Review of Medicare Contractor's Pension Segmentation, General American Life Insurance Company

Beginning with Fiscal Year 1988 the Health Care Financing Administration incorporated pension segmentation requirements into Medicare contracts. This final report points out that the General American Life Insurance Company, a Medicare contractor, understated the Medicare segment pension assets as of January 1, 1988 by $259,101. Also, General American had not updated the Medicare segment pension assets beyond January 1, 1988. We determined that the valuation of the Medicare segment pension assets was $6,205,564 as of January 1, 1998. Accordingly, we recommended that General American establish Medicare segment pension assets of that amount as of January 1, 1998. General American officials concurred with our finding and recommendation.