Review of Medicare Administrative Costs Claimed by Blue Cross and Blue Shield of Montana - Helena, Montana

This final report covers the audit of administrative costs claimed by Blue Cross Blue Shield of Montana for Part A and Part B of the Medicare Program for the period October 1, 1997 through September 30, 1999.  For the period audited, Blue Cross Blue Shield of Montana reported administrative costs of $4,321,121 for Part A and $6,606,700 for Part B.  The auditors questioned $211,086.  Questioned costs included unallowable deferred compensation costs, excessive executive compensation, errors in the calculation of return on investment, and a lack of support for certain consultant costs. The auditors also noted material internal control deficiencies relating to insufficient documentation of the indirect cost allocation and errors in reporting costs incurred.