Audit of the Pension Plan at a Terminated Medicare Contractor, Independence Blue Cross

EXECUTIVE SUMMARY:

Independence Blue Cross (IBC) was a Medicare contractor until their contract was terminated in 1997 and, as such, was allowed to claim Medicare reimbursement for their Medicare employees' pension costs.  Regulations and the Medicare contracts provide, however, that pension gains, which occur when a Medicare segment of a pension plan closes, should be credited to the Medicare program.  We identified about $2.9 million in excess pension assets at IBC.  Accordingly, we are recommending that IBC remit the $2.9 million in excess pension assets to the Medicare program.