Blue Cross Blue Shield of Tennessee Overclaimed Supplemental Executive Retirement Plan Costs for Fiscal Years 2005 Through 2009

Blue Cross Blue Shield of Tennessee (BCBS Tennessee), a Centers for Medicare & Medicaid Services (CMS) contractor, claimed approximately $1 million of unallowable supplemental executive retirement plan (SERP) costs for Medicare reimbursement for fiscal years (FY) 2005 through 2009. In addition, BCBS Tennessee's entire SERP termination claim of $365,000 was unallowable for Medicare reimbursement. BCBS Tennessee administered Medicare Part A operations under cost reimbursement contracts with CMS until the contractual relationship was terminated effective August 1, 2009.

We recommended that BCBS Tennessee (1) revise its Final Administrative Cost Proposals for FYs 2005 through 2009 to reduce its claimed SERP costs by $1 million and (2) withdraw its termination claim of $365,000 for SERP costs associated with the Medicare Part A contracts. BCBS Tennessee concurred with our recommendations and stated that it would work directly with CMS to resolve these issues.