Audit of the Pension Plan at a Terminated Medicare Contractor, Blue Shield of California

Blue Shield of California (BSC) was a Medicare Part B contractor until its contract was terminated in 1996. As of that time BSC had accumulated about $7.6 million in excess pension assets applicable to its Medicare business segment. The Medicare contract and Federal regulations provide that pension gains attributable to the Medicare segment of a pension plan at a terminated contractor be credited to the Medicare program. Accordingly, we have recommended and BSC has agreed to remit the $7.6 million in excess pension assets to the Medicare program.