Review of Pension Costs Claimed for Medicare Reimbursement by Rocky Mountain Health Care Corporation

EXECUTIVE SUMMARY:

This final report provides the results of our review of Pension Costs Claimed for Medicare Reimbursement by Rocky Mountain Health Care Corporation (Colorado) for Fiscal Years 1988 through 1995. In 1989 Colorado, Blue Cross and Blue Shield of New Mexico (New Mexico), and Blue Cross and Blue Shield of Nevada (Nevada) merged into the Rocky Mountain Health Care Corporation (Rocky Mountain). Our review included pension costs claimed by Colorado prior to the merger. For clarity, we used the current name of Rocky Mountain in this report for referring to Colorado prior to 1989. We reviewed pension costs claimed by New Mexico prior to the merger, in a separate audit (CIN: A-07-96-01196). Nevada was not a medicare contractor.

We determined that Rocky Mountain underclaimed allowable Medicare pension costs for 1988 through 1995. During this period, the allowable Medicare pension costs were $783,497. However, Rocky Mountain claimed pension costs of $708,324 for Medicare reimbursement. As a result, Rocky Mountain did not claim $75,173 of allowable pension costs. The underclaim occurred primarily because Rocky Mountain did not base its claim on separately computed Cost Accounting Standards pension costs for the Medicare segment. We recommended Rocky Mountain revise its Final Administrative Cost Proposals to reflect the remaining allowable pension costs.