of budget authorization; $2.4 million for unallowable strategic planning costs that did not directly benefit the Medicare program; $2.1 million in credits due the Medicare program from BCBSM's Medicare secondary payer activities; $1.3 million for unallowable investments; $1.2 million for implementation and maintenance of a claims processing system contrary to a memorandum of understanding with HCFA; and $0.6 million for various items which were unreasonable, not in accordance with Federal regulation, or did not benefit the Medicare program.