Review of Pension Costs Claimed for Medicare Reimbursement by Blue Cross of Washington and Alaska

EXECUTIVE SUMMARY:

This final report provides the results of our review of Pension Costs claimed for Medicare Reimbursement by Blue Cross of Washington and Alaska (Washington/Alaska) for Fiscal Years 1993 through 1995. During this period, the allowable Medicare pension costs were $57,826. However, Washington/Alaska claimed pension costs of $73,514 for Medicare reimbursement. As a result, Washington/Alaska claimed $15,688 in pension costs that were not allowable. The over claim occurred primarily because Washington/Alaska used an inappropriate cost when calculating pension costs attributable to Medicare indirect operations. We recommended Washington/Alaska revise its Final Administrative Cost Proposals to eliminate the unallowable pension costs. We also recommended that Washington/Alaska base future claims for pension costs on costs calculated in accordance with the Cost Accounting Standards. Washington/Alaska agreed with our recommendations.