Review of Unfunded Pension Costs of Pennsylvania Blue Shield for Fiscal Years 1988 Through 1991

EXECUTIVE SUMMARY:

This presents the results of our review of unfunded pension costs of Pennsylvania Blue Shield (PBS) for Fiscal Years (FYs) 1988 through 1991. The purpose of our review was to determine the funding status of pension costs claimed for Medicare reimbursement by PBS for Federal FYs 1988 through 1991. The PBS is the Medicare carrier for Pennsylvania, Delaware, New Jersey, and the District of Columbia. Our review showed that PBS did not make contributions to its pensions plans for the FYs 1988 through 1991. Contrary to the provisions of Medicare contract, however, PBS charged Medicare for pension costs totaling $1,299,419 during that period that were unallowable for Medicare reimbursement. This situation was previously reported in an Office of Inspector General report (A-03-89-02005) in which PBS claimed Medicare reimbursement of $653,516 for unfunded pension costs in FYs 1986 and 1987.