Review of Subsidiary Administrative Costs Claimed Under Parts A and B of the Health Insurance Program for the Aged and Disabled by Blue Cross and Blue Shield of Michigan

This final audit report points out that Blue Cross and Blue Shield of Michigan (BCBSM) charged unallowable costs totaling $1.4 million to Medicare over a 7-year period ending September 30, 1987. The unallowable charges consisted primarily of profits related to BCBSM's three subsidiaries. We recommended a financial adjustment for $1.4 million. Regional Health Care Financing Administration and BCBSM officials concurred with the recommendation.