Audit of Medicare Contractor's Segmented Pension Costs, Blue Cross and Blue Shield of Florida, Inc.

This final report presents the results of our review of the Medicare contractor's segmented pension cost, Blue Cross and Blue Shield of Florida, Inc. Our review disclosed that Florida misidentified the Medicare segment cost centers and the inactive plan participants for 1981. This understated the 1981 asset fraction which, when applied to the 1986 pension assets, understated Medicare's asset share. Also, Medicare's share of the actuarial value of pension assets on January 1, 1986, was understated by $1,206,991. In addition, we found that, as of January 1, 1990, Florida has accumulated $2,378,198 in direct pension costs of the Medicare segment which are unallowable for future Medicare reimbursement.